20-F

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F

☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2017

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 001-35991

GRAÑA Y MONTERO 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)

Av. Paseo de la República 4667

Surquillo

Lima 34, Peru

(Address of principal executive offices)

Daniel Urbina Pérez, Chief Legal Officer

Tel. 011-51-1-213-6565

Av. Paseo de la República 4667

Surquillo

Lima 34, Peru

(Name, telephone, e-mail and/or facsimile number and address of company contact person)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Common Shares, par value s/.1.00 per share, American Depositary Shares, each representing five Common Shares	New York Stock Exchange* New York Stock Exchange**

* Not for trading purposes, but only in connection with the registration on the New York Stock Exchange of the American Depositary Shares representing those common shares.

** On May 17, 2018, the New York Stock Exchange suspended trading of the Registrant’s American Depositary Shares and commenced proceedings to delist the Registrant. The Registrant has appealed the decision, which is pending.

Securities registered pursuant to Section 12(g) of the Act:

None

Securities for which there is a reporting obligation

pursuant to Section 15(d) of the Act:

None

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:

At December 31, 2017 660,053,790 shares of common stock

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities

Act.    Yes   ☐    No  ☒

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.    Yes  ☐    No  ☒

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☐    No   ☒

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate website, if any, every interactive data filed required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 203.405 of this chapter) during the preceding 12 months (or for such other period that the Registrant was required to submit and post such files)    Yes  ☒    No  ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer    ☒ Accelerated filer    ☐ Non-accelerated filer    ☐ Emerging growth company    ☐

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards^† provided pursuant to Section 13(a) of the Exchange Act.    ☐

^†The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark which basis of accounting the Registrant has used to prepare the financial statements included in this filing:

U.S. GAAP    ☐ International Financial Reporting  ☒ Standards as issued by the International Accounting Standards Board Other    ☐

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the Registrant has elected to follow. Item 17  ☐    Item 18  ☐

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No   ☒

Explanatory Note

This is the company’s annual report on Form 20-F for the year ended December 31, 2017. The company filed its annual report on Form 20-F for the year ended December 31, 2016 (the “2016 20-F”) on May 15, 2018, as amended on May 16, 2018. As the company disclosed in the 2016 20-F, certain developments caused delays in the filing of 2016 20-F and, as a result, this annual report was also delayed.

As the company disclosed on a Form 6-K furnished on May 17, 2017, the company was previously unable to file the 2016 20-F within the prescribed time period because the company was carrying out additional procedures in connection with the finalization of its consolidated financial statements and the assessment of its internal control over financial reporting as of and for the year ended December 31, 2016 related to its association with affiliates of Odebrecht S.A. in certain projects in Peru. Additionally, on January 24, 2017, the Peruvian government terminated the concession of Gasoducto Sur Peruano S.A., a consortium controlled and operated by Odebrecht affiliates in which the company held a minority investment, due to a failure of the consortium to obtain the required project financing by the stipulated deadline. The termination of the concession, despite the government compensation contemplated under the concession contract, has had a material impact on the consolidated financial results and backlog of the company, which was under review due to the complexity in the accounting for the concession and expected government compensation.

In addition, as the company disclosed on Form 6-Ks furnished on October 5, 2017 and November 3, 2017, the company and its former auditor determined that the former auditor was not independent of the company with respect to the fiscal year 2016 as a consequence of non-audit services provided by it to the company beginning in the fourth quarter of fiscal year 2016. The services relate to the company’s testing of internal controls in accordance with the Sarbanes-Oxley Act. As a result, the company and its former auditor mutually agreed on October 4, 2017 to the company’s dismissal of the former auditor with respect to the company’s consolidated financial statements for the fiscal year 2016. A shareholders’ meeting of the company held on November 2, 2017 appointed Moore Stephens SCAI S.A. (“Moore Stephens”) as the new independent auditor for the fiscal year 2016.

Subsequently, on or about March 23, 2018, the former auditor informed the company that it would not authorize the use of its 2015 audit opinion without conducting substantial additional procedures, which represented a difference in understanding from what the company had since October 2017 when the company dismissed the former auditor as the company’s auditor for the 2016 fiscal year. The former auditor could not give any assurance as to when it could complete such additional procedures. To avoid further delay in filing the 2016 20-F, on April 17, 2018, the Audit and Process Committee of the company appointed Moore Stephens to re-audit the 2015 fiscal year, and the shareholders’ meeting of the company held on May 14, 2018 ratified the appointment.

Since the 2016 20-F was filed, the company has worked diligently with Moore Stephens to complete the financial statements for the 2017 fiscal year and file this annual report.

For more information, see “Item 5.A. Operating and Financial Review and Prospects—Recent Developments” and “Item 16.F. Change in Registrant’s Certifying Accountant” of this annual report.

TABLE OF CONTENTS

	Page
PART I INTRODUCTION		1
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS		6
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE		6
ITEM 3. KEY INFORMATION		7
A. Selected Financial Data		7
B. Capitalization and Indebtedness		17
C. Reasons for the Offer and Use of Proceeds		17
D. Risk Factors		17
ITEM 4. INFORMATION ON THE COMPANY		43
A. History and Development of the Company		43
B. Business Overview		45
C. Organizational Structure		105
D. Property, Plant and Equipment		107
ITEM 4A. UNRESOLVED STAFF COMMENTS		108
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS		108
A. Operating Results		108
B. Liquidity and Capital Resources		142
C. Research and Development, Patents and Licenses		150
D. Trend Information		150
E. Off-Balance Sheet Arrangements		154
F. Tabular Disclosure of Contractual Obligations		154
G. Safe Harbor		154
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES		155
A. Directors and Senior Management		155
B. Compensation		162
C. Board Practices		163
D. Employees		165
E. Share Ownership		167
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS		167
A. Major Shareholders		167
B. Related Party Transactions		169
C. Interests of Experts and Counsel		170
ITEM 8. FINANCIAL INFORMATION		170
A. Consolidated Statements and Other Financial Information		170

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B. Significant Changes	173
ITEM 9. THE OFFER AND LISTING	173
A. Offer and Listing Details	173
B. Plan of Distribution	175
C. Markets	175
D. Selling Shareholders	177
E. Dilution	177
F. Expenses of the Issue	177
ITEM 10. ADDITIONAL INFORMATION	177
A. Share Capital	177
B. Memorandum and Articles of Association	177
C. Material Contracts	181
D. Exchange Controls	182
E. Taxation	183
F. Dividends and Paying Agents	188
G. Statement by Experts	188
H. Documents on Display	188
I. Subsidiary Information	189
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	189
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES	190
A. Debt Securities	190
B. Warrants and Rights	190
C. Other Securities	190
D. American Depositary Shares	190
PART II	192
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES	192
ITEM  14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS	193
ITEM 15. CONTROLS AND PROCEDURES	193
A. Disclosure Controls and Procedures	193
B. Management’s Annual Report on Internal Control Over Financial Reporting	193
C. Attestation Report of the Registered Public Accounting Firm	196
D. Changes in Internal Control Over Financial Reporting	196
ITEM 16. [RESERVED]	197
ITEM 16A AUDIT COMMITTEE FINANCIAL EXPERT	197
ITEM 16B CODE OF BUSINESS CONDUCT AND ETHICS	197
ITEM 16C PRINCIPAL ACCOUNTANT FEES AND SERVICES	198

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ITEM 16D EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES	199
ITEM  16E PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS	199
ITEM 16F CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT	199
ITEM 16G CORPORATE GOVERNANCE	200
ITEM 16H MINE SAFETY DISCLOSURE	201
ITEM 17. FINANCIAL STATEMENTS	201
ITEM 18. FINANCIAL STATEMENTS	201
ITEM 19. EXHIBITS	201

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PART I

INTRODUCTION

Certain Definitions

All references to “we,” “us,” “our,” “our company,” “the group” and “Graña y Montero” in this annual report are to Graña y Montero S.A.A., a publicly-held corporation (sociedad anónima abierta) organized under the laws of Peru. In this annual report, we refer to our principal subsidiaries, joint operations, joint ventures and associated companies as follows: (i) in our Engineering and Construction (E&C) segment: GyM S.A. as “GyM”; Stracon GyM S.A. as “Stracon GyM”; Vial y Vives—DSD S.A. as “Vial y Vives—DSD”; GMI S.A. as “GMI”; Morelco S.A.S. as “Morelco”; (ii) in our Infrastructure segment: Norvial S.A. as “Norvial”; Survial S.A. as “Survial”; Concesión Canchaque S.A. as “Canchaque”; GyM Ferrovías S.A. as “GyM Ferrovías”; Concesionaria La Chira S.A. as “La Chira”; GMP S.A. as “GMP”; Gasoducto Sur Peruano S.A. (investee) as “GSP”; Concesionaria Chavimochic S.A.C. (investee) as “Chavimochic”; (iii) in our Real Estate segment: Viva GyM S.A. as “Viva GyM”; Inmobiliaria Almonte S.A.C. as “Almonte” and Concar S.A. as “Concar”; and (iv) in our Technical Services segment, CAM Chile S.A. as “CAM”; Adexus S.A. as “Adexus.” We discuss GSP and Chavimochic in our Infrastructure segment in this annual report, however, as investees, their results are not presented within the Infrastructure segment in our consolidated financial statements. For more information on our subsidiaries, joint operations, joint ventures or associated companies, see notes 6a, 6c and 16 to our audited annual consolidated financial statements included in this annual report.

The GSP gas pipeline concession was terminated on January 24, 2017, and, as a result, we recognized impairments with respect to our investment in GSP and our participation in the related construction consortium (Consorcio Constructor Ductos del Sur). Both GSP and Consorcio Constructor Ductos del Sur are in the process of being liquidated. Additionally, on April 24, 2017 we sold our interest in Compañía Operadora de Gas del Amazonas (“COGA”), and on June 6, 2017, we sold our interest in GMD S.A. (“GMD”). On April 11, 2018, we sold our interest in Stracon GyM. For more information, see “Item 5.A. Operating and Financial Review and Prospects—Operating Results—Recent Developments.”

The term “U.S. dollar” and the symbol “US$” refer to the legal currency of the United States; the term “sol” and the symbol “S/.” refer to the legal currency of Peru; the term “Chilean peso” and the symbol “CLP” refer to the legal currency of Chile; and the term “Colombian peso” and the symbol “COP” refer to the legal currency of Colombia.

Financial Information

Our consolidated financial statements included in this annual report have been prepared in soles and in accordance with International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”). Our annual consolidated financial statements for the years ended December 31, 2015, 2016 and 2017 have been audited by Moore Stephens in accordance with the standards of the Public Company Accounting Oversight Board (United States). Our annual consolidated financial statements for the years ended December 31, 2013 and 2014 have been audited by Gaveglio, Aparicio y Asociados S.C. de R.L., a member firm of PricewaterhouseCoopers. For more information, see “Item 16.F. Change in Registrant’s Certifying Accountant.”

Our consolidated financial statements for the year ended December 31, 2015 included in this annual report were restated in our annual report on Form 20-F for the fiscal year ended December 31, 2016. The previously issued consolidated financial statements of the company for the 2015 fiscal year (and the related audit opinion) included in the company’s annual report on Form 20-F for the year ended December 31, 2015 should not be relied upon. The restatement of the 2015 fiscal year resulted in certain significant changes to the company’s consolidated financial statements. For more information, see note 2.30 to our audited annual consolidated financial statements for the year ended December 31, 2016 included in our annual report on Form 20-F for the 2016 fiscal year.

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We manage our business in four segments: Engineering and Construction (E&C); Infrastructure; Real Estate; and Technical Services. For information on our results of operations per our business segments, see note 7 to our audited annual consolidated financial statements included in this annual report. Beginning on April 1, 2017, we have transferred Concar from our Technical Services segment to our Infrastructure segment. For ease of comparison, the historical segment financial information included in this annual report presents Concar in the Infrastructure segment. This change does not impact our consolidated financial results.

We have requested that the staff of the U.S. Securities and Exchange Commission (the “SEC”) grant relief from the financial statement filing requirements of Rule 3.09 of Regulation S-X pursuant to Section 2430 of the Division of Corporation Finance Financial Reporting Manual, with respect to our investment in GSP. We have requested this relief because we believe the burden of producing financial statements of GSP as of and for the years ended December 31, 2015, 2016 and 2017 would outweigh their limited utility to the company’s investors. In particular, such financial statements would not provide additional material information to our investors that is not already included in our own audited annual consolidated financial statements included in this annual report. The SEC has not yet granted this request for relief, and we are in ongoing discussions with SEC regarding this matter. For more information on GSP, see notes 5(e), 5(f) and 16 of our audited annual consolidated financial statements included in this annual report.

On June 6, 2017, we sold our 89.19% interest in our former subsidiary, GMD. As a result, we present GMD as a discontinued operation in our audited annual consolidated financial statements for the year ended December 31, 2017. We have reclassified our consolidated financial statements for the years ended December 31, 2015 and 2016 included in this annual report, to show GMD as a discontinued operation for those years as well.

Non-IFRS Data

In this annual report, we present EBITDA, a non-GAAP financial measure. A non-GAAP financial measure is generally defined as one that purports to measure financial performance, financial position or cash flows but excludes or includes amounts that would not be so adjusted in the most comparable IFRS measure. We present EBITDA because we believe it provides readers with a supplemental measure of the financial performance of our core operations that facilitates period-to-period comparisons on a consistent basis. Furthermore, we regularly present EBITDA in our filings with the Lima Stock Exchange in Peru. Our management uses EBITDA, among other measures, for internal planning and performance measurement purposes. We believe that EBITDA is useful in evaluating our operating performance compared to other companies operating in our sectors because the calculation of EBITDA generally eliminates the effects of financing and income taxes and the accounting effects of capital spending, which items may vary for different companies for reasons unrelated to overall operating performance. EBITDA should not be construed as an alternative to net profit or operating profit, as an indicator of operating performance, as an alternative to cash flow provided by operating activities or as a measure of liquidity (in each case, as determined in accordance with IFRS). EBITDA, as calculated by us, may not be comparable to similarly titled measures reported by other companies. For our definition of EBITDA and a reconciliation of EBITDA to the most directly comparable IFRS financial measure, see “Item 3.A. Key Information—Selected Financial Data—Non-GAAP Financial Measure and Reconciliation.”

Currency Translations

Our consolidated financial statements are prepared in soles. For a description of our translation of amounts in currencies other than soles in our consolidated financial statements, see note 2.4 to our audited annual consolidated financial statements included in this annual report.

We have translated some of the soles amounts contained in this annual report into U.S. dollars and some U.S. dollars amounts contained in this annual report into soles, for convenience purposes only. Unless otherwise indicated or the context otherwise requires, the rate used to translate soles amounts to U.S. dollars and U.S. dollars amounts into soles was S/.3.245 to US$1.00, which was the exchange rate reported for December 31, 2017 by the Peruvian Superintendency of Banks, Insurance and Private Pension Fund Administrators (Superintendencia de Banca, Seguros y AFPs, or “SBS”). We present our backlog in U.S. dollars. For contracts denominated in soles or other local currencies, amounts have been converted into U.S. dollars based on the exchange rate published by the SBS on December 31 of the corresponding year. When we present our ratios of backlog and revenues in this annual report, we similarly convert our revenues, which are reported in soles, into U.S. dollars based on the exchange rate reported for December 31 of the corresponding year. For conversions of macroeconomic indicators (particularly in “Item 5.D. Operating and Financial Review and Prospects—Trend Information” in this annual report), average annual exchange rates for the currencies of each of the countries addressed are used. The Federal Reserve Bank of New York does not report a noon buying rate for soles. The U.S. dollar equivalent information presented in this annual report is provided solely for convenience of the reader and should not be construed as implying that the soles or other currency amounts represent, or could have been or could be converted into, U.S. dollars at such rates or at any other rate. See “Item 3.A. Key Information—Selected Financial Data—Exchange Rates” for information regarding historical exchange rates of soles to U.S. dollars.

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Rounding

Certain figures included in this annual report have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables may not be arithmetic aggregations of the figures that precede them.

Backlog

This annual report includes our backlog for our Engineering and Construction, Infrastructure, Real Estate and Technical Services segments. We do not include backlog in this annual report in our Infrastructure segment for: (i) our Norvial toll road concession because its revenues from the concession are derived from toll fees charged to vehicles using the highway, and, as a result, such revenues are dependent on vehicular traffic levels; (ii) our Energy line of business because: (a) our revenues from hydrocarbon extraction services are dependent on the amounts of oil and gas we produce and market prices, which fluctuate significantly; (b) our revenues from our gas processing plant are dependent on the amount of gas we process and market prices for natural gas liquids, which fluctuate significantly; and (c) our revenues from our fuel storage terminal operation partially depend on the volume of fuel dispatched; and (iii) COGA, which is not consolidated because it was jointly controlled, and which we sold on April 24, 2017. When we present backlog on a segment basis, we do not include eliminations that are included in our consolidated backlog. Backlog is not a measure defined by IFRS, and our methodology for determining backlog may not be comparable to the methodology used by other companies in determining their backlog. Backlog is not audited. For our definition of backlog, see “Item 4.B. Information on the Company—Business Overview—Backlog.” See also “Item 3.D. Key Information—Risk Factors—Risks Related to our Company—Our backlog and our ratio of historical backlog to revenues may not be reliable indicators of future revenues or profit.”

The GSP gas pipeline concession was terminated on January 24, 2017, which had a significant impact on our backlog for our E&C and our consolidated backlog. For more information, see “Item 5.A. Operating and Financial Review and Prospects—Operating Results—Recent Developments.”

Reserves Estimates

This annual report includes our estimates for proved reserves in Blocks I and V, where GMP provides hydrocarbon extraction services to, and Blocks III and IV, where GMP extracts hydrocarbon under license agreements with, Perupetro S.A. (“Perupetro”). These reserves estimates were prepared internally by our team of engineers and have not been audited or reviewed by any independent external engineers. For further information on these reserves estimates, see “Item 3.D. Key Information—Rights Relating to Our Company – Additional Risks Related to our Infrastructure Business” and “Item 4.B. Information on the Company—Business Overview—Infrastructure—Principal Infrastructure Lines of Business—Energy—Oil and Gas Production.”

Market Information

We make estimates in this annual report regarding our competitive position and market share, as well as the market size and expected growth of the engineering and construction, infrastructure, real estate and technical services industries in Peru and elsewhere in Latin America. We have made these estimates on the basis of our management’s knowledge and statistics and other information, which we believe to be the most recently available as of the date of this annual report, from government agencies, industry professional organizations, industry publications and other sources. While we believe these estimates to be accurate as of the date of this annual report, we have not independently verified the data from third-party sources and our internal data has not been verified by any independent source. In addition, our former director, Hugo Santa María Guzmán, is a partner in APOYO Consultoría, and Roberto Abusada Salah, a director of the company, is a director of the Peruvian Economy Institute. We paid Great Place to Work ^® Institute, a human resources consulting, research and training firm, for our employees to participate in their market survey referenced in this annual report (Copyright ^© 2017 Great Place to Work ^® Institute, Inc. All rights reserved.). In this annual report we present gross domestic product (“GDP”) both on a nominal and real basis. Real GDP is nominal GDP adjusted to exclude the effect of inflation. Unless otherwise indicated, references to GDP are to real GDP.

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Measurements and Other Data

In this annual report, we use the following measurements:

• “m” means one meter, which equals approximately 3.28084 feet;

• “m2” means one square meter, which equals approximately 10.7630 square feet;

• “km” means one kilometer, which equals approximately 0.621371 miles;

• “hectare” means one hectare, which equals approximately 2.47105 acres;

• “tonne” means one metric ton, which equals approximately 2,204.6 pounds;

• “bbl” or barrel of oil means one stock tank barrel, which is equivalent to approximately 0.15898 cubic meters;

• “boe” means one barrel of oil equivalent, which equals approximately 160.2167 cubic meters, determined using the ratio of 5,658 cubic feet of natural gas to one barrel of oil;

• “cf” means one cubic foot;

• “M,” when used before bbl, boe or cf, means one thousand bbl, boe and cf, respectively;

• “MM,” when used before bbl, boe or cf, means one million bbl, boe and cf, respectively;

• “MW” means one megawatt, which equals one million watts; and

• “Gwh” means one gigawatt hour, which equals one billion watt hours.

In this annual report, we use the term accident incident rate with respect to our E&C segment, which is calculated as the number of injuries divided by the total number of hours worked by all full-time employees of our E&C segment during the relevant year divided by 200,000 (which reflects 40 hours worked per week in a 50-week year by 100 equivalent full-time workers).

Forward-Looking Statements

This annual report contains forward-looking statements. Forward-looking statements convey our current expectations or forecasts of future events. These statements involve known and unknown risks, uncertainties and other factors, including those listed under “Item 3.D. Key Information—Risk Factors,” which may cause our actual results, performance or achievements to differ materially from the forward-looking statements that we make.

Forward-looking statements typically are identified by words or phrases such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “project,” “plan,” “believe,” “potential,” “continue,” “is/are likely to,” or other similar expressions. Any or all of our forward-looking statements in this annual report may turn out to be inaccurate. Our actual results could differ materially from those contained in forward-looking statements due to a number of factors, including, among others:

• the impact on our business reputation from our association with Odebrecht S.A. (“Odebrecht”) affiliates in Peru;

• the potential effects of investigations of our company and certain of our former directors and executive officers, or any future investigations, regarding corruption or other illegal acts;

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• uncertainty with regards to the timing and amount of the government payment we are entitled to receive in connection with the termination of the GSP pipeline concession;

• defaults under our debt instruments arising from certain financial covenants and our failure to deliver the company’s audited consolidated financial statements for the 2016 and 2017 fiscal years on time;

• our ability to consummate asset sales on favorable terms on a timely basis, or at all;

• the potential impact of the class action civil suit against the company and certain of our former directors and our former and current executive officers;

• our ability to successfully appeal the suspension of trading and eventual delisting of our American depositary shares (“ADSs”) on the New York Stock Exchange (“NYSE”);

• global macroeconomic conditions, including commodity prices;

• economic, political and social conditions in the markets in which we operate, particularly in Peru, including the resignation of former President Pedro Pablo Kuczynski in March 2018 following corruption allegations;

• political conflicts and deadlocks in Peru between the Peruvian Congress and the executive branch;

• major changes in Peruvian government policies at the national, regional or municipal levels, including in connection with infrastructure concessions, investments in infrastructure and affordable housing subsidies;

• social conflicts in Peru that disrupt infrastructure projects, particularly in the mining sector;

• interest rate fluctuation, inflation and devaluation or appreciation of the sol in relation to the U.S. dollar (or other currencies in which we receive revenue);

• our backlog may not be a reliable indicator of future revenues or profit;

• the level of capital investments and financings available for infrastructure projects of the types that we perform, both in the private and public sectors;

• competition in our markets, both from local and international companies;

• performance under contracts, where a failure to meet schedules, cost estimates or performance targets on a timely basis could result in reduced profit margins or losses and impact our reputation;

• developments, some of which may be beyond our control, that affect our reputation in our markets, including a deterioration in our safety record;

• industry-specific operational risks, such as operator errors, mechanical failures and other accidents;

• availability and costs of energy, raw materials, equipment and labor;

• our ability to obtain financing on favorable terms, including our ability to obtain performance bonds and similar financings; required in the ordinary course of our business;

• our ability to attract and retain qualified personnel;

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• our ability to enter into joint operations, and rules involved in operating under joint operation or similar arrangements;

• our exposure to potential liability claims and contract disputes, including as a result of environmental damage alleged to have been caused by our operations;

• our and our clients’ compliance with environmental, health and safety laws and regulations, and changes in government policies and regulations in the countries in which we operate;

• negotiations of claims with our clients of cost and schedule variances and change orders on major projects;

• delays in client payments, and increased financing costs for working capital resulting from those delays;

• volatility in global prices of oil and gas;

• the cyclical nature of some of our business segments;

• limitations on our ability to operate our concessions profitably, including changes in traffic patterns, and limitations on our ability to obtain new concessions;

• our ability to accurately estimate the costs of our projects;

• changes in real estate market prices, customer demand, preference and purchasing power, and financing availability and terms;

• our ability to obtain zoning and other license requirements for our real estate development;

• changes in tax laws;

• natural disasters, severe weather or other events that may adversely impact our business; and

• other factors identified or discussed under “Item 3.D. Key Information—Risk Factors.”

The forward-looking statements in this annual report represent our expectations and forecasts as of the date of this annual report. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this annual report.

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

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ITEM 3. KEY INFORMATION

A. Selected Financial Data

The following selected consolidated financial data should be read together with “Part I. Introduction — Financial Information,” “Item 5. Operations and Financial Review and Prospects” and our audited annual consolidated financial statements included in this annual report.

The following selected financial data as of December 31, 2016 and 2017 and for the years ended December 31, 2015, 2016 and 2017 have been derived from our audited annual consolidated financial statements included in this annual report. The following selected financial data as of December 31, 2013, 2014 and 2015 and for the years ended December 31, 2013 and 2014 have been derived from our audited annual consolidated financial statements not included in this annual report. Our annual consolidated financial statements for the years ended December 31, 2015, 2016 and 2017 have been audited by Moore Stephens in accordance with the standards of the Public Company Accounting Oversight Board (United States). For more information, see “Item 16.F. Change in Registrant’s Certifying Accountant.” Our consolidated financial statements for the year ended December 31, 2015 included in this annual report were restated in our annual report on Form 20-F for the fiscal year ended December 31, 2016. The previously issued consolidated financial statements of the company for the 2015 fiscal year (and the related audit opinion) included in the company’s annual report on Form 20-F for the year ended December 31, 2015 should not be relied upon. On June 6, 2017, we sold our 89.19% interest in our former subsidiary GMD. As a result, we present GMD as a discontinued operation in our audited annual consolidated financial statements for the year ended December 31, 2017. We have reclassified our financial statements for the years ended December 31, 2015 and 2016 included in this annual report to show GMD as a discontinued operation for those years as well. We have not reclassified GMD for the fiscal years 2013 and 2014, due to the immaterial amount of the difference.

	For the year ended December 31,
	2013(2)			2014(2)			2015			2016(3)			2017			2017
				(in millions of S/.)												(in millions of US$)(4)
Income Statement Data: (1)
Revenues		5,967.5			7,008.7			7,582.9			6,190.3			6,080.1			1,873.7
Cost of sales		(4,963.4	)		(6,057.1	)		(6.969.9	)		(5,633.0	)		(5,407.4	)		(1,666.4	)
Gross profit		1,004.1			951.6			613.0			557.3			672.7			207.3
Administrative expenses		(361.8	)		(421.4	)		(394.2	)		(382.4	)		(429.2	)		(132.3	)
Other income and expenses, net(5)		26.0			15.2			54.7			(12.7	)		(21.0	)		(6.5	)
Profit (losses) from sale of investments		5.7			—			(8.3	)		46.3			274.4			84.6
Other (expenses) income, net		(0.7	)		(0.1	)		(0.1	)		(0.7	)		0.4			0.1
Operating profit		673.4			545.3			265.1			207.8			497.3			153.2
Financial (expense) income, net(5)		(112.4	)		(91.4	)		(130.4	)		(201.0	)		(170.0	)		(52.4	)
Share of the profit and loss obtained from associates and joint ventures under the equity method of accounting		33.6			53.4			7.7			(589.7	)		1.3			0.4
Profit before income tax		594.5			507.4			142.3			(582.9	)		328.6			101.2
Income tax		(182.3	)		(146.2	)		(95.9	)		119.3			(123.0	)		(37.9	)
Profit from continuing operations		412.1			299.7			46.4			(463.6	)		205.6			63.3
Profit from discontinued operations		—			—			9.1			12.0			3.6			1.1
Net profit		412.1			361.2			55.6			(451.6	)		209.2			64.4
Net profit (loss) attributable to controlling interest(6)		320.0			299.7			7.1			(509.7	)		148.7			45.8
Net profit (loss) attributable to non-controlling interest(6)		92.1			61.5			48.5			58.1			60.5			18.6

(1) Includes the results of operations of DSD since August 2013, Morelco since January 2015 and Adexus which began consolidating in August 2016. See “Item 5.A. Operating and Financial Review and Prospects—Operating Results—Factors Affecting our Results of Operations—Acquisitions.” Additionally includes the results of Stracon, although we sold our interest in Stracon on April 11, 2018.

(2) We have not reclassified our financial information included in this annual report for the years ended December 31, 2013 and 2014 to show GMD as a discontinued operation, due to the immaterial amount of the difference.

(3) For the effects on our results of operations for 2016 resulting from the termination of the GSP gas pipeline concession, see “Item 5.A. Operating and Financial Review and Prospects—Operating Results—Recent Developments” and notes 5(e), 5(f), and 16 to our audited annual consolidated financial statements included in this annual report. In particular, we recognized an impairment to our investment in GSP of S/.593.1 million in 2016, which is recorded in Share of the profit and loss obtained from associates and joint ventures under the equity method of accounting.

(4) Calculated based on an exchange rate of S/.3.245 to US$1.00 as of December 31, 2017.

(5) Reflects exchange losses due to the depreciation of the sol against the U.S. dollar and our U.S. dollar denominated liabilities. For more information, see note 28 to our audited annual consolidated financial statements included in this annual report.

(6) We consolidate the results of our subsidiaries in our financial statements and we reflect the profit corresponding to the minority interests in our subsidiaries under “net profit attributable to non-controlling interests” in our income statement. With respect to our joint operations, we recognize in our consolidated financial statements the revenue and expenses, including our share of any asset, liability, revenue or expense we hold jointly with partners. We reflect the results of our associated companies under the equity method of accounting in our consolidated financial statements under the line item “share of the profit and loss in associates” in our income statement. See “Item 5.A. Operating and Financial Review and Prospects—Operating Results—Factors Affecting Our Results of Operations—Acquisitions,” “—General—Accounting for Subsidiaries, Joint Operations, Joint Ventures and Associated Companies” and note 2.2 to our audited annual consolidated financial statements included in this annual report.

7

	As of December 31,
	2013		2014		2015		2016(1)		2017		2017
Balance Sheet Data:			(in millions of S/.)								(in millions of US$)(2)
Total current assets		3,903.5		4,623.9		5,200.4		4,328.7		3,891.9		1,199.4
Cash and cash equivalents		959.4		818.4		554.0		607.0		626.2		193.0
Accounts receivables		1,162.4		1,768.6		2,143.3		1,862.5		1,858.9		572.9
Outstanding work in progress		971.7		1,161.8		1,278.2		680.9		584.8		180.2
Inventories(3)		762.8		833.6		1,159.2		1,104.3		770.7		237.5
Total non-current assets		2,412.6		3,106.8		3,699.6		4,718.0		4,775.7		1,471.7
Long-term accounts receivables(4)		591.9		580.0		621.8		667.5		848.6		261.5
Investments in associates and joint ventures		88.0		229.6		637.0		389.8		268.7		82.8
Property, plant and equipment		952.9		1,147.0		1,111.8		1,113.6		865.7		266.8
Intangible assets(5)		480.9		778.7		878.3		960.3		940.1		289.7
Total current liabilities		2,416.3		3,794.9		4,092.3		4,537.0		3,549.2		1,093.7
Short-term borrowings		486.1		1,425.5		1,265.1		2,007.1		1,093.4		336.9
Accounts payables(6) (7)		1,762.1		2,151.4		2,779.6		2,453.1		2,356.7		726.3
Total non-current liabilities		703.1		762.1		1,725.8		2,019.9		2,529.4		779.5
Long-term borrowings		309.7		326.1		1,310.3		1,341.0		1,544.2		475.9
Capital stock		660.1		660.1		660.1		660.1		660.1		203.4
Shareholders’ equity		2,765.4		2,691.7		2,558.8		1,980.4		2,123.3		654.3
Non-controlling interest		431.3		482.5		523.1		509.3		465.7		143.5

(1) For the effects on our financial condition as of December 31, 2016 resulting from the termination of the GSP gas pipeline concession, see “Item 5.A. Operating and Financial Review and Prospects—Operating Results—Recent Developments” and notes 5(e), 5(f) and 26 to our audited annual consolidated financial statements included in this annual report.

(2) Calculated based on an exchange rate of S/.3.245 to US$1.00 as of December 31, 2017.

(3) Includes investments for the purchase of land by our Real Estate segment. These investments in land are recorded at acquisition cost and are not marked-to-market for changes in fair value. See note 15 to our audited annual consolidated financial statements included in this annual report.

(4) Includes payments required to be made by the Peruvian government for the amounts we invest to purchase trains and other infrastructure for the Lima Metro. See “Item 5.A. Operating and Financial Review and Prospects—Operating Results—Results of Operations—General—Infrastructure” and note 11 to our audited annual consolidated financial statements included in this annual report.

(5) We recognize our investments in the construction of the highway of our Norvial concession as intangible assets. See note 18(c) to our audited annual consolidated financial statements included in this annual report.

(6) Includes S/.701.8 million, S/.684.3 million, S/.607.1 million, S/.810.8 million and S/.726.3 million in advance payments made by our clients as of December 31, 2013, 2014, 2015, 2016 and 2017, respectively, in connection with our E&C and operation and maintenance of infrastructure assets contracts. See “Item 5.A. Operating and Financial Review and Prospects—Operating Results—Results of Operations—General—Engineering and Construction” and “—Technical Services” and note 22 to our audited annual consolidated financial statements included in this annual report.

(7) Includes our US$15.6 million payable to Chubb Insurance Company (US$52.5 million as of December 31, 2016 and US$15.6 million as of December 31, 2017) relating to the termination of the GSP gas pipeline concession. For more information, see “Item 5.A. Operating and Financial Review and Prospects—Operating Results—Recent Developments” and “—Liquidity and Capital Resources—Indebtedness.”

8

	As of and for the year ended December 31,
	2013			2014			2015			2016(2)			2017			2017
	(in millions of S/.)															(in millions of US$)(3)
Other Data: (1)
EBITDA(4) (in millions of S/. or US$)		966.1			858.8			579.2			(93.6	)		785.1			241.9
Gross margin		16.8	%		13.6	%		8.1	%		9.0	%		11.1	%		11.1	%
EBITDA margin(5)		16.2	%		12.3	%		7.6	%		(1.5	)%		12.9	%		12.9	%
Outstanding shares (thousands)		660,054			660,054			660,054			660,054			660,054			660,054
Profit per share (in S/.or US$)		0.62			0.55			0.08			(0.68	)		0.31			0.10
Profit attributable to controlling interest per share (in S/.or US$)		0.48			0.45			0.01			(0.77	)		0.23			0.07
Dividend per share (in S/.or US$)(6)		0.17			0.16			0.05			—			—			—
Net debt(7)/ EBITDA ratio		(0.2	)x		1.1x			3.5x			(29.3	)		2.6			2.6
Backlog (in millions of US$) (Unaudited)(8)		3,935.0			3,765.4			3,918.4			3,011.6			2,388.4			2,388.4
Backlog/revenues ratio (Unaudited)(8)		1.9x			1.6x			1.9x			1.8x			1.3x			1.3x

(1) Includes the results of operations of DSD since August 2013, Morelco since January 2015 and Adexus which began consolidating in August 2016. See “Item 5.A. Operating and Financial Review and Prospects—Operating Results—Factors Affecting our Results of Operations—Acquisitions.” Additionally includes the results of Stracon, although we sold our interest in Stracon on April 11, 2018.

(2) For the effects on our results of operations and backlog for 2016 resulting from the termination of the GSP gas pipeline concession, see “Item 5.A. Operating and Financial Review and Prospects—Operating Results—Recent Developments” and notes 5(e), 5(f) and 16 to our audited annual consolidated financial statements included in this annual report.

(3) Calculated based on an exchange rate of S/.3.245 to US$1.00 as of December 31, 2017.

(4) For further information on the definition of EBITDA, see “—Non-GAAP Financial Measure and Reconciliation.”

(5) Reflects EBITDA as a percentage of revenues.

(6) Payment of dividends for the year’s profit.

(7) Net debt is calculated as total borrowings (including current and non-current borrowings) less cash and cash equivalents.

(8) For further information on our backlog, see “Item 4.B. Business Overview—Backlog.” Does not include, in our Infrastructure segment, our Norvial toll road concession; our Energy line of business; or our jointly controlled COGA venture (which we sold on April 24, 2017). Backlog is calculated as of the last day of the applicable year. Revenues are calculated for that year and converted into U.S. dollars based on the exchange rate published by the SBS on December 31 of the corresponding year, which was S/.2.796 to US$1.00 as of December 31, 2013, S/.2.989 to US$1.00 as of December 31, 2014, S/.3.413 to US$1.00 as of December 31, 2015, S/.3.36 to US$1.00 as of December 31, 2016 and S/.3.245 to US$1.00 as of December 31, 2017. Includes revenues only for businesses included in our backlog.

The following tables set forth summary financial data for each of our business segments. For more information on the results of operations of our segments, see “Item 5.A. Operating and Financial Review and Prospects—Operating Results—Results of Operations” and note 7 to our audited annual consolidated financial statements included in this annual report. The effects of the termination of the GSP gas pipeline concession on our results of operations and financial condition for 2016 are reflected in Corporate (the Parent Company Operations) and, with respect to the related construction consortium (Consorcio Constructor Ductos del Sur), in our E&C segment.

Beginning on April 1, 2017, we have transferred Concar from our Technical Services segment to our Infrastructure segment. For ease of comparison, the historical segment financial information included in this annual report presents Concar in the Infrastructure segment. This change does not impact our consolidated financial results.

1. Engineering & Construction

	For the year ended December 31,
	2013			2014			2015		2016			2017			2017
	(in millions of S/.)														(in millions of US$)(1)
Income Statement Data:
Revenues		4,075.3			5,035.7			5,829.4		4,159.5			3,353.2			1,033.3
Cost of sales		(3,515.7	)		(4,500.3	)		5,516.7		(3,934.9	)		(3,062.9	)		(943.9	)
Gross profit		559.5			535.4			312.8		224.6			290.3			89.5

9

	For the year ended December 31,
	2013			2014			2015			2016			2017			2017
	(in millions of S/.)															(in millions of US$)(1)
Administrative expenses		(217.9	)		(258.6	)		(289.1	)		(258.6	)		(231.0	)		(71.2	)
Other income and (expenses), net		10.8			(9.8	)		30.8			(9.2	)		(42.7	)		(13.2	)
Other (losses) gains, net		—			—			(0.2	)		—			25.8			8.0
Operating profit		352.4			267.0			54.2			(43.2	)		42.4			13.1
Financial (expense) income, net		(26.6	)		(62.4	)		(118.5	)		(53.9	)		(43.4	)		(13.4	)
Share of the profit or loss in associates under the equity method of accounting		42.0			48.2			(2.2	)		16.5			30.6			9.4
Profit (loss) before income tax		367.7			252.8			(66.5	)		(80.6	)		29.6			9.1
Income tax		(111.2	)		(59.3	)		(55.4	)		(12.8	)		(17.14	)		(5.3	)
Net profit (loss)		256.5			193.6			(121.8	)		(93.4	)		12.5			3.9
Net profit attributable to controlling interest		211.6			164.1			(131.2	)		(87.7	)		12.1			3.7
Net profit (loss) attributable to non-controlling interest		44.9			29.5			9.3			(5.7	)		0.3			0.1

	As of December 31,
	2013		2014		2015		2016		2017		2017
	(in millions of S/.)										(in millions of US$)(1)
Balance Sheet Data:
Total current assets		1,858.0		2,676.6		3,157.1		1,910.9		1,949.0		600.6
Cash and cash equivalents		265.8		285.4		172.1		93.5		184.4		56.8
Accounts receivables		737.7		1,092.9		1,526.4		1,060.5		1,117.0		344.2
Outstanding work in progress		735.0		1,145.4		1,260.5		648.9		578.7		178.3
Other current assets		119.6		152.9		198.1		108.0		68.9		21.2
Total non-current assets		931.1		1,250.0		1,118.4		1,328.0		1,382.3		426.0
Long-term accounts receivables		—		6.2		0.5		42.7		333.5		102.8
Property, plant and equipment		534.1		651.2		606.2		592.2		509.7		157.1
Other non-current assets		397.0		592.6		511.7		521.4		480.1		148.0
Total current liabilities		1,633.6		2,500.2		2,846.3		2,101.5		2,189.6		674.8
Short-term borrowings		195.1		629.6		653.0		582.3		592.0		182.4
Accounts payables(2)		1,321.5		1,701.9		2,174.0		1,482.1		1,561.6		481.2
Total non-current liabilities		385.6		445.2		629.2		471.8		546.3		168.4
Long-term borrowings		127.1		144.1		376.0		246.3		127.8		39.4
Other long-term liabilities		258.5		301.1		253.3		225.5		418.6		129.0
Shareholders’ equity		622.9		817.8		639.2		551.7		487.9		150.4
Non-controlling interest		147.0		163.4		160.8		113.9		107.5		33.1

2. Infrastructure

	For the year ended December 31,
	2013			2014			2015			2016			2017			2017
	(in millions of S/.)															(in millions of US$)(1)
Income Statement Data:
Revenues		1,109.9			1,249.1			1,353.1			1,174.8			1,447.9			446.2
Cost of sales		(876.8	)		(995.4	)		(1,107.2	)		(963.4	)		(1,187.8	)		(366.0	)
Gross profit		233.1			253.7			245.9			211.4			260.2			80.2
Administrative expenses		(67.0	)		(71.5	)		(67.0	)		(66.1	)		(63.9	)		(19.7	)
Other income and (expenses), net		(1.0	)		(2.6	)		2.0			1.3			5.8			1.8
Other (losses) gains, net		0.3			(0.1	)		(0.1	)		(0.5	)		0.4			0.1
Operating profit		165.3			179.5			180.8			146.1			202.5			62.4
Financial (expense) income, net		(44.5	)		(30.4	)		(22.9	)		(9.6	)		(19.5	)		(6.0	)
Share of the profit or loss in associates under the equity method of accounting		1.6			—			0.9			1.6			1.6			0.5
Profit before income tax		122.4			149.2			158.9			138.1			184.5			56.9
Income tax		(40.0	)		(56.6	)		(46.5	)		(39.9	)		(55.2	)		(17.0	)
Net profit		82.4			92.6			112.4			98.3			129.3			39.8
Net profit attributable to controlling interest		70.1			80.9			93.0			74.4			103.8			32.0
Net profit (loss) attributable to non-controlling interest		12.3			11.7			19.4			23.8			25.5			7.9

10

	2013		2014		2015		2016		2017		2017
	(in millions of S/.)										(in millions of US$)(1)
Balance Sheet Data:
Total current assets		651.8		614.1		639.3		806.5		923.3		284.5
Cash and cash equivalents		142.5		173.4		240.3		303.9		331.1		102.0
Accounts receivables		286.1		378.8		331.9		409.2		535.0		164.9
Outstanding work in progress		172.6		16.4		17.7		32.1		—		—
Other current assets		50.6		45.6		49.5		61.3		57.2		17.6
Total non-current assets		1,111.1		1,297.9		1,514.4		1,801.6		2,098.4		646.7
Long-term accounts receivables(3)		603.9		602.3		670.7		930.2		1,164.0		358.7
Property, plant and equipment		226.4		236.3		225.4		200.2		190.4		58.7
Other non-current assets		279.8		412.8		536.1		623.5		676.9		208.6
Total current liabilities		1,094.2		1,180.4		458.4		407.2		580.2		178.8
Short-term borrowings		140.4		588.8		197.2		85.1		86.2		26.6
Accounts payables		934.6		568.3		241.3		261.5		486.2		149.8
Total non-current liabilities		163.6		154.5		1,010.3		1,444.7		1,585.9		488.7
Long-term borrowings		99.6		103.3		842.5		1,004.6		1,014.4		312.6
Other long-term liabilities		63.9		51.1		167.8		440.1		571.4		176.1
Shareholders’ equity		434.2		497.1		586.2		643.3		729.5		224.8
Non-controlling interest		70.9		80.0		98.8		112.9		126.1		38.9

3. Real Estate

	For the year ended December 31,
	2013			2014			2015			2016			2017			2017
	(in millions of S/.)															(in millions of US$)(1)
Income Statement Data:
Revenues		313.7			224.6			215.8			411.5			647.5			199.5
Cost of sales		(200.0	)		(162.1	)		(164.0	)		(275.0	)		(500.2	)		(154.1	)
Gross profit		113.7			62.4			51.8			136.5			147.4			45.4
Administrative expenses		(21.0	)		(21.1	)		(20.5	)		(28.4	)		(21.2	)		(6.5	)
Other income and (expenses), net		(0.7	)		(0.8	)		1.8			0.8			(3.7	)		(1.1	)
Other (losses) gains, net		(1.0	)		—			—			—			49.0			15.1
Profit from the sale of investments		3.2			—			—			—			—			—
Operating profit		94.2			40.5			33.0			108.9			171.5			52.9
Financial (expense) income, net		(13.8	)		(14.7	)		(10.9	)		(11.6	)		(18.3	)		(5.6	)
Share of the profit or loss in associates under the equity method of accounting		0.1			12.2			14.9			6.8			0.5			0.2
Profit before income tax		80.5			38.0			37.0			104.2			153.6			47.3
Income tax		(21.4	)		(11.5	)		(7.6	)		(27.1	)		(35.9	)		(11.1	)
Net profit		59.0			26.5			29.3			77.2			117.7			36.3
Net profit attributable to controlling interest(4)		19.2			9.5			12.4			22.1			48.6			15.0
Net profit (loss) attributable to non-controlling interest(4)		39.9			17.0			17.0			55.1			69.1			21.3

	As of December 31,
	2013		2014		2015		2016		2017		2017
	(in millions of S/.)										(in millions of US$)(3)
Balance Sheet Data:
Total current assets		672.6		760.8		1,109.3		1,117.1		884.6		272.6
Cash and cash equivalents		43.0		54.3		74.5		58.9		85.2		26.3
Accounts receivables		36.4		75.6		114.4		111.2		155.3		47.9
Outstanding work in progress		593.2		631.0		920.4		947.0		644.1		198.5
Other current assets(5)		76.5		117.4		91.7		113.6		78.5		24.2
Total non-current assets		11.8		9.7		14.7		17.9		9.8		3.0
Long-term accounts receivables(3)		5.6		7.3		11.3		13.0		11.6		3.6
Property, plant and equipment		36.9		36.2		34.7		49.4		45.7		14.1
Other non-current assets		22.1		64.1		30.9		33.3		11.3		3.5
Total current liabilities		217.6		266.6		555.1		515.8		352.1		108.5
Short-term borrowings		77.9		144.3		224.4		206.5		162.0		49.9
Accounts payables		136.6		120.1		330.7		291.2		144.8		44.6
Total non-current liabilities		97.8		138.9		159.6		104.2		44.1		13.6
Long-term borrowings		52.3		16.4		27.6		16.5		12.0		3.7
Other long-term liabilities		45.4		122.5		132.0		87.6		32.1		9.9
Shareholders’ equity		152.7		157.3		158.6		234.4		217.3		67.0
Non-controlling interest(4)		281.0		315.4		327.6		376.3		349.6		107.7

11

4. Technical Services

	For the year ended December 31,
	2013			2014			2015			2016			2017			2017
	(in millions of S/.)															(in millions of US$)(1)
Income Statement Data:(6)
Revenues		740.2			843.8			563.9			841.1			1,061.0			327.0
Cost of sales		(607.3	)		(709.6	)		(487.0	)		(763.8	)		(1,003.2	)		(309.2	)
Gross profit		132.9			134.2			76.9			77.3			57.8			17.8
Administrative expenses		(96.5	)		(91.3	)		(60.9	)		(69.9	)		(74.2	)		(22.9	)
Other income and expenses, net		22.6			7.3			12.0			4.2			8.6			2.7
Gain from business combination		—			—			(8.3	)		—			—			—
Other (losses) gains, net		—			(2.1	)		0.2			(0.2	)		—			—
Operating profit		59.0			48.1			19.9			11.4			(7.8	)		(2.4	)
Financial (expense) income, net		(16.0	)		(20.7	)		(17.7	)		(17.2	)		(26.3	)		(8.1	)
Share of the profit or loss in associates under the equity method of accounting		1.1			0.6			0.6			0.4			1.2			0.4
Profit before income tax		44.1			28.0			2.8			(5.4	)		(32.9	)		(10.1	)
Income tax		(12.1	)		(6.6	)		20.6			(1.6	)		4.8			1.5
Profit from continuing operations								23.4			(7.0	)		(28.1	)		(8.7	)
Profit from discontinued operations								5.2			7.9			2.3			0.7
Net profit (loss)		32.0			21.4			28.6			0.9			(25.8	)		(8.0	)
Net profit (loss) attributable to controlling interest(4)		24.2			16.0			20.1			1.6			(18.2	)		(5.6	)
Net profit (loss) attributable to non-controlling interest(4)		7.8			5.5			8.5			(0.7	)		(7.6	)		(2.3	)
	As of December 31,
	2013			2014			2015			2016			2017			2017
	(in millions of S/.)															(in millions of US$)(1)
Balance Sheet Data:
Total current assets		310.4			429.3			390.0			591.6			403.2			124.3
Cash and cash equivalents		26.3			128.7			41.7			37.7			21.9			6.7
Accounts receivables		171.6			255.5			286.0			479.0			321.8			99.2
Outstanding work in progress		64.2			—			—			—			—			—
Other current assets		48.3			45.1			62.2			74.8			59.5			18.3
Total non-current assets		169.4			214.4			223.6			361.3			246.9			76.1
Long-term accounts receivables		12.3			4.9			0.5			24.5			42.0			12.9
Property, plant and equipment		89.1			139.5			145.9			195.5			100.9			31.1
Other non-current assets		67.9			70.0			77.2			141.3			103.9			32.0
Total current liabilities		262.1			277.5			308.0			600.2			463.6			142.9
Short-term borrowings		72.2			62.1			87.7			155.1			139.8			43.1
Accounts payables		163.3			194.3			212.0			438.2			313.9			96.7
Total non-current liabilities		104.7			181.8			161.8			166.6			104.2			32.1
Long-term borrowings		27.9			60.1			64.4			73.5			26.5			8.2
Other long-term liabilities		76.8			121.7			97.5			93.1			77.8			24.0
Shareholders’ equity		88.5			94.6			108.4			148.0			81.3			25.1
Non-controlling interest		24.4			89.7			35.4			38.0			1.0			0.3

(1) Calculated based on an exchange rate of S/.3.245 to US$1.00 as of December 31, 2017.

(2) Includes advance payments, which reflects advance payments made by our clients in connection with our E&C and Operation and Maintenance of Infrastructure Assets contracts. See “Item 5.A. Operating and Financial Review and Prospects—Operating Results—Results of Operations—General—Engineering and Construction” and “—Technical Services” and note 22 to our audited annual consolidated financial statements included in this annual report.

(3) Includes payments required to be made by the Peruvian government for the amounts we invest to purchase trains and other infrastructure for the Lima Metro. See “Item 5.A. Operating and Financial Review and Prospects—Operating Results—Results of Operations—General—Infrastructure” and note 11 to our audited annual consolidated financial statements included in this annual report.

(4) The net profit attributable to controlling interests of our Real Estate segment is significantly affected by the financing and commercial arrangements we use to purchase land and to develop real estate projects. Depending on the level of non-controlling interests used to finance our real estate projects, our Real Estate segment tends to have significant net profit attributable to non-controlling interests. See “Item 5.A. Operating and Financial Review and Prospects—Operating Results—Results of Operations—General—Real Estate.”

(5) Includes inventories, which includes investments for the purchase of land by our Real Estate segment. These investments in land are recorded at book value and are not marked-to-market for changes in fair value. See note 15 to our audited annual consolidated financial statements included in this annual report.

(6) We have not reclassified our financial information included in this annual report for the years ended December 31, 2013 and 2014 to show GMD as a discontinued operation, due to the immaterial amount of the difference.

12

Non-GAAP Financial Measure and Reconciliation

In this annual report, we present EBITDA, a non-GAAP financial measure. A non-GAAP financial measure is generally defined as one that purports to measure financial performance, financial position or cash flows but excludes or includes amounts that would not be so adjusted in the most comparable IFRS measure. We define EBITDA as net profit plus: financial (expense) income, net; income tax; and depreciation and amortization.

We present EBITDA because we believe it provides readers with a supplemental measure of the financial performance of our core operations that facilitates period-to-period comparisons on a consistent basis. Furthermore, we regularly present EBITDA in our filings with the Lima Stock Exchange in Peru. Our management uses EBITDA, among other measures, for internal planning and performance measurement purposes. We believe that EBITDA is useful in evaluating our operating performance compared to that of other companies operating in our sectors because the calculation of EBITDA and EBITDA generally eliminates the effects of financing and income taxes and the accounting effects of capital spending, which items may vary for different companies for reasons unrelated to overall operating performance. EBITDA should not be construed as an alternative to net profit or operating profit, as an indicator of operating performance, as an alternative to cash flow provided by operating activities or as a measure of liquidity (in each case, as determined in accordance with IFRS). EBITDA, as calculated by us, may not be comparable to similarly titled measures reported by other companies. The following table sets forth the reconciliation of our net profit to EBITDA on a consolidated basis.

	For the year ended December 31,
	2013			2014			2015			2016(1)			2017			2017
	(in millions of S/.)															(in millions of US$)(2)
Net profit (loss)(3)		412.1			361.2			46.4			(463.6	)		205.7			63.4
Financial expense		583.5			460.1			590.2			977.0			515.9			159.0
Financial income		(471.0	)		(368.8	)		(459.8	)		(776.0	)		(345.9	)		(106.6	)
Income tax		182.3			146.2			95.9			(119.3	)		123.0			37.9
Depreciation and amortization		259.1			260.0			306.4			288.3			286.4			88.3
EBITDA		967.2			858.8			579.2			93.6			785.1			241.9

The following table is the reconciliation of the EBITDA for our four segments, Parent company operations and elimination:

	For the year ended December 31,
	2013			2014			2015			2016(1)			2017			2017
	(in millions of S/.)															(in millions of US$)(2)
Engineering and construction		545.5			459.5			220.1			106.1			194.3			59.9
Infrastructure		236.6			257.2			272.2			237.8			300.9			92.7
Real state		97.9			56.5			52.8			121.4			177.3			54.6
Technical services		91.7			78.8			35.1			39.8			36.8			11.3
Parent company operations		309.1			252.3			(35.6	)		(1,026.4	)		216.7			66.8
Eliminations intercompany		(314.7	)		(245.4	)		34.6			427.8			(140.9	)		(43.4	)
EBITDA(5)		967.2			858.8			579.2			(93.6	)		785.1			241.9

The following tables set forth the reconciliation of our net profit to EBITDA for each of our business segments and certain of our lines of business or subsidiaries within these segments. The effects of the termination of the GSP gas pipeline concession on our results of operations and financial condition for 2016 are reflected in Corporate (the Parent Company Operations) and, with respect to the related construction consortium (Consorcio Constructor Ductos del Sur), in our E&C segment. Beginning on April 1, 2017, we have transferred Concar from our Technical Services segment to our Infrastructure segment. For ease of comparison, the historical segment financial information included in this annual report presents Concar in the Infrastructure segment. This change does not impact our consolidated financial results. For more information, see note 7 to our audited annual consolidated financial statements included in this annual report.

13

1. Engineering & Construction

	For the year ended December 31,
	2013			2014			2015			2016(1)			2017			2017
	(in millions of S/.)															(in millions of US$)(2)
Net profit (loss)(3)		256.5			193.6			(121.8	)		(93.4	)		12.4			3.8
Financial expense		318.4			256.9			433.3			560.1			218.1			67.2
Financial income		(291.8	)		(194.5	)		(314.8	)		(506.2	)		(174.7	)		(53.8	)
Income tax		111.2			59.3			55.4			12.8			17.1			5.3
Depreciation and amortization		151.2			144.2			168.1			132.8			121.4			37.4
EBITDA		545.5			459.5			220.1			106.1			194.2			59.9
2. Infrastructure
2.1 Full Segment
	For the year ended December 31,
	2013			2014			2015			2016(1)			2017			2017
	(in millions of S/.)															(in millions of US$)(2)
Net profit		82.4			92.6			112.4			98.3			129.3			39.8
Financial expense		117.5			101.6			78.2			101.7			62.6			19.3
Financial income		(72.9	)		(71.2	)		(55.3	)		(92.0	)		(43.1	)		(13.3	)
Income tax		40.0			56.6			46.5			39.9			55.2			17.0
Depreciation and amortization		69.7			77.6			90.5			90.0			96.9			29.9
EBITDA		236.7			257.2			272.3			237.8			300.9			92.7
2.2(a) All Toll Roads
	For the year ended December 31,
	2013			2014			2015			2016			2017			2017
	(in millions of S/.)															(in millions of US$)(2)
Net profit		40.4			43.0			53.5			44.9			55.0			16.9
Financial expense		22.4			19.0			10.8			14.9			7.7			2.4
Financial income		(18.0	)		(9.5	)		(14.8	)		(9.6	)		(3.5	)		(1.1	)
Income tax		15.0			16.2			18.8			15.5			20.9			6.4
Depreciation and amortization		10.0			11.4			10.9			11.1			11.0			3.4
EBITDA		69.8			80.1			79.2			76.8			91.1			28.1
2.2(b) Norvial
	For the year ended December 31,
	2013			2014			2015			2016			2017			2017
	(in millions of S/.)															(in millions of US$)(2)
Net profit		30.1			31.1			40.9			47.3			49.4			15.2
Financial expense		13.3			9.7			4.1			4.9			3.4			1.0
Financial income		(3.8	)		(0.4	)		(0.4	)		(1.6	)		(0.9	)		(0.3	)
Income tax		10.2			10.9			13.6			16.3			18.7			5.8
Depreciation and amortization		9.8			11.0			10.8			10.9			10.8			3.3
EBITDA		59.6			62.3			68.9			77.7			81.4			25.1

14

2.3 Mass Transit

	For the year ended December 31,
	2013			2014			2015			2016			2017			2017
	(in millions of S/.)															(in millions of US$)(2)
Net profit (loss)(5)		(13.1	)		12.1			18.8			23.9			19.5			6.0
Financial expense		60.3			39.8			7.9			20.5			18.4			5.7
Financial income		(34.3	)		(35.3	)		(4.9	)		(25.8	)		(14.0	)		(4.3	)
Income tax		(0.5	)		10.8			8.1			10.9			9.5			2.9
Depreciation and amortization		0.6			0.9			0.1			0.1			0.1			0.0
EBITDA		13.0			28.3			30.0			29.6			33.5			10.3

2.4 Energy

	For the year ended December 31,
	2013			2014			2015			2016			2017			2017
	(in millions of S/.)															(in millions of US$)(2)
Net profit		45.0			62.7			20.2			12.0			38.1			11.7
Financial expense		28.5			30.6			50.3			61.7			34.8			10.7
Financial income		(14.3	)		(19.2	)		(30.5	)		(52.0	)		(23.3	)		(7.2	)
Income tax		20.1			29.8			7.7			5.3			13.2			4.1
Depreciation and amortization		53.4			58.1			74.2			72.5			79.4			24.5
EBITDA		132.8			162.0			121.8			99.5			142.1			43.8

2.5 Concar

	For the year ended December 31,
	2013			2014			2015			2016			2017			2017
	(in millions of S/.)															(in millions of US$)(2)
Net profit (loss)		7.9			(26.5	)		18.5			14.0			16.9			5.2
Financial expense		6.2			12.0			9.1			4.5			1.7			0.5
Financial income		(6.3	)		(7.2	)		(5.0	)		(4.6	)		(2.3	)		(0.7	)
Income tax		4.6			(0.8	)		11.4			6.7			11.4			3.5
Depreciation and amortization		5.6			7.1			5.3			6.4			6.4			2.0
EBITDA		18.0			(15.3	)		39.3			27.0			34.1			10.5

3. Real Estate

	For the year ended December 31,
	2013			2014			2015			2016			2017(1)			2017
	(in millions of S/.)															(in millions of US$)(2)
Net profit		59.0			26.5			29.3			77.2			117.7			36.3
Financial expense		27.0			30.4			47.7			65.1			36.0			11.1
Financial income		(13.2	)		(15.6	)		(36.8	)		(53.5	)		(17.7	)		(5.5	)
Income tax		21.4			11.5			7.6			27.1			35.9			11.1
Depreciation and amortization		3.6			3.8			4.9			5.6			5.3			1.6
EBITDA		97.9			56.5			52.8			121.4			177.3			54.6

15

4. Technical Services

4.1 Full Segment

	For the year ended December 31,
	2013			2014			2015			2016			2017			2017
	(in millions of S/.)															(in millions of US$)(2)
Net profit (loss)		32.0			21.4			23.3			(7.0	)		(28.0	)		(8.6	)
Financial expense		29.0			27.9			22.8			36.8			39.4			12.1
Financial income		(13.1	)		(7.1	)		(5.1	)		(19.6	)		(13.2	)		(4.1	)
Income tax		12.1			6.6			(20.6	)		1.6			(4.8	)		(1.5	)
Depreciation and amortization		31.6			30.1			14.7			28.0			43.3			13.3
EBITDA		91.6			78.9			35.1			39.8			36.7			11.3

4.2 CAM

	For the year ended December 31,
	2013			2014			2015			2016			2017			2017
	(in millions of S/.)															(in millions of US$)(2)
Net profit		23.5			15.5			23.3			(3.0	)		(28.0	)		(8.6	)
Financial expense		16.2			19.6			22.8			28.2			27.8			8.6
Financial income		(5.3	)		(3.4	)		(5.1	)		(16.2	)		(12.1	)		(3.7	)
Income tax		6.2			1.2			(20.6	)		3.5			(4.6	)		(1.4	)
Depreciation and amortization		16.3			11.5			14.7			19.5			23.3			7.2
EBITDA		56.9			44.4			35.1			31.9			6.5			2.0

(1) For the effects on our results of operations for 2016 resulting from the termination of the GSP gas pipeline concession, see “Item 5.A. Operating and Financial Review and Prospects—Operating Results—Recent Developments” and notes 5(e) and 16 to our audited annual consolidated financial statements included in this annual report.

(2) Calculated based on an exchange rate of S/3.245 to US$1.00 as of December 31, 2017.

(3) Includes the results of operations of DSD since August 2013, Morelco since January 2015 and Adexus which began consolidating in August 2016. See “Item 5.A. Operating and Financial Review and Prospects—Operating Results—Factors Affecting Our Results of Operations—Acquisitions.” Additionally includes the results of Stracon, although we sold our interest in Stracon on April 11, 2018.

(4) Our E&C segment EBITDA includes S/.42.0 million, S/.48.2 million, S/.2.2 million, S/.15.8 million and S/.30.6 million in 2013, 2014, 2015, 2016 and 2017, respectively, which represents GyM’s 39.0% equity interest in Viva GyM’s net profit.

(5) In 2013 we generated losses as a result of the limited number of trains we initially operated in the Lima Metro. For more information on our Lima Metro, see “Item 5.A. Operating and Financial Review and Prospects—Operating Results—Factors Affecting Our Results of Operations—Infrastructure.”

16

Exchange Rates

The Peruvian sol is freely traded in the exchange market. Current Peruvian regulations on foreign investment allow foreign equity holders of Peruvian companies to receive and repatriate 100% of the cash dividends distributed by these companies. Non-Peruvian equity holders are allowed to purchase foreign currency at free market currency rates through any member of the Peruvian banking system and transfer such foreign currency outside Peru without restriction. Peruvian law in the past, however, has imposed restrictions on the conversion of Peruvian currency and the transfer of funds abroad, and we cannot assure you that Peruvian law will continue to permit such payments, transfers, conversions or remittances without restrictions.

The following table sets forth, for the periods indicated, certain information regarding the exchange rates for soles per U.S. dollar, as published by the SBS. The Federal Reserve Bank of New York does not report a noon buying rate for soles.

	High		Low		Average		Period end
2013		2.820		2.541		2.704		2.796
2014		2.990		2.761		2.840		2.989
2015		3.413		2.983		3.186		3.413
2016		3.537		3.249		3.375		3.360
2017		3.392		3.231		3.261		3.241
December 2017		3.289		3.231		3.246		3.241
January 2018		3.229		3.207		3.215		3.216
February 2018		3.269		3.212		3.248		3.260
March 2018		3.271		3.217		3.252		3.227
April 2018		3.249		3.216		3.231		3.249
May 2018		3.291		3.259		3.274		3.273
June 2018 (through June 26, 2018)		3.284		3.260		3.271		3.271

B. Capitalization and Indebtedness

Not applicable.

C. Reasons for the Offer and Use of Proceeds

Not applicable.

D. Risk Factors

Risk Relating to Recent Developments

Our reputation has been adversely affected by our association with Odebrecht’s affiliates in Peru

We have participated in consortia with Odebrecht affiliates in Peru. Our reputation has been adversely affected as a result of the plea agreements and criminal convictions of Odebrecht and certain key persons related to Odebrecht in connection with corruption, money laundering and criminal organization. Peruvian authorities have initiated congressional inquiries and criminal investigations into the dealings of Odebrecht’s affiliates in Peru, the scope of which include certain consortia in which we participated. Moreover, as a result, our company and certain of our former directors and executive officers have been the subject of congressional and criminal investigations related to corruption investigations. These investigations are ongoing.

Our reputation is a key factor in our clients’ evaluation of whether to engage our services, key industry players’ willingness to partner with us, financial institutions’ willingness to provide us credit, and recruiting and retaining talented personnel to our company. The impact on our business reputation related to our association with Odebrecht and the alleged actions of our former board members and executive officers has had, and is likely to continue to have, a material adverse effect on our business, financial condition and results of operation.

17

Investigations regarding potential corruption or other illegal acts could have a material adverse effect on our business, financial condition and results of operations

The Lava Jato commission of the Peruvian congress has undertaken congressional inquiries into the company and other construction companies in Peru, which have included certain of the company’s former board members and executive officers.

Peruvian prosecutors have included José Graña Miró Quesada, a shareholder and the former Chairman of the company, in an investigation for the crime of collusion, and Hernando Graña Acuña, a shareholder, a former board member of the company and chairman of our subsidiary GyM, for the crime of money laundering against the Peruvian government, each in connection with the IIRSA South project concession (tranches II and III), in which we participated with Odebrecht. Gonzalo Ferraro Rey, the former Chief Infrastructure Officer of the company, has also been included in an investigation for the crime of money laundering in connection with the same project.

In connection with investigations relating to the IIRSA South project concession (tranches II and III), the Peruvian criminal prosecutor moved to charge the company and our construction subsidiary, GyM, as criminal defendants in connection with the projects. Separately, an Ad Hoc Public Prosecutor appointed by the Peruvian executive branch to investigate matters of corruption (the “Ad Hoc Prosecutor”) moved to directly include the company as a civilly-responsible third party. In response, the Peruvian First National Preparatory Investigation Court (Primer Juzgado de Investigación Preparatoria Nacional) notified us of its decision to formally include the company and GyM in its criminal investigation. We appealed the court’s decision and, on June 22, 2018, the First Court of Appeals of the Superior Court of Lima revoked the judicial order No. 05 dated February 28, 2018 that indicted the company and GyM, among other corporate defendants, in the criminal investigation on charges of collusion and other crimes and rejected the petition, without prejudice, made by the prosecutor to incorporate both companies in the aforementioned process. Nevertheless, we cannot assure you that the criminal prosecutor will not appeal this decision, or file a new claim, against the company and GyM, or that our position will ultimately prevail. Furthermore, a decision from the Peruvian judiciary on whether our company will be included in the investigation proceedings as a civilly responsible third party remains pending, and we cannot assure you that our company will not be included or that our position would ultimately prevail.

The Ad Hoc Prosecutor has also moved to directly include GyM as a civilly-responsible third party in the investigation relating to Tranches 1 and 2 of Line 1 of the Lima Metro. A decision from the Peruvian judiciary regarding these matters remains pending, and we cannot assure you that our subsidiary will not be included or that our position would ultimately prevail.

We cannot assure you that other of our former or current board members and executive officers will not be included in the foregoing proceedings as criminal defendants or civilly-responsible third parties as well, or that the company will not be included in other investigations.

A conviction of corruption or settlements with government authorities could lead to criminal and civil fines as well as penalties, sanctions, injunctions against future conduct, profit disgorgement, disqualifications from directly and indirectly engaging in certain types of business, the loss of business licenses or permits or other restrictions. Moreover, our alleged involvement in corruption investigations, and any findings of wrongdoing in such investigations, could further damage our reputation and have a material adverse impact on our ability to compete for business. Such investigations may also adversely affect our ability to pursue strategic projects, and could potentially result in the termination or modification of certain existing contracts or relationships. In addition, such investigations may affect the company’s ability to secure financing in the future. Furthermore, investigations could continue to divert management’s attention and resources from other issues facing our business.

There is substantial uncertainty with regard to the amount, timing and manner in which the payment for the termination of the GSP gas pipeline concession will be paid

There is substantial uncertainty with regards to the payment contemplated under the GSP gas pipeline concession contract as a result of the termination of the gas pipeline concession, including with respect to the amount, timing and manner in which the payment will be made or if it will be made at all.

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Although the concession contract provides that payment must be made within one year of termination, the Peruvian Ministry of Energy and Mines has not made payment or, to our knowledge, initiated the payment process or the auction process for a new concessionaire. As a result, we may be forced to assert our rights against the Peruvian government in judicial or arbitration proceedings, which may place us in an adversarial position with the Peruvian government and/or other GSP shareholders. We cannot assure you that we will pursue any such claims, or that any such claims would ultimately prevail in a timely manner, or at all.

To initiate arbitration against the Peruvian government, we need the approval of all three shareholders of GSP. We have sought such approval on two occasions but have not succeeded. We cannot assure you that we will obtain the consent needed to initiate legal proceedings in the short term.

In 2016, in connection with efforts to restructure or sell Odebrecht’s participation in GSP, due to the corruption scandal surrounding Odebrecht, Odebrecht contractually agreed to subordinate its claims under the concession to other GSP shareholders, Enagás and ourselves. On January 2, 2018, we received a notification that Odebrecht commenced arbitration proceedings against us and Enagás, seeking to invalidate the contractual subordination. While we believe that the subordination arrangement with respect to Odebrecht’s claims in connection with the anticipated payment is enforceable, we cannot assure you that our position will prevail. See “Item 5.A. Operating and Financial Review and Prospects—Operating Results—Recent Developments.”

In addition, we have made certain estimates in our consolidated financial statements with respect to the expected payment for the termination of the GSP contract. In particular, after taking into account the S/.593.1 million impairment we recognized to our investment in GSP during 2016, we continue to record S/.218.3 million in connection with our investment in GSP as of December 31, 2017. If our assumptions and estimates are incorrect, our actual results could differ significantly from those reflected in our consolidated financial statements. Failure to receive the expected payment on a timely basis, or at all, would have a material adverse effect on our business, financial condition and results of operations.

We are in default under certain of our debt instruments and may not reach agreement with our creditors to amend or waive the covenants

We are currently in default under certain of our debt instruments and are initiating the process of renegotiating with our creditors under such instruments. See “Item 13. Defaults, Dividend Arrearages and Delinquencies.” Failure to successfully renegotiate new payment terms could force us to precipitate the sale of assets, including on unfavorable terms, to repay these debt instruments. Moreover, if we are not able to renegotiate the terms of these debt instruments or repay them promptly, our ability to obtain financings, including performance guarantees or similar financings required under many of our business contracts, would be impaired, which may have a material adverse effect on our business, financial condition and results of operations.

We may not be able to sell assets on favorable terms or at all

As part of our strategic action plan, our board of directors has approved the sale of certain non-strategic assets, to make payments in respect of debt related to the termination of the GSP gas pipeline concession. We cannot assure you that we will be able to sell assets on favorable terms or at all. If we are not able to sell assets on a timely basis, our ability to address our liquidity needs could be adversely affected and we may breach our payment obligations under our debt related to the termination of the GSP gas pipeline concession.

Conversely, if we sell significant assets, our business and results of operations will be diminished.

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A class action civil lawsuit in the United States may adversely affect our company

A securities class action civil lawsuit has been filed against the company and certain of our former directors and former and current executive officers in the United States. The suit is in early stages, and we cannot assure you that our position will prevail. If our position does not prevail, the case may have substantial adverse effects on our business, financial condition and results of operations.

We may be unable to access credit that we need to operate our business

Due to uncertainty relating to the investigations of our company, our creditors and other banks operating in the Peruvian market have placed restrictions on our ability, and the ability of other construction companies, to acquire future credit lines or other financings. This may affect our ability to obtain financing for new or existing projects on favorable terms or at all, and also may render us unable to compete for or win new projects.

Changes in key personnel could affect our future business

Our success depends significantly on the services of our senior management, board of directors and other key personnel. On February 27, 2017, our former chairman of the board, our former CEO and board member, and our former board member and the former chairman of our subsidiary GyM resigned from their positions at our company. Effective March 2, 2017, we appointed a new CEO, and on March 31, 2017, our shareholders at the annual shareholders’ meeting appointed a new board of directors, replacing all but two of our existing directors. Moreover, other senior managers have recently left the company.

While most of these officers have already been replaced, the replacement of directors and senior management is likely to have an impact on our business and results of operations. Moreover, we cannot assure you that we will be able to continue to attract and retain senior management, qualified engineers and other key personnel.

INDECOPI and Peruvian prosecutors have initiated investigations in response to a news report alleging that certain construction companies in Peru, Brazil and Spain, including our company, colluded to receive public contracts

In July 2017, media reports alleged that certain construction companies in Peru, Brazil and Spain, including our company, colluded as a “construction club” to receive public contracts. As a result of these reports, the Peruvian National Institute for the Defense of Free Competition and the Protection of Intellectual Property (“INDECOPI”) has initiated an investigation regarding the anti-competitive activities of construction companies in Peru, including our company. In July 2017, INDECOPI conducted a search of our facilities related to these allegations. Separately, a former employee of GyM has been included in a criminal investigation for collusion and other alleged crimes. Neither the company nor GyM have been formally included in these criminal investigations

We cannot assure you that the company or any of its current or former directors or senior management will not be included in these investigations in the future, nor can we predict the outcome of any such investigations, the timing thereof or how they may impact our business, financial condition and results of operations.

Risks Related to Our Company

Global economic conditions could adversely affect our financial performance

The global financial crisis and ensuing global recession in 2008 and 2009 had a significant adverse effect on the development of large-scale infrastructure and real estate projects worldwide. Subsequently, global economic conditions, including slower growth in China, declines in global commodity, in particular oil and gas prices, the

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appreciation of the U.S. dollar against foreign currencies, the withdrawal of investments from emerging markets and continued concerns about the U.S. and European economies, generated economic uncertainty which affected private- and public-sector investments. The United Kingdom voted to exit the European Union on June 23, 2016. As of the date hereof, the actions to be taken by the United Kingdom to effectively exit the European Union and the duration of this process are uncertain. The results of the referendum in the United Kingdom have caused, and are expected to continue to cause, volatility in financial markets, which in turn could have substantial adverse effects on our business, financial condition and results of operations. On November 8, 2016, Mr. Donald J. Trump was elected president of the United States. President Trump has implemented greater restrictions on free trade and limitations on immigration. Changes in social, political, regulatory and economic conditions in the United States or in laws and policies governing foreign trade could create uncertainty in the international markets and could have a negative impact on emerging market economies, including the Peruvian economy, which in turn could have a negative impact on our operations. Future global economic conditions, in particular fluctuations in commodity prices and financings costs, may impact our clients’ investment decisions. Should our clients choose to postpone or suspend new investments or delay or cancel the execution of existing projects as a result of global economic conditions, demand for our products and services, including our backlog, would decline, which may result in a decline in revenues and in under-utilization of our capacity. In addition, our business may be impacted by adverse economic developments even after economic conditions have improved because of the lag time between when investments decisions are made and when the projects are executed. Furthermore, financial difficulties suffered by our clients, joint operation partners, subcontractors or suppliers due to global economic conditions could result in payment delays or defaults, or increase our costs or adversely impact our project execution. Accordingly, a global economic downturn could have a material adverse effect on our financial performance.

We face significant competition in each of our markets

Each of the markets in which we operate is competitive. We compete on the basis of, among other factors, price, performance, product and service quality, skill and execution capability, client relations, reputation and brand, and health, safety and environmental record. We face significant competition from both local and international players. Some of these competitors may have greater resources than us or specialized expertise in certain sectors. In addition, a portion of our business is derived from open bidding processes which can be highly competitive. Certain of our markets are highly fragmented with a large number of companies competing for market share. Our competitors may be more inclined to take greater or unusual risks or accept terms and conditions in a contract that we might not deem acceptable. Moreover, we cannot assure you that we will not face new competition from industry players entering or expanding their operations in our markets. If we are unable to compete effectively, our ability to continue to grow our business or maintain our market share would be affected. In addition, because one of the factors on which we generally compete is price, increased competition could impact our operating margins. Accordingly, our business and financial performance could be adversely affected by competition in our markets.

A major change in Peruvian government policies could affect our business

Our business is significantly affected by national, regional and municipal government policies and regulations, including with respect to infrastructure concessions or similar contracts to the private sector, public spending in infrastructure investment and government housing subsidies, among others. Any adverse change in government policies with respect to these matters could result in a material adverse effect on our business and financial performance.

Social conflicts may disrupt infrastructure projects

Despite Peru’s ongoing economic growth and stabilization, high levels of poverty and unemployment and social and political tensions continue to be pervasive problems in the country. Peru has, from time to time, experienced social and political turmoil, including riots, nationwide protests, strikes and street demonstrations. In recent years, certain regions experienced strikes and protests related mainly to the environmental impact of mining activities, which resulted in commercial disruptions, including in the departments of Cajamarca and Arequipa. These protests may lead to the suspension of mining projects. Social conflicts may disrupt, delay or suspend infrastructure projects in the future, which could have a material adverse effect on our business and financial performance.

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New projects may require the prior approval of local indigenous communities

In September 2011, Peru enacted Law No. 29,785, regarding the Prior Consultation Right of Local Indigenous Communities, in accordance with the International Labor Organization Convention No. 169 (Ley del Derecho a la Consulta Previa a los Pueblos Indígenas y Originarios, Reconocido en el Convenio 169 de la Organización Internacional del Trabajo). This law establishes a prior non-binding consultation procedure (procedimiento de consulta previa) that the Peruvian government must carry out with local indigenous communities, whose rights may be directly affected by new legislative or administrative measures, including the granting of certain permits or new concessions or similar contracts, such as for mining, energy and oil and gas projects. Local indigenous communities do not have a veto right; and therefore, upon completion of this prior consultation procedure, the Peruvian government retains the discretion to approve or reject the applicable legislative or administrative measure. However, we cannot assure you that these consultation procedures will not negatively influence a decision by Peruvian government to grant us a permit, concession or consent and, therefore, adversely affect new projects and concessions. Accordingly, our business and financial performance may be materially and adversely affected.

Our backlog and our ratio of historical backlog to revenues may not be reliable indicators of future revenues or profit

Our backlog amount is subject to revision over time and our ability to realize revenues from our backlog is subject to a number of uncertainties. Cancellations, scope adjustments or deferrals may occur, from time to time, with respect to contracts reflected in our backlog and could reduce the amount of our backlog and the revenue and profits that we actually earn. For example, the termination of the GSP gas pipeline concession on January 24, 2017 reduced our backlog as of December 31, 2016 by US$855 million, 30.2% of our E&C backlog and 21.4% of our total backlog as of that date. Contracts may also remain in our backlog for an extended period of time and poor performance could also impact our profit from the contracts in our backlog. In addition, our backlog is expressed in U.S. dollars based on period-end exchange rates while a significant portion of our contracts are payable in soles or other local currencies. As a result, any depreciation of local currency would diminish the amount of revenues eventually earned relative to backlog. Moreover, as of December 31, 2017, one client, Ecopetrol, concentrated 23.3% of Morelco’s backlog. For more information, see “Item 5.A. Operating and Financial Review and Prospects—Operating Results—Recent Developments.” The amount of our backlog is not necessarily indicative of future revenues or profits related to the performance of the related contracts.

Our backlog may decline further. We cannot assure you that we will be able to obtain sufficient contracts in the future in number and magnitude to increase our backlog. Additionally, the amount of new contracts that we obtain can fluctuate significantly from period to period due to factors that are beyond our control.

The ratio of our historical backlog to revenues earned in subsequent years is volatile and substantially affected by a number of factors, some of which are outside our control, including levels of contract scope adjustments and our ability to enter into new contracts (which are substantially influenced by general macroeconomic conditions), delays and cancellations, foreign exchange rate movements and our ability to increase the scale of our operations to expand the amount of work we carry out beyond that previously contracted. Accordingly, historical correlations between backlog and revenues may not recur in future periods.

Our success depends on key personnel

Our success depends, to a significant degree, upon the services of our senior management, board of directors and other key personnel. Members of our management team are not subject to long-term employment agreements or non-competition agreements with us. We cannot assure you that we will be successful in retaining our current senior management or members of our board of directors, nor can we assure you that, in such event, we would be able to find suitable replacements. In addition, the success of our business depends on our ongoing ability to attract, train and retain qualified engineers and other personnel. In recent years, the availability in Peru of qualified personnel who have the necessary expertise and experience has been lower than demand and, therefore, competition for human resources has become intense. We cannot assure that we will be able to hire and retain the number of qualified personnel required to meet the needs of, or to grow, our business. If we are unable to attract, train and retain the qualified personnel that we require at reasonable cost, our business and financial performance could be adversely affected.

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Our success depends, to a large extent, on our reputation for the quality, reliability, timely delivery and safety of our products and services

We believe our track record and reputation are key factors in our clients’ evaluation of whether to engage our services and purchase our products, encouraging key industry players to partner with us, and recruiting and retaining talented personnel to our company. Our reputation is based, to a large extent, on the quality, reliability, timeliness and safety of our products and services. If our products do not meet expected standards or we fail to meet our deadlines, our relationship with our clients and partners could suffer, the reputation of our company could be adversely affected, we may not be invited to new bidding processes and our ability to capture new business could be severely diminished.

The nature of our business exposes us to potential liability claims and contract disputes

We may be subject to a variety of legal or administrative proceedings, liability claims or contract disputes. The government, clients and other third parties may present claims against us for injury or damage caused, directly or indirectly, by our operations, for example for alleged failures in our engineering and construction, the operation of our infrastructure concessions (such as our toll roads or the Lima Metro), and real estate developments we sell. Although we have a range of insurance coverage policies and have adopted risk management and risk avoidance programs designed to reduce potential liabilities, a catastrophic event resulting from the services we have performed or products we have provided could result in significant professional or product liability, warranty or other claims against us as well as reputational harm, especially if public safety is impacted. We may in the future be named as a defendant in legal proceedings where our clients or third parties may make a claim for damages or other remedies with respect to our projects or other matters. Any liability not covered by our insurance, or in excess of our insurance limits, could result in a significant loss for us, which may affect our financial performance. Moreover, certain of our clients have executed the performance guarantees that we were required to deliver in connection with their project in order to gain leverage, we believe, in the negotiation of contract disputes with us.

We are susceptible to operational risks that could affect our business and financial performance

Our business is subject to numerous industry-specific operational risks, including natural disasters, adverse weather conditions, operator error or other accidents, mechanical and technical failures, explosions and other events and accidents, many of which are beyond our control. Such occurrences could result in injury or loss of life, severe damage to and destruction of property and equipment, business interruption, pollution and other environmental damage, clean-up responsibilities, regulatory requirements, investigations and penalties, potential liability claims and contractual disputes. In addition, such occurrences could materially impact our reputation. Although we maintain comprehensive insurance covering our assets and operations at levels that our management believes to be adequate, our insurance coverage will not be sufficient in all circumstances or to protect against all hazards. The occurrence of such an operational risk could have a material adverse effect on our business and financial performance.

Deterioration in our safety record could adversely affect our business and financial performance

Our ability to retain existing clients and attract new business is dependent on our ability to safely operate our business. Existing and potential clients consider the safety record of their services providers to be of high importance in their decision to award service contracts. Some of our activities, in particular in our E&C segment, as well as our electricity networks services line of business, can be high risk by their nature. If one or more accidents were to occur at a site, the affected client may terminate or cancel our contract and may be less likely to continue to use our services. Although our track record on safety matters is consistent with industry standards, we cannot assure you that we will not experience accidents in the future, causing our safety record to deteriorate. Accidents may be more likely as we continue to grow, particularly if we are required to hire less experienced employees due to shortages of skilled labor. Moreover, often times we do not perform these activities by ourselves and accidents can happen due to errors committed by partners and subcontractors over whom we have no control. Because many of our clients require us to report our safety metrics to them as part of the bidding process and because a substantial part of our client base is comprised of major companies with high safety standards, a general deterioration in our safety record could have a material adverse impact on our business including our ability to bid for new contracts.

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Any safety incidents or deterioration in our safety record could adversely impact our ability to attract and retain qualified employees. In addition, we could also be subject to liability for damages as a result of accidents and could incur penalties or fines for violations of applicable safety laws and regulations.

Increases in the prices of energy, raw materials, equipment or wages could increase our operating costs

Our business requires significant purchases of energy, raw materials and components, including, among others, large quantities of fuel, cement and steel, as well as purchases or leases of equipment. Certain inputs used in our operations are susceptible to significant fluctuations in prices, over which we may have little control. The prices of some of these inputs are affected to a significant extent by the prices of commodities, such as oil and iron. Global oil prices in particular have declined significantly in recent years, although they increased in 2017, and we cannot assure you that oil prices will not continue to increase in the future (although increased oil prices would benefit revenues in our Energy line of business). Substantial increases in the prices of such commodities generally result in increases in our suppliers’ operating costs and, consequently, lead to increases in the prices they charge for their products. Moreover, we do not have long-term contracts for the supply of our key inputs, and, as a result, if prices increase significantly or if we are required to find alternative suppliers, our costs to procure these inputs may increase significantly. In addition, growing demand for labor, especially when coupled with shortages of qualified employees in the countries where we operate, may result in significant wage inflation. To the extent that we are unable to pass along to our clients increases in the prices of our key inputs or increases in the wages that we must pay, our operating margins could be materially adversely impacted.

We may not be able to obtain financing on favorable terms

Our ability to undertake large investments (particularly in our Infrastructure and Real Estate segments) or consummate significant acquisitions will depend on the availability of equity and debt financing. We cannot assure you that we will be able to obtain new financings in the future on favorable terms or at all. Our ability to obtain financings will depend in part upon prevailing conditions in credit and capital markets, which are beyond our control. In 2008 and 2009, global markets suffered turmoil, which significantly constrained the availability of new financings. In addition, our ability to obtain new financing, or refinance existing debt, may at certain times be adversely affected by the cyclicality of our business, particularly our E&C segment, as has occurred in the past. Furthermore, in response to the ensuing global economic recession in 2009, many countries, in particular the United States as well as the countries where we operate, have maintained target interest rates at very low levels. However, more recently, the U.S. Federal Reserve has begun to increase target interest rates in the United States. Emerging markets have been affected by this change in the U.S. monetary policy, resulting in a withdrawal of investments and increased volatility in the value of their currencies. If interest rates rise significantly in the United States, emerging market economies, including Peru, could find it more difficult and expensive to borrow capital and refinance existing debt. Higher interest rates globally or in Peru would in turn impact our costs of funding. If adequate funds are not available, or are not available on favorable terms, we may not be able to make future investments or pursue acquisitions or other opportunities.

We may not be able to recover on claims against clients for payment

If a client fails to pay our invoices on time or defaults in making its payments to us, we could incur significant losses. We occasionally bring claims against clients, principally the government, for delayed payments, additional costs that exceed the contract price or for amounts not included in the original contract price, including change orders. These types of claims can occur due to matters such as owner-caused delays or changes from the initial project scope, and, occasionally, they can be the subject of lengthy proceedings. When these types of events occur and unresolved claims are pending, we may invest significant working capital in projects to cover cost overruns pending the resolution of the relevant claims. Moreover, we have recently encountered difficulties collecting on claims, even following successful arbitration awards, particularly against the government. A failure to promptly recover on these types of claims and change orders could have a material adverse effect on our financial performance.

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If we are unable to enter into consortia or other strategic alliances, our ability to compete for new business may be adversely affected

We may join with other companies to form joint operations or other strategic alliances to compete for a specific concession or contract, including with partners that contribute expertise in a specific field. Because a consortium or alliance can often offer stronger combined qualifications than a company on a stand-alone basis, these arrangements can be important to the success of a particular bid. If we are unable to enter into consortia or other strategic alliances, our ability to compete for new business may be adversely affected.

Our consortia and other strategic alliances may be affected by disputes with, or the unsatisfactory performance by, our partners

Although we have a thorough partner selection process, consortia and other strategic alliances that we enter into as part of our business, including arrangements where operating control may be shared with unaffiliated third parties, may involve risks not otherwise present when we operate independently, including: sharing approval rights over major decisions; responsibility for our partners’ unpaid obligations or liabilities; ensuring ethical and compliance behavior; and inconsistencies in our and our partners’ economic or business interests or goals. Any disputes between us and our partners may result in delays, litigation or operational impasses. We may also incur liabilities as a result of action taken by our partners. In addition, if we participate in consortia or other strategic alliances where we are not the controlling party, we may have limited control over operation decisions and actions and the success of the consortium or other strategic alliance will depend largely on the performance of our partners. These risks could adversely affect our ability to transact the business that is the object of such consortium or other strategic alliance, and could result in the termination of the applicable concession or contract. Under these circumstances, we may be required to make additional investments and provide additional services to ensure adequate performance and delivery. These additional obligations could result in reduced profits or, in some cases, increased liabilities or significant losses for us. In addition, failure by a partner to comply with applicable laws or regulations could negatively impact our business and, in the case of government contracts, could result in fines, suspension or even debarment from participating in bidding processes. As a result, our business and financial performance could be adversely affected by disputes involving our consortia or other strategic alliances. We have recently been involved in ongoing disputes, including arbitration proceedings, with our minority partner in Adexus. These disputes could result in disruptions in Adexus’ operations.

We are dependent upon third parties to complete many of our contractual obligations

We rely on third-party suppliers to provide a significant amount of the materials and equipment used in our businesses. A portion of the work performed under our infrastructure concessions and, to a lesser extent, other contracts is performed by third-party subcontractors. As a result, the timely completion and quality of our projects may depend on factors beyond our control, including the quality and timeliness of the delivery of materials supplied for use in the project and the technical skills of subcontractors hired for the project. If we are unable to find qualified suppliers or hire qualified subcontractors, our ability to meet our contractual obligations could be impaired. In addition, if the amount we are required to pay for supplies, equipment or subcontractors exceeds what we have estimated, we may suffer losses under our contract. If a supplier or a subcontractor fails to provide supplies, equipment or services as required under a negotiated arrangement for any reason, or provides supplies, equipment or services that are not of an acceptable quality, we may be required to source those supplies, equipment or services on a delayed basis or at a higher price than anticipated, which could impact our financial performance. In addition, faulty materials or equipment could result in claims against us for failure to meet contractual specifications, and failure by suppliers or subcontractors to comply with applicable laws and regulations could negatively impact our reputation and our business and, in the case of government contracts, could result in fines, suspension or even debarment from participating in bidding processes. These risks may be intensified during economic downturns if these suppliers or subcontractors experience financial difficulties. As a result, our business and financial performance may be adversely affected by our dependence on third-party providers.

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Debarment from participating in government bidding processes would have a material adverse effect on our business and financial performance

We would face debarment from participating in government bidding processes for one to three years if we were found to have violated certain provisions of the Peruvian State Contracting Law (Ley de Contrataciones del Estado). We are required to comply with a large number of contractual obligations with the government in our business, and we cannot assure you that we will be in full compliance at all times. Moreover, such a debarment would affect the ability of our entire company (including any of our subsidiaries), and not just the line of business where the alleged violation took place, to participate in government bids under the Peruvian State Contracting Law. In April 2013, Perupetro initiated an administrative proceeding against a subsidiary in our E&C segment, claiming that the subsidiary had submitted a bid to provide engineering services while not being in compliance with certain technical requirements. We lost the administrative proceeding as well as the first and second instances of the judicial proceeding we had initiated to contest such administrative proceeding. We appealed the adverse judgment and are currently in annulment proceedings. Although we believe that the likelihood of an adverse outcome in this proceeding is remote, an adverse outcome would affect that particular subsidiary’s participation in government bidding processes under the Peruvian State Contracting Law. Subsequently, we canceled the road maintenance services contract because the regional government of Cusco did not pay any valuations (January, February and March of 2014) and did not give us access to the entire stretch of the related road. We have initiated an action against the regional government of Cusco for an amount of S/.97.4 million, and the government has filed a counterclaim for S/.403 million. All these proceedings remain pending as of the date of this annual report, and we cannot assure you that our position will prevail.

During 2016 and 2017, 11% and 4.5%, respectively, of our revenues on a consolidated basis was derived from public sector contracts in Peru (excluding public infrastructure concessions). As of December 31, 2017, 12.2% of our backlog is comprised of contracts with the public sector. As a result, if our company is debarred from participating in government bidding processes, our business and financial performance would be materially and adversely affected.

We may not be able to successfully expand outside of Peru

One of our long term strategies has been to continue to expand our operations outside of Peru, particularly in Chile and Colombia, and we expect that our international operations could become a more significant part of our consolidated business in future. We cannot assure you that we will be able to replicate our success in Peru in other countries. Our international expansion is subject to additional challenges, including: our ability to assimilate cultural differences and practices; our limited familiarity with local laws, regulators and contractors; our ability to attract and manage foreign personnel; the absence of a local workforce formed in our corporate values and familiar with our operations; competition in foreign markets, including from industry players with significantly greater local experience and reputation; and other risks specific to these countries. Moreover, we may not be able to make equity investments when needed by our foreign operations, due to restrictions imposed by Law 30737 in our ability to transfer funds abroad. Section II of Law 30737, promulgated in March 2018, imposes certain restrictions on companies that have been consortium partners of groups that have been, or whose officers or representatives have been, convicted of, or have admitted to, corruption, money-laundering or similar crimes. Among other things, the law requires that these companies suspend money transfers abroad.

Many countries in Latin America have suffered significant economic, political and social crises in the past, and these events may occur again in the future. If we are unable to overcome these challenges, we may not be able to successfully expand internationally.

We may not be able to make successful acquisitions

Part of our long-term strategy has been to evaluate strategic acquisition opportunities to expand our operations and geographic footprint, especially in Chile and Colombia. We may not be able to identify appropriate acquisition opportunities, or, if we do, we may overpay for these acquisitions or may not otherwise be able to negotiate terms and conditions that are acceptable to us. We may also face difficulties obtaining financing to pay for acquisitions. In addition, we may not be able to obtain regulatory approvals, including antitrust approvals, required to consummate acquisitions. Furthermore, even if we are able to successfully consummate an acquisition, we may

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encounter challenges in integrating the acquired business effectively and profitably into our operations. The integration of an acquisition involves a number of factors that may affect our operations, including diversion of management’s attention, difficulties in retaining personnel and entry into unfamiliar markets. Acquired businesses may not achieve the levels of productivity anticipated or otherwise perform as expected. Acquisitions may bring us into businesses we have not previously conducted and expose us to additional business risks that are different from those we have traditionally experienced, including new geographic, market, operating and financial risks. Moreover, acquisitions involve special risks, including the potential assumption of unanticipated liabilities and contingencies. Even if such liabilities are assumed by the sellers, we may have difficulties enforcing our rights, contractual or otherwise. We cannot assure you that future acquisitions will meet our strategic objectives.

Failure to comply with, or changes in, laws or regulations could have a material adverse effect on our business and financial performance

We operate in highly regulated industries. Our business and financial performance depends on our and our clients’ ability to comply on a timely and efficient basis with extensive national, regional and municipal laws and regulations relating to, among other matters, environmental, health and safety, building and zoning, labor, tax and other matters. The cost of complying with these laws and regulations can be substantial. In addition, compliance with these laws and regulations can cause scheduling delays. Although we believe we are in compliance with all applicable concessions, other similar contracts, laws and regulations in all material respects, we cannot assure you we have been or will be at all times in full compliance. Failure by us or our clients to comply with our concessions, similar contracts or these laws and regulations could result in a range of adverse consequences for our business, including subjecting us to significant fines, civil liabilities and criminal sanctions, requiring us to comply with costly restorative orders, the shutdown of operations, and revocation of permits and termination of concessions or similar contracts. In addition, we cannot assure you that future changes to existing laws and regulations, or stricter interpretation or enforcement of existing laws and regulations, will not impair our ability to comply with such laws and regulations or increase our compliance costs.

We may be held liable for environmental damage caused by our operations

The nature of certain of our operations requires us to assume risks of causing environmental and other damages. We may be held liable for the environmental damage we cause, including the incidental consequences of human exposure to hazardous substances or other environmental damage. We may be subject to clean up costs or penalties in the event of certain discharges into the environment and/or environmental contamination and damage. Our environmental liability insurance may not be sufficient or may not apply to certain types of environmental damage. Any substantial liability for environmental damage could have a material adverse effect on our financial performance.

New environmental regulation as a result of climate change could impact our business and financial performance

Growing concerns about climate change could result in the imposition of additional or more stringent environmental requirements or regulations. For example, there are ongoing international efforts to address greenhouse emissions, such as the Kyoto Protocol or the more recent Paris Agreement, which are in various stages of negotiation and implementation. If more stringent environmental regulation is adopted in the countries where we operate, we may be obliged to incur higher expenditures than anticipated, adversely affecting our financial performance. In addition, future remediation requirements in the event that we are found responsible for environmental damage may be substantial and could impact our financial condition. Moreover, more stringent environmental regulation could increase the costs of projects for our clients or, in some cases, prevent a project from going forward, thereby potentially reducing the demand for our services. Accordingly, new environmental regulation could have a material adverse effect on our business and financial performance.

We may not be able to effectively protect ourselves against financial market risks

Our operations are exposed to financial market risks, such as risks related to exchange rates, commodity prices and, to a lesser extent, interest rates. Fluctuations in currency, commodity prices or interest rates could adversely affect our financial performance. We cannot assure you that derivative financial instruments will protect

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us from the adverse effects of financial market risks. While hedging transactions are intended to reduce market risks, such transactions may expose us to other risks, such as counterparty risk. We may not be able to adequately protect ourselves against financial market risks and may not ultimately achieve an economic benefit from our hedging strategy.

The loss of a key client in some of our lines of business may affect our business and financial performance

In some of our lines of business, such as our Infrastructure and Technical Services segments, a substantial amount of the revenue we receive is concentrated among a limited number of clients, including the Peruvian government. If one or more of these major clients fail or delay in paying our fees, or if there is a significant reduction or cancellation of business by one or more of these major clients, our business and financial performance may be adversely affected. If we are not able to capture new clients to replace the loss of business from existing key clients, our financial performance may be adversely affected.

Our use of the percentage-of-completion method of accounting for our Engineering and Construction segment could result in a reduction of previously recorded profits

In accordance with IFRS, we measure and recognize a large portion of our revenues under the percentage-of-completion accounting methodology. This methodology allows us to recognize revenues ratably over the life of a contract, without regard to the timing of receipt of cash payments, by comparing the amount of the costs incurred to date against the total amount of costs expected to be incurred. The effect of revisions to estimated costs, and thus revenues, is recorded when the amounts are known and can be reasonably estimated. These revisions can occur at any time and could be material. On a historical basis, we believe that we have made reasonably reliable estimates of the progress towards completion on our long-term contracts. However, given the uncertainties associated with these types of contracts and inherent in the nature of some of the industries in which we operate, it is possible for actual costs to vary from estimates previously made, which may result in reductions or reversals of previously recorded profits.

Labor unrest could adversely affect our financial performance

All of our manual laborers and a portion of our employees are members of labor unions. Our practice is generally to extend benefits we offer our unionized employees to non-unionized employees. In our E&C segment, collective bargaining agreements are negotiated at two levels, on an annual basis between the Peruvian National Federation of Civil Construction and the Peruvian Chamber of Construction, without our direct involvement, and on a per project basis directly between the unions and us in accordance with such annual agreement. We also have collective agreements with our employees in certain of our business segments, which are also negotiated periodically. Although we consider that our relationship with unions is currently positive, we cannot assure you that we will not experience work slowdowns, work stoppages, strikes or other labor disputes in the future, which could result in the interruption or delay of our operations. Such interruptions or delays could have an adverse impact on our business, including on the cost of our projects and our ability to make timely delivery. Moreover, our operations may also be affected by labor unrest in our clients’ or our partners’ workforce.

The proceeds from our insurance policies may not be sufficient and we may not be insured against all risks

We maintain insurance coverage both as a corporate risk management strategy and in order to satisfy the requirements under certain regulations and contracts. We cannot assure you that proceeds from our insurance policies, however, will be sufficient to cover the damages resulting from any event covered by such policies. Certain risks are not covered under the terms of our insurance policies, such as interruption of operations. In such event, we may incur significant expenses to rebuild our facilities, repair or replace our equipment, or cover other damages. In addition, if any of our third-party insurers fail, abruptly cancel our coverage or otherwise cannot satisfy their insurance requirements to us, then our overall risk exposure and operational expenses could be increased. Moreover, we may not be able to renew our insurance policies on favorable terms, or at all. Although in the past we have been generally able to cover our insurance needs, we cannot assure you that we will be able to secure all necessary insurance in the future.

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An increase in import duties and controls may have a material adverse effect on our financial performance

Our future success depends in part on our ability to select and purchase high quality mechanical instruments and equipment at attractive prices. While we have historically been able to do so, such instruments and equipment may become subject to higher import taxes than currently apply. We cannot assure you that there will not be further increases in import taxes, changes in laws related to imports or the imposition of quotas by countries from which we import mechanical instruments and equipment, which could have a material adverse effect on our business.

The government may declare the nullity of public bidding processes after we have been awarded a project or concession

Even if we win the public bidding for a project or concession, the government may subsequently declare the process void for political, budgetary or other reasons and may cancel or terminate the project or concession awarded to us. For example, in June 2014, we were determined the winner of a public bidding for a concession to operate the fare collection system of Lima’s integrated transportation system for a period of 16 years. However, in January 2015, the Municipality of Lima notified us that the board of directors of the Instituto Metropolitano Protransporte de Lima – Protransporte had declared the nullity of the public bidding process, based on a report issued by the Peruvian Ministry of Economy and Finance, which concluded that the Ministry should have pronounced itself with respect to the concession prior to the bidding process instead of afterwards. We initiated a judicial proceeding in July 2015 to challenge such declaration of nullity, which proceedings remain ongoing. If upheld by the courts, the declaration of nullity of projects or concessions awarded to us could affect our future results of operations. Moreover, the uncertainty that results from these type of decisions may adversely impact investor confidence in Peru and our business.

Additional Risks Related to our Engineering and Construction Business

We are vulnerable to the cyclical nature of the end-markets we serve

Demand for our engineering and construction services is dependent on conditions in the end-markets we serve, which include, among others, the mining, power, oil and gas, transportation, real estate and other infrastructure sectors in Peru, as well as the mining sector in Chile and the energy sector in Colombia. Consequently, our engineering and construction business is closely linked to the performance and growth of these sectors, and it is exposed to many of the risks faced by our clients operating in these sectors, over which we have no control. These industries tend to be cyclical in nature and, as a result, although downturns can impact our entire company, our engineering and construction business has historically been subject to periods of very high and low demand. For example, between 2000 and 2003, there was a significant decline in activity in the Peruvian real estate and construction sectors, which consequently affected our and our competitors’ business and financial performance during that time. Factors that can affect these sectors include, among others, macroeconomic conditions, climate conditions, the level of private and public investment, the availability of credit, changes in laws and regulations, and political and social stability. The mining and oil and gas sectors, in particular, are also driven by worldwide demand for the underlying commodities, including, among others, silver, gold, copper, oil and gas, which can be affected by such other factors as global economic conditions and geopolitical affairs. A decline in prices for minerals, oil and gas has had in the past, and could have in the future, a significant impact on our clients’ exploration and production activities and, as a result, on their demand for our engineering and construction services. Accordingly, continuing adverse developments in the end-markets served by our engineering and construction business could have a material adverse effect on our financial performance.

Decreases in capital investments by our clients may adversely affect the demand for our services

Our engineering and construction business is directly affected by changes in private-sector and, to a lesser extent, public-sector investments for large-scale infrastructure projects. In addition, our engineering and construction business is directly affected by the availability and cost of financings for these projects. In the markets where we operate, investments and financings for large-scale projects have historically been influenced by macroeconomic and other factors which are beyond our control, including in the case of public-sector investment, government

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spending levels. As a result, we cannot assure you that clients will not choose to limit or not undertake new projects or delay, suspend or cancel existing projects. Further reductions in anticipated capital investments or available financing for large-scale projects could have a material adverse effect on our financial performance. Public and private investment in Peru, Colombia and Chile slowed significantly during 2016 and 2017 as a result of market conditions and, in the case of Peru, as a result of corruption investigations and political uncertainty.

Our revenues may fluctuate based on project cycles, which we may not control

The substantial majority of the revenues from our engineering and construction business is generated from project awards, the timing of which may be unpredictable and outside of our control, especially considering the highly competitive bidding processes and complex and lengthy negotiations they involve. These processes can be impacted by a wide variety of outside factors including governmental approvals, financing contingencies and overall market and economic conditions. Moreover, because a significant portion of our revenues is generated from large-scale projects, our results of operations can fluctuate quarterly or yearly depending on whether and when project awards occur and the commencement and progress of work under awarded contracts. As a result, we are subject to the risk that revenues may not be derived from awarded projects as quickly as anticipated.

Our business may be adversely affected if we incorrectly estimate the costs of our projects

We conduct our engineering and construction business under various types of contractual arrangements where costs are estimated in advance. In some of our contracts (i.e., lump-sum, unit price and EPC), we bear the risk of some or all unanticipated cost overruns, including due to inflation or certain unforeseen events. Risks under contracts which could result in cost overruns include: difficulties in performance of our subcontractors, suppliers, or other third parties; changes in laws and regulations or difficulties in obtaining permits or other approvals; unanticipated technical problems; unforeseen increases in the cost of inputs, components, equipment, labor, or the inability to obtain these on a timely basis; delays caused by weather conditions; incorrect assumptions related to productivity or scheduling estimates; and project modifications that create unanticipated costs or delays. These risks tend to be exacerbated for longer term contracts since there is increased risk that the circumstances under which we based our original bid could change. In many of our contracts, we may not be able to obtain compensation for additional work performed or expenses incurred. Our failure to estimate accurately the resources and time required to complete a project could adversely affect our profitability. Even under our cost-plus contracts, our inability to complete projects within the estimated budget could affect our relationship with our clients and negatively impact awards of future contracts. As a result, if we incorrectly estimate the costs of our projects, our business and financial performance could be adversely affected.

We may be unable to deliver our services in a timely manner

The success of our engineering and construction business depends on our ability to meet the standards and schedules required by our clients. Significant delays that prevent us from providing our services on agreed time frames could adversely affect our client relations and reputation. Delays may occur for a number of reasons, including: our inability to adequately foresee the needs of our clients; delays caused by our joint operation partners, subcontractors or suppliers; insufficient production capacity; equipment failure; shortage of qualified workers; changes to customs regulations; and natural disasters. Failure to finish construction by the contractual completion date set forth in the contract could result in costs that reduce our projected profit margins, including a requirement to pay daily penalties and damages. If we are unable to meet deadlines, either due to internal problems or as a result of events over which we have no control, we may lose the trust of our clients and, therefore, experience a decrease in the demand for our services. In such event, our business and financial performance could be adversely affected.

We may not be able to obtain compensation for additional work or expenses incurred as a result of client-requested change orders

Clients often determine, after commencement of the project, to change various elements of the project. Some of our contracts may also require that clients provide us with design or engineering information or with equipment or materials to be used on the project, and, in some cases, the client may provide us with deficient design or engineering information or equipment or materials or may provide the information or equipment or materials to us later than required by the project schedule. Our project contracts generally require the client to compensate us for

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additional work or expenses incurred due to client requested change orders or failure of the client to provide us with specified design or engineering information or equipment or materials. Under these circumstances, we generally negotiate with the client with respect to the amount of additional time required to make these changes and the compensation to be paid to us. We are subject to the risk that we are unable to obtain, through negotiation, arbitration, litigation or otherwise, adequate amounts to compensate us for the additional work or expenses incurred by us due to client-requested change orders or failure by the client to timely provide required items. A failure to obtain adequate compensation for these matters could require us to record an adjustment to amounts of revenue and gross profit that were recognized in prior periods. Any such adjustments, if substantial, could have a material adverse effect on our financial performance.

We may have difficulty obtaining performance bonds that we require in the normal course of our operations

In our engineering and construction business, it is industry practice for customers to require performance bonds or other forms of credit enhancement to secure, among other things, bids, advance payments and performance. We cannot assure you that in the future we will not encounter difficulties in obtaining such performance bonds or credit enhancements. The Peruvian market for these types of credit instruments is small; moreover, under Peruvian banking regulations, lenders are required to impose limits on the amount of credit they extend to a group of affiliated companies. Failure to provide performance bonds or credit enhancements on terms required by clients may result in our inability to compete for or win new projects.

Additional Risks Related to our Infrastructure Business

A substantial or extended decline in oil prices may adversely affect our financial performance

A substantial part of the revenues of our infrastructure business depends upon prevailing prices for oil. Historically, oil prices and markets have been volatile and are likely to continue to be volatile in the future. Moreover, global oil prices have declined significantly in recent years, with the average Brent crude prices declining from US$108.64 in 2013, US$99.02 in 2014 and US$52.46 per barrel in 2015 to US$43.55 per barrel in 2016 and US$54.20 per barrel in 2017. During the first quarter of 2018, the average Brent crude price was US$66.82 per barrel. Oil is a commodity and its price is subject to wide fluctuations in response to relatively minor changes in supply and demand for oil, market uncertainty, and a variety of additional factors beyond our control. Those factors include, among others: global demand and supply; political developments in producing regions; weather conditions; governmental regulations; international conflicts and acts of terrorism; the price and availability of alternative sources of energy; and overall local and global economic conditions. Moreover, lower oil prices may not only decrease our revenues on a per unit basis, but may also reduce the amount of oil we can produce economically, if any, and, as such, may have a negative impact on the reserves of the fields in which we operate. As result, our financial performance could be materially and adversely affected by declines in oil prices.

Our reserves estimates depend on many assumptions that may turn out to be inaccurate and are not subject to review by independent reserve auditors

The process of estimating oil and gas reserves is complex, although the fields where we produce oil and gas are mature (Block I has been in production for over 100 years, Block III for approximately 100 years, Block IV for approximately 95 years and Block V for over 50 years). In order to prepare our reserves estimates presented in this annual report, we must project production rates and timing of development expenditures as well as analyze available geological, geophysical, production and engineering data, and the extent, quality and reliability of this data can vary. The process also requires economic assumptions about matters such as oil prices, drilling and operating expenses, capital expenditures, taxes, and availability of funds. Therefore, estimates of reserves are inherently imprecise. Moreover, our reserve estimates included in this annual report have been prepared internally by our team of engineers, and have not been audited or reviewed by independent engineers. Future real production, oil and gas prices, revenues, taxes, development expenditures, operating expenses and quantities of recoverable reserves will most likely vary from the estimates presented in this annual report, and those variances may be material. Any significant variance could materially affect the estimated reserves of the fields in which we operate.

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Our return on our investment in our concessions may not meet estimated returns

Our return on any investment in a concession is based on the terms and conditions of the concession, its duration and the amount of capital invested as well as the amount of revenues collected, debt service costs, payment of penalties and other factors. For example, traffic volume at toll roads may be affected by a number of factors beyond our control, including security conditions; general economic conditions; demographic changes; fuel prices; reduction in commercial or industrial activities in the regions served by the roads; and natural disasters. Decreased traffic at Norvial could adversely affect our financial performance. Although some of our concessions allow for adjustments based on economic conditions, certain concessions provide that adjustment requests be approved only if certain limited events specified in our concession contracts have occurred. If a request of adjustment is not granted, our financial performance could be affected. Given these factors and the possibility that governmental authorities could implement policies that affect our contractual return on investment in a way that we did not anticipate, we cannot assure you that our return on any investment under any concession will meet our estimates.

Governmental entities may terminate prematurely our concessions and similar contracts under various circumstances, some of which are beyond our control

Our ability to continue operating our concessions and similar public-sector contracts depends on governmental authorities, which may terminate the concession or contract pursuant to the provisions set forth therein or in accordance with applicable legislation, including the failure to comply with any contractual terms (including the concessionaire’s default on debt) or applicable law. Moreover, the relevant governmental authority may terminate and/or repossess a concession at any time, if, in accordance with applicable law, the governmental authority determines that it is in the public interest to do so. The relevant governmental authority may also assume the operation of a concession in certain emergency situations, such as war, public disturbance or threat to national security. In addition, in the case of force majeure, the relevant governmental authority may require us to implement certain changes to our operations. If the government terminates any of our concessions, under Peruvian law, it is generally required to compensate us for the amount of our unrecovered investment, unless the concession is revoked pursuant to applicable law or the terms of the concession which would imply a serious breach of the concession’s terms by us. Such compensation process is likely to be time consuming and the amount paid to us may not fully compensate us. We cannot assure you that we would receive such compensation on a timely basis or in an amount equivalent to the value of our investment in a concession plus lost profits.

We are exposed to risks related to the operation and maintenance of our concessions and similar contracts

The operation and maintenance requirements under our concessions could encounter delays or cause us to exceed our budgeted costs for such projects, which could limit our ability to realize the expected return on these projects, increase our operating or capital expenses and adversely affect our business and financial performance. In addition, our operations may be adversely affected by interruptions or failures in the technology and infrastructure systems that we use to support our operations, including toll road collection and traffic measurement systems. The Lima Metro in particular may be susceptible to outages due to power loss, telecommunications failures and similar events. The failure of any of our technology systems may cause disruptions in our operations, adversely affecting our profitability. While we have business continuity plans in place to reduce the adverse impact of information technology system failures on our operations, we cannot assure you that these plans will be effective. Furthermore, accidents and natural disasters may also disrupt the construction, operation or maintenance of our projects and concessions, which could adversely affect our business and financial performance.

We may not be successful in obtaining new concessions

The market for infrastructure concessions in Peru is competitive. We compete with Peruvian and foreign companies for infrastructure concessions in Peru, some of whom may have greater financial and other resources or particular expertise pertinent to a specific concession. Additionally, our public-sector clients may face budget deficits that may prohibit the development of infrastructure concessions, which could affect our business. We may also not be able to obtain additional concessions if the government decides not to award new concessions, due to budget constraints or policy changes or because alternative financing mechanisms are used. Recently, the awarding of concessions and the use of public-private associations in Peru have stalled, due in part to concerns related to the corruption scandal surrounding Odebrecht and its potential effect on government officials in the country. Our inability to bid for or obtain new concessions may adversely affect our business and financial performance.

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Our contract with Petroperú S.A. (“Petroperú”) for fuel storage at the South terminal is currently scheduled to expire in August 2018. However, on June 6, 2018, the concessionaire, Consorcio Terminales, received a letter from Petroperú to initiate negotiations to extend the contract up to one more year. Moreover, we cannot assure you whether or when we will undertake any of the projects that have been awarded to us but for which contract negotiations are ongoing or stalled, in particular the concessions for Via Expresa Sur and Via Expresa Javier Prado.

Additional Risks Related to our Real Estate Business

We are exposed to risks associated with the development of real estate

Our real estate business is subject to the risks that generally affect the real estate industry, such as availability and prices of suitable land, environmental and zoning regulations, interruptions in supply and volatility of the prices of construction materials and equipment, and changes in the demand for real estate. Our real estate business is specifically affected by the following risks: macroeconomic conditions in Peru that may impact the growth of the real estate sector as a whole, particularly in the residential market, including an increase in unemployment or a decrease in wage levels; an increase in prevailing interest rates or lack of available credit; changes in government subsidies for affordable housing; unfavorable real estate market conditions, such as an oversupply of residential units or scarcity of suitable land in particular areas; the level of customer interest in our new projects or the sales price per unit necessary to sell the unit may be lower than expected; customer perception of the security, convenience and attractiveness of our projects and the areas in which they are located; cost overruns, many of which may be beyond our control, that exceed our estimates and affect our profit margins, including the price of labor, land, insurance, taxes and public charges; the construction and sale of units may not be completed on schedule; bankruptcy or significant financial difficulties of large industry players, which cause a loss of confidence in the industry; limitations when contracting with government entities; and restrictions on real estate development imposed by local, regional and national authorities which often render restrictive or higher bureaucratic laws and regulations. Recently, real estate sales have slowed due to modifications by the government to a program (Bono de Buen Pagador) that encourages social interest housing sales as well as access to credit. The occurrence or continuation of any of the above events may have a material adverse effect on our business and financial performance.

Real estate prices may not continue to rise and may decline

Real estate prices in Peru have risen significantly over the last decade. We cannot assure you that this increase in real estate prices does not represent a bubble. Real estate prices in Peru may not continue to rise or may decline significantly, particularly if financing costs rise or consumer confidence in the real estate market erodes. If real estate prices decline significantly, our business and financial performance could be materially and adversely affected.

Our business may be adversely affected if we are not able to obtain the necessary licenses and/or authorizations for our developments in due time

Real estate development requires obtaining certain licenses, authorizations and registrations. In Peru, municipal authorities are responsible for issuing most of the licenses that are required during the development stage, including zoning, demolition, construction and conformity (conformidad de obra) licenses, among others. Currently, we have approximately 22 real estate projects in various stages of development. For some of these projects, we have not yet initiated administrative proceedings with the appropriate authorities, or such proceedings are pending approval. A denial or an extended delay in issuing licenses, authorizations or registrations, or an extended delay by municipal authorities in approving licensing procedures, may render land unsuitable for development, delay the completion of planned projects, increase our costs or otherwise negatively impact the pricing of projects and adversely affect our business and financial performance.

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The scarcity of financing, an increase in interest rates or an increase in the security required by financial institutions as collateral may adversely affect the ability or willingness of prospective buyers to purchase our real estate properties. In most cases, the purchasers of our residential or commercial properties finance at least part of the purchase price with mortgage loans. In 2016 and 2017, approximately 95% and 88%, respectively, of our residential units were sold to purchasers who received government subsidies to finance the purchase of homes. An increase in interest rates, whether as a result of market conditions or government action or otherwise, may cause a decrease in the demand for our residential and commercial properties and for land development. An increase in interest rates could also increase our own financing costs, which may, in turn, increase the sale price of our projects and adversely affect our business and financial performance.

We may experience difficulties in finding desirable land and increases in the price of land may increase our cost of sales and decrease our earnings

The continued growth of our real estate business depends in large part on our ability to continue to acquire land at a reasonable cost. As more developers enter or expand their operations in the Peruvian real estate sector, land prices could rise significantly and suitable land could become scarce or overpriced due to increased demand or decreased supply. A resulting rise in land prices may increase our cost of sales and decrease our earnings. We may not be able to acquire suitable land at reasonable prices in the future, which may have a negative impact on our financial performance.

Changing market conditions may adversely affect our ability to sell home inventories in our land and at expected prices

There is a lag between the time we acquire land and the time that we can bring the developed properties to market. Lag time varies by sector and on a project-by-project basis. As a result, we face the risk that demand for real estate may decline or that other developments may occur during this period that affect market conditions, and that we will not be able to dispose of developed properties or undeveloped land at expected prices or profit margins or within anticipated time frames or at all. Significant expenditures associated with investments in real estate, such as maintenance costs, architectural fees in high-end projects, construction costs and debt payments, cannot generally be reduced if changes in market conditions cause a decrease in expected revenues from our properties. Moreover, the market value of home inventories and undeveloped land can fluctuate significantly because of changing market conditions. As a result of these and other factors beyond our control, we may be forced to sell properties or land at a loss or for prices that generate lower profit margins than we anticipate.

Determinations by INDECOPI may adversely affect our ability to enforce binding contracts

In resolving consumer protection complaints in the real estate and insurance sectors, INDECOPI has made determinations against real estate developers resulting in the modification of contractual provisions applicable to purchasers. Some purchasers of real estate properties have taken advantage of these INDECOPI determinations and filed complaints against developers before INDECOPI and/or made public claims through the media seeking to obtain compensation for alleged deficiencies in housing construction as well as the modification of the terms of their contracts, which may have a negative impact on our real estate business. Although we have a small number of such complaints in INDECOPI, an increase in consumer complaints and consumer protective measures, particularly those resulting in the modification of contractual terms, may affect our ability to enforce our contracts under their original terms if we are not able to counter such claims, which in turn may have a negative impact on our real estate business.

Additional Risks Related to our Technical Services Business

Our engagements with clients may not be profitable or may be terminated or not renewed

The pricing and other terms of many of our client contracts in our technical services business necessarily require us to make estimates and assumptions at the time we enter into these contracts that could differ from actual results. These estimates reflect our best judgments regarding the nature of the engagement and our expected costs to provide the contracted services. Because of the competitive nature of the markets in which we operate, particularly

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in IT services, the risks related to errors in these estimates are heightened. Any increased or unexpected costs of unanticipated delays or complications in connection with the performance of these engagements, including delays caused by factors outside our control, could make these contracts less profitable or not profitable, which would have an adverse effect on our profit margin. Our exposure to this risk increases generally in proportion to the scope of services provided under a contract.

In addition, the success of our technical services business is dependent on our ability to retain our clients. In our electricity networks services line of business in particular, Enel, which acquired Enersis (from whom we acquired control of the business in 2011) remains a key client; however, we cannot assure you that they will continue to use our services in the future. Also, in our IT services business in particular, we may lose clients due to their conversion to in-house service providers. We are also vulnerable to reduced volumes from our clients due to business downturns or for other reasons, which can reduce the scope and price of services we provide. A contract termination by a major client could cause us to experience a higher than expected number of unassigned employees, which would affect our profitability until we are able to reduce or reallocate our personnel. We may not be able to replace any client that elects to terminate or not renew its contract with us, and the termination or non-renewal of a significant number of our agreements, or of our most important contracts, may adversely affect our business and financial performance. In addition, non-compliance on a contract with a public-sector client may lead to debarment from participating in government bidding processes and, consequently, inability to contract with other public-sector clients, not just for the line of business where the alleged violation took place, but also for all of our other businesses.

We may not be successful in obtaining new government contracts

We compete to provide services to the Peruvian government, and some of our competitors may have greater financial and other resources or particular expertise pertinent to a specific contract. In addition, we may not be able to obtain additional government contracts for the provision of IT and electrical networks services, due to budget constraints, policy changes or otherwise. Our inability to obtain new government contracts may adversely affect our business and financial performance.

We face risks related to the delivery of products and services by our suppliers

In the course of our IT services and electricity networks services, we depend on technology providers that may commit errors or omissions related to the delivery or the quality of equipment, services or products that are essential to our business. A significant error or failure to deliver such equipment, products or services made by one of our suppliers, particularly in our IT services business where we may have an exclusive arrangement with a specific supplier for a client, may adversely affect our business and financial performance.

Our IT security measures may be breached or compromised and we may sustain system outages

We rely on encryption, authentication technology and firewalls to provide security for confidential information, including personal data, transmitted to and by us over the internet. A breach of our network security measures could result in the misappropriation of proprietary or personal information or cause interruptions in our IT services or operations, could damage our reputation and harm our ability to deliver services to our clients. This may result in client dissatisfaction and a loss of business. Our security measures may be inadequate to prevent security breaches, and we may be required to expand significant capital and other resources to protect against the threat of security breaches and to alleviate problems caused by breaches as well as by any unplanned unavailability of our IT systems caused by other reasons, which may adversely affect our business and financial performance.

Our services may infringe upon the intellectual property rights of others

Our IT services, or third-party products we offer our clients, may infringe the intellectual property rights of third parties, and we may have infringement claims asserted against us. These claims may harm our reputation, increase our costs and prevent us from offering certain services or products. Any claims or litigation relating to intellectual property, even if ultimately decided in our favor, could be time-consuming and costly, injure our reputation or require us to enter into royalty or licensing arrangements. Any limitation on our ability to provide a service or product could result in our loss of revenue-generating opportunities and require us to incur additional expenses to develop new or modified solutions for future projects, which may adversely affect our business and financial performance.

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Risks Relating to Peru

Economic, social and political developments in Peru could adversely affect our business and financial performance

The substantial majority of our operations are conducted in Peru and depend on economic and political developments in the country. As a result, our business may be materially and adversely affected by economic downturns, currency depreciation, inflation, interest rate fluctuation, government policies, regulation, taxation, social instability, political unrest, terrorism and other developments in or affecting the country, over which we have no control. In the past, Peru has experienced periods of severe economic recession, large currency devaluation and high inflation. We cannot assure you that Peru will not experience similar adverse economic developments in the future. In addition, Peru has experienced periods of political instability that has included a succession of regimes with differing economic policies and programs. Previous governments have imposed controls on prices, exchange rates, local and foreign investments and international trade, restricted the ability of companies to dismiss employees, expropriated private-sector assets and prohibited the remittance of profits to foreign investors. We cannot assure you that the Peruvian government will continue to pursue open-market policies that stimulate economic growth and social stability.

Moreover, investigations against former or current government officials relating to bribery payments made by Odebrecht have, and may continue to, result in political uncertainty in Peru. On March 22, 2018, President Pedro Pablo Kuczynski presented his resignation, due to allegations of corruption for vote-buying in connection with the impeachment proceeding against him. On March 23, 2018, the Congress accepted his resignation and his first vice president, Martín Vizcarra, was sworn in as acting president. We cannot assure you whether President Vizcarra will remain in office for the remainder of the presidential term, which ends in July 2021. If President Vizcarra and the current second vice president both resign, the president of the Congress would become acting president and the Congress would call for new elections.

A separate criminal investigation and extradition order has been initiated against former President Alejandro Toledo. Investigations have also been initiated against former Presidents Ollanta Humala, Alan García and Pedro Pablo Kuczynski.

Several corruption scandals regarding authorities at municipal, regional and national ministry-levels are also ongoing, and former and current government officials have been detained. These corruption investigations have resulted in lower investments in large projects.

The political instability caused by these events could affect macroeconomic conditions in the country, including currency volatility, as well as have a negative effect on our business.

Fluctuations in the value of the sol could adversely affect financial performance

Fluctuations in the value of the sol relative to the U.S. dollar could adversely affect Peru’s economy. In addition, fluctuations in the value of the sol to the U.S. dollar can materially adversely affect our results of operations. In 2017, 39.3% and 43.8% of our revenues were denominated in soles and U.S. dollars, respectively, whereas 63.9% and 18.3% of our costs of sales were denominated in soles and U.S. dollars, respectively. In the past the exchange rate between the sol and the U.S. dollar has fluctuated significantly. We cannot assure you that the value of sol against other currencies will not fluctuate significantly in the future, which could adversely affect the Peruvian economy and our business, financial condition and results of operations.

In addition, although Peruvian law currently imposes no restrictions on the ability to convert soles to foreign currency and transfer foreign currency outside of the country, in the 1980s and early 1990s, Peru imposed exchange controls, including controls affecting the remittance of dividends to foreign investors. We cannot assure you that exchange controls in Peru will not be implemented in the future. The imposition of exchange controls could have an adverse effect on the economy and on your ability to receive dividends from us as a holder of ADSs.

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Inflation could adversely affect our financial performance

In the past, Peru has suffered through periods of hyperinflation, which have materially undermined the Peruvian economy and the government’s ability to create conditions that support economic growth. A return to a high inflation environment would also undermine Peru’s foreign competitiveness, with negative effects on the level of economic activity and employment.

As a result of reforms initiated in the 1990s, Peruvian inflation decreased significantly from four-digit inflation during the 1980s. The Peruvian economy experienced annual inflation of 2.9% in 2013, 3.2% in 2014, 4.4% in 2015, 3.2% in 2016 and 1.4% in 2017, as measured by the Peruvian Consumer Price Index (Índice de Precios al Consumidor del Perú).

If Peru experiences substantial inflation in the future, our costs of sales and administrative expenses could increase which could affect our operating margins. Inflationary pressures may lead to governmental intervention in the economy, including the introduction of government policies that may adversely affect the overall performance of the Peruvian economy. For example, in response to increased inflation, the Peruvian Central Bank, which sets the Peruvian basic interest rate, may increase or decrease the basic interest rate in an attempt to control inflation or foster economic growth.

Changes in tax laws may increase our tax burden and, as a result, negatively affect our financial performance

The Peruvian congress and government regularly implement changes to tax laws that may increase our tax burden. These changes may include modifications in our tax rates and, on occasions, the enactment of temporary taxes that in some cases have become permanent taxes. Tax reforms related to the Peruvian income tax, value added tax and tax code have recently been approved, but we are unable to estimate the impacts that these reforms may have on business. The effects of any tax reforms that could be proposed in the future and any other changes that result from the enactment of additional reforms have not been, and cannot be, quantified. However, any changes to our tax regime may result in increases in our overall costs and/or our overall compliance costs, which could negatively affect our financial performance.

Earthquakes, severe weather and other natural disasters could adversely affect our business and financial performance

Peru is located in an area that experiences seismic activity and occasionally is affected by earthquakes. For example, in 2007, an earthquake with a magnitude of 7.9 on the Richter scale struck the central coast of Peru, severally damaging the region south of Lima. Such conditions may result in physical damage to our properties and equipment, closure of one or more of our project sites and infrastructure concessions, inadequate work forces in our markets and temporary disruptions in the supply of construction materials. In addition, Peru has also experienced adverse climate conditions (due to climate change or otherwise) and adverse weather patterns, such as El Niño, an oceanic and atmospheric phenomenon that causes a warming of temperatures in the Pacific Ocean, resulting in heavy rains off the coast of Peru and potentially flooding. Poor weather conditions can have significant adverse effects on our engineering and construction activities as well as on our operation and maintenance of infrastructure assets business. Any of these factors may materially adversely affect the Peruvian economy and our business and financial performance.

A resurgence of terrorism in Peru could adversely affect the Peruvian economy and, as a result, our business and results of operations

In the past, Peru experienced severe terrorist activity that reached its peak of violence against the government and private sector in the late 1980s and early 1990s. In the mid-1990s, terrorist groups suffered significant defeats, including the arrest of leaders, resulting in considerable limitations in their activities. Despite the suppression of terrorist activity, we cannot assure you that a resurgence of terrorism in Peru will not occur, or if there is such a resurgence, it will not disrupt the economy of Peru and our business.

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The Peruvian economy could be affected by adverse economic developments in regional or global markets

Financial and securities markets in Peru are influenced, to varying degrees, by economic and market conditions in regional or global markets. Although economic conditions vary from country to country, investors’ perceptions of events occurring in one country may adversely affect cash flows and securities from issuers in other countries, including Peru. For example, the Peruvian economy was adversely affected by the political and economic events that occurred in several emerging economies in the 1990s, including in Mexico in 1994, the Asian crisis in 1997, the economic crisis in Russia in 1998, the Brazilian currency devaluation in 1999 and the Argentine crisis in 2001, which affected the market value of securities issued by companies from markets throughout Latin America. In addition, Peru’s economy continues to be affected by events in the economies of its major regional partners and in developed economies that are trading partners or that affect the global economy. The 2008-2009 global economic recession, principally driven by the subprime mortgage market in the United States, substantially affected the international financial system, including Peru’s securities market and economy. More recently, global economic conditions, including slower growth in China, low global commodity prices, in particular oil and gas prices, and the appreciation of the U.S. dollar against foreign currencies generated economic uncertainty which may reduce the confidence of foreign investors, causing volatility in the securities markets and affecting the ability of companies to obtain financing globally. The United Kingdom voted to exit the European Union on June 23, 2016. As of the date hereof, the actions to be taken by the United Kingdom to effectively exit the European Union and the duration of this process are uncertain. The results of the referendum in the United Kingdom have caused, and are expected to continue to cause, volatility in financial markets, which in turn could have substantial adverse effects on our business, financial condition and results of operations. On November 8, 2016, Mr. Donald J. Trump was elected president of the United States. President Trump has implemented restrictions on free trade and limitations on immigration. Changes in social, political, regulatory and economic conditions in the United States or in laws and policies governing foreign trade could create uncertainty in the international markets and could have a negative impact on emerging market economies, including the Peruvian economy, which in turn could have a negative impact on our operations. The worsening of current global conditions or a new economic or financial crisis could affect Peru’s economy, and, consequently, materially adversely affect our business and financial performance.

Risks relating to Chile, Colombia and other Latin American Countries

We face risks relating to our operations outside of Peru

Latin American economic, political and social conditions may adversely affect our business. Our financial performance may be significantly affected not only by general economic, political and social conditions in Peru but also in other markets where we operate or intend to operate, including Chile and Colombia. During 2016 and 2017, approximately 26.5% and 28.0%, respectively, of our revenues on a consolidated basis derived from operations outside of Peru.

These countries have suffered significant economic, political and social crises in the past, and these events may occur again in the future. We cannot predict whether changes in current administrations will result in changes in governmental policy and whether such changes will affect our business. Instability in the region has been caused by many different factors, including: significant governmental influence over local economies; substantial fluctuations in economic growth; high levels of inflation; changes in currency values; exchange controls or restrictions on expatriation of earnings; high domestic interest rates; wage and price controls; changes in governmental economic or tax policies, including retroactive changes; imposition of trade barriers, including import duties on information technology equipment; electricity rationing; liquidity of domestic capital and lending markets; unexpected changes in regulation; expropriations; and high levels of organized crime, terrorism and social conflicts, as well as overall political, social and economic instability. Moreover, macroeconomic conditions in these countries are highly influenced by global commodity prices, including the price of copper for Chile and the price of oil and gas for Colombia.

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Risks Relating to our ADSs

We have identified material weaknesses in our internal control over financial reporting, and if we cannot maintain effective internal controls or provide reliable financial and other information in the future, investors may lose confidence in the reliability of our consolidated financial statements, which could result in a decrease in the value of our ADSs

Based on the assessment of our internal control over financial reporting as of December 31, 2017, management has concluded that, as of such date, our internal control over financial reporting was not effective at the reasonable assurance level due to control deficiencies that constituted material weaknesses. These material weaknesses consisted of:

• Control Environment. The control environment was not always sufficient to ensure adequate monitoring mechanisms were in place to secure that internal controls over financial reporting operated effectively. Personnel also lacked sufficient knowledge, experience and training in these areas. Management found deficiencies in the implementation of our internal control system of financial reporting in accordance with the Sarbanes-Oxley Act throughout all subsidiaries.

• Risk Assessment. We identified deficiencies in the controls to address the risks of material misstatements, which contributed to deficiencies in controls with respect to: (i) the review, approval and documentation related to journal entries; (ii) the segregation of duties; (iii) timely accounting for signed contracts to prevent or detect material inaccuracies; (iv) accounting for revenue; and (vi) inventory.

• Information and Communication. We identified deficiencies in the controls over information and communication.

• Monitoring and Evidential Matter. We identified deficiencies in the monitoring controls related to the design and operational effectiveness of our internal controls.

These material weaknesses resulted in adjustments to the accounting for revenue and accounts receivable and a number of adjustments and reclassifications in other accounts. Additionally, these material weaknesses could result in other misstatements in our financial results and disclosures, which could result in a material misstatement to our annual or interim consolidated financial statements not being prevented or detected. Because of these material weaknesses, management concluded that we did not maintain effective internal control over financial reporting as of December 31, 2017, based on criteria in Internal Control-Integrated Framework (2013) issued by the COSO.

For more information, see “Item 15. Controls and Procedures.” A “material weakness” is a deficiency, or combination of deficiencies, in internal controls such that there is a reasonable possibility that a material misstatement in financial statements will not be prevented or detected in a timely basis.

We are in the process of implementing measures to address these material weaknesses. We may not be able to remediate these identified material weaknesses. Moreover, we may in the future discover other areas of our internal controls that have material weaknesses or that need improvement, particularly with respect to businesses that we acquire.

Any failure to maintain an effective internal control over financial reporting, or implement required new or improved controls, could harm our operating results or cause us to fail to meet our reporting obligations. If we are unable to conclude that we have effective internal control over financial reporting, or if our independent registered public accounting firm is unable to provide us with an unqualified opinion regarding the effectiveness of our internal control over financial reporting, investors could lose confidence in the reliability of our consolidated financial statements, which could result in a decrease in the value of our ADSs.

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The New York Stock Exchange has commenced delisting procedures with respect to our ADSs

On May 17, 2018, the New York Stock Exchange suspended trading of our ADSs on the exchange and commenced proceedings to delist the company due to our delay in filing this annual report. The company has appealed the decision. As a result, our ADSs have traded on the over-the-counter (OTC) market in the United States since May 21, 2018, which is a significantly less liquid market than the New York Stock Exchange.

If our appeal is unsuccessful and the New York Stock Exchange does not resume trading of our ADSs on the exchange and halt the delisting process, our ADSs may not trade on the New York Stock Exchange in the future. In addition, although the company may continue to be subject to reporting and corporate governance requirements applicable under U.S. securities laws and regulations, we would not be subject to the listing requirements under the New York Stock Exchange. If we are not able to resume the trading of our ADSs on the New York Stock Exchange, this could materially impact the market price of our ADSs.

The market price of our ADSs may fluctuate significantly, and you could lose all or part of your investment

Volatility in the market price of our ADSs may prevent you from being able to sell your ADSs at or above the price you paid for them. The market price and liquidity of the market for our ADSs may be significantly affected by numerous factors, some of which are beyond our control and may not be directly related to our operating performance. These factors include, among others: actual or anticipated changes in our results of operations, quarterly fluctuations, or failure to meet expectations of financial market analysts and investors; investor perceptions of our prospects or our industries; operating performance of companies comparable to us and increased competition in our industries; new laws or regulations or new interpretations of laws and regulations applicable to our business; general economic trends in Peru; catastrophic events, such as earthquakes and other natural disasters; and developments and perceptions of risks in Peru and in other countries.

Substantial sales of ADSs or common shares could cause the price of our ADSs or common shares to decrease

Significant shareholders hold a large number of our common shares. These securities are eligible for sale. The market price of our ADSs could decline significantly if we or our significant shareholders sell securities in our company or the market perceives that we or our significant shareholders intend to do so.

We may raise additional capital in the future through the issuance of equity securities, which may result in dilution of the interests of our shareholders

We may need to raise additional capital and may opt for obtaining such capital through the public or private placement of debt securities or securities convertible into our common shares. In the event of a public or private debt financing, or the financing through the issuance of securities convertible into our common shares, such additional funds may be obtained with the exclusion of the preemptive rights of our shareholders, including the investors in our common shares, which may dilute the percentage interests of investors in our common shares.

No shareholder or group of shareholders holds a majority of our common shares

Our former chairman beneficially owns 17.81% of our outstanding share capital. No shareholder or group of shareholders currently owns a majority of our common shares. In addition, there is no shareholders’ agreement among any of our significant shareholders. Accordingly, no shareholder or group of shareholders may on its own determine the outcome of substantially all matters submitted for a vote to our shareholders. In addition, a new investor or group of investors may in the future seek to acquire a significant stake in, or control of, our company, subject to compliance with Peruvian tender offer requirements which require that a tender offer be made to all shareholders upon, among other matters, acquisition of 25%, 50% and 60% of our voting rights. If a new investor or group of investors acquires a significant stake in, or control of, our company, we cannot assure you that such investor or group of investors will not seek to change how our business is managed.

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Holders of ADSs may be unable to exercise voting rights with respect to our common shares underlying the ADSs at our shareholders’ meetings

As a holder of ADSs representing common shares being held by the depositary in your name, you may exercise voting rights with respect to the common shares represented by the ADSs only in accordance with the deposit agreement relating to the ADSs. Holders of our common shares will receive notice of shareholders’ meetings through publication of a notice 25 days in advance, in accordance with Peruvian law, in the official gazette in Peru, a Peruvian newspaper of general circulation and the website of the Peruvian Securities Commission, and will be able to exercise their voting rights by either attending the meeting in person or voting by proxy. ADS holders will not receive notice directly from us. Instead, pursuant to the deposit agreement, we will notify the depositary, who will mail to holders of ADSs the notice of the meeting and a statement as to the manner in which voting instructions may be given. To exercise their voting rights, ADS holders must instruct the depositary how to exercise the voting rights for the common shares which underlie their ADSs. Due to these additional procedural steps involving the depositary, the process for exercising voting rights may take longer for ADS holders than for holders of our common shares.

Holders of ADSs also may not receive voting materials in time to instruct the depositary to vote the common shares underlying their ADSs. In addition, the depositary and its agents are not responsible for failing to carry out voting instructions of the holders of ADS or for the manner of carrying out such instructions, unless such failure can be attributed to gross negligence, bad faith or willful misconduct on the part of the depositary or its agents. Accordingly, holders of ADSs may not be able to exercise voting rights, and they will have little, if any, recourse if the underlying common shares are not voted as requested.

Our shareholders’ ability to receive cash dividends may be limited

Our shareholders’ ability to receive cash dividends may be limited by the ability of the depositary to convert cash dividends paid in soles into U.S. dollars. Under the terms of our deposit agreement with the depositary for the ADSs, the depositary will convert any cash dividend or other cash distribution we pay on the common shares underlying the ADSs into U.S. dollars, if it can do so on a reasonable basis and can transfer the U.S. dollars to the United States. If this conversion is not possible or if any government approval is needed and cannot be obtained, the deposit agreement allows the depositary to distribute the foreign currency only to those ADR holders to whom it is possible to do so. If the exchange rate fluctuates significantly during a time when the depositary cannot convert the foreign currency, you may lose some or all of the value of the dividend distribution.

Holders of ADSs may be unable to exercise preemptive or accretion rights with respect to the common shares underlying their ADSs

Under Peruvian corporate law, if we issue new common shares as part of a capital increase, unless otherwise agreed to by holders of 40% of our subscribed voting common shares and, provided that such capital increase does not favor, directly or indirectly, certain shareholders to the detriment of others, our shareholders will generally have the right to subscribe to a proportional number of common shares of the class held by them to maintain their existing ownership percentage, which is known as preemptive rights. In addition, shareholders are entitled to the right to subscribe for the unsubscribed common shares at the end of a preemptive rights offering, on a pro rata basis, which is known as accretion rights. You may not be able to exercise the preemptive or accretion rights relating to common shares underlying your ADSs unless a registration statement under the Securities Act is effective with respect to those rights or an exemption from the registration requirements of the Securities Act is available. We are not obligated to file a registration statement with respect to the common shares relating to these preemptive and accretion rights, and we cannot assure you that we will file any such registration statement. Unless we file a registration statement or an exemption from registration is available, you may receive only the net proceeds from the sale of your preemptive and accretion rights by the depositary or, if the preemptive and accretion rights cannot be sold, they will be allowed to lapse. As a result, U.S. holders of our ADSs may suffer dilution of their interest in our company upon future capital increases.

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We are entitled to amend the deposit agreement and to change the rights of ADS holders under the terms of such agreement without the prior consent of the ADS holders

We are entitled to amend the deposit agreement and to change the rights of the ADS holders under the terms of such agreement without the prior consent of the ADS holders. Any change related to an increase in deposits or charges for book-entry securities services or any modification that might hinder the rights of the ADS holders will be effective within 30 days after the ADS holders have received notice of such change or modification and such holders will have no right to any compensation whatsoever.

Peru has different corporate disclosure and accounting standards than those you may be familiar with in the United States

Financial reporting and securities disclosure requirements in Peru differ in certain significant respects from those required in the United States. There are also material differences among IFRS, Peruvian GAAP and U.S. GAAP. Accordingly, the information about us available to you will not be the same as the information available to holders of shares issued by a U.S. company. In addition, the Peruvian Securities Market Law, which governs open or publicly listed companies, such as us, imposes disclosure requirements that are more limited than those in the U.S. in certain important respects. Although Peruvian law imposes restrictions on insider trading and price manipulation, applicable Peruvian laws are different from those in the United States, and the Peruvian securities markets are not as highly regulated and supervised as the U.S. securities markets.

Our status as a foreign private issuer allows us to follow alternate standards to the corporate governance standards of the New York Stock Exchange, which may limit the protections afforded to investors

We are a foreign private issuer within the meaning of the New York Stock Exchange corporate governance standards. Under New York Stock Exchange rules, a foreign private issuer may elect to comply with the practices of its home country and not to comply with certain corporate governance requirements applicable to U.S. companies with securities listed on the exchange. We currently follow certain Peruvian practices concerning corporate governance and intend to continue to do so. Accordingly, holders of our ADSs will not have the same protections afforded to shareholders of companies that are subject to all New York Stock Exchange corporate governance requirements.

For example, the New York Stock Exchange listing standards provide that the board of directors of a U.S. listed company must have a majority of independent directors at the time the company ceases to be a “controlled company.” Under Peruvian corporate governance practices, a Peruvian company is not required to have a majority of independent members on its board of directors. The listing standards for the New York Stock Exchange also require that U.S. listed companies, at the time they cease to be “controlled companies,” have a nominating/corporate governance committee and a compensation committee (in addition to an audit committee). Each of these committees must consist solely of independent directors and must have a written charter that addresses certain matters specified in the listing standards. Under Peruvian law, a Peruvian company may, but is not required to, form special governance committees, which may be composed partially or entirely of non-independent directors. In addition, New York Stock Exchange rules require the independent non-executive directors of U.S. listed companies to meet on a regular basis without management being present. There is no similar requirement under Peruvian law.

The New York Stock Exchange’s listing standards also require U.S. listed companies to adopt and disclose corporate governance guidelines. In July 2002, the Peruvian Securities Commission and a committee comprised of regulatory agencies and associations prepared and published a list of suggested non-mandatory corporate governance guidelines called the “Principles of Good Governance for Peruvian Companies.” Although we have implemented these measures, we are not legally required to comply with the corporate governance guidelines, only disclose whether or not we are in compliance.

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Minority shareholders in Peru are not afforded equivalent protections as minority shareholders in other jurisdictions and investors may face difficulties in commencing judicial and arbitration proceedings against our company or the controlling shareholder

Our company is organized and existing under the laws of Peru. Accordingly, investors may face difficulties in serving process on our company, officers and directors or significant shareholders in the United States of certain other jurisdictions, and in enforcing decisions granted by courts located in other jurisdictions against our company, our officers and directors or significant shareholders that are based on securities laws of jurisdictions other than Peru.

In Peru, there are no proceedings to file class action suits or shareholder derivative actions with respect to issues arising between minority shareholders and an issuer, its controlling shareholders or directors and officers. Furthermore, the procedural requirements to file actions by shareholders differ from those of other jurisdictions, such as in the United States. As a result, it may be more difficult for our minority shareholders to enforce their rights against us, our directors, officers or significant shareholders as compared to the shareholders of a U.S. company. The deposit agreement provides that the depositary has no obligation to commence or become involved in any judicial proceedings and any other legal actions relating to the ADSs or the deposit agreement, either on behalf of the ADS holders or on behalf of any other person.

Judgments of Peruvian courts with respect to our common shares will be payable only in soles

If proceedings are brought in the courts of Peru seeking to enforce our obligations in respect of the common shares, we will not be required to discharge our obligations in a currency other than soles. Under Peruvian exchange control limitations, an obligation in Peru to pay amounts denominated in a currency other than soles may be satisfied in Peruvian currency only at the exchange rate, as determined by the Peruvian Central Bank, in effect on the date the judgment is obtained, and such amounts are then adjusted to reflect exchange rate variations through the effective payment date. The then prevailing exchange rate may not afford non-Peruvian investors with full compensation for any claim arising out of or related to our obligations under the ADSs.

If securities or industry analysts publish unfavorable research about our business or if they cease to follow our business, the price and trading volume of the ADSs could decline

The trading market for the ADSs will depend, in part, on the research and reports that securities or industry analysts publish about us or our business. If one or more of the analysts who covers us downgrades the ADSs or publishes unfavorable research about our business, the price of the ADSs would likely decline. If one or more of these analysts ceases coverage of our company or fails to publish reports on us regularly, demand for the ADSs could decrease, which could cause the price and trading volume of the ADSs to decline.

ITEM 4. INFORMATION ON THE COMPANY

A. History and Development of the Company

Graña y Montero has been operating in Peru since 1933 and it is listed on the Lima Stock Exchange since 1997. Set forth below are key highlights in our company’s history:

• Graña y Montero traces its origins to its predecessor company GRAMONVEL, founded 84 years ago by, and named after, engineers Alejandro Graña Garland, Carlos Montero Bernales and Carlos Graña Elizalde. We began primarily as a construction company.

• We expanded our operations internationally in 1943 with our contract to build a Nestle factory in Venezuela.

• In 1948, we began one of our largest projects since our founding—the construction of the city of Talara for the International Petroleum Company, which was completed in 1957.

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• In 1949, GRAMONVEL merged with Morris y Montero to form Graña y Montero Contratistas Generales S.A. (now GyM S.A., our construction subsidiary), expanding its service offerings and increasing its capacity to undertake large-scale infrastructure projects.

• In 1983, we began a diversification strategy by developing complementary lines of business. In 1984, we founded GMP, our oil and gas subsidiary. In 1985, we partnered with Sonda S.A. (a Chilean IT services company) to form GMD, our IT services subsidiary. Beginning in 1987, we founded our real estate development business, currently Viva GyM.

• In 1996, we reorganized our subsidiaries and founded Graña y Montero, which became the principal shareholder of all our subsidiaries. In 1997, we listed our company on the Lima Stock Exchange.

• In 1998, the company built Larcomar, a landmark shopping center in Lima that has become a popular tourist destination, which we sold in 2010.

• In 2003, 2006 and 2007, we were awarded the concessions for the construction, operation and maintenance of the Norvial, Canchaque and Survial toll roads, respectively.

• In 2007, we also developed the first large-scale affordable housing project in Lima, consisting of 3,400 apartment units and located in the district of El Agustino.

• In 2011, Graña y Montero acquired 75.0% of CAM, a leading company in the electricity sector based in Chile, and formerly part of the Latin American power generation and distribution company Enersis.

• In 2012, we began operating the Lima Metro.

• In July 2013, we listed our company on the New York Stock Exchange.

• In 2012 and 2013, Graña y Montero acquired 74.0% and 6.4%, respectively, of Ingeniería y Construcción Vial y Vives S.A. (“Vial y Vives”), an engineering and construction company specializing in the Chilean mining sector. In August 2013, we acquired 86.0% of DSD Construcciones y Montajes S.A. (“DSD Construcciones y Montajes”), a Chilean engineering and construction company specialized in providing services to the energy, oil and gas, cellulose and mining sectors in Chile and Latin America. In July 2014, our subsidiary Vial y Vives merged with DSD Construcciones y Montajes to form Vial y Vives-DSD S.A. (“Vial y Vives-DSD”), through our subsidiary GyM Chile SpA, we hold an 86.2% interest in Vial y Vives-DSD. As of the date of this annual report, we hold a 94.5% interest in Vial y Vives-DSD.

• In March 2014, we acquired control of Coasin Instalaciones Ltda. (“Coasin”) for an amount of US$2.1 million (S/.7.1 million).

• In September 2014, our subsidiary Norvial established its first bond program for a maximum amount of S/.380 million or its equivalent in U.S. dollars. Norvial undertook its first and second issuances under this program for amounts of S/.80 million and S/.285 million, respectively, in July 2015.

• In December 2014, our subsidiary GyM S.A. acquired 70% of the share capital of Morelco S.A.S. (“Morelco”), a Colombian engineering and construction company specialized in the oil and gas and other energy sectors.

• In April 2015, GMP started operations of its hydrocarbon extraction services in Blocks III and IV for Perupetro, in the provinces of Talara and Paita in northern Peru.

• In August 2015, we acquired 44% of Adexus S.A., an information technology firm in Chile, for an approximate value of US$13.8 million (S/.44.1 million). In January 2016, we acquired an additional 8% stake in Adexus for US$2.5 million (S/.8.4 million) and, in August 2016, we increased our interest to 91%. In June 2018, we increased our stake to 100%.

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• In July 2016, our subsidiary GyM Ferrovías S.A., subscribed the Addendum N° 4 to the Line one concession contract of the Basic Metro Network of Lima-Mass Electrical Transport System for Lima and Callao, in order to purchase a total of 20 trains and 39 railcars. The total amount of the investment is approximately US$505 million (S/.1,696.8 million).

Graña y Montero, S.A.A. was incorporated in 1996 and is a publicly-held corporation (sociedad anónima abierta) organized under the laws of Peru. Our principal executive office is located at Avenida Paseo de la República 4667, Lima 34, Peru, and our main telephone number is +511-213-6565. Our website address is www.granaymontero.com.pe. Information contained on, or accessible through, our website is not incorporated in this annual report, and you should not consider any such information part of this annual report.

For information on our organizational structure, see “Item 4.C. Information on the Company – Organizational Structure.”

For information on our capital expenditures and divestitures, see “Item 5.B. Operating and Financial Review and Prospects— Liquidity and Capital Resources—Capital Expenditures.”

B. Business Overview

Overview

We are the largest engineering and construction company in Peru as measured by revenues during 2017, and one of the largest publicly-traded engineering and construction company in Latin America as measured by market capitalization as of December 31, 2017, with strong complementary businesses in infrastructure and real estate.

With 85 years of operations, we have a long track record of successfully completing the engineering and construction of many of Peru’s landmark private- and public-sector infrastructure projects, such as the Lima International Airport and the Peru LNG gas liquefaction plant, and we believe we have a track record of operational excellence in our markets. We have developed a highly-experienced management team, a talented pool of more than 2,996 engineers and a skilled work force that share our core corporate values of quality, professionalism, reliability and efficiency. As a company listed on the Lima Stock Exchange since 1997 and the New York Stock Exchange since 2013, we also abide by the highest corporate governance standards in Peru.

Beginning in the mid-1980s, we leveraged our engineering and construction expertise into complementary lines of business, such as the development, ownership, operation and maintenance of infrastructure assets (including the Lima Metro, Peru’s only urban railway system), real estate development, and the provision of technical services primarily to infrastructure-related assets. We believe our business mix creates significant opportunities across our lines of business, generates more stable revenues and earnings on a consolidated basis, and provides additional financial stability to our company.

As a result of our performance in Peru, we have been requested by clients to undertake the engineering and construction of large and complex projects outside our home market, such as the Pueblo Viejo gold mine for Barrick Gold in the Dominican Republic. Through the successful execution of those projects, we have developed operational experience in other Latin American countries. We have further expanded our activities in other key markets of the region through the acquisition of businesses with solid positions in those markets. In February 2011, we acquired a controlling interest in Compañía Americana de Multiservicios (CAM), which is headquartered in Chile and provides technical services to power utility companies in Chile, Peru and Colombia. In October 2012, we acquired a controlling interest in Vial y Vives, an engineering and construction company specializing in the Chilean mining sector, and in August 2013, we acquired a controlling interest in DSD Construcciones y Montajes, a Chilean engineering and construction company specialized in providing services to the energy, oil and gas, cellulose and mining sectors in Chile and Latin America. In December 2014, we acquired a controlling interest in Morelco, an engineering and construction company specialized in the Colombian oil and gas and other energy sectors.

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The tables below show our backlog, revenues and EBITDA from 2013 to 2017.

BACKLOG(1)	REVENUES(1)	EBITDA(1)

(1) On June 6, 2017, we sold our 89.19% interest in our former subsidiary, GMD. As a result, we present GMD as a discontinued operation in our audited annual consolidated financial statements for the year ended December 31, 2017. We have reclassified our consolidated financial statements for the years ended December 31, 2015 and 2016 included in this annual report, to show GMD as a discontinued operation for those years as well.

During 2017, we generated revenues of S/.6,080.1 million (US$1,873.7 million), EBITDA of S/.788.7 million (US$243.1 million), and net profit of S/.209.2 million (US$64.5 million) including net profit attributable to controlling interest of S/.148.7 million (US$45.8 million).

Our Strengths

We believe our company’s strengths provide us with significant competitive advantages. Our principal strengths include the following:

Leader in growing markets

We are the largest engineering and construction company in Peru as measured by revenues during 2017, and one of the largest publicly-traded engineering and construction company in Latin America as measured by market capitalization as of December 31, 2017. Peru is undergoing a period of development, with over 4.4% average annual real GDP growth between 2009 and 2017 and significant private and public investments in the mining, power, oil and gas, transportation, real estate and other infrastructure sectors. We have completed some of the most complex and large-scale infrastructure projects in the country, and we believe we are an integral part of Peru’s ongoing transformation with projects that contribute to the overall economic development of the country. We believe our expertise, track record, scale and operational capabilities in Peru position us to take advantage of the country’s favorable economic conditions and growth opportunities. We believe we are also a significant infrastructure concessionaire in Peru and a large apartment building developer in Peru.

Long-standing track record for operational excellence

During our 85-year history, we have focused on the successful and on-time execution of complex projects, through our “deliver before deadline” and “lean construction” initiatives. Our extensive experience has allowed us to gain deep market knowledge and expertise, which help us better serve our clients and manage risks in our contractual arrangements. We believe we have a track record of operational excellence. We believe that our track record of operational excellence are key factors in winning new and repeat business, as well as in partnering with strategic industry players and attracting top talent to our company.

Complementary lines of business which generate more stable cash flows and create additional business opportunities across our segments

We have expanded our company by developing complementary lines of business, many of which have become leaders in their respective markets. These lines of business create significant business opportunities across our segments, enabling us to capture a greater share of infrastructure spending, and also generate cost synergies. One

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example is Norvial, a toll-road concession operated within our Infrastructure segment. In addition to managing the concession, we used our E&C segment to design and construct the expansion of the highway and, once constructed, we are now using our Infrastructure segment to operate and maintain the highway. In addition to increasing our levels of consolidated activity, many of these lines of business enable us to achieve more stable cash flows through medium and long-term client service contracts and concessions, which counter in part the cyclicality of the engineering and construction business.

Significant backlog

Our backlog amounted to US$2,388.4 million as of December 31, 2017. We believe that our backlog, which as of December 31, 2017 represented approximately 1.42x of our related 2017 revenues, provides visibility as to our potential for growth in the coming years, although backlog may not always be an accurate indicator of future revenues. See “Item 3.D. Key Information—Risk Factors—Risks Related to our Company—Our backlog and our ratio of historical backlog to revenues may not be reliable indicators of future revenues or profit.” Moreover, we believe our backlog is strategically targeted to our key end-markets such as mining, infrastructure, power, energy and real estate. Approximately 72.7% of our backlog as of December 31, 2017 is comprised of contracts with the private sector. Furthermore, we continuously evaluate bidding on contracts arising from the significant ongoing private and public investments in Latin America.

Proven ability to create and grow businesses organically and through acquisitions

We have proven our ability to extend our engineering and construction capabilities into complementary lines of business in a diverse range of industries, some of which began as innovative start-ups in response to client needs. For example, in 1984, we created a new IT business division, which grew and evolved through the years to become the second largest IT company in Peru (we sold this business in June 2017). Additionally, we also have successfully acquired and integrated new businesses. In February 2011, we acquired a controlling interest in CAM, our electricity services business headquartered in Santiago, Chile, and have integrated its operations and personnel into our company, while improving its operational performance. In October 2012, we acquired Vial y Vives, an engineering and construction company specializing in the Chilean mining sector which complements our leading E&C practice in the mining sector. In August 2013, we acquired a controlling interest in DSD Construcciones y Montajes, a Chilean engineering and construction company whose main focus is electromechanical works and assemblies in construction projects related to oil refineries, pulp and paper, power plants and mining plants. More recently, in December 2014 we acquired a controlling interest in Morelco, an engineering and construction company specialized in the Colombian oil and gas and other energy sectors. We believe that our proven ability to create new businesses, develop businesses organically and acquire and successfully integrate new businesses into our platform is a key competitive advantage to expand our operations in Latin America.

Highly experienced management, talented engineers and skilled workforce, with shared core corporate values

Our senior management team has an average tenure within our company of approximately 20 years. We motivate our management through performance-based compensation, which align their interests with those of our shareholders. In addition, through our efforts to attract, train and retain our workforce, we have built a talented team of employees, including more than 2,996 engineers. We also have access to a network of approximately 156,000 manual laborers throughout Peru that can supplement our workforce when required by our construction pipeline. Thanks to our extensive and talented team, we have the capability and scale to undertake large and complex projects in Peru and elsewhere.

We have developed a strong corporate culture based on principles of high-quality, professionalism, reliability and efficiency. We safeguard the health and safety of our collaborators and of all the persons participating in our operations and services. To that end, we provide safe work conditions, we manage risks in a timely manner and we promote a culture of prevention, starting from the leadership and commitment of our senior management. In 2017, we had an accident incidence rate of 0.46, calculated over 200,000 hours worked.

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Our Strategies

In response to the impact of our association with Odebrecht in certain projects in Peru and the termination of the GSP pipeline concession, we are implementing a strategic action plan, as described in “Item 5.A. Operating and Financial Review and Prospects—Operating Results—Recent Developments.”

Our vision is to be “the most reliable engineering services company in Latin America.” Our key long-term strategies to achieve this vision include the following:

Be the contractor of choice for large-scale and complex projects in Peru and other key Latin American markets

We intend to enhance our position as a contractor of choice for large-scale and complex infrastructure projects in Peru and other key Latin American markets, by (i) utilizing the scale, expertise and market knowledge we have accumulated during our more than 80-year operating history to strengthen and expand our E&C segment; (ii) maintaining and further developing our long-standing client relationships based on our ongoing pursuit of operational excellence; (iii) continuing to strategically partner with global industry leaders, such as Bechtel and Fluor, with complementary capabilities for specific projects that we undertake; and (iv) leveraging our expertise in the mining sector with a view to becoming the premier mining services provider throughout Latin America.

Maintain highly capitalized balance sheet

We seek to maintain a prudent and sustainable capital structure and a strong financial position to allow us to capitalize on additional business opportunities as they arise. With the renegotiation and eventual repayment of debt related to GSP, we intend to regain our financially disciplined approach by significantly limiting our debt incurrence to identified projects with repayment sources.

Continue fostering our core corporate values throughout the organization

We will continue to instill our core corporate values throughout our organization, while also transmitting these values to surrounding communities. We will continue to attract and develop our human capital through various training, mentorship and reward programs in order to maintain our position as the best company in Peru to learn and work in the engineering and construction field. We also seek to promote social welfare by fostering relationships with the communities that surround our areas of operation. We strive to promote our corporate values to strengthen our organization and improve our performance as well as to have a positive impact on the markets where we operate.

Engineering and Construction

Our E&C segment has an 85-year track record and is the largest player in Peru as measured by revenues during 2017, according to our estimates based on Peru: The Top 10,000 Companies 2017 undertaking a broad range of activities relating to: engineering; civil construction; electromechanic construction; building construction; and contract mining. We provide E&C services for a diverse range of end-markets, focusing on the mining, power, oil and gas, transportation, real estate and other infrastructure sectors. The following chart sets forth our 2017 revenues by end-market.

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2017 E&C Revenues by End-Market

We mainly undertake private-sector projects, particularly projects with a high degree of complexity, which enable us to develop innovative and tailor-made solutions to our clients. We provide our clients with an integral service offering by leveraging our various areas of expertise and engaging in virtually all aspects of project execution, thereby capturing a larger share of investment projects.

In 1999, we began adopting the “lean construction” philosophy as a pillar in our design and construction projects. “Lean construction” aims to create value for customers by better understanding and considering clients’ needs to improve project design, functionality and cost optimization. “Lean construction” also provides techniques and tools that significantly reduce construction waste by improving planning reliability, process design, coordination and collaboration.

Although we primarily undertake engineering and construction projects in Peru, our clients often ask us to undertake the engineering and construction of large and complex projects in other countries, such as Mexico, the Dominican Republic, Bolivia, Panama and Chile. As a result, we have developed extensive experience executing projects throughout Latin America. To further capitalize on our capabilities and expertise, we have decided to expand our activities into other key markets, such as Chile and Colombia, which have been benefitting from high levels of investment and are aligned with our areas of strategic focus. In 2017, approximately US$256.4 million (S/.832.1 million) of our E&C revenues were derived from international projects outside of Peru.

The acquisition of Vial y Vives – DSD has solidified our presence in Chile. While we have been undertaking projects in Chile since 1995, such as the construction of the transmission line and crusher of the Caserones mine for SCM Minera Lumina Copiapo, we believe we will benefit from the established and long-lasting presence in the country of both Vial y Vives and DSD Construcciones y Montajes. Moreover, through the acquisition in December 2014 of Morelco, an engineering and construction company focused on the oil and gas and other energy sectors, we established our presence in the Colombian market.

Given the prevalence of mining operations in our principal markets—Peru has projected investment flows of approximately US$18.7 billion between 2017 and 2021 and Chile as projected investment flows of approximately 64.9 billion between 2017 and 2026, according to the Peruvian Ministry of Economy and Finance, respectively—we have significant expertise with respect to specialized engineering and construction services for the mining sector. As a result, we believe we are one of the leading mining construction companies in Latin America and we leverage this expertise both within our principal markets as well as to selectively undertake complex projects across the region.

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The table below sets forth selected financial information for our E&C business segment.

	As of and for the year ended December 31,
	2015			2016(1)			2017			2017
	(in millions of S/., except as indicated)									(in millions of US$)(2)
Revenues		5,829.4			4,159.5			3,353.2			1,033.3
Net profit		(121.8	)		(93.4	)		12.4			3.8
Net profit (loss) attributable to controlling		(131.2	)		(87.7	)		12.1			3.7
EBITDA		220.1			106.1			194.3			59.9
EBITDA margin		3.8	%		2.6	%		5.8	%		5.8	%
Backlog (in millions of US$)(3)(4)		3,129.4			1,977.9			1,456.7			1,456.7
Backlog/revenues ratio(3)(4)		1.8x			1.6x			1.4x			1.4x

(1) For the effects on our results of operations and backlog for 2016 resulting from the termination of the GSP gas pipeline concession, see “Item 5.A. Operating and Financial Review and Prospects—Operating Results—Recent Developments” and notes 5(e), 5(f) and 16 to our audited annual financial statements included in this annual report.

(2) Calculated based on an exchange rate of S/.3.245 to US$1.00 as of December 31, 2017.

(3) For more information on our backlog, see “—Backlog.” Backlog is calculated as of the last day of the applicable year. Revenues are calculated for such year and converted into U.S. dollars based on the exchange rate published by the SBS on December 31 of the corresponding year.

(4) In the third quarter of 2015 we added US$1,067 million in backlog from our participation in the engineering procurement and construction contract for the southern gas pipeline project of GSP. When the GSP gas pipeline concession was terminated on January 24, 2017, our E&C backlog as of December 31, 2016 decreased by US$855 million, representing 30.2% of our E&C backlog.

Principal Engineering and Construction Activities

The following chart sets forth our 2017 revenues by E&C activity.

2017 E&C Revenues by Activities

Engineering Services

Our engineering activities consist of a broad range of services relating to engineering, supervision, geometrics and environmental consultancy, including pre-investment studies, pre-feasibility studies, process design, project development, supervision of executive designs and construction management, including construction site reviews.

Civil Construction

Our civil construction activities focus on infrastructure projects, including earthworks, the construction of roads, highways, transportation facilities (e.g., mass transit systems such as the Lima Metro), dams, hydroelectric plants, water supply and sewage projects, excavation, structural concrete construction and tunneling. Our civil construction projects are generally large and complex, requiring the use of large construction equipment and sophisticated managerial and engineering techniques.

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Electromechanic Construction

Our electromechanic construction activities include the construction and assembly of concentrator plants, pipelines, transmission lines, gas and oil networks, and substations, predominantly for energy projects and industrial plants.

Building Construction

Through our building construction activities, we respond to the demands of the Peruvian real estate market with a focus on the construction of hotels, affordable housing projects, residential buildings, office buildings, shopping centers, and industrial plants.

Contract Mining

Our contract mining activities consist of mine planning, development, construction works, operation (including earthworks, blasting, loading and hauling ore) and mine closure.

Major Projects

We have played an active role in the development of the infrastructure sector in Peru, as well as other countries in Latin America, including the construction of roads, hotels, hospitals, shopping centers, housing developments, concentrator plants, hydroelectric power plants, thermal power plants and transmission lines as well as water supply and sewage projects, irrigation projects and dam building, among others. Throughout our history, we have participated, on our own or through minority or majority interests in joint operations, in a diverse range of landmark projects, including the following:

• in 1948, Talara city in northern Peru for the International Petroleum Company, consisting of 2,000 homes, schools, churches, a movie theater and airport;

• in 1950, a 430 km stretch of the Panamericana Sur highway;

• in 1952, the Rebagliati hospital, the largest public hospital in Peru;

• in 1960, the Cañón del Pato hydroelectric power plant, the second largest hydroelectric plant in Peru in terms of installed capacity;

• in 1961, the Jorge Chavez International Airport, Peru’s first international airport, located in Lima;

• in 1969, the Cuajone mining project, the largest copper mine and smelter complex in the world at that time and, in 1997, the Ilo smelter and refinery for Southern Copper Corporation;

• in 1974, the Sheraton Hotel in Lima, and, in 1995, the Sheraton Hotel in Santiago, Chile;

• in 1988, the Chavimochic irrigation project, the most significant irrigation project in Peru;

• in 1992, the Four Seasons Hotel in Mexico City, Mexico;

• in 1995, the U.S. Embassy in Peru;

• in 1998, the Mantaro-Socobaya 605 km transmission line, which connected the country’s electrical grids;

• in 2000, the Marriott Hotel in Lima;

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• in 2002, began providing open pit mining services, which are ongoing, to Brocal;

• in 2004, the Ralco hydroelectric power plant in Chile;

• in 2004, the gas fractionation plant and, in 2008, its expansion for Consorcio Camisea, Camisea project, the largest energy project in Peru’s history;

• in 2005, the San Cristobal concentrator plant in Bolivia;

• in 2005, the Cerro Verde mine concentrator plant for Phelps Dodge; in 2008, the Cerro Corona concentrator plant for GoldFields;

• in 2008, the Parque Agustino real estate development project, the first major affordable housing project in Peru, which consists of 3,400 units;

• in 2009, the Westin Lima Hotel, one of the tallest buildings in Peru;

• in 2010, the Melchorita liquefaction plant for Peru LNG, Camisea project;

• in 2010, the Bayóvar plant for Vale;

• in 2010, the Gran Teatro Nacional, the most modern theater in Peru;

• in 2011, the Pueblo Viejo Mine concentrator plant for Barrick Gold Corp. in the Dominican Republic;

• in 2011, the first stretch of Line One of the Lima Metro for the Peruvian Ministry of Transport and Communications;

• in 2012, for project manager Bechtel, the Antapaccay copper concentrator developed by Xstrata Copper, the world’s fourth largest copper producer;

• in 2013, expansion of the plant for Cementos Lima, the largest cement producer in Peru;

• in 2013, the Huanza hydroelectric plant for Compañía de Minas Buenaventura;

• in 2013, the leaching pad La Quinua for the Yanacocha mine;

• in 2014, the second stretch of Line One of the Lima Metro for the Peruvian Ministry of Transport and Communications;

• in 2014, construction of a natural gas distribution network for Contugas, providing access to natural gas for five districts south of Lima;

• in 2014, construction of the Nueva Fuerabamba city, an integral real estate development project for the population surrounding the Las Bambas mining project;

• in 2014, construction of a concentrator plant for the Toromocho copper mine, developed by Chinalco Mining;

• in 2014, construction of a primary crusher for Mina Caserones, developed by Minera Lumina Copiapo, which is expected to have a daily production capacity of 144,230 tonnes;

• in 2015, construction of a copper concentrator plant for the Las Bambas mining project, managed by Bechtel and developed by Xstrata Copper;

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• in 2015, expansion of the process plant for the Cerro Verde mine, one of the biggest concentrator plants in Latin America;

• in 2015, engineering, procurement and construction of Guyana Goldfields’ Aurora gold project in Guyana, with the scope of works including a 1.75 Mt/a processing plant, power station and integration management; and

• in 2015, design, engineering, procurement and construction of a new stock pile and 10,000 conveyor belts for the Escondida Mine, managed by Bechtel;

• in 2016, engineering, procurement and construction of the 510 MW Cerro del Águila S.A. hydroelectric plant for IC Power, which is expected to represent approximately 10% of Peru’s installed generation capacity;

• in 2016, engineering, procurement and construction of La Chira, a waste water treatment plant for the city of Lima for which we also have the concession through a joint operation with Acciona Agua;

• in 2016, engineering, procurement and construction of a concentrator plant for the La Inmaculada silver and gold project, developed by Hochschild Mining. This project is expected to have a daily processing capacity of 3,500 tonnes;

• in 2016, construction of an Open Plaza shopping center in the city of Huancayo, province of Junin;

• in 2016, construction of civil works and electromechanical assembly of the combined cycle power plant in the Kelar combined cycle thermoelectric plant located in Mejillones, Antofagasta Region, Chile;

• in 2017, prefabrication of certain products for the modernization of the Talara refinery in Peru;

• in 2017, electromechanical assembly of certain infrastructure in connection with the Cuajone mine improvement project in Peru;

• in 2017, various urban and industrial projects in the Lurin district of Lima, Peru, including moving earth for a road platform, a secondary network for potable waters and sewage, and electrical distribution networks;

• in 2017, construction of a 20-story residential building on the Pezet Avenue of Lima;

• in 2017, construction of a pavillion at the Universidad del Pacifico, Peru; and

• in 2017, construction of a multi-use hall at the Universidad ESAN in Peru.

We currently have a diversified portfolio of ongoing projects, on our own or through majority or minority interests in joint operations, in a wide range of sectors in Peru and the other countries where we operate, including the following:

• construction and design of a luxury business complex consisting of offices and a hotel in Lima, with state-of-the-art technology which will make it a smart building. This project named Talbot is scheduled to be completed in July 2018;

• execution of civil and electromechanical works in the interconnections area and off-sites of Talara’s refinery modernization project, which are scheduled to be completed in November 2018; and

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• execution of civil works and assembly of structures for the wet area of Toquepala, which were completed in May of 2018, and assembly of equipment and installation of pipelines, electricity and instrumentation of the wet area of Toquepala’s unit expansion, which is scheduled to be completed in September 2018.

Clients

We believe that we have developed long-term relationships with many clients as a result of our performance over the years and are focused on the successful and on-time execution of complex projects, through our “deliver before deadline” and “lean construction” initiatives. Our extensive experience of operational excellence has allowed us to gain deep market knowledge and expertise, which help us better serve our clients. The principal clients of our E&C segment include renowned domestic and multinational mining, power, oil and gas, transportation and infrastructure development companies, such as Glencore, Sociedad Minera Cerro Verde, Guyana Goldfields, Luz Del Sur, Kallpa Generación, Samsung Engineering, Rio Alto, Chinalco Mining, Hudbay Minerals and Red Eagle Mining Corporation, among others. We have a well-diversified client base, as none of our engineering and construction clients accounted for 7% or more of our consolidated revenues in 2017.

Project Selection and Bidding

We win new engineering and construction contracts through private and public bidding processes or direct negotiation, from a variety of sources, including potential client requests, proposals from existing or former clients, opportunities sought by our commercial team and from requests by the Peruvian government. Approximately 98.3% of our 2017 revenues came from private-sector contracts. The Peruvian government and its agencies typically award construction contracts through a public bidding process conducted in accordance with the Peruvian State Contracting Law (Ley de Contrataciones del Estado). In the private sector, in addition to obtaining new projects, another important source of revenue involves increases in the scope of work to be performed in connection with already existing projects. These arrangements are typically negotiated directly with the client, often during the course of the work we are already performing for that client.

We have a designated team that oversees the management of project proposals and a commercial team that reviews and evaluates potential projects in order to estimate costs. In considering whether to bid for a potential project, we principally consider the following factors: competition and the probability of being awarded the project; project size; the client; our experience undertaking similar projects; and the availability of resources, including human resources. As part of the project selection process, our commercial team performs a detailed cost analysis utilizing sophisticated software we developed to assist in determining whether the project is viable and cost-effective. If we choose to pursue a project, a budget leader is assigned to prepare the offer that is eventually presented to our potential client.

Despite the budgeting risks generally associated with engineering and construction contracts, our management believes that our experience generally allows us to estimate our project costs accurately. Our project management teams also periodically review project budgets for inconsistencies between budgeted and actual costs in order to recover for cost variations through contract renegotiation. Budgeting risks are also mitigated through advance payments. Considering that we receive advance payments for most of our E&C contracts, our E&C projects typically do not require significant working capital investment. Our E&C segment secures financing primarily to purchase machinery and equipment for our construction and contract mining services.

We are required, in the majority of our construction contracts, to provide a performance bond to guarantee project performance and completion, which remain in effect for the contract’s duration. We are also required to provide performance bonds to secure any advance payments provided to us by our clients. These bonds are periodically reduced during the project’s execution in accordance with project advancement. After the expiration of the contract term, we are typically required to provide an additional performance bond that remains valid for one year.

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Contracts

We principally enter into four types of engineering and construction contracts:

• Cost-plus fee contracts. The contract price is based upon actual costs incurred for time and materials plus a fee, which may be a percentage of the costs incurred or a pre-determined fee. Sometimes, cost-plus fee contracts include a target price, and a contractual arrangement that determines our responsibility in the event the total cost of the project exceeds the target price or the benefit we receive if the total contract price results in cost savings. Cost-plus fee contracts tend to involve the least budgeting risk for us.

• Unit price contracts. The contract price is based upon a price per unit (i.e., variable quantities of work priced at defined unit rates). Each line item of the project budget, such as cubic meter of earth excavated or cubic meter of concrete poured, has a defined price, but the quantities of the units may vary. Our bid price reflects our estimate of the costs that we expect to incur for each work unit. These contracts typically include an “escalation” clause which is essentially an adjustment mechanism to account for Peruvian inflation.

• Lump-sum contracts. The contract price is fixed. Our bid is meant to cover all costs and include a profit. The principal risk in these types of contracts are errors in calculating our costs, including those of raw materials; miscalculation of the number of units or workers needed to complete the project; unanticipated technical complexities; or other unexpected events or circumstances that may increase our costs.

• Engineering, procurement and construction (EPC) contracts. EPC contracts, known as “single source” or “turn-key” contracts, are also lump-sum contracts. Pursuant to EPC contracts, we provide a broad range of basic and detailed engineering services, including preparation of the technical project specifications, detailed drawings and construction specifications; technical studies; and identification of lists of materials and equipment necessary for the project. These contracts, which we utilize predominantly for our mining contracts, require a high-level of expertise and generally involve the most budgetary risks for us.

For further information, see “Item 5.A. Operating and Financial Review and Prospects—Operating Results—Results of Operations.”

Raw Materials

The principal inputs we use in our E&C segment are, among others, fuel, cement and steel. These and the other products we require in our E&C segment may be subject to the availability of raw materials, such as oil and iron, and commodity pricing fluctuations, which we monitor on a regular basis. We typically aim to enter into master supply agreements for a period of six months to one year. Although we obtain the majority of our inputs needs in Peru, we believe we have access to numerous global supply sources. The availability of these inputs, however, may vary significantly from year to year due to various factors including client demand, producer capacity, market conditions, transport costs and specific material shortages, and we may incur additional costs in obtaining them.

We purchase and lease the equipment we require for our E&C segment business from several local and international suppliers, currently with no significant concentration with any particular suppliers. While we do not have difficulty obtaining the equipment we need, we may face difficulties finding skilled personnel who are able to operate certain equipment and machinery.

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Competition

We generally compete with some of the largest contractors in Peru and the other countries where we operate. Because the E&C sector is highly competitive, the markets served by our business generally require substantial resources and highly-skilled and experienced technical personnel. The principal competitors of our E&C segment include local companies such as Besalco Cosapi S.A., San Martín Contratistas Generales, ICCGSA, JJC Contratistas Generales S.A., and international companies such as Techint S.A.C., SSK Montajes e Instalaciones S.A.C., Skanska del Perú S.A., Mota-Engil Peru S.A., Salfacorp S.A., OHL, Acciona, Astaldi, Grupo FCC, Ismocol, Termotecnica, Masa, Thiess, Redpath, among others. For certain projects, due to the size of the project, expertise required and other factors, we may choose to partner with our competitors, including the aforementioned companies.

Competition for our E&C segment is driven by performance, skill and project execution capabilities for completing complex projects in a safe, timely and cost-efficient manner, as well as price.

Infrastructure

We are an important toll road concessionaire in Peru, operating three toll roads. Moreover, we are the concessionaire for the Lima Metro, the largest mass-transit rail system in Peru, and a waste water treatment plant. Additionally, we operate ten multiple fuel storage facilities, four producing oil fields under long-term government contracts and we own a gas processing plant. Also, we provide services to maintain and operate different infrastructure projects.

The table below sets forth selected financial information for our Infrastructure business segment.

	As of and for the year ended December 31,
	2015			2016			2017			2017
	(in millions of S/., except as indicated)									(in millions of US$)(2)
Revenues		1,353.1			1,174.8			1,447.9			446.2
Net profit		112.4			98.3			129.3			39.9
Net profit attributable to controlling		93.0			74.4			103.8			32.0
EBITDA		272.2			237.8			300.9			92.7
EBITDA margin		20.1	%		20.2	%		20.8	%		20.8	%
Backlog (in millions of US$)(3)		385.2			519.0			544.8			544.8
Backlog/revenues ratio(3)		1.0	x		1.5	x		1.2	x		1.2	x

(1) Two of our four oilfields started operations in April 2015.

(2) Calculated based on an exchange rate of S/.3.245 to US$1.00 as of December 31, 2017.

(3) For more information on our backlog, see “—Backlog.” Does not include our Norvial toll road concession, our Energy line of business and our jointly controlled COGA venture (which we sold on April 24, 2017). Backlog is calculated as of the last day of the applicable year. Revenues are calculated for such year and converted into U.S. dollars based on the exchange rate published by the SBS on December 31 of the corresponding year. Includes revenues only for businesses included in backlog.

Our strategy is to pursue concessions with the potential to generate business opportunities across our organization. Once we obtain a concession, our goal is to be involved virtually in all aspects of project execution through the participation of our different business segments, from the design and construction to the operation and maintenance of the infrastructure asset.

Through our Infrastructure segment we participate in a number of joint operations with the objective of bidding for government concessions or other long-term contracts. When bidding, we occasionally look for partners to reduce our risks and achieve the level of expertise needed to meet the demands of each particular project.

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The following table shows selected information about our current concessions and long-term contracts as of December 31, 2017.

Project	Year Granted		Initiated Operations		Expiration		Characteristics	% Owned by Us			Status
Toll Roads:
Norvial		2003		2003		2028	183 km		67.0	%		Operating
Survial		2007		2008		2032	750 km		99.9	%		Operating
Canchaque		2006		2010		2025	78 km		99.9	%		Operating
Mass Transit:
Lima Metro		2011		2012		2041	33.1 km		75.0	%		Operating
Water Treatment:
La Chira		2010		June 2016		2037	Avg. treatment capacity of 6.3 m3/sec (expected)		50.0	%		Operating
Energy:
Oil Production(1) Block I		1995		1995		2021	Avg. daily production of 1,307 bbl (2016)		100.0	%		Operating
Block V		1993		1993		2023	Avg. daily production of 728 bbl (2016)		100.0	%		Operating
Block III		2015		2015		2045	Avg. daily production of 950 bbl (2016)		100.0	%		Operating
Block IV		2015		2015		2045	Avg. daily production of 638 bbl (2016)		100.0	%		Operating
Gas Processing(2)		2006		2006		N/A	Avg. daily processing capacity of 44 MMcf (2016)		100.0	%		Operating
North and Central Fuel Terminals		2014		2014		2034	Aggregate storage capacity of 2.2 MMbbl		50.0	%		Operating
South Fuel Terminals		1997		1998		August 2018	Aggregate storage capacity of 1.4 MMbbl		50.0	%		Operating

(1) Percentages owned in Energy reflect GMP’s ownership. We own 95% of GMP.

(2) We own a gas processing plant and have a long-term delivery and gas processing contract with Enel Generación Piura S.A.

Additionally, the Chavimochic concession was awarded in 2013 for the design, construction, operation and maintenance of major hydraulic works in northern Peru. Affiliates of Odebrecht own 73.5% of the Chavimochic consortium, with the remaining 26.5% stake held by us. The second phase of the hydraulic works project has not begun as a result of the government’s failure to deliver the required lands for the project. Chavimochic has requested the termination of the concession in light of the government’s breach, and the parties are currently in discussions with the government, including for a potential sale of the project.

On November 11, 2013, we entered into a memorandum of understanding with Canada Pension Plan Investment Board (“CPPIB”), to create an alliance regarding a partnership to invest in infrastructure projects in Latin America, mainly Peru, Chile and Colombia. This alliance is non-exclusive and investments will be determined on a case-by-case basis. In December 2014, we undertook our first large investment with CPPIB, by formalizing an agreement with Enagás (as defined below) and CPPIB whereby we acquired 51% of Tecgas and owner of 100% of the shares of COGA, the current operator of TGP while Enagás acquired 30% and CPPIB maintained 19% of the participation. COGA is dedicated to the management, operation, maintenance, and integrity management of transport and distribution hydrocarbon pipelines and installations as well as industrial plants and ancillary installations. COGA operates and maintains more than 1,430km of pipelines, one compression plant with 72,000 horse power and four pump stations with 19,200 horse power each. COGA operates two pipelines: one which is 730 km and transports natural gas (GN) with a 1,275 MM cubic feet per day capacity; and the other one which is 530 km and transports natural gas liquids (NGL) with a 130,000 barrels per day capacity. Both pipelines run from Cusco to Ayacucho and Huancavelica, with the GN pipeline extending to Lurin and the NGL pipeline continuing to the Pisco fractionation plant. As this is a joint operation, we do not include the results of our COGA venture in our consolidated results under our Infrastructure segment. On April 24, 2017, we sold our interest in COGA.

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On September 29, 2015, we entered into a memorandum of understanding with Odebrecht Latinvest to participate with a 20% stake in the shareholder equity of Concesionaria Gasoducto Sur Peruano S.A., for an amount of US$215 million (S/.722.4 million). On November 2, 2015, we acquired this 20% stake in GSP through a capital increase. The other shareholders are Odebrecht Latinvest with a 55% stake and Enagás with a 25% stake. Concesionaria Gasoducto Sur Peruano S.A. was responsible for the design, financing, construction and operation of the southern gas pipeline, a project which would bring natural gas to the southern region of Peru, particularly to the provinces of Cuzco, Arequipa, Puno and Moquegua. The GSP gas pipeline concession was terminated by the Peruvian Ministry of Energy and Mines on January 24, 2017. For more information, see “Item 5.A. Operating and Financial Review and Prospects—Operating Results—Recent Developments.”

Beginning on April 1, 2017, we have transferred Concar from our Technical Services segment to our Infrastructure segment. For ease of comparison, the historical segment financial information included in this annual report presents Concar in the Infrastructure segment. This change does not impact our consolidated financial results.

Principal Infrastructure Lines of Business

Toll Roads

Peru’s economic development is underpinned by a strong government commitment to infrastructure investment, with a particular focus on improving the country’s road system through the award of new concessions to the private sector. We believe this commitment offers significant opportunities to our Infrastructure segment.

Our Infrastructure segment currently has three toll road concessions through our subsidiaries Norvial, Survial and Canchaque. All three toll roads are currently in operation and we have the authorizations, permits and licenses necessary to fulfill our obligations under each concession, including releases of rights of way. All of our toll road concessions have utilized the construction services of our E&C segment and the roads are currently operated and maintained by our subsidiary Concar. The table below sets forth selected financial information relating to our toll roads.

	For the year ended December 31,
	2015			2016			2017			2017
	(in millions of S/.)									(in millions of US$)(1)
Revenues		394.5			264.4			263.8			81.3
EBITDA		79.2			76.8			91.1			28.1
EBITDA margin		20.1	%		29.0	%		34.5	%		34.5	%

(1) Calculated based on an exchange rate of S/.3.245 to US$1.00 as of December 31, 2017.

The charts below set forth the breakdown of our revenues and EBITDA from our toll road concessions for 2017.

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Norvial

Under our Norvial concession, we operate and maintain part of the only major highway that connects Lima to the northwest of Peru. This 183-km road, known as Red Vial 5, runs from the cities of Ancón to Pativilca and has three toll stations. The concession was awarded to Norvial in 2003 for a 25-year term. We own 67% of Norvial; and our partner in this concession is JJC Contratistas Generales. The following map shows the location of the Red Vial 5 road in Peru.

Norvial’s revenue derives from the collection of tolls. For the Norvial toll road, the toll rate is set out in the Norvial concession agreement and adjusted in accordance with a contractual formula that takes into account the sol/U.S. dollar exchange rate and Peruvian and U.S. inflation. We are required to transfer 5.5% of our monthly toll revenue to the Peruvian Ministry of Transport and Communications and pay a 1% regulatory fee to the Peruvian Supervisory Agency for Investment in Public Transportation Infrastructure.

Our obligations under the concession include expanding the already existing road by, among other things, adding two additional lanes. The first stage of construction was completed in 2008, and the second stage commenced in the second quarter of 2014 and is expected to be completed by March 2019. We estimate that our capital investment for the second stage will be approximately US$95 million (S/.319.2 million).

Unlike other toll roads in Peru, Norvial charges toll fees in both directions. Our road is highly transited both by heavy vehicles, primarily for the purpose of transporting goods, and also by passenger vehicles, which typically use the road to access tourist destinations. The following table sets forth average daily traffic volume and average toll fees charged for vehicle equivalents in respect to the Norvial toll road concession for 2015, 2016 and 2017.

	For the year ended December 31,
	2015		2016		2017
Average daily traffic by vehicle equivalents(1)		21.965		24.140		24.965
Average toll fee charged for vehicle equivalents (in S/.)		13.83		14.3		14.76

(1) Each automobile is counted as one equivalent vehicle and commercial vehicles (such as trucks or buses) represent the number of equivalent vehicles equal to the ratio between the toll rate applicable to commercial vehicles and that which is applicable to one automobile.

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The table below sets forth selected financial information relating to Norvial.

	For the year ended December 31,
	2015			2016			2017			2017
	(in millions of S/.)									(in millions of US$)(1)
Revenues		246.2			216.3			149.5			46.1
Net profit		40.9			47.3			49.4			15.2
EBITDA		68.9			77.7			81.4			25.1
EBITDA margin		28.0	%		35.9	%		54.5	%		54.5	%

(1) Calculated based on an exchange rate of S/./.3.245 to US$1.00 as of December 31, 2017.

Survial

Under our Survial concession, we operate and maintain a 750 km road from the San Juan de Marcona port to Urcos, Peru, which is connected to an interoceanic road that runs up to the Peruvian-Brazilian border. The road has five toll stations and three weigh stations. The concession was awarded to Survial in 2007 for a 25-year term. We own 99.9% of Survial. The following map shows the location of the road in Peru.

Our obligations under the concession include the construction of the road, which was completed in 2010.

Our revenue from this concession consists of an annual fee paid to Survial by the Peruvian Ministry of Transport and Communications in consideration for the operation and maintenance of the road, which fee can vary depending on the amount of maintenance required due to road damages. In 2015, 2016 and 2017 the fee amounted to US$33.9 million (S/.115.7 million), US$8.1 million (S/.27.2 million) and US$28.4 million (S/.92.2 million), respectively. Our revenue in this concession does not depend on traffic volume.

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Canchaque

Under our Canchaque concession, we operate and maintain a 78 km road from the towns of Buenos Aires to Canchaque, in Peru. The road has one toll station. The concession was awarded to Canchaque in 2006 for a 15- year term. We own 99.9% of Canchaque. Our obligations under the concession include the construction of the road, which was completed in 2009. Our revenue from this concession consists of an annual fee paid by the Peruvian Ministry of Transport and Communications in consideration for the operation and maintenance of the road, which fee can vary depending on the amount of road maintenance required due to road wear and tear. In 2015, 2016 and 2017, the fee amounted to US$1.3 million (S/.4.4 million), US$1.2 million (S/.4.0 million) and US$2.6 million (S/.8.5 million), respectively. Our revenue in this concession does not depend on traffic volume.

Additional Toll Road Projects

We continuously evaluate infrastructure projects and strategically present public-private partnership proposals and participate in bidding processes for road concessions. In 2012 we were awarded, and in 2013 we signed the contract for, a 40-year concession for a 4.6 km extension of Vía Expresa Sur, one of the main roads in Lima, which crosses the city from north to south. The road will connect downtown Lima to Panamericana Sur, a highway that runs from Ecuador to Chile. Our estimate of the total investment under the concession, as submitted in our bid, is approximately US$200 million (S/.672 million). Such investment will be made during the construction phase, which was originally to be completed in 2018. Our revenue will derive from the collection of a toll fee upon completion of the construction. The concession is expected to generate a minimum annual revenue of US$18 million (S/.60.5 million) during the first two years of the concession term, US$19.6 million (S/.65.9 million) for the third year. If in a particular year, our annual revenue is lower than the minimum guaranteed, we expect the government to compensate us for the difference, up to an amount not to exceed US$10 million (S/.33.6 million). The beginning of the construction phase is subject to expropriation by the government of the land necessary for the construction of the road. Moreover, in June of 2017, we signed Initial and Additional Acts of Suspension of the Concession with the municipality of Lima to freeze the responsibilities of the government, on the one hand, and the concessionaire, on the other hand, with respect to the concession for a period of 12 months. The concessionaire continues to act as custodian of certain assets of which it had taken possession and continues to maintain certain performance guaranties in connection with the concession. Also, the government and the concessionaire continue to meet and coordinate aspects of the project, with the goal of resuming operations. We cannot assure you that this concession contract will be resumed.

A joint operation in which we have a 50% interest has been awarded, and is in the process of negotiating the terms for, a 37-year concession for Via Expresa Javier Prado, a 20 km toll road that crosses Lima from east to west, traversing through eight districts. According to estimates from the Municipality of Lima, the total investment in the concession is expected to amount to approximately US$700 million (S/.2,352 million). Such investment will be made during the construction phase which is expected to take between five to seven years. Our revenue will derive from the collection of a toll fee upon completion of the construction. This concession was awarded to the joint operation at the end of the 1990s and negotiations were discontinued but were resumed in 2012. A project contract was approved by the City of Lima’s Council in November 2013 and was submitted to the Peruvian Ministry of Economy and Finance, which requested additional studies prior to approving the project. Subsequently, on July 26, 2017, the municipality of Lima signed an agreement that annulled the granting of the concession. The company has initiated legal action in Peru against such decision, and the municipality of Lima responded, but a decision remains pending. A preliminary injunction is pending that would prevent the municipality of Lima from granting the concession to another party. We cannot assure you that our position in these proceedings will prevail, nor can we assure you if or when the concession contracts will be agreed or whether the contractual terms will be favorable to us.

These projects are not included in our backlog. See “Item 3.D. Key Information—Risk Factors—Risks Related to our Infrastructure Business.”

Mass Transit

In 2011, we were awarded a 30-year concession for the operation of Line One of the Lima Metro, Peru’s only urban railway system. The concession was awarded to our subsidiary GyM Ferrovías, in which we hold a 75% ownership interest, with the other 25% being held by Ferrovías S.A.C. Our obligations under the contract include: (i) the operation and maintenance of the five trains provided by the government; (ii) the acquisition of 19 new trains on

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behalf of the Peruvian government, which will be the legal owner of such trains; (iii) the operation and maintenance of the 19 new trains (24 trains in the aggregate); and (iv) the design and construction of the railway maintenance and repair yard, which was built by our E&C segment. We currently have all 24 trains (including two backup trains) in operation. The construction of the second stretch of Line One was completed in July 2014, and started operations on July 25, 2014.

We entered into the fourth addendum to the Lima Metro concession contract on July 11, 2016, in order to expand the transportation capacity of Line One. In accordance with the fourth addendum, the expansion project involves: (i) the purchase of 20 new trains with five-car from Alstom; (ii) the purchase of 39 new cars from Alstom, to be coupled with the 19 existing Alstom trains and the 20 new Alstom trains, resulting in a consolidated fleet of 39 Alstom trains with a six-car configuration; and (iii) the expansion and improvement of the existing infrastructure, including revamping and improvement of five stations, improvements in the electrical systems, a new access route to the maintenance workshop and new switches on the main track. The construction of the expansion of the infrastructure will be carried out by our E&C segment and it is scheduled to be completed by the end of 2018 with the additional trains and rail cars to be delivered by the end of 2019.

As compensation for the investments of the expansion project, we are entitled to receive from the Ministry of Transportation and Communication, an advance payment of 30% of each investment component as well as the balance of 70% of each investment component compensated through an annual payment for complementary investments (pago annual por inversiones complementarias), which represents the unconditional and irrevocable right to receive a series of 56 quarterly payments from the Ministry of Transportation and Communication. In 2016 we received the advance payment of the trains and cars, and in the third quarter of 2017 we have received the advance payment corresponding to the infrastructure expansion.

The construction of the first and second stretches of Line One was carried out by our E&C segment. The operation and maintenance of the trains is carried out by our subsidiary Concar. The map below shows the route of Line One.

As of December 31, 2017, GyM Ferrovías had spent a total of S/.8.0 million (US$2.4 million) in capital expenditures in connection with the Lima Metro.

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Our revenue from this concession consists of a quarterly fee that we receive from the Ministry of Transport and Communications based on the kilometers travelled per train and adjusted for inflation, with the fee per kilometer, the number of trains required to be in operation and the number of kilometers that we are required to travel established by the terms of the concession. Our revenues do not depend on passenger traffic volume.

As of May 31, 2018, we operated 34 trains (including three backup trains), which we expect to enable us to travel 3,476,154.48 kilometers per year. The average frequency of the trains is 4 to 8.5 minutes and the fee per kilometer traveled is, for our original 24 trains, S/.81.43, and for our 10 newer trains, S/.53.19.

Pursuant to the concession, we must comply with certain requirements in the operation of the trains. According to the concession, at least 95% of our trains must be running and available for use and not less than 85% of our trains that are available for use must arrive to destination on scheduled time. The table below shows our monthly average results during 2017.

Water Treatment

In 2010, we were awarded a 25-year concession for the construction, operation and maintenance of La Chira waste water treatment plant in the south of Lima. The project is aimed at addressing Lima’s environmental problems caused by sewage discharged directly into the sea. We hold a 50% share in this concession and our partner Acciona Agua holds the remaining 50%. The plant began operations in June 2016.

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La Chira’s total investment in the concession was S/.250 million (US$74.4 million). Once the project is completed, La Chira will be entitled to collect (i) an annual payment for the investment made in the construction of the project for an amount of S/.24.2 million (approximately US$7.1 million), and (ii) and annual payment for the operation and maintenance of the project for an amount of S/.6.8 million. These fees will be paid by Sedapal S.A., the public utility company responsible for the supervision of the water service in Lima, for a period of 25 years. We funded our construction costs related to La Chira through the sale of government certificates to financial institutions, and, as a result, will not receive future cash flows from item (i). See “Item 5.A. Operating and Financial Review and Prospects—Operating Results—Factors Affecting Our Results of Operations—Infrastructure.” A joint operation in which our E&C segment participates is undertaking the construction of the waste water treatment plant.

Energy

We currently operate three energy businesses within our Infrastructure segment: Exploration and Production; Natural Gas; and Transport and Distribution. We operate and extract oil from four onshore fields (Block I, Block III, Block IV and Block V) located in the provinces of Talara and Paita in northern Peru. We have two long-term hydrocarbon extraction service contracts with Perupetro, the Peruvian entity responsible for the administration and supervision of all exploration and production contracts in Peru, under which we operate two oil producing fields, Blocks I and V. In addition, we have two long-term license contracts with Perupetro for two other blocks, Block III and IV, which started operations in April 2015. During 2017, the oil production of our four blocks was approximately 3,140 bbl per day. We also own and operate a natural gas processing plant located in northern Peru, which processes and fractions natural gas liquids and delivers dry gas to a gas-fired power generation company under a long-term processing and fractionation agreement. In addition, we are a 50% partner in two consortiums named Consorcio Terminales (CT) and Terminales del Peru (IP) both of which have contract with Petroperú, a state owned oil and gas company, to operate and maintain ten fuel storage terminals.

In addition, we are a 50% partner in Oil Tanking Andina Services S.A.C. (“OTAS”). This subsidiary operates a fuel terminal named Terminal Marino Pisco Camisea under a contract subscribed with Pluspetrol to operate an export terminal for gasoline, diesel, propane and butane. Additionally, through OTAS, we are also a 25% partner in Logística Químicos del Sur S.A. (“LQS”), which operates the Terminal de Químicos de Matarani and which in 2017 dispatched 54,878 tonnes of sodium hydrosulfide for international mining companies.

The table below sets forth selected financial information relating to our Energy line of business.

	For the year ended December 31,
	2015(1)			2016			2017			2017
	(in millions of S/.)									(in millions of US$)(2)
Revenues		389.4			382.2			436.9			130.0
Net Profit		20.2			12.0			38.1			11.3
EBITDA		121.8			99.5			142.1			42.3
EBITDA margin		31.3	%		26.0	%		32.5	%		32.5	%

(1) Includes production from the start of operations of Blocks III and IV in April 2015.

(2) Calculated based on an exchange rate of S/3.245 to US$1.00 as of December 31, 2017.

The pie charts below set forth the breakdown of our revenues and EBITDA from our Energy line of business for 2017.

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Revenues	EBITDA

Oil and Gas Production

We operate and extract oil from four mature fields (Block I, Block III, Block IV and Block V) located in the provinces of Talara and Paita in northern Peru. Two of these fields, Blocks I and V, are operated under long-term service contracts under which we provide hydrocarbon extraction services to Perupetro. Hydrocarbons extracted from these two blocks belong to Perupetro, which in turn pays us, once a month, a variable fee per barrel of lifted hydrocarbons. This extraction fee is based on a basket of international crude prices and the level of production. The other two fields, Blocks III and IV, are operated under long-term license contracts with Perupetro. The hydrocarbons extracted are owned by our subsidiary GMP, which in turn pays royalties, on a fortnightly basis, to Perupetro, based on the average prices of three international crude oil prices: Fortis, Suez Blend and Oman Blend crudes. Our activities are focused on proved reserves development and production and are conducted in mature oil fields, which have been producing oil for over 100 years in the case of Block I, approximately 96 years in the case of Block III, approximately 95 years in the case of Block IV, and over 50 years in the case of Block V. We believe our activities in these fields bear limited exploration risk.

The following table shows selected information about our fields.    

Property	Basin		GMP’s Ownership			Expiration		Developed Acres		Undeveloped Acres
Block I		Talara		100	%		2021		25,154		4,110
Block III		Talara		100	%		2045		7,475		80,986
Block IV		Talara		100	%		2045		8,400		64,550
Block V		Talara		100	%		2023		6,320		2,220

Block I:

We operate and extract oil and natural gas from Block I under a 20-year hydrocarbon extraction service contract with Perupetro, which was extended for an additional 10-year term and expires in December 2021. Average daily production during 2017 was 852 barrels of crude oil. We operate 204 wells using various oil extraction systems and operate a network of production batteries and pipelines to collect, measure and deliver oil in fiscalization point close to the Talara refinery. The field is located in the province of Talara, department of Piura, in northern Peru, approximately five miles from the Talara refinery, the second largest refinery in the country. Block I is the oldest oil producing field in Peru and has been producing oil since around 1890.

Block III:

We operate and extract oil and natural gas from Block III under a 30-year license agreement with Perupetro, which expires in April 2045. Average daily production during 2017 was 734 barrels of crude oil. We operate 167 wells using various oil extraction systems and operate a network of production batteries and pipelines to collect, measure and deliver oil in a fiscalization point close to the Talara refinery, which purchases the oil according to a contract based on an average price of three international crude oil prices: Fortis Blend, Suez Blend and Oman crudes, as adjusted by certain factors. The field is located between the provinces of Talara and Paita, department of Piura, in northern Peru, approximately 21 miles from the Talara refinery.

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Block IV:

We operate and extract oil and natural gas from Block IV under a 30-year license agreement with Perupetro, which expires in April 2045. Average daily production during 2017 was 1,454 barrels of crude oil. We operate 251 wells using various oil extraction systems and operate a network of production batteries and pipelines to collect, measure and deliver oil in a fiscalization point close to the Talara refinery, which purchases the oil according to a contract based on an average price of three international crude oil prices: Fortis Blend, Suez Blend and Oman crudes, adjusted for costs related to hydrocarbon transportation. The field is located in the province of Talara, department of Piura, in northern Peru, approximately 21 miles from the Talara refinery.

Block V:

We operate and extract oil and natural gas from Block V under a 20-year hydrocarbon extraction service contract with Perupetro, which was extended for an additional 10-year term and expires in October 2023. Average daily production during 2017 in this field was 99 barrels of crude oil. We operate 32 wells in this field using various oil extraction systems. The Block V field is located in the province of Los Órganos, department of Piura, Peru, close to the border with Ecuador. Block V has been producing oil since the 1950s.

The map below shows the geographic location of our oil producing blocks in northern Peru.

For Block I and Block V, we are entitled to a variable fee paid by Perupetro, which is based on the level of production of each field and a price formula that is based on an average price of three international crude oil prices: Fortis blend, Suez blend and Oman crudes, and a discount over this price of approximately of 72% per barrel. For Block III and Block IV, we pay royalties to Perupetro based on an average price of three international crude oil prices: Fortis blend, Suez blend and Oman crudes. The royalties paid to Perupetro were US$12.76 per barrel during 2016 and US$18.79 per barrel during 2017.

During 2015, 2016 and 2017, we received an average revenue (for all blocks) of US$45.59, US$38.55 and US$49.19, respectively, per barrel of extracted oil, which was equivalent to approximately 84.26 %, 88.52% and 91.84%, respectively, of average Brent crude oil prices in the same years. We are not committed to provide a fixed volume of oil or natural gas under our four contracts.

We produce natural gas as a byproduct of the production of crude oil (an average of 7,291 MMcf per day during 2017). In Block I, we provide natural gas to ENEL under a “take or pay” contract (an average of 5,619 MMcf

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per day during 2017), and we pay to Perupetro a fee which varies depending on market conditions. The additional volume of natural gas extracted is sent to our Pariñas plant to be processed and commercialized as liquid natural gas. In Block V, we reinject the natural gas produced back into the wells. In Block III, we use part of the produced gas as fuel to operate wells equipment (pumping units) and we are looking for a market to sell the excess. In Block IV, we also use a volume of gas as fuel and the residual volume is burnt. Our revenues for the sale of natural gas are not material relative to our oil production revenues.

Estimated Proved Reserves:

The following table sets forth estimated proved crude oil and natural gas reserves in Blocks I, III, IV and V as of December 31, 2017. We have only included estimates of proved and have not included any estimates of probable and possible reserves.

	Crude Oil (Mbbl)		Natural Gas (MMcf)		Crude Oil Equivalents (MBoe)
Block I:
Proved developed producing		1,4076		9,354		2,709
Proved developed non—producing		—		—		—
Proved undeveloped		—		—		—
Total proved reserves		1,406		9,354		2,709
Block III:
Proved developed producing		2,635		—		2,635
Proved developed non—producing		22		—		22
Proved undeveloped		11,989		—		11,989
Total proved reserves		14,647		—		14,647
Block IV:
Proved developed producing		4,475		—		4,475
Proved developed non—producing		228		—		228
Proved undeveloped		5,844		—		5,844
Total proved reserves		10,547		—		10,547
Block V:				—
Proved developed producing		256		—		256
Proved developed non—producing		—		—		—
Proved undeveloped		—		—		—
Total proved reserves		256		—		256
Total:
Proved developed producing		8,412		9,354		10,075
Proved developed non—producing		251		—		251
Proved undeveloped		17,833		—		17,833
Total proved reserves		26,496		9,354		28,159

Proved reserves are those quantities of oil and natural gas which, by analysis of geosciences and engineering data, can be estimated with reasonable certainty to be economically producible from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations. The term “reasonable certainty” implies a high degree of confidence that the quantities of oil and/or natural gas actually recovered will equal or exceed the estimate. To achieve reasonable certainty, we employed methodologies that have been demonstrated to yield results with consistency and repeatability. The methodologies and economic data used in the estimation of the proved reserves in the fields include, but are not limited to, well logs, geologic maps and available down hole and production data, seismic data, and well test data.

Reserve amounts were based on the 12-month unweighted arithmetic average of the first-day-of-the-month Brent crude price for each month in the period January through December 2017, which, pursuant to our contractual agreements, resulted in average oil and gas prices of US$53.02 per barrel and US$3.36 per million British Thermal Units, respectively, that for the purpose of reserve amount estimation were assumed to remain constant.

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Proved undeveloped reserves in the fields as of December 31, 2017 were 17,833 MBbbl consisting of 17,833 Mbbl of crude oil (0 MMcf of proved undeveloped reserves of natural gas). We estimate that during 2017, proved undeveloped reserves increased by 2,905 Mboe of crude oil and approximately 1,776 Mboe of crude oil of proved undeveloped reserves were converted into proved developed reserves. Capital expenditures, for both drilling activities and workovers, made during 2017 to convert undeveloped reserves to prove developed reserves amounted to approximately US$17.04 million (S/.55.3 million).

The principal changes in proved undeveloped reserves during 2017 were:

• Crude oil reserves: in 2017, due to drilling in Block IV and to an increase in the price of oil, 2.570 MMbbl were re-categorized from “resources” to “reserves.” In addition, 1,408 MMbbl were recategorized from “undeveloped” to “developed” reserves). As a result, proved, undeveloped crude oil reserves increased 1,162 MMbbl during 2017;

• Associated natural gas reserves increased 1,742 Mboe (9,802 MMcf) during 2017 due to development of a project to transport gas of the Block IV to our gas processing plant, which remains in progress.

For changes in proved developed and undeveloped reserves from December 31, 2015 to December 31, 2017, see supplementary data (unaudited) annexed to our audited annual consolidated financial statements included in this annual report.

Qualifications of Technical Persons and Internal Controls Over Reserves Estimation Process:

The reserves estimates shown in this annual report have been prepared internally by our engineers in accordance with the definitions and guidelines of the SEC. Our reserves are estimated at the property level and compiled by our engineering staff. Our engineering staff interacts with our internal staff of operations engineers and geoscience professionals and with accounting employees to obtain the necessary data for the reserves estimation process. Our reservoir engineers and geoscience professionals have worked to ensure the integrity, accuracy and timeliness of the data, methods and assumptions used in the preparation of the reserves estimates. Mr. Luis Huaranga and Javier Portuguez are our Reservoir Engineers. The reserves estimate report was submitted to our Committee of Reserves, which is formed by Mr. Anthony Alfaro (Exploration and Production Manager), Mr. Iván Miranda (Exploration and Production Technical Manager), Mr. Jose Pisconte Lomas (Chief of Geology), and Mr. Manuel Gomez (Chief of Reservoir Engineering). Mr. Huaranga holds a Petroleum Engineering degree from Universidad Nacional de Ingeniería in Lima, Peru and has 20 years of experience, developed as a reservoir engineer at Pluspetrol, Petrobras, and Repsol. He has been working for GMP since September 2016. Mr. Portuguez holds a Petroleum Engineering degree from Universidad Nacional de Ingeniería in Lima, Peru and has 23 years of experience, developed as a production and reservoir engineer at Mercantile and Interoil Peru. Mr. Gomez holds a Petroleum Engineering degree from Universidad Nacional de Ingeniería in Lima, Peru and has 10 years of experience, most of it as drilling, completion, stimulation, and reservoir engineer. Mr. Pisconte Lomas, holds a Geologist Engineering degree and a Regional Geology Master’s degree from Universidad Nacional Mayor de San Marcos and has 25 years of experience in the oil industry. Mr. Miranda holds a degree in Petroleum Engineering from Universidad Nacional de Ingeniería in Lima and a Petroleum Engineering Master’s degree from Texas A&M University of Texas—USA, and has 33 years of experience in the oil industry developed at Petroperu, Unipetro ABC, and GMP. Mr. Alfaro holds a Petroleum Engineering degree from Universidad Nacional de Ingeniería in Lima, Peru, Master´s degree in Business Administration from Universidad Rafael Belloso Chacin in Maracaibo, Venezuela, a Master´s degree in Projects Management an Administration from Universidad de Ciencias Aplicadas in Lima, Peru and has 28 years of experience developed at Petroperu, Perez Companc Peru and Argentina, Petrobras Venezuela and Peru, Grupo Synergy E&P Ecuador, and GMP.

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Production, Revenues, Prices and Costs:

The following table sets forth information regarding our production, revenues, prices and production costs for 2015, 2016 and 2017.

	For the year ended December 31,
	2015(1)		2016		2017
Production volumes(2):
Crude oil (Mbbl)
Block I		507.9		381.3		310.9
Block III		319.7		347.7		267.8
Block IV		174.7		232.7		530.9
Block V		59.0		46.9		3.2
Total (crude oil Mbbl)		1,061.40		1,008.60		1,145.8
Natural gas (MMcf)
Block I		3,729.9		2,025.8		2,979.0
Block III		1,075.7				—
Block IV		156.7				—
Block V		175.7				—
Total (natural gas MMcf)		5,138.0		2,025.8		2,979.0
Crude oil equivalents (Mboe)		913.4		360.1		529.5
Total Company		1,974.8		1,368.7		1,675.3
Average sales prices(3):
Crude oil (US$/bbl)		45.59		38.48		49.81
Natural Gas (US$/Mcf)		2.15		1.53		4.07
Crude oil equivalents (US$/boe)		37.56		30.62		41.95
Costs and expenses(3):
Production expenses (US$/boe)		10.07		10.08		17.35
Royalties (US$/boe)		4.0		5.4		9.27
General and administrative expenses (US$/boe)		2.42		2.09		2.02
Depreciation, depletion, amortization and accretion expenses (US$/boe)		8.57		12.58		8.99

(1) Includes operations of Blocks III and IV starting in April 2015.

(2) Hydrocarbons extracted from Blocks I and V belong to Perupetro, which in turns pays us a per barrel fee for lifted hydrocarbons. Hydrocarbons extracted from Blocks III and IV belong to GMP, which in turn pays Perupetro a royalty as per the extracted hydrocarbons.

(3) Crude oil sales volume differs from total production volume due to operational circumstances such as the inventory of product stored in our field batteries at the end of each monthly measurement. “Average sales prices” refers to the fees received in consideration for our extraction services, which do not equal the sales prices of crude oil. Average sales prices have been calculated using a basket price formula according to the service and license contracts of each block. Such formulation is at a discount to global oil prices for Blocks I and V, and for Blocks III and IV we pay royalties on the oil extracted. Per unit costs have been calculated using sales volumes.

Acreage, Productive and Development Wells, Drilling:

The following table sets forth certain information regarding the total developed and undeveloped acreage as of December 31, 2017.

Formation	Developed Acreage		Undeveloped Acreage
Block I
Pariñas		2,271		70
Mogollón		2,583		320
Basal Salina		1,850		100
Mesa		1,485		1,650
Total Block I		8,189		2,140
Block III
Salina Mogollón		7,475		3,983
Amotape		1,750		2,370
Total Block III		9,225		6,353
Block IV
Pariñas		4,155		3,402
Palegreda		5,292		3,951
Mogollón		1,470		2,606
Total Block IV		10,917		9,959
Block V
Verdún		530		650
Ostrea		175		115
Mogollón		1,350		120
Total Block V		2,055		885
Total		30,386		19,337

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As of December 31, 2017, we had a total of 654 producing wells. Our wells are oil wells, many of which also produce natural gas. We do not have interests in wells that only produce natural gas.

The following table shows the number of development and exploratory wells drilled during 2015, 2016 and 2017 in Blocks I, III, IV and V.

	For the year ended December 31,
	2015(1)		2016		2017
Development Wells
Productive		4		11		22
Dry		—		—		—
Total		4		11		22
Exploratory Wells
Productive		—		—		1
Dry		—		—		—
Total		—		—		1

(1) Includes operations of Blocks III and IV, starting in April 2015.

During 2015, 2016 and 2017 we invested US$3.8 million (S/13.0 million), US$5.4 million (S/18.1 million) and US$16.5 million (S/53.6 million), respectively, in drilling activities. We drilled a total of 23 wells during 2017 in Block IV. All of them are productive wells.

During 2014, 2015 and 2016 we invested US$25.6 million (S/.76.5 million), US$3.8 million (S/.13.0 million) and US$5.4 million (S/.18.1 million), respectively, in drilling activities. We drilled a total of eleven wells during 2016 in Block IV. All of them are productive wells.

Under the terms of our agreements with Perupetro, at the time the contract terminates, we are required to close non-producing wells that we have drilled. As of December 31, 2017, we estimated that we will be required to close 48 wells in Block I in December 2021 and 6 wells in Block V in October 2023, 40 wells in Block III and 50 wells in Block IV in December 2045. We have created a provision in our financial statements for the costs relating to those well closings. See notes 5.1(d) and 18(d) to our audited annual consolidated financial statements included in this annual report.

Gas Processing Plant

We own a gas processing plant located 7 km north of the city of Talara in Piura, Peru. We currently have under a long-term delivery and gas processing and fractioning contract with Enel Generación Piura (formerly known as EEPSA), according to which Enel Generación Piura delivers wet natural gas that it purchases from onshore and offshore gas operators in the area. We then process and fraction the gas into two products: (i) dry natural gas, which can be used as fuel in Enel Generación Piura’s gas-fired turbine; and (ii) natural gas liquids, which are sold in the Peruvian market. Under the terms of the agreement, we are responsible for all operating costs of the gas processing plant but are also entitled to keep revenues from the sale of the natural gas liquids to third parties after payment of a variable royalty, based on the volume of gas processed, to Enel Generación Piura. Our current gas processing and fractionation contract with Enel Generación Piura expires in 2023.

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Our gas processing plant has the capacity to process up to 44 MMcf per day. We processed 31.7 MMcf per day during 2015, 33.19 MMcf per day during 2016 and 30.57 MMcf per day during 2017. Approximately 70% of the volume processed by our gas processing plant depends on the gas volumes provided by Enel Generación Piura for processing and use on its gas-fired turbines. These volumes vary per month and depend upon the power dispatch curve of Enel Generación Piura among Peruvian power generation plants. In rainy months (December to April) where hydroelectric power generation in Peru is typically higher, gas volumes demanded by Enel Generación Piura are lower than in dryer months (May to November) in which activity of thermal generators tends to be higher. The remaining approximately 13% of the volume processed by our gas processing plant depends on the volumes of gas extracted by GMP in Block I, which we process and commercialize as liquid natural gas.

Fuel Storage Terminals

We are a 50% partner in Consorcio Terminales with a Peruvian affiliate of Oiltanking GmbH, one of the world’s largest operators of independent terminals for bulk liquid storage. Consorcio Terminales had a contract with Petroperú to operate the North and South Fuel Terminals in Peru, which expired in August 2014. In May 2014, there was a public bidding for the operation of the North, Center and South Terminals. In June 2014, Terminales del Perú, a new consortium also integrated by our subsidiary GMP S.A. and Oiltanking Peru was awarded a concession for the operation of the North and Central Fuel Terminals for Petroperú. The contracts have a 20-year term and consist of the operation of four terminals in the north and one terminal in the center of the country, providing storage and dispatching bulk liquid fuel. The total amount of the committed investment for both projects is approximately US$37.2 million (S/.125 million), while the total amount of the additional investment, which will be reimbursed, is approximately US$186 million (S/.625 million). There was no winner in the public bidding for the operation of the South Fuel Terminals, and the contract of Consorcio Terminales was extended through contract amendments: first, for an additional year until August 2015; subsequently, for two more years until August 2017; and most recently, in July 2017 for an additional year until August 2018. The total amount of the additional investment required during this two year period, which will be reimbursed, is approximately US$10 million (S/.84 million). On June 6, 2018, the concessionaire, Consorcio Terminales, received a letter from Petroperú to initiate negotiations to extend the contract up to one more year.

Our open-access terminals offer our customers dependable and critical handling and storage services for refined petroleum liquid products, maintaining high quality, safety and environmental standards. We provide storage, handling and loading and uploading services for a broad range of refined petroleum liquid products, including gasoline, aircraft fuel, diesel and heavy fuel oil. We deliver the liquids into two types of transportation systems, railroad cars and cistern trucks. Because of the strategic location of our assets, our deep-water access, inland terminals and our aggregate storage capacity of 2.2 MMbbl in the North and Central Terminals and of 1.4 MMbbl in the South Terminals, we believe that we are well-positioned to cover the needs of our clients, the two principal refineries in Peru. The map below shows the location of each of our fuel storage terminals in Peru.

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Under the current contracts, Consorcio Terminales and Terminales del Perú receive revenues paid in connection with monthly reserved volume in tanks for refined crude products (storage fee) and for volumes loaded and delivered into railroad cars or cistern trucks to each terminal (throughput fee). The storage fee per barrel, is based upon reserved volumes whether they are received or not. The throughput fee is paid based on effective barrels delivered per month. During 2015, 2016 and 2017, Consorcio Terminales and Terminales del Perú generated revenues of US$66.8 million (S/.228.0 million), US$74.1 million (S/.249.0 million) and US$39.42 million (S/.127.9 million) (we are entitled to 50% of the joint operation revenues), respectively. Under the contracts, Consorcio Terminales and Terminales del Perú are responsible for paying the fuel terminals operating and maintenance costs and also paying a royalty fee to Petroperú based on effective barrels delivered each month.

At the current stage of the contracts, any capital expenditure we invest in the fuel storage terminals can be recouped from any present and future royalties we owe to Petroperú.

Other Terminal Operations

We are a 50% partner in Oiltanking Andina Services S.A.C. (“OTAS”). This subsidiary operates a fuel terminal named “Terminal Marino Pisco Camisea” under a contract subscribed with Pluspetrol to operate an export terminal for gasoline, diesel, propane and butane. In 2016, this terminal dispatched 30.0 million barrels of natural gas liquids. Additionally, through OTAS, we are also a 25% partner in LQS, which operates the “Terminal de Químicos de Matarani,” which in 2017 dispatched 54,878 tonnes of sodium hydrosulfide for international mining companies. During 2015, 2016 and 2017 these activities generated revenues in the aggregate of approximately US$4.6 million (S/.15.7 million), US$6.3 million (S/.21.2 million) and US$6.6 million (S/.21.4 million), respectively.

Operation and Maintenance of Infrastructure Assets

We began providing our operation and maintenance of infrastructure assets services in 1994 when we were awarded the concession for the Arequipa Matarani highway in southern Peru. With this experience, in 2003, we began providing operation and maintenance services to Norvial. In 2007, the Peruvian government initiated Proyecto Peru, a program aimed at maintaining roads not under concession to ensure their longevity. Proyecto Peru allowed us to develop new business opportunities providing maintenance services to more than 4,000 km of public roads in Peru. We believe the experience we have gained operating highway and transportation concessions positioned the company to capitalize on the Peruvian government’s initiatives to increase infrastructure development.

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Our revenue in the operation and maintenance of infrastructure assets is generated either from fees we charge to Norvial, Survial, Canchaque, Pasco, Chinchaypujio, Chuquibambilla, Cora Cora and the Lima Metro to operate and maintain our concessions or from government payments through maintenance service contracts we have been awarded. As depicted in the chart below, we operate and maintain more than 2,579.3 km of Peruvian roads and highways, including our own highway concessions, in addition to the Lima Metro.

Operation and Maintenance of Infrastructure Assets

Total 2,579.3 KM

The table below sets forth selected financial information for our operation and maintenance of infrastructure assets activities.

	For the year ended December 31,
	2015			2016			2017(1)			2017
	(in millions of S/.)									(in millions of US$)(1)
Revenues		334.8			262.7			378.3			112.6
Net profit (loss)		18.5			14.0			16.9			5.0
EBITDA		39.3			27.0			34.1			10.1
EBITDA margin		11.7	%		10.3	%		9.0	%		9.0	%

(1) Calculated based on an exchange rate of S/.3.245 to US$1.00 as of December 31, 2017.

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The below map illustrates the roads in Peru for which we currently provide operation and maintenance services.

We provide the following road operation and maintenance services:

• Routine Maintenance. These services aim to preserve roads through ongoing maintenance, including: road demarcation; cleaning; drainage; road fissure treatment, which seals cracks in roads to prevent water infiltration; slurry sealing; and micro-paving, which seals asphalt to prevent aging and improve resistance to water and surface wear.

• Periodic Maintenance. These services entail activities that are performed periodically, intended to prevent the occurrence or exacerbation of defects, conserve the structural integrity of roads and correct major defects.

• Emergency maintenance. This maintenance work is performed whenever the need arises, such as when natural disasters damage road surfaces.

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We also administer toll stations and weighing stations; offer road patrolling services; operate assistance call centers; and provide emergency medical services.

The operation and maintenance services we provide to the Lima Metro aim to preserve the mass transit system through ongoing maintenance, including cleaning of the trains and stations and providing train operators, among other services.

With respect to operation and maintenance contracts with the Peruvian government, we obtain new contracts through public bidding. With respect to contracts with our Infrastructure segment, we participate in direct negotiation. Contract length typically ranges from three to five years.

Competition

Our ability to grow through successful bids for new infrastructure concessions or other long-term contracts could be affected as a result of competition. We view our competition as including both Peruvian and international infrastructure concession operators including joint operations with partners with specialized expertise in the relevant sector. Competition varies on a case-by-case basis, depending on the main purpose of the concession.

Real Estate

Our Real Estate segment is one of the largest apartment building developers in Peru, in terms of number of units sold and value of sales in 2017, and is focused on the development and sale of affordable housing and housing as well as other real estate projects. Since commencing our operations in 1987, we have developed approximately 850,135 m2 of affordable housing (approximately 13,338 units); approximately 363,392 m2 of housing (approximately 1,743 units); approximately 170,075 m2 of office space (approximately 902 offices); and approximately 43,000 m2 of shopping centers (three shopping centers). Moreover, we are currently building approximately 130,458 m2 of affordable housing (approximately 2,028 units); approximately 23,829 m2 of housing (approximately 148 units). Our Real Estate segment also owns significant land parcels in Lima, comprising of approximately 786 hectares as of December 31, 2017, and we have sold undeveloped land in the past and intend to continue such sales in the future.

The table below sets forth selected financial information for our Real Estate business segment.

	For the year ended December 31,
	2015			2016(1)			2017(1)			2017(1)
	(in millions of S/., except as indicated)									(in millions of US$)(2)
Revenues		215.8			411.5			647.5			199.5
Net profit		29.3			77.2			117.7			36.3
Net profit attributable to controlling		12.4			22.1			48.6			15.0
EBITDA		52.8			121.4			177.3			54.6
EBITDA margin		24.5	%		29.5	%		27.4	%		27.4	%
Backlog (in millions of US$)(3)		111.0			95.9			25.9			25.9
Backlog/revenues ratio(3)		1.8	x		0.8	x		0.1	x		0.1	x

(1) In 2016 we recognized S/.97 million (US$28.9 million) in revenues from land sales. In 2017 we recognized S/.163.1 million (US$50.3 million) in revenues from land sales.

(2) Calculated based on an exchange rate of S/.3.245 to US$1.00 as of December 31, 2017.

(3) For more information on our backlog, see “—Backlog.” Backlog is calculated as of the last day of the applicable period. Revenues are calculated for such period and converted into U.S. dollars based on the exchange rate published by the SBS at such period.

We undertake a significant amount of the activities in our Real Estate segment with partners through financing and commercial arrangements we use to purchase land and to develop real estate projects. See “—Financing.” As a result, a significant amount of our net profit in the Real Estate segment is attributable to the non-controlling interest of our partners. See also “Item 5.A. Operating and Financial Review and Prospects—Operating Results—Results of Operations—General—Real Estate.”

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Principal Real Estate Activities

Our real estate developments include the following products:

• affordable housing;

• housing; and

• commercial real estate.

We began developing affordable housing projects in 2001, following the Peruvian government’s efforts to address the country’s housing deficit, particularly for low-income families. We launched the first major affordable housing project in Peru in 2007, Parque Agustino in Lima’s El Agustino neighborhood. Since 2001, we have completed 16 affordable housing projects. As of December 31, 2017, we are developing six affordable housing projects, which are in various stages of development, including three which are in the construction phase but also are still in the process of obtaining the required approvals and permits. Three of our ongoing affordable housing projects consist of expansions of projects previously completed by us. Affordable housing consists of apartments, usually ranging between 50 and 72 m2, that are purchased through government subsidies. The Peruvian government has adopted the Nuevo Crédito Mi Vivienda and Techo Propio programs, among others, which promote access to affordable housing in Peru by providing government subsidies to individuals for the purchase of homes. In order for a unit to qualify for the Nuevo Crédito MiVivienda program, its selling price must range between S/.57,500 and S/.304,100. In order for a unit to qualify for the Techo Propio program, its selling price must range between S/ .81,000 and S/ .104, 000.

In order to be eligible for an affordable housing subsidy under the Nuevo Crédito MiVivienda program, a purchaser must not own any other home or have benefitted from a housing subsidy program in the past, among other requirements. A purchaser must also provide a down payment between 10% and 30% of the total purchase amount. Housing subsidies under this program fluctuate between S/ .6, 500 and S/ .17, 500 which incentivize purchasers with reduced monthly rates so long as they pay their mortgage loan payments on a timely basis. In order to be eligible for an affordable housing subsidy under the Techo Propio program, a purchaser must have a monthly income that does not exceed approximately S/.2,617 and must not have received any other government-sponsored housing benefit in the past, among other requirements. A Techo Propio purchaser must also show proven savings equal to at least 10% of the total purchase amount. Housing subsidies under this program is S/ .32,400. Purchasers of subsidized housing under both programs are also not required to pay a value-added tax normally applicable to residential purchases.

We develop substantially all of our affordable housing projects on land purchased from the private sector. To the extent these projects meet the requirements of a particular government subsidy program, purchasers can purchase units with government subsidies. Some of our affordable housing projects, however, such as Parque Agustino, are developed through government bidding processes. Government subsidy programs like Nuevo Crédito MiVivienda and Techo Propio have driven the demand for affordable housing in Peru, which has in turn increased our sales of affordable housing units.

Our housing developments consist of residential buildings comprised of apartments with a mid- to high-price range that do not qualify for government subsidies. Since 1987, we have developed 38 housing developments. As of December 31, 2017, we are developing four housing projects, which are in the construction stage. Our housing units typically range between 130 and 400 m2 in size.

Substantially all of our affordable housing and housing development projects are located in Lima. We have also purchased land to develop four affordable housing projects in Piura, Chimbote and Huancayo, two cities north of Lima and one in the center of the country. We intend to develop affordable housing projects in other cities outside of Lima.

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The table below sets forth number of units sold and not yet delivered and number of units delivered, as well as the value of units sold and our sales revenue for the periods indicated.

	For the year ended December 31,
	2015		2016		2017
Number of Units Delivered(1):
Affordable Housing		792		855		1,353
Housing		41		79		65
Total		833		934		1,418
Number of Units Sold and Not Yet Delivered(1):
Affordable Housing		1,316		1,620		1,152
Housing		96		97		43
Total		1,412		1,717		1,195
Total m2 Delivered:
Affordable Housing		46,894		48,460		78,004
Housing		12,962		19,398		20,978
Total		59,885		67,858		98,982
Total m2 Sold and Not Yet Delivered:
Affordable Housing		74,911		55,404		66,878
Housing		29,939		21,825		12,538
Total		104,849		77,229		79,416
Value of Units Delivered (in millions of S/.):
Affordable Housing		99.0		138.0		170
Housing		92.0		163.0		221
Total		191.0		301.0		391

(1) We typically pre-sell our affordable housing and housing units before construction begins and continue to sell during construction, although we recognize revenues at the time of delivery of units.

We develop and sell office and commercial buildings, such as shopping centers. On certain occasions, we have operated our commercial real estate and later sold it, such as Larcomar, a landmark shopping center which we built in 1998 and sold in 2010. We have also developed commercial real estate buildings in connection with our affordable housing and housing projects, such as the Parque Agustino shopping center. Since 1987, we have developed 14 office buildings, three shopping centers and one medical center. We are currently looking for a plot of land in order to develop a new office building.

Land Bank

We typically purchase land to develop real estate projects with the intention to begin construction within a 12- to 18-month period after the purchase of the land. We may also, from time to time, purchase land for subsequent resale. As of December 31, 2017, we owned approximately 786 hectares, of which 86% is located in Lima and 14% outside of Lima. We continually evaluate opportunities to purchase new land for our real estate development projects.

On February 24, 2017, we sold our interest in Project Espacio (formerly known as Cuartel San Martín) to Urbi Propiedades S.A., our partner in the project, for US$50 million (S/.168 million). On April 28, 2017, we also sold our interest (approximately 20.8%) in Promoción Inmobiliaria del Sur S.A. (“PRINSUR”) of Inversiones Centenario, which owns approximately 937.7 hectares of undeveloped land also located in Lurin, to its partner Inversiones Centenario S.A.A. for US$25 million (S/.84 million). For more information, see “Item 5.A. Operating and Financial Review and Prospect— Operating Results—Recent Developments.”

We have a 50.4% interest in Almonte, which owns approximately 738 hectares of undeveloped land in Lurin, located 30 km south of Lima. We previously sold 27 hectares of the land for industrial use. On May 31, 2018, Almonte signed a contract of sale with PRINSUR for 420.9 hectares of land for an amount of US$92.6 million.

Financing

We generally fund land purchases for our housing and commercial real estate projects through cash from our operations. For our affordable housing projects, we generally partner with real estate investment funds and insurance companies that provide between 60% and 70% of the total capital required to purchase the land and cover

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certain pre-construction costs in exchange for equity in the project. Once we acquire land for a particular real estate development project, we obtain working capital through a credit line from a financial institution, which we utilize to finance additional project needs as they arise. We also obtain financing through pre-construction sales for our affordable housing and housing projects and, to a lesser extent, our commercial real estate projects. Our affordable housing and housing projects generally require less outside financing because they are generally financed with pre-construction sales.

Sales and Marketing

We typically pre-sell our affordable housing and housing units prior to and during construction, and use the related proceeds we receive to finance the construction of the units. Our commercial and sales processes differ depending on the type of development and market segment of the development. We primarily sell our real estate development projects through an internal sales force that is assigned to particular projects and, to a lesser extent, external brokers on a non-exclusive, commission-fee basis. Our marketing efforts primarily consist of newspaper advertisements, radio and television commercials, billboards and promotional offers for referrals. We also advertise our real estate projects on our website.

We believe our brand is associated with product quality, professional operations and reliable post-sale customer service. We provide customer service call centers through which residents can report complaints or defects. Engineers respond with site visits, and repairs are made as long as the property continues to be covered by the applicable warranty or guarantee.

For our affordable housing projects, we provide post-sale customer service through our Ayni program, which aims to preserve the long-term value of our affordable housing developments by promoting a cooperative community life. Through this program, we distribute manuals that teach best practices for living in communities, offer leadership workshops, budget workshops, promote small business development, facilitate conflict resolution and provide other services. These services are provided for a six- to eight-month period following project delivery. In 2012, we initiated the Ayni contest for residents of our affordable housing projects with the aim of stimulating the sustainability of their community. Participants present an enhancement project for their community, such as a recreation center, and a jury selects the best project, which we fund and construct.

Competition

The Peruvian real estate development industry is highly competitive. The market is fragmented and no single company has a significant share of the national market. The principal competitors for our Real Estate segment are Paz Centenario Global S.A., Paz Centenario Inmobiliaria, Corporación Líder Perú S.A., Urbana Perú, Los Portales, Imagina Grupo Inmobiliario, ENACORP, Besco S.A. and Gerpal. In the coming years, we expect more competition from domestic and foreign real estate development companies who recognize the growth potential in the Peruvian residential market. The main factors that drive competition are product design and amenities, price, location and post-sale service offerings.

Technical Services

Our Technical Services segment undertakes a broad range of activities, including (i) information technology (IT) services for private clients and the government; and (ii) electricity networks services. Characterized by mid-to long-term contracts, our Technical Services segment further adds a more stable cash flow stream to our consolidated activities.

On June 6, 2017, we sold our 89.19% interest in our former subsidiary, GMD. As a result, we present GMD as a discontinued operation in our audited annual consolidated financial statements for the year ended December 31, 2017. We have reclassified our consolidated financial statements for the years ended December 31, 2015 and 2016 included in this annual report, to show GMD as a discontinued operation for those years as well.

On June 6, 2017, we sold our 89.19% interest in our former subsidiary GMD to Advent International for US$84.7 million (S/.276.9 million). Beginning on April 1, 2017, we have transferred Concar from our Technical Services segment to our Infrastructure segment. For ease of comparison, the historical segment financial information included in this annual report presents Concar in the Infrastructure segment. This change does not impact our consolidated financial results. We believe that this strategic decision will strengthen and boost the operating capacity of our Infrastructure segment by incorporating the experience and knowledge of our Concar team members for concession management.

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The table below sets forth selected financial information for our Technical Services business segment.⁽¹⁾

	As and for the year ended December 31,
	2015			2016			2017			2017
	(in millions of S/., except as indicated)									(in millions of US$)(2)
Revenues		563.9			841.1			1,061.0			327.0
Net profit (loss)		23.3			(7.0	)		(25.7	)		(7.9	)
Net profit (loss) attributable to controlling interest		20.0			1.5			(18.1	)		(5.6	)
EBITDA		35.1			65.5			49.0			15.1
EBITDA margin		6.2	%		7.8	%		4.6	%		4.6	%
Backlog (in millions of US$)(3)		364.9			513.8			460.1			460.1
Backlog/revenues ratio(3)		2.2x			2.1x			1.4			1.4

(1) On June 6, 2017, we sold our 89.19% interest in our former subsidiary, GMD. As a result, we present GMD as a discontinued operation in our audited annual consolidated financial statements for the year ended December 31, 2017. We have reclassified our consolidated financial statements for the years ended December 31, 2015 and 2016 included in this annual report, to show GMD as a discontinued operation for those years as well.

(2) Calculated based on an exchange rate of S/.3.245 to US$1.00 as of December 31, 2017.

(3) For more information on our backlog, see “—Backlog.” Backlog is calculated as of the last day of the applicable year. Revenues are calculated for such year and converted into U.S. dollars based on the exchange rate published by the SBS on December 31 of the corresponding year.

The pie charts below set forth the breakdown of our revenues and EBITDA from our Technical Services for 2017.

Revenues

IT Services

We began our IT services business in 1984 providing computer equipment to companies and evolved into a technology solutions provider in 2000. In the early 1980s, Sonda, one of the main IT services providers in Latin America, was looking for a partner to represent Digital Equipment Corp. (currently, Hewlett Packard Enterprise) for the sale of hardware in Peru. Sonda’s need coincided with our diversification strategy and, therefore, we decided to jointly constitute GMD. In 1994, we bought out Sonda. Our main focus was the provision of business process and IT outsourcing services, and providing the necessary corresponding equipment, to well-known large companies and public institutions in Peru. On June 6, 2017, we sold our interest in GMD.

The infrastructure through which we operate our business includes the largest software factory in the country, two world class data centers, one of which is Tier III certified and two call centers with high availability for help desk services. In addition, we have successfully entered into strategic partnerships with key international IT vendors such as Cisco Systems, Microsoft, Hewlett-Packard, Oracle, SAP, IBM, Citrix, VMware, CA Technologies and Louis Berger Group.

On January 4, 2016, we completed the acquisition of a 52% stake in Adexus. Adexus is a leading Chilean company in the development and implementation of solutions for information technology, with the ability to integrate technological systems of high added value and over 25 years of experience in the market. It has a significant regional presence distributed between Chile, Peru and Ecuador. The remainder of Adexus is owned by Sistemas y Redes Ltda. with a 47.5% stake and Asesorías e Inversiones Busso with the remaining 0.5%.

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The table below sets forth selected financial information relating to our IT services.⁽¹⁾

	For the year ended December 31,
	2015		2016			2017			2017
	(in millions of S/.)								(in millions of US$)(2)
Revenues		—		113.2			284.2			84.6
Net profit		—		(4.0	)		2.3			0.7
EBITDA		—		33.5			42.4			12.6
EBITDA margin		—		29.6	%		14.9	%		14.9	%

(1) On June 6, 2017, we sold our 89.19% interest in our former subsidiary, GMD. As a result, we present GMD as a discontinued operation in our audited annual consolidated financial statements for the year ended December 31, 2017. We have reclassified our consolidated financial statements for the years ended December 31, 2015 and 2016 included in this annual report, to show GMD as a discontinued operation for those years as well.

(2) Calculated based on an exchange rate of S/.3.245 to US$1.00 as of December 31, 2017.

Competition

The IT services industry is highly competitive. The market includes both international companies and local or regional companies. Our main competitors, which are sometimes also our partners, include companies such as IBM, Telefónica, Indra, Tata Consultancy Services and Cosapi Data, among others.

Electricity Networks Services

We offer field and specialized services consisting of installation and routine operation and maintenance of electricity infrastructure, primarily for power utility companies in Chile and, to a lesser extent, Colombia, and Peru. Field services include day-to-day services and troubleshooting required to maintain the electric grid. Specialized services require more sophisticated and more tailored technology and expertise. With over 20 years operating experience developing, installing, operating and maintaining metering systems, we have also developed a broad range of specialized solutions to reduce electricity theft, one of the main concerns for power utility companies in Latin America.

The table below sets forth selected financial information for our Electricity Networks Services.

	For the year ended December 31,
	2015			2016			2017			2017
	(in millions of S/.)									(in millions of US$)(1)
Revenues		563.9			727.9			776.8			231.2
Net profit		23.3			(3.0	)		(28.0	)		(8.3	)
EBITDA		35.1			31.9			6.5			1.9
EBITDA margin		6.2	%		4.4	%		0.8	%		0.8	%

(1) Calculated based on an exchange rate of S/.3.245 to US$1.00 as of December 31, 2017.

The field services we provide include, among others, installing and maintaining medium- and high-voltage electricity networks and public lighting networks; connecting new residential, commercial and industrial customers to the electrical grid; disconnecting and reconnecting the power supply of our clients’ customers; meter reading; verification of electricity theft; and the installation of meters and antitheft solutions. We also provide services that include changing and repairing damaged electrical equipment and maintaining, transferring and expanding the electrical grid. We have developed a sophisticated management system to monitor the efficiency of the field services we provide and increase the daily productivity of our field crews.

We also provide specialized services, which involve more technical expertise and specialized equipment, including the monitoring of electrical consumption for approximately 420,000 industrial, commercial and residential customers. We have developed specialized metering systems and anti-theft solutions for the Latin American markets. We believe we are one of two companies with a relevant market penetration of these antitheft solutions for power utility companies in our markets. We also operate laboratories that offer an array of services in response to local regulation requirements, such as meter certification, equipment testing and theft reports.

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In Brazil and Chile, we also operate the warehouse facilities of local power utility companies, which store and distribute the necessary equipment for operations, such as cables, insulators and meters. In addition, in Chile, we lease residential electricity meters to a power utility company, for which we also provide maintenance services. We have formed strategic alliances with equipment manufacturers in order to develop and commercialize specialized metering systems and anti-theft solutions.

The chart below sets forth the percentage of our 2017 revenues in each of the countries where we operate.

Revenue by Country

Contracts and Clients

We typically provide our services pursuant to long-term contracts ranging between three and five years. Most of our contracts are awarded through a non-public bidding process, although some contracts are negotiated directly with the client.

Our principal clients are power utility companies and, to a lesser extent, industrial clients, predominantly in the private sector. In Peru, we also provide services to the telecommunications industry. Our principal clients are the distribution companies of Enel, which acquired Enersis. Over the years, we have worked with the principal power utility companies in the region, including Chilectra, Saesa, Chilquinta, AES, E-CL, Endesa Chile, Ampla, Coelce, Cemig, Coelba, Elektro, Light, Codensa, Emgesa, EEC, Enertolima, Emcalo, Edelnor, Electrocentro, Enosa, and the telecommunication companies VTR, Entel, Claro and Telefonica.

Competition

The market for electricity networks services is highly fragmented and no single company has a significant share of the national market in the countries where we operate. We primarily compete with small, local privately-held service companies. We expect competition to increase in the coming years as electricity consumption grows in response to the economic growth, and relatively low per capita consumption, in the countries where we operate. The main factors that drive competition are safety; product and service quality; reliability; price; and ability to respond to increased industry regulations.

Backlog

We define our backlog as the U.S. dollar equivalent value of revenue we expect to realize in the future as a result of performing work under multi-period contracts that we have entered into. Backlog is not a measure defined by IFRS, and our methodology for determining backlog may not be comparable to the methodology used by other companies in determining their backlog. For contracts denominated in soles or other local currencies, amounts have been converted into U.S. dollars based on the exchange rate published by the SBS, in the case of Peru, or other relevant authority, in the case of other jurisdictions, on December 31 of the corresponding year.

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We do not include backlog in this annual report in our Infrastructure segment for: (i) our Norvial toll road concession because its revenues from the concession are derived from toll fees charged to vehicles using the highway, and, as a result, such revenues are dependent on vehicular traffic levels; and (ii) our Energy line of business because: (a) its revenues from hydrocarbon extraction services are dependent on the amounts of oil and gas we produce and market prices, which fluctuate significantly; (b) our revenues from our gas processing plant are dependent on the amount of gas we process and market prices for natural gas liquids, which fluctuate significantly; and (c) our revenues from our fuel storage terminal operation partially depend on the volume of fuel dispatched; and (iii) our COGA venture, which is not consolidated because it is jointly controlled (which we sold on April 24, 2017).

When we present backlog on a segment basis, we do not include eliminations that are included in our consolidated backlog. For a description of how we calculate our backlog, see our segment backlog presented below.

Our consolidated backlog as of December 31, 2017 was US$2,388.4 million. We expect to recognize as revenues 46% of our backlog by December 31, 2018, 27.9% by December 31, 2019 and 26.1% thereafter. The following table sets forth our consolidated backlog from December 31, 2013 to December 31, 2017.

Backlog (in US$ million)

Our backlog declined in 2017 and may decline further in the future, including due to the sale of assets. We cannot assure you that we will be able to continue obtaining sufficient contracts in the future in number and magnitude to grow our backlog. Additionally, the number and amounts of new contracts signed can fluctuate significantly from period to period. For example, the third quarter of 2015, we acquired a 29% participation in the construction consortium of the GSP gas pipeline project, and, as a result, we incorporated US$1.0 billion in backlog. Due to the termination of the GSP gas pipeline concession on January 24, 2017, we have removed US$855 million from the backlog, representing 30.2% of our E&C backlog and 21.4% of our total backlog as of December 31, 2016. During 2017 we also removed US$87.5 million from the backlog related to the Chavimochic project. For more information, see “Item 5.A. Operating and Financial Review and Prospects—Operating Results—Recent Developments.”

The table below sets forth our ending backlog for 2015, 2016 and 2017 accounting for opening backlog for each year, annual contract bookings and adjustments, cancellations during the year and annual revenues recognized.

	2015			2016			2017
	(in millions of US$)(1)
Opening backlog (end of prior year)		3,815.3			3,918.4			3,011.6
Contract bookings and adjustments during the year		2,187.4	(2)		1,660.6			1,172.1
Cancellations during the year		—			(855	)(2)		—
Revenues recognized during the year		(2,084.3	)		(1,712.3	)		(1,795.3	)
Ending backlog (end of current year)		3,918.4			3,011.6			2388.4

(1) On June 6, 2017, we sold our 89.19% interest in our former subsidiary, GMD. As a result, we present GMD as a discontinued operation in our audited annual consolidated financial statements for the year ended December 31, 2017. We have reclassified our consolidated financial statements for the years ended December 31, 2015 and 2016 included in this annual report, to show GMD as a discontinued operation for those years as well.

(2) In the third quarter of 2015, we acquired a 29% participation in the construction consortium of the GSP gas pipeline project, and, as a result, we incorporated US$1.0 billion in backlog. Due to the termination of the GSP gas pipeline concession on January 24, 2017, we have removed US$855 million from the backlog, representing 21.4% of our total backlog.

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The chart below sets forth our consolidated backlog breakdown by end-market, geography and client sector as of December 31, 2017.

Backlog by End-Market   Backlog by Geography  

Backlog by Client Type

The chart below shows the effects on our backlog of our participation in the GSP pipeline concession and the subsequent termination of the concession.

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E & C Backlog

To include an engineering and construction contract in our backlog, we assume that each party will satisfy all of its respective obligations under the contract. We also make assumptions, in agreement with the client, regarding the total expected contract price in the case of unit price and cost-plus fee contracts and the amount of the contract that will be completed in each year. We adjust our backlog periodically to account for developments related to each project. For projects related to joint operations or equity investments, we only include our percentage ownership of the joint operation’s or equity investment’s backlog. Our E&C segment backlog does not include intersegment eliminations.

Our E&C backlog as of December 31, 2017 was US$1,456.7 million. We expect to recognize as revenues 47.8% of such backlog by December 31, 2018 and 52.2% of such backlog thereafter. The following table sets forth of our E&C backlog from December 31, 2013 to December 31, 2017.

E&C Backlog (in US$ million)

The following pie charts set forth our E&C backlog breakdown by end-market, geography, client sector and contract type as of December 31, 2017.

Backlog by End-Market Backlog by Geography

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Backlog by Client Type Backlog by Client Contract

The table below sets forth our ending E&C backlog for 2015, 2016 and 2017 accounting for opening backlog for each year, annual contract bookings and adjustments, cancellations during the year and annual revenues recognized.

	2015			2016			2017
	(in millions of US$)
Opening backlog (end of prior year)		2,885.1	(1)		3,129.4			1,977.9
Contract bookings and adjustments during the year		1,954.6			926.2			415.0
Cancellations during the year		—			(855.0	)(1)
Revenues recognized during the year		(1,710.3	)		(1,222.8	)		(936.2	)
Ending backlog (end of current year)		3,129.4			1,977.9			1,456.7

(1) In the third quarter of 2015, we acquired a 29% participation in the construction consortium of the GSP gas pipeline project, and, as a result, we incorporated US$1.0 billion in backlog. Due to the termination of the GSP gas pipeline concession on January 24, 2017, we have removed US$855 million from the backlog, representing 30.2% of our E&C backlog.

Infrastructure Backlog

In reflecting an Infrastructure contract in our backlog, we assume that each party will satisfy all of its respective obligations under the contract. For our Infrastructure backlog, we only include contracted revenues expected to be paid during the next three years following the backlog calculation date. Infrastructure backlog in this annual report does not include our Norvial toll road concession or our Energy line of business. Beginning on April 1, 2017, we have transferred backlog relating to Concar from our Technical Services segment to our Infrastructure segment. For ease of comparison, the historical segment financial information included in this annual report presents Concar in the Infrastructure segment. This change does not impact our consolidated financial results.

Our Infrastructure segment backlog does not include intersegment eliminations. We calculate our Infrastructure backlog as follows:

• for the Lima Metro, our Infrastructure backlog assumes that for 2018, 20 new trains will incrementally begin to operate, and that at the end of the year we will operate our 44 trains, which in the aggregate will travel 3,724,052 kilometers for that year. Our backlog also assumes that for 2019 and 2020, we will operate 44 trains at full operation, which in the aggregate will travel 4,811,780 kilometers per year;

• for our Survial and Canchaque concessions, we assume our contractually agreed upon annual fee, adjusted for inflation. For our 2017 and 2018 backlog, we utilize the same adjustment amount that was utilized for our 2016 fee, which has already been negotiated; and

• for La Chira, for 2017 and 2018, backlog is calculated to include the fees we will receive under the concession for our operation and maintenance, adjusted for inflation.

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Our Infrastructure backlog as of December 31, 2017 was US$544.8 million. We expect to recognize as revenues 37.8% of our backlog by December 31, 2018 and 62.2% of our backlog thereafter. The following chart sets forth the growth of our Infrastructure backlog from December 31, 2013 to December 31, 2017.

Infrastructure Backlog (in US$ million)

The following pie chart sets forth our Infrastructure backlog breakdown by line of business as of December 31, 2017.

Backlog by Line of Business

The table below sets forth our ending Infrastructure backlog for 2015, 2016 and 2017, accounting for opening backlog for each year, annual contract bookings, cancellations during the year and adjustments and annual revenues recognized.

	2015			2016			2017
	(in millions of US$)
Opening backlog (end of prior year)		465.4			385.2			519.0
Contract bookings and adjustments during the year		127.8			302.4			288.6
Cancellations during the year
Revenues recognized during the year		(208.0	)		(168.7	)		(262.8	)
Ending backlog (end of current year)		385.2			519.0			544.8

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Real Estate Backlog

Our Real Estate segment backlog reflects sales contracts with buyers for units that have not yet been delivered and will be recognized as revenues once they are delivered.

Our Real Estate segment backlog as of December 31, 2017 was US$25.9 million. We expect to recognize as revenues 72.9% of our backlog by December 31, 2018, and 27.1% thereafter.

The following pie chart sets forth our Real Estate backlog breakdown by type of real estate activities as of December 31, 2017.

The table below sets forth our ending Real Estate backlog for 2015, 2016 and 2017, accounting for opening backlog for each year, annual contract bookings and adjustments, cancellations during the year and annual revenues recognized.

	2015			2016			2017
	(in millions of US$)
Opening backlog (end of prior year)		81.3			111.0			95.9
Contract bookings and adjustments during the year		92.9			107.3			129.6
Revenues recognized during the year		(63.2	)		(122.5	)		(199.5	)
Cancellations during the year		—			—			—
Ending backlog (end of current year)		111.0			95.9			25.9

Technical Services Backlog

In reflecting a Technical Services contract in our backlog, we assume that each party will satisfy all of its respective obligations under the contract and that work under the contract will be completed on a straight-line basis. Our Technical Services segment backlog does not include intersegment eliminations. The following information on our backlog for technical services does not include our backlog from GMD, which we sold on June 6, 2017. Begining on April 1, 2017, we have transferred Concar from our Technical Services segment to our Infrastructure segment. For ease of comparison, the historical segment backlog information included in this annual report presents Concar in the Infrastructure segment. This change does not impact our consolidated backlog.

Our Technical Services backlog as of December 31, 2017 was US$460 million. We expect to recognize 46% of our backlog by December 31, 2018 and 54% of our backlog thereafter. The following chart sets forth the growth of our Technical Services backlog from December 31, 2013 to December 31, 2017.

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Technical Services Backlog (in US$ million)

The table below sets forth our ending Technical Services backlog for 2015, 2016 and 2017, accounting for opening backlog for each year, annual contract bookings and adjustments, cancellations during the year and annual revenues recognized.

	2015			2016			2017
	(in millions of US$)(1)
Opening backlog (end of prior year)		492.5			364.9			513.8
Contract bookings and adjustments during the year		37.3			399.3			273.3
Cancellations during the year		—			—			—
Revenues recognized during the year		(164.9	)		(250.3	)		(327.0	)
Ending backlog (end of current year)		364.9			513.8			460.1

(1) On June 6, 2017, we sold our 89.19% interest in our former subsidiary, GMD. As a result, we present GMD as a discontinued operation in our audited annual consolidated financial statements for the year ended December 31, 2017. We have reclassified our consolidated financial statements for the years ended December 31, 2015 and 2016 included in this annual report, to show GMD as a discontinued operation for those years as well.

The following pie charts set forth our Technical Services backlog breakdown by geography, end-market and client sector as of December 31, 2017.

Backlog by End-Market Backlog by Geography Backlog by Client Type

Warranties

For certain of our contracts, we are required to provide performance bonds to ensure compliance with contractual obligations such as construction works, operation and maintenance of infrastructure assets, among others. The amount of the performance bond varies on a case-by-case basis, depending on the value of the project.

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Performance bonds are usually renewed annually until the contractual obligation which they intend to guarantee is fully satisfied.

As part of our real estate sales contracts, we provide a six-months warranty for latent defects, which covers hidden flaws not discoverable through inspection. The warranty extends to a five-year term if the defects are caused by: (i) the use of materials below the requisite quality standards; (ii) poor execution; or (iii) faulty land. We also provide a five-year warranty for structural defects, and assume the terms and conditions of our finishes suppliers’ warranties.

We provide warranties in connection with our IT services. All government contracts include a latent defects clause, in accordance with Article 51 of the Procurement Act which establishes a minimum warranty of one year, although, for some contracts, we provide warranties for two or three years. For contracts involving the sale of equipment or licensing, we provide the manufacturer’s warranty and, if a claim arises, we transfer the claim to the manufacturer unless we provided an extended warranty. For software development contracts, we provide a one to three years good performance warranty.

We have had no material disbursement or expenditure related to our warranties in the recent past, other than a disbursement in 2015 of US$17 million in respect of a performance bond in connection with the El Nuble project in Peru.

Quality Assurance

In 2017, our operations were certified according to the following international standards:

ISO 9001

ISO 14001

OHSAS 18001

ISO 27001

ISO 20000

Other standards

Engineering and Construction

GMI

x

x

x

GyM

x

x

x

MORELCO

x

x

x

x

Vial y Vives - DSD

x

x

x

Infrastructure

GMP

x

x

x

CONCAR

x

x

x

GyM Ferrovias

x

Technical Services

CAM Chile

x

x

x

x

CAM Colombia

x

x

x

x

CAM Perú

x

x

x

x

ADEXUS

x

x

x

x

x

x

Engineering and Construction:

• GMI: ISO 14001, ISO 9001 and OHSAS 18001; these certifications include ECOTEC, the environmental consulting company of GMI.

• GyM: ISO 9001 for Electromechanical Division and Transport’s Lines of Hydrocarbons; ISO 14001 and OHSAS 18001 for Electromechanical Division.

• Morelco: ISO 14001, ISO 9001 and OHSAS 18001; in addition, ASME ESTAMPES U/S NATIONAL BOARD ESTAMPER.

• Vial y Vives—DSD: ISO 14001, ISO 9001 and OHSAS 18001.

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Infrastructure:

• GMP: ISO 14001, ISO 9001 and OHSAS 18001: certified for oil and gas production processes in lots I and V, gas processing at the Pariñas plant, storage and dispatch of hydrocarbons-derived products in nine terminals (Eten, Salaverry, Chimbote, Supe, Pisco, Ilo, Mollendo, Cusco and Juliaca) and operations carried out at GMP’s Lima headquarters.

• CONCAR: ISO 9001, ISO 14001 and OHSAS 18001 (since Feb 2017).

• CONCAR: ISO 9001, ISO 14001 and OHSAS 18001 (since Feb 2017).

Technical Services:

• CAM Colombia, CAM Chile and CAM Perú have tri-standard. In addition, CAM Chile has NCh ISO 17025 Calibration Laboratory, NCh ISO 17025 Testing Laboratory and NCh ISO 17065 Product Certification Agency. CAM Colombia has ISO/IEC 17020 Certification and ISO/IEC 17025 accreditation. CAM Perú has NTP ISO 17020.

• Adexus: ISO 9001, ISO 14001, OHSAS 18001, ISO/IEC 27001, ISO/IEC 20000-1, SAP Provide of Hosting Partner and SAP in Cloud Provide.

Corporate Social Responsibility

We are committed to the sustainable development of our operations. We seek to create long-term value and conduct business in a manner that is not only economically viable, but also beneficial to greater society and environmentally responsible.

Our Sustainability Policy was approved by our board of directors on January 28, 2016, and its guidelines allow us to focus on seven managerial priorities linked to our stakeholders: ethical conduct, development of people, operational excellence, health and safety, the environment, communication and dialogue and sharing wellbeing.

The focuses of our social investment projects include education and capacity building to foster job creation and the promotion of responsible citizen behavior, particularly among our users, suppliers and neighboring communities.

The following are key programs we perform for the benefit of society:

• Corporate Volunteering: Our corporate volunteering program endeavors to train and promote the community integration of our employees. It brings together enthusiastic employees who want to leave a positive footprint on their environment by volunteering their time and knowledge to improve the community.

In 2017, volunteers participated in the Project to Expand the National Institute of Neoplastic Illnesses (INEN), in which engineers led playshops for children in a local hospital.

• Metro Culture: We conduct workshops that transform trains and train stations into centers of social and cultural education to promote respect and tolerance. In 2017, we carried out 40 workshops.

• Road Safety Education: This program promotes our culture of safety and accident prevention by training communities surrounding roads and highways that we operate or maintain. In 2017, approximately 4,000 road users participated in these workshops.

• Ayni: This social support program aims to improve the quality of life in urban areas by promoting respectful coexistence among new owners of our real estate projects. The initiative trains neighbors on several legal and managerial matters and on conflict management and leadership. In 2017, the program trained 2,400 people.

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• Training: This program trains, during six-month periods, certain stand-out students in Peruvian schools of engineering. Since its creation in 2010, the program has enabled us to recruit 801 junior engineers from Lima and other provinces, lowering the barriers that many young people face to formal employment. In 2017, we recruited 35 outstanding students from Peruvian engineering schools.

• Development of local suppliers: We build the capacities of our local suppliers and help them to develop their businesses by improving the quality of the goods and services they provide and encouraging the adoption of formal and responsible managerial styles. In this way, we make local economies more dynamic.

• Construction Management: In partnership with the Instituto de Educación Superior Tecnológico Público Fe y Alegría (Fe y Alegría Public Higher Technological Institute), we are implementing a technical career titled, “Planning and Control of Construction Projects,” certified by the Peruvian Ministry of Education. The program aims to train young people who cannot afford to increase their employability in construction projects. By 2017, we had 44 graduates, 100% of whom were employed.

• Labor Capabilities: This is a recruitment program where we share construction knowledge and train community members on building techniques, risk prevention and leadership skills. In this way, we increase the employability of members of local communities, generate formal jobs, reduce project risks, develop more efficient recruiting processes, and strengthen the trust with local communities. In 2017, we trained 1,429 participants, 53% of whom joined the Group.

Regulatory Matters

Set forth below is a description of the regulatory framework applicable to our company. We believe we are in compliance, in all material respects, with applicable laws and regulations in all of our business segments.

Engineering and Construction

Regulatory Framework Applicable to Contracts with the Public Sector

As of the date of this annual report, Peru’s Public Procurement Law, approved by Law No. 30225 (Ley de Contrataciones del Estado) and its Regulations, approved by Supreme Decree No. 350-2015-EF, which entered into force on January 9, 2016, governs services and construction agreements entered into with public entities. Article 8 of Supreme Decree No. 350-2015-EF establishes that, at the beginning of the procurement process, the contracting public entity must prepare a technical file describing the characteristics of the services it intends to purchase and the selection process for its counterparts, among other specifications.

The selection processes are established in Article 32 of Supreme Decree No. 350-2015-EF as follows:

• public biddings (licitación pública), applicable to goods and works;

• public tenders (concurso público), applicable to services, including consulting services;

• simplified award (adjudicación simplificada), applicable for the acquisition of any of the following: to (i) goods, if their value is greater than S/33,200 and less than S/400,000; (ii) services, if their value is greater than S/33,200 and less than S/400,000; and (iii) works, if their value is greater than S/33,200 and less than S/1,800,000;

• electronic reverse auction (subasta electronica inversa), applicable to goods and services with a value greater than S/33,200;

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• selection of individual consultants (selección de consultores individuales), applicable for the hiring of qualified consultants who do not need teams of personnel or additional professional support;

• price comparison (comparación de precios), applicable to goods and services that are easy to obtain in the market and that are not manufactured, produced, supplied or provided under a particular description or set of instructions given by the contracting entity; and

• direct contracting (contratación directa), applicable to goods and services, in situations of emergency arising from catastrophic events, involvement of national security, shortages, among other similar reasons.

As established in Articles 49, 60, 66, 71, 77 and 80 of the Supreme Decree No. 350-2015-EF, the selection processes include the following phases:

• in the case of public biddings, public tenders and simplified award: notice; registration of participants; submission and reply of inquiries; submission and reply of comments; preparation of the terms and conditions of the selection process; submission of bids; evaluation and qualification of bids; and award;

• in the case of the selection of individual consultants: notice; registration of participants; submission of bids; evaluation and qualification of bids; and

• in the case of price comparison: notice, submission of bids, and adjudication.

Article 46 of Peru’s Public Procurement Law establishes that any participants in a public procurement processes must be registered in the Peruvian National Suppliers Registry and must not be barred from contracting with the state. Article 234 of the Supreme Decree No. 350-2015-EF establishes that this registration has an indefinite validity and that all contractors must maintain their information up to date.

Bidders may participate in the selection process as part of a joint operation, in which case all members of the joint operation must be registered in the Peruvian National Registry of Suppliers and will be jointly liable for all consequences arising from the joint operation’s participation in the selection process and the execution of the agreement. Certain exceptions to the abovementioned joint liability for joint operations may apply, in cases where a contractor proves that only one party is liable to be sanctioned due to the nature of the infraction, the joint operation formal undertaking or the joint operation agreement.

GyM and GMI are registered in the Peruvian National Suppliers Registry as a construction and a consulting company, respectively.

Article 14 of the Supreme Decree No. 350-2015-EF establishes the types of contracts that may be entered into by public entities:

• lump-sum (sistema a suma alzada), applicable when the amounts, scales and quality are determined in the terms and conditions of the selection process. The bidder submits its proposal indicating a fixed amount and a term for the completion of the agreement;

• unit price, rates or percentages (sistema de precio unitario, tarifas o porcentajes), applicable when the nature of the service to be provided does not allow an accurate determination of the required quantities;

• lump-sum and unit price, rates or percentages mix (esquema mixto de suma alzada y precios unitarios), applicable when accurate determination of the quantities required for some of the components cannot be made; and

• fixed amount plus success fee (honorario fijo y comisión de éxito), applicable in contracts for rendering services. The fixed amount and success fee may be estimated on the basis of percentages.

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Article 15 and the 14^th Complementary Final Disposition of the Supreme Decree No. 350-2015-EF establishes that, in the case of goods and works, the terms and conditions of the selection process must indicate the execution type of the agreement as follows:

• “turn-key” (llave en mano), when completion is subject to the construction, equipment assembly and, if applicable, the assisted operation of works. In case of goods procurement, the installation and commissioning of such goods are also included; and

• bid contest (concurso oferta), when completion is subject to the submission of the technical file and the completion of the works. This completion type is only applicable to lump-sum contracts and public bidding selection process with a referential value exceeding S/10,000,00.

Peru’s Supervisory Authority on Public Procurement (Organismo Supervisor de las Contrataciones del Estado, or OSCE, by its Spanish acronym) is a public-sector entity within the Peruvian Ministry of Economy and Finance, that oversees the selection processes carried out by public entities; manages the Peruvian National Registry; imposes penalties to suppliers that violate the provisions set forth in Peru’s Public Procurement Law, its Regulations and other related provisions; and informs the government’s General Comptroller Office (Contraloría General de la República) regarding violations to the regulations when damages are caused against the State. As of the date of this annual report we do not believe that Peru’s Public Procurement Law and Supreme Decree No. 350-2015-EF will have a material impact on our business.

Pursuant to recent amendments to the Public Procurement Law, companies sentenced for corruption charges, among other criminal offences, or companies whose representatives have admitted committing corruption acts, will be prohibited from participating in public procurement processes.

Regulatory Framework Applicable to Contracts with the Private Sector

Parties to a private-sector agreement may freely determine the contract type and its contents as long as it complies with certain legal requirements, including the provisions set forth in Article 1353 of the Peruvian Civil Code (which states that all contracts, including innominate contracts, must comply with the rules of Section VIII of the Peruvian Civil Code, absent a statute specific to said contract type that collides with said rules). GyM and GMI participate in private-sector contracts for engineering and constructions.

Construction Activities in Peru

Legal Framework

Peru’s Law for the Promotion of Private Investment in Construction, approved by Legislative Decree No. 727 (Ley de Promoción de la Inversión Privada en Construcción), states that construction activities in Peru are in the public interest and a national priority. According to Section F of the Fourth review of the United Nations International Statistical Industrial Classification (ISIC), construction activities typically consist of the construction of dwellings, buildings and stores; and the construction of large scale infrastructure projects such as highways, bridges, tunnels, railways, irrigation systems, sewage systems, industrial facilities, pipelines and electric lines, among others. GyM has developed numerous projects in the construction sector. Currently, the company focuses on buildings (ISIC Division 41), civil works (ISIC Division 42) and specialized activities (ISIC Division 43).

Construction entities must comply with the National Building Regulations, approved by Supreme Decree No. 011-2006-VIVIENDA (Reglamento Nacional de Edificaciones), which establishes that urban allotments and buildings must be developed in compliance with the rules governing safety, functionality, accessibility, habitability and environmental impact. According to Technical Regulation No. G.030 of the National Building Regulations, construction companies, such as GyM and GMI, are responsible for (i) executing works in accordance with project specifications and applicable regulations; (ii) possessing sufficient organization and infrastructure to guarantee the feasibility of the project; (iii) appointing the party responsible for the construction to assume its technical representation; (iv) providing the resources and materials to complete the project pursuant to the terms of the agreement and required standards and within the approved budget; (v) executing subcontracts within contractual limitations; and (vi) delivering to the client documented information regarding the executed works.

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Notwithstanding any legal actions that the construction company may take against suppliers, manufacturers or subcontractors, the construction company may be responsible for all the works, including those executed by subcontractors, and for the use of defective materials or supplies.

Penalties for violating the National Building Regulation are determined by the municipal government in the jurisdiction where the project is developed and set forth in its corresponding regulations. In addition, they may also pursue criminal actions or civil claims if applicable.

Safety Regulation in Construction Projects

The Law on Safety and Health at Work (Law No. 29783) is intended to promote workplace accident prevention and applies to all business sectors. The principal safety rules applicable to construction projects include the following:

• companies with 20 or more employees must establish a committee for the promotion of workplace safety and health that oversees the implementation of the required internal safety and health regulation policy;

• all projects must have a safety and health plan consisting of all the technical and administrative mechanisms to guarantee the physical integrity and health of workers and third parties during project execution;

• companies shall hire an occupational physician and establish an area of occupational medicine;

• companies shall perform periodic audits to verify whether internal safety and health regulations are in accordance with law;

• occupational diseases and work accidents detected during project execution must be recorded and the competent authority must be notified in accordance with the Regulations of the Law on Safety and Health at Work, approved by Supreme Decree No. 005-2012-TR, and with Occupational Health Manual, approved by Ministerial Resolution No. 510-2005-MINSA;

• companies must provide for medical examinations of its employees prior to, during and at the termination of their employment (subject to certain terms and conditions depending on whether the empoyees were engaged in high-risk activities);

• companies must show a safety and health plan; an index of frequency; and the company’s performance in safety and health in order to be awarded public and private projects;

• use of individual protective equipment, including gloves, safety goggles, boots and helmets, is mandatory when risks to safety and health cannot be prevented by other means; and

• personnel responsible for safety must comply with all requirements in Rule NTP 399.010.1 for fire prevention.

The Peruvian Ministry of Labor and Employment Promotion, the National Superintendence of Labor Inspection (the “SUNAFIL”) and the Peruvian Ministry of Health are the competent organisms in the safety and health fields, respectively.

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Safety Regulations Applicable to Subsectors

In addition to the Law on Safety and Health at Work applicable to all our business sectors, our Engineering and Construction segment must also comply with the regulations set forth below.

Power and Utilities

GyM and CAM Peru must comply with the Rules of Safety and Health at Work with Electricity, approved by Ministerial Resolution No. 111-2013-MEM-DM, for its activities relating to the construction of hydroelectric plants, transmission lines and substations. OSINERGMIN is the authority responsible for supervising and enforcing compliance of the foregoing rules. The most relevant of the safety rules with which GyM and CAM Peru must comply include: (i) providing employees with necessary information regarding safety measures related to the tasks they perform; (ii) providing employees with adequate safety equipment; and (iii) evaluating and remedying potential sources of danger.

Mining

GyM must comply with the Mining Occupational Health and Safety Regulation, approved by Supreme Decree No. 024-2016-EM, and other related regulations for their mining-related construction activities including the construction of mineral processing plants and other mining-related buildings, among others. In developing mining projects, our subsidiaries’ personnel must follow the safety programs and be familiar with internal rules from their mining sector client. The SUNAFIL and OSINERGMIN are the authorities responsible for supervising and enforcing compliance of the foregoing rules. The most relevant of the safety rules with which GyM must comply include: (i) creating an internal safety and health regulation policy and selecting a manager responsible for its implementation; (ii) monitoring and recording workplace accidents and occupational diseases; (iii) providing information to employees regarding the safety risks related to their work; (iv) providing employees necessary first aid and medical attention in the event of a workplace accident; (v) providing employees the necessary tools, equipment or materials to perform their activities safely; and (vi) evaluating risks in order to establish accident prevention and mitigation plans.

Oil and Gas

GMP must comply with the Hydrocarbons Safety Regulations, as approved by Supreme Decree No. 043-2007-EM, which are enforced by the OSINERGMIN, while performing any hydrocarbon activities. The most relevant safety rules with which GMP must comply include: (i) assuring that senior project managers are responsible for the safety and health of workers; (ii) assigning specialized personnel responsible for safety and health matters; and (iii) monitoring and recording workplace accidents on a monthly basis.

Industrial Construction

GyM must comply with the Industrial Safety Regulation, approved by Supreme Decree No. 42-F (Reglamento de Seguridad Industrial), for its activities relating to the construction of industrial plants. The most relevant of the safety rules with which GyM must comply include: (i) overseeing that worksites are constructed, equipped and managed to provide security and protection to employees; (ii) instructing employees about risks to which they are exposed related to their work and adopting necessary measures to avoid accidents and damage to employee health; and (iii) overseeing inspections to verify the proper installation of safety equipment.

Registries and Permits

According to Supreme Decree No. 008-2013-TR, civil contractors must be registered in the National Civil Construction Works Registry and comply with the rules of Ministerial Resolution No. 195-2007-TR which sets out the requirements for registration, including registering through the corresponding local agency and filing an affidavit indicating compliance with the registration requirements before the effective date of registration. GyM is currently registered in the National Civil Construction Contractors and Subcontractor Registry.

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According to Supreme Decree No. 005-2008-EM mining contractors must register with the National Mining Contractors and Specialized Companies Registry. GyM is currently registered. Proper registration requires the filing of a request with the Regional Agency of Energy and Mines with jurisdiction in the area where the mining activities will take place. In addition, within five days upon commencement of construction, GyM must provide in writing its employees with the following information: (i) the company’s legal name; (ii) the scope of the contract; (iii) the place of execution; (iv) the applicable health and safety regulations; (v) the Safe Work Written Procedures (PETS); and, (vi) risk insurance policies.

Labor Law Requirements in Civil Construction

Labor law requirements in civil construction consist of the specific legal framework for civil construction workers and the general legal framework applicable to the administrative personnel in the civil construction sector set forth in the Single Revised Text of the Labor Productivity and Competitiveness Law, approved by Supreme Decree No. 003-97-TR.

Seasonality of services is one of the main features in the specific legal framework due to the temporary nature of construction contracts. Consequently, certain general rules such as the trial period are not applicable to construction workers.

The principal terms and conditions relating to collective bargaining from our civil construction workers have been agreed upon and recorded in the 2017-2018 agreement, dated August 25, 2017, and entered into between the Peruvian Chamber of Construction and the Federation of Civil Construction Workers (Federación de Trabajadores en Construcción Civil). By means of the 2017-2018 agreement, the parties have, among other things, agreed on an increase in the daily wage of such employees.

The Supreme Decree No. 009-97-SA, Law No. 26790 and Supreme Decree No. 003-98-SA require construction companies to have complementary high-risk insurance for workers that perform high risk tasks. As of the date of this annual report, GyM has this insurance coverage.

The insurance coverage provides medical care for injured workers to allow them to achieve full recovery. Moreover, it provides pensions to workers or their beneficiaries in case the worker becomes handicapped or dies as a result of a work accident or occupational disease.

Environmental Regulations

Section 24 of the General Environmental Law, approved by Law No. 28611 (the “General Environmental Law”), provides that all human activity likely to cause significant environmental impact is subject of regulation by the National System of Environmental Impact Assessment. The Peruvian Ministry of the Environment, through the Environmental Supervising and Enforcement Agency (Organismo de Evaluación y Supervisión Ambiental, or “OEFA”) supervises compliance with the law and enforces environmental rules related to mining, oil and gas and electricity.

In addition to being responsible for the impact that its activities, by action or omission, may have on the environment, GyM is also subject to an environmental impact assessment and must obtain an environmental certification necessary to obtain project permits or licenses. GyM must also adopt measures for the management of hazardous materials intrinsic to its activities to mitigate the negative environmental impact its activities may have.

Civil Construction

The Supreme Decree No. 015-2012-VIVIENDA (modified by the Supreme Decree No. 004-2015-VIVIENDA) regulates the environmental aspects of projects related to housing, urbanism, construction and sanitation activities in urban or rural areas. The National Directorate of Housing, Urbanism, Construction and Sanitation supervises the compliance and enforces the applicable rules. Projects are categorized according to their environmental impact during and after their execution and different rules are established for each category including compliance with the following environmental studies prior to starting construction works: (i) projects expected to cause minor environmental impacts require an environmental impact statement; (ii) projects expected to cause moderate environmental impacts require a semi-detailed environmental impact assessment; and (iii) projects expected to cause a major environmental impact require a detailed environmental impact assessment.

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Other Subsectors

Depending on the subsector in which it operates, GyM is required to follow specific environmental provisions issued by the competent authorities. For example, with respect to hydrocarbon activities, the Ministry of Energy and Mines has enacted the Oil and Gas Environmental Regulations, by means of Supreme Decree No. 039-2014-EM.

Tax Legal Regime Applicable to Construction

Section 63 of the Peruvian Income Tax Law, approved by Supreme Decree No. 179-2004-EF, establishes that construction companies engaged in construction contracts for a period longer than one fiscal year can choose to be taxed under any of the following systems:

• allocate to each fiscal year the gross income resulting from applying the percentage of gross margin estimated for the work over the amounts collected for the same work; or

• allocate to each fiscal year the gross income calculated by deducting the costs corresponding to the tasks performed during that year from the amount collected or that is expected to be collected corresponding to that work.

In both situations, a special accounting registry must be kept for each project, which is meant to keep a record of the costs, expenses and income of each project in an account separate from the general analytical accounts (cuentas analíticas de gestión).

Until December 31, 2012, construction companies could defer revenues related to each individual project until the total completion of the project, provided the project was completed in three years or less. In such cases, the income was to be recognized in the fiscal year in which the project concluded or was delivered. In case the project was scheduled to conclude in a period exceeding three years, the results would be determined in the third year in accordance with the progress of the works over the three-year period. Beginning in the fourth year, results were determined following the foregoing methods.

Starting on January 1, 2013, in accordance with Legislative Decree No. 1112, which amended the Peruvian Income Tax Law, construction companies that adopted the deferral method are authorized to continue with the use of such method only with respect to income arising from the execution of work contracts initiated prior to January 1, 2013, until their completion, and for execution of work contracts initiated on or after January 1, 2013 the deferral method is no longer accepted.

The Peruvian Income Tax Law also provides that the difference that may result from a comparison between the real gross income and the income assessed pursuant to any of the methods described above shall be allocated to the fiscal year in which the work concluded. Additionally, the company must apply the same system to all its construction contracts and must receive prior authorization from tax authorities to change the applied system.

Prevention of Money Laundering and Financing of Terrorism

Regulations for money laundering and terrorism financing prevention, approved by SBS Resolution No. 789-2018 (which has replaced SBS Resolution No. 486-2008 as of March 15, 2018), require construction and real estate companies to implement a money laundering and terrorism financing prevention system, including, among others, the appointment of a compliance officer, setting up a registry of operations and notifying the Financial Intelligence Unit of the SBS, the entity responsible for supervising and enforcing compliance, of any suspicious activity.

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Infrastructure

Infrastructure and Public Services through Public Private Partnership Contracts

In recent years, the Peruvian state has implemented a new regulatory framework (Single Supreme Decree No. 254-2017-EF, Legislative Decree No. 1224 and its regulations, approved by Supreme Decree No. 410-2015-EF) to set forth the procedures and mechanisms for enhancing private investment for the development of public infrastructure, public services, any ancillary services, applied research projects and/or technological innovation, through Public-Private Partnerships (PPP) and Projects with State Assets.

The main aspects of the new legal framework are the following:

1. The Ministry of Economy and Finance (Ministerio de Economía y Finanzas) is the governing authority of the National System for the Promotion of Private Investment (SNPIP), composed by ministries and public agencies of the national government, the Agency for the Promotion of Private Investment—ProInversión, and regional and local governments.

2. Private investment projects will comprise the following stages: (i) planning and programming, (ii) formulation, (iii) structuring, (iv) transaction, and (v) contract execution. Great emphasis is given to the Evaluation Report (Informe de Evaluación), a document determining the economic, financial and legal viability of a potential Public Private Partnership applying, where appropriate, the national public investment system. Investors are entitled to receive from the Peruvian state: (a) in the case of self-financed projects, taxes and tolls to be collected from final consumers; (b) in the case of co-financed projects, subsidies and payments from the public entity awarding the project; and (c) any other financing structure agreed between the parties.

3. The management of Public Private Partnership contracts by the three levels of government (central, regional and local) is regulated.

4. For projects in regulated sectors, the monitoring of Public Private Partnership contracts is subject to the provisions of the Law No. 27332, Framework Law on Regulators. According to this law, OSIPTEL, OSITRAN, SUNASS and OSINERGMIN should primarily safeguard the compliance of service levels agreed in Public Private Partnership contracts. For this purpose, Public Private Partnership contracts must establish the necessary arrangements to ensure timely and efficient supervision during the contract execution stage. To this end, public entities are required to ensure timely participation of regulatory agencies in the arbitration, when decisions and matters related to the competence of those bodies are discussed.

5. Favorable opinions for the Public Private Partnership Agreements from the General Comptroller Office of Peru are required. The General Comptroller will issue a report on any aspects that may jeopardize the financial capacity of the Peruvian state, according to Law No. 27785, Organic Law of the National Control System and the General Comptroller of Peru.

6. Investors interested in participating as bidders in private investment processes must review the list of restrictions and prohibitions established in the Public Procurement Law. Whether an investor is barred from participating shall be determined through administrative channels, and such restriction will apply to any expected strategic partners as well. Furthermore, it is stated that, the restriction would extend to strategic partners and to companies who have exercised direct control over the investor, as indicated in the regulations approved by the Superintendence of the Stock Market.

7. The development of projects related to assets owned by the Peruvian state (Legislative Decree No. 674, Law Promoting Private Investment in State Enterprises) can be carried out by private sector initiatives, without committing any public resources or transferring any risks to public entities, unless expressly required by law.

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Each of our subsidiaries Norvial, Survial, Canchaque and GyM Ferrovías has entered into a concession agreement with ProInversión and the Peruvian Ministry of Transportation and Communications. La Chira has entered into concession agreements with ProInversión and Sedapal S.A. The abovementioned agreements were entered into in accordance with the provisions in force at the time of their execution.

Infrastructure Construction and Safety

Infrastructure concessionaires must assure that the construction companies they hire to construct infrastructure projects comply with the foregoing rules relating to construction projects. In addition, companies engaged in road construction must comply with the guidelines issued by the Road and Railways General Directorate of the Peruvian Ministry of Transportation and Communications and with the National Road Infrastructure Management Regulation regarding road construction, maintenance and safety. These regulations establish procedures for authorizing road construction and approving work contracts, among others.

Environmental Regulations

Peruvian environmental laws and regulations have become increasingly stringent over the last decade. All industries and projects are subject to Peruvian laws and regulations concerning water, air and noise pollution, and the discharge of hazardous substances. The main legislation governing environmental matters is the General Environmental Law; the Law of the National System of the Environmental Impact Evaluation, approved by Law No. 27446 (the “SEIA”); the regulations of the SEIA Law, approved by Supreme Decree No. 019-2009-MINAM; and several environmental regulations that have been issued under the General Environmental Law, SEIA and other laws by the government with the collaboration of the Peruvian Ministry of the Environment.

Since the enactment of the General Environmental Law in October 15, 2005, several technical environmental regulations have been issued and this environmental regulatory framework is generally revised and updated regularly. Some regulations apply generally to Peruvian industries and some technical regulations are issued for specific industries.

The main environmental rules applicable to infrastructure projects include those described above in “—Engineering and Construction—Environmental Regulation.”

Peruvian Hydrocarbon Regulation

Our hydrocarbon operations are subject to governmental regulations as described below.

Exploration and Production

GMP is engaged in two major activities relating to the exploration and production of oil and gas: exploration and production of oil fields; and providing services to the oil industry.

Exploration and Production of Oil Fields

Peru’s hydrocarbon legislation regarding oil and gas exploration and production activities includes, among others, the Hydrocarbon Organic Law and the regulations governing the qualification of petroleum companies; the exploration and production of hydrocarbons; the transportation of hydrocarbons; hydrocarbons pipelines and safety requirements in such activities.

The foregoing regulations define the roles of Peruvian government agencies which regulate the oil and gas industry; provide the framework for the promotion and development of hydrocarbon activities based on the principles of private-sector competition and access to all economic activities; and set the safety and security standards as well as the legal proceedings for carrying out operations.

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The Peruvian Constitution establishes that the government is the sole proprietor of underground hydrocarbons within its national territory. However, the Peruvian government has granted Perupetro, a state-owned company authorized to negotiate and enter into agreements for the exploration and/or production of hydrocarbons, the ownership right over the hydrocarbons extracted which allows Perupetro to enter into such agreements. Furthermore, the Peruvian Ministry of Energy and Mines, the Environmental Evaluation and Supervision Agency (“OEFA”) and OSINERGMIN constitute public entities that play an active role in oil and gas regulation.

The Peruvian Ministry of Energy and Mines is responsible for devising energy and mining policies; supervising activities in the energy and mining sectors; and promoting investments in those sectors. Within the Peruvian Ministry of Energy and Mines, the General Directorate of Hydrocarbons (“DGH”) is responsible for regulating the development of oil and gas fields and the General Directorate of Energy-Related Environmental Affairs (“DGAAE”) is responsible for reviewing and approving regulations related to environmental risks associated with hydrocarbon exploration and production activities.

OEFA is a public entity ascribed to the Peruvian Ministry of the Environment and is responsible for evaluating and ensuring compliance with applicable environmental rules covering hydrocarbon activities, as well as for initiating sanctioning proceedings when a breach of an environmental regulation occurs. OSINERGMIN is a public entity ascribed to the Presidency of the Council of Ministers’ (Presidencia del Consejo de Ministros) office and is responsible for ensuring compliance with safety and security standards in the hydrocarbon industry, as well as for sanctioning proceedings. GMP is subject to the supervision, authority and regulations enacted by the foregoing agencies.

Regarding hydrocarbon exploration and production activities, companies are required to enter into either a licensing or a services agreement with Perupetro; other contractual arrangements are permitted with prior approval from the Peruvian Ministry of Energy and Mines. The foregoing agreements are governed by private law and must be approved by the Peruvian Ministry of Energy and Mines and the Peruvian Ministry of Economy and Finance. In licensing agreements, licensees obtain authorizations to explore and produce hydrocarbons in a determined area, are granted ownership over the extracted hydrocarbons and are subject to the payment of royalties. Licensees may trade the hydrocarbons with no limitations on sales prices, except in the event of a national emergency.

Services agreements grant contractors the right to perform hydrocarbon exploration and production activities in a determined area and receive compensation according to the production of hydrocarbons. The contractor is technically and financially responsible for the operations, but Perupetro maintains the ownership over the hydrocarbons extracted. GMP is party to services agreements with respect to Blocks I and V, and to licensing agreements with respect to Blocks III and IV. Each block has an independent contract with Perupetro.

Services and licensing agreements are intended for the development, production and eventually transportation of hydrocarbons, as well as for certain storage activities. Services and licensing agreements commonly include a minimum performance schedule guaranteed by performance bonds and require corporate guarantees to be issued to secure the contractor’s compliance to the provisions established by the parties.

Additionally, a company must be qualified by Perupetro prior to entering into hydrocarbon exploration and production agreements. In order to qualify, a company must meet the standards under the Regulations on the Qualification of Petroleum Companies (approved by means of the Supreme Decree No. 030-2004-EM), requiring companies to demonstrate that they have the technical, legal and financial capacity to comply with all the obligations they will assume under the agreement with Perupetro. Such capacities are measured according to the characteristics of the area to be explored or produced, the expected investment required for the project, and the strict fulfillment of the rules regarding prior consultation (if applicable), citizen participation and environmental issues related to the operation’s performance. Upon a positive evaluation, the company is issued a qualification certificate from Perupetro that allows it to initiate the negotiations of the agreement; notwithstanding the company remains responsible for obtaining all other licenses, permits and approvals required by applicable regulation.

Under the current regulation, 30 years is the maximum term of services and licensing agreements for the production of crude oil. On the other hand, natural gas and condensates-related services or licensing agreements have a maximum term of 40 years. Graña y Montero acts as GMP’s guarantor in all of the Block I, Block III, Block V and Block VI contracts.

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GMP must comply with Supreme Decree No. 043-2007-EM for its activities relating to hydrocarbons in all phases. The OSINERGMIN is the authority responsible for the supervision and enforcement of the foregoing rules.

Services to the Petroleum Industry

Peruvian regulation provides that all companies that enter into a service agreement with any company that holds a licensing or services agreement must be registered as a subcontractor in the Hydrocarbons Public Registry in case they render any of the following services: (i) geological studies, geophysical studies, petroleum engineering related to drilling operations, production and well services; or (ii) construction of oil pipelines, gas pipelines, refineries and their maintenance, and specialized transportation by land, air, sea or river. In order to register a company as a subcontractor in the Hydrocarbons Public Registry, prior authorization from the General Directorate of Hydrocarbons (“DGH”) of the Peruvian Ministry of Energy and Mines is required.

On June 1, 2004, GMP was included as a subcontractor for the petroleum industry in the Hydrocarbons Registry of Lima’s Public Registry of Legal Entities; such registry remains in force as of the date of this annual report.

Environmental Regulations

The Peruvian Ministry of Energy and Mines is responsible for enacting environmental regulation for the oil and gas sector. The Oil and Gas Environmental Protection Regulation, approved by Supreme Decree No. 039-2014-EM, sets out the legal framework and specific rules applicable to the exploration, production, refinement, processing, transportation, commercialization, storage and distribution of hydrocarbons, with the aim of preventing, controlling and remedying the negative environmental impacts arising from the foregoing activities.

The Peruvian Ministry of the Environment establishes general rules applicable to different activities in several sectors, in contrast to the specific rules enacted by the Peruvian Ministry of Energy and Mines regarding the oil and gas sector. Environmental laws and regulations are enforced by the National Environmental Enforcement Agency, OEFA (Organismo de Evaluación y Fiscalización Ambiental) which was created in 2008. Sanctions range from warnings and fines to suspensions of activities and mitigation of environmental damages, among others. In this regard, a breach of the obligations contemplated in the Environmental Impact Assessments in the hydrocarbons sector may originate fines up to 30,000 Tax Units (approximately US$39 million or S/124 million) according to the applicable law.

The main environmental rules applicable to GMP’s hydrocarbon projects include:

• obtaining an environmental certification and adopting the necessary measures to prevent and/or mitigate environmental impacts resulting from their activities;

• meeting minimum size, environmental and safety requirements applicable to worksites; handling and storing of hydrocarbons pursuant to safety and environmental requirements; establishing programs to monitor environmental issues; and

• providing training on environmental matters related to employee and personnel activities and responsibilities, especially with respect to regulations and procedures established for environmental protection and the environmental and legal consequences of non-compliance.

Operation of Terminals

In accordance with the Glossary, Acronyms and Abbreviations for the Hydrocarbons Subsector approved by Supreme Decree No. 032-2002-EM, a terminal is a facility that includes storage tanks, submarine lines or docks for receiving or dispatching liquid hydrocarbons and facilities related to activities of storage and reception and/or dispatch of liquid hydrocarbon from/to vessels.

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Consorcio Terminales and Terminales del Perú are two joint operations conducted by GMP and Oiltanking Peru S.A.C. which currently operates ten of Petroperú’s terminals in Peru: (i) the South Terminals of Pisco, Mollendo, Ilo, Juliaca and Cuzco; and (ii) the North Terminals of Eten, Salaverry, Chimbote and Supe; including Callao, respectively. Consorcio Terminales and Terminales del Perú provide hydrocarbons handling and storage services in Peru for gasoline, aviation fuel and diesel, among others.

The operation of both the South and North Terminals was granted through the “South Terminal Operation Agreement” and the “North Terminal Operation Agreement” (the “Operation Agreements”) dated February 2, 1998, by and among Petroperú and Consorcio Terminales. The Operation Agreements resulted from two tenders in accordance with Legislative Decree No. 674, and mandate that Consorcio Terminales, as operator of the terminals, be responsible for the storage, handling, additivation and dispatch of hydrocarbons in such facilities.

The initial term of the Operation Agreements was 15 years; however the parties agreed to extend the duration of the agreement to an additional 18 months ending in August 2014. The purpose of this extension was to undertake the additional investments that were necessary to satisfy the national demand increase and to perform operative and safety-related improvements to the facilities. In July of 2014, the Operation Agreements were extended for an additional four years ending in July of 2018. We expect to extend such agreements, at least for a few months.

In executing its operations, Consorcio Terminales is committed to develop and follow a work program which must include an investment schedule. The work program performed included the installation of fire protection systems and loading systems, among others and was secured by a performance bond.

GMP’s activities as a part of Consorcio Terminales fall under the scope of the Hydrocarbons Storage Safety Regulation, approved by Supreme Decree No. 052-93-EM. Consorcio Terminales is registered in the Hydrocarbon Registry of OSINERGMIN and is authorized to perform transportation activities such as loading and unloading hydrocarbons from vessels on the terminals. This regulation establishes the conditions under which GMP can operate and maintain storage facilities for hydrocarbons. For instance, the regulation specifies the technical requirements for storage systems, which vary depending upon the kinds of hydrocarbons stored. Moreover, pursuant to this regulation, GMP must establish procedures to minimize potential risks that these facilities present for employees, third parties and properties.

Gas Processing Plants

In accordance with the Glossary, Acronyms and Abbreviations for the Hydrocarbons Subsector, approved by Supreme Decree No. 032-2002-EM, a processing plant is a facility where the natural characteristics of hydrocarbons are changed to break them into the different compounds that comprise them, as well as the subsequent transformations to convert the hydrocarbons into fuel of specific qualities and suitable for transportation. This includes the facilities where the impurities, hydrogen sulfide, carbon dioxide, water and hazardous components are removed from natural gas.

Our processing and fractionation activities fall under the scope of regulations governing hydrocarbons refinement and processing including regulations on the design, construction, operation and maintenance of refineries and hydrocarbons processing plants, the oil refining process, the manufacture of natural asphalts, oil and lubricants, basic petrochemical activities and the processing of natural gas and condensates. In order to comply with these regulations, GMP must take cautionary measures in order to protect the safety of its employees and its facilities, protect the environment, preserve energy resources and ensure the quality of the products or services it delivers. For instance, GMP’s plant operations must be authorized by the General Direction of Hydrocarbons and comply with fire safety regulations. In the event of an accident, GMP must notify the Peruvian Ministry of Energy and Mines, the Peruvian Ministry of Labor and the Peruvian Social Security Administration.

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Terms of our Concessions

Our concessions are subject to certain terms and conditions established in each concession agreement. During the term of the concessions, we are responsible for the construction and maintenance of the infrastructure necessary to their operation. The concession agreements establish minimum capital stock requirements for our concessionaire subsidiaries as follows: US$15 million (S/50 million), US$8 million (S/27 million), US$0.8 million (S/2.7 million), S/46 million and S/100 million for Norvial, Survial, Canchaque, La Chira and the Lima Metro, respectively.

The concession agreements establish grounds for termination including mutual agreement of the parties thereto, force majeure and breach of certain contractual obligations. Additionally, in the case of La Chira and the Lima Metro, the agreement can be terminated unilaterally by the grantor, with the payment of compensation. On the expiration date, all of the assets that are essential for the operation of the concession are considered the state’s property and no compensation is paid to the concessionaire.

In the event that changes in legislation or regulations that are exclusively related to the financial conditions of the earnings and/or costs associated with the investment, operation or conservation of the infrastructure, affect the economic terms of the contract by 10% or more, the concession agreements set forth economic terms adjustment mechanisms aimed at restoring the economic and financial equilibrium. See “—Infrastructure—Principal Infrastructure Lines of Business.”

Real Estate

Since 1987, we have been operating in the Peruvian real estate sector. In 2008, we incorporated Viva GyM to concentrate the group’s activities in this sector including promoting and managing real estate projects including affordable housing and housing and commercial real estate projects.

Zoning Regulations

Article 79 of the Municipalities Organic Law (Law No. 27972) establishes that municipal governments are the exclusive authority responsible for approving urban and rural development plans, as well as the zoning of urban areas under their jurisdiction. Peruvian regulation states that urban zoning refers to the division of a municipal jurisdiction in zones for specific usage, such as residential, commercial, industrial or mixed-use.

The main zoning rules applicable to our real estate projects include the following: obtaining a construction license from the corresponding local municipality before commencing construction, reconstruction, conservation or repair of any property.

Environmental Regulations

The Environmental Protection Regulation for real estate, urbanism, construction and regularization related projects, approved by Supreme Decree No. 015-2012-VIVIENDA, sets out to prevent, mitigate, control and remedy negative environmental impacts that may arise from real estate developments. Prior to initiating construction works, companies are required to obtain an environmental authorization from the Housing, Urbanism, Regularization or Construction National Directorate of the Peruvian Ministry of Housing, Construction and Sanitation and to comply with the provisions set forth in the corresponding environmental impact assessment.

The main environmental rules applicable to our real estate projects include the following:

• undertaking an environmental impact assessment; and

• requesting the environmental classification of our projects, which depends on the environmental risks associated therewith.

Licenses

Article 10 of the Single Revised Text of the Urban Habilitation and Buildings Law, approved by Supreme Decree No. 006-2017, establishes the license requirements for urban habilitation and construction, depending on land size, the dimensions of the work to be undertaken and the financial target.

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Upon completion of the real estate development and construction stages, as the case may be, the following requirements must be met:

• for urban development, the reception of the works (recepción de la obra) must be requested to the corresponding municipal government in compliance with Article 19 of the Single Revised Text of the Urban Habilitation and Buildings Law; and

• for construction, the conformity of the works (conformidad de obra) must be requested to the corresponding municipal government in compliance with Article 28 of the Single Revised Text of the Urban Habilitation and Buildings Law, accompanying the request with the construction plans and the construction statement (a description of the technical conditions and characteristics of the work performed).

Exclusive and Common Property Real Estate Units Regimes

The Law on the Buildings Regularization, on the Factory Declaration Proceeding and on the Exclusive and Common Property Real Estate Units Regime, approved by Law No. 27157, establishes the legal regime applicable to real estate comprised of assets with exclusive and common property, including, among others, (i) apartment buildings; (ii) condominiums; (iii) units under co-ownership; and (iv) commercial spaces, such as galleries and malls. The foregoing construction projects must include internal by-laws prepared or approved by the sponsor or builder, or by the owners with the vote of the majority of participating owners, the content of which is regulated in Article 42 of the aforementioned law. Articles 40 and 41 of the foregoing law itemize the assets and services that qualify as common.

Owners of real estate units have the opportunity to choose between the exclusive and common property regime, and the independent and co-ownership regime. The internal by-laws, the owner’s assembly minutes, all construction plans, architectural division plans, perimetric boundaries and the construction statement must be registered in the Real Estate Registry of the corresponding jurisdiction. Upon completion of the proper registries, units are registered independently from one another.

Fondo Mivivienda

The acquisition of affordable housing units developed by Viva GyM is often financed by Fondo Mivivienda S.A., a publicly owned financial institution established in 1998 by Law No. 26912, with the purpose of (i) promoting and financing the acquisition, bettering and construction of houses, especially those of social interest; (ii) carrying out activities related to the fostering of capital flows to the housing financing market; (iii) participating in the primary and secondary markets of mortgage credits; and (iv) contributing to the development of the capital markets.

Prevention of Money Laundering and Financing of Terrorism

SBS Resolution No. 789-2018 (that has replaced SBS Resolution No. 486-2008 as of March 15, 2018), as amended from time to time, requires construction and real estate companies to implement a money laundering and terrorism financing prevention system, including, among others, appointing a compliance officer, setting a registry of operations and notifying the Financial Intelligence Unit of the SBS, the entity responsible for supervising and enforcing compliance to the resolution referred to herein, of any suspicious activity.

Public- and Private-Sector Contracts

Concar provides services in compliance with Peru’s Public Procurement Law and its Regulations, approved by Supreme Decree No. 350-2015-EF, as amended, when dealing with public counterparties; and with the regulation set forth in the Civil Code when dealing with private counterparties. Such regulations establish the different types of selection processes which companies may undergo when contracting with the state, as well as the rules and conditions applicable to such processes. They also establish general rules applicable to contractual relationships among private parties. See “—Engineering and Construction” for more information on the applicable legal frameworks. Concar is registered with the Peruvian National Registry of Suppliers, required to act as supplier for public entities.

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Technical Services

Intellectual Property

Certain operations of GMI and GMD are protected by Peruvian Copyright Law, approved by Legislative Decree No. 822, specifically the engineering drawings and software registered in the INDECOPI Copyright Registry. However, the company’s business and profitability are not dependent on patents or licenses; industrial, commercial or financial contracts; or new manufacturing processes.

Dimension Testing Services

CAM Peru S.R.L. provides the dimension testing service of electrical meters, for which it must be a registered testing entity as provided by Technical and Commercial Regulations Commission Resolution No. 0065-1999/INDECOPI-CRT. As of the date of this annual report, Cam Peru S.R.L, is registered as an accredited provider of electricity meters dimension-testing services. The pertaining registration can be renewed for consecutive periods, provided that a request is filled 60 days prior to expiration. If Cam Peru S.R.L. does not comply with the rules approved by the INDECOPI, said governmental authority may impose a suspension or revoke the registry.

C. Organizational Structure

The following organizational chart sets forth our principal operating subsidiaries within our four business segments

(1) In June 2018, Graña y Montero transferred economic rights over 48.8% of the share capital of Norvial S.A. The company continues to possess voting rights over such share capital of Norvial. S.A.

(2) 36.10% of the share capital in Viva GyM is held by our subsidiary GyM.

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The following charts set forth the principal activities of each of our four business segments:

The following is a brief description of our principal operating subsidiaries:

• Engineering and Construction:

• GyM S.A. (“GyM”), incorporated in Peru, is one of the oldest and largest construction companies in Peru. Graña y Montero owns 98.24% of GyM; the remaining 1.76% is held by former and current company executives.

• Vial y Vives—DSD S.A. (“Vial y Vives—DSD”), incorporated in Chile, is an engineering and construction company specialized in the mining sector and in providing services to the energy, oil and gas, and cellulose sector. GyM, through GyM Chile SpA, owns 94.49% of Vial y Vives—DSD; Inversiones VyV S.A., a company controlled by the founders of Ingeniería y Construcción Vial y Vives S.A., (which merged to form Vial y Vives—DSD) owns 1.36%; and the remaining 4.15% is held by third parties.

• GMI S.A. Ingenieros Consultores (“GMI”), incorporated in Peru, is primarily engaged in engineering consultancy for projects in the mining, hydrocarbons, electrical, agricultural, industrial, tourism and transportation sectors. Graña y Montero owns 89.41% of GMI; 5.0% is held by current and former company executives; and the remaining 5.59% is held by third parties.

• Morelco S.A.S. (“Morelco”), incorporated in Colombia, is a recognized specialist in electromechanical assemblies, civil works, and services for the oil and gas and other energy sectors. Our subsidiary GyM S.A. owns 70.0% of Morelco, and the remaining 30% is held by the Serna family in trust.

• Infrastructure:

• Toll Roads:

• Norvial S.A. (“Norvial”), incorporated in Peru, is the concessionaire of the 183 km stretch between Ancón and Pativilca of the Panamerican Highway. Norvial is comprised of common shares (Type A), and non-voting shares (Type B). Graña y Montero owns 52.0% of the common shares of Norvial and JJC Contratistas Generales S.A., a Peruvian construction company, owns the remaining 48.0%. Inversiones en Autopistas S.A. owns 75.1% of the non-voting shares and JJC Contratistas Generals S.A. the remaining 24.9%.

• Survial S.A. (“Survial”), incorporated in Peru, is the concessionaire of the 750 km highway between Marcona and Urcos in Peru. Graña y Montero owns 99.995% of Survial, and the remaining 0.005% is held by Concar S.A.

• Concesión Canchaque S.A.C. (“Canchaque”), incorporated in Peru, is the concessionaire of the 78 km highway between the towns of Buenos Aires and Canchaque in Peru. Graña y Montero owns 99.96% of Canchaque, and the remaining 0.04% is held by Concar S.A.

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• Concar S.A., incorporated in Peru, is engaged in the operation and maintenance of infrastructure assets. Graña y Montero S.A.A. owns 99.9983% of Concar and the remaining 0.0017% is held by GyM S.A. Beginning on April 1, 2017, we have transferred Concar from our Technical Services segment to our Infrastructure segment.

• Mass Transit:

• GyM Ferrovías S.A. (“GyM Ferrovías”), incorporated in Peru, is the concessionaire of the Lima Metro. Graña y Montero owns 75.0% of GyM Ferrovías; the other 25.0% is held by Ferrovías Participaciones S.A., a railway infrastructure company.

• Water Treatment:

• Concesionaria La Chira S.A. (“La Chira”), incorporated in Peru, is the concessionaire of La Chira waste water treatment plant in southern Lima, Peru. Graña y Montero owns 50.0% of La Chira; the other 50.0% is held by Acciona Agua S.A, an affiliate of a waste water treatment and distribution company.

• Energy:

• GMP S.A. (“GMP”), incorporated in Peru, is engaged in the oil and gas business and provides hydrocarbon extraction services to Perupetro S.A., a Peruvian state oil company; owns a gas processing plant; and, through a joint operation with a Peruvian affiliate of Oiltanking GmbH, operates ten fuel terminals in Peru. Graña y Montero owns 95.0% of GMP; the remaining 5.0% is held by a former company executive.

• Real Estate:

• Viva GyM S.A. (“Viva GyM”), incorporated in Peru, is focused on the development and sale of affordable housing and housing, as well as other real estate projects such as office buildings and shopping centers. Graña y Montero directly owns 63.44% of Viva GyM, with GyM owning an additional 36.10%; and the other 0.46% is owned by a company executive.

• Technical Services:

• CAM Chile S.A. (“CAM”), incorporated in Chile, provides field and specialized electrical services in Chile, Colombia, and Peru. Graña y Montero owns 73.16% of CAM; 24.39% is held by El Condor Combustibles S.A., which is part of a Chilean economic group and the remaining 2.45% is held by Inversiones y Asesoría Samburu Limitada, which belongs to a former executive of the company.

• Adexus S.A. (“Adexus”), incorporated in Chile, provides development and implementation solutions for information technology in Chile, Peru and Ecuador. Graña y Montero owns 100% of Adexus.

D. Property, Plant and Equipment

Approximately 76.8% of our assets are located in Peru, with the balance located primarily in Chile and Colombia. At December 31, 2017, the book value of all our land (excluding real estate inventories) and buildings, machinery and equipment was US$266.8 million (S/.865.7 million). We currently lease certain machinery and equipment from vendors. The term of our leasing contracts ranges from two to five years, depending on the nature of the equipment. Leased machinery and equipment are capitalized for accounting purposes. Our principal executive offices, which we lease, are located at Av. Paseo de la República 4667, Surquillo, Lima 34, Peru and Av. Petit Thouars 4957, Miraflores, Lima 18, Perú.

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Insurance and Contingency Planning

We have insurance coverage for fire; strike, riot, malicious damage, vandalism and terrorism; loses or damages to construction machinery and equipment; destruction or disappearance of property; civil liability, including physical harm to third parties; professional liability; transportation; vehicle theft, collision, rollover, fire and accidents; and directors and officers liability. Additionally, we carry different policies for specific risks related to our business segments. Our management considers this coverage to be sufficient to cover probable losses and damages, taking into consideration the nature of our activities, the risks involved in our transactions and the advice of our insurance brokers.

We also have contingency plans in place in order to protect our company and the interests of our clients. In the event of an emergency, we have procedures in place designed to minimize any resulting interruption in service to our most critical business processes.

Moreover, in the event of an emergency, we have systems and procedures in place that minimize the impact of unplanned downtime to our IT services’ clients. Our data centers have redundant facility systems and infrastructure to provide continued operation on each of them, complying with international standards such as ISO/IEC 27001 and ISO 9001.

ITEM 4A. UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The following discussion should be read in conjunction with our consolidated financial statements included in this annual report, which have been prepared in accordance with IFRS issued by the IASB. The following discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those discussed in the forward-looking statements as a result of various factors, including, without limitation, those set forth under “Part I. Introduction—Forward-Looking Statements” and “Item 3.D. Key Information—Risk Factors.”

A. Operating Results

Overview

We are the largest engineering and construction company in Peru as measured by revenues during 2017, and one of the largest publicly traded engineering and construction companies in Latin America as measured by market capitalization as of December 31, 2017, with strong complementary businesses in infrastructure, real estate and technical services. With more than 80 years of operations, we have a long track record of successfully completing the engineering and construction of many of the country’s landmark private and public sector infrastructure projects. Beginning in the mid-1980s, we decided to leverage our engineering and construction expertise into complementary lines of business. We have also undertaken the engineering and construction of large and complex projects outside our home market throughout our history. More recently, we decided to expand our activities into other key markets of the Latin American region through the acquisition of businesses with solid positions in those markets.

Recent Developments

Overview

We have participated in six consortia with affiliates of Odebrecht related to the construction and operation of infrastructure projects in Peru during the period from 2005 to 2017. On December 21, 2016, Odebrecht entered into a plea agreement with U.S., Brazilian and other authorities in which they admitted to making illegal bribery payments in connection with projects in various countries, including Peru. These projects include certain consortia in which we participated. As a result of the plea agreement, Peruvian authorities have initiated congressional inquiries and criminal investigations against our company and certain of our former directors and executive officers.

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Additionally, on January 24, 2017, the Peruvian government terminated the gas pipeline concession held by GSP, consortium in which we participated with Odebrecht affiliates, due to failure of GSP to obtain the required project financing by the stipulated deadline. The termination of the GSP gas pipeline concession, despite the government payment contemplated under the concession contract, has had a material impact on our consolidated financial results and backlog.

In response to these events, we have instituted a multi-step strategic action plan. This strategic action plan includes: (i) monitoring the process for government payment resulting from the termination of the GSP gas pipeline concession; (ii) renegotiations with creditors of certain debts that became due upon termination of the GSP gas pipeline concession contract; (iii) board approval of the sale of certain non-strategic assets to repay debt related to GSP; (iv) an internal investigation relating to our participation in consortia with Odebrecht; (v) an assessment to strengthen our anti-corruption compliance program; and (vi) changes to our board of directors and senior management.

See “Item 3.D. Key Information—Risk Factors —Risks Related to Recent Developments.”

Our Association with Odebrecht

We have participated in six construction and operation of infrastructure projects in Peru with affiliates of Odebrecht during the period from 2005 to 2017 (known as: IIRSA South Tranche II; IIRSA South Tranche III; IIRSA North; Electric Train Platform; Gasoducto Sur Peruano; and Chavimochic). Our stakes in these projects ranged from 17% to 33%. During 2017 we only participated in two of these projects (Gasoducto Sur Peruano and Chavimochic), neither of which are currently ongoing. During the period from January 1, 2005 to December 31, 2017 85% of the projects carried out by our company, in terms of consolidated revenues, involved the private sector, while projects with Odebrecht accounted for less than 5% of our consolidated revenues during this period. In its plea agreement, Odebrecht admitted to paying bribes in connection with the IRSA South Tranche II, the IRSA South Tranche III and the Electric Train Platform.

The Chavimochic concession, awarded in 2013 for the design, construction, operation and maintenance of major hydraulic works in northern Peru, is the only project with a contract in effect in which we are currently associated with Odebrecht. Affiliates of Odebrecht own 73.5% of the Chavimochic-related concessionaire company and construction consortium, and we hold the remaining 26.5% stake. As a result of the government’s failure to deliver land required for the project, the project’s first phase, hydraulic works, cannot be concluded, and the project’s second phase cannot begin. Since February 2017, the Chavimochic consortium has requested the termination of the concession in light of the government’s breach, and the parties are currently in discussions, including for a potential sale of the project. As of December 31, 2017, our investment in this project amounted to US$8.6 million (S/.22 million) and our portion of the performance guarantee amounted to US$9.5 million (S/.31.9 million).

Termination of the Gasoducto Sur Peruano Concession

In September 2015, we entered into a memorandum of understanding to invest US$215 million (S/.722 million) for a 20% stake in GSP, a company that had previously been awarded the concession for the design, construction and operation of the southern gas pipeline, a project to deliver natural gas to the southern region of Peru, particularly to the provinces of Cuzco, Arequipa, Puno and Moquegua. With our 20% investment commitment made on November 2, 2015, an affiliate of Odebrecht owned a 55% interest and an affiliate of Enagás International, S.L. (“Enagas”) owned a 25% interest in GSP. As of the date of this annual report, we have made total investments in the project in an amount of US$243 million (S/.811 million).

On January 24, 2017, the Peruvian government terminated the concession due to GSP’s failure to obtain the required project financing by the stipulated deadline. As a result, we recognized impairments with respect to our investment in GSP and our participation in the related construction consortium (Consorcio Constructor Ductos del Sur).

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In accordance with the concession contract, the Peruvian government is required to carry out an auction process to sell GSP’s assets and obtain a new concessionaire within one year of the contract termination, with the funds raised in the sale to be used to pay the existing concessionaire for its investment in the project. The amount of the termination payment is required to be no more than 100% and no less than 72.25% of the net carrying amount (valor contable neto), as defined in the concession contract. Consequently, the auction process should initiate with a base price equivalent to 100% of the net carrying amount. If the auction is unsuccessful in the first round, the government is required to undertake a second round, with a base price equal to 85% of the net carrying amount; and, if the second round is unsuccessful, the government is required to undertake a third round, with a base price equal to 72.25% of the net carrying amount. If a successful bidder is not obtained from such auction processes within one year of the termination of the contract, the termination payment to the existing concessionaire would be 72.25% of the net carrying amount.

The Peruvian Ministry of Energy and Mines announced on April 18, 2017 that the auction process for the new concessionaire of the project assets would be carried out during the first quarter of 2018, notwithstanding the requirements under the concession contract. On April 28, 2017, a third party was appointed, through an adjudication process, as temporary custodian and administrator of the gas pipeline assets until the new bidder is awarded the concession. Although the concession contract provides that payment be made within one year of termination, the Peruvian Ministry of Energy and Mines has not made payment or, to our knowledge, initiated the auction or payment process. Because this payment has not been made, GSP’s right to compensation pursuant to the concession contract should be 100% of the net carrying amount.

In 2016, in connection with efforts to restructure or sell Odebrecht’s participation in GSP, due to the corruption scandal surrounding Odebrecht, Odebrecht contractually agreed to subordinate its claims under the concession to the other project partners, Enagás and ourselves. As a result, we and Enagas may be entitled to repayment of our percentage payment under the concession contract prior to Odebrecht. However, on January 3, 2018, Odebrecht commenced arbitration proceedings against us, our subsidiary GyM and Enagás, seeking to invalidate the contractual subordination.

On December 4, 2017, GSP voluntarily commenced bankruptcy proceedings in Peru. GSP’s assets will be liquidated purusant to Peruvian law. GSP’s only substanttialy asset is the claim for government payment described above, as contemplated under the concession contract in the event of termination.

As of the date of this annual report, we have made investments in the GSP project of US$243 million (S/.811 million), which we financed in part with borrowings. We have also assumed our proportional obligation to repay the project’s bridge loan in an amount of US$129 million (S/.433 million) and the project’s performance guarantee in amount of US$52.5 million (S/.176 million) and recorded them as other financial liabilities and other accounts payable, respectively, in our consolidated financial statements as of December 31, 2017. We also recorded an account receivable for the same amounts, since we have the right to collect these amounts from GSP. According to our estimates, under the terms of the concession contract, taking into account the subordination arrangement, and based on receiving payment equal to 72.25% of the net carrying amount, in accordance with IFRS, we recorded an impairment to our equity investment in GSP in the amount of S/.593.1 million (approximately US$176.5 million) to reflect a write-off of equity value in GSP. Although GSP’s right to compensation pursuant to the concession contract, due to the Peruvian government’s failure to pay, is 100% of the net carrying amount, the company has accounted for 72.25% due to political uncertainty, GSP’s bankruptcy process with INDECOPI, and disagreements with the other GSP shareholders. In addition, our gross profit decreased by S/.15.2 million (US$4.5 million) due to the impact of the early termination of the construction consortium (Consorcio Ductos del Sur), in accordance with IFRS. Also, we registered a discount of the related long term account receivable in financial expenses of S/.76.9 million (US$22.9 million). Adding these three effects, plus the deferred tax effect, we had a net impact of S/.498.0 (US$148.2 million) on our income statement for the year ended December 31, 2016.

In addition, the termination of the GSP gas pipeline concession has reduced our backlog as of December 31, 2016, by US$855 million, representing 30.2% of our E&C backlog and 21.4% of our total backlog.

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The effects of the termination of the GSP gas pipeline concession recorded in our consolidated financial statements as of and for the year ended December 31, 2016 are based on our estimates, based on the terms of the concession contract, taking into account the subordination arrangement, receiving payment equal to 72.25% of the net carrying amount and with the information that we have available to date. The actual impact on our results, however, could change materially from our estimates. Moreover, we cannot assure you that we will receive the government payment provided for under the GSP gas pipeline concession contract on a timely basis or at all. For more information, see notes 5(e) and 5(f) to our annual audited consolidated financial statements included in this annual report.

Investigations

The Lava Jato commission of the Peruvian congress, which was formed in November 2016 to investigate alleged bribes made by Brazilian companies to Peruvian public officials, has initiated congressional inquiries into the company and other construction companies in Peru. These investigations have required certain of the company’s former board members and executive officers to provide testimony at hearings before the commission.

Separately, a former employee of GyM has been included in a criminal investigation for collusion and other alleged crimes, though neither the company nor GyM have been formally included in these criminal investigations.

Peruvian prosecutors have included José Graña Miró Quesada, the former Chairman of the company, in an investigation for the crime of collusion, and Hernando Graña Acuña, a shareholder, a former board member of the company and chairman of our subsidiary GyM, for the crime of money laundering against the Peruvian government, each in connection with the IIRSA South project concession (tranches II and III), in which we participated with Odebrecht. Gonzalo Ferraro Rey, the former Chief Infrastructure Officer of the company, has also been included in an investigation for the crime of money laundering in connection with the same project.

In connection with investigations relating to the IIRSA South project concession (tranches II and III), the Peruvian criminal prosecutor moved to charge the company and our construction subsidiary, GyM, as criminal defendants in connection with the projects. Separately, an Ad Hoc Public Prosecutor appointed by the Peruvian executive branch to investigate matters of corruption moved to directly include the company as a civilly-responsible third party. In response, the Peruvian First National Preparatory Investigation Court (Primer Juzgado de Investigación Preparatoria Nacional) notified us of its decision to formally include the company and GyM in its criminal investigation. We appealed the court’s decision and, on June 22, 2018, the First Court of Appeals of the Superior Court of Lima revoked the judicial order No. 05 dated February 28, 2018 that indicted the company and GyM, among other corporate defendants, in the criminal investigation on charges of collusion and other crimes, and rejected the petition, without prejudice, made by the prosecutor to incorporate both companies in the aforementioned process. Nevertheless, we cannot assure you that the criminal prosecutor will not appeal this decision, or file a new claim, against the company and GyM, or that our position will ultimately prevail. Furthermore, a decision from the Peruvian judiciary on whether our company will be included in the investigation proceedings as a civilly responsible third party remains pending, and we cannot assure you that our company will not be included or that our position would ultimately prevail.

On February 19, 2018, we also received notice from the Ad Hoc Prosecutor seeking to directly include our subsidiary, GyM S.A., as a civilly-responsible third party in the investigation relating to Tranches 1 and 2 of Line 1 of the Lima Metro. If our subsidiary’s officer or former or current officers are included and convicted, it may be required to pay civil damages to the Peruvian government. A decision from the Peruvian judiciary regarding these matters remains pending, and we cannot assure you that our subsidiary will not be included or that our position would ultimately prevail.

In July 2017, media reports alleged that certain construction companies in Peru, Brazil and Spain, including our company, colluded as a “construction club” to receive public contracts. As a result of these reports, INDECOPI has initiated an investigation regarding the anti-competitive activities of construction companies in Peru, including our company. In July 2017, the Peruvian government conducted a search of our facilities related to these allegations. In January 2018 criminal prosecutors conducted a search of our facilities regarding the “construction club” investigation. We have provided the information requested by the Peruvian criminal prosecutors. A former employee of GyM has been included in the investigation for collusion and other alleged crimes. To date, there is no formal investigation of the company.

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We cannot assure you that other of our former or current board members and executive officers will not be included in the foregoing proceedings as civilly-responsible third parties or criminal defendants as well.

A conviction of corruption or resolutions with government authorities may lead to criminal and civil fines as well as penalties, sanctions, injunctions against future conduct, profit disgorgement, disqualifications from directly and indirectly engaging in certain types of business, the loss of business licenses or permits or other restrictions. Moreover, our involvement in corruption investigations, and any findings of wrongdoing in such investigations, could further damage our reputation and have a material adverse impact on our ability to compete for business. Such investigations may also adversely affect our ability to pursue strategic projects, and could potentially result in the termination or modification of certain existing contracts or relationships. Also, such investigations may affect the company’s ability to secure financing in the future.

Emergency Decree and Subsequent Legislation

On February 13, 2017, the President of Peru issued an emergency decree (decreto de urgencia N° 003-2017), prohibiting groups that have been, or whose officers or representatives have been convicted of, or have admitted to, corruption, money-laundering or similar crimes (whether in Peru or elsewhere) from, among other things, transferring or selling any assets related to investments in Peru, including the proceeds of asset or equity sales, or sending money abroad without a governmental authorization. Section II of Law 30737, promulgated in March 2018 to replace the aforementioned emergency decree, includes companies that have been consortium partners of groups that have been, or whose officers or representatives have been, convicted of, or have admitted to, corruption, money-laundering or similar crimes. Our company and our subsidiary GyM are two such companies. The law requires that they: suspend money transfers abroad; implement a compliance program and disclose information to competent authorities; and create a trust of assets to guarantee eventual compensation in favor of the Peruvian government. A Peruvian prosecutor will determine the amount of such guarantee, pursuant to Law 30737. On May 9, 2018, Supreme Decree No. 096-2018-EF was passed, which provides guidelines for such determination. We estimate that we may be required to include in the trust assets worth approximately US$41 million and that our potential liability should not exceed approximately $51 million, based on the guidelines. We cannot assure you of the amount of this potential liability, nor can we assure you that the company will have sufficient assets to include in the trust. Furthermore, we cannot assure you that these laws will not be expanded, or that subsequent laws will not be passed, that impose further obligations or restrictions on our company and our subsidiaries.

Strategic Action Plan

In response to the events described above, we have instituted a multi-step strategic action.

Negotiation with Creditors

We have renegotiated three debt instruments related to GSP as follows:

• Syndicated Loan Related to our Equity Investment in GSP: As a result of the termination of the GSP gas pipeline concession, our syndicated loan used to finance our equity investment in GSP became due. The principal amount outstanding under our syndicated loan was US$81.1 million (S/.263.2 million) as of December 31, 2017, and is US$76.3 million (S/.249.9 million) as of the date of this annual report. On June 27, 2017, we entered into an amendment to the credit agreement. According to the terms of the amendment our syndicated loan matures on 2020, with required prepayments to be made with the proceeds of asset sales of 40% in the first year and an additional 30% in the second year of the amendment. The syndicated loan continues to accrue interest at LIBOR plus 4.90% per year. In addition, we are prohibited from paying dividends until the loan is repaid in full. Also, we have provided additional security interests, including: (i) a first lien on our shares of GyM and Concar; (ii) a second priority lien on our shares of Almonte; (iii) a first lien on certain real estate properties in Surquillo; (iv) liens on certain related amounts; (v) a second priority lien on our shares of CAM and CAM Servicios del Perú S.A.; and (vi) a first lien on cash flows from the sale of certain assets. For additional information on our syndicated loan, see “Item 5.B. Operating and Financial Review and Prospects—Liquidity and Capital Resources”;

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• Proportional guarantee of the GSP Bridge Loan: As a result of the termination of the GSP gas pipeline concession, our proportional guarantee of the GSP bridge loan became due. On June 27, 2017 we entered in a new, US$78.7 million (S/.264.8 million) term loan with Natixis, BBVA, SMBC and MUFJ, the proceeds of which were used to repay the GSP bridge loan. The new term loan matures on 2020, with required prepayments to be made with the proceeds of asset sales of 40% in the first year and an additional 30% in the second year of the closing date. The term loan accrues interest at LIBOR plus 4.50% per year, which will increase to 5.00% during the second year and to 5.50% during the third year. In addition, we will be prohibited from paying dividends until our guarantee is repaid in full. Also, we have provided the following security interests to secure repayment of the term loan: (i) a first lien on our rights to receive the termination payment derived from the GSP termination, (ii) a second priority lien on our shares of GyM and Concar; (iii) a second priority lien on our shares of Almonte; (iv) a second priority lien on certain real estate properties in Miraflores and Surquillo; (v) a second priority lien on our shares of CAM and CAM Servicios del Perú S.A.; and (vi) a first lien on cash flows from the sale of certain assets. The principal amount outstanding under the new term loan was US$72.4 million (S/.235.2 million) as of December 31, 2017, and as of the date of this annual report, there is US$72.4 million outstanding on the term loan.

• Proportional Repayment Obligations under the GSP Performance Guarantee: As a result of the termination of the GSP gas pipeline concession, the government exercised the GSP performance guarantee. As of December 31, 2017, we had US$15.6 million (S/.50.8 million) in obligations outstanding and, as of the date of this annual report, we have US$6.8 million (S/.22.1 million) in obligations outstanding. On March 31, 2017, we renegotiated the terms of our repayment obligations owed to Chubb Insurance Company regarding our proportional share of the performance guarantee issued in connection with the GSP gas pipeline concession. The new terms required repayment by March 31, 2018, extended until September 30, 2018, with interest accruing at 6% per year, and provide a security interest over our shares in CAM and over the cash flows from the sale of certain assets.

• In addition, in July 2017, we entered into a financial stability framework agreement with certain banks providing for new lines of credit to support our financial stability and liquidity. The principal amount outstanding under this Agreement was US$150.7 million (S/.489.0 million) as of December 31, 2017, and as of the date of this annual report, we had US$77.1 million (S/.250.2 million) outstanding. For more information, see “—Liquidity and Capital Resources—Indebtedness.”

We are currently in default of certain of the covenants under these financial instruments. For more information, see “Item 13. Defaults, Dividend Arrearages and Delinquencies.”

Asset Sales

In order to strengthen our liquidity and financial flexibility, particularly in the event of potential delays in receiving the government payment contemplated under the GSP gas pipeline concession contract, and make payments on our debt related to the GSP project, our board has approved the sale of non-strategic assets in the amount of up to US$350 million (S/.1,176 million) in proceeds.

As of the date of this annual report, we have entered into the following transactions:

• Sale of Cuartel San Martín: On February 3, 2017, our subsidiary Viva GyM sold all of its interests in the Cuartel San Martín real estate project, which represented a 50% stake in the project, to its partner Urbi Propiedades S.A. for US$50 million (S/.163 million);

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• Sale of Promoción Inmobiliaria del Sur: On February 24, 2017, our subsidiary Viva GyM sold all of its interests in PRINSUR, which owns undeveloped land located in Lurin, representing 22.5% of the share capital, to its partner Inversiones Centenario S.A.A. for US$25 million (S/.81 million);

• Sale of Shares in Red Eagle Mining Corporation: In February and March 2017, our subsidiary Stracon GyM sold shares of Red Eagle Mining Corporation, representing 9.97% of the share capital, in a stock exchange transaction for US$13.3 million (S/.43.0 million). Stracon GyM continues to own 2.70% of the share capital of Red Eagle Mining Corporation;

• Sale of our Interest in COGA: On April 24, 2017, we sold our 51% interest in COGA to our partners Enagas and Carmen Corporation for a price of US$21.5 million (S/.69.8 million). COGA is in charge of the operation and maintenance of TGP, the trans-Andean gas pipeline from Camisea to the Pacific coast in Peru;

• Sale of our Interest in GMD: On June 6, 2017, we sold our 89.19% interest in GMD, our IT services subsidiary, to Advent International for a price of US$84.7 million (S/.269.9 million);

• Sale of the building Petit Thouars: On September 29, 2017, we sold a building located in block 49 of Petit Thouars Avenue to VOLCOMCAPITAL Deuda Perú for a price of US$20.5 million (S/.68.9 million); and

• Sale of Almonte Properties. On May 31, 2018, Almonte signed an agreement to sell 4,208,769 square meters of land for the price of US$92.7 and a second agreement for the sale of additional land subject to certain conditions. In this case, the amount corresponding to the company is proportional to its 50.45% stake.

Refinancing operations for GSP debt reduction

Additionally, on June 11, 2018, we signed an investment agreement with BCI Perú, to monetize future dividends of Norvial. The amount of the transaction is US$42.3 million. We will continue to possess voting rights with respect to Norvial.

Other Sales for GyM Debt Reduction

Sale of Interest in Stracon GyM: On April 11, 2018, we sold our 88% interest in Stracon GyM for a price of US$77 million (S/.249 million).

Internal Investigation

In light of the recent events described above, we conducted an internal investigation led by external counsel with respect to our participation in consortia with Odebrecht. The new Risk, Compliance and Sustainability Committee of our board of directors was charged with monitoring the progress of the internal investigation. The internal investigation, which concluded on November 1, 2017, identified no evidence to conclude that any company personnel engaged in bribery in connection with any of the company’s public projects in Peru with Odebrecht or its subsidiaries, or that any company personnel was aware of, or knowingly participated in, any corrupt payments made in relation to such projects.

Strengthening of Anti-Corruption Program

We have approved a plan to continue strengthening our anti-corruption compliance program. This has included the creation of a Risk, Compliance and Sustainability Committee of our board of directors, the creation of a Corporate Risk and Compliance Function, the hiring of a Chief Risk and Compliance Officer, and the reinforcement of our procedures related to the third-party risk evaluation and mitigation.

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New CEO, New Board of Directors and Board Committee

On February 27, 2017, our former chairman of the board, our former CEO and board member, and our board member and the former chairman of the board of our subsidiary GyM resigned from their positions. Effective March 2, 2017, we appointed a new CEO. On March 31, 2017, our shareholders at the annual shareholders’ meeting appointed a new board of directors, replacing seven of our nine existing directors. For more information, see “Item 6. Directors, Senior Management and Employees.”

Securities Class Action

Two securities class action complaints have been filed against us and certain of our former directors and current and former executive officers in the Eastern District of New York during the first quarter of 2017. These complaints were consolidated into a single class action. The plaintiffs filed a consolidated amended compliant on May 29, 2018. We believe that we have meritorious defenses to the claims asserted, and we intend to defend ourselves vigorously in these matters.

Restatement of Financial Results for Fiscal Year 2015

As more fully described in “Item 16.F. Change in Registrant’s Certifying Accountant,” we appointed Moore Stephens to re-audit our financial results for fiscal year 2015. The previously issued consolidated financial statements of the company for the 2015 fiscal year (and the related audit opinion) included in the company’s annual report on Form 20-F for the year ended December 31, 2015 should not be relied upon. The restatement of the 2015 fiscal year has resulted in certain significant changes to the company’s consolidated financial statements. For more information, see note 2.30 to our audited annual consolidated financial statements for the year ended December 31, 2016 included in our annual report on Form 20-F for that year.

Reclassification of GMD

On June 6, 2017, we sold our 89.19% interest in our former subsidiary, GMD. As a result, we present GMD as a discontinued operation in our audited annual consolidated financial statements for the year ended December 31, 2017. We have reclassified our consolidated financial statements for the years ended December 31, 2015 and 2016 included in this annual report, to show GMD as a discontinued operation for those years as well.

Internal Control over Financial Reporting

In 2017, we identified material weaknesses regarding our internal control over financial reporting. For more information, see “Item 3. Key Information—D. Risk Factors—We have identified material weaknesses in our internal control over financial reporting, and if we cannot maintain effective internal control or provide reliable financial and other information in the future, investors may lose confidence in the reliability of our consolidated financial statements, which could result in a decrease in the value of our ADSs” and “Item 15. Controls and Procedures.”

Factors Affecting Our Results of Operations

General

Peruvian, Chilean and Colombian Economic Conditions

72.0%, 73.5% and 72.0% of our revenues in 2015, 2016 and 2017 were derived from activities in Peru. Accordingly, our results of operations are substantially affected by economic conditions in the country and our growth is driven in significant part by growth in the Peruvian economy. In addition, 12.5%, 11.4% and 17.3% of our revenues in 2015, 2016 and 2017 were derived from activities in Chile and 10.3%; 9.2% and 4.7% of our revenues in 2015, 2016 and 2017 were derived from activities in Colombia.

The Peruvian real GDP has grown at an average rate of 3.3% during the three years from 2015 to 2017. With increasing disposable income and an expanding middle class, private consumption grew at an average annual rate of 3.3% in real terms from 2015 to 2017. In 2015, 2016 and 2017 private investment decreased at an average rate of 4.3%, 5.9% and increased 0.1%, respectively, in real terms, primarily due to lower investment in mining. Inflation in Peru, as measured by the change in the consumer price index, was 4.4% in 2015, 3.2% in 2016 and 1.7% in 2017. The sol depreciated versus the U.S. dollar by 14.2% in 2015, and appreciated by 1.6% in 2016 and by 3.3% in 2017. Peru’s sovereign debt has been rated investment grade by S&P, Fitch and Moody’s. At the end of 2017, Peruvian sovereign debt had one of the highest credit ratings in the South American region, rated BBB+ by S&P (August 2013) and Fitch (March 2018), and A3 by Moody’s (August 2017).

The Chilean economy grew at an average annual rate of 1.7% during the three years from 2015 to 2017 in real terms. Total fixed investment declined at an annual average rate of 4.7% in real terms during the three years from 2015 to 2017. Inflation in Chile, as measured by the change in the consumer price index, was 4.4% in 2015, 2.7% in 2016 and 2.3% in 2017. The Chilean peso depreciated versus the U.S. dollar by 16.4% in 2015, and appreciated by 5.7% in 2016 and by 7.8% in 2017. Chilean sovereign debt has the highest rating in the South America region, rated A+ by S&P (July 2017), Aa3 by Moody’s (August 2017) and A by Fitch (February 2018).

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The Colombian real GDP grew at an average annual rate of 2.3% during the three years from 2015 to 2017. Inflation has increased during recent years, with inflation of 6.8% in 2015, 5.8% in 2016 and 4.1% in 2017. The Colombian peso depreciated against the U.S. dollar by 31.6% in 2015, and appreciated by 4.7% in 2016 and by 0.6% in 2017. Colombia’s sovereign debt was rated BBB by Fitch in March 2018, BBB- by S&P in December 2017, and Baa2 by Moody’s in February 2018.

From 2013 to 2017 our revenues grew at a compound annual growth rate (CAGR) of 0.5% ((1.54)% excluding acquisitions and asset sales). Our organic revenues decreased 5.9% in 2017 from 2016, principally as a result of lower activity levels in our E&C segment in 2017.

Fluctuations in Exchanges Rates

We estimate that in 2017, 39.3%, 43.8% and 16.9% of our revenues were denominated in soles, U.S. dollars and other currencies respectively, while 63.9%, 18.3% and 17.8% of our cost of sales during the year were denominated in soles, U.S. dollars and other currencies. In addition, as of December 31, 2017, 25.4%, 60.3% and 14.3% of our total debt was denominated in soles, U.S. dollars and other currencies, respectively. Accordingly, fluctuations in the value of these currencies can materially affect our results of operations. When the sol appreciates against the U.S. dollar, our operating margins tend to decrease; when the sol depreciates against the U.S. dollar, our operating margins tend to increase (if everything else were held equal). Conversely, the appreciation of the sol against the U.S. dollar tends to decrease our indebtedness and financial expenses as expressed in soles; and the depreciation of the sol against the U.S. dollar tends to increase our indebtedness and financial expenses as expressed in soles. We enter into derivatives, from time to time, to hedge part of our financial exposure to currency fluctuations. The value of the sol to the U.S. dollar depreciated in 2014 and 2015, and appreciated slightly in 2016, which impacted our results of operations. See “Item 3.A. Key Information—Selected Financial Data—Exchange Rates.”

We have included estimates of the approximate effects of fluctuations in exchange rates on our consolidated and segment revenues and costs of sales in “—Results of Operations.” These estimates were calculated based on daily average exchange rates and estimated aggregate revenues and cost of sales denominated in U.S. dollars, Chilean pesos and Colombian pesos, and were not calculated on a transaction by transaction basis. For additional information on the effect of exchange rate fluctuations on our results of operations, see “Item 11. Quantitative and Qualitative Disclosures about Market Risk—Exchange Rate Risk.”

Cost of Labor, Third-Party Services and Inputs

The largest components of our costs are: labor, which in 2017 represented 29.9% of our cost of sales and 47.8% of our administrative expenses; services provided by third parties, which in 2017 represented 31.0% of our cost of sales and 28.3% of our administrative expenses; and inputs (including raw materials), which in 2017 represented 21.0% of our cost of sales. For a breakdown of our cost of sales and administrative expenses, see note 27 to our audited annual consolidated financial statements included in this annual report.

Our cost of labor is influenced by, among other factors, the number of our employees, as well as inflation, competition we face for personnel in each of our business segments and the availability of qualified candidates. From 2015 to 2016 our personnel charges decreased by 30.0% and from 2016 to 2017 our personnel charges increased by 13.5%. Services provided by third parties include: subcontracting in our E&C segment, such as carpentry work; advisory and consultancy work, including external audit and legal services; and renting of equipment. From 2015 to 2016 our costs related to services provided by third parties decreased by 20.5% and from 2016 to 2017 our costs related to services provided by third parties decreased by 27.7%. The principal inputs we use are fuel, cement and steel, which in the aggregate represented 21.0% of our total input costs in 2017. Our costs for these inputs are affected by, among other factors, the growth or decline of our operations, market prices, including global prices in the case of fuel, and transportation costs. We do not have long-term contracts for the supply of our key inputs. From 2015 to 2016, our input costs decreased by 16.0% and from 2016 to 2017, our input costs increased by 26.1%. Our cost of labor, third party services and inputs decreased in 2017 primarily due to lower activity levels in our E&C segment.

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Acquisitions and Dispositions

In November 2014, we acquired an additional 13.5% interest of Stracon GyM for S/.74.7 million (US$25 million), increasing our stake in Stracon GyM to 87.6%. On April 11, 2018, we sold our stake in Stracon GyM to the former Chief Executive Officer of Stracon GyM for a price of US$76.4 million (S/.248.2 million). In December 2014, we acquired a 70% interest in Morelco for S/.277.1 million (US$93.7 million). This transaction represents our first acquisition in Colombia, which is a key part of our international strategy. The results of Morelco are included in our results of operations beginning in January 2015.

In December 2014, we also acquired 51% of the share capital of Tecgas, which holds 100% the share capital of COGA for a total of S/.75.8 million (US$25.4 million). This investment included goodwill resulting from the purchase amounting to S/.61.4 million. On April 24, 2017, we sold our 51% interest in COGA to our partners Enagas and Carmen Corporation for a price of US$21.5 million (S/.69.8 million).

In August 2015, we acquired 44% of Adexus, an information technology firm in Chile, for an approximate value of US$13.8 million (S/.44.1 million) through a participation in a capital increase. In January 2016 we acquired an additional 8% stake in Adexus for an approximate value of US$2.5 million (S/.8.3 million), and in August 2016 we increased our stake in Adexus to 91% for an approximate value of US$4.2 million (S/.14 million). In June 2018, we increased our stake to 100%.

In September 2015, we acquired a 20% participation in the shareholder´s equity of Gasoducto Sur Peruano, the concessionaire of the southern gas pipeline project for a total of US$215 million (S/.722 million). In addition, our subsidiary GyM participates with a 29% stake in the construction consortium for this project (Consorcio Ductos del Sur), which represented approximately US$1.0 billion of our backlog as of December 31, 2015. The GSP gas pipeline concession was terminated on January 24, 2017, and as a result, we recognized impairments with respect to our investment in GSP and our participation in the related construction consortium (Consorcio Constructor Ductos del Sur). For more information, see “Item 5.A. Operating and Financial Review and Prospects—Operating Results—Recent Developments.”

As of the date of this annual report, in order to strengthen our liquidity and financial flexibility, particularly in the event of potential delays in receiving the government payment contemplated under the GSP gas pipeline concession contract, and make payments on our debt related to the GSP project, our board has approved the sale of non-strategic assets in the amount of up to US$350 million (S/.1,176 million) in proceeds. For a detailed description of the sale of these non-strategic assets, see “Item 5.A. Operating and Financial Review and Prospects—Operating Results—Recent Developments.”

Cyclicality

Our Engineering and Construction segment is cyclical as a result of being closely linked to the conditions, performance and growth of the end-markets we serve, which include, among others, the mining, power, oil and gas, transportation, real estate and other infrastructure sectors in Peru, as well as the mining sector in Chile and, the energy sector in Colombia. These industries tend to be cyclical in nature and tend to be affected by factors such as macroeconomic conditions, climate conditions, the level of private and public investment, the availability of credit, changes in laws and regulations and political and social stability. As a result, although downturns impact our entire company, our Engineering and Construction segment has historically been subject to periods of very high and low demand. For example, between 2000 and 2003, there was a significant decline in activity in the Peruvian real estate and construction sectors, which consequently affected our and our competitors’ business and financial performance during that time. The mining and oil and gas sectors, in particular, are also driven by worldwide demand for the underlying commodities, including, among others, silver, gold, copper, oil and gas, which can be affected by such other factors as global economic conditions and geopolitical affairs. Furthermore, prevailing prices and expectations about future prices for minerals or oil and gas, costs of exploration, production and delivery of product and similar factors can have a significant impact on our clients’ exploration and production activities and, as a result, on their demand for our engineering and construction services.

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Our Real Estate segment is also cyclical and is significantly affected by changes in general and local economic conditions, such as employment levels and job growth, availability of financing for home buyers, interest rates, foreclosure rates, inflation, consumer confidence and housing demand. In addition, in our Infrastructure segment, our Energy line of business is cyclical and affected by global supply and demand for oil.

Seasonality

Our business, on a consolidated basis, has not historically experienced seasonality. In our Infrastructure segment, we have experienced moderate seasonality at (i) Norvial, due to heightened vehicular traffic activity during the summer season in the first quarter of the year, and (ii) GMP’s gas processing plant, which typically closes for maintenance during the rainy season in the first quarter of the year, as demand for gas is lower during this time.

Engineering and Construction

The principal driver of our E&C results is economic growth in Peru, particularly private and public investment in the country’s mining, power, oil and gas, transportation, real estate and other infrastructure sectors. See “—Peruvian and Chilean Economic Conditions.”

Appropriate pricing and budgeting of our engineering and construction projects is also key to our results of operations in our E&C segment and can be affected by such factors as competition, direct negotiations with clients as opposed to competitive bidding processes, the accuracy of our estimation of project costs and unexpected cost overruns. The types of contracts in this segment consist of cost-plus fee, unit price, lump-sum and EPC contracts. For a description of our E&C contracts, see “Item 4.B. Information on the Company—Business Overview—Engineering and Construction—Contracts.” The nature of our contractual arrangements can affect our margins, both because, depending on the type of contract, the burden of cost overruns may be placed on the client or on us, and because certain contractual arrangements tend to have lower gross margins. For the years from 2016 to 2017, our E&C segment has trended towards more contractual arrangements based on cost—plus fee and EPC contracts. The types of contractual arrangements we enter into in our E&C segment vary significantly from period to period.

During 2015, we suffered losses of S/.138.2 million from a dispute with respect to an E&C contract with Hochschild Mining for the Inmaculada mining project, which affected our operating results. The dispute was terminated in August 2015, and we expect no further losses to be incurred on account of this project. Additionally, we incurred losses for a total amount of S/.59.7 million because of the cancellation of the El Nuble hydroelectric project, for which our subsidiary Vial y Vives was carrying on civil works in Chile. As a consequence of the cancellation of this project, we also wrote down US$155 million of our consolidated backlog. We expect no further losses to be incurred on account of this project. Delays in obtaining payments from our E&C clients during 2015, in particular in the mining sector, increased financing needs for working capital. We managed to stabilize working capital requirements by the end of 2015.

During 2016, we suffered lower activity levels in our E&C segment due to the completion of two large mining projects at the end of 2015 (Las Bambas and Cerro Verde). These lower activity levels were not fully compensated by new works at the GSP gas pipeline project in Peru and, to a lesser extent, works in Chile and Colombia. Additionally, Stracon GyM completed one mining services contract for our E&C segment, which was not renewed, and had another contract reduced in scope. The 2016 presidential elections in Peru and the subsequent change in administration also contributed to lower activity levels in our E&C segment during 2016.

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During 2017, activity levels in our E&C segment remained low as a result of the cancellation of the GSP and Chavimochic projects, and also due to the ending of the bioenergy Zona Franca project in Colombia. Lower activity in Stracon GyM is related to the decrease in income from the Mina Constancia project. The activity levels in 2017 in the E&C segment have been affected by political and other issues related to the investigations described in “Item 5.A. Operating and Financial Review and Prospects—Recent Developments.”

Infrastructure

Traffic and Fees for Toll Roads

The majority of our toll roads revenues derive from the Norvial concession. Unlike our other toll road concessions, our revenues from the Norvial concession depend on traffic volume. Traffic volume on the Norvial road increased 7.1% from 2015 to 2016 and 3.2% from 2016 to 2017 (based on vehicle equivalents, as defined in “Item 4.B. Information on the Company—Business Overview—Infrastructure—Principal Infrastructure Activities—Toll Roads—Norvial”) due to the lower traffic resulting from the climactic phenomenon “El Niño,” which generated floods and mudslides in northern Peru. For the Norvial toll road, the toll rate is set out in the Norvial concession agreement and adjusted in accordance with a contractual formula that takes into account the sol/U.S. dollar exchange rate and Peruvian and United States inflation. Under our Survial and Canchaque road concessions, our revenues consist of annual fees paid by the Peruvian Ministry of Transport and Communications in consideration for the operation and maintenance of the roads, which can vary depending on the amount of road maintenance required due to road wear and tear.

Under the Norvial concession, we are required to expand certain stretches of the highway, by, among other things, adding two additional lanes. The first stage of construction was completed in 2008 and the second stage started on April 2014 and is expected to be completed by March 2019 due to delays in the government’s delivery of lands required for the project. We estimate that Norvial’s capital investment for the second stage will be approximately US$95 million (S/.319.2 million).

Mass Transit

We generate revenue from our Lima Metro concession based on kilometers travelled per train, with the fee per kilometer, the number of trains required to be in operation and the number of kilometers that we are required to travel established by the terms of the concession. Our revenues do not depend on passenger traffic volume. Our results in this concession between 2015 and 2017 were influenced by the timely acquisition, set up, reliability and proper operation of our trains as well as by the timing of the government’s completion of the 12.1 kilometer second stretch of Line One. We currently have all 34 trains in operation (including three backup trains). In addition, the second tranche of Line One was completed in the third quarter of 2014. As of December 31, 2017, GyM Ferrovías has spent a total of US$290 million (S/.941.0 million) in capital expenditures in connection with the Lima Metro.

On July 11, 2016, we entered into the fourth addendum to the Lima Metro concession contract in order to expand the transportation capacity of Line One. In accordance with the fourth addendum, the expansion project involves: (i) the purchase of 20 new trains with five-car from Alstom; (ii) the purchase of 39 new cars from Alstom, to be coupled with the 19 existing Alstom trains and 20 new Alstom trains, resulting in a consolidated fleet of 39 Alstom trains with a six-car configuration; and (iii) the expansion and improvement of the existing infrastructure, including revamping and improvement of five stations, improvements in the electrical systems, a new access route to the maintenance workshop and new switches on the main track.

Energy

A part of the revenues in our Infrastructure segment depends on global prices for oil. Under our hydrocarbon extraction service contracts, we are entitled to a variable fee, which is based on the level of production of each field and a basket of international crude oil prices. Under our contracts, we acquire the extracted hydrocarbons and pay royalties, which are also based on a basket of international crude prices and the level of production. Historically, oil prices have been volatile and are likely to be volatile again in the future. During 2015, 2016 and 2017, average Brent crude prices were approximately US$52.46, US$43.55 and US$53.02 per barrel, and

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the average fee we received in these years was US$45.59, US$38.54 and US$49.19 per barrel of extracted oil, respectively. During the first quarter of 2018, the Brent crude price was approximately US$68.81 per barrel and our fee was approximately US$64.37 per barrel of extracted oil. Because our activities are conducted in mature oil fields, which have been producing oil for over 100 years in the case of Block I, approximately 100 years in the case of Block III, approximately 95 years in the case of Block IV and for over 50 in the case of years Block V, our oil production depends primarily on the level of our drilling and production activities.

Our Pariñas gas processing plant has a long-term delivery and gas processing and fractionation contract with Empresa Eléctrica de Piura S.A. (“EEPSA”), a thermal power generation subsidiary of the Endesa group. Under this contract, EEPSA delivers natural gas that it purchases from onshore and offshore gas producers in the Talara area. We are responsible for all operating costs of the gas processing plant but are entitled to keep revenues from the sale of all resulting natural gas liquids to third parties after delivery of all dry gas and payment of a variable royalty to EEPSA. Approximately 75% of the total volume of natural gas processed by our Pariñas gas processing plant depend upon gas volumes demanded by EEPSA for its gas-fired turbines, which can vary significantly. The other 25% of the volume of natural gas is extracted from our Block I. Prices for natural gas liquids can also fluctuate significantly and are affected by market prices for crude oil. We processed 31.7 MMcf per day during 2015, 33.2 MMcf per day during 2016 and 30.57 MMcf per day during 2017. These volumes vary per month and depend upon the power dispatch curve of EEPSA among Peruvian power generation plants. In rainy months (December to April) where hydroelectric power generation in Peru is typically higher, gas volumes demanded by EEPSA are lower than in dryer months (May to November) in which activity of thermal generators tends to be higher.

In connection with our fuel storage terminal business, under three operation contracts with Petroperu, we receive revenues related to monthly reserved volume in storage tanks for refined crude products (storage fee) and for volumes loaded and delivered into railroad cars or cistern trucks to each terminal (throughput fee). These fees are adjusted annually to account for U.S. inflation. Our fuel storage activities in the North and Central terminals are carried out under 20-year contracts, which expire in 2034. Our contract for the operation of the South terminals was to expire in August 2017 but was extended for an additional year until August 2018. On June 6, 2018, the concessionaire, Consorcio Terminales, received a letter from Petroperú to initiate negotiations to extend the contract up to one more year.

Awarding and Timing of Infrastructure Concessions and Government Contracts

The results of operations of our Infrastructure segment are affected by our ability to win new concessions and government contracts, which depend in part on government policies and our ability to compete effectively. As of December 31, 2017, we have seven concessions as well as long-term government contracts in this segment. These include the concession for Via Expresa Sur, for which contract negotiations are currently stalled, and the concession for Chavimochic, for which Chavimochic has requested the termination of the concession in light of the government’s failure to deliver the required lands for the project. Joint operations in which we participate have been awarded one additional concession for Via Expresa Javier Prado for the expansion of another major highway within the city of Lima. We cannot assure you that we will be able to negotiate the pending concessions on favorable terms or at all. A consortium led by Odebrecht Latinvest, in which we acquired a 20% stake in September 2015, was awarded the concession for the southern gas pipeline project in July 2014, however, the GSP gas pipeline concession was terminated by the Peruvian Ministry of Energy and Mines on January 24, 2017. For more information, see “Item 5.A. Operating and Financial Review and Prospects—Operating Results—Recent Developments.”

Our results in the operation and maintenance of infrastructure assets depend on our ability to obtain contracts from the government or infrastructure concessionaires, such as those in our Infrastructure segment, which depend on government policies and our ability to compete effectively. In 2015, we obtained four new contracts (Sullana, La Merced, Iacapal and Bappo); in 2016, we received two new contracts (Chiquibambilla and Chincaypuijio, each with Provías Nacional); and in 2017, we were awarded two new contracts (Cora Cora and C.V. Pasco, also with Provías Nacional). We typically obtain higher revenues from these contracts during the commencement of services as we bring the road to proper operating condition, and lower revenues at the end of the contract term as services wind down.

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Our results in our Infrastructure segment are also affected by the timing of the commencement of operations under our concessions, as well as when we were required to undertake significant capital investments or major construction works under the terms of our concessions. Under our Norvial and Lima Metro concessions, we are required to undertake capital investments during the initial years of the concessions for which we are compensated throughout the term of the concessions by our toll rate in the case of the Norvial concession and tariffs in the case of the Lima Metro concession. Under our Survial, Canchaque and La Chira concessions, we generate revenues in our Infrastructure segment from our construction activities during the pre-operational phase, and once operations commence we generate revenues from fees related to operation and maintenance. Survial, Canchaque and La Chira have financed their construction costs through the sale of government certificates of construction to financial institutions at a discount from face value. Certificates of construction are negotiable instruments that the Peruvian government typically delivers upon completion of each stage of a project and which entitle the holder to receive payment from the government equal to the capital investment made in the corresponding stage upon completion of the entire project. Accordingly, the results of our Infrastructure segment may be affected by the discount rates obtained on the sale of government certificates of construction. For more information on our obligations and compensation under our concessions, see “Item 4.B. Information on the Company—Business Overview—Infrastructure.”

Real Estate

The results of operations of our Real Estate segment are driven by the number of units we develop and deliver in a reporting period, our mix of unit sales (affordable housing versus housing), unit prices, land purchase prices and our costs of construction. These results are also affected by a number of factors that may impact the Peruvian real estate sector as a whole, including: the availability of government subsidies for affordable housing; prices of suitable land in particular areas; regulation of real estate development imposed by national, regional and local laws and regulators, and the time required to obtain applicable construction permits and licenses; the unemployment rate and wage levels; prevailing interest rates and availability of financing; the supply in the market; the level of customer interest in our new projects; and our costs, such as the price of labor, materials, insurance, taxes and other public charges. We delivered 833, 934 and 1,418 units in 2015, 2016 and 2017, respectively.

The results of operations of our Real Estate segment are also significantly affected by our sales of land parcels. Due to the appreciation of land prices in Peru, and because we record our land holdings at book value (i.e., without marking to market), our recent land sales have resulted in high margins. Our board has approved the sale of non-strategic assets and, consequently, we have sold our interests in certain real estate projects as fully described in “Item 5.A. Operating and Financial Review and Prospects—Operating Results—Recent Developments.”

In addition, the net profit attributable to controlling interests of our Real Estate segment is significantly affected by the financing and commercial arrangements we use to purchase land and to develop real estate projects. Depending on the level of non-controlling interests used to finance our real estate projects, our Real Estate segment tends to have significant net profit attributable to non-controlling interests. See “—Results of Operations—General—Real Estate.”

Technical Services

The results of operations of our Technical Services segment, especially our activities relating to IT and electricity networks services, are affected by the economic growth of the countries in which we operate. As companies expand in response to economic growth, they tend to outsource certain activities in order to focus on their core businesses.

Critical Accounting Estimates and Judgments

For information on critical accounting estimates and judgments, see note 4 to our audited annual consolidated financial statements included in this annual report.

New Accounting Pronouncements, Amendments and Interpretations

For information on new accounting pronouncements, amendments and interpretations, see note 3.1 to our audited annual consolidated financial statements included in this annual report.

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Results of Operations

General

Accounting for Subsidiaries, Joint Operations, Joint Ventures and Associated Companies

Results of our subsidiaries, joint operations, joint ventures and associated companies are reflected in our financial results. We refer to our subsidiaries as those entities over which we exercise control. We consolidate the results of our subsidiaries in our financial statements and we reflect the profit corresponding to the minority interests in our subsidiaries under “profit attributable to non-controlling interests” in our income statement. Our consolidation of the results of our subsidiaries include subsidiaries in which we have less than 50% of the equity. We refer to business activities in which we share control with unrelated entities as joint arrangements, including joint operations and joint ventures, which are typically conducted through an agreement with a third party to carry out specific projects. We contribute our assets to these projects and derive revenue from their use. In our financial statements we recognize, in relation to our interest in a joint operation, our assets and liabilities, including our share of any asset or liability we hold jointly with our partner, as well as our share of revenue and expense from the joint operation. We refer to our associated companies as those entities over which we have significant influence but do not control. We reflect the results of our associated companies and joint ventures under the equity method of accounting in our financial statements under the line item “share of the profit and loss in associates” in our income statement. For further information, including a list of our subsidiaries, joint operations, joint ventures and associated companies, see notes 6a, 6c and 16 to our audited annual consolidated financial statements included in this annual report.

Intersegment Transactions

Some of our segments from time to time provide services to our other segments. In 2017, we obtained 1.4% of the revenues in our E&C segment from the construction of the highway at Norvial for our Infrastructure segment and the construction of real estate for our Real Estate segment; and 29.2% of the revenues in our operation and maintenance of infrastructure assets line of business derived from services provided to Norvial, Survial, Canchaque and the Lima Metro. Accordingly, in such circumstances, the segment providing services recognizes revenues and the segment receiving such services recognizes costs of sales relating to the services provided. For example, in the case of La Chira, in which our E&C segment provides services to our Infrastructure segment, our E&C segment recognizes revenues and our Infrastructure segment recognizes costs of sales with respect to the fees charged by our E&C segment for those services. In consolidation, these intersegment revenues and cost of sales are eliminated in our financial results. Nonetheless, our Infrastructure segment, in particular, may recognize gross profits or losses based on the difference between the fees the segment charges in accordance with concession terms and costs it incurs relating to services provided by our other segments. For more information on our segments, see note 7 to our audited annual consolidated financial statements.

Engineering and Construction

We obtain revenues in our E&C segment from the engineering and construction services we provide to our clients, which we recognize under the percentage-of-completion method of accounting. For further information, see note 2.25 to our audited annual consolidated financial statements included in this annual report. We receive unrestricted client advances in a substantial majority of our E&C projects, on average equal to approximately 23.5% of the contract price in 2017, which we record as an account payable. We typically invoice our clients on a periodic basis as each project progresses, deducting from the related advances on a proportional basis. For further information, see note 21 to our audited annual consolidated financial statements included in this annual report. Our cost of sales in our E&C segment includes labor, subcontractor expenses, materials, equipment, and project-specific general expenses.

Infrastructure

In our Infrastructure segment, we recognize revenues and cost of sales as follows:

(1) Toll Roads:

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• For Norvial, we obtain revenues for toll fees collected, minus deductions required to be transferred to the government as described in “Item 4.B. Information on the Company—Business Overview—Infrastructure—Principal Infrastructure Activities—Toll Roads—Norvial,” which we recognize upon receipt. Cost of sales for Norvial include fees paid to third parties (primarily our subsidiary Concar) for operation and maintenance services as well as the amortization of the road concession registered as an intangible asset in our financial statements; and

• For Survial and Canchaque, we obtain revenues for routine and periodic maintenance services, which we recognize in the period in which the services are performed. Cost of sales for Survial and Canchaque include fees paid to third parties (primarily our subsidiary Concar) for operation and maintenance services. We do not recognize the Survial and Canchaque concessions as intangible assets and therefore do not amortize the concessions.

For further information, see notes 2.15(iii) and 18 to our audited annual consolidated financial statements included in this annual report.

(2) Mass Transit: We obtain revenues from our Lima Metro concession based on a tariff per kilometer traveled by our trains in operation in accordance with a schedule established in our concession agreement, which we recognize in the period in which the services are performed. Under the concession, the tariff is comprised of three components: (i) fees related to our operation and maintenance services; (ii) fees related to the Peruvian government’s repayment of the amounts we invest to purchase trains, ongoing capital expenditures and other infrastructure for the Peruvian government; and (iii) fees related to interest we charge to the Peruvian government in connection with the amounts we invest to purchase such trains, ongoing capital expenditures and other infrastructure. In 2017, the fees related to items (i), (ii) and (iii) were S/.168.8 million, S/.10.2 million and S/.43.0 million, respectively. We only recognize in our income statement the portion of the tariff that relates to items (i) and (iii) We record the amounts paid by us that relate to item (ii) as long-term accounts receivables from the Peruvian government. Accordingly, tariff payments received relating to item (ii) reduce our accounts receivables but do not impact our income statement, and we do not amortize our investments in our income statement as our investment in the concession is recorded as an account receivable with the government rather than a depreciable investment.

We entered into the fourth addendum to the Lima Metro concession contract on July 11, 2016, in order to expand transportation capacity. In accordance with the fourth addendum, the expansion project will involve: (i) the purchase of 20 new trains; (ii) the purchase of 39 new cars; and (iii) the improvement and expansion of the existing infrastructure. As compensation for the investments of the expansion project, we will be entitled to receive the following: (i) an advance payment of 30% of each investment component; and (ii) the balance of 70% of each investment component, compensated through the annual payment for additional investments (pago anual por inversiones complementarias). We register the estimated compensation related to the direct cost in the income statement, plus a margin in the same period. In 2017, the income related to the investment components was S/.146.8 million.

For further information, see note 11 to our audited annual consolidated financial statements included in this annual report. Cost of sales for the Lima Metro include fees paid to third parties (primarily our E&C segment, our subsidiary Concar and other subcontractors) for construction and operation and maintenance services, energy, and our financing costs related to the purchase of trains.

(3) Water Treatment: We obtain revenues from the engineering design and construction of La Chira waste water treatment plant, which we recognize based on the percentage-of-completion method of accounting. Since the plant began operating in August 2016, we obtain revenues only for operation and maintenance services, which we recognize in the period in which the services are performed. During the construction phase, cost of sales for La Chira included fees paid to third parties, primarily our E&C segment, for engineering and construction services. During the operation phase, cost of sales for La Chira include personnel charges and maintenance of infrastructure.

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(4) Energy: We obtain revenues from extraction services and license contracts related to oil and gas production, fuel storage services, and the sale of natural gas liquids derived from our gas processing and fractionation services, which we recognize in the period in which the services are performed and, in the case of sale of natural gas liquids, when the sale is made. Cost of sales for our energy line of business includes labor, materials, amortization of oil wells, depreciation of the gas plant, maintenance and general expenses.

(5) Operation and Maintenance of Infrastructure Assets: We obtain revenues from our operation and maintenance of infrastructure assets line of business for the operation and maintenance services we provide to the government and concessionaires (currently concessions within our Infrastructure segment), which we recognize in the period in which the services are performed. We receive unrestricted advances with respect to our service contracts with the government, that vary from approximately 10% to 30% of the contract price, which we record as an account payable. We typically invoice our clients on a periodic basis as the project progresses, deducting from the related advances on a proportional basis. For further information, see note 22 to our audited annual consolidated financial statements included in this annual report. Our cost of sales in this line of business includes personnel costs, services provided by third parties, machinery and other materials (primarily trucks), and depreciation of equipment utilized to provide services. Beginning on April 1, 2017, we have transferred Concar from our Technical Services segment to our Infrastructure segment.

Real Estate

We obtain revenues in our Real Estate segment from sales of affordable housing and housing units, commercial buildings and land parcels, which we recognize at the time of delivery of the unit or building and, in the case of land parcels, at the time of the sale. We typically pre-sell our affordable housing and housing units prior to and during construction, and use the related proceeds we receive to finance the construction of the units. These pre-sale funds are restricted and released from escrow to us periodically as construction progresses. Our Real Estate cost of sales includes the cost to purchase land, costs of architectural design and construction (which usually includes payments to third parties, primarily our E&C segment), licensing and permit costs, personnel costs, and fees to third parties related to sanitation or electrical engineering. In 2017, our cost of land that is allocated to units delivered during these periods amounted to S/.74.0 million. We recognize land purchases as inventory, and, accordingly, do not mark-to-market the value of our land for changes in fair value. For further information, see note 15 to our audited annual consolidated financial statements included in this annual report.

In our Real Estate segment, we have significant net profit attributable to non-controlling interests. We hold a significant portion of our land bank through Almonte in which we have a 50.4% interest, and we consolidate Almonte’s results in our financial statements. In addition, we undertake a significant number of our real estate projects through entities in which we may have a majority interest, co-equal interest or minority interest; when we have control over these entities, we consolidate their results in our financial statements regardless of whether we own a majority of the capital. Furthermore, in connection with our affordable housing projects, we generally partner with real estate investment funds and insurance companies that provide between 60% and 70% of the total capital required to purchase the land and cover certain pre-construction costs in exchange for equity in the project. Although we typically own a minority interest in these projects, we consolidate their results in our financial statements because we exercise control over the project. Accordingly, we reflect the profit corresponding to our real estate partners under net profit attributable to non-controlling interests in our income statement. See “—Accounting for Subsidiaries, Joint Operations, Joint Ventures and Associated Companies.”

Technical Services

In our Technical Services segment, we recognize revenues and cost of sales as follows:

(1) IT Services: We obtain revenues from our IT services line of business for IT and outsourcing services we perform for government and private sector clients, which we recognize in the period in which the services are performed. Our IT services cost of sales includes personnel costs, services provided by third parties, equipment and other materials, depreciation of equipment utilized to provide services, and amortization of software.

(2) Electricity Networks Services: We obtain revenues from the electrical services we provide to our clients, which we recognize in the period in which the services are performed. Our cost of sales in this line of business includes personnel costs, services provided by third parties, machinery and other materials (primarily trucks and meters), and depreciation of equipment utilized to provide services.

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Comparison of Results of Operations of 2016 and 2017

The following table sets forth the components of our consolidated income statement for 2016 and 2017.

	Year ended December 31,
	2016			2017			Variation
	(in millions of S/.)						%
Revenues		6,190.3			6,080.1			(1.8	)
Cost of sales		(5,633.0	)		(5,407.4	)		(4.0	)
Gross profit		557.3			672.7			20.7
Administrative expenses		(382.4	)		(429.2	)		12.2
Other income (expenses)		(12.7	)		(21.0	)		65.4
Other (losses) gains, net		(0.7	)		0.4			NM
Profit from sale of investments		46.3			274.4
Operating profit		207.8			497.3
Financial (expense) income, net		(201.0	)		(170.0	)		(15.4	)
Share of profit and loss in associates		(589.7	)		1.3			(100.2	)
Profit (loss) before income tax		(582.9	)		328.6			NM
Income tax		119.3			(123.4	)		NM
Net profit from continuing operations		(463.7	)		205.6			NM
Profit from discontinuated operations		12.0			3.6			(70.0	)
Net profit (loss)		(451.7	)		209.2
Net profit (loss) attributable to controlling interest		(509.7	)		148.7			NM
Net profit attributable to non-controlling interest		58.1			60.5			4.1

Revenues

Our total revenues decreased by 1.8%, or S/.110.2 million, from S/.6,190.3 million for 2016 to S/.6,080.1 million for 2017. Revenues decreased due mainly to a reduction of revenues in the E&C segment as a consequence of fewer projects under execution. This was offset, in part, by an increase in revenues of GMP due to an increase in the average price of oil, as well as an increase in production. Revenues in the Mass Transit business increased due to expansion works, along with major maintenance works by Survial and new contracts awarded during 2016 that initiated works in 2017 for Concar. Revenues in the Real Estate segment increased due to the sale of Cuartel San Martín and also due to an increase in units delivered.

The following table sets forth a breakdown of our revenues by segment for 2016 and 2017.

	Year ended December 31,
	2016						2017						Variation
	(in millions of S/.)			% of Total			(in millions of S/.)			% of Total			%
Engineering and Construction		4,159.5			67.2			3,353.2			55.2			(19.4	)
Infrastructure		1,174.8			19.0			1,447.9			23.8			23.2
Real Estate		411.5			6.6			647.5			10.6			57.4
Technical Services		841.1			13.6			1,061.0			17.5			26.1
Corporate		62.1			1.0			70.0			1.2			12.7
Eliminations		(458.7	)		(7.4	)		(499.5	)		(8.2	)		8.9
Total		6,469.6			100.0			6,080.1			100.0			(1.8	)

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Cost of Sales

Our total cost of sales decreased by 4.0%, or S/. 225.6 million, from S/.5,633.0 million for 2016 to S/.5,407.4 million for 2017. This decrease is mainly due to the reduction of revenues.

Gross Profit

Our gross profit increased by 20.7% or S/.115.4 million, from S/.557.3 million for 2016 to S/.672.7 million for 2017. Our gross margin (i.e. gross profit as a percentage of revenues) for 2017 was 11.1% compared to 9.0% for 2016. In 2016, gross profit was impacted by the early termination of GSP construction consortium in our E&C segment and partially offset by the profit generated by the sale of land of Almonte in our Real Estate segment. During 2016, gross profit was also impacted in our Infrastructure segment by the decrease in oil price. During 2017, gross profit was impacted in our E&C segment by efficiencies in the projects under execution, in our Infrastructure Segment by an increase in oil price, in our Real Estate segment by the sale of Cuartel San Martín, and in our Technical Services segment due to the write off of provisions and account receivables in CAM.

The following table sets forth a breakdown of our gross profit by segment for 2016 and 2017.

	Year ended December 31,
	2016						2017						Variation
	(in millions of S/.)			% of Total			(in millions of S/.)			% of Total			%
Engineering and Construction		224.6			40.3			290.3			43.2			29.3
Infrastructure		211.4			37.9			260.2			38.7			23.1
Real Estate		136.5			24.5			147.4			21.9			8.0
Technical Services		77.3			13.9			57.8			8.6			(25.2	)
Corporate		(0.2	)		0.0			(37.8	)		(5.6	)		N.A.
Eliminations		(92.4	)		(16.6	)		(45.2	)		(6.7	)		(51.2	)
Total		557.3			100.0	%		672.7			100			20.7

Administrative Expenses

Our administrative expenses increased by 12.2%, or S/.46.8 million, from S/.382.4 million for 2016 to S/.429.2 million for 2017. This increase is mainly due to an increase in services provided by third parties principally relating to legal, accounting and tax consultancy. As a percentage of revenues, our administrative expenses increased to 7.1% in 2017 from 6.2% in 2016.

Other Income (Expenses)

Our other income (expenses) increased by 65.4%, or S/.8.3 million, from S/.12.7 million in expenses for 2016 to S/.21.0 million in expenses for 2017. In 2016, our other income included the sale of machinery and equipment, price adjustments as well as a reversion of legal and tax provisions in connection with the acquisition of Morelco, and extraordinary income from the settlement agreement reached in connection with the legal proceeding related to the Collahuasi project in Chile. In 2017, our other income included the sale of machinery and equipment, as well as the impairment of the Vial y Vives DSD brand.

Profit from Sale of Investments

We registered a profit of S/.274.4 million from the sale of the certain investments, mainly due to the sales of Red Eagle Mining, PRINSUR, GMD and COGA in 2017.

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The following table sets forth a breakdown of our operating profit by segment for 2016 and 2017.

Operating Profit

Our operating profit increased 109.8%, or S/.260.3 million, from S/.237.0 million for 2016 to S/.497.3 million for 2017. Our operating margin (i.e., operating profit as a percentage of revenues) was 8.2% for 2017 compared to 3.7% for 2016. The increase in operating margin is primarily due to the increase in profit from the sales of investments and, to a lesser extent, to the increase in gross profit.

	Year ended December 31,
	2016						2017						Variation
	(in millions of S/.)			% of Total			(in millions of S/.)			% of Total			%
Engineering and Construction		(43.2	)		20.8			42.3			8.5			NM
Infrastructure		146.1			70.3			202.5			40.7			38.6
Real Estate		108.9			52.4			171.5			34.5			57.5
Technical Services		11.4			5.5			(7.7	)		(1.5	)		NM
Corporate		4.6			2.2			67.4			13.6			1,365.2
Eliminations		(20.0	)		(9.6	)		21.5			4.3			(207.5	)
Total		207.8			100			497.3			100			139.3

The following discussion analyzes our key results of operations on a segment basis. For further information on our business segments, see note 7 to our audited annual consolidated financial statements included in this annual report.

Engineering and Construction

The table below sets forth selected financial information related to our E&C segment.

	Year ended December 31,
	2016			2017		Variation
	(in millions of S/.)					%
Revenue		4,159.5			3,353.2		(19.4	)
Gross profit		224.6			290.3		29.3
Operating profit		(43.2	)		42.3		NM

Revenues. Our E&C revenues decreased 19.4%, or S/.806.3 million, from S/.4,159.5 million for 2016 to S/.3,353.2 million for 2017.

The reduction is due to fewer projects under execution resulting from lower levels of private investment in Peru. The following tables set forth variations in our E&C revenues by business activities, types of contracts and end-markets:

	Year ended December 31,
	2016		2017
	%		%
Engineering services		3.0		5.0
Electromechanic construction		39.0		28.7
Civil construction		11.9		24.1
Contract mining		32.9		34.9
Building construction activities		11.5		6.5
Other Services		1.8		0.9
Total		100.0		100.0

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	Year ended December 31,
	2016		2017
	%		%
Cost + fee		32.0		8.4
Unit price		25.6		31.2
Lump sum		35.1		49.7
EPC contracts		7.3		10.7
Total		100.0		100.0

	Year ended December 31,
	2016		2017
	%		%
Mining		38.3		49.6
Real estate buildings		10.9		7.2
Power		12.6		0.0
Oil and gas		31.0		20.8
Transportation		3.9		15.2
Water and sewage		3.1		1.3
Other end markets		0.2		5.9
Total		100.0		100.0

The breakdown of E&C revenues by different business activities, types of contracts and end-markets tends to vary from period to period due to a variety of factors, including the timing of the execution of larger projects in any particular period, which is typically outside of our control.

Gross Profit. Our E&C gross profit increased 29.3%, or S/.65.7 million, from S/.224.6 million for 2016 to S/.290.3 million for 2017. Our E&C gross margin for 2017 was 8.7% compared to 5.4% for 2016. This increase in our E&C gross profit was mainly due to efficiencies implemented in the different projects under execution.

Other income (expenses). Other income (expenses) increased in our E&C segment, from S/.9.2 million in expenses for 2016 to a S/.42.7 million expenses in 2017, mainly because while this item usually includes sales of machinery and equipment, in 2017, it also included the impairment of the Vial y Vives DSD brand.

Operating Profit. Our E&C operating profit increased S/.85.5 million, from a S/.43.2 million loss for 2016 to a S/.42.3 million profit for 2017, due to an increase of gross profit, a reduction of administrative expenses, related to a reduction of personnel and lower expenses relating to bid proposals, and the profit from the sale of the shares of Red Eagle Mining owned by Stracon. Our E&C operating margin was 1.3% for 2017 compared to (1.0)% for 2016.

In addition, our E&C segment had a S/.0.3 million profit in 2017, compared to a S/.5.7 million loss in 2016, relating to minority interests held by Vial y Vives in several of its projects undertaken in Chile, as well as the minority participation of GyM in Viva GyM reflected under “share of profit and loss in associates” in our audited annual consolidated financial statements.

Infrastructure

The table below sets forth selected financial information related to our Infrastructure segment.

	Year ended December 31,
	2016		2017		Variation
	(in millions of S/.)				%
Revenue		1,174.8		1,447.9		23.2
Gross profit		211.4		260.2		23.1
Operating profit		146.1		202.5		38.6

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Revenues. The table below sets forth the breakdown of our Infrastructure revenues by principal lines of business.

	Year ended December 31,
	2016		2017		Variation
	(in millions of S/.)				%
Toll Roads		264.4		263.8		(0.2	)
Mass Transit		247.0		365.8		48.1
Water Treatment		18.5		3.2		(82.7	)
Energy		382.2		436.9		14.3
Operation and Maintenance of Infrastructure Assets		262.7		378.3		44.0
Total		1,174.8		1,447.9		23.2

Our Infrastructure revenues increased 23.2% or S/.273.1 million, from S/.1,174.8 million for 2016 to S/.1,447.9 million for 2017. The variation in our Infrastructure revenues principally reflected the following:

• Toll Roads: a 0.2%, or S/.0.6 million, decrease in revenues, from S/.264.4 million for 2016 to S/.263.8 million for 2017, primarily due to the timing of the work for the second stage of the Norvial toll road and partially offset by an increase in revenues in Survial due to more maintenance works executed on the road;

• Mass Transit: a 48.1%, or S/.118.8 million, increase in revenues, from S/.247.0 million for 2016 to S/.365.8 million for 2017, primarily due to the revenues recognized for the advance of the construction of the infrastructure expansion;

• Water Treatment: a 82.7%, or S/.15.3 million, decrease in revenues, from S/.18.5 million for 2016 to S/.3.2 million for 2017, primarily due to conclusion of the construction works of the La Chira waste water treatment plant. The operation of the plant started in the second quarter of 2016;

• Energy: a 14.3%, or S/.54.7 million, increase in revenues, from S/.382.2 million for 2016 to S/.436.9 million for 2017, primarily due to an increase in our barrel daily production (3,140 barrel daily production in 2017 versus 2,756 in 2016), as well as an increase in international oil prices (average price per basket of oils of US$52.84 bbl in 2017 versus US$41.8 bbl in 2016), and better results in our fuel terminals business (3.39 MM barrels in storage per month in 2017 versus 3.18 MM barrels in storage per month in 2016, and 3.43 MM barrels dispatched per month in 2017 versus 3.34 MM barrels dispatched per month in 2016). Additionally, even though gas processing levels in our gas processing plant were lower (33.2 MMcf per day in 2016 to 30.57 MMcf per day in 2017), this was partially offset by the increase in prices of liquefied petroleum gas (“LPG”). The price of LPG went from US$41.87/bbl in 2016 to US$48.18/bbl in 2017 and the price of HAS (CGN) went from US$35.64/bbl in 2016 to US$49.44/bbl in 2017; and

• Operation and Maintenance of Infrastructure Assets: a 44.0%, or S/.115.6 million, increase in revenues, from S/.262.7 million for 2016 to S/.378.3 million, due to new contracts awarded during 2016 that initiated works in 2017.

Gross Profit. The table below sets forth the breakdown of our Infrastructure gross profit by principal lines of business.

	Year ended December 31,
	2016		2017		Variation
	(in millions of S/.)				%
Toll Roads		75.8		89.9		18.6
Mass Transit		42.5		48.7		14.6
Water Treatment		5.7		0.4		(93.0	)
Energy		42.1		71.8		70.5
Operation and Maintenance of Infrastructure Assets		45.3		49.3		8.8
Total		211.4		260.2		23.1

129

Our Infrastructure gross profit increased 23.1%, or S/.48.8 million, from S/.211.4 million for 2016 to S/.260.2 for 2017. Our Infrastructure gross margin was 18% for 2017 and 18% for 2016 as well. The variation in our Infrastructure gross profit principally reflected the following:

• Toll Roads: a 18.6%, or S/.14.1 million, increase in gross profit, from S/.75.8 million for 2016 to S/.89.9 million for 2017. Our Toll Roads gross margin increased from 28.7% for 2016 to 34.1% for 2017, as a consequence of the fewer construction works that have lower margins during 2017;

• Mass Transit: a 14.6%, or S/.6.2 million, increase in gross profit, from S/.42.5 million for 2016 to S/.48.7 million for 2017, primarily due to more expansion works in 2017. Our gross margin for 2017 was 13.3%, compared to 17.2% for 2016, due to lower margins in those expansion works;

• Water Treatment: a 93.0%, or S/.5.3 million, decrease in gross profit for 2017, from S/.5.7 million gross profit for 2016 to S/.0.4 million gross profit for 2017, due to the conclusion of construction works. Our Water Treatment gross margin was 12.5% for 2017 compared to 30.8% for 2016;

• Energy: a 70.5%, or S/.29.7 million, increase in gross profit, from S/.42.1 million for 2016 to S/.71.8 million for 2017, primarily due to the increase of international oil prices. Our Energy gross margin was 16.4% for 2017 compared to 11.0% for 2016; and

• Operation and Maintenance of Infrastructure Assets: a 8.8%, or S/.4.0 million, increase in gross profit, from S/.45.3 million for 2016 to S/.49.3 million for 2017, due to new contracts awarded during 2016 that initiated works. Our Operation and Maintenance of Infrastructure Assets gross margin was 13.0% for 2017 compared to 17.2% for 2016, arising largely from certain high-costs delays in financing working capital.

Operating Profit. The table below sets forth the breakdown of our Infrastructure operating profit by principal lines of business.

	Year ended December 31,
	2016		2017		Variation
	(in millions of S/.)				%
Toll Roads		65.7		80.1		21.9
Mass Transit		29.5		33.4		13.2
Water Treatment		4.9		0.1		(98.0	)
Energy		25.4		61.1		140.6
Operation and Maintenance of Infrastructure Assets		20.6		27.7		34.5
Total		146.1		202.5		38.6

Our Infrastructure operating profit increased 38.6%, or S/.56.4 million, from S/.146.1 million for 2016 to S/.202.5 million for 2017. Our Infrastructure operating margin was 14.0% for 2017 compared to 12.4% for 2016. The variation in our Infrastructure operating profit principally reflected the following:

• Toll Roads: a 21.9%, or S/.14.4 million, increase in operating profit, from S/.65.7 million for 2016 to S/.80.1 million for 2017, primarily due to the increase in gross profit given that administrative expenses remained at the same level. Our Toll Roads operating margin was 30.4% for 2017 compared to 24.8% for 2016;

• Mass Transit: a 13.2%, or S/.3.9 million, increase in operating profit, from an operating profit of S/.29.5 million for 2016 to S/.33.4 million for 2017, primarily due to the increase of gross profit, partially offset by an increase in administrative expenses due to structuring fees and costs of the financing of the expansion. Our Mass Transit operating margin for 2017 was 9.1%, compared to 11.9% for 2016;

130

• Water Treatment: a 98.0%, or S/.4.8 million, decrease in operating profit, from an operating profit of S/.4.9 million for 2016 to S/.0.1 million in 2017, mainly due to the decrease in gross profit. Our Water Treatment operating margin for 2017 was 3.1% compared to 26.5% for 2016; and

• Energy: a 140.6%, or S/.35.7 million, increase in operating profit, from S/.25.4 million for 2016 to S/.61.1 million for 2017, primarily due to the increase in gross profit given that the administrative expenses remained at the same level. Our Energy operating margin was 14.0% for 2017 compared to 6.6% for 2016; and

• Operation and Maintenance of Infrastructure Assets: a S/.34.5%, or S/.7.1 million increase in operating profit, from a S/.20.6 million profit for 2016 to a S/.27.7 million profit in 2017, primarily due to the increase in gross profit given that the administrative expenses remained at the same level as 2016. Our Operation and Maintenance of Infrastructure Assets operating margin was 7.3% for 2017 compared to 7.8% for 2016.

Real Estate

The table below sets forth selected financial information related to our Real Estate segment.

	Year ended December 31,
	2016		2017		Variation
	(in millions of S/.)				%
Revenue		411.5		647.5		57.4
Gross profit		136.5		147.4		8.0
Operating profit		108.9		171.5		57.5

Revenues. Our Real Estate revenues increased 57.4%, or S/.236.0 million, from S/.411.5 million for 2016 to S/.647.5 million for 2017. The increase is primarily due to the sale of Cuartel San Martín in 2017 for S/.162.3 million, compared to the sale of land in Almonte for S/.97.0 million in 2016, as well as more units delivered in 2017 (1,418 units in 2017 and 938 units in 2016).

Gross Profit. Our Real Estate gross profit increased 8.0%, or S/.10.9 million, from S/.136.5 million for 2016 to S/.147.4 million for 2017, mainly as a result of sale of Cuartel San Martín and units delivered during 2017 with higher margins. Our Real Estate gross margin was 22.8% for 2017 compared to 33.2% for 2016, this is due to the fact that the sale of Almonte had larger margins than the sale of Cuartel San Martín.

Operating Profit. Our Real Estate operating profit increased 57.7%, or S/.62.6 million, from S/.108.9 million for 2016 to S/.171.5 million for 2017, primarily as a result of the increase in our gross profit and the sale of an investment, PRINSUR.

Technical Services

The table below sets forth selected financial information related to our Technical Services segment.

	Year ended December 31,
	2016		2017			Variation
	(in millions of S/.)					%
Revenue		841.1		1,061.0			26.1	%
Gross profit		77.3		57.8			(25.2	)
Operating profit		11.4		(7.7	)		(167.5	)

131

Revenues. The table below sets forth the breakdown of our Technical Services revenues by principal lines of business.

	Year ended December 31,
	2016		2017		Variation
	(in millions of $/.)
IT Services		113.2		284.2		151.1
Electricity Networks Services		727.9		776.8		6.7
Total		841.1		1,061.0		26.1

Our Technical Services revenues increased 26.1% or S/.219.9 million, from S/.841.1 million for 2016 to S/.1,061.0 million for 2017. The variation in our Technical Services revenues principally reflected the following:

• IT Services: a 151.1%, or S/.171.0 million, increase in revenues, from S/.113.2 million for 2016 to S/.284.2 million for 2017, due to the consolidation of Adexus for the 2017 year.

• Electricity Networks Services: a 6.7%, or S/.48.9 million, increase in revenues, from S/.727.9 million for 2016 to S/.776.8 million for 2017, due to an increase in revenues in Chile due to new contracts awarded during 2017.

Gross Profit. The table below sets forth the breakdown of our Technical Services gross profit by principal lines of business.

	Year ended December 31,
	2016		2017		Variation
	(in millions of $/.)
IT Services		15.7		44.4		182.8
Electricity Networks Services		61.6		13.5		(78.1	)
Total		77.3		57.8		(25.2	)

Our Technical Services gross profit decreased 25.2%, or S/.19.5 million, from S/.77.3 million for 2016 to S/.57.8 million for 2017. Our Technical Services gross margin was 5.4% for 2017 compared to 9.2% for 2016. The variation in our Technical Services gross profit principally reflected the following:

• IT Services: a 182.8%, or S/.28.7 million, increase in gross profit, from S/.15.7 million for 2016 to S/.44.4 million for 2017, due to the consolidation of Adexus for the 2017 year. Our IT Services gross margin was 15.6% for 2017 compared to 13.9% for 2016; and

• Electricity Networks Services: a 78.1%, or S/.48.1 million, decrease in gross profit, from S/.61.6 million for 2016 to S/.13.5 million for 2017. Our Electricity Networks Services gross margin was 1.7% for 2017 compared to 8.5% for 2016, mainly due to the impairment of provisions and accounts receivables and to ineffiencies in certain services provided .

Operating Profit. The table below sets forth the breakdown of our Technical Services operating profit by principal lines of business.

	Year ended December 31,
	2016			2017			Variation
	(in millions of S/.)						%
IT Services		(0.7	)		10.3			NM
Electricity Networks Services		12.1			(18.0	)		NM
Total		11.4			(7.7	)		NM

Our Technical Services operating profit decreased S/.19.1 million, from S/.11.4 million for 2016 to a S/.7.7 million loss for 2017. Our Technical Services operating margin for 2017 was (0.7)% compared to 1.4% for 2016. The variation in our Technical Services operating profit principally reflected the following:

132

• IT Services: a S/.11.0 million increase in operating profit, from S/.0.7 million loss for 2016 to S/.10.3 million profit for 2017, due to the consolidation of Adexus for a whole year. Our IT Services operating margin was 3.6% for 2017 compared to (0.6)% for 2016; and

• Electricity Networks Services: a S/.30.1 million decrease in operating profit, from a S/.12.1 million profit for 2016 to a S/.18.0 million loss for 2017. Our Electricity Network Services operating margin was (2.3)% for 2017 compared to 1.7% for 2016, mainly due to the decrease in gross profit partially offset by a reduction in administrative expenses.

Financial (Expense) Income, Net

Our net financial expense decreased S/.31.0 million from net financial expenses of S/.201.0 million in 2016 to net financial expenses of S/.170.0 million in 2017. Excluding foreign exchange differences, our net financial expense decreased 6.8%, or S/.12.9 million, from net financial expenses of S/.189.2 million for 2016 to net financial expenses of S/.176.3 million for 2017 due to a reduction of debt and due to the fact that no additional discounts in long term accounts receivables of GSP beyond those registered in 2016 were registered in 2017. Our net exchange difference increased S/.18.8 million, from a loss of S/.12.5 million for 2016 to a profit of S/.6.3 million for 2017. This increase is due to the appreciation of the sol against the U.S. dollar from 2016 to 2017.

Share of Profit and Loss in Associates

Our share of profit and loss in associates increased S/.591.0 million from a loss of S/.589.7 million in 2016 to a profit of S/.1.3 million in 2017. In 2016 we registered the impairment of our investment in GSP as a consequence of the cancellation of the concession on January 24, 2017. There were no additional impairments in 2017. For more information, see “Item 5.A. Operating and Financial Review and Prospects—Operating Results—Recent Developments.”

Income Tax

Our income tax increased S/.242.3 million, from S/.(119.3) million for 2016 to S/.123 million for 2017. This increase in income tax was primarily due to an increase in profit before tax. Our effective tax rates for 2017 and 2016 were 37.4% and 20.5%, respectively.

Net Profit

Our net profit increased 146.3%, or S/.660.8 million, from a S/.451.6 million loss for 2016 to a S/.209.2 million profit for 2017. Net profit attributable to controlling interests decreased 129.2%, while net profit attributable to non-controlling interests increased 4.1%. Net profit attributable to non-controlling interests increased primarily due to increases arising from our Real Estate segment. See “—General—Accounting for Subsidiaries, Joint Operations, Joint Ventures and Associated Companies.”

Comparison of Results of Operations of 2015 and 2016

The following table sets forth the components of our consolidated income statement for 2015 and 2016.

	Year ended December 31,
	2015			2016			Variation
	(in millions of $/.)
Revenues		7,582.9			6,190.3			(18.4	)
Cost of sales		(6,969.9	)		(5,633.0	)		(19.2	)
Gross profit		613.0			557.3			(9.1	)
Administrative expenses		(394.2	)		(382.4	)		(3.0	)
Other income (expenses)		54.7			(12.7	)		(123.2	)
Other (losses) gains, net		(0.1	)		(0.7	)		NM
Profit from sale of investments		(8.3	)		46.3			NM
Operating profit		265.1			207.8			(21.6	)

133

	Year ended December 31,
	2015			2016			Variation
	(in millions of $/.)
Financial (expense) income, net		(130.4	)		(201.0	)		54.1
Share of profit and loss in associates		7.7			(589.7	)		NM
Profit (loss) before income tax		142.4			(582.9	)		(509.3	)
Income tax		(95.9	)		119.3			NM
Net profit (loss) from continuing OP.		46.5			(463.6	)		NM
Profit from discontinued operations		9.1			12.0			31.9
Net profit (loss)		55.6			(451.6	)		(912.2	)
Net profit (loss) attributable to controlling interest		7.1			(509.7	)		NM
Net profit attributable to non-controlling interest		48.5			58.1			19.8

Revenues

Our total revenues decreased by 18.4%, or S/.1,392.6 million, from S/.7,582.9 million for 2015 to S/.6,190.3 million for 2016. Revenues decreased due mainly to lower revenues in our E&C segment as a result of the completion of two large mining projects at the end of 2015 (Las Bambas and Cerro Verde), which were not fully compensated by new works at the GSP project in Peru and, to a lesser extent, works in Chile and Colombia. The 2016 presidential elections in Peru and the subsequent change in administration also contributed to lower activity levels in our E&C segment during 2016. Additionally, Stracon GyM completed one mining services contract for our E&C segment, which was not renewed, and had another contract reduced in scope. On the other hand, in the Infrastructure segment, revenues decreased mainly due to the timing of works on the second stage of the Norvial toll road, lower amount of maintenance works on the Survial highway and lower revenues due to the termination of two Concar contracts, Red Vial 3 and Covial, both by the end of 2015. This reduction is partially offset by: the increase in revenues in the Real Estate segment, which is the result of the sale of land in Almonte for S/.97.0 million in 2016 compared to S/.12.0 million in 2015, as well as by more units delivered in 2016 (938 units versus 835 units in the previous year), and the increase in revenues of the Technical Services segment due to the consolidation of Adexus acquisition as of August 2016 and higher revenues in CAM for the new contracts awarded during the year.

The following table sets forth a breakdown of our revenues by segment for 2015 and 2016.

	Year ended December 31,
	2015						2016						Variation
	(in millions of S/.)			% of Total			(in millions of S/.)			% of Total			%
Engineering and Construction		5,829.4			76.9			4,159.5			67.2	%		(28.6	)
Infrastructure		1,353.1			17.8			1,174.8			19.0	%		(13.2	)
Real Estate		215.8			2.8			411.5			6.6	%		90.7
Technical Services		563.9			7.4			841.1			13.6	%		49.2
Corporate		70.5			0.9			62.1			1.0	%		(11.9	)
Eliminations		(449.8	)		(5.8	)		(458.7	)		(7.4	)%		2.0
Total		7,582.9			100.0			6,190.3			100.0	%		(18.4	)

Cost of Sales

Our total cost of sales decreased by 19.2%, or S/.1,336.9 million, S/.6,969.9 million for 2015 to S/.5,633.0 million for 2016. This decrease is mainly due to the reduction of revenues.

Gross Profit

Our gross profit decreased by 9.1% or S/.55.7 million, from S/.613.0 million for 2015 to S/.557.3 million for 2016. Our gross margin (i.e. gross profit as a percentage of revenues) for 2016 was 9.0% compared to 8.1% for 2015. In 2015 gross profit was impacted by losses incurred from a dispute with respect to an E&C contract with Hochschild Mining for the Inmaculada mining project and losses incurred because of the cancellation of the El Nuble hydroelectric plant project, for which our subsidiary Vial y Vives was carrying on civil works in Chile. In 2016, gross profit was impacted by the early termination of GSP construction consortium in our E&C segment and partially offset by the profit generated by the sale of land of Almonte in our Real Estate segment. During 2016, gross profit was also impacted in our Infrastructure segment by the decrease in oil price.

134

The following table sets forth a breakdown of our gross profit by segment for 2015 and 2016.

	Year ended December 31,
	2015						2016						Variation
	(in millions of S/.)			% of Total			(in millions of S/.)			% of Total			%
Engineering and Construction		312.8			51.0			224.6			40.3			(28.2	)%
Infrastructure		245.9			40.1			211.4			37.9			(14.0	)%
Real Estate		51.8			8.5			136.5			24.5			163.5	%
Technical Services		76.8			12.5			77.3			13.9			0.7	%
Corporate		(7.0	)		(1.1	)		(0.2	)		0.0			(97.1	)%
Eliminations		(67.2	)		(11.0	)		(92.4	)		(16.6	)		37.5	%
Total		613.0			100.0			557.3			100.0	%		(9.1	)%

Administrative Expenses

Our administrative expenses decreased by 3.0%, or S/.11.8 million, from S/394.2 million for 2015 to S/.382.4 million for 2016. This decrease is mainly due to a reduction in services provided by third parties principally relating to legal, accounting and tax consultancy. As a percentage of revenues, our administrative expenses increased to 6.2% in 2016 from 5.2% in 2015.

Other Income (Expenses)

Our other income (expenses) decreased by 123.2%, or S/.67.4 million, from S/.54.7 million in income for 2015 to S/.12.7 million in expenses for 2016. In 2015 our other income included the reversion of tax and labor provisions in connection with the acquisition of CAM, the sale of machinery, equipment and scrap and dividend payments from our subsidiary TGP, and in 2016, our other income included the sale of machinery and equipment, price adjustments as well as a reversion of legal and tax provisions in connection with the acquisition of Morelco, and extraordinary income from the settlement agreement reached in connection with the legal proceeding related to the Collahuasi project in Chile.

Profit from Sale of Investments

We registered a profit of S/.46.3 million from the sale of the certain investments, mainly the sale of our 1.64% stake in TGP in April 2016.

Operating Profit

Our operating profit decreased 21.6%, or S/.57.3 million, from S/.265.1 million for 2015 to S/.207.8 million for 2016. Our operating margin (i.e., operating profit as a percentage of revenues) was 3.4% for 2016 and 3.5% for 2015 as well.

The following table sets forth a breakdown of our operating profit by segment for 2015 and 2016.

	Year ended December 31,
	2015						2016						Variation
	(in millions of S/.)			% of Total			(in millions of S/.)			% of Total			%
Engineering and Construction		54.2			20.5			(43.2	)		(20.8	)		(179.7	)
Infrastructure		180.8			68.2			146.1			70.3			(19.2	)
Real Estate		33.0			12.5			108.9			52.4			230.0
Technical Services		19.8			7.5			11.4			5.5			(42.4	)
Corporate		(25.8	)		(9.7	)		4.6			2.2			(117.8	)
Eliminations		3.0			1.1			(20.0	)		(9.6	)		(766.7	)
Total		265.1			100.0			207.8			100			(21.6	)

135

The following discussion analyzes our key results of operations on a segment basis. For further information on our business segments, see note 7 to our audited annual consolidated financial statements included in this annual report. Beginning on April 1, 2017, we have transferred Concar from our Technical Services segment to our Infrastructure segment. For ease of comparison, the historical segment financial information included in this annual report presents Concar in the Infrastructure segment. This change does not impact our consolidated financial results.

Engineering and Construction

The table below sets forth selected financial information related to our E&C segment.

	Year ended December 31,
	2015		2016			Variation
	(in millions of S/.)					%
Revenue		5,829.4		4,159.5			(28.6	)
Gross profit		312.8		224.6			(28.2	)
Operating profit		54.2		(43.2	)		(179.7	)

Revenues. Our E&C revenues decreased 28.6%, or S/.1,669.9 million, from S/.5,829.4 million for 2015 to S/.4,159.5 million for 2016. This decrease is the result of the completion of two large mining projects at the end of 2015 (Las Bambas and Cerro Verde), which were not fully compensated by the works at the GSP project in Peru and, to a lesser extent, works in Chile and Colombia. Additionally, Stracon GyM completed one mining services contract for our E&C segment, which was not renewed, and had another contract reduced in scope. The 2016 presidential elections in Peru and the subsequent change in administration also contributed to lower activity levels in our E&C segment during 2016.

The following tables set forth variations in our E&C revenues by business activities, types of contracts and end-markets:

	Year ended December 31,
	2015		2016
	%		%
Engineering services		2.9		3.0
Electromechanic construction		27.6		39.0
Civil construction		23.3		11.9
Contract mining		35.4		32.9
Building construction activities		10.8		11.5
Other services		—		1.8
Total		100.0		100.0

	Year ended December 31,
	2015		2016
	%		%
Cost + fee		28.0		32.0
Unit price		49.0		25.6
Lump sum		11.0		35.1
EPC contracts		12.0		7.3
Total		100.0		100.0

	Year ended December 31,
	2015		2016
	%		%
Mining		60.0		38.3
Real estate buildings		9.0		11.0
Power		10.0		12.6
Oil and gas		15.9		30.9
Transportation		3.0		3.9
Water and sewage		2.0		3.1
Other end markets		—		0.2
Total		100.0		100.0

136

The breakdown of E&C revenues by different business activities, types of contracts and end-markets tends to vary from period to period due to a variety of factors, including the timing of the execution of larger projects in any particular period, which is typically outside of our control.

Gross Profit. Our E&C gross profit decreased 28.2%, or S/.88.2 million, from S/.312.8 million for 2015 to S/.224.6 million for 2016. Our E&C gross margin for 2016 was 5.4% compared to 5.4% for 2015. This decrease in our E&C gross profit was mainly due to a decline in revenues and the impact of the early termination of the GSP construction consortium.

Operating Profit. Our E&C operating profit decreased 179.7%, or S/.97.4 million, from S/.54.2 million profit for 2015 to S/.43.2 million loss for 2016, due to reduction of gross profit, partially offset by the decrease in administrative expenses, related to a reduction of personnel and lower expenses relating to bid proposals. Our E&C operating margin was (1.0)% for 2016 compared to 0.9% for 2015.

Other income (expenses). Other income (expenses) increased in our E&C segment, from S/.30.7 million income for 2015 to S/.9.2 million in expenses in 2016, mainly as a result of the settlement agreement reached in connection with the legal proceeding related to the Collahuasi project in Chile and the reversion of legal and tax provisions in connection with the acquisition of Morelco.

In addition, our E&C segment had S/.5.7 million in expenses in 2016, compared to S/.9.3 million in income in 2015, relating to minority interests held by Vial y Vives in several of its projects undertaken in Chile, as well as the minority participation of GyM in Viva GyM reflected under “share of profit and loss in associates” in our audited annual consolidated financial statements.

Infrastructure

The table below sets forth selected financial information related to our Infrastructure segment.

	Year ended December 31,
	2015		2016		Variation
	(in millions of US$)				%
Revenue		1,353.1		1,174.8		(13.2	)
Gross profit		245.9		211.4		(14.0	)
Operating profit		180.8		146.1		(19.2	)

Revenues. The table below sets forth the breakdown of our Infrastructure revenues by principal lines of business.

	Year ended December 31,
	2015		2016		Variation
	(in millions of US$)				%
Toll Roads		394.5		264.4		(33.0	)
Mass Transit		206.5		247.0		19.6
Water Treatment		28.0		18.5		(33.9	)
Energy		389.4		382.2		(1.8	)
Operation and Maintenance of Infrastructure Assets		334.8		262.7		(21.5	)
Total		1,353.1		1,174.8		(13.2	)

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Our Infrastructure revenues decreased 13.2% or S/.178.3 million, from S/.1,353.1 million for 2015 to S/.1,174.8 million for 2016. The variation in our Infrastructure revenues principally reflected the following:

• Toll Roads: a 33.0%, or S/.130.1 million, decrease in revenues, from S/.394.5 million for 2015 to S/.264.4 million for 2016, primarily due to the timing of the work for the second stage of the Norvial toll road and a decrease in revenues in Survial due to less maintenance executed on the road;

• Mass Transit: a 19.6%, or S/.40.5 million, increase in revenues, from S/.206.5 million for 2015 to S/.247.0 million for 2016, primarily due to the revenues recognized for the advance of the construction of the infrastructure expansion;

• Water Treatment: a 33.9%, or S/.9.5 million, decrease in revenues, from S/.28.0 million for 2015 to S/.18.5 million for 2016, primarily due to conclusion of the construction works of the La Chira waste water treatment plant. The operation of the plant started in the second quarter of 2016;

• Energy: a 1.8%, or S/.7.2 million, decrease in revenues, from S/.389.4 million for 2015 to S/.382.2 million for 2016, primarily due to a reduction in our barrel daily production (2,756 barrel daily production in 2016 versus 3,356 in 2015), as well as a decrease in international oil prices (average price per basket of oils of US$41.8 bbl in 2016 versus US$50.9 bbl in 2015), partially offset by better results in our fuel terminals business (3.18 MM barrels in storage per month in 2016 versus 3.12 MM barrels in storage in 2015, and 3.34 MM barrels dispatched per month in 2016 versus 3.19 MM barrels dispatched per month in 2015), the fact that operations in Blocks III and IV commenced in April 2015 and higher processing levels at our gas processing plant which increased from 31.7 MMcf per day in 2015 to 33.2 MMcf per day in 2016; and

• Operation and Maintenance of Infrastructure Assets: a 21.5%, or S/.72.1 million, decrease in revenues, from S/.334.8 million for 2015 to S/.262.7 million for 2016, primarily due to the termination of the Red Vial 3 and Covial contracts by the end of 2015.

Gross Profit. The table below sets forth the breakdown of our Infrastructure gross profit by principal lines of business.

	Year ended December 31,
	2015		2016		Variation
	(in millions of US$)				%
Toll Roads		78.5		75.8		(3.4	)
Mass Transit		40.5		42.5		4.9
Water Treatment		2.2		5.7		159.1
Energy		63.5		42.1		(33.7	)
Operation and Maintenance of Infrastructure Assets		61.1		45.3		(25.9	)
Total		245.9		211.4		(14.0	)

Our Infrastructure gross profit decreased 14.0%, or S/.34.5 million, from S/.245.9 million for 2015 to S/.211.4 million for 2016. Our Infrastructure gross margin was 18.0% for 2016 compared to 18.2% for 2015. The variation in our Infrastructure gross profit principally reflected the following:

• Toll Roads: a 3.4%, or S/.2.7 million, decrease in gross profit, from S/.78.5 million for 2015 to S/.75.8 million for 2016. Even though the gross profit decreased, due to the lower construction activities in Norvial, our Toll Roads gross margin increased from 19.9% for 2015 to 28.7% for 2016, as a consequence of a lesser impact on gross profit from lower construction activities in Norvial, because these activities have lower margins;

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• Mass Transit: a 4.9%, or S/.2.0 million, increase in gross profit, from S/.40.5 million for 2015 to S/.42.5 million gross profit for 2016, primarily due to the profit registered for the construction of the infrastructure expansion. Our gross margin for 2016 was 17.2%, compared to 19.6% for 2015;

• Water Treatment: a 159.1%, or S/.3.5 million, increase in gross profit for 2016, from S/.2.2 million gross profit for 2015 to S/.5.7 million gross profit for 2016, due to financial gains from the refinancing of the project. Our Water Treatment gross margin was 30.8% for 2016 compared to 7.9% for 2015;

• Energy: a 33.7%, or S/.21.4 million, decrease in gross profit, from S/.63.5 million for 2015 to S/.42.1 million for 2016, primarily due to lower fees resulting from the decrease in international oil prices. Our Energy gross margin was 11.0% for 2016 compared to 16.3% for 2015; and

• Operation and Maintenance of Infrastructure Assets: a 25.9%, or S/.15.8 million, decrease in gross profit, from S/.61.1 million for 2015 to S/.45.3 million for 2016, due to the reduction of revenues and reworks required in connection with a project executed in prior years and additional costs recognized in the Red Vial 3 project. Our Operation and Maintenance of Infrastructure Assets gross margin was 17.2% for 2016 compared to 18.2% for 2015.

Operating Profit. The table below sets forth the breakdown of our Infrastructure operating profit by principal lines of business.

	Year ended December 31,
	2015		2016		Variation
	(in millions of US$)				%
Toll Roads		68.3		65.7		(3.8	)
Mass Transit		29.9		29.5		(1.3	)
Water Treatment		1.9		4.9		157.9
Energy		46.7		25.4		(45.6	)
Operation and Maintenance of Infrastructure Assets		34.0		20.6		(39.4	)
Total		180.8		146.1		(19.2	)

Our Infrastructure operating profit decreased 19.2%, or S/.34.7 million, from S/.180.8 million for 2015 to S/.146.1 million for 2016. Our Infrastructure operating margin was 12.4% for 2016 compared to 13.4% for 2015. The variation in our Infrastructure operating profit principally reflected the following:

• Toll Roads: a 3.8%, or S/.2.6 million, decrease in operating profit, from S/.68.3 million for 2015 to S/.65.7 million for 2016, primarily due to the decrease in gross profit given that administrative expenses remained at the same level. Our Toll Roads operating margin was 24.8% for 2016 compared to 17.3% for 2015;

• Mass Transit: a 1.3%, or S/.0.4 million, decrease in operating profit, from an operating profit of S/.29.9 million for 2015 to S/.29.5 million for 2016, due to an increase in administrative expenses as a consequences of a tax fine from prior years and legal expenses for the negotiation of the credit agreement for the project expansion. Our Mass Transit operating margin for 2016 was 11.9% compared to 14.5% for 2015;

• Water Treatment: a 157.9%, or S/.3.0 million, increase in operating profit, from an operating profit of S/.1.9 million for 2015 to S/.4.9 million for 2016, due to the increase in gross profit partially offset by an increase in administrative expenses due to an increase in legal expenses for the closing of the refinancing of the project. Our Water Treatment operating margin for 2016 was 26.5% compared to 6.8% for 2015;

• Energy: a 45.6%, or S/.21.3 million, decrease in operating profit, from S/.46.7 million for 2015 to S/.25.4 million for 2016, primarily due to the decrease in gross profit given that the administrative expenses remained at the same level. Our Energy operating margin was 6.6% for 2016 compared to 12.0% for 2015; and

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• Operation and Maintenance of Infrastructure Assets: a S/.13.4 million decrease in operating profit, from a S/.34.0 million profit for 2015 to a S/.20.6 million profit for 2016, primarily due to the decrease in gross profit. Our Operation and Maintenance of Infrastructure Assets operating margin was 7.8% for 2016 compared to 10.2% for 2015.

Real Estate

The table below sets forth selected financial information related to our Real Estate segment.

	Year ended December 31,
	2015		2016		Variation
	(in millions of S/.)				%
Revenue		215.8		411.5		90.7
Gross profit		51.8		136.5		163.5
Operating profit		33.0		108.9		230.0

Revenues. Our Real Estate revenues increased 90.7%, or S/.195.7 million, from S/.215.8 million for 2015 to S/.411.5 million for 2016. The increase is primarily due to the sale of land in Almonte for S/.97.0 million in 2016, compared to S/.12.0 million from land sales in 2015, as well as more units delivered in 2016 (938 units in 2016 and 835 units in 2015).

Gross Profit. Our Real Estate gross profit increased 163.5%, or S/.84.7 million, from S/.51.8 million for 2015 to S/.136.5 million for 2016, mainly as a result of the sale of land in Almonte, partially offset by lower margins in units delivered in 2016, specifically the Rancho project, compared to 2015, when more housing units with higher margins were delivered. Our Real Estate gross margin was 33.2% for 2016 compared to 24.0% for 2015.

Operating Profit. Our Real Estate operating profit increased 230.0%, or S/.75.9 million, from S/.33.0 million for 2015 to S/.108.9 million for 2016, primarily as a result of the increase in our gross profit partially offset by an increase in administrative expenses due to write-offs of pre-operational costs for projects that were not executed.

Technical Services

The table below sets forth selected financial information related to our Technical Services segment.

	Year ended December 31,
	2015		2016		Variation
	(in millions of S/.)				%
Revenue		563.9		841.1		49.2
Gross profit		76.8		77.3		0.7
Operating profit		19.8		11.4		(42.4	)

Revenues. The table below sets forth the breakdown of our Technical Services revenues by principal lines of business.

	Year ended December 31,
	2015		2016		Variation
	(in millions of S/.))				%
IT Services		—		113.2		NM
Electricity Networks Services		563.9		727.9		29.1
Total		563.9		841.1		49.2

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Our Technical Services revenues increased 49.2% or S/.277.2 million, from S/.563.9 million for 2015 to S/.841.1 million for 2016. The variation in our Technical Services revenues principally reflected the following:

• IT Services: S/.113.2 million, increase in revenues, from S/.0 million for 2015 to S/.113.2 million for 2016, primarily as a result of the consolidation of Adexus, as of August 2016.

• Electricity Networks Services: a 29.1%, or S/.164.0 million, increase in revenues, from S/.563.9 million for 2015 to S/.727.9 million for 2016, primarily due to an increase in revenues in the electric and telecommunications division in Chile and Colombia as a consequence of contracts awarded during 2016.

Gross Profit. The table below sets forth the breakdown of our Technical Services gross profit by principal lines of business.

	Year ended December 31,
	2015		2016		Variation
	(in millions of S/.)				%
IT Services		—		15.7		NM
Electricity Networks Services		76.7		61.6		(19.7	)
Total		76.7		77.3		0.7

Our Technical Services gross profit increased 0.7%, or S/.0.5 million, from S/.76.7 million for 2015 to S/.77.3 million for 2016. Our Technical Services gross margin was 9.2% for 2016 compared to 13.6% for 2015. The variation in our Technical Services gross profit principally reflected the following:

• IT Services: S/.15.7 million, increase in gross profit, from S/.0 million for 2015 to S/.15.7 million for 2016, due to the consolidation of Adexus as of August 2016. Our IT Services gross margin was 13.9% for 2016; and

• Electricity Networks Services: a 19.7%, or S/.15.1 million, decrease in gross profit, from S/.76.7 million for 2015 to S/.61.6 million for 2016. Our Electricity Networks Services gross margin was 8.5% for 2016 compared to 13.6% for 2015, primarily due to the initial stages of the new contracts, which tend to have lower margins in the initial stage.

Operating Profit. The table below sets forth the breakdown of our Technical Services operating profit by principal lines of business.

	Year ended December 31,
	2015		2016			Variation
	(in millions of S/.)					%
IT Services		—		(0.7	)		NM
Electricity Networks Services		19.8		12.1			(38.9	)
Total		19.8		11.4			(42.4	)

Our Technical Services operating profit decreased S/.8.4 million, from S/.19.8 million for 2015 to a S/.11.4 million profit for 2016. Our Technical Services operating margin for 2016 was 1.4% compared to 3.5% for 2015. The variation in our Technical Services operating profit principally reflected the following:

• IT Services: S/.0.7 million, decrease in operating profit, from S/.0 million for 2015 to S/.0.7 million loss for 2016, due to the administrative expenses incurred in Adexus. Our IT Services operating margin was (0.6)% for 2016; and

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• Electricity Networks Services: a 38.9%, or S/.7.7 million, decrease in operating profit, from S/.19.8 million for 2015 to S/.12.1 million for 2016, In 2015, the operating profit was impacted by the sale of the division in Brazil of CAM at a value lower than book value. Our Electricity Network Services operating margin was 1.7% for 2016 compared to 3.5% for 2015.

Financial (Expense) Income, Net

Our net financial expense increased S/.70.6 million from net financial expenses of S/.130.4 million in 2015 to net financial expenses of S/.201.0 million in 2016. Excluding foreign exchange differences, our net financial expense increased 290.1%, or S/.140.7 million, from net financial expenses of S/.48.5 million for 2015 to net financial expenses of S/.189.2 million for 2016 due to the interest paid on our syndicated loan and a discount of the long term account receivable related to the termination of the GSP gas pipeline concession. Our net exchange difference decreased S/.69.5 million, from a loss of S/.82.0 million for 2015 to a loss of S/.12.5 million for 2016. This decrease is due to the appreciation of the sol against the U.S. dollar from 2015 to 2016.

Share of Profit and Loss in Associates

Our share of profit and loss in associates decreased S/.597.4 million from a profit of S/.7.7 million in 2015 to a loss of S/.589.7 million in 2016. This decrease is primarily due to the impairment of our investment in GSP as a consequence of the cancellation of the concession on January 24, 2017. For more information, see “Item 5.A. Operating and Financial Review and Prospects—Operating Results—Recent Developments.”

Income Tax

Our income tax decreased 224.4%, or S/.215.2 million, from S/.(95.9) million for 2015 to S/.119.3 million for 2016. This decrease in income tax was primarily due to a decrease in profit before tax. Our effective tax rates for 2016 and 2015 were (20.5)% and 67.3%, respectively.

Net Profit

Our net profit decreased S/.507.2 million, from S/.55.6 million for 2015 to a loss of S/.451.6 million for 2016. Net profit attributable to controlling interests decreased S/.516.8 million, while net profit attributable to non-controlling interests increased 19.8% or S/.9.6 million. Net profit attributable to non-controlling interests increased primarily due to our Real Estate segment. See “—General—Accounting for Subsidiaries, Joint Operations, Joint Ventures and Associated Companies.”

B. Liquidity and Capital Resources

Our principal sources of liquidity have historically been cash flows from operating activities and, to a lesser extent, equity capitalization and indebtedness. We conducted an initial public offering of ADSs in July 2013 from which we received approximately US$411.3 million in net proceeds. During 2015 we entered into a medium term loan credit agreement for up to US$200 million (S/.672 million) with Credit Suisse and our subsidiaries GyM Ferrovías and Norvial issued bonds for S/.629 million (US$184.3 million) and S/.365 million (US$106.9 million), respectively.

As a result of the termination of the GSP gas pipeline concession, we have renegotiated three debt instruments as follows: (i) we amended the terms of our syndicated loan related to our equity investment in GSP; (ii) we repaid our proportional guarantee of the GSP bridge loan and entered a new term loan in a principal amount of US$78.7 million (S/.264.8 million); and (iii) we amended the terms of our proportional repayment obligations under the GSP performance guarantee. In order to strengthen our liquidity and financial flexibility, particularly in the event of potential delays in receiving the government payment contemplated under the GSP gas pipeline concession contract, and make payments on our debt related to the GSP project, our board has approved the sale of non-strategic assets in the amount of up to US$350 million (S/.1,176 million) in proceeds. For more information, see “Item 5.A. Operating and Financial Review and Prospects—Operating Results—Recent Developments.”

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Our principal uses of cash (other than in connection with our operating activities) have historically been: capital expenditures in all our business segments, including acquisitions and investments in our infrastructure concessions; servicing of our debt; and payment of dividends. We believe that these sources of cash will be sufficient to cover our working capital needs in the ordinary course of business. We believe that our cash from operations, our current financing sources and the sale of non-strategic assets, as described in “Item 5.A. Operating and Financial Review and Prospects—Operating Results—Recent Developments”, are sufficient to satisfy our current capital expenditures and debt service obligations through the next twelve months.

We had credit lines with various financial institutions for a total amount of US$2,877.4 million as of December 31, 2016 and for a total amount of US$1,427.3 million as of December 31, 2017. However, our banks have currently restricted us from taking out further lines of credit to finance new operations. See “Recent Developments— Emergency Decree and Subsequent Legislation.”

We are currently in default of certain of the covenants under these financial instruments. For more information, see “Item 13. Defaults, Dividend Arrearages and Delinquencies.”

At December 31, 2017, our cash and cash equivalents totaled S/.638.2 million (US$196.7 million), of which S/.53.2 million (US$16.4 million) was held by our foreign subsidiaries. We intend to distribute any excess cash to our company. We are not currently required to accrue or pay any material taxes associated with the repatriation of these funds. In addition, our foreign subsidiaries have no contractual restrictions, and we are not aware of any material legal restrictions, on their ability to transfer funds to us in the form of cash dividends, loans or advances.

Cash Flows

The table below sets forth certain components of our cash flows for 2015, 2016 and 2017.

	Year ended December 31,
	2015			2016			2017
	(in millions of S/.)
Net cash provided by (used in) operating activities		(292.3	)		332.5			456.3
Net cash provided by (used in) investing activities		(551.1	)		(373.7	)		348.9
Net cash provided by (used in) financing activities		579.0			(85.8	)		(786.1	)
Net increase (net decrease) in cash		(264.4	)		44.6			19.1

Cash Flow from Operating Activities

Net cash flow used in operating activities in 2017 was greater than in 2016. For 2017 this reflects an increase in account payables during the year, due to the renegotiation of terms with our suppliers to pay in longer periods.

Net cash flow used in operating activities in 2016 was greater than in 2015. For 2016 this reflects a reduction in account receivables in the E&C segment mainly explained by the termination of two significant mining projects to the end of 2015.

Cash Flow from Investing Activities

Net cash flow used in investing activities in 2017 was lower than in 2016. In 2017, there was more cash flow from the sale of assets than cash flow used in investments.

Net cash flow used in investing activities in 2016 was lower than in 2015. In 2016 we continued with the equity contribution to the GSP consortium.

Cash Flow from Financing Activities

Net cash flow provided by financing activities in 2017 was lower than in 2016. This is primarily due to the reduction of GSP debt with the sale of assets.

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Net cash flow provided by financing activities in 2016 was lower than in 2015. This is primarily due to a reduction of indebtedness in our E&C segment due to the collection of account receivables and a reduction of debt in the Real Estate segment due to more projects in execution, with sufficient cash flows to repay their debt, partially offset by an increase in the Infrastructure and Technical Services segments, mainly due to the increase in the Norvial bond and consolidation of Adexus. Additionally, in 2016 less dividends were paid and there was an increase in the participation of Vial y Vives –DSD.

Indebtedness

As of December 31, 2017, we had a total outstanding indebtedness of S/.2,637.6 million (US$812.8 million) as set forth in the table below.

Segment	Type	Currency								Total in millions of S/.		Total in millions of US$		Weighted average interest rate			Range of Maturity Dates
		(in millions of US$)		(in millions of S/.)		(in millions of CLP)(1)		(in millions of COP)									Minimum	Maximum
E&C	Leasing		20.5		1.1		3,136.7		3,678.0		88.2		27.2		3.91	%	01/01/2018	02/01/2023
	Promissory Note		91.0		279.7		6,857.2		18,586.3		631.6		194.6		5.71	%	02/01/2018	01/11/2019
Infrastructure	Leasing		1.4		8.6		—		—		13.0		4.0		6.17	%	01/01/2018	01/07/2020
	Long term loan		36.6		947.6		—		—		1,066.2		328.6		5.98	%	25/07/2019	25/11/2039
	Promissory Note		6.3		0.8		—		—		21.3		6.6		5.07	%	05/01/2018	28/02/2018
Real Estate	Leasing		—		16.4		—		—		16.4		5.1		7.84	%	01/06/2018	01/07/2022
	Promissory Note		—		157.6		—		—		157.6		48.6		7.60	%	25/01/2018	18/11/2018
Technical Services	Leasing		0.2		0.5		3,543.2		5,409.5		25.9		8.0		8.08	%	23/01/2018	22/01/2022
	Long term loan		—		—		4,552.8		—		24.3		7.5		5.69	%	15/05/2018	27/10/2020
	Promissory Note		—		—		19,087.3		13,084.3		116.1		35.8		7.51	%	01/01/2018	18/12/2019
Corporate	Leasing		—		—		—		—		—		—		—		—	—
	Long term loan		146.99		—		—		—		477.0		147.0		6.19	%	27/06/2020	10/12/2020
	Promissory Note		—		—		—		—		—		—		—		—	—
	Total		303.0		1,412.3		37,177.3		40,758.0		2,637.6		812.8

(1) Includes debt held by CAM and its subsidiaries that is denominated in Chilean pesos and Colombian pesos, all of which is presented in Chilean pesos in the table above.

(2) Does not include our payable to Chubb Insurance Company related to our proportional repayment obligation under the GSP performance guarantee.

As of April 30, 2018, S/.145.2 million (US$44.7 million) of our total indebtedness indicated in the table above has matured, of which S/.90.4 million (US$27.8 million) was repaid and S/.54.8 million (US$16.9 million) was renewed by extending the maturities. The weighted average interest rate of this renewed indebtedness and additional indebtedness was 7.2% from February 26, 2018 to September 9, 2018. Stracon GyM, which we sold on April 11, 2018, has not been included in this calculation. Stracon GyM’s outstanding debt as of December 31, 2017 was US$29.2 million.

Below is a description of our material outstanding indebtedness as of December 31, 2017. As of such date, we were not in compliance with certain of the financial covenants related to our syndicated loan. We subsequently entered into an amendment of the syndicated loan, which modified the effective date of compliance with the covenants. However, as of the date of this annual report, we were in continuing default under the syndicated loan and certain of our other debt instruments due to, among other things, the delay in furnishing the company’s 2016 and 2017 audited consolidated financial statements. See “Item 5.A. Operating and Financial Review and Prospects—Operating Results—Recent Developments,” and “Item 13. Defaults, Dividends, Arreages and Delinquencies.”

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Leasing. As of December 31, 2017, we were party to numerous leasing agreements with several financial institutions which in the aggregate amounted to approximately S/.143.6 (US$44.3 million). We entered into such agreements primarily for the purpose of leasing the equipment and other assets necessary to run our operations. Upon maturity of each leasing agreement, we have the option to purchase or return the equipment or assets to the lessor. The amounts owed under these leasing agreements are generally repaid in monthly installments, subject to a minimum guaranteed payment corresponding to the minimum amount for which the equipment or assets could be sold to a third-party.

Citibank, N.A. Secured Loan. Our subsidiary GMP has a secured loan with Citibank, N.A. under a loan agreement dated September 19, 2008 and amended on August 27, 2012, with an outstanding principal amount of S/.31.2 million (US$9.6 million) as of December 31, 2017 and as of the date of this annual report. This loan accrues interest at an annual rate of three month LIBOR plus: (i) 1.70% if, at the installment payment date, the exchange rate between the sol and U.S. dollar remains between S/.2.60 to S/.2.75 per US$1.00 or (ii) 1.95%, if otherwise. The loan matures in August 2020. The proceeds of the loan were used by our subsidiary GMP to finance the construction, equipment and operation of the Gas Pariñas plant in Talara. The agreement is secured by certain land, equipment and accounts receivable of GMP. The agreement contains certain customary covenants, including restrictions on the ability of GMP to pay dividends if it is in default under the loan and the obligation by GMP to maintain the following financial covenants during the term of the agreement: (a) Leverage Ratio (as defined therein) shall not be greater than 1.50; (b) Debt Service Coverage Ratio (as defined therein) shall not be less than 1.20; (c) Liquidity Ratio (as defined therein) shall not be less than 1.10; and (d) Debt Coverage Ratio (as defined therein) shall not be greater than 2.20.

Norvial Corporate Bonds. In July 2015, Norvial established its first corporate bond program on the Lima Stock Exchange, for a total amount of S/.365 million (US$106.9 million). The first tranche under this program was issued for an amount of S/.80 million, due 2020 with an annual interest rate of 6.75%. The second tranche was issued for an amount of S/.285 million, due 2027 with an annual interest rate of 8.375%, structured in three disbursements. In July 2015 we received the first disbursement for S/.105 million, in January 2016 we received the second disbursement for S/.100 million and in July 2016 we received the third disbursement of S/.80 million. These bonds are secured by: (i) certain cash flows; (ii) a mortgage on the Norvial concession; (iii) a lien over Norvial shares; (iv) the assignment of Norvial’s rights over a performance bond provided by GMP; and (v) any additional guarantees granted in favor of other secured creditors. The proceeds of these bonds were used to pay S/.85 million of debt outstanding under a short-term loan agreement with Banco de Crédito del Perú (BCP) for a total S/.150 million, and the rest was used to finance the construction of the second stage of Ancon – Huacho Pativilca highway and the value added tax linked to the implementation of the project expenses. As of December 31, 2017, Norvial had S/.344 million (US$106 million) outstanding under these bonds.

Senior Secured Notes. On February 2015, GyM Ferrovías issued a total of S/.629,000,000 (US$184.3 million) Series A Senior Secured VAC-Indexed Notes due 2039, with an annual interest rate of 4.75% plus adjustments for inflation. The bonds are secured by (i) a mortgage on the Lima Metro concession, (ii) a lien on GyM Ferrovías shares, (iii) certain collection rights, (iv) certain cash flows and (v) liens on certain accounts. The proceeds from the issuance were used to repay a short term loan provide by Banco de Crédito del Perú-BCP for S/.400 million, funding of the reserve accounts, payment of the issuance expenses, and for the partial repayment of a subordinated loan provided by certain shareholders of GyM Ferrovías to GyM Ferrovías. According to the indenture, in order to make any payment of a subordinated loan or distribute any dividends, our Debt Service Coverage Ratio (as defined therein) should be at least 1.2x. Under the indenture GyM Ferrovías has fund the debt service reserve account on a quarterly basis with the equivalent of the amounts due in the next two succeeding interest payment dates. Moreover, the operation and maintenance reserve account must be funded annually with an amount equal to twenty-five percent (25%) of operation and maintenance costs of the corresponding current annual budget. As of December 31, 2017, GyM Ferrovías had S/.629.0 million (US$193.8 million) outstanding under these notes.

Financing of the Expansion Project of the Lima Metro Concession. On August 23, 2017, GyM Ferrovias entered into a US$396 million financing structure with Mizuho Bank, Ltd and Sumitomo Mitsui Banking Corporation. The particular structure for the expansion project of the Lima Metro involves the securitization of

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irrevocable and unconditional payment obligations of the Government of Peru (CPAOs), which have been sold by GyM Ferrovias to a borrower under a long-term loan facility. The expansion project includes the improvement of civil works and the purchase of additional rolling stock, including trains and cars that will be designed, built, operated and maintained by GyM Ferrovías, as concessionaire under the Lima Metro concession. The financing is structured as a long-term loan facility and a working capital facility. As of December 31, 2017, there was no debt outstanding under this financing structure. As of the date of this annual report, there is US$36.0 million outstanding under the financing structure.

As of the date of this annual report, GyM Ferrovias is in continuing default under the financing of the expansion project due to the non-delivery of our audited consolidated financial statements for the 2016 and 2017 fiscal year, in our capacity as guarantor of the obligations of GyM Ferrovias under the agreement. We have requested waivers from lenders, which are pending.

BCP Loan. In December 2015, our subsidiary GMP S.A. and Oiltanking Peru S.A.C. subscribed in equal parts to a medium term loan credit agreement for up to US$100 million with Banco de Crédito del Peru, comprised of (i) a medium term tranche for up to US$70 million (for additional investments) with an annual interest rate of 6.04% and a term of five years, and (ii) a medium term tranche for up to US$30 million (for committed investments) with an annual interest rate of 6.32% and a term of eight years. The tranches of the loan mature in 2024 and 2027, respectively. The proceeds of this loan are to finance Terminales del Peru’s obligations in the operation contracts that it maintains with Petroperu in regards to the Central Terminal (corresponding to the Callao Port), and North Terminals (corresponding to the Etén, Salaverry, Chimbote and Supe Ports). As of December 31, 2017, GMP S.A. had US$23.0 million (S/.74.7 million) outstanding under this loan.

Syndicated Loan. In December 2015 we entered into a medium term loan credit agreement for up to US$200 million (S/.672 million) with Credit Suisse AG, Cayman Islands Branch, and Credit Suisse Securities (USA) LLC. The term of the loan is five years, with quarterly installments starting on the 18th month. The loan accrued interest at a rate of three months Libor plus 3.9% per year. The proceeds were used to finance our equity participation in Gasoducto Sur Peruano (“GSP”), which was the concessionaire of the southern gas pipeline project. As of December 31, 2017, the principal amount outstanding under this loan was US$81.1 million (S/.263.2 million) and, as of the date of this annual report, the principal amount outstanding under this loan is US$76.3 million (S/.247.6 million).

As a result of the termination of the GSP gas pipeline concession, in June 2017, we entered into an amendment to the credit agreement. According to the terms of the amendment, our syndicated loan matures in December 2020, with required prepayments to be made with the proceeds of asset sales of 40% in the first year and an additional 30% in the second year of the amendment. The syndicated loan continues to accrue interest at LIBOR plus 4.90% per year. In addition, we are prohibited from paying dividends until the loan is repaid in full. Also, we have provided additional security interests, so that the amended syndicated loan will be secured by: (i) a first lien on our shares of GyM and Concar; (ii) a first lien on our shares of Almonte; (iii) a first lien on certain real estate properties in Surquillo; (iv) liens on certain related accounts; (v) a second priority lien on our shares of CAM and CAM Servicios del Perú S.A.; and (vi) a first lien on cash flows from the sale of certain assets.

The amendment to the credit agreement contains certain covenants, including the obligation by us to maintain the following financial ratios during the term of the agreement: (i) the Consolidated EBITDA to Consolidated Interest Expense Ratio (as defined therein) shall not be less than 3.5:1.0 commencing on April 1, 2018 and thereafter; (ii) the Consolidated Leverage Ratio (as defined therein) shall not be greater than (a) 3.5:1.0 at any time during the period commencing on December 31, 2016 and ending on March 31, 2017; (b) 3.5:1.0 at any time during the period commencing on April 1, 2017 and ending on June 30, 2017; (c) 3.0:1.0 at any time during the period commencing on July 1, 2017 and ending on September 30, 2017; and (d) 2.5:1.0 at any time thereafter; and (iii) the Debt Service Coverage Ratio (as defined therein) as of the last day of any fiscal quarter of the borrower, falling on or after the first anniversary of the closing date, shall not be less than 1.5:1.0 commencing on April 1, 2018 and thereafter. Furthermore, the agreement contains a covenant restricting the CAM Chile Leverage Ratio (as defined therein) from exceeding 2.5:1.0 at any time. The agreement also imposes limitations, in an event of default, on ours and our subsidiaries’ ability to distribute dividends, including, among others, that we may only distribute cash dividends to our stockholders out of 40% of our net income available for distribution in accordance with IFRS, as reflected in our audited consolidated financial statements for the fiscal year most recently ended.

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As of the date of this annual report, and due to the accounting adjustments in connection to the termination of the GSP concession, we are again under certain continuing defaults under the syndicated loan with respect to the financial ratios and the non-delivery of the company’s audited consolidated financial statements for the fiscal years 2016 and 2017 on time. We have requested a waiver from the lenders, which is pending.

GSP Bridge Loan and New Term Loan. With the termination of the GSP gas pipeline concession, our proportional guarantee under the GSP bridge loan became due. As of December 31, 2016, there was US$129 million (S/.433.4 million) of principal amount outstanding under our corporate guarantee. As of the date of this annual report the principal amount outstanding under the GSP bridge loan has been entirely paid. On June 27, 2017 we entered into a new US$78.7 million (S/.264.8 million) term loan with Natixis, BBVA, SMBC and MUFJ, the proceeds of which were used to prepay GSP bridge loan. The new term loan matures on 2020, with required prepayments to be made with the proceeds of asset sales of 40% in the first year and an additional 30% in the second year of the amendment. The agreement with respect to such term loan contains a covenant restricting the Consolidated Leverage Ratio (as defined therein) from exceeding 3.5:1.0 at any time and the CAM Chile Leverage Ratio (as defined therein) from exceeding 2.5:1.0 at any time. The term loan accrues interest at LIBOR plus 4.50% per year, which will increase to 5.00% during the second year and to 5.50% during the third year. In addition, we will be prohibited from paying dividends until the loan is repaid in full. Also, the term loan will be secured by: (i) a first lien on our rights to receive the termination payment derived from the GSP termination (the “VCN”), (ii) a second priority lien on our shares of GyM and Concar; (iii) a second priority lien on our shares of Almonte; (iv) a second priority lien on certain real estate properties in Surquillo; (v) a second priority lien on our shares of CAM; (vi) a second priority lien on our shares of CAM Servicios del Perú S.A.; and (vii) a first lien on cash flows from the sale of certain assets. As of the date of this annual report, there is US$72.5 million outstanding on the GSP bridge loan.

As of the date of this annual report, we are under certain continuing defaults under the term loan with respect to the financial ratios and the non-delivery of the audited consolidated financial statements of the company for the 2016 and 2017 fiscal years on time. We have requested a waiver from the lenders, which is pending.

GSP Performance Guarantee. Upon the termination of the GSP gas pipeline concession, our proportional repayment obligations under the GSP performance guarantee from Chubb Insurance Company became due. As of December 31, 2017, we had US$15.6 million (S/.50.6 million) in obligations outstanding and, as of the date of this annual report, we had US$6.8 million (S/.22.1 million) in obligations outstanding. We recorded this amount as other accounts payable in our financial statements as of December 31, 2017. On March 31, 2017, we renegotiated the terms of our repayment obligations. The new terms require repayment by March 31, 2018, and were extended until September 30, 2018, with interest accruing at 6% per year. The new terms also provide a security interest over our shares in CAM and over cash flows from the sale of certain assets.

Financial Stability Framework Agreement. On July 31, 2017, we, and certain of our subsidiaries, GyM, CAM Peru S.A., Vial y Vives — DSD and Concesionaria Vía Expresa Sur S.A., entered into a Financial Stability Framework Agreement (together with certain complementary contracts, the “Framework Agreement”) with the following financial entities: Scotiabank Perú S.A., Banco Internacional del Perú S.A.A., BBVA Banco Continental, Banco de Crédito del Perú, Citibank del Peru SA and Citibank N.A. The Framework Agreement aims to: (i) grant GyM a syndicated revolving line of credit for working capital for up to US$1,630,538 and S/.143,934,533, which may be increased by an additional US$14,000,000 subject to certain conditions; (ii) grant GyM a line of credit of up to US$51,566,849 and S/.33,563,807; (iii) grant us, GyM, CAM Peru S.A., Vial y Vives – DSD and Concesionaria Vía Expresa Sur S.A. a non-revolving line of credit to finance reimbursement obligations under performance bonds; (iv) grant a syndicated line of credit in favor of us and GyM for the issuance of performance bonds up to an amount of US$100,000,000 (which may be increased by an additional US$50,000,000, subject to compliance with certain conditions); and (v) to commit to maintain existing standby letters of credit issued at the request of GyM and us, as well as the request of CAM Peru S.A., Vial y Vives – DSD and Concesionaria Vía Expresa Sur S.A. In April of 2018, we repaid US$73.9 million of the facility with the proceeds of the sale of Stracon. As of December 31, 2017 and the date of this annual report, there was US$150.7 million and US$77.1 million outstanding under this agreement, respectively.

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As of the date of this annual report, we are under continuing default due to the non-delivery of our audited consolidated financial statements and those of our subsidiary, GyM, for the 2016 and 2017 fiscal years. We have requested a waiver from the lenders, which is pending.

Derivative Financial Instruments

In August 2012, our subsidiary GMP entered into two interest rate swaps with Citibank, N.A. to hedge its exposure to fluctuations in LIBOR under its unsecured loan with Citibank, N.A. described above. These interest rate swaps establish a fixed annual rate of 5.05%, payable at each interest payment date under the loan.

In August 2014, our subsidiary CAM Chile entered into two forward foreign exchange agreements for US$0.9 million and US$0.8 million, respectively. In addition, in February 2015, CAM entered into two forward foreign exchange agreements for US$0.9 million and US$0.5 million respectively.

We did not execute any derivative financial instruments from 2013 until the date hereof, other than as described above. For additional information about our derivative financial instruments and borrowings, see notes 2.9 and 19 to our audited annual consolidated financial statements included in this annual report.

Capital Expenditures

The table below provides our total capital expenditures incurred in 2015, 2016 and 2017.

	Year ended December 31,
	2015		2016		2017			2017
	(in millions of S/.)							(in millions of US$)
Engineering and Construction(1)(2)		124.2		116.8		37.6			11.6
Infrastructure		252.8		146.8		122.6			37.8
Real Estate(3)		41.4		49.7		3.4			1.0
Technical Services(4)		60.5		54.2		34.0			10.5
Corporate(2)		469.1		421.9		(122.3	)		(37.7	)
Total		948.0		789.3		75.2			23.2

(1) In our consolidated financial statements, in accordance with IFRS, we record in “cash flow used in investing activities” with respect to equipment leases only the amounts paid during the period as opposed to the total amount of lease payments, which is included in the table above.

(2) Includes S/.415.9 million, S/.73.4 million and S/.0 million of capital expenditures related to acquisitions in 2015, 2016 and 2017, respectively.

(3) Includes S/.0 million, S/.13.9 million and S/.1.0 million in investments in 2015, 2016 and 2017, respectively, for the purchase of land by our Real Estate segment, which in accordance with IFRS are recorded in our consolidated financial statements as “inventory.”

(4) In our consolidated financial statements, in accordance with IFRS, we record as “cash flow used in investing activities” with respect to equipment leases only the amounts paid during the period as opposed to the total amount of lease payments which is included in the table above.

Capital expenditures for our E&C segment of approximately S/.124.2 million (US$36.4 million), S/.116.8 million (US$34.8 million) and S/.37.6 million (US$11.6 million) in 2015, 2016 and 2017, respectively, primarily correspond to the purchase of equipment and machinery and, to a lesser extent, investments relating to mining services contracts. In 2015 capital investments in the E&C segment also included S/.25.1 million (US$7.3 million), with respect to the acquisition of 20% of the participation of Red Eagle in the San Ramon Project (Colombia). In 2016 capital investments in the E&C segment also included S/.51.18 million (US$15.1 million) with respect to an additional stake in Vial y Vives- DSD. In 2017, capital investments in the E&C segment only included the purchase of equipment and machinery.

Capital expenditures for our Infrastructure segment of approximately S/.252.8 million (US$74.0 million), S/.146.8 million (US$43.7 million) and S/.122.6 million (US$37.8 million) in 2015, 2016 and 2017, respectively, correspond to periodic maintenance and the construction of the second stage of our Norvial toll road concession and,

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in our Energy line of business, oil development drilling activities as well as improvements for our gas processing plant and investments in Metro de Lima. In 2015, capital expenditures for our Infrastructure segment also included the purchase of trains for Line One of the Lima Metro and the construction of the railway maintenance and repair yard, while in 2016 we only had capital expenditures relating to work maintenance of our trains and infrastructure. In 2017, capital expenditures for our Infrastructure segment included the purchase of trains for Line One of the Lima Metro, and also investments incurred in preparing wells in Blocks III and IV.

Capital expenditures for our Real Estate segment of approximately S/.41.4 million (US$12.4 million), S/.49.7 million (US$14.8 million) and S/.3.4 million (US$1.0 million) in 2015, 2016 and 2017, respectively, primarily correspond to the purchase of land for real estate projects, including the Ancon project in 2015, the Pezet and Paul Harris projects in 2016 and an additional purchase for the Paul Harris project in 2017.

Capital expenditures for our Technical Services segment of approximately S/.60.5 million (US$17.7 million), S/.54.2 million (US$16.1 million) and S/.34.0 million (US$10.5 million) in 2015, 2016 and 2017, respectively, primarily correspond to maintenance of equipment relating to CAM and GMD.

In 2015, corporate segment investments include S/.346.5 million (US$115.9) for the acquisition of a 20% stake of Concesionaria Gasoducto Sur Peruano S.A. and S/.47.4 million (US$13.9 million) for the acquisition of Adexus. In 2016, corporate segment investments include S/.426.7 million (US$127 million) for the acquisition of our 20% stake in GSP and S/.22.3 million (US$6.7 million) for an additional stake in Adexus. In 2017, there were no relevant corporate segment investments, as the company initiated a divestment process of non-strategic assets.

Divestitures in 2015 consisted of approximately S/.10.4 million (US$2.9 million) relating to the sale of equipment of GyM. Divestitures in 2016 consisted of S/.107.6 million (US$32.0 million) relating to the sale of our 1.64% stake in Transportadora de Gas del Perú S.A. (TGP) and also the sale of equipment of GyM. Divestitures in 2017 consisted of approximately S/.172.8 million (US$53.3 million) relating to the sale of our stake in Red Eagle in Stracon GyM, the sale of our 22.5% stake held in our associate, PRINSUR, the sale of our 89.19% interest in GMD, our IT services subsidiary, and the sale of our 51% interest in COGA to our partners, Enagas and Carmen Corporation, and relating to sale of equipment of GyM.

We have budgeted S/.237.9 million (US$73.3 million) in capital expenditures for 2018. Our current plans for our E&C segment contemplate capital expenditures in 2018 of approximately S/.43.6 million (US$13.4) million, mainly for the purchase of equipment and machinery. Our current plans for our Infrastructure segment contemplate capital expenditures in 2018 of approximately S/.114.4 million (US$35.3 million) principally for the construction of the second stage of Norvial, the expansion of the Line 1 of the Lima Metro and for investments in oil development drilling activities. Our current plans for our Real Estate segment contemplate expenditures in 2018 of approximately S/.43.3 million (US$13.3 million) for the purchase of land for real estate development projects. Our current plans for our Technical Services segment contemplate capital expenditures in 2018 of approximately S/.36.6 million (US$11.3 million) principally for the purchase of equipment used in our operations. Our current plans for our Corporate segment contemplate divestitures in 2018 of approximately S/.94.6 million (US$29.1 million). In addition, we have entered into a financial stability framework agreement providing for new lines of credit. For more information, see “Item 5.A. Operating and Financial Review and Prospects—Operating Results—Recent Developments.”

These estimates are subject to change. We routinely evaluate acquisitions, new infrastructure concessions, land purchases and other investment or divestiture opportunities that are aligned with our strategic goals, particularly in Peru, Chile and Colombia. We cannot assure you that we will find opportunities on terms that we consider to be favorable to us, whether we will be able to take advantage of such opportunities should they arise, or the timing of and funds required by such opportunities. In addition, should we undertake any such investments, we expect to finance these opportunities with a combination of cash on hand, new borrowings and/or financial contributions from partners, depending on a variety of commercial considerations at such time. See “Part I. Introduction—Forward-Looking Statements.”

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C. Research and Development, Patents and Licenses

Not applicable.

D. Trend Information

Our Main Market: Peru

The following sets forth key macroeconomic trends in our markets, Peru, Chile and Colombia. For additional information on trends in our business, see “Item 5.A. Operating and Financial Review and Prospects—Operating Results—Factors Affecting our Results of Operations” and “Item 4.B. Business Overview—Backlog.”

Overview of the Peruvian Economy

Our results are substantially affected by economic conditions prevailing in Peru. The Peruvian economy has been one of the fastest growing economies globally during the period from 2013 to 2017. According to the Peruvian Central Bank, Peruvian real GDP grew at an average rate of 3.5% during that period, one of the highest rates in South America. The economic expansion during this period was a result of robust domestic demand, increase in investment, price stability, increase in foreign direct investment, and an improvement in public finances, among other factors.

Nominal GDP per capita has increased from S/.17,645 in 2013 to S/.22,046 in 2017, a 24.9% increase. Average annual inflation, measured by the change in the CPI index, was 3.0% in the period from 2013 to 2017. On the other hand, Peru’s Sol, depreciated from an average of S/.2.70 per US$1.00 in 2013 to an average of S/.3.26 per US$1.00 in 2017, a depreciation of 21%. Peru’s sovereign debt has been granted investment grade rating by S&P, Fitch and Moody’s. At the end of 2017, Peruvian sovereign debt had one of the highest credit ratings in the South American region, rated BBB+ by S&P (August 2013) and Fitch (October 2013) and A3 by Moody’s (July 2014).

The following table sets forth the main economic indicators of the Peruvian economy from 2013 to 2017:

	2013			2014			2015			2016			2017
Nominal GDP (US$ billions)		202.1			202.8			192.3			195.3			215.1
Nominal GDP / capita (US$)		6,529.6			6,455.0			6,172.7			6,204.5			6,756.7
Real GDP growth rates (% based on local currency GDP)		5.0	%		2.4	%		3.3	%		4.0	%		2.5	%
Private consumption growth rate		5.2	%		3.9	%		4.0	%		3.3	%		2.5	%
Private investment growth rate		3.9	%		(2.3	%)		(4.3	%)		(5.9	%)		0.1	%
Foreign direct investment growth rate		(24.0	%)		(15.2	%)		4.9	%		(17.0	%)		(1.4	%)
Public expenditure (consumption and investment) growth rate		9.4	%		3.6	%		3.6	%		(0.2	%)		1.1	%
Total private and public fixed investment growth rate (1)		5.9	%		(2.1	%)		(5.3	%)		(4.6	%)		0.0	%
Exports growth rate		1.0	%		(0.9	%)		4.0	%		9.5	%		8.5	%
Imports growth rate		5.1	%		(1.4	%)		2.4	%		(2.2	%)		4.0	%
Inflation (measured by change in CPI)		2.9	%		3.2	%		4.4	%		3.2	%		1.4	%
Average exchange rate (S/./US$)		2.70			2.84			3.19			3.38			3.26
End of period exchange rate (S/./US$)		2.80			2.99			3.41			3.36			3.25
Central Bank interest rate (end of period)		4.00	%		3.50	%		3.75	%		4.25	%		3.25	%
Population (million)(1)		30.9			31.4			31.1			31.5			31.8
Unemployment rate(1)		7.5	%		6.0	%		6.4	%		6.7	%		6.7	%
Total public debt (US$ billions)		38.3			38.6			41.8			46.7			53.6
Public debt/nominal GDP (%)		19.6	%		20.0	%		23.3	%		23.8	%		24.8	%
Net reserves (US$ billions)		65.7			62.3			61.5			61.7			63.6
Net reserves/nominal GDP (%)		32.5	%		30.7	%		32.0	%		31.6	%		29.6	%
Fiscal surplus (deficit)/nominal GDP (%)		0.9	%		(0.3	%)		(2.1	%)		(2.6	%)		(3.1	%)

Source: Peruvian Central Bank, SBS, Ministry of Economy and Finance, National Statistical Institute of Peru (INEI), IMF.

(1) 2017 projected by IMF.

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The following table sets forth real gross domestic product by expenditure for the years indicated.

GDP by Expenditure (% of GDP unless otherwise stated)	2013			2014			2015			2016			2017
Government consumption		11.2			12.2			12.6			12.0			11.8
Private consumption		61.5			63.0			65.5			65.5			64.8
Total fixed investment		27.9			26.3			24.6			22.6			21.1
Public sector		5.8			5.6			5.0			4.8			4.6
Private sector		20.7			20.1			19.3			17.8			16.9
Change in inventories(1)		1.4			0.6			0.3			(0.0	)		(0.5	)
Exports of goods and services		24.1			22.4			21.0			22.1			24.3
Imports of goods and services		24.8			24.0			23.7			22.2			22.0
Net exports		(0.7	)		(1.6	)		(2.7	)		(0.1	)		2.3
GDP (in billions of US$)		202.1			202.8			192.3			195.3			215.1

Source: Peruvian Central Bank

(1) Defined as the difference between the volume at the end of the period and the volume at the beginning of the period; valued at the average price over the period.

Key Industry Sectors Relating to Our Business in Peru

Construction and Infrastructure

The Peruvian construction industry nominal GDP is estimated at US$12.4 billion and accounted for 5.8% of the country’s nominal GDP in 2017 according to the Peruvian Central Bank. Construction GDP grew at an average of 4.2% annually in nominal terms during the five years from 2013 to 2017. The following table illustrates, from 2013 to 2017, the average real growth rate in both private investment and construction in Peru vis-à-vis the average real GDP growth rate.

Growth of Real Private Investment GDP and Real Construction Sector GDP vs. Real GDP

Source: Peruvian Central Bank.

Mining

Peru is a poly-metallic resources producer and exports several metals including silver, copper, zinc, gold and lead, among others. Peru is also a major contributor to global metal reserves. According to the U.S. Geological Survey of 2018, Peru holds 17.5% of global silver reserves, 12.2% of global zinc reserves, 10.3% of global copper reserves and 4.3% of global gold reserves, as of January 2018. According to the Peruvian Central Bank, mining exports reached approximately US$27.2 billion and represented 60.5% of total Peruvian exports in 2017.

Upcoming mining projects comprise estimated capital expenditures of approximately US$18.9 billion from 2015 to 2017, according to APOYO Consultoría. As of December 2017, the Peruvian Ministry of Energy and Mines estimates 46 mining projects at various stages of development involving an estimated investment of US$46.1 billion.

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Mining Investment Projects by Level of Development

	Number of Projects		US$ billion
Expansion		5		5.2
With approved Environmental Impact Assessment (“EIA”)		14		15.7
With EIA under evaluation		2		0.6
Exploration		25		24.5
Total		46		46.1

Source: Peruvian Ministry of Energy and Mines.

Power and Utilities

The power and utilities market in Peru has shown sustained growth with maximum electricity demand reaching 6,596 MW and growing at an average annual rate of 4.5% during the five years from 2013 to 2017, according to the Economic Operations Committee of Peru’s National Interconnected System. The growth of the power and utilities market has led to the construction of power generation facilities, as well as the expansion of the power transmission and distribution network.

According to the Economic Operation Committee of the National Interconnected System (“COES SINAC”), Peru had an installed generation capacity of 11,970 MW as of December 2017. As of 2017, the Peruvian market was served by 54 generation companies. As of December 2017, the nation’s power transmission network spanned approximately 28,537 kilometers, according to the COES SINAC. As of 2017, there were 13 electric distribution companies across Peru.

Oil and Gas

The oil and gas activity in Peru has decreased with a sector nominal GDP average annual growth rate of (1.6)% during the five years from 2013 to 2017. Oil and gas activity includes the exploration and production, and transportation and commercialization of hydrocarbon products and derivatives.

According to the Peruvian Ministry of Energy and Mines, during 2017, local production of hydrocarbons was approximately 16 MMbbl of Petroleum, 33 MMboe of liquefied natural gas (LNG) and 81 MMboe of natural gas. These levels decreased an average of 3.3% annually from 2013 to 2017. Peruvian gas production increased considerably since 2004, when the Camisea project, the largest gas project in Peruvian history, began operations. The Peruvian Ministry of Energy and Mines reports that as of 2016 proven reserves of oil and gas amounted to 3,906 MMboe. These reserves have increased since 2009, due to increased exploration activities, as evidenced in the chart below. The Peruvian government’s reserves methodology may differ materially from the one mandated by the SEC.

Hydrocarbons Proven Reserves and Production Evolution in Peru (in MMboe)

Source: Peruvian Ministry of Energy and Mines

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Our Other Markets: Chile and Colombia

Chile

Overview of the Chilean Economy

Our activities in Chile span across the E&C and power services sectors. The following table sets forth the main economic indicators of the Chilean economy for the period from 2013 to 2017.

Values in nominal US$ billion unless otherwise stated	2013			2014			2015			2016			2017
Nominal GDP		278.5			261.1			244.0			250.1			276.9
Nominal GDP / capita (US$)		15,797.4			14,655.5			13,548.4			13,743.8			15,057.6
Real GDP growth rate (%)		4.2	%		1.9	%		2.2	%		1.3	%		1.5	%
Inflation (%, measured by change in CPI)		3.0	%		4.6	%		4.4	%		2.7	%		2.3	%
Total private and public fixed investment		69.1			57.1			49.6			47.6			49.1
Average exchange rate (CLP/US$)		495.0			570.0			654.2			676.8			649.3
End of period exchange rate (CLP/US$)		523.8			607.4			707.3			667.3			615.2
Population (million) (1)		17.6			17.8			18.0			18.2			18.4
Unemployment rate (2)		5.9	%		6.4	%		6.2	%		6.5	%		7.0	%
Public Debt / nominal GDP (%)		12.0	%		14.0	%		16.0	%		21.3	%		24.9	%
Net reserves / nominal GDP (%)		14.8	%		15.5	%		15.8	%		16.2	%		14.1	%
Fiscal surplus (deficit) / nominal GDP (%)		(0.5	%)		(1.5	%)		(2.1	%)		(2.7	%)		(2.8	%)

Source: Chilean Central Bank, Chilean Government Budget Office, IMF, Global Insight

(1) 2017 and 2016 projected by the IMF

(2) 2017 projected by the IMF

The Chilean real GDP grew at an average annual rate of 2.2% during the five years from 2013 to 2017 in real terms. The country’s nominal GDP per capita has increased 25.0% from CLP 7,819,646 in 2013 to CLP 9,777,343 in 2017. This expansion was mainly driven by a strong domestic demand in real terms: total consumption grew on average at 3.2% per year during the five years from 2013 to 2017. Inflation has remained stable since 2013, averaging 3.4% between 2013 and 2017, in line with the Chilean Central Bank’s inflation target of 3% +/- 1%. Chile’s sovereign debt has the highest rating in the region, rated A+ by S&P (July 2017), Aa3 by Moody’s (July 2016) and A by Fitch (February 2018).

Colombia

Overview of the Colombian Economy

Our current activities in Colombia involve technical services provided primarily to the power services sector. The following table sets forth the main economic indicators of the Colombian economy for the period from 2013 to 2017.

Values in nominal US$ billion unless otherwise stated	2013			2014			2015			2016			2017
Nominal GDP		380.0			377.9			288.4			280.4			309.2
Nominal GDP / capita (US$)		8,065.2			7,928.1			5,983.0			5,751.6			6,272.4
Real GDP growth rate (%)		4.9	%		4.6	%		3.1	%		2.0	%		1.8	%
Inflation (%, measured by change in CPI)		1.9	%		3.7	%		6.8	%		5.8	%		4.1	%
Total private and public fixed investment		92.2			97.6			76.2			68.9			70.7
Average exchange rate (COP/US$)		1,868.9			2,001.1			2,771.5			3,051.0			2,951.3
End of period exchange rate (COP/US$)		1,926.8			2,392.5			3,149.5			3,000.7			2,984.0
Population (million) (1)		47.1			47.7			48.2			48.7			49.3
Unemployment rate (1)		9.7	%		9.1	%		8.9	%		9.2	%		9.3	%
Public Debt / nominal GDP (%)		34.5	%		37.7	%		41.4	%		42.8	%		45.3	%
Net reserves / nominal GDP (%)		11.5	%		12.5	%		16.2	%		16.6	%		15.4	%
Fiscal surplus (deficit) / nominal GDP (%)		(2.2	%)		(2.6	%)		(3.1	%)		(3.9	%)		(3.3	%)

Source: Colombian National Department of Administration of Statistics (DANE), Colombian Central Bank, Colombian Treasury Department, IMF, Global Insight

(1) 2017 and 2016 projected by the IMF

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Colombian real GDP grew at an average annual rate of 3.3% during the five years from 2013 to 2017. The country’s nominal GDP per capita has increased 22.8% from COP 15,073,046 in 2013 to COP 18,511,888 in 2017. Inflation has increased in recent years, averaging 4.4% per year from 2013 to 2017, higher than the Colombian Central Bank’s inflation target of 3% +/- 1%. On the other hand, the Colombian peso depreciated from an average of COP 1,869 per US$1.00 in 2013 to an average of COP 2,951 per US$1.00 in 2017. Colombia’s sovereign debt currently holds BBB rating from Fitch (October 2017) BBB- from S&P (December 2017), and Baa2 from Moody’s (July 2014). Colombia is also recognized for its investor-friendly legal regime.

E. Off-Balance Sheet Arrangements

As of December 31, 2017, we did not have off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

For information about performance guarantees and similar instruments that we obtained in the ordinary course of business, see note 32 to our audited annual consolidated financial statements included in this annual report.

F. Tabular Disclosure of Contractual Obligations

The following table sets forth our contractual obligations with payment terms as of December 31, 2017.

	Payments Due By Period (in millions of S/.)
	Less than 1 year		1-2 years		3-5 years		More than 5 Years		Total
Indebtedness(1)		1,027.2		317.5		359.3		805.3		2,509.3
Capitalized Lease Obligations(1)		66.2		39.8		21.8		0.6		128.3
Interest(2)		129.3		200.7		362.1		1,272.7		1,964.7
Purchase Obligations(3)		50.8		—		—		—		50.8
Total(4)		1,273.5		557.9		743.1		2,078.6		4,653.1

(1) Includes principal only of our indebtedness and capitalized lease obligations.

(2) Includes the effect of our interest swap agreements described in “—Derivative Financial Instruments.”

(3) Includes the debt from performance guarantee with Chubb.

(4) Excludes building leases, which are not material.

G. Safe Harbor

See “Part I. Introduction—Forward-Looking Statements.”

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ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A. Directors and Senior Management

General

Our business and affairs are managed by our board of directors in accordance with our by-laws, shareholder meeting rules of procedure, board of directors rules of procedure, internal rules of conduct and Peruvian Corporate Law No. 26887 (“Peruvian Corporate Law”). Our bylaws provide for a board of directors of between five and nine members. Our shareholders may appoint an alternate director for each director to act on his or her behalf when absent from meetings or unable to exercise his or her duties. Alternate directors have the same responsibilities, duties and powers of directors to the extent they are called to replace them.

Directors are elected at a shareholders’ meeting and hold office for three years. Directors may be elected to multiple terms. Our current board of directors is composed of nine directors and no alternates. If a director resigns or otherwise becomes unable to continue with the duties, a majority of our directors may appoint one of the alternate directors, or in the absence of alternate directors, any other person, to serve as director for the remaining term of the board. In the first board meeting held after the annual shareholders’ meeting where members of the board are elected, the board of directors must elect among its members a chairman and a vice chairman if the shareholders’ meeting did not elect them.

The board of directors typically meets in regularly scheduled quarterly meetings and when called by any director or our Chief Executive Officer. Resolutions must be adopted by a majority of the directors present at the meeting and the chairman is entitled to cast the deciding vote in the event of a tie.

Duties and Liabilities of Directors

Pursuant to Article 177 of Peruvian Corporate Law, directors are jointly and severally liable to a corporation, shareholders and third parties for any damages caused by abuse of power, fraud, willful misconduct or gross negligence. In addition, pursuant to Article 3 of Law No. 29720, as amended, directors of companies with common shares listed on the Lima Stock Exchange are liable to the company and its shareholders for damages caused by resolutions which are favorable to their individual interest (or the interest of a related party) to the detriment of the company’s interest if: (i) the listed company is a party to the transaction; (ii) the controlling shareholder of the listed company controls the legal entity acting as counterparty; (iii) the transaction is not carried out on an arm’s length basis; and (iv) at least 10% of the listed company’s assets are involved in the transaction. A director cannot be found liable if he/she did not participate in the respective meeting or if the director’s express disagreement is noted in the corresponding record.

Article 180 of the Peruvian Corporate Law requires a director with a conflicting interest on a specific matter to disclose such interest and abstain from the deliberation and decision-making process with respect to such matter. A director who violates this requirement is liable for any damages caused to us and may be removed by a majority of the board of directors upon request of any member of the board or by a majority vote of the shareholders.

Pursuant to Article 181 of Peruvian Corporate Law, shareholders are entitled to protect the interest of a company through derivative law suits against directors in order to remedy or prevent a wrong to the corporation. In addition, pursuant to Article 4 of Law No. 29720, with respect to companies listed on the Lima Stock Exchange, a shareholder holding shares which represent at least 10% of the paid capital may bring said action against the directors.

Board of Directors

The following sets forth our directors and their respective positions as of the date of this annual report. All directors were elected at our annual shareholders’ meeting held on March 31, 2017, and their term expires in March 2020, on the third anniversary from the date of election.

Name	Position	Year of Birth		Year of First Appointment
Augusto Baertl Montori	Chairman of the Board (Independent)*		1945		2017
Rafael Venegas Vidaurre	Vice Chairman of the Board (Independent)**		1950		2017
Carlos Montero Graña	Director		1942		1996
Pedro Pablo Errazuriz Domínguez	Director (Independent)**		1961		2014

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Roberto Abusada Salah	Director (Independent)**	1946	2017
Alfonso de Orbegoso Baraybar	Director (Independent)**	1962	2017
Manuel del Río Jiménez	Director (Independent)**	1952	2017
Alfonso García Miró Peschiera	Director	1964	2017
José Antionio Rosas Dulanto	Director (Independent)**	1970	2017

* Independent member under Peruvian independence standards.

** Independent member under Peruvian and NYSE independence standards.

The following sets forth selected biographical information for each of the members of our board of directors. The business address of each of our current directors is Av. Paseo de la República 4667, Surquillo, Lima 34, Perú.

Augusto Baertl Montori. Mr. Baertl is a mine engineer from the Universidad Nacional de Ingeniería with postgraduate programs at Harvard Business School and at Northwestern University. He has assumed important senior management positions in Peruvian and international mining and oil companies. For 30 years, Mr. Baertl held various positions in the mining company Milpo, ranging from mine superintendent, assistant manager and COO, to CEO. From 1997 to 2003, he served as president and CEO of Compañía Minera Antamina. Since 1997 he has been CEO of Agrícola Chapi S.A., and since 2003, he has been the executive president of Gestora de Negocios e Inversiones.

Mr. Baertl is the former chairman of the board of directors of the National Society of Mining, Oil and Energy at the Institute of Mining Engineers of Peru, as well as of the Latin American Business Council (CEAL) and of the Chamber of Commerce Canada- Peru. He has also been chairman of the board of Atlas Copco Peru, Downing Teal-Peru, and Petroperu. In addition, he has been member of the board of directors of different companies such as Milpo, Atacocha, Huarón, Chungar, Castrovirreyna Mining Corporation, Interbank, BISA, Graña y Montero S.A.A., Norsemont and of the Prospectors and Developers Association of Canada (PDAC). He is currently chairman of the board of Agrícola Chapi, as well as a member of the board of Alturas Minerals, Chinalco International, FIMA, Stevia One and Ligabue Catering Perú S.A.C. He is also an active member of the board of directors of the National Society of Mining, Petroleum and Energy and COMEX. He has also participated in the board of directors of various non-profit institutions.

Rafael Venegas Vidaurre. Mr. Venegas is an industrial and systems engineer from Universidad Nacional de Ingeniería and holds post-graduate specializations in administrative and finance processes at A.Andersen School in Chicago, and has completed the Management and CEO programs at the Graduate School Kellogg, as well as the strategic planning, human management and marketing program at Harvard University. He has been CEO of Banco Internacional de Colombia, Citibank Peru, BankBoston Peru, Banco Sudamericano, Hermes/Brinks and, from 2010 to 2016, of Rimac Seguros y Reaseguros.

In addition, Mr. Venegas has served as director of several institutions and companies such as Diners Peru, Profuturo AFP, Banco Financiero, Scotiabank Perú, Compass Group Peru and as chairman of the board of directors in Citileasing, Citicorp S.A.B., Clínica Internacional and Rímac EPS.

Carlos Montero Graña. Mr. Montero is a civil engineer from Universidad Nacional de Ingeniería, and completed postgraduate studies in the senior management program at the University of Piura. He has been director of Graña y Montero S.A.A. since August 1996 to date. Mr. Montero is also chairman of the board of our subsidiary Concar S.A. and director of our subsidiary GMP S.A. He previously served as managing director of our subsidiary GyM until 2007, and was director of IPAE, GMD, GMI and UNICON.

Pedro Pablo Errázuriz Domínguez. Mr. Errázuriz is a civil engineer from Universidad Católica de Chile, with a master’s degree in engineering sciences from the same university and a master’s degree in operational research (Finance) from the London School of Economics. He is currently a partner of Veta Tres and director of companies. Until March 2014, he served as Minister of Transport and Telecommunications in the Chilean administration of president Sebastián Piñera, a position he assumed in 2011. He has been a director of several companies representing the Ontario Teachers’ Pension Plan Holding and CEO of its investments’ subsidiary in Chile, AndesCan, between 2009 and 2011. At the same time, he served as chairman of the board of Biodiversa,

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Esval, Aguas del Valle and SAESA Group. He was CEO and president of the board of the health services company ESSBIO. He was also CEO of Lan Express between 2000 and 2006 and Vice President of corporate planning for Lan Chile between 1999 and 2000. Mr. Errázurriz has been a member of the Graña y Montero board from 2014 to date.

Roberto Abusada Salah. Mr. Abusada studied Economics at Universidad Católica del Perú and at Cornell and Harvard Universities in the USA. He holds a Bachelor’s degree in economics from Universidad Católica as well as a master’s and PhD in economics from Cornell University. He has been senior advisor to the Minister of Economy during the years of the Peruvian economic reform (1993 and 1997). In 1994 he co-founded the Peruvian Institute of Economics (IPE), which he presides over. Dr. Abusada has taught economics at Universidad Católica del Perú, Universidad del Pacífico, UPC, ESAN and Boston University. He was director of the program of graduates in economics of the Universidad Católica and in the 1980s he held the positions of vice minister of commerce, vice minister of economy and member of the board of directors of the Central Reserve Bank. He has been director of the Corporación Andina de Fomento, as well as of Graña y Montero S.A.A. and TECSUP. He has been a member of the Global Strategic Advisory Group (GSAG) of the Konrad Adenauer Foundation. He has been a consultant to the United Nations (UNIDO, Vienna) World Bank, Inter-American Development Bank and various governments. He is currently an Ad Honorem advisor of the Peruvian government for matters of the Pacific Alliance and representative of the presidency of the council of ministers to the board of the fiscal stabilization fund and chairman of the board of GMD S.A., director in GMP S.A. and UNACEM S.A.A.

Dr. Abusada has written several books and academic articles in various economic areas and is currently writing a fortnightly opinion column at El Comercio newspaper in Lima, Peru.

Alfonso de Orbegoso Baraybar. Mr. de Orbegoso is a lawyer from Pontificia Universidad Católica del Perú. He holds a master’s degree from Duke University School of Law and has completed specialization courses at the London School of Economics, Georgetown University and The McDonough School of Business. During 1991 and 1998 was partner of the Ludowieg, Andrade & Associates law firm and during 1998 to 2013 he served as legal vice president and regulatory affairs at Nextel del Perú S.A. During 2014 and 2015 he served as vice president legal, regulatory and interconnection at Nextel Telecomunicações Ltda, Brazil.

Manuel del Río Jiménez. Mr. Del Río is a mechanical engineer from Pontificia Universidad Católica del Perú and holds a master’s degree in industrial management from the Krannert Graduate School of Management — Purdue University — Indiana, USA. Since October 2016, Mr. Del Río has been serving as manager of administration and finance at MZM Mining. From July 2013 to September 2016, he was partner in tax & legal at KPMG in Peru and responsible for transactions, transfer pricing, corporate finance and business development.

During 2010 and 2013, he was the lead partner in the practice of advisory at KPMG in Peru. Previously, and since joining KPMG in 2004 until 2010, he was the managing partner of the transfer pricing division of KPMG Tax & Legal in Peru. He has more than nine years as leader of the financial control area and CFO of Citibank Perú. He was vice president of Profuturo AFP as well as member of the executive committee and director for ten years. In addition to this, he has been in charge of the professional and medical equipment business unit at Philips for eight years. Moreover, for ten years he has held various positions in the industrial and internal consulting sectors of Philips Peruana. He has taught several courses and lectures at the ESAN School of Business for Graduates and at the Pontificia Universidad Católica del Perú, as well as in private companies.

Alfonso García Miró Peschiera. Mr. Alfonso Garcia Miro holds a degree in economics and an MBA from the Universidad de Piura, Peru. He is chairman and CEO of IPN Investments, a real assets investment & holding company based in Peru. He also leads IPN Properties, a Peruvian real estate development firm, and Swissport GBH Honduras, an airport handling & cargo services company. Mr. Garcia Miro is Past President of CONFIEP, the National Confederation of Private Business Associations; board member and former president of COMEXPERU, the Peruvian Foreign Trade Association; board member of the Chilean-Peruvian business council, a private initiative tasked to foster the economic ties between these two countries.

He is also board member of Instituto Proeducación, an educational NGO; board member of IPE, the Peruvian Institute of Economics, a private think tank supporting free economy principles and practices; and board member of MALI, the Lima Art Museum. In the past, Mr. Garcia Miro sponsored, as founder, chairman and CEO of several infrastructure companies, such as GBH Investments, Swissport GBH Perú and Aeropuertos del Perú.

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José Antonio Rosas Dulanto. Mr. Rosas holds a bachelor’s degree in business administration and accounting from Universidad del Pacífico. He also holds an MBA in finance from the Wharton School de University of Pennsylvania and has completed the high potential leadership program and the advanced management program at Harvard Business School. He has been CFO of Supermercados Peruanos S.A. and of Intercorp Perú Ltd. In addition, he has served as vice president of finance at Interbank and as CEO of Universidad Tecnológica del Perú. He is currently director of the MLW Institute for the Development of DreamFutures and managing partner at Nexus Group.

Executive Officers

Our executive officers oversee our business and are responsible for the execution of the decisions of the board of directors. Our executive officers are appointed for an indefinite period of time and their term of office may be terminated by our board of directors at its discretion. The following table presents information concerning the current executive officers of the company and their respective positions:

Name	Position	Year of Birth		Year of Appointment		Year of First Employment at the Company
Luis Díaz Olivero	Chief Executive Officer		1970		2017		1993
Mónica Miloslavich Hart	Chief Financial Officer		1966		2009		1993
Antonio Rodríguez Canales	Chief Investment Officer		1963		2017		1999
Daniel Urbina Pérez	Chief Legal Officer		1969		2018		2018
Jorge Luis Izquierdo Ramirez	Chief Human Resources Officer		1973		2015		1999
Antonio Cueto Saco	Chief Operating Officer		1966		2017		1996
Rolando Ponce Vergara	Chief Executive Officer of Viva GyM		1963		2008		1993
Renato Rojas Balta	Chief Executive Officer of GyM		1972		2014		1995
Eduardo Villa Corta Lucchessi	Chief Executive Officer of GMI		1964		2014		1995
Reynaldo Llosa Martinto	Chief Executive Officer of GMP		1960		2014		2014
Oscar Pando Mendoza	Chief Executive Officer of CONCAR		1973		2016		2016
Manuel Wu Rocha	Chief Executive Officer of GyM Ferrovías		1977		2011		2001
Arturo Serna Henao	Chief Executive Officer of Morelco		1957		2014		2014
Pablo Ruiz Parrilla	Chief Executive Officer of Vial y Vives-DSD		1965		2017		2017
Luis Fukunaga Mendoza	Roads Concessions Officer		1970		2012		2002
Sergio Morales Contreras	Chief Executive Officer of Adexus		1958		2017		2016
Carlos Gómez Pinto	Chief Audit Executive		1961		2018		2018
Javier Vaca Terron	Regional Manager of Engineering and Construction		1970		2018		2008
Fernando Dyer Estrella	Chief Risk and Compliance Officer		1962		2017		2017
Manuel Fernández Pollan	Executive Director, CAM and Adexus		1958		2017		2016
Julia Sobrevilla Perea	Corporate Affairs Offer		1969		2018		2018

* Appointed by CAM in 2007.

The following sets forth selected biographical information for each of our executive officers:

Luis Francisco Díaz Olivero. Mr. Díaz joined the group in 1993, and has been our chief executive officer since March 2, 2017 and was our deputy chief executive officer from February to March 2, 2017. Before that, he served as chief operating officer since 2015, as infrastructure officer between April 2013 and December 2014, and as the chief executive officer of our subsidiary GMP between 2011 and April 2013. He holds a degree in industrial engineering, and an MBA from University of Pittsburgh. He also served as the deputy chief executive officer of GMP from 2009 to 2011; chief financial officer of Graña y Montero from 2004 to 2009; and chief financial officer of our subsidiary GyM from 2001 to 2004. He is a member of the boards of directors of GyM, GMP, Viva GyM, Adexus and Stracon GyM.

Mónica Miloslavich Hart. Mrs. Miloslavich joined the group in 1993 and has served as our chief financial officer since 2009. She holds a degree in economics from Universidad de Lima. She worked as chief financial officer of Graña y Montero Edificaciones S.A.C. from 1998 to 2004, and as chief financial officer of our subsidiary GyM from 2004 to 2009.

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Antonio Rodriguez Canales. Mr. Rodríguez joined the group in 1999, and has been our chief commercial officer since 2017. Previously, he was our investment officer since 2017. Before that, he served as chief commercial officer since January 2015. He previously served as chief investment officer, from 2010 to 2014. He holds a degree in accounting from Universidad de Lima, a master’s in business administration from ESAN, and a master’s in business administration from Birmingham Business School in the UK. He was the chief executive officer of Larcomar from 1999 to 2010, and is currently a director of our subsidiaries CAM and GMD.

Daniel Urbina Pérez. Mr. Urbina joined the group in 2018 as Chief Legal Officer. Before that, he served as general counsel for Inkia Energy since 2008, as vice president for Standard Chartered Bank between July 2005 and October 2008, as head of legal and compliance for Banco Standard Chartered between March 2000 and July 2005, as director general of the legal department for the Ministry of the Presidency between June 1999 and March 2000, as advisor to the Minister for the Advancement of Women between July 1997 and July 1998 and as associate for Benites Mercado & Ugaz between July 1993 and July 1998. He holds a law degree and an LLM from Columbia University and is authorized to practice law in Peru and New York.

Jorge Luis Izquierdo Ramirez. Mr. Izquierdo joined the group in 1999, and was appointed chief human resources management officer in December 2015. Prior to that, he was our chief operational excellence officer between 2011 and 2015. In addition, from 2011 to 2013, he worked as chief officer of the Learning Center (currently known as Academia), and had previously served as project management officer. He holds a degree in civil engineering from Pontificia Universidad Católica del Perú, and a master’s degree in construction management from University of California, Berkeley.

Antonio Cueto Saco. Mr. Cueto joined the group in 1996 and has been our chief operating officer since 2017. Previously, he was our infrastructure area officer since January 2015. He formerly served as country manager in Chile and held different management positions in the group. He holds a degree in economics from Universidad Católica del Perú and has a Masters degree in business administration from Universidad del Pacífico. He also has master’s in management and finance from HEC (France). He is a director of our subsidiaries GMP, GyM Ferrovías, Norvial, La Chira, Concesionaria Vía Expresa Sur, Survial and GMI.

Rolando Ponce Vergara. Mr. Ponce joined the group in 1993 and has served as the chief executive officer of our subsidiary Viva GyM since 2008, and as our chief real estate area officer since 2014. He holds a degree in civil engineering from Universidad Ricardo Palma. He also holds a master’s degree in construction and real estate business management from Pontificia Universidad Católica de Chile-Politécnica de Madrid, Spain. He previously served as manager of GyM’s real estate division. He is currently a member of the boards of directors of our subsidiaries Viva GyM and Almonte.

Renato Rojas Balta. Mr. Rojas joined the group in 1995, and has served as the chief executive officer of GyM since February 2014. Prior to that, he held the position of manager of GyM’s civil works division from 2010 to 2014, and of assistant manager of that same division from 2002 to 2010. He holds a degree in civil engineering from Pontificia Universidad Católica del Perú. In addition, he pursued a master’s in company management at Universidad de Piura. He is currently a member of the boards of directors of GMI and GyM.

Eduardo Villa Corta Lucchessi. Mr. Villa Corta joined the group in 1995, and has served as chief executive officer of GMI since February 2014. He was the chief technical officer of GyM from 2010 to 2014; and GMI’s manager of the industry division from 2003 to 2010. In 2000 he joined GyM Mexico as its chief executive officer. He holds a degree in civil engineering from Pontificia Universidad Católica del Perú. In addition, he pursued an MBA at Universidad de Piura. He is currently a member of the board of directors of our subsidiary GMI.

Reynaldo Llosa Martinto. Mr. Llosa joined the group in 2014, and has served as the chief executive officer of GMP since February 2014. He holds a degree in mechanical engineering from University of Houston, as well as an MBA from Universidad de Piura. He has completed several technical and executive programs, including certificate programs at Rice University and Northeastern Kellogg School of Management. He served as the chief executive officer of BPZ Energy from 2010 to 2013. Prior to that, he had worked in Schlumberger for 25 years, the last 15 of which he spent in management positions.

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Oscar Pando Mendoza. Mr. Pando joined the group in May 2016, and is the chief executive officer of our subsidiary Concar. He is a business administrator at the Universidad de Lima with a master’s degree from Georgetown University. Mr. Pando has national and international experience of more than 20 years assuming various functional responsibilities, previously passed by Doe Run Perú, APC Corporation S.A., Philip Morris International, Securitas Peru, between other companies.

Manuel Wu Rocha. Mr. Wu is a civil engineer from the Pontificate Catholic University of Peru and holds a master’s degree in business administration from the University of Piura, Peru. He joined the group in 2001, and acted as chief technical officer for the oil and gas, electricity, infrastructure and sanitation areas of GyM S.A. from 2003 until 2007. He became manager of purchases and logistics of GyM S.A. in 2007, and general manager of the consortium Lima Actividades Comerciales comprised by GyM S.A. and Aguas de Barcelona from 2009 until 2011. Since 2011, he has worked as chief executive officer of GyM Ferrovias S.A.

Arturo Serna Henao. Mr. Serna has been part of the group since 2014, when we acquired the majority shareholding of Morelco where he now serves as chief executive officer. Mr. Serna has a degree in chemistry from Universidad del Valle, and over 35 years of experience. He has held the position of chief executive officer of Morelco for 17 years.

Pablo Ruiz Parrilla. Mr. Ruiz joined the group in 2017 and has been the chief executive officer of Vial y Vives – DSD S.A. since 2017. He holds a degree in civil engineering from the Polytechnic University of Madrid, he has a master degree in business administration from the University of La Laguna (Canary Island) and a master in civil engineering from the Universidad de Chile. Mr. Ruiz has more than 27 years of national and international experience in the construction of highways, roads, bridges, tunnels, environmental works, hydraulic works, marine works, railways, subways, industrial mining, urbanization and residential building, as well as a large design-build public-private partnerships on road and building projects. Mr. Ruiz previously worked as construction director at Acciona Construction and, chief operating officer of Habtoor Leighton Group and area southern cone area director of Dragados.

Luis Fukunaga Mendoza. Mr. Fukunaga joined the group in 2002 and has been our roads concessions manager in the infrastructure area since October 2012. In addition, he has held several management positions, including chief executive officer of Survial S.A and Concesión Canchaque S.A.C. He is a civil engineer with a degree from Universidad de Piura. He also completed a MBA at ESAN with studies at Kenan Flagler Business School–University of North Carolina at Chapel Hill, and completed a financial management Program at Universidad de Piura. He currently serves as director of our subsidiaries Survial, Norvial, Concesionaria Vía Expresa Sur and Concar.

Sergio Morales Contreras. Mr. Morales joined the group in 2016, and has served as the chief executive officer of Adexus S.A since April 2017. He holds a degree in civil industrial engineer from Santiago of Chile University. He has completed several technical and executive programs. He served as commercial manager of Adexus from June 2016 to April 2017. Prior to that, he worked at American Movil Group for nine years and also at Unisys Company for 11 years.

Javier Vaca Terron. Mr. Vaca graduated as a Civil Engineer, Channels and Ports from the Polytechnic University of Madrid in 1996. He joined the Spanish company, Ferrovial Agroman, participating in the study of international works and directing the execution of projects in Madrid. In 2004, he completed an Executive MBA master’s degree at IESE and joined Grupo Assignia as Director of International Production at the construction company, developing his work mainly in Latin America. In 2007, he was assigned new responsibilities within the Assignia group, as CEO of another group company, Eductrade, dedicated to foreign trade in the field of Health and Education. In 2014, he returned to the construction industry, this time directing the Business Development and Studies, Hiring and Institutional Relations Areas of the Spanish FCC. In 2016, he joined the OHL company as Southern Cone Zone Director, based in Santiago, Chile. In February 2018, he joined Graña y Montero as Regional Manager of the Engineering and Construction Area.

Carlos Gómez Pinto. Mr. Gómez has worked for Seagrams, Coca-Cola, Merril Lynch and Pacific Exploration & Production, in various leadership positions including as a CFO, Vice President of Internal Audit, Corporate Governance, Risks, Compliance, and Corporate Finance Manager. His experience includes

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responsibilities for implementing re-engineering processes, identifying non-value added activities and helping departments change their structure and improve work process efficiency. Currently, Mr. Gomez is a senior executive of Graña y Montero as Corporate Internal Auditor. Mr. Gomez is a Licensed International Financial Advisor and board member of certain companies and non-profit organizations. Mr. Gomez earned a bachelor’s degree in Economics at Rosario University, a top private university in Colombia. He also obtained a MBA from Southern New Hampshire University in the USA.

Fernando Dyer Estrella. Mr. Dyer is the Chief Risk and Compliance Officer of Graña y Montero, and is responsible for the company’s Corporate Risk and Compliance Program. Fernando has more than 30 years of international experience in audit, finance, internal controls, governance, ethics, compliance and management at leading multinationals. His experience includes the design, implementation, management and leading international programs on risk assessment, code of conduct, whistle blower, due diligence, anti-corruption, anti-money-laundering and international sanctions aimed to deter, detect and protect companies from crimes (focused on FCPA and UK Bribery Act). Mr. Dyer holds an MBA form Université de Genève (Switzerland), specialized in International Management, and a BA in Accounting from the Universidad del Pacífico (Perú). He is a Certified Anti-Money Laundering Specialist (CAMS) by the Association of Certified Anti-Money Laundering Specialists (USA), a Certified Corporate Compliance & Ethics Professional (CCEP) by the Society of Corporate Compliance and Ethics (USA), and an International Faculty of the International Training Compliance and International Compliance Association – ICT/ICA – (United Kingdom). Mr. Dyer speaks English, French and Spanish fluently.

Manueal Fernández Pollan. Mr. Fernández joined the Group in December 2015 as chief executive officer of Adexus in Chile. He currently leads the Corporate Management of Services of GyM, is the President of Adexus and a director of CAM. Mr. Fernández holds a Bachelor’s degree in Industrial Engineering from the Polytechnic University of Madrid, an MBA from CEPADE in Madrid and a Master’s in Strategic Planning and Finance from IDE in Madrid. He has worked for 10 years at Emerson Network Power, the last three years as Vice President of Sales and Regional Operations of Latin America. Before that he was chief executive officer for the Andean Countries (Colombia, Ecuador, Venezuela and Peru). Previously he worked in the Telefónica group, occupying different positions in Spain and Latin America, the last two years in Peru as chief executive officer of Telefónica Servicios Compartidos and Vice President of Resources of Telefónica del Perú.

Julia Sobrevilla Perea. Ms. Sobrevilla joined Graña y Montero in April 2018 as Corporate Affairs Officer. She joins Graña y Montero most recently from Coca-Cola Perú, where she was Public Affairs Director from 2012 to 2018. Before joining Coca-Cola Ms. Sobrevilla was Institutional Relations Manager at Grupo ACP, a Peruvian group dedicated to microfinance in Latin America. Prior to that, from 2002 to 2010 she was Country Representative for Population Services International, a Washington, DC-based not for profit, serving in Rwanda, Mexico and Mozambique. Previously she held several positions in MTV Networks and Nickelodeon Latin America from 1994 to 2001, based in Miami, Florida. She holds a Bachelors in Linguistics and Literature from the Pontificia Universidad Católica del Perú and completed Masters Courses in Communication at Stanford University. She sits on the board of SERNANP (Servicio Nacional de Areas Naturales Protegidas), Kunan and Premio Protagonistas del Cambio UPC.

Executive Commission

The Executive Commission is currently comprised by our Chief Executive Officer, the Business Segment Executive Officer for each of the four segments, our Chief Financial Officer, our Chief Investment Officer, our Chief Legal and Corporate Affairs Officer, our Chief Human Resources Officer, our Chief Audit Executive, our Chief Risk and Compliance Officer, and our Corporate Business Development Officer. The Executive Commission evaluates, at the management level, among other matters, our strategic plan, annual budget and annual investment plan.

Business Segments Executive Commission

The Business Segments Executive Commissions are comprised by the Business Segment Executive Officer and the CEOs of the companies in each of the relevant business segments. Each Business Segment Executive Commission evaluates the applicable business segment’s annual budget, finances and operations as well as a summary of the information discussed in the Executive Commission.

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Kinship

None.

B. Compensation

Compensation of Directors and Executive Officers

Director compensation must be approved by a majority of shareholders at our annual shareholders’ meeting.

In 2017, total compensation paid to our former board of directors amounted to S/.2.8 million including compensation paid to directors that serve on our subsidiaries’ board of directors. In 2017, total compensation paid to our executive officers amounted to S/.15.4 million. See “Item 4.B Information on the Company—Business Overview—Regulatory Matters—Labor Regulations” for additional information on profit sharing regulatory requirements.

Neither we nor any of our subsidiaries have entered into any agreement that provides for any benefit or compensation to any director or senior executive upon expiration of his or her term or termination of employment. Under Peruvian law, unless we dismiss someone for justified cause, we are required to pay the dismissed employee (but not directors) 1.5x annual salary for every year with the company for a period not to exceed 12 years. We are not required to make such payments in the event of voluntary termination. Although we have no ongoing obligation to do so, in the past we have provided, and in the future we may provide, such benefits to our executive officers upon their retirement. We have not set aside or reserved any amounts to provide for pension, retirement or other similar benefits.

Executive Compensation Plan

We establish and pay executive compensation in compliance with applicable labor and tax regulations and corporate governance standards and in accordance with market conditions.

We establish pay scales taking into consideration executives’ responsibilities, including the degree of complexity of those responsibilities, power of decision-making and scope of supervision entrusted.

The fixed salary component of compensation is established for each position based on a pay scale. Fixed salary includes family allowance and cost of living payments, if applicable. We evaluate executives at least once a year to develop action plans in furtherance of continuously improving management performance.

The variable component of compensation is paid to executives and other employees for meeting specific goals, and is related both to his or her performance and our financial results. Variable compensation is typically paid as an annual bonus.

In addition, labor regulation establishes a mandatory profit sharing provision of 5% of our total annual taxable income, to be distributed among all employees, calculated based on a formula established by law that considers the days worked in the year and remuneration.

Our executives also receive additional benefits, typically non-pecuniary. The benefits granted include: (i) a vehicle owned and maintained by the company, with the purpose of facilitating transportation of executives in the performance of their functions; (ii) a fuel allowance to offset transportation costs in the performance of their functions; and (iii) an insurance policy, including work accident and high risk coverage.

In addition, we have established a plan for certain executives effective March 2013 that awards cash bonuses for the exclusive use of purchasing shares of our company or of our subsidiaries. The executive must agree to hold the shares for a specific period. If the executive is no longer employed with the company during such period, we are entitled to repurchase the shares at the original purchase price. This benefit is awarded at the discretion and subject to the approval of the Human Resource Management Committee of our board of directors.

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C. Board Practices

Board Committees

We have four board committees comprised of members of our board of directors.

Audit and Process Committee

Our Audit and Process Committee is comprised of four directors, all of which are independent in accordance with the SEC rules applicable to foreign private issuers. The current members of our Audit and Process Committee are Mr. Pedro Pablo Errazuriz Domínguez, Mr. Manuel del Rio, Mr. José Antonio Rosas and Mr. Alfonso de Orbegoso. These directors have extensive business and economic experience in Peru. Mr. Manuel del Rio and Mr. José Antonio Rosas each qualify as an “audit committee financial expert” in accordance with SEC rules. Our Audit and Process Committee oversees our corporate accounting and financial reporting process. The Audit and Process Committee is responsible for:

• reviewing our financial statements;

• evaluating our internal controls and procedures, and identifying deficiencies;

• recommending to our annual shareholders’ meeting the appointment of our external auditors, determining their compensation, retention and oversight, and resolving any disagreements that may arise between management and our external auditors;

• evaluating the company’s compliance with the Board of Director’s internal regulation, as well as with general principles of corporate governance;

• informing our board of directors regarding any issues that arise with respect to the quality or integrity of our financial statements, our compliance with legal or regulatory requirements, the performance and independence of the external auditors, or the performance of the internal audit function;

• establishing procedures for the reception, retention and treatment of complaints regarding accounting, internal controls or other auditing matters, including the confidential, anonymous submission by our employees of concerns regarding questionable accounting or auditing matters;

• independently engaging its own counsel and any other advisers it deems necessary to fulfill its functions; and

• establishing policies and procedures to pre-approve audit and permissible non-audit services.

Our board of directors has adopted a written charter for our Audit and Process Committee, which is available on our website at www.granaymontero.com.pe.

Human Resource Management Committee

Our Human Resource Management Committee is comprised of three directors, all of which are independent in accordance with Peruvian and NYSE independence standards. The current members of the committee are Mr. Rafael Venegas, Mr. Pedro Errázuriz and Mr. Alfonso de Orbegoso. The Human Resource Management Committee is responsible for:

• reporting to our board of directors on the appointment and dismissal of senior executives;

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• reviewing and approving corporate goals and objectives relevant to CEO compensation, evaluating the CEO’s performance in light of those goals and objectives, and determining and approving CEO compensation;

• establishing compensation arrangements for senior executives in accordance with the financial results of the company; proposing measures to ensure transparency in the remuneration of directors and senior executives;

• evaluating our human resources policies;

• reporting to our board of directors on matters regarding related party transactions that could result in a conflict of interest; establishing our social responsibility policies; and

• appointing third-party independent compensation consultants, and establishing the compensation of and overseeing the third-party independent compensation consultants;

As a foreign private issuer, we are not required to maintain a compensation committee that complies with all of the U.S. laws and regulations and NYSE requirements applicable to U.S. issuers.

Investment Committee

Our Investment Committee is comprised of five directors, with independent members under Peruvian and NYSE independence standards, currently comprising the majority of the committee. The current members of the committee are Mr. José Antonio Rosas, Mr. Manuel del Río, Mr. Alfonso Garcia-Miro, Mr. Augusto Baertl and Mr. Pedro Pablo Errazuriz. The Investment Committee is responsible for:

• establishing our investment policies;

• approving our annual investment plan; and

• analyzing the projects that would require an investment greater than US$5 million.

Risk, Compliance and Sustainability Committee

Our Risk, Compliance and Sustainability Committee is comprised of five directors, with independent members under Peruvian and NYSE independence standards, currently comprising the majority of the committee. The current members of the committee are Mr. Alfonso de Orbegoso Baraybar (chairman of the committee), Mr. Pedro Errázuriz, Mr. Augusto Baertl and Mr. Manuel del Río. The Risk, Compliance and Sustainability Committee is responsible for:

• approving the structure, and evaluating the performance of the organization, in matters of risks and compliance;

• approving the policies and limits of exposure to risk, monitoring the risk profile of the company, and supervising the development of the risks and compliance area;

• ensuring compliance with the company’s policies, in particular with the anti-corruption policy and the sustainability policy, as well as with applicable laws. This committee can also propose policies, directives and/or complementary procedures that contribute to strengthening the responsible management of the company; and

• supervising and reporting to our board of directors on social responsibility practices and management.

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Operating Board Committees

We also have two operating board committees that meet monthly and are comprised of members of our board of directors, including at least one independent member under Peruvian and NYSE independence standards per committee.

Engineering and Construction Committee

Our Engineering and Construction Committee supervises the operations of our E&C segment, and is comprised of six directors. The current members of the committee are Mr. Augusto Baertl, Mr. Rafael Venegas, Mr. Roberto Abusada, Mr. Alfonso de Orbegoso, Mr. Pedro Errázuriz and Mr. Alfonso García-Miro.

Infrastructure Committee

Our Infrastructure Committee supervises the operations of our Infrastructure segment and is comprised of five directors. The current members of the committee are Mr. Augusto Baertl, Mr. Rafael Venegas, Mr. José Antonio Rosas, Mr. Alfonso García Miró and Mr. Manuel del Río.

D. Employees

We have developed an extensive and talented team, including more than 2,996 engineers, which gives us the capability and scale to undertake large and complex projects. We also have access to a network of approximately 150,000 manual laborers throughout Peru that can supplement our workforce when required by our projects. Moreover, we have the flexibility to engage our own workers on projects outside Peru, avoiding the need to seek new employees in other countries.

As of December 31, 2017, we had a total of 31,520 full-time employees, including approximately 13,629 manual laborers, a number that fluctuates depending on our project backlog. At such date, we also worked with 3,775 employees of subcontractors. Occasionally, we employ subcontractors for particular aspects of our projects, such as carpenters, specialists in elevator installation and specialists in glassworks. We are not dependent upon any particular subcontractor or group of subcontractors. As of December 31, 2017, 42% of our employees worked outside Peru. The following table sets forth a breakdown of our employees by category as of December 31, 2017.

Salaried Employees	E&C		Infrastructure		Real Estate		Technical Services		Corporate		TOTAL
Engineers		1,691		408		27		835		35		2,996
Other Professionals		729		301		33		357		113		1,533
Technical specialists		1,131		1,854		45		9,195		28		12,253
Manual Laborers(1)		13,629		—		—		—		—		13,629
Joint operation employees(2)		1,085		24		—		—		—		1,109
Subtotal		18,265		2,587		105		10,387		176		31,520
Subcontracted employees		3,152		174		—		449		—		3,775
Total		21,417		2,761		105		10,836		176		35,295

(1) The number of manual laborers, who form part of our network of approximately 150,000 manual laborers, varies in relation to the number and size of projects we have in process at any particular time.

(2) Includes engineers, professionals, technical specialists and manual laborers employed by our joint operations.

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The following chart sets forth the changes of our total employees from December 31, 2014 to December 31, 2017.

Total Employees

Our talent development system has allowed us to develop a team of professionals with the ability to design and implement sophisticated projects. Our talent management process broadly focuses on attracting, developing and training employees.

We have implemented programs to attract young and qualified candidates. Our “Cantera” Program offers various types of internships and training opportunities to engineering students and recent graduates, rewarding the most successful candidates with the opportunity to work as full-time, permanent employees. Our focus is not only to attract talented people but also to retain them.

Through our Graña y Montero Academy, we offer continuing education opportunities through a wide selection of courses and training programs targeted at each level. We believe the knowledge that our employees gain through these programs is reflected in the way they work and relate to our clients, adding value in every step. During 2017, we invested more than US$0.26 million in continuing education, reaching approximately 59,899 training hours for our employees.

We place significant emphasis on instilling our core corporate values of quality, professionalism, reliability and efficiency on our employees, and on promoting safety, environmental sustainability and social responsibility throughout the entire organization. Our Code of Conduct and Charter of Ethics regulate the conduct of our employees while promoting the foregoing values. In addition, our employees participate in ethics seminars on a periodic basis.

Substantially all of our manual laborers and some of our other employees are members of labor unions. Our practice is generally to extend the benefits we offer our unionized employees to non-unionized employees. We consider our current relationship with unions to be positive.

In our E&C segment, collective bargaining agreements are negotiated at two levels: (i) on an annual basis between the National Federation of Civil Construction and the Peruvian Chamber of Construction, without our direct involvement; and (ii) on a per project basis directly between the unions and our project committees, in accordance with such annual agreement. In addition, some of our personnel in our gas processing plant belongs to the labor union Unicode Workers Union GMP S.A. We currently have collective bargaining agreements with some of our gas processing plant workers. In the case of the operation and maintenance of our electricity infrastructure business, some of our personnel in CAM Perú are subject to a collective bargaining agreement. These collective bargaining agreements are negotiated on an annual basis.

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Safety

We safeguard the health and safety of our employees and of all the persons present in our operations and services. To that end, we provide safe work conditions, we manage risks in a timely manner and we promote a culture of prevention, starting from the leadership and commitment of our senior management.

In 2017, our company reached a total of 94.1 million hours worked. During this period, we reported an accident incidence rate of 0.46 accidents for every 200,000 hours worked, remaining at a level similar to 2016.

Our occupational health and safety management system in our subsidiaries GyM, GMI, Morelco, VyV-DSD, GMP, Concar, CAM (Chile, Perú, Colombia) and Adexus (February 2017) are certified by OHSAS 18001. We believe a safe job site contributes to our reputation and ability to gain new business while enhancing employee morale and reducing costs and exposure to liability.

Under our framework, we have provided over 100,000 hours of training in risk prevention for managers and directors, more than 1,000,000 hours of training for employees and nearly 200,000 hours of training for subcontractors. Additionally, to improve the leadership and commitment of our chain of command, these training sessions were complemented with periodic manager’s visits to projects, the establishment of annual safety goals based on the type of activity, the generation of opportunities to share lessons learned, and the monitoring of safety panels by our board of directors.

E. Share Ownership

As of May 31, 2018, persons who are currently members of our board of directors and our executive officers held as a group 34,534,193 of our common shares. This amount represented 5.23% of our outstanding share capital as of such date.

Our directors and executive officers hold, in the aggregate, less than 1% of our outstanding share capital, with the exception of Carlos Montero, who owns 33,785,285 common shares, representing 5.12% of our outstanding share capital, through Bethel Enterprises.

Our other directors and executive officers who in the aggregate hold less than 1% interest in our company are: Mr. Pedro Pablo Errázuriz, Mr. Roberto Abusada, Mr. Luis Francisco Díaz Olivero, Mr. Antonio Rodríguez, Ms. Mónica Miloslavich and Mr. Antonio Cueto.

Our directors and executive officers do not have different voting rights.

We have established a plan for certain executives effective since March 2013 that awards cash bonuses for the exclusive use of purchasing shares of our company or of our subsidiaries. The executive must agree to hold the shares for a specific period. If the executive is no longer employed with the company during such period, we are entitled to repurchase the shares at the original purchase price. This benefit is awarded at the discretion and subject to the approval of the Human Resource Management Committee of our board of directors.

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A. Major Shareholders

As of May 31, 2018, our issued and outstanding share capital was comprised of 660,053,790 common shares. The following table sets forth the beneficial ownership of our common shares as of May 31, 2018, based on information provided to us by CAVALI S.A. ICLV, the Peruvian clearing house (“CAVALI”) and JPMorgan Chase Bank NA, as depositary for the holders of ADS, except as set forth below.

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Shareholder	Number of shares		Percentage owned
GH Holding Group(1)		117,538,203		17.81	%
AFP PRIMA S.A. (Grupo Crédito)		74,011,175		11.21	%
AFP INTEGRA S.A. (Sura Group)		72,223,691		10.94	%
Aberdeen Asset Management PLC(2)		43,298,200		6.56	%
Fratelli Investment Limited(3)		34,098,379		5.166	%
Bethel Enterprises Inc.(4)		33,785,285		5.12	%
JPMorgan Chase Bank NA, as depositary for the holders of ADS(5)		87,757,289		13.30	%
Other Shareholders(6)		197,341,568		29.90	%
Total		660,053,790		100	%

(1) Mr. José Graña Miró Quesada, our former chairman, beneficially owns GH Holding Group.

(2) Based on filings on Schedule 13F filed with the SEC on March 31, 2018.

(3) Based on a Form 13G filed with the SEC on June 8, 2018.

(4) Mr. Carlos Montero, through Bethel Enterprises Inc., indirectly owns 33,785,285 common shares, representing 5.12% of our outstanding share capital.

(5) Excluding AFP PRIMA S.A., AFP INTEGRA S.A., Aberdeen Asset Management PLC, and Fratelli Investment Limited’s beneficial ownership of our common shares as of December 31, 2017.

(6) Among other shareholders, the following directors and executive officers hold directly or indirectly common shares of our outstanding share capital: Mr. Roberto Abusada, a member of our board of directors, Mr. Pedro Pablo Errazuriz, a member of our board of directors, Mr. Luis Francisco Díaz Olivero, Chief Executive Officer, Ms. Mónica Miloslavich, our Chief Financial Officer, Mr. Antonio Rodríguez, Chief Investment Officer, and Mr. Antonio Cueto, Chief Operations Officer, hold in aggregate less than 1% of our outstanding share capital.

As of December 31, 2017, 28 record holders of our common shares were located in the United States (including JPMorgan Chase Bank NA, as depositary for the holders of ADS), according to CAVALI.

Certain of our directors and executive officers directly or indirectly own shares of our subsidiaries: Mr. Renato Rojas, Chief Executive Officer of GyM, owns 108,854 common shares of GyM, representing 0.04% of its outstanding capital share; Mr. Rolando Ponce, Chief Executive Officer of Viva GyM owns 1,111,690 shares of Viva GyM, representing 0.46% of its outstanding capital share; and Eduardo Villa Corta, chief executive officer of GMI, owns 108,854 shares of GyM, representing 0.0421% of its outstanding capital share.

The following table sets forth the changes in beneficial ownership of our common shares from December 31, 2015, to December 31, 2017, based on information provided to us by CAVALI and JPMorgan Chase Bank NA, as depositary for the holders of ADS).

	As of December 31, 2015				As of December 31, 2016				As of December 31, 2017
Shareholders	No. of Shares		Percentage Owned		No. of Shares		Percentage Owned		No. of Shares		Percentage Owned
GH Holding Group(1)		117,538,203		17.81		117,538,203		17.81		117,538,203		17.81
AFP PRIMA S.A.		5,265,238		0.80		4,387,824		0.66		74,011,175		11.21
IN-CARTADM (AFP Integra-Sura Group)		39,656,375		6.01		38,384,976		5.82		72,223,691		10.94
PR-CARTADM (Profuturo AFP-Grupo Scotiabank)		36,968,166		5.60		36,968,166		5.60		23,136,533		3.51
Aberdeen Asset Management PLC(2)		37,323,615		5.70		35,501,465		5.38		49,730,025		7.53
Bethel Enterprises Inc.(3)		33,785,285		5.12		33,785,285		5.12		33,785,285		5.12
JPMorgan Chase Bank NA, as depositary for the holders of ADS(4)		213,716,525		32.38		229,683,570		34.80		96,482,855		14.62

(1) Mr. José Graña Miró Quesada, our former chairman, beneficially owns GH Holding Group.

(2) Based on filings on Schedule 13F filed with the SEC on December 31, 2017.

(3) Mr. Carlos Montero indirectly owns 33,785,285 common shares, representing 5.12% of our outstanding share capital, through Bethel Enterprises Inc.

(4) Excluding Aberdeen Asset Management PLC´s beneficial ownership of our common shares as of December 31, 2015 and December 31, 2016. As of December 31, 2017, excludes shares of Aberdeen Asset Management PLC, AFP PRIMA S.A. and AFP INTEGRA S.A.

Our major shareholders do not have different voting rights.

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B. Related Party Transactions

Peruvian Law Concerning Related Party Transactions

Peruvian law sets forth certain restrictions and limitations on transactions with certain related parties.

For instance, from a tax standpoint, the value of those transactions must be equal to the fair market value assessed under transfer pricing rules, i.e., the value agreed to by non-related parties under the same or similar circumstances. Similarly, companies with securities registered in the Peruvian Public Registry of Securities (Registro Público del Mercado de Valores), such as us, are required to comply with the following rules:

• The directors and managers of the company cannot, without the prior authorization of the board of directors, (i) receive in the form of a loan money or assets of the company; or (ii) use, for their own benefit or for the benefit of related parties, assets, services or credits of the company.

• The execution of agreements that involve at least 5% of the assets of the company with persons or entities related to directors, managers or shareholders that own, directly or indirectly, 10% of the share capital, requires the prior authorization of the board of directors (with no participation of the director involved in the transaction, if any).

• The execution of agreements with a party controlled by the company’s controlling shareholder requires the prior authorization of the board of directors and an evaluation of the terms of the transaction by an external independent company (audit companies or other to be determined by the Peruvian Securities Commission).

The external independent company that reviews the transaction should not be related to the parties involved therein, nor to directors, managers or shareholders that own at least 10% of the share capital of the company.

As a general policy, we do not enter into transactions with directors and executive officers on terms more favorable than what we would offer third parties. Any related party transaction we have entered into in the past has been in the ordinary course of business and on an arm’s length basis.

Article 30 of the internal regulations of our board of directors establishes a review procedure for identifying, approving and accounting for related party transactions. Related party transactions are defined as any transaction entered into by and among our company and any shareholder that owns 1% or more of our company’s or of our subsidiaries’ outstanding shares, directors, senior executives and persons related to them. The Human Resource Management Committee is responsible for identifying, analyzing and approving each such transaction considering market conditions and potential benefits for us and the related party. For ordinary course transactions carried out under market conditions, a general authorization for the operations of the business line is sufficient. For more information, see “Item 6. Directors Senior Management and Employees—Management.”

Related Party Transactions

We enter into certain related party transactions in the ordinary course of our business. No such transactions in effect during 2017 were material to the company or, to our knowledge, to any such related party, nor were any such transactions unusual in their nature or condition. Related party transactions with the following parties were in effect in 2017:

• architectural services agreements entered into among Mr. Oscar Borasino, the brother in law of Mario Alvarado Pflucker, our former chief executive officer and director, as architect, and our subsidiary Viva GyM, as customer, in the project Parques del Mar for an aggregate amount of US$26.0 thousand;

• architectural services agreements entered into among Mrs. Ruth Alvarado, the sister of Mario Alvarado Pflucker, our former chief executive officer and director, as architect, and our subsidiary Viva GyM, as customer, in the project Paul Harris, for an aggregate amount of US$46.5 thousand;

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• advertising services agreements entered among Servicios Empresariales El Administrador E.I.R.L., a company related to the brother of Rolando Ponce Vergara, the chief executive officer of Viva GyM and our corporate real estate officer, as advertising intermediary, and our subsidiary Viva GyM, as customer, for an aggregate amount of US$13.0 thousand;

• during 2016, our subsidiary CAM entered into a computer equipment lease agreement for a total amount of US$66.4 thousand with CSI, whose chief commercial officer, Alfredo Chavez, is the brother of Pedro Chavez, the chief executive officer of CAM;

• our former subsidiary Stracon GyM executed several services agreements with one of its directors, Mr. Miguel Aramburu, for an aggregate amount of US$10.2 thousand;

• our former subsidiary Stracon GyM entered into an operation management service agreement with Stracon S.A.C., a company owned by Stracon GyM’s shareholders, Mr. Stephen Dixon and Hayden Halsted, for an aggregate amount of US$1,650 thousand;

• lease agreement for administrative offices entered into among Sistemas y Redes Cia, a shareholder of Adexus, as lessor, and our subsidiary Adexus, as lessee, for an aggregate amount of US$2,157.3 thousand;

• lease agreement for use of vehicles used by our subsidiary Adexus, signed with Microrenta, a company owned by a shareholder of Adexus, for an aggregate amount of US$53.1 thousand;

• advising services agreement entered into among our subsidiary Vial y Vives – DSD S.A. and Gabriel Vives, a former board member of Vial y Vives – DSD, for an aggregate amount of US$14.9 thousand;

• our subsidiary Morelco entered into a service provision agreement for uniforms, shoes, helmets and goggles and other equipment for an aggregate amount of US$626.4 thousand with Agora, a company that is owned by the sister of a minority shareholder of Morelco;

• our subsidiary Morelco entered into a service provision agreement for uniforms, shoes, helmets and goggles for an aggregate amount of US$109.3 thousand with Noralba Serna Henao, sister of Arturo Serna, the chief executive officer of Morelco;

• our company and our subsidiaries Norvial, Terminales del Peru, Consorcio Terminales, Concar, GyM, Survial, GMI S.A. Ingenieros Consultores, and Viva GyM paid an aggregate amount of US$564.6 thousand to Editora El Comercio S.A., of which José Graña Miró Quesada, our former chairman, is a shareholder, for advertising, publishing and editing services; and

• our company has an advisory contract with Mr. Augusto Baertl, Chairman of the Board, for an aggregate amount of US$129.4 thousand for the year 2017.

C. Interests of Experts and Counsel

Not applicable.

ITEM 8.     FINANCIAL INFORMATION

A. Consolidated Statements and Other Financial Information.

See Item 18 of this annual report on Form 20-F.

Legal and Administrative Proceedings

We may, from time to time, become subject to various legal and administrative proceedings that are incidental to the ordinary conduct of our business. We are currently not party to any material legal or administrative proceedings, other than as described below. As of December 31, 2017, we had recorded provisions amounting to S/.23.4 million in connection with legal and administrative proceedings. See note 23 to our audited annual consolidated financial statements included in this annual report.

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Two securities class action complaints have been filed against us and certain of our former directors and current and former executive officers in the Eastern District of New York during the first quarter of 2017. These complaints are consolidated into a single class action. The plaintiffs filed a consolidated amended compliant on May 29, 2018. We believe that we have meritorious defenses to the claims asserted, and we intend to defend ourselves vigorously in these matters.

The Lava Jato commission of the Peruvian congress, which was formed in November 2016 and tasked with investigating the alleged bribes of Brazilian companies to Peruvian public officials, has initiated congressional inquiries into the company and other construction companies in Peru. Certain of the company’s former board members and executive officers to have been required to give testimony at hearings before the commission, during which they have affirmed that the company was unaware of Odebrecht’s illicit activities.

Peruvian prosecutors have included José Graña Miró Quesada, the former Chairman of the company, in an investigation for the crime of collusion, and Hernando Graña Acuña, a shareholder, a former board member of the company and chairman of our subsidiary GyM for the crime of money laundering against the Peruvian government, each in connection with the IIRSA South project concession (tranches II and III), in which we participated. Gonzalo Ferraro Rey, the former Chief Infrastructure Officer of the company, has also been included in an investigation for the crime of money laundering in connection with the same project.

In connection with investigations relating to the IIRSA South project concession (tranches II and III), the Peruvian criminal prosecutor moved to charge the company and our construction subsidiary, GyM, as criminal defendants in connection with the projects. Separately, an Ad Hoc Public Prosecutor appointed by the Peruvian executive branch to investigate matters of corruption moved to directly include the company as a civilly-responsible third party. In response, the Peruvian First National Preparatory Investigation Court (Primer Juzgado de Investigación Preparatoria Nacional) notified us of its decision to formally include the company and GyM in its criminal investigation. We appealed the court’s decision and, on June 22, 2018, the First Court of Appeals of the Superior Court of Lima revoked the judicial order No. 05 dated February 28, 2018 that indicted the company and GyM, among other corporate defendants, in the criminal investigation on charges of collusion and other crimes, and rejected the petition, without prejudice, made by the prosecutor to incorporate both companies in the aforementioned process. Nevertheless, we cannot assure you that the criminal prosecutor will not appeal this decision, or file a new claim, against the company and GyM, or that our position will ultimately prevail. Furthermore, a decision from the Peruvian judiciary on whether our company will be included in the investigation proceedings as a civilly responsible third party remains pending, and we cannot assure you that our company will not be included or that our position would ultimately prevail.

The Ad Hoc Prosecutor has also moved to directly include our subsidiary, GyM S.A., as a civilly-responsible third party in the investigation relating to Tranches 1 and 2 of Line 1 of the Lima Metro. A decision from the Peruvian judiciary regarding these matters remains pending, and we cannot assure you that our subsidiary will not be included or that our position would ultimately prevail.

In July 2017, media reports alleged that certain construction companies in Peru, Brazil and Spain, including our company, colluded as a “construction club” to receive public contracts. As a result of these reports, INDECOPI initiated an investigation regarding the anti-competitive activities of construction companies in Peru, including our company. In July 2017, the Peruvian government conducted a search of our facilities related to these allegations. Separately, a former employee of GyM has been included in a criminal investigation for collusion and other alleged crimes, though neither the company nor GyM have been formally included in these criminal investigations. In January 2018 criminal prosecutors conducted a search of our facilities regarding the “construction club” investigation. We have provided the information requested by the Peruvian criminal prosecutors. A former employee of GyM has been included in the investigation for collusion and other alleged crimes. To date, there is no formal investigation of the company.

A conviction of corruption or resolutions with government authorities may lead to criminal and civil fines as well as penalties, sanctions, injunctions against future conduct, profit disgorgement, disqualifications from directly and indirectly engaging in certain types of business, the loss of business licenses or permits or other restrictions. Moreover, our involvement in corruption investigations, and any findings of wrongdoing in such investigations, could further damage our reputation and have a material adverse impact on our ability to compete for business. Such investigations may also adversely affect our ability to pursue strategic projects, and could potentially result in the termination or modification of certain existing contracts or relationships. Also, such investigations may affect the company’s ability to secure financing in the future.

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Dividends and Dividend Policy

Dividend Policy

Our current dividend policy, adopted on March 29, 2016, is to distribute between 30% and 40% of the net profit from the preceding year, as long as we hold such net profit on a consolidated basis, subject to contractual restrictions on our indebtedness. Holders of our common shares are entitled to receive dividends on a pro rata basis in accordance with their respective number of shares held. Our dividend policy can be modified by a favorable vote of a majority of our shareholders and any changes become effective 30 days after approval. Dividends will not be distributed in advance.

Article 23 of our by-laws establishes that dividends distribution must be approved by our shareholders during the annual shareholders’ meeting. The recommendation of our board of directors is required for the distribution of interim dividends, which must be subsequently ratified at a shareholders’ meeting.

Under Peruvian law, companies may distribute up to 100% of their profit (after payment of income tax) subject to a 10% legal reserve until the legal reserve equals 20% of the total value of their capital stock. According to Article 40 of the Peruvian Corporate Law, in order to distribute dividends, profits must be determined in accordance with the individual financial statements of the company.

Payment of Dividends

Dividends are paid to holders of our common shares as of a record date determined by us. In order to allow for the settlement of securities, under the rules of the Peruvian Securities Commission, investors who purchase shares of a publicly-held company three business days prior to a dividend payment date do not have the right to receive such dividend payment. Dividends on issued and outstanding common shares are distributed pro rata.

We may not make any dividend payments until all outstanding amounts under our repayment obligations of the GSP performance guarantee have been repaid in full. In addition, we may not be able to make any dividend payments until all outstanding amounts under our syndicated loan and our corporate guarantee of the GSP bridge loan have been repaid or discharged, as the case may be, in full. For more information, see “Item 5.A. Operating and Financial Review and Prospects—Operating Results—Recent Developments.”

In addition, the indentures of the Senior Secured Notes issued by GyM Ferrovías and the Corporate Bonds issued by Norvial, contain, respectively, certain customary covenants, including restrictions on our ability to pay dividends if we are in default under the agreement, and our medium term loan with Credit Suisse imposes, certain limitations in an event of default, on our ability to distribute cash dividends. See “Item 5.B. Operating and Financial Review and Prospects—Liquidity and Capital Resources—Indebtedness.”

Holders of common shares are not entitled to interest on accrued dividends. In addition, under Article 232 of the Peruvian Corporate Law, the right to collect accrued dividends declared by a publicly-held company expires ten years from the original dividend payment date.

Previous Dividend Payments

The following table sets forth the amounts of cash dividends declared and paid since 2015 for our common shares.

	Dividends Paid		Per Share
	(in S/.)
2015		104,910,523		0.158942384
2016		30,854,000		0.046700000
2017		—		—
2018		—		—

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B. Significant Changes.

Except as disclosed in our audited annual consolidated financial statements and in this annual report, we have not experienced any significant changes since the date of our audited annual consolidated financial statements included in this annual report.

ITEM 9. THE OFFER AND LISTING

A. Offer and Listing Details

Market Price of Our Common Shares and ADSs

Our ADSs

On July 29, 2013, we completed our initial equity offering in the United States of 19,534,884 ADSs, representing 97,674,420 common shares. Our ADSs are listed on the New York Stock Exchange under the symbol “GRAM.” On March 31, 2018, the closing price on the New York Stock Exchange was US$3.04 per ADS.

As the company disclosed on a Form 6-K furnished on May 17, 2018, the New York Stock Exchange suspended trading of our ADSs and commenced proceedings to delist the company due to the company’s delay in filing this annual report. The company has appealed the decision. Our ADSs have been available for trading on the over-the-counter (OTC) market in the United States since May 21, 2018.

The following table sets forth, for the periods indicated below, the high and low market prices for our ADSs in U.S. dollars, as reported by the New York Stock Exchange and, from May 21, 2018, the over-the-counter (OTC) market.

	High		Low
Full year:	in US$
2013 (since July 29)		22.07		18.52
2014		21.97		11.70
2015		12.68		2.88
2016		8.79		2.20
2017		6.88		2.17
Quarters:
2016
First Quarter		4.20		2.20
Second Quarter		7.64		3.93
Third Quarter		8.79		7.10
Fourth Quarter		8.67		6.35
2017
First Quarter		6.88		2.17
Second Quarter		4.50		2.91
Third Quarter		4.81		2.99
Fourth Quarter		5.12		2.58
2018
First Quarter		3.16		2.29
	High		Low
Last Six Months:	in US$
2018
January		3.16		2.73
February		3.11		2.45
March		3.04		2.29
April		3.70		2.95
May		3.54		2.25
June (through June 26, 2018)		3.20		3.03

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Our Common Shares

Our common shares are registered in the Public Registry of Securities held with the Peruvian Securities Commission and are listed on the Lima Stock Exchange under the symbols “GRAMONC1”. On May 31, 2018, the closing price on the Lima Stock Exchange was S/.2.04 per common share. As of December 31, 2017, 28 record holders of our common shares were located in the United States, according to CAVALI.

The following table sets forth, for the periods indicated below, the high and low closing prices of our common shares as reported by the Lima Stock Exchange.

	High		Low
	(in S/.)
2013		12.79		9.76
2014		12.30		6.90
2015		7.30		1.94
2016		5.90		1.60
2017		4.63		1.47

The following table sets forth, for the periods indicated below, the high and low market prices, as well as the average daily trading volume for such periods, of our common shares as reported by the Lima Stock Exchange.

	High		Low		Avergae Daily Trading Volume
	(in millions of US$)
Full year:
2015		7.30		1.94		150,100
2016		5.90		1.60		307,874
2017		4.63		1.47		467,517
Quarters:
2015
First quarter		7.30		4.80		156,468
Second quarter		5.45		4.55		110,936
Third quarter		4.60		2.38		153,138
Fourth quarter		2.68		1.94		181,680
2016
First quarter		3.00		1.60		282,537
Second quarter		5.00		2.70		353,154
Third quarter		5.90		4.64		359,053
Fourth quarter		5.84		4.35		231,603
2017
First quarter		4.63		1.47		586,273
Second quarter		2.90		1.88		630,419
Third quarter		3.10		1.98		212,057
Fourth quarter		3.39		1.70		442,321
2018
First quarter		2.00		1.50		286,157

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The following table sets forth for each of the most recent six months the high and low closing prices of our common shares as reported by the Lima Stock Exchange.

	High		Low
	(in S/.)
2017
December		1.99		1.70
2018
January		2.00		1.81
February		2.00		1.63
March		1.91		1.50
April		2.42		1.90
May		2.35		1.90
June (through June 26, 2018)		2.13		2.05

B. Plan of Distribution

Not applicable.

C. Markets

Our common shares are traded on the Lima Stock Exchange, and our ADSs were traded on the New York Stock Exchange throughout 2017. On May 17, 2018, the New York Stock Exchange suspended the trading of our ADSs and commenced proceedings to delist the company. The company appealed the decision. Since May 21, 2018, our ADSs have been available for trading on the over-the-counter (OTC) market in the United States.

Trading in the Peruvian Securities Market

Lima Stock Exchange

As of the day of this annual report, there were 284 companies listed on the Lima Stock Exchange. Established in 1970, the Lima Stock Exchange is Peru’s only securities exchange. On November 19, 2003, the members of the Lima Stock Exchange approved to convert its corporate status to a publicly held corporation. As of the day of this annual report, Lima Stock Exchange had a share capital of S/.182,092,340, divided into 173,659,481 class “A” shares and 8,432,859 class “B” shares of par value S/.1.00 each. Class “A” shares are entitled to one vote per share while class “B” shares do not have voting rights.

Trading on the Lima Stock Exchange is primarily done on an electronic trading system that became operational in August 1995. From the second Sunday of March through the first Sunday of November of each year, trading hours are Monday through Friday (except holidays) as follows: 8:20 a.m.-8:30 a.m. (pre-market ordering); 8:30 a.m.-2:52 p.m. (trading); 2:52 p.m.-3:00 p.m. (after-market sales); and 3:02 p.m.-3:10 p.m. (after-market trading). At all other times, trading hours are from Monday to Friday (except holidays) as follows: 9:00 a.m.-9:30 a.m. (pre-market ordering); 9:30 a.m.-3:55 p.m. (trading); 3:55 p.m.-4:00 p.m. (after-market sales); and 4:00 p.m.-4:10 p.m. (after-market trading).

Substantially all of the transactions on the Lima Stock Exchange are traded on the electronic system. Transactions during the electronic sessions are executed through brokerage firms and stock brokers on behalf of their clients. Brokers submit orders in the order in which they are received. The orders must specify the type of security as well as the amount and price of the proposed sale or purchase. In order to control price volatility, the Lima Stock Exchange imposes a 15-minute suspension on trading when the price of a security varies on a single day by more than 15% for Peruvian companies and 30% for non-Peruvian companies.

Certain information regarding trading on the Lima Stock Exchange is set forth in the table below:

	2013		2014		2015		2016		2017
Market capitalization (in millions of soles)(1)		337,226		360,960		309,412		416,787		526,841
Volume (in millions of soles)		16,124		17,301		12,001		15,342		29,022
Average daily trading volume (in millions of soles)		64		69		48		61		116

(1) End-of-period figures for trading on the Lima Stock Exchange.

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The stock market capitalization of companies listed on the Lima Stock Exchange was US$162.4 billion at the end of 2017, compared to US$120.7 billion, US$120.8 billion, US$90.7 billion and US$124.0 at the end of 2013, 2014, 2015 and 2016 respectively.

Total market volume in 2017 was US$8.9 billion, reflecting a 95.9% increase compared with 2016. Equity market volume, which represented 70.4% of total market volume, ended the year at US$6.3 billion, 136.1% more than the previous year. The repo market, which represented 7.8% of total market volume, reported volume of US$698.1 million in 2017, reflecting an increase of 40.1%.

The total number of operations in the market in 2017 increased by 20.5%, closing the year at 158,661 operations. The number of operations in the equity market in 2017 increased by 20.9% amounting to 147,779 operations.

In 2013, the S&P/BVL Peru General Index (Índice S&P/BVL Peru General) registered a decrease of 23.6% to 15,754 points, while in 2014, it reached 14,794 points, decreasing 6.1% compared to 2013. In 2015, it reached 9,849 points, decreasing 33.4% compared to 2014. In 2016, it reached 15,567 points, increasing 58.1% compared to 2015. In 2017, it reached 19,974 points, increasing 28.3% compared to 2016.

Regulation of the Peruvian Securities Market

The regulatory framework for the Peruvian securities market is established in the Securities Market Law approved by Legislative Decree No. 861, whose unified sole text was enacted by Supreme Decree No. 093-2002-EF, as amended (Ley del Mercado de Valores), and the resolutions issued from time to time by the Peruvian Securities Commission. The purpose of the Securities Market Law is to promote the ordered development and transparency of the Peruvian securities markets, adequate protection for investors and the principles under which the Peruvian securities market is intended to operate. The Securities Market Law contains the general rules for: (i) primary and secondary public offerings of securities; (ii) public offering of securities for acquisitions and sales; (iii) local and international offerings, including simultaneous offerings; (iv) the Public Registry of Securities (Registro Público del Mercado de Valores); (v) reporting obligations of material information (hechos de importancia) by the issuers of securities recorded in the Public Registry of Securities and by the entities that are subject to the regulation and supervision of the Peruvian Securities Commission; (vi) the enforcement of insider trading; (vii) privileged information and confidentiality regulations and prohibitions against price manipulation; (viii) the broker-dealers; (ix) the Lima Stock Exchange; (x) CAVALI (the settlement and registry entity for transactions executed on the Lima Stock Exchange); (xi) other entities that are required to be registered at the Peruvian securities market Public Registry of Securities; (xii) capital market instruments and operations, including securitizations; and (xiii) mutual funds and investments funds publicly placed and their respective management companies.

The Peruvian securities market is regulated and supervised by the Peruvian Securities Commission (Superintendencia de Mercado de Valores), a governmental entity reporting to the Peruvian Ministry of Economy and Finance, with functional, administrative, economic, technical and budgetary autonomy. The Peruvian Securities Commission is governed by the Superintendent, designated by the Peruvian Ministry of Economy and Finance, and by a five member board of directors convened by the Superintendent (who acts as Chairman of the board). The other four members are appointed by the government under applicable legislation. The Peruvian Securities Commission issues from time to time resolutions which provide specific regulations or may impose sanctions in cases of violations of the Securities Market Law or the resolutions issued by the Peruvian Securities Commission.

The Peruvian Securities Commission, in order to achieve the Securities Market Law´s purposes, has broad regulatory and supervisory powers, including (i) issuing general mandatory rules; (ii) supervision and oversight of compliance with applicable legislation (including the power to order inspections and require the submission of information and documentation by entities that are under its jurisdiction and summon and interrogate any person that may contribute to its investigations); (iii) imposing sanctions; (iv) managing the Peruvian securities market public registry; (v) verifying that public offerings meet filing requirements and that the securities subject to such offerings are duly recorded at the Peruvian securities market public registry of securities; (vi) authorizing the incorporation and functioning of entities under its scope of supervision; and (vii) monitoring the content and accuracy of the financial and other information that is filed with the Peruvian Securities Commission. The Peruvian Securities Commission is responsible for the enactment, interpretation and enforcement of rules and regulations issued under the Securities Market Law.

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Disclosure Obligations

Issuers of securities registered with the Peruvian Securities Commission are required to disclose material information relating to the issuer. Pursuant to the Securities Market Law and relevant regulations enacted thereunder, all material information in connection with the issuer of registered securities (such as our common shares), its activities or securities issued or secured by such issuer which may influence the liquidity or price of such securities must be disclosed. Accordingly, issuers must file with the Peruvian Securities Commission mainly two types of information: (i) financial information, including unaudited interim financial statements on a quarterly basis (which are not required to be subject to limited review by external auditors), and audited annual consolidated financial statements on an annual basis, and (ii) material information relating to the issuer and its activities that may significantly affect the price, offering or trading of the issued securities, and in general, all the information that may be relevant for investors to be able to make investment decisions.

In order to comply with the foregoing disclosure obligations, issuers must disclose information to the Peruvian Securities Commission and, if the securities are listed, with the Lima Stock Exchange as soon as practicable but not later than the day on which the event took place or the issuer became aware of such information.

D. Selling Shareholders

Not applicable.

E. Dilution

Not applicable.

F. Expenses of the Issue

Not applicable.

ITEM 10. ADDITIONAL INFORMATION

A. Share Capital

Not applicable.

B. Memorandum and Articles of Association

Set forth below is certain information relating to our share capital, including brief summaries of certain material provisions of our bylaws, Peruvian Corporate Law and certain other laws and regulations of Peru, all as in effect as of the date hereof.

General

We are a publicly-held corporation under Peruvian Corporate Law and registered with the Public Registry of Corporations in Lima. We are listed on the Lima Stock Exchange and the New York Stock Exchange.

Our by-laws provide that our principal corporate purposes are to engage in any and all activities related to the construction and real estate businesses; to provide services related to the mining and hydrocarbons industries; to participate in all stages of development of public services and other infrastructure concessions; and to provide management and corporate services to related and third parties. In addition, our company can realize investments and corporate transactions, including the acquisition, holding and transfer of securities of Peruvian and foreign companies.

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Shareholders’ Liability

Under Peruvian Corporate Law, holders of our common shares cannot vote on matters with respect to which they have a conflict of interest.

Under Article 133 of the Peruvian Corporate Law, a shareholder must abstain from voting when faced with a conflict of interest. A resolution approved in disregard of this provision may be challenged under Article 139 of the Peruvian Corporate Law and the shareholders that participated in the determination in breach of this provision, if their vote was key in attaining the required majority, may be held jointly liable.

Redemption and Rights of Withdrawal

Under Article 200 of the Peruvian Corporate Law, holders of our common shares have redemption rights if: (i) we change our corporate purpose; (ii) a change occurs in the place of organization to a foreign country; or (iii) any transformation, merger or significant spin-off occurs with respect to our company.

Preemptive and Accretion Rights

If we increase our share capital, holders of our common shares have the right to subscribe to new common shares on a pro rata basis. Holders of common shares have preemptive rights in order to maintain their share interest in our share capital, unless the capital increase (i) results from a conversion of debt to common shares, (ii) is approved by shareholders representing at least 40% of the subscribed voting shares provided that the capital increase does not favor, directly or indirectly, certain shareholders to the detriment of others, or (iii) results from a corporate reorganization.

Shareholders who are in default of any payments relating to subscribed but unpaid shares may not exercise their preemptive rights.

Voting Rights and Dividends

Holders of common shares are entitled to one vote per share, with the exception of the election of the board of directors, where each holder is entitled to one vote per share per nominee. Each holder’s votes may be cast for a single nominee or distributed among the nominees at the holder’s discretion. To that effect, each of our common shares gives the holder the right to as many votes as there are directors to be elected. Shareholders may pool votes in favor of one person or distribute them among various persons. Those candidates for the board who receive the most votes are elected directors. Holders of common shares may attend and vote at shareholders’ meetings either in person or through a proxy.

Holders of common shares have the right to participate in the distribution of dividends and shareholder equity resulting from liquidation. Our by-laws do not establish a maximum time limit for the payment of the dividends. However, according to Article 232 of the Peruvian Corporate Law, the right to collect past-due dividends in the case of companies that are publicly held companies, such as ours, expires ten years after the date on which the dividend payment was due.

Our share capital may be increased by a decision of holders of common shares at a shareholders’ meeting. Capital reductions may be voluntary or mandatory and must be approved by holders of common shares at a shareholders’ meeting. Capital reductions are mandatory when accumulated losses exceed 50% of the capital and to the extent such accumulated losses are not offset by accumulated earnings and capital increases within the following fiscal year. Capital increases and reductions must be communicated to the Peruvian Securities Commission, the Lima Stock Exchange and SUNAT. Voluntary capital reductions must also be published in the official gazette El Peruano and in a widely circulated newspaper in the city in which we are located.

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Liquidation Rights

If we are liquidated, our shareholders have the right to receive net assets resulting from the liquidation, after we comply with our obligation to pay all our creditors and after discounting any existing dividend liabilities. For this reason, we cannot assure that we will be able to reimburse 100% of the book value of the common shares in case of bankruptcy or liquidation.

Ordinary and Extraordinary Meetings

Pursuant to Peruvian Corporate Law and our by-laws, the annual shareholders’ meeting must be held during the three-month period after the end of each fiscal year. Additional shareholders’ meetings may be held during the year. Because we are a publicly-held corporation, we are subject to the special control of the Peruvian Securities Commission, as provided in Article 253 of the Peruvian Corporate Law. If we do not hold the annual shareholders’ meeting during the three-month period after the end of each fiscal year or any other shareholders’ meeting required by our by-laws, a public notary or a competent judge shall call for such a meeting at the request of at least one shareholder of the common shares. Such meeting will take place within a reasonable period of time.

Pursuant to the Peruvian Corporate Law, other shareholders’ meetings are convened by the board of directors when deemed convenient by the company or when it is requested by notarized letter by the holders of at least 5% of our common shares which voting rights are not suspended according to Peruvian Law. Pursuant to section 255 of the Peruvian Corporate Law, if the board expressly or implicitly refuses to convene the shareholders’ meeting, a notary public or a competent judge will call for such meeting at the request of holders of at least 5% of our common shares. If a notary public or competent judge calls for a shareholders’ meeting, the place, date and hour of the meeting, the agenda, the person who will preside the meeting and the notary public who will certify the resolutions of the meeting shall be indicated in the meeting notice. If the meeting called is other than the annual shareholders’ meeting or a shareholders’ meeting required by the Peruvian Corporate Law or the by-laws, the agenda will contain those matters requested by the shareholders who requested the meeting.

Notices of Meetings

Since we are a publicly-held corporation, notice of shareholders’ meetings must be given by publication of a notice. The publication shall occur at least 25 days prior to any shareholders’ meeting in the Peruvian Official Gazette, El Peruano, and in a widely circulated newspaper in the city in which we are located.

Quorum and Voting Requirements

According to Article 33 of our by-laws and Article 257 of the Peruvian Corporate Law, shareholders’ meetings called for the purpose of considering a capital increase or decrease, the issuance of obligations, a change in the by-laws, the sale in a single act of assets with an accounting value that exceeds 50% of our share capital, a merger, division, reorganization, transformation or dissolution, are subject to a first, second and third quorum call, with each of the second and third quorum call to occur upon the failure of the preceding one. A quorum for the first call requires the presence of shareholders holding 50% of our total common shares. For the second call, the presence of shareholders holding at least 25% of our total common shares is adequate, while for the third call there is no quorum requirement. These decisions require the approval of the majority of the common shares represented at the shareholders’ meeting. Shareholders’ meetings convened to consider all other matters are subject to a first and second quorum call, with the second quorum call to occur upon the failure of the first quorum.

In accordance with Peruvian Corporate Law, only those holders of common shares whose names are registered in the company’s stock ledger not less than 10 days in advance of a meeting will be entitled to attend the shareholders’ meeting and to exercise their rights.

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Limitations on the Rights of Non-Residents or Foreign Shareholders

There are no limitations under our by-laws or Peruvian Corporate Law on the rights of non-residents or foreign shareholders to own securities or exercise voting rights with respect to our securities.

Disclosure of Shareholdings and Tender Offer Regulations

Disclosure of Shareholdings

There are no provisions in our by-laws governing the ownership threshold above which share ownership must be disclosed.

However, according to Article 10 of CONASEV Resolution Nº 090-2005-EF-94.10, as amended, we must inform the Peruvian Securities Commission of the members of our economic group, comprised by our subsidiaries, and a list of our holders of common shares owning more than a 5% share interest, as well as any change to such information.

Tender Offer Regulations

Peruvian securities regulations include mandatory takeover rules applicable to the acquisition of control of a publicly held company.

Subject to certain conditions, such regulations generally establish the obligation to launch a tender offer when a person or group of persons acquires a significant interest in a publicly held company. According to the provisions set forth in CONASEV Resolution No. 009-2006-EF-94.10, a person acquires a significant interest in a listed company when such person (i) holds or has the power to exercise directly or indirectly 25%, 50% or 60% of the voting rights in a listed company, or (ii) has the power to appoint or remove the majority of the board members or to amend its by-laws.

A tender offer may be launched prior or following an acquisition of the significant interest. The tender offer may be launched after the “significant interest” is acquired if it is acquired (i) by means of an indirect transaction, defined as a relevant acquisition or interest increase through the acquisition of securities issued by a company that in turn holds share capital of the target company; (ii) as a consequence of a public sale offer, or (iii) in no more than four transactions within a three-year period.

This mandatory procedure has the effect of alerting other shareholders and the market that an individual or financial group has acquired a significant percentage of a company’s voting shares, and gives other shareholders the opportunity to sell their shares at the price offered by the purchaser. The purchaser is required to launch a tender offer unless: (i) shareholders representing 100% of the voting rights consent in writing, (ii) voting shares are acquired by a depositary in order to subsequently issue ADSs, or (iii) voting shares are acquired pursuant to the exercise of preemptive rights.

Changes in Capital

Our by-laws do not establish special conditions to increase or reduce our share capital beyond what is required under Peruvian Corporate Law.

Anti-Takeover Provisions

Our by-laws do not contain any provision that would have the effect of delaying, deferring or preventing a change of control.

Board of Directors

For additional information regarding our board of directors, see “Item 6. Directors, Senior Management and Employees—Directors and Senior Management.”

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Form and Transfer

Common shares may be either physical share certificates in registered form or book-entry securities in the CAVALI S.A. ICLV book-entry settlement system also in registered form. Furthermore, in the case of shares represented in book entries, the issuance of new shares which result from share splits or similar corporate events must also be represented in said form.

Furthermore, the Peruvian Corporate Law forbids publicly-held corporations, such as us, from including in their by-laws stipulations limiting the transfer of their shares or restraining their trading in other ways. According to Article 18 of our by-laws, we cannot recognize a shareholders’ agreement that contemplates limitations, restrictions or preferential rights on the transfer of shares, even if such an agreement is recorded in our stock ledger (matrícula de acciones) or in CAVALI. As of the date of this annual report, no shareholders’ agreement is recorded in our stock ledger.

Arbitration

Our by-laws include an arbitration clause applicable to disputes arising from the interpretation of our bylaws or Peruvian Corporate Law and their complementary provisions, among our company, our management and our shareholders. Any such arbitration will be subject to the regulations of the Arbitration Center of the Lima Chamber of Commerce. The material terms of the arbitration clause are as follows:

• any dispute, controversy or claim arising out of the performance and the interpretation of the by-laws and any action or remedy set forth in the Peruvian Corporate Law (Ley General de Sociedades) among us, our current or former shareholders and/or our current or former management shall be settled by arbitration;

• any dispute, controversy or claim between us and a third party shall be also settled by arbitration, if agreed upon by all parties either expressly or tacitly;

• arbitrations shall be conducted before a panel of three arbitrators;

• arbitrators shall consider only the applicable law for their award (arbitration in law and not arbitration in equity);

• each party to a dispute shall appoint an arbitrator within 10 business days from receiving the notice of arbitration. The two selected arbitrators shall appoint the third arbitrator. If one of the parties fails to appoint its arbitrator within 10 business days, the Center of Arbitration of the Lima Chamber of Commerce shall appoint the arbitrator;

• the rules of the Center of Arbitration of the Lima Chamber of Commerce shall apply to the arbitration; and

• the arbitration clause is not applicable to the cases that must be submitted to the jurisdiction of the courts or of the Superintendencia del Mercado de Valores, such as when arbitration would present hardship to minority shareholders or when Peruvian law otherwise requires it.

The arbitration clause does not apply to claims based on violations of U.S. securities laws.

C. Material Contracts

Syndicated Loan

In December 2015 we entered into a medium term loan credit agreement for up to US$200 million (S/.672 million) with Credit Suisse AG, Cayman Islands Branch, and Credit Suisse Securities (USA) LLC. As a result of the termination of the GSP gas pipeline concession, in June 2017, we entered into an amendment to the credit agreement. See “Item 5. Operating and Financial Review and Prospects—Liquidity and Capital Resources—Indebtedness.” This agreement and the amendments thereto have been filed as Exhibit 10.01 to this annual report.

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Term Loan

As a result of the termination of the GSP gas pipeline concession, our proportional guarantee of the GSP bridge loan became due. On June 27, 2017 we entered into a new US$78.7 million (S/.264.8 million) term loan with Natixis, BBVA, SMBC and MUFJ, the proceeds of which were used to prepay GSP bridge loan in full. See “Item 5. Operating and Financial Review and Prospects—Liquidity and Capital Resources—Indebtedness.” This agreement and an amendment thereto has been filed as Exhibit 10.02 to this annual report.

Financial Stability Framework Agreement

On July 31, 2017, we, and certain of our subsidiaries, GyM, CAM Peru S.A., Vial y Vives—DSD and Concesionaria Vía Expresa Sur S.A., entered into a Financial Stability Framework Agreement with the following financial entities: Scotiabank Peru S.A.A., Banco Internacional del Perú S.A.A., BBVA Banco Continental, Banco de Crédito del Perú, Citibank del Perú S.A. and Citibank N.A. In April 2018, we repaid US$73.9 million of the facility with the proceeds of the sale of Stracon. See “Item 5. Operating and Financial Review and Prospects—Liquidity and Capital Resources—Indebtedness.” This agreement has been filed as Exhibit 10.03 to this annual report.

GSP Concession and Subordination Arrangements

In November 2015 we acquired a 20% interest in GSP, an entity which, on July 22, 2014, signed a concession agreement with the government of Peru to build, operate and maintain the natural gas pipeline transportation system to satisfy the demand of certain cities in the southern region of Peru.

On January 24, 2017, the government of Peru terminated the contract, due to the impossibility of obtaining financial closing. In accordance with the concession contract, the Peruvian government is required to carry out an auction process to sell GSP’s assets and obtain a new concessionaire within one year of the contract termination, with the funds raised in the sale to be used to pay the existing concessionaire for its investment in the project. Although the concession contract provides that payment must be made within one year of termination, the Peruvian Ministry of Energy and Mines has not made payment or, to our knowledge, initiated the payment process. A summary of these provisions of the concession contract have been filed as Exhibit 10.04 to this annual report.

In 2016, in connection with efforts to restructure or sell Odebrecht’s participation in GSP, due to the corruption scandal surrounding Odebrecht, Odebrecht contractually agreed to subordinate its claims under the concession to the other project partners, Enagás and ourselves. As a result, we and Enagas may be entitled to repayment of our percentage payment under the concession contract prior to Odebrecht. However, on January 3, 2018, Odebrecht commenced arbitration proceedings against us, our subsidiary GyM and Enagás, seeking to invalidate the contractual subordination. These contractual arrangements have been filed as Exhibit 10.05 to this annual report.

For more information, see “Item 5.A. Operating and Financial Review and Prospects—Operating Results—Recent Developments.”

D. Exchange Controls

Since August 1990, there have been no exchange controls in Peru and all foreign exchange transactions are based on free market exchange rates. Prior to August 1990, the Peruvian foreign market consisted of several alternative exchange rates. Additionally, during the 1990s, the Peruvian currency experienced a significant number of large devaluations, and Peru has consequently adopted, and operated under, various exchange rate control practices and exchange rate policies, ranging from strict control over exchange rates to market determination of rates. Current Peruvian regulations on foreign investment allow the foreign holders of equity shares of Peruvian companies to receive and repatriate 100 percent of the cash dividends distributed by such companies. Such investors

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are allowed to purchase foreign exchange at free market currency rates through any member of the Peruvian banking system and transfer such foreign currency rates through any member of the Peruvian banking system and transfer such foreign currency outside Peru without restriction.

E. Taxation

Peruvian Tax Considerations

The following is a general summary of material Peruvian tax matters under Peruvian law, as in effect on the date of this annual report, and describes the principal tax consequences of ownership of ADSs and common shares by non-resident individuals or entities (“Non-Peruvian Holders”). Legislative, judicial or administrative changes or interpretations may, however, be forthcoming. Any such changes or interpretations could affect the tax consequences to holders of ADSs and common shares and could alter or modify the conclusions set forth herein. This summary is not intended to be a comprehensive description of all of the tax considerations that may be relevant to a decision to make an investment in the ADSs or common shares. In addition, it does not describe any tax consequences arising under the laws of any taxing jurisdiction other than Peru or applicable to an individual or entity resident of Peru or to a person with a permanent establishment in Peru.

For purposes of Peruvian taxation:

• individuals are residents of Peru, if they are Peruvian nationals who have established their place of residence in Peru or if they are foreign nationals with a permanence of more than 183 days in Peru in any 12-month period (in the latter case, the condition of Peruvian resident can only be acquired as of the 1st of January of the year following the fulfillment of residence conditions); and

• legal entities are residents of Peru if they are established or incorporated in Peru.

Cash Dividends and Other Distributions

Cash dividends paid to Non-Peruvian Holders with respect to common shares and amounts distributed with respect to ADSs have been subject to Peruvian withholding income tax at a rate of 5% since 2017. As a general rule, the distribution of additional common shares representing profits, the distribution of shares which differ from the distribution of earnings or profits, as well as the distribution of preemptive rights with respect to common shares, which are carried out as part of a pro rata distribution to all shareholders, will not be subject to Peruvian income tax or withholding taxes.

Capital Gains

Pursuant to Article 6 of the Peruvian income tax law, individuals and domiciled entities in Peru are subject to Peruvian income tax on their worldwide income while non-domiciled entities are subject to Peruvian income tax only on their Peruvian source income.

Peruvian income tax law provides that income derived from the disposal of securities issued by Peruvian entities is considered Peruvian source income and is therefore subject to income tax. Under current Peruvian income tax law, capital gains resulting from the disposal of American Depositary Receipts (ADRs) that represent shares issued by Peruvian entities are considered Peruvian source income and therefore are subject to Peruvian income tax. Peruvian income tax law also provides that the taxable income resulting from the disposal of securities is equal to the difference between the sale price of the securities (which may not be less than their fair market value) and their tax basis.

Notwithstanding the foregoing, capital gains resulting from the disposal of ADSs or beneficial interest in ADSs that represent shares issued by a Peruvian entity are not considered Peruvian source income, and therefore are not subject to Peruvian income tax.

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In the event ADSs are exchanged into common shares and such common shares are disposed of, capital gains resulting therefrom will be subject to an income tax rate of either 5% or 30%, depending on where the transaction takes place. If the transaction is consummated in Peru, any capital gain will be subject to an income tax rate of 5%; and if the transaction is performed outside of Peru, any capital gain will be subject to a 30% income tax rate.

Peruvian income tax law regulations have stated with respect to the transfer of common shares, that transactions are deemed to be consummated in Peru if the common shares are transferred through the Lima Stock Exchange. From 2016 through December 31 of 2019, pursuant to the Law 30341, capital gains resulting from a transfer of: (i) Common shares and investment shares, (ii) ADRs and Global Depositary Receipts (GDRs), (iii) Exchange Trade Funds (ETF) units that have underlying shares and/or securities representing debt, (iv) representative securities of debt, (v) Certificates of participation in mutual funds for investment in securities, (vi) Certificates of participation in investment Funds in Rent of Real Property (FIRBI) and certificates of participation in Trustee of Securitization for Investment in Rent of Real Estate (FIBRA), and (vii) Negotiable invoices, in each case, through the Lima Stock Exchange will be exempt from income tax, provided, however, that the following conditions are met:

(a) The transfer must be performed through a centralized trading mechanism supervised by the Securities Market Superintendence;

(b) In any 12-month period, neither the seller or any person related to him must dispose of more than 10% of the total number of common shares issued by the company through one or more simultaneous or successive operations; and

(c) The shares must have a “market presence”, meaning that transactions in respect of those shares for a value exceeding four Tax Units (currently, S/.16,600) shall have occurred in at least 27 business days out of any 180 business day period including the date of the transaction.

Any gain resulting from the conversion of ADSs into common shares or common shares into ADSs will not be subject to taxation in Peru.

Likewise, it is important to notice that if after applying the exemption, the issuer delisted the securities from the Registry of the Lima Stock Exchange, in whole or in part, in an act or progressively, within the next 12 months after the disposal is made, the exemption that is applied to the securities unlisted is lost.

Any Non-Peruvian Holder entities who acquires common shares will have the following tax basis: (i) for common shares purchased by the transferor, the acquisition price paid for the shares; (ii) for common shares received by the transferor as a result of a share capital increase because of a capitalization of net profits, the par value of such common shares; (iii) for other common shares received free of any payment, tax basis will be: (x) zero or the cost borne by the transferor, in the case of individuals and (y) the fair market value at the time of the acquisition, in the case of entities; and (iv) for common shares of the same type acquired at different opportunities and at different values, the tax basis will be the weighted average cost. In cases where common shares are sold by Non-Peruvian Holders outside the Lima Stock Exchange, the tax basis must be certified by the Peruvian tax administration prior to the time payment is made to the transferor; otherwise it would not be possible to deduct the tax basis and the 30% Peruvian income tax would apply to the total sale price. Under Peruvian income tax law, tax basis certification is granted by the Peruvian tax authorities within 30 business days after the filing of the corresponding application. If the Peruvian tax authorities do not respond within the abovementioned period, the tax basis calculation will be deemed automatically approved.

In any transaction relating to Peruvian securities through the Lima Stock Exchange, CAVALI will act as withholding agent of the Peruvian income tax. If the purchaser is a resident in Peru and the sale is not performed through the Lima Stock Exchange, the purchaser will act as withholding agent. In other cases, the transferor shall be obliged to self-assess the tax and pay it to the Peruvian tax authorities within the first 12 business days of the month following the transfer.

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Other Considerations

No Peruvian estate or gift taxes are imposed on the gratuitous transfer of ADSs or common shares. No stamp, transfer or similar tax applies to any transfer of ADSs or common shares, except for commissions payable by seller and buyer to the Lima Stock Exchange (0.021% of value sold), fees payable to the Peruvian Securities Commission (0.0135% of value sold), brokers’ fees (about 0.05% to 0.50% of value sold) and value added tax (at the rate of 18%) on commissions and fees. Any investor who sells its common shares on the Lima Stock Exchange will incur these fees and taxes upon purchase and sale of the common shares.

United States Federal Income Tax Considerations

The following summary describes certain United States federal income tax consequences to a United States Holder (as defined below) of the purchase, ownership and disposition of our common shares and ADSs as of the date of this annual report. Except where noted, this summary deals only with common shares and ADSs held as capital assets (generally, property held for investment). As used herein, the term “United States Holder” means a beneficial owner of common shares or ADSs that is for United States federal income tax purposes:

• an individual citizen or resident of the United States;

• a corporation (or other entity treated as a corporation for United States federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia;

• an estate the income of which is subject to United States federal income taxation regardless of its source; or

• a trust if it (i) is subject to the primary supervision of a court within the United States and one or more United States persons have the authority to control all substantial decisions of the trust, or (ii) has a valid election in effect under applicable United States Treasury regulations to be treated as a United States person.

This summary does not represent a detailed description of the United States federal income tax consequences applicable to you in light of your particular circumstances and does not address the United States federal income tax consequences applicable to you if you are subject to special treatment under the United States federal income tax laws, including if you are:

• a dealer in securities or currencies;

• a financial institution;

• a regulated investment company;

• a real estate investment trust;

• an insurance company;

• a tax-exempt organization;

• a person holding our common shares or ADSs as part of a hedging, integrated or conversion transaction, a constructive sale or a straddle;

• a trader in securities that has elected the mark-to-market method of accounting for your securities;

• a person liable for alternative minimum tax;

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• a person who owns or is deemed to own 10% or more of our voting stock;

• a partnership or other pass-through entity for United States federal income tax purposes; or

• a person whose “functional currency” is not the U.S. dollar.

The discussion below is based upon the provisions of the Internal Revenue Code of 1986, as amended (the “Code”), and regulations, rulings and judicial decisions thereunder as of the date hereof, and such authorities may be replaced, revoked or modified so as to result in United States federal income tax consequences different from those discussed below. There is currently no income tax treaty between the United States and Peru that would provide for United States federal income tax consequences different than the consequences under the foregoing authorities. In addition, this summary is based, in part, upon representations made by the depositary to us and assumes that the deposit agreement, and all other related agreements, will be performed in accordance with their terms.

If a partnership (or other entity or arrangement treated as a partnership for United States federal income tax purposes) holds our common shares or ADSs, the tax treatment of a partner in the partnership will generally depend upon the status of the partner and the activities of the partnership. If you are a partner of a partnership holding our common shares or ADSs, you should consult your tax advisors.

This summary does not address the effects of the Medicare tax on net investment income or other United States income tax consequences such as United States federal estate or gift tax consequences, and does not address the effects of any state, local or non-United States tax laws. If you are considering the purchase, ownership or disposition of our common shares or ADSs, you should consult your own tax advisors concerning the United States federal income tax consequences to you in light of your particular situation as well as any consequences arising under the laws of any other taxing jurisdiction.

ADSs

If you hold ADSs, for United States federal income tax purposes, you generally will be treated as the owner of the underlying common shares that are represented by such ADSs. Accordingly, deposits or withdrawals of common shares for ADSs will not be subject to United States federal income tax.

Taxation of Dividends

The gross amount of distributions, other than certain pro rata distributions of common shares, on the ADSs or common shares (including amounts withheld to reflect Peruvian withholding taxes) will be taxable as dividends, to the extent paid out of our current or accumulated earnings and profits, as determined under United States federal income tax principles.

To the extent that the amount of any distribution (including amounts withheld to reflect Peruvian withholding taxes) exceeds our current and accumulated earnings and profits for a taxable year, as determined under United States federal income tax principles, the distribution will first be treated as a tax-free return of capital, causing a reduction in the adjusted basis of the ADSs or common shares, and the balance in excess of adjusted basis will be taxed as capital gain recognized on a sale or exchange. However, we do not expect to keep earnings and profits in accordance with United States federal income tax principles. Therefore, you should expect that a distribution will generally be treated as a dividend. Such dividends (including any withheld taxes) will be includable in your gross income as ordinary income on the day actually or constructively received by you, in the case of the common shares, or by the depositary, in the case of ADSs. Such dividends will not be eligible for the dividends received deduction allowed to corporations under the Code.

With respect to non-corporate United States Holders, certain dividends received from a qualified foreign corporation may be subject to reduced rates of taxation. A non-United States corporation is treated as a qualified foreign corporation with respect to dividends received from that corporation on common shares (or ADSs backed by such shares) that are readily tradable on an established securities market in the United States. United States Treasury Department guidance indicates that our ADSs, which are listed on the New York Stock Exchange, will be

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considered readily tradable on an established securities market in the United States. Based on existing guidance, it is not entirely clear whether our common shares will be considered readily tradable on an established securities market in the United States because only the ADSs, not the underlying common shares, are listed on a securities market in the United States. We believe that dividends we pay on our common shares that are represented by ADSs, but not our common shares that are not so represented, will meet such conditions required for the reduced tax rates. There can be no assurance that our ADSs will be considered readily tradable on an established securities market in later years. Non-corporate United States Holders that do not meet a minimum holding period requirement during which they are not protected from the risk of loss or that elect to treat the dividend income as “investment income” pursuant to Section 163(d)(4) of the Code will not be eligible for the reduced rates of taxation regardless of our status as a qualified foreign corporation. In addition, the rate reduction will not apply to dividends if the recipient of a dividend is obligated to make related payments with respect to positions in substantially similar or related property. This disallowance applies even if the minimum holding period has been met. You should consult your own tax advisors regarding the application of these rules given your particular circumstances.

The amount of any dividend paid in soles will equal the U.S. dollar value of the soles received, calculated by reference to the exchange rate in effect on the date the dividend is actually or constructively received by you, in the case of the common shares, or by the depositary, in the case of ADSs, regardless of whether the soles are converted into U.S. dollars at that time. If the soles received as a dividend are converted into U.S. dollars on the date they are received, you generally will not be required to recognize foreign currency gain or loss in respect of the dividend income. If the soles received as a dividend are not converted into U.S. dollars on the date of receipt, you will have a tax basis in the soles equal to their U.S. dollar value on the date of receipt. Any gain or loss realized on a subsequent conversion or other disposition of the soles will be treated as United States source ordinary income or loss.

Subject to certain conditions and limitations, Peruvian withholding taxes on dividends may be treated as foreign taxes eligible for credit against your United States federal income tax liability. For purposes of calculating the foreign tax credit, dividends paid on the ADSs or common shares will be treated as foreign source income and will generally constitute passive category income. However, in certain circumstances, if you have held the ADSs or common shares for less than a specified minimum period during which you are not protected from risk of loss, or are obligated to make payments related to the dividends, you will not be allowed a foreign tax credit for any Peruvian withholding taxes imposed on dividends paid on the ADSs or common shares. If you do not elect to claim a United States foreign tax credit, you may instead claim a deduction for Peruvian income tax withheld, but only for a taxable year in which you elect to do so with respect to all foreign income taxes paid or accrued in such taxable year. The rules governing the foreign tax credit are complex. You are urged to consult your tax advisors regarding the availability of the foreign tax credit under your particular circumstances.

Taxation of Capital Gains

For United States federal income tax purposes, you will recognize taxable gain or loss on any sale or exchange of ADSs or common shares in an amount equal to the difference between the amount realized for the ADSs or common shares and your tax basis in the ADSs or common shares, in each case as determined in U.S. dollars. Such gain or loss will generally be capital gain or loss. Capital gains of non-corporate United States Holders derived with respect to capital assets held for more than one year are eligible for reduced rates of taxation. The deductibility of capital losses is subject to limitations.

If a Peruvian income tax is withheld on the sale or other disposition of our ADSs or common shares, your amount realized will include the gross amount of the proceeds of that sale or other disposition before deduction of the Peruvian income tax. See “—Peruvian Tax Considerations—Capital Gains” for a description of when a sale or other disposition of our ADSs or common shares may be subject to taxation by Peru. Any gain or loss recognized by you will generally be treated as United States source gain or loss for foreign tax credit purposes. Consequently, in the case of gain from the disposition of ADSs or common shares that is subject to Peruvian income tax, you may not be able to benefit from the foreign tax credit for that Peruvian income tax (i.e., because the gain from the disposition would be United States source), unless you can apply the credit (subject to applicable limitations) against United States federal income tax payable on other income from foreign sources. Alternatively, you may take a deduction for the Peruvian income tax if you do not take a credit for any foreign taxes paid or accrued during the taxable year. You are urged to consult your tax advisors regarding the tax consequences if Peruvian income tax is imposed on a disposition of ADSs or common shares, including the availability of the foreign tax credit under your particular circumstances.

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Passive Foreign Investment Company

We do not believe that we are, for United States federal income tax purposes, a passive foreign investment company (a “PFIC”), and we expect to operate in such a manner so as not to become a PFIC. If, however, we are or become a PFIC, you could be subject to additional United States federal income taxes on gain recognized with respect to the ADSs or common shares and on certain distributions, plus an interest charge on certain taxes treated as having been deferred under the PFIC rules. Non-corporate United States Holders will not be eligible for reduced rates of taxation on any dividends received from us (as discussed above under “—Taxation of Dividends”) if we are a PFIC in the taxable year in which such dividends are paid or in the preceding taxable year.

Information Reporting and Backup Withholding

In general, information reporting will apply to dividends in respect of our ADSs or common shares and the proceeds from the sale, exchange or redemption of our ADSs or common shares that are paid to you within the United States (and in certain cases, outside the United States), unless you are an exempt recipient. Backup withholding may apply to such payments if you fail to provide a taxpayer identification number or certification of other exempt status or fail to report in full dividend and interest income.

Any amounts withheld under the backup withholding rules will be allowed as a refund or a credit against your United States federal income tax liability provided the required information is furnished to the Internal Revenue Service in a timely manner.

The above description is not intended to constitute a complete analysis of all tax consequences relating to the acquisition, ownership or disposition of our ADSs or common shares. You should consult your own tax advisors concerning the overall tax consequences to you, including the consequences under laws other than United States federal income tax laws, of an investment in our ADSs or common shares.

F. Dividends and Paying Agents

Not applicable.

G. Statement by Experts

Not applicable.

H. Documents on Display

We are subject to the informational requirements of the U.S. Securities Exchange Act of 1934, or the Exchange Act. Accordingly, we are required to submit reports and other information to the SEC, including annual reports on Form 20-F and reports on Form 6-K. You may inspect and copy reports and other information submitted to the SEC at the public reference facilities maintained by the SEC at 100 F Street, N.E., Washington, D.C. Copies of the materials may be obtained from the Public Reference Room of the SEC at 100 F Street, N.E., Washington, D.C. 20549 at prescribed rates. The public may obtain information on the operation of the SEC’s Public Reference Room by calling the SEC in the United States at 1-800-SEC-0330. In addition, the SEC maintains an Internet website at http://www.sec.gov, from which you can electronically access these materials.

As a foreign private issuer, we are required to file with the SEC annual reports on Form 20-F, but we are not subject to the same disclosure requirements as a domestic U.S. registrant under the Exchange Act. For example, we are not required to prepare and issue quarterly reports. However, we have furnished, and intend to continue to furnish, our shareholders with quarterly reports containing unaudited financial data for the first three quarters of each fiscal year. In addition, as a foreign issuer, we are not subject to the proxy rules under Section 14 of the Exchange Act and our officers and directors are subject to Section 16 of the Exchange Act relating to insider short-swing profit disclosure and recovery regime.

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We send the depositary a copy of all notices that we give relating to meetings of our shareholders or to distributions to shareholders or the offering of rights and a copy of any other report or communication that we make generally available to our shareholders. The depositary makes all these notices, reports and communications that it receives from us available for inspection by registered holders of ADSs at its office. The depositary mails copies of those notices, reports and communications to you if we ask the depositary to do so and furnish sufficient copies of materials for that purpose.

We file financial statements and other periodic reports with the Peruvian Securities Commission in Peru. Issuers of securities registered with the Peruvian Securities Commission are required to disclose material information relating to the issuer. Pursuant to the Securities Market Law and relevant regulations enacted thereunder, all material information in connection with the issuer of registered securities, its activities or securities issued or secured by such issuer which may influence the liquidity or price of such securities must be disclosed. Accordingly, issuers must file with the Peruvian Securities Commission mainly two types of information: (a) financial information, including unaudited interim financial statements on a quarterly basis (which are not required to be subject to limited review), and audited annual consolidated financial statements on an annual basis, and (b) material information relating to the issuer and its activities that may significantly affect the price, offering or negotiation of the issued securities, and in general, all the information that may be relevant for investors to be able to make investment decisions.

I. Subsidiary Information

See the notes 2.2 and 6 to our adutied annual consolidated financial statements included in this annual report for a description of our subsidiaries.

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to a number of market risks arising from our normal business activities, including the possibility that changes in currency exchange rates or interest rates will adversely affect future cash flows and profit or the value of our financial assets and liabilities. From time to time, we enter into derivative transactions to hedge against foreign currencies and interest rate fluctuations. For further information regarding our market risk, see note 4 to our audited annual consolidated financial statements included in this annual report.

Exchange Rate Risk

We are exposed to market risk associated with changes in foreign currency exchange rates. Our revenues and costs, and our assets and liabilities, are denominated in soles, U.S. dollars, Chilean pesos and, to a lesser extent, other currencies. In 2017, we estimate that 39.3%, 43.8% and 16.9% of our revenues were denominated in soles, U.S. dollars and other currencies (principally Chilean pesos), respectively, while 63.9%, 18.3% and 17.8% of our cost of sales during the year were denominated in soles, U.S. dollars and other currencies. In addition, as of December 31, 2017, 52.2%, 38.6% and 9.2% of our total debt was denominated in soles, U.S. dollars and other currencies, respectively. If, at December 31, 2017, the sol had strengthened/weakened by 2% against the U.S. dollar, with all other variables remaining constant, or pre-tax profit for the year would have increased/decreased by S/.0.1 million. This sensitivity analysis does not take into account our payable to Chubb Insurance Company relating to our reimbursement obligations under the GSP performance guarantee.

Interest Rate Risk

We may from time to time incur variable interest rate indebtedness, and accordingly our financial expenses are affected by changes in interest rates. Based upon our indebtedness at December 31, 2017, and taking into account our interest rate derivative instruments, a change in interest rates of five percent (or 500 basis points) would impact our net profit by S/.82.5 million annually. This sensitivity analysis does not take into account our payable to Chubb Insurance Company relating to our reimbursement obligations under the GSP performance guarantee.

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Commodity Price Risk

We are exposed to market risk associated with changes in commodity prices, primarily for oil, steel and cement, which in aggregate represented a majority of our total input cost in 2017. We do not have long-term contracts for the supply of these key inputs. Based upon our consumption of these inputs during 2017, a 10% increase/decrease in the prices of each of oil, steel and cement would have increased/decreased our costs of sales by S/.51.6 million, S/.13.9 million and S/.1.5 million, respectively. However, based on our production of oil during 2017, a 10% increase/decrease in the price of oil would have increased/decreased our revenues by S/.58.1 million.

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

A. Debt Securities

Not applicable.

B. Warrants and Rights

Not applicable.

C. Other Securities

Not applicable.

D. Ameri can Depositary Shares

Fees and Expenses

The depositary may charge each person to whom ADSs are issued, including, without limitation, issuances against deposits of common shares, issuances in respect of common share distributions, rights and other distributions, issuances pursuant to a stock dividend or stock split declared by us or issuances pursuant to a merger, exchange of securities or any other transaction or event affecting the ADSs or deposited securities, and each person surrendering ADSs for withdrawal of deposited securities or whose ADRs are cancelled or reduced for any other reason, US$5.00 or less for each 100 ADSs (or any portion thereof) issued, delivered, reduced, cancelled or surrendered, as the case may be. The depositary may sell (by public or private sale) sufficient securities and property received in respect of a common share distribution, rights and/or other distribution prior to such deposit to pay such charge.

The following additional charges shall be incurred by the ADR holders, by any party depositing or withdrawing common shares or by any party surrendering ADSs or to whom ADSs are issued (including, without limitation, issuance pursuant to a stock dividend or stock split declared by us or an exchange of stock regarding the ADRs or the deposited securities or a distribution of ADSs), whichever is applicable:

• a fee of US$1.50 per ADR or ADRs for transfers of certificated or direct registration ADRs;

• a fee of US$0.05 or less per ADS for any cash distribution made pursuant to the deposit agreement;

• a fee of US$0.05 or less per ADS per calendar year (or portion thereof) for services performed by the depositary in administering the ADRs (which fee may be charged on a periodic basis during each calendar year and shall be assessed against holders of ADRs as of the record date or record dates set by the depositary during each calendar year and shall be payable in the manner described in the next succeeding provision);

• a fee for the reimbursement of such fees, charges and expenses as are incurred by the depositary and/or any of the depositary’s agents (including, without limitation, the custodian and expenses incurred on behalf of holders in connection with compliance with foreign exchange control regulations or any law

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or regulation relating to foreign investment) in connection with the servicing of the common shares or other deposited securities, the sale of securities, the delivery of deposited securities or otherwise in connection with the depositary’s or the custodian’s compliance with applicable law, rule or regulation (which charge shall be assessed on a proportionate basis against holders as of the record date or dates set by the depositary and shall be payable at the sole discretion of the depositary by billing such holders or by deducting such charge from one or more cash dividends or other cash distributions);

• a fee for the distribution or sale of securities pursuant to paragraph 10 of the deposit agreement, such fee being in an amount equal to the US$0.05 per ADS issuance fee for the execution and delivery of ADSs which would have been charged as a result of the deposit of such securities (treating all such securities as if they were common shares) but which securities or the net cash proceeds from the sale thereof are instead distributed by the depositary to those holders entitled thereto;

• stock transfer or other taxes and other governmental charges;

• cable and facsimile transmission and delivery charges incurred at your request in connection with the deposit or delivery of common shares;

• transfer or registration fees for the registration of transfer of deposited securities on any applicable register in connection with the deposit or withdrawal of deposited securities; and

• expenses of the depositary in connection with the conversion of foreign currency into U.S. dollars.

We will pay all other charges and expenses of the depositary and any agent of the depositary (except the custodian) pursuant to agreements from time to time between us and the depositary. The charges described above may be amended from time to time by agreement between us and the depositary.

Our depositary has agreed to reimburse us for certain expenses we incur that are related to establishment and maintenance of the ADR program, including investor relations expenses and exchange application and listing fees. The amounts of reimbursements available to us are not based upon the amounts of fees the depositary collects from investors. The depositary collects its fees for issuance and cancellation of ADSs directly from investors depositing common shares or surrendering ADSs for the purpose of withdrawal or from intermediaries acting on their behalf. The depositary collects fees for making distributions to investors by deducting those fees from the amounts distributed or by selling a portion of distributable property to pay the fees. The depositary may collect its annual fee for depositary services by deduction from cash distributions, or by directly billing investors, or by charging the book-entry system accounts of participants acting for them. The depositary will generally set off the amounts owing from distributions made to holders of ADSs. If, however, no distribution exists and payment owing is not timely received by the depositary, the depositary may refuse to provide any further services to holders that have not paid those fees and expenses owing until such fees and expenses have been paid. At the discretion of the depositary, all fees and charges owing under the deposit agreement are due in advance and/or when declared owing by the depositary.

During 2017, the depositary reimbursed us for expenses in an aggregate amount of US$89,950.1 (S/.291,887.9).

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PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

Financing of the Expansion Project of the Lima Metro Concession

On August 23, 2017, GyM Ferrovias entered into a US$396 million financing structure with Mizuho Bank, Ltd and Sumitomo Mitsui Banking Corporation. The particular structure for the expansion project of the Lima Metro involves the securitization of irrevocable and unconditional payment obligations of the Government of Peru (CPAOs), which have been sold by GyM Ferrovias to a borrower under a long-term loan facility. The expansion project includes the improvement of civil works and the purchase of additional rolling stock, including trains and cars that will be designed, built, operated and maintained by GyM Ferrovías, as concessionaire under the Lima Metro concession. The financing is structured as a long-term loan facility and a working capital facility.

As of the date of this annual report, GyM Ferrovias is in continuing default under the financing of the expansion project due to the non-delivery of our audited consolidated financial statements for the 2016 fiscal year, in our capacity as guarantor of the obligations of GyM Ferrovias under the agreement. The financing required that we provide the financial statements no later than April 4, 2018. Also, the financing required that we deliver our audited consolidated financial statements for the 2017 fiscal year by May 15, 2018. We were not able to deliver those financial statements on time. We have requested a waiver from the lenders, which is pending.

Syndicated Loan

Due to the termination of the GSP gas pipeline concession on January 24, 2017, we were in breach of our covenants, including our Consolidated Leverage Ratio, under our syndicated loan as of December 31, 2016, as the effects on our financial condition and results of operations of the concession termination were taken into account for the purposes of calculating compliance with our financial covenants for 2016. However, as of December 31, 2017 our Consolidated Leverage Ratio (as defined therein) was 2.2x, no more than 3.5x as required under the syndicated loan. Upon the termination of the GSP gas pipeline concession on January 24, 2017, we were required to prepay our syndicated loan. We amended the terms of our syndicated loan, including certain financial covenants and certain prepayment requirements.

As of the date of this annual report, and due to the accounting adjustments in connection to the termination of the GSP gas pipeline concession, we are again under certain continuing defaults under the syndicated loan with respect to certain financial ratios and the failure to timely deliver our audited consolidated financial statements for the 2016 and 2017 fiscal years. The syndicated loan required that we provide the financial statements for the 2016 and 2017 fiscal years no later than April 30, 2018. As of March 31, 2018, our Consolidated Leverage Ratio (as defined therein) was 2.6, rather than no more than 2.50 as required under the syndicated loan. We have requested a waiver from the lenders, which is pending.

GSP Bridge Loan and New Term Loan.

With the termination of the GSP gas pipeline concession, our proportional guarantee under the GSP bridge loan became due. As of December 31, 2017, there was US$72.5 million (S/.235.2 million) of principal amount outstanding under our corporate guarantee. On June 27, 2017 we entered into a new US$78.7 million (S/.264.8 million) term loan with Natixis, BBVA, SMBC and MUFJ, the proceeds of which were used to prepay GSP bridge loan.

As of the date of this annual report, we are under certain continuing defaults under the term loan with respect to certain financial ratios and the failure to timely deliver of our audited consolidated financial statements for the 2016 and 2017 fiscal years. The term loan required that we provide the financial statements for the 2016 and 2017 fiscal years no later than April 30, 2018. As of the date hereof, our Consolidated Leverage Ratio (as defined therein) was 2.2, no more than 2.50 as required under the syndicated loan. We have requested a waiver from the lenders, which is pending.

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Financial Stability Framework Agreement

As of the date of this annual report, we are under continuing default due to the failure to timely deliver our audited consolidated financial statements and those of our subsidiary, GyM, for the 2016 and 2017 fiscal years. The loan required that we provide such financial statements no later than April 30, 2018. We have requested a waiver from the lenders, which is pending.

For more information, see “Item 5.A. Operating and Financial Review and Prospects—Operating Results—Recent Developments” and “Item 5.B. Operating and Financial Review and Prospects—Liquidity and Capital Resources—Indebtedness.”

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

Material Modifications to the Rights of Security Holders

None.

Use of Proceeds

On July 29, 2013, we completed our initial public offering in the United States by issuing 20,353,920 ADSs, representing 101,769,600 common shares (including partial exercise of the underwriters’ over-allotment option on August 23, 2013, for cash consideration of US$21.13 per ADS. We received approximately US$411.3 million in net proceeds from our initial public offering. We have used these net proceeds for capital investments, acquisitions and other general corporate purposes, consistent with our disclosure in the registration statement relating to the initial public offering.

Item 15. CONTROLS AND PROCEDURES

A.    Disclosure Controls and Procedures

Management, with the participation of the company’s Chief Executive Officer and Chief Financial Officer, performed an evaluation of the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Our disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including the Chief Executive Officer and the Chief Financial Officer, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objective. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2017, our disclosure controls and procedures were not effective as a result of the material weaknesses in internal control over financial reporting described below.

B.    Management’s Annual Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting for our company as such term is defined by Exchange Act rules 13(a)-15(f) and 15(d)-15(f). In order to evaluate the effectiveness of internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), management has conducted an assessment, including testing, using the criteria in Internal Control-Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Our company’s system of internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

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The company has established a continuous testing process throughout the year. From this assessment of the effectiveness of our internal control over financial reporting as of December 31, 2017, we have identified certain material weaknesses. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. The material weaknesses identified are described below:

Control Environment

The control environment, which is the responsibility of senior management, helps set the tone of the organization, influences the control consciousness of its officers and employees, and is an important component affecting how the organization performs risk management, financial analysis, accounting and financial reporting. A proper organizational tone can be promoted through a variety of means, such as policies and codes of ethics, a commitment to hiring competent employees, the manner and content of oral and written communications, and structures that promote and reward openness, strong internal controls, effective governance, risk management, compliance and ethical behavior.

As of December 31, 2017, we did not maintain an effective control environment primarily attributable to the following identified material weaknesses:

• Our assessment found that the control environment was not always sufficient to ensure that adequate enterprise risk management (including fraud risk) and monitoring mechanisms were in place to secure that our internal control over financial reporting operated effectively, including that the relevant risk/control activities were carried out properly and that corrective actions were taken on a priority basis and in timely manner.

• Our assessment found deficiencies in the implementation of our internal control system of financial reporting in accordance with the Sarbanes-Oxley Act throughout all subsidiaries.

These material weaknesses in the risk and control environment contributed to the following additional material weaknesses, including the material weaknesses in risk assessment, information and communication, and monitoring and evidential matter.

Risk Assessment

We identified deficiencies in the controls to address the risks of a material misstatement. Specifically, changes to existing controls or the implementation of new controls were not sufficient to respond to changes to the risks of material misstatements to financial reporting, due in part to dispositions and other changes to the business. These deficiencies contributed to the following additional material weaknesses:

• Accounting closing process with respect to the review of the consolidated and separate financial statements: we identified deficiencies including controls over the review, approval and documentation related to some journal entries. Specifically, effective controls were not in place to verify and properly approve that journal entries were prepared with sufficient supporting documentation, that there was adequate segregation of duties between preparation and approval, and that the spreadsheets used to support the journal entries were in compliance with IFRS documentation requirements.

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• Deficiencies in the design and operational effectiveness of controls over segregation of duties: we identified deficiencies in the process to ensure that potential conflicted individuals were not involved in activities related to their conflicts or that such activities were monitored by appropriate individuals using complete and accurate information.

• Deficiencies in the design of controls over the timely accounting for signed contracts: we identified deficiencies in the design of the controls, including entity-level controls and process-level controls to prevent or detect material inaccuracies, related to the accounting for the contracts signed with certain companies. Nevertheless, there were no significant impacts in our consolidated financial statements.

• Deficiencies in the design and operational effectiveness of controls established with respect to the recognition of revenue: we identified deficiencies related to procedures to calculate and prepare the supporting documentation for the accounting for revenue recognition, including construction contract revenues and contingent revenues. Also, we identified deficiencies in the design and operational effectiveness of controls over the accounting of inventory and inventory journal entries in certain entities.

Information and Communication

We identified deficiencies in the controls over information and communications. Specifically, we identified deficiencies in the process to verify all information necessary to be provided to the accounting department to achieve complete and accurate financial reporting from other operating departments were provided completely, accurately and on a timely basis.

Monitoring and Evidential Matter

Deficiencies in operational effectiveness of controls over SOX compliance: we identified deficiencies in design and operational effectiveness of the monitoring controls related to the design and operational effectiveness of our internal controls. Specifically, we did not maintain personnel and systems within the internal audit function that were sufficient to ensure the adequate monitoring of control activities. This control deficiency resulted in some instances of the internal audit function’s failure to identify or sufficiently follow through on the analysis of certain inappropriate accounting decisions and changes in accounting methodology.

We did not consistently maintain sufficient evidential matter, including documentation, to provide reasonable support for management’s assessment of the effectiveness of internal control over financial reporting.

Conclusion

These material weaknesses resulted in adjustments to the accounting for revenue and accounts receivable, as well as other adjustments and reclassifications, including adjustments to intercompany transactions. Additionally, these material weaknesses could result in other misstatements in our financial results and disclosures, which could result in a material misstatement to our annual or interim consolidated financial statements not being prevented or detected. Because of these material weaknesses, management concluded that we did not maintain effective internal control over financial reporting as of December 31, 2017, based on criteria in Internal Control-Integrated Framework (2013) issued by the COSO.

Moore Stephens SCAI S.A. (a member firm of Moore Stephens International), an independent registered public accounting firm, which has audited and reported on the consolidated financial statements as of and for the year ended December 31, 2017 contained in this annual report on Form 20-F, has issued an attestation report on our internal control over financial reporting as of December 31, 2017.

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Remediation Plan

We continue to evaluate our internal control over financial reporting and are taking remedial actions to address the material weaknesses that have been identified.

Our board of directors established a new Risk, Compliance and Sustainability Committee in March 2017, which is charged with, among other things, risk management. We believe that the role of the new committee reflects, along with the role of the Audit and Process Committee and our senior management, the priority that our company gives to the improvement of our enterprise and fraud risk management, internal control environment, and will reinforce from the top of our company a culture of compliance with internal controls across our subsidiaries and other entities.

In addition, our internal audit function is in the process of being reorganized, and a new Chief Executive Auditor was hired in January 2018, reporting to Audit and Process Committee. We are in the process of hiring personnel with the appropriate training and experience to ensure that our internal control system and processes are executed in an adequate and timely manner.

Our management is communicating to employees the need for effective internal control over financial reporting and is having meetings with process owners to reinforce the purpose and importance of controls, review and analyze the identified deficiencies, and promote top-down ownership and accountability over the control environment. Also, we will be conducting a formal training program, including related to IFRS, at our subsidiaries with employees responsible for our internal controls to ensure they have an appropriate level of knowledge of and build the experience with those controls, specifically, those relating to monitoring, evaluation and accountability, in order to execute their control responsibilities.

We are in the process of reviewing our employees’ access to our accounting and key systems and we are designing and implementing new information technology tools in order to improve our control process over the segregation of accounting duties and for the proper custody and recording of all supporting documentation, including information related to contracts.

Furthermore, moving forward, we will continue to monitor and assess our remediation activities to address the material weaknesses discussed above through remediation as soon as practicable.

The implementation of these measures may not fully address the material weaknesses in our internal control over financial reporting described above. Such material weaknesses have not been, nor can we ensure by what date they will be, fully remediated. The process of designing and implementing an effective reporting system is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environments and to expend significant resources to maintain a financial reporting system that is adequate to satisfy our reporting obligations. See “Item 3. Key Information— D. Risk Factors — We have identified material weaknesses in our internal control over financial reporting, and if we cannot maintain effective internal controls or provide reliable financial and other information in the future, investors may lose confidence in the reliability of our consolidated financial statements, which could result in a decrease in the value of our ADSs.” If we fail to implement and maintain an effective system of internal control, we may be unable to accurately report our results of operations or prevent fraud or fail to meet our reporting obligations, and investor confidence and the market price of our ADSs may be materially and adversely affected.

C.    Attestation Report of the Registered Public Accounting Firm

See Item 18. Financial Statements.

D.    Changes in Internal Control Over Financial Reporting

We identified material weaknesses in our internal control as described in Item 15.B. above. There were no other changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the year ended December 31, 2017 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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ITEM 16. [RESERVED]

ITEM 16A AUDIT COMMITTEE FINANCIAL EXPERT

Mr. Manuel del Rio and Mr. José Antonio Rosas each qualify as an “audit committee financial expert” and are independent in accordance with SEC rules.

Item 16B CODE OF BUSINESS CONDUCT AND ETHICS

We are committed to responsible, honest, transparent and ethical conduct. Our management system enables us to communicate our corporate values and principles to all levels of the organization, offers a confidential reporting mechanism (canal ético), and has a governance structure to investigate and remedy potential breaches of our code.

We have adopted a code of conduct and it applies to our directors, officers and employees. Our code of conduct is available on our website www.granaymontero.com.pe. Information on our website is not incorporated by reference in this annual report.

If we make any substantive amendment to the code of conduct or if we grant any waiver, including any implicit waiver, from a provision of the code of conduct that applies to our chief executive officer, chief financial officer or controller, we will disclose the nature of such amendment or waiver in our website or in our next Form 20-F to be filed with the SEC to the extent required under applicable rules. During the year ended December 31, 2017, no such amendment was made or waiver granted.

In 2015, we reinforced our ethics management system as a preventative measure. Our board of directors approved an anti-corruption compliance program, which establishes the leadership and commitment of senior management on this matter, defines supervisory bodies and the reporting lines, establishes new policies and procedures, identifies additional internal controls, and proposes training plans for the entire organization. This program applies to all companies in the group and to any third parties that may act on our behalf. Within the program, the anti-corruption policy provides the guidelines required to avoid acts of corruption in our business or in our relations with any state entity, and reinforces the obligation to have accounting records and internal controls.

During 2016, our efforts regarding compliance and prevention were focused on the deployment of the anti-corruption program across our companies. As part of this process, we implemented in our web-based platform, a training program with respect to the principal anti-corruption guidelines. Additionally, we have included anti-corruption matters in our board of directors’ periodic agenda, and we also have established a compliance officer who reports to the Audit and Processes Committee. We continue performing due diligence in connection with acquisitions, and used the “Know Your Partner” initiative (2015), through which preventive assessments were performed on potential strategic partners, suppliers and potential recipients of grants in 2016. In this regard, anti-corruption clauses were included in contracts with suppliers and a specific procedure was implemented for charitable donations.

In March 2017, our board of directors created the Risk, Compliance and Sustainability Committee to enhance our ethics and compliance program. That committee then created the Risk and Compliance Corporate Function, which reports to the committee. A new Chief Risk and Compliance Officer for the group was appointed on July 1, 2017 to enhance and develop further our ethics and compliance program. Our board of directors also appointed an External Advisory Council to provide the Board with independent advice and recommendations on corporate governance and compliance matters. The first meeting was held in Lima on October 10, 2017. In 2017, we launched training sessions, combined with specialized courses addressed to middle and senior managers as well as to all members of our board of directors.

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On February 5, 2018 we launched a revised, risk-based Due Diligence Corporate Policy with respect to our employees and existing and potential third-parties. The first wave began immediately and aims to renew the due diligence process with our partners and customers. The second wave, to be launched in July 2018, aims to renew the due diligence process with our suppliers and sub-contractors. In the second half of 2018, we intend to continue to reinforce our compliance program by launching new projects, including a revised policy on donations, a revised policy on gifts, hospitality and entertainment, and a strengthened manual on relationships with government officials.

On the May 11, 2018, the Chairman of the Board of Directors launched, and communicated to the organization, the group’s new Code of Business Conduct. In December 2017, the Group had launched a project to renew our Code of Ethics. We brought together, in a single and enhanced document, our previous Ethics Charter and our Code of Conduct, and complemented it with additional relevant topics in accordance with benchmarks from peer organizations, best practices and guidance from international organizations. The renewed Code of Ethics was written by the group’s senior management, with the support of the Corporate Risk and Compliance team. We plan to launch revised training programs on values, conduct, the compliance program and our confidential reporting mechanism in July 2018.

ITEM 16C PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit and Non-Audit Fees

The following table sets forth the fees billed to the company by our current independent registered public accounting firm, Moore Stephens, in connection with its audit of our annual consolidated financial statements for the fiscal years ended December 31, 2016 and 2017, which are included in this report.

	For the year ended December 31,
	2016		2017
	(in thousands of S/.)
Audit fees		5,107.2		4,932.4
Audit-related fees		—		—
Tax fees		—		—
All other fees		—		—
Total fees		5,108.2		4,932.4

The following table sets forth the fees billed to the company by our former independent registered public accounting firm, PwC, in connection with audit procedures in connection with our annual consolidated financial statements for the year ended December 31, 2016. See “Item 16F. Change in Registrant’s Certifying Accountant.”

	For the year ended December 31, 2016
	(in thousands of S/.)
Audit fees		8,703.4
Audit-related fees		276.7
Tax fees		1,945.9
All other fees		1,040.4
Total fees		11,966.4

Audit fees in the tables above are the aggregate fees billed and billable by our current or former independent auditor, as the case may be, in connection with the audit of, or audit procedures in connection with, our annual consolidated financial statements and review of our internal controls.

Audit-related fees in the tables above relate to accounting consultation.

Tax fees in the tables above are fees billed relating to tax compliance services.

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Our Audit and Process Committee is responsible for the oversight of the independent auditors and has established pre-approval procedures for the engagement of our registered public accounting firm for audit and non-audit services. Such services can only be contracted if they are approved by the Audit and Process Committee, they comply with the restrictions provided under applicable rules and they do not jeopardize the independence of our auditors. All services provided by our current independent auditor for our fiscal years ended December 31, 2016 and 2017 were pre-approved by our Audit and Process Committee.

ITEM 16D EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

None.

ITEM 16E PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

None.

ITEM 16F CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT

(a) Dismissal of Independent Registered Public Accounting Firm

The company and Gaveglio, Aparicio y Asociados S.C. de R.L., a member firm of PricewaterhouseCoopers (“PwC”) determined that PwC lacked independence from the company with respect to the company’s financial statements for the fiscal year 2016 as a consequence of non-audit services provided by PwC to the company beginning in the fourth quarter of the fiscal year 2016. The services related to the company’s testing of internal controls in accordance with the Sarbanes-Oxley Act. As a result, the company and PwC mutually agreed on October 4, 2017 to the company’s dismissal of PwC as auditor of the company’s consolidated financial statements for the fiscal year 2016. The company’s Audit and Process Committee and Board of Directors participated in and approved the decision to dismiss PwC and recommended the appointment of the company’s new independent registered public accounting firm.

(b) New Audit of 2015

The independence issue described above did not affect the independence of PwC with respect to PwC’s audit of the company’s consolidated financial statements for the fiscal years 2014 and 2015. The audit reports of PwC on the company’s consolidated financial statements for the fiscal years 2014 and 2015 did not contain any adverse opinion or a disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles.

On or about March 23, 2018, PwC informed the company that it would not authorize the use of its 2015 audit opinion in connection with the filing of the company’s annual report on Form 20-F without conducting substantial additional procedures. PwC could not give any assurance as to when it could complete such additional procedures and stated it could take several months. PwC informed the company that professional standards required the performance of substantial additional procedures with respect to the 2015 consolidated financial statements because of publicly reported procedural developments since the firm’s dismissal in October 2017 concerning the cumulative effect of the decision of the Peruvian court to include three former executives of the company and the company in its ongoing criminal investigation relating to projects involving Odebrecht, coupled with a 2015 agreement that was first provided to PwC in May 2017 while PwC was conducting the audit for the fiscal year 2016.

On April 17, 2018, to avoid further delay, the company appointed Moore Stephens SCAI S.A. (“Moore Stephens”) as its new independent registered public accounting firm for the fiscal year 2015 and announced that the previously issued consolidated financial statements of the company for the 2015 fiscal year (and the related audit opinion of PwC) should no longer be relied upon. Among other factors, as the company’s current auditor, Moore Stephens, was in the process of completing its audit work with respect to the 2016 fiscal year (see (d) below) and thus, in the company’s view, could more timely and efficiently complete the 2015 audit processes as well.

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(c) Disagreements and Reportable Events

During the 2015 and 2016 fiscal years and the subsequent interim period through October 4, 2017, there were no “disagreements” (as described in Item 16.F(a)(1)(iv) of Form 20-F) with PwC on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedures, which disagreements, if not resolved to the satisfaction of PwC, would have caused them to make reference thereto in their reports on the financial statements for such years.

During the 2015 and 2016 fiscal years and the subsequent interim period through October 4, 2017, there were “reportable events” (as that term is defined in Item 16.F(a)(1)(v) of Form 20-F) as follows: (i) as disclosed in the company’s annual report on Form 20-F for the 2015 fiscal year, the company’s management and PwC each concluded that the company did not maintain effective internal control over financial reporting as of December 31, 2015, because of a material weakness related to inadequate controls over segregation of duties in certain activities in some subsidiaries; (ii) PwC advised the company that the company did not maintain effective internal control over financial reporting as of December 31, 2016 as a result of the material weaknesses described in Item 15.B of the company’s annual report on Form 20-F for the fiscal year ended December 31, 2016, except that the following items were not advised by PwC: (1) inadequate oversight by the Audit Committee regarding the role of the Internal Audit Department, (2) a control environment not always sufficient to ensure adequate enterprise risk management (including fraud risk), and (3) the conclusion which states that there were no significant impacts in our consolidated financial statements because clarifying addendums were signed by the parties; and (iii) at the time of PwC’s dismissal, as described in (a) above, PwC’s audit of the consolidated financial statements for the fiscal year 2016 was not complete, including the final resolution of matters related to the accounting for two contracts and any related implications from the finalization of the internal investigation conducted by the company.

The Audit and Process Committee of the company discussed the subject matter of each of the reportable events with PwC. The company authorized PwC to fully respond to the inquiries of the successor accountant concerning these reportable events.

The company has requested that PwC furnish it with a letter addressed to the SEC stating whether or not it agrees with the above statements. A copy of such letter, dated May 15, 2018, is filed as Exhibit 16.01 to the company’s annual report on Form 20-F for the fiscal year ended December 31, 2016.

(c) Appointment of New Independent Registered Public Auditing Firm

A shareholders’ meeting of the company held on November 2, 2017 appointed Moore Stephens as the new independent auditor for the fiscal year 2016.

On April 17, 2018, the Audit and Process Committee of the company appointed Moore Stephens to audit the 2015 fiscal year. The shareholders’ meeting of the company held on May 14, 2018 ratified the appointment.

During the 2015 and 2016 fiscal years and the subsequent interim period through April 16, 2018, the company did not consult with Moore Stephens regarding either (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the company’s consolidated financial statements, other than in connection with the ongoing audit work by Moore Stephens of the company’s consolidated financial statements for the 2016 fiscal year; or (ii) any matter that was either the subject of a disagreement or a reportable event.

Item 16G CORPORATE GOVERNANCE

We are a “foreign private issuer” within the meaning of the New York Stock Exchange corporate governance standards. Under New York Stock Exchange rules, a foreign private issuer may elect to comply with the practices of its home country and not to comply with certain corporate governance requirements applicable to U.S. companies with securities listed on the exchange.

200

We currently follow certain Peruvian practices concerning corporate governance and intend to continue to do so. There are significant differences in the Peruvian corporate governance practices as compared to those followed by United States domestic companies under the New York Stock Exchange’s listing standards.

The New York Stock Exchange listing standards provide that the board of directors of a U.S. listed company must have a majority of independent directors. Under Peruvian corporate governance practices, a Peruvian company is not required to have a majority of independent members on its board of directors. However we currently have a majority of independent directors on our board in accordance with Peruvian and NYSE independence standards. Our Audit and Process Committee is comprised of independent directors under SEC rules applicable to foreign private issuers. Additionally, our Human Resources Management Committee is currently comprised of independent directors, while our Investment Committee and our Risk, Compliance and Sustainability Committee are currently comprised of a majority of independent directors, in each case under Peruvian and NYSE independence standards. Our Human Resources Management Committee is not the equivalent of, or wholly comparable to, a U.S. compensation committee.

The listing standards for the New York Stock Exchange also require that U.S. listed companies have a nominating/corporate governance committee and a compensation committee (in addition to an audit committee). Each of these committees must consist solely of independent directors and must have a written charter that addresses certain matters specified in the listing standards. Under Peruvian law, a Peruvian company may, but is not required to, form such committees, which may be composed partially or entirely of non-independent directors. Accordingly, we do not have a nominating/corporate governance committee and a compensation committee.

In addition, New York Stock Exchange rules require the independent non-executive directors of U.S. listed companies to meet on a regular basis without management being present. There is no similar requirement under Peruvian law, accordingly, we do not have such meetings.

The New York Stock Exchange’s listing standards also require U.S. listed companies to adopt and disclose corporate governance guidelines. In July 2002, the Peruvian Securities Commission and a committee comprised of regulatory agencies and associations prepared and published a list of suggested non-mandatory corporate governance guidelines called the “Principles of Good Governance for Peruvian Companies.” These principles are disclosed on the Peruvian Securities Commission web page http://www.smv.gob.pe and the Lima Stock Exchange web page http://www.bvl.com.pe. Although we have implemented a number of these measures and have been selected to form part of the Best Corporate Governance Practices Index of the Lima Stock Exchange, we are not required to comply with the referred corporate governance guidelines by law or regulation.

ITEM 16H MINE SAFETY DISCLOSURE

Not applicable.

ITEM 17. FINANCIAL STATEMENTS

Not applicable.

ITEM 18. FINANCIAL STATEMENTS

See our consolidated financial statements beginning at page F-1 of this annual report. See also Oil and Gas Supplementary Schedules beginning on page S-1.

ITEM 19. EXHIBITS

The agreements and other documents filed as exhibits to this annual report are not intended to provide factual information or other disclosure other than with respect to the terms of the agreements or other documents themselves, and you should not rely on them for that purpose. In particular, any representations and warranties made by us in these agreements or other documents were made solely within the specific context of the relevant agreement or document and for the benefit of the other parties to the agreements and they may not describe the actual state of affairs as of the date they were made or at any other time.

201

Exhibit Number	Description
1.01*	By-Laws of the Registrant, as currently in effect
2.01**	Registrant’s Form of American Depositary Receipt
2.02***	Form of Deposit Agreement among the Registrant, JP Morgan Chase Bank, N.A., as depositary, and the holders from time to time of American depositary shares issued thereunder
8.01	Subsidiaries of the Registrant
10.01****	Credit Agreement, dated as of December  10, 2015, by and among, inter alia, the company, as borrower, and Credit Suisse AG, Cayman Islands Branch, as administrative agent.
10.01.1****	Amendment No. 1, dated as of December 22, 2015, to the Credit Agreement, dated as of December  10, 2015, by and among, inter alia, the company, as borrower, and Credit Suisse AG, Cayman Islands Branch, as administrative agent.
10.01.2****	Amendment No. 2, dated as of February 1, 2016, to the Credit Agreement, dated as of December  10, 2015, by and among, inter alia, the company, as borrower, and Credit Suisse AG, Cayman Islands Branch, as administrative agent.
10.01.3****	Amendment No. 3, dated as of February 12, 2016, to the Credit Agreement, dated as of December  10, 2015, by and among, inter alia, the company, as borrower, and Credit Suisse AG, Cayman Islands Branch, as administrative agent.
10.01.4****	Amendment No. 4, dated as of February 29, 2016, to the Credit Agreement, dated as of December  10, 2015, by and among, inter alia, the company, as borrower, and Credit Suisse AG, Cayman Islands Branch, as administrative agent.
10.01.5****	Amendment No. 5, dated as of April 15, 2016, to the Credit Agreement, dated as of December  10, 2015, by and among, inter alia, the company, as borrower, and Credit Suisse AG, Cayman Islands Branch, as administrative agent.
10.01.6****	Waiver and Amendment No. 6, dated as of September 15, 2016, to the Credit Agreement, dated as of December  10, 2015, by and among, inter alia, the company, as borrower, and Credit Suisse AG, Cayman Islands Branch, as administrative agent.
10.01.7****	Amendment No. 7, dated as of December 16, 2016, to the Credit Agreement, dated as of December  10, 2015, by and among, inter alia, the company, as borrower, and Credit Suisse AG, Cayman Islands Branch, as administrative agent.
10.01.8**** +	Amendment No. 8, dated as of June 27, 2017, to the Credit Agreement, dated as of December  10, 2015, by and among, inter alia, the company, as borrower, and Credit Suisse AG, Cayman Islands Branch, as administrative agent.
10.01.9****	Amendment No. 9, dated as of October 12, 2017, to the Credit Agreement, dated as of December  10, 2015, by and among, inter alia, the company, as borrower, and Credit Suisse AG, Cayman Islands Branch, as administrative agent.
10.02****	Loan Agreement, dated as of June  27, 2017, by and among, inter alia, the company, as borrower, and Natixis, New York Branch, as administrative agent.
10.02.1****	Waiver and Amendment, dated as of March 26, 2018, to the Credit Agreement, dated as of June  27, 2017, by and among, inter alia, the company, as borrower, and Natixis, New York Branch, as administrative agent.

202

Exhibit Number	Description
10.03****	English translation of Financial Stability Framework Agreement, dated as of July  31, 2017, by and among, inter alia, the company, as borrower, and Scotiabank Perú S.A.A., Banco Internacional del Perú S.A.A., BBVA Banco Continental, Banco de Crédito del Perú, Citibank del Perú S.A. and Citibank, N.A., as lenders.
10.04****	English translation of Section 20 of Concession Agreement, dated as of July  22, 2014, by and among the Peruvian Ministry of Energy and Mines, as contracting authority and the concessionaire party thereto.
10.05****	English translation of Memorandum of Understanding, dated as of September  26, 2017, by and among the company, Negocios de Gas S.A., Enagás S.A., Odebrecht S.A., and Inversiones en Infraestructura de Transporte por Ductos S.A.C.
10.05.1****	English translation of Rights Subordination Agreement, dated as of April  29, 2016, by and among Odebrecht Latinvest Peru Ductos, S.A., Odebrecht S.A., Enagás, S.A., the company, Negocios de Gas S.A., Inversiones en Infraestructura de Transporte por Ductos S.A.C., and Gasoducto Sur Peruano S.A.
10.05.1.1****	English translation of Addendum No. 1, dated as of June  24, 2016, to the Rights Subordination Agreement, dated as of April  29, 2016, by and among, inter alia, Odebrecht Latinvest Peru Ductos, S.A., Odebrecht S.A., Enagás, S.A., the company, GyM S.A., Negocios de Gas S.A., Inversiones en Infraestructura de Transporte por Ductos S.A.C., Gasoducto Sur Peruano S.A., Odebrecht Perú Ingeniería y Construcción S.A.C., and Constructora Norberto Odebrecht S.A., Sucursal del Perú.
10.05.1.2****	English translation of Addendum No. 2 and Assignment Agreement, dated as of August  11, 2016, to the Rights Subordination Agreement, dated as of April  29, 2016, by and among, inter alia, Odebrecht Latinvest Peru Ductos, S.A., Odebrecht S.A., Enagás, S.A., the company, GyM S.A., Negocios de Gas S.A., Inversiones en Infraestructura de Transporte por Ductos S.A.C., Gasoducto Sur Peruano S.A., Odebrecht Perú Ingeniería y Construcción S.A.C., and Constructora Norberto Odebrecht S.A., Sucursal del Perú.
10.05.1.3****	English translation of Modification to Addendum No. 2 and Assignment Agreement, dated as of October  25, 2016, to the Rights Subordination Agreement, dated as of April  29, 2016, by and among, inter alia, Odebrecht Latinvest Peru Ductos, S.A., Odebrecht S.A., Enagás, S.A., the company, GyM S.A., Negocios de Gas S.A., Inversiones en Infraestructura de Transporte por Ductos S.A.C., Gasoducto Sur Peruano S.A., Odebrecht Perú Ingeniería y Construcción S.A.C., and Constructora Norberto Odebrecht S.A., Sucursal del Perú.
12.01	Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act
12.02	Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act
13.01*****	Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
13.02*****	Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
16.01****	Letter dated May  15, 2018 by Gaveglio, Aparicio y Asociados S.C. de R.L., a member firm of PricewaterhouseCoopers, as required by Item 16F of Form 20-F.
101. INS	XBRL Instance Document
101. SCH	XBRL Taxonomy Extension Schema Document
101. CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101. DEF	XBRL Taxonomy Extension Definition Linkbase Document

203

Exhibit Number	Description
101. LAB	XBRL Taxonomy Extension Label Linkbase Document
101. PRE	XBRL Taxonomy Extension Presentation Linkbase Document

* Incorporated herein by reference to exhibit 1.01 of the registrant’s Form 20-F (File No. 333-172855) filed with the SEC on April 30, 2014.

** Incorporated herein by reference to exhibit 4.1 to the registrant’s registration statement on Form F-1 (File No. 333-178922) filed with the SEC on June 4, 2013.

*** Incorporated herein by reference to exhibit 4.2 to the registrant’s registration statement on Form F-1 (File No. 333-178922) filed with the SEC on June 4, 2013.

**** Incorporated herein by reference to the registrant’s Form 20-F (File No. 333-172855) filed with the SEC on May 15, 2018.

***** This certification will not be deemed “filed” for purposes of Section 18 of the Exchange Act (15 U.S.C. §78r), or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the Registrant specifically incorporates it by reference.

+ Confidential treatment requested.

204

EXHIBIT INDEX

Exhibit Number	Description
1.01*	By-Laws of the Registrant, as currently in effect
2.01**	Registrant’s Form of American Depositary Receipt
2.02***	Form of Deposit Agreement among the Registrant, JP Morgan Chase Bank, N.A., as depositary, and the holders from time to time of American depositary shares issued thereunder
8.01	Subsidiaries of the Registrant
10.01****	Credit Agreement, dated as of December  10, 2015, by and among, inter alia, the company, as borrower, and Credit Suisse AG, Cayman Islands Branch, as administrative agent.
10.01.1****	Amendment No. 1, dated as of December 22, 2015, to the Credit Agreement, dated as of December  10, 2015, by and among, inter alia, the company, as borrower, and Credit Suisse AG, Cayman Islands Branch, as administrative agent.
10.01.2****	Amendment No. 2, dated as of February 1, 2016, to the Credit Agreement, dated as of December  10, 2015, by and among, inter alia, the company, as borrower, and Credit Suisse AG, Cayman Islands Branch, as administrative agent.
10.01.3****	Amendment No. 3, dated as of February 12, 2016, to the Credit Agreement, dated as of December  10, 2015, by and among, inter alia, the company, as borrower, and Credit Suisse AG, Cayman Islands Branch, as administrative agent.
10.01.4****	Amendment No. 4, dated as of February 29, 2016, to the Credit Agreement, dated as of December  10, 2015, by and among, inter alia, the company, as borrower, and Credit Suisse AG, Cayman Islands Branch, as administrative agent.
10.01.5****	Amendment No. 5, dated as of April 15, 2016, to the Credit Agreement, dated as of December  10, 2015, by and among, inter alia, the company, as borrower, and Credit Suisse AG, Cayman Islands Branch, as administrative agent.
10.01.6****	Waiver and Amendment No. 6, dated as of September 15, 2016, to the Credit Agreement, dated as of December  10, 2015, by and among, inter alia, the company, as borrower, and Credit Suisse AG, Cayman Islands Branch, as administrative agent.
10.01.7****	Amendment No. 7, dated as of December 16, 2016, to the Credit Agreement, dated as of December  10, 2015, by and among, inter alia, the company, as borrower, and Credit Suisse AG, Cayman Islands Branch, as administrative agent.
10.01.8**** +	Amendment No. 8, dated as of June 27, 2017, to the Credit Agreement, dated as of December  10, 2015, by and among, inter alia, the company, as borrower, and Credit Suisse AG, Cayman Islands Branch, as administrative agent.
10.01.9****	Amendment No. 9, dated as of October 12, 2017, to the Credit Agreement, dated as of December  10, 2015, by and among, inter alia, the company, as borrower, and Credit Suisse AG, Cayman Islands Branch, as administrative agent.
10.02****	Loan Agreement, dated as of June  27, 2017, by and among, inter alia, the company, as borrower, and Natixis, New York Branch, as administrative agent.
10.02.1****	Waiver and Amendment, dated as of March 26, 2018, to the Credit Agreement, dated as of June  27, 2017, by and among, inter alia, the company, as borrower, and Natixis, New York Branch, as administrative agent.

Exhibit Number	Description
10.03****	English translation of Financial Stability Framework Agreement, dated as of July  31, 2017, by and among, inter alia, the company, as borrower, and Scotiabank Perú S.A.A., Banco Internacional del Perú S.A.A., BBVA Banco Continental, Banco de Crédito del Perú, Citibank del Perú S.A. and Citibank, N.A., as lenders.
10.04****	English translation of Section 20 of Concession Agreement, dated as of July  22, 2014, by and among the Peruvian Ministry of Energy and Mines, as contracting authority and the concessionaire party thereto.
10.05****	English translation of Memorandum of Understanding, dated as of September  26, 2017, by and among the company, Negocios de Gas S.A., Enagás S.A., Odebrecht S.A., and Inversiones en Infraestructura de Transporte por Ductos S.A.C.
10.05.1****	English translation of Rights Subordination Agreement, dated as of April  29, 2016, by and among Odebrecht Latinvest Peru Ductos, S.A., Odebrecht S.A., Enagás, S.A., the company, Negocios de Gas S.A., Inversiones en Infraestructura de Transporte por Ductos S.A.C., and Gasoducto Sur Peruano S.A.
10.05.1.1****	English translation of Addendum No. 1, dated as of June  24, 2016, to the Rights Subordination Agreement, dated as of April  29, 2016, by and among, inter alia, Odebrecht Latinvest Peru Ductos, S.A., Odebrecht S.A., Enagás, S.A., the company, GyM S.A., Negocios de Gas S.A., Inversiones en Infraestructura de Transporte por Ductos S.A.C., Gasoducto Sur Peruano S.A., Odebrecht Perú Ingeniería y Construcción S.A.C., and Constructora Norberto Odebrecht S.A., Sucursal del Perú.
10.05.1.2****	English translation of Addendum No. 2 and Assignment Agreement, dated as of August  11, 2016, to the Rights Subordination Agreement, dated as of April  29, 2016, by and among, inter alia, Odebrecht Latinvest Peru Ductos, S.A., Odebrecht S.A., Enagás, S.A., the company, GyM S.A., Negocios de Gas S.A., Inversiones en Infraestructura de Transporte por Ductos S.A.C., Gasoducto Sur Peruano S.A., Odebrecht Perú Ingeniería y Construcción S.A.C., and Constructora Norberto Odebrecht S.A., Sucursal del Perú.
10.05.1.3****	English translation of Modification to Addendum No. 2 and Assignment Agreement, dated as of October  25, 2016, to the Rights Subordination Agreement, dated as of April  29, 2016, by and among, inter alia, Odebrecht Latinvest Peru Ductos, S.A., Odebrecht S.A., Enagás, S.A., the company, GyM S.A., Negocios de Gas S.A., Inversiones en Infraestructura de Transporte por Ductos S.A.C., Gasoducto Sur Peruano S.A., Odebrecht Perú Ingeniería y Construcción S.A.C., and Constructora Norberto Odebrecht S.A., Sucursal del Perú.
12.01	Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act
12.02	Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act
13.01*****	Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
13.02*****	Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
16.01****	Letter dated May  15, 2018 by Gaveglio, Aparicio y Asociados S.C. de R.L., a member firm of PricewaterhouseCoopers, as required by Item 16F of Form 20-F.
101. INS	XBRL Instance Document
101. SCH	XBRL Taxonomy Extension Schema Document
101. CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101. DEF	XBRL Taxonomy Extension Definition Linkbase Document
101. LAB	XBRL Taxonomy Extension Label Linkbase Document
101. PRE	XBRL Taxonomy Extension Presentation Linkbase Document

* Incorporated herein by reference to exhibit 1.01 of the registrant’s Form 20-F (File No. 333-172855) filed with the SEC on April 30, 2014.

** Incorporated herein by reference to exhibit 4.1 to the registrant’s registration statement on Form F-1 (File No. 333-178922) filed with the SEC on June 4, 2013.

*** Incorporated herein by reference to exhibit 4.2 to the registrant’s registration statement on Form F-1 (File No. 333-178922) filed with the SEC on June 4, 2013.

**** Incorporated herein by reference to the registrant’s Form 20-F (File No. 333-172855) filed with the SEC on May 15, 2018.

***** This certification will not be deemed “filed” for purposes of Section 18 of the Exchange Act (15 U.S.C. §78r), or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the Registrant specifically incorporates it by reference.

+ Confidential treatment requested

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on Form 20-F on its behalf.

GRAÑA Y MONTERO S.A.A.
By:	/s/ Luis Francisco Díaz Olivero
Name:	Luis Francisco Díaz Olivero
Title:	Chief Executive Officer
By:	/s/ Monica Miloslavich
Name:	Monica Miloslavich
Title:	Chief Financial Officer

Date: July 2, 2018

(Free translation from the original in Spanish)

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

GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2015, 2016 AND 2017

GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2015, 2016 AND 2017

CONTENTS	Page
Report of Independent Registered Public Accounting		F-1 -F-2
Consolidated Statement of Financial Position		F-3
Consolidated Statement of Income		F-4
Consolidated Statement of Comprehensive Income		F-5
Consolidated Statement of Changes in Equity		F-6
Consolidated Statement of Cash Flows		F-7 - F-8
Notes to the Consolidated Financial Statements		F-9 - F-108

S/ = Peruvian Sol

US$ = United States dollar

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Graña y Montero S.A.A. and its subsidiaries

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated statements of financial position of Graña y Montero S.A.A. and its subsidiaries (the “Company”) as of December 31, 2017 and 2016 and the related consolidated statements of income, comprehensive income, changes in equity, and cash flows for each of the three years in the period ended December 31, 2017, and the related notes. In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016 and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2017, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board. Also, in our opinion, the Company did not maintain, in all material respects, effective internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control - Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) because the following material weaknesses in internal control over financial reporting existed as of that date:

• Lack of a formally established and documented process for enterprise and fraud risk management.

• Deficiencies in the design and operational effectiveness of controls over segregation of duties to help ensure that personnel with potential conflicts were not involved in incompatible activities.

• Deficiencies in the design and operational effectiveness of the controls established in the accounting closing process with respect to the review of the consolidated and separate financial statements, including controls over the review, approval and documentation related to journal entries.

• Deficiencies in the design and operational effectiveness of controls established with respect to the recognition of revenue and determination of related estimates, including construction contract revenues and contingent revenues, and the accounting for inventory.

• Deficiencies in the design of controls over the timely accounting for signed contracts.

• Lack of adequate supervision, monitoring and follow-up by the Audit Committee regarding the role of the Internal Audit Department.

• Deficiencies in operational effectiveness of controls over SOX compliance.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. The material weaknesses referred to above are described in Management Report on Internal Control over Financial Reporting appearing under Item 15. We considered these material weaknesses in determining the nature, timing, and extent of audit tests applied in our audit of the 2017 consolidated financial statements, and our opinion regarding the effectiveness of the Company’s internal control over financial reporting does not affect our opinion on those consolidated financial statements.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

F-1

Emphasis of Certain Matters

As discussed in Note 1 to the financial statements, Peruvian prosecutors included three former executives of the Company in an investigation for the alleged crimes of collusion and money laundering in relation to the IIRSA case. While the Superior Court has ruled in favor of not including the Company in this investigation, Peruvian authorities have requested that the Company be included as a third party responsible on a civil basis on this and another matter. The Note also states that GyM S.A. (subsidiary of the Company) is being investigated by a Peruvian regulatory entity for the existence of an alleged cartel called the Constructors’ Club. The Company’s management believes these cases will be resolved in a manner favorable to their interests, however we are not able to anticipate the final result of those procedures and the possible contingencies which may arise.

Basis for Opinion

The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the Management’s Report on Internal Control over Financial Reporting referred to above. Our responsibility is to express opinions on these financial statements and on the Company’s internal control over financial reporting based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

/s/ Moore Stephens SCAI S.A.

Moore Stephens SCAI S.A.

We have served as the Company’s auditor since 2017.

Bogota, Colombia

July 2, 2018

F-2

GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

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

ASSETS
			As at December 31,
	Note		2016		2017
Current assets
Cash and cash equivalent		9		606,950		626,180
Financial asset at fair value through profit or loss				352		181
Trade accounts receivables, net		11		1,031,270		992,724
Work in progress, net		12		680,929		584,753
Accounts receivable from related parties		13		181,664		100,752
Other accounts receivable		14		649,516		765,445
Inventories, net		15		1,104,293		770,711
Prepaid expenses				51,301		33,478
				4,306,275		3,874,224
Non-current assets classified as held for sale				22,385		17,722
Total current assets				4,328,660		3,891,946
Non-current assets
Long-term trade accounts receivable, net		11		667,519		848,590
Long-term work in progress, net		12		197,586		87,410
Long-term accounts receivable from related parties		13		531,384		773,930
Prepaid expenses				23,526		38,082
Other long-term accounts receivable		14		357,952		470,852
Investments in associates and joint ventures		16		389,759		268,671
Investment property				49,357		45,687
Property, plant and equipment, net		17		1,113,599		865,735
Intangible assets, net		18		960,286		940,070
Deferred income tax asset		25		427,008		436,697
Total non-current assets				4,717,976		4,775,724
Total assets				9,046,636		8,667,670

LIABILITIES AND EQUITY
			As at December 31,
	Note		2016			2017
Current liabilities
Borrowings		19		1,961,043			1,056,764
Bonds		20		46,091			36,655
Trade accounts payable		21		1,276,617			1,453,046
Accounts payable to related parties		13		80,217			55,174
Current income tax				62,160			85,543
Other accounts payable		22		1,096,307			848,500
Provisions		23		14,531			13,503
Total current liabilities				4,536,966			3,549,185
Non-current liabilities
Borrowings		19		419,395			633,299
Long-term bonds		20		921,623			910,912
Other long-term accounts payable		22		512,803			852,473
Long-term accounts payable to related parties		13		65,320			25,954
Provisions		23		26,542			33,914
Derivative financial instruments				1,081			383
Deferred income tax liability		25		73,169			72,472
Total non-current liabilities				2,019,933			2,529,407
Total liabilities				6,556,899			6,078,592
Equity
Capital		24		660,054			660,054
Legal reserve				132,011			132,011
Optional reserve				29,974			29,974
Share Premium				882,464			881,795
Other reserves				(167,456	)		(169,671	)
Retained earnings				443,377			589,167
Equity attributable to controlling interest in the Company				1,980,424			2,123,330
Non-controlling interest				509,313			465,748
Total equity				2,489,737			2,589,078
Total liabilities and equity				9,046,636			8,667,670

The accompanying notes on pages F-9 to F-108 are an integral part of the consolidated financial statements.

F-3

(Free translation from the original in Spanish)

GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES    

CONSOLIDATED STATEMENT OF INCOME    

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

			For the year ended December 31,
	Note		2015			2016			2017
Revenues from construction activities				5,501,537			3,945,599			3,253,199
Revenues from services provided				1,720,110			1,648,041			1,884,950
Revenue from real estate and sale of goods				361,265			596,677			941,993
				7,582,912			6,190,317			6,080,142
Cost of construction activities				(5,342,379	)		(3,751,221	)		(3,029,159	)
Cost of services provided				(1,372,330	)		(1,477,723	)		(1,660,239	)
Cost of real estate and goods sold				(255,208	)		(404,078	)		(717,957	)
		27		(6,969,917	)		(5,633,022	)		(5,407,355	)
Gross profit				612,995			557,295			672,787
Administrative expenses		27		(394,223	)		(382,393	)		(429,181	)
Other income and expenses		29		54,586			(13,374	)		(20,545	)
Gain from the sale of investments				(8,289	)		46,336			274,363
Operating profit				265,069			207,864			497,424
Financial expenses		28		(168,083	)		(221,664	)		(185,445	)
Financial income		28		37,636			20,645			15,407
Share of the profit or loss in associates and joint ventures under the equity method of accounting		16		7,724			(589,710	)		1,327
Profit (loss) before income tax				142,346			(582,865	)		328,713
Income tax		30		(95,899	)		119,272			(123,037	)
Profit (loss) for the year from continuing operations				46,447			(463,593	)		205,676
Profit for the year from discontinued operations		37		9,142			11,995			3,562
Profit (loss) for the year				55,589			(451,598	)		209,238
Profit (loss) attributable to:
Owners of the Company				7,097			(509,699	)		148,738
Non-controlling interest				48,492			58,101			60,500
				55,589			(451,598	)		209,238
Earnings (losses) per share from continuing operations attributable to owners of the Company during the year		35		0.011			(0.772	)		0.225

The accompanying notes on pages F-9 to F-108 are an integral part of the consolidated financial statements.    

F-4

(Free translation from the original in Spanish)

GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

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

			For the year ended December 31,
	Note		2015			2016			2017
Profit (Loss) for the period				55,589			(451,598	)		209,238
Other comprehensive income:
Items that will not be reclassified to profit or loss
Remeasurement of actuarial gains and losses, net of tax		31		(3,860	)		(1,531	)		(4,031	)
Items that may be subsequently reclassified to profit or loss
Cash flow hedge, net of tax		31		723			883			482
Foreign currency translation adjustment, net of tax				(59,660	)		14,307			(11,341	)
Change in value of available-for-sale financial assets, net of tax		10		19,973			(2,220	)		—
Transfer to profit or loss from sales of available-for-sale financial assets, net of tax		10		—			(41,461	)		—
Exchange movements on translation of foreign subsidiaries, net of tax		31		(5,220	)		7,860			6,610
Exchange difference from foreign net investment, net of tax		31		—			1,563			—
				(44,184	)		(19,068	)		(4,249	)
Other comprenhensive income for the year, net of tax				(48,044	)		(20,599	)		(8,280	)
Total comprehensive income for the year				7,545			(472,197	)		200,958
Comprehensive income attributable to:
Owners of the Company				(25,713	)		(534,492	)		143,575
Non-controlling interest				33,258			62,295			57,383
				7,545			(472,197	)		200,958
Comprehensive income attributable to owners of the Company:
Continuing operations				(34,315	)		(545,627	)		140,279
Discontinued operations				8,602			11,135			3,296
				(25,713	)		(534,492	)		143,575

The accompanying notes on pages F-9 to F-108 are an integral part of the consolidated financial statements.    

F-5

(Free translation from the original in Spanish)

GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED DECEMBER 31, 2015, 2016 AND 2017

(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		Optional reserve		Premium for issuance of shares			Other reserves			Retained earnings			Total			Non-controlling interest			Total
Balances as of January 1, 2015		660,054		660,054		132,011		—		899,311			(113,895	)		1,113,696			2,691,177			482,530			3,173,707
Profit for the year		—		—		—		—		—			—			7,097			7,097			48,492			55,589
Cash flow hedge		—		—		—		—		—			687			—			687			36			723
Adjustment for actuarial gains and losses		—		—		—		—		—			—			(2,921	)		(2,921	)		(939	)		(3,860	)
Foreign currency translation adjustment		—		—		—		—		—			(45,411	)		—			(45,411	)		(14,249	)		(59,660	)
Change in value of available-for-sale financial assets		—		—		—		—		—			19,973			—			19,973			—			19,973
Transfer to profit or loss for sale of investment of available-for-sale financial assets		—		—		—		—		—			(5,138	)		—			(5,138	)		(82	)		(5,220	)
Comprehensive income of the year		—		—		—		—		—			(29,889	)		4,176			(25,713	)		33,258			7,545
Transactions with shareholders:
- Transfer to legal reserve		—		—		—		29,974		—			—			(29,974	)		—			—			—
- Dividend distribution (Note 34, 36 d)		—		—		—		—		—			—			(104,911	)		(104,911	)		(4,535	)		(109,446	)
- Contributions of non-controlling shareholders (Note 36 c)		—		—		—		—		—			—			—			—			10,329			10,329
- Additional acquisition of non-controlling interest (Note 36 a)		—		—		—		—		(894	)		—			—			(894	)		(971	)		(1,865	)
- Sale to non-controlling interest		—		—		—		—		(885	)		—			—			(885	)		2,527			1,642
Total transactions with shareholders		—		—		—		29,974		(1,779	)		—			(134,885	)		(106,690	)		7,350			(99,340	)
Balances as of December 31, 2015		660,054		660,054		132,011		29,974		897,532			(143,784	)		982,987			2,558,774			523,138			3,081,912
Balances as of January 1, 2016		660,054		660,054		132,011		29,974		897,532			(143,784	)		982,987			2,558,774			523,138			3,081,912
(Loss) profit for the year		—		—		—		—		—			—			(509,699	)		(509,699	)		58,101			(451,598	)
Cash flow hedge		—		—		—		—		—			839			—			839			44			883
Adjustment for actuarial gains and losses		—		—		—		—		—			—			(1,121	)		(1,121	)		(410	)		(1,531	)
Foreign currency translation adjustment		—		—		—		—		—			9,885			—			9,885			4,422			14,307
Change in value of available-for-sale financial assets		—		—		—		—		—			(2,220	)		—			(2,220	)		—			(2,220	)
Transfer to profit or loss for sale of investment of available-for-sale financial assets		—		—		—		—		—			(41,461	)		—			(41,461	)		—			(41,461	)
Exchange difference from net investment in a foreign operation		—		—		—		—		—			7,722			—			7,722			138			7,860
Transfer to profit or loss of exchange difference from net investment in a foreign operation, net of tax		—		—		—		—		—			1,563			—			1,563			—			1,563
Comprehensive income of the year		—		—		—		—		—			(23,672	)		(510,820	)		(534,492	)		62,295			(472,197	)
Transactions with shareholders:
- Dividend distribution (Note 34, 36 d)		—		—		—		—		—			—			(30,853	)		(30,853	)		(25,473	)		(56,326	)
- Contributions of non-controlling shareholders (Note 36 c)		—		—		—		—		—			—			—			—			(19,099	)		(19,099	)
- Additional acquisition of non-controlling interest (Note 36 a)		—		—		—		—		(15,167	)		—			—			(15,167	)		(35,972	)		(51,139	)
- Sale to non-controlling interest		—		—		—		—		99			—			—			99			236			335
- Purchase of subsidiaries		—		—		—		—		—			—			—			—			4,153			4,153
- Deconsolidation of former subsidiary		—		—		—		—		—			—			2,063			2,063			35			2,098
Total transactions with shareholders		—		—		—		—		(15,068	)		—			(28,790	)		(43,858	)		(76,120	)		(119,978	)
Balances as of December 31, 2016		660,054		660,054		132,011		29,974		882,464			(167,456	)		443,377			1,980,424			509,313			2,489,737
Balances as of January 1, 2017		660,054		660,054		132,011		29,974		882,464			(167,456	)		443,377			1,980,424			509,313			2,489,737
Profit for the year		—		—		—		—		—			—			148,738			148,738			60,500			209,238
Cash flow hedge		—		—		—		—		—			458			—			458			24			482
Adjustment for actuarial gains and losses		—		—		—		—		—			—			(2,948	)		(2,948	)		(1,083	)		(4,031	)
Foreign currency translation adjustment		—		—		—		—		—			(9,166	)		—			(9,166	)		(2,175	)		(11,341	)
Exchange difference from net investment in a foreign operation		—		—		—		—		—			6,493			—			6,493			117			6,610
Comprehensive income of the year		—		—		—		—		—			(2,215	)		145,790			143,575			57,383			200,958
Transactions with shareholders:
- Dividend distribution (Note 36 d)		—		—		—		—		—			—			—			—			(59,677	)		(59,677	)
- Contributions (devolution) of non-controlling shareholders, net (Note 36 c)		—		—		—		—		—			—			—			—			(33,197	)		(33,197	)
- Additional acquisition of non-controlling interest (Note 36 a)		—		—		—		—		(669	)		—			—			(669	)		(273	)		(942	)
- Deconsolidation of former subsidiary		—		—		—		—		—			—			—			—			(7,801	)		(7,801	)
Total transactions with shareholders		—		—		—		—		(669	)		—			—			(669	)		(100,948	)		(101,617	)
Balances as of December 31, 2017		660,054		660,054		132,011		29,974		881,795			(169,671	)		589,167			2,123,330			465,748			2,589,078

The accompanying notes on pages F-9 to F-108 are an integral part of the consolidated financial statements.

F-6

(Free translation from the original in Spanish)

GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

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

				For the year ended December 31,
	Note			2015			2016			2017
OPERATING ACTIVITIES
Profit (loss) before income tax					154,617			(563,404	)		332,275
Adjustments to profit not affecting cash flows from operating activities:
Depreciation		27			217,070			205,522			199,794
Amortization of other assets		27			89,355			82,743			86,557
Impairment of inventories		27			17			36,353			40,908
Impairment of accounts receivable and other accounts receivable		27			5,806			419,584			19,109
Debt condonation		5.1 f	)		—			(431,484	)		—
Impairment of property, plant and equipment		27			3,796			9,263			14,680
Impairment of intangible assets		29			—			54,308			49,609
Financial expenses-CCDS					—			7,004			—
Expenses for liquidation of works - CCDS					—			164			—
Indemnification					—			(33,600	)		3,220
Profit (loss) on fair value of financial asset at fair value through profit or loss					(2,740	)		31			(34	)
Change in the fair value of the liability for put option		23			(18,627	)		(984	)		(1,400	)
Other Provisions		23			6,398			9,486			9,510
Dividends income from available-for-sale financial assets					(7,215	)		—			—
Return receipt from Morelco					—			(6,658	)		—
Remeasurement of purchase consideration of Morelco		33 b	)		—			(7,166	)		—
Financial expense,net					125,096			106,739			138,016
Other provisions in CCDS					—			24,915			—
Share of the profit and loss in associates and joint ventures
under the equity method of accounting		16 a) b)			(24,993	)		589,710			(1,327	)
Reversal of provisions		23			(7,796	)		(17,883	)		(1,044	)
Disposal of assets					5,881			3,951			5,438
Disposal of investments					2,755			1,227			106
Profit on sale of property, plant and equipment		17			(17,385	)		(18,393	)		(26,883	)
Loss on financial asset at fair value through profit or loss					450			221			—
Loss on sale of non-current asset held for sale					—			22			45
Profit on sale from available-for-sale financial assets		10			—			(46,337	)		(25,768	)
Loss (Profit) on sale of investments in subsidiaries					8,289			—			(244,313	)
Loss on remeasurement of accounts receivable					—			76,864			15,807
Loss on remeasurement of investment					—			6,832			—
Net variations in assets and liabilities:
Trade accounts receivable and working in progress					(50,150	)		115,263			(213,126	)
Other accounts receivable					(184,181	)		(85,234	)		33,196
Other accounts receivable from related parties					(133,286	)		84,448			(245,688	)
Inventories					(220,670	)		33,709			279,867
Pre-paid expenses and other assets					11,667			(99	)		(6,494	)
Trade accounts payable					199,402			(87,553	)		463,401
Other accounts payable					(60,073	)		114,666			(62,280	)
Other accounts payable to related parties					14,777			45,902			(66,819	)
Other provisions					(6,770	)		(2,756	)		(1,680	)
Interest payment					(110,884	)		(171,572	)		(173,662	)
Payments for purchases of intangibles - Concessions					(142,575	)		(97,711	)		(20,178	)
Payment of income tax					(150,337	)		(125,619	)		(144,545	)
Net cash (applied to) provided by operating activities					(292,306	)		332,474			456,297

F-7

GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS (continue)

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

	Note			For the year ended December 31,
				2015			2016			2017
INVESTING ACTIVITIES
Sale of available-for-sale investment					5,613			107,341			391,786
Sale of property, plant and equipment					55,832			66,086			127,221
Sale of financial asset at fair value through profit or loss					—			1,427			98
Sale of non-current assets held for sale					(13,496	)		117			43,367
Refunding for price adjustment - Morelco					—			6,658			—
Return of contributions					481			1,963			—
Interest received					32,162			15,370			6,992
Dividends received		16 b	) 34		59,175			27,992			3,758
Payment for purchase of investments properties					(748	)		(17,543	)		(1,183	)
Payments for intangible purchase					(32,883	)		(45,706	)		(97,112	)
Payments for purchase and contributions on investment in associate and joint ventures		16 a	)		(464,086	)		(389,657	)		(2,116	)
Payments for property, plant and equipment purchase					(193,156	)		(147,732	)		(123,941	)
Net cash (applied to) provided by investing activities					(551,106	)		(373,684	)		348,870
FINANCING ACTIVITIES
Loans received					4,448,332			3,941,750			1,406,717
Bonds issued		20			814,016			178,640			—
Amortization of loans received					(4,549,000	)		(3,914,570	)		(2,044,256	)
Amortization of bonds issued					(16,480	)		(25,281	)		(39,151	)
Payment for transaction costs for debt					(18,516	)		(650	)		(31,286	)
Dividends paid to owners of the parent					(104,911	)		(30,853	)		—
Dividends paid to non-controlling interest					(4,535	)		(25,473	)		(43,942	)
Cash received from non-controlling shareholders		36 b	)		10,329			(19,099	)		(33,197	)
Acquisition or sale of interest in a subsidiary of non-controlling shareholders					(223	)		(18,702	)		(942	)
Net cash provided by (applied to) financing activities					579,012			85,762			(786,057	)
(Net decrease) net increase in cash					(264,400	)		44,552			19,110
Cash and cash equivalent at the beginning of the year					818,402			554,002			606,950
Cash and cash equivalent at the end of the year		9			554,002			598,554			626,060
NON-CASH TRANSACTIONS:
Debt capitalization					—			8,308			—
Acquisition of assets through finance leases					92,093			65,336			48,507
Recognition of debt as guarantor					—			608,247			—
Change in fair value of available-for-sale financial assets					19,973			—			—
Adjustment for deconsolidation of former subsidiaries					9,298			—			—
Establishment of joint operation - Panorama Plaza de negocios (net assets)					36,180			—			—
Dividends declared to non-controlling interest					—			—			15,735

The accompanying notes on pages F-9 to F-108 are an integral part of the consolidated financial statements.     

F-8

GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2015, 2016 AND 2017

1 GENERAL INFORMATION

a) Incorporation and operations

Graña y Montero S.A.A. (hereinafter the Company) was established in Peru on August 12, 1996 as a result of the equity spin-off of Inversiones GyM S.A. (formerly Graña y Montero S.A.). The Company’s legal address is Av. Paseo de la República 4675, Surquillo Lima, Peru and is listed on the Lima Stock Exchange and the New York Stock Exchange (NYSE).

The Company is the parent of the Graña y Montero Group (hereinafter the Group, which includes the Company and subsidiaries) and it is mainly engaged in holding investments in different Group companies. Additionally, the Company provides services of general management, financial management, commercial management, legal advisory, human resources management and office operating leasing to the Group companies.

The Group is a conglomerate of companies with operations including different business activities, the most significant are engineering and construction, infrastructure (public concession ownership and operation), real estate businesses and services. See details of operating segments in Note 7.

b) Authorization for issue of the financial statements

The consolidated financial statements for the year ended December 31, 2017 were prepared and issued with Management and Board of Directors authorization on June 29, 2018 and will be submitted for consideration and approval at the General Shareholders’ Meeting. Management expects that the consolidated financial statements as of December 31, 2017 will be approved with no changes.

The consolidated financial statements for the year ended December 31, 2016 were approved by the General Shareholders’ Meeting on June 12, 2018

c) Current situation of the Company

1) Projects conducted in association with group companies Odebrecht

Our company and one of its subsidiaries participated as minority shareholder in certain entities that developed six infrastructure projects in Peru with companies belonging to the group Odebrecht (from now on Odebretch). In 2016, Odebrecht entered into a Plea Agreement with the authorities of the United States Department of Justice and the Office of the District Attorney for the Eastern District of New York by which it admitted the commission of corrupt acts in connection with two of these projects (tranches 2 and 3 of the Interoceánica Sur highway (“IIRSA Sur”) and the project to construct the Tren Eléctrico). As a consequence of this agreement, the Peruvian authorities opened investigations.

i) IIRSA Sur

With respect to the investigations conducted in relation to IIRSA Sur, the Public Prosecutor’s Office included the former Chairman of the Board of Directors, for collusion; a former Director, and a former executive of the Company, for money laundering. Subsequently, Graña y Montero S.A.A. and GyM S.A. were incorporated as subjects investigated in the case described above. The companies appealed this decision and later the Superior Court ruled in favor of the companies.

F-9

In addition, the Peruvian authorities have requested incorporation of Graña y Montero S.A.A. as third party responsible on a civil basis and the Company has filed an opposition to the government’s motion. Oral arguments will be made to the court on a hearing that is yet to be scheduled. The Company believes that it has a solid defense and that therefore, the case would be resolved in its favor.

ii) Electric Train

The Peruvian authorities also requested to incorporate GyM S.A. as a third party responsible on a civil basis in the case related to the project to construct the electric train. The Company has filed an opposition. Oral arguments were made to the court on a hearing held on May 29, 2018; to date the court resolution regarding this request is pending. The management believes that the case would be resolved in its favor.

2) The Constructor Club

On July 11, 2017, Commission of Free Competition (“Indecopi”) initiated an investigation against several construction companies, including GyM S.A., about the existence of an alleged cartel called the Constructor Club, Throughout the investigation, GyM S.A., has provided to the Indecopi with all the information requested.

The Company’s former commercial manager is under a criminal investigation, as well as other individuals related to other construction companies. However, the Company is not included in this case.

To date, the result of the case described is uncertain because it is in the preliminary phase and depends on the actions of the third parties that have been included in the investigation. Management believes that the contingency should not have a significant equity impact due to the company’s limited link with the alleged facts.

3) Anticorruption Law application to the Group

Law 30737 and its regulation issued by Supreme Decree 096-2018-EF have mitigated the Company and subsidiaries exposure to the cases described in sub sections 1) and 2) above. These rules set clear guidelines to estimate the potential compensation reducing the uncertainty derived from the legal proceedings, by among other things, preventing the imposition of liens or attachments of assets that would impair the ability to operate.

The benefits of the mentioned rules are subject to the fulfillment of the following obligations:

• The obligation to set up a trust that will guarantee any eventual payment obligation of an eventual civil compensation and the interests in favor of the Peruvian State;

• The obligation not to transfer funds abroad without the prior consent of the Ministry of Justice;

• The implementation of a compliance program; and

• The obligation to disclose information to the authorities and to collaborate in the investigation.

The Group has designed a compliance program which is currently under implementation. In addition, it fully cooperates with the authorities in its investigations and is doing the preliminary work for the constitution of the trust of the alleged facts. It is also engaged in preliminary works necessary to set up the trust while it receives from the authorities the amount of the trust.

Based on the standards indicated and their guidelines, management has estimated that the value of the assets that the Company and its Subsidiaries could eventually assign to the trust will amount to approximately US $ 41 million and calculates that their contingency for the cases described above should not exceed of US $ 51 million.

F-10

4) Independent Investigation related to Group business with Odebrecht.

On January 9, 2017, the Board of Directors approved a plan to conduct an internal investigation related to six projects executed in association with Odebrecht.

On March 30, 2017, the Board of Directors created a Risk, Compliance and Sustainability Committee who was in charge of the oversight of the investigation independent from management. The investigation was conducted by outside counselor reported to the Risk, Compliance and Sustainability Committee.

The independent investigation concluded on November 2, 2017 and found no evidence for determining that the Group or any of its former or current directors or executives had intentionally or knowingly participated in acts of corruption related to the six projects developed in association with Odebrecht.

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied in all the years presented, unless otherwise stated.

2.1 Basis of preparation

The consolidated financial statements of the Company and its subsidiaries have been prepared in accordance with International Financial Reporting Standards (IFRS) and interpretations issued by the IFRS Interpretations Committee (IFRIC) applicable to companies reporting under IFRS. The financial statements comply with IFRS as issued by the IASB in force as of December 31, 2016 and December 31, 2017, respectively.

The consolidated financial statements have been prepared under the historical cost convention, except for derivative financial instruments, financial assets at fair value through profit and loss, available-for-sale financial assets measured at fair value. The financial statements are presented in thousands of Peruvian Soles, unless otherwise stated.

The preparation of the consolidated financial statements in conformity with IFRS requires Management to make estimates and assumptions in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5.

2.2 Consolidation of financial statements

a) Subsidiaries

Subsidiaries are entities over which the Company has control. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

The Group applies the acquisition method to account for business combinations. Identifiable assets acquired, liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date.

The Group evaluates measurement of the non-controlling interest on an acquisition-by-acquisition basis. At December 31, 2016 and 2017, the measurements of the non-controlling interest in the Group´s acquisitions were made at the non-controlling interest´s proportionate share of the recognized amounts of the acquiree´s identifiable net assets.

F-11

Business acquisition-related costs are expensed as incurred.

Any contingent consideration assumed by the Group with the selling party is recognized at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration are recognized in accordance with IAS 39 “Financial Instruments: Recognition and Measurement” as profit or loss.

Goodwill is initially measured as the excess of the acquisition cost, the fair value at the acquisition date of any interest previously acquired plus the fair value of the non-controlling interest, over the net identifiable assets acquired and liabilities and contingent liabilities assumed. If the acquisition cost is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized in profit or loss at the time of acquisition.

For consolidating subsidiaries, balances, income and expenses from transactions between Group companies are eliminated. Profits and losses resulting from inter-company transactions that are recognized as assets are also eliminated. Group companies use common accounting practices, except for those that are specifically required for specific businesses.

b) Changes in ownership interests in subsidiaries without change of control

Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions, in other words as transactions with owners in their capacity as owners. The difference between fair value of any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interest are also recorded in equity at the time of disposal.

c) Disposal of subsidiaries

When the Group ceases to have control over a subsidiary, any retained interest in the entity is re-measured at its fair value at the date when control is lost, with the change in carrying amount recognized in profit or loss at such date. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognized in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that the amount previously recognized in other comprehensive income is reclassified to profit or loss.

d) Joint arrangements

Contracts in which the Group and one or more of the contracting parties have joint control on the relevant joint activities are called joint arrangements.

Investments in joint arrangements are classified as either joint operations or joint ventures depending on the contractual rights and obligations of each investor. The Group has assessed the nature of its joint arrangements and determined them to be both joint ventures as well as joint operations.

Joint ventures are accounted for using the equity method. Under this method, interests in joint ventures are initially recognized at cost and adjusted thereafter to recognize the Group’s share of the post-acquisition profits or losses and movements in the comprehensive income statement.

The Group assesses on an annual basis whether there is any objective evidence that the investment in the joint ventures and associate is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognizes the impairment loss in share of the profit or loss in associates and joint ventures under the equity method of accounting in the income statement. In addition, the Group stops the use of the equity method if the entity ceases to be an operating entity.

F-12

Joint operations are joint arrangements whereby the parties that have joint control of the arrangement, have rights over the assets, and obligations for the liabilities, relating to the arrangement. Each party recognizes its assets, liabilities, revenue and cost and its share of any asset or liability jointly held and, on any revenue, or cost arisen from the joint operation.

In the Group, joint operations mainly relate to consortiums (entities without legal personality) created exclusively for the development of a construction contract. Considering that the only objective of the consortium is to develop a specific project, all costs and revenue are included within revenue from construction activities and cost of construction activities, respectively.

e) Associates

Associates are all entities over which the Group has significant influence but not control, generally accompanying a holding of between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method (see section d) above).

Profits and losses resulting from transactions between the Group and its associates are recognized in the Group’s consolidated financial statements only to the extent of unrelated investor’s interests in the associates. Unrealized losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates are changed where necessary to ensure consistency with the policies adopted by the Group.

Impairment losses are measured and recorded in accordance with section d) above.

2.3 Segment reporting

Operating segments are reported in a consistent manner with internal reporting provided to Management of the Group.

If an entity changes the structure of its internal organization in a manner that causes the composition of its reportable segments to change, the Group restates the information for earlier periods unless the information is not available.

2.4 Foreign currency translation

a) Functional and presentation currency

The consolidated financial statements are presented in soles, which is the functional presentation currency of the Group. All subsidiaries, joint arrangements and associates use the Peruvian Sol as their functional currency, except for foreign entities, for which the functional currency is the currency of the country in which they operate.

b) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates at the date of the transactions or valuation when items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions are recognized in the consolidated income statement, except when deferred in other comprehensive income.

Exchange differences arising on loans from the Company to its subsidiaries in foreign currencies are recognized in the separate financial statements of the Company and separated financial statements of the subsidiaries. In the consolidated financial statements, such exchange differences are recognized in other comprehensive income and are re-classified in the income statement on the disposal of the subsidiary or debt repayment; to the extent such loans qualify as part of the “net investment in a foreign operation”.

F-13

Foreign exchange gains and losses of all monetary items are included in the income statement within financial income or expense.

c) Group companies

The results and financial position of all the Group entities (none of which has the currency of a hyper-inflationary economy) that have a functional currency different from the presentation currency of the Group are translated into the presentation currency as follows:

i) Assets and liabilities for each statement of financial position are translated using the closing exchange rate prevailing at the date of the consolidated statement of financial position;

ii) income and expenses for each income statement are translated at the average exchange rate (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated using the exchange rate on the date of the transaction);

iii) capital is translated by using the historical exchange rate for each capital contribution made; and

iv) all exchange differences are recognized as separate components in other comprehensive income (loss), within foreign currency translations adjustment.

Goodwill and fair value adjustments arising from the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and are translated at the closing exchange rate. Exchange differences are recognized in other comprehensive income.

2.5 Public services concession agreements

Concession agreements signed between the Group and the Peruvian Government entitle the Group, as a Concessionaire, to assume obligations for the construction or improvement of infrastructure and which qualify as public service concessions are accounted as defined by IFRIC 12, “Service Concession Arrangements”. The consideration to be received from the Government for the services of constructing or improving public infrastructure is recognized as a financial asset or as an intangible asset, as set forth below.

a) It is recognized a financial asset to the extent that it has a contractual right to receive cash or other financial assets either because the Government secures the payment of specified or determinable amounts or because the Government will cover any difference arising from the amounts actually received from public service users in relation with the specified or determinable amounts. These financial assets are recognized initially at fair value and subsequently at amortized cost (the financial model).

b) It is recognized an intangible asset to the extent that the service agreement grants the Group a contractual right to charge users of the public service. The resulting intangible asset is measured at cost and is amortized as described in Note 2.15 (intangible asset model).

c) It is recognized a financial asset and an intangible asset when the Group recovers its investment partially by a financial asset and partially by an intangible asset (bifurcated model).

2.6 Cash and cash equivalents

In the consolidated statements of financial position and cash flows, cash and cash equivalents include cash on hand, on-demand bank deposits, other highly liquid investments with original maturities of three months or less and bank overdrafts. In the consolidated statement of financial position, bank overdrafts are included in the balance of financial obligations as current liabilities.

F-14

2.7 Financial assets

2.7.1 Classification

The Group classifies its financial assets in the following categories: financial assets at fair value through profit or loss, financial assets held-to-maturity, loans and account receivables and financial assets available-for-sale. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.

As of the date of the consolidated financial statements, the Group has classified its financial assets in the following three categories:

a) Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss are non-derivatives that are designated by the Group as at fair value upon initial recognition and are held-for-trading. They are included in current assets in the consolidated statement of financial position.

b) Loans and accounts receivable

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for those whose maturity is greater than twelve months after the date of the consolidated financial statements. These are classified as non-current assets on the consolidated financial position. The Group’s loans and receivables comprise “trade accounts receivables”, “accounts receivable from related parties”, “other accounts receivable”, “unbilled work in progress” and “cash and cash equivalents”.

c) Financial assets held for sale

Financial assets for sale are non-derivatives that are either designated in this category or not classified in any of the other categories. They are registered at cost and are included in non-current assets as “Other Financial Assets” unless Management intends to dispose them within 12 months of the date of the statement of financial position.

2.7.2 Recognition and measurement

The usual purchases and sales of financial assets are recognized at the trading date, the date on which the Group commits to buy or sell the asset. Investments are initially recognized at their acquisition value (fair value at the time of purchase). Financial assets available for sale are subsequently recorded at their fair value. Loans and accounts receivable are subsequently recorded at amortized cost using the effective interest method.

Gains or losses arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’ category is presented in profit or loss within “Other income and expenses, net” in the period in which they arise. Dividend income from financial assets at fair value through profit or loss is recognized in the income statement as part of “Other income and expenses, net” when the Group’s right to receive payments is established.

Changes in the fair value of monetary securities classified as available for sale are recognized in other comprehensive income. When a financial asset classified as available for sale is sold or impaired, the accumulated fair value adjustments recognized in equity are reclassified to profit or loss. Dividends on available-for-sale equity instruments are recognized in the income statement as part of “Other income and expenses, net” when the Group’s right to receive payments is established.

F-15

2.8 Impairment of financial assets

a) Assets carried at amortized cost

At the end of each reporting period the Group assesses whether there is objective evidence that a financial asset or a group of financial assets is impaired. If a financial asset or a group of financial assets is impaired, the impairment losses are recognized only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a “loss event”) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

For the loans and receivables category, the amount of any loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognized in the statement of income. If a loan or an account receivable has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.

b) Assets classified as available-for-sale

The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or a group of financial assets classified as available-for-sale is impaired.

For equity investments, a significant or prolonged decline in the fair value of the security below its cost is also evidence that the assets are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss - measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognized in profit or loss - is removed from equity and recognized in profit or loss. Impairment losses recognized in the income statement on equity instruments are not reversed through the income statement.

2.9 Derivative financial instruments and hedging activities

Derivatives are initially recognized at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value at the end of each reporting period. The method of recognizing the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged.

The Group designates certain derivatives as hedges of a particular risk associated with a recognized asset or liability (fair value hedge) or a highly probable forecast transaction (cash flow hedge). Derivatives are initially recognized at fair value on the date of subscription of the contract and are subsequently recognized at their fair value. The method to recognize the gain or loss resulting from changes in the fair values of the derivatives depends on the nature of the item being covered.

The Group documents, at the inception of the transaction, the relationship between hedging instruments and hedged items, as well as its risk management objectives and strategy for undertaking various hedging transactions. The Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.

The fair values of various derivative instruments used for hedging purposes and changes in the account reserves for hedging in equity are disclosed in Note 8. The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining maturity period of the hedged item is more than 12 months and as a current asset or liability when the remaining maturity period of the hedged item is less than 12 months. Trading derivatives are classified as a current asset or liability.

Cash flow hedge

The effective portion of changes in the fair value of derivatives that are designated and qualify as fair value hedges is recognized as other comprehensive income. The gain or loss relating to the ineffective portion is recognized immediately in the income statement. Amounts accumulated in equity are reclassified to profit or loss in the periods when the hedged item affects profit or loss (for example, when the forecasted sale that is hedged takes place).

F-16

The gain or loss relating to the effective portion of interest rate swaps hedging variable rate borrowings is recognized in the income statement as “Financial income or Financial expenses”.

However, when the forecasted transaction that is hedged results in the recognition of a non-financial asset (for example, inventory or fixed assets), the gains or losses previously deferred in equity are transferred from equity and are included in the initial measurement of the cost of the non-financial asset. The deferred amounts are ultimately recognized in cost of goods sold in the case of inventory or in depreciation in the case of fixed assets.

When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognized when the forecasted transaction is ultimately recognized in the income statement. When a forecasted transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the income statement within “other income and expenses, net”.

2.10 Trade accounts receivables

Trade receivables are amounts due from customers for goods or services sold by the Group. If collection is expected in one year or less, they are classified as current assets. If not, they are presented as non-current assets.

Trade receivables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method, less any provision for impairment, except for receivables of less than one year that are stated at nominal amount which is similar to their fair values since they are short term.

2.11 Work in progress

Unbilled work in progress comprises the estimation made by the Management of the Engineering and Construction segment related to the unbilled rights receivable for services rendered and not yet approved by the client (valuation based on the percentage of completion).

It also includes the balance of work in progress costs incurred that relates to future activities of the construction contracts and the constructions phase in concessions (see Note 2.25 for detail on Revenue from construction and concession activities).

Changes in estimates of contract revenues and costs can increase or decrease the estimated margin. When a change in the estimate is known, the cumulative impact of the change is recorded in the period in which it is known based on the progress made.

2.12 Inventories

The inventories include land, works in progress and finished buildings related to the real estate activity; materials used in the construction activity and merchandise and supplies marketed as part of the computer services segment.

a) Real estate activity

Land used for the execution of real estate projects is recognized at acquisition cost. Work in progress and finished real estate includes the costs of design, materials, direct labor, borrowing costs (directly attributable to the acquisition, construction, production of the asset), other indirect costs and general expenses related to construction phase.

F-17

Net realizable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses. The Group reviews annually whether inventories have been impaired identifying three groups of inventories to measure their net realizable value: i) land bought for future real estate projects which are compared to their net appraisal value; if the acquisition value is higher, a provision of impairment is made; ii) land under construction, impairment is measured based on cost projections; if these costs are higher than selling prices of each real estate unit, a estimate is made for impairment; and iii) completed real estate units; these inventory items are compared to the selling prices less selling expenses; if these selling expenses are higher, a provision for impairment is made.

For the reductions in the carrying amount of these inventories to their net realizable value, a provision is made for impairment of inventories with a charge to profit or loss for the year in which those reductions occur.

b) Other Activities

Materials and supplies are estimated under the weighted average cost method or its replacement value, the lower. The cost of these items includes freight and non-refundable applicable taxes. The estimation for devaluation is estimated on the basis of specific analyzes carried out by the Management on its rotation. If it is identified that the book value of the stocks of materials and supplies exceeds their replacement value, the difference is charged to income in the year in which this situation is determined. Management considers that at the date of the consolidated financial statements it is not necessary to establish additional provisions to cover losses due to obsolescence of these inventories.

2.13 Investment property

Investment properties are shown at cost less accumulated depreciation and impairment losses, if any. Subsequent costs attributable to investment properties are capitalized only if it is probable that future economic benefits will flow to the Company and the cost of these assets can be measured reliably; if not, they are recognized as expenses when incurred.

Repair and maintenance expenses are recognized in profit and loss when they are incurred. If the property’s carrying amount is greater than its estimated recoverable amount, an adjustment to reduce the carrying amount to the recoverable amount is recognized.

Depreciation is determined at rates calculated to write off cost, less estimated residual value, of each asset on a straight-line basis over its estimated useful life. The estimated useful lives of those properties range from 5 to 33 years.

The investment properties held by the Group correspond to: (i) “Agustino Plaza” Shopping Center, located in the El Agustino District, (ii) the 35% participation in the “Panorama Panorama” Shopping Plaza, located in the district of Santiago de Surco and (iii) the stores located within the stations of Line 1 of the Lima Metro; the properties that are owned by the subsidiary VIVA GyM SA. Fair value is estimated to be US$34.5 million, equivalent to S/112.7 million as of December 31, 2017 (US$29.5 million, equivalent to S/99 million, as of December 31 of 2016). The sales stores of these properties have been leased as an operating lease with third parties.

These investment properties have been leased under the modality of an operating lease to third parties.

2.14 Property, plant and equipment

Property, plant and equipment are stated at historical cost less accumulated depreciation and impairment losses, if any. Historical cost includes expenditure that is directly attributable to the acquisition of these items.

Subsequent costs are included in the asset’s carrying amount or are recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. Repairs and maintenance expense are charged to the income statement during the financial period in which they are incurred.

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Assets under construction are capitalized as a separate component. At their completion, the cost of such assets is transferred to their definitive category.

Replacement units are major spare parts in which depreciation starts when the units are installed for use within the related asset.

Depreciation of machinery, equipment and vehicles recognized as “Major equipment” are depreciated based on their hours of use. Under this method, the total number of work hours that machinery and equipment is capable to produce is estimated and a charge per hour is determined. The depreciation of other assets that do not qualify as “Major equipment” is calculated under the straight-line method to allocate their cost less their residual values over their estimated useful lives, as follows:

	Years
Buildings and facilities		Between 3 and 50
Machinery and equipment		Between 4 and 10
Vehicles		Between 2 and 10
Furniture and fixtures		Between 2 and 10
Other equipment		Between 2 and 10

Residual values and useful lives are reviewed and adjusted as appropriate at each date of the statement of financial position. Gains and losses on disposals are recognized in “Other income and expenses, net” in the income statement. Regarding joint operations that carry out construction activities, the difference between the proceeds from disposals of fixed assets and their carrying amount is shown within “revenue from construction activities” and “cost of construction activities”, respectively.

2.15 Intangible assets

i) Goodwill

Goodwill arises on the acquisition of subsidiaries and represents the excess of the purchase consideration, the amount of any non-controlling interest and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the net identifiable assets acquired. If the total of consideration transferred, non-controlling interest recognized and previously held interest measured at fair value is less than the fair value of the net assets of the subsidiary acquired, in the case of a bargain purchase, the difference is recognized directly in the income statement.

Goodwill acquired in a business combination is allocated to each cash-generating units (CGU), or group of CGUs, that is expected to benefit from the synergies of the combination. Goodwill is monitored at the operating segment level.

Goodwill impairment reviews are performed at least annually and when events or changes in circumstances indicate a potential impairment. Any impairment is recognized immediately as an expense in item “Other income and expenses, net” and cannot be reversed later.

ii) Trademarks

Trademarks acquired separately are shown at historical cost. Trademarks acquired in a business combination are recognized at fair value at the acquisition date. Management has determined that these trademarks have indefinite useful lives.

Trademark impairment reviews are performed at least annually and when events or changes in circumstances indicate a potential impairment. Any impairment is recognized immediately as an expense in item “Other income and expenses, net”.

F-19

iii) Concession rights

The intangible asset consisting of the right to charge users for the services related to service concessions agreements (Note 2.5 and Note 6.b) is initially recorded at the fair value of construction or improvement services. Before amortization is started, an impairment test is performed; it is amortized under the straight-line method, from the date revenue starts using the lower of its estimated expected useful life or effective period of the concession agreement.

iv) Contractual relationships with customers

Contractual relationships with customers are assets resulting from business combinations that were initially recognized at fair value as determined based on the expected cash flows from those relations over an estimated period of time based on the time period those customers will remain as customers of the Group (the estimation of useful life is based on the contract terms which fluctuate between 5 and 9 years). The useful life and the impairment of these assets are individually assessed.

v) Cost of developing wells

Costs incurred in preparing wells to extract hydrocarbons in Blocks I, III, IV and V, located in Talara, and are capitalized as part of intangible assets. These costs are amortized over the useful lives of the wells (estimated to be 5 years for Blocks I and V and unit of production method for Blocks III and IV), when is less than the period of the service agreement signed with Perupetro.

vi) Internally generated software and development costs

Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the Group are recognized as intangible assets when the following criteria are met:

• It is technically feasible to complete the software product so that it will be available for use;

• management intends to complete the software product and use or sell it;

• there is an ability to use or sell the software product;

• it can be demonstrated how the software product will probably generate future economic benefits;

• technical, financial and other resources are available to complete the development and to use or sell the software product; and

• software expense during its development can be reliably measured.

Other development expenditures that do not meet these criteria are expensed as incurred. Development costs previously recognized as an expense are not recognized as an asset in a subsequent period. Computer software development costs recognized as assets are amortized over their estimated useful lives, which fluctuate between 2 to 8 years.

vii) Rights of use of land

Refers rights maintained by the subsidiary Promotora Larcomar S.A. Rights of use of land are stated at historical cost less amortization and any accumulated impairment losses. The useful life of this asset is based on the agreement signed (60 years) and may be extended if agreed by parties. Amortization will begin when it becomes ready for its intended use by Management.

2.16 Impairment of non-financial assets

Assets subject to amortization are subject to impairment tests when events or circumstances occur that indicate that their book value may not be recovered. Impairment losses are measured as the amount by which the book value of the asset exceeds its recoverable value. The recoverable value of the assets corresponds to the higher of its fair value and its value in use. For purposes of the impairment assessment, assets are grouped at the lowest levels in which they generate identifiable cash flows (cash-generating units). The book value of non-financial assets other than goodwill that have been subject to write-offs for impairment are reviewed at each reporting date to verify possible reversals of impairment.

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2.17 Trade accounts payables

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities.

Accounts payable are initially recognized at their fair value and subsequently are amortized at amortized cost using the effective interest method, except for accounts payable less than one year that are recorded at their nominal value that is similar to their fair value due to its maturity in the short term.

2.18 Other financial liabilities

Corresponds to the loans and bonds issued by the Group, which are initially recognized at their fair value, net of the costs incurred in the transaction. These financial liabilities are subsequently recorded at amortized cost; any difference between the funds received (net of transaction costs) and the redemption value is recognized in the income statement during the period of the loan using the effective interest method.

The costs incurred to obtain these financial liabilities are recognized as transaction costs to the extent that it is probable that part or the entire loan will be received. In this case, these charges are deferred until the time the loan is received.

2.19 Borrowing costs

Debt costs are recognized at the income statement in the period in which they have been incurred, except for intangible assets and inventories (Note 18-c and 15) in which the borrowing costs are capitalized.

The general and specific borrowing costs directly attributable to the acquisition, construction or production of qualified assets, which are assets that necessarily take a substantial period (more than 12 months) to reach their condition of use or sale, are added to the cost of said assets until in such period the assets are substantially ready for use or sale. The Group suspends the capitalization of borrowing costs during the periods in which the development of activities of a qualified asset has been suspended. The income obtained from the temporary investment of specific loans that have not yet been invested in qualified assets is deducted from the borrowing costs eligible for capitalization.

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2.20 Current and deferred income tax

Income tax expense comprises current and deferred tax. Tax expense is recognized in the income statement, except to the extent that it relates to items recognized in other comprehensive income or equity, in which case, it is recognized in the statement of comprehensive income or directly in equity, respectively.

The current income tax is calculated based on the tax laws enacted or substantively enacted at the date of the statement of financial position in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation.

Management, where appropriate, establishes provisions based on amounts expected to be paid to the tax authorities. Deferred tax is recognized on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, deferred tax liabilities are not recognized if they arise from the initial recognition of goodwill; deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realized or is settled.

Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized. Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except for deferred income tax liability where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority.

2.21 Employee benefits

The Group recognizes a liability when the employee has rendered services in exchange for which he is entitled to receive future payments and an expense when the Group has consumed the economic benefit from the service provided by the employee in exchange for the benefits in question.

The Group determines employee benefits in accordance with current labor and legal regulations and classifies them as short-term benefits, post-employment benefits, long-term benefits and termination benefits.

Short-term benefits are those other than termination indemnities, whose payment is settled in the twelve months following the end of the period in which the employees have rendered the services; they correspond to current remunerations (salaries, salaries and contributions to social security), annual paid and sick absences, participation in profits and incentives and other non-monetary benefits.

Post-employment benefits are those other than termination benefits that are paid after completing your period of employment with the entity. Retirement benefits or post-employment benefit plans can be classified into (i) Defined contribution plans and (ii) Defined benefit plans. The Group maintains defined benefit plans and therefore assumes the actuarial risk.

Long-term benefits are those benefits that must be paid more than twelve months after the end of the period in which the services were rendered. As of December 31, 2016, and 2017, the Group does not grant benefits in this category.

Termination benefits are those benefits payable as a result of: (i) the entity’s decision to terminate the employee’s contract before the retirement date, and (ii) the employee’s decision to voluntarily accept the conclusion of the relationship of work.

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Short-term benefits:

a) Current salaries and wages

The current remunerations are constituted by salaries, wages, contributions to social security, statutory bonuses and compensation for time of services. Salaries, wages and contributions to social security are settled on a monthly basis.

Entities of the Group recognize the expense and the related liability for statutory bonuses based on applicable laws and regulations effective in Peru, Chile, Bolivia, Guyana and Colombia. In Peru bonuses correspond to two monthly payments, settled one in July and one in December of each year.

The compensation for time of services corresponds to the indemnification rights of the staff, and is accrued based on the consideration of the service calculated according to the legislation in force in each country in which the entities that make up the Group operate and determine as follows: (i) in Peru it is equivalent to half the remuneration in force at the date of payment and this is effected by deposit in bank accounts designated by the workers in the months of May and November of each year; (ii) In Colombia, it is equivalent to 8.33% of the monthly remuneration, (iii) in Bolivia, the calculation is made taking into account the average salary or wages of the last three months. In Chile and Guyana, this benefit is not available.

b) Annual paid absences

Annual holidays are recognized on an accrual basis. The provision for the estimated obligation resulting from the services rendered by employees is recognized on the date of the consolidated statement of financial position and corresponds; (i) one month for personnel in Peru, (ii) fifteen days for personnel in the Dominican Republic and Colombia, and (iii) in the case of Chile and Bolivia, they are subject to the worker’s seniority and range from fifteen and thirty days.

c) Share in profits and incentives

The participation of the workers in the profits is determined on the basis of the legal provisions in force in each country where the entities that make up the Group operate, as follows: (i) in Peru it is equivalent to 5% of the taxable matter determined by each Company of the Group, in accordance with current income tax legislation, (ii) in the case of the branch domiciled in the Dominican Republic, the worker participation rate is 10%; (iii) in Chile, workers’ participation is a component of the remuneration (equivalent to 4.75 minimum wages per year) and not a determinable percentage of the utility, (iv) in Bolivia the participation equals one monthly salary and the total distributed cannot exceed 25% of the profits determined under local regulations, (v) in Colombia and Guyana these benefits are not provided to employees.

Post-employment benefits

The CAM subsidiary has pension plans for its staff. The liability recognized in the statement of financial position with respect to defined benefit plans is measured based on the present value of the obligation at the end of the reporting period less the fair value of the plan assets.

The present value of the defined benefit obligations is determined by discounting the estimated future cash flows using the interest rates of high quality corporate bonds denominated in the currency in which the benefits will be paid and with maturity periods similar to the obligations for pension plans. In countries where there is no market with instruments with similar characteristics, the market rate of government bonds will be used.

The remeasurements that arise from adjustments and changes in the actuarial assumptions are recorded in other comprehensive income in the period in which they arise.

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Termination benefits.

The Group entities recognize the liability and expense for severance payments when they occur, based on the legal provisions in force in each country. In the legislation of Peru, the compensation for arbitrary dismissal for personnel with an indefinite contract amounts to 1.5 times the monthly remuneration for each year worked.

In Colombian legislation, compensation depends on the remuneration received; in the legislation of Chile is granted compensation of 30 days of salary for each year worked with a maximum salary of 330 days.

2.22 Other provisions

a) General

Provisions are recognized when the Group has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Provisions are reviewed at year - end. If the time value of money is significant, provisions are discounted using a pre-tax rate that reflects, when applicable, the specific risks related to the liability. Reversal of the discount due to the passage of time results in the obligation being recognized with a charge to the income statement as a financial expense.

Contingent obligations are disclosed for possible obligations that are not yet determined to be probable. Contingent assets are not recognized and only disclosed if it is probable that future economic benefits will flow to the Company.

b) Provision for the closure of production wells

The subsidiary GMP S.A. recognizes a provision for the closure of operating units that correspond to the legal obligation to close oil production wells once the production phase has been completed. At the initial date of recognition, the liability that arises from said obligation measured at its fair value discounted at its present value, the valuation techniques established by IFRS 13, “Measurement of Fair Value”, simultaneously charged to the intangible account in the statement of financial position.

Subsequently, the liability will increase in each period to reflect the financial cost considered in the initial measurement of the discount, and the capitalized cost is depreciated based on the useful life of the related asset. When a liability is settled, the subsidiaries entities will recognize any gain or loss that may arise. The fair value changes estimated for the initial obligation and the interest rates used to discount the flows, any decrease in the provision, and any decrease of the asset that may exceed the carrying amount of said asset is immediately recognized in the income statement.

If the review of the estimated obligation results in the need to increase the provision and, accordingly, increase the carrying amount of the asset, the subsidiaries will also take into consideration if said increase corresponds to an indicator that the asset has been impaired and, if so, impairment tests are carried out (Note 2.16).

2.23 Put option arrangement

The subsidiary GyM S.A. signed a sale option contract on the equity of its subsidiary Morelco SAS (Note 33 b) that allows the shareholder to reallocate its shares over a period of 10 years. The amount payable under the option is initially recognized at the present value of the reimbursement under “Other accounts payable”, directly charged to equity. The charge to equity is recorded separately as put options subscribed on the non-controlling interest, adjacent to the non-controlling interest in the net assets of the consolidated subsidiaries.

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Subsequently, the financial liability is updated by changes in the assumptions on which the estimation of the expected cash flows is based and by the financial component due to the passage of time. The effects of this update are recognized in results. In the event that the option expires without being exercised, the liability is written off with the corresponding adjustment to equity.

2.24 Capital

Common shares are classified as equity.

Incremental costs directly attributable to the issue of new shares or options are shown in equity, as a deduction, net of taxes, of the proceeds.

Where any Group company purchases the Company’s equity shares (treasury shares), the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the company’s equity holders until the shares are cancelled or reissued. Where such shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects is included in equity attributable to the Group’s equity holders.

2.25 Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable. The Group recognizes revenue when the amount of revenue can be reliably measured; when it is probable that future economic benefits will flow to the entity; and when specific criteria have been met for each of the Group’s activities.

The Group’s revenue recognition policy is described as follows:

i) Revenue from construction activities

Revenues from construction contracts are recognized using the percentage-of-completion method which is based on the completion of a physical proportion of the overall work contract considering total costs and revenues estimated at the end of the project, in accordance with IAS 11, Construction Contracts. Under this method revenues are determined based on the proportion of actual physical completion compared to the total contracted physical construction commitment.

When it is probable that the total costs of the contract will be above the related revenue, the expected loss will be immediately expensed.

When the outcome of a construction contract cannot be estimated reliably, the associated revenue is recognized to the extent costs incurred are recoverable. Revenue is billed once approval is received by the owners of the work in progress.

In the statement consolidated of financial position, the Group shows the net position of each contract as an asset or a liability. A contract is considered an asset when the costs incurred plus recognized earnings less the sum of all the recognized losses and consolidated assessments exceed work in progress billings; this asset is shown in the statement of financial position as “Unbilled work in progress”; otherwise they are presented as a liability within “Trade accounts payables”.

A change order is an instruction by the customer for a change in the scope of the work to be performed under the contract that may lead to an increase or a decrease in contract revenue. A variation is included in contract revenue when it is probable that the customer will approve the variation and the amount of revenue arising from the variation; can be reliably measured.

A claim is an amount that the Group seeks to collect from the customer or third party as reimbursement for costs not included in the contract price. Claims are included in contract revenue only when negotiations have reached an advanced stage such that it is probable that the customer will accept the claim; and the amount that it is probable will be accepted by the customer can be measured reliably.

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ii) Revenue from engineering, advisory, consulting services and other services

Revenues from service contracts are recognized in the accounting period in which they are performed using the percentage of completion method, calculated based on the percentage of costs incurred. Additionally, there are contracts whereby income is recognized as it is earned, regardless of when the related fees are received.

iii) Sales of real-estate properties

Revenue from sales of real estate properties is recognized in the results of the period when sales occur, that is, when the properties are delivered and the risks and rewards inherent to ownership are transferred to the buyer and the collection of the corresponding receivables is reasonably assured.

iv) Revenue from Information Technology Services (IT)

The sale of computer equipment includes some services to be provided in a subsequent date to the asset sale as installation and maintenance. When sales agreements include multiple elements, the amount of the revenue is attributed to each element based on their related fair values. The fair value of each element is determined based on the market price prevailing for each element when sold separately. Revenue derived from computer equipment is recognized when the related risks and rewards are transferred to the customer, which occurs upon delivery. Revenue relating to each service element is recognized using the straight-line method.

v) Interest income

Interest income is recognized on a time-proportion basis, using the effective interest method.

vi) Revenue for concession services

Revenue from concession services is recognized according to its nature. Construction and restoration activities are accounted for applying the percentage-of-completion method as described above and operation and maintenance services in the accounting period when they are provided (see Note 2.5).

2.26 Construction contract costs

Contract costs include all direct costs such as materials, labor, subcontracting costs, manufacturing and supply costs of equipment, start-up costs and indirect costs. Periodically, the Group evaluates the reasonableness of the estimates used in the determination of the percentage-of-completion. If, as a result of this evaluation, there are modifications to the revenue or cost previously estimated, or if the total estimated cost of the project exceeds expected revenues, an adjustment is made in order to reflect the effect in results of the period in which the adjustment or loss is incurred.

When the outcome of a construction work cannot be estimated reliably, the revenue of the contract is recognized only up to the amount of the contractual costs incurred and that are likely to be recovered.

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2.27 Leases

a) The Group as a lessee

Operating leases

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases, including prepayments (net of any incentives received from lessor) are charged to the consolidated income statement under the straight-line method over the lease term. The Group’s major kinds of operating leases are leases of machinery, computer equipment, printing equipment, among others.

Finance leases

Leases in which the Group assumes substantially all the risks and rewards of ownership of an asset are classified as finance leases. Each lease payment is allocated between the liability and finance charges so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The corresponding rental obligations, net of finance charges, are included in other payables, short- and long-term in the consolidated statement of financial position.

The interest element of the finance cost is charged to the consolidated income statement of over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant and equipment acquired under finance leases are depreciated over the useful life of the asset or the lease term.

b) Group as a lessor

The Group only has operating leases and the leased assets are stated in the statement of financial position based on the nature of the asset. Revenue from operating leases are recognized under the straight-line method over the lease term and the incentives given to lessees reduce the revenue obtained from leases.

2.28 Dividend distribution

Dividend distribution to the Group shareholders is recognized as a liability in the financial statements in the period in which the dividends are approved.

2.29 Significant non-operating items

Significant non-operating items are separately shown in the financial statements when they are necessary to provide a more adequate understanding of the Group’s financial performance. These material items are income or expenses shown separately due to their nature or significant amount.

3 ADOPTION OF NEW INTERNATIONAL FINANCIAL INFORMATION REGULATIONS (IFRS), AMENDMENTS AND INTERPRETATIONS

3.1. Standards, amendments and interpretations published but not yet in force

The relevant standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Group’s financial statements are disclosed below. The Group intends to adopt these standards, if applicable, when they become effective.

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IFRS 9 “Financial Instruments”

In July 2014, the IASB issued the final version of IFRS 9 Financial Instruments that replaces IAS 39 and all previous versions of IFRS 9. IFRS 9 brings together all three aspects of the accounting for financial instruments project: classification and measurement, impairment and hedge accounting. IFRS 9 is effective for annual periods beginning on or after January 1, 2018, with early application permitted. Except for hedge accounting, retrospective application is required, but the provision of comparative information is not compulsory. For hedge accounting, the requirements are generally applied prospectively, with some limited exceptions. The Group plans to adopt the new standard on the required effective date and will not restate comparative information.

During 2017, the Group performed a detailed impact assessment of all three aspects of IFRS 9. This assessment is based on currently available information and may be subject to changes arising from further reasonable and supportable information being made available to the Group in 2018 when the Group will adopt IFRS 9. Overall, the Group expects no significant impact on its statement of financial position or equity from the adoption of IFRS 9. In addition, the Group will adopt changes in certain financial instruments.

a) Classification and measurement

Management expects to maintain the measurement at fair value for all financial assets that are currently measured at that value. There is no impact on financial liabilities.

b) Impairment

IFRS 9 requires the Group to record an expected credit loss for its debt instruments, loans and account receivables, regardless of the period. The Group will apply the simplified approach on all trade receivables and the general approach for accounts that originate from loans and third parties and related companies.

The Group will strengthen the internal controls, processes and systems regarding the identification of the different financial instruments of accounts receivable loans so that from the moment of initial recognition these items are recognized at their recoverable value. Given the substantially current nature of these accounts and the guarantees received, the Group expects that there will be no significant impact on its consolidated financial statements as a result of the adoption of this standard.

c) Hedge accounting

The Group has determined that all hedge transactions that are currently designated as effective hedges will continue to qualify as hedge accounting under IFRS 9. The Group has chosen not to retrospectively apply IFRS 9 at the time of transition for those hedges designated as hedges under IAS 39. As IFRS 9 does not change the main principles of how an entity should record the effective hedges.

IFRS 15 “Revenue from Contracts with Customers”

IFRS 15 was issued in May 2014 and establishes a five-step model to account for revenue arising from contracts with customers. Under IFRS 15, revenue is recognized at an amount that reflects the consideration agreed with the customer. The new revenue standard will supersede all current revenue recognition requirements under IFRS. Either a full retrospective application or a modified retrospective application is required for annual periods beginning on or after January 1 2018. Early adoption is permitted.

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The Group plans to adopt the new standard on the required effective date using the modified retrospective method, under which the accumulated effect of applying this new standard is presented adjusting the beginning balance of accumulated results (January 1, 2018). During 2016, the Group performed a preliminary assessment of IFRS 15, which was followed by a more detailed analysis in 2017.

(a) Engineering and Construction

At the time of the adoption of IFRS 15, the segment considered the following:

i) In the case of additional services, the Group will strengthen the internal controls, processes and systems regarding the obtaining of the valorizations approved by clients, the follow-up of their timely collection and the write off if necessary.

ii) In the case of work in progress (Note 12), the Group will strengthen the internal controls, processes and systems with respect to the support required to register adjustments for work progress and the construction contract margin as of the date of the financial statements

iii) In the case of construction contracts, the Group will strengthen the internal controls, processes and systems regarding the identification of the different performance obligations agreed in the contract with the client, mainly in the Engineering, Procurement and Construction contracts (EPC by its acronym in English). During the review process of the current procedures and those required by IFRS 15, we observed a case whose current accounting treatment must be corrected in order to recognize the different performance obligations contemplated in the contract. The Group is in the process of determining the effect of this situation on its financial statements, although it estimates that it will not be significant at the date of adoption of IFRS 15 or in subsequent years

iv) In the case of penalties, the Group will strengthen its policies on factual support to support that the recognition of charges is not required to the results

(b) Infrastructure

In the case of penalties, the Group will strengthen its policies to support the recognition at the income statement is not required. Specifically, in the contract between OTAS and PLUSPETROL, the Group will strengthen the internal controls, processes and systems regarding the identification of the different performance obligations agreed with the client.

(c) Real Estate

In the case of real estate sales contracts, the Group will strengthen the internal controls, processes and systems regarding the identification of the different performance obligations agreed in the contract with the client, mainly in contracts that include sale of common areas. During the review of current procedures and those required by IFRS 15, we observe a case whose current accounting treatment must be adapted in order to recognize the different performance obligations contemplated in the contract. The Group is in the process of determining the effect of this situation on its financial statements, although it estimates that it will not be significant at the date of adoption of IFRS 15 or in subsequent years

(d) Presentation and disclosure requirements

IFRS 15 requires the presentation and disclosure of more detailed information than required by current regulations. The presentation requirements represent a significant change in current practice and will increase the volume of disclosures required in the Group’s financial statements. In 2017, the Group continued testing its internal controls, policies and procedures necessary to collect and disclose the required information.

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IFRS 16 “Leases”

IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model similar to the accounting for finance leases under IAS 17. The standard includes two recognition exemptions for lessees: leases of ‘low-value’ assets and short-term leases. IFRS 16 is effective for annual periods beginning on or after 1 January 2019. Early application is permitted only in conjunction with the adoption of IFRS 15. The Group is evaluating the impact of IFRS 16 in its consolidated financial statements with the identification, collection and analysis of current lease agreements.

4 FINANCIAL RISK MANAGEMENT

Financial risk management is carried out by the Group’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 as well as financial risks and carries out periodic supervision and monitoring.

4.1 Financial risk factors

The Group’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 Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Group’s financial performance. The Group uses derivative financial instruments to hedge certain risk exposures in one of its subsidiaries and considers the use of other derivatives in the event that it identifies risks that may generate an adverse effect for the Group in the short and medium-term.

a) Market risks

i) Foreign exchange risk

The Group 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, 2016, and 2017 this exposure is mainly concentrated in fluctuations of U.S. dollar, the Chilean and Colombian Pesos. The foreign exchange risk of the investments in Bolivia and Panama are not significant due to the volume of operations.

At December 31, 2017, the consolidated statement of financial position includes assets and liabilities in foreign currency (mainly in U.S. dollars) equivalent to S/1,851.3 million and S/1,982 million, respectively (S/2,770.9 million and S/2,708.30 million, respectively, at December 31, 2016) equivalents to US$570.5 million and US$610.8 million, respectively (US$826.6 million and US$806 million, respectively, at December 31, 2016).

During 2017, the Peruvian Sol, the Chilean and Colombian Pesos were exposed against the U.S. dollar. The Group’s exchange gains and losses for 2017 amounted to S/336.8 million and S/330.5 million, respectively (S/761.8 million and S/774.3 million, respectively, in 2016 and S/427.2 million and S/510.1 million, respectively, in 2015).

If at December 31, 2017 the Peruvian Sol and the Chilean and Colombian Pesos had strengthened/weakened by 2% against the U.S. dollar, with all other variables held constant, the pre-tax profit for the year would have increased/decreased by S/0.1 million (S/0.3 million in 2016 and S/1.7 million in 2015).

At December 31, 2017 the consolidated statement of changes in equity comprises a foreign currency translation adjustment originated by its subsidiaries. Their financial position includes assets and liabilities in functional currency equivalent to CLP 77,199.1 million and CLP 74,447.9 million, respectively (CLP 75,561.3 million and CLP 87,221.10 million, respectively, at December 2016), COP 101,300.8 million and COP 74,319.7 million, respectively (COP 169,774.8 and COP 166,091.8 million, respectively, at December 2016).

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The Group’s foreign exchange translation adjustment for 2017 was negative for S/11.3 million (negative for S/14.3 million in 2016 and S/59.7 million in 2015).

ii) Price risk

Management considers that the exposure of the Group 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 Group’s interest rate risk mainly arises from its long-term borrowings. Borrowings issued at variable rates expose the Group to cash flow interest rate risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk. Group policy is to maintain most of its borrowings at fixed rate instruments; 57.8% of total debt in 2017 (52.8% in 2016) was contracted at fixed rates and 42.2% at variable rates (47.2% in 2016) which consisted of a 22.9% fixed rate plus VAC (adjusted for inflation) and the remaining 19.3% at a variable rate (18% fixed rate + VAC and the remaining 29.2% at a variable rate in 2016).

The debt subject to fixed rate plus VAC is related to a bond issued in Peruvian soles to finance the GyM Ferrovías Project, Metro Line 1 (Note 20). Any increase in the interest rate resulting from higher inflation will have no significant impact on the Group’s profit because these revenues are also adjusted for inflation.

During 2017 and 2016 borrowings at variable rates are denominated in Peruvian Soles and U.S. dollars and the Group’s policy is to manage their cash flow risk by using interest-rate swaps, which are recognized under hedge accounting. However, regarding the variable rate loans related to GSP (Note 19-a), Management decided to assume the risk since it expects to pre-pay them before due. If at December 31, 2017, the Libor rate plus 3 months had increased/ decreased by 5%, with all other variables held constant, the pre-tax profit for the year would have increased/ decreased by S/0.49 million (S/0.40 million in 2016). In 2017 and 2016 there were no significant ineffectiveness in the cash flow hedge.

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. For banks and financial institutions, only independently rated parties with a minimum rating of ‘A’ are accepted.

With respect to loans to related parties, the Group 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.

No credit limits were exceeded during the reporting period, and Management does not expect the Group to incur any losses from performance by these counterparties, except for the ones already recorded at the financial statements.

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c) Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and cash equivalents, the availability of funding through an adequate number of sources of committed credit facilities and the capacity to close out positions in the market. Historically, the Group cash flows enabled it to maintain sufficient cash to meet its obligations. However, as of December 31, 2016, the Group started to experienced liquidity risk due to the early termination of the GSP concession agreement and the obligations assumed (Note 16 a-i). As a consequence, the Group started a disinvestment plan to be able to meet the obligations resulting from this scenario (Note 38).

Group Corporate Finance monitors rolling forecasts of the Group’s liquidity requirements to ensure it has sufficient cash to meet operational needs, so that the Group does not breach borrowing limits or covenants, where applicable, on any of its borrowing facilities. Less significant financing transactions are controlled by the Finance Management of each subsidiary.

Such forecasting takes into consideration the Group’s debt financing plans, covenant compliance, compliance with internal statement of financial position ratio targets and, if applicable, external regulatory or legal requirements; for example, foreign currency restrictions.

Surplus cash held by the operating entities over the balance required for working capital management are invested in interest-bearing checking accounts or time deposits, selecting instruments with appropriate maturities and sufficient liquidity.

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

	Less than 1 year		1-2 years		2-5 years		More than 5 years		Total
At December 31, 2016
Other financial liabilities (except for finance leases)		1,936,825		128,508		173,145		—		2,238,478
Finance leases		127,496		85,989		26,780		19,506		259,771
Bonds		113,299		180,431		365,697		1,334,485		1,993,912
Trade accounts payables		1,276,617		—		—		—		1,276,617
Accounts payables to related parties		80,217		28,082		37,238		—		145,537
Other accounts payables		303,827		49,064		143,655		—		496,546
Other non-financial liabilities		—		1,081		—		—		1,081
		3,838,281		473,155		746,515		1,353,991		6,411,942
At December 31, 2017
Other financial liabilities (except for finance leases)		1,003,500		336,913		290,253		—		1,630,666
Finance leases		72,864		41,877		24,022		638		139,401
Bonds		109,746		148,986		353,349		1,272,647		1,884,728
Trade accounts payables		1,453,046		—		—		—		1,453,046
Accounts payables to related parties		55,174		25,954		—		—		81,128
Other accounts payables		153,498		34,527		371,976		—		560,001
Other non-financial liabilities		—		383		—		—		383
		2,847,828		588,640		1,039,600		1,273,285		5,749,353

4.2 Capital management

The Group’s objectives when managing capital are to safeguard the Group’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 reduce the cost of capital. In 2017 the situation of the Group, has lead Management to monitor deviations that might cause the non-compliance of covenants and may hinder renegotiation of liabilities (Note19-a and Note 38-a).

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In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

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

As of December 31, 2017, and 2016, the gearing ratio is presented below indicating the Company’s strategy to keep it in a range from 0.10 to 0.70.

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

	2016			2017
Total financial liabilities and bonds		3,348,152			2,637,630
Less: Cash and cash equivalent		(606,950	)		(626,180	)
Net debt		2,741,202			2,011,450
Total equity		2,489,737			2,589,078
Total capital		5,230,939			4,600,528
Gearing ratio		0.52			0.44

4.3 Fair value estimation

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

•	Level 1:	Measurement based on quoted prices in active markets for identical assets or liabilities.
•	Level 2:	Measurement based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices).
•	Level 3:	Measurement based on inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs, generally based on internal estimates and assumptions of the Group).

The table below shows the Group’s assets and liabilities measured at fair value at December 31, 2016 and 2017:

	Level 1		Level 2		Level 3		Total
At December 31, 2016
Financial assets
Financial assets at fair value through profit or loss		6,379		—		—		6,379
Financial liabilities
Derivatives used for hedging		—		1,081		—		1,081
At December 31, 2017
Financial assets
Financial assets at fair value through profit or loss		181		—		—		181
Financial liabilities
Derivatives used for hedging		—		383		—		383

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There were no transfers between levels 1 and 2 during the year.

Financial instruments in level 3

The fair value as of December 31, 2015 of the investment held in Transportadora de Gas del Perú S.A. (TGP) classified as other financial asset was based on observable inputs in the market and unobservable inputs. The Group calculated its fair value based on its discounted cash flows as of the financial statement date. The information used to determine the fair value of this investment corresponds to Level 3 (Note 10).

The following table shows the changes in fair value by the investment held in TGP for the years ended on December 31:

	2015		2016
Opening balance		93,144		120,134
Unrealized gains (losses) recognized in the period		26,990		(2,996	)
Derecognition of investment sold:
- Historical cost of investment		—		(61,105	)
- Cumulative fair value		—		(56,033	)
Final balance		120,134		—

The carrying amounts of cash and cash equivalents correspond to their fair values. The Company considers that the carrying amount of trade accounts receivable and payable is similar to their fair values since they are short term. The fair value for long-term receivables and liabilities is disclosed in Note 11, Note 12, Note 19-c, Note 20 and Note 22. The fair value of financial liabilities has been estimated by discounting the future contractual cash flows at the interest rate currently prevailing in the market and which is available to the Company for similar financial instruments (Level 2).

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.

5.1 Critical accounting estimates and assumptions

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below.

a) Estimated impairment of goodwill and other intangible assets with indefinite useful life

Impairment reviews are undertaken annually to determine if goodwill arising from business acquisitions and other intangible assets with indefinite useful life are impaired, in accordance with the policy described in Note 2.15-i). For this purpose, goodwill is allocated to the different CGU to which it relates while other intangible assets with indefinite useful life are assessed individually. The recoverable amounts of the CGU and of other intangible assets with indefinite useful life have been determined based on the higher of their value-in-use and fair value less costs to sell. This evaluation requires the exercise of Management’s professional judgment to analyze any potential indicators of impairment as well as the use of estimates in determining the value in use, including preparing future cash flows, macro-economic forecasts as well as defining the interest rate at which said cash flows will be discounted.

F-34

If the Group experiences a significant drop in revenues or a drastic increase in costs or changes in other factors, the fair value of their business units might decrease. If management determines the factors that reduce the fair value of the business are permanent, those economic factors will be taken into consideration to determine the recoverable amount of those business units and therefore, goodwill as well as other intangible assets with indefinite useful life may be deemed to be impaired, which may cause their write-down to be required.

In accordance with the impairment evaluations carried out by the Management, losses due to deterioration of the goodwill and of the trademarks have been recognized; they were generated by the decrease in the expected flows as a reduction of the contracts’ “backlog”.

At December 31, 2016 and 2017 the Group has performed a sensitivity analysis increasing or decreasing the assumptions of gross margin, discount rate and revenue and terminal growth rate by a 10%, with all the other variables held constant, as follows:

	Difference between recoverable amount and carrying amounts
	2016			2017
Goodwill
Gross margin		(10%)	+10%		(10%)	+10%
Mining construction services		19.18%	71.19%		—	—
Engineering and construction		(42.68%)	17.85%		81.31%	143.63%
Electromechanical		32.16%	74.41%		197.30%	620.85%
IT equipment and services		200.93%	289.04%		0.32%	38.87%
Telecommunication services		(110.85%)	176.40%		465.17%	1339.26%
Discount rate:		(10%)	+10%		(10%)	+10%
Mining construction services		65.94%	28.99%		—	—
Engineering and construction		8.22%	(27.56%)		146.07%	86.86%
Electromechanical		74.42%	36.77%		478.08%	354.39%
IT equipment and services		285.63%	212.65%		30.06%	11.25%
Telecommunication services		70.31%	4.59%		2190.66%	1967.37%
Terminal growth rate:		(10%)	+10%		(10%)	+10%
Mining construction services		42.92%	47.55%		—	—
Engineering and construction		(16.49%)	(7.84%)		107.41%	117.91%
Electromechanical		51.14%	55.62%		402.19%	416.25%
IT equipment and services		243.21%	247.06%		18.54%	20.52%
Telecommunication services		26.14%	39.94%		2232.86%	2394.81%

F-35

	Difference between recoverable amount and carrying amounts
	2016			2017
Trademarks
Revenue growth rate:		(10%)	+10%		(10%)	+10%
Morelco		22.37%	42.03%		16.37%	(4.79%)
Vial yVives - DSD		17.01%	43.01%		(40.72%)	(63.32%)
Adexus		(8.18%)	(9.91%)		22.10%	(0.10%)
Discount rate:		(10%)	+10%		(10%)	+10%
Morelco		53.35%	15.66%		(7.21%)	22.92%
Vial yVives - DSD		56.88%	10.88%		(58.56%)	(45.65%)
Adexus		15.42%	(10.59%)		(2.13%)	28.02%
Terminal growth rate:		(10%)	+10%		(10%)	+10%
Morelco		29.19%	34.94%		8.61%	3.17%
Vial yVives - DSD		23.19%	37.83%		(51.36%)	(54.47%)
Adexus		(0.12%)	1.89%		13.27%	8.86%

In 2017 if the gross margin, the discount rate or terminal growth rate had been 10% below or 10% above Management’s estimates, the Group would have not recognized a provision for impairment of goodwill (in 2016 would have recognized a provision for impairment of the Engineering and Construction CGU and Telecommunication Services CGU).

In 2017 if the revenue growth rate, terminal growth rate or the discount rate had been 10% or had been 10% above Management’s estimates, the Group would have recognized a provision for impairment of their trademarks in Morelco, Vial y Vies-DSD and Adexus (in 2016, would have recognized a provision for impairment of trademark in Adexus).

At December 31, 2017, as a result of these evaluations, an impairment was identified and recorded in the Engineering and Construction CGU, trademark impairment in Vial and Vives-DSD and goodwill impairment in Morelco (At December 31, 2016, a goodwill impairment was recorded in the Engineering and Construction CGU, in Vial and Vives-DSD) (Note 18).

b) Income taxes

Determination of the tax obligations and expenses requires interpretations of the applicable tax laws and regulations. The Group seeks legal and tax counsel before making any decision on tax matters.

Deferred tax assets and liabilities are calculated on the temporary differences arising between the tax basis of assets and liabilities and the amounts stated in the financial statement of each entity that makes up the Group, using the tax rates in effect in each of the years in which the difference is expected to reverse. Any change in tax rates will affect the deferred income tax assets and liabilities. This change will be recognized in the income statement in the period in which the change takes effect.

F-36

Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences and tax loss carryforwards can be utilized. For this purpose, the Group takes into consideration all available evidence, including factors such as historical data, projected income, current operations and tax planning strategies. A tax benefit related to a tax position is only recognized if it is more likely than not that the benefit will ultimately be realized.

The Group´s maximum exposure to tax contingencies amounts to S/13.5.

c) Percentage of completion revenue recognition

Revenues from construction contracts are recognized using the percentage-of-completion method which is based on the completion of a physical proportion of the overall work contract considering total costs and revenues estimated at the end of the project (Note 2.25 i).

As of December 31, 2015, 2016 and 2017, a sensitivity analysis was performed considering a 10% increase/decrease in the Group’s gross margins, as follows:

	2015			2016			2017
Sales		5,501,537			3,945,599			3,253,199
Gross profit		159,158			194,378			224,040
%		2.89			4.93			6.89
Plus 10%		3.18			5.42			7.58
Increase in pre-tax profit		15,787			19,473			22,552
		174,949			213,851			246,592
Less 10%		2.60			4.44			6.20
Decrease in pre-tax profit		(15,787	)		(19,473	)		(22,552	)
		143,371			174,905			201,488

d) Provision for well closure costs

At December 31, 2017 the present value of the estimated provision for closure of 144 wells located in Talara amounted to S/16.8 million (S/17.2 million as of December 31, 2016 for closure of 144 wells). The well closure liability is adjusted to reflect the changes that resulted from the passage of time and from reviews of either the date of occurrence or the amount of the present value of the originally estimated obligations (Note 18).

The Group estimates the present value of its future obligation for well closure costs, or well closure liability, and increases the carrying amount of the asset that will be withdrawn in the future and that is shown under the heading of intangibles in the statement of financial position.

The pre-tax discount rate used for the present value calculation was 2.09% for Block I and 2.27% for Block V (1.93% for Blocks I and V for year 2016), and 2.72% for Blocks III and IV, (2.93% for year 2016) based on a 5 to 30-year rate used on U.S. bonds effective at December 31, 2017

If, at December 31, 2016 and 2017, the estimated rate had increased or decreased by 10%, with all variables held constant, the impact on pre-tax profit would have not been significant.

e) Impairment of investment in Gasoducto Sur Peruano

Based on the termination of the concession agreement, on which Gasoducto Sur Peruano S.A. (GSP) acts as concessionaire (Note 16.a-i), the Group identified potential impairment indicators affecting the recoverability of its investment. Consequently, the Group has applied the rules stated in IAS 36, ‘Impairment of assets” to determine the recoverable amount of this investment.

F-37

In that process, the Group has applied judgment to weight the various uncertainties surrounding the amount that can be recovered from this investment. Management has determined the recoverable amount assuming two key factors: (i) the amount that GSP will recover as a result of the public auction, and (ii) the validity of its right to subordinate the Odebrecht Group’s debts in GSP.

With relation to the amount to be recovered by GSP, the Group is assuming a recovery of the minimum amount established in the concession agreement, which is equivalent to 72.25% of the Net Carrying Amount (NCA) of the Concession assets. This amount, in substance, represents a minimum payment to be obtained by GSP based on a public auction (liquidation) to be set up for the adequate transfer of the Concession’s assets to a new Concessionaire within a year, under the relevant contractual terms and conditions.

With relation to the validity of its right to subordinate the Odebrecht Group’s liabilities in GSP, Management assessment, in consultation with its legal advisors, is that, although some uncertainties exist, these do not represent a material risk for exercising this right.

The concession agreement also established two additional tranches of 82.5% or 100% of the NCA to be recovered as a result of public auction, depending on several factors. In any of these scenarios, the Group would be able to recover their total investment and no additional impairment would be necessary to be recognized.

Depending on the date in which the NCA is actually cashed, the Group may need to take into account additional costs ranging from S/18.95 million (US$5.64 million) to S/42.2 million (US$12.56 million), due to higher financial expense.

f) Impairment of the joint operation in Consorcio Constructor Ductos del Sur (CCDS)

CCDS was mainly engaged in performing the engineering, procurement and construction work for Gasoducto Sur Peruano S.A. (GSP). Due to the early termination of GSP, the Group applied the rules stated in IAS 36 “Impairment of assets” and IAS 37 “Provisions” to determine the recoverable amounts of the assets and liabilities to be recorded, respectively. As of December 31, 2016, adjustments were made to the audited financial statements of CCDS; as a result, the following adjustments were included in the financial statements of our subsidiary GyM S.A., resulting in a loss of S/15.2 million:

	S/000
Income for debt forgiveness (i)		431,484
Indemnification income		33,600
Work in progress impairment (ii)		(410,199	)
Other provisions		(24,915	)
Inventories impairment (iii)		(33,824	)
Financial expenses		(7,004	)
Property, plant and equipment impairment		(4,143	)
Others (liability) asset, net		(164	)
		(15,165	)

(i) The extinguished trade accounts payable relates to the recognition of the construction project estimated margin recorded as a liability (Note 2.25.i)

(ii) The recoverable of work in progress relates to the minimum secured payment to be obtained from GSP.

(iii) Inventories were specialized in nature assets and cannot be traded in an active market that could not be sold in an active market.

F-38

5.2 Critical judgments in applying of the accounting policies

Consolidation of entities in which the Group holds less than 50%

The Group owns some direct and indirect subsidiaries of which the Group has control even though it has less than 50% of the voting rights. These subsidiaries mainly comprise indirect subsidiaries in the real estate business owned through Viva GyM S.A., has the power to affect the relevant activities that impact the subsidiaries’ returns, where even though the Group holds interest between 30% and 50%, has the power to affect the relevant activities that impact the subsidiaries’ returns. Additionally, the Group has de facto by a contractual agreement with the majority investor control over Promotora Larcomar S.A. of which it owns 46.55% of equity interest.

Consolidation of entities in which the Group does not have joins control but have rights and obligations over the assets and liabilities

The Group assesses, on an ongoing basis, the nature of the contracts signed with one or more parties. If no control or joint control is determined to be held by the Group but it has rights to assets and obligations for liabilities under the arrangement, then the Group recognizes its assets, liabilities, revenue and expenses and its share of any jointly controlled assets or liabilities and any revenue or expense arising under the arrangement as a joint operation in accordance with IFRS 11 - Joint arrangements (Note 2.2-d).

6 INTERESTS IN OTHER ENTITIES

The consolidated financial statements include the accounts of the Group and its subsidiaries. Additionally, the consolidated financial statements of the Group include its interest in joint operations in which the Company or certain subsidiaries have joint control with their partners (Note 2.2-d).

a) Principal subsidiaries

The following table shows the principal direct and indirect subsidiaries classified by operating segment (Note 7):

Name	Country	Economic activity
Engineering and Construction:
GyM S.A.	Peru, and Colombia	Civil construction, electro-mechanic assembly, buildings management and implementing housing development projects and other related services.
Stracon GyM S.A.	Peru and Panama	Mining contracting activities, providing mining services and carrying out drilling, demolition and any other activity related to construction and mining operations.
GyM Chile S.p.A.	Chile	Electromechanical assemblies and services to energy, oil, gas and mining sector.
Vial y Vives - DSD S.A.	Chile	Electromechanical assemblies and services. Develop activities related to the construction of engineering projects, civil construction projects and electromechanical assemblies, as well as architectural design and installations in general. Construction and assemblies and electromechanical services in the sectors of energy, oil, gas and mining.
GMI S.A.	Peru	Advisory and consultancy services in engineering, carrying out studies and projects, managing projects and supervision of works.
Morelco S.A.S	Colombia and Ecuador	Providing construction and assembly services, supplying equipment and material to design, build, assemble, operate and maintain all types of mechanical engineering, instrumentation and civil work.

F-39

Name	Country	Economic activity
Infrastructure:
GMP S.A.	Peru	Natural oil and oil by-products extraction services, as well as providing storage and fuel dispatch services.
Oiltanking Andina Services S.A.	Peru	Operation of the gas processing plant of Pisco - Camisea.
Transportadora de Gas Natural Comprimido Andino S.A.C.	Peru	Supply, process and market natural gas and its derivates.
Concar S.A.	Peru	Operating and maintaining roads.
GyM Ferrovías S.A.	Peru	Concession for the operation of the public transportation system (Metro de Lima Metropolitana).
Survial S.A.	Peru	Concession for constructing, operating and maintaining the Section 1 of the “Southern Inter-oceanic” road.
Norvial S.A.	Peru	Concession for restoring, operating and maintaining the “Ancón - Huacho - Pativilca” section of the Panamericana Norte road.
Concesión Canchaque S.A.	Peru	Concession for operating and maintaining the Buenos Aires - Canchaque road.
Concesionaria Vía Expresa Sur S.A.	Peru	Concession for designing, constructing, operating and maintaining the Via Expresa - Paseo de la República in Lima.
Real estate:
VIVA GyM S.A.	Peru	Developing and managing real estate projects directly or together with other partners.
Technical services:
CAM Holding S.p.A.	Chile and Colombia	Electric and technological services for the power industry.
Coasin Instalaciones Ltda.	Chile	Installing and maintaining network and equipment for telecommunications.
Adexus S.A.	Chile, Peru, Colombia and Ecuador	IT solutions services.
Parent company operation:
Generadora Arabesco S.A.	Peru	Implementing projects related to electric power-generating activities.
Larcomar S.A.	Peru	Exploiting land right to use the Larcomar Shopping Center.
Promotora Larcomar S.A.	Peru	Building a hotel complex on a plot of land located in the district of Miraflores.
Promotores Asociados de Inmobiliarias S.A.	Peru	Operating in the real-estate industry and engaged in the development and selling office facilities in Peru.
Negocios del Gas S.A.	Peru	Construction, operation and maintenance of the pipeline system to transport natural gas and liquids of natural gas.

F-40

The following are the Group’s subsidiaries and related interests at December 31, 2017:

	Percentage of common shares directly held by Parent (%)			Percentage of common shares held by Subsidiaries (%)			Percentage of common shares held by the Group (%)			Percentage of common shares held by non- controlling interests (%)
Engineering and Construction:
GyM S.A.		98.23	%		—			98.23	%		1.77	%
- GyM S.A. subsidiaries		—			87.06	%		87.06	%		12.94	%
Stracon GyM S.A.		—			87.59	%		87.59	%		12.41	%
GyM Chile SpA		—			99.99	%		99.99	%		0.01	%
Vial y Vives - DSD S.A.		—			94.49	%		94.49	%		5.51	%
Morelco S.A.S.		—			70.00	%		70.00	%		30.00	%
GMI S.A.		89.41	%		—			89.41	%		10.59	%
Infrastructure:
GMP S.A.		95.00	%		—			95.00	%		5.00	%
Oiltanking Andina Services S.A.		—			50.00	%		50.00	%		50.00	%
Transportadora de Gas Natural
Comprimido Andino S.A.C		—			99.93	%		99.93	%		0.07	%
Concar S.A.		99.75	%		—			99.75	%		0.25	%
GyM Ferrovias S.A.		75.00	%		—			75.00	%		25.00	%
Survial S.A.		99.99	%		—			99.99	%		0.01	%
Norvial S.A.		67.00	%		—			67.00	%		33.00	%
Concesión Canchaque S.A.		99.96	%		—			99.96	%		0.04	%
Concesionaria Vía Expresa Sur S.A.		99.98	%		0.02	%		100.00	%		—
Real Estate:
Viva GyM S.A.		63.44	%		36.10	%		99.54	%		0.46	%
- Viva GyM S.A. subsidiaries		—			60.51	%		60.51	%		39.49	%
Services:
Cam Holding S.p.A.		100.00	%		—			100.00	%		—
Coasin Instalaciones Ltda.		—			100.00	%		100.00	%		—
CAM Servicios del Perú S.A.		73.16	%		—			73.16	%		26.84	%
Adexus S.A.		91.03	%		—			91.03	%		8.97	%
Parent company operations:
Generadora Arabesco S.A.		99.00	%		—			99.00	%		1.00	%
Larcomar S.A.		79.66	%		—			79.66	%		20.34	%
Promotora Larcomar S.A.		46.55	%		—			46.55	%		53.45	%
Promotores Asociados de Inmobiliarias S.A.		99.99	%		—			99.99	%		0.01	%
Negocios del Gas S.A.		99.99	%		0.01	%		100.00	%		—
Agenera S.A.		99.00	%		1.00	%		100.00	%		—

F-41

The following are the Group’s subsidiaries and related interests at December 31, 2016:

	Percentage of common shares directly held by Parent (%)			Percentage of common shares held by Subsidiaries (%)			Percentage of common shares held by the Group (%)			Percentage of common shares held by non- controlling interests (%)
Engineering and Construction:
GyM S.A.		98.23	%		—			98.23	%		1.77	%
- GyM S.A. subsidiaries		—			87.06	%		87.06	%		12.94	%
Stracon GyM S.A.		—			87.59	%		87.59	%		12.41	%
GyM Chile SpA		—			99.99	%		99.99	%		0.01	%
Vial y Vives – DSD S.A.		—			94.49	%		94.49	%		5.51	%
Morelco S.A.S.		—			70.00	%		70.00	%		30.00	%
GMI S.A.		89.41	%		—			89.41	%		10.59	%
Infrastructure:
GMP S.A.		95.00	%		—			95.00	%		5.00	%
Oiltanking Andina Services S.A.		—			50.00	%		50.00	%		50.00	%
Transportadora de Gas Natural
Comprimido Andino S.A.C		—			99.93	%		99.93	%		0.07	%
GyM Ferrovias S.A.		75.00	%		—			75.00	%		25.00	%
Survial S.A.		99.99	%		—			99.99	%		0.01	%
Norvial S.A.		67.00	%		—			67.00	%		33.00	%
Concesión Canchaque S.A.		99.96	%		—			99.96	%		0.04	%
Concesionaria Vía Expresa Sur S.A.		99.98	%		0.02	%		100.00	%		—
Real Estate:
Viva GyM S.A.		63.44	%		36.10	%		99.54	%		0.46	%
- Viva GyM S.A. subsidiaries		—			60.51	%		60.51	%		39.49	%
Services:
GMD S.A.		89.23	%		—			89.23	%		10.77	%
Cam Holding S.p.A.		100.00	%		—			100.00	%		—
Concar S.A.		99.75	%		—			99.75	%		0.25	%
Gestión de Servicios Digitales S.A.		—			100.00	%		100.00	%		—
Coasin Instalaciones Ltda.		—			100.00	%		100.00	%		—
CAM Servicios del Perú S.A.		73.16	%		—			73.16	%		26.84	%
Adexus S.A.		91.03	%		—			91.03	%		8.97	%
Parent company operations:
Generadora Arabesco S.A.		99.00	%		—			99.00	%		1.00	%
Larcomar S.A.		79.66	%		—			79.66	%		20.34	%
Promotora Larcomar S.A.		46.55	%		—			46.55	%		53.45	%
Promotores Asociados de
Inmobiliarias S.A.		99.99	%		—			99.99	%		0.01	%
Negocios del Gas S.A.		99.99	%		0.01	%		100.00	%		—
Agenera S.A.		99.00	%		1.00	%		100.00	%		—

On November 17, 2015, Cam Holding S.p.A. sold 100% of its shares in Cam Brasil Multiservicos S.A., at a total US$300 thousand; as a result, a loss of S/8.3 million was recorded, which is shown in the statement of income, within “Profit (loss) on sale of investments” (a cash balance of S/0.98 million was presented net of the cash received for the sale of this investment in the statement of cash flow).

In August 2016, the Company acquired additional interest in the share capital of Adexus S.A. to obtained control (Note 33 a)

All investments in subsidiaries have been included in the consolidation. The percentage of voting rights in those subsidiaries is directly held by the Parent Company and do not significantly differ from the percentage of shares held. There are no restrictions to the access or use of the Group’s assets and liabilities.

F-42

The following are the Group’s subsidiaries non-controlling interests at December 31:

	2016		2017
NON-CONTROLLING PARTICIPATION
Viva GyM S.A. and subsidiaries		241,140		224,345
Viva GyM S.A.		1,700		1,576
GyM S.A. and subsidiaries		100,840		95,052
GyM S.A.		9,354		8,118
Norvial S.A.		61,349		68,419
CAM Holding S.p.A.		26,589		(6,417	)
GMP S.A.		20,879		22,263
GyM Ferrovias S.A.		30,548		35,419
Promotora Larcomar S.A.		13,539		13,395
Other		3,375		3,578
		509,313		465,748

Summarized financial information of subsidiaries with material non-controlling interests

Set out below is the summarized financial information for each subsidiary that has non-controlling interests that are material to the Group.

Summarized statement of financial position

	Viva GYM S.A. and subsidiaries						GyM S.A. and subsidiaries						Norvial S.A.
	At December 31,						At December 31,						At December 31,
	2016			2017			2016			2017			2016			2017
Current:
Assets		1,117,065			884,591			1,849,077			1,875,231			107,838			88,077
Liabilities		(515,781	)		(352,125	)		(2,050,803	)		(2,142,618	)		(49,721	)		(45,613	)
Current net assets (liabilities)		601,284			532,466			201,726			(267,387	)		58,117			42,464
Non-current:
Assets		113,594			78,457			1,326,599			1,368,460			467,449			492,803
Liabilities		(104,179	)		(44,068	)		(471,424	)		(546,342	)		(339,661	)		(327,936	)
Non-current net assets (liabilities)		9,415			34,389			855,175			822,118			127,788			164,867
Net assets		610,699			566,855			653,449			554,731			185,905			207,331

Summarized income statement    

	Viva GyM S.A. and subsidiaries						GyM S.A. and subsidiaries						Norvial S.A.
	For the year ended						For the year ended						For the year ended
	2016			2017			2016			2017			2016			2017
Revenue		411,518			647,535			4,036,226			3,184,833			216,260			149,467
Profit (loss) before income tax		104,223			153,602			(85,857	)		18,827			63,582			68,104
Income tax		(27,054	)		(35,900	)		(11,228	)		(13,482	)		(16,262	)		(18,678	)
Profit (loss) for the period		77,169			117,702			(97,085	)		5,345			47,320			49,426
Other comprehensive Income		—			—			19,486			(2,641	)		—			—
Total comprehensive Income for the period		77,169			117,702			(77,599	)		2,704			47,320			49,426
Dividends paid to non-controlling interest Note (36-c)		5,050			21,165			8,288			4,056			7,260			9,240

F-43

Summarized statement of cash flows

	Viva GyM S.A. and subsidiaries						GyM S.A. and subsidiaries						Norvial S.A.
	For the year ended						For the year ended						For the year ended
	2016			2017			2016			2017			2016			2017
Cash flows from operating activities provided by (used in), net		44,910			164,852			224,428			239,935			(42,051	)		25,041
Cash flows from investing activities provided by (used in), net		(546	)		79,471			(29,853	)		44,020			—			—
Cash flows from financing activities provided by (used in), net		(59,931	)		(203,958	)		(283,296	)		(191,689	)		99,193			(48,010	)
Increase (decrease) in cash and cash equivalents, net		(15,567	)		38,817			(88,721	)		92,266			57,142			(22,969	)
Cash and cash equivalents at the beginning of the year		74,459			58,892			167,620			87,294			38,276			95,418
Cash and cash equivalents at the end of the year		58,892			97,709			78,899			179,560			95,418			72,449

The information above is the amount before inter-company eliminations.

b) Public services concessions

The Group acts as an operator in various public service concessions. When applicable, revenue attributable to the construction or restoration of infrastructure has been accounted for by applying the models set forth in Note 2.5 (financial asset, intangible asset and bifurcated models).

Subsidiary Transportadora de Gas Natural Comprimido Andino S.A.C. (hereinafter TGNCA) held a concession to design, finance, construct, maintain and operate the compressed natural gas supply system to be implemented in certain cities. The Concession was recognized under the financial asset model. In September 2016 the Concession Agreement was terminated on the grounds of counterparty’s failure to meet the required conditions (availability of assets and resources). As a result, TGNCA recognized an impairment loss of receivables amounting to S/6.3 million, which is included in the income statement as of December 31, 2016 within “cost of services provided”. The balance remaining relates to trade accounts receivable for S/17.3 million, to be received from the Ministry of Energy and Mines. This balance was classified as current assets because a favorable result was obtained with the interposed award.

In all the Group concessions’, the infrastructure is returned to grantor at the end of the concession agreement.

F-44

The concessions held by the Group are as follows at December 31, 2017:

Name of Concession	Description	Estimated investment	Consideration	Ordinary shares held			Concession termination		Accounting model
Survial S.A.	This company operates and maintains a 750 km road from the San Juan de Marcona port to Urcos, Peru, which is connected to an interoceanic road. The road has five toll stations and three weigh stations.	US$98.9 million	Transaction secured by the Peruvian Government involving from annual payments for the maintenance and operation of the road, which is in charge of the Peruvian Ministry of Transport and Communications (MTC).		99.9	%		2032		Financial asset
Canchaque S.A.C.	This company operates and periodically maintains a 78 km road from the towns of Buenos Aires to Canchaque, in Peru The road has one toll station.	US$29 million	Transaction secured by the Peruvian Government regardless the traffic volume. Revenue is secured by an annual minimum amount of US$0.3 million.		99.96	%		2025		Financial asset
Concesionaria. La Chira S.A.	Designing, financing, constructing, operating and maintaining project called “Planta de Tratamiento de Aguas Residuales y Emisario Submarino La Chira”. The Project will treat approximately 25% of waste waters in Lima.	S/250 million	Transaction secured by the Peruvian Government consisting of monthly and quarterly payments settled by Sedapal´s collection trust.		50.00	%		2036		Financial asset
GyM Ferrovías S.A.	Concession for the operation of Line 1 of the Lima Metro, Peru’s only urban railway system in Lima city, which includes (i) operation and maintenance of the five existing trains, (ii) operation and maintenance and the acquisition of 19 trains on behalf of the Peruvian Government and (iii) design and construction of the repair yard and maintenance of railway.	S/548.8 million	Transaction secured by the Peruvian Government involving a quarterly payment received from MTC based on km travelled per train.		75.00	%		2041		Financial asset

F-45

Name of concession	Description	Estimated investment		Consideration	Ordinary shares held			Concession termination		Accounting model
Norvial S.A.	The Company operates and maintains part of the only highway that connects Lima to the northwest of Peru. This 183 km road known as Red Vial 5 runs from the cities of Ancón to Pativilca and has three toll stations.	US$	152 million	From users (self-financed concession; revenue is derived from collection of tolls).		67.00	%		2028		Intangible
Vía Expresa Sur S.A.	The Company obtained the concession for designing, financing, building, operating and maintaining the infrastructure associated with the Vía Expresa Sur Project. This project involves the second stage expansion of the Via Expresa - Paseo de la República,between Av. República de Panamá and and Panamericana highway.	US$	196.8 million	Contract give the right of collection from users; however the Peruvian Government shall pay the difference when the operating revenue obtained is below US$18 million during the first two years and below US$19.7 million from the third year to the fifteenth year of the effective period of the financing, with a ceiling of US$10 million. In June 2017, the contract was suspended temporarily for one year by agreement between Concessionaire and grantor.		99.98	%		2053		Bifurcated
Recaudo Trujillo S.A.C.	Design, implementation, operation, technological maintenance and renewal (estimate) of the single system of electronic collection. Design, implementation, operation and maintenance of the Clearing house Implementation of the Fleet Control Center, as well as training to personnel.	US$	40.2 million	Economic consideration resulting from applying the “price for validation” considering daily validations input on the system to be managed through a trust.		95.00	%		2036		Intangible

F-46

c) Principal Joint Operations

At December 31, 2017, the Group is a partner to 64 Joint Operations with third parties (69 at December 31, 2016). The table below lists the Group’s major Joint Operations.

	Percentage of interest
Joint operations	2016			2017
Graña y Montero S.A.A.
- Concesionaria la Chira S.A.		50.00	%		50.00	%
GyM S.A.
- Consorcio Constructor Alto Cayma		50.00	%		50.00	%
- Consorcio Rio Pallca – Huanza		40.00	%		40.00	%
- Consorcio Alto Cayma		49.00	%		49.00	%
- Consorcio Lima Actividades Comerciales		50.00	%		50.00	%
- Consorcio Atocongo		40.00	%		40.00	%
- Consorcio Norte Pachacutec		49.00	%		49.00	%
- Consorcio La Chira		50.00	%		50.00	%
- Consorcio Río Urubamba		50.00	%		50.00	%
- Consorcio Vial Quinua		46.00	%		46.00	%
- Consorcio Rio Mantaro		50.00	%		50.00	%
- Consorcio GyM – CONCIVILES		66.70	%		66.70	%
- Consorcio Toromocho		55.00	%		55.00	%
- Consorcio Construcciones y Montajes CCN		25.00	%		25.00	%
- Consorcio HV GyM		50.00	%		50.00	%
- Consorcio Stracon Motta Engil JV		50.00	%		50.00	%
- Consorcio Huacho Pativilca		67.00	%		67.00	%
- Consorcio Constructor Chavimochic		26.50	%		26.50	%
- Consorcio Constructor Ductos del Sur		29.00	%		29.00	%
- Consorcio Italo Peruano		48.00	%		48.00	%
- Consorcio Menegua		50.00	%		50.00	%
- Consorcio Energía y Vapor		50.00	%		50.00	%
- Consorcio Ermitaño		50.00	%		50.00	%
- Consorcio para la Atención y Mantenimiento de Ductos		50.00	%		50.00	%
- Consorcio Lima Actividades Comerciales Sur		50.00	%		50.00	%
- Consorcio CDEM		—			85.00	%
- Consorcio AMDP Norte		—			50.00	%
- Consorcio Chicama - Ascope		—			50.00	%
- Consorcio TNT Vial y Vives - DSD Chile LTDA		—			50.00	%
- Consorcio La Gloria		49.00	%		49.00	%
- Consorcio GyM Sade Skanska		50.00	%		50.00	%
- Constructora Incolur DSD Limitada		50.00	%		50.00	%
GMP S.A.
- Consorcio Terminales		50.00	%		50.00	%
- Terminales del Perú		50.00	%		50.00	%

F-47

	Percentage of interest
Joint operations	2016			2017
GMD S.A.
- Consorcio Cosapi-Data – GMD S.A.		70.00	%		—
- Consorcio The Louis Berger Group Inc. - GMD		66.45	%		—
- Consorcio Procesos Digitales		43.65	%		—
- Consorcio GMD S.A. – Indra S.A.		50.00	%		—
- Consorcio Fábrica de Software		50.00	%		—
- Consorcio Gestión de Procesos Electorales (ONPE)		50.00	%		—
- Consorcio Lima Actividades Sur		50.00	%		—
- Consorcio Latino de Actividades Comerciales de
Clientes Especiales		50.00	%		—
- Consorcio Latino de Actividades Comerciales		75.00	%		—
- Consorcio Gestión de Procesos Junta de Gobernadores		45.00	%		—
- Consorcio Soluciones Digitales		38.00	%		—
- Consorcio de Gestión de la Información		56.00	%		—
- Consorcio de la Disponibilidad PKI		70.00	%		—
CONCAR S.A.
- Consorcio Ancón-Pativilca		67.00	%		67.00	%
- Consorcio Peruano de Conservación		50.00	%		50.00	%
- Consorcio Manperán		67.00	%		67.00	%
- Consorcio Vial Sierra		50.00	%		50.00	%
Viva GyM S.A.
- Consorcio Panorama		35.00	%		35.00	%
CAM HOLDING S.p.A
- Consorcio Mecam		50.00	%		50.00	%
- Consorcio Seringel		50.00	%		50.00	%

All of the joint arrangements listed above operate in Peru, Chile and Colombia.

The table below provides a description of the major activities carried out by these joint operations:

Joint Operations in	Economic activity
Graña y Montero S.A.A.	Construction, operation and maintenance of La Chira waste water treatment plant south of Lima. The project is aimed to solve Lima’s environmental problems caused by sewage discharged directly into the sea.
GyM S.A.	Theses joint operations carried out activities through the four divisions of the engineering and construction segment (Note 7).
GMP S.A.	Consorcio Terminales and Terminales del Peru provide services for receiving, storing, shipping and transporting liquid hydrocarbons, such as gasoline, jet fuel, diesel fuel and residual among others.
CONCAR S.A.	Joint operations Concar provides rehabilitation service, routine and periodic maintenance of the road; and road preservation services.
Viva GyM S.A.	Construction of a five-star hotel with a convention center, a business center and entertainment center.
CAM Holding S.p.A.	Execution of outsourcing services to the electric power sector.
GMD S.A.	Outsourcing service of online BPO processes (Business Process Outsourcing).

F-48

The consolidated financial statements do not include any other type of entities in addition to those mentioned above, such as trust funds or special purpose entities.

7 SEGMENT REPORTING

Operating segments are reported consistently with the internal reports that are reviewed by the Group’ chief decision-maker; that is, the Executive Committee, which is led by the Corporate General Manager. This Committee is the chief operating decision maker, responsible for allocating resources and evaluating the performance of each operating segment.

The Group’s operating segments are assessed by the activities of the following business units: (i)engineering and construction, (ii)infrastructure, (iii)real estate and (iv)technical services.

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

The revenues derived from foreign operations (Chile, Colombia, Ecuador, Panama, Dominican Republic, Bolivia and Guyana) comprise 28.0% of the Group’s total revenue reported in 2017 (26.5% in 2016 and 28.0% in 2015).

Sales between segments are carried out at arm’s length, are no material, and are eliminated on consolidation. The revenue from external parties is measured in a manner consistent with that in the income statement. Sale of goods relate to the real state segment. Revenue from services relate to all other segments.

Group sales and receivables are not concentrated in a few customers. There is no external customer that represents 10% or more of the Group’s revenue.

The following segments set forth the principal activities of the Group:

a) Engineering and construction: This segment includes from traditional engineering services such as structural, civil and design engineering, and architectural planning to advanced specialties including process design, simulation, and environmental services at four divisions; i) civil works, such as the construction of hydroelectric power stations and other large infrastructure facilities; (ii) electro mechanic construction, such as concentrator plants, oil and natural gas pipelines, and transmission lines; iii) building construction, such as office buildings, residential buildings, hotels, affordable housing projects, shopping centers and industrial facilities; and iv) services related to mining, such as earthworks, blasting, loading and hauling ore.

b) Infrastructure: The Group has long-term concessions or similar contractual arrangements in Peru for three toll roads, the Lima Metro, a waste water treatment plant in Lima, four producing oil fields, and a gas processing plant. Additionally, the Group provides operation and maintenance services for infrastructure assets.

c) Real Estate: The Group develops and sells homes targeted to low and middle-income population sectors which are experiencing a significant increase in disposable income, as well as, office and commercial space to a lesser extent.

d) Technical Services: The Group provides: (i) information technology (IT) services, including IT outsourcing, systems integration, application and business process outsourcing services; and (ii) electricity networks services (maintenance) in telecommunications.

e) Parent Company Operation corresponds to the services which the Holding company provides, management, logistics and accounting services, among others.

The Executive Committee uses a measurement of adjusted earnings before interest, tax, depreciation and amortization (EBITDA) to assess the performance of operating segments.

F-49

Profit before income tax reconciles to EBITDA as follows:

	2015		2016			2017
(Profit) loss before income tax		142,345		(582,865	)		328,713
Financial cost, net		130,447		201,019			170,038
Depreciation		217,071		205,522			199,793
Amortization		89,355		82,743			86,557
EBITDA		579,218		(93,581	)		785,101

EBITDA for each segment is as follows:

	2015			2016			2017
Engineering and construction		220,137			106,106			194,334
Infrastructure		272,230			237,752			300,935
Real state		52,794			121,421			177,285
Technical services		35,083			39,751			36,796
Parent company operations		(35,591	)		(1,026,394	)		216,666
Eliminations intercompany		34,565			427,783			(140,915	)
Total EBITDA		579,218			(93,581	)		785,101

The “Backlog” refers to the expected future revenue under signed contracts and legally binding letters of intent. The breakdown by operating segments as of December 31, 2017, and the dates in which they are estimated to, is shown in the following table:

				Annual Backlog
	2017			2018			2019			2020+
Engineering and Construction		4,727,022			2,261,700			1,320,381			1,144,941
Infrastructure		3,090,417			1,023,749			997,309			1,069,358
Real state		84,128			61,296			22,832			—
Technical Services		1,493,181			687,183			390,647			415,351
Eliminations Intercompany		(321,897	)		(112,237	)		(104,459	)		(105,200	)
		9,072,850			3,921,691			2,626,709			2,524,450

F-50

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

Operating segments financial position

Segment reporting

	Engineering		Infrastructure												Parent
	and construction		Energy		Toll roads		Transportation		Water treatment		Real estate		Technical services		Company Operations		Eliminations			Consolidated
As of December 31, 2016
Assets.-
Cash and cash equivalent		93,543		35,396		125,853		139,414		3,229		58,892		37,675		112,398		550			606,950
Financial asset at fair value through profit or loss		352		—		—		—		—		—		—		—		—			352
Trade accounts receivables		334,426		84,996		77,615		56,665		256		83,704		395,812		—		(2,204	)		1,031,270
Work in progress		648,851		—		—		32,078		—		—		—		—		—			680,929
Accounts receivable from related parties		327,385		3,255		55,907		392		12,379		7,284		12,468		50,582		(287,988	)		181,664
Other accounts receivable		398,666		58,235		28,779		25,895		4,841		20,198		70,769		42,133		—			649,516
Inventories		76,058		12,561		9,839		16,862		—		946,657		55,431		387		(13,502	)		1,104,293
Prepaid expenses		9,204		2,614		2,005		17,265		167		329		19,412		305		—			51,301
Non-current assets classified as held for sale		22,385		—		—		—		—		—		—		—		—			22,385
Total current assets		1,910,870		197,057		299,998		288,571		20,872		1,117,064		591,567		205,805		(303,144	)		4,328,660
Long-term trade accounts receivable		149		—		15,092		629,310		—		—		22,968		—		—			667,519
Long-term work in progress		171,752		—		24,165		—		—		—		—		—		1,669			197,586
Long-term accounts receivable from related parties		—		—		408		—		—		—		492		700,615		(170,131	)		531,384
Prepaid expenses		—		—		20,554		2,029		943		—		—		—		—			23,526
Other long-term accounts receivable		42,511		29,533		22,926		225,565		7,347		17,887		1,075		11,108		—			357,952
Investments in associates and joint ventures		116,512		8,516		—		—		—		31,768		9,589		2,358,918		(2,135,544	)		389,759
Investment property		—		—		—		—		—		49,357		—		—		—			49,357
Property, plant and equipment		592,191		176,486		23,508		193		21		13,008		195,462		130,422		(17,692	)		1,113,599
Intangible assets		246,715		139,353		457,163		269		—		950		78,687		22,793		14,356			960,286
Deferred income tax asset		158,168		4,983		13,244		—		—		623		53,003		189,230		7,757			427,008
Total non-current assets		1,327,998		358,871		577,060		857,366		8,311		113,593		361,276		3,413,086		(2,299,585	)		4,717,976
Total assets		3,238,868		555,928		877,058		1,145,937		29,183		1,230,657		952,843		3,618,891		(2,602,729	)		9,046,636
Liabilities.-
Borrowings		582,260		82,063		3,014		—		—		206,456		155,137		932,113		—			1,961,043
Bonds		—		—		25,540		20,551		—		—		—		—		—			46,091
Trade accounts payable		876,849		59,830		31,857		23,882		599		30,617		247,219		6,703		(939	)		1,276,617
Accounts payable to related parties		119,989		3,902		38,219		33,009		237		66,190		33,749		67,685		(282,763	)		80,217
Current income tax		30,576		3,631		3,401		—		1,064		17,944		5,544		—		—			62,160
Other accounts payable		485,247		11,711		43,614		14,622		27		194,441		157,201		189,444		—			1,096,307
Provisions		6,615		6,441		—		—		—		131		1,344		—		—			14,531
Total current liabilities		2,101,536		167,578		145,645		92,064		1,927		515,779		600,194		1,195,945		(283,702	)		4,536,966
Borrowings		246,315		80,488		2,510		—		—		16,541		73,541		—		—			419,395
Long-term bonds		—		—		338,143		583,480		—		—		—		—		—			921,623
Other long-term accounts payable		147,839		—		44,451		246,522		—		32,000		39,558		2,433		—			512,803
Long-term accounts payable to related parties		41,672		—		408		87,200		23,445		40,074		42,259		394		(170,132	)		65,320
Provisions		7,670		17,115		—		—		—		—		1,757		—		—			26,542
Derivative financial instruments		—		1,081		—		—		—		—		—		—		—			1,081
Deferred income tax liability		28,278		3,546		1,525		14,482		283		15,564		9,491		—		—			73,169
Total non-current liabilities		471,774		102,230		387,037		931,684		23,728		104,179		166,606		2,827		(170,132	)		2,019,933
Total liabilities		2,573,310		269,808		532,682		1,023,748		25,655		619,958		766,800		1,198,772		(453,834	)		6,556,899
Equity attributable to controlling interest in the Company		551,653		265,241		282,851		91,643		3,528		234,449		148,028		2,406,577		(2,003,546	)		1,980,424
Non-controlling interest		113,905		20,879		61,525		30,546		—		376,250		38,015		13,542		(145,349	)		509,313
Total liabilities and equity		3,238,868		555,928		877,058		1,145,937		29,183		1,230,657		952,843		3,618,891		(2,602,729	)		9,046,636

F-51

Operating segments financial position

Segment reporting

	Engineering		Infrastructure													Parent
	and construction		Energy		Toll roads		Transportation		Water treatment			Real estate		Technical services		Company Operations		Eliminations			Consolidated
As of December 31, 2017
Assets.-
Cash and cash equivalent		184,401		43,878		121,901		161,073		4,204			85,187		21,904		3,632		—			626,180
Financial asset at fair value through profit or loss		181		—		—		—		—			—		—		—		—			181
Trade accounts receivables		368,303		64,364		128,124		108,706		604			45,897		274,103		419		2,204			992,724
Work in progress		578,723		—		—		—		—			—		—		6,030		—			584,753
Accounts receivable from related parties		230,607		2,746		62,525		3,072		8,852			69,382		9,947		66,059		(352,438	)		100,752
Other accounts receivable		518,123		55,959		66,765		31,381		1,922			40,026		38,527		12,742		—			765,445
Inventories		46,499		15,093		8,685		19,457		—			643,882		45,512		190		(8,607	)		770,711
Prepaid expenses		4,470		1,168		2,354		10,312		164			216		14,037		757		—			33,478
Non-current assets classified as held for sale		17,722		—		—		—		—			—		—		—		—			17,722
Total current assets		1,949,029		183,208		390,354		334,001		15,746			884,590		404,030		89,829		(358,841	)		3,891,946
Long-term trade accounts receivable		—		—		14,747		793,991		—			—		39,852		—		—			848,590
Long-term work in progress		58,997		—		28,413		—		—			—		—		—		—			87,410
Long-term accounts receivable from related parties		258,479		—		27,660		—		—			—		474		636,941		(149,624	)		773,930
Prepaid expenses		—		—		24,585		13,115		892			—		—		—		(510	)		38,082
Other long-term accounts receivable		75,030		53,917		11,159		255,179		7,348			9,811		1,712		56,696		—			470,852
Investments in associates and joint ventures		111,513		7,344		—		—		—			1		10,113		2,206,230		(2,066,530	)		268,671
Investment property		—		—		—		—		—			45,687		—		—		—			45,687
Property, plant and equipment		509,700		171,226		18,572		580		60			11,621		100,936		70,627		(17,587	)		865,735
Intangible assets		203,390		160,288		492,424		323		—			1,022		47,332		24,031		11,260			940,070
Deferred income tax asset		165,227		5,507		11,057		—		—			10,316		46,470		192,088		6,032			436,697
Total non-current assets		1,382,336		398,282		628,617		1,063,188		8,300			78,458		246,889		3,186,613		(2,216,959	)		4,775,724
Total assets		3,331,365		581,490		1,018,971		1,397,189		24,046			963,048		650,919		3,276,442		(2,575,800	)		8,667,670
Liabilities.-
Borrowings		591,987		46,924		2,589		—		—			162,031		139,821		113,412		—			1,056,764
Bonds		—		—		24,361		12,294		—			—		—		—		—			36,655
Trade accounts payable		955,015		62,659		85,329		81,161		132			43,724		189,553		36,412		(939	)		1,453,046
Accounts payable to related parties		114,198		3,664		60,857		83,841		14			37,396		14,428		88,546		(347,770	)		55,174
Current income tax		29,379		1,282		1,122		—		161			45,299		8,300		—		—			85,543
Other accounts payable		492,362		12,487		68,994		27,058		49			63,654		109,904		73,992		—			848,500
Provisions		6,682		5,204		—		—		—			20		1,597		—		—			13,503
Total current liabilities		2,189,623		132,220		243,252		204,354		356			352,124		463,603		312,362		(348,709	)		3,549,185
Borrowings		127,773		101,549		1,945		—		—			12,010		26,458		363,564		—			633,299
Long-term bonds		—		—		319,549		591,363		—			—		—		—		—			910,912
Other long-term accounts payable		379,043		—		52,349		349,987		158			32,058		36,409		2,469		—			852,473
Long-term accounts payable to related parties		4,306		—		836		89,023		23,445			—		30,739		32,102		(154,497	)		25,954
Provisions		8,587		16,707		—		—		—			—		3,365		5,255		—			33,914
Derivative financial instruments		—		383		—		—		—			—		—		—		—			383
Deferred income tax liability		26,633		8,957		8,606		20,789		210			—		7,277		—		—			72,472
Total non-current liabilities		546,342		127,596		383,285		1,051,162		23,813			44,068		104,248		403,390		(154,497	)		2,529,407
Total liabilities		2,735,965		259,816		626,537		1,255,516		24,169			396,192		567,851		715,752		(503,206	)		6,078,592
Equity attributable to controlling interest in the Company		487,923		299,411		323,987		106,256		(123	)		217,290		82,100		2,547,328		(1,940,842	)		2,123,330
Non-controlling interest		107,477		22,263		68,447		35,417		—			349,566		968		13,362		(131,752	)		465,748
Total liabilities and equity		3,331,365		581,490		1,018,971		1,397,189		24,046			963,048		650,919		3,276,442		(2,575,800	)		8,667,670

F-52

Operating segment performance

Segment Reporting

	Engineering			Infrastructure																		Parent
	and construction			Energy			Toll roads			Transportation			Water treatment			Real estate			Technical services			Company operations			Eliminations			Consolidated
Year 2015 -
Revenue		5,829,441			389,377			729,232			206,459			27,994			215,764			563,874			70,531			(449,760	)		7,582,912
Gross profit (loss)		312,780			63,530			139,651			40,468			2,225			51,755			76,828			(7,004	)		(67,238	)		612,995
Administrative expenses		(289,149	)		(18,214	)		(37,934	)		(10,529	)		(310	)		(20,521	)		(60,871	)		(29,882	)		73,187			(394,223	)
Other income and expenses		30,616			1,365			565			—			—			1,759			12,135			11,114			(2,968	)		54,586
Gain from the sale of investments		—			—			—			—			—			—			(8,289	)		—			—			(8,289	)
Operating profit (loss)		54,247			46,681			102,282			29,939			1,915			32,993			19,803			(25,772	)		2,981			265,069
Financial expenses		(127,383	)		(19,953	)		(9,974	)		(5,303	)		(45	)		(11,642	)		(18,265	)		(2,818	)		27,300			(168,083	)
Financial income		8,875			158			9,812			2,316			121			746			584			56,101			(41,077	)		37,636
Share of the profit or loss in associates and joint ventures under the equity method of accounting		(2,234	)		944			—			—			—			14,888			589			(14,709	)		8,246			7,724
(Loss) profit before income tax		(66,495	)		27,830			102,120			26,952			1,991			36,985			2,711			12,802			(2,550	)		142,346
Income tax		(55,350	)		(7,650	)		(30,157	)		(8,129	)		(520	)		(7,649	)		20,593			(9,208	)		2,171			(95,899	)
(Loss) profit from continuing operations		(121,845	)		20,180			71,963			18,823			1,471			29,336			23,304			3,594			(379	)		46,447
Profit from discontinued operations		—			—			—			—			—			—			5,162			—			3,980			9,142
(Loss) Profit for the year		(121,845	)		20,180			71,963			18,823			1,471			29,336			28,466			3,594			3,601			55,589
(loss) Profit attributable to:
Owners of the Company		(131,181	)		17,072			60,331			14,118			1,471			12,377			20,001			4,337			8,571			7,097
Non-controlling interest		9,336			3,108			11,632			4,705			—			16,959			8,465			(743	)		(4,970	)		48,492
		(121,845	)		20,180			71,963			18,823			1,471			29,336			28,466			3,594			3,601			55,589

F-53

Operating segment performance

Segment Reporting

	Engineering			Infrastructure																		Parent
	and construction			Energy			Toll roads			Transportation			Water treatment			Real estate			Technical services			Company operations			Eliminations			Consolidated
Year 2016 -
Revenue		4,159,538			382,211			527,104			247,040			18,459			411,518			841,121			62,070			(458,744	)		6,190,317
Gross profit (loss)		224,621			42,129			121,114			42,473			5,698			136,540			77,304			(171	)		(92,413	)		557,295
Administrative expenses		(258,568	)		(17,260	)		(35,085	)		(12,952	)		(786	)		(28,430	)		(69,870	)		(35,740	)		76,298			(382,393	)
Other income and expenses		(9,250	)		542			263			10			—			838			3,989			(5,843	)		(3,923	)		(13,374	)
Gain from the sale of investments		—			—			—			—			—			—			—			46,336			—			46,336
Operating (loss) profit		(43,197	)		25,411			86,292			29,531			4,912			108,948			11,423			4,582			(20,038	)		207,864
Financial expenses		(65,138	)		(10,801	)		(7,390	)		(2,810	)		(38	)		(14,388	)		(20,170	)		(115,225	)		14,296			(221,664	)
Financial income		11,216			1,040			2,225			8,037			86			2,816			2,991			18,688			(26,454	)		20,645
Share of the profit or loss in associates and joint ventures under the equity method of accounting		16,501			1,615			—			—			—			6,850			360			(1,036,888	)		421,852			(589,710	)
(Loss) profit before income tax		(80,618	)		17,265			81,127			34,758			4,960			104,226			(5,396	)		(1,128,843	)		389,656			(582,865	)
Income tax		(12,828	)		(5,308	)		(22,213	)		(10,904	)		(1,433	)		(27,054	)		(1,646	)		193,425			7,233			119,272
(Loss) profit from continuing operations		(93,446	)		11,957			58,914			23,854			3,527			77,172			(7,042	)		(935,418	)		396,889			(463,593	)
Profit from discontinued operations		—			—			—			—			—			—			7,851			—			4,144			11,995
(Loss) profit for the year		(93,446	)		11,957			58,914			23,854			3,527			77,172			809			(935,418	)		401,033			(451,598	)
(Loss) profit attributable to:
Owners of the Company		(87,710	)		9,370			43,656			17,891			3,527			22,106			1,546			(934,508	)		414,423			(509,699	)
Non-controlling interest		(5,736	)		2,587			15,258			5,963			—			55,066			(737	)		(910	)		(13,390	)		58,101
		(93,446	)		11,957			58,914			23,854			3,527			77,172			809			(935,418	)		401,033			(451,598	)

F-54

Operating segment performance

Segment Reporting

	Engineering			Infrastructure																		Parent
	and construction			Energy			Toll roads			Transportation			Water treatment			Real estate			Technical services			Company operations			Eliminations			Consolidated
Year 2017 -
Revenue		3,353,199			436,876			642,127			365,772			3,152			647,535			1,060,996			70,049			(499,564	)		6,080,142
Gross profit (loss)		290,296			71,825			139,196			48,696			445			147,384			57,816			(37,771	)		(45,100	)		672,787
Administrative expenses		(231,044	)		(15,854	)		(32,454	)		(15,279	)		(317	)		(21,189	)		(74,174	)		(100,687	)		61,817			(429,181	)
Other income and expenses		(42,747	)		5,139			1,062			5			—			(3,700	)		8,625			10,512			559			(20,545	)
Gain from the sale of investments		25,768			—			—			—			—			49,002			—			195,378			4,215			274,363
Operating profit (loss)		42,273			61,110			107,804			33,422			128			171,497			(7,733	)		67,432			21,491			497,424
Financial expenses		(52,852	)		(13,423	)		(6,893	)		(8,000	)		(50	)		(21,917	)		(29,597	)		(80,339	)		27,626			(185,445	)
Financial income		9,434			1,964			3,256			3,606			26			3,569			3,382			32,925			(42,755	)		15,407
Share of the profit or loss in associates and joint ventures under the equity method of accounting		30,633			1,584			—			—			—			455			1,203			142,596			(175,144	)		1,327
Profit (loss) before income tax		29,488			51,235			104,167			29,028			104			153,604			(32,745	)		162,614			(168,782	)		328,713
Income tax		(17,091	)		(13,151	)		(32,290	)		(9,545	)		(227	)		(35,900	)		4,763			(19,495	)		(101	)		(123,037	)
Profit (loss) from continuing operations		12,397			38,084			71,877			19,483			(123	)		117,704			(27,982	)		143,119			(168,883	)		205,676
Profit from discontinued operations		—			—			—			—			—			—			2,317			—			1,245			3,562
Profit (loss) for the year		12,397			38,084			71,877			19,483			(123	)		117,704			(25,665	)		143,119			(167,638	)		209,238
Profit (loss) attributable to:
Owners of the Company		12,077			33,715			55,620			14,613			(123	)		48,648			(18,094	)		143,279			(140,997	)		148,738
Non-controlling interest		320			4,369			16,257			4,870			—			69,056			(7,571	)		(160	)		(26,641	)		60,500
		12,397			38,084			71,877			19,483			(123	)		117,704			(25,665	)		143,119			(167,638	)		209,238

F-55

Segments by geographical area

	2015		2016		2017
Revenue:
- Peru		5,457,577		4,547,449		4,375,760
- Chile		944,198		707,364		1,054,885
- Colombia		778,333		570,203		285,897
- Panama		206,137		346,065		361,450
- Guyana		111,924		717		—
- Brasil		39,253		—		—
- Ecuador		—		3,682		—
- Bolivia		45,490		14,837		2,149
		7,582,912		6,190,317		6,080,142
Non-current assets:
- Peru		3,230,288		3,995,453		4,164,342
- Chile		320,094		446,998		407,152
- Colombia		124,820		260,732		203,203
- Bolivia		15,043		13,043		149
- Ecuador		—		888		—
- Guyana		8,800		862		878
- Panama		584		—		—
		3,699,629		4,717,976		4,775,724

Until March 2017, the subsidiary Concar belonged to the ‘technical services’ segment, on April 2017, transferred its subsidiary to the ‘infrastructure’ segment.

8 FINANCIAL INSTRUMENTS

8.1 Financial instruments by category

At December 31 the classification of financial assets and liabilities by category is as follows:

	At December, 31
	2016		2017
Assets according to the statement of financial position
Loans and accounts receivable:
- Cash and cash equivalents		600,923		626,180
- Trade accounts receivable and other accounts receivable not including advances to suppliers, net		1,329,262		1,447,629
- Work in progress		878,515		672,163
- Financial assets related to concession agreements		685,975		952,780
- Accounts receivable from related parties		713,048		874,682
		4,207,723		4,573,434
Financial asset at fair value through profit or loss
- Cash and cash equivalents (Mutual funds)		6,027		—
- Other financial asset		352		181
		6,379		181

F-56

Financial assets related to concession agreements are recorded in the consolidated statement of financial position within the line items of short-term trade accounts receivable and long-term trade accounts receivable.

	At December, 31
	2016		2017
Financial liabilities according to the statement of financial position
Other financial liabilities at amortized cost
- Other financial liabilities		2,140,297		1,561,754
- Finance leases		240,141		128,309
- Bonds		967,714		947,567
- Trade and other accounts payable (excluding non-financial liabilities)		1,769,444		2,054,217
- Accounts payable to related parties		145,537		81,128
		5,263,133		4,772,975
Hedging derivatives:
- Derivative financial instruments
		1,081		383

8.2 Credit quality of financial assets

The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external risk ratings (if available) or to historical information about counterparty default rates.

At December 31 the credit quality of financial assets is shown as follows:

	At December 31,
	2016		2017
Cash and cash equivalents (*)
Banco de Crédito del Perú (A+)		147,759		224,834
Banco Continental (A+)		136,805		100,882
Banco Scotiabank (A+)		121,480		71,608
Citibank (A)		105,812		110,846
Banco de la Nación (A)		30,007		17,776
Banco Santander - Perú (A)		17,480		—
Banco Interbank (A)		6,344		14,937
Banco de Chile (AAA)		4,822		4,337
Banco Interamericano de Finanzas (A)		4,035		5,551
Banco Bogotá (A)		3,756		25,609
Larrain Vial de Chile (A)		3,514		—
Banco GNB (A)		2,080		1,334
Banco Santander - Chile (AAA)		1,941		22,041
Scotiabank Chile (AAA)		1,117		3
Banco de Crédito e Inversiones - Chile (AA+)		937		1,105
Banco Scotiabank de Guyana (A)		125		116
Others		5,061		5,935
		593,075		606,914

The ratings in the above table “A and AAA” represent high quality credit ratings. For banks located in Peru, the ratings were derived from risk rating agencies authorized by the Peruvian banking and insurance regulator “Superintendencia de Banca, Seguros y AFP” (SBS). For banks located in Chile, the ratings were derived from risk rating agencies authorized by the Chilean stock and insurance regulator “Superintendencia de Valores y Seguros” (SVS).

(*) The difference between the balances shown above with the balances shown in the statement of financial position corresponds to cash on hand and in-transit remittances (Note 9).

F-57

The credit quality of customers is assessed in three categories (internal classification):

A: New customers/related parties (less than 6 months),

B: existing customers/related parties (with more than 6 months of trade relationship) with no previous default history; and

C: existing customers/related parties (with more than 6 months of trade relationship) with previous default history.

	2016		2017
Trade accounts receivable (Note 11 and Note 12)
Counterparties with no external risk rating
A		117,797		6,042
B		2,052,356		2,313,187
C		407,151		194,248
		2,577,304		2,513,477
Receivable from related parties (Note 13)
B		713,048		874,682

The total balance of trade accounts receivable and receivable from related parties is in compliance with contract terms and conditions; none of them have been re-negotiated.

9 CASH AND CASH EQUIVALENT

At December 31 this account comprises:

	2016		2017
Cash on hand		5,944		16,468
In-transit remittances		7,931		2,798
Bank accounts		475,025		493,666
Time deposits		112,023		113,248
Mutual funds		6,027		—
		606,950		626,180

At December 31, 2017, short-term deposits were mainly derived from subsidiaries GyM Ferrovías S.A., GyM S.A., Viva GyM S.A., Concar S.A. and Concesión Canchaque S.A.C. for S/36.7million, S/30.5million, S/17.8 million, S/13.6 millones and S/11.0 million respectively and interest rates ranged from 0.25% to 4.55% (GyM S.A., GyM Ferrovías S.A., Viva GyM S.A., and GMP S.A. for S/43.7 million, S/24.7million, S/19.6 million and S/16.4 million, respectively, at interest rates ranging from 0.10% and 4.95%, at December 31, 2016).

F-58

(i) Reconciliation to cash flow statement

The above figures reconcile to the amount of cash shown in the statement of cash flows at the end of the financial year as follows:

	2016			2017
Cash and Cash Equivalent		606,950			626,180
Bank overdrafts (Note 19)		(8,396	)		(120	)
Balances of the statement of cash flows		598,554			626,060

10 OTHER FINANCIAL ASSETS

On April 2016, the Company sold their 1.64% of interest held in Transportadora de Gas del Peru S.A. (TGP) for S/107.3 million, resulting in a net profit of S/46.3 million, as shown in the income statement, within “Profit (loss) on sale of investments”. The balance of its investment at the date of sale was S/117.1 million.

The cumulative amount of fair values at the date of sale amounting to S/41.5 million (S/56 million of gain on fair value and S/14.6 million of income tax), as recognized in the statement of other comprehensive income was transferred to profits for the period.

At 2015, dividends were received from the investments for S/7.2 million.

At December 31, 2015 the fair value of the Group’s interest in TGP equals S/120.1 million based on the discounted cash flow method. The information used in the calculation was as follows:

• Discounted cash flows from operating activities of TGP net of cash flows from investment activities (CAPEX).

• Cash flows were estimated for a 30-year term.

• The discount rate used was 7.5% corresponding to estimated TGP’s WACC.

• The interest of the Company in TGP was 1.64%.

11 TRADE ACCOUNTS RECEIVABLE, NET

At December 31 this account comprises:

	2016					2017
	Current			Non-current		Current			Non-current
Invoices receivable		903,878			652,939		459,721			819,699
Collection rights		150,065			14,580		546,351			28,891
		1,053,943			667,519		1,006,072			848,590
Impairment of receivables		(22,673	)		—		(13,348	)		—
		1,031,270			667,519		992,724			848,590

Invoices receivable are related to estimated percentages of completion approved by customers.

The fair value of current receivables is similar to their carrying amount since their average collection turnover is less than 60 days. These current receivables do not bear interest and have no specific guarantees.

The non-current portion of the trade accounts receivable is related to the financial asset model (Note 2.5) of subsidiary GyM Ferrovías S.A.

F-59

At December 31, 2017 the fair value of non-current accounts receivable amounted to S/835 million (S/606 million at December 31, 2016), which was calculated under the discounted cash flows method, using rates of 6.33% (7.14% at December 31, 2016).

At December 31, 2017, collection rights primarily relate to GyM Ferrovías S.A., CAM Holding S.p.A., Concar S.A., Survial S.A, CAM Servicios del Perú S.A. and GMI S.A.,amounting to S/355 million, S/85 million, S/53 million, S/31 million, S/21 million and S/20 million, respectively. (GyM Ferrovías S.A., GMD S.A., GMI S.A., Concar S.A., CAM Servicios del Perú S.A. y Survial for S/68 million, S/49 million, S/19 million, S/13 million, S/12 million and S/11 million, respectively, in 2016).

Aging of trade accounts receivable is as follows:

	At December 31,
	2016		2017
Current		1,396,040		1,575,709
Past due up to 30 days		103,617		118,158
Past due from 31 days up to 180 days		113,825		141,121
Past due from 181 days up to 360 days		29,506		1,962
Past due over 360 days		78,474		17,712
		1,721,462		1,854,662

At December 31, 2017, for trade accounts receivables with maturity greater than 31 days for S/160.8 million (S/221.8 million in 2016), the Group recognized impairment of S/0.7 million (S/3.1 million in 2016) in the consolidated income statement (Note 27).

The maximum exposure to credit risk at the reporting date is the carrying amount of the accounts receivable and of unbilled work in progress (Note 12).

12 WORK IN PROGRESS, NET

At December 31 this account comprises:

	2016					2017
	Current			Non-current		Current		Non-current
Unbilled rights receivable		971,882			171,752		535,119		58,997
Rights for concessions in progress		32,078			25,834		—		28,413
Cost of work in progress		87,168			—		49,634		—
		1,091,128			197,586		584,753		87,410
Impairment of work in progress (Note 5.1-f)		(410,199	)		—		—		—
		680,929			197,586		584,753		87,410

Unbilled rights receivable are the rights that were not billed by the Engineering and Construction segment. Until that revenue is billed, they are stated as unbilled rights receivable. At December 31, 2017, the book value of non-current unbilled rights receivable is similar to its fair value since it was recorded using the discounted cash flow method, using a 1.71% rate.

Concession rights in progress correspond to future collection rights for public service concessions that are still in the pre-operational stage.

Costs of work in progress include all those expenses incurred by the Group comprising future activities to be carried out under construction contracts currently effective. The Group estimates that all incurred cost will be billed and collected.

F-60

At December 31, 2017 and 2016 work in progress that remained to be billed are shown net of any advances received from customers for S/15.3 million and S/10.6 million, respectively under the terms and conditions set forth in each specific agreement. These advances are mostly related to subsidiary GyM S.A.

13 TRANSACTIONS WITH RELATED PARTIES AND JOINT OPERATORS

a) Transactions with related parties

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

	2015		2016		2017
Revenue from sales of goods and services:
- Associates		1,400		—		3,367
- Joint operations		52,384		36,901		18,138
		53,784		36,901		21,505
Purchase of goods and services:
- Associates		18		739		2,776
- Joint operations		489		3,228		14,191
		507		3,967		16,967

Inter-company transactions are based on the price lists in force and terms and conditions that would be agreed with third parties.

b) Key management compensation

Key management includes directors (executives and non-executives), members of the Executive Committee and Internal Audit Management. The compensation paid or payable to key management in 2017 amounted to S/90.5 million (S/106.9 million and S/111.7 millions in 2016 and 2015, respectively) and only relates to short-term benefits.

d) Balances at the end of the year were:

	At December 31,				At December 31,
	2016				2017
	Receivable		Payable		Receivable		Payable
Current portion:
Joint operations:
Consorcio Constructor Ductos del Sur		62,834		—		—		—
Consorcio GyM Conciviles		61,006		—		43,435		—
Consorcio Rio Urubamba		9,072		—		8,964		—
Consorcio Peruano de Conservación		8,784		—		7,417		—
Consorcio Vial Quinua		4,198		738		—		2,162
Consorcio Italo Peruano		4,174		17,325		14,536		18,849
Consorcio La Gloria		3,521		3,080		1,688		1,358
Terminales del Perú		3,215		259		3,290		—
Consorcio Rio Mantaro		3,191		6,886		1,134		763
Consorcio Vial Sierra		940		5,400		2,355		1,854
Consorcio Constructor Chavimochic		915		2,471		1,959		5,817
Consorcio Energía y Vapor		491		3,203		—		72
Consorcio Ermitaño		83		6,372		1,067		6
Consorcio Menegua		30		3,803		39		—
Consorcio para la Atención y Mantenimiento de Ductos		—		21,790		—		12,074
Consorcio Huacho Pativilca		—		3,434		—		2,377
Other minors		10,134		2,472		12,182		6,973
		172,588		77,233		98,066		52,305

F-61

	At December 31,				At December 31,
	2016				2017
	Receivable		Payable		Receivable		Payable
Other related parties:
Gaseoducto Sur Peruano S.A		—		—		2,407		—
Perú Piping Spools S.A.C.		9,076		—		279		185
Ferrovías Argentina		—		—		—		2,684
Arturo Serna		—		2,984		—		—
		9,076		2,984		2,686		2,869
Portion current		181,664		80,217		100,752		55,174
Non-current portion:
Gasoducto Sur Peruano S.A		531,384		—		773,930		—
Consorcio Constructor Ductos del Sur		—		37,238		—		—
Ferrovías Participaciones		—		20,813		—		21,648
Ferrovías Argentina		—		2,835		—		—
Arturo Serna		—		4,434		—		4,306
Portion current		531,384		65,320		773,930		25,954

Receivables and payables are mainly of current maturity and do not have specific guarantees, except for the receivable account from GSP. Accounts receivable from related parties have maturity periods of 60 days and arise from sales of goods and services. These balances are non-interest-bearing, and at December 31, 2017 an impairment was recognized for S/18 million, in the receivables of GyM from Consorcio GyM Conciviles.

The non-current balance corresponds to the obligations arising from the early termination of the GSP project (Note 16.a-i). As of December 31, 2017, the book value of the non-current account receivable recorded by the Company, for S/515 million, is similar to its fair value as it was recorded using the discounted cash flow method, at a 2.92% that originated a discount value of US$ 22.8 million (equivalent to S/76.9 million) Note 28. Additionally, as a consequence of the early termination of the GSP, and the related facts, the subsidiary GyM SA reclassified as of December 31, 2017, the balances of the Consorcio Constructor Ductos del Sur to which adjustments for impairment had previously been applied (Note 5.1 f) and which, up to 2016, was included in the consolidation under the proportional share method. The value of accounts receivable from CCDS correspond mainly to collection rights to GSP for S/244 million.

Accounts payable to related parties have maturity periods of 60 days and arise from engineering, construction, maintenance and other services received. These balances are not interest-bearing due to their short-term maturities.

Transactions with non-controlling interest are disclosed in Note 36.

14 OTHER ACCOUNTS RECEIVABLE

At December 31 this account comprises:

	2016				2017
	Current		Non-current		Current		Non-current
Advances to suppliers (a)		79,455		225,567		149,464		255,181
Income tax on-account payments (b)		202,045		—		125,176		2,607
Fiscal credit (c)		80,091		52,225		81,732		30,680
Guarantee deposits (d)		95,916		—		113,429		—
Claims to third parties		26,529		32,669		109,491		41,072
Restricted Fund		14,067		—		61,993		44,770
Petróleos del Perú S.A.- Petroperú S.A.		16,879		29,534		3,619		53,918
Temporary tax on net assets		21,204		—		21,934		—
Taxes receivable		13,954		—		31,875		33,428
Claims to SUNAT (pre-paid taxes)		16,479		—		12,274		—
Rental and sale of equipment		13,640		—		27,970		—
Receivables from personnel		10,726		—		6,737		—
Other		58,531		17,957		19,751		9,196
		649,516		357,952		765,445		470,852

F-62

Other receivables are neither past due nor impaired. Other non-current accounts receivable have maturities between 2 and 5 years.

The fair value of the short-term receivables approximates their carrying amount due to their short-term maturities. The non-current portion mainly comprises non-financial assets such as advances to suppliers and fiscal credit; the remaining balance is not significant for any period shown in the financial statements.

The maximum exposure to credit risk at the reporting date is the carrying amounts of each class of above-mentioned other receivables. The Group does not demand guarantees.

The following paragraph contains a description of major accounts receivable:

(a) Advances to suppliers

In 2017, the balance mainly comprises advances that subsidiary GyM Ferrovias S.A. gave to Alstom Transporte for S/233 million (S/230 million in 2016).

(b) Income tax on-account payment

This balance mainly consists of income tax on-account payments made by GyM S.A., GMP S.A., CAM Holding S.p.A. and Viva GyM S.A., for S/85 million, S/19 million, S/11 million, and S/6 million, respectively (GyM S.A., GMP S.A., Graña y Montero.S.A.A., CAM Holding S.p.A., Viva GyM S.A, GMI S.A. and GMD S.A. for S/133 million, S/17 million, S/16 million, S/16 million, S/5 million, S/4 million and S/4 million, respectively in 2016).

(c) Fiscal credit

This item is related to subsidiaries GyM S.A., Viva GyM S.A., Negocios del Gas S.A., Norvial S.A., Concesionaria Vía Expresa Sur S.A. and La Chira S.A. amounting to S/50 million, S/20 million, S/8 million, S/6 million, S/5 million and S/2 million, respectively (GyM S.A., Viva GyM S.A., Norvial S.A.,Negocios del Gas S.A., Concesionaria La Chira and Concesionaria Via Expresa Sur S.A.. for S/55 million, S/25 million, S/15 million, S/8 million, S/5 million, and S/5 million, respectively in 2016). Management considers that this VAT fiscal credit will be recovered in the normal course of future operations of these subsidiaries.

(d) Guarantee deposits

Guarantee deposits are the funds retained by customers for work contracts assumed basically by subsidiary GyM S.A. These deposits are retained by the customers to secure the Subsidiary’s compliance with its obligations under the contracts. The amounts retained will be recovered once the contracted work is completed.

F-63

15 INVENTORIES

At December 31 this account comprises:

	2016			2017
Land		398,120			317,337
Work in progress - Real estate		289,775			150,537
Finished properties		244,240			203,209
Construction material		114,919			51,131
Merchandise and supplies		97,860			90,504
		1,144,914			812,718
Impairment of inventories (Note 5.1-f)		(40,621	)		(42,007	)
		1,104,293			770,711

Land

At December 31, land comprises properties for the implementation of the following projects of subsidiary Viva GyM:

	2016		2017
Lurín (a)		95,634		103,574
Miraflores (b)		80,552		1,349
San Miguel (c)		70,556		44,126
San Isidro (d)		46,606		58,441
Ancón (e)		35,934		37,823
Nuevo Chimbote (f)		17,054		17,201
Huancayo (g)		11,618		13,572
Canta Callao		—		12,978
Others		40,166		28,273
		398,120		317,337

(a) Plot of land of 750 hectares located in the district of Lurín, province of Lima, for industrial development and public housing.

(b) Land located in Av. El Ejército, Urb. Santa Cruz- Miraflores, Lima, for the development of a project consisting in a 5-star hotel, a cultural, convention, commercial, business center, and residential buildings. On February 3, 2017, the land was sold to Urbi Propiedades S.A. the sale price was agreed at US$50 million, which has been fully paid.

(c) Land located in San Miguel, a total of 1.4 hectares for the development of a multi-family housing project of 248 apartments and 185 parking lots. On November 6, 2017, a portion of 0.56 hectares was sold to a real estate investment fund in Larrainvial-Colliers II at S/27.8 million.

(d) A plot of land in the district of San Isidro in which a 15-storey building will be built with 24 apartments and 124 parking spaces.

(e) A 108-hectare land property in which a mega housing-project will be implemented, consisting of 13,768 real estate units.

(f) Land located in Chimbote, 11.5 hectares, for the development of a social housing project

(g) Land located in Huancayo, 8.5 hectares for the development of a land sale project.

Land properties correspond to assets maintained since 2015, for which construction has not yet begun. Variance in these balances over 2017 is mainly due to engineering, license paperwork and other smaller costs. Construction in these land properties is expected to begin in late 2018 and the second half of 2019.

F-64

Real estate - work in progress

At December 31, real state work in progress comprises the following projects:

	2016		2017
Klimt		100,751		—
Los Parques de Comas		89,074		70,647
Los Parques del Callao		51,613		53,441
Real 2		17,181		—
Villa El Salvador 2		12,674		2,141
Others		18,482		24,308
		289,775		150,537

During 2017 the Company has capitalized financing costs of these construction projects (Note 2.19) amounting to S/5.9 million at interest rates between 7.0% and 11.22% (S/12.2 million in 2016 at interest rates between 6.75% and 8.90%; and S/4 million in 2015 at interest rates between 5.3% and 9.5%).

Finished properties

At December 31, the balance of finished properties consists of the following investment properties:

	2016		2017
El Rancho		121,302		82,796
Panorama		33,443		18,481
Los Parques de San Martín de Porres		30,724		16,687
Los Parques de Callao		19,736		486
Rivera Navarrete		11,966		7,870
Los Parques de Carabayllo 2da etapa		7,497		3,134
Los Parques de Comas		7,336		16,058
Los Parques de Villa El Salvador II		5,951		9,313
Klimt		—		44,103
Real 2		—		3,877
Others		6,285		404
		244,240		203,209

Construction materials

At December 31, 2017, construction materials correspond mainly to different projects such as Stracon GyM - Central de Equipos, Morelco, and electromechanical works of the subsidiary GyM S.A. for S/50 million (S/50.5 million in 2016, of which S/33.8 million corresponds to Consorcio Constructor Ductos del Sur (CCDS) impaired in 2016 (Note 5.1-f).

16 INVESTMENTS IN ASSOCIATES AND JOINT VENTURES

At December 31 this account comprises:

	2016		2017
Associates		286,403		250,053
Joint ventures		103,356		18,618
		389,759		268,671

F-65

The amounts recognized in the income statement are as follows:

	2016			2017
Associates		(584,801	)		(5,915	)
Joint ventures		(4,909	)		7,242	)
		(589,710	)		1,327

a) Investment in associates

Set out below are the associates of the Group at December 31, 2016 and 2017. The associates listed below have share capital solely consisting of common shares, which are held directly by the Group. None of the associates are listed companies; therefore, there is no quoted market price available for their shares.

							Carrying amount
	Class		Interest in capital				At December 31,
Entity	of share		2016		2017		2016		2017
			%		%
Gasoducto Sur Peruano S.A.		Common		20.00		21.49		218,276		218,276
Promoción Inmobiliaria del Sur S.A.		Common		22.50		—		31,768		—
Concesionaria Chavimochic S.A.C.		Common		26.50		26.50		32,394		22,091
Betchel Vial y Vives Servicios Complementarios Ltda.		Common		40.00		40.00		69		102
Others								3,896		9,584
								286,403		250,053

The most significant associates are described as follows:

i) Gasoducto Sur Peruano S.A.

In November 2015, the group acquired a 20% interest in Gasoducto Sur Peruano (hereinafter GSP) and obtained a 29% interest in the Ductos del Sur Consortium (CCDS) through its subsidiary GyM S.A. GSP signed on July 22, 2014 a concession contract with the Peruvian Government (Grantor) to build, operate and maintain the transportation system by natural gas pipelines to meet the demand of the cities of the Peruvian southern region. Additionally, GSP signed an engineering, procurement and construction (EPC) contract with the Consorcio Ductos del Sur (CCDS). The Group made an investment of US $242.5 million (S/811 million) and was required to assume 20% of the performance guarantee established in the Concession contract for US$262.5 million (equivalent to S/882 million) and 21.49% of the guarantee for the bridge loan obtained by GSP for US$600 million (equivalent to S/2,016 million).

Early termination of the Concession Agreement

According to a notification issued by the Ministry of Energy and Mines of Peru on January 24, 2017, the early termination of the Concession Contract was declared, based on the provisions of clause 6.7 of the Concession Agreement “Improvements to the country’s energy security and development of the South Peru gas Pipeline”, as GSP failed to certify the financial closing within the established contractual deadline and proceeded to the immediate execution of the performance guarantee. This situation generated the execution of the counter-guarantees offered by the Group to the company issuing the performance guarantee of the Concession Contract for US$52.5 million (S/176.4 million nominal value) and US$129 million (S/433.3 million nominal value) for the corporate guarantee of the bridge loan granted to GSP.

On October 11, 2017, the agreement was signed for the delivery of the goods of the South Peru gas pipeline concession between GSP and the Ministry of Energy and Mines (MEM). As stated in the agreement, GSP delivered most of the Concession Assets in possession to the administrator designated by the MEM for its custody and conservation. The assets include all the works, equipment and facilities provided for the execution of the project, as well as the engineering studies that were prepared by the concessionaire company.

F-66

After the termination of the contract, the Peruvian Government, in accordance with the contract, had to hire an audit entity of recognized international prestige to calculate the Net Book Value (“VCN” for its Spanish definition “Valor Contable Neto”) of the Concession Assets and the subsequent call for up to three public auctions, being the base amount for the first of them 100% of the VCN, guaranteeing in any case that after the third auction, in case the concession has not been awarded, the payment to GSP would be at least 72.25% of the VCN. Having elapsed more than a year since the termination of the contract, the Peruvian Government has not taken any action to calculate the VCN and call for auctions. In the opinion of the external and internal legal advisors, since the previous procedure had not been done within the established deadlines, the Peruvian Government would be obliged to pay GSP 100% of the VCN. Regarding the amount of the VCN there is a previous calculation commissioned by GSP reviewed by an audit firm as an independent expert as of December 31, 2016 which determined a VCN of US$2,602 million.

GSP as of December 4, 2017 entered into a bankruptcy proceeding that will be carried out by the National Institute for the Defense of Competition and Intellectual Protection of Peru (hereinafter, INDECOPI), and the Group registered a claim for accounts receivable in 2017 charge for US$0.4 million and the fiduciary based in its capacity as administrator accounts receivable amounting US$169.3 million.

The fair value of the investment in GSP is based on the amount of the VCN, taking into consideration the payments anticipated in the insolvency proceedings, the subordination contracts and the loan cession agreements between the Group and GSP partners. Based on management’s estimate of such payments, an impairment of the investment was determined to be US$176.49 million. In addition, according to the conclusions of our internal and external legal advisors, an international arbitration will be required to receive the payment from the Government. The estimated time frame for the international arbitration is 5 years. Therefore, management has applied a discount to the long-term account receivable from GSP of US$22.8 million. These two effects amounted US$199.3 million before taxes and was recorded in the income statement for the year ended December 31, 2016.

In addition, at December 31, 2016, the Group evaluated the impairment of the financial statements of CCDS. As a result, a net loss before taxes of S/15.2 million was determined (Note 5.1-f), that was recognized in gross profit in the Engineering and Construction segment.

Same as in the Emergency Decree 003, Law 30737 (see note 1.c-1) in its First Section includes Odebrecht and its related companies, which include GSP. According to this Law, GSP will not be able to make transfers abroad, will require the consent of the Ministry of Justice in case it wishes to sell assets and must deposit the proceeds of such sale in a guarantee trust. Likewise, the entities of the Government that must make some payment to the entities included in the Law, must withheld according to the contract 10%, equivalent to the net profit margin, and deposit it in the aforementioned trust in guarantee. According to our internal and external legal advisors, Government payment for the VCN is not within the scope of the withholding, as this payment does not include net profit margin, nor is a sale of assets.

ii) Promoción Inmobiliaria del Sur S.A.

An entity engaged in purchasing land properties to obtain gains from their subsequent appreciation and disposal in the long term. Major assets consist of plots of land of 891.08 hectares in Lurín and 2.07 hectares in Punta Hermosa, both in Lima. Based on recent appraisals of the properties, Management believes that the commercial value of these properties is higher than their carrying amount.

In February 2017, the subsidiary Viva GyM S.A. signed a purchase sale contract for the total shares (representing 22.5%) in the investment in the associate Promoción Inmobiliaria del Sur S.A. The sale price was agreed in US$25 million (equivalent to S/81 million), which were paid in full.

F-67

iii) Concesionaria Chavimochic S.A.C.

An entity that was awarded with the implementation 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 concession effective period is 25 years and the total investment amounts US$647 million.

F-68

The following table shows financial information of the principal associates:

Summarized financial information for associates -

Entity	Gasoducto Sur Peruano S.A.						Promoción Inmobiliaria del Sur S.A.						Concesionaria Chavimochic S.A.C.
	At December, 31						At December, 31						At December, 31
	2015			2016			2015			2016			2015			2016			2017
Current
Assets		303,219			375,547			124,887			149,300			171,400			120,342			73,004
Liabilities		(3,357,508	)		(6,747,492	)		(32,072	)		(187,380	)		(110,799	)		(3,160	)		(1,111	)
Non-current
Assets		4,943,392			8,522,099			47,669			193,127			8,608			8,282			11,809
Liabilities		(7,442	)		—			(13,090	)		(13,855	)		(2,547	)		(1,918	)		(342	)
Net assets		1,881,661			2,150,154			127,394			141,192			66,662			123,546			83,360
Entity	Gasoducto Sur Peruano S.A.						Promoción Inmobiliaria del Sur S.A.						Concesionaria Chavimochic S.A.C.
	2015 (*)			2016 (*)			2015			2016			2015			2016			2017
Revenues		3,007,799			3,323,410			90,970			65,071			376,124			264,386			—
Profit (loss) from continuing operations		69,191			(1,372,594	)		90,618			42,281			22,995			(2,994	)		(43,340	)
Income tax		(19,828	)		—			(25,373	)		(11,839	)		(6,656	)		921			3,185
Profit (loss) from operations after income tax		49,363			(1,372,594	)		65,245			30,442			16,339			(2,073	)		(40,155	)
Other comprehensive income					—						—						—			—
Total comprehensive income		49,363			(1,372,594	)		65,245			30,442			16,339			(2,073	)		(40,155	)

(*) Gaseoducto Sur Peruano S.A. gross profit 2015 and 2016 amounting to S/257.7 million and S/0.8 million, respectively.

F-69

The movement of the investments in associates is as follows:

	2015			2016			2017
Opening balance		82,494			490,702			286,403
Contributions received		—			390,506			2,116
Acquisition of Gasoducto Sur Peruano		437,494			—			—
Impairment of GSP		—			(593,105	)		—
Panorama Project		(39,180	)		—			—
Dividends received		(9,838	)		(10,149	)		(259	)
Equity interest in results		22,800			8,304			(5,915	)
Decrease in capital		—			(166	)		(111	)
Sale of Investment		—			—			(32,223	)
Derecognition of investments		(2,755	)		—			—
Conversion adjustment		(313	)		311			42
Final balance		490,702			286,403			250,053

In addition to the GSP acquisition described in Note 16 a-i); in 2015, 2016 and 2017 the following significant movements were noted:

• In 2015, the “share of the profit or loss in associates and joint ventures under the equity method” shown in the income statement includes S/17.3 million as expenses that subsidiary GyM S.A. had to pay for the execution of the letter of guarantee in JV Panama.

• During 2016 cash contributions were made principally to Gasoducto Sur Peruano S.A. and Concesionaria Chavimochic amounting to S/373.9 million and S/15.7 million, respectively.

• In 2016 the Group obtained dividends mainly from Betchel Vial y Promoción Inmobiliaria del Sur S.A. amounting to S/6.3 million and S/3.8 million, respectively. In 2015 the Group received dividends from Promoción Inmobiliaria del Sur S.A. amounting to S/9.8 million.

• In 2016, the Group included an impairment provision of GSP for S/593.1 million (US$176.49 million). (Note 16 a-i).

• In 2017, the sale of investments refers to the sale transaction of the associate Promoción Inmobiliaria del Sur S.A. to the company Inversiones Centenario S.A.A. (Note 16 a-ii), transaction that was collected in full

b) Investment in Joint Ventures

Set out below are the joint ventures of the Group as of December 31:

							Carrying amount
	Class of share		Interest in capital				At December 31,
Entity			2016		2017		2016		2017
			%		%
Tecgas N.V.		Common		51.00		—		84,100		—
Sistemas SEC		Common		49.00		49.00		9,591		10,112
Logistica Químicos del Sur S.A.C.		Common		50.00		50.00		8,515		7,343
G.S.J.V. SCC		Common		50.00		50.00		861		878
Constructora SK-VyV Ltda.		Common		50.00		50.00		59		49
Others				—		—		230		236
								103,356		18,618

F-70

i) Tecgas N.V.

This entity provides operation and maintenance services for hydrocarbon pipelines and related activities, concentrates its activities substantially in fulfilling the obligations arising from the operation and maintenance contract of the pipeline gas transport system connected to the Concession of Gas Concession Peru SAA (TGP, its main client). In April 2017, the Company entered into a purchase sale contract for all of its shares (representing 51%) in the investment in a joint venture with the Operating Company of Gas del Amazonas S.A.C. (COGA). The sale price was agreed at US$21.5 million (equivalent to S/69.8), which are fully paid.

ii) Sistemas SEC

The company’s activities include the renovation and automation of the electrical system and signaling of railways and communications within the Santiago - Chillán - Bulnes - Caravans and Conception areas. The contract was awarded in 2005 for a period of 16 years.

iii) Adexus S.A.

It is mainly engaged in providing specialized technological IT services and communications solutions, including system integration to companies in a wide range of industries, such as financial services, telecommunications, manufacturing, mining, retail, among others. The Group acquired control of this company since August 2016, going from a joint venture to a subsidiary (Note 33-a).

The following table shows the financial information of the principal joint ventures:

Summarized financial information for joint ventures

	Tecgas N.V.
	At December, 31
Entity	2016
Current
Cash and cash equivalents		67
Other current assets		92,843
Total current assets		92,910
Other current liabilities		(87,780	)
Total current liabilities		(87,780	)
Non-current
Total non-current assets		33,336
Total non-current liabilities		(7,367	)
Net assets		31,099
Revenue		457,554
Depreciation and amortization		(2,266	)
Interest income		215
Interest expense		—
Profit (loss) from continuing operations		(3,209	)
Income tax expense		(4,078	)
Post-tax profit (loss) from continuing operations		(7,287	)
Other comprehensive income		—
Total comprehensive income		7,287

F-71

The movement of the investments in joint ventures was as follows:

	2015			2016			2017
Opening balance		147,069			146,303			103,356
Debt capitalization		—			8,308			—
Contributions received		—			6,889			—
Equity interest in results		2,193			(4,909	)		7,242
Acquisitions		44,145			—			—
Sale of Investment		—			—			(88,556	)
Transfer of Adexus from acquisition of control		—			(35,870	)		—
Dividends received		(42,122	)		(17,843	)		(3,758	)
Decrease in capital		(3,364	)		(1,798	)		—
Conversion adjustment		(1,618	)		2,276			334
Final balance		146,303			103,356			18,618

In 2017, 2016 and 2015 the following significant movements were carried out:

• The Group obtained dividends in 2017 principally from Consorcio Sistemas SEC for S/1 million and Logistica Quimicos del Sur S.A. for S/2.8 million (S/13.1 and S/3.3 million from G.S.J.V. in 2016 and S/41.1 million in 2015 from Constructora SK - VyV Ltda.).

• On April 24, 2017 the Company signed a purchase-sale agreement for their total capital stock (representing 51%) held in their joint venture with Compañía Operadora de Gas del Amazonas S.A.C. (COGA). The selling price was agreed at US$21.5 million (equivalent to S/69.8 million), which was fully paid.

• On June 6, 2017 the Company signed a purchase-sale agreement for their total share of GMD S.A., which represent 89.19% of the Company’s shareholding, in favor of AI Inversiones Palo Alto II S.A.C., a company affiliated with Advent International. The value agreed for the entire participation was S/269.9 million. At the close of this report, the amount was collected in full.

• In February and December 2016, a debt with Adexus was capitalized and a cash contribution was made to Tecgas N.V. for S/8.3 million and S/6.9 million, respectively.

In August 2015 the Company acquired a 44% interest in the share capital of Adexus S.A. amounting to S/44.1 million. This investment includes goodwill arising from the acquisition for S/20.7 million. In February 2016 the Group acquired 8% of additional interest by capitalizing debt for S/8.3 million. In August 2016, the Group obtained control over Adexus S.A. and the balance of the investment at that date was transferred to investments in subsidiaries for S/35.9 million. Since that date, the Company consolidated the financial statements of Adexus S.A (Note 33 a).

F-72

17 PROPERTY, PLANT AND EQUIPMENT, NET

The movement in property, plant and equipment accounts and its related accumulated depreciation for the year ended December 31, 2015, 2016 and 2017 is as follows:

													Furniture and			Other			Replacement			In-transit			Work in
	Land			Buildings			Machinery			Vehicles			fixtures			equipment			units			units			progress			Total
At January 1, 2015
Cost		30,675			200,450			986,487			394,077			43,146			176,869			7,245			9,177			99,831			1,947,957
Accumulated depreciation and impairment		—			(35,479	)		(416,029	)		(201,815	)		(27,279	)		(120,333	)		(4	)		—			—			(800,939	)
Net carrying amount		30,675			164,971			570,458			192,262			15,867			56,536			7,241			9,177			99,831			1,147,018
Net initial carrying amount		30,675			164,971			570,458			192,262			15,867			56,536			7,241			9,177			99,831			1,147,018
Additions		—			9,021			105,575			86,923			12,684			22,802			—			16,018			44,933			297,956
CAM Brazil deconsolidation		—			(839	)		(1,462	)		(633	)		(70	)		—			—			—			—			(3,004	)
Reclassifications		—			36,180			32,389			9,300			1,245			7,272			10,529			(23,092	)		(73,823	)		—
Transfers to intangibles (Note 18)		—			—			68			—			—			—			—			—			(36,785	)		(36,717	)
Transfers to accounts receivable		—			(3,635	)		—			—			(777	)		(4,442	)		—			—			(5,168	)		(14,022	)
Deduction for sale of assets		(2,001	)		(1,235	)		(35,118	)		(42,464	)		(1,491	)		(7,979	)		—			—			(14,185	)		(104,473	)
Disposals – cost		—			(5,057	)		(10,224	)		(362	)		(2,299	)		(1,810	)		(2,326	)		(89	)		(1,206	)		(23,373	)
Depreciation charge		—			(11,780	)		(116,993	)		(54,545	)		(4,623	)		(13,141	)		—			—			—			(201,082	)
Discontinued operations		—			(1,818	)		—			(263	)		(533	)		(11,084	)		—			—			—			(13,698	)
Depreciation for sale deductions		—			1,003			23,907			32,566			799			7,751			—			—			—			66,026
Disposals – accumulated depreciation		—			3,060			4,373			323			503			1,331			—			—			—			9,590
Translations adjustments		(265	)		(306	)		(8,288	)		(2,221	)		(128	)		(506	)		—			(197	)		(553	)		(12,464	)
Net final carrying amount		28,409			189,565			564,685			220,886			21,177			56,730			15,444			1,817			13,044			1,111,757
At December 31, 2015
Cost		28,409			231,029			1,074,195			443,239			52,225			191,238			15,448			1,817			13,044			2,050,644
Accumulated depreciation and impairment		—			(41,464	)		(509,510	)		(222,353	)		(31,048	)		(134,508	)		(4	)		—			—			(938,887	)
Net carrying amount		28,409			189,565			564,685			220,886			21,177			56,730			15,444			1,817			13,044			1,111,757

F-73

													Furniture and			Other			Replacement			In-transit			Work in
	Land			Buildings			Machinery			Vehicles			fixtures			equipment			units			units			progress			Total
At January 1, 2016
Cost		28,409			231,029			1,074,195			443,239			52,225			191,238			15,448			1,817			13,044			2,050,644
Accumulated depreciation and impairment		—			(41,464	)		(509,510	)		(222,353	)		(31,048	)		(134,508	)		(4	)		—			—			(938,887	)
Net carrying amount		28,409			189,565			564,685			220,886			21,177			56,730			15,444			1,817			13,044			1,111,757
Net initial carrying amount		28,409			189,565			564,685			220,886			21,177			56,730			15,444			1,817			13,044			1,111,757
Additions		6,238			12,126			81,378			50,574			4,423			24,870			553			19,312			13,594			213,068
Adquisition of subsidiaries – Adexus (Note 33 a)		—			13,913			—			420			1,525			26,130			—			—			—			41,988
Reclassifications		—			588			1,927			(1,172	)		4,456			13,156			2,583			(17,349	)		(4,189	)		—
Transfers to inventories		2,941			—			—			—			—			—			—			—			—			2,941
Transfers to intangibles (Note 18)		—			—			—			—			—			—			—			—			(1,257	)		(1,257	)
Deduction for sale of assets		(5,256	)		(14,333	)		(60,374	)		(48,521	)		(1,724	)		(5,766	)		—			—			—			(135,974	)
Disposals – cost		—			(1,232	)		(15,149	)		(1,354	)		(1,579	)		(4,364	)		(661	)		(2	)		—			(24,341	)
Depreciation charge		—			(12,651	)		(104,638	)		(47,366	)		(6,947	)		(15,088	)		(5	)		—			—			(186,695	)
Impairment loss		—			(73	)		(5,190	)		(317	)		(3,301	)		(382	)		—			—			—			(9,263	)
Discontinued operations		—			(2,191	)		0			(675	)		(601	)		(13,039	)		—			—			—			(16,506	)
Depreciation for sale deductions		—			8,113			48,266			29,536			1,026			1,907			—			—			—			88,848
Disposals – accumulated depreciation		—			939			14,430			886			1,540			3,991			—			—			—			21,786
Translations adjustments		282			130			5,987			922			176			(344	)		—			—			94			7,247
Net final carrying amount		32,614			194,894			531,322			203,819			20,171			87,801			17,914			3,778			21,286			1,113,599
At December 31, 2016
Cost		32,614			241,150			1,088,229			443,641			59,593			246,102			17,923			3,778			21,286			2,154,316
Accumulated depreciation and impairment		—			(46,256	)		(556,907	)		(239,822	)		(39,422	)		(158,301	)		(9	)		—			—			(1,040,717	)
Net carrying amount		32,614			194,894			531,322			203,819			20,171			87,801			17,914			3,778			21,286			1,113,599

F-74

	Land			Buildings			Machinery			Vehicles			Furniture and fixtures			Other equipment			Replacement units			In-transit units			Work in progress			Total
At January 1, 2017
Cost		32,614			241,352			1,090,460			443,641			59,593			246,102			17,923			3,778			18,853			2,154,316
Accumulated depreciation and impairment		—			(46,256	)		(556,907	)		(239,822	)		(39,422	)		(158,301	)		(9	)		—			—			(1,040,717	)
Net carrying amount		32,614			195,096			533,553			203,819			20,171			87,801			17,914			3,778			18,853			1,113,599
Net initial carrying amount		32,614			195,096			533,553			203,819			20,171			87,801			17,914			3,778			18,853			1,113,599
Additions		157			2,724			48,207			36,594			11,607			36,179			925			22,877			13,178			172,448
Deconsolidation of GMD		(3,713	)		(26,109	)		—			(1,527	)		(2,153	)		(46,032	)		0			(3,903	)		(4	)		(-83,441	)
Reclassifications		0			1,969			12,459			2,888			609			6,579			4,076			(21,600	)		(6,980	)		—
Transfers to intangibles (Note 18)		—			—			2,119			724			—			—			—			(964	)		(2,048	)		(169	)
Deduction for sale of assets		(5,616	)		(51,736	)		(149,202	)		(92,079	)		(4,200	)		(5,270	)		—			—			—			(308,103	)
Disposals – cost		—			(1,869	)		(6,442	)		(7,941	)		(1,200	)		(12,592	)		—			(230	)		(3,606	)		(33,880	)
Depreciation charge		—			(12,469	)		(100,976	)		(45,457	)		(11,654	)		(26,928	)		—			—			—			(197,484	)
Impairment loss		—			—			(14,328	)		—			—			0			—			—			(352	)		(14,680	)
Depreciation for sale deductions		—			3,579			115,864			84,145			1,049			3,128			—			—			—			207,765
Disposals – accumulated depreciation		—			1,624			2,410			434			778			3,179			—			—			—			8,425
Translations adjustments		236			152			606			(350	)		(23	)		980			—			—			(346	)		1,255
Net final carrying amount		23,678			112,961			444,270			181,250			14,984			47,024			22,915			(42	)		18,695			865,735
At December 31, 2017
Cost		23,678			166,483			998,207			381,950			64,233			225,946			22,924			(42	)		19,047			1,902,426
Accumulated depreciation and impairment		—			(53,522	)		(553,937	)		(200,700	)		(49,249	)		(178,922	)		(9	)		—			-352			(1,036,691	)
Net carrying amount		23,678			112,961			444,270			181,250			14,984			47,024			22,915			(42	)		18,695			865,735

F-75

In 2016 and 2017 additions to the carrying amount correspond to the acquisition of fixed assets under finance leases or by direct acquisition.

The balance of work in progress at December 31, 2017 relates mainly to investments made by the subsidiary GMP S.A. for S/11 million (S/19 million at December 31, 2016) for the activities of oil drilling in order to increase the volume of exploitation of oil and gas. Additionally, the balance includes the construction work of Proyecto Hotel Larcomar for S/15.6 million (S/14.4 million in 2016).

In 2017 fixed asset sales amounted to S/127.2 million (S/70.5 million and S/55.8 million in 2016 and 2015, respectively) resulting in profits of S/26.9 million (profits of S/18.4 and S/17.4 million in 2016 and 2015, respectively) that are shown in the statement of income within “other income and expenses, net” (Note 29), the difference between the income proceeds from disposals of fixed assets and their profit are shown within “revenue from construction activities” and “gross profit”, respectively.

In September 2017, the Company signed a sale contract for the corporate building located in Miraflores with Volcomcapital Petit Thouars S.A.C. The sale was made in October 2017, the amount of the purchase-sale amount to US$20.5 million. This operation includes a 5-year lease period that can be extended up to 10 years as well as a purchase option on the building. The sale of the mentioned property generates a profit of US$3.5 million.

Depreciation of fixed assets and investment properties for the year is broken down in the statement of income as follows:

	2015			2016			2017
Cost of services and goods		186,661			177,699			178,209
Administrative expenses		16,711			11,317			13,224
(+) Depreciation GMD discontinued operation		—			—			8,361
Total depreciation related to property, plant and equipment		203,372			189,016			199,794
(-) Depreciation related to investment property		(2,290	)		(2,321	)		(2,310	)
Total depreciation related to property, plant and equipment		201,082			186,695			197,484

The amount of S/8.3 million corresponds to the depreciation recorded from January to May 2017 of the subsidiary GMD S.A. which was sold in June 2017.

In 2016, the Group determined indicators of impairment of items of property, plant and equipment relating to: i) early termination of the GSP concession in respect of Consorcio Constructor Ductos del Sur (CCDS) and ii) assets under stand-by status. Management calculated the recoverable amount of those assets as the fair value; fair value was determined taking into account appraisals performed by independent experts. The recognized impairment loss is mainly related to Consorcio Constructor Ductos del Sur (CCDS) for a total of S/4.1 million (Note 5.1-f), GyM for S/2.39 million and Stracon GyM S.A. for S/2.34 million, which are shown within “Expenses by nature” (Note 27).

At December 31, 2017 the Group has fully depreciated property, plant and equipment items that are still in use for S/154 million (S/151.6 million, at December 31, 2016).

F-76

The net carrying amount of machinery and equipment, vehicles and furniture and fixtures acquired under finance lease agreements is broken down as follows:

Financial Leasing

	At December 31,
	2015			2016			2017
Cost of acquisition		735,591			800,927			650,301
Accumulated depreciation		(327,465	)		(386,411	)		(351,447	)
Net carrying amount		408,126			414,516			298,854

Other financial liabilities are secured with items of property, plant and equipment for S/368.1 million (S/617.9 million in 2016).

Commitment for operating leases:

In relation to the sale lease contract for the corporate building located in Miraflores mentioned on the previous page, the Company has outstanding commitments for non-cancelable operating leases, with the following maturities:

	2017
Not later than 1 year		8,526
Within 2 to 5 years		35,161
Later than 5 years		46,451
		90,138

F-77

18 INTANGIBLE ASSETS, NET

The movement of intangible assets and that of their related accumulated amortization, as of December 31, 2015, 2016 and 2017, is as follows:

	Goodwill			Trade- marks			Concession rights			Contractual relations with clients			Internally generated software and development costs			Costs of development of wells			Development costs			Land use rights		Other assets			Total
At January 1, 2015
Cost		202,144			102,835			561,183			86,233			32,231			281,722			3,623			13,288		14,257			1,297,516
Accumulated amortization and impairment		(21,995	)		(217	)		(269,504	)		(43,243	)		(26,462	)		(150,392	)		(3,623	)		—		(3,337	)		(518,773	)
Net carrying amount		180,149			102,618			291,679			42,990			5,769			131,330			—			13,288		10,920			778,743
Net initial carrying amount		180,149			102,618			291,679			42,990			5,769			131,330			—			13,288		10,920			778,743
Additions		5,418			—			165,149			—			9,141			11,842			—			—		3,429			194,979
CAM Brazil Deconsolidation		—			—			—			—			(129	)		—			—			—		—			(129	)
Transfers from assets under construction (Note 17)		—			—			—			(68	)		1,562			33,396			—			—		1,827			36,717
Transfers to accounts receivable		—			—			(2,278	)		—			—			—			—			—		—			(2,278	)
Transfers to pre-paid expenses		—			—			(10,923	)		—			—			—			—			—		(3,684	)		(14,607	)
Reclassifications		—			—			—			—			188			(188	)		—			—		(3	)		(3	)
Amortization		—			—			(18,436	)		(14,697	)		(4,601	)		(42,117	)		—			—		(825	)		(80,676	)
Discontinued operations		—			—			(7,247	)		—			(1,432	)		—			—			—		—			(8,679	)
Translations adjustments		(15,335	)		(6,084	)		(51	)		(4,031	)		(280	)		—			—			—		—			(25,781	)
Net final carrying amount		184,808			96,534			417,893			24,194			10,218			122,421			—			13,288		11,664			878,286
At December 31, 2015
Cost		192,227			96,751			716,125			82,134			42,761			326,723			3,623			13,288		15,425			1,489,057
Accumulated amortization and impairment		(21,995	)		(217	)		(298,232	)		(57,940	)		(32,543	)		(192,460	)		(3,623	)		—		(3,761	)		(610,771	)
Net carrying amount		170,232			96,534			417,893			24,194			10,218			134,263			—			13,288		11,664			878,286

F-78

	Goodwill			Trade- marks			Concession rights			Contractual relations with clients			Internally generated software and development costs			Costs of development of wells			Development costs			Land use rights		Other assets			Total
At January 1, 2016
Cost		192,227			96,751			716,125			82,134			42,761			326,723			3,623			13,288		15,425			1,489,057
Accumulated amortization and impairment		(21,995	)		(217	)		(298,232	)		(57,940	)		(32,543	)		(192,460	)		(3,623	)		—		(3,761	)		(610,771	)
Net carrying amount		170,232			96,534			417,893			24,194			10,218			134,263			—			13,288		11,664			878,286
Net initial carrying amount		170,232			96,534			417,893			24,194			10,218			134,263			—			13,288		11,664			878,286
Additions		—			—			118,222			—			16,477			17,772			—			—		19,255			171,726
Acquisition of subsidiary – Adexus (Note 33 a)		930			9,088			6,090			12,822			—			—			—			—		4,203			33,133
Transfers from assets under construction (Note 17)		—			—			—			—			—			—			—			—		1,257			1,257
Reclasifications		—			—			5,258			—			345			—			—			—		(5,603	)		—
Disposals – net cost		—			—			(1,395	)		—			—			(2,395	)		—			—		—			(3,790	)
Amortization		—			—			(19,646	)		(4,376	)		(7,407	)		(40,918	)		—			—		(1,200	)		(73,547	)
Discontinued operations		—			—			(8,560	)		—			(636	)		—			—			—		—			(9,196	)
Impairment loss		(38,680	)		(15,628	)		—			—			—			—			—			—		—			(54,308	)
Translations adjustments		12,038			3,672			(102	)		171			1,024			—			—			—		(78	)		16,725
Net final carrying amount		144,520			93,666			517,760			32,811			20,021			108,722			—			13,288		29,498			960,286
At December 31, 2016
Cost		205,195			109,511			844,213			95,127			60,607			342,100			3,623			13,288		34,418			1,708,082
Accumulated amortization and impairment		(60,675	)		(15,845	)		(326,453	)		(62,316	)		(40,586	)		(233,378	)		(3,623	)		—		(4,920	)		(747,796	)
Net carrying amount		144,520			93,666			517,760			32,811			20,021			108,722			—			13,288		29,498			960,286

F-79

	Goodwill			Trade- marks			Concession rights			Contractual relations with clients			Internally generated software and development costs			Costs of development of wells			Development costs			Land use rights		Other assets			Total
At January 1, 2017
Cost		205,195			109,511			844,213			95,127			60,607			342,100			3,623			13,288		34,294			1,707,958
Accumulated amortization and impairment		(60,675	)		(15,845	)		(326,453	)		(62,316	)		(40,586	)		(233,378	)		(3,623	)		—		(4,796	)		(747,672	)
Net cost		144,520			93,666			517,760			32,811			20,021			108,722			—			13,288		29,498			960,286
Net initial cost		144,520			93,666			517,760			32,811			20,021			108,722			—			13,288		29,498			960,286
Additions		—			—			64,171			5,274			3,330			49,698			—			—		20,832			143,305
Deconsolidation GMD		(3,524	)		—			(17,354	)		—			(21	)		—			—			—		(2,767	)		(23,666	)
Transfers from assets under construction (Note 17)		—			—			(11,217	)		—			2,761			5,008			—			—		3,617			169
Derecognition – cost		—			—			(537	)		—			(1,572	)		—			—			—		(355	)		(2,464	)
Amortization		—			—			(24,609	)		(4,189	)		(8,091	)		(46,695	)		—			—		(2,973	)		(86,557	)
Impairment		(20,068	)		(29,541	)		—			—			—			—			—			—		—			(49,609	)
Translations adjustments		(4,124	)		975			13			369			1,196			—			—			—		177			(1,394	)
Net final cost		116,804			65,100			528,227			34,265			17,624			116,733			—			13,288		48,029			940,070
At December 31, 2017
Cost		193,862			110,486			879,289			100,640			66,301			396,806			3,623			13,288		51,983			1,816,278
Accumulated amortization and impairment		(77,058	)		(45,386	)		(351,062	)		(66,375	)		(48,677	)		(280,073	)		(3,623	)		—		(3,954	)		(876,208	)
Net cost		116,804			65,100			528,227			34,265			17,624			116,733			—			13,288		48,029			940,070

F-80

a) Goodwill

Management reviews the results of its businesses based on the type of economic activity carried out.

At December 31 goodwill allocated to cash-generating units (CGU) are:

	2015		2016		2017
Engineering and construction		125,514		98,587		75,051
Electromechanical		20,737		20,737		20,737
Mining and construction services		13,366		13,366		13,366
IT equipment and services		4,172		5,102		6,720
Telecommunications services		6443		6,728		930
		170,232		144,520		116,804

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

As a result of these assessments an impairment was identified in 2016 and 2017 in two CGU’s, Vial y Vives—DSD, and Morelco S.A. and was accounted as of December 31st, 2016 and 2017, respectively. The loss to impairment was generated due to the decrease in the expected flows, as a result of the reduction of the contracts linked to the Backlog. The amount of the impairment it impacted the total amount of goodwill was S/20.1 in 2017(S/38.7 million in 2016).

Major assumptions used by the Group in determining the fair value less cost of disposal and the value in use were as follows:

	Engineering and construction		Electro- mechanical		Mining and construction		IT equipment and services		Telecommunication services
	%		%		%		%		%
2016
Gross margin		9.50% - 12.99%		11.10%		12.04%		15.00% - 23.19%		11.75%
Terminal growth rate		3.00% - 4.00%		2.00%		2.00%		2.00% - 3.00%		3.00%
Discount rate		9.66% - 12.72%		11.01%		11.71%		21.74%		10.02%
2017
Gross margin		9.50%		8.00%		—		20.83%		4.26%
Terminal growth rate		3.00%		2.00%		—		2.90%		3.00%
Discount rate		11.18%		11.48%		—		10.17%		4.02%

These assumptions have been used for the analysis of each CGU included in the operating economic activities for a period of 5 years.

Management determines the forecasted gross margins based on past results and market development expectations. Average growth rates are consistent with those prevailing in the industry. Discount rates used are pre-tax or post-tax as appropriate and reflect the specific risk related to the assessed CGUs.

b) Trademarks

This item mainly comprises the trademarks acquired in the business combination processes with Vial y Vives S.A.C. (S/75.4 million) in August 2013; Morelco S.A.S. (S/33.33 million) in December 2014; and Adexus S.A. (S/9.1 million) in August 2016. Management determined that the brands obtained from Vial y Vives, Morelco and Adexus have indefinite lives; consequently, annual impairment tests are performed on these intangibles, as described in paragraph a) above.

F-81

As a result of these tests, at December 31, 2016 and 2017, the Vial y Vives—DSD trademark was partially impaired, the amount of the impairment was S/15.6 million and S/29.5 million, respectively. No provision for impairment was performed for Stracon GYM since the Company sold its shares (87.59%) for a total of US $76.8 million, generating a profit of S/41.9 million

Major assumptions used by the Group in determining the fair value less cost of disposal are as follows:

	Engineering and construction						IT Equipment Services
	Morelco			Vial y Vives - DSD			Adexus
	%			%			%
2016
Average revenue growth rate		14.39	%		24.53	%		12.60	%
Terminal growth rate		3.00	%		4.00	%		3.00	%
Discount rate		11.85	%		9.87	%		16.05	%
2017
Average revenue growth rate		9.60	%		25.00	%		9.19	%
Terminal growth rate		3.00	%		4.00	%		3.00	%
Discount rate		11.18	%		14.80	%		16.63	%

c) Concessions

The intangibles of Norvial S.A. as of December 31, 2017, they mainly comprise:

i.) The EPC contract for S/78 million (S/86 million as of December 31, 2016), ii) the construction of the second section of the “Ancón-Huacho-Pativilca” highway, and the cost of financing capitalized at effective interest rates between 7.14% and 8.72% for S/331 million and S/26 million, respectively (S/297 million and S/23 million, respectively as of December 31, 2016 at interest rates between 7.14 % and 8.72%) iii) road improvement for S/17 million (S/18 million as of December 31, 2016), iv) implementation for road safety for S/4 million (S/3 million as of December 31, 2016 ), v) disbursements for the acquisition of properties for S/5 million (S/6 million as of December 31, 2016) and vi) Other intangible assets contracted for the process of delivery of the Concession for S/4 million (S/3 million as of December 31, 2016). During the year 2017, financing costs have been capitalized for S/26 million (S/22.5 million in 2016), see (Note 2.19).

d) Costs of development of wells

Through one of its subsidiaries, the Group operates and extracts oil from two oil fields (Block I and Block V) located in the province of Talara in northern Peru. Both oil fields are operated under long-term service agreements by which the Group provides hydrocarbon extraction services to Perupetro.

On December 10, 2014 the Peruvian Government granted subsidiary GMP S.A. a right of exploiting for 30 years the oil blocks III and IV (owned by the Peruvian government-run entity- Perupetro) located in Talara, Piura, 230 wells and 330 wells respectively. The total investment expected to be made in both wells is estimated to be US$560 million; operations began in April 2015 in both blocks.

As part of the Group’s obligations under the relevant service agreements, certain costs will be incurred in preparing the wells in Blocks I, III, IV and V. These costs are capitalized as part of intangible assets at a carrying amount of S/99 million at December 31, 2017 (S/80 million at December 31, 2016).

All blocks are amortized on the basis of the useful lives of the wells (estimated to be 5 years for Blocks I and V and unit of production method for Blocks III and IV), which is less than the total effective period of the service agreement with Perupetro.

F-82

e) Amortization of intangible assets

Amortization of intangibles is broken down in the income statement as follows:

	2015		2016		2017
Cost of sales and services (Note 27)		74,187		66,862		74,515
Administrative expenses (Note 27)		6,489		6,685		8,227
		80,676		73,547		82,742

19 OTHER FINANCIAL LIABILITIES

At December 31 this account comprises:

	Total				Current				Non-current
	2016		2017		2016		2017		2016		2017
Bank overdrafts		8,396		120		8,396		120		—		—
Bank loans		2,131,901		1,561,634		1,835,340		990,467		296,561		571,167
Finance leases		240,141		128,309		117,307		66,177		122,834		62,132
		2,380,438		1,690,063		1,961,043		1,056,764		419,395		633,299

a) Bank loans

At December 31, 2016 and 2017, this item comprises bank borrowings contracted in local and foreign currency intended for working capital. These obligations are subject to fixed interest rates ranging between 3.30% and 13.9% in 2017 and between 1.0% and 14.4% in 2016.

					Current				Non-current
	Interest		Date of		At December, 31				At December, 31
	rate		maturity		2016		2017		2016		2017
GyM S.A.		3.30% / 8.73%		2018 / 2019		492,910		551,413		187,029		95,376
Graña y Montero S.A.A.		Libor USD 3M + from 4.9% to 5.5%		2018 / 2020		932,114		113,412		—		363,564
Viva GyM S.A.		7.00% / 10.67%		2018		201,609		157,592		—		—
GMP S.A.		4.45% / 6.04%		2018 / 2020		77,857		42,911		71,453		96,245
CAM Holding S.A.		4.44% / 13.93%		2018 / 2020		69,702		77,775		24,889		12,807
Adexus S.A.		3.63% / 5.90%		2018 / 2019		42,782		46,552		13,190		3,175
CONCAR S.A.		7.50%		2018		—		812		—		—
CAM Servicios Perú S.A.		6.39% / 7.18%		2017		3,620		—		—		—
GMD S.A.		6.20% / 7.47%		2017		14,746		—		—		—
					1,835,340		990,467		296,561		571,167

i) Credit Suisse Syndicated Loan

In December 2015, the Group entered into a medium-term loan credit agreement for up to US$200 million (equivalent to S/672 million), with Credit Suisse AG, Cayman Islands Branch, Credit Suisse AG, Cayman Islands Branch and Credit Suisse Securities (USA) LLC. The initial term of the loan was set at five years, with quarterly installments starting to be paid on the 18th month. The loan accrued interest at a rate of three months Libor plus 3.9% per year. The proceeds were used to finance the equity interest in GSP. As of December 2016, the outstanding balance amounted to US$148.5 (equivalent to S/498.8 million) and is included as a current part. As of December 31, 2017, the outstanding balance amounted to US$81.1 million (equivalent to S/263.2 million).

On June 27, 2017, the Group renegotiated the terms of this loan to clear breaches related to the termination of the GSP concession. The new terms require repayment by December, 2020, with required prepayments to be made with the proceeds of asset sales of 40% in the first year and an additional 30% in the second year of the amendment. The syndicated loan accrues interest at LIBOR plus 4.90% per year. Under the amendment, the Group is prohibited from paying dividends until the loan is fully repaid. The loan is secured by (i) a lien on Concar’s shares; (ii) a lien on Almonte’s shares;

F-83

(iii) a mortgage over certain real estate property in Surquillo; (iv) liens on certain accounts; (v) a lien on GyM’s share; (vi) a second lien on CAM Holding SPA’s shares; (vii) a second lien on CAM Servicios del Peru S.A.’s shares; and (viii) a first lien on cash flows from the sale of certain assets.

The agreement contains certain covenants, including the obligation by the Company to maintain the following financial ratios during the term of the agreement: (1) the Consolidated EBITDA to Consolidated Interest Expense Ratio shall not be less than 3.5:1.0 commencing on April 1, 2018 and thereafter; (2) the Consolidated Leverage Ratio (as defined therein) shall not be greater than 3.5:1.0 at any time during the period commencing on December 31, 2016 and ending on March 31, 2017; 3.5:1.0 at any time during the period commencing on July 1, 2017 and ending on September 30, 2017; and no greater than 2.5:1.0 at any time thereafter; and (3) the Debt Service Coverage Ratio as of the last day of any fiscal quarter of the borrower, falling on or after the first anniversary of the closing date, shall not be less than 1.5:1.0, commencing on April 1, 2018 and thereafter.

As of the date of this annual report, we are under default in relation to the financial ratios and as per paragraph (2) the non-delivery of the audited consolidated financial statements of Graña y Montero and GyM for the 2017 fiscal year. The syndicated loan required that we provide the financial statements for the 2017 fiscal year no later than April 30, 2018. We are in the process of obtaining waivers from the lenders. Management estimates that these will be granted and, therefore, do not represent a contingency for the Company.

ii) GSP Bridge Loan

At December 31, 2016, the current balance includes US$129 million (equivalent to S/433.3 million) of the corporate guarantee issued by the Company to secure the bridge loan given to GSP, which was enforceable at that date. On June 27, 2017, the Company has reached a new term loan with Natixis, BBVA, SMBC and MUFJ for US$78.7 million (equivalent to S/264.8 million), the proceeds of which were used to repay the GSP bridge loan. At December 31, 2017, the outstanding loan amount is US$72.5 million (S/235.2 million)

The maturity is June, 2020, with required prepayments to be made with the proceeds of asset sales of 40% in the first year and an additional 30% in the second year. The new term contains the following covenant: the consolidated leverage ratio shall not be more than 3.5:1.0 at any time, and accrues interest at LIBOR plus 4.50% per year, which increases to 5.00% during the second year and 5.50% during the third year. Under the new term, the Group is prohibited from paying dividends until the loan is fully repaid. Also, the new term is secured by (i) a first lien on rights to receive the termination payment derived from the GSP termination (the “VCN”), (ii) a second lien on our shares of GyM S.A. and Concar S.A.; (iii) a second lien on our shares of Almonte; (iv) a second lien on certain real estate properties in Miraflores and Surquillo; (v) a second lien on our shares of CAM Holding SPA; (vi) a second lien on our shares of CAM Servicios del Peru S.A.; and (vii) a first lien on cash flows from the sale of certain assets.

As of the date of this annual report, we are under defaults under the term loan with respect to the financial ratio and the non-delivery of the audited consolidated financial statements of Graña y Montero for and 2017 fiscal year. The term loan required that we provide the financial statements for the 2017 fiscal year no later than April 30, 2018. We are in the process of obtaining waivers from the lenders. Management estimates that these will be granted and, therefore, do not represent a contingency for the Company.

F-84

b) Finance lease obligations

					Current				Non-current
	Interest		Date of		At December, 31				At December, 31
	rate		maturity		2016		2017		2016		2017
GyM S.A.		2.25% / 8.96%		2018 / 2021		80,570		40,107		58,937		32,397
Viva GyM S.A.		7.30% / 8.95%		2018 / 2022		4,847		4,439		16,541		12,010
Adexus S.A.		3.36% / 18.00%		2018 / 2021		9,884		8,567		12,287		4,363
GMP S.A.		4.22% / 4.98%		2018 / 2020		4,206		4,013		9,035		5,304
CAM Holding S.A.		3.01% / 14.76%		2018 / 2022		3,729		6,240		10,590		5,692
CONCAR S.A.		3.23% / 4.70%		2018 / 2020		3,667		1,777		3,345		1,945
CAM Servicios Perú S.A.		6.79% / 7.75%		2019 / 2020		—		687		—		421
GMI S.A.		5.56% / 6.90%		2018		—		347		—		—
GMD S.A.		4.99% / 7.00%		2017		10,404		—		12,099		—
						117,307		66,177		122,834		62,132

The minimum payments to be made by maturity and present value of the finance lease obligations are as follows:

	At December 31,
	2016			2017
Up to 1 year		127,496			72,864
From 1 to 5 years		112,769			65,899
Over 5 years		19,506			638
		259,771			139,401
Future financial charges on finance leases		(19,630	)		(11,092	)
Present value of the obligations for finance lease contracts		240,141			128,309

The present value of finance lease obligations is broken down as follows:

	At December 31,
	2016		2017
Up to 1 year		117,307		66,177
From 1 year to 5 years		105,978		61,501
Over 5 years		16,856		631
		240,141		128,309

c) Fair value of borrowings

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

	Carrying amount				Fair value
	At December, 31				At December, 31
	2016		2017		2016		2017
Bank overdrafts		8,396		120		8,396		120
Bank loans		2,131,901		1,561,634		2,142,890		1,627,000
Finance leases		240,141		128,309		240,089		141,040
		2,380,438		1,690,063		2,391,375		1,768,160

In 2017 fair values are determined based on discounted expected cash flows using borrowing rates between 2.4% and 13.8% (between 1.3% and 14.3% in 2016) that corresponds to level 2 of the fair value hierarchy.

F-85

20 BONDS

At December 31 this account comprises:

	Total				Current				Non-current
	2016		2017		2016		2017		2016		2017
GyM Ferrovías		604,031		603,657		20,551		12,294		583,480		591,363
Norvial		363,683		343,910		25,540		24,361		338,143		319,549
		967,714		947,567		46,091		36,655		921,623		910,912

GyM Ferrovías S.A.

In February 2015, subsidiary GyM Ferrovías S.A. carried out an international issue of corporate bonds under the U.S. Regulation S. The issue was carried out in Soles VAC (the Spanish acronym for constant value update) for a total amount of S/629 million. The costs of issue in this transaction were S/22 million. Maturity of these bonds is November 2039 and interest is accrued at a rate of 4.75% (plus VAC adjustment); they have a risk rating of AA+ (local level) granted by Apoyo & Asociados Internacionales Clasificadora de Riesgo and a guarantee scheme that includes a mortgage on the concession to which GyM Ferrovías S.A. is the concessionaire, security interest over the shares of GyM Ferrovías S.A., Cession of the Collection Rights of the Administration Trust, a Flow and Reserve Account Trust for the Debt, Operation and Maintenance Service and Capex currently in progress. At December 31, 2017 the Group amortized a total of S/19.1 million (S/21.9 million in 2016).

At December 31, 2017 the balance included accrued interest and VAC adjustments payable for S/52.3 million (S/34.5 million at December 31, 2016).

As part of the process of bond structuring, GyM Ferrovías S.A. engaged to report on and verify the following covenants measured on the basis of the individual financial statements:

• Maintaining debt service coverage ratio of not less than 1.2 times.

• Maintaining a constant minimum balance of trust equal to a quarter of operating and maintenance costs (including VAT)

• Maintaining a constant minimum balance of trust equal to two coupons as per schedule.

On August 23, 2017, GyM Ferrovias S. A. and Line One CPAO Purchaser LLC entered into the Sale and Purchase Agreement and Assignment of Rights Agreement regarding the CPAO (“Pago Anual por Inversión Complementaria” in Spanish) derived from the Concession Agreement for up to US$ 316 million.

As of December 31, 2017, GyM Ferrovias S. A. as Borrower, Mizuho Bank, Ltd. and Sumitomo Mitsui Banking Corporation as Lenders and Mizuho Bank, Ltd. as Administrative Agent entered into a US$80 million Working Capital loan agreement to partially finance the Expansion Project of Line 1 Lima Metro. As of December 31, 2017, the loan has not been disbursed.

Norvial S.A.

In July 2015, Norvial S.A. issued the First Corporate Bond Program on the Lima Stock Exchange for a total S/365 million. The first issue was for S/80 million at 5 years, bearing an interest rate of 6.75% and funds drawdown performed on July 23, 2015. The second issue was for S/285 million at 11.5 years, bearing an interest rate of 8.375%, structured in 3 disbursements: the first disbursement of S/105 million was on July 23, 2015; the second disbursement of S/100 million was on January 25, 2016; and the third disbursement of S/80 million will be made effective in July 25, 2016. The issues costs corresponding to the first issue and the first disbursement of the second issue were for S/3.9 million. Risk rating agencies Equilibrium y Apoyo & Asociados Internacionales graded this debt instrument AA.

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This financing transaction has been secured by (i) a cash flow trust, related to the consideration and the regulatory rate; (ii) a mortgage on the concession in which Norvial S.A. is a concessionaire; (iii) a security on shares; (iv) collection rights and (v) in general, all those additional collaterals given to the secured creditors.

The capital raised is intended to finance the construction of the Second Phase of Red Vial No.5 and the financing of VAT arising from project-related expenses.

At December 31, 2017 the balance included interest payables for S/4.4 million (S/4.9 million at December 31, 2016).

	2016			2017
Balances as of January 1		186,223			363,684
Additions		179,977			—
Transaction cost applied to additions		(1,099	)		—
Amortization		(3,369	)		(20,010	)
Transaction cost applied to amortization		265			195
Accrued interest		3,332			2,789
Capitalized interest		22,002			26,014
Interest paid		(23,382	)		(28,567	)
Transaction cost applied to paid interest		(265	)		(195	)
Balances as of December 31		363,684			343,910
Less : non current portion		(25,541	)		(24,361	)
Long term - bonds		338,143			319,549

As part of the process of bond structuring, Norvial S.A. engaged to report on and verify periodically the compliance of the following covenants:

• Debt service coverage ratio of not less than 1.3 times.

• Proforma gearing ratio lower than 4 times.

As of December 31, 2016, and 2017 both Companies have complied with their covenants.

Fair value of the bonds of both Companies at December 31, 2017 amounted to S/1,040 million (S/1,055 million at December 31, 2016), which was calculated under discounted cash flows method, using rates between 4.49% and 6.63% (between 4.20% and 7.99% at December 31, 2016), which are within level 2 of the fair value hierarchy.

21 TRADE ACCOUNTS PAYABLE

At December 31 this account comprises:

	2016		2017
Unbilled services received		924,025		132,513
Invoices payable		350,559		1,250,586
Notes payable		2,033		69,947
		1,276,617		1,453,046

Unbilled services received include the estimate made by Management of the valuation of the percentage of completion, amounting to S/132.5 million at December 31, 2017 (S/127.2 million at December 31, 2016).

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22 OTHER ACCOUNTS PAYABLE

At December 31, this account comprises:

	Total				Current				Not Current
	2016		2017		2016		2017		2016		2017
Advances received from customers		810,755		726,294		510,367		316,891		300,388		409,403
Payables Consorcio Ductos del Sur		—		250,021		—		—		—		250,021
Salaries and profit sharing payable		176,022		246,916		176,022		246,916		—		—
GSP performance guarantee (Note 16-a-i)		176,401		—		176,401		—		—		—
Put option liability on Morelco acquisition (Note 33-b)		110,604		105,418		—		—		110,604		105,418
Third-party loans		69,991		107,314		37,991		75,256		32,000		32,058
Other taxes payable		50,548		69,584		50,548		69,584		—		—
VAT payable		65,777		48,095		53,678		37,544		12,099		10,551
Payables Consorcio Rio Mantaro		—		35,531		—		35,531		—		—
Acquisition of non-controlling interest (Note 36-a)		32,102		22,407		32,102		22,407		—		—
Supplier funding		40,612		14,886		26,526		—		14,086		14,886
Guarantee deposits		16,799		15,580		16,799		15,580		—		—
Post-retirement benefits		9,088		8,914		—		—		9,088		8,914
Other accounts payables		50,411		50,013		15,873		28,791		34,538		21,222
		1,609,110		1,700,973		1,096,307		848,500		512,803		852,473

Advances received from customers relate mainly to construction projects and are discounted from billing under contract terms.

As of December 31, 2017, other accounts payable from Consorcio Constructor Ductos del Sur corresponds mainly to payment obligations to main subcontractors for S/237 million, as a consequence of the termination of GSP operations.

The fair value of the short-term payables approximates their carrying amount due to their short-term maturities. The non-current portion, mainly comprises non-financial liabilities such as advances received from customers; the remaining balance is not significant for any period shown in the financial statements.

23 PROVISIONS

At December 31 this account comprises:

	Total				Current				Not Current
	2016		2017		2016		2017		2016		2017
Legal claims		15,733		23,364		13,303		12,220		2,430		11,144
Contingent liabilities from the acquisition of Morelco		5,182		4,224		—		—		5,182		4,224
Contingent liabilities from the acquisition of Coasin and Vial yVives - DSD		1,815		1,839		—		—		1,815		1,839
Contingent liabilities from the acquisition of Adexus		1,128		1,186		1,128		1,186		—		—
Provision for well closure (Note 5.1 d)		17,215		16,804		100		97		17,115		16,707
		41,073		47,417		14,531		13,503		26,542		33,914

At December 31, 2017, legal claims mainly comprise provisions for labor liabilities and tax claims for S/19.3 million (S/14.7 million at December 31, 2016). Claims with the tax authority have been accounted for based on management estimates of the amounts the Group would most likely be required to pay in regard of these current court actions. Due to the fact those amounts will depend on the tax authority, the Group does not have an estimated timing of when these cash outflows would be required.

This legal claim balance also includes court actions brought against the Group by the Peruvian energy regulator (OSINERGMIN) resulting from the storage of hydrocarbons and the applicable environmental laws and regulations for S/5.1 million (S/6.3 million at December 31, 2016).

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The gross movement of other provisions is broken down as follows:

Other provisions	Legal claims			Contingent liabilities resulting from acquisitions			Provision for well closure			Total
At January 1, 2016		15,000			26,779			19,149			60,928
Additions		9,486			—			462			9,948
Acquisition of subsidiaries		1,926			1,149			—			3,075
Reversals of provisions		(10,569	)		(17,883	)		(2,395	)		(30,847	)
Payments		(298	)		(2,458	)		—			(2,756	)
Translation adjustments		187			538			—			725
At December 31, 2016		15,732			8,125			17,216			41,073
At January 1, 2017		15,732			8,125			17,216			41,073
Additions		9,510			—			—			9,510
Reversals of provisions		(235	)		(809	)		(412	)		(1,456	)
Payments		(1,680	)		—			—			(1,680	)
Translation adjustments		37			(67	)		—			(30	)
At December 31, 2017		23,364			7,249			16,804			47,417

The reversal corresponds to contingent liabilities that expired in 2017 from subsidiaries Morelco, for S/0.8 million, (from subsidiaries Morelco, Vial Vives—DSD y CAM Chile for S/10.1 million, S/4.0 million and S/3.8 million, respectively in 2016).

24 EQUITY

a) Capital

At December 31, 2016 and 2017, the authorized, subscribed and paid-in capital, according to the Company’s by-laws, and its amendments, comprises 660,053,790 common shares at S/1.00 par value each.

At December 31, 2016 a total of 264,809,545 shares were represented by ADS, equivalent to 52,961,909 ADS at a ratio of 5 shares per ADS; and a total of 259,302,745 shares were represented by ADS, equivalent to 51,860,549 ADSs at December 31, 2017.

As of December 31, 2017, the Company’s shareholding structure was as follows:

Percentage of individual interest in capital	Number of shareholders		Total percentage of interest
Up to 1.00		2,062		14.22
From 1.01 to 5.00		11		23.57
From 5.01 to 10.00		1		5.12
Over 10		2		57.09
		2,076		100.00

As of December 31, 2017, the year-end quoted price of the Company’s shares was S/1.87 per share, with a trading frequency of 100% (quoted price of S/4.7 per share and a trading frequency of 97.6% at December 31, 2016).

b) Other reserves

This item comprises legal reserve exclusively. In accordance with Peruvian Company Law, the Company’s legal reserve is formed by the transfer of 10% of the annual net profits, up to a maximum of

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20% of the paid-in capital. In the absence of profits or freely available reserves, this legal reserve can be applied to offset losses but it has to be replenished with the profits to be obtained in subsequent years. This reserve can also be capitalized but its subsequent replenishment is equally mandatory. At December 31, 2016 and 2017 the legal reserve balance reached the above-mentioned limit.

c) Voluntary reserve

At December 31, 2016 and 2017 the balance of this reserve of S/29.97 million correspond to the excess legal reserve, which is above the limit established of 20% of paid-in capital.

d) Share premium

This item comprises the excess of the total proceeds obtained for the issuance of common shares in 2013 in comparison with the nominal value of those for S/1,055,488.

Also, this balance shows the difference between the par value and transaction value of the non-controlling interest acquired.

e) Retained earnings

Dividends to be distributed to shareholders other than domiciliated entities are subject to a 4.1% rate (based on 2014’s profits), 6.8% (based on 2015’s and 2016’s profits) and 5.00% (on profits for 2017 and onwards) of income tax payable by these shareholders; this tax rate should be withheld and settled by the Company. No dividends for fiscal years 2016 and 2017 were distributed (Note 34).

25 DEFERRED INCOME TAX

Deferred income tax is broken down by its estimated reversal period as follows:

	2016			2017
Deferred income tax asset:
Reversal expected in the following 12 months		86,990			73,883
Reversal expected after 12 months		340,018			362,814
Total deferred tax asset		427,008			436,697
Deferred income tax liability:
Reversal expected in the following 12 months		(166	)		(5,583	)
Reversal expected after 12 months		(73,003	)		(66,889	)
Total deferred tax liability		(73,169	)		(72,472	)
Deferred income tax asset, net		353,839			364,225

The gross movement of the deferred income tax item is as follows:

	2015			2016			2017
Deferred income tax asset, net as of January 1		58,723			48,682			353,839
Credit to income statement (Note 30)		(175	)		263,806			42,779
Adjustment for changes in rates of income tax		(2,008	)		17,105			1,951
Credit (charge) to other comprehensive income		(7,298	)		15,004			—
Tax charged to equity		—			159			—
Acquisition of a subsidiary		—			10,363			(12,340	)
Acquisition of joint operation		1,476			—			(16,804	)
Other movements		(2,036	)		(1,280	)		(5,200	)
Total as of December 31		48,682			353,839			364,225

F-90

The movement of deferred tax assets and liabilities in the year, without taking into account the offsetting of balances, is as follows:

Deferred income tax liability	Non-taxable income			Difference in depreciation rates		Fair value gains			Work in Process			Difference in depreciation rates of assets leased			Receivables from local Government		Capitalized Financing cost			Purchase price allocation			Others			Total
At January 1, 2015		14,190			36,515		13,732			14,368			10,445			—		—			—			21,534			110,784
(Charge) credit to P&L		—			2,791		15,338			16,393			—			9,986		15,178			—			1,347			61,032
(Charge) credit to OCI		—			—		7,016			—			—			—		—			—			281			7,297
Reclassification of prior years		(14,190	)		5,849		(5,402	)		(6,038	)		(10,445	)		15,557		—			—			(11,354	)		(26,020	)
At December 31, 2015		—			45,155		30,684			24,723			—			25,543		15,178			—			11,808			153,093
(Charge) credit to P&L		—			16,595		13,587			(16,481	)		—			3,324		6,240			—			2,619			25,883
(Charge) credit to OCI		—			—		(15,348	)		—			—			—		—			—			—			(15,348	)
Reclassification of prior years		—			—		(28,923	)		—			—			—		—			30,187			(1,264	)		—
Adquisition of subsidiary (Adexus)		—			—		—			—			—			—		—			(3,069	)		—			(3,069	)
At December 31, 2016		—			61,750		—			8,242			—			28,867		21,418			27,118			13,163			160,559
(Charge) credit to P&L		—			104,101		—			(5,712	)		—			3,322		(1,473	)		(11,780	)		(3,724	)		84,734
Sale of subsidiary (GMD S.A.)		—			—		—			—			—			—		—			—			(81	)		(81	)
At December 31, 2017		—			165,851		—			2,530			—			32,189		19,945			15,338			9,358			245,211

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Deferred income tax asset	Provisions			Accelerated tax depreciation			Tax losses			Work in Process			Accrual for unpaid vacations			Investments in subsidiaries			Impairment			Tax Goodwill			Other			Total
At January 1, 2015		25,806			23,350			59,036			23,941			16,973			11,769			—			—			8,636			169,511
Charge (credit) to P&L		342			4,076			26,661			18,623			772			(13,832	)		—			17,522			4,646			58,810
Adquisition of subsidiary (Coasin)		—			—			—			—			—			—			—			—			—			—
Adquisition of subsidiary (Morelco)		—			—			—			—			—			—			—			—			—			—
Others		—			—			—			—			—			—			—			—			—			—
Reclassification of prior years		(5,199	)		(12,534	)		5,615			(19,544	)		(2,768	)		2,063									5,623			(26,744	)
At December 31, 2015		20,949			14,892			91,313			24,103			14,977			1,476			—			17,522			16,463			201,775
Charge (credit) to P&L		84,571			1,489			51,163			(6,489	)		(2,005	)		(312	)		172,052			3,003			3,322			306,794
Charge (credit) to equity		159			—			—			—			—			—			—			—			—			159
Cargo (abono) a ORI		—			—			—			—			—			—			—			—			(343	)		(343	)
Adquisition of subsidiary (Adexus)		—			—			10,607			—			—			—			—			—			(3,313	)		7,294
Others		—			—			—			—			—			(556	)		—			—			(724	)		(1,280	)
At December 31, 2016		105,679			16,381			153,083			17,614			12,972			608			172,052			20,525			15,487			514,398
Charge (credit) to P&L		(12,614	)		79,637			(8,555	)		21,873			2,166			118			28,593			(112	)		18,358			129,464
Charge (credit) to equity		(8,882	)		—			—			—			—			0			(7,493	)		—			(347	)		(16,722	)
Reclassification		(30,901	)		—			—			—			—			(726	)		31,627			—			—			—
Sale of subsidiary (GMD)		(683	)		(9,367	)		(438	)		—			(1,697	)		—			—			—			(236	)		(12,421	)
Others		(160	)		—			(1	)		—			(1	)		—			1			—			(5,123	)		(5,284	)
At December 31, 2017		52,439			86,651			144,089			39,487			13,440			0			224,780			20,413			28,139			609,435

At December 31, 2017, total tax losses amounted to S/494.8 million of which S/83.9 million are expected to be applied in 2018, S/10.3 million in 2019 and the remaining balance in the following fiscal years.

Tax goodwill arose from a tax credit balance resulting from the reorganization of Chilean subsidiaries in 2014 under Chilean tax laws and regulations. In 2016, the arbitration process relating to Project Collahuasi was completed and an additional payment was determined to be paid to the Chilean subsidiary selling party; which resulted in a higher balance in this item.

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26 WORKERS’ PROFIT SHARING

Worker’s profit sharing is broken down in the income statement as of December 31 as follows:

	2015		2016		2017
Cost of sales of goods and services		27,618		15,234		6,531
Administrative expenses		7,263		1,297		7,562
		34,881		16,531		14,093

27 EXPENSES BY NATURE

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

	Cost of goods		Administrative
	and services		expenses
2015
Services provided by third-parties		2,915,682		135,636
Salaries, wages and fringe benefits		2,033,316		199,635
Purchase of goods		1,072,900		7,369
Other management charges		629,799		23,873
Depreciation		186,661		16,711
Amortization of intangibles		74,187		6,489
Taxes		37,129		1,919
Impairment of accounts receivable		13,180		—
Impairment of property, plant and equipment		7,063		2,591
		6,969,917		394,223
2016
Services provided by third-parties		2,317,589		121,294
Salaries, wages and fringe benefits		1,423,664		217,337
Purchase of goods		901,473		—
Impairment of accounts receivable		419,584		—
Other management charges		267,011		24,122
Depreciation		177,699		11,317
Amortization of intangibles		66,862		6,685
Impairment (inventories and accounts receivable)		36,137		—
Taxes		13,740		1,638
Impairment of property, plant and equipment		9,263		—
		5,633,022		382,393
2017
Services provided by third-parties		1,674,731		121,508
Salaries, wages and fringe benefits		1,615,278		205,245
Purchase of goods		1,136,616		140
Other management charges		656,875		54,201
Depreciation		178,209		13,224
Amortization of intangibles		74,515		8,227
Impairment (inventories and accounts receivable)		40,908		—
Taxes		14,860		8,210
Impairment of property, plant and equipment		14,660		20
Impairment of accounts receivable		703		18,406
		5,407,355		429,181

F-93

For the year’s ended December 31 wages, salaries and fringe benefits comprise the following items:

	2015		2016		2017
Salaries		1,728,410		1,233,272		1,304,893
Social contributions		164,965		139,423		128,046
Statutory bonuses		129,909		92,418		155,206
Employee’s severance indemnities		91,958		64,421		99,011
Vacations		72,719		58,411		74,759
Worker’s profit sharing (Note 26)		33,972		15,693		14,093
Others		11,018		37,363		44,515
		2,232,951		1,641,001		1,820,523

28 FINANCIAL INCOME AND EXPENSES

For the years ended December 31 these items comprise the following:

	2015			2016			2017
Financial income:
Interest on short-term bank deposits		12,076			9,193			5,133
Interest on loans to third parties		19,749			6,142			635
Commissions and collaterals		3,026			4			12
Exchange rate gain, net		—			—			6,292
Others		2,785			5,306			3,335
		37,636			20,645			15,407
Financial expenses:
Interest expense:
- Bank loans		56,974			97,953			109,366
- Bonds		3,350			25,352			28,804
- Financial lease		13,167			12,138			9,748
- Commissions and collaterals		8,574			9,166			15,648
- Loans from third parties		2,868			264			7,569
- Loans from related parties		556			3,452			—
Exchange difference loss, net		82,851			12,527			—
Derivative financial instruments		1,691			1,248			739
Loss by measurement of financial asset fair value		—			76,864			8,059
Other financial expenses		11,205			18,134			37,420
Less capitalized interest		(13,153	)		(35,434	)		(31,908	)
		168,083			221,664			185,445

29 OTHER INCOME AND EXPENSES, NET

For the years ended December 31 these items comprise the following:

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	2015		2016			2017
Other income:
Sales of fixed assets		25,690		39,774			119,554
Reversal of legal and tax provisions		7,796		18,778			79
Legal indemnities		—		8,957			—
Sale of investments held for sale		60		46			—
Disposal of non-current assets classified as held for sale		8,775		—			—
Present value of the liability from put option		18,627		—			—
Others		18,434		18,574			15,449
		79,382		86,129			135,082
Other expenses:
Impairment of goodwill and trademarks		—		54,308			49,608
Net cost of fixed assets disposal		15,669		31,247			95,541
Loss on remeasurement of previously held interest (Note 33-a)		—		6,832			—
Present value of the liability from put option		—		984			—
Cost of sales of non-current assets classified as held for sale		8,945		—			—
Others		184		6,132			10,478
		24,798		99,503			155,627
		54,584		(13,374	)		(20,545	)

30 TAX SITUATION

a) Each company in the Group is individually subject to the applicable taxes. Management considers that it has determined the taxable income under general income tax laws in accordance with the tax legislation current effective of each country.

b) Changes in the Peruvian Income Tax Law -

By means of Law No.30296 enacted on December 31, 2014 amendments to Income Tax Law have been made, which are effective starting in fiscal year 2015 onwards. Among these amendments, it should be noted the progressive reduction in the corporate income tax rate (on the Peruvian third-category income earners) from 30% to 28% for fiscal years 2015 and 2016; then a reduction to 27% for fiscal years 2017 and 2018; and a final reduction to 26% from fiscal year 2019 onwards. Tax on dividends and other forms of profit distribution, agreed on by any legal entities to individuals and non-domiciled legal persons is to be progressively increased from 4.1% to 6.8% for distributions that are agreed on or paid during fiscal years 2015 and 2016; then an increase to 8.8% for fiscal years 2017 and 2018 will be effective; and a final increase to 9.3% will be effective from fiscal year 2019 onwards. The distribution of retained earnings until December 31, 2014 will continue to be subject to a 4.1% tax even when the distribution is to be made in the subsequent years.

By means of Legislative Decree No. 1261, enacted on December 10, 2016 the Peruvian income tax law was amended to be effective from fiscal 2017 onwards. This amendment sets forth a corporate income tax rate of 29.5%. It also sets forth an income tax rate on dividends of 5% applicable to non-domiciled legal entities and individuals effective from fiscal 2017 onwards. Undistributed profits up to December 31, 2016 will continue to be affected to a 6.8% income tax rate regardless of whether the distribution is agreed or occurs in subsequent periods.

c) Amendments to Income Tax Law in Chile

On February 1, 2016 Law No 20899 was enacted to simplify and define the application of the above-mentioned tax reform. With respect to income tax, two systems have been established:

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i) Attributable income system: the tax rate of first-category applicable on entities will be progressively increased, 21% in 2014, 22.5% in 2015, 24% in 2016, up to 25% in 2017. Its choice is being restricted to companies whose partners are individuals domiciled or resident in Chile or individuals or legal persons non-domiciled and non-resident in Chile. This system levies the shareholders of Chilean entities with taxes on an annual basis regardless of any effective distribution of profits from the local entity; and entitles them to use the total taxes paid as income tax fiscal credit.

ii) Partially integrated system: of first-category taxes applicable on entities will be progressively increased, 21% in 2014, 22.5% in 2015, 24% in 2016, 25.5% in 2017, up to 27% in 2018. Subject to this system are corporations and entities in which at least one of its owners is not an individual (whether domiciled or not) or non-domiciled legal entity. This system levies the shareholders of Chilean entities that distribute dividends and entitle them to use such distribution as a fiscal credit at a 65% of the total taxes paid. This limit does not apply to investors with whom Chile had signed double taxation agreements, such as Peru.

d) Changes in the Income Tax Law in Colombia -

In December 2016 Law No.1819 was published with another amendment to the tax laws, effective from fiscal 2017. Major changes are as follows:

• Changes in the previous income tax rate system in place up to 2016 (three tax rates system, Income Tax + CREE + Surtax) New single rate of Income Tax of 34% and a temporary add tax of 6% for 2017; an Income Tax rate of 33% and add tax of 4% for the year 2018 onwards on a taxable income base greater than S/895 thousand (equivalent to COP800 million).

• Presumed income, applicable if there are tax losses or is greater than the ordinary income. Taxable base presumed to be 3.5% of net assets (before 3%), this could be compensated with subsequent tax income.

• Tax losses may be compensated in the subsequent twelve (12) years from its generation.

• A rate for dividends and participations received by foreign companies will be 5%.

• The VAT rate increase from 16% to 19%.

• Starting fiscal year 2017, statute of limitation will be three (3) years. However, some terms may be higher, as is the case of companies that qualified for transfer prices fillings whose statute of limitation period will be six (6) years. In the case of returns with tax losses the term increases to twelve (12) up to fifteen (15) years.

e) The income tax expense shown in the consolidated income statement comprises:

	2015			2016			2017
Current income tax		135,036			169,428			167,154
Deferred income tax (Note 25)		2,222			(280,911	)		(44,730	)
PPUA		(41,359	)		(7,789	)		613
Income tax expense		95,899			(119,272	)		123,037

Under Chilean Legislation, when a Company reports tax losses, it can apply for a refund of first-category taxes paid in prior years up to an amount that equals the taxes that would be levied on the tax losses, provided that no dividends have been distributed on the income obtained from the refund. The amount to be refunded by the Chilean Tax Authorities is called “provisional payment on absorbed profits - PPUA”. The Company recognizes income from income tax and an account receivable when applying for this tax refund.

In 2016 the PPUA-derived income is related to the tax losses reported by of subsidiary VyV-DSD.

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f) The Group’s income tax differs from the theoretical amount that would have resulted from applying the weighted-average income tax rate applicable to the profit reported by of the consolidated companies, as follows:

	2015			2016			2017
Profit (loss) before income tax		142,446			(582,865	)		328,712
Income tax by applying local applicable tax rates on profit generated in the respective countries		51,503			(164,742	)		98,902
Tax effect on:
- Non-taxable income		(31,266	)		(1,068	)		(7,281	)
- Equity method (profit) loss		2,171			3,673			392
- Non-deductible expenses		9,831			57,044			27,901
- Unrecognized deferred tax asset income (expense)		31,432			(4,535	)		1,562
- Adjustment for changes in rates of income tax		2,008			(17,105	)		(1,951	)
- PPUA adjustment for changes in tax rates		15,296			4,871			(611	)
- Change in prior years estimations		12,762			(181	)		12,200
- Others, net		2,162			2,771			(8,077	)
Income tax charge		95,899			(119,272	)		123,037

g) The theoretical tax disclosed resulted from applying the income tax rate stipulated in the tax laws of the country in which a Group company is legally resident. Accordingly, for fiscal 2017, companies that are legally resident in Peru, Chile and Colombia applied income tax rates of 29.5%, 25.5% and 40% respectively (28%, 24% and 40% for 2016; 28%, 22.5% and 39% for 2015). Norvial, GyM Ferrovías, Vesur and GMP (Blocks III and IV) have legal stability agreements with Peruvian Government, in force for all years preserved. In this sense, the consolidated theoretical amount is obtained as a weighted average pre-tax profit or loss and the applicable income tax.

RATES

Country	Rates Taxes local Applicable			Utility before the Tax to Rent			Tax to rent
	(A)			(B)			(A)*(B)
2015
Perú		28.00	%		174,432			48,841
Perú - Norvial S.A.		27.00	%		54,471			14,707
Perú - GyM Ferrovías S.A.		30.00	%		26,954			8,086
Perú – Vesur		30.00	%		2,336			701
Perú – GMP S.A.		30.00	%		15,007			4,502
Chile		22.50	%		(95,284	)		(21,439	)
Colombia		39.00	%		40,900			15,951
Bolivia		25.00	%		(57,382	)		(14,345	)
Unrealized gains					(6,818	)		(2,371	)
Total					154,616			54,631

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Country	Rates Taxes local Applicable			Utility before the Tax to Rent			Tax to rent
	(A)			(B)			(A)*(B)
2016
Perú		28.00	%		(1,098,327	)		(307,532	)
Perú - Norvial S.A.		27.00	%		63,583			17,167
Perú - GyM Ferrovías S.A.		30.00	%		34,760			10,428
Perú – Vesur		30.00	%		888			267
Perú – GMP S.A.		30.00	%		8,602			2,581
Chile		24.00	%		(86,151	)		(20,676	)
Colombia		40.00	%		(25,555	)		(10,222	)
Bolivia		25.00	%		(703	)		(176	)
Unrealized gains					520,038			143,421
Total					(582,865	)		(164,742	)
2017
Perú		29.50	%		730,980			215,639
Perú - Norvial S.A.		27.00	%		68,104			18,388
Perú - GyM Ferrovías S.A.		30.00	%		29,028			8,708
Perú – Vesur		30.00	%		779			234
Perú – GMP S.A.		29.00	%		20,941			6,073
Chile		25.50	%		(128,734	)		(32,827	)
Colombia		40.00	%		(27,970	)		(11,188	)
Bolivia		25.00	%		(2,897	)		(724	)
Unrealized gains					(361,519	)		(105,401	)
Total					328,712			98,902

h) Peruvian tax authorities have the right to examine, and, if necessary, amend the income tax determined by the Company in the last four years - from January 1 of the year after the date when the tax returns are filed (open fiscal year). Therefore, years 2013 through 2017 are subject to examination by the tax authorities. Management considers that no significant liabilities will arise as a result of these possible tax examinations. Additionally, income tax returns for fiscal years 2013, 2014, 2016 and 2017 remain open for examination by the Chilean tax authorities who have the right to carry out said examination within the three years following the date the income tax returns have been filed. Fiscal years 2015 and 2016 are open for tax audit by Colombian tax authorities; fiscal 2017 will also be open for audit. Colombian tax authorities are entitled to audit two consecutive years following the date the income tax returns were filed.

i) In accordance with current legislation, for determination of income tax and general sales tax, the transfer prices transactions with related companies and companies resident in territories with low or no taxation must be considered. For this purpose, documentation and information must be available to support the valuation methods used and the criteria considered for their determination (transfer pricing rules). The Tax Administration is authorized to request this information from the taxpayer. Based on the analysis of the Company’s operations, Management and its legal advisors estimate that the transfer prices of transactions with related companies are based on market conditions, similar to those agreed with third parties, at 31 December 2017

j) Temporary tax on net assets - ITAN

The temporary tax on net assets is applied by the companies which operate in Peru, to third category income generators subject to the Peruvian Income Tax General Regime. Effective the year 2012, the tax rate is 0.4%, applicable to the amount of the net assets exceeding S/1 million.

The amount effectively paid may be used as a credit against payments on account of income tax or against the provisional tax payment of the income tax of the related period.

k) Unrecognized deferred income tax assets amount to S/5 million and S/30.6 million for 2016 and 2017, respectively. In 2016, the Río Mantaro Consortium obtained a profit that was applied against the tax loss and generated an adjustment to the deferred income tax asset of S/5 million.

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l) The current income tax payable, after applying the corresponding tax credits and whose due date reaches the first week of April of the following year, includes mainly:

•  CCDS	S/14.9 million in 2016
•  Consorcio AMDP	S/ 9.3 million in 2016
•  Terminales del Perú	S/ 3.6 million in 2016
•  Concar	S/ 3.3 million in 2|016
•  PICSA	S/ 22 million in 2017
•  Viva GyM	S/ 22 million in 2017
•  GMH	S/ 7 million in 2017

31 ACCUMULATED OTHER COMPREHENSIVE INCOME

The analysis of the movement is as follows:

										Exchange
				Foreign			Increase in			difference from
				currency			fair value of			net investment
	Cash flow			translations			available-for			in a foreign
	hedge			adjustment			sale assets			operation			Total
At January 31, 2015		(1,613	)		(19,030	)		31,169			(12,602	)		(2,076	)
(Charge) credit for the year		954			(45,411	)		26,991			(6,942	)		(24,408	)
Tax effects		(267	)					(7,018	)		1,804			(5,481	)
Other comprehensive income of the year		687			(45,411	)		19,973			(5,138	)		(29,889	)
At December 31, 2015		(926	)		(64,441	)		51,142			(17,740	)		(31,965	)
(Charge) credit for the year		1,190			9,885			(3,149	)		10,965			18,891
Tax effects		(351	)		—			929			(3,243	)		(2,665	)
Transfer to profit or loss (Note 10)		—			—			(41,461	)		1,563			(39,898	)
Other comprehensive income of the year		839			9,885			(43,681	)		9,285			(23,672	)
At December 31, 2016		(87	)		(54,556	)		7,461			(8,455	)		(55,637	)
(Charge) credit for the year		650			(9,166	)		—			9,222			706
Tax effects		(192	)		—			—			(2,729	)		(2,921	)
Other comprehensive income of the year		458			(9,166	)		—			6,493			(2,215	)
At December 31, 2017		371			(63,722	)		7,461			(1,962	)		(57,852	)

Amounts in the table above represent only amounts attributable to the Company’s controlling interest net of taxes. Below is the movement in Other Comprehensive Income for each year:

	2015			2016			2017
Controlling interest		(29,889	)		(23,672	)		(2,215	)
Non-controlling interest		(15,235	)		4,194			(3,117	)
Adjustment for actuarial gains and losses, net of tax		(2,921	)		(1,121	)		(2,948	)
Total value in OCI		(48,045	)		(20,599	)		(8,280	)

32 CONTINGENCIES, COMMITMENTS AND GUARANTEES

In the opinion of management and its legal advisors, the provisions recorded mainly for labor and tax claims are sufficient to cover the results of these probable contingencies. (Note 23).

a) Tax contingencies

• For fiscal 2016 an appeal is in progress with the Peruvian Tax Court and another administrative action with the Judiciary involving the results of tax audits of VAT (IGV) and Income Tax returns performed by the Peruvian tax authorities for fiscal years 1999 to 2002. The maximum exposure amount is S/5.2 million.

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• With respect to our subsidiary GyM S.A., as a result of the tax audits of fiscal 1999, 2001 and 2010, SUNAT issued tax determination and tax penalties resolutions amounting to approximately S/19.1 million.

• In fiscal year 2017, the tax litigation process related to 2001 was resolved, where the Tax Court orders SUNAT to recalculate the observations, determining an amount lower than initially claimed. Our subsidiary has decided to accept the conclusions of this resolution and submit fractionation requests for the payment of the debt in reference amounting to S/14.1 million.

• Likewise, at the end of fiscal year 2017, the contentious-administrative process related to the 1999 fiscal year was resolved, where the Judicial Branch rejected our arguments and confirmed what was stated by SUNAT. Regarding this process, there was already a contingency provision of S/5 million.

• An administrative tax process related to the 2010 fiscal year is still underway; however, its resolution will not imply economic damage since it corresponds to a greater refund of the balance in favor in 2011, already audited by the Tax Administration

• Consortiums in which subsidiary GyM S.A takes part, brought claims with SUNAT against the results of the tax inspection, which had a maximum exposure at December 31, 2017 of S/3 million (S/2.8 million at December 31, 2016 and S/0.8 million at December 31, 2015).

• In 2017, Viva GyM challenged the results of the audit process corresponding to the year 2009, which resulted in a maximum exposure amount of S/1.5 million as of December 31, 2017 including fines and penalties. In April 2018, the tax administration declared the claim as unsubstantiated. The company filed a challenge recourse on the Tax Court.

Management expects the outcome of the other court actions will be favorable to the Company considering their nature and characteristics as well as the opinion of its legal advisor.

b) Other contingencies

i) Civil-court lawsuits mainly related to indemnities for damages, contract termination and workplace accidents amounting to S/90.38 million (S/90.25 million attributable to Viva GyM, S/0.09 million attributable to GyM, and; S/0.12 million attributable to Concar;).

ii) Contentious administrative lawsuits for S/10.26 million, of which, S/9.7 million is related to Consorcio Terminales, and S/.0.56 million corresponds to GMP S.A.

iii) Administrative lawsuits for S/3.82 million, S/1.44 million is related to 12 administrative processes of GMP S.A., Consorcio Terminales and Terminales del Peru; S/2.13 million involving GyM Ferrovías resulting from an action brought by OSITRAN, the Municipalities of Villa María del Triunfo and San Juan de Miraflores comprising the property tax; S/0.20 million against Consorcio Toromocho.

iv) Labor lawsuits for a total S/6.13 million (S/2.93 million comprising actions brought against GyM; S/1.66 million against Consortiums from GyM; S/.0.65 million against GMI; S/0.32 million against Vial y Vives-DSD; S/0.26 million against STRACON GyM; S/0.25 million against Morelco; and, S/0.06 million against GMD S.A).

v) Two securities class actions have been filed against the Company, an executive and a former executive officer in the Eastern District of New York during the first quarter of 2017. Both complaints allege false and misleading statements during the class period. In particular, they allege that the Company failed to disclose, among other things, that a) the company knew that its partner Odebrecht was engaged in illegal activities, and b) the Company profited from such activities in violation of its own corporate governance standards. All parties have agreed to unify

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the two lawsuits and appoint a single lead plaintiff, with one single council to control the class action. On March 6, 2018, the court appointed Treasure Finance Holding Corp. as the plaintiffs’ representative. The company must submit an exception at the latest on July 30, 2018, in which the Court will be required to dismiss the case because even assuming that the facts alleged in it were true, the plaintiffs would not have the right to sue, based on: (a) the omission to record the alleged illicit payments would not have a significant impact on the company’s financial statements even if they existed; (b) the evidence offered by the plaintiffs should be dismissed by the Court; and (c) the plaintiffs have not alleged that the defendants acted with intent to deceive and to benefit. The request will be reviewed at a hearing in October 2018 and the procedural incident is expected to be resolved by the end of the first quarter of 2019. After this, the Court could dismiss the claim or admit it. Management considers that the claim will probably be dismissed by the corresponding courts due to the deficiency in the filing of the claim and believes that the risk of significant losses for the Company is not probable at this date.

Management expects the outcome of the other court actions will be favorable to the Company considering their nature and characteristics as well as the opinion of its legal advisor.

c) Performance Bonds and Guarantees

At December 31, 2017, the Group holds current performance bonds and guarantees with a number of financial institutions to secure transactions for US$959.70 million and US$202.2 million, respectively (US$1,258.5 million and US$330.5 million, respectively, as of December 31, 2016).

33 BUSINESS COMBINATIONS

a) Acquisiton of Adexus S.A.

In June 2015 the Company acquired 44% interest in the capital stock of Chilean entity Adexus S.A., which is mainly engaged in providing IT solutions services. At December 31, 2015 the Company arrived at the conclusion that joint control existed and that the joint arrangement qualified as a joint venture; therefore, the investment was recorded under the equity method of accounting in the consolidated financial statements of the Group (Note 16-b).

In January 2016 the Group acquired an additional interest of 8%, totaling 52% of total interest; the consideration agreed totaled S/8.3 million which was settled through debt capitalization. This larger interest did not affected the investment classification as a joint venture.

Subsequently, in August 2016, the Group acquired an additional interest of 39.03% to obtain total interest in its capital stock of 91.03%; thus gaining control over this entity. The consideration agreed totaled S/14 million which was initially stated as debt and then capitalized in the same period.

Upon obtaining control, the Company accounted for the transaction using the acquisition method of accounting set forth in IFRS 3 “Business Combination” and determined goodwill resulting from the acquisition. The balance at December 31, 2016 was stated at provisional values.

The table below itemizes the determination of the fair value of the identifiable assets acquired, liabilities assumed, non-controlling interest held and goodwill at the acquisition date:

	Fair Value
	S/000		US$000
Purchase consideration		14,040		4,179
Fair value of previously held interest		29,039		8,643
Total consideration (a)		43,079		12,822

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	Fair Value
	S/000			US$000
Fair value of assets and liabilities of Adexus S.A.:
Cash and cash equivalents		7,737			2,303
Trade receivables		107,426			31,972
Receivables from related parties		2,610			777
Other receivables		1,160			345
Inventories		1,647			490
Prepaid expenses		11,587			3,449
Long-term trade receivables		26,886			8,195
Other long-term receivables		2,063			614
Property, plant and equipment		41,988			12,496
Intangibles		32,204			9,585
Deferred income tax assets		18,115			5,198
Borrowings		(108,808	)		(32,383	)
Trade payables		(59,399	)		(17,678	)
Payables to related parties		(15,683	)		(4,667	)
Current income tax		(2,763	)		(822	)
Other payables		(10,291	)		(3,063	)
Other provisions		(1,926	)		(573	)
Contingent liabilities		(1,149	)		(342	)
Deferred income tax liabilities		(7,102	)		(2,114	)
Fair value of net identifiable assets		46,302			13,782
Non-controlling interest (8.97%)		(4,153	)		(1,236	)
Fair value of net assets attributable to the Group (b)		42,149			12,546
Goodwill (Note 18) (a) - (b)		930			276

Losses arising from the re-measurement at fair value of the previously held interest amounted to S/6.8 million, which was recognized in the statement of income within “Other income and expenses, net”, at the date of acquisition of that additional interest in 2016 (Note 29).

Acquisition transaction costs amounting to S/1.4 million were charged to profit or loss within administrative expenses in 2016.

b) Acquisition of Morelco S.A.S.

In December 23, 2014, through subsidiary GyM S.A. the Company obtained control of Morelco S.A.S. (Morelco) by acquiring 70% of its capital shares. Morelco is an entity domiciled in Colombia that is mainly engaged in providing construction and assembly services. This acquisition is part of the Group’s plan to increase its presence in markets that present high growth potential as in Colombia, and in attractive industries, such as mining and energy.

At December 31, 2014 the Company determined goodwill resulting from this acquisition on the basis of an estimated purchase price of US$93.7 million (equivalent to S/277.1 million), which included cash payments made for US$78.5 million and cash payable estimated to be US$15.1 million (equivalent to S/45.7 million), which, under the agreement of the parties, would be defined after a review of the acquiree’s balance sheet, mainly working capital, cash and financial debt as well as the final carrying amount of the acquiree’s work backlog. The estimated purchase price was allocated to the provisional carrying amounts of the assets acquired and the liabilities assumed.

As a result of this allocation, the balance of goodwill was determined to be US$36.1 million (equivalent to S/105.8 million).

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In 2015 as part of the review of the provisional allocation of the purchase price, the following situations arose:

a) The balance at December 31, 2014 of the consideration payable of US$15 million (equivalent to S/46 million) was adjusted in 2015 to US$9.1 million (S/32 million) as a result of the final determination of the working capital, cash and financial debt balances, under the purchase agreement. This amount was fully paid in 2015.

b) The provisional fair values of certain assets acquired and liabilities assumed were reviewed.

As a result of the above, the purchase price was adjusted to US$87.5 million (equivalent to S/258.6 million); the provisional fair values of certain asset and liabilities were modified, giving rise to an adjustment of goodwill to US$35.2 million (equivalent to S/103 million).

Put and call options of non-controlling interest -

Under the shareholder agreement signed for the acquisition of Morelco, the subsidiary GyM signed a purchase-sale agreement for 30% of Morelco’s capital stock held by the non-controlling shareholders. By this agreement, the non-controlling shareholders obtained a right to sell their shares over a period and for an amount set in the agreement (put option). The period to exercise the option began on the second anniversary of the acquisition of the option and expires on its tenth anniversary. The option exercise price is based on a EBITDA multiple less the net debt and until months 51 and 63 until from the date of the agreement a minimum amount is set that is based on the price per share that GyM paid to buy 70% of Morelco’s share capital.

On the other hand, the subsidiary GyM obtains call option to buy those shares over a period of 10 years and at a price that is determined the same way as the put option price is determined, except for the fact the minimum amount is effective for the entire effective period of the option (call option).

Under the IFRS framework, the put option is for the Company an obligation to purchase non-controlling interest shares, and therefore, the Group recognizes a liability measured on the basis of the present value of that option. Since the Group arrived at the conclusion that as a result of this agreement, it did not obtain the risks and rewards inherent to the ownership of this share package underlying the option, initial recognition of this liability was a charge to equity of controlling shareholders within other reserves.

The amount of the liability arising from the put option was estimated at the present value of the redemption amounts expected on the basis of minimum amount of the Morelco’s agreement and the exercise rights of the option. The Company expects that purchase options are to be exercised at the date following the date of transfer. The expected redemption of the non-controlling interest is as follows: 41.66% in the second year, 41.66% in the fourth year and the remaining shares will be sold on the fifth anniversary of the option grant date. The discount rate used to determine the present value of the expected redemption amounts is a risk-free rate available to comparable market participants and indicates the fact that the Group estimates to pay the minimum price of the agreement. At December 31, 2017 the liability is estimated to be S/105.4 million, using a 1.79% discount rate for the first year, 2.03% for the second year, and 2.12% discount rate for the third year (at December 31, 2016 it was S/109.9 million, using a 0.78% discount rate for the first year, 1.37% discount rate for the second year and 1.76% for the third year). In 2017 the changes in the present value of the put option estimated to be S/5.19 million were recognized in the statement of income stated within “Other income and expenses, net” and within “Financial Income and expenses”.

c) Acquisition of Coasin Instalaciones Ltda.

In March 2014, through the subsidiary CAM Chile S.A., the Group acquired control of Coasin Instalaciones Limited with the purchase of 100% of its capital shares. Coasin is an entity incorporated in Chile and is mainly engaged in providing installation and maintenance services for networks and equipment related to the telecommunications industry.

F-103

Over a period of twelve months after the acquisition, the Group reviewed the allocation of the purchase price and fair values determined provisionally for certain assets and liabilities. As a result of this process, the balance of goodwill was changed on March 2015 to US$2.2 million (equivalent to S/6.4 million).

34 DIVIDENDS

Due to loans covenants commitments no dividends will be paid for fiscal years 2016 and 2017.

At the General Shareholders’ meeting held on March 29, 2016 the decision was made to distribute dividends for S/30.9 million (S/0.0467 per share), which correspond to 2015 earnings.

At the General Shareholders’ meeting held on March 27, 2015 the decision was made to distribute dividends for S/104.9 million (S/0.159 per share), which correspond to 2014 earnings.

35 EARNINGS (LOSSES) PER SHARE

Basic earnings per share are calculated by dividing the net profit of the period attributable to common shareholders of the Group by the weighted average number of common shares outstanding during the year. No diluted earnings per common share were calculated because there are no common or investment shares with potential dilutive effects (i.e., financial instruments or agreements that give the right to obtain common or investment shares); therefore, it is equal to basic earnings per share.

The basic earnings per share are broken down as follows:

	2015		2016			2017
Profit (Losses) attributable to the controlling interest in the Company		7,097		(509,699	)		148,739
Weighted average number of shares in issue at S/1.00 each, at December 31,		660,053,790		660,053,790			660,053,790
Basic earnings (losses) per share (in S/)		0.011		(0.772	)		0.225

36 TRANSACTIONS WITH NON-CONTROLLING INTERESTS

a) Additional acquisition of non-controlling interest -

In May, November and December 2016, GyM Chile SPA acquired 5.43%, 6.77% and 1.49% respectively additional capital stock in Vial y Vives—DSD S.A. at a purchase price of S/21.6 million, S/25.7 million and S/3.8 million, respectively. The carrying amounts of the non-controlling interests at the date of the acquisitions were S/13.9 million, S/17.9 million and S/3.9 million. The Group de-recognized the non-controlling interests by reducing the equity attributable to the owners of the parent Company by S/15.4 million. At December 31, 2017, there is an outstanding balance of S/22 million (S/32.1 million in 2016) (Note 22).

b) Disposal of interests in subsidiary without loss of control -

i) In March 2015, GyM S.A. sold 0.048% (S/97) of its total 87.64% interest held in Stracon GyM for a payment of S/377. The carrying amount of this non-controlling interest in Stracon GyM at the date of disposal was S/23.7 million (a 12.36% interest).

ii) In June 2015, GyM S.A. sold 1.92% (S/385) of its total 82.04% interest held in Vial y Vives—DSD S.A. for a payment of S/385. The carrying amount of this non-controlling interest in Vial y Vives—DSD S.A. at the date of disposal was S/3.6 million (a 17.96% interest).

F-104

iii) In April 2015, CAM Holding Spa sold a 2.45% (S/2,045) of its total 75.61% interest held in CAM Chile S.A. for S/880. The carrying amount of the non-controlling interest in CAM Chile at the disposal date was S/20.4 million (a 24.39% interest).

c) Contributions of non-controlling shareholders

This balance mainly corresponds to the contributions and returns made by the partners of subsidiary Viva GyM S.A. of their real estate projects. At December 31 this balance comprises:

	2015			2016			2017
Viva GyM S.A.
Contributions received		20,446			6,380			8,654
Returns of contributions		(14,987	)		(27,134	)		(45,053	)
		5,459			(20,754	)		(36,399	)
Plus (less):
Contributions from other subsidiaries		4,870			1,655			3,202
Increase (decrease) in equity of non controlling parties		10,329			(19,099	)		(33,197	)

Returns of contributions mainly correspond to the following projects: “Los Parques de Comas” for S/6.8 million, “Asociacion Parques del Mar” for S/27.8 million, and Klimt for S/8 million in 2017 (“Los Parques de Comas” for S/6.3 million, “Los Parques de Villa El Salvador II” for S/ 12.6 million and “Klimt for S/7.1 million in 2016)

d) Dividends

At December 31, 2017, 2016 and 2015 dividends were distributed for S/59.7 million, S/25.5 million, and S/4.5 million, respectively.

37 DISCONTINUED OPERATION

The Company has initiated a divestment process of non-strategic assets to meet the obligations arose from the early terminations of the GSP project, as part of the process (Note 16 a-i) as a result, some subsidiaries, consortiums and joint ventures were sold during 2017 and 2018.

The effect in the consolidated income statement is summarized as follows:

a) GMD S.A.

On June 6, 2017 the Company signed a purchase-sale agreement for their total share (representing 89.19%) of GMD S.A. The selling price was agreed at US$84.7 million (equivalent to S/269.9 million), which was fully paid.

The financial performance and cash flow information presented are for the five months ended May 31, 2017 and the years ended 2015 and 2016.

F-105

	GMD S.A.
	(net of intercompany transactions)
							From January 1 to May 31,
	2015			2016			2017
Revenue		21,318			18,651			7,204
Operating costs		(23,829	)		(24,129	)		(10,567	)
Finance costs, net		(8,249	)		(9,758	)		(2,617	)
Operating loss from discontinued activities before taxation		(10,760	)		(15,236	)		(5,980	)
Income tax expense		(3,129	)		(7,466	)		(1,171	)
Loss from discontinued ordinary activities after taxation		(13,888	)		(22,702	)		(7,151	)
Loss from discontinued activities attributable to owners of the Company		(12,393	)		(20,257	)		(6,381	)
Losses per share relating to the discontinued operation are as follows:
Basic		(1.08	)		(1.77	)		(0.56	)
Cash flows relating to the discontinued operation are as follows:
Operating cash flows		(14,193	)		78,286			10,220
Investing cash flows		(17,499	)		(30,712	)		(11,189	)
Financing cash flows		(53,501	)		(48,516	)		1,618

b) TECGAS N.V. (COGA)

On April 24, 2017 the Company signed a purchase-sale agreement for their total capital stock (representing 51%) held in their joint venture with Compañía Operadora de Gas del Amazonas S.A.C. (COGA). The selling price was agreed at US$21.5 million (equivalent to S/69.8 million), which was fully paid.

The financial performance presented is for the period year ended 2016.

	TECGAS N.V.
	2016
Revenue		457,554
Finance costs		215
Operating loss from discontinued activities before taxation		(3,209	)
Income tax expense		(4,078	)
Loss from discontinued ordinary activities after taxation		(7,287	)

38 EVENTS AFTER THE DATE OF THE STATEMENT OF FINANCIAL POSITION

a) Divestment process

The Company has initiated a divestment process of non-strategic assets to meet the obligations arose from the early terminations of the GSP project. It should be noted that outside the situation described above, the subsidiaries of the Group are operating normally with their own capital and financing needs.

To date these divestments are the following:

• On March 28, 2018, the subsidiary GYM sold its total share (87.59%) in Stracon GyM S.A. for a total of US $76.8 million which was fully paid. All of the inflows were used to amortize their financial obligations.

F-106

The information on the financial result and the cash flow presented below correspond to Stracon GyM S.A. from the years to the periods ended December 31, 2016 and 2017, which were included in the consolidated financial statements.

	STRACON GyM S.A.
	2015			2016			2017
Revenue		1,476,764			1,222,707			1,027,804
Operating costs		(1,305,806	)		(1,099,789	)		(943,805	)
Finance costs, net		(21,478	)		(3,104	)		(5,231	)
Operating profit from discontinued activities before taxation		149,480			119,814			78,768
Income tax expense		(40,492	)		(32,558	)		(17,969	)
Profit from discontinued ordinary activities after taxation		108,988			87,256			60,799
Profit from discontinued activities attributable to owners of the Company		95,463			76,428			53,254
Earnings per share relating to the discontinued operation are as follows Basic		1.395			1.117			0.778
Cash flows relating to the discontinued operation are as follows:
Operating cash flows		166,438			49,105			118,418
Investing cash flows		(19,914	)		(31,132	)		(6,750	)
Financing cash flows		(120,655	)		(71,382	)		(97,802	)

• On May 29, 2018 our company subscribed with Inversiones Concesión Vial S.A.C. (“BCI Peru”)—with the intervention of the Investment Fund BCI NV (“BCI Fund”) and BCI Management Administradora General de Fondos S.A. (“BCI Asset Management”)—an investment agreement to monetize future dividends on Norvial S.A., for US$42.3 million The net proceeds will be use to amortize their financial obligations.

• On May 31st, 2018, the subsidiary Almonte signed an agreement to sell 4,208,769.24 square meters of land for the price of US$92.6 and a second agreement for the sale of additional land subject to certain conditions.

b) Legal processes arising in 2018

i) Consorcio Italo Peruano

On January 26, 2018, GyM S.A. (hereinafter, “GyM”) initiated an arbitration against the National Institute of Neoplastic Diseases (hereinafter, “INEN”), its claim being the approval of the Extension of Term No. 1 for a period of 62 calendar days and, recognition of expenses S/1.4 million (S/0.7 million corresponds to GyM SA). To date, the installation of the Arbitral Tribunal is pending.

ii) Consorcio Norte Pachacutec.

On February 8, 2018, the North Pachacutec Consortium (hereinafter, the “Consortium”) initiated an arbitration against the Drinking Water and Sewerage Service of Lima S.A. (hereinafter, “SEDAPAL”), its main claim being the determination of the final cost of the work executed by the Consortium, considering unrecognized, recognized concepts and awards previously issued and that has not yet been met with the payment in favor of the Consortium, equivalent to the sum of S/36.3 million (S/17.8 million corresponds to GyM). To date, the installation of the Arbitral Tribunal is pending.

c) Deslisting procedure

The New York Stock Exchange (“NYSE”) initiated the Company’s delisting procedure and determined the immediate suspension of the trading of its American Depositary Shares as a result of the Company’s delay in presenting its annual report in Form 20-F corresponding to the year 2017.

F-107

This decision was appealed by the Company on May 27, 2018. As a result of the appeal, the NYSE established that the Company must support its appeal no later than July 19, 2018 and scheduled a hearing to orally discuss the company’s arguments for October 11, 2018.

Based on recent precedents and in our legal advisors’ opinion, we estimate that the delisting and suspension decision described above would be revoked upon satisfactory presentation of our annual report in form 20-F corresponding to the year 2017.

F-108

Supplementary Data (Unaudited)

Oil and Gas Producing Activities

In accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 932, “Extractive Activities-Oil and Gas,” and regulations of the U.S. Securities and Exchange Commission (SEC), the company has included certain supplemental disclosures about its oil and gas exploration and production operations.

All information in the following supplemental disclosures related to Blocks I, III, IV and V. Information with respect to Blocks III and IV has been included from April 5, 2015, when the company began operating these blocks.

A. Reserve Quantity Information

Graña y Montero Petrolera S.A. net proved reserves in the fields in which they operate and changes in those reserves for operations are disclosed below. The net proved reserves represent the company’s best estimate of proved oil and natural gas reserves. For 2016 and 2017 reserve estimates have been evaluated by its technical staff (reservoir engineers and geoscience professionals) and submitted to its Reserve Development Committee. The estimates for all years presented conform to the definitions found in FASB ASC paragraph 932-10-65-1 and Rule 4-10(a) of Regulation S-X.

Proved oil reserves are those quantities of oil, which, by analysis of geosciences and engineering data, can be estimated with reasonable certainty to be economically producible, based on prices used to estimate reserves, from a given date forward from known reservoirs, and under existing economic conditions, operating methods, and government regulation prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain.

The term “reasonable certainty” implies a high degree of confidence that the quantities of oil actually recovered will equal or exceed the estimate. To achieve reasonable certainty, the company’s engineers and independent petroleum consultants relied on technologies that have been demonstrated to yield results with consistency and repeatability. The technologies and economic data used to estimate the company’s proved reserves include, but are not limited to, well logs, geologic maps, seismic data, well test data, production data, historical price and cost information and property ownership interests.

PROVED RESERVES (1)

	Total						Peru
	Oil (MBBL)			Gas (MMcf)			Oil (MBBL)			Gas (MMcf)
Proved developed and undeveloped reserves, December 31, 2015		23,727			50,103			23,727			50,103
Revisions of previous estimates		2,472			(36,543	)		2,472			(36,543	)
Enhanced oil recovery		—			—			—			—
Purchases		—			—			—			—
Production (a)		(1,008	)		(3,039	)		(1,008	)		(3,039	)
Sales in place		—			—			—			—
Proved developed and undeveloped reserves, December 31, 2016		25,191			10,521			25,191			10,521
Revisions of previous estimates		2,451			17,011			2,451			17,011
Enhanced oil recovery		—			—			—			—
Purchases		—			—			—			—
Production		(1,146	)		(2,661	)		(1,146	)		(2,661	)
Sales in place		—			—			—			—
Proved developed and undeveloped reserves, December 31, 2017 (2)(3)		26,496			9,354			26,496			9,354

(1) Proved reserves estimated in oil and gas properties located in Blocks I, III, IV and V (Talara and Paita) under two service contracts and two license contracts with Perupetro. The rights to produce hydrocarbons expire in December 2021 for Block I, April 2045 for Blocks III and IV, and October 2023 for Block V. The proved reserves estimated in this report constitute all of the proved reserves under contracts by Graña y Montero Petrolera S.A.

(2) The revisions in reserve estimates are based on new information obtained as a result of drilling activities and workovers. During 2016 and 2017, proved developed reserves of crude oil increased due to drilling activities in Block IV and the impact of the higher price in reserve estimations.

(3) As of December 31, 2016, the associated gas reserves were 10,521 MMCF; and as of December 31, 2017, the associated gas reserves were 9,354 MMCF.

S-1

RESERVE QUANTITY INFORMATION

FOR THE YEAR ENDED DECEMBER 31, 2015

	Total				Peru
	Oil (MBBL)		Gas (MMCF)		Oil (MBBL)		Gas (MMCF)
Proved developed reserves
Beginning of year		2,882		11,960		2,882		11,960
End of year		9,168		23,384		9,168		23,384
Proved undeveloped reserves
Beginning of year		1,125		4,748		1,125		4,748
End of year		14,562		26,719		14,562		26,179

RESERVE QUANTITY INFORMATION

FOR THE YEAR ENDED DECEMBER 31, 2016

	Total				Peru
	Oil (MBBL)		Gas (MMCF)		Oil (MBBL)		Gas (MMCF)
Proved developed reserves
Beginning of year		9,168		23,384		9,168		23,384
End of year		8,521		10,521		8,521		10,521
Proved undeveloped reserves
Beginning of year		14,562		26,719		14,562		26,719
End of year		16,670		—		16,670		—

S-2

RESERVE QUANTITY INFORMATION

FOR THE YEAR ENDED DECEMBER 31, 2017

	Total				Peru
	Oil (MBBL)		Gas (MMCF)		Oil (MBBL)		Gas (MMCF)
Proved developed reserves
Beginning of year		8,521		10,521		8,521		10,521
End of year		8,664		9,354		8,663		9,354
Proved undeveloped reserves
Beginning of year		16,670		—		16,670		—
End of year		17,833		—		17,833		—

B. Capitalized Costs Relating to Oil and Gas Producing Activities

The following table sets forth the capitalized costs relating to the company’s crude oil and natural gas producing activities for the years indicated:

	2013			2014			2015			2016			2017
Proved properties
Concessions
Mineral property, wells and related equipment		44,974			47,267			54,582			39,069			84,960
Drilling and Works in progress and Replacement Units		11,444			11,290			5,682			6,188			10,767
Total Proved Properties		56,418			58,557			60,264			45,257			95,727
Unproved properties		—			—			—			—			—
Total Property, Plant and Equipment		56,418			58,557			60,264			45,257			95,727
Accumulated depreciation, depletion, and amortization, and valuation allowances		(13,864	)		(13,735	)		(17,875	)		(17,774	)		(36,672	)
Net capitalized costs		42,554			44,822			42,389			27,482			59,054

C. Costs Incurred in Oil and Natural Gas Property Acquisition, Exploration and Development Activities

The following table sets forth costs incurred related to the company’s oil and natural gas activities for the years indicated:

	2013			2014			2015			2016			2017
	(in US$ thousands)
Acquisition costs of properties
Proved		—			—			—			—			—
Unproved		—			—			—			—			—
Total acquisition costs		—			—			—			—			—
Exploration costs
Development costs		(13,465	)		(13,126	)		(17,179	)		(19,161	)		(22,905	)
Total		(13,465	)		(13,126	)		(17,179	)		(19,161	)		(22,905	)

(1) The company has not incurred in any cost related to Oil and Gas property acquisition for all years presented

D. Results of Operations for Oil and Natural Gas Producing Activities

The results of operations for oil and natural gas producing activities, excluding overhead costs and interest expenses, are as follows for the years indicated:

S-3

	Total Peru
	2013			2014			2015			2016			2017
	(in US$ thousands)
Revenues		58,275			59,233			57,938			50,556			67,949
Additional Revenues of Gas Extraction Services (1)		11,892
Total Revenues (2)		70,167			59,233			57,938			50,556			67,949
Production Costs		(16,692	)		(16,257	)		(25,976	)		(24,645	)		(28,097	)
Costs of Labor		(1,715	)		(1,602	)		(1,660	)		(1,767	)		(2,008	)
Repairs and Maintenance		(1,024	)		(958	)		(1,828	)		(1,563	)		(2,076	)
Materials, supplies, and fuel consumed and supplies utilize		(7,103	)		(6,486	)		(10,775	)		(9,540	)		(10,253	)
External services, insurances, security and others		(3,297	)		(3,605	)		(6,938	)		(6,388	)		(6,634	)
Operation office and staff expenses		(3,553	)		(3,607	)		(4,776	)		(5,388	)		(7,126	)
Additional Natural Gas supply costs after price adjustment (1)		(14,843	)
Royalties								(7,982	)		(7,402	)		(15,016	)
DD&A Expenses		(13,811	)		(13,672	)		(16,931	)		(17,223	)		(19,851	)
Income (loss) before income taxes		24,821			29,304			7,048			1,286			4,984
Income tax expense (3)		(7,446	)		(8,791	)		(1,974	)		(373	)		(1,470	)
Results of operations from producing activities		17,375			20,513			5,075			913			3,514

(1) During 2013, GMP finished a negotiation setting prices of natural gas extraction services provided to Perupetro retroactively since 2008 to 2013. Likewise, prices for natural gas supply paid by GMP to Perupetro were adjusted. The effects in revenues and costs of sales were registered in 2013.

(2) Income after deductions for Graña y Montero Petrolera S.A.’s share of government royalties according to contract obligations. There are no sales or transfers to the company’s other operations.

(3) 30% of income before income tax, until 2014. In 2015, the legal rate was 28% and during 2016 was 27%. In 2017, the Peruvian government increased the legal rate to 29.50%.

E. Standardized Measure of Discounted Future Net Cash Flows

The standardized measure of discounted future net cash flows, related to the proved reserves is based on estimates of net proved reserves and the period during which they are expected to be produced. Future cash inflows are computed by applying the twelve month period unweighted arithmetic average of the price as of the first day of each month within that twelve month period, unless prices are defined by contractual arrangements, after royalty share of estimated annual future production from proved oil and gas reserves.

Future production and development costs to be incurred in producing and further developing the proved reserves are based on year end cost indicators. Future income taxes are computed by applying year end statutory tax rates.

The following chart shows standardized measures of dicounted future net cash flows for the periods indicated:

	Total
	2013			2014			2015			2016			2017
	(in US$ thousands)
Future Cash inflows		360,386			251,695			1,461,565			1,106,849			1,436,101
Future production costs		(107,031	)		(72,857	)		(507,212	)		(285,608	)		(776,847	)
Future development costs		(63,643	)		(37,423	)		(368,873	)		(463,224	)		(221,557	)
Future production and development costs		(170,674	)		(110,280	)		(876,085	)		(748,832	)		(998,404	)
Future income tax expenses		(56,913	)		(37,264	)		(153,178	)		(105,615	)		(129,121	)
Future Net cash flows		132,799			104,151			432,301			252,402			308,577
10% annual discount for estimates timing of cash flows		(35,325	)		(29,483	)		(209,039	)		(115,028	)		(168,224	)
Standardized measure of discounted Future Net Cash Flows		97,474			74,668			223,262			137,374			140,353

(1) For oil volumes, per barrel prices after deductions of Graña y Montero Petrolera S.A.’s share government royalties used in determining future cash inflows for the years ended December 31, 2013, 2014, 2015, 2016 and 2017 were US$87.25, US$83.96, US$77.33, US$45.59, US$38.54 and US$49.82, respectively. For gas volumes, gas price is linked to the oil price according to the gas purchase contract.

(2) Production costs and developments costs relating to future production of proved reserves are based on the continuation of existing economic conditions. Future estimated decommissioning costs are included.

(3) Taxation is computed using the appropriate year-end statutory corporate income tax rates.

(4) Future net cash flows from oil production are discounted at 10% regardless of assessment of the risk associated with its production activities.

S-4

F. Changes in Standardized Measure of Discounted Future Net Cash Flows

The following chart shows changes in standardized measures of dicounted future net cash flows for the periods indicated:

	Year Ended December 31,
	2013			2014			2015			2016			2017
	(in US$ thousands)
Standardized measure of discounted Future Net Cash Flows, beginning of the year		116,153			97,474			74,668			223,262			137,374
Revenue less production and other costs		(89,810	)		(75,490	)		(103,058	)		(75,202	)		(96,045	)
Net changes in future development costs		24,533			11,497			(185,387	)		(53,464	)		94,388
Changes in price, net of production costs		(34,973	)		(53,214	)		(284,832	)		560			(109,168	)
Development cost incurred		13,465			13,126			17,179			19,161			22,905
Revisions of previous quantity estimates		47,511			23,273			674,410			(54,052	)		27,456
Accretion of discount		23,616			16,836			67,666			55,438			70,152
Net change in income taxes		3,593			9,286			(53,715	)		21,327			(85	)
Timing difference and other		(6,613	)		31,879			(16,330	)		(343	)		(6,623	)
Standardized measure of discounted Future Net Cash Flows, end of the year		97,474			74,668			223,262			137,374			140,353

S-5

EX-8.01

Exhibit 8.01

Subsidiaries of the Registrant

Subsidiary	Jurisdiction of Incorporation	Name Under Which the Subsidiary Does Business	Ownership Interest
Viva GyM S.A.	Peru	Viva GyM	Graña y Montero owns 63.4%; GyM owns 36.1%
GyM S.A.	Peru	GyM	Graña y Montero owns 98.24%
Concesionaria La Chira S.A.	Peru	La Chira	Graña y Montero owns 50.0%
Concesión Canchaque S.A.	Peru	Canchaque	Graña y Montero owns 99.96%
Concar S.A.	Peru	Concar	Graña y Montero owns 99.99%
GMP S.A.	Peru	GMP	Graña y Montero owns 95.0%
GMD S.A.*	Peru	GMD	Graña y Montero owns 89.19%
GyM Ferrovías S.A.	Peru	GyM Ferrovías	Graña y Montero owns 75.0%
Norvial S.A.**	Peru	Norvial	Graña y Montero owns 67.0%
CAM Holding SPA	Peru	CAM Holding	Graña y Montero owns 100%
CAM Chile S.A.	Chile	Cam	Graña y Montero owns 73.16%
Survial S.A.	Peru	Survial	Graña y Montero owns 99.9%
GMI S.A. Ingenieros Consultores	Peru	GMI	Graña y Montero owns 89.4%
STRACON GyM S.A.***	Peru	Stracon GyM	GyM owns 87.6%
Vial y Vives – DSD S.A.	Chile	Vial y Vives	GyM owns 94.49%
Inmobiliaria Almonte S.A.C.	Peru	Almonte	Viva GyM owns 50.45%
Morelco S.A.S	Colombia	Morelco	GyM owns 70.0%
Concesionaria Via Expresa Sur S.A.	Peru	VESUR	Graña y Montero owns 99.98%; GyM owns the remaining 0.02%
Agenera S.A.C.	Perú	Agenera	Graña y Montero owns 99%; GyM owns the remaining 1%
GyM Colombia S.A.S.	Colombia	GyM Colombia	Graña y Montero owns 66.2%, GyM owns the remaining 33.8%
Negocios de Gas S.A.	Peru	Negocios de Gas	Graña y Montero owns 99.99%, the remaining 0.01% Is owned by GyM.
Tecgas Inc*	Canadá	Tecgas	Graña y Montero owns 51%,
Generadora Arabesco S.A.	Perú	Generadora Arabesco	Graña y Montero owns 99%,
Adexus S.A.****	Chile	Adexus	Graña y Montero owns 91.03%,
Recaudo Lima S.A.	Perú	Recaudo Lima	Graña y Montero owns 70%, GMD owns the remaining 30%
CAM Servicios del Perú S.A.	Perú	CAM Servicios del Perú	Graña y Montero owns 73.16%
Promotora Larco Mar S.A.	Perú	Promotora Larco Mar	Graña y Montero owns 46.55%
TGNCA S.A.	Perú	TGNCA	Graña y Montero owns 99.93%

Subsidiary	Jurisdiction of Incorporation	Name Under Which the Subsidiary Does Business	Ownership Interest
Compañía Operadora de Gas del Amazonas S.A.*	Perú	COGA	51%
Coasin Instalaciones Limitada	Chile	Coasin	CAM Chile owns 99.89%, the remaining 0.11% is owned by Inversiones y Construcción GyM Limitada
Billetera Electrónica de Transporte Lima S.A.C.	Perú	BETL	Graña y Montero owns 95.5%
GyM Chile SPA	Chile	GyM Chile SPA	GyM owns 100%
Gestión de Soluciones Digitales S.A.C.	Perú	GSD	Graña y Montero owns 100%
Larcomar S.A.	Perú	Larcomar	Graña y Montero owns 79.66%
Promotores Asociados de Inmobiliaria S.A.	Perú	Promotores Asociados de Inmobiliaria	Graña y Montero owns 99.99%
Oiltanking Andina Services S.A.	Perú	OTAS	GMP owns 50%

* In 2017, we sold these companies.

** In June 2018, Graña y Montero transferred economic rights over 48.8% of the share capital of Norvial S.A. The company continues to posess voting rights over Norvial .S.A.

*** Stracon GyM was sold in April 2018.

**** In June 2018, we consolidated the 100% of Adexus S.A.

EX-12.01

Exhibit 12.01

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Luis Francisco Díaz Olivero, certify that:

1. I have reviewed this annual report on Form 20-F of Graña y Montero S.A.A.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

4. The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect the company’s internal control over financial reporting; and

5. The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.

Date: July 2, 2018

/s/ Luis Francisco Díaz Olivero

Luis Francisco Díaz Olivero

Chief Executive Officer

EX-12.02

Exhibit 12.02

CERTIFICATION PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Mónica Miloslavich, certify that:

1. I have reviewed this annual report on Form 20-F of Graña y Montero S.A.A.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

4. The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect the company’s internal control over financial reporting; and

5. The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.

Date: July 2, 2018

/s/ Mónica Miloslavich

Mónica Miloslavich

Chief Financial Officer

EX-13.01

Exhibit 13.01

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE U.S. SARBANES-OXLEY ACT OF 2002

In connection with the annual report of Graña y Montero S.A.A. (the “Company”) on Form 20-F for the fiscal year ended December 31, 2017, as filed with the U.S. Securities and Exchange Commission on the date hereof (the “Report”), I, Luis Francisco Díaz Olivero, Chief Executive Officer, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the U.S. Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(i) the Report fully complies with the requirements of Section 13(a) or 15(d) of the U.S. Securities Exchange Act of 1934; and

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Luis Francisco Díaz Olivero

Name: Luis Francisco Díaz Olivero

Title: Chief Executive Officer

July 2, 2018

EX-13.02

Exhibit 13.02

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE U.S. SARBANES-OXLEY ACT OF 2002

In connection with the annual report of Graña y Montero S.A.A. (the “Company”) on Form 20-F for the fiscal year ended December 31, 2017, as filed with the U.S. Securities and Exchange Commission on the date hereof (the “Report”), I, Mónica Miloslavich, Chief Financial Officer, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the U.S. Sarbanes-Oxley-Act of 2002, that to the best of my knowledge:

(i) the Report fully complies with the requirements of Section 13(a) or 15(d) of the U.S. Securities Exchange Act of 1934; and

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Mónica Miloslavich

Name: Mónica Miloslavich

Title: Chief Financial Officer

July 2, 2018

XML

Document and Entity Information	12 Months Ended
	Dec. 31, 2017 shares
Document Information [Line Items]
Document Type	20-F
Amendment Flag	false
Document Period End Date	Dec. 31, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	FY
Trading Symbol	GRAM
Entity Registrant Name	Grana & Montero S.A.A.
Entity Central Index Key	0001572621
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Current Reporting Status	No
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding	660,053,790
Entity Accounting Standard	IFRS

XML

Consolidated Statement of Financial Position - PEN (S/) S/ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Current assets
Cash and cash equivalent	S/ 626,180	S/ 606,950
Financial asset at fair value through profit or loss	181	352
Trade accounts receivables, net	992,724	1,031,270
Work in progress, net	584,753	680,929
Accounts receivable from related parties	100,752	181,664
Other accounts receivable	765,445	649,516
Inventories, net	770,711	1,104,293
Prepaid expenses	33,478	51,301
Current assets before non-current assets classified as held for sale	3,874,224	4,306,275
Non-current assets classified as held for sale	17,722	22,385
Total current assets	3,891,946	4,328,660
Non-currentassets
Long-term trade accounts receivable, net	848,590	667,519
Long-term work in progress, net	87,410	197,586
Long-term accounts receivable from related parties	773,930	531,384
Prepaid expenses	38,082	23,526
Other long-term accounts receivable	470,852	357,952
Investments in associates and joint ventures	268,671	389,759
Investment property	45,687	49,357
Property, plant and equipment, net	865,735	1,113,599
Intangible assets, net	940,070	960,286
Deferred income tax asset	436,697	427,008
Total non-currentassets	4,775,724	4,717,976
Total assets	8,667,670	9,046,636
Current liabilities
Borrowings	1,056,764	1,961,043
Bonds	36,655	46,091
Trade accounts payable	1,453,046	1,276,617
Accounts payable to related parties	55,174	80,217
Current income tax	85,543	62,160
Other accounts payable	848,500	1,096,307
Provisions	13,503	14,531
Current liabilities excluding non-current liabilities classified as held for sale	3,549,185	4,536,966
Total current liabilities	3,549,185	4,536,966
Non-currentliabilities
Borrowings	633,299	419,395
Long-term bonds	910,912	921,623
Other long-term accounts payable	852,473	512,803
Long-term accounts payable to related parties	25,954	65,320
Provisions	33,914	26,542
Derivative financial instruments	383	1,081
Deferred income tax liability	72,472	73,169
Total non-currentliabilities	2,529,407	2,019,933
Total liabilities	6,078,592	6,556,899
Equity
Capital	660,054	660,054
Legal reserve	132,011	132,011
Optional reserve	29,974	29,974
Share Premium	881,795	882,464
Other reserves	(169,671)	(167,456)
Retained earnings	589,167	443,377
Equity attributable to controlling interest in the Company	2,123,330	1,980,424
Non-controllinginterest	465,748	509,313
Total equity	2,589,078	2,489,737
Total liabilities and equity	S/ 8,667,670	S/ 9,046,636

XML

Consolidated Statement of Income - PEN (S/) S/ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Revenues from construction activities	S/ 3,253,199	S/ 3,945,599	S/ 5,501,537
Revenues from services provided	1,884,950	1,648,041	1,720,110
Revenue from real estate and sale of goods	941,993	596,677	361,265
Revenue	6,080,142	6,190,317	7,582,912
Cost of construction activities	(3,029,159)	(3,751,221)	(5,342,379)
Cost of services provided	(1,660,239)	(1,477,723)	(1,372,330)
Cost of real estate and goods sold	(717,957)	(404,078)	(255,208)
Cost of sales	(5,407,355)	(5,633,022)	(6,969,917)
Gross profit	672,787	557,295	612,995
Administrative expenses	(429,181)	(382,393)	(394,223)
Other income and expenses	(20,545)	(13,374)	54,586
Gain from the sale of investments	274,363	46,336	(8,289)
Operating profit	497,424	207,864	265,069
Financial expenses	(185,445)	(221,664)	(168,083)
Financial income	15,407	20,645	37,636
Share of the profit or loss in associates and joint ventures under the equity method of accounting	1,327	(589,710)	7,724
Profit (loss) before income tax	328,713	(582,865)	142,346
Income tax	(123,037)	119,272	(95,899)
Profit (loss) for the year from continuing operations	205,676	(463,593)	46,447
Profit for the year from discontinued operations	3,562	11,995	9,142
Profit (loss) for the period	209,238	(451,598)	55,589
Profit (loss) attributable to:
Owners of the Company	148,738	(509,699)	7,097
Non-controlling interest	60,500	58,101	48,492
Profit (loss) for the year	S/ 209,238	S/ (451,598)	S/ 55,589
Earnings (losses) per share from continuing operations attributable to owners of the Company during the year	S/ 0.225	S/ (0.772)	S/ 0.011

XML

Consolidated Statement of Comprehensive Income - PEN (S/) S/ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Profit (Loss) for the period	S/ 209,238	S/ (451,598)	S/ 55,589
Items that will not be reclassified to profit or loss
Remeasurement of actuarial gains and losses, net of tax	(4,031)	(1,531)	(3,860)
Items that may be subsequently reclassified to profit or loss
Cash flow hedge, net of tax	482	883	723
Foreign currency translation adjustment, net of tax	(11,341)	14,307	(59,660)
Change in value of available-for-sale financial assets, net of tax		(2,220)	19,973
Transfer to profit or loss from sales of available-for-sale financial assets, net of tax		(41,461)
Exchange movements on translation of foreign subsidiaries, net of tax	6,610	7,860	(5,220)
Exchange difference from foreign net investment, net of tax		1,563
Items that may be subsequently reclassified to profit or loss	(4,249)	(19,068)	(44,184)
Other comprenhensive income for the year, net of tax	(8,280)	(20,599)	(48,044)
Comprehensive income of the year	200,958	(472,197)	7,545
Comprehensive income attributable to:
Owners of the Company	143,575	(534,492)	(25,713)
Non-controllinginterest	57,383	62,295	33,258
Total comprehensive income for the period	200,958	(472,197)	7,545
Comprehensive income attributable to owners of the Company:
Continuing operations	140,279	(545,627)	(34,315)
Discontinued operations	3,296	11,135	8,602
Total comprehensive income for the period	S/ 143,575	S/ (534,492)	S/ (25,713)

XML

Consolidated Statement of Changes in Equity shares in Thousands, S/ in Thousands, $ in Thousands	PEN (S/)	Issued capital [member] PEN (S/) shares	Issued capital [member] USD ($) shares	Legal reserve [member] PEN (S/)	Optional reserve [member] PEN (S/) shares	Premium for issuance of shares [member] PEN (S/)	Other reserves [member] PEN (S/)	Retained earnings [member] PEN (S/) shares	Equity attributable to owners of parent [member] PEN (S/)	Non-controlling interests [member] PEN (S/)
Beginning balance, shares at Dec. 31, 2014 | shares		660,054	660,054
Beginning balance at Dec. 31, 2014	S/ 3,173,707	S/ 660,054		S/ 132,011		S/ 899,311	S/ (113,895)	S/ 1,113,696	S/ 2,691,177	S/ 482,530
(Loss) profit for the year	55,589							7,097	7,097	48,492
Cash flow hedge	723						687		687	36
Adjustment for actuarial gains and losses	(3,860)							(2,921)	(2,921)	(939)
Foreign currency translation adjustment	(59,660)						(45,411)		(45,411)	(14,249)
Change in value of available-for-sale financial assets	19,973						19,973		19,973
Exchange difference from net investment in a foreign operation	(5,220)						(5,138)		(5,138)	(82)
Comprehensive income of the year	7,545						(29,889)	S/ 4,176	(25,713)	33,258
- Transfer to legal reserve | shares					29,974			(29,974)
- Transfer to legal reserve	0	S/ 0	$ 0	0	S/ 0	0	0	S/ 0	0	0
- Dividend distribution	(109,446)							(104,911)	(104,911)	(4,535)
- Contributions (devolution) of non-controlling shareholders, net	10,329									10,329
- Additional acquisition of non-controlling	(1,865)					(894)			(894)	(971)
- Sale to non-controlling interest	1,642					(885)			(885)	2,527
Total transactions with shareholders	(99,340)				29,974	(1,779)		(134,885)	(106,690)	7,350
Ending balance, shares at Dec. 31, 2015 | shares		660,054	660,054
Ending balance at Dec. 31, 2015	3,081,912	S/ 660,054		132,011	29,974	897,532	(143,784)	982,987	2,558,774	523,138
(Loss) profit for the year	(451,598)							(509,699)	(509,699)	58,101
Cash flow hedge	883						839		839	44
Adjustment for actuarial gains and losses	(1,531)							(1,121)	(1,121)	(410)
Foreign currency translation adjustment	14,307						9,885		9,885	4,422
Change in value of available-for-sale financial assets	(2,220)						(2,220)		(2,220)
Transfer to profit or loss for sale of investment of available-for-sale financial assets	(41,461)						(41,461)		(41,461)
Exchange difference from net investment in a foreign operation	7,860						7,722		7,722	138
Transfer to profit or loss of exchange difference from net investment in a foreign operation, net of tax	1,563						1,563		1,563
Comprehensive income of the year	(472,197)						(23,672)	(510,820)	(534,492)	62,295
- Dividend distribution	(56,326)							(30,853)	(30,853)	(25,473)
- Contributions (devolution) of non-controlling shareholders, net	(19,099)									(19,099)
- Additional acquisition of non-controlling	(51,139)					(15,167)			(15,167)	(35,972)
- Sale to non-controlling interest	335					99			99	236
- Purchase of subsidiaries	4,153									4,153
- Deconsolidation of former subsidiary	2,098							2,063	2,063	35
Total transactions with shareholders	(119,978)					(15,068)		(28,790)	(43,858)	(76,120)
Ending balance, shares at Dec. 31, 2016 | shares		660,054	660,054
Ending balance at Dec. 31, 2016	2,489,737	S/ 660,054		132,011	29,974	882,464	(167,456)	443,377	1,980,424	509,313
(Loss) profit for the year	209,238							148,738	148,738	60,500
Cash flow hedge	482						458		458	24
Adjustment for actuarial gains and losses	(4,031)							(2,948)	(2,948)	(1,083)
Foreign currency translation adjustment	(11,341)						(9,166)		(9,166)	(2,175)
Exchange difference from net investment in a foreign operation	6,610						6,493		6,493	117
Comprehensive income of the year	200,958						(2,215)	145,790	143,575	57,383
- Dividend distribution	(59,677)									(59,677)
- Contributions (devolution) of non-controlling shareholders, net	(33,197)									(33,197)
- Additional acquisition of non-controlling	(942)					(669)			(669)	(273)
- Deconsolidation of former subsidiary	(7,801)									(7,801)
Total transactions with shareholders	(101,617)					(669)			(669)	(100,948)
Ending balance, shares at Dec. 31, 2017 | shares		660,054	660,054
Ending balance at Dec. 31, 2017	S/ 2,589,078	S/ 660,054		S/ 132,011	S/ 29,974	S/ 881,795	S/ (169,671)	S/ 589,167	S/ 2,123,330	S/ 465,748

XML

Consolidated Statement of Cash Flows - PEN (S/) S/ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
OPERATING ACTIVITIES
Profit (loss) before income tax	S/ 332,275	S/ (563,404)	S/ 154,617
Adjustments to profit not affecting cash flows from operating activities:
Depreciation	199,794	205,522	217,070
Amortization of other assets	86,557	82,743	89,355
Impairment of inventories	40,908	36,353	17
Impairment of accounts receivable and other accounts receivable	19,109	419,584	5,806
Debt condonation		(431,484)
Impairment of property, plant and equipment	14,680	9,263	3,796
Impairment of intangible assets	49,609	54,308
Financial expenses-CCDS		7,004
Expenses for liquidation of works - CCDS		164
Indemnification	3,220	(33,600)
Profit (loss) on fair value of financial asset at fair value through profit or loss	(34)	31	(2,740)
Change in the fair value of the liability for put option	(1,400)	(984)	(18,627)
Other Provisions	9,510	9,486	6,398
Dividends income from available-for-sale financial assets			(7,215)
Return receipt from Morelco		(6,658)
Remeasurement of purchase consideration of Morelco		(7,166)
Financial expense,net	138,016	106,739	125,096
Other provisions in CCDS		24,915
Share of the profit and loss in associates and joint ventures under the equity method of accounting	(1,327)	589,710	(24,993)
Reversal of provisions	(1,044)	(17,883)	(7,796)
Disposal of assets	5,438	3,951	5,881
Disposal of investments	106	1,227	2,755
Profit on sale of property, plant and equipment	(26,883)	(18,393)	(17,385)
Loss on financial asset at fair value through profit or loss		221	450
Loss on sale of non-current asset held for sale	45	22
Profit on sale from available-for-sale financial assets	(25,768)	(46,337)
Loss (Profit) on sale of investments in subsidiaries	(244,313)		8,289
Loss on remeasurement of accounts receivable	15,807	76,864
Loss on remeasurement of investment		6,832
Net variations in assets and liabilities:
Trade accounts receivable and working in progress	(213,126)	115,263	(50,150)
Other accounts receivable	33,196	(85,234)	(184,181)
Other accounts receivable from related parties	(245,688)	84,448	(133,286)
Inventories	279,867	33,709	(220,670)
Pre-paid expenses and other assets	(6,494)	(99)	11,667
Trade accounts payable	463,401	(87,553)	199,402
Other accounts payable	(62,280)	114,666	(60,073)
Other accounts payable to related parties	(66,819)	45,902	14,777
Other provisions	(1,680)	(2,756)	(6,770)
Interest payment	(173,662)	(171,572)	(110,884)
Payments for purchases of intangibles - Concessions	(20,178)	(97,711)	(142,575)
Payment of income tax	(144,545)	(125,619)	(150,337)
Net cash (applied to) provided by operating activities	456,297	332,474	(292,306)
INVESTING ACTIVITIES
Sale of available-for-saleinvestment	391,786	107,341	5,613
Sale of property, plant and equipment	127,221	66,086	55,832
Sale of financial asset at fair value through profit or loss	98	1,427
Sale of non-current assets held for sale	43,367	117	(13,496)
Refunding for price adjustment - Morelco		6,658
Return of contributions		1,963	481
Interest received	6,992	15,370	32,162
Dividends received	3,758	27,992	59,175
Payment for purchase of investments properties	(1,183)	(17,543)	(748)
Payments for intangible purchase	(97,112)	(45,706)	(32,883)
Payments for purchase and contributions on investment in associate and joint ventures	(2,116)	(389,657)	(464,086)
Payments for property, plant and equipment purchase	(123,941)	(147,732)	(193,156)
Net cash (applied to) provided by investing activities	348,870	(373,684)	(551,106)
FINANCING ACTIVITIES
Loans received	1,406,717	3,941,750	4,448,332
Bonds issued		178,640	814,016
Amortization of loans received	(2,044,256)	(3,914,570)	(4,549,000)
Amortization of bonds issued	(39,151)	(25,281)	(16,480)
Payment for transaction costs for debt	(31,286)	(650)	(18,516)
Dividends paid to owners of the parent		(30,853)	(104,911)
Dividends paid to non-controlling interest	(43,942)	(25,473)	(4,535)
Cash received from non-controlling shareholders	(33,197)	(19,099)	10,329
Acquisition or sale of interest in a subsidiary of non-controlling shareholders	(942)	(18,702)	(223)
Net cash provided by (applied to) financing activities	(786,057)	85,762	579,012
(Net decrease) net increase in cash	19,110	44,552	(264,400)
Cash and cash equivalent at the beginning of the year	606,950	554,002	818,402
Cash and cash equivalent at the end of the year	626,180	606,950	554,002
NON-CASHTRANSACTIONS:
Debt capitalization		8,308
Acquisition of assets through finance leases	48,507	65,336	92,093
Recognition of debt as guarantor		S/ 608,247
Change in fair value of available-for-sale financial assets			19,973
Adjustment for deconsolidation of former subsidiaries			9,298
Establishment of joint operation - Panorama Plaza de negocios (net assets)			S/ 36,180
Dividends declared to non-controlling interest	S/ 15,735

XML

General Information

12 Months Ended

Dec. 31, 2017

General Information

1 GENERAL INFORMATION

a) Incorporation and operations

Graña y Montero S.A.A. (hereinafter the Company) was established in Peru on August 12, 1996 as a result of the equity spin-off of Inversiones GyM S.A. (formerly Graña y Montero S.A.). The Company’s legal address is Av. Paseo de la República 4675, Surquillo Lima, Peru and is listed on the Lima Stock Exchange and the New York Stock Exchange (NYSE).

The Company is the parent of the Graña y Montero Group (hereinafter the Group, which includes the Company and subsidiaries) and it is mainly engaged in holding investments in different Group companies. Additionally, the Company provides services of general management, financial management, commercial management, legal advisory, human resources management and office operating leasing to the Group companies.

The Group is a conglomerate of companies with operations including different business activities, the most significant are engineering and construction, infrastructure (public concession ownership and operation), real estate businesses and services. See details of operating segments in Note 7.

b) Authorization for issue of the financial statements

The consolidated financial statements for the year ended December 31, 2017 were prepared and issued with Management and Board of Directors authorization on June 29, 2018 and will be submitted for consideration and approval at the General Shareholders’ Meeting. Management expects that the consolidated financial statements as of December 31, 2017 will be approved with no changes.

The consolidated financial statements for the year ended December 31, 2016 were approved by the General Shareholders’ Meeting on June 12, 2018

c) Current situation of the Company

1) Projects conducted in association with group companies Odebrecht

Our company and one of its subsidiaries participated as minority shareholder in certain entities that developed six infrastructure projects in Peru with companies belonging to the group Odebrecht (from now on Odebretch). In 2016, Odebrecht entered into a Plea Agreement with the authorities of the United States Department of Justice and the Office of the District Attorney for the Eastern District of New York by which it admitted the commission of corrupt acts in connection with two of these projects (tranches 2 and 3 of the Interoceánica Sur highway (“IIRSA Sur”) and the project to construct the Tren Eléctrico). As a consequence of this agreement, the Peruvian authorities opened investigations.

i) IIRSA Sur

With respect to the investigations conducted in relation to IIRSA Sur, the Public Prosecutor’s Office included the former Chairman of the Board of Directors, for collusion; a former Director, and a former executive of the Company, for money laundering. Subsequently, Graña y Montero S.A.A. and GyM S.A. were incorporated as subjects investigated in the case described above. The companies appealed this decision and later the Superior Court ruled in favor of the companies.

In addition, the Peruvian authorities have requested incorporation of Graña y Montero S.A.A. as third party responsible on a civil basis and the Company has filed an opposition to the government’s motion. Oral arguments will be made to the court on a hearing that is yet to be scheduled. The Company believes that it has a solid defense and that therefore, the case would be resolved in its favor.

ii) Electric Train

The Peruvian authorities also requested to incorporate GyM S.A. as a third party responsible on a civil basis in the case related to the project to construct the electric train. The Company has filed an opposition. Oral arguments were made to the court on a hearing held on May 29, 2018; to date the court resolution regarding this request is pending. The management believes that the case would be resolved in its favor.

2) The Constructor Club

On July 11, 2017, Commission of Free Competition (“Indecopi”) initiated an investigation against several construction companies, including GyM S.A., about the existence of an alleged cartel called the Constructor Club, Throughout the investigation, GyM S.A., has provided to the Indecopi with all the information requested.

The Company’s former commercial manager is under a criminal investigation, as well as other individuals related to other construction companies. However, the Company is not included in this case.

To date, the result of the case described is uncertain because it is in the preliminary phase and depends on the actions of the third parties that have been included in the investigation. Management believes that the contingency should not have a significant equity impact due to the company’s limited link with the alleged facts.

3) Anticorruption Law application to the Group

Law 30737 and its regulation issued by Supreme Decree 096-2018-EF have mitigated the Company and subsidiaries exposure to the cases described in sub sections 1) and 2) above. These rules set clear guidelines to estimate the potential compensation reducing the uncertainty derived from the legal proceedings, by among other things, preventing the imposition of liens or attachments of assets that would impair the ability to operate.

The benefits of the mentioned rules are subject to the fulfillment of the following obligations:

• The obligation to set up a trust that will guarantee any eventual payment obligation of an eventual civil compensation and the interests in favor of the Peruvian State;

• The obligation not to transfer funds abroad without the prior consent of the Ministry of Justice;

• The implementation of a compliance program; and

• The obligation to disclose information to the authorities and to collaborate in the investigation.

The Group has designed a compliance program which is currently under implementation. In addition, it fully cooperates with the authorities in its investigations and is doing the preliminary work for the constitution of the trust of the alleged facts. It is also engaged in preliminary works necessary to set up the trust while it receives from the authorities the amount of the trust.

Based on the standards indicated and their guidelines, management has estimated that the value of the assets that the Company and its Subsidiaries could eventually assign to the trust will amount to approximately US $ 41 million and calculates that their contingency for the cases described above should not exceed of US $ 51 million.

4) Independent Investigation related to Group business with Odebrecht.

On January 9, 2017, the Board of Directors approved a plan to conduct an internal investigation related to six projects executed in association with Odebrecht.

On March 30, 2017, the Board of Directors created a Risk, Compliance and Sustainability Committee who was in charge of the oversight of the investigation independent from management. The investigation was conducted by outside counselor reported to the Risk, Compliance and Sustainability Committee.

The independent investigation concluded on November 2, 2017 and found no evidence for determining that the Group or any of its former or current directors or executives had intentionally or knowingly participated in acts of corruption related to the six projects developed in association with Odebrecht.

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Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2017

Summary of Significant Accounting Policies

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied in all the years presented, unless otherwise stated.

2.1 Basis of preparation

The consolidated financial statements of the Company and its subsidiaries have been prepared in accordance with International Financial Reporting Standards (IFRS) and interpretations issued by the IFRS Interpretations Committee (IFRIC) applicable to companies reporting under IFRS. The financial statements comply with IFRS as issued by the IASB in force as of December 31, 2016 and December 31, 2017, respectively.

The consolidated financial statements have been prepared under the historical cost convention, except for derivative financial instruments, financial assets at fair value through profit and loss, available-for-sale financial assets measured at fair value. The financial statements are presented in thousands of Peruvian Soles, unless otherwise stated.

The preparation of the consolidated financial statements in conformity with IFRS requires Management to make estimates and assumptions in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5.

2.2 Consolidation of financial statements

a) Subsidiaries

Subsidiaries are entities over which the Company has control. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

The Group applies the acquisition method to account for business combinations. Identifiable assets acquired, liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date.

The Group evaluates measurement of the non-controlling interest on an acquisition-by-acquisition basis. At December 31, 2016 and 2017, the measurements of the non-controlling interest in the Group´s acquisitions were made at the non-controlling interest´s proportionate share of the recognized amounts of the acquiree´s identifiable net assets.

Business acquisition-related costs are expensed as incurred.

Any contingent consideration assumed by the Group with the selling party is recognized at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration are recognized in accordance with IAS 39 “Financial Instruments: Recognition and Measurement” as profit or loss.

Goodwill is initially measured as the excess of the acquisition cost, the fair value at the acquisition date of any interest previously acquired plus the fair value of the non-controlling interest, over the net identifiable assets acquired and liabilities and contingent liabilities assumed. If the acquisition cost is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized in profit or loss at the time of acquisition.

For consolidating subsidiaries, balances, income and expenses from transactions between Group companies are eliminated. Profits and losses resulting from inter-company transactions that are recognized as assets are also eliminated. Group companies use common accounting practices, except for those that are specifically required for specific businesses.

b) Changes in ownership interests in subsidiaries without change of control

Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions, in other words as transactions with owners in their capacity as owners. The difference between fair value of any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interest are also recorded in equity at the time of disposal.

c) Disposal of subsidiaries

When the Group ceases to have control over a subsidiary, any retained interest in the entity is re-measured at its fair value at the date when control is lost, with the change in carrying amount recognized in profit or loss at such date. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognized in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that the amount previously recognized in other comprehensive income is reclassified to profit or loss.

d) Joint arrangements

Contracts in which the Group and one or more of the contracting parties have joint control on the relevant joint activities are called joint arrangements.

Investments in joint arrangements are classified as either joint operations or joint ventures depending on the contractual rights and obligations of each investor. The Group has assessed the nature of its joint arrangements and determined them to be both joint ventures as well as joint operations.

Joint ventures are accounted for using the equity method. Under this method, interests in joint ventures are initially recognized at cost and adjusted thereafter to recognize the Group’s share of the post-acquisition profits or losses and movements in the comprehensive income statement.

The Group assesses on an annual basis whether there is any objective evidence that the investment in the joint ventures and associate is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognizes the impairment loss in share of the profit or loss in associates and joint ventures under the equity method of accounting in the income statement. In addition, the Group stops the use of the equity method if the entity ceases to be an operating entity.

Joint operations are joint arrangements whereby the parties that have joint control of the arrangement, have rights over the assets, and obligations for the liabilities, relating to the arrangement. Each party recognizes its assets, liabilities, revenue and cost and its share of any asset or liability jointly held and, on any revenue, or cost arisen from the joint operation.

In the Group, joint operations mainly relate to consortiums (entities without legal personality) created exclusively for the development of a construction contract. Considering that the only objective of the consortium is to develop a specific project, all costs and revenue are included within revenue from construction activities and cost of construction activities, respectively.

e) Associates

Associates are all entities over which the Group has significant influence but not control, generally accompanying a holding of between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method (see section d) above).

Profits and losses resulting from transactions between the Group and its associates are recognized in the Group’s consolidated financial statements only to the extent of unrelated investor’s interests in the associates. Unrealized losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates are changed where necessary to ensure consistency with the policies adopted by the Group.

Impairment losses are measured and recorded in accordance with section d) above.

2.3 Segment reporting

Operating segments are reported in a consistent manner with internal reporting provided to Management of the Group.

If an entity changes the structure of its internal organization in a manner that causes the composition of its reportable segments to change, the Group restates the information for earlier periods unless the information is not available.

2.4 Foreign currency translation

a) Functional and presentation currency

The consolidated financial statements are presented in soles, which is the functional presentation currency of the Group. All subsidiaries, joint arrangements and associates use the Peruvian Sol as their functional currency, except for foreign entities, for which the functional currency is the currency of the country in which they operate.

b) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates at the date of the transactions or valuation when items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions are recognized in the consolidated income statement, except when deferred in other comprehensive income.

Exchange differences arising on loans from the Company to its subsidiaries in foreign currencies are recognized in the separate financial statements of the Company and separated financial statements of the subsidiaries. In the consolidated financial statements, such exchange differences are recognized in other comprehensive income and are re-classified in the income statement on the disposal of the subsidiary or debt repayment; to the extent such loans qualify as part of the “net investment in a foreign operation”.

Foreign exchange gains and losses of all monetary items are included in the income statement within financial income or expense.

c) Group companies

The results and financial position of all the Group entities (none of which has the currency of a hyper-inflationary economy) that have a functional currency different from the presentation currency of the Group are translated into the presentation currency as follows:

i) Assets and liabilities for each statement of financial position are translated using the closing exchange rate prevailing at the date of the consolidated statement of financial position;

ii) income and expenses for each income statement are translated at the average exchange rate (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated using the exchange rate on the date of the transaction);

iii) capital is translated by using the historical exchange rate for each capital contribution made; and

iv) all exchange differences are recognized as separate components in other comprehensive income (loss), within foreign currency translations adjustment.

Goodwill and fair value adjustments arising from the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and are translated at the closing exchange rate. Exchange differences are recognized in other comprehensive income.

2.5 Public services concession agreements

Concession agreements signed between the Group and the Peruvian Government entitle the Group, as a Concessionaire, to assume obligations for the construction or improvement of infrastructure and which qualify as public service concessions are accounted as defined by IFRIC 12, “Service Concession Arrangements”. The consideration to be received from the Government for the services of constructing or improving public infrastructure is recognized as a financial asset or as an intangible asset, as set forth below.

a) It is recognized a financial asset to the extent that it has a contractual right to receive cash or other financial assets either because the Government secures the payment of specified or determinable amounts or because the Government will cover any difference arising from the amounts actually received from public service users in relation with the specified or determinable amounts. These financial assets are recognized initially at fair value and subsequently at amortized cost (the financial model).

b) It is recognized an intangible asset to the extent that the service agreement grants the Group a contractual right to charge users of the public service. The resulting intangible asset is measured at cost and is amortized as described in Note 2.15 (intangible asset model).

c) It is recognized a financial asset and an intangible asset when the Group recovers its investment partially by a financial asset and partially by an intangible asset (bifurcated model).

2.6 Cash and cash equivalents

In the consolidated statements of financial position and cash flows, cash and cash equivalents include cash on hand, on-demand bank deposits, other highly liquid investments with original maturities of three months or less and bank overdrafts. In the consolidated statement of financial position, bank overdrafts are included in the balance of financial obligations as current liabilities.

2.7 Financial assets

2.7.1 Classification

The Group classifies its financial assets in the following categories: financial assets at fair value through profit or loss, financial assets held-to-maturity, loans and account receivables and financial assets available-for-sale. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.

As of the date of the consolidated financial statements, the Group has classified its financial assets in the following three categories:

a) Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss are non-derivatives that are designated by the Group as at fair value upon initial recognition and are held-for-trading. They are included in current assets in the consolidated statement of financial position.

b) Loans and accounts receivable

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for those whose maturity is greater than twelve months after the date of the consolidated financial statements. These are classified as non-current assets on the consolidated financial position. The Group’s loans and receivables comprise “trade accounts receivables”, “accounts receivable from related parties”, “other accounts receivable”, “unbilled work in progress” and “cash and cash equivalents”.

c) Financial assets held for sale

Financial assets for sale are non-derivatives that are either designated in this category or not classified in any of the other categories. They are registered at cost and are included in non-current assets as “Other Financial Assets” unless Management intends to dispose them within 12 months of the date of the statement of financial position.

2.7.2 Recognition and measurement

The usual purchases and sales of financial assets are recognized at the trading date, the date on which the Group commits to buy or sell the asset. Investments are initially recognized at their acquisition value (fair value at the time of purchase). Financial assets available for sale are subsequently recorded at their fair value. Loans and accounts receivable are subsequently recorded at amortized cost using the effective interest method.

Gains or losses arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’ category is presented in profit or loss within “Other income and expenses, net” in the period in which they arise. Dividend income from financial assets at fair value through profit or loss is recognized in the income statement as part of “Other income and expenses, net” when the Group’s right to receive payments is established.

Changes in the fair value of monetary securities classified as available for sale are recognized in other comprehensive income. When a financial asset classified as available for sale is sold or impaired, the accumulated fair value adjustments recognized in equity are reclassified to profit or loss. Dividends on available-for-sale equity instruments are recognized in the income statement as part of “Other income and expenses, net” when the Group’s right to receive payments is established.

2.8 Impairment of financial assets

a) Assets carried at amortized cost

At the end of each reporting period the Group assesses whether there is objective evidence that a financial asset or a group of financial assets is impaired. If a financial asset or a group of financial assets is impaired, the impairment losses are recognized only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a “loss event”) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

For the loans and receivables category, the amount of any loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognized in the statement of income. If a loan or an account receivable has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.

b) Assets classified as available-for-sale

The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or a group of financial assets classified as available-for-sale is impaired.

For equity investments, a significant or prolonged decline in the fair value of the security below its cost is also evidence that the assets are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss - measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognized in profit or loss - is removed from equity and recognized in profit or loss. Impairment losses recognized in the income statement on equity instruments are not reversed through the income statement.

2.9 Derivative financial instruments and hedging activities

Derivatives are initially recognized at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value at the end of each reporting period. The method of recognizing the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged.

The Group designates certain derivatives as hedges of a particular risk associated with a recognized asset or liability (fair value hedge) or a highly probable forecast transaction (cash flow hedge). Derivatives are initially recognized at fair value on the date of subscription of the contract and are subsequently recognized at their fair value. The method to recognize the gain or loss resulting from changes in the fair values of the derivatives depends on the nature of the item being covered.

The Group documents, at the inception of the transaction, the relationship between hedging instruments and hedged items, as well as its risk management objectives and strategy for undertaking various hedging transactions. The Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.

The fair values of various derivative instruments used for hedging purposes and changes in the account reserves for hedging in equity are disclosed in Note 8. The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining maturity period of the hedged item is more than 12 months and as a current asset or liability when the remaining maturity period of the hedged item is less than 12 months. Trading derivatives are classified as a current asset or liability.

Cash flow hedge

The effective portion of changes in the fair value of derivatives that are designated and qualify as fair value hedges is recognized as other comprehensive income. The gain or loss relating to the ineffective portion is recognized immediately in the income statement. Amounts accumulated in equity are reclassified to profit or loss in the periods when the hedged item affects profit or loss (for example, when the forecasted sale that is hedged takes place).

The gain or loss relating to the effective portion of interest rate swaps hedging variable rate borrowings is recognized in the income statement as “Financial income or Financial expenses”.

However, when the forecasted transaction that is hedged results in the recognition of a non-financial asset (for example, inventory or fixed assets), the gains or losses previously deferred in equity are transferred from equity and are included in the initial measurement of the cost of the non-financial asset. The deferred amounts are ultimately recognized in cost of goods sold in the case of inventory or in depreciation in the case of fixed assets.

When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognized when the forecasted transaction is ultimately recognized in the income statement. When a forecasted transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the income statement within “other income and expenses, net”.

2.10 Trade accounts receivables

Trade receivables are amounts due from customers for goods or services sold by the Group. If collection is expected in one year or less, they are classified as current assets. If not, they are presented as non-current assets.

Trade receivables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method, less any provision for impairment, except for receivables of less than one year that are stated at nominal amount which is similar to their fair values since they are short term.

2.11 Work in progress

Unbilled work in progress comprises the estimation made by the Management of the Engineering and Construction segment related to the unbilled rights receivable for services rendered and not yet approved by the client (valuation based on the percentage of completion).

It also includes the balance of work in progress costs incurred that relates to future activities of the construction contracts and the constructions phase in concessions (see Note 2.25 for detail on Revenue from construction and concession activities).

Changes in estimates of contract revenues and costs can increase or decrease the estimated margin. When a change in the estimate is known, the cumulative impact of the change is recorded in the period in which it is known based on the progress made.

2.12 Inventories

The inventories include land, works in progress and finished buildings related to the real estate activity; materials used in the construction activity and merchandise and supplies marketed as part of the computer services segment.

a) Real estate activity

Land used for the execution of real estate projects is recognized at acquisition cost. Work in progress and finished real estate includes the costs of design, materials, direct labor, borrowing costs (directly attributable to the acquisition, construction, production of the asset), other indirect costs and general expenses related to construction phase.

Net realizable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses. The Group reviews annually whether inventories have been impaired identifying three groups of inventories to measure their net realizable value: i) land bought for future real estate projects which are compared to their net appraisal value; if the acquisition value is higher, a provision of impairment is made; ii) land under construction, impairment is measured based on cost projections; if these costs are higher than selling prices of each real estate unit, a estimate is made for impairment; and iii) completed real estate units; these inventory items are compared to the selling prices less selling expenses; if these selling expenses are higher, a provision for impairment is made.

For the reductions in the carrying amount of these inventories to their net realizable value, a provision is made for impairment of inventories with a charge to profit or loss for the year in which those reductions occur.

b) Other Activities

Materials and supplies are estimated under the weighted average cost method or its replacement value, the lower. The cost of these items includes freight and non-refundable applicable taxes. The estimation for devaluation is estimated on the basis of specific analyzes carried out by the Management on its rotation. If it is identified that the book value of the stocks of materials and supplies exceeds their replacement value, the difference is charged to income in the year in which this situation is determined. Management considers that at the date of the consolidated financial statements it is not necessary to establish additional provisions to cover losses due to obsolescence of these inventories.

2.13 Investment property

Investment properties are shown at cost less accumulated depreciation and impairment losses, if any. Subsequent costs attributable to investment properties are capitalized only if it is probable that future economic benefits will flow to the Company and the cost of these assets can be measured reliably; if not, they are recognized as expenses when incurred.

Repair and maintenance expenses are recognized in profit and loss when they are incurred. If the property’s carrying amount is greater than its estimated recoverable amount, an adjustment to reduce the carrying amount to the recoverable amount is recognized.

Depreciation is determined at rates calculated to write off cost, less estimated residual value, of each asset on a straight-line basis over its estimated useful life. The estimated useful lives of those properties range from 5 to 33 years.

The investment properties held by the Group correspond to: (i) “Agustino Plaza” Shopping Center, located in the El Agustino District, (ii) the 35% participation in the “Panorama Panorama” Shopping Plaza, located in the district of Santiago de Surco and (iii) the stores located within the stations of Line 1 of the Lima Metro; the properties that are owned by the subsidiary VIVA GyM SA. Fair value is estimated to be US$34.5 million, equivalent to S/112.7 million as of December 31, 2017 (US$29.5 million, equivalent to S/99 million, as of December 31 of 2016). The sales stores of these properties have been leased as an operating lease with third parties.

These investment properties have been leased under the modality of an operating lease to third parties.

2.14 Property, plant and equipment

Property, plant and equipment are stated at historical cost less accumulated depreciation and impairment losses, if any. Historical cost includes expenditure that is directly attributable to the acquisition of these items.

Subsequent costs are included in the asset’s carrying amount or are recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. Repairs and maintenance expense are charged to the income statement during the financial period in which they are incurred.

Assets under construction are capitalized as a separate component. At their completion, the cost of such assets is transferred to their definitive category.

Replacement units are major spare parts in which depreciation starts when the units are installed for use within the related asset.

Depreciation of machinery, equipment and vehicles recognized as “Major equipment” are depreciated based on their hours of use. Under this method, the total number of work hours that machinery and equipment is capable to produce is estimated and a charge per hour is determined. The depreciation of other assets that do not qualify as “Major equipment” is calculated under the straight-line method to allocate their cost less their residual values over their estimated useful lives, as follows:

	Years
Buildings and facilities		Between 3 and 50
Machinery and equipment		Between 4 and 10
Vehicles		Between 2 and 10
Furniture and fixtures		Between 2 and 10
Other equipment		Between 2 and 10

Residual values and useful lives are reviewed and adjusted as appropriate at each date of the statement of financial position. Gains and losses on disposals are recognized in “Other income and expenses, net” in the income statement. Regarding joint operations that carry out construction activities, the difference between the proceeds from disposals of fixed assets and their carrying amount is shown within “revenue from construction activities” and “cost of construction activities”, respectively.

2.15 Intangible assets

i) Goodwill

Goodwill arises on the acquisition of subsidiaries and represents the excess of the purchase consideration, the amount of any non-controlling interest and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the net identifiable assets acquired. If the total of consideration transferred, non-controlling interest recognized and previously held interest measured at fair value is less than the fair value of the net assets of the subsidiary acquired, in the case of a bargain purchase, the difference is recognized directly in the income statement.

Goodwill acquired in a business combination is allocated to each cash-generating units (CGU), or group of CGUs, that is expected to benefit from the synergies of the combination. Goodwill is monitored at the operating segment level.

Goodwill impairment reviews are performed at least annually and when events or changes in circumstances indicate a potential impairment. Any impairment is recognized immediately as an expense in item “Other income and expenses, net” and cannot be reversed later.

ii) Trademarks

Trademarks acquired separately are shown at historical cost. Trademarks acquired in a business combination are recognized at fair value at the acquisition date. Management has determined that these trademarks have indefinite useful lives.

Trademark impairment reviews are performed at least annually and when events or changes in circumstances indicate a potential impairment. Any impairment is recognized immediately as an expense in item “Other income and expenses, net”.

iii) Concession rights

The intangible asset consisting of the right to charge users for the services related to service concessions agreements (Note 2.5 and Note 6.b) is initially recorded at the fair value of construction or improvement services. Before amortization is started, an impairment test is performed; it is amortized under the straight-line method, from the date revenue starts using the lower of its estimated expected useful life or effective period of the concession agreement.

iv) Contractual relationships with customers

Contractual relationships with customers are assets resulting from business combinations that were initially recognized at fair value as determined based on the expected cash flows from those relations over an estimated period of time based on the time period those customers will remain as customers of the Group (the estimation of useful life is based on the contract terms which fluctuate between 5 and 9 years). The useful life and the impairment of these assets are individually assessed.

v) Cost of developing wells

Costs incurred in preparing wells to extract hydrocarbons in Blocks I, III, IV and V, located in Talara, and are capitalized as part of intangible assets. These costs are amortized over the useful lives of the wells (estimated to be 5 years for Blocks I and V and unit of production method for Blocks III and IV), when is less than the period of the service agreement signed with Perupetro.

vi) Internally generated software and development costs

Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the Group are recognized as intangible assets when the following criteria are met:

• It is technically feasible to complete the software product so that it will be available for use;

• management intends to complete the software product and use or sell it;

• there is an ability to use or sell the software product;

• it can be demonstrated how the software product will probably generate future economic benefits;

• technical, financial and other resources are available to complete the development and to use or sell the software product; and

• software expense during its development can be reliably measured.

Other development expenditures that do not meet these criteria are expensed as incurred. Development costs previously recognized as an expense are not recognized as an asset in a subsequent period. Computer software development costs recognized as assets are amortized over their estimated useful lives, which fluctuate between 2 to 8 years.

vii) Rights of use of land

Refers rights maintained by the subsidiary Promotora Larcomar S.A. Rights of use of land are stated at historical cost less amortization and any accumulated impairment losses. The useful life of this asset is based on the agreement signed (60 years) and may be extended if agreed by parties. Amortization will begin when it becomes ready for its intended use by Management.

2.16 Impairment of non-financial assets

Assets subject to amortization are subject to impairment tests when events or circumstances occur that indicate that their book value may not be recovered. Impairment losses are measured as the amount by which the book value of the asset exceeds its recoverable value. The recoverable value of the assets corresponds to the higher of its fair value and its value in use. For purposes of the impairment assessment, assets are grouped at the lowest levels in which they generate identifiable cash flows (cash-generating units). The book value of non-financial assets other than goodwill that have been subject to write-offs for impairment are reviewed at each reporting date to verify possible reversals of impairment.

2.17 Trade accounts payables

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities.

Accounts payable are initially recognized at their fair value and subsequently are amortized at amortized cost using the effective interest method, except for accounts payable less than one year that are recorded at their nominal value that is similar to their fair value due to its maturity in the short term.

2.18 Other financial liabilities

Corresponds to the loans and bonds issued by the Group, which are initially recognized at their fair value, net of the costs incurred in the transaction. These financial liabilities are subsequently recorded at amortized cost; any difference between the funds received (net of transaction costs) and the redemption value is recognized in the income statement during the period of the loan using the effective interest method.

The costs incurred to obtain these financial liabilities are recognized as transaction costs to the extent that it is probable that part or the entire loan will be received. In this case, these charges are deferred until the time the loan is received.

2.19 Borrowing costs

Debt costs are recognized at the income statement in the period in which they have been incurred, except for intangible assets and inventories (Note 18-c and 15) in which the borrowing costs are capitalized.

The general and specific borrowing costs directly attributable to the acquisition, construction or production of qualified assets, which are assets that necessarily take a substantial period (more than 12 months) to reach their condition of use or sale, are added to the cost of said assets until in such period the assets are substantially ready for use or sale. The Group suspends the capitalization of borrowing costs during the periods in which the development of activities of a qualified asset has been suspended. The income obtained from the temporary investment of specific loans that have not yet been invested in qualified assets is deducted from the borrowing costs eligible for capitalization.

2.20 Current and deferred income tax

Income tax expense comprises current and deferred tax. Tax expense is recognized in the income statement, except to the extent that it relates to items recognized in other comprehensive income or equity, in which case, it is recognized in the statement of comprehensive income or directly in equity, respectively.

The current income tax is calculated based on the tax laws enacted or substantively enacted at the date of the statement of financial position in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation.

Management, where appropriate, establishes provisions based on amounts expected to be paid to the tax authorities. Deferred tax is recognized on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, deferred tax liabilities are not recognized if they arise from the initial recognition of goodwill; deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realized or is settled.

Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized. Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except for deferred income tax liability where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority.

2.21 Employee benefits

The Group recognizes a liability when the employee has rendered services in exchange for which he is entitled to receive future payments and an expense when the Group has consumed the economic benefit from the service provided by the employee in exchange for the benefits in question.

The Group determines employee benefits in accordance with current labor and legal regulations and classifies them as short-term benefits, post-employment benefits, long-term benefits and termination benefits.

Short-term benefits are those other than termination indemnities, whose payment is settled in the twelve months following the end of the period in which the employees have rendered the services; they correspond to current remunerations (salaries, salaries and contributions to social security), annual paid and sick absences, participation in profits and incentives and other non-monetary benefits.

Post-employment benefits are those other than termination benefits that are paid after completing your period of employment with the entity. Retirement benefits or post-employment benefit plans can be classified into (i) Defined contribution plans and (ii) Defined benefit plans. The Group maintains defined benefit plans and therefore assumes the actuarial risk.

Long-term benefits are those benefits that must be paid more than twelve months after the end of the period in which the services were rendered. As of December 31, 2016, and 2017, the Group does not grant benefits in this category.

Termination benefits are those benefits payable as a result of: (i) the entity’s decision to terminate the employee’s contract before the retirement date, and (ii) the employee’s decision to voluntarily accept the conclusion of the relationship of work.

Short-term benefits:

a) Current salaries and wages

The current remunerations are constituted by salaries, wages, contributions to social security, statutory bonuses and compensation for time of services. Salaries, wages and contributions to social security are settled on a monthly basis.

Entities of the Group recognize the expense and the related liability for statutory bonuses based on applicable laws and regulations effective in Peru, Chile, Bolivia, Guyana and Colombia. In Peru bonuses correspond to two monthly payments, settled one in July and one in December of each year.

The compensation for time of services corresponds to the indemnification rights of the staff, and is accrued based on the consideration of the service calculated according to the legislation in force in each country in which the entities that make up the Group operate and determine as follows: (i) in Peru it is equivalent to half the remuneration in force at the date of payment and this is effected by deposit in bank accounts designated by the workers in the months of May and November of each year; (ii) In Colombia, it is equivalent to 8.33% of the monthly remuneration, (iii) in Bolivia, the calculation is made taking into account the average salary or wages of the last three months. In Chile and Guyana, this benefit is not available.

b) Annual paid absences

Annual holidays are recognized on an accrual basis. The provision for the estimated obligation resulting from the services rendered by employees is recognized on the date of the consolidated statement of financial position and corresponds; (i) one month for personnel in Peru, (ii) fifteen days for personnel in the Dominican Republic and Colombia, and (iii) in the case of Chile and Bolivia, they are subject to the worker’s seniority and range from fifteen and thirty days.

c) Share in profits and incentives

The participation of the workers in the profits is determined on the basis of the legal provisions in force in each country where the entities that make up the Group operate, as follows: (i) in Peru it is equivalent to 5% of the taxable matter determined by each Company of the Group, in accordance with current income tax legislation, (ii) in the case of the branch domiciled in the Dominican Republic, the worker participation rate is 10%; (iii) in Chile, workers’ participation is a component of the remuneration (equivalent to 4.75 minimum wages per year) and not a determinable percentage of the utility, (iv) in Bolivia the participation equals one monthly salary and the total distributed cannot exceed 25% of the profits determined under local regulations, (v) in Colombia and Guyana these benefits are not provided to employees.

Post-employment benefits

The CAM subsidiary has pension plans for its staff. The liability recognized in the statement of financial position with respect to defined benefit plans is measured based on the present value of the obligation at the end of the reporting period less the fair value of the plan assets.

The present value of the defined benefit obligations is determined by discounting the estimated future cash flows using the interest rates of high quality corporate bonds denominated in the currency in which the benefits will be paid and with maturity periods similar to the obligations for pension plans. In countries where there is no market with instruments with similar characteristics, the market rate of government bonds will be used.

The remeasurements that arise from adjustments and changes in the actuarial assumptions are recorded in other comprehensive income in the period in which they arise.

Termination benefits.

The Group entities recognize the liability and expense for severance payments when they occur, based on the legal provisions in force in each country. In the legislation of Peru, the compensation for arbitrary dismissal for personnel with an indefinite contract amounts to 1.5 times the monthly remuneration for each year worked.

In Colombian legislation, compensation depends on the remuneration received; in the legislation of Chile is granted compensation of 30 days of salary for each year worked with a maximum salary of 330 days.

2.22 Other provisions

a) General

Provisions are recognized when the Group has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Provisions are reviewed at year - end. If the time value of money is significant, provisions are discounted using a pre-taxrate that reflects, when applicable, the specific risks related to the liability. Reversal of the discount due to the passage of time results in the obligation being recognized with a charge to the income statement as a financial expense.

Contingent obligations are disclosed for possible obligations that are not yet determined to be probable. Contingent assets are not recognized and only disclosed if it is probable that future economic benefits will flow to the Company.

b) Provision for the closure of production wells

The subsidiary GMP S.A. recognizes a provision for the closure of operating units that correspond to the legal obligation to close oil production wells once the production phase has been completed. At the initial date of recognition, the liability that arises from said obligation measured at its fair value discounted at its present value, the valuation techniques established by IFRS 13, “Measurement of Fair Value”, simultaneously charged to the intangible account in the statement of financial position.

Subsequently, the liability will increase in each period to reflect the financial cost considered in the initial measurement of the discount, and the capitalized cost is depreciated based on the useful life of the related asset. When a liability is settled, the subsidiaries entities will recognize any gain or loss that may arise. The fair value changes estimated for the initial obligation and the interest rates used to discount the flows, any decrease in the provision, and any decrease of the asset that may exceed the carrying amount of said asset is immediately recognized in the income statement.

If the review of the estimated obligation results in the need to increase the provision and, accordingly, increase the carrying amount of the asset, the subsidiaries will also take into consideration if said increase corresponds to an indicator that the asset has been impaired and, if so, impairment tests are carried out (Note 2.16).

2.23 Put option arrangement

The subsidiary GyM S.A. signed a sale option contract on the equity of its subsidiary Morelco SAS (Note 33 b) that allows the shareholder to reallocate its shares over a period of 10 years. The amount payable under the option is initially recognized at the present value of the reimbursement under “Other accounts payable”, directly charged to equity. The charge to equity is recorded separately as put options subscribed on the non-controlling interest, adjacent to the non-controlling interest in the net assets of the consolidated subsidiaries.

Subsequently, the financial liability is updated by changes in the assumptions on which the estimation of the expected cash flows is based and by the financial component due to the passage of time. The effects of this update are recognized in results. In the event that the option expires without being exercised, the liability is written off with the corresponding adjustment to equity.

2.24 Capital

Common shares are classified as equity.

Incremental costs directly attributable to the issue of new shares or options are shown in equity, as a deduction, net of taxes, of the proceeds.

Where any Group company purchases the Company’s equity shares (treasury shares), the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the company’s equity holders until the shares are cancelled or reissued. Where such shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects is included in equity attributable to the Group’s equity holders.

2.25 Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable. The Group recognizes revenue when the amount of revenue can be reliably measured; when it is probable that future economic benefits will flow to the entity; and when specific criteria have been met for each of the Group’s activities.

The Group’s revenue recognition policy is described as follows:

i) Revenue from construction activities

Revenues from construction contracts are recognized using the percentage-of-completion method which is based on the completion of a physical proportion of the overall work contract considering total costs and revenues estimated at the end of the project, in accordance with IAS 11, Construction Contracts. Under this method revenues are determined based on the proportion of actual physical completion compared to the total contracted physical construction commitment.

When it is probable that the total costs of the contract will be above the related revenue, the expected loss will be immediately expensed.

When the outcome of a construction contract cannot be estimated reliably, the associated revenue is recognized to the extent costs incurred are recoverable. Revenue is billed once approval is received by the owners of the work in progress.

In the statement consolidated of financial position, the Group shows the net position of each contract as an asset or a liability. A contract is considered an asset when the costs incurred plus recognized earnings less the sum of all the recognized losses and consolidated assessments exceed work in progress billings; this asset is shown in the statement of financial position as “Unbilled work in progress”; otherwise they are presented as a liability within “Trade accounts payables”.

A change order is an instruction by the customer for a change in the scope of the work to be performed under the contract that may lead to an increase or a decrease in contract revenue. A variation is included in contract revenue when it is probable that the customer will approve the variation and the amount of revenue arising from the variation; can be reliably measured.

A claim is an amount that the Group seeks to collect from the customer or third party as reimbursement for costs not included in the contract price. Claims are included in contract revenue only when negotiations have reached an advanced stage such that it is probable that the customer will accept the claim; and the amount that it is probable will be accepted by the customer can be measured reliably.

ii) Revenue from engineering, advisory, consulting services and other services

Revenues from service contracts are recognized in the accounting period in which they are performed using the percentage of completion method, calculated based on the percentage of costs incurred. Additionally, there are contracts whereby income is recognized as it is earned, regardless of when the related fees are received.

iii) Sales of real-estate properties

Revenue from sales of real estate properties is recognized in the results of the period when sales occur, that is, when the properties are delivered and the risks and rewards inherent to ownership are transferred to the buyer and the collection of the corresponding receivables is reasonably assured.

iv) Revenue from Information Technology Services (IT)

The sale of computer equipment includes some services to be provided in a subsequent date to the asset sale as installation and maintenance. When sales agreements include multiple elements, the amount of the revenue is attributed to each element based on their related fair values. The fair value of each element is determined based on the market price prevailing for each element when sold separately. Revenue derived from computer equipment is recognized when the related risks and rewards are transferred to the customer, which occurs upon delivery. Revenue relating to each service element is recognized using the straight-line method.

v) Interest income

Interest income is recognized on a time-proportion basis, using the effective interest method.

vi) Revenue for concession services

Revenue from concession services is recognized according to its nature. Construction and restoration activities are accounted for applying the percentage-of-completion method as described above and operation and maintenance services in the accounting period when they are provided (see Note 2.5).

2.26 Construction contract costs

Contract costs include all direct costs such as materials, labor, subcontracting costs, manufacturing and supply costs of equipment, start-up costs and indirect costs. Periodically, the Group evaluates the reasonableness of the estimates used in the determination of the percentage-of-completion. If, as a result of this evaluation, there are modifications to the revenue or cost previously estimated, or if the total estimated cost of the project exceeds expected revenues, an adjustment is made in order to reflect the effect in results of the period in which the adjustment or loss is incurred.

When the outcome of a construction work cannot be estimated reliably, the revenue of the contract is recognized only up to the amount of the contractual costs incurred and that are likely to be recovered.

2.27 Leases

a) The Group as a lessee

Operating leases

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases, including prepayments (net of any incentives received from lessor) are charged to the consolidated income statement under the straight-line method over the lease term. The Group’s major kinds of operating leases are leases of machinery, computer equipment, printing equipment, among others.

Finance leases

Leases in which the Group assumes substantially all the risks and rewards of ownership of an asset are classified as finance leases. Each lease payment is allocated between the liability and finance charges so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The corresponding rental obligations, net of finance charges, are included in other payables, short- and long-term in the consolidated statement of financial position.

The interest element of the finance cost is charged to the consolidated income statement of over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant and equipment acquired under finance leases are depreciated over the useful life of the asset or the lease term.

b) Group as a lessor

The Group only has operating leases and the leased assets are stated in the statement of financial position based on the nature of the asset. Revenue from operating leases are recognized under the straight-line method over the lease term and the incentives given to lessees reduce the revenue obtained from leases.

2.28 Dividend distribution

Dividend distribution to the Group shareholders is recognized as a liability in the financial statements in the period in which the dividends are approved.

2.29 Significant non-operating items

Significant non-operating items are separately shown in the financial statements when they are necessary to provide a more adequate understanding of the Group’s financial performance. These material items are income or expenses shown separately due to their nature or significant amount.

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Adoption of New International Financial Information Regulations (Ifrs), Amendments and Interpretations

12 Months Ended

Dec. 31, 2017

Adoption of New International Financial Information Regulations (Ifrs), Amendments and Interpretations

3 ADOPTION OF NEW INTERNATIONAL FINANCIAL INFORMATION REGULATIONS (IFRS), AMENDMENTS AND INTERPRETATIONS

3.1. Standards, amendments and interpretations published but not yet in force

The relevant standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Group’s financial statements are disclosed below. The Group intends to adopt these standards, if applicable, when they become effective.

IFRS 9 “Financial Instruments”

In July 2014, the IASB issued the final version of IFRS 9 Financial Instruments that replaces IAS 39 and all previous versions of IFRS 9. IFRS 9 brings together all three aspects of the accounting for financial instruments project: classification and measurement, impairment and hedge accounting. IFRS 9 is effective for annual periods beginning on or after January 1, 2018, with early application permitted. Except for hedge accounting, retrospective application is required, but the provision of comparative information is not compulsory. For hedge accounting, the requirements are generally applied prospectively, with some limited exceptions. The Group plans to adopt the new standard on the required effective date and will not restate comparative information.

During 2017, the Group performed a detailed impact assessment of all three aspects of IFRS 9. This assessment is based on currently available information and may be subject to changes arising from further reasonable and supportable information being made available to the Group in 2018 when the Group will adopt IFRS 9. Overall, the Group expects no significant impact on its statement of financial position or equity from the adoption of IFRS 9. In addition, the Group will adopt changes in certain financial instruments.

a) Classification and measurement

Management expects to maintain the measurement at fair value for all financial assets that are currently measured at that value. There is no impact on financial liabilities.

b) Impairment

IFRS 9 requires the Group to record an expected credit loss for its debt instruments, loans and account receivables, regardless of the period. The Group will apply the simplified approach on all trade receivables and the general approach for accounts that originate from loans and third parties and related companies.

The Group will strengthen the internal controls, processes and systems regarding the identification of the different financial instruments of accounts receivable loans so that from the moment of initial recognition these items are recognized at their recoverable value. Given the substantially current nature of these accounts and the guarantees received, the Group expects that there will be no significant impact on its consolidated financial statements as a result of the adoption of this standard.

c) Hedge accounting

The Group has determined that all hedge transactions that are currently designated as effective hedges will continue to qualify as hedge accounting under IFRS 9. The Group has chosen not to retrospectively apply IFRS 9 at the time of transition for those hedges designated as hedges under IAS 39. As IFRS 9 does not change the main principles of how an entity should record the effective hedges.

IFRS 15 “Revenue from Contracts with Customers”

IFRS 15 was issued in May 2014 and establishes a five-step model to account for revenue arising from contracts with customers. Under IFRS 15, revenue is recognized at an amount that reflects the consideration agreed with the customer. The new revenue standard will supersede all current revenue recognition requirements under IFRS. Either a full retrospective application or a modified retrospective application is required for annual periods beginning on or after January 1 2018. Early adoption is permitted.

The Group plans to adopt the new standard on the required effective date using the modified retrospective method, under which the accumulated effect of applying this new standard is presented adjusting the beginning balance of accumulated results (January 1, 2018). During 2016, the Group performed a preliminary assessment of IFRS 15, which was followed by a more detailed analysis in 2017.

(a) Engineering and Construction

At the time of the adoption of IFRS 15, the segment considered the following:

i) In the case of additional services, the Group will strengthen the internal controls, processes and systems regarding the obtaining of the valorizations approved by clients, the follow-up of their timely collection and the write off if necessary.

ii) In the case of work in progress (Note 12), the Group will strengthen the internal controls, processes and systems with respect to the support required to register adjustments for work progress and the construction contract margin as of the date of the financial statements

iii) In the case of construction contracts, the Group will strengthen the internal controls, processes and systems regarding the identification of the different performance obligations agreed in the contract with the client, mainly in the Engineering, Procurement and Construction contracts (EPC by its acronym in English). During the review process of the current procedures and those required by IFRS 15, we observed a case whose current accounting treatment must be corrected in order to recognize the different performance obligations contemplated in the contract. The Group is in the process of determining the effect of this situation on its financial statements, although it estimates that it will not be significant at the date of adoption of IFRS 15 or in subsequent years

iv) In the case of penalties, the Group will strengthen its policies on factual support to support that the recognition of charges is not required to the results

(b) Infrastructure

In the case of penalties, the Group will strengthen its policies to support the recognition at the income statement is not required. Specifically, in the contract between OTAS and PLUSPETROL, the Group will strengthen the internal controls, processes and systems regarding the identification of the different performance obligations agreed with the client.

(c) Real Estate

In the case of real estate sales contracts, the Group will strengthen the internal controls, processes and systems regarding the identification of the different performance obligations agreed in the contract with the client, mainly in contracts that include sale of common areas. During the review of current procedures and those required by IFRS 15, we observe a case whose current accounting treatment must be adapted in order to recognize the different performance obligations contemplated in the contract. The Group is in the process of determining the effect of this situation on its financial statements, although it estimates that it will not be significant at the date of adoption of IFRS 15 or in subsequent years

(d) Presentation and disclosure requirements

IFRS 15 requires the presentation and disclosure of more detailed information than required by current regulations. The presentation requirements represent a significant change in current practice and will increase the volume of disclosures required in the Group’s financial statements. In 2017, the Group continued testing its internal controls, policies and procedures necessary to collect and disclose the required information.

IFRS 16 “Leases”

IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model similar to the accounting for finance leases under IAS 17. The standard includes two recognition exemptions for lessees: leases of ‘low-value’ assets and short-term leases. IFRS 16 is effective for annual periods beginning on or after 1 January 2019. Early application is permitted only in conjunction with the adoption of IFRS 15. The Group is evaluating the impact of IFRS 16 in its consolidated financial statements with the identification, collection and analysis of current lease agreements.

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Financial Risk Management

12 Months Ended

Dec. 31, 2017

Financial Risk Management

4 FINANCIAL RISK MANAGEMENT

Financial risk management is carried out by the Group’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 as well as financial risks and carries out periodic supervision and monitoring.

4.1 Financial risk factors

The Group’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 Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Group’s financial performance. The Group uses derivative financial instruments to hedge certain risk exposures in one of its subsidiaries and considers the use of other derivatives in the event that it identifies risks that may generate an adverse effect for the Group in the short and medium-term.

a) Market risks

i) Foreign exchange risk

The Group 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, 2016, and 2017 this exposure is mainly concentrated in fluctuations of U.S. dollar, the Chilean and Colombian Pesos. The foreign exchange risk of the investments in Bolivia and Panama are not significant due to the volume of operations.

At December 31, 2017, the consolidated statement of financial position includes assets and liabilities in foreign currency (mainly in U.S. dollars) equivalent to S/1,851.3 million and S/1,982 million, respectively (S/2,770.9 million and S/2,708.30 million, respectively, at December 31, 2016) equivalents to US$570.5 million and US$610.8 million, respectively (US$826.6 million and US$806 million, respectively, at December 31, 2016).

During 2017, the Peruvian Sol, the Chilean and Colombian Pesos were exposed against the U.S. dollar. The Group’s exchange gains and losses for 2017 amounted to S/336.8 million and S/330.5 million, respectively (S/761.8 million and S/774.3 million, respectively, in 2016 and S/427.2 million and S/510.1 million, respectively, in 2015).

If at December 31, 2017 the Peruvian Sol and the Chilean and Colombian Pesos had strengthened/weakened by 2% against the U.S. dollar, with all other variables held constant, the pre-tax profit for the year would have increased/decreased by S/0.1 million (S/0.3 million in 2016 and S/1.7 million in 2015).

At December 31, 2017 the consolidated statement of changes in equity comprises a foreign currency translation adjustment originated by its subsidiaries. Their financial position includes assets and liabilities in functional currency equivalent to CLP 77,199.1 million and CLP 74,447.9 million, respectively (CLP 75,561.3 million and CLP 87,221.10 million, respectively, at December 2016), COP 101,300.8 million and COP 74,319.7 million, respectively (COP 169,774.8 and COP 166,091.8 million, respectively, at December 2016).

The Group’s foreign exchange translation adjustment for 2017 was negative for S/11.3 million (negative for S/14.3 million in 2016 and S/59.7 million in 2015).

ii) Price risk

Management considers that the exposure of the Group 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 Group’s interest rate risk mainly arises from its long-term borrowings. Borrowings issued at variable rates expose the Group to cash flow interest rate risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk. Group policy is to maintain most of its borrowings at fixed rate instruments; 57.8% of total debt in 2017 (52.8% in 2016) was contracted at fixed rates and 42.2% at variable rates (47.2% in 2016) which consisted of a 22.9% fixed rate plus VAC (adjusted for inflation) and the remaining 19.3% at a variable rate (18% fixed rate + VAC and the remaining 29.2% at a variable rate in 2016).

The debt subject to fixed rate plus VAC is related to a bond issued in Peruvian soles to finance the GyM Ferrovías Project, Metro Line 1 (Note 20). Any increase in the interest rate resulting from higher inflation will have no significant impact on the Group’s profit because these revenues are also adjusted for inflation.

During 2017 and 2016 borrowings at variable rates are denominated in Peruvian Soles and U.S. dollars and the Group’s policy is to manage their cash flow risk by using interest-rate swaps, which are recognized under hedge accounting. However, regarding the variable rate loans related to GSP (Note 19-a), Management decided to assume the risk since it expects to pre-pay them before due. If at December 31, 2017, the Libor rate plus 3 months had increased/ decreased by 5%, with all other variables held constant, the pre-tax profit for the year would have increased/ decreased by S/0.49 million (S/0.40 million in 2016). In 2017 and 2016 there were no significant ineffectiveness in the cash flow hedge.

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. For banks and financial institutions, only independently rated parties with a minimum rating of ‘A’ are accepted.

With respect to loans to related parties, the Group 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.

No credit limits were exceeded during the reporting period, and Management does not expect the Group to incur any losses from performance by these counterparties, except for the ones already recorded at the financial statements.

c) Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and cash equivalents, the availability of funding through an adequate number of sources of committed credit facilities and the capacity to close out positions in the market. Historically, the Group cash flows enabled it to maintain sufficient cash to meet its obligations. However, as of December 31, 2016, the Group started to experienced liquidity risk due to the early termination of the GSP concession agreement and the obligations assumed (Note 16 a-i). As a consequence, the Group started a disinvestment plan to be able to meet the obligations resulting from this scenario (Note 38).

Group Corporate Finance monitors rolling forecasts of the Group’s liquidity requirements to ensure it has sufficient cash to meet operational needs, so that the Group does not breach borrowing limits or covenants, where applicable, on any of its borrowing facilities. Less significant financing transactions are controlled by the Finance Management of each subsidiary.

Such forecasting takes into consideration the Group’s debt financing plans, covenant compliance, compliance with internal statement of financial position ratio targets and, if applicable, external regulatory or legal requirements; for example, foreign currency restrictions.

Surplus cash held by the operating entities over the balance required for working capital management are invested in interest-bearing checking accounts or time deposits, selecting instruments with appropriate maturities and sufficient liquidity.

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

	Less than 1 year		1-2 years		2-5 years		More than 5 years		Total
At December 31, 2016
Other financial liabilities (except for finance leases)		1,936,825		128,508		173,145		—		2,238,478
Finance leases		127,496		85,989		26,780		19,506		259,771
Bonds		113,299		180,431		365,697		1,334,485		1,993,912
Trade accounts payables		1,276,617		—		—		—		1,276,617
Accounts payables to related parties		80,217		28,082		37,238		—		145,537
Other accounts payables		303,827		49,064		143,655		—		496,546
Other non-financial liabilities		—		1,081		—		—		1,081
		3,838,281		473,155		746,515		1,353,991		6,411,942
At December 31, 2017
Other financial liabilities (except for finance leases)		1,003,500		336,913		290,253		—		1,630,666
Finance leases		72,864		41,877		24,022		638		139,401
Bonds		109,746		148,986		353,349		1,272,647		1,884,728
Trade accounts payables		1,453,046		—		—		—		1,453,046
Accounts payables to related parties		55,174		25,954		—		—		81,128
Other accounts payables		153,498		34,527		371,976		—		560,001
Other non-financial liabilities		—		383		—		—		383
		2,847,828		588,640		1,039,600		1,273,285		5,749,353

4.2 Capital management

The Group’s objectives when managing capital are to safeguard the Group’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 reduce the cost of capital. In 2017 the situation of the Group, has lead Management to monitor deviations that might cause the non-compliance of covenants and may hinder renegotiation of liabilities (Note19-a and Note 38-a).

In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

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

As of December 31, 2017, and 2016, the gearing ratio is presented below indicating the Company’s strategy to keep it in a range from 0.10 to 0.70.

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

	2016			2017
Total financial liabilities and bonds		3,348,152			2,637,630
Less: Cash and cash equivalent		(606,950	)		(626,180	)
Net debt		2,741,202			2,011,450
Total equity		2,489,737			2,589,078
Total capital		5,230,939			4,600,528
Gearing ratio		0.52			0.44

4.3 Fair value estimation

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

•	Level 1:	Measurement based on quoted prices in active markets for identical assets or liabilities.
•	Level 2:	Measurement based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices).
•	Level 3:	Measurement based on inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs, generally based on internal estimates and assumptions of the Group).

The table below shows the Group’s assets and liabilities measured at fair value at December 31, 2016 and 2017:

	Level 1		Level 2		Level 3		Total
At December 31, 2016
Financial assets
Financial assets at fair value through profit or loss		6,379		—		—		6,379
Financial liabilities
Derivatives used for hedging		—		1,081		—		1,081
At December 31, 2017
Financial assets
Financial assets at fair value through profit or loss		181		—		—		181
Financial liabilities
Derivatives used for hedging		—		383		—		383

There were no transfers between levels 1 and 2 during the year.

Financial instruments in level 3

The fair value as of December 31, 2015 of the investment held in Transportadora de Gas del Perú S.A. (TGP) classified as other financial asset was based on observable inputs in the market and unobservable inputs. The Group calculated its fair value based on its discounted cash flows as of the financial statement date. The information used to determine the fair value of this investment corresponds to Level 3 (Note 10).

The following table shows the changes in fair value by the investment held in TGP for the years ended on December 31:

	2015		2016
Opening balance		93,144		120,134
Unrealized gains (losses) recognized in the period		26,990		(2,996	)
Derecognition of investment sold:
- Historical cost of investment		—		(61,105	)
- Cumulative fair value		—		(56,033	)
Final balance		120,134		—

The carrying amounts of cash and cash equivalents correspond to their fair values. The Company considers that the carrying amount of trade accounts receivable and payable is similar to their fair values since they are short term. The fair value for long-term receivables and liabilities is disclosed in Note 11, Note 12, Note 19-c, Note 20 and Note 22. The fair value of financial liabilities has been estimated by discounting the future contractual cash flows at the interest rate currently prevailing in the market and which is available to the Company for similar financial instruments (Level 2).

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Critical Accounting Estimates and Judgements

12 Months Ended

Dec. 31, 2017

Critical Accounting Estimates and Judgements

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.

5.1 Critical accounting estimates and assumptions

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below.

a) Estimated impairment of goodwill and other intangible assets with indefinite useful life

Impairment reviews are undertaken annually to determine if goodwill arising from business acquisitions and other intangible assets with indefinite useful life are impaired, in accordance with the policy described in Note 2.15-i). For this purpose, goodwill is allocated to the different CGU to which it relates while other intangible assets with indefinite useful life are assessed individually. The recoverable amounts of the CGU and of other intangible assets with indefinite useful life have been determined based on the higher of their value-in-use and fair value less costs to sell. This evaluation requires the exercise of Management’s professional judgment to analyze any potential indicators of impairment as well as the use of estimates in determining the value in use, including preparing future cash flows, macro-economic forecasts as well as defining the interest rate at which said cash flows will be discounted.

If the Group experiences a significant drop in revenues or a drastic increase in costs or changes in other factors, the fair value of their business units might decrease. If management determines the factors that reduce the fair value of the business are permanent, those economic factors will be taken into consideration to determine the recoverable amount of those business units and therefore, goodwill as well as other intangible assets with indefinite useful life may be deemed to be impaired, which may cause their write-down to be required.

In accordance with the impairment evaluations carried out by the Management, losses due to deterioration of the goodwill and of the trademarks have been recognized; they were generated by the decrease in the expected flows as a reduction of the contracts’ “backlog”.

At December 31, 2016 and 2017 the Group has performed a sensitivity analysis increasing or decreasing the assumptions of gross margin, discount rate and revenue and terminal growth rate by a 10%, with all the other variables held constant, as follows:

	Difference between recoverable amount and carrying amounts
	2016			2017
Goodwill
Gross margin		(10%)	+10%		(10%)	+10%
Mining construction services		19.18%	71.19%		—	—
Engineering and construction		(42.68%)	17.85%		81.31%	143.63%
Electromechanical		32.16%	74.41%		197.30%	620.85%
IT equipment and services		200.93%	289.04%		0.32%	38.87%
Telecommunication services		(110.85%)	176.40%		465.17%	1339.26%
Discount rate:		(10%)	+10%		(10%)	+10%
Mining construction services		65.94%	28.99%		—	—
Engineering and construction		8.22%	(27.56%)		146.07%	86.86%
Electromechanical		74.42%	36.77%		478.08%	354.39%
IT equipment and services		285.63%	212.65%		30.06%	11.25%
Telecommunication services		70.31%	4.59%		2190.66%	1967.37%
Terminal growth rate:		(10%)	+10%		(10%)	+10%
Mining construction services		42.92%	47.55%		—	—
Engineering and construction		(16.49%)	(7.84%)		107.41%	117.91%
Electromechanical		51.14%	55.62%		402.19%	416.25%
IT equipment and services		243.21%	247.06%		18.54%	20.52%
Telecommunication services		26.14%	39.94%		2232.86%	2394.81%
Trademarks
Revenue growth rate:		(10%)	+10%		(10%)	+10%
Morelco		22.37%	42.03%		16.37%	(4.79%)
Vial yVives - DSD		17.01%	43.01%		(40.72%)	(63.32%)
Adexus		(8.18%)	(9.91%)		22.10%	(0.10%)
Discount rate:		(10%)	+10%		(10%)	+10%
Morelco		53.35%	15.66%		(7.21%)	22.92%
Vial yVives - DSD		56.88%	10.88%		(58.56%)	(45.65%)
Adexus		15.42%	(10.59%)		(2.13%)	28.02%
Terminal growth rate:		(10%)	+10%		(10%)	+10%
Morelco		29.19%	34.94%		8.61%	3.17%
Vial yVives - DSD		23.19%	37.83%		(51.36%)	(54.47%)
Adexus		(0.12%)	1.89%		13.27%	8.86%

In 2017 if the gross margin, the discount rate or terminal growth rate had been 10% below or 10% above Management’s estimates, the Group would have not recognized a provision for impairment of goodwill (in 2016 would have recognized a provision for impairment of the Engineering and Construction CGU and Telecommunication Services CGU).

In 2017 if the revenue growth rate, terminal growth rate or the discount rate had been 10% or had been 10% above Management’s estimates, the Group would have recognized a provision for impairment of their trademarks in Morelco, Vial y Vies-DSD and Adexus (in 2016, would have recognized a provision for impairment of trademark in Adexus).

At December 31, 2017, as a result of these evaluations, an impairment was identified and recorded in the Engineering and Construction CGU, trademark impairment in Vial and Vives-DSD and goodwill impairment in Morelco (At December 31, 2016, a goodwill impairment was recorded in the Engineering and Construction CGU, in Vial and Vives-DSD) (Note 18).

b) Income taxes

Determination of the tax obligations and expenses requires interpretations of the applicable tax laws and regulations. The Group seeks legal and tax counsel before making any decision on tax matters.

Deferred tax assets and liabilities are calculated on the temporary differences arising between the tax basis of assets and liabilities and the amounts stated in the financial statement of each entity that makes up the Group, using the tax rates in effect in each of the years in which the difference is expected to reverse. Any change in tax rates will affect the deferred income tax assets and liabilities. This change will be recognized in the income statement in the period in which the change takes effect.

Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences and tax loss carryforwards can be utilized. For this purpose, the Group takes into consideration all available evidence, including factors such as historical data, projected income, current operations and tax planning strategies. A tax benefit related to a tax position is only recognized if it is more likely than not that the benefit will ultimately be realized.

The Group´s maximum exposure to tax contingencies amounts to S/13.5.

c) Percentage of completion revenue recognition

Revenues from construction contracts are recognized using the percentage-of-completion method which is based on the completion of a physical proportion of the overall work contract considering total costs and revenues estimated at the end of the project (Note 2.25 i).

As of December 31, 2015, 2016 and 2017, a sensitivity analysis was performed considering a 10% increase/decrease in the Group’s gross margins, as follows:

	2015			2016			2017
Sales		5,501,537			3,945,599			3,253,199
Gross profit		159,158			194,378			224,040
%		2.89			4.93			6.89
Plus 10%		3.18			5.42			7.58
Increase in pre-tax profit		15,787			19,473			22,552
		174,949			213,851			246,592
Less 10%		2.60			4.44			6.20
Decrease in pre-tax profit		(15,787	)		(19,473	)		(22,552	)
		143,371			174,905			201,488

d) Provision for well closure costs

At December 31, 2017 the present value of the estimated provision for closure of 144 wells located in Talara amounted to S/16.8 million (S/17.2 million as of December 31, 2016 for closure of 144 wells). The well closure liability is adjusted to reflect the changes that resulted from the passage of time and from reviews of either the date of occurrence or the amount of the present value of the originally estimated obligations (Note 18).

The Group estimates the present value of its future obligation for well closure costs, or well closure liability, and increases the carrying amount of the asset that will be withdrawn in the future and that is shown under the heading of intangibles in the statement of financial position.

The pre-tax discount rate used for the present value calculation was 2.09% for Block I and 2.27% for Block V (1.93% for Blocks I and V for year 2016), and 2.72% for Blocks III and IV, (2.93% for year 2016) based on a 5 to 30-year rate used on U.S. bonds effective at December 31, 2017

If, at December 31, 2016 and 2017, the estimated rate had increased or decreased by 10%, with all variables held constant, the impact on pre-tax profit would have not been significant.

e) Impairment of investment in Gasoducto Sur Peruano

Based on the termination of the concession agreement, on which Gasoducto Sur Peruano S.A. (GSP) acts as concessionaire (Note 16.a-i), the Group identified potential impairment indicators affecting the recoverability of its investment. Consequently, the Group has applied the rules stated in IAS 36, ‘Impairment of assets” to determine the recoverable amount of this investment.

In that process, the Group has applied judgment to weight the various uncertainties surrounding the amount that can be recovered from this investment. Management has determined the recoverable amount assuming two key factors: (i) the amount that GSP will recover as a result of the public auction, and (ii) the validity of its right to subordinate the Odebrecht Group’s debts in GSP.

With relation to the amount to be recovered by GSP, the Group is assuming a recovery of the minimum amount established in the concession agreement, which is equivalent to 72.25% of the Net Carrying Amount (NCA) of the Concession assets. This amount, in substance, represents a minimum payment to be obtained by GSP based on a public auction (liquidation) to be set up for the adequate transfer of the Concession’s assets to a new Concessionaire within a year, under the relevant contractual terms and conditions.

With relation to the validity of its right to subordinate the Odebrecht Group’s liabilities in GSP, Management assessment, in consultation with its legal advisors, is that, although some uncertainties exist, these do not represent a material risk for exercising this right.

The concession agreement also established two additional tranches of 82.5% or 100% of the NCA to be recovered as a result of public auction, depending on several factors. In any of these scenarios, the Group would be able to recover their total investment and no additional impairment would be necessary to be recognized.

Depending on the date in which the NCA is actually cashed, the Group may need to take into account additional costs ranging from S/18.95 million (US$5.64 million) to S/42.2 million (US$12.56 million), due to higher financial expense.

f) Impairment of the joint operation in Consorcio Constructor Ductos del Sur (CCDS)

CCDS was mainly engaged in performing the engineering, procurement and construction work for Gasoducto Sur Peruano S.A. (GSP). Due to the early termination of GSP, the Group applied the rules stated in IAS 36 “Impairment of assets” and IAS 37 “Provisions” to determine the recoverable amounts of the assets and liabilities to be recorded, respectively. As of December 31, 2016, adjustments were made to the audited financial statements of CCDS; as a result, the following adjustments were included in the financial statements of our subsidiary GyM S.A., resulting in a loss of S/15.2 million:

	S/000
Income for debt forgiveness (i)		431,484
Indemnification income		33,600
Work in progress impairment (ii)		(410,199	)
Other provisions		(24,915	)
Inventories impairment (iii)		(33,824	)
Financial expenses		(7,004	)
Property, plant and equipment impairment		(4,143	)
Others (liability) asset, net		(164	)
		(15,165	)

(i) The extinguished trade accounts payable relates to the recognition of the construction project estimated margin recorded as a liability (Note 2.25.i)

(ii) The recoverable of work in progress relates to the minimum secured payment to be obtained from GSP.

(iii) Inventories were specialized in nature assets and cannot be traded in an active market that could not be sold in an active market.

5.2 Critical judgments in applying of the accounting policies

Consolidation of entities in which the Group holds less than 50%

The Group owns some direct and indirect subsidiaries of which the Group has control even though it has less than 50% of the voting rights. These subsidiaries mainly comprise indirect subsidiaries in the real estate business owned through Viva GyM S.A., has the power to affect the relevant activities that impact the subsidiaries’ returns, where even though the Group holds interest between 30% and 50%, has the power to affect the relevant activities that impact the subsidiaries’ returns. Additionally, the Group has de facto by a contractual agreement with the majority investor control over Promotora Larcomar S.A. of which it owns 46.55% of equity interest.

Consolidation of entities in which the Group does not have joins control but have rights and obligations over the assets and liabilities

The Group assesses, on an ongoing basis, the nature of the contracts signed with one or more parties. If no control or joint control is determined to be held by the Group but it has rights to assets and obligations for liabilities under the arrangement, then the Group recognizes its assets, liabilities, revenue and expenses and its share of any jointly controlled assets or liabilities and any revenue or expense arising under the arrangement as a joint operation in accordance with IFRS 11 - Joint arrangements (Note 2.2-d).

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Interest in Other Entities

12 Months Ended

Dec. 31, 2017

Interest in Other Entities

6 INTERESTS IN OTHER ENTITIES

The consolidated financial statements include the accounts of the Group and its subsidiaries. Additionally, the consolidated financial statements of the Group include its interest in joint operations in which the Company or certain subsidiaries have joint control with their partners (Note 2.2-d).

a) Principal subsidiaries

The following table shows the principal direct and indirect subsidiaries classified by operating segment (Note 7):

Name	Country	Economic activity
Engineering and Construction:
GyM S.A.	Peru, and Colombia	Civil construction, electro-mechanic assembly, buildings management and implementing housing development projects and other related services.
Stracon GyM S.A.	Peru and Panama	Mining contracting activities, providing mining services and carrying out drilling, demolition and any other activity related to construction and mining operations.
GyM Chile S.p.A.	Chile	Electromechanical assemblies and services to energy, oil, gas and mining sector.
Vial y Vives - DSD S.A.	Chile	Electromechanical assemblies and services. Develop activities related to the construction of engineering projects, civil construction projects and electromechanical assemblies, as well as architectural design and installations in general. Construction and assemblies and electromechanical services in the sectors of energy, oil, gas and mining.
GMI S.A.	Peru	Advisory and consultancy services in engineering, carrying out studies and projects, managing projects and supervision of works.
Morelco S.A.S	Colombia and Ecuador	Providing construction and assembly services, supplying equipment and material to design, build, assemble, operate and maintain all types of mechanical engineering, instrumentation and civil work.

Name	Country	Economic activity
Infrastructure:
GMP S.A.	Peru	Natural oil and oil by-products extraction services, as well as providing storage and fuel dispatch services.
Oiltanking Andina Services S.A.	Peru	Operation of the gas processing plant of Pisco - Camisea.
Transportadora de Gas Natural Comprimido Andino S.A.C.	Peru	Supply, process and market natural gas and its derivates.
Concar S.A.	Peru	Operating and maintaining roads.
GyM Ferrovías S.A.	Peru	Concession for the operation of the public transportation system (Metro de Lima Metropolitana).
Survial S.A.	Peru	Concession for constructing, operating and maintaining the Section 1 of the “Southern Inter-oceanic” road.
Norvial S.A.	Peru	Concession for restoring, operating and maintaining the “Ancón - Huacho - Pativilca” section of the Panamericana Norte road.
Concesión Canchaque S.A.	Peru	Concession for operating and maintaining the Buenos Aires - Canchaque road.
Concesionaria Vía Expresa Sur S.A.	Peru	Concession for designing, constructing, operating and maintaining the Via Expresa - Paseo de la República in Lima.
Real estate:
VIVA GyM S.A.	Peru	Developing and managing real estate projects directly or together with other partners.
Technical services:
CAM Holding S.p.A.	Chile and Colombia	Electric and technological services for the power industry.
Coasin Instalaciones Ltda.	Chile	Installing and maintaining network and equipment for telecommunications.
Adexus S.A.	Chile, Peru, Colombia and Ecuador	IT solutions services.
Parent company operation:
Generadora Arabesco S.A.	Peru	Implementing projects related to electric power-generating activities.
Larcomar S.A.	Peru	Exploiting land right to use the Larcomar Shopping Center.
Promotora Larcomar S.A.	Peru	Building a hotel complex on a plot of land located in the district of Miraflores.
Promotores Asociados de Inmobiliarias S.A.	Peru	Operating in the real-estate industry and engaged in the development and selling office facilities in Peru.
Negocios del Gas S.A.	Peru	Construction, operation and maintenance of the pipeline system to transport natural gas and liquids of natural gas.

The following are the Group’s subsidiaries and related interests at December 31, 2017:

	Percentage of common shares directly held by Parent (%)			Percentage of common shares held by Subsidiaries (%)			Percentage of common shares held by the Group (%)			Percentage of common shares held by non- controlling interests (%)
Engineering and Construction:
GyM S.A.		98.23	%		—			98.23	%		1.77	%
- GyM S.A. subsidiaries		—			87.06	%		87.06	%		12.94	%
Stracon GyM S.A.		—			87.59	%		87.59	%		12.41	%
GyM Chile SpA		—			99.99	%		99.99	%		0.01	%
Vial y Vives - DSD S.A.		—			94.49	%		94.49	%		5.51	%
Morelco S.A.S.		—			70.00	%		70.00	%		30.00	%
GMI S.A.		89.41	%		—			89.41	%		10.59	%
Infrastructure:
GMP S.A.		95.00	%		—			95.00	%		5.00	%
Oiltanking Andina Services S.A.		—			50.00	%		50.00	%		50.00	%
Transportadora de Gas Natural
Comprimido Andino S.A.C		—			99.93	%		99.93	%		0.07	%
Concar S.A.		99.75	%		—			99.75	%		0.25	%
GyM Ferrovias S.A.		75.00	%		—			75.00	%		25.00	%
Survial S.A.		99.99	%		—			99.99	%		0.01	%
Norvial S.A.		67.00	%		—			67.00	%		33.00	%
Concesión Canchaque S.A.		99.96	%		—			99.96	%		0.04	%
Concesionaria Vía Expresa Sur S.A.		99.98	%		0.02	%		100.00	%		—
Real Estate:
Viva GyM S.A.		63.44	%		36.10	%		99.54	%		0.46	%
- Viva GyM S.A. subsidiaries		—			60.51	%		60.51	%		39.49	%
Services:
Cam Holding S.p.A.		100.00	%		—			100.00	%		—
Coasin Instalaciones Ltda.		—			100.00	%		100.00	%		—
CAM Servicios del Perú S.A.		73.16	%		—			73.16	%		26.84	%
Adexus S.A.		91.03	%		—			91.03	%		8.97	%
Parent company operations:
Generadora Arabesco S.A.		99.00	%		—			99.00	%		1.00	%
Larcomar S.A.		79.66	%		—			79.66	%		20.34	%
Promotora Larcomar S.A.		46.55	%		—			46.55	%		53.45	%
Promotores Asociados de Inmobiliarias S.A.		99.99	%		—			99.99	%		0.01	%
Negocios del Gas S.A.		99.99	%		0.01	%		100.00	%		—
Agenera S.A.		99.00	%		1.00	%		100.00	%		—

The following are the Group’s subsidiaries and related interests at December 31, 2016:

	Percentage of common shares directly held by Parent (%)			Percentage of common shares held by Subsidiaries (%)			Percentage of common shares held by the Group (%)			Percentage of common shares held by non- controlling interests (%)
Engineering and Construction:
GyM S.A.		98.23	%		—			98.23	%		1.77	%
- GyM S.A. subsidiaries		—			87.06	%		87.06	%		12.94	%
Stracon GyM S.A.		—			87.59	%		87.59	%		12.41	%
GyM Chile SpA		—			99.99	%		99.99	%		0.01	%
Vial y Vives – DSD S.A.		—			94.49	%		94.49	%		5.51	%
Morelco S.A.S.		—			70.00	%		70.00	%		30.00	%
GMI S.A.		89.41	%		—			89.41	%		10.59	%
Infrastructure:
GMP S.A.		95.00	%		—			95.00	%		5.00	%
Oiltanking Andina Services S.A.		—			50.00	%		50.00	%		50.00	%
Transportadora de Gas Natural
Comprimido Andino S.A.C		—			99.93	%		99.93	%		0.07	%
GyM Ferrovias S.A.		75.00	%		—			75.00	%		25.00	%
Survial S.A.		99.99	%		—			99.99	%		0.01	%
Norvial S.A.		67.00	%		—			67.00	%		33.00	%
Concesión Canchaque S.A.		99.96	%		—			99.96	%		0.04	%
Concesionaria Vía Expresa Sur S.A.		99.98	%		0.02	%		100.00	%		—
Real Estate:
Viva GyM S.A.		63.44	%		36.10	%		99.54	%		0.46	%
- Viva GyM S.A. subsidiaries		—			60.51	%		60.51	%		39.49	%
Services:
GMD S.A.		89.23	%		—			89.23	%		10.77	%
Cam Holding S.p.A.		100.00	%		—			100.00	%		—
Concar S.A.		99.75	%		—			99.75	%		0.25	%
Gestión de Servicios Digitales S.A.		—			100.00	%		100.00	%		—
Coasin Instalaciones Ltda.		—			100.00	%		100.00	%		—
CAM Servicios del Perú S.A.		73.16	%		—			73.16	%		26.84	%
Adexus S.A.		91.03	%		—			91.03	%		8.97	%
Parent company operations:
Generadora Arabesco S.A.		99.00	%		—			99.00	%		1.00	%
Larcomar S.A.		79.66	%		—			79.66	%		20.34	%
Promotora Larcomar S.A.		46.55	%		—			46.55	%		53.45	%
Promotores Asociados de
Inmobiliarias S.A.		99.99	%		—			99.99	%		0.01	%
Negocios del Gas S.A.		99.99	%		0.01	%		100.00	%		—
Agenera S.A.		99.00	%		1.00	%		100.00	%		—

On November 17, 2015, Cam Holding S.p.A. sold 100% of its shares in Cam Brasil Multiservicos S.A., at a total US$300 thousand; as a result, a loss of S/8.3 million was recorded, which is shown in the statement of income, within “Profit (loss) on sale of investments” (a cash balance of S/0.98 million was presented net of the cash received for the sale of this investment in the statement of cash flow).

In August 2016, the Company acquired additional interest in the share capital of Adexus S.A. to obtained control (Note 33 a)

All investments in subsidiaries have been included in the consolidation. The percentage of voting rights in those subsidiaries is directly held by the Parent Company and do not significantly differ from the percentage of shares held. There are no restrictions to the access or use of the Group’s assets and liabilities.

The following are the Group’s subsidiaries non-controlling interests at December 31:

	2016		2017
NON-CONTROLLING PARTICIPATION
Viva GyM S.A. and subsidiaries		241,140		224,345
Viva GyM S.A.		1,700		1,576
GyM S.A. and subsidiaries		100,840		95,052
GyM S.A.		9,354		8,118
Norvial S.A.		61,349		68,419
CAM Holding S.p.A.		26,589		(6,417	)
GMP S.A.		20,879		22,263
GyM Ferrovias S.A.		30,548		35,419
Promotora Larcomar S.A.		13,539		13,395
Other		3,375		3,578
		509,313		465,748

Summarized financial information of subsidiaries with material non-controlling interests

Set out below is the summarized financial information for each subsidiary that has non-controlling interests that are material to the Group.

Summarized statement of financial position

	Viva GYM S.A. and subsidiaries						GyM S.A. and subsidiaries						Norvial S.A.
	At December 31,						At December 31,						At December 31,
	2016			2017			2016			2017			2016			2017
Current:
Assets		1,117,065			884,591			1,849,077			1,875,231			107,838			88,077
Liabilities		(515,781	)		(352,125	)		(2,050,803	)		(2,142,618	)		(49,721	)		(45,613	)
Current net assets (liabilities)		601,284			532,466			201,726			(267,387	)		58,117			42,464
Non-current:
Assets		113,594			78,457			1,326,599			1,368,460			467,449			492,803
Liabilities		(104,179	)		(44,068	)		(471,424	)		(546,342	)		(339,661	)		(327,936	)
Non-current net assets (liabilities)		9,415			34,389			855,175			822,118			127,788			164,867
Net assets		610,699			566,855			653,449			554,731			185,905			207,331

Summarized income statement    

	Viva GyM S.A. and subsidiaries						GyM S.A. and subsidiaries						Norvial S.A.
	For the year ended						For the year ended						For the year ended
	2016			2017			2016			2017			2016			2017
Revenue		411,518			647,535			4,036,226			3,184,833			216,260			149,467
Profit (loss) before income tax		104,223			153,602			(85,857	)		18,827			63,582			68,104
Income tax		(27,054	)		(35,900	)		(11,228	)		(13,482	)		(16,262	)		(18,678	)
Profit (loss) for the period		77,169			117,702			(97,085	)		5,345			47,320			49,426
Other comprehensive Income		—			—			19,486			(2,641	)		—			—
Total comprehensive Income for the period		77,169			117,702			(77,599	)		2,704			47,320			49,426
Dividends paid to non-controlling interest Note (36-c)		5,050			21,165			8,288			4,056			7,260			9,240

Summarized statement of cash flows

	Viva GyM S.A. and subsidiaries						GyM S.A. and subsidiaries						Norvial S.A.
	For the year ended						For the year ended						For the year ended
	2016			2017			2016			2017			2016			2017
Cash flows from operating activities provided by (used in), net		44,910			164,852			224,428			239,935			(42,051	)		25,041
Cash flows from investing activities provided by (used in), net		(546	)		79,471			(29,853	)		44,020			—			—
Cash flows from financing activities provided by (used in), net		(59,931	)		(203,958	)		(283,296	)		(191,689	)		99,193			(48,010	)
Increase (decrease) in cash and cash equivalents, net		(15,567	)		38,817			(88,721	)		92,266			57,142			(22,969	)
Cash and cash equivalents at the beginning of the year		74,459			58,892			167,620			87,294			38,276			95,418
Cash and cash equivalents at the end of the year		58,892			97,709			78,899			179,560			95,418			72,449

The information above is the amount before inter-company eliminations.

b) Public services concessions

The Group acts as an operator in various public service concessions. When applicable, revenue attributable to the construction or restoration of infrastructure has been accounted for by applying the models set forth in Note 2.5 (financial asset, intangible asset and bifurcated models).

Subsidiary Transportadora de Gas Natural Comprimido Andino S.A.C. (hereinafter TGNCA) held a concession to design, finance, construct, maintain and operate the compressed natural gas supply system to be implemented in certain cities. The Concession was recognized under the financial asset model. In September 2016 the Concession Agreement was terminated on the grounds of counterparty’s failure to meet the required conditions (availability of assets and resources). As a result, TGNCA recognized an impairment loss of receivables amounting to S/6.3 million, which is included in the income statement as of December 31, 2016 within “cost of services provided”. The balance remaining relates to trade accounts receivable for S/17.3 million, to be received from the Ministry of Energy and Mines. This balance was classified as current assets because a favorable result was obtained with the interposed award.

In all the Group concessions’, the infrastructure is returned to grantor at the end of the concession agreement.

The concessions held by the Group are as follows at December 31, 2017:

Name of Concession	Description	Estimated investment	Consideration	Ordinary shares held			Concession termination		Accounting model
Survial S.A.	This company operates and maintains a 750 km road from the San Juan de Marcona port to Urcos, Peru, which is connected to an interoceanic road. The road has five toll stations and three weigh stations.	US$98.9 million	Transaction secured by the Peruvian Government involving from annual payments for the maintenance and operation of the road, which is in charge of the Peruvian Ministry of Transport and Communications (MTC).		99.9	%		2032		Financial asset
Canchaque S.A.C.	This company operates and periodically maintains a 78 km road from the towns of Buenos Aires to Canchaque, in Peru The road has one toll station.	US$29 million	Transaction secured by the Peruvian Government regardless the traffic volume. Revenue is secured by an annual minimum amount of US$0.3 million.		99.96	%		2025		Financial asset
Concesionaria. La Chira S.A.	Designing, financing, constructing, operating and maintaining project called “Planta de Tratamiento de Aguas Residuales y Emisario Submarino La Chira”. The Project will treat approximately 25% of waste waters in Lima.	S/250 million	Transaction secured by the Peruvian Government consisting of monthly and quarterly payments settled by Sedapal´s collection trust.		50.00	%		2036		Financial asset
GyM Ferrovías S.A.	Concession for the operation of Line 1 of the Lima Metro, Peru’s only urban railway system in Lima city, which includes (i) operation and maintenance of the five existing trains, (ii) operation and maintenance and the acquisition of 19 trains on behalf of the Peruvian Government and (iii) design and construction of the repair yard and maintenance of railway.	S/548.8 million	Transaction secured by the Peruvian Government involving a quarterly payment received from MTC based on km travelled per train.		75.00	%		2041		Financial asset

Name of concession	Description	Estimated investment		Consideration	Ordinary shares held			Concession termination		Accounting model
Norvial S.A.	The Company operates and maintains part of the only highway that connects Lima to the northwest of Peru. This 183 km road known as Red Vial 5 runs from the cities of Ancón to Pativilca and has three toll stations.	US$	152 million	From users (self-financed concession; revenue is derived from collection of tolls).		67.00	%		2028		Intangible
Vía Expresa Sur S.A.	The Company obtained the concession for designing, financing, building, operating and maintaining the infrastructure associated with the Vía Expresa Sur Project. This project involves the second stage expansion of the Via Expresa - Paseo de la República,between Av. República de Panamá and and Panamericana highway.	US$	196.8 million	Contract give the right of collection from users; however the Peruvian Government shall pay the difference when the operating revenue obtained is below US$18 million during the first two years and below US$19.7 million from the third year to the fifteenth year of the effective period of the financing, with a ceiling of US$10 million. In June 2017, the contract was suspended temporarily for one year by agreement between Concessionaire and grantor.		99.98	%		2053		Bifurcated
Recaudo Trujillo S.A.C.	Design, implementation, operation, technological maintenance and renewal (estimate) of the single system of electronic collection. Design, implementation, operation and maintenance of the Clearing house Implementation of the Fleet Control Center, as well as training to personnel.	US$	40.2 million	Economic consideration resulting from applying the “price for validation” considering daily validations input on the system to be managed through a trust.		95.00	%		2036		Intangible

c) Principal Joint Operations

At December 31, 2017, the Group is a partner to 64 Joint Operations with third parties (69 at December 31, 2016). The table below lists the Group’s major Joint Operations.

	Percentage of interest
Joint operations	2016			2017
Graña y Montero S.A.A.
- Concesionaria la Chira S.A.		50.00	%		50.00	%
GyM S.A.
- Consorcio Constructor Alto Cayma		50.00	%		50.00	%
- Consorcio Rio Pallca – Huanza		40.00	%		40.00	%
- Consorcio Alto Cayma		49.00	%		49.00	%
- Consorcio Lima Actividades Comerciales		50.00	%		50.00	%
- Consorcio Atocongo		40.00	%		40.00	%
- Consorcio Norte Pachacutec		49.00	%		49.00	%
- Consorcio La Chira		50.00	%		50.00	%
- Consorcio Río Urubamba		50.00	%		50.00	%
- Consorcio Vial Quinua		46.00	%		46.00	%
- Consorcio Rio Mantaro		50.00	%		50.00	%
- Consorcio GyM – CONCIVILES		66.70	%		66.70	%
- Consorcio Toromocho		55.00	%		55.00	%
- Consorcio Construcciones y Montajes CCN		25.00	%		25.00	%
- Consorcio HV GyM		50.00	%		50.00	%
- Consorcio Stracon Motta Engil JV		50.00	%		50.00	%
- Consorcio Huacho Pativilca		67.00	%		67.00	%
- Consorcio Constructor Chavimochic		26.50	%		26.50	%
- Consorcio Constructor Ductos del Sur		29.00	%		29.00	%
- Consorcio Italo Peruano		48.00	%		48.00	%
- Consorcio Menegua		50.00	%		50.00	%
- Consorcio Energía y Vapor		50.00	%		50.00	%
- Consorcio Ermitaño		50.00	%		50.00	%
- Consorcio para la Atención y Mantenimiento de Ductos		50.00	%		50.00	%
- Consorcio Lima Actividades Comerciales Sur		50.00	%		50.00	%
- Consorcio CDEM		—			85.00	%
- Consorcio AMDP Norte		—			50.00	%
- Consorcio Chicama - Ascope		—			50.00	%
- Consorcio TNT Vial y Vives - DSD Chile LTDA		—			50.00	%
- Consorcio La Gloria		49.00	%		49.00	%
- Consorcio GyM Sade Skanska		50.00	%		50.00	%
- Constructora Incolur DSD Limitada		50.00	%		50.00	%
GMP S.A.
- Consorcio Terminales		50.00	%		50.00	%
- Terminales del Perú		50.00	%		50.00	%

	Percentage of interest
Joint operations	2016			2017
GMD S.A.
- Consorcio Cosapi-Data – GMD S.A.		70.00	%		—
- Consorcio The Louis Berger Group Inc. - GMD		66.45	%		—
- Consorcio Procesos Digitales		43.65	%		—
- Consorcio GMD S.A. – Indra S.A.		50.00	%		—
- Consorcio Fábrica de Software		50.00	%		—
- Consorcio Gestión de Procesos Electorales (ONPE)		50.00	%		—
- Consorcio Lima Actividades Sur		50.00	%		—
- Consorcio Latino de Actividades Comerciales de
Clientes Especiales		50.00	%		—
- Consorcio Latino de Actividades Comerciales		75.00	%		—
- Consorcio Gestión de Procesos Junta de Gobernadores		45.00	%		—
- Consorcio Soluciones Digitales		38.00	%		—
- Consorcio de Gestión de la Información		56.00	%		—
- Consorcio de la Disponibilidad PKI		70.00	%		—
CONCAR S.A.
- Consorcio Ancón-Pativilca		67.00	%		67.00	%
- Consorcio Peruano de Conservación		50.00	%		50.00	%
- Consorcio Manperán		67.00	%		67.00	%
- Consorcio Vial Sierra		50.00	%		50.00	%
Viva GyM S.A.
- Consorcio Panorama		35.00	%		35.00	%
CAM HOLDING S.p.A
- Consorcio Mecam		50.00	%		50.00	%
- Consorcio Seringel		50.00	%		50.00	%

All of the joint arrangements listed above operate in Peru, Chile and Colombia.

The table below provides a description of the major activities carried out by these joint operations:

Joint Operations in	Economic activity
Graña y Montero S.A.A.	Construction, operation and maintenance of La Chira waste water treatment plant south of Lima. The project is aimed to solve Lima’s environmental problems caused by sewage discharged directly into the sea.
GyM S.A.	Theses joint operations carried out activities through the four divisions of the engineering and construction segment (Note 7).
GMP S.A.	Consorcio Terminales and Terminales del Peru provide services for receiving, storing, shipping and transporting liquid hydrocarbons, such as gasoline, jet fuel, diesel fuel and residual among others.
CONCAR S.A.	Joint operations Concar provides rehabilitation service, routine and periodic maintenance of the road; and road preservation services.
Viva GyM S.A.	Construction of a five-star hotel with a convention center, a business center and entertainment center.
CAM Holding S.p.A.	Execution of outsourcing services to the electric power sector.
GMD S.A.	Outsourcing service of online BPO processes (Business Process Outsourcing).

The consolidated financial statements do not include any other type of entities in addition to those mentioned above, such as trust funds or special purpose entities.

XML

Segment Reportinorng

12 Months Ended

Dec. 31, 2017

Segment Reportinorng

7 SEGMENT REPORTING

Operating segments are reported consistently with the internal reports that are reviewed by the Group’ chief decision-maker; that is, the Executive Committee, which is led by the Corporate General Manager. This Committee is the chief operating decision maker, responsible for allocating resources and evaluating the performance of each operating segment.

The Group’s operating segments are assessed by the activities of the following business units: (i)engineering and construction, (ii)infrastructure, (iii)real estate and (iv)technical services.

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

The revenues derived from foreign operations (Chile, Colombia, Ecuador, Panama, Dominican Republic, Bolivia and Guyana) comprise 28.0% of the Group’s total revenue reported in 2017 (26.5% in 2016 and 28.0% in 2015).

Sales between segments are carried out at arm’s length, are no material, and are eliminated on consolidation. The revenue from external parties is measured in a manner consistent with that in the income statement. Sale of goods relate to the real state segment. Revenue from services relate to all other segments.

Group sales and receivables are not concentrated in a few customers. There is no external customer that represents 10% or more of the Group’s revenue.

The following segments set forth the principal activities of the Group:

a) Engineering and construction: This segment includes from traditional engineering services such as structural, civil and design engineering, and architectural planning to advanced specialties including process design, simulation, and environmental services at four divisions; i) civil works, such as the construction of hydroelectric power stations and other large infrastructure facilities; (ii) electro mechanic construction, such as concentrator plants, oil and natural gas pipelines, and transmission lines; iii) building construction, such as office buildings, residential buildings, hotels, affordable housing projects, shopping centers and industrial facilities; and iv) services related to mining, such as earthworks, blasting, loading and hauling ore.

b) Infrastructure: The Group has long-term concessions or similar contractual arrangements in Peru for three toll roads, the Lima Metro, a waste water treatment plant in Lima, four producing oil fields, and a gas processing plant. Additionally, the Group provides operation and maintenance services for infrastructure assets.

c) Real Estate: The Group develops and sells homes targeted to low and middle-income population sectors which are experiencing a significant increase in disposable income, as well as, office and commercial space to a lesser extent.

d) Technical Services: The Group provides: (i) information technology (IT) services, including IT outsourcing, systems integration, application and business process outsourcing services; and (ii) electricity networks services (maintenance) in telecommunications.

e) Parent Company Operation corresponds to the services which the Holding company provides, management, logistics and accounting services, among others.

The Executive Committee uses a measurement of adjusted earnings before interest, tax, depreciation and amortization (EBITDA) to assess the performance of operating segments.

Profit before income tax reconciles to EBITDA as follows:

	2015		2016			2017
(Profit) loss before income tax		142,345		(582,865	)		328,713
Financial cost, net		130,447		201,019			170,038
Depreciation		217,071		205,522			199,793
Amortization		89,355		82,743			86,557
EBITDA		579,218		(93,581	)		785,101

EBITDA for each segment is as follows:

	2015			2016			2017
Engineering and construction		220,137			106,106			194,334
Infrastructure		272,230			237,752			300,935
Real state		52,794			121,421			177,285
Technical services		35,083			39,751			36,796
Parent company operations		(35,591	)		(1,026,394	)		216,666
Eliminations intercompany		34,565			427,783			(140,915	)
Total EBITDA		579,218			(93,581	)		785,101

The “Backlog” refers to the expected future revenue under signed contracts and legally binding letters of intent. The breakdown by operating segments as of December 31, 2017, and the dates in which they are estimated to, is shown in the following table:

				Annual Backlog
	2017			2018			2019			2020+
Engineering and Construction		4,727,022			2,261,700			1,320,381			1,144,941
Infrastructure		3,090,417			1,023,749			997,309			1,069,358
Real state		84,128			61,296			22,832			—
Technical Services		1,493,181			687,183			390,647			415,351
Eliminations Intercompany		(321,897	)		(112,237	)		(104,459	)		(105,200	)
		9,072,850			3,921,691			2,626,709			2,524,450

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

Operating segments financial position

Segment reporting

	Engineering		Infrastructure												Parent
	and construction		Energy		Toll roads		Transportation		Water treatment		Real estate		Technical services		Company Operations		Eliminations			Consolidated
As of December 31, 2016
Assets.-
Cash and cash equivalent		93,543		35,396		125,853		139,414		3,229		58,892		37,675		112,398		550			606,950
Financial asset at fair value through profit or loss		352		—		—		—		—		—		—		—		—			352
Trade accounts receivables		334,426		84,996		77,615		56,665		256		83,704		395,812		—		(2,204	)		1,031,270
Work in progress		648,851		—		—		32,078		—		—		—		—		—			680,929
Accounts receivable from related parties		327,385		3,255		55,907		392		12,379		7,284		12,468		50,582		(287,988	)		181,664
Other accounts receivable		398,666		58,235		28,779		25,895		4,841		20,198		70,769		42,133		—			649,516
Inventories		76,058		12,561		9,839		16,862		—		946,657		55,431		387		(13,502	)		1,104,293
Prepaid expenses		9,204		2,614		2,005		17,265		167		329		19,412		305		—			51,301
Non-current assets classified as held for sale		22,385		—		—		—		—		—		—		—		—			22,385
Total current assets		1,910,870		197,057		299,998		288,571		20,872		1,117,064		591,567		205,805		(303,144	)		4,328,660
Long-term trade accounts receivable		149		—		15,092		629,310		—		—		22,968		—		—			667,519
Long-term work in progress		171,752		—		24,165		—		—		—		—		—		1,669			197,586
Long-term accounts receivable from related parties		—		—		408		—		—		—		492		700,615		(170,131	)		531,384
Prepaid expenses		—		—		20,554		2,029		943		—		—		—		—			23,526
Other long-term accounts receivable		42,511		29,533		22,926		225,565		7,347		17,887		1,075		11,108		—			357,952
Investments in associates and joint ventures		116,512		8,516		—		—		—		31,768		9,589		2,358,918		(2,135,544	)		389,759
Investment property		—		—		—		—		—		49,357		—		—		—			49,357
Property, plant and equipment		592,191		176,486		23,508		193		21		13,008		195,462		130,422		(17,692	)		1,113,599
Intangible assets		246,715		139,353		457,163		269		—		950		78,687		22,793		14,356			960,286
Deferred income tax asset		158,168		4,983		13,244		—		—		623		53,003		189,230		7,757			427,008
Total non-current assets		1,327,998		358,871		577,060		857,366		8,311		113,593		361,276		3,413,086		(2,299,585	)		4,717,976
Total assets		3,238,868		555,928		877,058		1,145,937		29,183		1,230,657		952,843		3,618,891		(2,602,729	)		9,046,636
Liabilities.-
Borrowings		582,260		82,063		3,014		—		—		206,456		155,137		932,113		—			1,961,043
Bonds		—		—		25,540		20,551		—		—		—		—		—			46,091
Trade accounts payable		876,849		59,830		31,857		23,882		599		30,617		247,219		6,703		(939	)		1,276,617
Accounts payable to related parties		119,989		3,902		38,219		33,009		237		66,190		33,749		67,685		(282,763	)		80,217
Current income tax		30,576		3,631		3,401		—		1,064		17,944		5,544		—		—			62,160
Other accounts payable		485,247		11,711		43,614		14,622		27		194,441		157,201		189,444		—			1,096,307
Provisions		6,615		6,441		—		—		—		131		1,344		—		—			14,531
Total current liabilities		2,101,536		167,578		145,645		92,064		1,927		515,779		600,194		1,195,945		(283,702	)		4,536,966
Borrowings		246,315		80,488		2,510		—		—		16,541		73,541		—		—			419,395
Long-term bonds		—		—		338,143		583,480		—		—		—		—		—			921,623
Other long-term accounts payable		147,839		—		44,451		246,522		—		32,000		39,558		2,433		—			512,803
Long-term accounts payable to related parties		41,672		—		408		87,200		23,445		40,074		42,259		394		(170,132	)		65,320
Provisions		7,670		17,115		—		—		—		—		1,757		—		—			26,542
Derivative financial instruments		—		1,081		—		—		—		—		—		—		—			1,081
Deferred income tax liability		28,278		3,546		1,525		14,482		283		15,564		9,491		—		—			73,169
Total non-current liabilities		471,774		102,230		387,037		931,684		23,728		104,179		166,606		2,827		(170,132	)		2,019,933
Total liabilities		2,573,310		269,808		532,682		1,023,748		25,655		619,958		766,800		1,198,772		(453,834	)		6,556,899
Equity attributable to controlling interest in the Company		551,653		265,241		282,851		91,643		3,528		234,449		148,028		2,406,577		(2,003,546	)		1,980,424
Non-controlling interest		113,905		20,879		61,525		30,546		—		376,250		38,015		13,542		(145,349	)		509,313
Total liabilities and equity		3,238,868		555,928		877,058		1,145,937		29,183		1,230,657		952,843		3,618,891		(2,602,729	)		9,046,636

Operating segments financial position

Segment reporting

	Engineering		Infrastructure													Parent
	and construction		Energy		Toll roads		Transportation		Water treatment			Real estate		Technical services		Company Operations		Eliminations			Consolidated
As of December 31, 2017
Assets.-
Cash and cash equivalent		184,401		43,878		121,901		161,073		4,204			85,187		21,904		3,632		—			626,180
Financial asset at fair value through profit or loss		181		—		—		—		—			—		—		—		—			181
Trade accounts receivables		368,303		64,364		128,124		108,706		604			45,897		274,103		419		2,204			992,724
Work in progress		578,723		—		—		—		—			—		—		6,030		—			584,753
Accounts receivable from related parties		230,607		2,746		62,525		3,072		8,852			69,382		9,947		66,059		(352,438	)		100,752
Other accounts receivable		518,123		55,959		66,765		31,381		1,922			40,026		38,527		12,742		—			765,445
Inventories		46,499		15,093		8,685		19,457		—			643,882		45,512		190		(8,607	)		770,711
Prepaid expenses		4,470		1,168		2,354		10,312		164			216		14,037		757		—			33,478
Non-current assets classified as held for sale		17,722		—		—		—		—			—		—		—		—			17,722
Total current assets		1,949,029		183,208		390,354		334,001		15,746			884,590		404,030		89,829		(358,841	)		3,891,946
Long-term trade accounts receivable		—		—		14,747		793,991		—			—		39,852		—		—			848,590
Long-term work in progress		58,997		—		28,413		—		—			—		—		—		—			87,410
Long-term accounts receivable from related parties		258,479		—		27,660		—		—			—		474		636,941		(149,624	)		773,930
Prepaid expenses		—		—		24,585		13,115		892			—		—		—		(510	)		38,082
Other long-term accounts receivable		75,030		53,917		11,159		255,179		7,348			9,811		1,712		56,696		—			470,852
Investments in associates and joint ventures		111,513		7,344		—		—		—			1		10,113		2,206,230		(2,066,530	)		268,671
Investment property		—		—		—		—		—			45,687		—		—		—			45,687
Property, plant and equipment		509,700		171,226		18,572		580		60			11,621		100,936		70,627		(17,587	)		865,735
Intangible assets		203,390		160,288		492,424		323		—			1,022		47,332		24,031		11,260			940,070
Deferred income tax asset		165,227		5,507		11,057		—		—			10,316		46,470		192,088		6,032			436,697
Total non-current assets		1,382,336		398,282		628,617		1,063,188		8,300			78,458		246,889		3,186,613		(2,216,959	)		4,775,724
Total assets		3,331,365		581,490		1,018,971		1,397,189		24,046			963,048		650,919		3,276,442		(2,575,800	)		8,667,670
Liabilities.-
Borrowings		591,987		46,924		2,589		—		—			162,031		139,821		113,412		—			1,056,764
Bonds		—		—		24,361		12,294		—			—		—		—		—			36,655
Trade accounts payable		955,015		62,659		85,329		81,161		132			43,724		189,553		36,412		(939	)		1,453,046
Accounts payable to related parties		114,198		3,664		60,857		83,841		14			37,396		14,428		88,546		(347,770	)		55,174
Current income tax		29,379		1,282		1,122		—		161			45,299		8,300		—		—			85,543
Other accounts payable		492,362		12,487		68,994		27,058		49			63,654		109,904		73,992		—			848,500
Provisions		6,682		5,204		—		—		—			20		1,597		—		—			13,503
Total current liabilities		2,189,623		132,220		243,252		204,354		356			352,124		463,603		312,362		(348,709	)		3,549,185
Borrowings		127,773		101,549		1,945		—		—			12,010		26,458		363,564		—			633,299
Long-term bonds		—		—		319,549		591,363		—			—		—		—		—			910,912
Other long-term accounts payable		379,043		—		52,349		349,987		158			32,058		36,409		2,469		—			852,473
Long-term accounts payable to related parties		4,306		—		836		89,023		23,445			—		30,739		32,102		(154,497	)		25,954
Provisions		8,587		16,707		—		—		—			—		3,365		5,255		—			33,914
Derivative financial instruments		—		383		—		—		—			—		—		—		—			383
Deferred income tax liability		26,633		8,957		8,606		20,789		210			—		7,277		—		—			72,472
Total non-current liabilities		546,342		127,596		383,285		1,051,162		23,813			44,068		104,248		403,390		(154,497	)		2,529,407
Total liabilities		2,735,965		259,816		626,537		1,255,516		24,169			396,192		567,851		715,752		(503,206	)		6,078,592
Equity attributable to controlling interest in the Company		487,923		299,411		323,987		106,256		(123	)		217,290		82,100		2,547,328		(1,940,842	)		2,123,330
Non-controlling interest		107,477		22,263		68,447		35,417		—			349,566		968		13,362		(131,752	)		465,748
Total liabilities and equity		3,331,365		581,490		1,018,971		1,397,189		24,046			963,048		650,919		3,276,442		(2,575,800	)		8,667,670

Operating segment performance

Segment Reporting

	Engineering			Infrastructure																		Parent
	and construction			Energy			Toll roads			Transportation			Water treatment			Real estate			Technical services			Company operations			Eliminations			Consolidated
Year 2015 -
Revenue		5,829,441			389,377			729,232			206,459			27,994			215,764			563,874			70,531			(449,760	)		7,582,912
Gross profit (loss)		312,780			63,530			139,651			40,468			2,225			51,755			76,828			(7,004	)		(67,238	)		612,995
Administrative expenses		(289,149	)		(18,214	)		(37,934	)		(10,529	)		(310	)		(20,521	)		(60,871	)		(29,882	)		73,187			(394,223	)
Other income and expenses		30,616			1,365			565			—			—			1,759			12,135			11,114			(2,968	)		54,586
Gain from the sale of investments		—			—			—			—			—			—			(8,289	)		—			—			(8,289	)
Operating profit (loss)		54,247			46,681			102,282			29,939			1,915			32,993			19,803			(25,772	)		2,981			265,069
Financial expenses		(127,383	)		(19,953	)		(9,974	)		(5,303	)		(45	)		(11,642	)		(18,265	)		(2,818	)		27,300			(168,083	)
Financial income		8,875			158			9,812			2,316			121			746			584			56,101			(41,077	)		37,636
Share of the profit or loss in associates and joint ventures under the equity method of accounting		(2,234	)		944			—			—			—			14,888			589			(14,709	)		8,246			7,724
(Loss) profit before income tax		(66,495	)		27,830			102,120			26,952			1,991			36,985			2,711			12,802			(2,550	)		142,346
Income tax		(55,350	)		(7,650	)		(30,157	)		(8,129	)		(520	)		(7,649	)		20,593			(9,208	)		2,171			(95,899	)
(Loss) profit from continuing operations		(121,845	)		20,180			71,963			18,823			1,471			29,336			23,304			3,594			(379	)		46,447
Profit from discontinued operations		—			—			—			—			—			—			5,162			—			3,980			9,142
(Loss) Profit for the year		(121,845	)		20,180			71,963			18,823			1,471			29,336			28,466			3,594			3,601			55,589
(loss) Profit attributable to:
Owners of the Company		(131,181	)		17,072			60,331			14,118			1,471			12,377			20,001			4,337			8,571			7,097
Non-controlling interest		9,336			3,108			11,632			4,705			—			16,959			8,465			(743	)		(4,970	)		48,492
		(121,845	)		20,180			71,963			18,823			1,471			29,336			28,466			3,594			3,601			55,589

Operating segment performance

Segment Reporting

	Engineering			Infrastructure																		Parent
	and construction			Energy			Toll roads			Transportation			Water treatment			Real estate			Technical services			Company operations			Eliminations			Consolidated
Year 2016 -
Revenue		4,159,538			382,211			527,104			247,040			18,459			411,518			841,121			62,070			(458,744	)		6,190,317
Gross profit (loss)		224,621			42,129			121,114			42,473			5,698			136,540			77,304			(171	)		(92,413	)		557,295
Administrative expenses		(258,568	)		(17,260	)		(35,085	)		(12,952	)		(786	)		(28,430	)		(69,870	)		(35,740	)		76,298			(382,393	)
Other income and expenses		(9,250	)		542			263			10			—			838			3,989			(5,843	)		(3,923	)		(13,374	)
Gain from the sale of investments		—			—			—			—			—			—			—			46,336			—			46,336
Operating (loss) profit		(43,197	)		25,411			86,292			29,531			4,912			108,948			11,423			4,582			(20,038	)		207,864
Financial expenses		(65,138	)		(10,801	)		(7,390	)		(2,810	)		(38	)		(14,388	)		(20,170	)		(115,225	)		14,296			(221,664	)
Financial income		11,216			1,040			2,225			8,037			86			2,816			2,991			18,688			(26,454	)		20,645
Share of the profit or loss in associates and joint ventures under the equity method of accounting		16,501			1,615			—			—			—			6,850			360			(1,036,888	)		421,852			(589,710	)
(Loss) profit before income tax		(80,618	)		17,265			81,127			34,758			4,960			104,226			(5,396	)		(1,128,843	)		389,656			(582,865	)
Income tax		(12,828	)		(5,308	)		(22,213	)		(10,904	)		(1,433	)		(27,054	)		(1,646	)		193,425			7,233			119,272
(Loss) profit from continuing operations		(93,446	)		11,957			58,914			23,854			3,527			77,172			(7,042	)		(935,418	)		396,889			(463,593	)
Profit from discontinued operations		—			—			—			—			—			—			7,851			—			4,144			11,995
(Loss) profit for the year		(93,446	)		11,957			58,914			23,854			3,527			77,172			809			(935,418	)		401,033			(451,598	)
(Loss) profit attributable to:
Owners of the Company		(87,710	)		9,370			43,656			17,891			3,527			22,106			1,546			(934,508	)		414,423			(509,699	)
Non-controlling interest		(5,736	)		2,587			15,258			5,963			—			55,066			(737	)		(910	)		(13,390	)		58,101
		(93,446	)		11,957			58,914			23,854			3,527			77,172			809			(935,418	)		401,033			(451,598	)

Operating segment performance

Segment Reporting

	Engineering			Infrastructure																		Parent
	and construction			Energy			Toll roads			Transportation			Water treatment			Real estate			Technical services			Company operations			Eliminations			Consolidated
Year 2017 -
Revenue		3,353,199			436,876			642,127			365,772			3,152			647,535			1,060,996			70,049			(499,564	)		6,080,142
Gross profit (loss)		290,296			71,825			139,196			48,696			445			147,384			57,816			(37,771	)		(45,100	)		672,787
Administrative expenses		(231,044	)		(15,854	)		(32,454	)		(15,279	)		(317	)		(21,189	)		(74,174	)		(100,687	)		61,817			(429,181	)
Other income and expenses		(42,747	)		5,139			1,062			5			—			(3,700	)		8,625			10,512			559			(20,545	)
Gain from the sale of investments		25,768			—			—			—			—			49,002			—			195,378			4,215			274,363
Operating profit (loss)		42,273			61,110			107,804			33,422			128			171,497			(7,733	)		67,432			21,491			497,424
Financial expenses		(52,852	)		(13,423	)		(6,893	)		(8,000	)		(50	)		(21,917	)		(29,597	)		(80,339	)		27,626			(185,445	)
Financial income		9,434			1,964			3,256			3,606			26			3,569			3,382			32,925			(42,755	)		15,407
Share of the profit or loss in associates and joint ventures under the equity method of accounting		30,633			1,584			—			—			—			455			1,203			142,596			(175,144	)		1,327
Profit (loss) before income tax		29,488			51,235			104,167			29,028			104			153,604			(32,745	)		162,614			(168,782	)		328,713
Income tax		(17,091	)		(13,151	)		(32,290	)		(9,545	)		(227	)		(35,900	)		4,763			(19,495	)		(101	)		(123,037	)
Profit (loss) from continuing operations		12,397			38,084			71,877			19,483			(123	)		117,704			(27,982	)		143,119			(168,883	)		205,676
Profit from discontinued operations		—			—			—			—			—			—			2,317			—			1,245			3,562
Profit (loss) for the year		12,397			38,084			71,877			19,483			(123	)		117,704			(25,665	)		143,119			(167,638	)		209,238
Profit (loss) attributable to:
Owners of the Company		12,077			33,715			55,620			14,613			(123	)		48,648			(18,094	)		143,279			(140,997	)		148,738
Non-controlling interest		320			4,369			16,257			4,870			—			69,056			(7,571	)		(160	)		(26,641	)		60,500
		12,397			38,084			71,877			19,483			(123	)		117,704			(25,665	)		143,119			(167,638	)		209,238

Segments by geographical area

	2015		2016		2017
Revenue:
- Peru		5,457,577		4,547,449		4,375,760
- Chile		944,198		707,364		1,054,885
- Colombia		778,333		570,203		285,897
- Panama		206,137		346,065		361,450
- Guyana		111,924		717		—
- Brasil		39,253		—		—
- Ecuador		—		3,682		—
- Bolivia		45,490		14,837		2,149
		7,582,912		6,190,317		6,080,142
Non-current assets:
- Peru		3,230,288		3,995,453		4,164,342
- Chile		320,094		446,998		407,152
- Colombia		124,820		260,732		203,203
- Bolivia		15,043		13,043		149
- Ecuador		—		888		—
- Guyana		8,800		862		878
- Panama		584		—		—
		3,699,629		4,717,976		4,775,724

Until March 2017, the subsidiary Concar belonged to the ‘technical services’ segment, on April 2017, transferred its subsidiary to the ‘infrastructure’ segment.

XML

Financial Instruments

12 Months Ended

Dec. 31, 2017

Financial Instruments

8 FINANCIAL INSTRUMENTS

8.1 Financial instruments by category

At December 31 the classification of financial assets and liabilities by category is as follows:

	At December, 31
	2016		2017
Assets according to the statement of financial position
Loans and accounts receivable:
- Cash and cash equivalents		600,923		626,180
- Trade accounts receivable and other accounts receivable not including advances to suppliers, net		1,329,262		1,447,629
- Work in progress		878,515		672,163
- Financial assets related to concession agreements		685,975		952,780
- Accounts receivable from related parties		713,048		874,682
		4,207,723		4,573,434
Financial asset at fair value through profit or loss
- Cash and cash equivalents (Mutual funds)		6,027		—
- Other financial asset		352		181
		6,379		181

Financial assets related to concession agreements are recorded in the consolidated statement of financial position within the line items of short-term trade accounts receivable and long-term trade accounts receivable.

	At December, 31
	2016		2017
Financial liabilities according to the statement of financial position
Other financial liabilities at amortized cost
- Other financial liabilities		2,140,297		1,561,754
- Finance leases		240,141		128,309
- Bonds		967,714		947,567
- Trade and other accounts payable (excluding non-financial liabilities)		1,769,444		2,054,217
- Accounts payable to related parties		145,537		81,128
		5,263,133		4,772,975
Hedging derivatives:
- Derivative financial instruments
		1,081		383

8.2 Credit quality of financial assets

The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external risk ratings (if available) or to historical information about counterparty default rates.

At December 31 the credit quality of financial assets is shown as follows:

	At December 31,
	2016		2017
Cash and cash equivalents (*)
Banco de Crédito del Perú (A+)		147,759		224,834
Banco Continental (A+)		136,805		100,882
Banco Scotiabank (A+)		121,480		71,608
Citibank (A)		105,812		110,846
Banco de la Nación (A)		30,007		17,776
Banco Santander - Perú (A)		17,480		—
Banco Interbank (A)		6,344		14,937
Banco de Chile (AAA)		4,822		4,337
Banco Interamericano de Finanzas (A)		4,035		5,551
Banco Bogotá (A)		3,756		25,609
Larrain Vial de Chile (A)		3,514		—
Banco GNB (A)		2,080		1,334
Banco Santander - Chile (AAA)		1,941		22,041
Scotiabank Chile (AAA)		1,117		3
Banco de Crédito e Inversiones - Chile (AA+)		937		1,105
Banco Scotiabank de Guyana (A)		125		116
Others		5,061		5,935
		593,075		606,914

The ratings in the above table “A and AAA” represent high quality credit ratings. For banks located in Peru, the ratings were derived from risk rating agencies authorized by the Peruvian banking and insurance regulator “Superintendencia de Banca, Seguros y AFP” (SBS). For banks located in Chile, the ratings were derived from risk rating agencies authorized by the Chilean stock and insurance regulator “Superintendencia de Valores y Seguros” (SVS).

(*) The difference between the balances shown above with the balances shown in the statement of financial position corresponds to cash on hand and in-transit remittances (Note 9).

The credit quality of customers is assessed in three categories (internal classification):

A: New customers/related parties (less than 6 months),

B: existing customers/related parties (with more than 6 months of trade relationship) with no previous default history; and

C: existing customers/related parties (with more than 6 months of trade relationship) with previous default history.

	2016		2017
Trade accounts receivable (Note 11 and Note 12)
Counterparties with no external risk rating
A		117,797		6,042
B		2,052,356		2,313,187
C		407,151		194,248
		2,577,304		2,513,477
Receivable from related parties (Note 13)
B		713,048		874,682

The total balance of trade accounts receivable and receivable from related parties is in compliance with contract terms and conditions; none of them have been re-negotiated.

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CASH AND CASH EQUIVALENT

12 Months Ended

Dec. 31, 2017

CASH AND CASH EQUIVALENT

9 CASH AND CASH EQUIVALENT

At December 31 this account comprises:

	2016		2017
Cash on hand		5,944		16,468
In-transit remittances		7,931		2,798
Bank accounts		475,025		493,666
Time deposits		112,023		113,248
Mutual funds		6,027		—
		606,950		626,180

At December 31, 2017, short-term deposits were mainly derived from subsidiaries GyM Ferrovías S.A., GyM S.A., Viva GyM S.A., Concar S.A. and Concesión Canchaque S.A.C. for S/36.7million, S/30.5million, S/17.8 million, S/13.6 millones and S/11.0 million respectively and interest rates ranged from 0.25% to 4.55% (GyM S.A., GyM Ferrovías S.A., Viva GyM S.A., and GMP S.A. for S/43.7 million, S/24.7million, S/19.6 million and S/16.4 million, respectively, at interest rates ranging from 0.10% and 4.95%, at December 31, 2016).

(i) Reconciliation to cash flow statement

The above figures reconcile to the amount of cash shown in the statement of cash flows at the end of the financial year as follows:

	2016			2017
Cash and Cash Equivalent		606,950			626,180
Bank overdrafts (Note 19)		(8,396	)		(120	)
Balances of the statement of cash flows		598,554			626,060

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Other Financial Assets

12 Months Ended

Dec. 31, 2017

Other Financial Assets

10 OTHER FINANCIAL ASSETS

On April 2016, the Company sold their 1.64% of interest held in Transportadora de Gas del Peru S.A. (TGP) for S/107.3 million, resulting in a net profit of S/46.3 million, as shown in the income statement, within “Profit (loss) on sale of investments”. The balance of its investment at the date of sale was S/117.1 million.

The cumulative amount of fair values at the date of sale amounting to S/41.5 million (S/56 million of gain on fair value and S/14.6 million of income tax), as recognized in the statement of other comprehensive income was transferred to profits for the period.

At 2015, dividends were received from the investments for S/7.2 million.

At December 31, 2015 the fair value of the Group’s interest in TGP equals S/120.1 million based on the discounted cash flow method. The information used in the calculation was as follows:

• Discounted cash flows from operating activities of TGP net of cash flows from investment activities (CAPEX).

• Cash flows were estimated for a 30-year term.

• The discount rate used was 7.5% corresponding to estimated TGP’s WACC.

• The interest of the Company in TGP was 1.64%.

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Trade Accounts Receivable, Net

12 Months Ended

Dec. 31, 2017

Trade Accounts Receivable, Net

11 TRADE ACCOUNTS RECEIVABLE, NET

At December 31 this account comprises:

	2016					2017
	Current			Non-current		Current			Non-current
Invoices receivable		903,878			652,939		459,721			819,699
Collection rights		150,065			14,580		546,351			28,891
		1,053,943			667,519		1,006,072			848,590
Impairment of receivables		(22,673	)		—		(13,348	)		—
		1,031,270			667,519		992,724			848,590

Invoices receivable are related to estimated percentages of completion approved by customers.

The fair value of current receivables is similar to their carrying amount since their average collection turnover is less than 60 days. These current receivables do not bear interest and have no specific guarantees.

The non-current portion of the trade accounts receivable is related to the financial asset model (Note 2.5) of subsidiary GyM Ferrovías S.A.

At December 31, 2017 the fair value of non-current accounts receivable amounted to S/835 million (S/606 million at December 31, 2016), which was calculated under the discounted cash flows method, using rates of 6.33% (7.14% at December 31, 2016).

At December 31, 2017, collection rights primarily relate to GyM Ferrovías S.A., CAM Holding S.p.A., Concar S.A., Survial S.A, CAM Servicios del Perú S.A. and GMI S.A.,amounting to S/355 million, S/85 million, S/53 million, S/31 million, S/21 million and S/20 million, respectively. (GyM Ferrovías S.A., GMD S.A., GMI S.A., Concar S.A., CAM Servicios del Perú S.A. y Survial for S/68 million, S/49 million, S/19 million, S/13 million, S/12 million and S/11 million, respectively, in 2016).

Aging of trade accounts receivable is as follows:

	At December 31,
	2016		2017
Current		1,396,040		1,575,709
Past due up to 30 days		103,617		118,158
Past due from 31 days up to 180 days		113,825		141,121
Past due from 181 days up to 360 days		29,506		1,962
Past due over 360 days		78,474		17,712
		1,721,462		1,854,662

At December 31, 2017, for trade accounts receivables with maturity greater than 31 days for S/160.8 million (S/221.8 million in 2016), the Group recognized impairment of S/0.7 million (S/3.1 million in 2016) in the consolidated income statement (Note 27).

The maximum exposure to credit risk at the reporting date is the carrying amount of the accounts receivable and of unbilled work in progress (Note 12).

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Work in Progress, Net

12 Months Ended

Dec. 31, 2017

Work in Progress, Net

12 WORK IN PROGRESS, NET

At December 31 this account comprises:

	2016					2017
	Current			Non-current		Current		Non-current
Unbilled rights receivable		971,882			171,752		535,119		58,997
Rights for concessions in progress		32,078			25,834		—		28,413
Cost of work in progress		87,168			—		49,634		—
		1,091,128			197,586		584,753		87,410
Impairment of work in progress (Note 5.1-f)		(410,199	)		—		—		—
		680,929			197,586		584,753		87,410

Unbilled rights receivable are the rights that were not billed by the Engineering and Construction segment. Until that revenue is billed, they are stated as unbilled rights receivable. At December 31, 2017, the book value of non-current unbilled rights receivable is similar to its fair value since it was recorded using the discounted cash flow method, using a 1.71% rate.

Concession rights in progress correspond to future collection rights for public service concessions that are still in the pre-operational stage.

Costs of work in progress include all those expenses incurred by the Group comprising future activities to be carried out under construction contracts currently effective. The Group estimates that all incurred cost will be billed and collected.

At December 31, 2017 and 2016 work in progress that remained to be billed are shown net of any advances received from customers for S/15.3 million and S/10.6 million, respectively under the terms and conditions set forth in each specific agreement. These advances are mostly related to subsidiary GyM S.A.

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Transactions with Related Parties and Joint Operators

12 Months Ended

Dec. 31, 2017

Transactions with Related Parties and Joint Operators

13 TRANSACTIONS WITH RELATED PARTIES AND JOINT OPERATORS

a) Transactions with related parties

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

	2015		2016		2017
Revenue from sales of goods and services:
- Associates		1,400		—		3,367
- Joint operations		52,384		36,901		18,138
		53,784		36,901		21,505
Purchase of goods and services:
- Associates		18		739		2,776
- Joint operations		489		3,228		14,191
		507		3,967		16,967

Inter-company transactions are based on the price lists in force and terms and conditions that would be agreed with third parties.

b) Key management compensation

Key management includes directors (executives and non-executives), members of the Executive Committee and Internal Audit Management. The compensation paid or payable to key management in 2017 amounted to S/90.5 million (S/106.9 million and S/111.7 millions in 2016 and 2015, respectively) and only relates to short-term benefits.

d) Balances at the end of the year were:

	At December 31,				At December 31,
	2016				2017
	Receivable		Payable		Receivable		Payable
Current portion:
Joint operations:
Consorcio Constructor Ductos del Sur		62,834		—		—		—
Consorcio GyM Conciviles		61,006		—		43,435		—
Consorcio Rio Urubamba		9,072		—		8,964		—
Consorcio Peruano de Conservación		8,784		—		7,417		—
Consorcio Vial Quinua		4,198		738		—		2,162
Consorcio Italo Peruano		4,174		17,325		14,536		18,849
Consorcio La Gloria		3,521		3,080		1,688		1,358
Terminales del Perú		3,215		259		3,290		—
Consorcio Rio Mantaro		3,191		6,886		1,134		763
Consorcio Vial Sierra		940		5,400		2,355		1,854
Consorcio Constructor Chavimochic		915		2,471		1,959		5,817
Consorcio Energía y Vapor		491		3,203		—		72
Consorcio Ermitaño		83		6,372		1,067		6
Consorcio Menegua		30		3,803		39		—
Consorcio para la Atención y Mantenimiento de Ductos		—		21,790		—		12,074
Consorcio Huacho Pativilca		—		3,434		—		2,377
Other minors		10,134		2,472		12,182		6,973
		172,588		77,233		98,066		52,305

	At December 31,				At December 31,
	2016				2017
	Receivable		Payable		Receivable		Payable
Other related parties:
Gaseoducto Sur Peruano S.A		—		—		2,407		—
Perú Piping Spools S.A.C.		9,076		—		279		185
Ferrovías Argentina		—		—		—		2,684
Arturo Serna		—		2,984		—		—
		9,076		2,984		2,686		2,869
Portion current		181,664		80,217		100,752		55,174
Non-current portion:
Gasoducto Sur Peruano S.A		531,384		—		773,930		—
Consorcio Constructor Ductos del Sur		—		37,238		—		—
Ferrovías Participaciones		—		20,813		—		21,648
Ferrovías Argentina		—		2,835		—		—
Arturo Serna		—		4,434		—		4,306
Portion current		531,384		65,320		773,930		25,954

Receivables and payables are mainly of current maturity and do not have specific guarantees, except for the receivable account from GSP. Accounts receivable from related parties have maturity periods of 60 days and arise from sales of goods and services. These balances are non-interest-bearing, and at December 31, 2017 an impairment was recognized for S/18 million, in the receivables of GyM from Consorcio GyM Conciviles.

The non-current balance corresponds to the obligations arising from the early termination of the GSP project (Note 16.a-i). As of December 31, 2017, the book value of the non-current account receivable recorded by the Company, for S/515 million, is similar to its fair value as it was recorded using the discounted cash flow method, at a 2.92% that originated a discount value of US$ 22.8 million (equivalent to S/76.9 million) Note 28. Additionally, as a consequence of the early termination of the GSP, and the related facts, the subsidiary GyM SA reclassified as of December 31, 2017, the balances of the Consorcio Constructor Ductos del Sur to which adjustments for impairment had previously been applied (Note 5.1 f) and which, up to 2016, was included in the consolidation under the proportional share method. The value of accounts receivable from CCDS correspond mainly to collection rights to GSP for S/244 million.

Accounts payable to related parties have maturity periods of 60 days and arise from engineering, construction, maintenance and other services received. These balances are not interest-bearing due to their short-term maturities.

Transactions with non-controlling interest are disclosed in Note 36.

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Other Accounts Receivable

12 Months Ended

Dec. 31, 2017

Other Accounts Receivable

14 OTHER ACCOUNTS RECEIVABLE

At December 31 this account comprises:

	2016				2017
	Current		Non-current		Current		Non-current
Advances to suppliers (a)		79,455		225,567		149,464		255,181
Income tax on-account payments (b)		202,045		—		125,176		2,607
Fiscal credit (c)		80,091		52,225		81,732		30,680
Guarantee deposits (d)		95,916		—		113,429		—
Claims to third parties		26,529		32,669		109,491		41,072
Restricted Fund		14,067		—		61,993		44,770
Petróleos del Perú S.A.- Petroperú S.A.		16,879		29,534		3,619		53,918
Temporary tax on net assets		21,204		—		21,934		—
Taxes receivable		13,954		—		31,875		33,428
Claims to SUNAT (pre-paid taxes)		16,479		—		12,274		—
Rental and sale of equipment		13,640		—		27,970		—
Receivables from personnel		10,726		—		6,737		—
Other		58,531		17,957		19,751		9,196
		649,516		357,952		765,445		470,852

Other receivables are neither past due nor impaired. Other non-current accounts receivable have maturities between 2 and 5 years.

The fair value of the short-term receivables approximates their carrying amount due to their short-term maturities. The non-current portion mainly comprises non-financial assets such as advances to suppliers and fiscal credit; the remaining balance is not significant for any period shown in the financial statements.

The maximum exposure to credit risk at the reporting date is the carrying amounts of each class of above-mentioned other receivables. The Group does not demand guarantees.

The following paragraph contains a description of major accounts receivable:

(a) Advances to suppliers

In 2017, the balance mainly comprises advances that subsidiary GyM Ferrovias S.A. gave to Alstom Transporte for S/233 million (S/230 million in 2016).

(b) Income tax on-account payment

This balance mainly consists of income tax on-account payments made by GyM S.A., GMP S.A., CAM Holding S.p.A. and Viva GyM S.A., for S/85 million, S/19 million, S/11 million, and S/6 million, respectively (GyM S.A., GMP S.A., Graña y Montero.S.A.A., CAM Holding S.p.A., Viva GyM S.A, GMI S.A. and GMD S.A. for S/133 million, S/17 million, S/16 million, S/16 million, S/5 million, S/4 million and S/4 million, respectively in 2016).

(c) Fiscal credit

This item is related to subsidiaries GyM S.A., Viva GyM S.A., Negocios del Gas S.A., Norvial S.A., Concesionaria Vía Expresa Sur S.A. and La Chira S.A. amounting to S/50 million, S/20 million, S/8 million, S/6 million, S/5 million and S/2 million, respectively (GyM S.A., Viva GyM S.A., Norvial S.A.,Negocios del Gas S.A., Concesionaria La Chira and Concesionaria Via Expresa Sur S.A.. for S/55 million, S/25 million, S/15 million, S/8 million, S/5 million, and S/5 million, respectively in 2016). Management considers that this VAT fiscal credit will be recovered in the normal course of future operations of these subsidiaries.

(d) Guarantee deposits

Guarantee deposits are the funds retained by customers for work contracts assumed basically by subsidiary GyM S.A. These deposits are retained by the customers to secure the Subsidiary’s compliance with its obligations under the contracts. The amounts retained will be recovered once the contracted work is completed.

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Inventories

12 Months Ended

Dec. 31, 2017

Inventories

15 INVENTORIES

At December 31 this account comprises:

	2016			2017
Land		398,120			317,337
Work in progress - Real estate		289,775			150,537
Finished properties		244,240			203,209
Construction material		114,919			51,131
Merchandise and supplies		97,860			90,504
		1,144,914			812,718
Impairment of inventories (Note 5.1-f)		(40,621	)		(42,007	)
		1,104,293			770,711

Land

At December 31, land comprises properties for the implementation of the following projects of subsidiary Viva GyM:

	2016		2017
Lurín (a)		95,634		103,574
Miraflores (b)		80,552		1,349
San Miguel (c)		70,556		44,126
San Isidro (d)		46,606		58,441
Ancón (e)		35,934		37,823
Nuevo Chimbote (f)		17,054		17,201
Huancayo (g)		11,618		13,572
Canta Callao		—		12,978
Others		40,166		28,273
		398,120		317,337

(a) Plot of land of 750 hectares located in the district of Lurín, province of Lima, for industrial development and public housing.

(b) Land located in Av. El Ejército, Urb. Santa Cruz- Miraflores, Lima, for the development of a project consisting in a 5-star hotel, a cultural, convention, commercial, business center, and residential buildings. On February 3, 2017, the land was sold to Urbi Propiedades S.A. the sale price was agreed at US$50 million, which has been fully paid.

(c) Land located in San Miguel, a total of 1.4 hectares for the development of a multi-family housing project of 248 apartments and 185 parking lots. On November 6, 2017, a portion of 0.56 hectares was sold to a real estate investment fund in Larrainvial-Colliers II at S/27.8 million.

(d) A plot of land in the district of San Isidro in which a 15-storey building will be built with 24 apartments and 124 parking spaces.

(e) A 108-hectare land property in which a mega housing-project will be implemented, consisting of 13,768 real estate units.

(f) Land located in Chimbote, 11.5 hectares, for the development of a social housing project

(g) Land located in Huancayo, 8.5 hectares for the development of a land sale project.

Land properties correspond to assets maintained since 2015, for which construction has not yet begun. Variance in these balances over 2017 is mainly due to engineering, license paperwork and other smaller costs. Construction in these land properties is expected to begin in late 2018 and the second half of 2019.

Real estate - work in progress

At December 31, real state work in progress comprises the following projects:

	2016		2017
Klimt		100,751		—
Los Parques de Comas		89,074		70,647
Los Parques del Callao		51,613		53,441
Real 2		17,181		—
Villa El Salvador 2		12,674		2,141
Others		18,482		24,308
		289,775		150,537

During 2017 the Company has capitalized financing costs of these construction projects (Note 2.19) amounting to S/5.9 million at interest rates between 7.0% and 11.22% (S/12.2 million in 2016 at interest rates between 6.75% and 8.90%; and S/4 million in 2015 at interest rates between 5.3% and 9.5%).

Finished properties

At December 31, the balance of finished properties consists of the following investment properties:

	2016		2017
El Rancho		121,302		82,796
Panorama		33,443		18,481
Los Parques de San Martín de Porres		30,724		16,687
Los Parques de Callao		19,736		486
Rivera Navarrete		11,966		7,870
Los Parques de Carabayllo 2da etapa		7,497		3,134
Los Parques de Comas		7,336		16,058
Los Parques de Villa El Salvador II		5,951		9,313
Klimt		—		44,103
Real 2		—		3,877
Others		6,285		404
		244,240		203,209

Construction materials

At December 31, 2017, construction materials correspond mainly to different projects such as Stracon GyM - Central de Equipos, Morelco, and electromechanical works of the subsidiary GyM S.A. for S/50 million (S/50.5 million in 2016, of which S/33.8 million corresponds to Consorcio Constructor Ductos del Sur (CCDS) impaired in 2016 (Note 5.1-f).

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Investments in Associates and Joint Ventures

12 Months Ended

Dec. 31, 2017

Investments in Associates and Joint Ventures

16 INVESTMENTS IN ASSOCIATES AND JOINT VENTURES

At December 31 this account comprises:

	2016		2017
Associates		286,403		250,053
Joint ventures		103,356		18,618
		389,759		268,671

The amounts recognized in the income statement are as follows:

	2016			2017
Associates		(584,801	)		(5,915	)
Joint ventures		(4,909	)		7,242	)
		(589,710	)		1,327

a) Investment in associates

Set out below are the associates of the Group at December 31, 2016 and 2017. The associates listed below have share capital solely consisting of common shares, which are held directly by the Group. None of the associates are listed companies; therefore, there is no quoted market price available for their shares.

							Carrying amount
	Class		Interest in capital				At December 31,
Entity	of share		2016		2017		2016		2017
			%		%
Gasoducto Sur Peruano S.A.		Common		20.00		21.49		218,276		218,276
Promoción Inmobiliaria del Sur S.A.		Common		22.50		—		31,768		—
Concesionaria Chavimochic S.A.C.		Common		26.50		26.50		32,394		22,091
Betchel Vial y Vives Servicios Complementarios Ltda.		Common		40.00		40.00		69		102
Others								3,896		9,584
								286,403		250,053

The most significant associates are described as follows:

i) Gasoducto Sur Peruano S.A.

In November 2015, the group acquired a 20% interest in Gasoducto Sur Peruano (hereinafter GSP) and obtained a 29% interest in the Ductos del Sur Consortium (CCDS) through its subsidiary GyM S.A. GSP signed on July 22, 2014 a concession contract with the Peruvian Government (Grantor) to build, operate and maintain the transportation system by natural gas pipelines to meet the demand of the cities of the Peruvian southern region. Additionally, GSP signed an engineering, procurement and construction (EPC) contract with the Consorcio Ductos del Sur (CCDS). The Group made an investment of US $242.5 million (S/811 million) and was required to assume 20% of the performance guarantee established in the Concession contract for US$262.5 million (equivalent to S/882 million) and 21.49% of the guarantee for the bridge loan obtained by GSP for US$600 million (equivalent to S/2,016 million).

Early termination of the Concession Agreement

According to a notification issued by the Ministry of Energy and Mines of Peru on January 24, 2017, the early termination of the Concession Contract was declared, based on the provisions of clause 6.7 of the Concession Agreement “Improvements to the country’s energy security and development of the South Peru gas Pipeline”, as GSP failed to certify the financial closing within the established contractual deadline and proceeded to the immediate execution of the performance guarantee. This situation generated the execution of the counter-guarantees offered by the Group to the company issuing the performance guarantee of the Concession Contract for US$52.5 million (S/176.4 million nominal value) and US$129 million (S/433.3 million nominal value) for the corporate guarantee of the bridge loan granted to GSP.

On October 11, 2017, the agreement was signed for the delivery of the goods of the South Peru gas pipeline concession between GSP and the Ministry of Energy and Mines (MEM). As stated in the agreement, GSP delivered most of the Concession Assets in possession to the administrator designated by the MEM for its custody and conservation. The assets include all the works, equipment and facilities provided for the execution of the project, as well as the engineering studies that were prepared by the concessionaire company.

After the termination of the contract, the Peruvian Government, in accordance with the contract, had to hire an audit entity of recognized international prestige to calculate the Net Book Value (“VCN” for its Spanish definition “Valor Contable Neto”) of the Concession Assets and the subsequent call for up to three public auctions, being the base amount for the first of them 100% of the VCN, guaranteeing in any case that after the third auction, in case the concession has not been awarded, the payment to GSP would be at least 72.25% of the VCN. Having elapsed more than a year since the termination of the contract, the Peruvian Government has not taken any action to calculate the VCN and call for auctions. In the opinion of the external and internal legal advisors, since the previous procedure had not been done within the established deadlines, the Peruvian Government would be obliged to pay GSP 100% of the VCN. Regarding the amount of the VCN there is a previous calculation commissioned by GSP reviewed by an audit firm as an independent expert as of December 31, 2016 which determined a VCN of US$2,602 million.

GSP as of December 4, 2017 entered into a bankruptcy proceeding that will be carried out by the National Institute for the Defense of Competition and Intellectual Protection of Peru (hereinafter, INDECOPI), and the Group registered a claim for accounts receivable in 2017 charge for US$0.4 million and the fiduciary based in its capacity as administrator accounts receivable amounting US$169.3 million.

The fair value of the investment in GSP is based on the amount of the VCN, taking into consideration the payments anticipated in the insolvency proceedings, the subordination contracts and the loan cession agreements between the Group and GSP partners. Based on management’s estimate of such payments, an impairment of the investment was determined to be US$176.49 million. In addition, according to the conclusions of our internal and external legal advisors, an international arbitration will be required to receive the payment from the Government. The estimated time frame for the international arbitration is 5 years. Therefore, management has applied a discount to the long-term account receivable from GSP of US$22.8 million. These two effects amounted US$199.3 million before taxes and was recorded in the income statement for the year ended December 31, 2016.

In addition, at December 31, 2016, the Group evaluated the impairment of the financial statements of CCDS. As a result, a net loss before taxes of S/15.2 million was determined (Note 5.1-f), that was recognized in gross profit in the Engineering and Construction segment.

Same as in the Emergency Decree 003, Law 30737 (see note 1.c-1) in its First Section includes Odebrecht and its related companies, which include GSP. According to this Law, GSP will not be able to make transfers abroad, will require the consent of the Ministry of Justice in case it wishes to sell assets and must deposit the proceeds of such sale in a guarantee trust. Likewise, the entities of the Government that must make some payment to the entities included in the Law, must withheld according to the contract 10%, equivalent to the net profit margin, and deposit it in the aforementioned trust in guarantee. According to our internal and external legal advisors, Government payment for the VCN is not within the scope of the withholding, as this payment does not include net profit margin, nor is a sale of assets.

ii) Promoción Inmobiliaria del Sur S.A.

An entity engaged in purchasing land properties to obtain gains from their subsequent appreciation and disposal in the long term. Major assets consist of plots of land of 891.08 hectares in Lurín and 2.07 hectares in Punta Hermosa, both in Lima. Based on recent appraisals of the properties, Management believes that the commercial value of these properties is higher than their carrying amount.

In February 2017, the subsidiary Viva GyM S.A. signed a purchase sale contract for the total shares (representing 22.5%) in the investment in the associate Promoción Inmobiliaria del Sur S.A. The sale price was agreed in US$25 million (equivalent to S/81 million), which were paid in full.

iii) Concesionaria Chavimochic S.A.C.

An entity that was awarded with the implementation 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 concession effective period is 25 years and the total investment amounts US$647 million.

The following table shows financial information of the principal associates:

Summarized financial information for associates -

Entity	Gasoducto Sur Peruano S.A.						Promoción Inmobiliaria del Sur S.A.						Concesionaria Chavimochic S.A.C.
	At December, 31						At December, 31						At December, 31
	2015			2016			2015			2016			2015			2016			2017
Current
Assets		303,219			375,547			124,887			149,300			171,400			120,342			73,004
Liabilities		(3,357,508	)		(6,747,492	)		(32,072	)		(187,380	)		(110,799	)		(3,160	)		(1,111	)
Non-current
Assets		4,943,392			8,522,099			47,669			193,127			8,608			8,282			11,809
Liabilities		(7,442	)		—			(13,090	)		(13,855	)		(2,547	)		(1,918	)		(342	)
Net assets		1,881,661			2,150,154			127,394			141,192			66,662			123,546			83,360
Entity	Gasoducto Sur Peruano S.A.						Promoción Inmobiliaria del Sur S.A.						Concesionaria Chavimochic S.A.C.
	2015 (*)			2016 (*)			2015			2016			2015			2016			2017
Revenues		3,007,799			3,323,410			90,970			65,071			376,124			264,386			—
Profit (loss) from continuing operations		69,191			(1,372,594	)		90,618			42,281			22,995			(2,994	)		(43,340	)
Income tax		(19,828	)		—			(25,373	)		(11,839	)		(6,656	)		921			3,185
Profit (loss) from operations after income tax		49,363			(1,372,594	)		65,245			30,442			16,339			(2,073	)		(40,155	)
Other comprehensive income					—						—						—			—
Total comprehensive income		49,363			(1,372,594	)		65,245			30,442			16,339			(2,073	)		(40,155	)

(*) Gaseoducto Sur Peruano S.A. gross profit 2015 and 2016 amounting to S/257.7 million and S/0.8 million, respectively.

The movement of the investments in associates is as follows:

	2015			2016			2017
Opening balance		82,494			490,702			286,403
Contributions received		—			390,506			2,116
Acquisition of Gasoducto Sur Peruano		437,494			—			—
Impairment of GSP		—			(593,105	)		—
Panorama Project		(39,180	)		—			—
Dividends received		(9,838	)		(10,149	)		(259	)
Equity interest in results		22,800			8,304			(5,915	)
Decrease in capital		—			(166	)		(111	)
Sale of Investment		—			—			(32,223	)
Derecognition of investments		(2,755	)		—			—
Conversion adjustment		(313	)		311			42
Final balance		490,702			286,403			250,053

In addition to the GSP acquisition described in Note 16 a-i); in 2015, 2016 and 2017 the following significant movements were noted:

• In 2015, the “share of the profit or loss in associates and joint ventures under the equity method” shown in the income statement includes S/17.3 million as expenses that subsidiary GyM S.A. had to pay for the execution of the letter of guarantee in JV Panama.

• During 2016 cash contributions were made principally to Gasoducto Sur Peruano S.A. and Concesionaria Chavimochic amounting to S/373.9 million and S/15.7 million, respectively.

• In 2016 the Group obtained dividends mainly from Betchel Vial y Promoción Inmobiliaria del Sur S.A. amounting to S/6.3 million and S/3.8 million, respectively. In 2015 the Group received dividends from Promoción Inmobiliaria del Sur S.A. amounting to S/9.8 million.

• In 2016, the Group included an impairment provision of GSP for S/593.1 million (US$176.49 million). (Note 16 a-i).

• In 2017, the sale of investments refers to the sale transaction of the associate Promoción Inmobiliaria del Sur S.A. to the company Inversiones Centenario S.A.A. (Note 16 a-ii), transaction that was collected in full

b) Investment in Joint Ventures

Set out below are the joint ventures of the Group as of December 31:

							Carrying amount
	Class of share		Interest in capital				At December 31,
Entity			2016		2017		2016		2017
			%		%
Tecgas N.V.		Common		51.00		—		84,100		—
Sistemas SEC		Common		49.00		49.00		9,591		10,112
Logistica Químicos del Sur S.A.C.		Common		50.00		50.00		8,515		7,343
G.S.J.V. SCC		Common		50.00		50.00		861		878
Constructora SK-VyV Ltda.		Common		50.00		50.00		59		49
Others				—		—		230		236
								103,356		18,618

i) Tecgas N.V.

This entity provides operation and maintenance services for hydrocarbon pipelines and related activities, concentrates its activities substantially in fulfilling the obligations arising from the operation and maintenance contract of the pipeline gas transport system connected to the Concession of Gas Concession Peru SAA (TGP, its main client). In April 2017, the Company entered into a purchase sale contract for all of its shares (representing 51%) in the investment in a joint venture with the Operating Company of Gas del Amazonas S.A.C. (COGA). The sale price was agreed at US$21.5 million (equivalent to S/69.8), which are fully paid.

ii) Sistemas SEC

The company’s activities include the renovation and automation of the electrical system and signaling of railways and communications within the Santiago - Chillán - Bulnes - Caravans and Conception areas. The contract was awarded in 2005 for a period of 16 years.

iii) Adexus S.A.

It is mainly engaged in providing specialized technological IT services and communications solutions, including system integration to companies in a wide range of industries, such as financial services, telecommunications, manufacturing, mining, retail, among others. The Group acquired control of this company since August 2016, going from a joint venture to a subsidiary (Note 33-a).

The following table shows the financial information of the principal joint ventures:

Summarized financial information for joint ventures

	Tecgas N.V.
	At December, 31
Entity	2016
Current
Cash and cash equivalents		67
Other current assets		92,843
Total current assets		92,910
Other current liabilities		(87,780	)
Total current liabilities		(87,780	)
Non-current
Total non-current assets		33,336
Total non-current liabilities		(7,367	)
Net assets		31,099
Revenue		457,554
Depreciation and amortization		(2,266	)
Interest income		215
Interest expense		—
Profit (loss) from continuing operations		(3,209	)
Income tax expense		(4,078	)
Post-tax profit (loss) from continuing operations		(7,287	)
Other comprehensive income		—
Total comprehensive income		7,287

The movement of the investments in joint ventures was as follows:

	2015			2016			2017
Opening balance		147,069			146,303			103,356
Debt capitalization		—			8,308			—
Contributions received		—			6,889			—
Equity interest in results		2,193			(4,909	)		7,242
Acquisitions		44,145			—			—
Sale of Investment		—			—			(88,556	)
Transfer of Adexus from acquisition of control		—			(35,870	)		—
Dividends received		(42,122	)		(17,843	)		(3,758	)
Decrease in capital		(3,364	)		(1,798	)		—
Conversion adjustment		(1,618	)		2,276			334
Final balance		146,303			103,356			18,618

In 2017, 2016 and 2015 the following significant movements were carried out:

• The Group obtained dividends in 2017 principally from Consorcio Sistemas SEC for S/1 million and Logistica Quimicos del Sur S.A. for S/2.8 million (S/13.1 and S/3.3 million from G.S.J.V. in 2016 and S/41.1 million in 2015 from Constructora SK - VyV Ltda.).

• On April 24, 2017 the Company signed a purchase-sale agreement for their total capital stock (representing 51%) held in their joint venture with Compañía Operadora de Gas del Amazonas S.A.C. (COGA). The selling price was agreed at US$21.5 million (equivalent to S/69.8 million), which was fully paid.

• On June 6, 2017 the Company signed a purchase-sale agreement for their total share of GMD S.A., which represent 89.19% of the Company’s shareholding, in favor of AI Inversiones Palo Alto II S.A.C., a company affiliated with Advent International. The value agreed for the entire participation was S/269.9 million. At the close of this report, the amount was collected in full.

• In February and December 2016, a debt with Adexus was capitalized and a cash contribution was made to Tecgas N.V. for S/8.3 million and S/6.9 million, respectively.

In August 2015 the Company acquired a 44% interest in the share capital of Adexus S.A. amounting to S/44.1 million. This investment includes goodwill arising from the acquisition for S/20.7 million. In February 2016 the Group acquired 8% of additional interest by capitalizing debt for S/8.3 million. In August 2016, the Group obtained control over Adexus S.A. and the balance of the investment at that date was transferred to investments in subsidiaries for S/35.9 million. Since that date, the Company consolidated the financial statements of Adexus S.A (Note 33 a).

XML

Property, Plant and Equipment,net

12 Months Ended

Dec. 31, 2017

Property, Plant and Equipment,net

17 PROPERTY, PLANT AND EQUIPMENT, NET

The movement in property, plant and equipment accounts and its related accumulated depreciation for the year ended December 31, 2015, 2016 and 2017 is as follows:

													Furniture and			Other			Replacement			In-transit			Work in
	Land			Buildings			Machinery			Vehicles			fixtures			equipment			units			units			progress			Total
At January 1, 2015
Cost		30,675			200,450			986,487			394,077			43,146			176,869			7,245			9,177			99,831			1,947,957
Accumulated depreciation and impairment		—			(35,479	)		(416,029	)		(201,815	)		(27,279	)		(120,333	)		(4	)		—			—			(800,939	)
Net carrying amount		30,675			164,971			570,458			192,262			15,867			56,536			7,241			9,177			99,831			1,147,018
Net initial carrying amount		30,675			164,971			570,458			192,262			15,867			56,536			7,241			9,177			99,831			1,147,018
Additions		—			9,021			105,575			86,923			12,684			22,802			—			16,018			44,933			297,956
CAM Brazil deconsolidation		—			(839	)		(1,462	)		(633	)		(70	)		—			—			—			—			(3,004	)
Reclassifications		—			36,180			32,389			9,300			1,245			7,272			10,529			(23,092	)		(73,823	)		—
Transfers to intangibles (Note 18)		—			—			68			—			—			—			—			—			(36,785	)		(36,717	)
Transfers to accounts receivable		—			(3,635	)		—			—			(777	)		(4,442	)		—			—			(5,168	)		(14,022	)
Deduction for sale of assets		(2,001	)		(1,235	)		(35,118	)		(42,464	)		(1,491	)		(7,979	)		—			—			(14,185	)		(104,473	)
Disposals – cost		—			(5,057	)		(10,224	)		(362	)		(2,299	)		(1,810	)		(2,326	)		(89	)		(1,206	)		(23,373	)
Depreciation charge		—			(11,780	)		(116,993	)		(54,545	)		(4,623	)		(13,141	)		—			—			—			(201,082	)
Discontinued operations		—			(1,818	)		—			(263	)		(533	)		(11,084	)		—			—			—			(13,698	)
Depreciation for sale deductions		—			1,003			23,907			32,566			799			7,751			—			—			—			66,026
Disposals – accumulated depreciation		—			3,060			4,373			323			503			1,331			—			—			—			9,590
Translations adjustments		(265	)		(306	)		(8,288	)		(2,221	)		(128	)		(506	)		—			(197	)		(553	)		(12,464	)
Net final carrying amount		28,409			189,565			564,685			220,886			21,177			56,730			15,444			1,817			13,044			1,111,757
At December 31, 2015
Cost		28,409			231,029			1,074,195			443,239			52,225			191,238			15,448			1,817			13,044			2,050,644
Accumulated depreciation and impairment		—			(41,464	)		(509,510	)		(222,353	)		(31,048	)		(134,508	)		(4	)		—			—			(938,887	)
Net carrying amount		28,409			189,565			564,685			220,886			21,177			56,730			15,444			1,817			13,044			1,111,757

													Furniture and			Other			Replacement			In-transit			Work in
	Land			Buildings			Machinery			Vehicles			fixtures			equipment			units			units			progress			Total
At January 1, 2016
Cost		28,409			231,029			1,074,195			443,239			52,225			191,238			15,448			1,817			13,044			2,050,644
Accumulated depreciation and impairment		—			(41,464	)		(509,510	)		(222,353	)		(31,048	)		(134,508	)		(4	)		—			—			(938,887	)
Net carrying amount		28,409			189,565			564,685			220,886			21,177			56,730			15,444			1,817			13,044			1,111,757
Net initial carrying amount		28,409			189,565			564,685			220,886			21,177			56,730			15,444			1,817			13,044			1,111,757
Additions		6,238			12,126			81,378			50,574			4,423			24,870			553			19,312			13,594			213,068
Adquisition of subsidiaries – Adexus (Note 33 a)		—			13,913			—			420			1,525			26,130			—			—			—			41,988
Reclassifications		—			588			1,927			(1,172	)		4,456			13,156			2,583			(17,349	)		(4,189	)		—
Transfers to inventories		2,941			—			—			—			—			—			—			—			—			2,941
Transfers to intangibles (Note 18)		—			—			—			—			—			—			—			—			(1,257	)		(1,257	)
Deduction for sale of assets		(5,256	)		(14,333	)		(60,374	)		(48,521	)		(1,724	)		(5,766	)		—			—			—			(135,974	)
Disposals – cost		—			(1,232	)		(15,149	)		(1,354	)		(1,579	)		(4,364	)		(661	)		(2	)		—			(24,341	)
Depreciation charge		—			(12,651	)		(104,638	)		(47,366	)		(6,947	)		(15,088	)		(5	)		—			—			(186,695	)
Impairment loss		—			(73	)		(5,190	)		(317	)		(3,301	)		(382	)		—			—			—			(9,263	)
Discontinued operations		—			(2,191	)		0			(675	)		(601	)		(13,039	)		—			—			—			(16,506	)
Depreciation for sale deductions		—			8,113			48,266			29,536			1,026			1,907			—			—			—			88,848
Disposals – accumulated depreciation		—			939			14,430			886			1,540			3,991			—			—			—			21,786
Translations adjustments		282			130			5,987			922			176			(344	)		—			—			94			7,247
Net final carrying amount		32,614			194,894			531,322			203,819			20,171			87,801			17,914			3,778			21,286			1,113,599
At December 31, 2016
Cost		32,614			241,150			1,088,229			443,641			59,593			246,102			17,923			3,778			21,286			2,154,316
Accumulated depreciation and impairment		—			(46,256	)		(556,907	)		(239,822	)		(39,422	)		(158,301	)		(9	)		—			—			(1,040,717	)
Net carrying amount		32,614			194,894			531,322			203,819			20,171			87,801			17,914			3,778			21,286			1,113,599

	Land			Buildings			Machinery			Vehicles			Furniture and fixtures			Other equipment			Replacement units			In-transit units			Work in progress			Total
At January 1, 2017
Cost		32,614			241,352			1,090,460			443,641			59,593			246,102			17,923			3,778			18,853			2,154,316
Accumulated depreciation and impairment		—			(46,256	)		(556,907	)		(239,822	)		(39,422	)		(158,301	)		(9	)		—			—			(1,040,717	)
Net carrying amount		32,614			195,096			533,553			203,819			20,171			87,801			17,914			3,778			18,853			1,113,599
Net initial carrying amount		32,614			195,096			533,553			203,819			20,171			87,801			17,914			3,778			18,853			1,113,599
Additions		157			2,724			48,207			36,594			11,607			36,179			925			22,877			13,178			172,448
Deconsolidation of GMD		(3,713	)		(26,109	)		—			(1,527	)		(2,153	)		(46,032	)		0			(3,903	)		(4	)		(-83,441	)
Reclassifications		0			1,969			12,459			2,888			609			6,579			4,076			(21,600	)		(6,980	)		—
Transfers to intangibles (Note 18)		—			—			2,119			724			—			—			—			(964	)		(2,048	)		(169	)
Deduction for sale of assets		(5,616	)		(51,736	)		(149,202	)		(92,079	)		(4,200	)		(5,270	)		—			—			—			(308,103	)
Disposals – cost		—			(1,869	)		(6,442	)		(7,941	)		(1,200	)		(12,592	)		—			(230	)		(3,606	)		(33,880	)
Depreciation charge		—			(12,469	)		(100,976	)		(45,457	)		(11,654	)		(26,928	)		—			—			—			(197,484	)
Impairment loss		—			—			(14,328	)		—			—			0			—			—			(352	)		(14,680	)
Depreciation for sale deductions		—			3,579			115,864			84,145			1,049			3,128			—			—			—			207,765
Disposals – accumulated depreciation		—			1,624			2,410			434			778			3,179			—			—			—			8,425
Translations adjustments		236			152			606			(350	)		(23	)		980			—			—			(346	)		1,255
Net final carrying amount		23,678			112,961			444,270			181,250			14,984			47,024			22,915			(42	)		18,695			865,735
At December 31, 2017
Cost		23,678			166,483			998,207			381,950			64,233			225,946			22,924			(42	)		19,047			1,902,426
Accumulated depreciation and impairment		—			(53,522	)		(553,937	)		(200,700	)		(49,249	)		(178,922	)		(9	)		—			-352			(1,036,691	)
Net carrying amount		23,678			112,961			444,270			181,250			14,984			47,024			22,915			(42	)		18,695			865,735

In 2016 and 2017 additions to the carrying amount correspond to the acquisition of fixed assets under finance leases or by direct acquisition.

The balance of work in progress at December 31, 2017 relates mainly to investments made by the subsidiary GMP S.A. for S/11 million (S/19 million at December 31, 2016) for the activities of oil drilling in order to increase the volume of exploitation of oil and gas. Additionally, the balance includes the construction work of Proyecto Hotel Larcomar for S/15.6 million (S/14.4 million in 2016).

In 2017 fixed asset sales amounted to S/127.2 million (S/70.5 million and S/55.8 million in 2016 and 2015, respectively) resulting in profits of S/26.9 million (profits of S/18.4 and S/17.4 million in 2016 and 2015, respectively) that are shown in the statement of income within “other income and expenses, net” (Note 29), the difference between the income proceeds from disposals of fixed assets and their profit are shown within “revenue from construction activities” and “gross profit”, respectively.

In September 2017, the Company signed a sale contract for the corporate building located in Miraflores with Volcomcapital Petit Thouars S.A.C. The sale was made in October 2017, the amount of the purchase-sale amount to US$20.5 million. This operation includes a 5-year lease period that can be extended up to 10 years as well as a purchase option on the building. The sale of the mentioned property generates a profit of US$3.5 million.

Depreciation of fixed assets and investment properties for the year is broken down in the statement of income as follows:

	2015			2016			2017
Cost of services and goods		186,661			177,699			178,209
Administrative expenses		16,711			11,317			13,224
(+) Depreciation GMD discontinued operation		—			—			8,361
Total depreciation related to property, plant and equipment		203,372			189,016			199,794
(-) Depreciation related to investment property		(2,290	)		(2,321	)		(2,310	)
Total depreciation related to property, plant and equipment		201,082			186,695			197,484

The amount of S/8.3 million corresponds to the depreciation recorded from January to May 2017 of the subsidiary GMD S.A. which was sold in June 2017.

In 2016, the Group determined indicators of impairment of items of property, plant and equipment relating to: i) early termination of the GSP concession in respect of Consorcio Constructor Ductos del Sur (CCDS) and ii) assets under stand-by status. Management calculated the recoverable amount of those assets as the fair value; fair value was determined taking into account appraisals performed by independent experts. The recognized impairment loss is mainly related to Consorcio Constructor Ductos del Sur (CCDS) for a total of S/4.1 million (Note 5.1-f), GyM for S/2.39 million and Stracon GyM S.A. for S/2.34 million, which are shown within “Expenses by nature” (Note 27).

At December 31, 2017 the Group has fully depreciated property, plant and equipment items that are still in use for S/154 million (S/151.6 million, at December 31, 2016).

The net carrying amount of machinery and equipment, vehicles and furniture and fixtures acquired under finance lease agreements is broken down as follows:

Financial Leasing

	At December 31,
	2015			2016			2017
Cost of acquisition		735,591			800,927			650,301
Accumulated depreciation		(327,465	)		(386,411	)		(351,447	)
Net carrying amount		408,126			414,516			298,854

Other financial liabilities are secured with items of property, plant and equipment for S/368.1 million (S/617.9 million in 2016).

Commitment for operating leases:

In relation to the sale lease contract for the corporate building located in Miraflores mentioned on the previous page, the Company has outstanding commitments for non-cancelable operating leases, with the following maturities:

	2017
Not later than 1 year		8,526
Within 2 to 5 years		35,161
Later than 5 years		46,451
		90,138

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Intangible Assets.net

12 Months Ended

Dec. 31, 2017

Intangible Assets.net

18 INTANGIBLE ASSETS, NET

The movement of intangible assets and that of their related accumulated amortization, as of December 31, 2015, 2016 and 2017, is as follows:

	Goodwill			Trade- marks			Concession rights			Contractual relations with clients			Internally generated software and development costs			Costs of development of wells			Development costs			Land use rights		Other assets			Total
At January 1, 2015
Cost		202,144			102,835			561,183			86,233			32,231			281,722			3,623			13,288		14,257			1,297,516
Accumulated amortization and impairment		(21,995	)		(217	)		(269,504	)		(43,243	)		(26,462	)		(150,392	)		(3,623	)		—		(3,337	)		(518,773	)
Net carrying amount		180,149			102,618			291,679			42,990			5,769			131,330			—			13,288		10,920			778,743
Net initial carrying amount		180,149			102,618			291,679			42,990			5,769			131,330			—			13,288		10,920			778,743
Additions		5,418			—			165,149			—			9,141			11,842			—			—		3,429			194,979
CAM Brazil Deconsolidation		—			—			—			—			(129	)		—			—			—		—			(129	)
Transfers from assets under construction (Note 17)		—			—			—			(68	)		1,562			33,396			—			—		1,827			36,717
Transfers to accounts receivable		—			—			(2,278	)		—			—			—			—			—		—			(2,278	)
Transfers to pre-paid expenses		—			—			(10,923	)		—			—			—			—			—		(3,684	)		(14,607	)
Reclassifications		—			—			—			—			188			(188	)		—			—		(3	)		(3	)
Amortization		—			—			(18,436	)		(14,697	)		(4,601	)		(42,117	)		—			—		(825	)		(80,676	)
Discontinued operations		—			—			(7,247	)		—			(1,432	)		—			—			—		—			(8,679	)
Translations adjustments		(15,335	)		(6,084	)		(51	)		(4,031	)		(280	)		—			—			—		—			(25,781	)
Net final carrying amount		184,808			96,534			417,893			24,194			10,218			122,421			—			13,288		11,664			878,286
At December 31, 2015
Cost		192,227			96,751			716,125			82,134			42,761			326,723			3,623			13,288		15,425			1,489,057
Accumulated amortization and impairment		(21,995	)		(217	)		(298,232	)		(57,940	)		(32,543	)		(192,460	)		(3,623	)		—		(3,761	)		(610,771	)
Net carrying amount		170,232			96,534			417,893			24,194			10,218			134,263			—			13,288		11,664			878,286

	Goodwill			Trade- marks			Concession rights			Contractual relations with clients			Internally generated software and development costs			Costs of development of wells			Development costs			Land use rights		Other assets			Total
At January 1, 2016
Cost		192,227			96,751			716,125			82,134			42,761			326,723			3,623			13,288		15,425			1,489,057
Accumulated amortization and impairment		(21,995	)		(217	)		(298,232	)		(57,940	)		(32,543	)		(192,460	)		(3,623	)		—		(3,761	)		(610,771	)
Net carrying amount		170,232			96,534			417,893			24,194			10,218			134,263			—			13,288		11,664			878,286
Net initial carrying amount		170,232			96,534			417,893			24,194			10,218			134,263			—			13,288		11,664			878,286
Additions		—			—			118,222			—			16,477			17,772			—			—		19,255			171,726
Acquisition of subsidiary – Adexus (Note 33 a)		930			9,088			6,090			12,822			—			—			—			—		4,203			33,133
Transfers from assets under construction (Note 17)		—			—			—			—			—			—			—			—		1,257			1,257
Reclasifications		—			—			5,258			—			345			—			—			—		(5,603	)		—
Disposals – net cost		—			—			(1,395	)		—			—			(2,395	)		—			—		—			(3,790	)
Amortization		—			—			(19,646	)		(4,376	)		(7,407	)		(40,918	)		—			—		(1,200	)		(73,547	)
Discontinued operations		—			—			(8,560	)		—			(636	)		—			—			—		—			(9,196	)
Impairment loss		(38,680	)		(15,628	)		—			—			—			—			—			—		—			(54,308	)
Translations adjustments		12,038			3,672			(102	)		171			1,024			—			—			—		(78	)		16,725
Net final carrying amount		144,520			93,666			517,760			32,811			20,021			108,722			—			13,288		29,498			960,286
At December 31, 2016
Cost		205,195			109,511			844,213			95,127			60,607			342,100			3,623			13,288		34,418			1,708,082
Accumulated amortization and impairment		(60,675	)		(15,845	)		(326,453	)		(62,316	)		(40,586	)		(233,378	)		(3,623	)		—		(4,920	)		(747,796	)
Net carrying amount		144,520			93,666			517,760			32,811			20,021			108,722			—			13,288		29,498			960,286

	Goodwill			Trade- marks			Concession rights			Contractual relations with clients			Internally generated software and development costs			Costs of development of wells			Development costs			Land use rights		Other assets			Total
At January 1, 2017
Cost		205,195			109,511			844,213			95,127			60,607			342,100			3,623			13,288		34,294			1,707,958
Accumulated amortization and impairment		(60,675	)		(15,845	)		(326,453	)		(62,316	)		(40,586	)		(233,378	)		(3,623	)		—		(4,796	)		(747,672	)
Net cost		144,520			93,666			517,760			32,811			20,021			108,722			—			13,288		29,498			960,286
Net initial cost		144,520			93,666			517,760			32,811			20,021			108,722			—			13,288		29,498			960,286
Additions		—			—			64,171			5,274			3,330			49,698			—			—		20,832			143,305
Deconsolidation GMD		(3,524	)		—			(17,354	)		—			(21	)		—			—			—		(2,767	)		(23,666	)
Transfers from assets under construction (Note 17)		—			—			(11,217	)		—			2,761			5,008			—			—		3,617			169
Derecognition – cost		—			—			(537	)		—			(1,572	)		—			—			—		(355	)		(2,464	)
Amortization		—			—			(24,609	)		(4,189	)		(8,091	)		(46,695	)		—			—		(2,973	)		(86,557	)
Impairment		(20,068	)		(29,541	)		—			—			—			—			—			—		—			(49,609	)
Translations adjustments		(4,124	)		975			13			369			1,196			—			—			—		177			(1,394	)
Net final cost		116,804			65,100			528,227			34,265			17,624			116,733			—			13,288		48,029			940,070
At December 31, 2017
Cost		193,862			110,486			879,289			100,640			66,301			396,806			3,623			13,288		51,983			1,816,278
Accumulated amortization and impairment		(77,058	)		(45,386	)		(351,062	)		(66,375	)		(48,677	)		(280,073	)		(3,623	)		—		(3,954	)		(876,208	)
Net cost		116,804			65,100			528,227			34,265			17,624			116,733			—			13,288		48,029			940,070

a) Goodwill

Management reviews the results of its businesses based on the type of economic activity carried out.

At December 31 goodwill allocated to cash-generating units (CGU) are:

	2015		2016		2017
Engineering and construction		125,514		98,587		75,051
Electromechanical		20,737		20,737		20,737
Mining and construction services		13,366		13,366		13,366
IT equipment and services		4,172		5,102		6,720
Telecommunications services		6443		6,728		930
		170,232		144,520		116,804

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

As a result of these assessments an impairment was identified in 2016 and 2017 in two CGU’s, Vial y Vives—DSD, and Morelco S.A. and was accounted as of December 31st, 2016 and 2017, respectively. The loss to impairment was generated due to the decrease in the expected flows, as a result of the reduction of the contracts linked to the Backlog. The amount of the impairment it impacted the total amount of goodwill was S/20.1 in 2017(S/38.7 million in 2016).

Major assumptions used by the Group in determining the fair value less cost of disposal and the value in use were as follows:

	Engineering and construction		Electro- mechanical		Mining and construction		IT equipment and services		Telecommunication services
	%		%		%		%		%
2016
Gross margin		9.50% - 12.99%		11.10%		12.04%		15.00% - 23.19%		11.75%
Terminal growth rate		3.00% - 4.00%		2.00%		2.00%		2.00% - 3.00%		3.00%
Discount rate		9.66% - 12.72%		11.01%		11.71%		21.74%		10.02%
2017
Gross margin		9.50%		8.00%		—		20.83%		4.26%
Terminal growth rate		3.00%		2.00%		—		2.90%		3.00%
Discount rate		11.18%		11.48%		—		10.17%		4.02%

These assumptions have been used for the analysis of each CGU included in the operating economic activities for a period of 5 years.

Management determines the forecasted gross margins based on past results and market development expectations. Average growth rates are consistent with those prevailing in the industry. Discount rates used are pre-tax or post-tax as appropriate and reflect the specific risk related to the assessed CGUs.

b) Trademarks

This item mainly comprises the trademarks acquired in the business combination processes with Vial y Vives S.A.C. (S/75.4 million) in August 2013; Morelco S.A.S. (S/33.33 million) in December 2014; and Adexus S.A. (S/9.1 million) in August 2016. Management determined that the brands obtained from Vial y Vives, Morelco and Adexus have indefinite lives; consequently, annual impairment tests are performed on these intangibles, as described in paragraph a) above.

As a result of these tests, at December 31, 2016 and 2017, the Vial y Vives—DSD trademark was partially impaired, the amount of the impairment was S/15.6 million and S/29.5 million, respectively. No provision for impairment was performed for Stracon GYM since the Company sold its shares (87.59%) for a total of US $76.8 million, generating a profit of S/41.9 million

Major assumptions used by the Group in determining the fair value less cost of disposal are as follows:

	Engineering and construction						IT Equipment Services
	Morelco			Vial y Vives - DSD			Adexus
	%			%			%
2016
Average revenue growth rate		14.39	%		24.53	%		12.60	%
Terminal growth rate		3.00	%		4.00	%		3.00	%
Discount rate		11.85	%		9.87	%		16.05	%
2017
Average revenue growth rate		9.60	%		25.00	%		9.19	%
Terminal growth rate		3.00	%		4.00	%		3.00	%
Discount rate		11.18	%		14.80	%		16.63	%

c) Concessions

The intangibles of Norvial S.A. as of December 31, 2017, they mainly comprise:

i.) The EPC contract for S/78 million (S/86 million as of December 31, 2016), ii) the construction of the second section of the “Ancón-Huacho-Pativilca” highway, and the cost of financing capitalized at effective interest rates between 7.14% and 8.72% for S/331 million and S/26 million, respectively (S/297 million and S/23 million, respectively as of December 31, 2016 at interest rates between 7.14 % and 8.72%) iii) road improvement for S/17 million (S/18 million as of December 31, 2016), iv) implementation for road safety for S/4 million (S/3 million as of December 31, 2016 ), v) disbursements for the acquisition of properties for S/5 million (S/6 million as of December 31, 2016) and vi) Other intangible assets contracted for the process of delivery of the Concession for S/4 million (S/3 million as of December 31, 2016). During the year 2017, financing costs have been capitalized for S/26 million (S/22.5 million in 2016), see (Note 2.19).

d) Costs of development of wells

Through one of its subsidiaries, the Group operates and extracts oil from two oil fields (Block I and Block V) located in the province of Talara in northern Peru. Both oil fields are operated under long-term service agreements by which the Group provides hydrocarbon extraction services to Perupetro.

On December 10, 2014 the Peruvian Government granted subsidiary GMP S.A. a right of exploiting for 30 years the oil blocks III and IV (owned by the Peruvian government-run entity- Perupetro) located in Talara, Piura, 230 wells and 330 wells respectively. The total investment expected to be made in both wells is estimated to be US$560 million; operations began in April 2015 in both blocks.

As part of the Group’s obligations under the relevant service agreements, certain costs will be incurred in preparing the wells in Blocks I, III, IV and V. These costs are capitalized as part of intangible assets at a carrying amount of S/99 million at December 31, 2017 (S/80 million at December 31, 2016).

All blocks are amortized on the basis of the useful lives of the wells (estimated to be 5 years for Blocks I and V and unit of production method for Blocks III and IV), which is less than the total effective period of the service agreement with Perupetro.

e) Amortization of intangible assets

Amortization of intangibles is broken down in the income statement as follows:

	2015		2016		2017
Cost of sales and services (Note 27)		74,187		66,862		74,515
Administrative expenses (Note 27)		6,489		6,685		8,227
		80,676		73,547		82,742

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Other Financial Liabilities

12 Months Ended

Dec. 31, 2017

Other Financial Liabilities

19 OTHER FINANCIAL LIABILITIES

At December 31 this account comprises:

	Total				Current				Non-current
	2016		2017		2016		2017		2016		2017
Bank overdrafts		8,396		120		8,396		120		—		—
Bank loans		2,131,901		1,561,634		1,835,340		990,467		296,561		571,167
Finance leases		240,141		128,309		117,307		66,177		122,834		62,132
		2,380,438		1,690,063		1,961,043		1,056,764		419,395		633,299

a) Bank loans

At December 31, 2016 and 2017, this item comprises bank borrowings contracted in local and foreign currency intended for working capital. These obligations are subject to fixed interest rates ranging between 3.30% and 13.9% in 2017 and between 1.0% and 14.4% in 2016.

					Current				Non-current
	Interest		Date of		At December, 31				At December, 31
	rate		maturity		2016		2017		2016		2017
GyM S.A.		3.30% / 8.73%		2018 / 2019		492,910		551,413		187,029		95,376
Graña y Montero S.A.A.		Libor USD 3M + from 4.9% to 5.5%		2018 / 2020		932,114		113,412		—		363,564
Viva GyM S.A.		7.00% / 10.67%		2018		201,609		157,592		—		—
GMP S.A.		4.45% / 6.04%		2018 / 2020		77,857		42,911		71,453		96,245
CAM Holding S.A.		4.44% / 13.93%		2018 / 2020		69,702		77,775		24,889		12,807
Adexus S.A.		3.63% / 5.90%		2018 / 2019		42,782		46,552		13,190		3,175
CONCAR S.A.		7.50%		2018		—		812		—		—
CAM Servicios Perú S.A.		6.39% / 7.18%		2017		3,620		—		—		—
GMD S.A.		6.20% / 7.47%		2017		14,746		—		—		—
					1,835,340		990,467		296,561		571,167

i) Credit Suisse Syndicated Loan

In December 2015, the Group entered into a medium-term loan credit agreement for up to US$200 million (equivalent to S/672 million), with Credit Suisse AG, Cayman Islands Branch, Credit Suisse AG, Cayman Islands Branch and Credit Suisse Securities (USA) LLC. The initial term of the loan was set at five years, with quarterly installments starting to be paid on the 18th month. The loan accrued interest at a rate of three months Libor plus 3.9% per year. The proceeds were used to finance the equity interest in GSP. As of December 2016, the outstanding balance amounted to US$148.5 (equivalent to S/498.8 million) and is included as a current part. As of December 31, 2017, the outstanding balance amounted to US$81.1 million (equivalent to S/263.2 million).

On June 27, 2017, the Group renegotiated the terms of this loan to clear breaches related to the termination of the GSP concession. The new terms require repayment by December, 2020, with required prepayments to be made with the proceeds of asset sales of 40% in the first year and an additional 30% in the second year of the amendment. The syndicated loan accrues interest at LIBOR plus 4.90% per year. Under the amendment, the Group is prohibited from paying dividends until the loan is fully repaid. The loan is secured by (i) a lien on Concar’s shares; (ii) a lien on Almonte’s shares;

(iii) a mortgage over certain real estate property in Surquillo; (iv) liens on certain accounts; (v) a lien on GyM’s share; (vi) a second lien on CAM Holding SPA’s shares; (vii) a second lien on CAM Servicios del Peru S.A.’s shares; and (viii) a first lien on cash flows from the sale of certain assets.

The agreement contains certain covenants, including the obligation by the Company to maintain the following financial ratios during the term of the agreement: (1) the Consolidated EBITDA to Consolidated Interest Expense Ratio shall not be less than 3.5:1.0 commencing on April 1, 2018 and thereafter; (2) the Consolidated Leverage Ratio (as defined therein) shall not be greater than 3.5:1.0 at any time during the period commencing on December 31, 2016 and ending on March 31, 2017; 3.5:1.0 at any time during the period commencing on July 1, 2017 and ending on September 30, 2017; and no greater than 2.5:1.0 at any time thereafter; and (3) the Debt Service Coverage Ratio as of the last day of any fiscal quarter of the borrower, falling on or after the first anniversary of the closing date, shall not be less than 1.5:1.0, commencing on April 1, 2018 and thereafter.

As of the date of this annual report, we are under default in relation to the financial ratios and as per paragraph (2) the non-delivery of the audited consolidated financial statements of Graña y Montero and GyM for the 2017 fiscal year. The syndicated loan required that we provide the financial statements for the 2017 fiscal year no later than April 30, 2018. We are in the process of obtaining waivers from the lenders. Management estimates that these will be granted and, therefore, do not represent a contingency for the Company.

ii) GSP Bridge Loan

At December 31, 2016, the current balance includes US$129 million (equivalent to S/433.3 million) of the corporate guarantee issued by the Company to secure the bridge loan given to GSP, which was enforceable at that date. On June 27, 2017, the Company has reached a new term loan with Natixis, BBVA, SMBC and MUFJ for US$78.7 million (equivalent to S/264.8 million), the proceeds of which were used to repay the GSP bridge loan. At December 31, 2017, the outstanding loan amount is US$72.5 million (S/235.2 million)

The maturity is June, 2020, with required prepayments to be made with the proceeds of asset sales of 40% in the first year and an additional 30% in the second year. The new term contains the following covenant: the consolidated leverage ratio shall not be more than 3.5:1.0 at any time, and accrues interest at LIBOR plus 4.50% per year, which increases to 5.00% during the second year and 5.50% during the third year. Under the new term, the Group is prohibited from paying dividends until the loan is fully repaid. Also, the new term is secured by (i) a first lien on rights to receive the termination payment derived from the GSP termination (the “VCN”), (ii) a second lien on our shares of GyM S.A. and Concar S.A.; (iii) a second lien on our shares of Almonte; (iv) a second lien on certain real estate properties in Miraflores and Surquillo; (v) a second lien on our shares of CAM Holding SPA; (vi) a second lien on our shares of CAM Servicios del Peru S.A.; and (vii) a first lien on cash flows from the sale of certain assets.

As of the date of this annual report, we are under defaults under the term loan with respect to the financial ratio and the non-delivery of the audited consolidated financial statements of Graña y Montero for and 2017 fiscal year. The term loan required that we provide the financial statements for the 2017 fiscal year no later than April 30, 2018. We are in the process of obtaining waivers from the lenders. Management estimates that these will be granted and, therefore, do not represent a contingency for the Company.

b) Finance lease obligations

					Current				Non-current
	Interest		Date of		At December, 31				At December, 31
	rate		maturity		2016		2017		2016		2017
GyM S.A.		2.25% / 8.96%		2018 / 2021		80,570		40,107		58,937		32,397
Viva GyM S.A.		7.30% / 8.95%		2018 / 2022		4,847		4,439		16,541		12,010
Adexus S.A.		3.36% / 18.00%		2018 / 2021		9,884		8,567		12,287		4,363
GMP S.A.		4.22% / 4.98%		2018 / 2020		4,206		4,013		9,035		5,304
CAM Holding S.A.		3.01% / 14.76%		2018 / 2022		3,729		6,240		10,590		5,692
CONCAR S.A.		3.23% / 4.70%		2018 / 2020		3,667		1,777		3,345		1,945
CAM Servicios Perú S.A.		6.79% / 7.75%		2019 / 2020		—		687		—		421
GMI S.A.		5.56% / 6.90%		2018		—		347		—		—
GMD S.A.		4.99% / 7.00%		2017		10,404		—		12,099		—
						117,307		66,177		122,834		62,132

The minimum payments to be made by maturity and present value of the finance lease obligations are as follows:

	At December 31,
	2016			2017
Up to 1 year		127,496			72,864
From 1 to 5 years		112,769			65,899
Over 5 years		19,506			638
		259,771			139,401
Future financial charges on finance leases		(19,630	)		(11,092	)
Present value of the obligations for finance lease contracts		240,141			128,309

The present value of finance lease obligations is broken down as follows:

	At December 31,
	2016		2017
Up to 1 year		117,307		66,177
From 1 year to 5 years		105,978		61,501
Over 5 years		16,856		631
		240,141		128,309

c) Fair value of borrowings

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

	Carrying amount				Fair value
	At December, 31				At December, 31
	2016		2017		2016		2017
Bank overdrafts		8,396		120		8,396		120
Bank loans		2,131,901		1,561,634		2,142,890		1,627,000
Finance leases		240,141		128,309		240,089		141,040
		2,380,438		1,690,063		2,391,375		1,768,160

In 2017 fair values are determined based on discounted expected cash flows using borrowing rates between 2.4% and 13.8% (between 1.3% and 14.3% in 2016) that corresponds to level 2 of the fair value hierarchy.

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Bonds

12 Months Ended

Dec. 31, 2017

Bonds

20 BONDS

At December 31 this account comprises:

	Total				Current				Non-current
	2016		2017		2016		2017		2016		2017
GyM Ferrovías		604,031		603,657		20,551		12,294		583,480		591,363
Norvial		363,683		343,910		25,540		24,361		338,143		319,549
		967,714		947,567		46,091		36,655		921,623		910,912

GyM Ferrovías S.A.

In February 2015, subsidiary GyM Ferrovías S.A. carried out an international issue of corporate bonds under the U.S. Regulation S. The issue was carried out in Soles VAC (the Spanish acronym for constant value update) for a total amount of S/629 million. The costs of issue in this transaction were S/22 million. Maturity of these bonds is November 2039 and interest is accrued at a rate of 4.75% (plus VAC adjustment); they have a risk rating of AA+ (local level) granted by Apoyo & Asociados Internacionales Clasificadora de Riesgo and a guarantee scheme that includes a mortgage on the concession to which GyM Ferrovías S.A. is the concessionaire, security interest over the shares of GyM Ferrovías S.A., Cession of the Collection Rights of the Administration Trust, a Flow and Reserve Account Trust for the Debt, Operation and Maintenance Service and Capex currently in progress. At December 31, 2017 the Group amortized a total of S/19.1 million (S/21.9 million in 2016).

At December 31, 2017 the balance included accrued interest and VAC adjustments payable for S/52.3 million (S/34.5 million at December 31, 2016).

As part of the process of bond structuring, GyM Ferrovías S.A. engaged to report on and verify the following covenants measured on the basis of the individual financial statements:

• Maintaining debt service coverage ratio of not less than 1.2 times.

• Maintaining a constant minimum balance of trust equal to a quarter of operating and maintenance costs (including VAT)

• Maintaining a constant minimum balance of trust equal to two coupons as per schedule.

On August 23, 2017, GyM Ferrovias S. A. and Line One CPAO Purchaser LLC entered into the Sale and Purchase Agreement and Assignment of Rights Agreement regarding the CPAO (“Pago Anual por Inversión Complementaria” in Spanish) derived from the Concession Agreement for up to US$ 316 million.

As of December 31, 2017, GyM Ferrovias S. A. as Borrower, Mizuho Bank, Ltd. and Sumitomo Mitsui Banking Corporation as Lenders and Mizuho Bank, Ltd. as Administrative Agent entered into a US$80 million Working Capital loan agreement to partially finance the Expansion Project of Line 1 Lima Metro. As of December 31, 2017, the loan has not been disbursed.

Norvial S.A.

In July 2015, Norvial S.A. issued the First Corporate Bond Program on the Lima Stock Exchange for a total S/365 million. The first issue was for S/80 million at 5 years, bearing an interest rate of 6.75% and funds drawdown performed on July 23, 2015. The second issue was for S/285 million at 11.5 years, bearing an interest rate of 8.375%, structured in 3 disbursements: the first disbursement of S/105 million was on July 23, 2015; the second disbursement of S/100 million was on January 25, 2016; and the third disbursement of S/80 million will be made effective in July 25, 2016. The issues costs corresponding to the first issue and the first disbursement of the second issue were for S/3.9 million. Risk rating agencies Equilibrium y Apoyo & Asociados Internacionales graded this debt instrument AA.

This financing transaction has been secured by (i) a cash flow trust, related to the consideration and the regulatory rate; (ii) a mortgage on the concession in which Norvial S.A. is a concessionaire; (iii) a security on shares; (iv) collection rights and (v) in general, all those additional collaterals given to the secured creditors.

The capital raised is intended to finance the construction of the Second Phase of Red Vial No.5 and the financing of VAT arising from project-related expenses.

At December 31, 2017 the balance included interest payables for S/4.4 million (S/4.9 million at December 31, 2016).

	2016			2017
Balances as of January 1		186,223			363,684
Additions		179,977			—
Transaction cost applied to additions		(1,099	)		—
Amortization		(3,369	)		(20,010	)
Transaction cost applied to amortization		265			195
Accrued interest		3,332			2,789
Capitalized interest		22,002			26,014
Interest paid		(23,382	)		(28,567	)
Transaction cost applied to paid interest		(265	)		(195	)
Balances as of December 31		363,684			343,910
Less : non current portion		(25,541	)		(24,361	)
Long term - bonds		338,143			319,549

As part of the process of bond structuring, Norvial S.A. engaged to report on and verify periodically the compliance of the following covenants:

• Debt service coverage ratio of not less than 1.3 times.

• Proforma gearing ratio lower than 4 times.

As of December 31, 2016, and 2017 both Companies have complied with their covenants.

Fair value of the bonds of both Companies at December 31, 2017 amounted to S/1,040 million (S/1,055 million at December 31, 2016), which was calculated under discounted cash flows method, using rates between 4.49% and 6.63% (between 4.20% and 7.99% at December 31, 2016), which are within level 2 of the fair value hierarchy.

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Trade Accounts Payable

12 Months Ended

Dec. 31, 2017

Trade Accounts Payable

21 TRADE ACCOUNTS PAYABLE

At December 31 this account comprises:

	2016		2017
Unbilled services received		924,025		132,513
Invoices payable		350,559		1,250,586
Notes payable		2,033		69,947
		1,276,617		1,453,046

Unbilled services received include the estimate made by Management of the valuation of the percentage of completion, amounting to S/132.5 million at December 31, 2017 (S/127.2 million at December 31, 2016).

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Other Accounts Payable

12 Months Ended

Dec. 31, 2017

Other Accounts Payable

22 OTHER ACCOUNTS PAYABLE

At December 31, this account comprises:

	Total				Current				Not Current
	2016		2017		2016		2017		2016		2017
Advances received from customers		810,755		726,294		510,367		316,891		300,388		409,403
Payables Consorcio Ductos del Sur		—		250,021		—		—		—		250,021
Salaries and profit sharing payable		176,022		246,916		176,022		246,916		—		—
GSP performance guarantee (Note 16-a-i)		176,401		—		176,401		—		—		—
Put option liability on Morelco acquisition (Note 33-b)		110,604		105,418		—		—		110,604		105,418
Third-party loans		69,991		107,314		37,991		75,256		32,000		32,058
Other taxes payable		50,548		69,584		50,548		69,584		—		—
VAT payable		65,777		48,095		53,678		37,544		12,099		10,551
Payables Consorcio Rio Mantaro		—		35,531		—		35,531		—		—
Acquisition of non-controlling interest (Note 36-a)		32,102		22,407		32,102		22,407		—		—
Supplier funding		40,612		14,886		26,526		—		14,086		14,886
Guarantee deposits		16,799		15,580		16,799		15,580		—		—
Post-retirement benefits		9,088		8,914		—		—		9,088		8,914
Other accounts payables		50,411		50,013		15,873		28,791		34,538		21,222
		1,609,110		1,700,973		1,096,307		848,500		512,803		852,473

Advances received from customers relate mainly to construction projects and are discounted from billing under contract terms.

As of December 31, 2017, other accounts payable from Consorcio Constructor Ductos del Sur corresponds mainly to payment obligations to main subcontractors for S/237 million, as a consequence of the termination of GSP operations.

The fair value of the short-term payables approximates their carrying amount due to their short-term maturities. The non-current portion, mainly comprises non-financial liabilities such as advances received from customers; the remaining balance is not significant for any period shown in the financial statements.

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Provisions

12 Months Ended

Dec. 31, 2017

Provisions

23 PROVISIONS

At December 31 this account comprises:

	Total				Current				Not Current
	2016		2017		2016		2017		2016		2017
Legal claims		15,733		23,364		13,303		12,220		2,430		11,144
Contingent liabilities from the acquisition of Morelco		5,182		4,224		—		—		5,182		4,224
Contingent liabilities from the acquisition of Coasin and Vial yVives - DSD		1,815		1,839		—		—		1,815		1,839
Contingent liabilities from the acquisition of Adexus		1,128		1,186		1,128		1,186		—		—
Provision for well closure (Note 5.1 d)		17,215		16,804		100		97		17,115		16,707
		41,073		47,417		14,531		13,503		26,542		33,914

At December 31, 2017, legal claims mainly comprise provisions for labor liabilities and tax claims for S/19.3 million (S/14.7 million at December 31, 2016). Claims with the tax authority have been accounted for based on management estimates of the amounts the Group would most likely be required to pay in regard of these current court actions. Due to the fact those amounts will depend on the tax authority, the Group does not have an estimated timing of when these cash outflows would be required.

This legal claim balance also includes court actions brought against the Group by the Peruvian energy regulator (OSINERGMIN) resulting from the storage of hydrocarbons and the applicable environmental laws and regulations for S/5.1 million (S/6.3 million at December 31, 2016).

The gross movement of other provisions is broken down as follows:

Other provisions	Legal claims			Contingent liabilities resulting from acquisitions			Provision for well closure			Total
At January 1, 2016		15,000			26,779			19,149			60,928
Additions		9,486			—			462			9,948
Acquisition of subsidiaries		1,926			1,149			—			3,075
Reversals of provisions		(10,569	)		(17,883	)		(2,395	)		(30,847	)
Payments		(298	)		(2,458	)		—			(2,756	)
Translation adjustments		187			538			—			725
At December 31, 2016		15,732			8,125			17,216			41,073
At January 1, 2017		15,732			8,125			17,216			41,073
Additions		9,510			—			—			9,510
Reversals of provisions		(235	)		(809	)		(412	)		(1,456	)
Payments		(1,680	)		—			—			(1,680	)
Translation adjustments		37			(67	)		—			(30	)
At December 31, 2017		23,364			7,249			16,804			47,417

The reversal corresponds to contingent liabilities that expired in 2017 from subsidiaries Morelco, for S/0.8 million, (from subsidiaries Morelco, Vial Vives—DSD y CAM Chile for S/10.1 million, S/4.0 million and S/3.8 million, respectively in 2016).

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Equity

12 Months Ended

Dec. 31, 2017

Equity

24 EQUITY

a) Capital

At December 31, 2016 and 2017, the authorized, subscribed and paid-in capital, according to the Company’s by-laws, and its amendments, comprises 660,053,790 common shares at S/1.00 par value each.

At December 31, 2016 a total of 264,809,545 shares were represented by ADS, equivalent to 52,961,909 ADS at a ratio of 5 shares per ADS; and a total of 259,302,745 shares were represented by ADS, equivalent to 51,860,549 ADSs at December 31, 2017.

As of December 31, 2017, the Company’s shareholding structure was as follows:

Percentage of individual interest in capital	Number of shareholders		Total percentage of interest
Up to 1.00		2,062		14.22
From 1.01 to 5.00		11		23.57
From 5.01 to 10.00		1		5.12
Over 10		2		57.09
		2,076		100.00

As of December 31, 2017, the year-end quoted price of the Company’s shares was S/1.87 per share, with a trading frequency of 100% (quoted price of S/4.7 per share and a trading frequency of 97.6% at December 31, 2016).

b) Other reserves

This item comprises legal reserve exclusively. In accordance with Peruvian Company Law, the Company’s legal reserve is formed by the transfer of 10% of the annual net profits, up to a maximum of 20% of the paid-in capital. In the absence of profits or freely available reserves, this legal reserve can be applied to offset losses but it has to be replenished with the profits to be obtained in subsequent years. This reserve can also be capitalized but its subsequent replenishment is equally mandatory. At December 31, 2016 and 2017 the legal reserve balance reached the above-mentioned limit.

c) Voluntary reserve

At December 31, 2016 and 2017 the balance of this reserve of S/29.97 million correspond to the excess legal reserve, which is above the limit established of 20% of paid-in capital.

d) Share premium

This item comprises the excess of the total proceeds obtained for the issuance of common shares in 2013 in comparison with the nominal value of those for S/1,055,488.

Also, this balance shows the difference between the par value and transaction value of the non-controlling interest acquired.

e) Retained earnings

Dividends to be distributed to shareholders other than domiciliated entities are subject to a 4.1% rate (based on 2014’s profits), 6.8% (based on 2015’s and 2016’s profits) and 5.00% (on profits for 2017 and onwards) of income tax payable by these shareholders; this tax rate should be withheld and settled by the Company. No dividends for fiscal years 2016 and 2017 were distributed (Note 34).

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Deferred Income Tax

12 Months Ended

Dec. 31, 2017

Deferred Income Tax

25 DEFERRED INCOME TAX

Deferred income tax is broken down by its estimated reversal period as follows:

	2016			2017
Deferred income tax asset:
Reversal expected in the following 12 months		86,990			73,883
Reversal expected after 12 months		340,018			362,814
Total deferred tax asset		427,008			436,697
Deferred income tax liability:
Reversal expected in the following 12 months		(166	)		(5,583	)
Reversal expected after 12 months		(73,003	)		(66,889	)
Total deferred tax liability		(73,169	)		(72,472	)
Deferred income tax asset, net		353,839			364,225

The gross movement of the deferred income tax item is as follows:

	2015			2016			2017
Deferred income tax asset, net as of January 1		58,723			48,682			353,839
Credit to income statement (Note 30)		(175	)		263,806			42,779
Adjustment for changes in rates of income tax		(2,008	)		17,105			1,951
Credit (charge) to other comprehensive income		(7,298	)		15,004			—
Tax charged to equity		—			159			—
Acquisition of a subsidiary		—			10,363			(12,340	)
Acquisition of joint operation		1,476			—			(16,804	)
Other movements		(2,036	)		(1,280	)		(5,200	)
Total as of December 31		48,682			353,839			364,225

The movement of deferred tax assets and liabilities in the year, without taking into account the offsetting of balances, is as follows:

Deferred income tax liability	Non-taxable income			Difference in depreciation rates		Fair value gains			Work in Process			Difference in depreciation rates of assets leased			Receivables from local Government		Capitalized Financing cost			Purchase price allocation			Others			Total
At January 1, 2015		14,190			36,515		13,732			14,368			10,445			—		—			—			21,534			110,784
(Charge) credit to P&L		—			2,791		15,338			16,393			—			9,986		15,178			—			1,347			61,032
(Charge) credit to OCI		—			—		7,016			—			—			—		—			—			281			7,297
Reclassification of prior years		(14,190	)		5,849		(5,402	)		(6,038	)		(10,445	)		15,557		—			—			(11,354	)		(26,020	)
At December 31, 2015		—			45,155		30,684			24,723			—			25,543		15,178			—			11,808			153,093
(Charge) credit to P&L		—			16,595		13,587			(16,481	)		—			3,324		6,240			—			2,619			25,883
(Charge) credit to OCI		—			—		(15,348	)		—			—			—		—			—			—			(15,348	)
Reclassification of prior years		—			—		(28,923	)		—			—			—		—			30,187			(1,264	)		—
Adquisition of subsidiary (Adexus)		—			—		—			—			—			—		—			(3,069	)		—			(3,069	)
At December 31, 2016		—			61,750		—			8,242			—			28,867		21,418			27,118			13,163			160,559
(Charge) credit to P&L		—			104,101		—			(5,712	)		—			3,322		(1,473	)		(11,780	)		(3,724	)		84,734
Sale of subsidiary (GMD S.A.)		—			—		—			—			—			—		—			—			(81	)		(81	)
At December 31, 2017		—			165,851		—			2,530			—			32,189		19,945			15,338			9,358			245,211

Deferred income tax asset	Provisions			Accelerated tax depreciation			Tax losses			Work in Process			Accrual for unpaid vacations			Investments in subsidiaries			Impairment			Tax Goodwill			Other			Total
At January 1, 2015		25,806			23,350			59,036			23,941			16,973			11,769			—			—			8,636			169,511
Charge (credit) to P&L		342			4,076			26,661			18,623			772			(13,832	)		—			17,522			4,646			58,810
Adquisition of subsidiary (Coasin)		—			—			—			—			—			—			—			—			—			—
Adquisition of subsidiary (Morelco)		—			—			—			—			—			—			—			—			—			—
Others		—			—			—			—			—			—			—			—			—			—
Reclassification of prior years		(5,199	)		(12,534	)		5,615			(19,544	)		(2,768	)		2,063									5,623			(26,744	)
At December 31, 2015		20,949			14,892			91,313			24,103			14,977			1,476			—			17,522			16,463			201,775
Charge (credit) to P&L		84,571			1,489			51,163			(6,489	)		(2,005	)		(312	)		172,052			3,003			3,322			306,794
Charge (credit) to equity		159			—			—			—			—			—			—			—			—			159
Cargo (abono) a ORI		—			—			—			—			—			—			—			—			(343	)		(343	)
Adquisition of subsidiary (Adexus)		—			—			10,607			—			—			—			—			—			(3,313	)		7,294
Others		—			—			—			—			—			(556	)		—			—			(724	)		(1,280	)
At December 31, 2016		105,679			16,381			153,083			17,614			12,972			608			172,052			20,525			15,487			514,398
Charge (credit) to P&L		(12,614	)		79,637			(8,555	)		21,873			2,166			118			28,593			(112	)		18,358			129,464
Charge (credit) to equity		(8,882	)		—			—			—			—			0			(7,493	)		—			(347	)		(16,722	)
Reclassification		(30,901	)		—			—			—			—			(726	)		31,627			—			—			—
Sale of subsidiary (GMD)		(683	)		(9,367	)		(438	)		—			(1,697	)		—			—			—			(236	)		(12,421	)
Others		(160	)		—			(1	)		—			(1	)		—			1			—			(5,123	)		(5,284	)
At December 31, 2017		52,439			86,651			144,089			39,487			13,440			0			224,780			20,413			28,139			609,435

At December 31, 2017, total tax losses amounted to S/494.8 million of which S/83.9 million are expected to be applied in 2018, S/10.3 million in 2019 and the remaining balance in the following fiscal years.

Tax goodwill arose from a tax credit balance resulting from the reorganization of Chilean subsidiaries in 2014 under Chilean tax laws and regulations. In 2016, the arbitration process relating to Project Collahuasi was completed and an additional payment was determined to be paid to the Chilean subsidiary selling party; which resulted in a higher balance in this item.

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Expenses by Nature

12 Months Ended

Dec. 31, 2017

Expenses by Nature

27 EXPENSES BY NATURE

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

	Cost of goods		Administrative
	and services		expenses
2015
Services provided by third-parties		2,915,682		135,636
Salaries, wages and fringe benefits		2,033,316		199,635
Purchase of goods		1,072,900		7,369
Other management charges		629,799		23,873
Depreciation		186,661		16,711
Amortization of intangibles		74,187		6,489
Taxes		37,129		1,919
Impairment of accounts receivable		13,180		—
Impairment of property, plant and equipment		7,063		2,591
		6,969,917		394,223
2016
Services provided by third-parties		2,317,589		121,294
Salaries, wages and fringe benefits		1,423,664		217,337
Purchase of goods		901,473		—
Impairment of accounts receivable		419,584		—
Other management charges		267,011		24,122
Depreciation		177,699		11,317
Amortization of intangibles		66,862		6,685
Impairment (inventories and accounts receivable)		36,137		—
Taxes		13,740		1,638
Impairment of property, plant and equipment		9,263		—
		5,633,022		382,393
2017
Services provided by third-parties		1,674,731		121,508
Salaries, wages and fringe benefits		1,615,278		205,245
Purchase of goods		1,136,616		140
Other management charges		656,875		54,201
Depreciation		178,209		13,224
Amortization of intangibles		74,515		8,227
Impairment (inventories and accounts receivable)		40,908		—
Taxes		14,860		8,210
Impairment of property, plant and equipment		14,660		20
Impairment of accounts receivable		703		18,406
		5,407,355		429,181

For the year’s ended December 31 wages, salaries and fringe benefits comprise the following items:

	2015		2016		2017
Salaries		1,728,410		1,233,272		1,304,893
Social contributions		164,965		139,423		128,046
Statutory bonuses		129,909		92,418		155,206
Employee’s severance indemnities		91,958		64,421		99,011
Vacations		72,719		58,411		74,759
Worker’s profit sharing (Note 26)		33,972		15,693		14,093
Others		11,018		37,363		44,515
		2,232,951		1,641,001		1,820,523

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Financial Income and Expenses

12 Months Ended

Dec. 31, 2017

Financial Income and Expenses

28 FINANCIAL INCOME AND EXPENSES

For the years ended December 31 these items comprise the following:

	2015			2016			2017
Financial income:
Interest on short-term bank deposits		12,076			9,193			5,133
Interest on loans to third parties		19,749			6,142			635
Commissions and collaterals		3,026			4			12
Exchange rate gain, net		—			—			6,292
Others		2,785			5,306			3,335
		37,636			20,645			15,407
Financial expenses:
Interest expense:
- Bank loans		56,974			97,953			109,366
- Bonds		3,350			25,352			28,804
- Financial lease		13,167			12,138			9,748
- Commissions and collaterals		8,574			9,166			15,648
- Loans from third parties		2,868			264			7,569
- Loans from related parties		556			3,452			—
Exchange difference loss, net		82,851			12,527			—
Derivative financial instruments		1,691			1,248			739
Loss by measurement of financial asset fair value		—			76,864			8,059
Other financial expenses		11,205			18,134			37,420
Less capitalized interest		(13,153	)		(35,434	)		(31,908	)
		168,083			221,664			185,445

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Other Income and Expenses, Net

12 Months Ended

Dec. 31, 2017

Other Income and Expenses, Net

29 OTHER INCOME AND EXPENSES, NET

For the years ended December 31 these items comprise the following:

	2015		2016			2017
Other income:
Sales of fixed assets		25,690		39,774			119,554
Reversal of legal and tax provisions		7,796		18,778			79
Legal indemnities		—		8,957			—
Sale of investments held for sale		60		46			—
Disposal of non-current assets classified as held for sale		8,775		—			—
Present value of the liability from put option		18,627		—			—
Others		18,434		18,574			15,449
		79,382		86,129			135,082
Other expenses:
Impairment of goodwill and trademarks		—		54,308			49,608
Net cost of fixed assets disposal		15,669		31,247			95,541
Loss on remeasurement of previously held interest (Note 33-a)		—		6,832			—
Present value of the liability from put option		—		984			—
Cost of sales of non-current assets classified as held for sale		8,945		—			—
Others		184		6,132			10,478
		24,798		99,503			155,627
		54,584		(13,374	)		(20,545	)

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Tax Situation

12 Months Ended

Dec. 31, 2017

Tax Situation

30 TAX SITUATION

a) Each company in the Group is individually subject to the applicable taxes. Management considers that it has determined the taxable income under general income tax laws in accordance with the tax legislation current effective of each country.

b) Changes in the Peruvian Income Tax Law -

By means of Law No.30296 enacted on December 31, 2014 amendments to Income Tax Law have been made, which are effective starting in fiscal year 2015 onwards. Among these amendments, it should be noted the progressive reduction in the corporate income tax rate (on the Peruvian third-category income earners) from 30% to 28% for fiscal years 2015 and 2016; then a reduction to 27% for fiscal years 2017 and 2018; and a final reduction to 26% from fiscal year 2019 onwards. Tax on dividends and other forms of profit distribution, agreed on by any legal entities to individuals and non-domiciled legal persons is to be progressively increased from 4.1% to 6.8% for distributions that are agreed on or paid during fiscal years 2015 and 2016; then an increase to 8.8% for fiscal years 2017 and 2018 will be effective; and a final increase to 9.3% will be effective from fiscal year 2019 onwards. The distribution of retained earnings until December 31, 2014 will continue to be subject to a 4.1% tax even when the distribution is to be made in the subsequent years.

By means of Legislative Decree No. 1261, enacted on December 10, 2016 the Peruvian income tax law was amended to be effective from fiscal 2017 onwards. This amendment sets forth a corporate income tax rate of 29.5%. It also sets forth an income tax rate on dividends of 5% applicable to non-domiciled legal entities and individuals effective from fiscal 2017 onwards. Undistributed profits up to December 31, 2016 will continue to be affected to a 6.8% income tax rate regardless of whether the distribution is agreed or occurs in subsequent periods.

c) Amendments to Income Tax Law in Chile

On February 1, 2016 Law No 20899 was enacted to simplify and define the application of the above-mentioned tax reform. With respect to income tax, two systems have been established:

i) Attributable income system: the tax rate of first-category applicable on entities will be progressively increased, 21% in 2014, 22.5% in 2015, 24% in 2016, up to 25% in 2017. Its choice is being restricted to companies whose partners are individuals domiciled or resident in Chile or individuals or legal persons non-domiciled and non-resident in Chile. This system levies the shareholders of Chilean entities with taxes on an annual basis regardless of any effective distribution of profits from the local entity; and entitles them to use the total taxes paid as income tax fiscal credit.

ii) Partially integrated system: of first-category taxes applicable on entities will be progressively increased, 21% in 2014, 22.5% in 2015, 24% in 2016, 25.5% in 2017, up to 27% in 2018. Subject to this system are corporations and entities in which at least one of its owners is not an individual (whether domiciled or not) or non-domiciled legal entity. This system levies the shareholders of Chilean entities that distribute dividends and entitle them to use such distribution as a fiscal credit at a 65% of the total taxes paid. This limit does not apply to investors with whom Chile had signed double taxation agreements, such as Peru.

d) Changes in the Income Tax Law in Colombia -

In December 2016 Law No.1819 was published with another amendment to the tax laws, effective from fiscal 2017. Major changes are as follows:

• Changes in the previous income tax rate system in place up to 2016 (three tax rates system, Income Tax + CREE + Surtax) New single rate of Income Tax of 34% and a temporary add tax of 6% for 2017; an Income Tax rate of 33% and add tax of 4% for the year 2018 onwards on a taxable income base greater than S/895 thousand (equivalent to COP800 million).

• Presumed income, applicable if there are tax losses or is greater than the ordinary income. Taxable base presumed to be 3.5% of net assets (before 3%), this could be compensated with subsequent tax income.

• Tax losses may be compensated in the subsequent twelve (12) years from its generation.

• A rate for dividends and participations received by foreign companies will be 5%.

• The VAT rate increase from 16% to 19%.

• Starting fiscal year 2017, statute of limitation will be three (3) years. However, some terms may be higher, as is the case of companies that qualified for transfer prices fillings whose statute of limitation period will be six (6) years. In the case of returns with tax losses the term increases to twelve (12) up to fifteen (15) years.

e) The income tax expense shown in the consolidated income statement comprises:

	2015			2016			2017
Current income tax		135,036			169,428			167,154
Deferred income tax (Note 25)		2,222			(280,911	)		(44,730	)
PPUA		(41,359	)		(7,789	)		613
Income tax expense		95,899			(119,272	)		123,037

Under Chilean Legislation, when a Company reports tax losses, it can apply for a refund of first-category taxes paid in prior years up to an amount that equals the taxes that would be levied on the tax losses, provided that no dividends have been distributed on the income obtained from the refund. The amount to be refunded by the Chilean Tax Authorities is called “provisional payment on absorbed profits - PPUA”. The Company recognizes income from income tax and an account receivable when applying for this tax refund.

In 2016 the PPUA-derived income is related to the tax losses reported by of subsidiary VyV-DSD.

f) The Group’s income tax differs from the theoretical amount that would have resulted from applying the weighted-average income tax rate applicable to the profit reported by of the consolidated companies, as follows:

	2015			2016			2017
Profit (loss) before income tax		142,446			(582,865	)		328,712
Income tax by applying local applicable tax rates on profit generated in the respective countries		51,503			(164,742	)		98,902
Tax effect on:
- Non-taxable income		(31,266	)		(1,068	)		(7,281	)
- Equity method (profit) loss		2,171			3,673			392
- Non-deductible expenses		9,831			57,044			27,901
- Unrecognized deferred tax asset income (expense)		31,432			(4,535	)		1,562
- Adjustment for changes in rates of income tax		2,008			(17,105	)		(1,951	)
- PPUA adjustment for changes in tax rates		15,296			4,871			(611	)
- Change in prior years estimations		12,762			(181	)		12,200
- Others, net		2,162			2,771			(8,077	)
Income tax charge		95,899			(119,272	)		123,037

g) The theoretical tax disclosed resulted from applying the income tax rate stipulated in the tax laws of the country in which a Group company is legally resident. Accordingly, for fiscal 2017, companies that are legally resident in Peru, Chile and Colombia applied income tax rates of 29.5%, 25.5% and 40% respectively (28%, 24% and 40% for 2016; 28%, 22.5% and 39% for 2015). Norvial, GyM Ferrovías, Vesur and GMP (Blocks III and IV) have legal stability agreements with Peruvian Government, in force for all years preserved. In this sense, the consolidated theoretical amount is obtained as a weighted average pre-tax profit or loss and the applicable income tax.

RATES

Country	Rates Taxes local Applicable			Utility before the Tax to Rent			Tax to rent
	(A)			(B)			(A)*(B)
2015
Perú		28.00	%		174,432			48,841
Perú - Norvial S.A.		27.00	%		54,471			14,707
Perú - GyM Ferrovías S.A.		30.00	%		26,954			8,086
Perú – Vesur		30.00	%		2,336			701
Perú – GMP S.A.		30.00	%		15,007			4,502
Chile		22.50	%		(95,284	)		(21,439	)
Colombia		39.00	%		40,900			15,951
Bolivia		25.00	%		(57,382	)		(14,345	)
Unrealized gains					(6,818	)		(2,371	)
Total					154,616			54,631
2016
Perú		28.00	%		(1,098,327	)		(307,532	)
Perú - Norvial S.A.		27.00	%		63,583			17,167
Perú - GyM Ferrovías S.A.		30.00	%		34,760			10,428
Perú – Vesur		30.00	%		888			267
Perú – GMP S.A.		30.00	%		8,602			2,581
Chile		24.00	%		(86,151	)		(20,676	)
Colombia		40.00	%		(25,555	)		(10,222	)
Bolivia		25.00	%		(703	)		(176	)
Unrealized gains					520,038			143,421
Total					(582,865	)		(164,742	)
2017
Perú		29.50	%		730,980			215,639
Perú - Norvial S.A.		27.00	%		68,104			18,388
Perú - GyM Ferrovías S.A.		30.00	%		29,028			8,708
Perú – Vesur		30.00	%		779			234
Perú – GMP S.A.		29.00	%		20,941			6,073
Chile		25.50	%		(128,734	)		(32,827	)
Colombia		40.00	%		(27,970	)		(11,188	)
Bolivia		25.00	%		(2,897	)		(724	)
Unrealized gains					(361,519	)		(105,401	)
Total					328,712			98,902

h) Peruvian tax authorities have the right to examine, and, if necessary, amend the income tax determined by the Company in the last four years - from January 1 of the year after the date when the tax returns are filed (open fiscal year). Therefore, years 2013 through 2017 are subject to examination by the tax authorities. Management considers that no significant liabilities will arise as a result of these possible tax examinations. Additionally, income tax returns for fiscal years 2013, 2014, 2016 and 2017 remain open for examination by the Chilean tax authorities who have the right to carry out said examination within the three years following the date the income tax returns have been filed. Fiscal years 2015 and 2016 are open for tax audit by Colombian tax authorities; fiscal 2017 will also be open for audit. Colombian tax authorities are entitled to audit two consecutive years following the date the income tax returns were filed.

i) In accordance with current legislation, for determination of income tax and general sales tax, the transfer prices transactions with related companies and companies resident in territories with low or no taxation must be considered. For this purpose, documentation and information must be available to support the valuation methods used and the criteria considered for their determination (transfer pricing rules). The Tax Administration is authorized to request this information from the taxpayer. Based on the analysis of the Company’s operations, Management and its legal advisors estimate that the transfer prices of transactions with related companies are based on market conditions, similar to those agreed with third parties, at 31 December 2017

j) Temporary tax on net assets - ITAN

The temporary tax on net assets is applied by the companies which operate in Peru, to third category income generators subject to the Peruvian Income Tax General Regime. Effective the year 2012, the tax rate is 0.4%, applicable to the amount of the net assets exceeding S/1 million.

The amount effectively paid may be used as a credit against payments on account of income tax or against the provisional tax payment of the income tax of the related period.

k) Unrecognized deferred income tax assets amount to S/5 million and S/30.6 million for 2016 and 2017, respectively. In 2016, the Río Mantaro Consortium obtained a profit that was applied against the tax loss and generated an adjustment to the deferred income tax asset of S/5 million.

l) The current income tax payable, after applying the corresponding tax credits and whose due date reaches the first week of April of the following year, includes mainly:

•  CCDS	S/14.9 million in 2016
•  Consorcio AMDP	S/ 9.3 million in 2016
•  Terminales del Perú	S/ 3.6 million in 2016
•  Concar	S/ 3.3 million in 2|016
•  PICSA	S/ 22 million in 2017
•  Viva GyM	S/ 22 million in 2017
•  GMH	S/ 7 million in 2017

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Accumulated Other Comprehensive Income

12 Months Ended

Dec. 31, 2017

Accumulated Other Comprehensive Income

31 ACCUMULATED OTHER COMPREHENSIVE INCOME

The analysis of the movement is as follows:

										Exchange
				Foreign			Increase in			difference from
				currency			fair value of			net investment
	Cash flow			translations			available-for			in a foreign
	hedge			adjustment			sale assets			operation			Total
At January 31, 2015		(1,613	)		(19,030	)		31,169			(12,602	)		(2,076	)
(Charge) credit for the year		954			(45,411	)		26,991			(6,942	)		(24,408	)
Tax effects		(267	)					(7,018	)		1,804			(5,481	)
Other comprehensive income of the year		687			(45,411	)		19,973			(5,138	)		(29,889	)
At December 31, 2015		(926	)		(64,441	)		51,142			(17,740	)		(31,965	)
(Charge) credit for the year		1,190			9,885			(3,149	)		10,965			18,891
Tax effects		(351	)		—			929			(3,243	)		(2,665	)
Transfer to profit or loss (Note 10)		—			—			(41,461	)		1,563			(39,898	)
Other comprehensive income of the year		839			9,885			(43,681	)		9,285			(23,672	)
At December 31, 2016		(87	)		(54,556	)		7,461			(8,455	)		(55,637	)
(Charge) credit for the year		650			(9,166	)		—			9,222			706
Tax effects		(192	)		—			—			(2,729	)		(2,921	)
Other comprehensive income of the year		458			(9,166	)		—			6,493			(2,215	)
At December 31, 2017		371			(63,722	)		7,461			(1,962	)		(57,852	)

Amounts in the table above represent only amounts attributable to the Company’s controlling interest net of taxes. Below is the movement in Other Comprehensive Income for each year:

	2015			2016			2017
Controlling interest		(29,889	)		(23,672	)		(2,215	)
Non-controlling interest		(15,235	)		4,194			(3,117	)
Adjustment for actuarial gains and losses, net of tax		(2,921	)		(1,121	)		(2,948	)
Total value in OCI		(48,045	)		(20,599	)		(8,280	)

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Contingencies, Committments and Guarantees

12 Months Ended

Dec. 31, 2017

Contingencies, Committments and Guarantees

32 CONTINGENCIES, COMMITMENTS AND GUARANTEES

In the opinion of management and its legal advisors, the provisions recorded mainly for labor and tax claims are sufficient to cover the results of these probable contingencies. (Note 23).

a) Tax contingencies

• For fiscal 2016 an appeal is in progress with the Peruvian Tax Court and another administrative action with the Judiciary involving the results of tax audits of VAT (IGV) and Income Tax returns performed by the Peruvian tax authorities for fiscal years 1999 to 2002. The maximum exposure amount is S/5.2 million.

• With respect to our subsidiary GyM S.A., as a result of the tax audits of fiscal 1999, 2001 and 2010, SUNAT issued tax determination and tax penalties resolutions amounting to approximately S/19.1 million.

• In fiscal year 2017, the tax litigation process related to 2001 was resolved, where the Tax Court orders SUNAT to recalculate the observations, determining an amount lower than initially claimed. Our subsidiary has decided to accept the conclusions of this resolution and submit fractionation requests for the payment of the debt in reference amounting to S/14.1 million.

• Likewise, at the end of fiscal year 2017, the contentious-administrative process related to the 1999 fiscal year was resolved, where the Judicial Branch rejected our arguments and confirmed what was stated by SUNAT. Regarding this process, there was already a contingency provision of S/5 million.

• An administrative tax process related to the 2010 fiscal year is still underway; however, its resolution will not imply economic damage since it corresponds to a greater refund of the balance in favor in 2011, already audited by the Tax Administration

• Consortiums in which subsidiary GyM S.A takes part, brought claims with SUNAT against the results of the tax inspection, which had a maximum exposure at December 31, 2017 of S/3 million (S/2.8 million at December 31, 2016 and S/0.8 million at December 31, 2015).

• In 2017, Viva GyM challenged the results of the audit process corresponding to the year 2009, which resulted in a maximum exposure amount of S/1.5 million as of December 31, 2017 including fines and penalties. In April 2018, the tax administration declared the claim as unsubstantiated. The company filed a challenge recourse on the Tax Court.

Management expects the outcome of the other court actions will be favorable to the Company considering their nature and characteristics as well as the opinion of its legal advisor.

b) Other contingencies

i) Civil-court lawsuits mainly related to indemnities for damages, contract termination and workplace accidents amounting to S/90.38 million (S/90.25 million attributable to Viva GyM, S/0.09 million attributable to GyM, and; S/0.12 million attributable to Concar;).

ii) Contentious administrative lawsuits for S/10.26 million, of which, S/9.7 million is related to Consorcio Terminales, and S/.0.56 million corresponds to GMP S.A.

iii) Administrative lawsuits for S/3.82 million, S/1.44 million is related to 12 administrative processes of GMP S.A., Consorcio Terminales and Terminales del Peru; S/2.13 million involving GyM Ferrovías resulting from an action brought by OSITRAN, the Municipalities of Villa María del Triunfo and San Juan de Miraflores comprising the property tax; S/0.20 million against Consorcio Toromocho.

iv) Labor lawsuits for a total S/6.13 million (S/2.93 million comprising actions brought against GyM; S/1.66 million against Consortiums from GyM; S/.0.65 million against GMI; S/0.32 million against Vial y Vives-DSD; S/0.26 million against STRACON GyM; S/0.25 million against Morelco; and, S/0.06 million against GMD S.A).

v) Two securities class actions have been filed against the Company, an executive and a former executive officer in the Eastern District of New York during the first quarter of 2017. Both complaints allege false and misleading statements during the class period. In particular, they allege that the Company failed to disclose, among other things, that a) the company knew that its partner Odebrecht was engaged in illegal activities, and b) the Company profited from such activities in violation of its own corporate governance standards. All parties have agreed to unify the two lawsuits and appoint a single lead plaintiff, with one single council to control the class action. On March 6, 2018, the court appointed Treasure Finance Holding Corp. as the plaintiffs’ representative. The company must submit an exception at the latest on July 30, 2018, in which the Court will be required to dismiss the case because even assuming that the facts alleged in it were true, the plaintiffs would not have the right to sue, based on: (a) the omission to record the alleged illicit payments would not have a significant impact on the company’s financial statements even if they existed; (b) the evidence offered by the plaintiffs should be dismissed by the Court; and (c) the plaintiffs have not alleged that the defendants acted with intent to deceive and to benefit. The request will be reviewed at a hearing in October 2018 and the procedural incident is expected to be resolved by the end of the first quarter of 2019. After this, the Court could dismiss the claim or admit it. Management considers that the claim will probably be dismissed by the corresponding courts due to the deficiency in the filing of the claim and believes that the risk of significant losses for the Company is not probable at this date.

Management expects the outcome of the other court actions will be favorable to the Company considering their nature and characteristics as well as the opinion of its legal advisor.

c) Performance Bonds and Guarantees

At December 31, 2017, the Group holds current performance bonds and guarantees with a number of financial institutions to secure transactions for US$959.70 million and US$202.2 million, respectively (US$1,258.5 million and US$330.5 million, respectively, as of December 31, 2016).

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Business Combinations

12 Months Ended

Dec. 31, 2017

Business Combinations

33 BUSINESS COMBINATIONS

a) Acquisiton of Adexus S.A.

In June 2015 the Company acquired 44% interest in the capital stock of Chilean entity Adexus S.A., which is mainly engaged in providing IT solutions services. At December 31, 2015 the Company arrived at the conclusion that joint control existed and that the joint arrangement qualified as a joint venture; therefore, the investment was recorded under the equity method of accounting in the consolidated financial statements of the Group (Note 16-b).

In January 2016 the Group acquired an additional interest of 8%, totaling 52% of total interest; the consideration agreed totaled S/8.3 million which was settled through debt capitalization. This larger interest did not affected the investment classification as a joint venture.

Subsequently, in August 2016, the Group acquired an additional interest of 39.03% to obtain total interest in its capital stock of 91.03%; thus gaining control over this entity. The consideration agreed totaled S/14 million which was initially stated as debt and then capitalized in the same period.

Upon obtaining control, the Company accounted for the transaction using the acquisition method of accounting set forth in IFRS 3 “Business Combination” and determined goodwill resulting from the acquisition. The balance at December 31, 2016 was stated at provisional values.

The table below itemizes the determination of the fair value of the identifiable assets acquired, liabilities assumed, non-controlling interest held and goodwill at the acquisition date:

	Fair Value
	S/000		US$000
Purchase consideration		14,040		4,179
Fair value of previously held interest		29,039		8,643
Total consideration (a)		43,079		12,822

	Fair Value
	S/000			US$000
Fair value of assets and liabilities of Adexus S.A.:
Cash and cash equivalents		7,737			2,303
Trade receivables		107,426			31,972
Receivables from related parties		2,610			777
Other receivables		1,160			345
Inventories		1,647			490
Prepaid expenses		11,587			3,449
Long-term trade receivables		26,886			8,195
Other long-term receivables		2,063			614
Property, plant and equipment		41,988			12,496
Intangibles		32,204			9,585
Deferred income tax assets		18,115			5,198
Borrowings		(108,808	)		(32,383	)
Trade payables		(59,399	)		(17,678	)
Payables to related parties		(15,683	)		(4,667	)
Current income tax		(2,763	)		(822	)
Other payables		(10,291	)		(3,063	)
Other provisions		(1,926	)		(573	)
Contingent liabilities		(1,149	)		(342	)
Deferred income tax liabilities		(7,102	)		(2,114	)
Fair value of net identifiable assets		46,302			13,782
Non-controlling interest (8.97%)		(4,153	)		(1,236	)
Fair value of net assets attributable to the Group (b)		42,149			12,546
Goodwill (Note 18) (a) - (b)		930			276

Losses arising from the re-measurement at fair value of the previously held interest amounted to S/6.8 million, which was recognized in the statement of income within “Other income and expenses, net”, at the date of acquisition of that additional interest in 2016 (Note 29).

Acquisition transaction costs amounting to S/1.4 million were charged to profit or loss within administrative expenses in 2016.

b) Acquisition of Morelco S.A.S.

In December 23, 2014, through subsidiary GyM S.A. the Company obtained control of Morelco S.A.S. (Morelco) by acquiring 70% of its capital shares. Morelco is an entity domiciled in Colombia that is mainly engaged in providing construction and assembly services. This acquisition is part of the Group’s plan to increase its presence in markets that present high growth potential as in Colombia, and in attractive industries, such as mining and energy.

At December 31, 2014 the Company determined goodwill resulting from this acquisition on the basis of an estimated purchase price of US$93.7 million (equivalent to S/277.1 million), which included cash payments made for US$78.5 million and cash payable estimated to be US$15.1 million (equivalent to S/45.7 million), which, under the agreement of the parties, would be defined after a review of the acquiree’s balance sheet, mainly working capital, cash and financial debt as well as the final carrying amount of the acquiree’s work backlog. The estimated purchase price was allocated to the provisional carrying amounts of the assets acquired and the liabilities assumed.

As a result of this allocation, the balance of goodwill was determined to be US$36.1 million (equivalent to S/105.8 million).

In 2015 as part of the review of the provisional allocation of the purchase price, the following situations arose:

a) The balance at December 31, 2014 of the consideration payable of US$15 million (equivalent to S/46 million) was adjusted in 2015 to US$9.1 million (S/32 million) as a result of the final determination of the working capital, cash and financial debt balances, under the purchase agreement. This amount was fully paid in 2015.

b) The provisional fair values of certain assets acquired and liabilities assumed were reviewed.

As a result of the above, the purchase price was adjusted to US$87.5 million (equivalent to S/258.6 million); the provisional fair values of certain asset and liabilities were modified, giving rise to an adjustment of goodwill to US$35.2 million (equivalent to S/103 million).

Put and call options of non-controlling interest -

Under the shareholder agreement signed for the acquisition of Morelco, the subsidiary GyM signed a purchase-sale agreement for 30% of Morelco’s capital stock held by the non-controlling shareholders. By this agreement, the non-controlling shareholders obtained a right to sell their shares over a period and for an amount set in the agreement (put option). The period to exercise the option began on the second anniversary of the acquisition of the option and expires on its tenth anniversary. The option exercise price is based on a EBITDA multiple less the net debt and until months 51 and 63 until from the date of the agreement a minimum amount is set that is based on the price per share that GyM paid to buy 70% of Morelco’s share capital.

On the other hand, the subsidiary GyM obtains call option to buy those shares over a period of 10 years and at a price that is determined the same way as the put option price is determined, except for the fact the minimum amount is effective for the entire effective period of the option (call option).

Under the IFRS framework, the put option is for the Company an obligation to purchase non-controlling interest shares, and therefore, the Group recognizes a liability measured on the basis of the present value of that option. Since the Group arrived at the conclusion that as a result of this agreement, it did not obtain the risks and rewards inherent to the ownership of this share package underlying the option, initial recognition of this liability was a charge to equity of controlling shareholders within other reserves.

The amount of the liability arising from the put option was estimated at the present value of the redemption amounts expected on the basis of minimum amount of the Morelco’s agreement and the exercise rights of the option. The Company expects that purchase options are to be exercised at the date following the date of transfer. The expected redemption of the non-controlling interest is as follows: 41.66% in the second year, 41.66% in the fourth year and the remaining shares will be sold on the fifth anniversary of the option grant date. The discount rate used to determine the present value of the expected redemption amounts is a risk-free rate available to comparable market participants and indicates the fact that the Group estimates to pay the minimum price of the agreement. At December 31, 2017 the liability is estimated to be S/105.4 million, using a 1.79% discount rate for the first year, 2.03% for the second year, and 2.12% discount rate for the third year (at December 31, 2016 it was S/109.9 million, using a 0.78% discount rate for the first year, 1.37% discount rate for the second year and 1.76% for the third year). In 2017 the changes in the present value of the put option estimated to be S/5.19 million were recognized in the statement of income stated within “Other income and expenses, net” and within “Financial Income and expenses”.

c) Acquisition of Coasin Instalaciones Ltda.

In March 2014, through the subsidiary CAM Chile S.A., the Group acquired control of Coasin Instalaciones Limited with the purchase of 100% of its capital shares. Coasin is an entity incorporated in Chile and is mainly engaged in providing installation and maintenance services for networks and equipment related to the telecommunications industry.

Over a period of twelve months after the acquisition, the Group reviewed the allocation of the purchase price and fair values determined provisionally for certain assets and liabilities. As a result of this process, the balance of goodwill was changed on March 2015 to US$2.2 million (equivalent to S/6.4 million).

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Dividends

12 Months Ended

Dec. 31, 2017

Dividends

34 DIVIDENDS

Due to loans covenants commitments no dividends will be paid for fiscal years 2016 and 2017.

At the General Shareholders’ meeting held on March 29, 2016 the decision was made to distribute dividends for S/30.9 million (S/0.0467 per share), which correspond to 2015 earnings.

At the General Shareholders’ meeting held on March 27, 2015 the decision was made to distribute dividends for S/104.9 million (S/0.159 per share), which correspond to 2014 earnings.

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Earnings (Losses) Per Share

12 Months Ended

Dec. 31, 2017

Earnings (Losses) Per Share

35 EARNINGS (LOSSES) PER SHARE

Basic earnings per share are calculated by dividing the net profit of the period attributable to common shareholders of the Group by the weighted average number of common shares outstanding during the year. No diluted earnings per common share were calculated because there are no common or investment shares with potential dilutive effects (i.e., financial instruments or agreements that give the right to obtain common or investment shares); therefore, it is equal to basic earnings per share.

The basic earnings per share are broken down as follows:

	2015		2016			2017
Profit (Losses) attributable to the controlling interest in the Company		7,097		(509,699	)		148,739
Weighted average number of shares in issue at S/1.00 each, at December 31,		660,053,790		660,053,790			660,053,790
Basic earnings (losses) per share (in S/)		0.011		(0.772	)		0.225

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Transactions with Non-Controlling Interests

12 Months Ended

Dec. 31, 2017

Transactions with Non-Controlling Interests

36 TRANSACTIONS WITH NON-CONTROLLING INTERESTS

a) Additional acquisition of non-controlling interest -

In May, November and December 2016, GyM Chile SPA acquired 5.43%, 6.77% and 1.49% respectively additional capital stock in Vial y Vives—DSD S.A. at a purchase price of S/21.6 million, S/25.7 million and S/3.8 million, respectively. The carrying amounts of the non-controlling interests at the date of the acquisitions were S/13.9 million, S/17.9 million and S/3.9 million. The Group de-recognized the non-controlling interests by reducing the equity attributable to the owners of the parent Company by S/15.4 million. At December 31, 2017, there is an outstanding balance of S/22 million (S/32.1 million in 2016) (Note 22).

b) Disposal of interests in subsidiary without loss of control -

i) In March 2015, GyM S.A. sold 0.048% (S/97) of its total 87.64% interest held in Stracon GyM for a payment of S/377. The carrying amount of this non-controlling interest in Stracon GyM at the date of disposal was S/23.7 million (a 12.36% interest).

ii) In June 2015, GyM S.A. sold 1.92% (S/385) of its total 82.04% interest held in Vial y Vives—DSD S.A. for a payment of S/385. The carrying amount of this non-controlling interest in Vial y Vives—DSD S.A. at the date of disposal was S/3.6 million (a 17.96% interest).

iii) In April 2015, CAM Holding Spa sold a 2.45% (S/2,045) of its total 75.61% interest held in CAM Chile S.A. for S/880. The carrying amount of the non-controlling interest in CAM Chile at the disposal date was S/20.4 million (a 24.39% interest).

c) Contributions of non-controlling shareholders

This balance mainly corresponds to the contributions and returns made by the partners of subsidiary Viva GyM S.A. of their real estate projects. At December 31 this balance comprises:

	2015			2016			2017
Viva GyM S.A.
Contributions received		20,446			6,380			8,654
Returns of contributions		(14,987	)		(27,134	)		(45,053	)
		5,459			(20,754	)		(36,399	)
Plus (less):
Contributions from other subsidiaries		4,870			1,655			3,202
Increase (decrease) in equity of non controlling parties		10,329			(19,099	)		(33,197	)

Returns of contributions mainly correspond to the following projects: “Los Parques de Comas” for S/6.8 million, “Asociacion Parques del Mar” for S/27.8 million, and Klimt for S/8 million in 2017 (“Los Parques de Comas” for S/6.3 million, “Los Parques de Villa El Salvador II” for S/ 12.6 million and “Klimt for S/7.1 million in 2016)

d) Dividends

At December 31, 2017, 2016 and 2015 dividends were distributed for S/59.7 million, S/25.5 million, and S/4.5 million, respectively.

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Discountinued Operation

12 Months Ended

Dec. 31, 2017

Discountinued Operation

37 DISCONTINUED OPERATION

The Company has initiated a divestment process of non-strategic assets to meet the obligations arose from the early terminations of the GSP project, as part of the process (Note 16 a-i) as a result, some subsidiaries, consortiums and joint ventures were sold during 2017 and 2018.

The effect in the consolidated income statement is summarized as follows:

a) GMD S.A.

On June 6, 2017 the Company signed a purchase-sale agreement for their total share (representing 89.19%) of GMD S.A. The selling price was agreed at US$84.7 million (equivalent to S/269.9 million), which was fully paid.

The financial performance and cash flow information presented are for the five months ended May 31, 2017 and the years ended 2015 and 2016.

	GMD S.A.
	(net of intercompany transactions)
							From January 1 to May 31,
	2015			2016			2017
Revenue		21,318			18,651			7,204
Operating costs		(23,829	)		(24,129	)		(10,567	)
Finance costs, net		(8,249	)		(9,758	)		(2,617	)
Operating loss from discontinued activities before taxation		(10,760	)		(15,236	)		(5,980	)
Income tax expense		(3,129	)		(7,466	)		(1,171	)
Loss from discontinued ordinary activities after taxation		(13,888	)		(22,702	)		(7,151	)
Loss from discontinued activities attributable to owners of the Company		(12,393	)		(20,257	)		(6,381	)
Losses per share relating to the discontinued operation are as follows:
Basic		(1.08	)		(1.77	)		(0.56	)
Cash flows relating to the discontinued operation are as follows:
Operating cash flows		(14,193	)		78,286			10,220
Investing cash flows		(17,499	)		(30,712	)		(11,189	)
Financing cash flows		(53,501	)		(48,516	)		1,618

b) TECGAS N.V. (COGA)

On April 24, 2017 the Company signed a purchase-sale agreement for their total capital stock (representing 51%) held in their joint venture with Compañía Operadora de Gas del Amazonas S.A.C. (COGA). The selling price was agreed at US$21.5 million (equivalent to S/69.8 million), which was fully paid.

The financial performance presented is for the period year ended 2016.

	TECGAS N.V.
	2016
Revenue		457,554
Finance costs		215
Operating loss from discontinued activities before taxation		(3,209	)
Income tax expense		(4,078	)
Loss from discontinued ordinary activities after taxation		(7,287	)

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Events After the Date of the Statement of Financial Position

12 Months Ended

Dec. 31, 2017

Events After the Date of the Statement of Financial Position

38 EVENTS AFTER THE DATE OF THE STATEMENT OF FINANCIAL POSITION

a) Divestment process

The Company has initiated a divestment process of non-strategic assets to meet the obligations arose from the early terminations of the GSP project. It should be noted that outside the situation described above, the subsidiaries of the Group are operating normally with their own capital and financing needs.

To date these divestments are the following:

• On March 28, 2018, the subsidiary GYM sold its total share (87.59%) in Stracon GyM S.A. for a total of US $76.8 million which was fully paid. All of the inflows were used to amortize their financial obligations.

The information on the financial result and the cash flow presented below correspond to Stracon GyM S.A. from the years to the periods ended December 31, 2016 and 2017, which were included in the consolidated financial statements.

	STRACON GyM S.A.
	2015			2016			2017
Revenue		1,476,764			1,222,707			1,027,804
Operating costs		(1,305,806	)		(1,099,789	)		(943,805	)
Finance costs, net		(21,478	)		(3,104	)		(5,231	)
Operating profit from discontinued activities before taxation		149,480			119,814			78,768
Income tax expense		(40,492	)		(32,558	)		(17,969	)
Profit from discontinued ordinary activities after taxation		108,988			87,256			60,799
Profit from discontinued activities attributable to owners of the Company		95,463			76,428			53,254
Earnings per share relating to the discontinued operation are as follows Basic		1.395			1.117			0.778
Cash flows relating to the discontinued operation are as follows:
Operating cash flows		166,438			49,105			118,418
Investing cash flows		(19,914	)		(31,132	)		(6,750	)
Financing cash flows		(120,655	)		(71,382	)		(97,802	)

• On May 29, 2018 our company subscribed with Inversiones Concesión Vial S.A.C. (“BCI Peru”)—with the intervention of the Investment Fund BCI NV (“BCI Fund”) and BCI Management Administradora General de Fondos S.A. (“BCI Asset Management”)—an investment agreement to monetize future dividends on Norvial S.A., for US$42.3 million The net proceeds will be use to amortize their financial obligations.

• On May 31st, 2018, the subsidiary Almonte signed an agreement to sell 4,208,769.24 square meters of land for the price of US$92.6 and a second agreement for the sale of additional land subject to certain conditions.

b) Legal processes arising in 2018

i) Consorcio Italo Peruano

On January 26, 2018, GyM S.A. (hereinafter, “GyM”) initiated an arbitration against the National Institute of Neoplastic Diseases (hereinafter, “INEN”), its claim being the approval of the Extension of Term No. 1 for a period of 62 calendar days and, recognition of expenses S/1.4 million (S/0.7 million corresponds to GyM SA). To date, the installation of the Arbitral Tribunal is pending.

ii) Consorcio Norte Pachacutec.

On February 8, 2018, the North Pachacutec Consortium (hereinafter, the “Consortium”) initiated an arbitration against the Drinking Water and Sewerage Service of Lima S.A. (hereinafter, “SEDAPAL”), its main claim being the determination of the final cost of the work executed by the Consortium, considering unrecognized, recognized concepts and awards previously issued and that has not yet been met with the payment in favor of the Consortium, equivalent to the sum of S/36.3 million (S/17.8 million corresponds to GyM). To date, the installation of the Arbitral Tribunal is pending.

c) Deslisting procedure

The New York Stock Exchange (“NYSE”) initiated the Company’s delisting procedure and determined the immediate suspension of the trading of its American Depositary Shares as a result of the Company’s delay in presenting its annual report in Form 20-F corresponding to the year 2017.

This decision was appealed by the Company on May 27, 2018. As a result of the appeal, the NYSE established that the Company must support its appeal no later than July 19, 2018 and scheduled a hearing to orally discuss the company’s arguments for October 11, 2018.

Based on recent precedents and in our legal advisors’ opinion, we estimate that the delisting and suspension decision described above would be revoked upon satisfactory presentation of our annual report in form 20-F corresponding to the year 2017.

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Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2017

Basis of preparation

2.1 Basis of preparation

The consolidated financial statements of the Company and its subsidiaries have been prepared in accordance with International Financial Reporting Standards (IFRS) and interpretations issued by the IFRS Interpretations Committee (IFRIC) applicable to companies reporting under IFRS. The financial statements comply with IFRS as issued by the IASB in force as of December 31, 2016 and December 31, 2017, respectively.

The consolidated financial statements have been prepared under the historical cost convention, except for derivative financial instruments, financial assets at fair value through profit and loss, available-for-sale financial assets measured at fair value. The financial statements are presented in thousands of Peruvian Soles, unless otherwise stated.

The preparation of the consolidated financial statements in conformity with IFRS requires Management to make estimates and assumptions in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 5.

Consolidation of financial statements

2.2 Consolidation of financial statements

a) Subsidiaries

Subsidiaries are entities over which the Company has control. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

The Group applies the acquisition method to account for business combinations. Identifiable assets acquired, liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date.

The Group evaluates measurement of the non-controlling interest on an acquisition-by-acquisition basis. At December 31, 2016 and 2017, the measurements of the non-controlling interest in the Group´s acquisitions were made at the non-controlling interest´s proportionate share of the recognized amounts of the acquiree´s identifiable net assets.

Business acquisition-related costs are expensed as incurred.

Any contingent consideration assumed by the Group with the selling party is recognized at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration are recognized in accordance with IAS 39 “Financial Instruments: Recognition and Measurement” as profit or loss.

Goodwill is initially measured as the excess of the acquisition cost, the fair value at the acquisition date of any interest previously acquired plus the fair value of the non-controlling interest, over the net identifiable assets acquired and liabilities and contingent liabilities assumed. If the acquisition cost is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized in profit or loss at the time of acquisition.

For consolidating subsidiaries, balances, income and expenses from transactions between Group companies are eliminated. Profits and losses resulting from inter-company transactions that are recognized as assets are also eliminated. Group companies use common accounting practices, except for those that are specifically required for specific businesses.

b) Changes in ownership interests in subsidiaries without change of control

Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions, in other words as transactions with owners in their capacity as owners. The difference between fair value of any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interest are also recorded in equity at the time of disposal.

c) Disposal of subsidiaries

When the Group ceases to have control over a subsidiary, any retained interest in the entity is re-measured at its fair value at the date when control is lost, with the change in carrying amount recognized in profit or loss at such date. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognized in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that the amount previously recognized in other comprehensive income is reclassified to profit or loss.

d) Joint arrangements

Contracts in which the Group and one or more of the contracting parties have joint control on the relevant joint activities are called joint arrangements.

Investments in joint arrangements are classified as either joint operations or joint ventures depending on the contractual rights and obligations of each investor. The Group has assessed the nature of its joint arrangements and determined them to be both joint ventures as well as joint operations.

Joint ventures are accounted for using the equity method. Under this method, interests in joint ventures are initially recognized at cost and adjusted thereafter to recognize the Group’s share of the post-acquisition profits or losses and movements in the comprehensive income statement.

The Group assesses on an annual basis whether there is any objective evidence that the investment in the joint ventures and associate is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognizes the impairment loss in share of the profit or loss in associates and joint ventures under the equity method of accounting in the income statement. In addition, the Group stops the use of the equity method if the entity ceases to be an operating entity.

Joint operations are joint arrangements whereby the parties that have joint control of the arrangement, have rights over the assets, and obligations for the liabilities, relating to the arrangement. Each party recognizes its assets, liabilities, revenue and cost and its share of any asset or liability jointly held and, on any revenue, or cost arisen from the joint operation.

In the Group, joint operations mainly relate to consortiums (entities without legal personality) created exclusively for the development of a construction contract. Considering that the only objective of the consortium is to develop a specific project, all costs and revenue are included within revenue from construction activities and cost of construction activities, respectively.

e) Associates

Associates are all entities over which the Group has significant influence but not control, generally accompanying a holding of between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method (see section d) above).

Profits and losses resulting from transactions between the Group and its associates are recognized in the Group’s consolidated financial statements only to the extent of unrelated investor’s interests in the associates. Unrealized losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates are changed where necessary to ensure consistency with the policies adopted by the Group.

Impairment losses are measured and recorded in accordance with section d) above.

Segment reporting

2.3 Segment reporting

Operating segments are reported in a consistent manner with internal reporting provided to Management of the Group.

If an entity changes the structure of its internal organization in a manner that causes the composition of its reportable segments to change, the Group restates the information for earlier periods unless the information is not available.

Foreign currency translation

2.4 Foreign currency translation

a) Functional and presentation currency

The consolidated financial statements are presented in soles, which is the functional presentation currency of the Group. All subsidiaries, joint arrangements and associates use the Peruvian Sol as their functional currency, except for foreign entities, for which the functional currency is the currency of the country in which they operate.

b) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates at the date of the transactions or valuation when items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions are recognized in the consolidated income statement, except when deferred in other comprehensive income.

Exchange differences arising on loans from the Company to its subsidiaries in foreign currencies are recognized in the separate financial statements of the Company and separated financial statements of the subsidiaries. In the consolidated financial statements, such exchange differences are recognized in other comprehensive income and are re-classified in the income statement on the disposal of the subsidiary or debt repayment; to the extent such loans qualify as part of the “net investment in a foreign operation”.

Foreign exchange gains and losses of all monetary items are included in the income statement within financial income or expense.

c) Group companies

The results and financial position of all the Group entities (none of which has the currency of a hyper-inflationary economy) that have a functional currency different from the presentation currency of the Group are translated into the presentation currency as follows:

i) Assets and liabilities for each statement of financial position are translated using the closing exchange rate prevailing at the date of the consolidated statement of financial position;

ii) income and expenses for each income statement are translated at the average exchange rate (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated using the exchange rate on the date of the transaction);

iii) capital is translated by using the historical exchange rate for each capital contribution made; and

iv) all exchange differences are recognized as separate components in other comprehensive income (loss), within foreign currency translations adjustment.

Goodwill and fair value adjustments arising from the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and are translated at the closing exchange rate. Exchange differences are recognized in other comprehensive income.

Public services concession agreements

2.5 Public services concession agreements

Concession agreements signed between the Group and the Peruvian Government entitle the Group, as a Concessionaire, to assume obligations for the construction or improvement of infrastructure and which qualify as public service concessions are accounted as defined by IFRIC 12, “Service Concession Arrangements”. The consideration to be received from the Government for the services of constructing or improving public infrastructure is recognized as a financial asset or as an intangible asset, as set forth below.

a) It is recognized a financial asset to the extent that it has a contractual right to receive cash or other financial assets either because the Government secures the payment of specified or determinable amounts or because the Government will cover any difference arising from the amounts actually received from public service users in relation with the specified or determinable amounts. These financial assets are recognized initially at fair value and subsequently at amortized cost (the financial model).

b) It is recognized an intangible asset to the extent that the service agreement grants the Group a contractual right to charge users of the public service. The resulting intangible asset is measured at cost and is amortized as described in Note 2.15 (intangible asset model).

c) It is recognized a financial asset and an intangible asset when the Group recovers its investment partially by a financial asset and partially by an intangible asset (bifurcated model).

Cash and cash equivalents

2.6 Cash and cash equivalents

In the consolidated statements of financial position and cash flows, cash and cash equivalents include cash on hand, on-demand bank deposits, other highly liquid investments with original maturities of three months or less and bank overdrafts. In the consolidated statement of financial position, bank overdrafts are included in the balance of financial obligations as current liabilities.

Financial assets

2.7 Financial assets

2.7.1 Classification

The Group classifies its financial assets in the following categories: financial assets at fair value through profit or loss, financial assets held-to-maturity, loans and account receivables and financial assets available-for-sale. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.

As of the date of the consolidated financial statements, the Group has classified its financial assets in the following three categories:

a) Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss are non-derivatives that are designated by the Group as at fair value upon initial recognition and are held-for-trading. They are included in current assets in the consolidated statement of financial position.

b) Loans and accounts receivable

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for those whose maturity is greater than twelve months after the date of the consolidated financial statements. These are classified as non-current assets on the consolidated financial position. The Group’s loans and receivables comprise “trade accounts receivables”, “accounts receivable from related parties”, “other accounts receivable”, “unbilled work in progress” and “cash and cash equivalents”.

c) Financial assets held for sale

Financial assets for sale are non-derivatives that are either designated in this category or not classified in any of the other categories. They are registered at cost and are included in non-current assets as “Other Financial Assets” unless Management intends to dispose them within 12 months of the date of the statement of financial position.

2.7.2 Recognition and measurement

The usual purchases and sales of financial assets are recognized at the trading date, the date on which the Group commits to buy or sell the asset. Investments are initially recognized at their acquisition value (fair value at the time of purchase). Financial assets available for sale are subsequently recorded at their fair value. Loans and accounts receivable are subsequently recorded at amortized cost using the effective interest method.

Gains or losses arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’ category is presented in profit or loss within “Other income and expenses, net” in the period in which they arise. Dividend income from financial assets at fair value through profit or loss is recognized in the income statement as part of “Other income and expenses, net” when the Group’s right to receive payments is established.

Changes in the fair value of monetary securities classified as available for sale are recognized in other comprehensive income. When a financial asset classified as available for sale is sold or impaired, the accumulated fair value adjustments recognized in equity are reclassified to profit or loss. Dividends on available-for-sale equity instruments are recognized in the income statement as part of “Other income and expenses, net” when the Group’s right to receive payments is established.

Impairment of financial assets

2.8 Impairment of financial assets

a) Assets carried at amortized cost

At the end of each reporting period the Group assesses whether there is objective evidence that a financial asset or a group of financial assets is impaired. If a financial asset or a group of financial assets is impaired, the impairment losses are recognized only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a “loss event”) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

For the loans and receivables category, the amount of any loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognized in the statement of income. If a loan or an account receivable has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.

b) Assets classified as available-for-sale

The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or a group of financial assets classified as available-for-sale is impaired.

For equity investments, a significant or prolonged decline in the fair value of the security below its cost is also evidence that the assets are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss - measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognized in profit or loss - is removed from equity and recognized in profit or loss. Impairment losses recognized in the income statement on equity instruments are not reversed through the income statement.

Derivative financial instruments and hedging activities

2.9 Derivative financial instruments and hedging activities

Derivatives are initially recognized at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value at the end of each reporting period. The method of recognizing the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged.

The Group designates certain derivatives as hedges of a particular risk associated with a recognized asset or liability (fair value hedge) or a highly probable forecast transaction (cash flow hedge). Derivatives are initially recognized at fair value on the date of subscription of the contract and are subsequently recognized at their fair value. The method to recognize the gain or loss resulting from changes in the fair values of the derivatives depends on the nature of the item being covered.

The Group documents, at the inception of the transaction, the relationship between hedging instruments and hedged items, as well as its risk management objectives and strategy for undertaking various hedging transactions. The Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.

The fair values of various derivative instruments used for hedging purposes and changes in the account reserves for hedging in equity are disclosed in Note 8. The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining maturity period of the hedged item is more than 12 months and as a current asset or liability when the remaining maturity period of the hedged item is less than 12 months. Trading derivatives are classified as a current asset or liability.

Cash flow hedge

The effective portion of changes in the fair value of derivatives that are designated and qualify as fair value hedges is recognized as other comprehensive income. The gain or loss relating to the ineffective portion is recognized immediately in the income statement. Amounts accumulated in equity are reclassified to profit or loss in the periods when the hedged item affects profit or loss (for example, when the forecasted sale that is hedged takes place).

The gain or loss relating to the effective portion of interest rate swaps hedging variable rate borrowings is recognized in the income statement as “Financial income or Financial expenses”.

However, when the forecasted transaction that is hedged results in the recognition of a non-financial asset (for example, inventory or fixed assets), the gains or losses previously deferred in equity are transferred from equity and are included in the initial measurement of the cost of the non-financial asset. The deferred amounts are ultimately recognized in cost of goods sold in the case of inventory or in depreciation in the case of fixed assets.

When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognized when the forecasted transaction is ultimately recognized in the income statement. When a forecasted transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the income statement within “other income and expenses, net”.

Trade accounts receivables

2.10 Trade accounts receivables

Trade receivables are amounts due from customers for goods or services sold by the Group. If collection is expected in one year or less, they are classified as current assets. If not, they are presented as non-current assets.

Trade receivables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method, less any provision for impairment, except for receivables of less than one year that are stated at nominal amount which is similar to their fair values since they are short term.

Work in progress

2.11 Work in progress

Unbilled work in progress comprises the estimation made by the Management of the Engineering and Construction segment related to the unbilled rights receivable for services rendered and not yet approved by the client (valuation based on the percentage of completion).

It also includes the balance of work in progress costs incurred that relates to future activities of the construction contracts and the constructions phase in concessions (see Note 2.25 for detail on Revenue from construction and concession activities).

Changes in estimates of contract revenues and costs can increase or decrease the estimated margin. When a change in the estimate is known, the cumulative impact of the change is recorded in the period in which it is known based on the progress made.

Inventories

2.12 Inventories

The inventories include land, works in progress and finished buildings related to the real estate activity; materials used in the construction activity and merchandise and supplies marketed as part of the computer services segment.

a) Real estate activity

Land used for the execution of real estate projects is recognized at acquisition cost. Work in progress and finished real estate includes the costs of design, materials, direct labor, borrowing costs (directly attributable to the acquisition, construction, production of the asset), other indirect costs and general expenses related to construction phase.

Net realizable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses. The Group reviews annually whether inventories have been impaired identifying three groups of inventories to measure their net realizable value: i) land bought for future real estate projects which are compared to their net appraisal value; if the acquisition value is higher, a provision of impairment is made; ii) land under construction, impairment is measured based on cost projections; if these costs are higher than selling prices of each real estate unit, a estimate is made for impairment; and iii) completed real estate units; these inventory items are compared to the selling prices less selling expenses; if these selling expenses are higher, a provision for impairment is made.

For the reductions in the carrying amount of these inventories to their net realizable value, a provision is made for impairment of inventories with a charge to profit or loss for the year in which those reductions occur.

b) Other Activities

Materials and supplies are estimated under the weighted average cost method or its replacement value, the lower. The cost of these items includes freight and non-refundable applicable taxes. The estimation for devaluation is estimated on the basis of specific analyzes carried out by the Management on its rotation. If it is identified that the book value of the stocks of materials and supplies exceeds their replacement value, the difference is charged to income in the year in which this situation is determined. Management considers that at the date of the consolidated financial statements it is not necessary to establish additional provisions to cover losses due to obsolescence of these inventories.

Investment property

2.13 Investment property

Investment properties are shown at cost less accumulated depreciation and impairment losses, if any. Subsequent costs attributable to investment properties are capitalized only if it is probable that future economic benefits will flow to the Company and the cost of these assets can be measured reliably; if not, they are recognized as expenses when incurred.

Repair and maintenance expenses are recognized in profit and loss when they are incurred. If the property’s carrying amount is greater than its estimated recoverable amount, an adjustment to reduce the carrying amount to the recoverable amount is recognized.

Depreciation is determined at rates calculated to write off cost, less estimated residual value, of each asset on a straight-line basis over its estimated useful life. The estimated useful lives of those properties range from 5 to 33 years.

The investment properties held by the Group correspond to: (i) “Agustino Plaza” Shopping Center, located in the El Agustino District, (ii) the 35% participation in the “Panorama Panorama” Shopping Plaza, located in the district of Santiago de Surco and (iii) the stores located within the stations of Line 1 of the Lima Metro; the properties that are owned by the subsidiary VIVA GyM SA. Fair value is estimated to be US$34.5 million, equivalent to S/112.7 million as of December 31, 2017 (US$29.5 million, equivalent to S/99 million, as of December 31 of 2016). The sales stores of these properties have been leased as an operating lease with third parties.

These investment properties have been leased under the modality of an operating lease to third parties.

Property, plant and equipment

2.14 Property, plant and equipment

Property, plant and equipment are stated at historical cost less accumulated depreciation and impairment losses, if any. Historical cost includes expenditure that is directly attributable to the acquisition of these items.

Subsequent costs are included in the asset’s carrying amount or are recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. Repairs and maintenance expense are charged to the income statement during the financial period in which they are incurred.

Assets under construction are capitalized as a separate component. At their completion, the cost of such assets is transferred to their definitive category.

Replacement units are major spare parts in which depreciation starts when the units are installed for use within the related asset.

Depreciation of machinery, equipment and vehicles recognized as “Major equipment” are depreciated based on their hours of use. Under this method, the total number of work hours that machinery and equipment is capable to produce is estimated and a charge per hour is determined. The depreciation of other assets that do not qualify as “Major equipment” is calculated under the straight-line method to allocate their cost less their residual values over their estimated useful lives, as follows:

	Years
Buildings and facilities		Between 3 and 50
Machinery and equipment		Between 4 and 10
Vehicles		Between 2 and 10
Furniture and fixtures		Between 2 and 10
Other equipment		Between 2 and 10

Residual values and useful lives are reviewed and adjusted as appropriate at each date of the statement of financial position. Gains and losses on disposals are recognized in “Other income and expenses, net” in the income statement. Regarding joint operations that carry out construction activities, the difference between the proceeds from disposals of fixed assets and their carrying amount is shown within “revenue from construction activities” and “cost of construction activities”, respectively.

Intangible assets

2.15 Intangible assets

i) Goodwill

Goodwill arises on the acquisition of subsidiaries and represents the excess of the purchase consideration, the amount of any non-controlling interest and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the net identifiable assets acquired. If the total of consideration transferred, non-controlling interest recognized and previously held interest measured at fair value is less than the fair value of the net assets of the subsidiary acquired, in the case of a bargain purchase, the difference is recognized directly in the income statement.

Goodwill acquired in a business combination is allocated to each cash-generating units (CGU), or group of CGUs, that is expected to benefit from the synergies of the combination. Goodwill is monitored at the operating segment level.

Goodwill impairment reviews are performed at least annually and when events or changes in circumstances indicate a potential impairment. Any impairment is recognized immediately as an expense in item “Other income and expenses, net” and cannot be reversed later.

ii) Trademarks

Trademarks acquired separately are shown at historical cost. Trademarks acquired in a business combination are recognized at fair value at the acquisition date. Management has determined that these trademarks have indefinite useful lives.

Trademark impairment reviews are performed at least annually and when events or changes in circumstances indicate a potential impairment. Any impairment is recognized immediately as an expense in item “Other income and expenses, net”.

iii) Concession rights

The intangible asset consisting of the right to charge users for the services related to service concessions agreements (Note 2.5 and Note 6.b) is initially recorded at the fair value of construction or improvement services. Before amortization is started, an impairment test is performed; it is amortized under the straight-line method, from the date revenue starts using the lower of its estimated expected useful life or effective period of the concession agreement.

iv) Contractual relationships with customers

Contractual relationships with customers are assets resulting from business combinations that were initially recognized at fair value as determined based on the expected cash flows from those relations over an estimated period of time based on the time period those customers will remain as customers of the Group (the estimation of useful life is based on the contract terms which fluctuate between 5 and 9 years). The useful life and the impairment of these assets are individually assessed.

v) Cost of developing wells

Costs incurred in preparing wells to extract hydrocarbons in Blocks I, III, IV and V, located in Talara, and are capitalized as part of intangible assets. These costs are amortized over the useful lives of the wells (estimated to be 5 years for Blocks I and V and unit of production method for Blocks III and IV), when is less than the period of the service agreement signed with Perupetro.

vi) Internally generated software and development costs

Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the Group are recognized as intangible assets when the following criteria are met:

• It is technically feasible to complete the software product so that it will be available for use;

• management intends to complete the software product and use or sell it;

• there is an ability to use or sell the software product;

• it can be demonstrated how the software product will probably generate future economic benefits;

• technical, financial and other resources are available to complete the development and to use or sell the software product; and

• software expense during its development can be reliably measured.

Other development expenditures that do not meet these criteria are expensed as incurred. Development costs previously recognized as an expense are not recognized as an asset in a subsequent period. Computer software development costs recognized as assets are amortized over their estimated useful lives, which fluctuate between 2 to 8 years.

vii) Rights of use of land

Refers rights maintained by the subsidiary Promotora Larcomar S.A. Rights of use of land are stated at historical cost less amortization and any accumulated impairment losses. The useful life of this asset is based on the agreement signed (60 years) and may be extended if agreed by parties. Amortization will begin when it becomes ready for its intended use by Management.

Impairment of non-financial assets

2.16 Impairment of non-financial assets

Assets subject to amortization are subject to impairment tests when events or circumstances occur that indicate that their book value may not be recovered. Impairment losses are measured as the amount by which the book value of the asset exceeds its recoverable value. The recoverable value of the assets corresponds to the higher of its fair value and its value in use. For purposes of the impairment assessment, assets are grouped at the lowest levels in which they generate identifiable cash flows (cash-generating units). The book value of non-financial assets other than goodwill that have been subject to write-offs for impairment are reviewed at each reporting date to verify possible reversals of impairment.

Trade accounts payables

2.17 Trade accounts payables

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities.

Accounts payable are initially recognized at their fair value and subsequently are amortized at amortized cost using the effective interest method, except for accounts payable less than one year that are recorded at their nominal value that is similar to their fair value due to its maturity in the short term.

Other financial liabilities

2.18 Other financial liabilities

Corresponds to the loans and bonds issued by the Group, which are initially recognized at their fair value, net of the costs incurred in the transaction. These financial liabilities are subsequently recorded at amortized cost; any difference between the funds received (net of transaction costs) and the redemption value is recognized in the income statement during the period of the loan using the effective interest method.

The costs incurred to obtain these financial liabilities are recognized as transaction costs to the extent that it is probable that part or the entire loan will be received. In this case, these charges are deferred until the time the loan is received.

Borrowing costs

2.19 Borrowing costs

Debt costs are recognized at the income statement in the period in which they have been incurred, except for intangible assets and inventories (Note 18-c and 15) in which the borrowing costs are capitalized.

The general and specific borrowing costs directly attributable to the acquisition, construction or production of qualified assets, which are assets that necessarily take a substantial period (more than 12 months) to reach their condition of use or sale, are added to the cost of said assets until in such period the assets are substantially ready for use or sale. The Group suspends the capitalization of borrowing costs during the periods in which the development of activities of a qualified asset has been suspended. The income obtained from the temporary investment of specific loans that have not yet been invested in qualified assets is deducted from the borrowing costs eligible for capitalization.

Current and deferred income tax

2.20 Current and deferred income tax

Income tax expense comprises current and deferred tax. Tax expense is recognized in the income statement, except to the extent that it relates to items recognized in other comprehensive income or equity, in which case, it is recognized in the statement of comprehensive income or directly in equity, respectively.

The current income tax is calculated based on the tax laws enacted or substantively enacted at the date of the statement of financial position in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation.

Management, where appropriate, establishes provisions based on amounts expected to be paid to the tax authorities. Deferred tax is recognized on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, deferred tax liabilities are not recognized if they arise from the initial recognition of goodwill; deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realized or is settled.

Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized. Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except for deferred income tax liability where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority.

Employee benefits

2.21 Employee benefits

The Group recognizes a liability when the employee has rendered services in exchange for which he is entitled to receive future payments and an expense when the Group has consumed the economic benefit from the service provided by the employee in exchange for the benefits in question.

The Group determines employee benefits in accordance with current labor and legal regulations and classifies them as short-term benefits, post-employment benefits, long-term benefits and termination benefits.

Short-term benefits are those other than termination indemnities, whose payment is settled in the twelve months following the end of the period in which the employees have rendered the services; they correspond to current remunerations (salaries, salaries and contributions to social security), annual paid and sick absences, participation in profits and incentives and other non-monetary benefits.

Post-employment benefits are those other than termination benefits that are paid after completing your period of employment with the entity. Retirement benefits or post-employment benefit plans can be classified into (i) Defined contribution plans and (ii) Defined benefit plans. The Group maintains defined benefit plans and therefore assumes the actuarial risk.

Long-term benefits are those benefits that must be paid more than twelve months after the end of the period in which the services were rendered. As of December 31, 2016, and 2017, the Group does not grant benefits in this category.

Termination benefits are those benefits payable as a result of: (i) the entity’s decision to terminate the employee’s contract before the retirement date, and (ii) the employee’s decision to voluntarily accept the conclusion of the relationship of work.

Short-term benefits:

a) Current salaries and wages

The current remunerations are constituted by salaries, wages, contributions to social security, statutory bonuses and compensation for time of services. Salaries, wages and contributions to social security are settled on a monthly basis.

Entities of the Group recognize the expense and the related liability for statutory bonuses based on applicable laws and regulations effective in Peru, Chile, Bolivia, Guyana and Colombia. In Peru bonuses correspond to two monthly payments, settled one in July and one in December of each year.

The compensation for time of services corresponds to the indemnification rights of the staff, and is accrued based on the consideration of the service calculated according to the legislation in force in each country in which the entities that make up the Group operate and determine as follows: (i) in Peru it is equivalent to half the remuneration in force at the date of payment and this is effected by deposit in bank accounts designated by the workers in the months of May and November of each year; (ii) In Colombia, it is equivalent to 8.33% of the monthly remuneration, (iii) in Bolivia, the calculation is made taking into account the average salary or wages of the last three months. In Chile and Guyana, this benefit is not available.

b) Annual paid absences

Annual holidays are recognized on an accrual basis. The provision for the estimated obligation resulting from the services rendered by employees is recognized on the date of the consolidated statement of financial position and corresponds; (i) one month for personnel in Peru, (ii) fifteen days for personnel in the Dominican Republic and Colombia, and (iii) in the case of Chile and Bolivia, they are subject to the worker’s seniority and range from fifteen and thirty days.

c) Share in profits and incentives

The participation of the workers in the profits is determined on the basis of the legal provisions in force in each country where the entities that make up the Group operate, as follows: (i) in Peru it is equivalent to 5% of the taxable matter determined by each Company of the Group, in accordance with current income tax legislation, (ii) in the case of the branch domiciled in the Dominican Republic, the worker participation rate is 10%; (iii) in Chile, workers’ participation is a component of the remuneration (equivalent to 4.75 minimum wages per year) and not a determinable percentage of the utility, (iv) in Bolivia the participation equals one monthly salary and the total distributed cannot exceed 25% of the profits determined under local regulations, (v) in Colombia and Guyana these benefits are not provided to employees.

Post-employment benefits

The CAM subsidiary has pension plans for its staff. The liability recognized in the statement of financial position with respect to defined benefit plans is measured based on the present value of the obligation at the end of the reporting period less the fair value of the plan assets.

The present value of the defined benefit obligations is determined by discounting the estimated future cash flows using the interest rates of high quality corporate bonds denominated in the currency in which the benefits will be paid and with maturity periods similar to the obligations for pension plans. In countries where there is no market with instruments with similar characteristics, the market rate of government bonds will be used.

The remeasurements that arise from adjustments and changes in the actuarial assumptions are recorded in other comprehensive income in the period in which they arise.

Termination benefits.

The Group entities recognize the liability and expense for severance payments when they occur, based on the legal provisions in force in each country. In the legislation of Peru, the compensation for arbitrary dismissal for personnel with an indefinite contract amounts to 1.5 times the monthly remuneration for each year worked.

In Colombian legislation, compensation depends on the remuneration received; in the legislation of Chile is granted compensation of 30 days of salary for each year worked with a maximum salary of 330 days.

Other provisions

2.22 Other provisions

a) General

Provisions are recognized when the Group has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Provisions are reviewed at year - end. If the time value of money is significant, provisions are discounted using a pre-tax rate that reflects, when applicable, the specific risks related to the liability. Reversal of the discount due to the passage of time results in the obligation being recognized with a charge to the income statement as a financial expense.

Contingent obligations are disclosed for possible obligations that are not yet determined to be probable. Contingent assets are not recognized and only disclosed if it is probable that future economic benefits will flow to the Company.

b) Provision for the closure of production wells

The subsidiary GMP S.A. recognizes a provision for the closure of operating units that correspond to the legal obligation to close oil production wells once the production phase has been completed. At the initial date of recognition, the liability that arises from said obligation measured at its fair value discounted at its present value, the valuation techniques established by IFRS 13, “Measurement of Fair Value”, simultaneously charged to the intangible account in the statement of financial position.

Subsequently, the liability will increase in each period to reflect the financial cost considered in the initial measurement of the discount, and the capitalized cost is depreciated based on the useful life of the related asset. When a liability is settled, the subsidiaries entities will recognize any gain or loss that may arise. The fair value changes estimated for the initial obligation and the interest rates used to discount the flows, any decrease in the provision, and any decrease of the asset that may exceed the carrying amount of said asset is immediately recognized in the income statement.

If the review of the estimated obligation results in the need to increase the provision and, accordingly, increase the carrying amount of the asset, the subsidiaries will also take into consideration if said increase corresponds to an indicator that the asset has been impaired and, if so, impairment tests are carried out (Note 2.16).

Put option arrangement

2.23 Put option arrangement

The subsidiary GyM S.A. signed a sale option contract on the equity of its subsidiary Morelco SAS (Note 33 b) that allows the shareholder to reallocate its shares over a period of 10 years. The amount payable under the option is initially recognized at the present value of the reimbursement under “Other accounts payable”, directly charged to equity. The charge to equity is recorded separately as put options subscribed on the non-controlling interest, adjacent to the non-controlling interest in the net assets of the consolidated subsidiaries.

Subsequently, the financial liability is updated by changes in the assumptions on which the estimation of the expected cash flows is based and by the financial component due to the passage of time. The effects of this update are recognized in results. In the event that the option expires without being exercised, the liability is written off with the corresponding adjustment to equity.

Capital

2.24 Capital

Common shares are classified as equity.

Incremental costs directly attributable to the issue of new shares or options are shown in equity, as a deduction, net of taxes, of the proceeds.

Where any Group company purchases the Company’s equity shares (treasury shares), the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the company’s equity holders until the shares are cancelled or reissued. Where such shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects is included in equity attributable to the Group’s equity holders.

Revenue recognition

2.25 Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable. The Group recognizes revenue when the amount of revenue can be reliably measured; when it is probable that future economic benefits will flow to the entity; and when specific criteria have been met for each of the Group’s activities.

The Group’s revenue recognition policy is described as follows:

i) Revenue from construction activities

Revenues from construction contracts are recognized using the percentage-of-completion method which is based on the completion of a physical proportion of the overall work contract considering total costs and revenues estimated at the end of the project, in accordance with IAS 11, Construction Contracts. Under this method revenues are determined based on the proportion of actual physical completion compared to the total contracted physical construction commitment.

When it is probable that the total costs of the contract will be above the related revenue, the expected loss will be immediately expensed.

When the outcome of a construction contract cannot be estimated reliably, the associated revenue is recognized to the extent costs incurred are recoverable. Revenue is billed once approval is received by the owners of the work in progress.

In the statement consolidated of financial position, the Group shows the net position of each contract as an asset or a liability. A contract is considered an asset when the costs incurred plus recognized earnings less the sum of all the recognized losses and consolidated assessments exceed work in progress billings; this asset is shown in the statement of financial position as “Unbilled work in progress”; otherwise they are presented as a liability within “Trade accounts payables”.

A change order is an instruction by the customer for a change in the scope of the work to be performed under the contract that may lead to an increase or a decrease in contract revenue. A variation is included in contract revenue when it is probable that the customer will approve the variation and the amount of revenue arising from the variation; can be reliably measured.

A claim is an amount that the Group seeks to collect from the customer or third party as reimbursement for costs not included in the contract price. Claims are included in contract revenue only when negotiations have reached an advanced stage such that it is probable that the customer will accept the claim; and the amount that it is probable will be accepted by the customer can be measured reliably.

ii) Revenue from engineering, advisory, consulting services and other services

Revenues from service contracts are recognized in the accounting period in which they are performed using the percentage of completion method, calculated based on the percentage of costs incurred. Additionally, there are contracts whereby income is recognized as it is earned, regardless of when the related fees are received.

iii) Sales of real-estate properties

Revenue from sales of real estate properties is recognized in the results of the period when sales occur, that is, when the properties are delivered and the risks and rewards inherent to ownership are transferred to the buyer and the collection of the corresponding receivables is reasonably assured.

iv) Revenue from Information Technology Services (IT)

The sale of computer equipment includes some services to be provided in a subsequent date to the asset sale as installation and maintenance. When sales agreements include multiple elements, the amount of the revenue is attributed to each element based on their related fair values. The fair value of each element is determined based on the market price prevailing for each element when sold separately. Revenue derived from computer equipment is recognized when the related risks and rewards are transferred to the customer, which occurs upon delivery. Revenue relating to each service element is recognized using the straight-line method.

v) Interest income

Interest income is recognized on a time-proportion basis, using the effective interest method.

vi) Revenue for concession services

Revenue from concession services is recognized according to its nature. Construction and restoration activities are accounted for applying the percentage-of-completion method as described above and operation and maintenance services in the accounting period when they are provided (see Note 2.5).

Construction contract costs

2.26 Construction contract costs

Contract costs include all direct costs such as materials, labor, subcontracting costs, manufacturing and supply costs of equipment, start-up costs and indirect costs. Periodically, the Group evaluates the reasonableness of the estimates used in the determination of the percentage-of-completion. If, as a result of this evaluation, there are modifications to the revenue or cost previously estimated, or if the total estimated cost of the project exceeds expected revenues, an adjustment is made in order to reflect the effect in results of the period in which the adjustment or loss is incurred.

When the outcome of a construction work cannot be estimated reliably, the revenue of the contract is recognized only up to the amount of the contractual costs incurred and that are likely to be recovered.

Leases

2.27 Leases

a) The Group as a lessee

Operating leases

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases, including prepayments (net of any incentives received from lessor) are charged to the consolidated income statement under the straight-line method over the lease term. The Group’s major kinds of operating leases are leases of machinery, computer equipment, printing equipment, among others.

Finance leases

Leases in which the Group assumes substantially all the risks and rewards of ownership of an asset are classified as finance leases. Each lease payment is allocated between the liability and finance charges so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The corresponding rental obligations, net of finance charges, are included in other payables, short- and long-term in the consolidated statement of financial position.

The interest element of the finance cost is charged to the consolidated income statement of over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant and equipment acquired under finance leases are depreciated over the useful life of the asset or the lease term.

b) Group as a lessor

The Group only has operating leases and the leased assets are stated in the statement of financial position based on the nature of the asset. Revenue from operating leases are recognized under the straight-line method over the lease term and the incentives given to lessees reduce the revenue obtained from leases.

Dividend distribution

2.28 Dividend distribution

Dividend distribution to the Group shareholders is recognized as a liability in the financial statements in the period in which the dividends are approved.

Significant non-operating items

2.29 Significant non-operating items

Significant non-operating items are separately shown in the financial statements when they are necessary to provide a more adequate understanding of the Group’s financial performance. These material items are income or expenses shown separately due to their nature or significant amount.

Standards, amendments and interpretations published but not yet in force

3.1. Standards, amendments and interpretations published but not yet in force

The relevant standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Group’s financial statements are disclosed below. The Group intends to adopt these standards, if applicable, when they become effective.

IFRS 9 “Financial Instruments”

In July 2014, the IASB issued the final version of IFRS 9 Financial Instruments that replaces IAS 39 and all previous versions of IFRS 9. IFRS 9 brings together all three aspects of the accounting for financial instruments project: classification and measurement, impairment and hedge accounting. IFRS 9 is effective for annual periods beginning on or after January 1, 2018, with early application permitted. Except for hedge accounting, retrospective application is required, but the provision of comparative information is not compulsory. For hedge accounting, the requirements are generally applied prospectively, with some limited exceptions. The Group plans to adopt the new standard on the required effective date and will not restate comparative information.

During 2017, the Group performed a detailed impact assessment of all three aspects of IFRS 9. This assessment is based on currently available information and may be subject to changes arising from further reasonable and supportable information being made available to the Group in 2018 when the Group will adopt IFRS 9. Overall, the Group expects no significant impact on its statement of financial position or equity from the adoption of IFRS 9. In addition, the Group will adopt changes in certain financial instruments.

a) Classification and measurement

Management expects to maintain the measurement at fair value for all financial assets that are currently measured at that value. There is no impact on financial liabilities.

b) Impairment

IFRS 9 requires the Group to record an expected credit loss for its debt instruments, loans and account receivables, regardless of the period. The Group will apply the simplified approach on all trade receivables and the general approach for accounts that originate from loans and third parties and related companies.

The Group will strengthen the internal controls, processes and systems regarding the identification of the different financial instruments of accounts receivable loans so that from the moment of initial recognition these items are recognized at their recoverable value. Given the substantially current nature of these accounts and the guarantees received, the Group expects that there will be no significant impact on its consolidated financial statements as a result of the adoption of this standard.

c) Hedge accounting

The Group has determined that all hedge transactions that are currently designated as effective hedges will continue to qualify as hedge accounting under IFRS 9. The Group has chosen not to retrospectively apply IFRS 9 at the time of transition for those hedges designated as hedges under IAS 39. As IFRS 9 does not change the main principles of how an entity should record the effective hedges.

IFRS 15 “Revenue from Contracts with Customers”

IFRS 15 was issued in May 2014 and establishes a five-step model to account for revenue arising from contracts with customers. Under IFRS 15, revenue is recognized at an amount that reflects the consideration agreed with the customer. The new revenue standard will supersede all current revenue recognition requirements under IFRS. Either a full retrospective application or a modified retrospective application is required for annual periods beginning on or after January 1 2018. Early adoption is permitted.

The Group plans to adopt the new standard on the required effective date using the modified retrospective method, under which the accumulated effect of applying this new standard is presented adjusting the beginning balance of accumulated results (January 1, 2018). During 2016, the Group performed a preliminary assessment of IFRS 15, which was followed by a more detailed analysis in 2017.

(a) Engineering and Construction

At the time of the adoption of IFRS 15, the segment considered the following:

i) In the case of additional services, the Group will strengthen the internal controls, processes and systems regarding the obtaining of the valorizations approved by clients, the follow-up of their timely collection and the write off if necessary.

ii) In the case of work in progress (Note 12), the Group will strengthen the internal controls, processes and systems with respect to the support required to register adjustments for work progress and the construction contract margin as of the date of the financial statements

iii) In the case of construction contracts, the Group will strengthen the internal controls, processes and systems regarding the identification of the different performance obligations agreed in the contract with the client, mainly in the Engineering, Procurement and Construction contracts (EPC by its acronym in English). During the review process of the current procedures and those required by IFRS 15, we observed a case whose current accounting treatment must be corrected in order to recognize the different performance obligations contemplated in the contract. The Group is in the process of determining the effect of this situation on its financial statements, although it estimates that it will not be significant at the date of adoption of IFRS 15 or in subsequent years

iv) In the case of penalties, the Group will strengthen its policies on factual support to support that the recognition of charges is not required to the results

(b) Infrastructure

In the case of penalties, the Group will strengthen its policies to support the recognition at the income statement is not required. Specifically, in the contract between OTAS and PLUSPETROL, the Group will strengthen the internal controls, processes and systems regarding the identification of the different performance obligations agreed with the client.

(c) Real Estate

In the case of real estate sales contracts, the Group will strengthen the internal controls, processes and systems regarding the identification of the different performance obligations agreed in the contract with the client, mainly in contracts that include sale of common areas. During the review of current procedures and those required by IFRS 15, we observe a case whose current accounting treatment must be adapted in order to recognize the different performance obligations contemplated in the contract. The Group is in the process of determining the effect of this situation on its financial statements, although it estimates that it will not be significant at the date of adoption of IFRS 15 or in subsequent years

(d) Presentation and disclosure requirements

IFRS 15 requires the presentation and disclosure of more detailed information than required by current regulations. The presentation requirements represent a significant change in current practice and will increase the volume of disclosures required in the Group’s financial statements. In 2017, the Group continued testing its internal controls, policies and procedures necessary to collect and disclose the required information.

IFRS 16 “Leases”

IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for all leases under a single on-balance sheet model similar to the accounting for finance leases under IAS 17. The standard includes two recognition exemptions for lessees: leases of ‘low-value’ assets and short-term leases. IFRS 16 is effective for annual periods beginning on or after 1 January 2019. Early application is permitted only in conjunction with the adoption of IFRS 15. The Group is evaluating the impact of IFRS 16 in its consolidated financial statements with the identification, collection and analysis of current lease agreements.

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Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2017

Summary of Estimated Useful Life of Property, Plant and Equipment

The depreciation of other assets that do not qualify as “Major equipment” is calculated under the straight-line method to allocate their cost less their residual values over their estimated useful lives, as follows:

	Years
Buildings and facilities		Between 3 and 50
Machinery and equipment		Between 4 and 10
Vehicles		Between 2 and 10
Furniture and fixtures		Between 2 and 10
Other equipment		Between 2 and 10

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Financial Risk Management (Tables)

12 Months Ended

Dec. 31, 2017

Schedule of Undiscounted Cash Flows of Financial Liabilities

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

	Less than 1 year		1-2 years		2-5 years		More than 5 years		Total
At December 31, 2016
Other financial liabilities (except for finance leases)		1,936,825		128,508		173,145		—		2,238,478
Finance leases		127,496		85,989		26,780		19,506		259,771
Bonds		113,299		180,431		365,697		1,334,485		1,993,912
Trade accounts payables		1,276,617		—		—		—		1,276,617
Accounts payables to related parties		80,217		28,082		37,238		—		145,537
Other accounts payables		303,827		49,064		143,655		—		496,546
Other non-financial liabilities		—		1,081		—		—		1,081
		3,838,281		473,155		746,515		1,353,991		6,411,942
At December 31, 2017
Other financial liabilities (except for finance leases)		1,003,500		336,913		290,253		—		1,630,666
Finance leases		72,864		41,877		24,022		638		139,401
Bonds		109,746		148,986		353,349		1,272,647		1,884,728
Trade accounts payables		1,453,046		—		—		—		1,453,046
Accounts payables to related parties		55,174		25,954		—		—		81,128
Other accounts payables		153,498		34,527		371,976		—		560,001
Other non-financial liabilities		—		383		—		—		383
		2,847,828		588,640		1,039,600		1,273,285		5,749,353

Schedule of Information About Gearing Ratio

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

	2016			2017
Total financial liabilities and bonds		3,348,152			2,637,630
Less: Cash and cash equivalent		(606,950	)		(626,180	)
Net debt		2,741,202			2,011,450
Total equity		2,489,737			2,589,078
Total capital		5,230,939			4,600,528
Gearing ratio		0.52			0.44

Schedule of Assets and Liabilities Measured at Fair Value

The table below shows the Group’s assets and liabilities measured at fair value at December 31, 2016 and 2017:

	Level 1		Level 2		Level 3		Total
At December 31, 2016
Financial assets
Financial assets at fair value through profit or loss		6,379		—		—		6,379
Financial liabilities
Derivatives used for hedging		—		1,081		—		1,081
At December 31, 2017
Financial assets
Financial assets at fair value through profit or loss		181		—		—		181
Financial liabilities
Derivatives used for hedging		—		383		—		383

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Critical Accounting Estimates and Judgements (Tables)

12 Months Ended

Dec. 31, 2017

Summary of Sensitivity Analysis Based on 10% Increase/Decrease in Assumptions of Gross Margin, Discount Rate, Terminal Growth Rate (Details)

At December 31, 2016 and 2017 the Group has performed a sensitivity analysis increasing or decreasing the assumptions of gross margin, discount rate and revenue and terminal growth rate by a 10%, with all the other variables held constant, as follows:

	Difference between recoverable amount and carrying amounts
	2016			2017
Goodwill
Gross margin		(10%)	+10%		(10%)	+10%
Mining construction services		19.18%	71.19%		—	—
Engineering and construction		(42.68%)	17.85%		81.31%	143.63%
Electromechanical		32.16%	74.41%		197.30%	620.85%
IT equipment and services		200.93%	289.04%		0.32%	38.87%
Telecommunication services		(110.85%)	176.40%		465.17%	1339.26%
Discount rate:		(10%)	+10%		(10%)	+10%
Mining construction services		65.94%	28.99%		—	—
Engineering and construction		8.22%	(27.56%)		146.07%	86.86%
Electromechanical		74.42%	36.77%		478.08%	354.39%
IT equipment and services		285.63%	212.65%		30.06%	11.25%
Telecommunication services		70.31%	4.59%		2190.66%	1967.37%
Terminal growth rate:		(10%)	+10%		(10%)	+10%
Mining construction services		42.92%	47.55%		—	—
Engineering and construction		(16.49%)	(7.84%)		107.41%	117.91%
Electromechanical		51.14%	55.62%		402.19%	416.25%
IT equipment and services		243.21%	247.06%		18.54%	20.52%
Telecommunication services		26.14%	39.94%		2232.86%	2394.81%
Trademarks
Revenue growth rate:		(10%)	+10%		(10%)	+10%
Morelco		22.37%	42.03%		16.37%	(4.79%)
Vial yVives - DSD		17.01%	43.01%		(40.72%)	(63.32%)
Adexus		(8.18%)	(9.91%)		22.10%	(0.10%)
Discount rate:		(10%)	+10%		(10%)	+10%
Morelco		53.35%	15.66%		(7.21%)	22.92%
Vial yVives - DSD		56.88%	10.88%		(58.56%)	(45.65%)
Adexus		15.42%	(10.59%)		(2.13%)	28.02%
Terminal growth rate:		(10%)	+10%		(10%)	+10%
Morelco		29.19%	34.94%		8.61%	3.17%
Vial yVives - DSD		23.19%	37.83%		(51.36%)	(54.47%)
Adexus		(0.12%)	1.89%		13.27%	8.86%

Summary of Sensitivity Analysis Performed Considering a 10% Increase/Decrease in Group's Gross Margins

As of December 31, 2015, 2016 and 2017, a sensitivity analysis was performed considering a 10% increase/decrease in the Group’s gross margins, as follows:

	2015			2016			2017
Sales		5,501,537			3,945,599			3,253,199
Gross profit		159,158			194,378			224,040
%		2.89			4.93			6.89
Plus 10%		3.18			5.42			7.58
Increase in pre-tax profit		15,787			19,473			22,552
		174,949			213,851			246,592
Less 10%		2.60			4.44			6.20
Decrease in pre-tax profit		(15,787	)		(19,473	)		(22,552	)
		143,371			174,905			201,488

Disclosure of Adjustments of Financial Statements

as a result, the following adjustments were included in the financial statements of our subsidiary GyM S.A., resulting in a loss of S/15.2 million:

	S/000
Income for debt forgiveness (i)		431,484
Indemnification income		33,600
Work in progress impairment (ii)		(410,199	)
Other provisions		(24,915	)
Inventories impairment (iii)		(33,824	)
Financial expenses		(7,004	)
Property, plant and equipment impairment		(4,143	)
Others (liability) asset, net		(164	)
		(15,165	)

(i) The extinguished trade accounts payable relates to the recognition of the construction project estimated margin recorded as a liability (Note 2.25.i)

(ii) The recoverable of work in progress relates to the minimum secured payment to be obtained from GSP.

(iii) Inventories were specialized in nature assets and cannot be traded in an active market that could not be sold in an active market.

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Interest in Other Entities (Tables)

12 Months Ended

Dec. 31, 2017

Summary of Principal Direct and Indirect Subsidiaries Classified by Operating Segment

The following table shows the principal direct and indirect subsidiaries classified by operating segment (Note 7):

Name	Country	Economic activity
Engineering and Construction:
GyM S.A.	Peru, and Colombia	Civil construction, electro-mechanic assembly, buildings management and implementing housing development projects and other related services.
Stracon GyM S.A.	Peru and Panama	Mining contracting activities, providing mining services and carrying out drilling, demolition and any other activity related to construction and mining operations.
GyM Chile S.p.A.	Chile	Electromechanical assemblies and services to energy, oil, gas and mining sector.
Vial y Vives - DSD S.A.	Chile	Electromechanical assemblies and services. Develop activities related to the construction of engineering projects, civil construction projects and electromechanical assemblies, as well as architectural design and installations in general. Construction and assemblies and electromechanical services in the sectors of energy, oil, gas and mining.
GMI S.A.	Peru	Advisory and consultancy services in engineering, carrying out studies and projects, managing projects and supervision of works.
Morelco S.A.S	Colombia and Ecuador	Providing construction and assembly services, supplying equipment and material to design, build, assemble, operate and maintain all types of mechanical engineering, instrumentation and civil work.

Name	Country	Economic activity
Infrastructure:
GMP S.A.	Peru	Natural oil and oil by-products extraction services, as well as providing storage and fuel dispatch services.
Oiltanking Andina Services S.A.	Peru	Operation of the gas processing plant of Pisco - Camisea.
Transportadora de Gas Natural Comprimido Andino S.A.C.	Peru	Supply, process and market natural gas and its derivates.
Concar S.A.	Peru	Operating and maintaining roads.
GyM Ferrovías S.A.	Peru	Concession for the operation of the public transportation system (Metro de Lima Metropolitana).
Survial S.A.	Peru	Concession for constructing, operating and maintaining the Section 1 of the “Southern Inter-oceanic” road.
Norvial S.A.	Peru	Concession for restoring, operating and maintaining the “Ancón - Huacho - Pativilca” section of the Panamericana Norte road.
Concesión Canchaque S.A.	Peru	Concession for operating and maintaining the Buenos Aires - Canchaque road.
Concesionaria Vía Expresa Sur S.A.	Peru	Concession for designing, constructing, operating and maintaining the Via Expresa - Paseo de la República in Lima.
Real estate:
VIVA GyM S.A.	Peru	Developing and managing real estate projects directly or together with other partners.
Technical services:
CAM Holding S.p.A.	Chile and Colombia	Electric and technological services for the power industry.
Coasin Instalaciones Ltda.	Chile	Installing and maintaining network and equipment for telecommunications.
Adexus S.A.	Chile, Peru, Colombia and Ecuador	IT solutions services.
Parent company operation:
Generadora Arabesco S.A.	Peru	Implementing projects related to electric power-generating activities.
Larcomar S.A.	Peru	Exploiting land right to use the Larcomar Shopping Center.
Promotora Larcomar S.A.	Peru	Building a hotel complex on a plot of land located in the district of Miraflores.
Promotores Asociados de Inmobiliarias S.A.	Peru	Operating in the real-estate industry and engaged in the development and selling office facilities in Peru.
Negocios del Gas S.A.	Peru	Construction, operation and maintenance of the pipeline system to transport natural gas and liquids of natural gas.

Summary of Group's Subsidiaries and Related Interests

The following are the Group’s subsidiaries and related interests at December 31, 2017:

	Percentage of common shares directly held by Parent (%)			Percentage of common shares held by Subsidiaries (%)			Percentage of common shares held by the Group (%)			Percentage of common shares held by non- controlling interests (%)
Engineering and Construction:
GyM S.A.		98.23	%		—			98.23	%		1.77	%
- GyM S.A. subsidiaries		—			87.06	%		87.06	%		12.94	%
Stracon GyM S.A.		—			87.59	%		87.59	%		12.41	%
GyM Chile SpA		—			99.99	%		99.99	%		0.01	%
Vial y Vives - DSD S.A.		—			94.49	%		94.49	%		5.51	%
Morelco S.A.S.		—			70.00	%		70.00	%		30.00	%
GMI S.A.		89.41	%		—			89.41	%		10.59	%
Infrastructure:
GMP S.A.		95.00	%		—			95.00	%		5.00	%
Oiltanking Andina Services S.A.		—			50.00	%		50.00	%		50.00	%
Transportadora de Gas Natural
Comprimido Andino S.A.C		—			99.93	%		99.93	%		0.07	%
Concar S.A.		99.75	%		—			99.75	%		0.25	%
GyM Ferrovias S.A.		75.00	%		—			75.00	%		25.00	%
Survial S.A.		99.99	%		—			99.99	%		0.01	%
Norvial S.A.		67.00	%		—			67.00	%		33.00	%
Concesión Canchaque S.A.		99.96	%		—			99.96	%		0.04	%
Concesionaria Vía Expresa Sur S.A.		99.98	%		0.02	%		100.00	%		—
Real Estate:
Viva GyM S.A.		63.44	%		36.10	%		99.54	%		0.46	%
- Viva GyM S.A. subsidiaries		—			60.51	%		60.51	%		39.49	%
Services:
Cam Holding S.p.A.		100.00	%		—			100.00	%		—
Coasin Instalaciones Ltda.		—			100.00	%		100.00	%		—
CAM Servicios del Perú S.A.		73.16	%		—			73.16	%		26.84	%
Adexus S.A.		91.03	%		—			91.03	%		8.97	%
Parent company operations:
Generadora Arabesco S.A.		99.00	%		—			99.00	%		1.00	%
Larcomar S.A.		79.66	%		—			79.66	%		20.34	%
Promotora Larcomar S.A.		46.55	%		—			46.55	%		53.45	%
Promotores Asociados de Inmobiliarias S.A.		99.99	%		—			99.99	%		0.01	%
Negocios del Gas S.A.		99.99	%		0.01	%		100.00	%		—
Agenera S.A.		99.00	%		1.00	%		100.00	%		—

The following are the Group’s subsidiaries and related interests at December 31, 2016:

	Percentage of common shares directly held by Parent (%)			Percentage of common shares held by Subsidiaries (%)			Percentage of common shares held by the Group (%)			Percentage of common shares held by non- controlling interests (%)
Engineering and Construction:
GyM S.A.		98.23	%		—			98.23	%		1.77	%
- GyM S.A. subsidiaries		—			87.06	%		87.06	%		12.94	%
Stracon GyM S.A.		—			87.59	%		87.59	%		12.41	%
GyM Chile SpA		—			99.99	%		99.99	%		0.01	%
Vial y Vives – DSD S.A.		—			94.49	%		94.49	%		5.51	%
Morelco S.A.S.		—			70.00	%		70.00	%		30.00	%
GMI S.A.		89.41	%		—			89.41	%		10.59	%
Infrastructure:
GMP S.A.		95.00	%		—			95.00	%		5.00	%
Oiltanking Andina Services S.A.		—			50.00	%		50.00	%		50.00	%
Transportadora de Gas Natural
Comprimido Andino S.A.C		—			99.93	%		99.93	%		0.07	%
GyM Ferrovias S.A.		75.00	%		—			75.00	%		25.00	%
Survial S.A.		99.99	%		—			99.99	%		0.01	%
Norvial S.A.		67.00	%		—			67.00	%		33.00	%
Concesión Canchaque S.A.		99.96	%		—			99.96	%		0.04	%
Concesionaria Vía Expresa Sur S.A.		99.98	%		0.02	%		100.00	%		—
Real Estate:
Viva GyM S.A.		63.44	%		36.10	%		99.54	%		0.46	%
- Viva GyM S.A. subsidiaries		—			60.51	%		60.51	%		39.49	%
Services:
GMD S.A.		89.23	%		—			89.23	%		10.77	%
Cam Holding S.p.A.		100.00	%		—			100.00	%		—
Concar S.A.		99.75	%		—			99.75	%		0.25	%
Gestión de Servicios Digitales S.A.		—			100.00	%		100.00	%		—
Coasin Instalaciones Ltda.		—			100.00	%		100.00	%		—
CAM Servicios del Perú S.A.		73.16	%		—			73.16	%		26.84	%
Adexus S.A.		91.03	%		—			91.03	%		8.97	%
Parent company operations:
Generadora Arabesco S.A.		99.00	%		—			99.00	%		1.00	%
Larcomar S.A.		79.66	%		—			79.66	%		20.34	%
Promotora Larcomar S.A.		46.55	%		—			46.55	%		53.45	%
Promotores Asociados de
Inmobiliarias S.A.		99.99	%		—			99.99	%		0.01	%
Negocios del Gas S.A.		99.99	%		0.01	%		100.00	%		—
Agenera S.A.		99.00	%		1.00	%		100.00	%		—

Summary of Group's Subsidiaries Non-controlling Interests

The following are the Group’s subsidiaries non-controlling interests at December 31:

	2016		2017
NON-CONTROLLING PARTICIPATION
Viva GyM S.A. and subsidiaries		241,140		224,345
Viva GyM S.A.		1,700		1,576
GyM S.A. and subsidiaries		100,840		95,052
GyM S.A.		9,354		8,118
Norvial S.A.		61,349		68,419
CAM Holding S.p.A.		26,589		(6,417	)
GMP S.A.		20,879		22,263
GyM Ferrovias S.A.		30,548		35,419
Promotora Larcomar S.A.		13,539		13,395
Other		3,375		3,578
		509,313		465,748

Summarized Financial Information of Subsidiaries With Material Non-controlling Interests

Summarized financial information of subsidiaries with material non-controlling interests

Set out below is the summarized financial information for each subsidiary that has non-controlling interests that are material to the Group.

Summarized statement of financial position

	Viva GYM S.A. and subsidiaries						GyM S.A. and subsidiaries						Norvial S.A.
	At December 31,						At December 31,						At December 31,
	2016			2017			2016			2017			2016			2017
Current:
Assets		1,117,065			884,591			1,849,077			1,875,231			107,838			88,077
Liabilities		(515,781	)		(352,125	)		(2,050,803	)		(2,142,618	)		(49,721	)		(45,613	)
Current net assets (liabilities)		601,284			532,466			201,726			(267,387	)		58,117			42,464
Non-current:
Assets		113,594			78,457			1,326,599			1,368,460			467,449			492,803
Liabilities		(104,179	)		(44,068	)		(471,424	)		(546,342	)		(339,661	)		(327,936	)
Non-current net assets (liabilities)		9,415			34,389			855,175			822,118			127,788			164,867
Net assets		610,699			566,855			653,449			554,731			185,905			207,331

Summarized income statement    

	Viva GyM S.A. and subsidiaries						GyM S.A. and subsidiaries						Norvial S.A.
	For the year ended						For the year ended						For the year ended
	2016			2017			2016			2017			2016			2017
Revenue		411,518			647,535			4,036,226			3,184,833			216,260			149,467
Profit (loss) before income tax		104,223			153,602			(85,857	)		18,827			63,582			68,104
Income tax		(27,054	)		(35,900	)		(11,228	)		(13,482	)		(16,262	)		(18,678	)
Profit (loss) for the period		77,169			117,702			(97,085	)		5,345			47,320			49,426
Other comprehensive Income		—			—			19,486			(2,641	)		—			—
Total comprehensive Income for the period		77,169			117,702			(77,599	)		2,704			47,320			49,426
Dividends paid to non-controlling interest Note (36-c)		5,050			21,165			8,288			4,056			7,260			9,240

Summarized statement of cash flows

	Viva GyM S.A. and subsidiaries						GyM S.A. and subsidiaries						Norvial S.A.
	For the year ended						For the year ended						For the year ended
	2016			2017			2016			2017			2016			2017
Cash flows from operating activities provided by (used in), net		44,910			164,852			224,428			239,935			(42,051	)		25,041
Cash flows from investing activities provided by (used in), net		(546	)		79,471			(29,853	)		44,020			—			—
Cash flows from financing activities provided by (used in), net		(59,931	)		(203,958	)		(283,296	)		(191,689	)		99,193			(48,010	)
Increase (decrease) in cash and cash equivalents, net		(15,567	)		38,817			(88,721	)		92,266			57,142			(22,969	)
Cash and cash equivalents at the beginning of the year		74,459			58,892			167,620			87,294			38,276			95,418
Cash and cash equivalents at the end of the year		58,892			97,709			78,899			179,560			95,418			72,449

Summary of Group's Public Services Concessions

The concessions held by the Group are as follows at December 31, 2017:

Name of Concession	Description	Estimated investment	Consideration	Ordinary shares held			Concession termination		Accounting model
Survial S.A.	This company operates and maintains a 750 km road from the San Juan de Marcona port to Urcos, Peru, which is connected to an interoceanic road. The road has five toll stations and three weigh stations.	US$98.9 million	Transaction secured by the Peruvian Government involving from annual payments for the maintenance and operation of the road, which is in charge of the Peruvian Ministry of Transport and Communications (MTC).		99.9	%		2032		Financial asset
Canchaque S.A.C.	This company operates and periodically maintains a 78 km road from the towns of Buenos Aires to Canchaque, in Peru The road has one toll station.	US$29 million	Transaction secured by the Peruvian Government regardless the traffic volume. Revenue is secured by an annual minimum amount of US$0.3 million.		99.96	%		2025		Financial asset
Concesionaria. La Chira S.A.	Designing, financing, constructing, operating and maintaining project called “Planta de Tratamiento de Aguas Residuales y Emisario Submarino La Chira”. The Project will treat approximately 25% of waste waters in Lima.	S/250 million	Transaction secured by the Peruvian Government consisting of monthly and quarterly payments settled by Sedapal´s collection trust.		50.00	%		2036		Financial asset
GyM Ferrovías S.A.	Concession for the operation of Line 1 of the Lima Metro, Peru’s only urban railway system in Lima city, which includes (i) operation and maintenance of the five existing trains, (ii) operation and maintenance and the acquisition of 19 trains on behalf of the Peruvian Government and (iii) design and construction of the repair yard and maintenance of railway.	S/548.8 million	Transaction secured by the Peruvian Government involving a quarterly payment received from MTC based on km travelled per train.		75.00	%		2041		Financial asset

Name of concession	Description	Estimated investment		Consideration	Ordinary shares held			Concession termination		Accounting model
Norvial S.A.	The Company operates and maintains part of the only highway that connects Lima to the northwest of Peru. This 183 km road known as Red Vial 5 runs from the cities of Ancón to Pativilca and has three toll stations.	US$	152 million	From users (self-financed concession; revenue is derived from collection of tolls).		67.00	%		2028		Intangible
Vía Expresa Sur S.A.	The Company obtained the concession for designing, financing, building, operating and maintaining the infrastructure associated with the Vía Expresa Sur Project. This project involves the second stage expansion of the Via Expresa - Paseo de la República,between Av. República de Panamá and and Panamericana highway.	US$	196.8 million	Contract give the right of collection from users; however the Peruvian Government shall pay the difference when the operating revenue obtained is below US$18 million during the first two years and below US$19.7 million from the third year to the fifteenth year of the effective period of the financing, with a ceiling of US$10 million. In June 2017, the contract was suspended temporarily for one year by agreement between Concessionaire and grantor.		99.98	%		2053		Bifurcated
Recaudo Trujillo S.A.C.	Design, implementation, operation, technological maintenance and renewal (estimate) of the single system of electronic collection. Design, implementation, operation and maintenance of the Clearing house Implementation of the Fleet Control Center, as well as training to personnel.	US$	40.2 million	Economic consideration resulting from applying the “price for validation” considering daily validations input on the system to be managed through a trust.		95.00	%		2036		Intangible

Summary of Group's Major Joint Operations

The table below lists the Group’s major Joint Operations.

	Percentage of interest
Joint operations	2016			2017
Graña y Montero S.A.A.
- Concesionaria la Chira S.A.		50.00	%		50.00	%
GyM S.A.
- Consorcio Constructor Alto Cayma		50.00	%		50.00	%
- Consorcio Rio Pallca – Huanza		40.00	%		40.00	%
- Consorcio Alto Cayma		49.00	%		49.00	%
- Consorcio Lima Actividades Comerciales		50.00	%		50.00	%
- Consorcio Atocongo		40.00	%		40.00	%
- Consorcio Norte Pachacutec		49.00	%		49.00	%
- Consorcio La Chira		50.00	%		50.00	%
- Consorcio Río Urubamba		50.00	%		50.00	%
- Consorcio Vial Quinua		46.00	%		46.00	%
- Consorcio Rio Mantaro		50.00	%		50.00	%
- Consorcio GyM – CONCIVILES		66.70	%		66.70	%
- Consorcio Toromocho		55.00	%		55.00	%
- Consorcio Construcciones y Montajes CCN		25.00	%		25.00	%
- Consorcio HV GyM		50.00	%		50.00	%
- Consorcio Stracon Motta Engil JV		50.00	%		50.00	%
- Consorcio Huacho Pativilca		67.00	%		67.00	%
- Consorcio Constructor Chavimochic		26.50	%		26.50	%
- Consorcio Constructor Ductos del Sur		29.00	%		29.00	%
- Consorcio Italo Peruano		48.00	%		48.00	%
- Consorcio Menegua		50.00	%		50.00	%
- Consorcio Energía y Vapor		50.00	%		50.00	%
- Consorcio Ermitaño		50.00	%		50.00	%
- Consorcio para la Atención y Mantenimiento de Ductos		50.00	%		50.00	%
- Consorcio Lima Actividades Comerciales Sur		50.00	%		50.00	%
- Consorcio CDEM		—			85.00	%
- Consorcio AMDP Norte		—			50.00	%
- Consorcio Chicama - Ascope		—			50.00	%
- Consorcio TNT Vial y Vives - DSD Chile LTDA		—			50.00	%
- Consorcio La Gloria		49.00	%		49.00	%
- Consorcio GyM Sade Skanska		50.00	%		50.00	%
- Constructora Incolur DSD Limitada		50.00	%		50.00	%
GMP S.A.
- Consorcio Terminales		50.00	%		50.00	%
- Terminales del Perú		50.00	%		50.00	%

	Percentage of interest
Joint operations	2016			2017
GMD S.A.
- Consorcio Cosapi-Data – GMD S.A.		70.00	%		—
- Consorcio The Louis Berger Group Inc. - GMD		66.45	%		—
- Consorcio Procesos Digitales		43.65	%		—
- Consorcio GMD S.A. – Indra S.A.		50.00	%		—
- Consorcio Fábrica de Software		50.00	%		—
- Consorcio Gestión de Procesos Electorales (ONPE)		50.00	%		—
- Consorcio Lima Actividades Sur		50.00	%		—
- Consorcio Latino de Actividades Comerciales de
Clientes Especiales		50.00	%		—
- Consorcio Latino de Actividades Comerciales		75.00	%		—
- Consorcio Gestión de Procesos Junta de Gobernadores		45.00	%		—
- Consorcio Soluciones Digitales		38.00	%		—
- Consorcio de Gestión de la Información		56.00	%		—
- Consorcio de la Disponibilidad PKI		70.00	%		—
CONCAR S.A.
- Consorcio Ancón-Pativilca		67.00	%		67.00	%
- Consorcio Peruano de Conservación		50.00	%		50.00	%
- Consorcio Manperán		67.00	%		67.00	%
- Consorcio Vial Sierra		50.00	%		50.00	%
Viva GyM S.A.
- Consorcio Panorama		35.00	%		35.00	%
CAM HOLDING S.p.A
- Consorcio Mecam		50.00	%		50.00	%
- Consorcio Seringel		50.00	%		50.00	%

All of the joint arrangements listed above operate in Peru, Chile and Colombia.

The table below provides a description of the major activities carried out by these joint operations:

Joint Operations in	Economic activity
Graña y Montero S.A.A.	Construction, operation and maintenance of La Chira waste water treatment plant south of Lima. The project is aimed to solve Lima’s environmental problems caused by sewage discharged directly into the sea.
GyM S.A.	Theses joint operations carried out activities through the four divisions of the engineering and construction segment (Note 7).
GMP S.A.	Consorcio Terminales and Terminales del Peru provide services for receiving, storing, shipping and transporting liquid hydrocarbons, such as gasoline, jet fuel, diesel fuel and residual among others.
CONCAR S.A.	Joint operations Concar provides rehabilitation service, routine and periodic maintenance of the road; and road preservation services.
Viva GyM S.A.	Construction of a five-star hotel with a convention center, a business center and entertainment center.
CAM Holding S.p.A.	Execution of outsourcing services to the electric power sector.
GMD S.A.	Outsourcing service of online BPO processes (Business Process Outsourcing).

XML

Segment Reportinorng (Tables)

12 Months Ended

Dec. 31, 2017

Disclosure of Profit before Income Tax Reconciles to EBITDA

Profit before income tax reconciles to EBITDA as follows:

	2015		2016			2017
(Profit) loss before income tax		142,345		(582,865	)		328,713
Financial cost, net		130,447		201,019			170,038
Depreciation		217,071		205,522			199,793
Amortization		89,355		82,743			86,557
EBITDA		579,218		(93,581	)		785,101

Disclosure of Detailed Information About EBITDA for Each Segment

EBITDA for each segment is as follows:

	2015			2016			2017
Engineering and construction		220,137			106,106			194,334
Infrastructure		272,230			237,752			300,935
Real state		52,794			121,421			177,285
Technical services		35,083			39,751			36,796
Parent company operations		(35,591	)		(1,026,394	)		216,666
Eliminations intercompany		34,565			427,783			(140,915	)
Total EBITDA		579,218			(93,581	)		785,101

Summary of Breakdown by Operating Segments

The “Backlog” refers to the expected future revenue under signed contracts and legally binding letters of intent. The breakdown by operating segments as of December 31, 2017, and the dates in which they are estimated to, is shown in the following table:

				Annual Backlog
	2017			2018			2019			2020+
Engineering and Construction		4,727,022			2,261,700			1,320,381			1,144,941
Infrastructure		3,090,417			1,023,749			997,309			1,069,358
Real state		84,128			61,296			22,832			—
Technical Services		1,493,181			687,183			390,647			415,351
Eliminations Intercompany		(321,897	)		(112,237	)		(104,459	)		(105,200	)
		9,072,850			3,921,691			2,626,709			2,524,450

Disclosure of Detailed Information About Operating Segments Financial Position

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

Operating segments financial position

Segment reporting

	Engineering		Infrastructure												Parent
	and construction		Energy		Toll roads		Transportation		Water treatment		Real estate		Technical services		Company Operations		Eliminations			Consolidated
As of December 31, 2016
Assets.-
Cash and cash equivalent		93,543		35,396		125,853		139,414		3,229		58,892		37,675		112,398		550			606,950
Financial asset at fair value through profit or loss		352		—		—		—		—		—		—		—		—			352
Trade accounts receivables		334,426		84,996		77,615		56,665		256		83,704		395,812		—		(2,204	)		1,031,270
Work in progress		648,851		—		—		32,078		—		—		—		—		—			680,929
Accounts receivable from related parties		327,385		3,255		55,907		392		12,379		7,284		12,468		50,582		(287,988	)		181,664
Other accounts receivable		398,666		58,235		28,779		25,895		4,841		20,198		70,769		42,133		—			649,516
Inventories		76,058		12,561		9,839		16,862		—		946,657		55,431		387		(13,502	)		1,104,293
Prepaid expenses		9,204		2,614		2,005		17,265		167		329		19,412		305		—			51,301
Non-current assets classified as held for sale		22,385		—		—		—		—		—		—		—		—			22,385
Total current assets		1,910,870		197,057		299,998		288,571		20,872		1,117,064		591,567		205,805		(303,144	)		4,328,660
Long-term trade accounts receivable		149		—		15,092		629,310		—		—		22,968		—		—			667,519
Long-term work in progress		171,752		—		24,165		—		—		—		—		—		1,669			197,586
Long-term accounts receivable from related parties		—		—		408		—		—		—		492		700,615		(170,131	)		531,384
Prepaid expenses		—		—		20,554		2,029		943		—		—		—		—			23,526
Other long-term accounts receivable		42,511		29,533		22,926		225,565		7,347		17,887		1,075		11,108		—			357,952
Investments in associates and joint ventures		116,512		8,516		—		—		—		31,768		9,589		2,358,918		(2,135,544	)		389,759
Investment property		—		—		—		—		—		49,357		—		—		—			49,357
Property, plant and equipment		592,191		176,486		23,508		193		21		13,008		195,462		130,422		(17,692	)		1,113,599
Intangible assets		246,715		139,353		457,163		269		—		950		78,687		22,793		14,356			960,286
Deferred income tax asset		158,168		4,983		13,244		—		—		623		53,003		189,230		7,757			427,008
Total non-current assets		1,327,998		358,871		577,060		857,366		8,311		113,593		361,276		3,413,086		(2,299,585	)		4,717,976
Total assets		3,238,868		555,928		877,058		1,145,937		29,183		1,230,657		952,843		3,618,891		(2,602,729	)		9,046,636
Liabilities.-
Borrowings		582,260		82,063		3,014		—		—		206,456		155,137		932,113		—			1,961,043
Bonds		—		—		25,540		20,551		—		—		—		—		—			46,091
Trade accounts payable		876,849		59,830		31,857		23,882		599		30,617		247,219		6,703		(939	)		1,276,617
Accounts payable to related parties		119,989		3,902		38,219		33,009		237		66,190		33,749		67,685		(282,763	)		80,217
Current income tax		30,576		3,631		3,401		—		1,064		17,944		5,544		—		—			62,160
Other accounts payable		485,247		11,711		43,614		14,622		27		194,441		157,201		189,444		—			1,096,307
Provisions		6,615		6,441		—		—		—		131		1,344		—		—			14,531
Total current liabilities		2,101,536		167,578		145,645		92,064		1,927		515,779		600,194		1,195,945		(283,702	)		4,536,966
Borrowings		246,315		80,488		2,510		—		—		16,541		73,541		—		—			419,395
Long-term bonds		—		—		338,143		583,480		—		—		—		—		—			921,623
Other long-term accounts payable		147,839		—		44,451		246,522		—		32,000		39,558		2,433		—			512,803
Long-term accounts payable to related parties		41,672		—		408		87,200		23,445		40,074		42,259		394		(170,132	)		65,320
Provisions		7,670		17,115		—		—		—		—		1,757		—		—			26,542
Derivative financial instruments		—		1,081		—		—		—		—		—		—		—			1,081
Deferred income tax liability		28,278		3,546		1,525		14,482		283		15,564		9,491		—		—			73,169
Total non-current liabilities		471,774		102,230		387,037		931,684		23,728		104,179		166,606		2,827		(170,132	)		2,019,933
Total liabilities		2,573,310		269,808		532,682		1,023,748		25,655		619,958		766,800		1,198,772		(453,834	)		6,556,899
Equity attributable to controlling interest in the Company		551,653		265,241		282,851		91,643		3,528		234,449		148,028		2,406,577		(2,003,546	)		1,980,424
Non-controlling interest		113,905		20,879		61,525		30,546		—		376,250		38,015		13,542		(145,349	)		509,313
Total liabilities and equity		3,238,868		555,928		877,058		1,145,937		29,183		1,230,657		952,843		3,618,891		(2,602,729	)		9,046,636

Operating segments financial position

Segment reporting

	Engineering		Infrastructure													Parent
	and construction		Energy		Toll roads		Transportation		Water treatment			Real estate		Technical services		Company Operations		Eliminations			Consolidated
As of December 31, 2017
Assets.-
Cash and cash equivalent		184,401		43,878		121,901		161,073		4,204			85,187		21,904		3,632		—			626,180
Financial asset at fair value through profit or loss		181		—		—		—		—			—		—		—		—			181
Trade accounts receivables		368,303		64,364		128,124		108,706		604			45,897		274,103		419		2,204			992,724
Work in progress		578,723		—		—		—		—			—		—		6,030		—			584,753
Accounts receivable from related parties		230,607		2,746		62,525		3,072		8,852			69,382		9,947		66,059		(352,438	)		100,752
Other accounts receivable		518,123		55,959		66,765		31,381		1,922			40,026		38,527		12,742		—			765,445
Inventories		46,499		15,093		8,685		19,457		—			643,882		45,512		190		(8,607	)		770,711
Prepaid expenses		4,470		1,168		2,354		10,312		164			216		14,037		757		—			33,478
Non-current assets classified as held for sale		17,722		—		—		—		—			—		—		—		—			17,722
Total current assets		1,949,029		183,208		390,354		334,001		15,746			884,590		404,030		89,829		(358,841	)		3,891,946
Long-term trade accounts receivable		—		—		14,747		793,991		—			—		39,852		—		—			848,590
Long-term work in progress		58,997		—		28,413		—		—			—		—		—		—			87,410
Long-term accounts receivable from related parties		258,479		—		27,660		—		—			—		474		636,941		(149,624	)		773,930
Prepaid expenses		—		—		24,585		13,115		892			—		—		—		(510	)		38,082
Other long-term accounts receivable		75,030		53,917		11,159		255,179		7,348			9,811		1,712		56,696		—			470,852
Investments in associates and joint ventures		111,513		7,344		—		—		—			1		10,113		2,206,230		(2,066,530	)		268,671
Investment property		—		—		—		—		—			45,687		—		—		—			45,687
Property, plant and equipment		509,700		171,226		18,572		580		60			11,621		100,936		70,627		(17,587	)		865,735
Intangible assets		203,390		160,288		492,424		323		—			1,022		47,332		24,031		11,260			940,070
Deferred income tax asset		165,227		5,507		11,057		—		—			10,316		46,470		192,088		6,032			436,697
Total non-current assets		1,382,336		398,282		628,617		1,063,188		8,300			78,458		246,889		3,186,613		(2,216,959	)		4,775,724
Total assets		3,331,365		581,490		1,018,971		1,397,189		24,046			963,048		650,919		3,276,442		(2,575,800	)		8,667,670
Liabilities.-
Borrowings		591,987		46,924		2,589		—		—			162,031		139,821		113,412		—			1,056,764
Bonds		—		—		24,361		12,294		—			—		—		—		—			36,655
Trade accounts payable		955,015		62,659		85,329		81,161		132			43,724		189,553		36,412		(939	)		1,453,046
Accounts payable to related parties		114,198		3,664		60,857		83,841		14			37,396		14,428		88,546		(347,770	)		55,174
Current income tax		29,379		1,282		1,122		—		161			45,299		8,300		—		—			85,543
Other accounts payable		492,362		12,487		68,994		27,058		49			63,654		109,904		73,992		—			848,500
Provisions		6,682		5,204		—		—		—			20		1,597		—		—			13,503
Total current liabilities		2,189,623		132,220		243,252		204,354		356			352,124		463,603		312,362		(348,709	)		3,549,185
Borrowings		127,773		101,549		1,945		—		—			12,010		26,458		363,564		—			633,299
Long-term bonds		—		—		319,549		591,363		—			—		—		—		—			910,912
Other long-term accounts payable		379,043		—		52,349		349,987		158			32,058		36,409		2,469		—			852,473
Long-term accounts payable to related parties		4,306		—		836		89,023		23,445			—		30,739		32,102		(154,497	)		25,954
Provisions		8,587		16,707		—		—		—			—		3,365		5,255		—			33,914
Derivative financial instruments		—		383		—		—		—			—		—		—		—			383
Deferred income tax liability		26,633		8,957		8,606		20,789		210			—		7,277		—		—			72,472
Total non-current liabilities		546,342		127,596		383,285		1,051,162		23,813			44,068		104,248		403,390		(154,497	)		2,529,407
Total liabilities		2,735,965		259,816		626,537		1,255,516		24,169			396,192		567,851		715,752		(503,206	)		6,078,592
Equity attributable to controlling interest in the Company		487,923		299,411		323,987		106,256		(123	)		217,290		82,100		2,547,328		(1,940,842	)		2,123,330
Non-controlling interest		107,477		22,263		68,447		35,417		—			349,566		968		13,362		(131,752	)		465,748
Total liabilities and equity		3,331,365		581,490		1,018,971		1,397,189		24,046			963,048		650,919		3,276,442		(2,575,800	)		8,667,670

Disclosure of Detailed Information About Operating Segment Performance

Operating segment performance

Segment Reporting

	Engineering			Infrastructure																		Parent
	and construction			Energy			Toll roads			Transportation			Water treatment			Real estate			Technical services			Company operations			Eliminations			Consolidated
Year 2015 -
Revenue		5,829,441			389,377			729,232			206,459			27,994			215,764			563,874			70,531			(449,760	)		7,582,912
Gross profit (loss)		312,780			63,530			139,651			40,468			2,225			51,755			76,828			(7,004	)		(67,238	)		612,995
Administrative expenses		(289,149	)		(18,214	)		(37,934	)		(10,529	)		(310	)		(20,521	)		(60,871	)		(29,882	)		73,187			(394,223	)
Other income and expenses		30,616			1,365			565			—			—			1,759			12,135			11,114			(2,968	)		54,586
Gain from the sale of investments		—			—			—			—			—			—			(8,289	)		—			—			(8,289	)
Operating profit (loss)		54,247			46,681			102,282			29,939			1,915			32,993			19,803			(25,772	)		2,981			265,069
Financial expenses		(127,383	)		(19,953	)		(9,974	)		(5,303	)		(45	)		(11,642	)		(18,265	)		(2,818	)		27,300			(168,083	)
Financial income		8,875			158			9,812			2,316			121			746			584			56,101			(41,077	)		37,636
Share of the profit or loss in associates and joint ventures under the equity method of accounting		(2,234	)		944			—			—			—			14,888			589			(14,709	)		8,246			7,724
(Loss) profit before income tax		(66,495	)		27,830			102,120			26,952			1,991			36,985			2,711			12,802			(2,550	)		142,346
Income tax		(55,350	)		(7,650	)		(30,157	)		(8,129	)		(520	)		(7,649	)		20,593			(9,208	)		2,171			(95,899	)
(Loss) profit from continuing operations		(121,845	)		20,180			71,963			18,823			1,471			29,336			23,304			3,594			(379	)		46,447
Profit from discontinued operations		—			—			—			—			—			—			5,162			—			3,980			9,142
(Loss) Profit for the year		(121,845	)		20,180			71,963			18,823			1,471			29,336			28,466			3,594			3,601			55,589
(loss) Profit attributable to:
Owners of the Company		(131,181	)		17,072			60,331			14,118			1,471			12,377			20,001			4,337			8,571			7,097
Non-controlling interest		9,336			3,108			11,632			4,705			—			16,959			8,465			(743	)		(4,970	)		48,492
		(121,845	)		20,180			71,963			18,823			1,471			29,336			28,466			3,594			3,601			55,589

Operating segment performance

Segment Reporting

	Engineering			Infrastructure																		Parent
	and  construction			Energy			Toll roads			Transportation			Water treatment			Real estate			Technical services			Company operations			Eliminations			Consolidated
Year 2016 -
Revenue		4,159,538			382,211			527,104			247,040			18,459			411,518			841,121			62,070			(458,744	)		6,190,317
Gross profit (loss)		224,621			42,129			121,114			42,473			5,698			136,540			77,304			(171	)		(92,413	)		557,295
Administrative expenses		(258,568	)		(17,260	)		(35,085	)		(12,952	)		(786	)		(28,430	)		(69,870	)		(35,740	)		76,298			(382,393	)
Other income and expenses		(9,250	)		542			263			10			—			838			3,989			(5,843	)		(3,923	)		(13,374	)
Gain from the sale of investments		—			—			—			—			—			—			—			46,336			—			46,336
Operating (loss) profit		(43,197	)		25,411			86,292			29,531			4,912			108,948			11,423			4,582			(20,038	)		207,864
Financial expenses		(65,138	)		(10,801	)		(7,390	)		(2,810	)		(38	)		(14,388	)		(20,170	)		(115,225	)		14,296			(221,664	)
Financial income		11,216			1,040			2,225			8,037			86			2,816			2,991			18,688			(26,454	)		20,645
Share of the profit or loss in associates and joint ventures under the equity method of accounting		16,501			1,615			—			—			—			6,850			360			(1,036,888	)		421,852			(589,710	)
(Loss) profit before income tax		(80,618	)		17,265			81,127			34,758			4,960			104,226			(5,396	)		(1,128,843	)		389,656			(582,865	)
Income tax		(12,828	)		(5,308	)		(22,213	)		(10,904	)		(1,433	)		(27,054	)		(1,646	)		193,425			7,233			119,272
(Loss) profit from continuing operations		(93,446	)		11,957			58,914			23,854			3,527			77,172			(7,042	)		(935,418	)		396,889			(463,593	)
Profit from discontinued operations		—			—			—			—			—			—			7,851			—			4,144			11,995
(Loss) profit for the year		(93,446	)		11,957			58,914			23,854			3,527			77,172			809			(935,418	)		401,033			(451,598	)
(Loss) profit attributable to:
Owners of the Company		(87,710	)		9,370			43,656			17,891			3,527			22,106			1,546			(934,508	)		414,423			(509,699	)
Non-controlling interest		(5,736	)		2,587			15,258			5,963			—			55,066			(737	)		(910	)		(13,390	)		58,101
		(93,446	)		11,957			58,914			23,854			3,527			77,172			809			(935,418	)		401,033			(451,598	)

Operating segment performance

Segment Reporting

	Engineering			Infrastructure																		Parent
	and  construction			Energy			Toll roads			Transportation			Water treatment			Real estate			Technical services			Company operations			Eliminations			Consolidated
Year 2017 -
Revenue		3,353,199			436,876			642,127			365,772			3,152			647,535			1,060,996			70,049			(499,564	)		6,080,142
Gross profit (loss)		290,296			71,825			139,196			48,696			445			147,384			57,816			(37,771	)		(45,100	)		672,787
Administrative expenses		(231,044	)		(15,854	)		(32,454	)		(15,279	)		(317	)		(21,189	)		(74,174	)		(100,687	)		61,817			(429,181	)
Other income and expenses		(42,747	)		5,139			1,062			5			—			(3,700	)		8,625			10,512			559			(20,545	)
Gain from the sale of investments		25,768			—			—			—			—			49,002			—			195,378			4,215			274,363
Operating profit (loss)		42,273			61,110			107,804			33,422			128			171,497			(7,733	)		67,432			21,491			497,424
Financial expenses		(52,852	)		(13,423	)		(6,893	)		(8,000	)		(50	)		(21,917	)		(29,597	)		(80,339	)		27,626			(185,445	)
Financial income		9,434			1,964			3,256			3,606			26			3,569			3,382			32,925			(42,755	)		15,407
Share of the profit or loss in associates and joint ventures under the equity method of accounting		30,633			1,584			—			—			—			455			1,203			142,596			(175,144	)		1,327
Profit (loss) before income tax		29,488			51,235			104,167			29,028			104			153,604			(32,745	)		162,614			(168,782	)		328,713
Income tax		(17,091	)		(13,151	)		(32,290	)		(9,545	)		(227	)		(35,900	)		4,763			(19,495	)		(101	)		(123,037	)
Profit (loss) from continuing operations		12,397			38,084			71,877			19,483			(123	)		117,704			(27,982	)		143,119			(168,883	)		205,676
Profit from discontinued operations		—			—			—			—			—			—			2,317			—			1,245			3,562
Profit (loss) for the year		12,397			38,084			71,877			19,483			(123	)		117,704			(25,665	)		143,119			(167,638	)		209,238
Profit (loss) attributable to:
Owners of the Company		12,077			33,715			55,620			14,613			(123	)		48,648			(18,094	)		143,279			(140,997	)		148,738
Non-controlling interest		320			4,369			16,257			4,870			—			69,056			(7,571	)		(160	)		(26,641	)		60,500
		12,397			38,084			71,877			19,483			(123	)		117,704			(25,665	)		143,119			(167,638	)		209,238

Disclosure of Geographical Areas

Segments by geographical area

	2015		2016		2017
Revenue:
- Peru		5,457,577		4,547,449		4,375,760
- Chile		944,198		707,364		1,054,885
- Colombia		778,333		570,203		285,897
- Panama		206,137		346,065		361,450
- Guyana		111,924		717		—
- Brasil		39,253		—		—
- Ecuador		—		3,682		—
- Bolivia		45,490		14,837		2,149
		7,582,912		6,190,317		6,080,142
Non-current assets:
- Peru		3,230,288		3,995,453		4,164,342
- Chile		320,094		446,998		407,152
- Colombia		124,820		260,732		203,203
- Bolivia		15,043		13,043		149
- Ecuador		—		888		—
- Guyana		8,800		862		878
- Panama		584		—		—
		3,699,629		4,717,976		4,775,724

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Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2017

Summary of Financial Assets and Liabilities by Category

At December 31 the classification of financial assets and liabilities by category is as follows:

	At December, 31
	2016		2017
Assets according to the statement of financial position
Loans and accounts receivable:
- Cash and cash equivalents		600,923		626,180
- Trade accounts receivable and other accounts receivable not including advances to suppliers, net		1,329,262		1,447,629
- Work in progress		878,515		672,163
- Financial assets related to concession agreements		685,975		952,780
- Accounts receivable from related parties		713,048		874,682
		4,207,723		4,573,434
Financial asset at fair value through profit or loss
- Cash and cash equivalents (Mutual funds)		6,027		—
- Other financial asset		352		181
		6,379		181

Financial assets related to concession agreements are recorded in the consolidated statement of financial position within the line items of short-term trade accounts receivable and long-term trade accounts receivable.

	At December, 31
	2016		2017
Financial liabilities according to the statement of financial position
Other financial liabilities at amortized cost
- Other financial liabilities		2,140,297		1,561,754
- Finance leases		240,141		128,309
- Bonds		967,714		947,567
- Trade and other accounts payable (excluding non-financial liabilities)		1,769,444		2,054,217
- Accounts payable to related parties		145,537		81,128
		5,263,133		4,772,975
Hedging derivatives:
- Derivative financial instruments
		1,081		383

Summary of Credit Quality of Financial Assets

At December 31 the credit quality of financial assets is shown as follows:

	At December 31,
	2016		2017
Cash and cash equivalents (*)
Banco de Crédito del Perú (A+)		147,759		224,834
Banco Continental (A+)		136,805		100,882
Banco Scotiabank (A+)		121,480		71,608
Citibank (A)		105,812		110,846
Banco de la Nación (A)		30,007		17,776
Banco Santander - Perú (A)		17,480		—
Banco Interbank (A)		6,344		14,937
Banco de Chile (AAA)		4,822		4,337
Banco Interamericano de Finanzas (A)		4,035		5,551
Banco Bogotá (A)		3,756		25,609
Larrain Vial de Chile (A)		3,514		—
Banco GNB (A)		2,080		1,334
Banco Santander - Chile (AAA)		1,941		22,041
Scotiabank Chile (AAA)		1,117		3
Banco de Crédito e Inversiones - Chile (AA+)		937		1,105
Banco Scotiabank de Guyana (A)		125		116
Others		5,061		5,935
		593,075		606,914

Summary of Credit Quality of Customers

	2016		2017
Trade accounts receivable (Note 11 and Note 12)
Counterparties with no external risk rating
A		117,797		6,042
B		2,052,356		2,313,187
C		407,151		194,248
		2,577,304		2,513,477
Receivable from related parties (Note 13)
B		713,048		874,682

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CASH AND CASH EQUIVALENT (Tables)

12 Months Ended

Dec. 31, 2017

Summary of Cash and Cash Equivalents

At December 31 this account comprises:

	2016		2017
Cash on hand		5,944		16,468
In-transit remittances		7,931		2,798
Bank accounts		475,025		493,666
Time deposits		112,023		113,248
Mutual funds		6,027		—
		606,950		626,180

Summary of Reconcile to the Amount of Cash Shown in the Statement of Cash Flow

The above figures reconcile to the amount of cash shown in the statement of cash flows at the end of the financial year as follows:

	2016			2017
Cash and Cash Equivalent		606,950			626,180
Bank overdrafts (Note 19)		(8,396	)		(120	)
Balances of the statement of cash flows		598,554			626,060

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Trade Accounts Receivable, Net (Tables)

12 Months Ended

Dec. 31, 2017

Summary of trade accounts receivables

At December 31 this account comprises:

	2016					2017
	Current			Non-current		Current			Non-current
Invoices receivable		903,878			652,939		459,721			819,699
Collection rights		150,065			14,580		546,351			28,891
		1,053,943			667,519		1,006,072			848,590
Impairment of receivables		(22,673	)		—		(13,348	)		—
		1,031,270			667,519		992,724			848,590

Summary of aging of trade accounts receivable

Aging of trade accounts receivable is as follows:

	At December 31,
	2016		2017
Current		1,396,040		1,575,709
Past due up to 30 days		103,617		118,158
Past due from 31 days up to 180 days		113,825		141,121
Past due from 181 days up to 360 days		29,506		1,962
Past due over 360 days		78,474		17,712
		1,721,462		1,854,662

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Work in Progress, Net (Tables)

12 Months Ended

Dec. 31, 2017

Summary of Work in Progress

At December 31 this account comprises:

	2016					2017
	Current			Non-current		Current		Non-current
Unbilled rights receivable		971,882			171,752		535,119		58,997
Rights for concessions in progress		32,078			25,834		—		28,413
Cost of work in progress		87,168			—		49,634		—
		1,091,128			197,586		584,753		87,410
Impairment of work in progress (Note 5.1-f)		(410,199	)		—		—		—
		680,929			197,586		584,753		87,410

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Transactions with Related Parties and Joint Operators (Tables)

12 Months Ended

Dec. 31, 2017

Disclosure of Transactions Between Related Parties

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

	2015		2016		2017
Revenue from sales of goods and services:
- Associates		1,400		—		3,367
- Joint operations		52,384		36,901		18,138
		53,784		36,901		21,505
Purchase of goods and services:
- Associates		18		739		2,776
- Joint operations		489		3,228		14,191
		507		3,967		16,967

Summary of Sale Purchase of Goods Services

d) Balances at the end of the year were:

	At December 31,				At December 31,
	2016				2017
	Receivable		Payable		Receivable		Payable
Current portion:
Joint operations:
Consorcio Constructor Ductos del Sur		62,834		—		—		—
Consorcio GyM Conciviles		61,006		—		43,435		—
Consorcio Rio Urubamba		9,072		—		8,964		—
Consorcio Peruano de Conservación		8,784		—		7,417		—
Consorcio Vial Quinua		4,198		738		—		2,162
Consorcio Italo Peruano		4,174		17,325		14,536		18,849
Consorcio La Gloria		3,521		3,080		1,688		1,358
Terminales del Perú		3,215		259		3,290		—
Consorcio Rio Mantaro		3,191		6,886		1,134		763
Consorcio Vial Sierra		940		5,400		2,355		1,854
Consorcio Constructor Chavimochic		915		2,471		1,959		5,817
Consorcio Energía y Vapor		491		3,203		—		72
Consorcio Ermitaño		83		6,372		1,067		6
Consorcio Menegua		30		3,803		39		—
Consorcio para la Atención y Mantenimiento de Ductos		—		21,790		—		12,074
Consorcio Huacho Pativilca		—		3,434		—		2,377
Other minors		10,134		2,472		12,182		6,973
		172,588		77,233		98,066		52,305

	At December 31,				At December 31,
	2016				2017
	Receivable		Payable		Receivable		Payable
Other related parties:
Gaseoducto Sur Peruano S.A		—		—		2,407		—
Perú Piping Spools S.A.C.		9,076		—		279		185
Ferrovías Argentina		—		—		—		2,684
Arturo Serna		—		2,984		—		—
		9,076		2,984		2,686		2,869
Portion current		181,664		80,217		100,752		55,174
Non-current portion:
Gasoducto Sur Peruano S.A		531,384		—		773,930		—
Consorcio Constructor Ductos del Sur		—		37,238		—		—
Ferrovías Participaciones		—		20,813		—		21,648
Ferrovías Argentina		—		2,835		—		—
Arturo Serna		—		4,434		—		4,306
Portion current		531,384		65,320		773,930		25,954

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Other Accounts Receivable (Tables)

12 Months Ended

Dec. 31, 2017

Other Accounting Recivables

At December 31 this account comprises:

	2016				2017
	Current		Non-current		Current		Non-current
Advances to suppliers (a)		79,455		225,567		149,464		255,181
Income tax on-account payments (b)		202,045		—		125,176		2,607
Fiscal credit (c)		80,091		52,225		81,732		30,680
Guarantee deposits (d)		95,916		—		113,429		—
Claims to third parties		26,529		32,669		109,491		41,072
Restricted Fund		14,067		—		61,993		44,770
Petróleos del Perú S.A.- Petroperú S.A.		16,879		29,534		3,619		53,918
Temporary tax on net assets		21,204		—		21,934		—
Taxes receivable		13,954		—		31,875		33,428
Claims to SUNAT (pre-paid taxes)		16,479		—		12,274		—
Rental and sale of equipment		13,640		—		27,970		—
Receivables from personnel		10,726		—		6,737		—
Other		58,531		17,957		19,751		9,196
		649,516		357,952		765,445		470,852

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Inventories (Tables)

12 Months Ended

Dec. 31, 2017

Schedule of Inventories (Details)

At December 31 this account comprises:

	2016			2017
Land		398,120			317,337
Work in progress - Real estate		289,775			150,537
Finished properties		244,240			203,209
Construction material		114,919			51,131
Merchandise and supplies		97,860			90,504
		1,144,914			812,718
Impairment of inventories (Note 5.1-f)		(40,621	)		(42,007	)
		1,104,293			770,711

Schedule of Inventories of Land

At December 31, land comprises properties for the implementation of the following projects of subsidiary Viva GyM:

	2016		2017
Lurín (a)		95,634		103,574
Miraflores (b)		80,552		1,349
San Miguel (c)		70,556		44,126
San Isidro (d)		46,606		58,441
Ancón (e)		35,934		37,823
Nuevo Chimbote (f)		17,054		17,201
Huancayo (g)		11,618		13,572
Canta Callao		—		12,978
Others		40,166		28,273
		398,120		317,337

(a) Plot of land of 750 hectares located in the district of Lurín, province of Lima, for industrial development and public housing.

(b) Land located in Av. El Ejército, Urb. Santa Cruz- Miraflores, Lima, for the development of a project consisting in a 5-star hotel, a cultural, convention, commercial, business center, and residential buildings. On February 3, 2017, the land was sold to Urbi Propiedades S.A. the sale price was agreed at US$50 million, which has been fully paid.

(c) Land located in San Miguel, a total of 1.4 hectares for the development of a multi-family housing project of 248 apartments and 185 parking lots. On November 6, 2017, a portion of 0.56 hectares was sold to a real estate investment fund in Larrainvial-Colliers II at S/27.8 million.

(d) A plot of land in the district of San Isidro in which a 15-storey building will be built with 24 apartments and 124 parking spaces.

(e) A 108-hectare land property in which a mega housing-project will be implemented, consisting of 13,768 real estate units.

(f) Land located in Chimbote, 11.5 hectares, for the development of a social housing project

(g) Land located in Huancayo, 8.5 hectares for the development of a land sale project.

Schedule of Inventories of Work In Progress (Details)

At December 31, real state work in progress comprises the following projects:

	2016		2017
Klimt		100,751		—
Los Parques de Comas		89,074		70,647
Los Parques del Callao		51,613		53,441
Real 2		17,181		—
Villa El Salvador 2		12,674		2,141
Others		18,482		24,308
		289,775		150,537

Schedule of Inventories of Finished Properties (Details)

At December 31, the balance of finished properties consists of the following investment properties:

	2016		2017
El Rancho		121,302		82,796
Panorama		33,443		18,481
Los Parques de San Martín de Porres		30,724		16,687
Los Parques de Callao		19,736		486
Rivera Navarrete		11,966		7,870
Los Parques de Carabayllo 2da etapa		7,497		3,134
Los Parques de Comas		7,336		16,058
Los Parques de Villa El Salvador II		5,951		9,313
Klimt		—		44,103
Real 2		—		3,877
Others		6,285		404
		244,240		203,209

XML

Investments in Associates and Joint Ventures (Tables)

12 Months Ended

Dec. 31, 2017

Schedule of Amounts Recognised in Balance Sheet

At December 31 this account comprises:

	2016		2017
Associates		286,403		250,053
Joint ventures		103,356		18,618
		389,759		268,671

Schedule of Amounts Recognised in Income Statement

The amounts recognized in the income statement are as follows:

	2016			2017
Associates		(584,801	)		(5,915	)
Joint ventures		(4,909	)		7,242	)
		(589,710	)		1,327

Summary of Detailed Information about Associates

Set out below are the associates of the Group at December 31, 2016 and 2017. The associates listed below have share capital solely consisting of common shares, which are held directly by the Group. None of the associates are listed companies; therefore, there is no quoted market price available for their shares.

							Carrying amount
	Class		Interest in capital				At December 31,
Entity	of share		2016		2017		2016		2017
			%		%
Gasoducto Sur Peruano S.A.		Common		20.00		21.49		218,276		218,276
Promoción Inmobiliaria del Sur S.A.		Common		22.50		—		31,768		—
Concesionaria Chavimochic S.A.C.		Common		26.50		26.50		32,394		22,091
Betchel Vial y Vives Servicios Complementarios Ltda.		Common		40.00		40.00		69		102
Others								3,896		9,584
								286,403		250,053

Summary of Financial Information for Associates

Summarized financial information for associates -

Entity	Gasoducto Sur Peruano S.A.						Promoción Inmobiliaria del Sur S.A.						Concesionaria Chavimochic S.A.C.
	At December, 31						At December, 31						At December, 31
	2015			2016			2015			2016			2015			2016			2017
Current
Assets		303,219			375,547			124,887			149,300			171,400			120,342			73,004
Liabilities		(3,357,508	)		(6,747,492	)		(32,072	)		(187,380	)		(110,799	)		(3,160	)		(1,111	)
Non-current
Assets		4,943,392			8,522,099			47,669			193,127			8,608			8,282			11,809
Liabilities		(7,442	)		—			(13,090	)		(13,855	)		(2,547	)		(1,918	)		(342	)
Net assets		1,881,661			2,150,154			127,394			141,192			66,662			123,546			83,360
Entity	Gasoducto Sur Peruano S.A.						Promoción Inmobiliaria del Sur S.A.						Concesionaria Chavimochic S.A.C.
	2015 (*)			2016 (*)			2015			2016			2015			2016			2017
Revenues		3,007,799			3,323,410			90,970			65,071			376,124			264,386			—
Profit (loss) from continuing operations		69,191			(1,372,594	)		90,618			42,281			22,995			(2,994	)		(43,340	)
Income tax		(19,828	)		—			(25,373	)		(11,839	)		(6,656	)		921			3,185
Profit (loss) from operations after income tax		49,363			(1,372,594	)		65,245			30,442			16,339			(2,073	)		(40,155	)
Other comprehensive income					—						—						—			—
Total comprehensive income		49,363			(1,372,594	)		65,245			30,442			16,339			(2,073	)		(40,155	)

(*) Gaseoducto Sur Peruano S.A. gross profit 2015 and 2016 amounting to S/257.7 million and S/0.8 million, respectively.

Schedule of Movement of Investments in Associates

The movement of the investments in associates is as follows:

	2015			2016			2017
Opening balance		82,494			490,702			286,403
Contributions received		—			390,506			2,116
Acquisition of Gasoducto Sur Peruano		437,494			—			—
Impairment of GSP		—			(593,105	)		—
Panorama Project		(39,180	)		—			—
Dividends received		(9,838	)		(10,149	)		(259	)
Equity interest in results		22,800			8,304			(5,915	)
Decrease in capital		—			(166	)		(111	)
Sale of Investment		—			—			(32,223	)
Derecognition of investments		(2,755	)		—			—
Conversion adjustment		(313	)		311			42
Final balance		490,702			286,403			250,053

Summary of Detailed Information about Joint Ventures

Set out below are the joint ventures of the Group as of December 31:

							Carrying amount
	Class of share		Interest in capital				At December 31,
Entity			2016		2017		2016		2017
			%		%
Tecgas N.V.		Common		51.00		—		84,100		—
Sistemas SEC		Common		49.00		49.00		9,591		10,112
Logistica Químicos del Sur S.A.C.		Common		50.00		50.00		8,515		7,343
G.S.J.V. SCC		Common		50.00		50.00		861		878
Constructora SK-VyV Ltda.		Common		50.00		50.00		59		49
Others				—		—		230		236
								103,356		18,618

Summary of Financial Information for Joint Ventures

Summarized financial information for joint ventures

	Tecgas N.V.
	At December, 31
Entity	2016
Current
Cash and cash equivalents		67
Other current assets		92,843
Total current assets		92,910
Other current liabilities		(87,780	)
Total current liabilities		(87,780	)
Non-current
Total non-current assets		33,336
Total non-current liabilities		(7,367	)
Net assets		31,099
Revenue		457,554
Depreciation and amortization		(2,266	)
Interest income		215
Interest expense		—
Profit (loss) from continuing operations		(3,209	)
Income tax expense		(4,078	)
Post-tax profit (loss) from continuing operations		(7,287	)
Other comprehensive income		—
Total comprehensive income		7,287

Schedule of Movement of Investments in Joint Ventures

The movement of the investments in joint ventures was as follows:

	2015			2016			2017
Opening balance		147,069			146,303			103,356
Debt capitalization		—			8,308			—
Contributions received		—			6,889			—
Equity interest in results		2,193			(4,909	)		7,242
Acquisitions		44,145			—			—
Sale of Investment		—			—			(88,556	)
Transfer of Adexus from acquisition of control		—			(35,870	)		—
Dividends received		(42,122	)		(17,843	)		(3,758	)
Decrease in capital		(3,364	)		(1,798	)		—
Conversion adjustment		(1,618	)		2,276			334
Final balance		146,303			103,356			18,618

XML

Property, Plant and Equipment,net (Tables)

12 Months Ended

Dec. 31, 2017

Summary of Movement in Property, Plant and Equipment Accounts and Its Related Accumulated Depreciation

The movement in property, plant and equipment accounts and its related accumulated depreciation for the year ended December 31, 2015, 2016 and 2017 is as follows:

													Furniture and			Other			Replacement			In-transit			Work in
	Land			Buildings			Machinery			Vehicles			fixtures			equipment			units			units			progress			Total
At January 1, 2015
Cost		30,675			200,450			986,487			394,077			43,146			176,869			7,245			9,177			99,831			1,947,957
Accumulated depreciation and impairment		—			(35,479	)		(416,029	)		(201,815	)		(27,279	)		(120,333	)		(4	)		—			—			(800,939	)
Net carrying amount		30,675			164,971			570,458			192,262			15,867			56,536			7,241			9,177			99,831			1,147,018
Net initial carrying amount		30,675			164,971			570,458			192,262			15,867			56,536			7,241			9,177			99,831			1,147,018
Additions		—			9,021			105,575			86,923			12,684			22,802			—			16,018			44,933			297,956
CAM Brazil deconsolidation		—			(839	)		(1,462	)		(633	)		(70	)		—			—			—			—			(3,004	)
Reclassifications		—			36,180			32,389			9,300			1,245			7,272			10,529			(23,092	)		(73,823	)		—
Transfers to intangibles (Note 18)		—			—			68			—			—			—			—			—			(36,785	)		(36,717	)
Transfers to accounts receivable		—			(3,635	)		—			—			(777	)		(4,442	)		—			—			(5,168	)		(14,022	)
Deduction for sale of assets		(2,001	)		(1,235	)		(35,118	)		(42,464	)		(1,491	)		(7,979	)		—			—			(14,185	)		(104,473	)
Disposals – cost		—			(5,057	)		(10,224	)		(362	)		(2,299	)		(1,810	)		(2,326	)		(89	)		(1,206	)		(23,373	)
Depreciation charge		—			(11,780	)		(116,993	)		(54,545	)		(4,623	)		(13,141	)		—			—			—			(201,082	)
Discontinued operations		—			(1,818	)		—			(263	)		(533	)		(11,084	)		—			—			—			(13,698	)
Depreciation for sale deductions		—			1,003			23,907			32,566			799			7,751			—			—			—			66,026
Disposals – accumulated depreciation		—			3,060			4,373			323			503			1,331			—			—			—			9,590
Translations adjustments		(265	)		(306	)		(8,288	)		(2,221	)		(128	)		(506	)		—			(197	)		(553	)		(12,464	)
Net final carrying amount		28,409			189,565			564,685			220,886			21,177			56,730			15,444			1,817			13,044			1,111,757
At December 31, 2015
Cost		28,409			231,029			1,074,195			443,239			52,225			191,238			15,448			1,817			13,044			2,050,644
Accumulated depreciation and impairment		—			(41,464	)		(509,510	)		(222,353	)		(31,048	)		(134,508	)		(4	)		—			—			(938,887	)
Net carrying amount		28,409			189,565			564,685			220,886			21,177			56,730			15,444			1,817			13,044			1,111,757

													Furniture and			Other			Replacement			In-transit			Work in
	Land			Buildings			Machinery			Vehicles			fixtures			equipment			units			units			progress			Total
At January 1, 2016
Cost		28,409			231,029			1,074,195			443,239			52,225			191,238			15,448			1,817			13,044			2,050,644
Accumulated depreciation and impairment		—			(41,464	)		(509,510	)		(222,353	)		(31,048	)		(134,508	)		(4	)		—			—			(938,887	)
Net carrying amount		28,409			189,565			564,685			220,886			21,177			56,730			15,444			1,817			13,044			1,111,757
Net initial carrying amount		28,409			189,565			564,685			220,886			21,177			56,730			15,444			1,817			13,044			1,111,757
Additions		6,238			12,126			81,378			50,574			4,423			24,870			553			19,312			13,594			213,068
Adquisition of subsidiaries – Adexus (Note 33 a)		—			13,913			—			420			1,525			26,130			—			—			—			41,988
Reclassifications		—			588			1,927			(1,172	)		4,456			13,156			2,583			(17,349	)		(4,189	)		—
Transfers to inventories		2,941			—			—			—			—			—			—			—			—			2,941
Transfers to intangibles (Note 18)		—			—			—			—			—			—			—			—			(1,257	)		(1,257	)
Deduction for sale of assets		(5,256	)		(14,333	)		(60,374	)		(48,521	)		(1,724	)		(5,766	)		—			—			—			(135,974	)
Disposals – cost		—			(1,232	)		(15,149	)		(1,354	)		(1,579	)		(4,364	)		(661	)		(2	)		—			(24,341	)
Depreciation charge		—			(12,651	)		(104,638	)		(47,366	)		(6,947	)		(15,088	)		(5	)		—			—			(186,695	)
Impairment loss		—			(73	)		(5,190	)		(317	)		(3,301	)		(382	)		—			—			—			(9,263	)
Discontinued operations		—			(2,191	)		0			(675	)		(601	)		(13,039	)		—			—			—			(16,506	)
Depreciation for sale deductions		—			8,113			48,266			29,536			1,026			1,907			—			—			—			88,848
Disposals – accumulated depreciation		—			939			14,430			886			1,540			3,991			—			—			—			21,786
Translations adjustments		282			130			5,987			922			176			(344	)		—			—			94			7,247
Net final carrying amount		32,614			194,894			531,322			203,819			20,171			87,801			17,914			3,778			21,286			1,113,599
At December 31, 2016
Cost		32,614			241,150			1,088,229			443,641			59,593			246,102			17,923			3,778			21,286			2,154,316
Accumulated depreciation and impairment		—			(46,256	)		(556,907	)		(239,822	)		(39,422	)		(158,301	)		(9	)		—			—			(1,040,717	)
Net carrying amount		32,614			194,894			531,322			203,819			20,171			87,801			17,914			3,778			21,286			1,113,599

	Land			Buildings			Machinery			Vehicles			Furniture and fixtures			Other equipment			Replacement units			In-transit units			Work in progress			Total
At January 1, 2017
Cost		32,614			241,352			1,090,460			443,641			59,593			246,102			17,923			3,778			18,853			2,154,316
Accumulated depreciation and impairment		—			(46,256	)		(556,907	)		(239,822	)		(39,422	)		(158,301	)		(9	)		—			—			(1,040,717	)
Net carrying amount		32,614			195,096			533,553			203,819			20,171			87,801			17,914			3,778			18,853			1,113,599
Net initial carrying amount		32,614			195,096			533,553			203,819			20,171			87,801			17,914			3,778			18,853			1,113,599
Additions		157			2,724			48,207			36,594			11,607			36,179			925			22,877			13,178			172,448
Deconsolidation of GMD		(3,713	)		(26,109	)		—			(1,527	)		(2,153	)		(46,032	)		0			(3,903	)		(4	)		(-83,441	)
Reclassifications		0			1,969			12,459			2,888			609			6,579			4,076			(21,600	)		(6,980	)		—
Transfers to intangibles (Note 18)		—			—			2,119			724			—			—			—			(964	)		(2,048	)		(169	)
Deduction for sale of assets		(5,616	)		(51,736	)		(149,202	)		(92,079	)		(4,200	)		(5,270	)		—			—			—			(308,103	)
Disposals – cost		—			(1,869	)		(6,442	)		(7,941	)		(1,200	)		(12,592	)		—			(230	)		(3,606	)		(33,880	)
Depreciation charge		—			(12,469	)		(100,976	)		(45,457	)		(11,654	)		(26,928	)		—			—			—			(197,484	)
Impairment loss		—			—			(14,328	)		—			—			0			—			—			(352	)		(14,680	)
Depreciation for sale deductions		—			3,579			115,864			84,145			1,049			3,128			—			—			—			207,765
Disposals – accumulated depreciation		—			1,624			2,410			434			778			3,179			—			—			—			8,425
Translations adjustments		236			152			606			(350	)		(23	)		980			—			—			(346	)		1,255
Net final carrying amount		23,678			112,961			444,270			181,250			14,984			47,024			22,915			(42	)		18,695			865,735
At December 31, 2017
Cost		23,678			166,483			998,207			381,950			64,233			225,946			22,924			(42	)		19,047			1,902,426
Accumulated depreciation and impairment		—			(53,522	)		(553,937	)		(200,700	)		(49,249	)		(178,922	)		(9	)		—			-352			(1,036,691	)
Net carrying amount		23,678			112,961			444,270			181,250			14,984			47,024			22,915			(42	)		18,695			865,735

Summary of Depreciation of Fixed Assets and Investment Properties

Depreciation of fixed assets and investment properties for the year is broken down in the statement of income as follows:

	2015			2016			2017
Cost of services and goods		186,661			177,699			178,209
Administrative expenses		16,711			11,317			13,224
(+) Depreciation GMD discontinued operation		—			—			8,361
Total depreciation related to property, plant and equipment		203,372			189,016			199,794
(-) Depreciation related to investment property		(2,290	)		(2,321	)		(2,310	)
Total depreciation related to property, plant and equipment		201,082			186,695			197,484

Summary of Net Carrying Amount of Machinery and Equipment, Vehicles and Furniture and Fixtures Acquired Under Finance Lease Agreements

The net carrying amount of machinery and equipment, vehicles and furniture and fixtures acquired under finance lease agreements is broken down as follows:

Financial Leasing

	At December 31,
	2015			2016			2017
Cost of acquisition		735,591			800,927			650,301
Accumulated depreciation		(327,465	)		(386,411	)		(351,447	)
Net carrying amount		408,126			414,516			298,854

Summary Of Outstanding Commitments For Non-Cancelable Operating Leases

In relation to the sale lease contract for the corporate building located in Miraflores mentioned on the previous page, the Company has outstanding commitments for non-cancelable operating leases, with the following maturities:

	2017
Not later than 1 year		8,526
Within 2 to 5 years		35,161
Later than 5 years		46,451
		90,138

XML

Intangible Assets.net (Tables)

12 Months Ended

Dec. 31, 2017

Summary of Movement of Intangible Assets and That of Their Related Accumulated Amortization

The movement of intangible assets and that of their related accumulated amortization, as of December 31, 2015, 2016 and 2017, is as follows:

	Goodwill			Trade- marks			Concession rights			Contractual relations with clients			Internally generated software and development costs			Costs of development of wells			Development costs			Land use rights		Other assets			Total
At January 1, 2015
Cost		202,144			102,835			561,183			86,233			32,231			281,722			3,623			13,288		14,257			1,297,516
Accumulated amortization and impairment		(21,995	)		(217	)		(269,504	)		(43,243	)		(26,462	)		(150,392	)		(3,623	)		—		(3,337	)		(518,773	)
Net carrying amount		180,149			102,618			291,679			42,990			5,769			131,330			—			13,288		10,920			778,743
Net initial carrying amount		180,149			102,618			291,679			42,990			5,769			131,330			—			13,288		10,920			778,743
Additions		5,418			—			165,149			—			9,141			11,842			—			—		3,429			194,979
CAM Brazil Deconsolidation		—			—			—			—			(129	)		—			—			—		—			(129	)
Transfers from assets under construction (Note 17)		—			—			—			(68	)		1,562			33,396			—			—		1,827			36,717
Transfers to accounts receivable		—			—			(2,278	)		—			—			—			—			—		—			(2,278	)
Transfers to pre-paid expenses		—			—			(10,923	)		—			—			—			—			—		(3,684	)		(14,607	)
Reclassifications		—			—			—			—			188			(188	)		—			—		(3	)		(3	)
Amortization		—			—			(18,436	)		(14,697	)		(4,601	)		(42,117	)		—			—		(825	)		(80,676	)
Discontinued operations		—			—			(7,247	)		—			(1,432	)		—			—			—		—			(8,679	)
Translations adjustments		(15,335	)		(6,084	)		(51	)		(4,031	)		(280	)		—			—			—		—			(25,781	)
Net final carrying amount		184,808			96,534			417,893			24,194			10,218			122,421			—			13,288		11,664			878,286
At December 31, 2015
Cost		192,227			96,751			716,125			82,134			42,761			326,723			3,623			13,288		15,425			1,489,057
Accumulated amortization and impairment		(21,995	)		(217	)		(298,232	)		(57,940	)		(32,543	)		(192,460	)		(3,623	)		—		(3,761	)		(610,771	)
Net carrying amount		170,232			96,534			417,893			24,194			10,218			134,263			—			13,288		11,664			878,286

	Goodwill			Trade- marks			Concession rights			Contractual relations with clients			Internally generated software and development costs			Costs of development of wells			Development costs			Land use rights		Other assets			Total
At January 1, 2016
Cost		192,227			96,751			716,125			82,134			42,761			326,723			3,623			13,288		15,425			1,489,057
Accumulated amortization and impairment		(21,995	)		(217	)		(298,232	)		(57,940	)		(32,543	)		(192,460	)		(3,623	)		—		(3,761	)		(610,771	)
Net carrying amount		170,232			96,534			417,893			24,194			10,218			134,263			—			13,288		11,664			878,286
Net initial carrying amount		170,232			96,534			417,893			24,194			10,218			134,263			—			13,288		11,664			878,286
Additions		—			—			118,222			—			16,477			17,772			—			—		19,255			171,726
Acquisition of subsidiary – Adexus (Note 33 a)		930			9,088			6,090			12,822			—			—			—			—		4,203			33,133
Transfers from assets under construction (Note 17)		—			—			—			—			—			—			—			—		1,257			1,257
Reclasifications		—			—			5,258			—			345			—			—			—		(5,603	)		—
Disposals – net cost		—			—			(1,395	)		—			—			(2,395	)		—			—		—			(3,790	)
Amortization		—			—			(19,646	)		(4,376	)		(7,407	)		(40,918	)		—			—		(1,200	)		(73,547	)
Discontinued operations		—			—			(8,560	)		—			(636	)		—			—			—		—			(9,196	)
Impairment loss		(38,680	)		(15,628	)		—			—			—			—			—			—		—			(54,308	)
Translations adjustments		12,038			3,672			(102	)		171			1,024			—			—			—		(78	)		16,725
Net final carrying amount		144,520			93,666			517,760			32,811			20,021			108,722			—			13,288		29,498			960,286
At December 31, 2016
Cost		205,195			109,511			844,213			95,127			60,607			342,100			3,623			13,288		34,418			1,708,082
Accumulated amortization and impairment		(60,675	)		(15,845	)		(326,453	)		(62,316	)		(40,586	)		(233,378	)		(3,623	)		—		(4,920	)		(747,796	)
Net carrying amount		144,520			93,666			517,760			32,811			20,021			108,722			—			13,288		29,498			960,286

	Goodwill			Trade- marks			Concession rights			Contractual relations with clients			Internally generated software and development costs			Costs of development of wells			Development costs			Land use rights		Other assets			Total
At January 1, 2017
Cost		205,195			109,511			844,213			95,127			60,607			342,100			3,623			13,288		34,294			1,707,958
Accumulated amortization and impairment		(60,675	)		(15,845	)		(326,453	)		(62,316	)		(40,586	)		(233,378	)		(3,623	)		—		(4,796	)		(747,672	)
Net cost		144,520			93,666			517,760			32,811			20,021			108,722			—			13,288		29,498			960,286
Net initial cost		144,520			93,666			517,760			32,811			20,021			108,722			—			13,288		29,498			960,286
Additions		—			—			64,171			5,274			3,330			49,698			—			—		20,832			143,305
Deconsolidation GMD		(3,524	)		—			(17,354	)		—			(21	)		—			—			—		(2,767	)		(23,666	)
Transfers from assets under construction (Note 17)		—			—			(11,217	)		—			2,761			5,008			—			—		3,617			169
Derecognition – cost		—			—			(537	)		—			(1,572	)		—			—			—		(355	)		(2,464	)
Amortization		—			—			(24,609	)		(4,189	)		(8,091	)		(46,695	)		—			—		(2,973	)		(86,557	)
Impairment		(20,068	)		(29,541	)		—			—			—			—			—			—		—			(49,609	)
Translations adjustments		(4,124	)		975			13			369			1,196			—			—			—		177			(1,394	)
Net final cost		116,804			65,100			528,227			34,265			17,624			116,733			—			13,288		48,029			940,070
At December 31, 2017
Cost		193,862			110,486			879,289			100,640			66,301			396,806			3,623			13,288		51,983			1,816,278
Accumulated amortization and impairment		(77,058	)		(45,386	)		(351,062	)		(66,375	)		(48,677	)		(280,073	)		(3,623	)		—		(3,954	)		(876,208	)
Net cost		116,804			65,100			528,227			34,265			17,624			116,733			—			13,288		48,029			940,070

Summary of Goodwill Allocated to Cash-Generating Units (CGU)

At December 31 goodwill allocated to cash-generating units (CGU) are:

	2015		2016		2017
Engineering and construction		125,514		98,587		75,051
Electromechanical		20,737		20,737		20,737
Mining and construction services		13,366		13,366		13,366
IT equipment and services		4,172		5,102		6,720
Telecommunications services		6443		6,728		930
		170,232		144,520		116,804

Summary of Major Assumptions Used by the Group in Determining the Fair Value Less Cost of Disposal

Major assumptions used by the Group in determining the fair value less cost of disposal and the value in use were as follows:

	Engineering and construction		Electro- mechanical		Mining and construction		IT equipment and services		Telecommunication services
	%		%		%		%		%
2016
Gross margin		9.50% - 12.99%		11.10%		12.04%		15.00% - 23.19%		11.75%
Terminal growth rate		3.00% - 4.00%		2.00%		2.00%		2.00% - 3.00%		3.00%
Discount rate		9.66% - 12.72%		11.01%		11.71%		21.74%		10.02%
2017
Gross margin		9.50%		8.00%		—		20.83%		4.26%
Terminal growth rate		3.00%		2.00%		—		2.90%		3.00%
Discount rate		11.18%		11.48%		—		10.17%		4.02%

Major assumptions used by the Group in determining the fair value less cost of disposal are as follows:

	Engineering and construction						IT Equipment Services
	Morelco			Vial y Vives - DSD			Adexus
	%			%			%
2016
Average revenue growth rate		14.39	%		24.53	%		12.60	%
Terminal growth rate		3.00	%		4.00	%		3.00	%
Discount rate		11.85	%		9.87	%		16.05	%
2017
Average revenue growth rate		9.60	%		25.00	%		9.19	%
Terminal growth rate		3.00	%		4.00	%		3.00	%
Discount rate		11.18	%		14.80	%		16.63	%

Summary of Amortization of Intangibles

Amortization of intangibles is broken down in the income statement as follows:

	2015		2016		2017
Cost of sales and services (Note 27)		74,187		66,862		74,515
Administrative expenses (Note 27)		6,489		6,685		8,227
		80,676		73,547		82,742

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Other Financial Liabilities (Tables)

12 Months Ended

Dec. 31, 2017

Summary of Other Financial Liabilities

At December 31 this account comprises:

	Total				Current				Non-current
	2016		2017		2016		2017		2016		2017
Bank overdrafts		8,396		120		8,396		120		—		—
Bank loans		2,131,901		1,561,634		1,835,340		990,467		296,561		571,167
Finance leases		240,141		128,309		117,307		66,177		122,834		62,132
		2,380,438		1,690,063		1,961,043		1,056,764		419,395		633,299

Summary of Bank Loan

					Current				Non-current
	Interest		Date of		At December, 31				At December, 31
	rate		maturity		2016		2017		2016		2017
GyM S.A.		3.30% / 8.73%		2018 / 2019		492,910		551,413		187,029		95,376
Graña y Montero S.A.A.		Libor USD 3M + from 4.9% to 5.5%		2018 / 2020		932,114		113,412		—		363,564
Viva GyM S.A.		7.00% / 10.67%		2018		201,609		157,592		—		—
GMP S.A.		4.45% / 6.04%		2018 / 2020		77,857		42,911		71,453		96,245
CAM Holding S.A.		4.44% / 13.93%		2018 / 2020		69,702		77,775		24,889		12,807
Adexus S.A.		3.63% / 5.90%		2018 / 2019		42,782		46,552		13,190		3,175
CONCAR S.A.		7.50%		2018		—		812		—		—
CAM Servicios Perú S.A.		6.39% / 7.18%		2017		3,620		—		—		—
GMD S.A.		6.20% / 7.47%		2017		14,746		—		—		—
					1,835,340		990,467		296,561		571,167

Summary of Finance Lease Obligations

					Current				Non-current
	Interest		Date of		At December, 31				At December, 31
	rate		maturity		2016		2017		2016		2017
GyM S.A.		2.25% / 8.96%		2018 / 2021		80,570		40,107		58,937		32,397
Viva GyM S.A.		7.30% / 8.95%		2018 / 2022		4,847		4,439		16,541		12,010
Adexus S.A.		3.36% / 18.00%		2018 / 2021		9,884		8,567		12,287		4,363
GMP S.A.		4.22% / 4.98%		2018 / 2020		4,206		4,013		9,035		5,304
CAM Holding S.A.		3.01% / 14.76%		2018 / 2022		3,729		6,240		10,590		5,692
CONCAR S.A.		3.23% / 4.70%		2018 / 2020		3,667		1,777		3,345		1,945
CAM Servicios Perú S.A.		6.79% / 7.75%		2019 / 2020		—		687		—		421
GMI S.A.		5.56% / 6.90%		2018		—		347		—		—
GMD S.A.		4.99% / 7.00%		2017		10,404		—		12,099		—
						117,307		66,177		122,834		62,132

Summary of Minimum Payment by Maturity and Present Value of Finance Lease Obligations

The minimum payments to be made by maturity and present value of the finance lease obligations are as follows:

	At December 31,
	2016			2017
Up to 1 year		127,496			72,864
From 1 to 5 years		112,769			65,899
Over 5 years		19,506			638
		259,771			139,401
Future financial charges on finance leases		(19,630	)		(11,092	)
Present value of the obligations for finance lease contracts		240,141			128,309

Summary of Carrying Amount and Fair Value of Borrowings

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

	Carrying amount				Fair value
	At December, 31				At December, 31
	2016		2017		2016		2017
Bank overdrafts		8,396		120		8,396		120
Bank loans		2,131,901		1,561,634		2,142,890		1,627,000
Finance leases		240,141		128,309		240,089		141,040
		2,380,438		1,690,063		2,391,375		1,768,160

Obligations under finance leases [Member]

Summary of Present value of Finance Lease Obligations

The present value of finance lease obligations is broken down as follows:

	At December 31,
	2016		2017
Up to 1 year		117,307		66,177
From 1 year to 5 years		105,978		61,501
Over 5 years		16,856		631
		240,141		128,309

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Bonds (Tables)

12 Months Ended

Dec. 31, 2017

Summary of Bonds Issued

At December 31 this account comprises:

	Total				Current				Non-current
	2016		2017		2016		2017		2016		2017
GyM Ferrovías		604,031		603,657		20,551		12,294		583,480		591,363
Norvial		363,683		343,910		25,540		24,361		338,143		319,549
		967,714		947,567		46,091		36,655		921,623		910,912

Bonds

	2016			2017
Balances as of January 1		186,223			363,684
Additions		179,977			—
Transaction cost applied to additions		(1,099	)		—
Amortization		(3,369	)		(20,010	)
Transaction cost applied to amortization		265			195
Accrued interest		3,332			2,789
Capitalized interest		22,002			26,014
Interest paid		(23,382	)		(28,567	)
Transaction cost applied to paid interest		(265	)		(195	)
Balances as of December 31		363,684			343,910
Less : non current portion		(25,541	)		(24,361	)
Long term - bonds		338,143			319,549

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Trade Accounts Payable (Tables)

12 Months Ended

Dec. 31, 2017

Summary of Trade Accounts Payable

At December 31 this account comprises:

	2016		2017
Unbilled services received		924,025		132,513
Invoices payable		350,559		1,250,586
Notes payable		2,033		69,947
		1,276,617		1,453,046

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Other Accounts Payable (Tables)

12 Months Ended

Dec. 31, 2017

Summary of Other Accounts Payable

At December 31, this account comprises:

	Total				Current				Not Current
	2016		2017		2016		2017		2016		2017
Advances received from customers		810,755		726,294		510,367		316,891		300,388		409,403
Payables Consorcio Ductos del Sur		—		250,021		—		—		—		250,021
Salaries and profit sharing payable		176,022		246,916		176,022		246,916		—		—
GSP performance guarantee (Note 16-a-i)		176,401		—		176,401		—		—		—
Put option liability on Morelco acquisition (Note 33-b)		110,604		105,418		—		—		110,604		105,418
Third-party loans		69,991		107,314		37,991		75,256		32,000		32,058
Other taxes payable		50,548		69,584		50,548		69,584		—		—
VAT payable		65,777		48,095		53,678		37,544		12,099		10,551
Payables Consorcio Rio Mantaro		—		35,531		—		35,531		—		—
Acquisition of non-controlling interest (Note 36-a)		32,102		22,407		32,102		22,407		—		—
Supplier funding		40,612		14,886		26,526		—		14,086		14,886
Guarantee deposits		16,799		15,580		16,799		15,580		—		—
Post-retirement benefits		9,088		8,914		—		—		9,088		8,914
Other accounts payables		50,411		50,013		15,873		28,791		34,538		21,222
		1,609,110		1,700,973		1,096,307		848,500		512,803		852,473

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Provisions (Tables)

12 Months Ended

Dec. 31, 2017

Summary of Provisions

At December 31 this account comprises:

	Total				Current				Not Current
	2016		2017		2016		2017		2016		2017
Legal claims		15,733		23,364		13,303		12,220		2,430		11,144
Contingent liabilities from the acquisition of Morelco		5,182		4,224		—		—		5,182		4,224
Contingent liabilities from the acquisition of Coasin and Vial yVives - DSD		1,815		1,839		—		—		1,815		1,839
Contingent liabilities from the acquisition of Adexus		1,128		1,186		1,128		1,186		—		—
Provision for well closure (Note 5.1 d)		17,215		16,804		100		97		17,115		16,707
		41,073		47,417		14,531		13,503		26,542		33,914

Summary Gross Movement of Other Provisions

The gross movement of other provisions is broken down as follows:

Other provisions	Legal claims			Contingent liabilities resulting from acquisitions			Provision for well closure			Total
At January 1, 2016		15,000			26,779			19,149			60,928
Additions		9,486			—			462			9,948
Acquisition of subsidiaries		1,926			1,149			—			3,075
Reversals of provisions		(10,569	)		(17,883	)		(2,395	)		(30,847	)
Payments		(298	)		(2,458	)		—			(2,756	)
Translation adjustments		187			538			—			725
At December 31, 2016		15,732			8,125			17,216			41,073
At January 1, 2017		15,732			8,125			17,216			41,073
Additions		9,510			—			—			9,510
Reversals of provisions		(235	)		(809	)		(412	)		(1,456	)
Payments		(1,680	)		—			—			(1,680	)
Translation adjustments		37			(67	)		—			(30	)
At December 31, 2017		23,364			7,249			16,804			47,417

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Equity (Tables)

12 Months Ended

Dec. 31, 2017

Summary of Company's Shareholding Structure

As of December 31, 2017 the Company’s shareholding structure was as follows:

Percentage of individual interest in capital	Number of shareholders		Total percentage of interest
Up to 1.00		2,062		14.22
From 1.01 to 5.00		11		23.57
From 5.01 to 10.00		1		5.12
Over 10		2		57.09
		2,076		100.00

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Deferred Income Tax (Tables)

12 Months Ended

Dec. 31, 2017

Summary of Deferred Income Tax

Deferred income tax is broken down by its estimated reversal period as follows:

	2016			2017
Deferred income tax asset:
Reversal expected in the following 12 months		86,990			73,883
Reversal expected after 12 months		340,018			362,814
Total deferred tax asset		427,008			436,697
Deferred income tax liability:
Reversal expected in the following 12 months		(166	)		(5,583	)
Reversal expected after 12 months		(73,003	)		(66,889	)
Total deferred tax liability		(73,169	)		(72,472	)
Deferred income tax asset, net		353,839			364,225

Summary of Gross Movement of Deferred Income Tax Item

The gross movement of the deferred income tax item is as follows:

	2015			2016			2017
Deferred income tax asset, net as of January 1		58,723			48,682			353,839
Credit to income statement (Note 30)		(175	)		263,806			42,779
Adjustment for changes in rates of income tax		(2,008	)		17,105			1,951
Credit (charge) to other comprehensive income		(7,298	)		15,004			—
Tax charged to equity		—			159			—
Acquisition of a subsidiary		—			10,363			(12,340	)
Acquisition of joint operation		1,476			—			(16,804	)
Other movements		(2,036	)		(1,280	)		(5,200	)
Total as of December 31		48,682			353,839			364,225

Summary of Movements of Deferred Tax Assets and Liabilities

The movement of deferred tax assets and liabilities in the year, without taking into account the offsetting of balances, is as follows:

Deferred income tax liability	Non-taxable income			Difference in depreciation rates		Fair value gains			Work in Process			Difference in depreciation rates of assets leased			Receivables from local Government		Capitalized Financing cost			Purchase price allocation			Others			Total
At January 1, 2015		14,190			36,515		13,732			14,368			10,445			—		—			—			21,534			110,784
(Charge) credit to P&L		—			2,791		15,338			16,393			—			9,986		15,178			—			1,347			61,032
(Charge) credit to OCI		—			—		7,016			—			—			—		—			—			281			7,297
Reclassification of prior years		(14,190	)		5,849		(5,402	)		(6,038	)		(10,445	)		15,557		—			—			(11,354	)		(26,020	)
At December 31, 2015		—			45,155		30,684			24,723			—			25,543		15,178			—			11,808			153,093
(Charge) credit to P&L		—			16,595		13,587			(16,481	)		—			3,324		6,240			—			2,619			25,883
(Charge) credit to OCI		—			—		(15,348	)		—			—			—		—			—			—			(15,348	)
Reclassification of prior years		—			—		(28,923	)		—			—			—		—			30,187			(1,264	)		—
Adquisition of subsidiary (Adexus)		—			—		—			—			—			—		—			(3,069	)		—			(3,069	)
At December 31, 2016		—			61,750		—			8,242			—			28,867		21,418			27,118			13,163			160,559
(Charge) credit to P&L		—			104,101		—			(5,712	)		—			3,322		(1,473	)		(11,780	)		(3,724	)		84,734
Sale of subsidiary (GMD S.A.)		—			—		—			—			—			—		—			—			(81	)		(81	)
At December 31, 2017		—			165,851		—			2,530			—			32,189		19,945			15,338			9,358			245,211

Deferred income tax asset	Provisions			Accelerated tax depreciation			Tax losses			Work in Process			Accrual for unpaid vacations			Investments in subsidiaries			Impairment			Tax Goodwill			Other			Total
At January 1, 2015		25,806			23,350			59,036			23,941			16,973			11,769			—			—			8,636			169,511
Charge (credit) to P&L		342			4,076			26,661			18,623			772			(13,832	)		—			17,522			4,646			58,810
Adquisition of subsidiary (Coasin)		—			—			—			—			—			—			—			—			—			—
Adquisition of subsidiary (Morelco)		—			—			—			—			—			—			—			—			—			—
Others		—			—			—			—			—			—			—			—			—			—
Reclassification of prior years		(5,199	)		(12,534	)		5,615			(19,544	)		(2,768	)		2,063									5,623			(26,744	)
At December 31, 2015		20,949			14,892			91,313			24,103			14,977			1,476			—			17,522			16,463			201,775
Charge (credit) to P&L		84,571			1,489			51,163			(6,489	)		(2,005	)		(312	)		172,052			3,003			3,322			306,794
Charge (credit) to equity		159			—			—			—			—			—			—			—			—			159
Cargo (abono) a ORI		—			—			—			—			—			—			—			—			(343	)		(343	)
Adquisition of subsidiary (Adexus)		—			—			10,607			—			—			—			—			—			(3,313	)		7,294
Others		—			—			—			—			—			(556	)		—			—			(724	)		(1,280	)
At December 31, 2016		105,679			16,381			153,083			17,614			12,972			608			172,052			20,525			15,487			514,398
Charge (credit) to P&L		(12,614	)		79,637			(8,555	)		21,873			2,166			118			28,593			(112	)		18,358			129,464
Charge (credit) to equity		(8,882	)		—			—			—			—			0			(7,493	)		—			(347	)		(16,722	)
Reclassification		(30,901	)		—			—			—			—			(726	)		31,627			—			—			—
Sale of subsidiary (GMD)		(683	)		(9,367	)		(438	)		—			(1,697	)		—			—			—			(236	)		(12,421	)
Others		(160	)		—			(1	)		—			(1	)		—			1			—			(5,123	)		(5,284	)
At December 31, 2017		52,439			86,651			144,089			39,487			13,440			0			224,780			20,413			28,139			609,435

Worker's Profit Sharing

26 WORKERS’ PROFIT SHARING

Worker’s profit sharing is broken down in the income statement as of December 31 as follows:

	2015		2016		2017
Cost of sales of goods and services		27,618		15,234		6,531
Administrative expenses		7,263		1,297		7,562
		34,881		16,531		14,093

Summary of Worker's Profit Sharing

Worker’s profit sharing is broken down in the income statement as of December 31 as follows:

	2015		2016		2017
Cost of sales of goods and services		27,618		15,234		6,531
Administrative expenses		7,263		1,297		7,562
		34,881		16,531		14,093

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Expenses by Nature (Tables)

12 Months Ended

Dec. 31, 2017

Summary of Information about Expense by Nature

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

	Cost of goods		Administrative
	and services		expenses
2015
Services provided by third-parties		2,915,682		135,636
Salaries, wages and fringe benefits		2,033,316		199,635
Purchase of goods		1,072,900		7,369
Other management charges		629,799		23,873
Depreciation		186,661		16,711
Amortization of intangibles		74,187		6,489
Taxes		37,129		1,919
Impairment of accounts receivable		13,180		—
Impairment of property, plant and equipment		7,063		2,591
		6,969,917		394,223
2016
Services provided by third-parties		2,317,589		121,294
Salaries, wages and fringe benefits		1,423,664		217,337
Purchase of goods		901,473		—
Impairment of accounts receivable		419,584		—
Other management charges		267,011		24,122
Depreciation		177,699		11,317
Amortization of intangibles		66,862		6,685
Impairment (inventories and accounts receivable)		36,137		—
Taxes		13,740		1,638
Impairment of property, plant and equipment		9,263		—
		5,633,022		382,393
2017
Services provided by third-parties		1,674,731		121,508
Salaries, wages and fringe benefits		1,615,278		205,245
Purchase of goods		1,136,616		140
Other management charges		656,875		54,201
Depreciation		178,209		13,224
Amortization of intangibles		74,515		8,227
Impairment (inventories and accounts receivable)		40,908		—
Taxes		14,860		8,210
Impairment of property, plant and equipment		14,660		20
Impairment of accounts receivable		703		18,406
		5,407,355		429,181

Summary of Wages, Salaries and Fringe Benefits

For the year’s ended December 31 wages, salaries and fringe benefits comprise the following items:

	2015		2016		2017
Salaries		1,728,410		1,233,272		1,304,893
Social contributions		164,965		139,423		128,046
Statutory bonuses		129,909		92,418		155,206
Employee’s severance indemnities		91,958		64,421		99,011
Vacations		72,719		58,411		74,759
Worker’s profit sharing (Note 26)		33,972		15,693		14,093
Others		11,018		37,363		44,515
		2,232,951		1,641,001		1,820,523

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Financial Income and Expenses (Tables)

12 Months Ended

Dec. 31, 2017

Summary of Financial Income and Expenses

For the years ended December 31 these items comprise the following:

	2015			2016			2017
Financial income:
Interest on short-term bank deposits		12,076			9,193			5,133
Interest on loans to third parties		19,749			6,142			635
Commissions and collaterals		3,026			4			12
Exchange rate gain, net		—			—			6,292
Others		2,785			5,306			3,335
		37,636			20,645			15,407
Financial expenses:
Interest expense:
- Bank loans		56,974			97,953			109,366
- Bonds		3,350			25,352			28,804
- Financial lease		13,167			12,138			9,748
- Commissions and collaterals		8,574			9,166			15,648
- Loans from third parties		2,868			264			7,569
- Loans from related parties		556			3,452			—
Exchange difference loss, net		82,851			12,527			—
Derivative financial instruments		1,691			1,248			739
Loss by measurement of financial asset fair value		—			76,864			8,059
Other financial expenses		11,205			18,134			37,420
Less capitalized interest		(13,153	)		(35,434	)		(31,908	)
		168,083			221,664			185,445

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Other Income and Expenses, Net (Tables)

12 Months Ended

Dec. 31, 2017

Summary of Other Income and Expenses, Net

For the years ended December 31 these items comprise the following:

	2015		2016			2017
Other income:
Sales of fixed assets		25,690		39,774			119,554
Reversal of legal and tax provisions		7,796		18,778			79
Legal indemnities		—		8,957			—
Sale of investments held for sale		60		46			—
Disposal of non-current assets classified as held for sale		8,775		—			—
Present value of the liability from put option		18,627		—			—
Others		18,434		18,574			15,449
		79,382		86,129			135,082
Other expenses:
Impairment of goodwill and trademarks		—		54,308			49,608
Net cost of fixed assets disposal		15,669		31,247			95,541
Loss on remeasurement of previously held interest (Note 33-a)		—		6,832			—
Present value of the liability from put option		—		984			—
Cost of sales of non-current assets classified as held for sale		8,945		—			—
Others		184		6,132			10,478
		24,798		99,503			155,627
		54,584		(13,374	)		(20,545	)

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Tax Situation (Tables)

12 Months Ended

Dec. 31, 2017

Summary of Income Tax Expense

e) The income tax expense shown in the consolidated income statement comprises:

	2015			2016			2017
Current income tax		135,036			169,428			167,154
Deferred income tax (Note 25)		2,222			(280,911	)		(44,730	)
PPUA		(41,359	)		(7,789	)		613
Income tax expense		95,899			(119,272	)		123,037

Summary of Weighted-Average Income Tax Rate Applicable To Profit

f) The Group’s income tax differs from the theoretical amount that would have resulted from applying the weighted-average income tax rate applicable to the profit reported by of the consolidated companies, as follows:

	2015			2016			2017
Profit (loss) before income tax		142,446			(582,865	)		328,712
Income tax by applying local applicable tax rates on profit generated in the respective countries		51,503			(164,742	)		98,902
Tax effect on:
- Non-taxable income		(31,266	)		(1,068	)		(7,281	)
- Equity method (profit) loss		2,171			3,673			392
- Non-deductible expenses		9,831			57,044			27,901
- Unrecognized deferred tax asset income (expense)		31,432			(4,535	)		1,562
- Adjustment for changes in rates of income tax		2,008			(17,105	)		(1,951	)
- PPUA adjustment for changes in tax rates		15,296			4,871			(611	)
- Change in prior years estimations		12,762			(181	)		12,200
- Others, net		2,162			2,771			(8,077	)
Income tax charge		95,899			(119,272	)		123,037

Summary of Weighted Average Pre-tax Profit or Loss and Applicable Income Tax Rate

g) The theoretical tax disclosed resulted from applying the income tax rate stipulated in the tax laws of the country in which a Group company is legally resident. Accordingly, for fiscal 2017, companies that are legally resident in Peru, Chile and Colombia applied income tax rates of 29.5%, 25.5% and 40% respectively (28%, 24% and 40% for 2016; 28%, 22.5% and 39% for 2015). Norvial, GyM Ferrovías, Vesur and GMP (Blocks III and IV) have legal stability agreements with Peruvian Government, in force for all years preserved. In this sense, the consolidated theoretical amount is obtained as a weighted average pre-tax profit or loss and the applicable income tax.

RATES

Country	Rates Taxes local Applicable			Utility before the Tax to Rent			Tax to rent
	(A)			(B)			(A)*(B)
2015
Perú		28.00	%		174,432			48,841
Perú - Norvial S.A.		27.00	%		54,471			14,707
Perú - GyM Ferrovías S.A.		30.00	%		26,954			8,086
Perú – Vesur		30.00	%		2,336			701
Perú – GMP S.A.		30.00	%		15,007			4,502
Chile		22.50	%		(95,284	)		(21,439	)
Colombia		39.00	%		40,900			15,951
Bolivia		25.00	%		(57,382	)		(14,345	)
Unrealized gains					(6,818	)		(2,371	)
Total					154,616			54,631
2016
Perú		28.00	%		(1,098,327	)		(307,532	)
Perú - Norvial S.A.		27.00	%		63,583			17,167
Perú - GyM Ferrovías S.A.		30.00	%		34,760			10,428
Perú – Vesur		30.00	%		888			267
Perú – GMP S.A.		30.00	%		8,602			2,581
Chile		24.00	%		(86,151	)		(20,676	)
Colombia		40.00	%		(25,555	)		(10,222	)
Bolivia		25.00	%		(703	)		(176	)
Unrealized gains					520,038			143,421
Total					(582,865	)		(164,742	)
2017
Perú		29.50	%		730,980			215,639
Perú - Norvial S.A.		27.00	%		68,104			18,388
Perú - GyM Ferrovías S.A.		30.00	%		29,028			8,708
Perú – Vesur		30.00	%		779			234
Perú – GMP S.A.		29.00	%		20,941			6,073
Chile		25.50	%		(128,734	)		(32,827	)
Colombia		40.00	%		(27,970	)		(11,188	)
Bolivia		25.00	%		(2,897	)		(724	)
Unrealized gains					(361,519	)		(105,401	)
Total					328,712			98,902

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Accumulated Other Comprehensive Income (Tables)

12 Months Ended

Dec. 31, 2017

Summary of Accumulated Other Comprehensive Income Loss

The analysis of the movement is as follows:

										Exchange
				Foreign			Increase in			difference from
				currency			fair value of			net investment
	Cash flow			translations			available-for			in a foreign
	hedge			adjustment			sale assets			operation			Total
At January 31, 2015		(1,613	)		(19,030	)		31,169			(12,602	)		(2,076	)
(Charge) credit for the year		954			(45,411	)		26,991			(6,942	)		(24,408	)
Tax effects		(267	)					(7,018	)		1,804			(5,481	)
Other comprehensive income of the year		687			(45,411	)		19,973			(5,138	)		(29,889	)
At December 31, 2015		(926	)		(64,441	)		51,142			(17,740	)		(31,965	)
(Charge) credit for the year		1,190			9,885			(3,149	)		10,965			18,891
Tax effects		(351	)		—			929			(3,243	)		(2,665	)
Transfer to profit or loss (Note 10)		—			—			(41,461	)		1,563			(39,898	)
Other comprehensive income of the year		839			9,885			(43,681	)		9,285			(23,672	)
At December 31, 2016		(87	)		(54,556	)		7,461			(8,455	)		(55,637	)
(Charge) credit for the year		650			(9,166	)		—			9,222			706
Tax effects		(192	)		—			—			(2,729	)		(2,921	)
Other comprehensive income of the year		458			(9,166	)		—			6,493			(2,215	)
At December 31, 2017		371			(63,722	)		7,461			(1,962	)		(57,852	)

Summary of Other Comprehensive Income

Below is the movement in Other Comprehensive Income for each year:

	2015			2016			2017
Controlling interest		(29,889	)		(23,672	)		(2,215	)
Non-controlling interest		(15,235	)		4,194			(3,117	)
Adjustment for actuarial gains and losses, net of tax		(2,921	)		(1,121	)		(2,948	)
Total value in OCI		(48,045	)		(20,599	)		(8,280	)

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Business Combinations (Tables)

12 Months Ended

Dec. 31, 2017

Summary of Provisional Determination of Fair Value of Identifiable Assets Acquired and Liabilities Assumed

The table below itemizes the determination of the fair value of the identifiable assets acquired, liabilities assumed, non-controlling interest held and goodwill at the acquisition date:

	Fair Value
	S/000		US$000
Purchase consideration		14,040		4,179
Fair value of previously held interest		29,039		8,643
Total consideration (a)		43,079		12,822

	Fair Value
	S/000			US$000
Fair value of assets and liabilities of Adexus S.A.:
Cash and cash equivalents		7,737			2,303
Trade receivables		107,426			31,972
Receivables from related parties		2,610			777
Other receivables		1,160			345
Inventories		1,647			490
Prepaid expenses		11,587			3,449
Long-term trade receivables		26,886			8,195
Other long-term receivables		2,063			614
Property, plant and equipment		41,988			12,496
Intangibles		32,204			9,585
Deferred income tax assets		18,115			5,198
Borrowings		(108,808	)		(32,383	)
Trade payables		(59,399	)		(17,678	)
Payables to related parties		(15,683	)		(4,667	)
Current income tax		(2,763	)		(822	)
Other payables		(10,291	)		(3,063	)
Other provisions		(1,926	)		(573	)
Contingent liabilities		(1,149	)		(342	)
Deferred income tax liabilities		(7,102	)		(2,114	)
Fair value of net identifiable assets		46,302			13,782
Non-controlling interest (8.97%)		(4,153	)		(1,236	)
Fair value of net assets attributable to the Group (b)		42,149			12,546
Goodwill (Note 18) (a) - (b)		930			276

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Earnings (Losses) Per Share (Tables)

12 Months Ended

Dec. 31, 2017

Summary of Basic Earnings Per Share

The basic earnings per share are broken down as follows:

	2015		2016			2017
Profit (Losses) attributable to the controlling interest in the Company		7,097		(509,699	)		148,739
Weighted average number of shares in issue at S/1.00 each, at December 31,		660,053,790		660,053,790			660,053,790
Basic earnings (losses) per share (in S/)		0.011		(0.772	)		0.225

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Transactions with Non-Controlling Interests (Tables)

12 Months Ended

Dec. 31, 2017

Summary of Contributions of Non-controlling Shareholders

At December 31 this balance comprises:

	2015			2016			2017
Viva GyM S.A.
Contributions received		20,446			6,380			8,654
Returns of contributions		(14,987	)		(27,134	)		(45,053	)
		5,459			(20,754	)		(36,399	)
Plus (less):
Contributions from other subsidiaries		4,870			1,655			3,202
Increase (decrease) in equity of non controlling parties		10,329			(19,099	)		(33,197	)

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Discountinued Operation (Tables)

12 Months Ended

Dec. 31, 2017

GMD SA [member]

Summary on the Financial Performance and Cash Flow Information

The financial performance and cash flow information presented are for the five months ended May 31, 2017 and the years ended 2015 and 2016.

	GMD S.A.
	(net of intercompany transactions)
							From January 1 to May 31,
	2015			2016			2017
Revenue		21,318			18,651			7,204
Operating costs		(23,829	)		(24,129	)		(10,567	)
Finance costs, net		(8,249	)		(9,758	)		(2,617	)
Operating loss from discontinued activities before taxation		(10,760	)		(15,236	)		(5,980	)
Income tax expense		(3,129	)		(7,466	)		(1,171	)
Loss from discontinued ordinary activities after taxation		(13,888	)		(22,702	)		(7,151	)
Loss from discontinued activities attributable to owners of the Company		(12,393	)		(20,257	)		(6,381	)
Losses per share relating to the discontinued operation are as follows:
Basic		(1.08	)		(1.77	)		(0.56	)
Cash flows relating to the discontinued operation are as follows:
Operating cash flows		(14,193	)		78,286			10,220
Investing cash flows		(17,499	)		(30,712	)		(11,189	)
Financing cash flows		(53,501	)		(48,516	)		1,618

Tecgas N.V. [member]

Summary on the Financial Performance and Cash Flow Information

The financial performance presented is for the period year ended 2016.

	TECGAS N.V.
	2016
Revenue		457,554
Finance costs		215
Operating loss from discontinued activities before taxation		(3,209	)
Income tax expense		(4,078	)
Loss from discontinued ordinary activities after taxation		(7,287	)

Stracon GyM member]

Summary on the Financial Performance and Cash Flow Information

The information on the financial result and the cash flow presented below correspond to Stracon GyM S.A. from the years to the periods ended December 31, 2016 and 2017, which were included in the consolidated financial statements.-

	STRACON GyM S.A.
	2015			2016			2017
Revenue		1,476,764			1,222,707			1,027,804
Operating costs		(1,305,806	)		(1,099,789	)		(943,805	)
Finance costs, net		(21,478	)		(3,104	)		(5,231	)
Operating profit from discontinued activities before taxation		149,480			119,814			78,768
Income tax expense		(40,492	)		(32,558	)		(17,969	)
Profit from discontinued ordinary activities after taxation		108,988			87,256			60,799
Profit from discontinued activities attributable to owners of the Company		95,463			76,428			53,254
Earnings per share relating to the discontinued operation are as follows Basic		1.395			1.117			0.778
Cash flows relating to the discontinued operation are as follows:
Operating cash flows		166,438			49,105			118,418
Investing cash flows		(19,914	)		(31,132	)		(6,750	)
Financing cash flows		(120,655	)		(71,382	)		(97,802	)

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General Information - Additional Information (Detail) $ in Millions	Dec. 31, 2017 USD ($)
General Information [Line Items]
Trust assets worth	$ 41
Maximum eventual liability	$ 51

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Summary of Significant Accounting Policies - Additional Information (Detail) S/ in Millions, $ in Millions	12 Months Ended
	Dec. 31, 2017 PEN (S/)	Dec. 31, 2017 USD ($)	Dec. 31, 2016 PEN (S/)	Dec. 31, 2016 USD ($)
Viva GyM SA [member]
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Estimated fair value	S/ 112.7	$ 34.5	S/ 99.0	$ 29.5
Morelco SAS [member]
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Put option period	10 years	10 years
Peru (member)
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Workers' profit sharing on taxable income, Percentage	5.00%	5.00%
Dominican Republic (member)
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Workers' profit sharing on taxable income, Percentage	10.00%	10.00%
Chile (member)
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Employees indemnity period			330 days	330 days
Block III [member] | Capitalised development expenditure [member]
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Estimated useful life	5 years	5 years
Block IV [member] | Capitalised development expenditure [member]
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Estimated useful life	5 years	5 years
Block five [member] | Capitalised development expenditure [member]
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Estimated useful life	5 years	5 years
Block one [member] | Capitalised development expenditure [member]
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Estimated useful life	5 years	5 years
Investment property [member]
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Interest in the Panorama Patio Shopping Center	35.00%	35.00%
Right-of-use assets [member] | Land [member]
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Estimated useful life	60 years	60 years
Bottom of range [member]
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Percentage of voting rights held	20.00%	20.00%
Bottom of range [member] | Chile (member)
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Workers' profit sharing on taxable income, Percentage	4.75%	4.75%
Bottom of range [member] | Contractual relationships with customers [member]
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Estimated useful life	5 years	5 years
Bottom of range [member] | Computer software [member]
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Estimated useful life	2 years	2 years
Bottom of range [member] | Investment property [member]
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Estimated useful life of property	5 years	5 years
Top of range [member]
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Percentage of voting rights held	50.00%	50.00%
Top of range [member] | Bolivia (member)
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Workers' profit sharing on taxable income, Percentage	25.00%	25.00%
Top of range [member] | Contractual relationships with customers [member]
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Estimated useful life	9 years	9 years
Top of range [member] | Computer software [member]
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Estimated useful life	8 years	8 years
Top of range [member] | Investment property [member]
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Estimated useful life of property	33 years	33 years

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Summary of Significant Accounting Policies - Summary of Estimated Useful Life of Property, Plant and Equipment (Detail)	12 Months Ended
	Dec. 31, 2016
Bottom of range [member] | Buildings [member]
Disclosure Of Property Plant And Equipment Estimated Useful Life [Line Items]
Property, plant and equipment, estimated useful life	3 years
Bottom of range [member] | Machinery [member]
Disclosure Of Property Plant And Equipment Estimated Useful Life [Line Items]
Property, plant and equipment, estimated useful life	4 years
Bottom of range [member] | Vehicles [member]
Disclosure Of Property Plant And Equipment Estimated Useful Life [Line Items]
Property, plant and equipment, estimated useful life	2 years
Bottom of range [member] | Furniture and fixture [member]
Disclosure Of Property Plant And Equipment Estimated Useful Life [Line Items]
Property, plant and equipment, estimated useful life	2 years
Bottom of range [member] | Other property, plant and equipment [member]
Disclosure Of Property Plant And Equipment Estimated Useful Life [Line Items]
Property, plant and equipment, estimated useful life	2 years
Top of range [member] | Buildings [member]
Disclosure Of Property Plant And Equipment Estimated Useful Life [Line Items]
Property, plant and equipment, estimated useful life	50 years
Top of range [member] | Machinery [member]
Disclosure Of Property Plant And Equipment Estimated Useful Life [Line Items]
Property, plant and equipment, estimated useful life	10 years
Top of range [member] | Vehicles [member]
Disclosure Of Property Plant And Equipment Estimated Useful Life [Line Items]
Property, plant and equipment, estimated useful life	10 years
Top of range [member] | Furniture and fixture [member]
Disclosure Of Property Plant And Equipment Estimated Useful Life [Line Items]
Property, plant and equipment, estimated useful life	10 years
Top of range [member] | Other property, plant and equipment [member]
Disclosure Of Property Plant And Equipment Estimated Useful Life [Line Items]
Property, plant and equipment, estimated useful life	10 years

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Financial Risk Management - Additional Information (Detail) $ in Thousands, $ in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2017 PEN (S/)	Dec. 31, 2016 PEN (S/)	Dec. 31, 2015 PEN (S/)	Dec. 31, 2017 USD ($)	Dec. 31, 2017 CLP ($)	Dec. 31, 2017 COP ($)	Dec. 31, 2016 USD ($)	Dec. 31, 2016 CLP ($)	Dec. 31, 2016 COP ($)
Disclosure Of Financial Risk Management [Line Items]
Financial liabilities	S/ 2,637,630,000	S/ 3,348,152,000
Percentage of debt at fixed rate	57.80%	52.80%
Percentage of debt at variable rate	42.20%	47.20%
Increase / decrease in libor plus spread rate	5.00%
Increase / decrease in pretax profit	S/ 490,000	S/ 400,000
Transfers from level 1 to 2, Fair value assets	0
Transfers from level 1 to 2, Fair value liabilities	0
Transfers from level 2 to 1, Fair value assets	0
Transfers from level 2 to 1, Fair value liabilities	S/ 0
Bottom of range [member]
Disclosure Of Financial Risk Management [Line Items]
Gearing ratio	10.00%	10.00%		10.00%	10.00%	10.00%	10.00%	10.00%	10.00%
Top of range [member]
Disclosure Of Financial Risk Management [Line Items]
Gearing ratio	70.00%	70.00%		70.00%	70.00%	70.00%	70.00%	70.00%	70.00%
Foreign exchange risk [member]
Disclosure Of Financial Risk Management [Line Items]
Financial assets	S/ 1,851,300,000	S/ 2,770,900,000		$ 570,500	$ 77,199,100	$ 101,300,800	$ 826,600	$ 75,561,300	$ 169,774,800
Financial liabilities	1,982,000,000	2,708,300,000		$ 610,800	$ 74,447,900	$ 74,319,700	$ 806,000	$ 87,221,100	$ 166,091,800
Gains on foreign exchange	336,800,000	761,800,000	S/ 427,200,000
Losses on foreign exchange	S/ 330,500,000	774,300,000	510,100,000
Percentage change in foreign currency	2.00%
Increase / decrease in pretax profit	S/ 100,000	300,000	1,700,000
Foreign currency translation adjustments	S/ (11,300,000)	S/ (14,300,000)	S/ (59,700,000)
Valor Adquisitivo Constante [Member]
Disclosure Of Financial Risk Management [Line Items]
Percentage of debt at fixed rate plus inflation rate	22.90%	18.00%
Percentage of debt at variable rate plus inflation rate	19.30%	29.20%

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Financial Risk Management - Schedule of Undiscounted Cash Flows of Financial Liabilities (Detail) - PEN (S/) S/ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Disclosure Of Undiscounted Cash Flows Financial Liabilities [Line Items]
Other financial liabilities (except for finance leases)	S/ 1,690,063	S/ 2,380,438
Bonds	947,567	967,714
Accounts payables to related parties	55,174	80,217
Other accounts payables	50,013	50,411
Liquidity risk [member]
Disclosure Of Undiscounted Cash Flows Financial Liabilities [Line Items]
Other financial liabilities (except for finance leases)	1,630,666	2,238,478
Finance leases	139,401	259,771
Bonds	1,884,728	1,993,912
Trade accounts payables	1,453,046	1,276,617
Accounts payables to related parties	81,128	145,537
Other accounts payables	560,001	496,546
Other non-financial liabilities	383	1,081
Derivative financial liabilities undiscounted cash flows	5,749,353	6,411,942
Liquidity risk [member] | Less than1 year [member]
Disclosure Of Undiscounted Cash Flows Financial Liabilities [Line Items]
Other financial liabilities (except for finance leases)	1,003,500	1,936,825
Finance leases	72,864	127,496
Bonds	109,746	113,299
Trade accounts payables	1,453,046	1,276,617
Accounts payables to related parties	55,174	80,217
Other accounts payables	153,498	303,827
Derivative financial liabilities undiscounted cash flows	2,847,828	3,838,281
Liquidity risk [member] | From 1 to 2 years [member]
Disclosure Of Undiscounted Cash Flows Financial Liabilities [Line Items]
Other financial liabilities (except for finance leases)	336,913	128,508
Finance leases	41,877	85,989
Bonds	148,986	180,431
Accounts payables to related parties	25,954	28,082
Other accounts payables	34,527	49,064
Other non-financial liabilities	383	1,081
Derivative financial liabilities undiscounted cash flows	588,640	473,155
Liquidity risk [member] | From 2 to 5 years [member]
Disclosure Of Undiscounted Cash Flows Financial Liabilities [Line Items]
Other financial liabilities (except for finance leases)	290,253	173,145
Finance leases	24,022	26,780
Bonds	353,349	365,697
Accounts payables to related parties		37,238
Other accounts payables	371,976	143,655
Derivative financial liabilities undiscounted cash flows	1,039,600	746,515
Liquidity risk [member] | Over 5 years [member]
Disclosure Of Undiscounted Cash Flows Financial Liabilities [Line Items]
Finance leases	638	19,506
Bonds	1,272,647	1,334,485
Derivative financial liabilities undiscounted cash flows	S/ 1,273,285	S/ 1,353,991

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Financial Risk Management - Schedule of Information About Gearing Ratio (Detail) - PEN (S/) S/ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Disclosure of Gearing Ratio [Line Items]
Total financial liabilities and bonds	S/ 2,637,630	S/ 3,348,152
Less: Cash and cash equivalent	(626,180)	(606,950)	S/ (554,002)	S/ (818,402)
Net debt	2,011,450	2,741,202
Total equity	2,589,078	2,489,737	S/ 3,081,912	S/ 3,173,707
Total capital	S/ 4,600,528	S/ 5,230,939
Gearing ratio	0.44%	0.52%

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Financial Risk Management - Schedule of Assets and Liabilities Measured at Fair Value (Detail) - PEN (S/) S/ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Financial liabilities
Derivatives used for hedging	S/ 2,637,630	S/ 3,348,152
Financial assets at fair value through profit or loss, category [member]
Financial assets
Financial assets	181	6,379
Derivatives used for hedging [member]
Financial liabilities
Derivatives used for hedging	383	1,081
Level 1 of fair value hierarchy [member] | Financial assets at fair value through profit or loss, category [member]
Financial assets
Financial assets	181	6,379
Level 2 of fair value hierarchy [member] | Derivatives used for hedging [member]
Financial liabilities
Derivatives used for hedging	S/ 383	S/ 1,081

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Financial Risk Management - Schedule of Changes in Fair Value of Investments Held (Detail) - PEN (S/) S/ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Disclosure of financial investments [Line Items]
Opening balance	S/ 120,134	S/ 93,144
Unrealized gains (losses) recognized in the period	(2,996)	26,990
Historical cost of investment	(61,105)
Cumulative fair value	S/ (56,033)
Final balance		S/ 120,134

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Critical Accounting Estimates And Judgments - Summary of Sensitivity Analysis Based on 10% Increase/Decrease in Assumptions of Gross Margin, Discount Rate, Terminal Growth Rate (Detail)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Goodwill [member] | Mining and construction services [member]
Disclosure Of Sensitivity Analysis [Line Items]
Effect of ten percent decrease in assumptions of gross margin on percentage of recoverable amount, percent		19.18%
Effect of ten percent decrease in assumptions of discount rate on percentage of recoverable amount, percent		65.94%
Effect of ten percent decrease in assumptions of terminal growth rate on percentage of recoverable amount, percent		42.92%
Effect of ten percent increase in assumptions of gross margin on percentage of recoverable amount, percent		71.19%
Effect of ten percent increase in assumptions of discount rate on percentage of recoverable amount, percent		28.99%
Effect of ten percent increase in assumptions of terminal growth rate on percentage of recoverable amount, percent		47.55%
Goodwill [member] | Engineering and construction [member]
Disclosure Of Sensitivity Analysis [Line Items]
Effect of ten percent decrease in assumptions of gross margin on percentage of recoverable amount, percent	81.31%	(42.68%)
Effect of ten percent decrease in assumptions of discount rate on percentage of recoverable amount, percent	146.07%	8.22%
Effect of ten percent decrease in assumptions of terminal growth rate on percentage of recoverable amount, percent	107.41%	(16.49%)
Effect of ten percent increase in assumptions of gross margin on percentage of recoverable amount, percent	143.63%	17.85%
Effect of ten percent increase in assumptions of discount rate on percentage of recoverable amount, percent	86.86%	(27.56%)
Effect of ten percent increase in assumptions of terminal growth rate on percentage of recoverable amount, percent	117.91%	(7.84%)
Goodwill [member] | Electromechanical [member]
Disclosure Of Sensitivity Analysis [Line Items]
Effect of ten percent decrease in assumptions of gross margin on percentage of recoverable amount, percent	197.30%	32.16%
Effect of ten percent decrease in assumptions of discount rate on percentage of recoverable amount, percent	478.08%	74.42%
Effect of ten percent decrease in assumptions of terminal growth rate on percentage of recoverable amount, percent	402.19%	51.14%
Effect of ten percent increase in assumptions of gross margin on percentage of recoverable amount, percent	620.85%	74.41%
Effect of ten percent increase in assumptions of discount rate on percentage of recoverable amount, percent	354.39%	36.77%
Effect of ten percent increase in assumptions of terminal growth rate on percentage of recoverable amount, percent	416.25%	55.62%
Goodwill [member] | IT equipment and services [member]
Disclosure Of Sensitivity Analysis [Line Items]
Effect of ten percent decrease in assumptions of gross margin on percentage of recoverable amount, percent	0.32%	200.93%
Effect of ten percent decrease in assumptions of discount rate on percentage of recoverable amount, percent	30.06%	285.63%
Effect of ten percent decrease in assumptions of terminal growth rate on percentage of recoverable amount, percent	18.54%	243.21%
Effect of ten percent increase in assumptions of gross margin on percentage of recoverable amount, percent	38.87%	289.04%
Effect of ten percent increase in assumptions of discount rate on percentage of recoverable amount, percent	11.25%	212.65%
Effect of ten percent increase in assumptions of terminal growth rate on percentage of recoverable amount, percent	20.52%	247.06%
Goodwill [member] | Telecommunications services [member]
Disclosure Of Sensitivity Analysis [Line Items]
Effect of ten percent decrease in assumptions of gross margin on percentage of recoverable amount, percent	465.17%	(110.85%)
Effect of ten percent decrease in assumptions of discount rate on percentage of recoverable amount, percent	2190.66%	70.31%
Effect of ten percent decrease in assumptions of terminal growth rate on percentage of recoverable amount, percent	2232.86%	26.14%
Effect of ten percent increase in assumptions of gross margin on percentage of recoverable amount, percent	1339.26%	176.40%
Effect of ten percent increase in assumptions of discount rate on percentage of recoverable amount, percent	1967.37%	4.59%
Effect of ten percent increase in assumptions of terminal growth rate on percentage of recoverable amount, percent	2394.81%	39.94%
Trademark [member] | Morelco SAS [member]
Disclosure Of Sensitivity Analysis [Line Items]
Effect of ten percent decrease in assumptions of revenue growth rate on percentage of recoverable amount, percent	16.37%	22.37%
Effect of ten percent increase in assumptions of revenue growth rate on percentage of recoverable amount, percent	(4.79%)	42.03%
Effect of ten percent decrease in assumptions of discount rate on percentage of recoverable amount, percent	(7.21%)	53.35%
Effect of ten percent decrease in assumptions of terminal growth rate on percentage of recoverable amount, percent	8.61%	29.19%
Effect of ten percent increase in assumptions of discount rate on percentage of recoverable amount, percent	22.92%	15.66%
Effect of ten percent increase in assumptions of terminal growth rate on percentage of recoverable amount, percent	3.17%	34.94%
Trademark [member] | Vial y Vives-DSD [member]
Disclosure Of Sensitivity Analysis [Line Items]
Effect of ten percent decrease in assumptions of revenue growth rate on percentage of recoverable amount, percent	(40.72%)	17.01%
Effect of ten percent increase in assumptions of revenue growth rate on percentage of recoverable amount, percent	(63.32%)	43.01%
Effect of ten percent decrease in assumptions of discount rate on percentage of recoverable amount, percent	(58.56%)	56.88%
Effect of ten percent decrease in assumptions of terminal growth rate on percentage of recoverable amount, percent	(51.36%)	23.19%
Effect of ten percent increase in assumptions of discount rate on percentage of recoverable amount, percent	(45.65%)	10.88%
Effect of ten percent increase in assumptions of terminal growth rate on percentage of recoverable amount, percent	(54.47%)	37.83%
Trademark [member] | Adexus S A [member]
Disclosure Of Sensitivity Analysis [Line Items]
Effect of ten percent decrease in assumptions of revenue growth rate on percentage of recoverable amount, percent	22.10%	(8.18%)
Effect of ten percent increase in assumptions of revenue growth rate on percentage of recoverable amount, percent	(0.10%)	(9.91%)
Effect of ten percent decrease in assumptions of discount rate on percentage of recoverable amount, percent	(2.13%)	15.42%
Effect of ten percent decrease in assumptions of terminal growth rate on percentage of recoverable amount, percent	13.27%	(0.12%)
Effect of ten percent increase in assumptions of discount rate on percentage of recoverable amount, percent	28.02%	(10.59%)
Effect of ten percent increase in assumptions of terminal growth rate on percentage of recoverable amount, percent	8.86%	1.89%

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Critical Accounting Estimates and Judgments - Additional Information (Detail)	12 Months Ended
	Dec. 31, 2017 PEN (S/) Well	Dec. 31, 2017 USD ($) Well	Dec. 31, 2016 PEN (S/) Well	Dec. 31, 2015
Disclosure of critical accounting estimates and judgments [line items]
Maximum exposure to tax contingencies	S/ 13,500,000
Percentage of increase/ decrease in Group's gross margins considered for sensitivity analysis	10.00%	10.00%	10.00%	10.00%
Pre-tax discount rate used for present value calculation, bond rate period description	5 to 30-year rate used on U.S. bonds	5 to 30-year rate used on U.S. bonds
Block one [member]
Disclosure of critical accounting estimates and judgments [line items]
Pre-tax discount rate used for present value calculation	2.09%		1.93%
Block five [member]
Disclosure of critical accounting estimates and judgments [line items]
Pre-tax discount rate used for present value calculation	2.27%		1.93%
Block III [member]
Disclosure of critical accounting estimates and judgments [line items]
Pre-tax discount rate used for present value calculation	2.72%		2.93%
Block IV [member]
Disclosure of critical accounting estimates and judgments [line items]
Pre-tax discount rate used for present value calculation	2.72%		2.93%
Gasoducto Sur Peruano [member]
Disclosure of critical accounting estimates and judgments [line items]
Percentage of Net Carrying Amount (NCA) of the Concession assets	72.25%	72.25%
Bottom of range [member]
Disclosure of critical accounting estimates and judgments [line items]
Percentage of Net Carrying Amount (NCA) of the Concession assets	72.25%	72.25%
Additional cost paid due to higher financial expense	S/ 18,950,000	$ 5,640,000
Bottom of range [member] | Viva GyM SA [member]
Disclosure of critical accounting estimates and judgments [line items]
Percentage of voting rights held in subsidiaries	30.00%	30.00%
Top of range [member]
Disclosure of critical accounting estimates and judgments [line items]
Additional cost paid due to higher financial expense	S/ 42,200,000	$ 12,560,000
Top of range [member] | Viva GyM SA [member]
Disclosure of critical accounting estimates and judgments [line items]
Percentage of voting rights held in subsidiaries	50.00%	50.00%
Consorcio Constructor Ductos del Sur [member] | GyM S A [member]
Disclosure of critical accounting estimates and judgments [line items]
Additional cost paid due to higher financial expense			S/ (7,004,000)
Adjustment for reconcile profit (loss)			S/ (15,165,000)
Parent company operation [member] | Promotora Larcomar S.A. [member]
Disclosure of critical accounting estimates and judgments [line items]
Percentage of equity interest in subsidiaries	46.55%	46.55%	46.55%
Tranche one [member]
Disclosure of critical accounting estimates and judgments [line items]
Percentage of Net Carrying Amount (NCA) of the Concession assets to be recovered	82.50%	82.50%
Tranche two [member]
Disclosure of critical accounting estimates and judgments [line items]
Percentage of Net Carrying Amount (NCA) of the Concession assets to be recovered	100.00%	100.00%
Talara, Piura [member]
Disclosure of critical accounting estimates and judgments [line items]
Number of wells closed | Well	144	144	144
Present value of estimated provision for closure of wells	S/ 16,800,000		S/ 17,200,000

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Critical Accounting Estimates and Judgments - Summary of Sensitivity Analysis Performed Considering a 10% Increase/Decrease in Group's Gross Margins (Detail) - PEN (S/) S/ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure Of Sensitivity Analysis [Line Items]
Sales	S/ 3,253,199	S/ 3,945,599	S/ 5,501,537
Gross profit	672,787	557,295	612,995
Profit loss before tax	328,713	(582,865)	142,346
Sensitivity analysis [member]
Disclosure Of Sensitivity Analysis [Line Items]
Sales	3,253,199	3,945,599	5,501,537
Gross profit	S/ 224,040	S/ 194,378	S/ 159,158
Percentage of gross profit	6.89%	4.93%	2.89%
Percentage of gross profit, Plus 10%	7.58%	5.42%	3.18%
Increase in pre-taxprofit	S/ 22,552	S/ 19,473	S/ 15,787
Profit loss before tax	S/ 246,592	S/ 213,851	S/ 174,949
Profit loss before tax, Less 10%	6.20%	4.44%	2.60%
Decrease in pre-taxprofit	S/ (22,552)	S/ (19,473)	S/ (15,787)
Profit loss before tax on ten percentage decrease in gross margin	S/ 201,488	S/ 174,905	S/ 143,371

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Critical Accounting Estimates and Judgements - Disclosure of Adjustments of Financial Statements (Detail) - PEN (S/) S/ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of retrospective adjustments of financial statements [Line items]
Indemnification income	S/ 3,220	S/ (33,600)
Inventories impairment	S/ 40,908	36,353	S/ 17
GyM S A [member] | Consorcio Constructor Ductos del Sur [member]
Disclosure of retrospective adjustments of financial statements [Line items]
Income for debt forgiveness		431,484
Indemnification income		33,600
Work in progress impairment		(410,199)
Other provisions		(24,915)
Inventories impairment		(33,824)
Financial expenses		(7,004)
Property, plant and equipment impairment		(4,143)
Others (liability) asset, net		(164)
Adjustment for reconcile profit (loss)		S/ (15,165)

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Interests in Other Entities - Summary of Principal Direct and Indirect Subsidiaries Classified by Operating Segment (Detail)	12 Months Ended
	Dec. 31, 2017
Engineering and construction [member] | GyM S A [member]
Disclosure of subsidiaries [line items]
Name	GyM S.A.
Country	Peru, and Colombia
Economic activity	Civil construction, electro-mechanic assembly, buildings management and implementing housing development projects and other related services.
Engineering and construction [member] | Stracon GyM S.A. [member]
Disclosure of subsidiaries [line items]
Name	Stracon GyM S.A.
Country	Peru and Panama
Economic activity	Mining contracting activities, providing mining services and carrying out drilling, demolition and any other activity related to construction and mining operations.
Engineering and construction [member] | GyM Chile S.p.A. [member]
Disclosure of subsidiaries [line items]
Name	GyM Chile S.p.A.
Country	Chile
Economic activity	Electromechanical assemblies and services to energy, oil, gas and mining sector.
Engineering and construction [member] | Vial y Vives-DSD S.A. [member]
Disclosure of subsidiaries [line items]
Name	Vial y Vives - DSD S.A.
Country	Chile
Economic activity	Electromechanical assemblies and services. Develop activities related to the construction of engineering projects, civil construction projects and electromechanical assemblies, as well as architectural design and installations in general. Construction and assemblies and electromechanical services in the sectors of energy, oil, gas and mining.
Engineering and construction [member] | GMI SA [member]
Disclosure of subsidiaries [line items]
Name	GMI S.A.
Country	Peru
Economic activity	Advisory and consultancy services in engineering, carrying out studies and projects, managing projects and supervision of works.
Engineering and construction [member] | Morelco SAS [member]
Disclosure of subsidiaries [line items]
Name	Morelco S.A.S
Country	Colombia and Ecuador
Economic activity	Providing construction and assembly services, supplying equipment and material to design, build, assemble, operate and maintain all types of mechanical engineering, instrumentation and civil work.
Infrastructure [member] | GMP S.A. [member]
Disclosure of subsidiaries [line items]
Name	GMP S.A.
Country	Peru
Economic activity	Natural oil and oil by-products extraction services, as well as providing storage and fuel dispatch services.
Infrastructure [member] | Oiltanking Andina Services S.A. [member]
Disclosure of subsidiaries [line items]
Name	Oiltanking Andina Services S.A.
Country	Peru
Economic activity	Operation of the gas processing plant of Pisco - Camisea.
Infrastructure [member] | Transportadora de Gas Natural Comprimido Andino S.A.C. [member]
Disclosure of subsidiaries [line items]
Name	Transportadora de Gas Natural Comprimido Andino S.A.C.
Country	Peru
Economic activity	Supply, process and market natural gas and its derivates.
Infrastructure [member] | CONCARSA [member]
Disclosure of subsidiaries [line items]
Name	Concar S.A.
Country	Peru
Economic activity	Operating and maintaining roads.
Infrastructure [member] | GyM Ferrovias SA. [member]
Disclosure of subsidiaries [line items]
Name	GyM Ferrovías S.A.
Country	Peru
Economic activity	Concession for the operation of the public transportation system (Metro de Lima Metropolitana).
Infrastructure [member] | Survial S.A. [member]
Disclosure of subsidiaries [line items]
Name	Survial S.A.
Country	Peru
Economic activity	Concession for constructing, operating and maintaining the Section 1 of the "Southern Inter-oceanic" road.
Infrastructure [member] | Norvial S.A. [member]
Disclosure of subsidiaries [line items]
Name	Norvial S.A.
Country	Peru
Economic activity	Concession for restoring, operating and maintaining the "Ancón - Huacho - Pativilca" section of the Panamericana Norte road.
Infrastructure [member] | Concesin Canchaque S.A. [member]
Disclosure of subsidiaries [line items]
Name	Concesión Canchaqu S.A.
Country	Peru
Economic activity	Concession for operating and maintaining the Buenos Aires - Canchaque road.
Infrastructure [member] | Concesionaria Va Expresa Sur SA[member]
Disclosure of subsidiaries [line items]
Name	Concesionaria Vía Expresa Sur S.A.
Country	Peru
Economic activity	Concession for designing, constructing, operating and maintaining the Via Expresa - Paseo de la República in Lima.
Real estate [member] | Viva GyM SA [member]
Disclosure of subsidiaries [line items]
Name	VIVA GyM S.A.
Country	Peru
Economic activity	Developing and managing real estate projects directly or together with other partners.
Technical services [member] | CAM Holding S.p.A. [Member]
Disclosure of subsidiaries [line items]
Name	CAM Holding S.p.A.
Country	Chile and Colombia
Economic activity	Electric and technological services for the power industry.
Technical services [member] | Coasin Instalaciones Ltda [member]
Disclosure of subsidiaries [line items]
Name	Coasin Instalaciones Ltda
Country	Chile
Economic activity	Installing and maintaining network and equipment for telecommunications.
Technical services [member] | Adexus S A [member]
Disclosure of subsidiaries [line items]
Name	Adexus S.A.
Country	Chile, Peru, Colombia and Ecuador
Economic activity	IT solutions services.
Parent company operation [member] | Generadora Arabesco S.A. [member]
Disclosure of subsidiaries [line items]
Name	Generadora Arabesc S.A.
Country	Peru
Economic activity	Implementing projects related to electric power-generating activities.
Parent company operation [member] | Larcomar S.A. [member]
Disclosure of subsidiaries [line items]
Name	Larcomar S.A.
Country	Peru
Economic activity	Exploiting land right to use the Larcomar Shopping Center.
Parent company operation [member] | Promotora Larcomar S.A. [member]
Disclosure of subsidiaries [line items]
Name	Promotora Larcomar S.A.
Country	Peru
Economic activity	Building a hotel complex on a plot of land located in the district of Miraflores.
Parent company operation [member] | Promotores Asociados de Inmobiliarias S.A. [member]
Disclosure of subsidiaries [line items]
Name	Promotores Asociados de Inmobiliarias S.A.
Country	Peru
Economic activity	Operating in the real-estate industry and engaged in the development and selling office facilities in Peru.
Parent company operation [member] | Negocios del Gas S.A. [member]
Disclosure of subsidiaries [line items]
Name	Negocios del Gas S.A.
Country	Peru
Economic activity	Construction, operation and maintenance of the pipeline system to transport natural gas and liquids of natural gas.

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Interests in Other Entities - Summary of Group's Subsidiaries and Related Interests (Detail)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Engineering and construction [member] | GyM S A [member]
Disclosure of subsidiaries [line items]
Percentage of common shares directly held by Parent (%)	98.23%	98.23%
Percentage of common shares held by the Group (%)	98.23%	98.23%
Percentage of common shares held by non-controlling interests (%)	1.77%	1.77%
Engineering and construction [member] | GyM SA and subsidiaries [member]
Disclosure of subsidiaries [line items]
Percentage of common shares held by Subsidiaries (%)	87.06%	87.06%
Percentage of common shares held by the Group (%)	87.06%	87.06%
Percentage of common shares held by non-controlling interests (%)	12.94%	12.94%
Engineering and construction [member] | Stracon GyM S.A. [member]
Disclosure of subsidiaries [line items]
Percentage of common shares held by Subsidiaries (%)	87.59%	87.59%
Percentage of common shares held by the Group (%)	87.59%	87.59%
Percentage of common shares held by non-controlling interests (%)	12.41%	12.41%
Engineering and construction [member] | GyM Chile S.p.A. [member]
Disclosure of subsidiaries [line items]
Percentage of common shares held by Subsidiaries (%)	99.99%	99.99%
Percentage of common shares held by the Group (%)	99.99%	99.99%
Percentage of common shares held by non-controlling interests (%)	0.01%	0.01%
Engineering and construction [member] | V y V - DSD S.A. [member]
Disclosure of subsidiaries [line items]
Percentage of common shares held by Subsidiaries (%)	94.49%	94.49%
Percentage of common shares held by the Group (%)	94.49%	94.49%
Percentage of common shares held by non-controlling interests (%)	5.51%	5.51%
Engineering and construction [member] | Morelco SAS [member]
Disclosure of subsidiaries [line items]
Percentage of common shares held by Subsidiaries (%)	70.00%	70.00%
Percentage of common shares held by the Group (%)	70.00%	70.00%
Percentage of common shares held by non-controlling interests (%)	30.00%	30.00%
Engineering and construction [member] | GMI SA [member]
Disclosure of subsidiaries [line items]
Percentage of common shares directly held by Parent (%)	89.41%	89.41%
Percentage of common shares held by the Group (%)	89.41%	89.41%
Percentage of common shares held by non-controlling interests (%)	10.59%	10.59%
Infrastructure [member] | GMP S.A. [member]
Disclosure of subsidiaries [line items]
Percentage of common shares directly held by Parent (%)	95.00%	95.00%
Percentage of common shares held by the Group (%)	95.00%	95.00%
Percentage of common shares held by non-controlling interests (%)	5.00%	5.00%
Infrastructure [member] | Oiltanking Andina Services S.A. [member]
Disclosure of subsidiaries [line items]
Percentage of common shares held by Subsidiaries (%)	50.00%	50.00%
Percentage of common shares held by the Group (%)	50.00%	50.00%
Percentage of common shares held by non-controlling interests (%)	50.00%	50.00%
Infrastructure [member] | Transportadora de Gas Natural Comprimido Andino S.A.C. [member]
Disclosure of subsidiaries [line items]
Percentage of common shares held by Subsidiaries (%)	99.93%	99.93%
Percentage of common shares held by the Group (%)	99.93%	99.93%
Percentage of common shares held by non-controlling interests (%)	0.07%	0.07%
Infrastructure [member] | CONCARSA [member]
Disclosure of subsidiaries [line items]
Percentage of common shares directly held by Parent (%)	99.75%
Percentage of common shares held by the Group (%)	99.75%
Percentage of common shares held by non-controlling interests (%)	0.25%
Infrastructure [member] | GyM Ferrovias SA. [member]
Disclosure of subsidiaries [line items]
Percentage of common shares directly held by Parent (%)	75.00%	75.00%
Percentage of common shares held by the Group (%)	75.00%	75.00%
Percentage of common shares held by non-controlling interests (%)	25.00%	25.00%
Infrastructure [member] | Survial S.A. [member]
Disclosure of subsidiaries [line items]
Percentage of common shares directly held by Parent (%)	99.99%	99.99%
Percentage of common shares held by the Group (%)	99.99%	99.99%
Percentage of common shares held by non-controlling interests (%)	0.01%	0.01%
Infrastructure [member] | Norvial S.A. [member]
Disclosure of subsidiaries [line items]
Percentage of common shares directly held by Parent (%)	67.00%	67.00%
Percentage of common shares held by the Group (%)	67.00%	67.00%
Percentage of common shares held by non-controlling interests (%)	33.00%	33.00%
Infrastructure [member] | Concesin Canchaque S.A. [member]
Disclosure of subsidiaries [line items]
Percentage of common shares directly held by Parent (%)	99.96%	99.96%
Percentage of common shares held by the Group (%)	99.96%	99.96%
Percentage of common shares held by non-controlling interests (%)	0.04%	0.04%
Infrastructure [member] | Concesionaria Via Expresa Sur S.A. [Member]
Disclosure of subsidiaries [line items]
Percentage of common shares directly held by Parent (%)	99.98%	99.98%
Percentage of common shares held by Subsidiaries (%)	0.02%	0.02%
Percentage of common shares held by the Group (%)	100.00%	100.00%
Real estate [member] | Viva GyM SA [member]
Disclosure of subsidiaries [line items]
Percentage of common shares directly held by Parent (%)	63.44%	63.44%
Percentage of common shares held by Subsidiaries (%)	36.10%	36.10%
Percentage of common shares held by the Group (%)	99.54%	99.54%
Percentage of common shares held by non-controlling interests (%)	0.46%	0.46%
Real estate [member] | Viva GyM S.A. and subsidiaries [member]
Disclosure of subsidiaries [line items]
Percentage of common shares held by Subsidiaries (%)	60.51%	60.51%
Percentage of common shares held by the Group (%)	60.51%	60.51%
Percentage of common shares held by non-controlling interests (%)	39.49%	39.49%
Services [Member] | CONCARSA [member]
Disclosure of subsidiaries [line items]
Percentage of common shares directly held by Parent (%)		99.75%
Percentage of common shares held by the Group (%)		99.75%
Percentage of common shares held by non-controlling interests (%)		0.25%
Services [Member] | CAM Holding S.p.A. [Member]
Disclosure of subsidiaries [line items]
Percentage of common shares directly held by Parent (%)	100.00%	100.00%
Percentage of common shares held by the Group (%)	100.00%	100.00%
Services [Member] | Coasin Instalaciones Ltda [member]
Disclosure of subsidiaries [line items]
Percentage of common shares held by Subsidiaries (%)	100.00%	100.00%
Percentage of common shares held by the Group (%)	100.00%	100.00%
Services [Member] | CAM Servicios del Peru SA [member]
Disclosure of subsidiaries [line items]
Percentage of common shares directly held by Parent (%)	73.16%	73.16%
Percentage of common shares held by the Group (%)	73.16%	73.16%
Percentage of common shares held by non-controlling interests (%)	26.84%	26.84%
Services [Member] | Adexus S A [member]
Disclosure of subsidiaries [line items]
Percentage of common shares directly held by Parent (%)	91.03%
Percentage of common shares held by the Group (%)	91.03%
Percentage of common shares held by non-controlling interests (%)	8.97%
Services [Member] | GMD SA [member]
Disclosure of subsidiaries [line items]
Percentage of common shares directly held by Parent (%)		89.23%
Percentage of common shares held by the Group (%)		89.23%
Percentage of common shares held by non-controlling interests (%)		10.77%
Services [Member] | Gestion de Servicios Digitales S.A. [member]
Disclosure of subsidiaries [line items]
Percentage of common shares held by Subsidiaries (%)		100.00%
Percentage of common shares held by the Group (%)		100.00%
Parent company operation [member] | Generadora Arabesco S.A. [member]
Disclosure of subsidiaries [line items]
Percentage of common shares directly held by Parent (%)	99.00%	99.00%
Percentage of common shares held by the Group (%)	99.00%	99.00%
Percentage of common shares held by non-controlling interests (%)	1.00%	1.00%
Parent company operation [member] | Larcomar S.A. [member]
Disclosure of subsidiaries [line items]
Percentage of common shares directly held by Parent (%)	79.66%	79.66%
Percentage of common shares held by the Group (%)	79.66%	79.66%
Percentage of common shares held by non-controlling interests (%)	20.34%	20.34%
Parent company operation [member] | Promotora Larcomar S.A. [member]
Disclosure of subsidiaries [line items]
Percentage of common shares directly held by Parent (%)	46.55%	46.55%
Percentage of common shares held by the Group (%)	46.55%	46.55%
Percentage of common shares held by non-controlling interests (%)	53.45%	53.45%
Parent company operation [member] | Promotores Asociados de Inmobiliarias S.A. [member]
Disclosure of subsidiaries [line items]
Percentage of common shares directly held by Parent (%)	99.99%	99.99%
Percentage of common shares held by the Group (%)	99.99%	99.99%
Percentage of common shares held by non-controlling interests (%)	0.01%	0.01%
Parent company operation [member] | Negocios del Gas S.A. [member]
Disclosure of subsidiaries [line items]
Percentage of common shares directly held by Parent (%)	99.99%	99.99%
Percentage of common shares held by Subsidiaries (%)	0.01%	0.01%
Percentage of common shares held by the Group (%)	100.00%	100.00%
Parent company operation [member] | Agenera S.A. [member]
Disclosure of subsidiaries [line items]
Percentage of common shares directly held by Parent (%)	99.00%	99.00%
Percentage of common shares held by Subsidiaries (%)	1.00%	1.00%
Percentage of common shares held by the Group (%)	100.00%	100.00%

XML

Interests in Other Entities - Additional Information (Detail) S/ in Thousands, $ in Thousands			12 Months Ended
	Nov. 17, 2015 PEN (S/)	Nov. 17, 2015 USD ($)	Dec. 31, 2016 PEN (S/)	Dec. 31, 2017 PEN (S/)
Disclosure of subsidiaries [line items]
Trade accounts receivables			S/ 1,031,270	S/ 992,724
Ministry Of Energy And Mining [Member]
Disclosure of subsidiaries [line items]
Trade accounts receivables			17,300
Cam Brasil Multiservicos S.A. [member]
Disclosure of subsidiaries [line items]
Percentage of shares sold by Cam Holding S.p.A.	100.00%
Proceeds from shares sold sold by Cam Holding S.p.A. | $		$ 300
Loss from shares sold by Cam Holding S.p.A.	S/ (8,300)
Cash balance	S/ 980
TGNCA [member]
Disclosure of subsidiaries [line items]
Recognized impairment loss of receivables			S/ 6,300

XML

Interests in Other Entities - Summary of Group's Subsidiaries Non-controlling Interests (Detail) - PEN (S/) S/ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Disclosure of Subsidiaries noncontrolling interests [Line Items]
Non controlling interests	S/ 465,748	S/ 509,313
Viva GyM S.A. and subsidiaries [member]
Disclosure of Subsidiaries noncontrolling interests [Line Items]
Non controlling interests	224,345	241,140
Viva GyM SA [member]
Disclosure of Subsidiaries noncontrolling interests [Line Items]
Non controlling interests	1,576	1,700
GyM SA and subsidiaries [member]
Disclosure of Subsidiaries noncontrolling interests [Line Items]
Non controlling interests	95,052	100,840
GyM S A [member]
Disclosure of Subsidiaries noncontrolling interests [Line Items]
Non controlling interests	8,118	9,354
Norvial S.A. [member]
Disclosure of Subsidiaries noncontrolling interests [Line Items]
Non controlling interests	68,419	61,349
CAM Holding S A [member]
Disclosure of Subsidiaries noncontrolling interests [Line Items]
Non controlling interests	(6,417)	26,589
GMP S.A. [member]
Disclosure of Subsidiaries noncontrolling interests [Line Items]
Non controlling interests	22,263	20,879
GyM Ferrovias SA. [member]
Disclosure of Subsidiaries noncontrolling interests [Line Items]
Non controlling interests	35,419	30,548
Promotora Larcomar S.A. [member]
Disclosure of Subsidiaries noncontrolling interests [Line Items]
Non controlling interests	13,395	13,539
Others [member]
Disclosure of Subsidiaries noncontrolling interests [Line Items]
Non controlling interests	S/ 3,578	S/ 3,375

XML

Interests in Other Entities - Summarized Financial Information of Subsidiaries With Material Non-controlling Interests (Detail) - PEN (S/) S/ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of summarized financial information [Line Items]
Assets	S/ 3,891,946	S/ 4,328,660
Liabilities	(3,549,185)	(4,536,966)
Assets	4,775,724	4,717,976	S/ 3,699,629
Liabilities	(2,529,407)	(2,019,933)
Revenue	6,080,142	6,190,317	7,582,912
(Loss) profit before income tax	328,713	(582,865)	142,346
Income tax	(123,037)	119,272	(95,899)
Profit (loss) for the period	209,238	(451,598)	55,589
Other comprehensive Income	(8,280)	(20,599)	(48,044)
Total comprehensive Income for the period	200,958	(472,197)	7,545
Dividends paid to non-controlling interest Note (36-c)	43,942	25,473	4,535
Cash flows from investing activities provided by (used in), net	348,870	(373,684)	(551,106)
Cash flows from financing activities provided by (used in), net	(786,057)	85,762	579,012
(Net decrease) net increase in cash	19,110	44,552	(264,400)
Cash and cash equivalent at the beginning of the year	606,950	554,002	818,402
Cash and cash equivalent at the end of the year	626,180	606,950	554,002
Viva GyM S.A. and subsidiaries [member]
Disclosure of summarized financial information [Line Items]
Assets	884,591	1,117,065
Liabilities	(352,125)	(515,781)
Current net assets (liabilities)	532,466	601,284
Assets	78,457	113,594
Liabilities	(44,068)	(104,179)
Non-current net assets (liabilities)	34,389	9,415
Net assets	566,855	610,699
Revenue	647,535	411,518
(Loss) profit before income tax	153,602	104,223
Income tax	(35,900)	(27,054)
Profit (loss) for the period	117,702	77,169
Total comprehensive Income for the period	117,702	77,169
Dividends paid to non-controlling interest Note (36-c)	21,165	5,050
Cash flows from operating activities provided by (used in), net	164,852	44,910
Cash flows from investing activities provided by (used in), net	79,471	(546)
Cash flows from financing activities provided by (used in), net	(203,958)	(59,931)
(Net decrease) net increase in cash	38,817	(15,567)
Cash and cash equivalent at the beginning of the year	58,892	74,459
Cash and cash equivalent at the end of the year	97,709	58,892	74,459
GyM SA and subsidiaries [member]
Disclosure of summarized financial information [Line Items]
Assets	1,875,231	1,849,077
Liabilities	(2,142,618)	(2,050,803)
Current net assets (liabilities)	(267,387)	201,726
Assets	1,368,460	1,326,599
Liabilities	(546,342)	(471,424)
Non-current net assets (liabilities)	822,118	855,175
Net assets	554,731	653,449
Revenue	3,184,833	4,036,226
(Loss) profit before income tax	18,827	(85,857)
Income tax	(13,482)	(11,228)
Profit (loss) for the period	5,345	(97,085)
Other comprehensive Income	(2,641)	19,486
Total comprehensive Income for the period	2,704	(77,599)
Dividends paid to non-controlling interest Note (36-c)	4,056	8,288
Cash flows from operating activities provided by (used in), net	239,935	224,428
Cash flows from investing activities provided by (used in), net	44,020	(29,853)
Cash flows from financing activities provided by (used in), net	(191,689)	(283,296)
(Net decrease) net increase in cash	92,266	(88,721)
Cash and cash equivalent at the beginning of the year	78,899	167,620
Cash and cash equivalent at the end of the year	179,560	78,899	167,620
Norvial S.A. [member]
Disclosure of summarized financial information [Line Items]
Assets	88,077	107,838
Liabilities	(45,613)	(49,721)
Current net assets (liabilities)	42,464	58,117
Assets	492,803	467,449
Liabilities	(327,936)	(339,661)
Non-current net assets (liabilities)	164,867	127,788
Net assets	207,331	185,905
Revenue	149,467	216,260
(Loss) profit before income tax	68,104	63,582
Income tax	(18,678)	(16,262)
Profit (loss) for the period	49,426	47,320
Total comprehensive Income for the period	49,426	47,320
Dividends paid to non-controlling interest Note (36-c)	9,240	7,260
Cash flows from operating activities provided by (used in), net	25,041	(42,051)
Cash flows from financing activities provided by (used in), net	(48,010)	99,193
(Net decrease) net increase in cash	(22,969)	57,142
Cash and cash equivalent at the beginning of the year	95,418	38,276
Cash and cash equivalent at the end of the year	S/ 72,449	S/ 95,418	S/ 38,276

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Interests in Other Entities - Summary of Group's Public Services Concessions (Detail) S/ in Millions, $ in Millions	12 Months Ended
	Dec. 31, 2017 PEN (S/)	Dec. 31, 2017 USD ($)
Survial S.A. [member]
Disclosure of detailed information about service concession arrangements [line items]
Description	This company operates and maintains a 750 km road from the San Juan de Marcona port to Urcos, Peru, which is connected to an interoceanic road. The road has five toll stations and three weigh stations.
Estimated investment		$ 98.9
Consideration	Transaction secured by the Peruvian Government involving from annual payments for the maintenance and operation of the road, which is in charge of the Peruvian Ministry of Transport and Communications (MTC).
Ordinary shares held	99.90%	99.90%
Accounting model	Financial asset
Concesin Canchaque S.A. [member]
Disclosure of detailed information about service concession arrangements [line items]
Description	This company operates and periodically maintains a 78 km road from the towns of Buenos Aires to Canchaque, in Peru The road has one toll station.
Estimated investment		$ 29.0
Consideration	Transaction secured by the Peruvian Government regardless the traffic volume. Revenue is secured by an annual minimum amount of US$0.3 million.
Ordinary shares held	99.96%	99.96%
Accounting model	Financial asset
La Chira S.A. [Member]
Disclosure of detailed information about service concession arrangements [line items]
Description	Designing, financing, constructing, operating and maintaining project called “Planta de Tratamiento de Aguas Residuales y Emisario Submarino La Chira”. The Project will treat approximately 25% of waste waters in Lima.
Estimated investment | S/	S/ 250
Consideration	Transaction secured by the Peruvian Government consisting of monthly and quarterly payments settled by Sedapal´s collection trust.
Ordinary shares held	50.00%	50.00%
Accounting model	Financial asset
GyM Ferrovias SA. [member]
Disclosure of detailed information about service concession arrangements [line items]
Description	Concession for the operation of Line 1 of the Lima Metro, Peru’s only urban railway system in Lima city, which includes (i) operation and maintenance of the five existing trains, (ii) operation and maintenance and the acquisition of 19 trains on behalf of the Peruvian Government and (iii) design and construction of the repair yard and maintenance of railway.
Estimated investment | S/	S/ 548
Consideration	Transaction secured by the Peruvian Government involving a quarterly payment received from MTC based on km travelled per train.
Ordinary shares held	75.00%	75.00%
Accounting model	Financial asset
Norvial S.A. [member]
Disclosure of detailed information about service concession arrangements [line items]
Description	The Company operates and maintains part of the only highway that connects Lima to the northwest of Peru. This 183 km road known as Red Vial 5 runs from the cities of Ancón to Pativilca and has three toll stations.
Estimated investment		$ 152.0
Consideration	From users (self-financed concession; revenue is derived from collection of tolls).
Ordinary shares held	67.00%	67.00%
Accounting model	Intangible
Va Expresa Sur S.A. [member]
Disclosure of detailed information about service concession arrangements [line items]
Description	The Company obtained the concession for designing, financing, building, operating and maintaining the infrastructure associated with the Vía Expresa Sur Project. This project involves the second stage expansion of the Via Expresa - Paseo de la República,between Av. República de Panamá and and Panamericana highway.
Estimated investment		$ 196.8
Consideration	Contract give the right of collection from users; however the Peruvian Government shall pay the difference when the operating revenue obtained is below US$18 million during the first two years and below US$19.7 million from the third year to the fifteenth year of the effective period of the financing, with a ceiling of US$10 million. In June 2017, the contract was suspended temporarily for one year by agreement between Concessionaire and grantor.
Ordinary shares held	99.98%	99.98%
Accounting model	Bifurcated
Recaudo Trujillo S.A.C. [member]
Disclosure of detailed information about service concession arrangements [line items]
Description	Design, implementation, operation, technological maintenance and renewal (estimate) of the single system of electronic collection. Design, implementation, operation and maintenance of the Clearing house Implementation of the Fleet Control Center, as well as training to personnel.
Estimated investment		$ 40.2
Consideration	Economic consideration resulting from applying the “price for validation” considering daily validations input on the system to be managed through a trust.
Ordinary shares held	95.00%	95.00%
Accounting model	Intangible

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Interests in Other Entities - Summary of Group's Major Joint Operations (Detail)	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Concesionaria la Chira S.A. [member]
Disclosure of joint operations [line items]
Percentage of interest	50.00%	50.00%
Consorcio Constructor Alto Cayma [member]
Disclosure of joint operations [line items]
Percentage of interest	50.00%	50.00%
Consorcio Rio Pallca - Huanza [member]
Disclosure of joint operations [line items]
Percentage of interest	40.00%	40.00%
Consorcio Alto Cayma [member]
Disclosure of joint operations [line items]
Percentage of interest	49.00%	49.00%
Consorcio Lima Actividades Comerciales [member]
Disclosure of joint operations [line items]
Percentage of interest	50.00%	50.00%
Consorcio Atocongo [member]
Disclosure of joint operations [line items]
Percentage of interest	40.00%	40.00%
Consorcio Norte Pachacutec [member]
Disclosure of joint operations [line items]
Percentage of interest	49.00%	49.00%
Consorcio La Chira [member]
Disclosure of joint operations [line items]
Percentage of interest	50.00%	50.00%
Consorcio Ro Urubamba [member]
Disclosure of joint operations [line items]
Percentage of interest	50.00%	50.00%
Consorcio Vial Quinua [member]
Disclosure of joint operations [line items]
Percentage of interest	46.00%	46.00%
Consorcio Rio Mantaro [member]
Disclosure of joint operations [line items]
Percentage of interest	50.00%	50.00%
Consorcio GyM Conciviles [member]
Disclosure of joint operations [line items]
Percentage of interest	66.70%	66.70%
Consorcio Toromocho [member]
Disclosure of joint operations [line items]
Percentage of interest	55.00%	55.00%
Consorcio Construcciones y Montajes CCN [member]
Disclosure of joint operations [line items]
Percentage of interest	25.00%	25.00%
Consorcio HV GyM [member]
Disclosure of joint operations [line items]
Percentage of interest	50.00%	50.00%
Consorcio Stracon Motta Engil JV [member]
Disclosure of joint operations [line items]
Percentage of interest	50.00%	50.00%
Consorcio Huacho Pativilca [member]
Disclosure of joint operations [line items]
Percentage of interest	67.00%	67.00%
Consorcio Constructor Chavimochic [Member]
Disclosure of joint operations [line items]
Percentage of interest	26.50%	26.50%
Consorcio Constructor Ductos del Sur [member]
Disclosure of joint operations [line items]
Percentage of interest	29.00%	29.00%
Consorcio Italo Peruano [member]
Disclosure of joint operations [line items]
Percentage of interest	48.00%	48.00%
Consorcio Menegua [member]
Disclosure of joint operations [line items]
Percentage of interest	50.00%	50.00%
Consorcio Energa y Vapor [member]
Disclosure of joint operations [line items]
Percentage of interest	50.00%	50.00%
Consorcio Ermitano [member]
Disclosure of joint operations [line items]
Percentage of interest	50.00%	50.00%
Consorcio para la Atencionn y Mantenimiento de Ductos [member]
Disclosure of joint operations [line items]
Percentage of interest	50.00%	50.00%
Consorcio Lima Actividades Comerciales Sur [member]
Disclosure of joint operations [line items]
Percentage of interest	50.00%	50.00%
Consorcio CDEM [member]
Disclosure of joint operations [line items]
Percentage of interest	85.00%
Consorcio AMDP Norte [member]
Disclosure of joint operations [line items]
Percentage of interest	50.00%
Consorcio Chicama Ascope [member]
Disclosure of joint operations [line items]
Percentage of interest	50.00%
Consorcio TNT Vial y Vives - DSD Chile LTDA [member]
Disclosure of joint operations [line items]
Percentage of interest	50.00%
Consorcio La Gloria [member]
Disclosure of joint operations [line items]
Percentage of interest	49.00%	49.00%
Consorcio GyM Sade Skanska [member]
Disclosure of joint operations [line items]
Percentage of interest	50.00%	50.00%
Constructora Incolur DSD Limitada [member]
Disclosure of joint operations [line items]
Percentage of interest	50.00%	50.00%
Consorcio Terminales [member]
Disclosure of joint operations [line items]
Percentage of interest	50.00%	50.00%
Terminales del Peru [member]
Disclosure of joint operations [line items]
Percentage of interest	50.00%	50.00%
Consorcio Cosapi-Data - GMD S.A. [member]
Disclosure of joint operations [line items]
Percentage of interest		70.00%
Consorcio The Louis Berger Group Inc.-GMD [member]
Disclosure of joint operations [line items]
Percentage of interest		66.45%
Consorcio Procesos digitales [member]
Disclosure of joint operations [line items]
Percentage of interest		43.65%
Consorcio GMD S.A. - Indra S.A. [member]
Disclosure of joint operations [line items]
Percentage of interest		50.00%
Consorcio Fabrica de Software [member]
Disclosure of joint operations [line items]
Percentage of interest		50.00%
Consorcio Gestion de Procesos Electorales (ONPE) [member]
Disclosure of joint operations [line items]
Percentage of interest		50.00%
Consorcio Lima Actividades Sur [member]
Disclosure of joint operations [line items]
Percentage of interest		50.00%
Consorcio Latino de Actividades Comerciales de Clientes Especiales [member]
Disclosure of joint operations [line items]
Percentage of interest		50.00%
Consorcio Latino de Actividades Comerciales [member]
Disclosure of joint operations [line items]
Percentage of interest		75.00%
Consorcio Gestin de Procesos Junta de Gobernadores [member]
Disclosure of joint operations [line items]
Percentage of interest		45.00%
Consorcio Soluciones Digitales [member]
Disclosure of joint operations [line items]
Percentage of interest		38.00%
Consorcio de Gestion de la Informacin [member]
Disclosure of joint operations [line items]
Percentage of interest		56.00%
Consorcio de la Disponibilidad PKI [member]
Disclosure of joint operations [line items]
Percentage of interest		70.00%
Consorcio Ancon-Pativilca [member]
Disclosure of joint operations [line items]
Percentage of interest	67.00%	67.00%
Consorcio Peruano de Conservacion [member]
Disclosure of joint operations [line items]
Percentage of interest	50.00%	50.00%
Consorcio Manperan [member]
Disclosure of joint operations [line items]
Percentage of interest	67.00%	67.00%
Consorcio Vial Sierra [member]
Disclosure of joint operations [line items]
Percentage of interest	50.00%	50.00%
Consorcio Panorama [member]
Disclosure of joint operations [line items]
Percentage of interest	35.00%	35.00%
Consorcio Mecam [member]
Disclosure of joint operations [line items]
Percentage of interest	50.00%	50.00%
Consorcio Seringel [member]
Disclosure of joint operations [line items]
Percentage of interest	50.00%	50.00%

XML

Segment Reporting - Additional Information (Detail) - Customer	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of operating segments [line items]
Number of External customer that represents 10% or more of the Group's revenue		0
Foreign countries [member]
Disclosure of operating segments [line items]
Percentage of revenues derived from foreign operations	28.00%	26.50%	28.00%

XML

Segment Reporting - Disclosure of Profit before Income Tax Reconciles to EBITDA (Detail) - PEN (S/) S/ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of operating segments [line items]
(Profit) loss before income tax	S/ 328,713	S/ (582,865)	S/ 142,346
Financial cost, net	170,038	201,019	130,447
Depreciation	199,794	205,522	217,071
Amortization	86,557	82,743	89,355
EBITDA	S/ 785,101	S/ (93,581)	S/ 579,218

XML

Segment Reporting - Disclosure of Detailed Information about EBITDA for Each Segment (Detail) - PEN (S/) S/ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Schedule Of Breakdown By Operating Segments [line items]
EBITDA	S/ 785,101	S/ (93,581)	S/ 579,218
Parent company operations [member]
Schedule Of Breakdown By Operating Segments [line items]
EBITDA	216,666	(1,026,394)	(35,591)
Elimination of intersegment amounts [member]
Schedule Of Breakdown By Operating Segments [line items]
EBITDA	(140,915)	427,783	34,565
Engineering and construction [member]
Schedule Of Breakdown By Operating Segments [line items]
EBITDA	194,334	106,106	220,137
Infrastructure [member]
Schedule Of Breakdown By Operating Segments [line items]
EBITDA	300,935	237,752	272,230
Real estate [member]
Schedule Of Breakdown By Operating Segments [line items]
EBITDA	177,285	121,421	52,794
Technical services [member]
Schedule Of Breakdown By Operating Segments [line items]
EBITDA	S/ 36,796	S/ 39,751	S/ 35,083

XML

Segment Reporting - Summary of Breakdown by Operating Segments (Detail) - PEN (S/) S/ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Schedule Of Breakdown By Operating Segments [line items]
Revenue	S/ 6,080,142	S/ 6,190,317	S/ 7,582,912
Real estate [member]
Schedule Of Breakdown By Operating Segments [line items]
Revenue			215,764
Technical services [member]
Schedule Of Breakdown By Operating Segments [line items]
Revenue			563,874
Elimination of intersegment amounts [member]
Schedule Of Breakdown By Operating Segments [line items]
Revenue	(499,564)	S/ (458,744)	S/ (449,760)
Annual Backlog Two Thousand Seventeen [Member]
Schedule Of Breakdown By Operating Segments [line items]
Revenue	9,072,850
Annual Backlog Two Thousand Seventeen [Member] | Engineering and construction [member]
Schedule Of Breakdown By Operating Segments [line items]
Revenue	4,727,022
Annual Backlog Two Thousand Seventeen [Member] | Infrastructure [member]
Schedule Of Breakdown By Operating Segments [line items]
Revenue	3,090,417
Annual Backlog Two Thousand Seventeen [Member] | Real estate [member]
Schedule Of Breakdown By Operating Segments [line items]
Revenue	84,128
Annual Backlog Two Thousand Seventeen [Member] | Technical services [member]
Schedule Of Breakdown By Operating Segments [line items]
Revenue	1,493,181
Annual Backlog Two Thousand Seventeen [Member] | Elimination of intersegment amounts [member]
Schedule Of Breakdown By Operating Segments [line items]
Revenue	(321,897)
Annual Backlog Two Thousand Eighteen [Member]
Schedule Of Breakdown By Operating Segments [line items]
Revenue	3,921,691
Annual Backlog Two Thousand Eighteen [Member] | Engineering and construction [member]
Schedule Of Breakdown By Operating Segments [line items]
Revenue	2,261,700
Annual Backlog Two Thousand Eighteen [Member] | Infrastructure [member]
Schedule Of Breakdown By Operating Segments [line items]
Revenue	1,023,749
Annual Backlog Two Thousand Eighteen [Member] | Real estate [member]
Schedule Of Breakdown By Operating Segments [line items]
Revenue	61,296
Annual Backlog Two Thousand Eighteen [Member] | Technical services [member]
Schedule Of Breakdown By Operating Segments [line items]
Revenue	687,183
Annual Backlog Two Thousand Eighteen [Member] | Elimination of intersegment amounts [member]
Schedule Of Breakdown By Operating Segments [line items]
Revenue	(112,237)
Annual Backlog Two Thousand Nineteen [Member]
Schedule Of Breakdown By Operating Segments [line items]
Revenue	2,626,709
Annual Backlog Two Thousand Nineteen [Member] | Engineering and construction [member]
Schedule Of Breakdown By Operating Segments [line items]
Revenue	1,320,381
Annual Backlog Two Thousand Nineteen [Member] | Infrastructure [member]
Schedule Of Breakdown By Operating Segments [line items]
Revenue	997,309
Annual Backlog Two Thousand Nineteen [Member] | Real estate [member]
Schedule Of Breakdown By Operating Segments [line items]
Revenue	22,832
Annual Backlog Two Thousand Nineteen [Member] | Technical services [member]
Schedule Of Breakdown By Operating Segments [line items]
Revenue	390,647
Annual Backlog Two Thousand Nineteen [Member] | Elimination of intersegment amounts [member]
Schedule Of Breakdown By Operating Segments [line items]
Revenue	(104,459)
Annual Backlog Two Thousand Twenty [Member]
Schedule Of Breakdown By Operating Segments [line items]
Revenue	2,524,450
Annual Backlog Two Thousand Twenty [Member] | Engineering and construction [member]
Schedule Of Breakdown By Operating Segments [line items]
Revenue	1,144,941
Annual Backlog Two Thousand Twenty [Member] | Infrastructure [member]
Schedule Of Breakdown By Operating Segments [line items]
Revenue	1,069,358
Annual Backlog Two Thousand Twenty [Member] | Technical services [member]
Schedule Of Breakdown By Operating Segments [line items]
Revenue	415,351
Annual Backlog Two Thousand Twenty [Member] | Elimination of intersegment amounts [member]
Schedule Of Breakdown By Operating Segments [line items]
Revenue	S/ (105,200)

XML

Segment Reporting - Disclosure of Detailed Information About Operating Segments Financial Position (Detail) - PEN (S/) S/ in Thousands	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Assets.-
Cash and cash equivalent	S/ 626,180	S/ 606,950	S/ 554,002	S/ 818,402
Financial asset at fair value through profit or loss	181	352
Trade accounts receivables	992,724	1,031,270
Work in progress	584,753	680,929
Accounts receivable from related parties	100,752	181,664
Other accounts receivable	765,445	649,516
Inventories	770,711	1,104,293
Prepaid expenses	33,478	51,301
Non-current assets classified as held for sale	17,722	22,385
Total current assets	3,891,946	4,328,660
Long-term trade accounts receivable	848,590	667,519
Long-term work in progress	87,410	197,586
Long-term accounts receivable from related parties	773,930	531,384
Prepaid expenses	38,082	23,526
Other long-term accounts receivable	470,852	357,952
Investments in associates and joint ventures	268,671	389,759
Investment property	45,687	49,357
Property, plant and equipment	865,735	1,113,599	1,111,757	1,147,018
Intangible assets	940,070	960,286	878,286	S/ 778,743
Deferred income tax asset	436,697	427,008
Total non-currentassets	4,775,724	4,717,976	S/ 3,699,629
Total assets	8,667,670	9,046,636
LIABILITIES AND EQUITY
Borrowings	1,056,764	1,961,043
Bonds	36,655	46,091
Trade accounts payable	1,453,046	1,276,617
Accounts payable to related parties	55,174	80,217
Current income tax	85,543	62,160
Other accounts payable	848,500	1,096,307
Provisions	13,503	14,531
Total current liabilities	3,549,185	4,536,966
Borrowings	633,299	419,395
Long-term bonds	910,912	921,623
Other long-term accounts payable	852,473	512,803
Long-term accounts payable to related parties	25,954	65,320
Provisions	33,914	26,542
Derivative financial instruments	383	1,081
Deferred income tax liability	72,472	73,169
Total non-currentliabilities	2,529,407	2,019,933
Total liabilities	6,078,592	6,556,899
Equity attributable to controlling interest in the Company	2,123,330	1,980,424
Non-controllinginterest	465,748	509,313
Total liabilities and equity	8,667,670	9,046,636
Parent company operations [member]
Assets.-
Cash and cash equivalent	3,632	112,398
Trade accounts receivables	419
Work in progress	6,030
Accounts receivable from related parties	66,059	50,582
Other accounts receivable	12,742	42,133
Inventories	190	387
Prepaid expenses	757	305
Total current assets	89,829	205,805
Long-term accounts receivable from related parties	636,941	700,615
Other long-term accounts receivable	56,696	11,108
Investments in associates and joint ventures	2,206,230	2,358,918
Property, plant and equipment	70,627	130,422
Intangible assets	24,031	22,793
Deferred income tax asset	192,088	189,230
Total non-currentassets	3,186,613	3,413,086
Total assets	3,276,442	3,618,891
LIABILITIES AND EQUITY
Borrowings	113,412	932,113
Trade accounts payable	36,412	6,703
Accounts payable to related parties	88,546	67,685
Other accounts payable	73,992	189,444
Total current liabilities	312,362	1,195,945
Borrowings	363,564
Other long-term accounts payable	2,469	2,433
Long-term accounts payable to related parties	32,102	394
Provisions	5,255
Total non-currentliabilities	403,390	2,827
Total liabilities	715,752	1,198,772
Equity attributable to controlling interest in the Company	2,547,328	2,406,577
Non-controllinginterest	13,362	13,542
Total liabilities and equity	3,276,442	3,618,891
Elimination of intersegment amounts [member]
Assets.-
Cash and cash equivalent		550
Trade accounts receivables	2,204	(2,204)
Accounts receivable from related parties	(352,438)	(287,988)
Inventories	(8,607)	(13,502)
Total current assets	(358,841)	(303,144)
Long-term work in progress		1,669
Long-term accounts receivable from related parties	(149,624)	(170,131)
Prepaid expenses	(510)
Investments in associates and joint ventures	(2,066,530)	(2,135,544)
Property, plant and equipment	(17,587)	(17,692)
Intangible assets	11,260	14,356
Deferred income tax asset	6,032	7,757
Total non-currentassets	(2,216,959)	(2,299,585)
Total assets	(2,575,800)	(2,602,729)
LIABILITIES AND EQUITY
Trade accounts payable	(939)	(939)
Accounts payable to related parties	(347,770)	(282,763)
Total current liabilities	(348,709)	(283,702)
Long-term accounts payable to related parties	(154,497)	(170,132)
Total non-currentliabilities	(154,497)	(170,132)
Total liabilities	(503,206)	(453,834)
Equity attributable to controlling interest in the Company	(1,940,842)	(2,003,546)
Non-controllinginterest	(131,752)	(145,349)
Total liabilities and equity	(2,575,800)	(2,602,729)
Operating segments [member] | Engineering and construction [member]
Assets.-
Cash and cash equivalent	184,401	93,543
Financial asset at fair value through profit or loss	181	352
Trade accounts receivables	368,303	334,426
Work in progress	578,723	648,851
Accounts receivable from related parties	230,607	327,385
Other accounts receivable	518,123	398,666
Inventories	46,499	76,058
Prepaid expenses	4,470	9,204
Non-current assets classified as held for sale	17,722	22,385
Total current assets	1,949,029	1,910,870
Long-term trade accounts receivable		149
Long-term work in progress	58,997	171,752
Long-term accounts receivable from related parties	258,479
Other long-term accounts receivable	75,030	42,511
Investments in associates and joint ventures	111,513	116,512
Property, plant and equipment	509,700	592,191
Intangible assets	203,390	246,715
Deferred income tax asset	165,227	158,168
Total non-currentassets	1,382,336	1,327,998
Total assets	3,331,365	3,238,868
LIABILITIES AND EQUITY
Borrowings	591,987	582,260
Trade accounts payable	955,015	876,849
Accounts payable to related parties	114,198	119,989
Current income tax	29,379	30,576
Other accounts payable	492,362	485,247
Provisions	6,682	6,615
Total current liabilities	2,189,623	2,101,536
Borrowings	127,773	246,315
Other long-term accounts payable	379,043	147,839
Long-term accounts payable to related parties	4,306	41,672
Provisions	8,587	7,670
Deferred income tax liability	26,633	28,278
Total non-currentliabilities	546,342	471,774
Total liabilities	2,735,965	2,573,310
Equity attributable to controlling interest in the Company	487,923	551,653
Non-controllinginterest	107,477	113,905
Total liabilities and equity	3,331,365	3,238,868
Operating segments [member] | Energy infrastructure [member]
Assets.-
Cash and cash equivalent	43,878	35,396
Trade accounts receivables	64,364	84,996
Accounts receivable from related parties	2,746	3,255
Other accounts receivable	55,959	58,235
Inventories	15,093	12,561
Prepaid expenses	1,168	2,614
Total current assets	183,208	197,057
Other long-term accounts receivable	53,917	29,533
Investments in associates and joint ventures	7,344	8,516
Property, plant and equipment	171,226	176,486
Intangible assets	160,288	139,353
Deferred income tax asset	5,507	4,983
Total non-currentassets	398,282	358,871
Total assets	581,490	555,928
LIABILITIES AND EQUITY
Borrowings	46,924	82,063
Trade accounts payable	62,659	59,830
Accounts payable to related parties	3,664	3,902
Current income tax	1,282	3,631
Other accounts payable	12,487	11,711
Provisions	5,204	6,441
Total current liabilities	132,220	167,578
Borrowings	101,549	80,488
Provisions	16,707	17,115
Derivative financial instruments	383	1,081
Deferred income tax liability	8,957	3,546
Total non-currentliabilities	127,596	102,230
Total liabilities	259,816	269,808
Equity attributable to controlling interest in the Company	299,411	265,241
Non-controllinginterest	22,263	20,879
Total liabilities and equity	581,490	555,928
Operating segments [member] | Toll roads infrastructure [member]
Assets.-
Cash and cash equivalent	121,901	125,853
Trade accounts receivables	128,124	77,615
Accounts receivable from related parties	62,525	55,907
Other accounts receivable	66,765	28,779
Inventories	8,685	9,839
Prepaid expenses	2,354	2,005
Total current assets	390,354	299,998
Long-term trade accounts receivable	14,747	15,092
Long-term work in progress	28,413	24,165
Long-term accounts receivable from related parties	27,660	408
Prepaid expenses	24,585	20,554
Other long-term accounts receivable	11,159	22,926
Property, plant and equipment	18,572	23,508
Intangible assets	492,424	457,163
Deferred income tax asset	11,057	13,244
Total non-currentassets	628,617	577,060
Total assets	1,018,971	877,058
LIABILITIES AND EQUITY
Borrowings	2,589	3,014
Bonds	24,361	25,540
Trade accounts payable	85,329	31,857
Accounts payable to related parties	60,857	38,219
Current income tax	1,122	3,401
Other accounts payable	68,994	43,614
Total current liabilities	243,252	145,645
Borrowings	1,945	2,510
Long-term bonds	319,549	338,143
Other long-term accounts payable	52,349	44,451
Long-term accounts payable to related parties	836	408
Deferred income tax liability	8,606	1,525
Total non-currentliabilities	383,285	387,037
Total liabilities	626,537	532,682
Equity attributable to controlling interest in the Company	323,987	282,851
Non-controllinginterest	68,447	61,525
Total liabilities and equity	1,018,971	877,058
Operating segments [member] | Transportation infrastructure [member]
Assets.-
Cash and cash equivalent	161,073	139,414
Trade accounts receivables	108,706	56,665
Work in progress		32,078
Accounts receivable from related parties	3,072	392
Other accounts receivable	31,381	25,895
Inventories	19,457	16,862
Prepaid expenses	10,312	17,265
Total current assets	334,001	288,571
Long-term trade accounts receivable	793,991	629,310
Prepaid expenses	13,115	2,029
Other long-term accounts receivable	255,179	225,565
Property, plant and equipment	580	193
Intangible assets	323	269
Total non-currentassets	1,063,188	857,366
Total assets	1,397,189	1,145,937
LIABILITIES AND EQUITY
Bonds	12,294	20,551
Trade accounts payable	81,161	23,882
Accounts payable to related parties	83,841	33,009
Other accounts payable	27,058	14,622
Total current liabilities	204,354	92,064
Long-term bonds	591,363	583,480
Other long-term accounts payable	349,987	246,522
Long-term accounts payable to related parties	89,023	87,200
Deferred income tax liability	20,789	14,482
Total non-currentliabilities	1,051,162	931,684
Total liabilities	1,255,516	1,023,748
Equity attributable to controlling interest in the Company	106,256	91,643
Non-controllinginterest	35,417	30,546
Total liabilities and equity	1,397,189	1,145,937
Operating segments [member] | Water treatment infrastructure [member]
Assets.-
Cash and cash equivalent	4,204	3,229
Trade accounts receivables	604	256
Accounts receivable from related parties	8,852	12,379
Other accounts receivable	1,922	4,841
Prepaid expenses	164	167
Total current assets	15,746	20,872
Prepaid expenses	892	943
Other long-term accounts receivable	7,348	7,347
Property, plant and equipment	60	21
Total non-currentassets	8,300	8,311
Total assets	24,046	29,183
LIABILITIES AND EQUITY
Trade accounts payable	132	599
Accounts payable to related parties	14	237
Current income tax	161	1,064
Other accounts payable	49	27
Total current liabilities	356	1,927
Other long-term accounts payable	158
Long-term accounts payable to related parties	23,445	23,445
Deferred income tax liability	210	283
Total non-currentliabilities	23,813	23,728
Total liabilities	24,169	25,655
Equity attributable to controlling interest in the Company	(123)	3,528
Total liabilities and equity	24,046	29,183
Operating segments [member] | Real estate [member]
Assets.-
Cash and cash equivalent	85,187	58,892
Trade accounts receivables	45,897	83,704
Accounts receivable from related parties	69,382	7,284
Other accounts receivable	40,026	20,198
Inventories	643,882	946,657
Prepaid expenses	216	329
Total current assets	884,590	1,117,064
Other long-term accounts receivable	9,811	17,887
Investments in associates and joint ventures	1	31,768
Investment property	45,687	49,357
Property, plant and equipment	11,621	13,008
Intangible assets	1,022	950
Deferred income tax asset	10,316	623
Total non-currentassets	78,458	113,593
Total assets	963,048	1,230,657
LIABILITIES AND EQUITY
Borrowings	162,031	206,456
Trade accounts payable	43,724	30,617
Accounts payable to related parties	37,396	66,190
Current income tax	45,299	17,944
Other accounts payable	63,654	194,441
Provisions	20	131
Total current liabilities	352,124	515,779
Borrowings	12,010	16,541
Other long-term accounts payable	32,058	32,000
Long-term accounts payable to related parties		40,074
Deferred income tax liability		15,564
Total non-currentliabilities	44,068	104,179
Total liabilities	396,192	619,958
Equity attributable to controlling interest in the Company	217,290	234,449
Non-controllinginterest	349,566	376,250
Total liabilities and equity	963,048	1,230,657
Operating segments [member] | Technical services [member]
Assets.-
Cash and cash equivalent	21,904	37,675
Trade accounts receivables	274,103	395,812
Accounts receivable from related parties	9,947	12,468
Other accounts receivable	38,527	70,769
Inventories	45,512	55,431
Prepaid expenses	14,037	19,412
Total current assets	404,030	591,567
Long-term trade accounts receivable	39,852	22,968
Long-term accounts receivable from related parties	474	492
Other long-term accounts receivable	1,712	1,075
Investments in associates and joint ventures	10,113	9,589
Property, plant and equipment	100,936	195,462
Intangible assets	47,332	78,687
Deferred income tax asset	46,470	53,003
Total non-currentassets	246,889	361,276
Total assets	650,919	952,843
LIABILITIES AND EQUITY
Borrowings	139,821	155,137
Trade accounts payable	189,553	247,219
Accounts payable to related parties	14,428	33,749
Current income tax	8,300	5,544
Other accounts payable	109,904	157,201
Provisions	1,597	1,344
Total current liabilities	463,603	600,194
Borrowings	26,458	73,541
Other long-term accounts payable	36,409	39,558
Long-term accounts payable to related parties	30,739	42,259
Provisions	3,365	1,757
Deferred income tax liability	7,277	9,491
Total non-currentliabilities	104,248	166,606
Total liabilities	567,851	766,800
Equity attributable to controlling interest in the Company	82,100	148,028
Non-controllinginterest	968	38,015
Total liabilities and equity	S/ 650,919	S/ 952,843

XML

Segment Reporting - Disclosure of Detailed Information About Operating Segment Performance (Detail) - PEN (S/) S/ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of detailed information about operating segment performance [Line Items]
Revenue	S/ 6,080,142	S/ 6,190,317	S/ 7,582,912
Gross profit (loss)	672,787	557,295	612,995
Administrative expenses	(429,181)	(382,393)	(394,223)
Other income and expenses	(20,545)	(13,374)	54,586
Gain from the sale of investments	274,363	46,336	(8,289)
Operating (loss) profit	497,424	207,864	265,069
Financial expenses	(185,445)	(221,664)	(168,083)
Financial income	15,407	20,645	37,636
Share of the profit or loss in associates and joint ventures under the equity method of accounting	1,327	(589,710)	7,724
(Loss) profit before income tax	328,713	(582,865)	142,346
Income tax	(123,037)	119,272	(95,899)
(Loss) profit from continuing operations	205,676	(463,593)	46,447
Profit from discontinued operations	3,562	11,995	9,142
(Loss) profit for the year	209,238	(451,598)	55,589
(Loss) profit attributable to:
Owners of the Company	148,738	(509,699)	7,097
Non-controllinginterest	60,500	58,101	48,492
(Loss) profit for the year	209,238	(451,598)	55,589
Real estate [member]
Disclosure of detailed information about operating segment performance [Line Items]
Revenue			215,764
Gross profit (loss)			51,755
Administrative expenses			(20,521)
Other income and expenses			1,759
Operating (loss) profit			32,993
Financial expenses			(11,642)
Financial income			746
Share of the profit or loss in associates and joint ventures under the equity method of accounting			14,888
(Loss) profit before income tax			36,985
Income tax			(7,649)
(Loss) profit from continuing operations			29,336
(Loss) profit for the year			29,336
(Loss) profit attributable to:
Owners of the Company			12,377
Non-controllinginterest			16,959
(Loss) profit for the year			29,336
Technical services [member]
Disclosure of detailed information about operating segment performance [Line Items]
Revenue			563,874
Gross profit (loss)			76,828
Administrative expenses			(60,871)
Other income and expenses			12,135
Gain from the sale of investments			(8,289)
Operating (loss) profit			19,803
Financial expenses			(18,265)
Financial income			584
Share of the profit or loss in associates and joint ventures under the equity method of accounting			589
(Loss) profit before income tax			2,711
Income tax			20,593
(Loss) profit from continuing operations			23,304
Profit from discontinued operations			5,162
(Loss) profit for the year			28,466
(Loss) profit attributable to:
Owners of the Company			20,001
Non-controllinginterest			8,465
(Loss) profit for the year			28,466
Parent company operations [member]
Disclosure of detailed information about operating segment performance [Line Items]
Revenue	70,049	62,070	70,531
Gross profit (loss)	(37,771)	(171)	(7,004)
Administrative expenses	(100,687)	(35,740)	(29,882)
Other income and expenses	10,512	(5,843)	11,114
Gain from the sale of investments	195,378	46,336
Operating (loss) profit	67,432	4,582	(25,772)
Financial expenses	(80,339)	(115,225)	(2,818)
Financial income	32,925	18,688	56,101
Share of the profit or loss in associates and joint ventures under the equity method of accounting	142,596	(1,036,888)	(14,709)
(Loss) profit before income tax	162,614	(1,128,843)	12,802
Income tax	(19,495)	193,425	(9,208)
(Loss) profit from continuing operations	143,119	(935,418)	3,594
(Loss) profit for the year	143,119	(935,418)	3,594
(Loss) profit attributable to:
Owners of the Company	143,279	(934,508)	4,337
Non-controllinginterest	(160)	(910)	(743)
(Loss) profit for the year	143,119	(935,418)	3,594
Elimination of intersegment amounts [member]
Disclosure of detailed information about operating segment performance [Line Items]
Revenue	(499,564)	(458,744)	(449,760)
Gross profit (loss)	(45,100)	(92,413)	(67,238)
Administrative expenses	61,817	76,298	73,187
Other income and expenses	559	(3,923)	(2,968)
Gain from the sale of investments	4,215
Operating (loss) profit	21,491	(20,038)	2,981
Financial expenses	27,626	14,296	27,300
Financial income	(42,755)	(26,454)	(41,077)
Share of the profit or loss in associates and joint ventures under the equity method of accounting	(175,144)	421,852	8,246
(Loss) profit before income tax	(168,782)	389,656	(2,550)
Income tax	(101)	7,233	2,171
(Loss) profit from continuing operations	(168,883)	396,889	(379)
Profit from discontinued operations	1,245	4,144	3,980
(Loss) profit for the year	(167,638)	401,033	3,601
(Loss) profit attributable to:
Owners of the Company	(140,997)	414,423	8,571
Non-controllinginterest	(26,641)	(13,390)	(4,970)
(Loss) profit for the year	(167,638)	401,033	3,601
Operating segments [member] | Engineering and construction [member]
Disclosure of detailed information about operating segment performance [Line Items]
Revenue	3,353,199	4,159,538	5,829,441
Gross profit (loss)	290,296	224,621	312,780
Administrative expenses	(231,044)	(258,568)	(289,149)
Other income and expenses	(42,747)	(9,250)	30,616
Gain from the sale of investments	25,768
Operating (loss) profit	42,273	(43,197)	54,247
Financial expenses	(52,852)	(65,138)	(127,383)
Financial income	9,434	11,216	8,875
Share of the profit or loss in associates and joint ventures under the equity method of accounting	30,633	16,501	(2,234)
(Loss) profit before income tax	29,488	(80,618)	(66,495)
Income tax	(17,091)	(12,828)	(55,350)
(Loss) profit from continuing operations	12,397	(93,446)	(121,845)
(Loss) profit for the year	12,397	(93,446)	(121,845)
(Loss) profit attributable to:
Owners of the Company	12,077	(87,710)	(131,181)
Non-controllinginterest	320	(5,736)	9,336
(Loss) profit for the year	12,397	(93,446)	(121,845)
Operating segments [member] | Energy infrastructure [member]
Disclosure of detailed information about operating segment performance [Line Items]
Revenue	436,876	382,211	389,377
Gross profit (loss)	71,825	42,129	63,530
Administrative expenses	(15,854)	(17,260)	(18,214)
Other income and expenses	5,139	542	1,365
Operating (loss) profit	61,110	25,411	46,681
Financial expenses	(13,423)	(10,801)	(19,953)
Financial income	1,964	1,040	158
Share of the profit or loss in associates and joint ventures under the equity method of accounting	1,584	1,615	944
(Loss) profit before income tax	51,235	17,265	27,830
Income tax	(13,151)	(5,308)	(7,650)
(Loss) profit from continuing operations	38,084	11,957	20,180
(Loss) profit for the year	38,084	11,957	20,180
(Loss) profit attributable to:
Owners of the Company	33,715	9,370	17,072
Non-controllinginterest	4,369	2,587	3,108
(Loss) profit for the year	38,084	11,957	20,180
Operating segments [member] | Toll roads infrastructure [member]
Disclosure of detailed information about operating segment performance [Line Items]
Revenue	642,127	527,104	729,232
Gross profit (loss)	139,196	121,114	139,651
Administrative expenses	(32,454)	(35,085)	(37,934)
Other income and expenses	1,062	263	565
Operating (loss) profit	107,804	86,292	102,282
Financial expenses	(6,893)	(7,390)	(9,974)
Financial income	3,256	2,225	9,812
(Loss) profit before income tax	104,167	81,127	102,120
Income tax	(32,290)	(22,213)	(30,157)
(Loss) profit from continuing operations	71,877	58,914	71,963
(Loss) profit for the year	71,877	58,914	71,963
(Loss) profit attributable to:
Owners of the Company	55,620	43,656	60,331
Non-controllinginterest	16,257	15,258	11,632
(Loss) profit for the year	71,877	58,914	71,963
Operating segments [member] | Transportation infrastructure [member]
Disclosure of detailed information about operating segment performance [Line Items]
Revenue	365,772	247,040	206,459
Gross profit (loss)	48,696	42,473	40,468
Administrative expenses	(15,279)	(12,952)	(10,529)
Other income and expenses	5	10
Operating (loss) profit	33,422	29,531	29,939
Financial expenses	(8,000)	(2,810)	(5,303)
Financial income	3,606	8,037	2,316
(Loss) profit before income tax	29,028	34,758	26,952
Income tax	(9,545)	(10,904)	(8,129)
(Loss) profit from continuing operations	19,483	23,854	18,823
(Loss) profit for the year	19,483	23,854	18,823
(Loss) profit attributable to:
Owners of the Company	14,613	17,891	14,118
Non-controllinginterest	4,870	5,963	4,705
(Loss) profit for the year	19,483	23,854	18,823
Operating segments [member] | Water treatment infrastructure [member]
Disclosure of detailed information about operating segment performance [Line Items]
Revenue	3,152	18,459	27,994
Gross profit (loss)	445	5,698	2,225
Administrative expenses	(317)	(786)	(310)
Operating (loss) profit	128	4,912	1,915
Financial expenses	(50)	(38)	(45)
Financial income	26	86	121
(Loss) profit before income tax	104	4,960	1,991
Income tax	(227)	(1,433)	(520)
(Loss) profit from continuing operations	(123)	3,527	1,471
(Loss) profit for the year	(123)	3,527	1,471
(Loss) profit attributable to:
Owners of the Company	(123)	3,527	1,471
(Loss) profit for the year	(123)	3,527	S/ 1,471
Operating segments [member] | Real estate [member]
Disclosure of detailed information about operating segment performance [Line Items]
Revenue	647,535	411,518
Gross profit (loss)	147,384	136,540
Administrative expenses	(21,189)	(28,430)
Other income and expenses	(3,700)	838
Gain from the sale of investments	49,002
Operating (loss) profit	171,497	108,948
Financial expenses	(21,917)	(14,388)
Financial income	3,569	2,816
Share of the profit or loss in associates and joint ventures under the equity method of accounting	455	6,850
(Loss) profit before income tax	153,604	104,226
Income tax	(35,900)	(27,054)
(Loss) profit from continuing operations	117,704	77,172
(Loss) profit for the year	117,704	77,172
(Loss) profit attributable to:
Owners of the Company	48,648	22,106
Non-controllinginterest	69,056	55,066
(Loss) profit for the year	117,704	77,172
Operating segments [member] | Technical services [member]
Disclosure of detailed information about operating segment performance [Line Items]
Revenue	1,060,996	841,121
Gross profit (loss)	57,816	77,304
Administrative expenses	(74,174)	(69,870)
Other income and expenses	8,625	3,989
Operating (loss) profit	(7,733)	11,423
Financial expenses	(29,597)	(20,170)
Financial income	3,382	2,991
Share of the profit or loss in associates and joint ventures under the equity method of accounting	1,203	360
(Loss) profit before income tax	(32,745)	(5,396)
Income tax	4,763	(1,646)
(Loss) profit from continuing operations	(27,982)	(7,042)
Profit from discontinued operations	2,317	7,851
(Loss) profit for the year	(25,665)	809
(Loss) profit attributable to:
Owners of the Company	(18,094)	1,546
Non-controllinginterest	(7,571)	(737)
(Loss) profit for the year	S/ (25,665)	S/ 809

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Segment Reporting - Disclosure of Detailed Information About Segments by Geographical Area (Detail) - PEN (S/) S/ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of detailed information about segments by geographical area [line items]
Revenue	S/ 6,080,142	S/ 6,190,317	S/ 7,582,912
Non-current assets	4,775,724	4,717,976	3,699,629
Peru (member)
Disclosure of detailed information about segments by geographical area [line items]
Revenue	4,375,760	4,547,449	5,457,577
Non-current assets	4,164,342	3,995,453	3,230,288
Chile (member)
Disclosure of detailed information about segments by geographical area [line items]
Revenue	1,054,885	707,364	944,198
Non-current assets	407,152	446,998	320,094
Colombia (member)
Disclosure of detailed information about segments by geographical area [line items]
Revenue	285,897	570,203	778,333
Non-current assets	203,203	260,732	124,820
Panama [member]
Disclosure of detailed information about segments by geographical area [line items]
Revenue	361,450	346,065	206,137
Non-current assets			584
Guyana [member]
Disclosure of detailed information about segments by geographical area [line items]
Revenue		717	111,924
Non-current assets	878	862	8,800
Brasil [member]
Disclosure of detailed information about segments by geographical area [line items]
Revenue			39,253
Ecuador [member]
Disclosure of detailed information about segments by geographical area [line items]
Revenue		3,682
Non-current assets		888
Bolivia (member)
Disclosure of detailed information about segments by geographical area [line items]
Revenue	2,149	14,837	45,490
Non-current assets	S/ 149	S/ 13,043	S/ 15,043

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Financial Instruments - Summary of Financial Assets and Liabilities by Category (Detail) - PEN (S/) S/ in Thousands	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Disclosure of detailed information about financial instruments [line items]
Cash and cash equivalents	S/ 626,180	S/ 606,950	S/ 554,002	S/ 818,402
Accounts receivable from related parties	100,752	181,664
Other financial liabilities	1,690,063	2,380,438
Bonds	947,567	967,714
Financial liabilities	2,637,630	3,348,152
Financial liabilities at amortised cost, category [member]
Disclosure of detailed information about financial instruments [line items]
Other financial liabilities	1,561,754	2,140,297
Finance leases	128,309	240,141
Bonds	947,567	967,714
Trade and other accounts payable (excluding non-financial liabilities)	2,054,217	1,769,444
Accounts payable to related parties	81,128	145,537
Financial liabilities	4,772,975	5,263,133
Financial Liabilities Hedging Derivatives [Member]
Disclosure of detailed information about financial instruments [line items]
Financial liabilities	383	1,081
Loans and receivables, category [member]
Disclosure of detailed information about financial instruments [line items]
Cash and cash equivalents	626,180	600,923
Trade accounts receivable and other accounts receivable not including advances to suppliers, net	1,447,629	1,329,262
Work in progress	672,163	878,515
Financial assets related to concession agreements	952,780	685,975
Accounts receivable from related parties	874,682	713,048
Available-for-sale financial asset	4,573,434	4,207,723
Financial assets at fair value through profit or loss, category [member]
Disclosure of detailed information about financial instruments [line items]
Available-for-sale financial asset	181	6,379
Cash and cash equivalents (Mutual funds)		6,027
Other financial asset	181	352
Total	S/ 181	S/ 6,379

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Financial Instruments - Summary of Credit Quality of Financial Assets (Detail) - PEN (S/) S/ in Thousands	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Disclosure of financial assets [line items]
Cash and cash equivalents	S/ 626,180	S/ 606,950	S/ 554,002	S/ 818,402
Financial assets neither past due nor impaired [member]
Disclosure of financial assets [line items]
Cash and cash equivalents	606,914	593,075
Financial assets neither past due nor impaired [member] | Banco de Crdito del Per [Member] | A + [member]
Disclosure of financial assets [line items]
Cash and cash equivalents	224,834	147,759
Financial assets neither past due nor impaired [member] | Banco Continental [member] | A + [member]
Disclosure of financial assets [line items]
Cash and cash equivalents	100,882	136,805
Financial assets neither past due nor impaired [member] | Banco Scotiabank [Member] | A + [member]
Disclosure of financial assets [line items]
Cash and cash equivalents	71,608	121,480
Financial assets neither past due nor impaired [member] | Citibank [Member] | A- [member]
Disclosure of financial assets [line items]
Cash and cash equivalents	110,846	105,812
Financial assets neither past due nor impaired [member] | Banco de la Nacion [Member] | A- [member]
Disclosure of financial assets [line items]
Cash and cash equivalents	17,776	30,007
Financial assets neither past due nor impaired [member] | Banco Santander-Peru [member] | A- [member]
Disclosure of financial assets [line items]
Cash and cash equivalents		17,480
Financial assets neither past due nor impaired [member] | Banco Interbank [Member] | A- [member]
Disclosure of financial assets [line items]
Cash and cash equivalents	14,937	6,344
Financial assets neither past due nor impaired [member] | Banco de Chile [Member] | AAA [Member]
Disclosure of financial assets [line items]
Cash and cash equivalents	4,337	4,822
Financial assets neither past due nor impaired [member] | Banco Interamericano de Finanzas [member] | A- [member]
Disclosure of financial assets [line items]
Cash and cash equivalents	5,551	4,035
Financial assets neither past due nor impaired [member] | Banco Bogota [member] | A- [member]
Disclosure of financial assets [line items]
Cash and cash equivalents	25,609	3,756
Financial assets neither past due nor impaired [member] | Larrain Vial de Chile [member] | A- [member]
Disclosure of financial assets [line items]
Cash and cash equivalents		3,514
Financial assets neither past due nor impaired [member] | Banco GNB [member]
Disclosure of financial assets [line items]
Cash and cash equivalents	1,334	2,080
Financial assets neither past due nor impaired [member] | Banco Santander Chile [member] | AAA [Member]
Disclosure of financial assets [line items]
Cash and cash equivalents	22,041	1,941
Financial assets neither past due nor impaired [member] | Scotiabank chile S A [member] | AAA [Member]
Disclosure of financial assets [line items]
Cash and cash equivalents	3	1,117
Financial assets neither past due nor impaired [member] | Banco de Crdito e Inversiones-Chile [member] | AA + [member]
Disclosure of financial assets [line items]
Cash and cash equivalents	1,105	937
Financial assets neither past due nor impaired [member] | Banco Scotiabank de Guyana [member] | A- [member]
Disclosure of financial assets [line items]
Cash and cash equivalents	116	125
Financial assets neither past due nor impaired [member] | Others [member]
Disclosure of financial assets [line items]
Cash and cash equivalents	S/ 5,935	S/ 5,061

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Financial Instruments - Summary of Credit Quality of Customers (Detail) - PEN (S/) S/ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Trade receivables [member]
Disclosure of internal credit grades [line items]
Credit exposure	S/ 2,513,477	S/ 2,577,304
Trade receivables [member] | New customers/related parties (less than 6 months) [member]
Disclosure of internal credit grades [line items]
Credit exposure	6,042	117,797
Trade receivables [member] | Existing customers/related parties (with more than 6 months of trade relationship) with no previous default history [member]
Disclosure of internal credit grades [line items]
Credit exposure	2,313,187	2,052,356
Trade receivables [member] | Existing customers/related parties (with more than 6 months of trade relationship) with previous default history [member]
Disclosure of internal credit grades [line items]
Credit exposure	194,248	407,151
Receivable from related parties [member] | Existing customers/related parties (with more than 6 months of trade relationship) with no previous default history [member]
Disclosure of internal credit grades [line items]
Credit exposure	S/ 874,682	S/ 713,048

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Cash and Cash Equivalent- Summary of Cash and Cash Equivalents (Detail) - PEN (S/) S/ in Thousands	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Disclosure of cash and cash equivalents [line items]
Cash on hand	S/ 16,468	S/ 5,944
In-transit remittances	2,798	7,931
Bank accounts	493,666	475,025
Time deposits	113,248	112,023
Mutual funds		6,027
Total	S/ 626,180	S/ 606,950	S/ 554,002	S/ 818,402

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Cash and Cash Equivalents - Additional Information (Detail) - PEN (S/) S/ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Minimum [Member]
Disclosure of cash and cash equivalents [line items]
Interest rate	0.25%	0.10%
Maximum [Member]
Disclosure of cash and cash equivalents [line items]
Interest rate	4.55%	4.95%
GyM Ferrovias S.A. [Member]
Disclosure of cash and cash equivalents [line items]
Short term deposits from subsidiaries	S/ 36.7	S/ 24.7
GyM S A [member]
Disclosure of cash and cash equivalents [line items]
Short term deposits from subsidiaries	30.5	43.7
Viva GyM SA [member]
Disclosure of cash and cash equivalents [line items]
Short term deposits from subsidiaries	17.8	19.6
CONCARSA [member]
Disclosure of cash and cash equivalents [line items]
Short term deposits from subsidiaries	13.6
Concesin Canchaque S.A.C. [member]
Disclosure of cash and cash equivalents [line items]
Short term deposits from subsidiaries	S/ 11.0
GMP S.A. [member]
Disclosure of cash and cash equivalents [line items]
Short term deposits from subsidiaries		S/ 16.4

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Cash and Cash Equivalent- Summary of Reconcile to the Amount of Cash Shown in the Statement of Cash Flow (Detail) - PEN (S/) S/ in Thousands	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Disclosure of cash and cash equivalents [line items]
Cash and cash equivalent	S/ 626,180	S/ 606,950	S/ 554,002	S/ 818,402
Bank overdrafts (Note 19)	(120)	(8,396)
Balances of the statement of cash flows	S/ 626,060	S/ 598,554

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Other Financial Assets - Additional Information (Detail) - PEN (S/) S/ in Thousands	1 Months Ended	12 Months Ended
	Apr. 30, 2016	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2017	Dec. 31, 2014
Disclosure of financial assets [line items]
Available-for-sale financial assets			S/ 120,134		S/ 93,144
Cumulative amount of fair values at the date of sale as recognized in statement of other comprehensive income transfered to profits before tax		S/ (2,220)	19,973
Dividends received from investments			7,200
Discount rate used for discounted cash flows		7.14%		6.33%
Transportadora de Gas del Peru S.A [member]
Disclosure of financial assets [line items]
Percentage of ownership interest sold	1.64%
Proceeds from sale of investment	S/ 107,300
Gain on sale of investment	46,300
Available-for-sale financial assets	117,100		S/ 120,100
Cumulative amount of fair values at the date of sale as recognized in statement of other comprehensive income transfered to profits before tax	41,500
Cumulative amount of fair values at the date of sale as recognized in statement of other comprehensive income transfered to profits net of tax	56,000
Cumulative amount of fair values at the date of sale as recognized in statement of other comprehensive income transfered to profits, tax	S/ 14,600
Percent of ownership interest			1.64%
Transportadora de Gas del Peru S.A [member] | Discounted cash flow [member]
Disclosure of financial assets [line items]
Discounted cash flows period			30-year term
Discount rate used for discounted cash flows			7.50%

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Trade Accounts Receivable, Net - Summary of Trade Accounts Receivables (Detail) - PEN (S/) S/ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Disclosure Of Accounts Receivable [line items]
Trade accounts receivable	S/ 992,724	S/ 1,031,270
Trade accounts receivable	848,590	667,519
Gross carrying amount [member]
Disclosure Of Accounts Receivable [line items]
Invoices receivable	459,721	903,878
Collection rights	546,351	150,065
Trade accounts receivable	1,006,072	1,053,943
Invoices receivable receivable	819,699	652,939
Collection rights	28,891	14,580
Trade accounts receivable	848,590	667,519
Accumulated impairment [member]
Disclosure Of Accounts Receivable [line items]
Trade accounts receivable	S/ (13,348)	S/ (22,673)

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Trade Accounts Receivable, Net - Additional Information (Detail) - PEN (S/) S/ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure Of Accounts Receivable [line items]
Discount rate under discounted cash flows method	6.33%	7.14%
Financial assets neither past due nor impaired [member] | Maturity Greater Than Thirty One Days [member]
Disclosure Of Accounts Receivable [line items]
Trade accounts receivable	S/ 160.8	S/ 221.8
Financial assets impaired [member]
Disclosure Of Accounts Receivable [line items]
Trade accounts receivable	0.7	3.1
CAM Holding S.p.A. [Member]
Disclosure Of Accounts Receivable [line items]
Collection rights	85.0
GyM Ferrovias SA. [member]
Disclosure Of Accounts Receivable [line items]
Collection rights	355.0	68.0
GMD SA [member]
Disclosure Of Accounts Receivable [line items]
Collection rights		49.0
GMI SA [member]
Disclosure Of Accounts Receivable [line items]
Collection rights	20.0	19.0
CONCARSA [member]
Disclosure Of Accounts Receivable [line items]
Collection rights	53.0	13.0
Survial [member]
Disclosure Of Accounts Receivable [line items]
Collection rights	31.0	12.0
CAM Servicios del Peru SA [member]
Disclosure Of Accounts Receivable [line items]
Collection rights	21.0	11.0
At fair value [member]
Disclosure Of Accounts Receivable [line items]
Non current receivables	S/ 835.0	S/ 606.0

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Trade Accounts Receivable, Net - Summary of Aging of Trade Accounts Receivable (Detail) - Gross carrying amount [member] - PEN (S/) S/ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Disclosure of financial assets that are either past due or impaired [line items]
Trade accounts receivable	S/ 1,854,662	S/ 1,721,462
Current [member]
Disclosure of financial assets that are either past due or impaired [line items]
Trade accounts receivable	1,575,709	1,396,040
Not later than one month [member]
Disclosure of financial assets that are either past due or impaired [line items]
Trade accounts receivable	118,158	103,617
Later than one month and not later than six months [member]
Disclosure of financial assets that are either past due or impaired [line items]
Trade accounts receivable	141,121	113,825
Later than six months and not later than one year [member]
Disclosure of financial assets that are either past due or impaired [line items]
Trade accounts receivable	1,962	29,506
Later than one year [member]
Disclosure of financial assets that are either past due or impaired [line items]
Trade accounts receivable	S/ 17,712	S/ 78,474

XML

Work in Progress, Net - Summary of Unbilled Work in Progress (Detail) - PEN (S/) S/ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Current [member]
Disclosure Of Unbilled Work In Progress [Line items]
Unbilled work in progress	S/ 584,753	S/ 680,929
Current [member] | Gross carrying amount [member]
Disclosure Of Unbilled Work In Progress [Line items]
Unbilled rights receivable	535,119	971,882
Rights for concessions in progress		32,078
Cost of work in progress	49,634	87,168
Unbilled work in progress	584,753	1,091,128
Current [member] | Accumulated impairment [member]
Disclosure Of Unbilled Work In Progress [Line items]
Unbilled work in progress		(410,199)
Non current [member]
Disclosure Of Unbilled Work In Progress [Line items]
Unbilled work in progress	87,410	197,586
Non current [member] | Gross carrying amount [member]
Disclosure Of Unbilled Work In Progress [Line items]
Unbilled rights receivable	58,997	171,752
Rights for concessions in progress	28,413	25,834
Unbilled work in progress	S/ 87,410	S/ 197,586

XML

Work in Progress, Net - Additional Information (Detail) - PEN (S/) S/ in Millions	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure Of Unbilled Work In Progress [Line items]
Discount rate	6.33%	7.14%
GyM S A [member]
Disclosure Of Unbilled Work In Progress [Line items]
Discount rate	1.71%
Advances received from customers	S/ 15.3	S/ 10.6	S/ 111.7

XML

Transactions with Related Parties and Joint Operators - Disclosure of Transactions Between Related Parties (Detail) - PEN (S/) S/ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of transactions between related parties [line items]
Revenue from sales of goods and services	S/ 21,505	S/ 36,901	S/ 53,784
Purchase of goods and services	16,967	3,967	507
Associates [member]
Disclosure of transactions between related parties [line items]
Revenue from sales of goods and services	3,367		1,400
Purchase of goods and services	2,776	739	18
Joint operations [member]
Disclosure of transactions between related parties [line items]
Revenue from sales of goods and services	18,138	36,901	52,384
Purchase of goods and services	S/ 14,191	S/ 3,228	S/ 489

XML

Transactions with Related Parties and Joint Operators - Additional Information (Detail) S/ in Thousands, $ in Millions	12 Months Ended
	Dec. 31, 2017 PEN (S/)	Dec. 31, 2017 USD ($)	Dec. 31, 2016 PEN (S/)	Dec. 31, 2015 USD ($)
Disclosure of transactions between related parties [line items]
Key management personnel compensation	S/ 90,500		S/ 106,900	$ 111.7
Accounts receivable from related parties maturity periods			60 days
Impairment loss			S/ 18,000
Long-term accounts receivable from related parties	S/ 773,930		S/ 531,384
Discount rate	6.33%		7.14%
Discounted Value	S/ 76,900	$ 22.8
Collection rights, related parties	244,000
Accounts payable from related parties maturity periods			60 days
Related parties [member]
Disclosure of transactions between related parties [line items]
Long-term accounts receivable from related parties	S/ 515,000
Discount rate	2.92%

XML

Transactions With Related Parties and Joint Operators - Summary of Sale Purchase of Goods Services (Detail) - PEN (S/) S/ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Disclosure of transactions between related parties [line items]
Accounts receivable from related parties	S/ 100,752	S/ 181,664
Accounts payable to related parties	55,174	80,217
Long-term accounts receivable from related parties	773,930	531,384
Long-term accounts payable to related parties	25,954	65,320
Gaseoducto Sur Peruano SA [member]
Disclosure of transactions between related parties [line items]
Accounts receivable from related parties	2,407
Peru Piping Spools SAC [Member]
Disclosure of transactions between related parties [line items]
Accounts receivable from related parties	279	9,076
Accounts payable to related parties	185
Arturo Serna [Member]
Disclosure of transactions between related parties [line items]
Accounts payable to related parties		2,984
Other related parties [member]
Disclosure of transactions between related parties [line items]
Accounts receivable from related parties	2,686	9,076
Accounts payable to related parties	2,869	2,984
Gaseoducto Sur Peruano SA [member]
Disclosure of transactions between related parties [line items]
Long-term accounts receivable from related parties	773,930	531,384
Consorcio Constructor Ductos del Sur [member]
Disclosure of transactions between related parties [line items]
Accounts receivable from related parties		62,834
Long-term accounts payable to related parties		37,238
Ferrovias Participaciones [member]
Disclosure of transactions between related parties [line items]
Long-term accounts payable to related parties	21,648	20,813
Ferrovias Argentina [member]
Disclosure of transactions between related parties [line items]
Accounts payable to related parties	2,684
Long-term accounts payable to related parties		2,835
Arturo Serna [Member]
Disclosure of transactions between related parties [line items]
Long-term accounts payable to related parties	4,306	4,434
Consorcio GyM Conciviles [member]
Disclosure of transactions between related parties [line items]
Accounts receivable from related parties	43,435	61,006
Consorcio Rio Urubamba [member]
Disclosure of transactions between related parties [line items]
Accounts receivable from related parties	8,964	9,072
Consorcio Peruano de Conservacion [member]
Disclosure of transactions between related parties [line items]
Accounts receivable from related parties	7,417	8,784
Consorcio Vial Quinua [member]
Disclosure of transactions between related parties [line items]
Accounts receivable from related parties		4,198
Accounts payable to related parties	2,162	738
Consorcio Italo Peruano [member]
Disclosure of transactions between related parties [line items]
Accounts receivable from related parties	14,536	4,174
Accounts payable to related parties	18,849	17,325
Consorcio La Gloria [member]
Disclosure of transactions between related parties [line items]
Accounts receivable from related parties	1,688	3,521
Accounts payable to related parties	1,358	3,080
Terminales del Peru [member]
Disclosure of transactions between related parties [line items]
Accounts receivable from related parties	3,290	3,215
Accounts payable to related parties		259
Consorcio Rio Mantaro [member]
Disclosure of transactions between related parties [line items]
Accounts receivable from related parties	1,134	3,191
Accounts payable to related parties	763	6,886
Consorcio Vial Sierra [member]
Disclosure of transactions between related parties [line items]
Accounts receivable from related parties	2,355	940
Accounts payable to related parties	1,854	5,400
Consorcio Constructor Chavimochic [Member]
Disclosure of transactions between related parties [line items]
Accounts receivable from related parties	1,959	915
Accounts payable to related parties	5,817	2,471
Consorcio Energia Y Vapor [member]
Disclosure of transactions between related parties [line items]
Accounts receivable from related parties		491
Accounts payable to related parties	72	3,203
Consorcio Ermitano [member]
Disclosure of transactions between related parties [line items]
Accounts receivable from related parties	1,067	83
Accounts payable to related parties	6	6,372
Consorcio Menegua [member]
Disclosure of transactions between related parties [line items]
Accounts receivable from related parties	39	30
Accounts payable to related parties		3,803
Consorcio para la Atencion y Mantenimiento de Ductos [member]
Disclosure of transactions between related parties [line items]
Accounts payable to related parties	12,074	21,790
Consorcio Huacho Pativilca [member]
Disclosure of transactions between related parties [line items]
Accounts payable to related parties	2,377	3,434
Other minors [member]
Disclosure of transactions between related parties [line items]
Accounts receivable from related parties	12,182	10,134
Accounts payable to related parties	6,973	2,472
Joint operations [member]
Disclosure of transactions between related parties [line items]
Accounts receivable from related parties	98,066	172,588
Accounts payable to related parties	S/ 52,305	S/ 77,233

XML

Other Accounts Receivable - Schedule of Other Accounts Receivable (Detail) - PEN (S/) S/ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Current
Advances to suppliers (a)	S/ 149,464	S/ 79,455
Income tax on-accountpayments (b)	125,176	202,045
Fiscal credit (c)	81,732	80,091
Guarantee deposits (d)	113,429	95,916
Restricted Fund	61,993	14,067
Temporary tax on net assets	21,934	21,204
Taxes receivable	31,875	13,954
Claims to SUNAT (pre-paidtaxes)	33,478	51,301
Rental and sale of equipment	27,970	13,640
Receivables from personnel	6,737	10,726
Other	19,751	58,531
Total	765,445	649,516
Non-current
Advances to suppliers	255,181	225,567
Income tax on-account payments	2,607
Fiscal credit	30,680	52,225
Guarantee deposits	0	0
Restricted Fund	44,770
Temporary tax on net assets	0	0
Taxes receivable	33,428
Claims to SUNAT (pre-paidtaxes)	38,082	23,526
Rental and sale of equipment	0	0
Receivables from personnel	0	0
Other	9,196	17,957
Total	470,852	357,952
Others [member]
Current
Claims to third parties	109,491	26,529
Non-current
Claims to third parties	41,072	32,669
Petroleos Del Peru S. A. Petroperu S.A. [Member]
Current
Claims to third parties	3,619	16,879
Non-current
Claims to third parties	53,918	29,534
SUNAT [member]
Current
Claims to SUNAT (pre-paidtaxes)	12,274	16,479
Non-current
Claims to SUNAT (pre-paidtaxes)	S/ 0	S/ 0

XML

Other Accounts Receivable - Additional Information (Details) (Detail)	12 Months Ended
	Dec. 31, 2017
Bottom of range [member]
Other Accounts Receivable [Line Items]
Other non-current accounts receivable maturity period	2 years
Top of range [member]
Other Accounts Receivable [Line Items]
Other non-current accounts receivable maturity period	5 years

XML

Other Accounts Receivable - Schedule of Other Accounts Receivable (Parenthetical) (Detail) - PEN (S/) S/ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Other Accounts Receivable [Line Items]
Advances to suppliers	S/ 149,464	S/ 79,455
Income tax on-account payments	125,176	202,045
Fiscal credit	81,732	80,091
GyM Ferrovias S.A. [Member]
Other Accounts Receivable [Line Items]
Advances to suppliers	233,000	230,000
GyM S A [member]
Other Accounts Receivable [Line Items]
Income tax on-account payments	85,000	133,000
Fiscal credit	50,000	55,000
GMP S.A. [member]
Other Accounts Receivable [Line Items]
Income tax on-account payments	19,000	17,000
CAM Holding S.p.A. [Member]
Other Accounts Receivable [Line Items]
Income tax on-account payments	11,000	16,000
Viva GyM SA [member]
Other Accounts Receivable [Line Items]
Income tax on-account payments	6,000	5,000
Fiscal credit	20,000	25,000
Grana Y Montero S.A.A. [Member]
Other Accounts Receivable [Line Items]
Income tax on-account payments		16,000
GMI SA [member]
Other Accounts Receivable [Line Items]
Income tax on-account payments		4,000
GMD SA [member]
Other Accounts Receivable [Line Items]
Income tax on-account payments		4,000
Norvial S.A. [member]
Other Accounts Receivable [Line Items]
Fiscal credit	6,000	15,000
Negocias del Gas S.A. [Member]
Other Accounts Receivable [Line Items]
Fiscal credit	8,000	8,000
La Chira S.A. [Member]
Other Accounts Receivable [Line Items]
Fiscal credit	2,000
Concesionaria Via Expresa Sur S.A. [Member]
Other Accounts Receivable [Line Items]
Fiscal credit	S/ 5,000
Concesionaria La Chira [member]
Other Accounts Receivable [Line Items]
Fiscal credit		5,000
Concesionaria Via Expresa Sur S.A. [member]
Other Accounts Receivable [Line Items]
Fiscal credit		S/ 5,000

XML

Inventories - Schedule of Inventories of Work In Progress (Detail) - PEN (S/) S/ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure of inventories [line items]
Land	S/ 317,337	S/ 398,120
Work in progress - Real estate	150,537	289,775
Finished properties	203,209	244,240
Construction material	51,131	114,919
Merchandise and supplies	90,504	97,860
Inventories Gross, Total	812,718	1,144,914
Impairment of inventories (Note 5.1-f)	(42,007)	(40,621)
Inventories	770,711	1,104,293
Work in progress-Real estate	150,537	289,775
Klimt [member]
Disclosure of inventories [line items]
Work in progress - Real estate		100,751
Finished properties	44,103
Work in progress-Real estate		100,751
Los Parques de Comas [Member]
Disclosure of inventories [line items]
Work in progress - Real estate	70,647	89,074
Finished properties	16,058	7,336
Work in progress-Real estate	70,647	89,074
Los Parques de Callao [Member]
Disclosure of inventories [line items]
Work in progress - Real estate	53,441	51,613
Finished properties	486	19,736
Work in progress-Real estate	53,441	51,613
Real 2 [member]
Disclosure of inventories [line items]
Work in progress - Real estate		17,181
Finished properties	3,877
Work in progress-Real estate		17,181
Villa el Salvador [member]
Disclosure of inventories [line items]
Work in progress - Real estate	2,141	12,674
Work in progress-Real estate	2,141	12,674
Others [member]
Disclosure of inventories [line items]
Land	28,273	40,166
Work in progress - Real estate	24,308	18,482
Finished properties	404	6,285
Work in progress-Real estate	S/ 24,308	S/ 18,482

XML

Inventories - Schedule of Inventories of Land (Detail) - PEN (S/) S/ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Disclosure of inventories [line items]
Land	S/ 317,337	S/ 398,120
Lurin [member]
Disclosure of inventories [line items]
Land	103,574	95,634
Ancon [member]
Disclosure of inventories [line items]
Land	37,823	35,934
Huancayo [member]
Disclosure of inventories [line items]
Land	13,572	11,618
Miraflores [member]
Disclosure of inventories [line items]
Land	1,349	80,552
San Miguel [member]
Disclosure of inventories [line items]
Land	44,126	70,556
San Isidro [member]
Disclosure of inventories [line items]
Land	58,441	46,606
Nuevo Chimbote [member]
Disclosure of inventories [line items]
Land	17,201	17,054
Canta callao [member]
Disclosure of inventories [line items]
Land	12,978
Others [member]
Disclosure of inventories [line items]
Land	S/ 28,273	S/ 40,166

XML

Inventories - Schedule of Inventories of Land (Parenthetical) (Detail) $ in Millions			12 Months Ended
	Nov. 06, 2017 PEN (S/) ha	Feb. 03, 2017 USD ($)	Dec. 31, 2017 ha m² ParkingSpaces Apartment Real_Estate_Unit
Lurin [member]
Disclosure of inventories [line items]
Area of land for industrial development and public housing			750
Ancon [member]
Disclosure of inventories [line items]
Number of real estate unit | Real_Estate_Unit			13,768
Area of land for development of social housing project			108
Chimbote [Member]
Disclosure of inventories [line items]
Area of land for development of social housing project			11.5
Huancayo [member]
Disclosure of inventories [line items]
Area of land for development of social housing project | m²			8.5
San Miguel [member]
Disclosure of inventories [line items]
Area of land for building family			1.4
Number of apartments in building | Apartment			248
Number of parking lots | ParkingSpaces			185
San Isidro [member]
Disclosure of inventories [line items]
Number of apartments in building | Apartment			24
Number of parking spaces | ParkingSpaces			124
Larrainvial Colliers [member]
Disclosure of inventories [line items]
Area of land sold	0.56
Real estate investment fund sold | S/	S/ 27.8
Urbi Propiedades SA [member]
Disclosure of inventories [line items]
Sale of property, amount | $		$ 50

XML

Inventories - Additional Information (Detail) - PEN (S/) S/ in Millions	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of inventories [line items]
Capitalised financing cost	S/ 5.9	S/ 12.2	S/ 4.0
Bottom of range [member]
Disclosure of inventories [line items]
Interest rate	7.00%	6.75%	5.30%
Top of range [member]
Disclosure of inventories [line items]
Interest rate	11.22%	8.90%	9.50%

XML

Inventories - Schedule of Inventories of Finished Properties (Details) (Detail) - PEN (S/) S/ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Disclosure of inventories [line items]
Finished properties	S/ 203,209	S/ 244,240
El Rancho [Member]
Disclosure of inventories [line items]
Finished properties	82,796	121,302
Panorama [Member]
Disclosure of inventories [line items]
Finished properties	18,481	33,443
Los Parques de San Martin de Porres [Member]
Disclosure of inventories [line items]
Finished properties	16,687	30,724
Los Parques de Callao [Member]
Disclosure of inventories [line items]
Finished properties	486	19,736
Rivera Navarrete[Member]
Disclosure of inventories [line items]
Finished properties	7,870	11,966
Los Parques de Carabayllo Second Phase [Member]
Disclosure of inventories [line items]
Finished properties	3,134	7,497
Los Parques de Comas [Member]
Disclosure of inventories [line items]
Finished properties	16,058	7,336
Los Parques de Villa El Salvador Second [Member]
Disclosure of inventories [line items]
Finished properties	9,313	5,951
Klimt [member]
Disclosure of inventories [line items]
Finished properties	44,103
Real 2 [member]
Disclosure of inventories [line items]
Finished properties	3,877
Others [member]
Disclosure of inventories [line items]
Finished properties	S/ 404	S/ 6,285

XML

Inventories - Additional Information (Details) (Detail) - PEN (S/) S/ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure of inventories [line items]
Construction material	S/ 51,131	S/ 114,919
Impairment of inventories	(42,007)	(40,621)
Stracon GyM member]
Disclosure of inventories [line items]
Construction material	S/ 50,000	50,500
Impairment of inventories		S/ 33,800

XML

Investments In Associates And Joint Ventures - Schedule of Amounts Recognised in Balance Sheet (Detail) - PEN (S/) S/ in Thousands	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Disclosure of Investments in Associates and Joint Ventures [Line Items]
Associates	S/ 250,053	S/ 286,403	S/ 490,702	S/ 82,494
Joint ventures	18,618	103,356	S/ 146,303	S/ 147,069
Investments in associates and joint ventures	S/ 268,671	S/ 389,759

XML

Investments In Associates And Joint Ventures - Schedule of Amounts Recognised in Income Statement (Detail) - PEN (S/) S/ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of Investments in Associates and Joint Ventures [Line Items]
Associates	S/ (5,915)	S/ (584,801)
Joint ventures	7,242	(4,909)	S/ 2,193
Share of profit loss of associates and joint ventures accounted for using equity method	S/ 1,327	S/ (589,710)	S/ 7,724

XML

Investments In Associates And Joint Ventures - Summary of Detailed Information about Associates (Detail) - PEN (S/) S/ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Disclosure of associates and joint ventures [line items]
Carrying amount	S/ 250,053	S/ 286,403	S/ 490,702	S/ 82,494
Other Associates [Member]
Disclosure of associates and joint ventures [line items]
Carrying amount	S/ 9,584	S/ 3,896
Common Share [Member] | Gasoducto Sur Peruano S A [member]
Disclosure of associates and joint ventures [line items]
Interest in capital	21.49%	20.00%
Carrying amount	S/ 218,276	S/ 218,276
Common Share [Member] | Promocion inmobiliariadel sur SA [member]
Disclosure of associates and joint ventures [line items]
Interest in capital		22.50%
Carrying amount		S/ 31,768
Common Share [Member] | Concesionaria Chavimochic S.A.C [member]
Disclosure of associates and joint ventures [line items]
Interest in capital	26.50%	26.50%
Carrying amount	S/ 22,091	S/ 32,394
Common Share [Member] | Betchel Vial y Vives Servicios Complementarios Ltda [member]
Disclosure of associates and joint ventures [line items]
Interest in capital	40.00%	40.00%
Carrying amount	S/ 102	S/ 69

XML

Investments In Associates And Joint Ventures - Additional Information (Detail) S/ in Thousands, $ in Thousands										1 Months Ended								12 Months Ended
	Dec. 04, 2017 USD ($)	Jun. 24, 2017 PEN (S/)	Jun. 24, 2017 USD ($)	Jun. 06, 2017 PEN (S/)	Jun. 06, 2017 USD ($)	Apr. 24, 2017 PEN (S/)	Apr. 24, 2017 USD ($)	Dec. 01, 2016 PEN (S/)	Feb. 01, 2016 PEN (S/)	Apr. 30, 2017 PEN (S/)	Apr. 30, 2017 USD ($)	Feb. 28, 2017 PEN (S/)	Feb. 28, 2017 USD ($)	Feb. 28, 2016 PEN (S/)	Nov. 30, 2015 PEN (S/)	Aug. 31, 2015 PEN (S/)	Jun. 30, 2015	Dec. 31, 2017 PEN (S/)	Dec. 31, 2017 USD ($)	Dec. 31, 2016 PEN (S/) ha	Dec. 31, 2016 USD ($) ha	Dec. 31, 2015 PEN (S/)	Dec. 31, 2017 USD ($)	Aug. 31, 2016 PEN (S/)	Nov. 30, 2015 USD ($)	Dec. 31, 2014 PEN (S/)
Disclosure of Investments in Associates and Joint Ventures [Line Items]
Investment in associate																		S/ 250,053		S/ 286,403		S/ 490,702				S/ 82,494
Percentage of amount determined by audit firm																		100.00%	100.00%
Value determined by audit firm as payable | $																			$ 2,602,000
Accounts receivable claim | $	$ 400
Claims from fiduciary based activities from capacity as administrator accounts receivable | $	$ 169,300
Impairment of investment | $																					$ 176,900
Discount to long-term account receivable | $																					22,800
Finance update and estimation of costs | $																					199,300
Net loss before taxes																		S/ 328,713		(582,865)		142,346
Percentage of payment to withheld according to contract																		10.00%	10.00%
Share of the profit or loss in associates and joint ventures under the equity method																		S/ 1,327		(589,710)		7,724
Dividends received																		3,758		27,992		59,175
Investments in joint ventures																		18,618		103,356		146,303				S/ 147,069
Compania Operadora de Gas del Amazonas SAC [member]
Disclosure of Investments in Associates and Joint Ventures [Line Items]
Ownership interest in joint venture										51.00%	51.00%
Sale of investment in joint venture										S/ 69,800	$ 21,500
Construction contracts 1 [member]
Disclosure of Investments in Associates and Joint Ventures [Line Items]
Net loss before taxes																		S/ (15,200)
Bottom of range [member]
Disclosure of Investments in Associates and Joint Ventures [Line Items]
Percentage of net book value (VCN) of concession's assets																		72.25%	72.25%
Santiago, Chillan, Bulnes, Caravans and Conception [Member]
Disclosure of Investments in Associates and Joint Ventures [Line Items]
Contract period																		16 years	16 years
Gasoducto Sur Peruano S A [member]
Disclosure of Investments in Associates and Joint Ventures [Line Items]
Ownership interest in associate															20.00%
Percentage of performance guarantee															21.49%
Performance guarantee required under concession agreement															S/ 882,000										$ 262,500
Percentage of collateral of bridge loan															20.00%
Collateral bridge loan															S/ 2,016,000										600,000
Net loss before taxes																				(1,372,594)		69,191
Cash contributions																				373,900
Provision for financial assets impairment loss																				593,100	176,490
Gasoducto Sur Peruano S A [member] | GSP Bridge Loan [member]
Disclosure of Investments in Associates and Joint Ventures [Line Items]
Guarantee obligation		S/ 433,300	$ 129,000																	433,300	$ 129,000
Gasoducto Sur Peruano S A [member] | Capital Contributions [member]
Disclosure of Investments in Associates and Joint Ventures [Line Items]
Investment in associate															S/ 811,000										$ 242,500
Gasoducto Sur Peruano S A [member] | Concession Agreement [member]
Disclosure of Investments in Associates and Joint Ventures [Line Items]
Guarantee obligation		S/ 176,400	$ 52,500
Consorcio Constructor Ductos del Sur [member]
Disclosure of Investments in Associates and Joint Ventures [Line Items]
Ownership interest in associate															29.00%
Promocion inmobiliariadel sur SA [member]
Disclosure of Investments in Associates and Joint Ventures [Line Items]
Ownership interest in associate												22.50%	22.50%
Net loss before taxes																				42,281		90,618
Sale of investment in associate												S/ 81,000	$ 25,000
Dividends received																				S/ 3,800		9,800
Promocion inmobiliariadel sur SA [member] | Lurin [member]
Disclosure of Investments in Associates and Joint Ventures [Line Items]
Area of land | ha																				891.08	891.08
Promocion inmobiliariadel sur SA [member] | Punta Hermosa [member]
Disclosure of Investments in Associates and Joint Ventures [Line Items]
Area of land | ha																				2.07	2.07
Concesionaria Chavimochic S.A.C [member]
Disclosure of Investments in Associates and Joint Ventures [Line Items]
Investment in associate | $																							$ 647,000
Net loss before taxes																		S/ (43,340)		S/ (2,994)		22,995
Concession effective period																		25 years	25 years
Cash contributions																				15,700
Betchel Vial y Vives Servicios [member]
Disclosure of Investments in Associates and Joint Ventures [Line Items]
Dividends received																				6,300
GyM S A [member]
Disclosure of Investments in Associates and Joint Ventures [Line Items]
Ownership interest in associate																	82.04%
Share of the profit or loss in associates and joint ventures under the equity method																						17,300
Consorcio G.S.J.V.SCC [Member]
Disclosure of Investments in Associates and Joint Ventures [Line Items]
Dividends received																		S/ 1,000		13,100
Constructora SK-VyV Ltda. [member]
Disclosure of Investments in Associates and Joint Ventures [Line Items]
Dividends received																		S/ 2,800		3,300		S/ 41,100
Tecgas N.V. [member]
Disclosure of Investments in Associates and Joint Ventures [Line Items]
Net loss before taxes																				S/ (3,209)
Percentage of interest in property						51.00%	51.00%
'Agreed selling price						S/ 69,800	$ 21,500
Cash contribution								S/ 6,900	S/ 8,300
GMD SA [member]
Disclosure of Investments in Associates and Joint Ventures [Line Items]
Percentage of interest in property				89.19%	89.19%
'Agreed selling price				S/ 269,900	$ 84,700
Adexus S A [member]
Disclosure of Investments in Associates and Joint Ventures [Line Items]
Percentage of capital contribution																44.00%
Capital contribution																S/ 44,100
Goodwill acquisition																S/ 20,700
Percentage of additional interest by capitalizing debt														8.00%
Additional interest by capitalizing debt														S/ 8,300
Investments in joint ventures																								S/ 35,900

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Investments In Associates And Joint Ventures - Summary of Financial Information for Associates (Detail) - PEN (S/) S/ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of financial information of associates [Line Items]
Assets	S/ 3,891,946	S/ 4,328,660
Liabilities	(3,549,185)	(4,536,966)
Assets	4,775,724	4,717,976	S/ 3,699,629
Liabilities	(2,529,407)	(2,019,933)
Revenues	6,080,142	6,190,317	7,582,912
Profit (loss) from continuing operations	328,713	(582,865)	142,346
Income tax	(123,037)	119,272	(95,899)
Profit (loss) from operations after income tax	205,676	(463,593)	46,447
Other comprehensive Income	(8,280)	(20,599)	(48,044)
Comprehensive income of the year	200,958	(472,197)	7,545
Gasoducto Sur Peruano S A [member]
Disclosure of financial information of associates [Line Items]
Assets		375,547	303,219
Liabilities		(6,747,492)	(3,357,508)
Assets		8,522,099	4,943,392
Liabilities			(7,442)
Net assets		2,150,154	1,881,661
Revenues		3,323,410	3,007,799
Profit (loss) from continuing operations		(1,372,594)	69,191
Income tax			(19,828)
Profit (loss) from operations after income tax		(1,372,594)	49,363
Other comprehensive Income		0	0
Comprehensive income of the year		(1,372,594)	49,363
Promocion inmobiliariadel sur SA [member]
Disclosure of financial information of associates [Line Items]
Assets		149,300	124,887
Liabilities		(187,380)	(32,072)
Assets		193,127	47,669
Liabilities		(13,855)	(13,090)
Net assets		141,192	127,394
Revenues		65,071	90,970
Profit (loss) from continuing operations		42,281	90,618
Income tax		(11,839)	(25,373)
Profit (loss) from operations after income tax		30,442	65,245
Other comprehensive Income		0	0
Comprehensive income of the year		30,442	65,245
Concesionaria Chavimochic S.A.C [member]
Disclosure of financial information of associates [Line Items]
Assets	73,004	120,342	171,400
Liabilities	(1,111)	(3,160)	(110,799)
Assets	11,809	8,282	8,608
Liabilities	(342)	(1,918)	(2,547)
Net assets	83,360	123,546	66,662
Revenues		264,386	376,124
Profit (loss) from continuing operations	(43,340)	(2,994)	22,995
Income tax	3,185	921	(6,656)
Profit (loss) from operations after income tax	(40,155)	(2,073)	16,339
Other comprehensive Income	0	0	0
Comprehensive income of the year	S/ (40,155)	S/ (2,073)	S/ 16,339

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Investments In Associates And Joint Ventures - Summary of Financial Information for Associates (Parenthetical) (Detail) - PEN (S/) S/ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of financial information of associates [Line Items]
Gross profit	S/ 672,787	S/ 557,295	S/ 612,995
Gasoducto Sur Peruano S A [member]
Disclosure of financial information of associates [Line Items]
Gross profit		S/ 800	S/ 257,700

XML

Investments In Associates And Joint Ventures - Schedule of Movement of Investments in Associates (Detail) - PEN (S/) S/ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of financial information of associates [Line Items]
Opening balance	S/ 286,403	S/ 490,702	S/ 82,494
Contributions received	2,116	390,506
Dividends received	(3,758)	(27,992)	(59,175)
Equity interest in results	(5,915)	(584,801)
Decrease in capital	(111)	(166)
Derecognition of investments			(2,755)
Conversion adjustment	334	2,276	(1,618)
Final balance	250,053	286,403	490,702
Gasoducto Sur Peruano S A [member]
Disclosure of financial information of associates [Line Items]
Acquisition			437,494
Impairment of GSP		(593,105)
Panorama project [member]
Disclosure of financial information of associates [Line Items]
Panorama Project			(39,180)
Associates [member]
Disclosure of financial information of associates [Line Items]
Dividends received	(259)	(10,149)	(9,838)
Equity interest in results	(5,915)	8,304	22,800
Sale of Investment	(32,223)
Conversion adjustment	S/ 42	S/ 311	S/ (313)

XML

Investments In Associates And Joint Ventures - Summary of Detailed Information about Joint Ventures (Detail) - PEN (S/) S/ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Disclosure of associates [line items]
Carrying amount, joint ventures	S/ 18,618	S/ 103,356	S/ 146,303	S/ 147,069
Common Share [Member] | Tecgas N.V. [member]
Disclosure of associates [line items]
Interest in capital, joint ventures		51.00%
Common Share [Member] | Sistemas SEC [member]
Disclosure of associates [line items]
Interest in capital, joint ventures	49.00%	49.00%
Common Share [Member] | Logistica Qumicos del Sur S.A.C. [member]
Disclosure of associates [line items]
Interest in capital, joint ventures	50.00%	50.00%
Common Share [Member] | G.S.J.V. SCC [member]
Disclosure of associates [line items]
Interest in capital, joint ventures	50.00%	50.00%
Common Share [Member] | Constructora SK-VyV Ltda. [member]
Disclosure of associates [line items]
Interest in capital, joint ventures	50.00%	50.00%
Common Share [Member] | Tecgas N.V. [member]
Disclosure of associates [line items]
Carrying amount, joint ventures		S/ 84,100
Common Share [Member] | Sistemas SEC [member]
Disclosure of associates [line items]
Carrying amount, joint ventures	S/ 10,112	9,591
Common Share [Member] | Logistica Qumicos del Sur S.A.C. [member]
Disclosure of associates [line items]
Carrying amount, joint ventures	7,343	8,515
Common Share [Member] | G.S.J.V. SCC [member]
Disclosure of associates [line items]
Carrying amount, joint ventures	878	861
Common Share [Member] | Constructora SK-VyV Ltda. [member]
Disclosure of associates [line items]
Carrying amount, joint ventures	49	59
Common Share [Member] | Other joint ventures [Member]
Disclosure of associates [line items]
Carrying amount, joint ventures	S/ 236	S/ 230

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Investments In Associates And Joint Venture - Summary of Financial Information for Joint Ventures (Detail) - PEN (S/) S/ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Disclosure of financial information of joint ventures [Line Items]
Cash and cash equivalents	S/ 626,180	S/ 606,950	S/ 554,002	S/ 818,402
Total current assets	3,891,946	4,328,660
Total current liabilities	(1,056,764)	(1,961,043)
Total non-currentassets	4,775,724	4,717,976	3,699,629
Total non-currentliabilities	(2,529,407)	(2,019,933)
Revenue	6,080,142	6,190,317	7,582,912
Profit (loss) from continuing operations	328,713	(582,865)	142,346
Income tax expense	(123,037)	119,272	(95,899)
Post-tax profit (loss) from continuing operations	205,676	(463,593)	46,447
Other comprehensive Income	(8,280)	(20,599)	(48,044)
Total comprehensive income	S/ 200,958	(472,197)	S/ 7,545
Tecgas N.V. [member]
Disclosure of financial information of joint ventures [Line Items]
Cash and cash equivalents		67
Other current assets		92,843
Total current assets		92,910
Other current liabilities		(87,780)
Total current liabilities		(87,780)
Total non-currentassets		33,336
Total non-currentliabilities		(7,367)
Net assets		31,099
Revenue		457,554
Depreciation and amortization		(2,266)
Interest income		215
Interest expense		0
Profit (loss) from continuing operations		(3,209)
Income tax expense		(4,078)
Post-tax profit (loss) from continuing operations		(7,287)
Other comprehensive Income		0
Total comprehensive income		S/ 7,287

XML

Investments In Associates And Joint Venture - Schedule of Movement of Investments in Joint Ventures (Detail) - PEN (S/) S/ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of financial information of joint ventures [Line Items]
Opening balance	S/ 103,356	S/ 146,303	S/ 147,069
Debt capitalization		8,308
Contributions received		6,889
Equity interest in results	7,242	(4,909)	2,193
Acquisitions			44,145
Sale of Investment	(88,556)
Transfer of Adexus from acquisition of control		(35,870)
Dividends received	(3,758)	(27,992)	(59,175)
Decrease in capital		(1,798)	(3,364)
Conversion adjustment	334	2,276	(1,618)
Final balance	18,618	103,356	146,303
Joint ventures [member]
Disclosure of financial information of joint ventures [Line Items]
Dividends received	S/ (3,758)	S/ (17,843)	S/ (42,122)

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Property, Plant And Equipment - Summary of Movement in Property, Plant and Equipment Accounts and Its Related Accumulated Depreciation (Detail) - PEN (S/) S/ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of detailed information about property, plant and equipment [line items]
Net carrying amount	S/ 1,113,599	S/ 1,111,757	S/ 1,147,018
Additions	172,448	213,068	297,956
CAM Brazil deconsolidation			(3,004)
Reclassifications Transfers from inventories		2,941
Transfers to intangibles (Note 18)	(169)	(1,257)	(36,717)
Transfers to accounts receivable			(14,022)
Deduction for sale of assets	(308,103)	(135,974)	(104,473)
Depreciation charge	(197,484)	(186,695)	(201,082)
Impairment loss	(14,680)	(9,263)
Discontinued operations		(16,506)	(13,698)
Depreciation for sale deductions	207,765	88,848	66,026
Translations adjustments	1,255	7,247	(12,464)
Net carrying amount	865,735	1,113,599	1,111,757
Adexus S A [member]
Disclosure of detailed information about property, plant and equipment [line items]
Acquisition of subsidiary - Adexus Deconsolidation of GMD	(83,441)	41,988
Gross carrying amount [member]
Disclosure of detailed information about property, plant and equipment [line items]
Net carrying amount	2,154,316	2,050,644	1,947,957
Disposals - accumulated depreciation	(33,880)	(24,341)	(23,373)
Net carrying amount	1,902,426	2,154,316	2,050,644
Accumulated depreciation and amortisation [member]
Disclosure of detailed information about property, plant and equipment [line items]
Net carrying amount	(1,040,717)	(938,887)	(800,939)
Disposals - accumulated depreciation	8,425	21,786	9,590
Net carrying amount	(1,036,691)	(1,040,717)	(938,887)
Land [member]
Disclosure of detailed information about property, plant and equipment [line items]
Net carrying amount	32,614	28,409	30,675
Additions	157	6,238
Reclassifications Transfers from inventories	0	2,941
Deduction for sale of assets	(5,616)	(5,256)	(2,001)
Translations adjustments	236	282	(265)
Net carrying amount	23,678	32,614	28,409
Land [member] | Adexus S A [member]
Disclosure of detailed information about property, plant and equipment [line items]
Acquisition of subsidiary - Adexus Deconsolidation of GMD	(3,713)
Land [member] | Gross carrying amount [member]
Disclosure of detailed information about property, plant and equipment [line items]
Net carrying amount	32,614	28,409	30,675
Net carrying amount	23,678	32,614	28,409
Buildings [member]
Disclosure of detailed information about property, plant and equipment [line items]
Net carrying amount	194,894	189,565	164,971
Additions	2,724	12,126	9,021
CAM Brazil deconsolidation			(839)
Reclassifications		588	36,180
Reclassifications Transfers from inventories	1,969
Transfers to accounts receivable			(3,635)
Deduction for sale of assets	(51,736)	(14,333)	(1,235)
Depreciation charge	(12,469)	(12,651)	(11,780)
Impairment loss		(73)
Discontinued operations		(2,191)	(1,818)
Depreciation for sale deductions	3,579	8,113	1,003
Translations adjustments	152	130	(306)
Net carrying amount	112,961	194,894	189,565
Buildings [member] | Adexus S A [member]
Disclosure of detailed information about property, plant and equipment [line items]
Acquisition of subsidiary - Adexus Deconsolidation of GMD	(26,109)	13,913
Buildings [member] | Gross carrying amount [member]
Disclosure of detailed information about property, plant and equipment [line items]
Net carrying amount	241,150	231,029	200,450
Disposals - accumulated depreciation	(1,869)	(1,232)	(5,057)
Net carrying amount	166,483	241,150	231,029
Buildings [member] | Accumulated depreciation and amortisation [member]
Disclosure of detailed information about property, plant and equipment [line items]
Net carrying amount	(46,256)	(41,464)	(35,479)
Disposals - accumulated depreciation	1,624	939	3,060
Net carrying amount	(53,522)	(46,256)	(41,464)
Machinery [member]
Disclosure of detailed information about property, plant and equipment [line items]
Net carrying amount	531,322	564,685	570,458
Additions	48,207	81,378	105,575
CAM Brazil deconsolidation			(1,462)
Reclassifications		1,927	32,389
Reclassifications Transfers from inventories	12,459
Transfers to intangibles (Note 18)	2,119		68
Deduction for sale of assets	(149,202)	(60,374)	(35,118)
Depreciation charge	(100,976)	(104,638)	(116,993)
Impairment loss	(14,328)	(5,190)
Discontinued operations		0
Depreciation for sale deductions	115,864	48,266	23,907
Translations adjustments	606	5,987	(8,288)
Net carrying amount	444,270	531,322	564,685
Machinery [member] | Gross carrying amount [member]
Disclosure of detailed information about property, plant and equipment [line items]
Net carrying amount	1,088,229	1,074,195	986,487
Disposals - accumulated depreciation	(6,442)	(15,149)	(10,224)
Net carrying amount	998,207	1,088,229	1,074,195
Machinery [member] | Accumulated depreciation and amortisation [member]
Disclosure of detailed information about property, plant and equipment [line items]
Net carrying amount	(556,907)	(509,510)	(416,029)
Disposals - accumulated depreciation	2,410	14,430	4,373
Net carrying amount	(553,937)	(556,907)	(509,510)
Vehicles [member]
Disclosure of detailed information about property, plant and equipment [line items]
Net carrying amount	203,819	220,886	192,262
Additions	36,594	50,574	86,923
CAM Brazil deconsolidation			(633)
Reclassifications		(1,172)	9,300
Reclassifications Transfers from inventories	2,888
Transfers to intangibles (Note 18)	724
Deduction for sale of assets	(92,079)	(48,521)	(42,464)
Depreciation charge	(45,457)	(47,366)	(54,545)
Impairment loss		(317)
Discontinued operations		(675)	(263)
Depreciation for sale deductions	84,145	29,536	32,566
Translations adjustments	(350)	922	(2,221)
Net carrying amount	181,250	203,819	220,886
Vehicles [member] | Adexus S A [member]
Disclosure of detailed information about property, plant and equipment [line items]
Acquisition of subsidiary - Adexus Deconsolidation of GMD	(1,527)	420
Vehicles [member] | Gross carrying amount [member]
Disclosure of detailed information about property, plant and equipment [line items]
Net carrying amount	443,641	443,239	394,077
Disposals - accumulated depreciation	(7,941)	(1,354)	(362)
Net carrying amount	381,950	443,641	443,239
Vehicles [member] | Accumulated depreciation and amortisation [member]
Disclosure of detailed information about property, plant and equipment [line items]
Net carrying amount	(239,822)	(222,353)	(201,815)
Disposals - accumulated depreciation	434	886	323
Net carrying amount	(200,700)	(239,822)	(222,353)
Fixtures and fittings [member]
Disclosure of detailed information about property, plant and equipment [line items]
Net carrying amount	20,171	21,177	15,867
Additions	11,607	4,423	12,684
CAM Brazil deconsolidation			(70)
Reclassifications		4,456	1,245
Reclassifications Transfers from inventories	609
Transfers to accounts receivable			(777)
Deduction for sale of assets	(4,200)	(1,724)	(1,491)
Depreciation charge	(11,654)	(6,947)	(4,623)
Impairment loss		(3,301)
Discontinued operations		(601)	(533)
Depreciation for sale deductions	1,049	1,026	799
Translations adjustments	(23)	176	(128)
Net carrying amount	14,984	20,171	21,177
Fixtures and fittings [member] | Adexus S A [member]
Disclosure of detailed information about property, plant and equipment [line items]
Acquisition of subsidiary - Adexus Deconsolidation of GMD	(2,153)	1,525
Fixtures and fittings [member] | Gross carrying amount [member]
Disclosure of detailed information about property, plant and equipment [line items]
Net carrying amount	59,593	52,225	43,146
Disposals - accumulated depreciation	(1,200)	(1,579)	(2,299)
Net carrying amount	64,233	59,593	52,225
Fixtures and fittings [member] | Accumulated depreciation and amortisation [member]
Disclosure of detailed information about property, plant and equipment [line items]
Net carrying amount	(39,422)	(31,048)	(27,279)
Disposals - accumulated depreciation	778	1,540	503
Net carrying amount	(49,249)	(39,422)	(31,048)
Other property, plant and equipment [member]
Disclosure of detailed information about property, plant and equipment [line items]
Net carrying amount	87,801	56,730	56,536
Additions	36,179	24,870	22,802
Reclassifications		13,156	7,272
Reclassifications Transfers from inventories	6,579
Transfers to accounts receivable			(4,442)
Deduction for sale of assets	(5,270)	(5,766)	(7,979)
Depreciation charge	(26,928)	(15,088)	(13,141)
Impairment loss		(382)
Discontinued operations		(13,039)	(11,084)
Depreciation for sale deductions	3,128	1,907	7,751
Translations adjustments	980	(344)	(506)
Net carrying amount	47,024	87,801	56,730
Other property, plant and equipment [member] | Adexus S A [member]
Disclosure of detailed information about property, plant and equipment [line items]
Acquisition of subsidiary - Adexus Deconsolidation of GMD	(46,032)	26,130
Other property, plant and equipment [member] | Gross carrying amount [member]
Disclosure of detailed information about property, plant and equipment [line items]
Net carrying amount	246,102	191,238	176,869
Disposals - accumulated depreciation	(12,592)	(4,364)	(1,810)
Net carrying amount	225,946	246,102	191,238
Other property, plant and equipment [member] | Accumulated depreciation and amortisation [member]
Disclosure of detailed information about property, plant and equipment [line items]
Net carrying amount	(158,301)	(134,508)	(120,333)
Disposals - accumulated depreciation	3,179	3,991	1,331
Net carrying amount	(178,922)	(158,301)	(134,508)
Replacement units [Member]
Disclosure of detailed information about property, plant and equipment [line items]
Net carrying amount	17,914	15,444	7,241
Additions	925	553
Reclassifications		2,583	10,529
Reclassifications Transfers from inventories	4,076
Depreciation charge		(5)
Net carrying amount	22,915	17,914	15,444
Replacement units [Member] | Adexus S A [member]
Disclosure of detailed information about property, plant and equipment [line items]
Acquisition of subsidiary - Adexus Deconsolidation of GMD	0
Replacement units [Member] | Gross carrying amount [member]
Disclosure of detailed information about property, plant and equipment [line items]
Net carrying amount	17,923	15,448	7,245
Disposals - accumulated depreciation		(661)	(2,326)
Net carrying amount	22,924	17,923	15,448
Replacement units [Member] | Accumulated depreciation and amortisation [member]
Disclosure of detailed information about property, plant and equipment [line items]
Net carrying amount	(9)	(4)	(4)
Net carrying amount	(9)	(9)	(4)
In-transit units [Member]
Disclosure of detailed information about property, plant and equipment [line items]
Net carrying amount	3,778	1,817	9,177
Additions	22,877	19,312	16,018
Reclassifications		(17,349)	(23,092)
Reclassifications Transfers from inventories	(21,600)
Transfers to intangibles (Note 18)	(964)
Translations adjustments			(197)
Net carrying amount	(42)	3,778	1,817
In-transit units [Member] | Adexus S A [member]
Disclosure of detailed information about property, plant and equipment [line items]
Acquisition of subsidiary - Adexus Deconsolidation of GMD	(3,903)
In-transit units [Member] | Gross carrying amount [member]
Disclosure of detailed information about property, plant and equipment [line items]
Net carrying amount	3,778	1,817	9,177
Disposals - accumulated depreciation	(230)	(2)	(89)
Net carrying amount	(42)	3,778	1,817
Work in progress [member]
Disclosure of detailed information about property, plant and equipment [line items]
Net carrying amount	21,286	13,044	99,831
Additions	13,178	13,594	44,933
Reclassifications		(4,189)	(73,823)
Reclassifications Transfers from inventories	(6,980)
Transfers to intangibles (Note 18)	(2,048)	(1,257)	(36,785)
Transfers to accounts receivable			(5,168)
Deduction for sale of assets			(14,185)
Impairment loss	(352)
Translations adjustments	(346)	94	(553)
Net carrying amount	18,695	21,286	13,044
Work in progress [member] | Adexus S A [member]
Disclosure of detailed information about property, plant and equipment [line items]
Acquisition of subsidiary - Adexus Deconsolidation of GMD	(4)
Work in progress [member] | Gross carrying amount [member]
Disclosure of detailed information about property, plant and equipment [line items]
Net carrying amount	21,286	13,044	99,831
Disposals - accumulated depreciation	(3,606)		(1,206)
Net carrying amount	19,047	S/ 21,286	S/ 13,044
Work in progress [member] | Accumulated depreciation and amortisation [member]
Disclosure of detailed information about property, plant and equipment [line items]
Net carrying amount	S/ (352)

XML

Property, Plant and Equipment - Additional Information (Detail) S/ in Thousands, $ in Millions	1 Months Ended	12 Months Ended
	Oct. 30, 2017 USD ($)	Dec. 31, 2017 PEN (S/)	Dec. 31, 2016 PEN (S/)	Dec. 31, 2015 PEN (S/)
Disclosure of detailed information about property, plant and equipment [line items]
Proceeds from sale of fixed assets	$ 20.5	S/ 127,200	S/ 70,500	S/ 55,800
Profits from fixed assets	$ 3.5	26,900	18,400	17,400
Operating lease period	5-year lease period
Leases expiration period	10 years
Depreciation related to property, plant and equipment		197,484	186,695	S/ 201,082
Impairment loss		(14,680)	(9,263)
Fully Depreciated property, plant and equipment		154,000	151,600
Other financial liabilities		1,690,063	2,380,438
Property, plant and equipment [member]
Disclosure of detailed information about property, plant and equipment [line items]
Other financial liabilities		368,100	617,900
Consorcio Constructor Ductos del Sur [member]
Disclosure of detailed information about property, plant and equipment [line items]
Impairment loss		4,100
GMP S.A. [member]
Disclosure of detailed information about property, plant and equipment [line items]
Work in progress		11,000	19,000
Proyecto Hotel Larcomar [Member]
Disclosure of detailed information about property, plant and equipment [line items]
Work in progress		15,600	S/ 14,400
GyM S A [member]
Disclosure of detailed information about property, plant and equipment [line items]
Impairment loss		2,390
Stracon GyM S.A. [member]
Disclosure of detailed information about property, plant and equipment [line items]
Impairment loss		2,340
GMD SA [member]
Disclosure of detailed information about property, plant and equipment [line items]
Depreciation related to property, plant and equipment		S/ 8,361

XML

Property Plant and Equipment, Net - Summary Of Outstanding Commitments For Non-Cancelable Operating Leases (Detail) S/ in Thousands	Dec. 31, 2017 PEN (S/)
Disclosure of finance lease and operating lease by lessee [line items]
Outstanding commitments for non-cancelable operating leases	S/ 90,138
Less than1 year [member]
Disclosure of finance lease and operating lease by lessee [line items]
Outstanding commitments for non-cancelable operating leases	8,526
Later than one year and not later than five years [member]
Disclosure of finance lease and operating lease by lessee [line items]
Outstanding commitments for non-cancelable operating leases	35,161
Over 5 years [member]
Disclosure of finance lease and operating lease by lessee [line items]
Outstanding commitments for non-cancelable operating leases	S/ 46,451

XML

Property, Plant and Equipment - Summary of Depreciation of Fixed Assets and Investment Properties (Detail) - PEN (S/) S/ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of detailed information about property, plant and equipment [line items]
Depreciation related to investment property	S/ (2,310)	S/ (2,321)	S/ (2,290)
Total depreciation related to property, plant and equipment	197,484	186,695	201,082
Property, plant and equipment including investment property [Member]
Disclosure of detailed information about property, plant and equipment [line items]
Total depreciation related to property, plant and equipment	199,794	189,016	203,372
GMD SA [member]
Disclosure of detailed information about property, plant and equipment [line items]
Total depreciation related to property, plant and equipment	8,361
GMD SA [member] | Discontinued operations [member]
Disclosure of detailed information about property, plant and equipment [line items]
Total depreciation related to property, plant and equipment	8,361
Cost of goods and services [member]
Disclosure of detailed information about property, plant and equipment [line items]
Total depreciation related to property, plant and equipment	178,209	177,699	186,661
Administrative expenses [member]
Disclosure of detailed information about property, plant and equipment [line items]
Total depreciation related to property, plant and equipment	S/ 13,224	S/ 11,317	S/ 16,711

XML

Property, Plant and Equipment - Summary of Net Carrying Amount of Machinery and Equipment, Vehicles and Furniture and Fixtures Acquired Under Finance Lease Agreements (Detail) - PEN (S/) S/ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Disclosure of detailed information about property, plant and equipment [line items]
Accumulated depreciation	S/ 197,484	S/ 186,695	S/ 201,082
Net carrying amount	865,735	1,113,599	1,111,757	S/ 1,147,018
Finance Lease [Member]
Disclosure of detailed information about property, plant and equipment [line items]
Cost of acquisition	650,301	800,927	735,591
Accumulated depreciation	(351,447)	(386,411)	(327,465)
Net carrying amount	S/ 298,854	S/ 414,516	S/ 408,126

XML

Intangible Assets - Summary of Movement of Intangible Assets and That of Their Related Accumulated Amortization (Detail) - PEN (S/) S/ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure Of Goodwill [Line Items]
Intangible assets	S/ 960,286	S/ 878,286	S/ 778,743
Additions	143,305	171,726	194,979
CAM Brazil Deconsolidation	(2,464)		(129)
Transfers from assets under construction (Note 17)	169	1,257	36,717
Transfers to accounts receivable			(2,278)
Disposals - net cost			(14,607)
Reclassifications			(3)
Amortization	(82,742)	(73,547)	(80,676)
Discontinued operations		(9,196)	(8,679)
Impairment	(49,609)	(54,308)
Translations adjustments	(1,394)	16,725	(25,781)
Intangible assets	940,070	960,286	878,286
Adexus S A [member]
Disclosure Of Goodwill [Line Items]
Acquisition of subsidiary - Adexus (Note 33 a)		33,133
Gross carrying amount [member]
Disclosure Of Goodwill [Line Items]
Intangible assets	1,708,082	1,489,057	1,297,516
CAM Brazil Deconsolidation	(23,666)
Disposals - net cost		(3,790)
Intangible assets	1,816,278	1,708,082	1,489,057
Accumulated depreciation, amortisation and impairment [member]
Disclosure Of Goodwill [Line Items]
Intangible assets	(747,796)	(610,771)	(518,773)
Intangible assets	(876,208)	(747,796)	(610,771)
Goodwill [member]
Disclosure Of Goodwill [Line Items]
Intangible assets	144,520	170,232	180,149
Additions			5,418
Impairment	(20,068)	(38,680)
Translations adjustments	(4,124)	12,038	(15,335)
Intangible assets	116,804	144,520	170,232
Goodwill [member] | Adexus S A [member]
Disclosure Of Goodwill [Line Items]
Acquisition of subsidiary - Adexus (Note 33 a)		930
Goodwill [member] | Gross carrying amount [member]
Disclosure Of Goodwill [Line Items]
Intangible assets	205,195	192,227	202,144
CAM Brazil Deconsolidation	(3,524)
Intangible assets	193,862	205,195	192,227
Goodwill [member] | Accumulated depreciation, amortisation and impairment [member]
Disclosure Of Goodwill [Line Items]
Intangible assets	(60,675)	(21,995)	(21,995)
Intangible assets	(77,058)	(60,675)	(21,995)
Trademarks [member]
Disclosure Of Goodwill [Line Items]
Intangible assets	93,666	96,534	102,618
Impairment	(29,541)	(15,628)
Translations adjustments	975	3,672	(6,084)
Intangible assets	65,100	93,666	96,534
Trademarks [member] | Adexus S A [member]
Disclosure Of Goodwill [Line Items]
Acquisition of subsidiary - Adexus (Note 33 a)		9,088
Trademarks [member] | Gross carrying amount [member]
Disclosure Of Goodwill [Line Items]
Intangible assets	109,511	96,751	102,835
Intangible assets	110,486	109,511	96,751
Trademarks [member] | Accumulated depreciation, amortisation and impairment [member]
Disclosure Of Goodwill [Line Items]
Intangible assets	(15,845)	(217)	(217)
Intangible assets	(45,386)	(15,845)	(217)
Service concession rights [member]
Disclosure Of Goodwill [Line Items]
Intangible assets	517,760	417,893	291,679
Additions	64,171	118,222	165,149
CAM Brazil Deconsolidation	(537)
Transfers from assets under construction (Note 17)	(11,217)
Transfers to accounts receivable			(2,278)
Disposals - net cost			(10,923)
Reclassifications		5,258
Amortization	(24,609)	(19,646)	(18,436)
Discontinued operations		(8,560)	(7,247)
Translations adjustments	13	(102)	(51)
Intangible assets	528,227	517,760	417,893
Service concession rights [member] | Adexus S A [member]
Disclosure Of Goodwill [Line Items]
Acquisition of subsidiary - Adexus (Note 33 a)		6,090
Service concession rights [member] | Gross carrying amount [member]
Disclosure Of Goodwill [Line Items]
Intangible assets	844,213	716,125	561,183
CAM Brazil Deconsolidation	(17,354)
Disposals - net cost		(1,395)
Intangible assets	879,289	844,213	716,125
Service concession rights [member] | Accumulated depreciation, amortisation and impairment [member]
Disclosure Of Goodwill [Line Items]
Intangible assets	(326,453)	(298,232)	(269,504)
Intangible assets	(351,062)	(326,453)	(298,232)
Contractual relationships with customers [member]
Disclosure Of Goodwill [Line Items]
Intangible assets	32,811	24,194	42,990
Additions	5,274
Transfers from assets under construction (Note 17)			(68)
Amortization	(4,189)	(4,376)	(14,697)
Translations adjustments	369	171	(4,031)
Intangible assets	34,265	32,811	24,194
Contractual relationships with customers [member] | Adexus S A [member]
Disclosure Of Goodwill [Line Items]
Acquisition of subsidiary - Adexus (Note 33 a)		12,822
Contractual relationships with customers [member] | Gross carrying amount [member]
Disclosure Of Goodwill [Line Items]
Intangible assets	95,127	82,134	86,233
Intangible assets	100,640	95,127	82,134
Contractual relationships with customers [member] | Accumulated depreciation, amortisation and impairment [member]
Disclosure Of Goodwill [Line Items]
Intangible assets	(62,316)	(57,940)	(43,243)
Intangible assets	(66,375)	(62,316)	(57,940)
Internally generated software and development costs [member]
Disclosure Of Goodwill [Line Items]
Intangible assets	20,021	10,218	5,769
Additions	3,330	16,477	9,141
CAM Brazil Deconsolidation	(1,572)		(129)
Transfers from assets under construction (Note 17)	2,761		1,562
Reclassifications		345	188
Amortization	(8,091)	(7,407)	(4,601)
Discontinued operations		(636)	(1,432)
Translations adjustments	1,196	1,024	(280)
Intangible assets	17,624	20,021	10,218
Internally generated software and development costs [member] | Gross carrying amount [member]
Disclosure Of Goodwill [Line Items]
Intangible assets	60,607	42,761	32,231
CAM Brazil Deconsolidation	(21)
Intangible assets	66,301	60,607	42,761
Internally generated software and development costs [member] | Accumulated depreciation, amortisation and impairment [member]
Disclosure Of Goodwill [Line Items]
Intangible assets	(40,586)	(32,543)	(26,462)
Intangible assets	(48,677)	(40,586)	(32,543)
Costs of development of wells [member]
Disclosure Of Goodwill [Line Items]
Intangible assets	108,722	134,263	131,330
Additions	49,698	17,772	11,842
Transfers from assets under construction (Note 17)	5,008		33,396
Reclassifications			(188)
Amortization	(46,695)	(40,918)	(42,117)
Intangible assets	116,733	108,722	134,263
Costs of development of wells [member] | Gross carrying amount [member]
Disclosure Of Goodwill [Line Items]
Intangible assets	342,100	326,723	281,722
Disposals - net cost		(2,395)
Intangible assets	396,806	342,100	326,723
Costs of development of wells [member] | Accumulated depreciation, amortisation and impairment [member]
Disclosure Of Goodwill [Line Items]
Intangible assets	(233,378)	(192,460)	(150,392)
Intangible assets	(280,073)	(233,378)	(192,460)
Development costs [member] | Gross carrying amount [member]
Disclosure Of Goodwill [Line Items]
Intangible assets	3,623	3,623	3,623
Intangible assets	3,623	3,623	3,623
Development costs [member] | Accumulated depreciation, amortisation and impairment [member]
Disclosure Of Goodwill [Line Items]
Intangible assets	(3,623)	(3,623)	(3,623)
Intangible assets	(3,623)	(3,623)	(3,623)
Land use right [member]
Disclosure Of Goodwill [Line Items]
Intangible assets	13,288	13,288	13,288
Intangible assets	13,288	13,288	13,288
Land use right [member] | Gross carrying amount [member]
Disclosure Of Goodwill [Line Items]
Intangible assets	13,288	13,288	13,288
Intangible assets	13,288	13,288	13,288
Other intangible assets [member]
Disclosure Of Goodwill [Line Items]
Intangible assets	29,498	11,664	10,920
Additions	20,832	19,255	3,429
CAM Brazil Deconsolidation	(355)
Transfers from assets under construction (Note 17)	3,617	1,257	1,827
Disposals - net cost			(3,684)
Reclassifications		(5,603)	(3)
Amortization	(2,973)	(1,200)	(825)
Translations adjustments	177	(78)
Intangible assets	48,029	29,498	11,664
Other intangible assets [member] | Adexus S A [member]
Disclosure Of Goodwill [Line Items]
Acquisition of subsidiary - Adexus (Note 33 a)		4,203
Other intangible assets [member] | Gross carrying amount [member]
Disclosure Of Goodwill [Line Items]
Intangible assets	34,418	15,425	14,257
CAM Brazil Deconsolidation	(2,767)
Intangible assets	51,983	34,418	15,425
Other intangible assets [member] | Accumulated depreciation, amortisation and impairment [member]
Disclosure Of Goodwill [Line Items]
Intangible assets	(4,920)	(3,761)	(3,337)
Intangible assets	S/ (3,954)	S/ (4,920)	S/ (3,761)

XML

Intangible Assets - Summary of Goodwill Allocated to Cash-Generating Units (CGU) (Detail) - PEN (S/) S/ in Thousands	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure Of Goodwill [Line Items]
Goodwill	S/ 116,804	S/ 144,520	S/ 170,232
Engineering and construction [member]
Disclosure Of Goodwill [Line Items]
Goodwill	75,051	98,587	125,514
Electromechanical [member]
Disclosure Of Goodwill [Line Items]
Goodwill	20,737	20,737	20,737
Mining and construction services [member]
Disclosure Of Goodwill [Line Items]
Goodwill	13,366	13,366	13,366
IT equipment and services [member]
Disclosure Of Goodwill [Line Items]
Goodwill	6,720	5,102	4,172
Telecommunications services [member]
Disclosure Of Goodwill [Line Items]
Goodwill	S/ 930	S/ 6,728	S/ 6,443

XML

Intangible Assets - Additional Information (Detail) $ in Thousands		12 Months Ended
	Dec. 10, 2014	Dec. 31, 2017 PEN (S/) Wells	Dec. 31, 2017 USD ($) Wells	Dec. 31, 2016 PEN (S/)	Dec. 31, 2015 PEN (S/)	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)	Aug. 31, 2016 PEN (S/)	Dec. 31, 2014 PEN (S/)	Aug. 31, 2013 PEN (S/)
Disclosure of reconciliation of changes in intangible assets and goodwill [line items]
Impairment impact in goodwill		S/ 20,100,000		S/ 38,700,000
Period of operating economic activities of each CGU		5 years	5 years
Impairment		S/ (49,609,000)		(54,308,000)
Intangible assets		940,070,000		960,286,000	S/ 878,286,000				S/ 778,743,000
Borrowing costs capitalized		5,900,000		12,200,000	S/ 4,000,000
Costs capitalized		99,000,000		S/ 80,000,000
GMP S.A. [member] | Talara, Piura [member]
Disclosure of reconciliation of changes in intangible assets and goodwill [line items]
Right for exploiting oil blocks in years	30 years
Total estimated investment | $						$ 560,000
Stracon GyM S.A. [member]
Disclosure of reconciliation of changes in intangible assets and goodwill [line items]
Provision for impairment		S/ 0
Percentage of ownership disposed in subsidiary		87.59%				87.59%
Proceeds from ownership interest disposed		S/ 41,900,000	$ 76,800
Amortisation expense of intangible assets		S/ 41,900,000
Bottom of range [member]
Disclosure of reconciliation of changes in intangible assets and goodwill [line items]
Borrowings interest rate		7.00%		6.75%	5.30%	7.00%	6.75%
Top of range [member]
Disclosure of reconciliation of changes in intangible assets and goodwill [line items]
Borrowings interest rate		11.22%		8.90%	9.50%	11.22%	8.90%
Adexus S A [member]
Disclosure of reconciliation of changes in intangible assets and goodwill [line items]
Trademarks acquired				S/ 32,204,000			$ 9,585
Trademark [member] | Vialy Vives [member]
Disclosure of reconciliation of changes in intangible assets and goodwill [line items]
Impairment		S/ 29,500,000		15,600,000
Trademark [member] | Vialy Vives [member]
Disclosure of reconciliation of changes in intangible assets and goodwill [line items]
Trademarks acquired										S/ 75,400,000
Trademark [member] | Morelco SAS [member]
Disclosure of reconciliation of changes in intangible assets and goodwill [line items]
Trademarks acquired									33,330,000
Trademark [member] | Adexus S A [member]
Disclosure of reconciliation of changes in intangible assets and goodwill [line items]
Trademarks acquired								S/ 9,100,000
Block III [member] | GMP S.A. [member] | Talara, Piura [member]
Disclosure of reconciliation of changes in intangible assets and goodwill [line items]
Number of wells | Wells		230	230
Block IV [member] | GMP S.A. [member] | Talara, Piura [member]
Disclosure of reconciliation of changes in intangible assets and goodwill [line items]
Number of wells | Wells		330	330
Blocks I and V [member]
Disclosure of reconciliation of changes in intangible assets and goodwill [line items]
Estimated useful lives of wells		5 years	5 years
Blocks III and IV [member]
Disclosure of reconciliation of changes in intangible assets and goodwill [line items]
Estimated useful lives of wells		5 years	5 years
Service concession rights [member]
Disclosure of reconciliation of changes in intangible assets and goodwill [line items]
Intangible assets		S/ 528,227,000		517,760,000	S/ 417,893,000				S/ 291,679,000
Road improvement charges		17,000,000		18,000,000
Implementation charge for road safety		4,000,000		3,000,000
Disbursements for acquisition of properties		5,000,000		6,000,000
Other intangible assets contracted for concession delivery process		4,000,000		3,000,000
Financing costs, capitalized		26,000,000		22,500,000
Service concession rights [member] | Contractual arrangements [member]
Disclosure of reconciliation of changes in intangible assets and goodwill [line items]
Intangible assets		78,000,000		86,000,000
Service concession rights [member] | Bottom of range [member]
Disclosure of reconciliation of changes in intangible assets and goodwill [line items]
Borrowing costs capitalized		S/ 26,000,000		S/ 23,000,000
Borrowings interest rate		7.14%		7.14%		7.14%	7.14%
Service concession rights [member] | Top of range [member]
Disclosure of reconciliation of changes in intangible assets and goodwill [line items]
Borrowing costs capitalized		S/ 331,000,000		S/ 297,000,000
Borrowings interest rate		8.72%		8.72%		8.72%	8.72%

XML

Intangible Assets - Summary of Major Assumptions Used by the Group in Determining the Fair Value Less Cost of Disposal (Detail)	Dec. 31, 2017	Dec. 31, 2016
Engineering and construction [member]
Disclosure Of Major Assumptions Used In Determining Fair Value Less Cost Of disposal And Value In Use [line items]
Gross margin	9.50%
Terminal growth rate	3.00%
Discount rate	11.18%
Engineering and construction [member] | Bottom of range [member]
Disclosure Of Major Assumptions Used In Determining Fair Value Less Cost Of disposal And Value In Use [line items]
Gross margin		9.50%
Terminal growth rate		3.00%
Discount rate		9.66%
Engineering and construction [member] | Top of range [member]
Disclosure Of Major Assumptions Used In Determining Fair Value Less Cost Of disposal And Value In Use [line items]
Gross margin		12.99%
Terminal growth rate		4.00%
Discount rate		12.72%
Engineering and construction [member] | Trademarks [member] | Morelco SAS [member]
Disclosure Of Major Assumptions Used In Determining Fair Value Less Cost Of disposal And Value In Use [line items]
Average revenue growth rate	9.60%	14.39%
Terminal growth rate	3.00%	3.00%
Discount rate	11.18%	11.85%
Engineering and construction [member] | Trademarks [member] | Vial y Vives - DSD [member]
Disclosure Of Major Assumptions Used In Determining Fair Value Less Cost Of disposal And Value In Use [line items]
Average revenue growth rate	25.00%	24.53%
Terminal growth rate	4.00%	4.00%
Discount rate	14.80%	9.87%
Electromechanical [member]
Disclosure Of Major Assumptions Used In Determining Fair Value Less Cost Of disposal And Value In Use [line items]
Gross margin	8.00%	11.10%
Terminal growth rate	2.00%	2.00%
Discount rate	11.48%	11.01%
Mining and construction services [member]
Disclosure Of Major Assumptions Used In Determining Fair Value Less Cost Of disposal And Value In Use [line items]
Gross margin		12.04%
Terminal growth rate		2.00%
Discount rate		11.71%
IT equipment and services [member]
Disclosure Of Major Assumptions Used In Determining Fair Value Less Cost Of disposal And Value In Use [line items]
Gross margin	20.83%
Terminal growth rate	2.90%
Discount rate	10.17%
IT equipment and services [member] | Bottom of range [member]
Disclosure Of Major Assumptions Used In Determining Fair Value Less Cost Of disposal And Value In Use [line items]
Gross margin		15.00%
Terminal growth rate		2.00%
IT equipment and services [member] | Top of range [member]
Disclosure Of Major Assumptions Used In Determining Fair Value Less Cost Of disposal And Value In Use [line items]
Gross margin		23.19%
Terminal growth rate		3.00%
Discount rate		21.74%
IT equipment and services [member] | Trademarks [member] | Adexus S A [member]
Disclosure Of Major Assumptions Used In Determining Fair Value Less Cost Of disposal And Value In Use [line items]
Average revenue growth rate	9.19%	12.60%
Terminal growth rate	3.00%	3.00%
Discount rate	16.63%	16.05%
Telecommunications services [member]
Disclosure Of Major Assumptions Used In Determining Fair Value Less Cost Of disposal And Value In Use [line items]
Gross margin	4.26%	11.75%
Terminal growth rate	3.00%	3.00%
Discount rate	4.02%	10.02%

XML

Intangible Assets - Summary of Amortization of Intangibles (Detail) - PEN (S/) S/ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of reconciliation of changes in intangible assets and goodwill [line items]
Amortisation expense of intangible assets	S/ 82,742	S/ 73,547	S/ 80,676
Cost of sales and services [member]
Disclosure of reconciliation of changes in intangible assets and goodwill [line items]
Amortisation expense of intangible assets	74,515	66,862	74,187
Administrative expenses [member]
Disclosure of reconciliation of changes in intangible assets and goodwill [line items]
Amortisation expense of intangible assets	S/ 8,227	S/ 6,685	S/ 6,489

XML

Other Financial Liabilities - Summary of Other Financial Liabilities (Detail) - PEN (S/) S/ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Disclosure Of Other Financial Liabilities [Line Items]
Total	S/ 1,690,063	S/ 2,380,438
Other current liabilities	1,056,764	1,961,043
Other non current liabilities	633,299	419,395
Bank Overdrafts [member]
Disclosure Of Other Financial Liabilities [Line Items]
Total	120	8,396
Other current liabilities	120	8,396
Bank loans [member]
Disclosure Of Other Financial Liabilities [Line Items]
Total	1,561,634	2,131,901
Other current liabilities	990,467	1,835,340
Other non current liabilities	571,167	296,561
Finance Leases Liabilities [member]
Disclosure Of Other Financial Liabilities [Line Items]
Total	128,309	240,141
Other current liabilities	66,177	117,307
Other non current liabilities	S/ 62,132	S/ 122,834

XML

Other Financial Liabilities - Additional information (Detail) S/ in Millions, $ in Millions						3 Months Ended		12 Months Ended
	Apr. 01, 2018	Oct. 01, 2017	Jun. 27, 2017	Jun. 24, 2017 PEN (S/)	Jun. 24, 2017 USD ($)	Sep. 30, 2017	Mar. 31, 2017	Dec. 31, 2017 PEN (S/)	Dec. 31, 2016 PEN (S/)	Dec. 31, 2016 USD ($)	Dec. 31, 2017 USD ($)	Jun. 30, 2017 PEN (S/)	Jun. 30, 2017 USD ($)	Dec. 31, 2016 USD ($)	Dec. 31, 2015 PEN (S/)	Dec. 31, 2015 USD ($)
Credit Suisse Syndicated Loan [Member]
Disclosure Of Other Financial Liabilities [Line Items]
Consolidated leverage ratio						350.00%
Credit Suisse Syndicated Loan [Member] | GSP Project [Member]
Disclosure Of Other Financial Liabilities [Line Items]
Borrowings, maturity			December, 2020
Credit Suisse Syndicated Loan [Member] | GSP Project [Member] | First year of repayment [member]
Disclosure Of Other Financial Liabilities [Line Items]
Repayment as percentage of proceeds of asset sales			40.00%
Credit Suisse Syndicated Loan [Member] | GSP Project [Member] | Second year of repayment [member]
Disclosure Of Other Financial Liabilities [Line Items]
Repayment as percentage of proceeds of asset sales			30.00%
Credit Suisse Syndicated Loan [Member] | GSP Project [Member] | London Inter Bank Rate [Member]
Disclosure Of Other Financial Liabilities [Line Items]
Borrowings, adjustment to interest rate basis			4.90%
Term Loan One [Member]
Disclosure Of Other Financial Liabilities [Line Items]
Borrowings, maturity								June, 2020
Term Loan One [Member] | First year of repayment [member]
Disclosure Of Other Financial Liabilities [Line Items]
Repayment as percentage of proceeds of asset sales								40.00%
Term Loan One [Member] | Second year of repayment [member]
Disclosure Of Other Financial Liabilities [Line Items]
Repayment as percentage of proceeds of asset sales								30.00%
Term Loan One [Member] | London Inter Bank Rate [Member] | First year of repayment [member]
Disclosure Of Other Financial Liabilities [Line Items]
Borrowings, adjustment to interest rate basis								4.50%			4.50%
Term Loan One [Member] | London Inter Bank Rate [Member] | Second year of repayment [member]
Disclosure Of Other Financial Liabilities [Line Items]
Borrowings, adjustment to interest rate basis								5.00%			5.00%
Term Loan One [Member] | London Inter Bank Rate [Member] | Third year of repayment [member]
Disclosure Of Other Financial Liabilities [Line Items]
Borrowings, adjustment to interest rate basis								5.50%			5.50%
Term Loan One [Member] | Credit Suisse Syndicated Loan [Member]
Disclosure Of Other Financial Liabilities [Line Items]
Term loan credit agreement															S/ 672.0	$ 200.0
Initial term of loan								5 years
Current portion of outstanding balance								S/ 263.2	S/ 498.8		$ 81.1			$ 148.5
Term Loan One [Member] | Credit Suisse Syndicated Loan [Member] | three months LIBOR [Member]
Disclosure Of Other Financial Liabilities [Line Items]
Borrowings, adjustment to interest rate basis								3.90%			3.90%
Term Loan One [Member] | GSP Bridge Loan [member]
Disclosure Of Other Financial Liabilities [Line Items]
Outstanding loan amount								S/ 235.2			$ 72.5
Term Loan One [Member] | Natixis, BBVA, SMBC and MUFJ [Member]
Disclosure Of Other Financial Liabilities [Line Items]
Outstanding loan amount												S/ 264.8	$ 78.7
Gasoducto Sur Peruano S A [member] | GSP Bridge Loan [member]
Disclosure Of Other Financial Liabilities [Line Items]
Guarantee obligation				S/ 433.3	$ 129.0				S/ 433.3	$ 129.0
Bottom of range [member]
Disclosure Of Other Financial Liabilities [Line Items]
Borrowings, interest rate								7.00%	6.75%		7.00%			6.75%	5.30%	5.30%
Bottom of range [member] | Level 2 of fair value hierarchy [member]
Disclosure Of Other Financial Liabilities [Line Items]
Borrowings, interest rate								2.40%	1.30%		2.40%			1.30%
Bottom of range [member] | Subsequent Event [Member] | Credit Suisse Syndicated Loan [Member]
Disclosure Of Other Financial Liabilities [Line Items]
Consolidated EBITDA to consolidated interest expense ratio	350.00%
Debt service coverage ratio	150.00%
Bottom of range [member] | Fixed interest rate [member]
Disclosure Of Other Financial Liabilities [Line Items]
Borrowings, interest rate								1.00%	3.30%		1.00%			3.30%
Top of range [member]
Disclosure Of Other Financial Liabilities [Line Items]
Borrowings, interest rate								11.22%	8.90%		11.22%			8.90%	9.50%	9.50%
Top of range [member] | Level 2 of fair value hierarchy [member]
Disclosure Of Other Financial Liabilities [Line Items]
Borrowings, interest rate								13.80%	14.30%		13.80%			14.30%
Top of range [member] | Credit Suisse Syndicated Loan [Member]
Disclosure Of Other Financial Liabilities [Line Items]
Consolidated leverage ratio		250.00%					350.00%
Top of range [member] | Term Loan One [Member]
Disclosure Of Other Financial Liabilities [Line Items]
Consolidated leverage ratio								350.00%
Top of range [member] | Fixed interest rate [member]
Disclosure Of Other Financial Liabilities [Line Items]
Borrowings, interest rate								14.40%	13.90%		14.40%			13.90%

XML

Other Financial Liabilities - Summary of Bank Loan (Detail) - PEN (S/) S/ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure Of Other Financial Liabilities [Line Items]
Current financial liabilities	S/ 1,056,764	S/ 1,961,043
Non current financial liabilities	633,299	419,395
Bank loans [member]
Disclosure Of Other Financial Liabilities [Line Items]
Current financial liabilities	990,467	1,835,340
Non current financial liabilities	571,167	296,561
Bank loans [member] | GyM S A [member]
Disclosure Of Other Financial Liabilities [Line Items]
Current financial liabilities	551,413	492,910
Non current financial liabilities	95,376	187,029
Bank loans [member] | Grana Y Montero S.A.A. [Member] | three months LIBOR [Member]
Disclosure Of Other Financial Liabilities [Line Items]
Current financial liabilities	113,412	932,114
Non current financial liabilities	S/ 363,564
Bank loans [member] | Viva GyM SA [member]
Disclosure Of Other Financial Liabilities [Line Items]
Borrowings, maturity	2018
Current financial liabilities	S/ 157,592	201,609
Bank loans [member] | GMP S.A. [member]
Disclosure Of Other Financial Liabilities [Line Items]
Current financial liabilities	42,911	77,857
Non current financial liabilities	96,245	71,453
Bank loans [member] | CAM Holding S A [member]
Disclosure Of Other Financial Liabilities [Line Items]
Current financial liabilities	77,775	69,702
Non current financial liabilities	12,807	24,889
Bank loans [member] | Adexus S A [member]
Disclosure Of Other Financial Liabilities [Line Items]
Current financial liabilities	46,552	42,782
Non current financial liabilities	S/ 3,175	13,190
Bank loans [member] | CONCARSA [member]
Disclosure Of Other Financial Liabilities [Line Items]
Borrowings, interest rate	7.50%
Borrowings, maturity	2018
Current financial liabilities	S/ 812
Bank loans [member] | CAM Servicios Peru S A [member]
Disclosure Of Other Financial Liabilities [Line Items]
Borrowings, maturity	2017
Current financial liabilities		3,620
Bank loans [member] | GMD SA [member]
Disclosure Of Other Financial Liabilities [Line Items]
Borrowings, maturity	2017
Current financial liabilities		S/ 14,746
Bottom of range [member]
Disclosure Of Other Financial Liabilities [Line Items]
Borrowings, interest rate	7.00%	6.75%	5.30%
Bottom of range [member] | Bank loans [member] | GyM S A [member]
Disclosure Of Other Financial Liabilities [Line Items]
Borrowings, interest rate	3.30%
Borrowings, maturity	2018
Bottom of range [member] | Bank loans [member] | Grana Y Montero S.A.A. [Member] | three months LIBOR [Member]
Disclosure Of Other Financial Liabilities [Line Items]
Borrowings, adjustment to interest rate basis	4.90%
Borrowings, maturity	2018
Bottom of range [member] | Bank loans [member] | Viva GyM SA [member]
Disclosure Of Other Financial Liabilities [Line Items]
Borrowings, interest rate	7.00%
Bottom of range [member] | Bank loans [member] | GMP S.A. [member]
Disclosure Of Other Financial Liabilities [Line Items]
Borrowings, interest rate	4.45%
Borrowings, maturity	2018
Bottom of range [member] | Bank loans [member] | CAM Holding S A [member]
Disclosure Of Other Financial Liabilities [Line Items]
Borrowings, interest rate	4.44%
Borrowings, maturity	2018
Bottom of range [member] | Bank loans [member] | Adexus S A [member]
Disclosure Of Other Financial Liabilities [Line Items]
Borrowings, interest rate	3.63%
Borrowings, maturity	2018
Bottom of range [member] | Bank loans [member] | CAM Servicios Peru S A [member]
Disclosure Of Other Financial Liabilities [Line Items]
Borrowings, interest rate	6.39%
Bottom of range [member] | Bank loans [member] | GMD SA [member]
Disclosure Of Other Financial Liabilities [Line Items]
Borrowings, interest rate	6.20%
Top of range [member]
Disclosure Of Other Financial Liabilities [Line Items]
Borrowings, interest rate	11.22%	8.90%	9.50%
Top of range [member] | Bank loans [member] | GyM S A [member]
Disclosure Of Other Financial Liabilities [Line Items]
Borrowings, interest rate	8.73%
Borrowings, maturity	2019
Top of range [member] | Bank loans [member] | Grana Y Montero S.A.A. [Member] | three months LIBOR [Member]
Disclosure Of Other Financial Liabilities [Line Items]
Borrowings, adjustment to interest rate basis	5.50%
Borrowings, maturity	2020
Top of range [member] | Bank loans [member] | Viva GyM SA [member]
Disclosure Of Other Financial Liabilities [Line Items]
Borrowings, interest rate	10.67%
Top of range [member] | Bank loans [member] | GMP S.A. [member]
Disclosure Of Other Financial Liabilities [Line Items]
Borrowings, interest rate	6.04%
Borrowings, maturity	2020
Top of range [member] | Bank loans [member] | CAM Holding S A [member]
Disclosure Of Other Financial Liabilities [Line Items]
Borrowings, interest rate	13.93%
Borrowings, maturity	2020
Top of range [member] | Bank loans [member] | Adexus S A [member]
Disclosure Of Other Financial Liabilities [Line Items]
Borrowings, interest rate	5.90%
Borrowings, maturity	2019
Top of range [member] | Bank loans [member] | CAM Servicios Peru S A [member]
Disclosure Of Other Financial Liabilities [Line Items]
Borrowings, interest rate	7.18%
Top of range [member] | Bank loans [member] | GMD SA [member]
Disclosure Of Other Financial Liabilities [Line Items]
Borrowings, interest rate	7.47%

XML

Other Financial Liabilities - Summary of Finance Lease Obligations (Detail) - PEN (S/) S/ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure of finance lease and operating lease by lessor [line items]
Current finance lease liabilities	S/ 66,177	S/ 117,307
Non-current finance lease liabilities	62,132	122,834
GyM S A [member]
Disclosure of finance lease and operating lease by lessor [line items]
Current finance lease liabilities	40,107	80,570
Non-current finance lease liabilities	32,397	58,937
Viva GyM SA [member]
Disclosure of finance lease and operating lease by lessor [line items]
Current finance lease liabilities	4,439	4,847
Non-current finance lease liabilities	12,010	16,541
Adexus S A [member]
Disclosure of finance lease and operating lease by lessor [line items]
Current finance lease liabilities	8,567	9,884
Non-current finance lease liabilities	4,363	12,287
GMP S.A. [member]
Disclosure of finance lease and operating lease by lessor [line items]
Current finance lease liabilities	4,013	4,206
Non-current finance lease liabilities	5,304	9,035
CAM Holding S A [member]
Disclosure of finance lease and operating lease by lessor [line items]
Current finance lease liabilities	6,240	3,729
Non-current finance lease liabilities	5,692	10,590
CONCARSA [member]
Disclosure of finance lease and operating lease by lessor [line items]
Current finance lease liabilities	1,777	3,667
Non-current finance lease liabilities	1,945	3,345
CAM Servicios Peru S A [member]
Disclosure of finance lease and operating lease by lessor [line items]
Current finance lease liabilities	687	0
Non-current finance lease liabilities	421
GMI SA [member]
Disclosure of finance lease and operating lease by lessor [line items]
Current finance lease liabilities	S/ 347	(8)
GMD SA [member]
Disclosure of finance lease and operating lease by lessor [line items]
Current finance lease liabilities		10,404
Non-current finance lease liabilities		S/ 12,099
Bottom of range [member] | GyM S A [member]
Disclosure of finance lease and operating lease by lessor [line items]
Interest rate	2.25%
Date of maturity	2018
Bottom of range [member] | Viva GyM SA [member]
Disclosure of finance lease and operating lease by lessor [line items]
Interest rate	7.30%
Date of maturity	2018
Bottom of range [member] | Adexus S A [member]
Disclosure of finance lease and operating lease by lessor [line items]
Interest rate	3.36%
Date of maturity	2018
Bottom of range [member] | GMP S.A. [member]
Disclosure of finance lease and operating lease by lessor [line items]
Interest rate	4.22%
Date of maturity	2018
Bottom of range [member] | CAM Holding S A [member]
Disclosure of finance lease and operating lease by lessor [line items]
Interest rate	3.01%
Date of maturity	2018
Bottom of range [member] | CONCARSA [member]
Disclosure of finance lease and operating lease by lessor [line items]
Interest rate	3.23%
Date of maturity	2018
Bottom of range [member] | CAM Servicios Peru S A [member]
Disclosure of finance lease and operating lease by lessor [line items]
Interest rate	6.79%
Date of maturity	2019
Bottom of range [member] | GMI SA [member]
Disclosure of finance lease and operating lease by lessor [line items]
Interest rate	5.56%
Bottom of range [member] | GMD SA [member]
Disclosure of finance lease and operating lease by lessor [line items]
Interest rate	4.99%
Top of range [member] | GyM S A [member]
Disclosure of finance lease and operating lease by lessor [line items]
Interest rate	8.96%
Date of maturity	2021
Top of range [member] | Viva GyM SA [member]
Disclosure of finance lease and operating lease by lessor [line items]
Interest rate	8.95%
Date of maturity	2022
Top of range [member] | Adexus S A [member]
Disclosure of finance lease and operating lease by lessor [line items]
Interest rate	18.00%
Date of maturity	2021
Top of range [member] | GMP S.A. [member]
Disclosure of finance lease and operating lease by lessor [line items]
Interest rate	4.98%
Date of maturity	2020
Top of range [member] | CAM Holding S A [member]
Disclosure of finance lease and operating lease by lessor [line items]
Interest rate	14.76%
Date of maturity	2022
Top of range [member] | CONCARSA [member]
Disclosure of finance lease and operating lease by lessor [line items]
Interest rate	4.70%
Date of maturity	2020
Top of range [member] | CAM Servicios Peru S A [member]
Disclosure of finance lease and operating lease by lessor [line items]
Interest rate	7.75%
Date of maturity	2020
Top of range [member] | GMI SA [member]
Disclosure of finance lease and operating lease by lessor [line items]
Interest rate	6.90%
Date of maturity	2018
Top of range [member] | GMD SA [member]
Disclosure of finance lease and operating lease by lessor [line items]
Interest rate	7.00%
Date of maturity	2017

XML

Other Financial Liabilities - Summary of Minimum Payment by Maturity (Detail) - PEN (S/) S/ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Disclosure of finance lease and operating lease by lessor [line items]
Minimum finance lease payments payable	S/ 139,401	S/ 259,771
Future financial charges on finance leases	(11,092)	(19,630)
Present value of the obligations for finance lease contracts	128,309	240,141
Maturity Period Less than One Year [member]
Disclosure of finance lease and operating lease by lessor [line items]
Minimum finance lease payments payable	72,864	127,496
Present value of the obligations for finance lease contracts	66,177	117,307
Maturity Period Greater than One and Less than Five Year [member]
Disclosure of finance lease and operating lease by lessor [line items]
Minimum finance lease payments payable	65,899	112,769
Present value of the obligations for finance lease contracts	61,501	105,978
Maturity Period Greater than Five Year [member]
Disclosure of finance lease and operating lease by lessor [line items]
Minimum finance lease payments payable	638	19,506
Present value of the obligations for finance lease contracts	S/ 631	S/ 16,856

XML

Other Financial Liabilities - Summary of Present Value of Finance Lease Obligations (Detail) - PEN (S/) S/ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Disclosure of finance lease and operating lease by lessor [line items]
Present value of finance lease obligations	S/ 128,309	S/ 240,141
Maturity Period Less than One Year [member]
Disclosure of finance lease and operating lease by lessor [line items]
Present value of finance lease obligations	66,177	117,307
Maturity Period Greater than One and Less than Five Year [member]
Disclosure of finance lease and operating lease by lessor [line items]
Present value of finance lease obligations	61,501	105,978
Maturity Period Greater than Five Year [member]
Disclosure of finance lease and operating lease by lessor [line items]
Present value of finance lease obligations	S/ 631	S/ 16,856

XML

Other Financial Liabilities - Summary of Carrying Amount and Fair Value of Borrowings (Detail) - PEN (S/) S/ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Carrying amount [member]
Disclosure of finance lease and operating lease by lessor [line items]
Carrying amount	S/ 1,690,063	S/ 2,380,438
Carrying amount [member] | Bank Overdrafts [member]
Disclosure of finance lease and operating lease by lessor [line items]
Carrying amount	120	8,396
Carrying amount [member] | Bank Loan [member]
Disclosure of finance lease and operating lease by lessor [line items]
Carrying amount	1,561,634	2,131,901
Carrying amount [member] | Finance Lease [Member]
Disclosure of finance lease and operating lease by lessor [line items]
Carrying amount	128,309	240,141
At fair value [member]
Disclosure of finance lease and operating lease by lessor [line items]
Carrying amount	1,768,160	2,391,375
At fair value [member] | Bank Overdrafts [member]
Disclosure of finance lease and operating lease by lessor [line items]
Carrying amount	120	8,396
At fair value [member] | Bank Loan [member]
Disclosure of finance lease and operating lease by lessor [line items]
Carrying amount	1,627,000	2,142,890
At fair value [member] | Finance Lease [Member]
Disclosure of finance lease and operating lease by lessor [line items]
Carrying amount	S/ 141,040	S/ 240,089

XML

Bonds - Summary of Bonds Issued (Detail) - PEN (S/) S/ in Thousands	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of detailed information about borrowings [line items]
Total	S/ 947,567	S/ 967,714
Current	36,655	46,091
Non-current	910,912	921,623
GyM Ferrovias S.A. [Member]
Disclosure of detailed information about borrowings [line items]
Total	603,657	604,031
Current	12,294	20,551
Non-current	591,363	583,480
Norvial S.A. [member]
Disclosure of detailed information about borrowings [line items]
Total	343,910	363,684	S/ 186,223
Current	24,361	25,541
Non-current	S/ 319,549	S/ 338,143

XML

Bonds - Additional Information (Detail) S/ in Millions, $ in Millions		1 Months Ended		12 Months Ended
	Aug. 23, 2017 USD ($)	Jul. 31, 2015 PEN (S/)	Feb. 28, 2015 PEN (S/)	Dec. 31, 2017 PEN (S/)	Dec. 31, 2016 PEN (S/)	Dec. 31, 2017 USD ($)	Jul. 25, 2016 PEN (S/)	Jan. 25, 2016 PEN (S/)	Dec. 31, 2015	Jul. 23, 2015 PEN (S/)
Disclosure of detailed information about borrowings [line items]
Maximum proforma gearing ratio				400.00%
Fair value of bonds				S/ 1,040.0	S/ 1,055.0
Mizuho Bank Ltd And Sumitomo Mitsui Banking Corporation [Member]
Disclosure of detailed information about borrowings [line items]
Working capital loan | $						$ 80
Top of range [member]
Disclosure of detailed information about borrowings [line items]
Interest rate				11.22%	8.90%	11.22%			9.50%
Top of range [member] | Concession Agreement [member]
Disclosure of detailed information about borrowings [line items]
Sale and purchase agreement | $	$ 316
Top of range [member] | Level 2 of fair value hierarchy [member]
Disclosure of detailed information about borrowings [line items]
Interest rate				13.80%	14.30%	13.80%
Discounted cash flows rates				6.63%	7.99%
Bottom of range [member]
Disclosure of detailed information about borrowings [line items]
Interest rate				7.00%	6.75%	7.00%			5.30%
Bottom of range [member] | Level 2 of fair value hierarchy [member]
Disclosure of detailed information about borrowings [line items]
Interest rate				2.40%	1.30%	2.40%
Discounted cash flows rates				4.49%	4.20%
GyM Ferrovias S.A. [Member]
Disclosure of detailed information about borrowings [line items]
Issue of corporate bonds			S/ 629.0
Costs of bonds issue			S/ 22.0
Maturity period of bonds			November 2039
Interest rate			4.75%
Bonds amortized				S/ 19.1	S/ 21.9
Accrued interest and VAC adjustments payable				S/ 52.3	S/ 34.5
Minimum debt service coverage ratio					120.00%
Norvial S.A. [member]
Disclosure of detailed information about borrowings [line items]
Costs of bonds issue		S/ 3.9
Minimum debt service coverage ratio				130.00%
Interest payables				S/ 4.4	S/ 4.9
Norvial S.A. [member] | Bonds six point seven five percentage [member]
Disclosure of detailed information about borrowings [line items]
Issue of corporate bonds		365.0
Costs of bonds issue		S/ 80.0
Maturity period of bonds		5 years
Interest rate		6.75%
Norvial S.A. [member] | BondsEightPointThreeSevenFivePercentage [member]
Disclosure of detailed information about borrowings [line items]
Costs of bonds issue		S/ 285.0
Maturity period of bonds		11.5 years
Interest rate		8.375%
Disbursement amount							S/ 80.0	S/ 100.0		S/ 105.0

XML

Bonds - Rollforwards of Bonds (Detail) - PEN (S/) S/ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure of detailed information about borrowings [line items]
Balances as of January 1	S/ 967,714
Balances as of December 31	947,567	S/ 967,714
Less : non current portion	(36,655)	(46,091)
Long term - bonds	910,912	921,623
Norvial S.A. [member]
Disclosure of detailed information about borrowings [line items]
Balances as of January 1	363,684	186,223
Additions		179,977
Transaction cost applied to additions		(1,099)
Amortization	(20,010)	(3,369)
Transaction cost applied to amortization	195	265
Accrued interest	2,789	3,332
Capitalized interest	26,014	22,002
Interest paid	(28,567)	(23,382)
Transaction cost applied to paid interest	(195)	(265)
Balances as of December 31	343,910	363,684
Less : non current portion	(24,361)	(25,541)
Long term - bonds	S/ 319,549	S/ 338,143

XML

Trade Accounts Payable - Summary of Trade Accounts Payable (Detail) - PEN (S/) S/ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Disclosure Of Trade Accounts Payable [line items]
Unbilled services received	S/ 132,513	S/ 924,025
Invoices payable	1,250,586	350,559
Notes payable	69,947	2,033
Trade accounts payable	S/ 1,453,046	S/ 1,276,617

XML

Trade Accounts Payable - Additional Information (Detail) - PEN (S/) S/ in Millions	Dec. 31, 2017	Dec. 31, 2016
Disclosure Of Trade Accounts Payable [line items]
Unbilled services received include the estimate made by Management of the valuation of the percentage of completion	S/ 132.5	S/ 127.2

XML

Other Accounts Payable - Summary of Other Accounts Payable (Detail) S/ in Thousands, $ in Millions	Dec. 31, 2017 PEN (S/)	Dec. 31, 2017 USD ($)	Dec. 31, 2016 PEN (S/)	Dec. 31, 2016 USD ($)
Disclosure Of Other Payables [line items]
Advances received from customers	S/ 726,294		S/ 810,755
Salaries and profit sharing payable	246,916		176,022
GSP performance guarantee (Note 16-a-i)		$ 202.2	176,401	$ 330.5
Put option liability on Morelco acquisition	105,418		110,604
Third-party loans	107,314		69,991
Other taxes payable	69,584		50,548
VAT payable	48,095		65,777
Acquisition of non-controlling interest (Note 36-a)	22,407		32,102
Supplier funding	14,886		40,612
Guarantee deposits	15,580		16,799
Post-retirement benefits	8,914		9,088
Other accounts payables	50,013		50,411
Other payables	1,700,973		1,609,110
Advances received from customers, current	316,891		510,367
Salaries and profit sharing payable, current	246,916		176,022
GSP performance guarantee (Note 16-a-i), current			176,401
Put option liability on Morelco acquisition, current	0		0
Third-party loans, current	75,256		37,991
Other taxes payable, current	69,584		50,548
VAT payable, current	37,544		53,678
Acquisition of non-controlling interest (Note 36-a), current	22,407		32,102
Supplier funding, current			26,526
Guarantee deposits, current	15,580		16,799
Post-retirement benefits, current	0		0
Other accounts payables, current	28,791		15,873
Other payables, current	848,500		1,096,307
Advances received from customers, not current	409,403		300,388
Payables related parties, not current	25,954		65,320
Put option liability on Morelco acquisition, not current	105,418		110,604
Third-party loans, not current	32,058		32,000
Other taxes payable, not current	0		0
VAT payable, not current	10,551		12,099
Supplier funding, not current	14,886		14,086
Guarantee deposits, not current	0		0
Post-retirement benefits, not current	8,914		9,088
Other accounts payables, not current	21,222		34,538
Other payables, not current	852,473		S/ 512,803
Consorcio Ductos del Sur [Member]
Disclosure Of Other Payables [line items]
Payables related parties	250,021
Payables related parties, not current	250,021
Consorcio Rio Mantaro [member]
Disclosure Of Other Payables [line items]
Payables related parties	35,531
Payables related parties, current	S/ 35,531

XML

OTHER ACCOUNTS PAYABLE- Additional Information (Detail) S/ in Millions	Dec. 31, 2017 PEN (S/)
Construction contracts 1 [member]
Disclosure Of Other Payables [line items]
Payment obligations to main subcontractors as a consequence of termination of GSP operations	S/ 237

XML

Provisions - Summary of Other Provisions (Detail) - PEN (S/) S/ in Thousands	Dec. 31, 2017	Dec. 31, 2016
Disclosure of other provisions [line items]
Provisions	S/ 47,417	S/ 41,073
Provisions, current	13,503	14,531
Provisions, no current	33,914	26,542
Legal proceedings provision [member]
Disclosure of other provisions [line items]
Provisions	23,364	15,733
Provisions, current	12,220	13,303
Provisions, no current	11,144	2,430
Contingent liabilities [member] | Morelco SAS [member]
Disclosure of other provisions [line items]
Provisions	4,224	5,182
Provisions, no current	4,224	5,182
Contingent liabilities [member] | Coasin and Vialy Vives-DSD [member]
Disclosure of other provisions [line items]
Provisions	1,839	1,815
Provisions, no current	1,839	1,815
Contingent liabilities [member] | Adexus S A [member]
Disclosure of other provisions [line items]
Provisions	1,186	1,128
Provisions, current	1,186	1,128
Provision for decommissioning, restoration and rehabilitation costs [member]
Disclosure of other provisions [line items]
Provisions	16,804	17,215
Provisions, current	97	100
Provisions, no current	S/ 16,707	S/ 17,115

XML

Provisions - Additional Information (Detail) - PEN (S/) S/ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of other provisions [line items]
Other provisions	S/ 47,417	S/ 41,073	S/ 60,928
Reversals	(1,456)	(30,847)
Legal proceedings provision [member]
Disclosure of other provisions [line items]
Other provisions	23,364	15,732	15,000
Reversals	(235)	(10,569)
Legal proceedings provision [member] | Provisions for labor, taxes and civil [Member]
Disclosure of other provisions [line items]
Other provisions	19,300	14,700
Legal proceedings provision [member] | Environmental laws and regulations [member]
Disclosure of other provisions [line items]
Other provisions	5,100	6,300
Contingent liabilities [member]
Disclosure of other provisions [line items]
Other provisions	7,249	8,125	S/ 26,779
Reversals	(809)	(17,883)
Contingent liabilities [member] | Morelco [member]
Disclosure of other provisions [line items]
Reversals	S/ 800	10,100
Contingent liabilities [member] | V y V - DSD S.A. [member]
Disclosure of other provisions [line items]
Reversals		4,000
Contingent liabilities [member] | CAM Acquisition [member]
Disclosure of other provisions [line items]
Reversals		S/ 3,800

XML

Provisions - Summary Gross Movement of Other Provisions (Detail) - PEN (S/) S/ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016
Disclosure of other provisions [line items]
Beginning balance	S/ 41,073	S/ 60,928
Additions	9,510	9,948
Acquisition of subsidiaries		3,075
Reversals of provisions	(1,456)	(30,847)
Payments	(1,680)	(2,756)
Translation adjustments	(30)	725
Ending balance	47,417	41,073
Legal proceedings provision [member]
Disclosure of other provisions [line items]
Beginning balance	15,732	15,000
Additions	9,510	9,486
Acquisition of subsidiaries		1,926
Reversals of provisions	(235)	(10,569)
Payments	(1,680)	(298)
Translation adjustments	37	187
Ending balance	23,364	15,732
Contingent liabilities [member]
Disclosure of other provisions [line items]
Beginning balance	8,125	26,779
Acquisition of subsidiaries		1,149
Reversals of provisions	(809)	(17,883)
Payments		(2,458)
Translation adjustments	(67)	538
Ending balance	7,249	8,125
Provision for decommissioning, restoration and rehabilitation costs [member]
Disclosure of other provisions [line items]
Beginning balance	17,216	19,149
Additions		462
Reversals of provisions	(412)	(2,395)
Ending balance	S/ 16,804	S/ 17,216

XML

Equity - Additional Information (Detail) - PEN (S/) S/ / shares in Units, S/ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Disclosure of classes of share capital [line items]
Number of equity shares per American Depository Shares		S/ 5
Quoted share price	S/ 1.87	S/ 4.70
Trading frequency, percentage	100.00%	97.60%
Percentage of net profit transferred to legal reserve	10.00%
Maximum allowed percentage to legal reserve to paid-in capital	20.00%
Voluntary reserve	S/ 29,970	S/ 29,970
Nominal value of share issued	S/ 660,054	S/ 660,054			S/ 1,055,488
Dividend rate percentage		6.80%	6.80%	4.10%
2017 and Onwards [member]
Disclosure of classes of share capital [line items]
Dividend rate percentage	5.00%
Ordinary shares [member]
Disclosure of classes of share capital [line items]
Number of shares authorized	660,053,790	660,053,790
Par value per share	S/ 1.00	S/ 1.00
Number of shares	259,302,745	264,809,545
American depository shares [member]
Disclosure of classes of share capital [line items]
Number of shares	51,860,549	52,961,909

XML

Equity - Summary of Company's Shareholding Structure (Detail)	12 Months Ended
	Dec. 31, 2017
Disclosure of classes of share capital [line items]
Number of shareholders	2,076
Total percentage of interest	100.00%
Upto one percent [member]
Disclosure of classes of share capital [line items]
Number of shareholders	2,062
Total percentage of interest	14.22%
From one point zero one percent to five percent [member]
Disclosure of classes of share capital [line items]
Number of shareholders	11
Total percentage of interest	23.57%
From five point zero one percent to ten percent [member]
Disclosure of classes of share capital [line items]
Number of shareholders	1
Total percentage of interest	5.12%
Over Ten Percent [member]
Disclosure of classes of share capital [line items]
Number of shareholders	2
Total percentage of interest	57.09%

XML

Deferred Income Tax - Summary of Deferred Income Tax (Detail) - PEN (S/) S/ in Thousands	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Disclosure of deferred income taxes [Line Items]
Deferred income tax asset	S/ 436,697	S/ 427,008
Deferred income tax liability	(72,472)	(73,169)
Deferred income tax asset, net	364,225	353,839	S/ 48,682	S/ 58,723
Less than1 year [member]
Disclosure of deferred income taxes [Line Items]
Deferred income tax asset	73,883	86,990
Deferred income tax liability	(5,583)	(166)
Later than one year [member]
Disclosure of deferred income taxes [Line Items]
Deferred income tax asset	362,814	340,018
Deferred income tax liability	S/ (66,889)	S/ (73,003)

XML

Deferred Income Tax - Summary of Gross Movement of Deferred Income Tax Item (Detail) - PEN (S/) S/ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of deferred income taxes [Line Items]
Beginning balance	S/ 353,839	S/ 48,682	S/ 58,723
Credit to income statement (Note 30)	42,779	263,806	(175)
Adjustment for changes in rates of income tax	1,951	17,105	(2,008)
Credit (charge) to other comprehensive income		15,004	(7,298)
Tax charged to equity		159
Acquisition of a subsidiary	(12,340)	10,363
Acquisition of joint operation	(16,804)		1,476
Other movements	(5,200)	(1,280)	(2,036)
Ending balance	S/ 364,225	S/ 353,839	S/ 48,682

XML

Deferred Income Tax - Summary of Movements of Deferred Tax Assets and Liabilities (Detail) - PEN (S/) S/ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Beginning balance	S/ 353,839	S/ 48,682	S/ 58,723
(Charge) credit to P&L	42,779	263,806	(175)
Charge (credit) to equity		159
(Charge) credit to OCI		15,004	(7,298)
Acquisition of subsidiary	(12,340)	10,363
Ending balance	364,225	353,839	48,682
Non-taxable income [member]
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Beginning balance			14,190
Reclassification of prior years			(14,190)
Difference in depreciation rates [member]
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Beginning balance	61,750	45,155	36,515
(Charge) credit to P&L	104,101	16,595	2,791
Reclassification of prior years			5,849
Ending balance	165,851	61,750	45,155
Fair value gains [member]
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Beginning balance		30,684	13,732
(Charge) credit to P&L		13,587	15,338
(Charge) credit to OCI		(15,348)	7,016
Reclassification of prior years		(28,923)	(5,402)
Ending balance			30,684
Deferred income tax liability work in process [Member]
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Beginning balance	8,242	24,723	14,368
(Charge) credit to P&L	(5,712)	(16,481)	16,393
Reclassification of prior years			(6,038)
Ending balance	2,530	8,242	24,723
Difference in depreciation rates of assets leased [member]
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Beginning balance			10,445
Reclassification of prior years			(10,445)
Receivables from local Governement [member]
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Beginning balance	28,867	25,543
(Charge) credit to P&L	3,322	3,324	9,986
Reclassification of prior years			15,557
Ending balance	32,189	28,867	25,543
Capitalized Financing Cost [member]
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Beginning balance	21,418	15,178
(Charge) credit to P&L	(1,473)	6,240	15,178
Ending balance	19,945	21,418	15,178
Purchase price allocation [member]
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Beginning balance	27,118
(Charge) credit to P&L	(11,780)
Reclassification of prior years		30,187
Ending balance	15,338	27,118
Purchase price allocation [member] | Adexus S A [member]
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Acquisition of subsidiary		(3,069)
Others [Member]
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Beginning balance	13,163	11,808	21,534
(Charge) credit to P&L	(3,724)	2,619	1,347
(Charge) credit to OCI			281
Reclassification of prior years		(1,264)	(11,354)
Sale of subsidiary (GMD S.A.)	(81)
Ending balance	9,358	13,163	11,808
Deferred Tax Liabilities [Member]
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Beginning balance	160,559	153,093	110,784
(Charge) credit to P&L	84,734	25,883	61,032
(Charge) credit to OCI		(15,348)	7,297
Reclassification of prior years			(26,020)
Sale of subsidiary (GMD S.A.)	(81)
Ending balance	245,211	160,559	153,093
Deferred Tax Liabilities [Member] | Adexus S A [member]
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Acquisition of subsidiary		(3,069)
Provisions [member]
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Beginning balance	105,679	20,949	25,806
(Charge) credit to P&L	(12,614)	84,571	342
Charge (credit) to equity	(8,882)	159
Others	(160)
Reclassification of prior years	(30,901)		(5,199)
Sale of subsidiary (GMD S.A.)	(683)
Ending balance	52,439	105,679	20,949
Accelerated tax depreciation [member]
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Beginning balance	16,381	14,892	23,350
(Charge) credit to P&L	79,637	1,489	4,076
Reclassification of prior years			(12,534)
Sale of subsidiary (GMD S.A.)	(9,367)
Ending balance	86,651	16,381	14,892
Tax losses [member]
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Beginning balance	153,083	91,313	59,036
(Charge) credit to P&L	(8,555)	51,163	26,661
Others	(1)
Reclassification of prior years			5,615
Sale of subsidiary (GMD S.A.)	(438)
Ending balance	144,089	153,083	91,313
Tax losses [member] | Adexus S A [member]
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Acquisition of subsidiary		10,607
Deferred income tax asset work in process [Member]
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Beginning balance	17,614	24,103	23,941
(Charge) credit to P&L	21,873	(6,489)	18,623
Reclassification of prior years			(19,544)
Ending balance	39,487	17,614	24,103
Accrual for unpaid vacations [member]
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Beginning balance	12,972	14,977	16,973
(Charge) credit to P&L	2,166	(2,005)	772
Others	(1)
Reclassification of prior years			(2,768)
Sale of subsidiary (GMD S.A.)	(1,697)
Ending balance	13,440	12,972	14,977
Investments in subsidiaries [member]
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Beginning balance	608	1,476	11,769
(Charge) credit to P&L	118	(312)	(13,832)
Charge (credit) to equity	0
Others		(556)
Reclassification of prior years	(726)		2,063
Ending balance	0	608	1,476
Impairment [Member]
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Beginning balance	172,052
(Charge) credit to P&L	28,593	172,052
Charge (credit) to equity	(7,493)
Others	1
Reclassification of prior years	31,627
Ending balance	224,780	172,052
Tax goodwill [member]
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Beginning balance	20,525	17,522
(Charge) credit to P&L	(112)	3,003	17,522
Ending balance	20,413	20,525	17,522
Other [Member]
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Beginning balance	15,487	16,463	8,636
(Charge) credit to P&L	18,358	3,322	4,646
Charge (credit) to equity	(347)
(Charge) credit to OCI		(343)
Others	(5,123)	(724)
Reclassification of prior years			5,623
Sale of subsidiary (GMD S.A.)	(236)
Ending balance	28,139	15,487	16,463
Other [Member] | Adexus S A [member]
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Acquisition of subsidiary		(3,313)
Deferred Tax Asset [Member]
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Beginning balance	514,398	201,775	169,511
(Charge) credit to P&L	129,464	306,794	58,810
Charge (credit) to equity	(16,722)	159
(Charge) credit to OCI		(343)
Others	(5,284)	(1,280)
Reclassification of prior years			(26,744)
Sale of subsidiary (GMD S.A.)	(12,421)
Ending balance	S/ 609,435	514,398	S/ 201,775
Deferred Tax Asset [Member] | Adexus S A [member]
Disclosure of temporary difference, unused tax losses and unused tax credits [line items]
Acquisition of subsidiary		S/ 7,294

XML

Deferred Income Tax - Additional Information (Detail) S/ in Millions	Dec. 31, 2017 PEN (S/)
Disclosure of deferred income taxes [Line Items]
Tax losses	S/ 494.8
Later than one year [member]
Disclosure of deferred income taxes [Line Items]
Tax losses	83.9
From 1 to 2 years [member]
Disclosure of deferred income taxes [Line Items]
Tax losses	S/ 10.3

XML

Workers Profit Sharing - Summary of Workers Profit Sharing (Detail) - PEN (S/) S/ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure Of Workers Profit Sharing [Line items]
Workers profit sharing	S/ 14,093	S/ 15,693	S/ 33,972
Cost of sales of goods and services [member]
Disclosure Of Workers Profit Sharing [Line items]
Workers profit sharing	6,531	15,234	27,618
Administrative expenses [member]
Disclosure Of Workers Profit Sharing [Line items]
Workers profit sharing	S/ 7,562	S/ 1,297	S/ 7,263

XML

Expenses by Nature - Summary of Information about Expense by Nature (Detail) - PEN (S/) S/ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Expense by Nature [Line Items]
Salaries, wages and fringe benefits	S/ 1,820,523	S/ 1,641,001	S/ 2,232,951
Depreciation	199,794	205,522	217,071
Amortization of intangibles	86,557	82,743	89,355
Cost of goods and services [member]
Expense by Nature [Line Items]
Services provided by third-parties	1,674,731	2,317,589	2,915,682
Salaries, wages and fringe benefits	1,615,278	1,423,664	2,033,316
Purchase of goods	1,136,616	901,473	1,072,900
Impairment of accounts receivable	703	419,584	13,180
Other management charges	656,875	267,011	629,799
Depreciation	178,209	177,699	186,661
Amortization of intangibles	74,515	66,862	74,187
Impairment (inventories and accounts receivable)	40,908	36,137
Taxes	14,860	13,740	37,129
Impairment of property, plant and equipment	14,660	9,263	7,063
Expenses, by nature, Total	5,407,355	5,633,022	6,969,917
Administrative expenses [member]
Expense by Nature [Line Items]
Services provided by third-parties	121,508	121,294	135,636
Salaries, wages and fringe benefits	205,245	217,337	199,635
Purchase of goods	140		7,369
Impairment of accounts receivable	18,406
Other management charges	54,201	24,122	23,873
Depreciation	13,224	11,317	16,711
Amortization of intangibles	8,227	6,685	6,489
Taxes	8,210	1,638	1,919
Impairment of property, plant and equipment	20		2,591
Expenses, by nature, Total	S/ 429,181	S/ 382,393	S/ 394,223

XML

Expenses by Nature - Summary of Wages, Salaries and Fringe Benefits (Detail) - PEN (S/) S/ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Expense by Nature [Line Items]
Salaries	S/ 1,304,893	S/ 1,233,272	S/ 1,728,410
Social contributions	128,046	139,423	164,965
Statutory bonuses	155,206	92,418	129,909
Employee's severance indemnities	99,011	64,421	91,958
Vacations	74,759	58,411	72,719
Worker's profit sharing (Note 26)	14,093	15,693	33,972
Others	44,515	37,363	11,018
Total	S/ 1,820,523	S/ 1,641,001	S/ 2,232,951

XML

Financial Income and Expenses - Summary of Financial Income and Expenses (Detail) - PEN (S/) S/ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Financial income:
Interest on short-term bank deposits	S/ 5,133	S/ 9,193	S/ 12,076
Interest on loans to third parties	635	6,142	19,749
Commissions and collaterals	12	4	3,026
Exchange rate gain, net	6,292
Others	3,335	5,306	2,785
Finance income	15,407	20,645	37,636
Interest expense:
- Bank loans	109,366	97,953	56,974
- Bonds	28,804	25,352	3,350
- Financial lease	9,748	12,138	13,167
- Commissions and collaterals	15,648	9,166	8,574
- Loans from third parties	7,569	264	2,868
- Loans from related parties		3,452	556
Exchange difference loss, net		12,527	82,851
Derivative financial instruments	739	1,248	1,691
Loss by measurement of financial asset fair value	8,059	76,864
Other financial expenses	37,420	18,134	11,205
Less capitalized interest	(31,908)	(35,434)	(13,153)
Finance costs	S/ 185,445	S/ 221,664	S/ 168,083

XML

Other Income and Expenses, Net - Summary of Other Income and Expenses, Net (Detail) - PEN (S/) S/ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Other income:
Sales of fixed assets	S/ 119,554	S/ 39,774	S/ 25,690
Reversal of legal and tax provisions	79	18,778	7,796
Legal indemnities		8,957
Sale of investments held for sale		46	60
Disposal of non-current assets classified as held for sale			8,775
Present value of the liability from put option			18,627
Others	15,449	18,574	18,434
Other Income	135,082	86,129	79,382
Other expenses:
Impairment of goodwill and trademarks	49,608	54,308
Net cost of fixed assets disposal	95,541	31,247	15,669
Loss on remeasurement of previously held interest (Note 33-a)		6,832
Present value of the liability from put option		984
Cost of sales of non-current assets classified as held for sale			8,945
Others	10,478	6,132	184
Other expense by nature	155,627	99,503	24,798
Other expenses	S/ (20,545)	S/ (13,374)	S/ 54,584

XML

Tax Situation - Additional Information (Detail) S/ in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018 PEN (S/)	Dec. 31, 2018 COP ($)	Dec. 31, 2017 PEN (S/)	Dec. 31, 2016 PEN (S/)	Dec. 31, 2015 PEN (S/)	Dec. 31, 2014
Disclosure of Income Tax [Line items]
Unrecognized deferred income tax assets				S/ 30,600	S/ 5,000
Unrecognized deferred tax asset income (expense)				1,562	(4,535)	S/ 31,432
Current income tax payable				167,154	169,428	S/ 135,036
PICSA [Member]
Disclosure of Income Tax [Line items]
Current income tax payable				22,000
Viva GyM SA [member]
Disclosure of Income Tax [Line items]
Current income tax payable				22,000
GMH [Member]
Disclosure of Income Tax [Line items]
Current income tax payable				S/ 7,000
Consorcio Constructor Ductos del Sur [member]
Disclosure of Income Tax [Line items]
Current income tax payable					14,900
Consorcio AMDP [member]
Disclosure of Income Tax [Line items]
Current income tax payable					9,300
Terminales del Peru [member]
Disclosure of Income Tax [Line items]
Current income tax payable					3,600
Concar [member]
Disclosure of Income Tax [Line items]
Current income tax payable					S/ 3,300
Peru (member)
Disclosure of Income Tax [Line items]
Income tax rate				29.50%	28.00%	28.00%	30.00%
Tax on dividends and other forms of profit distribution					6.80%	4.10%
Tax rate applicable to net assets exceeding S/1 million				0.40%
Peru (member) | Changes in tax rates or tax laws enacted or announced Effective 2017 Onwards [member]
Disclosure of Income Tax [Line items]
Income tax rate					29.50%
Tax on dividends and other forms of profit distribution					5.00%
Percentage of undistributed profit income tax rate					6.80%
Peru (member) | Changes in tax rates or tax laws enacted or announced [member]
Disclosure of Income Tax [Line items]
Income tax rate				27.00%
Tax on dividends and other forms of profit distribution				8.80%
Peru (member) | Scenario, Forecast [Member] | Changes in tax rates or tax laws enacted or announced [member]
Disclosure of Income Tax [Line items]
Income tax rate	26.00%	27.00%	27.00%
Tax on dividends and other forms of profit distribution	9.30%	8.80%	8.80%
Chile (member)
Disclosure of Income Tax [Line items]
Income tax rate				25.50%	24.00%	22.50%
Chile (member) | Attributed Income System [Member]
Disclosure of Income Tax [Line items]
Income tax rate					24.00%	22.50%	21.00%
Chile (member) | Partially Integrated System [Member]
Disclosure of Income Tax [Line items]
Income tax rate					24.00%	22.50%	21.00%
Chile (member) | Changes in tax rates or tax laws enacted or announced [member] | Attributed Income System [Member]
Disclosure of Income Tax [Line items]
Income tax rate				25.00%
Chile (member) | Changes in tax rates or tax laws enacted or announced [member] | Partially Integrated System [Member]
Disclosure of Income Tax [Line items]
Income tax rate				25.50%
Percentage of tax credit on distributions				65.00%
Chile (member) | Scenario, Forecast [Member] | Changes in tax rates or tax laws enacted or announced [member] | Partially Integrated System [Member]
Disclosure of Income Tax [Line items]
Income tax rate		27.00%	27.00%
Colombia (member)
Disclosure of Income Tax [Line items]
Income tax rate				40.00%	40.00%	39.00%
Tax loss compensating period				12 years
Special rate on dividends and interests					5.00%
Statute of limitation period				3 years
Colombia (member) | Bottom of range [member]
Disclosure of Income Tax [Line items]
VAT rate					16.00%
Colombia (member) | Top of range [member]
Disclosure of Income Tax [Line items]
VAT rate					19.00%
Colombia (member) | Qualified for transfer prices fillings [member]
Disclosure of Income Tax [Line items]
Statute of limitation period				6 years
Colombia (member) | Tax losses [member] | Bottom of range [member]
Disclosure of Income Tax [Line items]
Statute of limitation period				12 years
Colombia (member) | Tax losses [member] | Top of range [member]
Disclosure of Income Tax [Line items]
Statute of limitation period				15 years
Colombia (member) | Changes in tax rates or tax laws enacted or announced [member]
Disclosure of Income Tax [Line items]
Effective tax rate				34.00%
Effective tax rate, temporary overrate				6.00%
Tax rate effect of tax losses				3.50%	3.00%
Colombia (member) | Scenario, Forecast [Member] | Changes in tax rates or tax laws enacted or announced [member]
Disclosure of Income Tax [Line items]
Effective tax rate		33.00%	33.00%
Effective tax rate, temporary overrate		4.00%	4.00%
Taxable income		S/ 895	$ 800

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Tax Situation - Summary of Income Tax Expense (Detail) - PEN (S/) S/ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of income tax expense benefit [line Items]
Current income tax	S/ 167,154	S/ 169,428	S/ 135,036
Deferred income tax (Note 25)	(44,730)	(280,911)	2,222
PPUA	613	(7,789)	(41,359)
Income tax expense	S/ 123,037	S/ (119,272)	S/ 95,899

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Tax Situation - Summary of Weighted-Average Income Tax Rate Applicable To Profit (Detail) - PEN (S/) S/ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Reconciliation of Accounting Profit Multiplied by Applicable Tax Rates [Line Items]
Profit (loss) before income tax	S/ 328,712	S/ (582,865)	S/ 142,446
Income tax by applying local applicable tax rates on profit generated in the respective countries	98,902	(164,742)	51,503
Non-taxable income	(7,281)	(1,068)	(31,266)
Equity method (profit) loss	392	3,673	2,171
Non-deductibleexpenses	27,901	57,044	9,831
Unrecognized deferred tax asset income (expense)	1,562	(4,535)	31,432
Adjustment for changes in rates of income tax	(1,951)	(17,105)	2,008
PPUA adjustment for changes in tax rates	(611)	4,871	15,296
Change in prior years estimations	12,200	(181)	12,762
Others, net	(8,077)	2,771	2,162
Income tax charge	S/ 123,037	S/ (119,272)	S/ 95,899

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Tax Situation - Summary of Weighted Average Pre-tax Profit or Loss and Applicable Income Tax Rate (Detail) - PEN (S/) S/ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Disclosure of weighted average pre-tax profit or loss and applicable income tax rate [line items]
Pre - tax profit	S/ 328,712	S/ (582,865)	S/ 142,446
Tax at tatutory tax rate	S/ 98,902	S/ (164,742)	S/ 51,503
Peru (member)
Disclosure of weighted average pre-tax profit or loss and applicable income tax rate [line items]
Statutory tax rate	29.50%	28.00%	28.00%	30.00%
Pre - tax profit	S/ 730,980	S/ (1,098,327)	S/ 174,432
Tax at tatutory tax rate	S/ 215,639	S/ (307,532)	S/ 48,841
Peru Norvial [member]
Disclosure of weighted average pre-tax profit or loss and applicable income tax rate [line items]
Statutory tax rate	27.00%	27.00%	27.00%
Pre - tax profit	S/ 68,104	S/ 63,583	S/ 54,471
Tax at tatutory tax rate	S/ 18,388	S/ 17,167	S/ 14,707
Peru Gy M Ferrovias [member]
Disclosure of weighted average pre-tax profit or loss and applicable income tax rate [line items]
Statutory tax rate	30.00%	30.00%	30.00%
Pre - tax profit	S/ 29,028	S/ 34,760	S/ 26,954
Tax at tatutory tax rate	S/ 8,708	S/ 10,428	S/ 8,086
Peru Vesur [member]
Disclosure of weighted average pre-tax profit or loss and applicable income tax rate [line items]
Statutory tax rate	30.00%	30.00%	30.00%
Pre - tax profit	S/ 779	S/ 888	S/ 2,336
Tax at tatutory tax rate	S/ 234	S/ 267	S/ 701
Peru GMP [member]
Disclosure of weighted average pre-tax profit or loss and applicable income tax rate [line items]
Statutory tax rate	29.00%	30.00%	30.00%
Pre - tax profit	S/ 20,941	S/ 8,602	S/ 15,007
Tax at tatutory tax rate	S/ 6,073	S/ 2,581	S/ 4,502
Chile (member)
Disclosure of weighted average pre-tax profit or loss and applicable income tax rate [line items]
Statutory tax rate	25.50%	24.00%	22.50%
Pre - tax profit	S/ (128,734)	S/ (86,151)	S/ (95,284)
Tax at tatutory tax rate	S/ (32,827)	S/ (20,676)	S/ (21,439)
Colombia (member)
Disclosure of weighted average pre-tax profit or loss and applicable income tax rate [line items]
Statutory tax rate	40.00%	40.00%	39.00%
Pre - tax profit	S/ (27,970)	S/ (25,555)	S/ 40,900
Tax at tatutory tax rate	S/ (11,188)	S/ (10,222)	S/ 15,951
Bolivia (member)
Disclosure of weighted average pre-tax profit or loss and applicable income tax rate [line items]
Statutory tax rate	25.00%	25.00%	25.00%
Pre - tax profit	S/ (2,897)	S/ (703)	S/ (57,382)
Tax at tatutory tax rate	(724)	(176)	(14,345)
Unrealized Gain (Loss) [member]
Disclosure of weighted average pre-tax profit or loss and applicable income tax rate [line items]
Pre - tax profit	(361,519)	520,038	(6,818)
Tax at tatutory tax rate	(105,401)	143,421	(2,371)
Utility [member]
Disclosure of weighted average pre-tax profit or loss and applicable income tax rate [line items]
Pre - tax profit	328,712	(582,865)	154,616
Tax at tatutory tax rate	S/ 98,902	S/ (164,742)	S/ 54,631

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Accumulated other Comprehensive Income - Summary of Accumulated Other Comprehensive Income Loss (Detail) - PEN (S/) S/ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of analysis of other comprehensive income by item [line items]
Beginning balance	S/ 2,489,737	S/ 3,081,912	S/ 3,173,707
Tax effects		15,004	(7,298)
Ending balance	2,589,078	2,489,737	3,081,912
Reserve of cash flow hedges [member]
Disclosure of analysis of other comprehensive income by item [line items]
Beginning balance	(87)	(926)	(1,613)
(Charge) credit for the year	650	1,190	954
Tax effects	(192)	(351)	(267)
Other comprehensive income of the year	458	839	687
Ending balance	371	(87)	(926)
Reserve of exchange differences on translation [member]
Disclosure of analysis of other comprehensive income by item [line items]
Beginning balance	(54,556)	(64,441)	(19,030)
(Charge) credit for the year	(9,166)	9,885	(45,411)
Other comprehensive income of the year	(9,166)	9,885	(45,411)
Ending balance	(63,722)	(54,556)	(64,441)
Reserve of gains and losses on remeasuring available-for-sale financial assets [member]
Disclosure of analysis of other comprehensive income by item [line items]
Beginning balance	7,461	51,142	31,169
(Charge) credit for the year		(3,149)	26,991
Tax effects		929	(7,018)
Transfer to profit or loss (Note 10)		(41,461)
Other comprehensive income of the year		(43,681)	19,973
Ending balance	7,461	7,461	51,142
Reserve of change in value of foreign currency basis spreads [member]
Disclosure of analysis of other comprehensive income by item [line items]
Beginning balance	(8,455)	(17,740)	(12,602)
(Charge) credit for the year	9,222	10,965	(6,942)
Tax effects	(2,729)	(3,243)	1,804
Transfer to profit or loss (Note 10)		1,563
Other comprehensive income of the year	6,493	9,285	(5,138)
Ending balance	(1,962)	(8,455)	(17,740)
Accumulated other comprehensive income [member]
Disclosure of analysis of other comprehensive income by item [line items]
Beginning balance	(55,637)	(31,965)	(2,076)
(Charge) credit for the year	706	18,891	(24,408)
Tax effects	(2,921)	(2,665)	(5,481)
Transfer to profit or loss (Note 10)		(39,898)
Other comprehensive income of the year	(2,215)	(23,672)	(29,889)
Ending balance	S/ (57,852)	S/ (55,637)	S/ (31,965)

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Accumulated other Comprehensive Income - Summary of Other Comprehensive Income Loss (Detail) - PEN (S/) S/ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of analysis of other comprehensive income by item [line items]
Other comprehensive Income	S/ (8,280)	S/ (20,599)	S/ (48,044)
Equity attributable to owners of parent [member]
Disclosure of analysis of other comprehensive income by item [line items]
Other comprehensive Income	(2,215)	(23,672)	(29,889)
Non-controlling interests [member]
Disclosure of analysis of other comprehensive income by item [line items]
Other comprehensive Income	(3,117)	4,194	(15,235)
Reserve of remeasurements of defined benefit plans [member]
Disclosure of analysis of other comprehensive income by item [line items]
Other comprehensive Income	S/ (2,948)	S/ (1,121)	S/ (2,921)

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Contingencies Commitments and Guarantees - Additional Information (Detail) S/ in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2017 PEN (S/)	Dec. 31, 2016 PEN (S/)	Dec. 31, 2015 PEN (S/)	Dec. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)
Disclosure of commitments and contingencies [Line Items]
Payment of debt	S/ 31,286	S/ 650	S/ 18,516
Performance bonds amount | $				$ 959,700	$ 1,258,500
Performance guarantee amount		176,401		$ 202,200	$ 330,500
Civil lawsuits [member]
Disclosure of commitments and contingencies [Line Items]
Contingent liabilities	90,380
Labor lawsuits [member]
Disclosure of commitments and contingencies [Line Items]
Contingent liabilities		6,130
Contentious administrative lawsuits [member]
Disclosure of commitments and contingencies [Line Items]
Contingent liabilities	10,260
GMD SA [member] | Labor lawsuits [member]
Disclosure of commitments and contingencies [Line Items]
Contingent liabilities		60
GyM S A [member] | Civil lawsuits [member]
Disclosure of commitments and contingencies [Line Items]
Contingent liabilities	90
GyM S A [member] | Labor lawsuits [member]
Disclosure of commitments and contingencies [Line Items]
Contingent liabilities		2,930
CONCARSA [member] | Civil lawsuits [member]
Disclosure of commitments and contingencies [Line Items]
Contingent liabilities	120
Viva GyM SA [member] | Tax contingent liability [member] | Top of range [member]
Disclosure of commitments and contingencies [Line Items]
Contingent liabilities	1,500
Viva GyM SA [member] | Civil lawsuits [member]
Disclosure of commitments and contingencies [Line Items]
Contingent liabilities	90,250
GMP S.A. [member] | Administrative lawsuits [member]
Disclosure of commitments and contingencies [Line Items]
Contingent liabilities		3,820
GMP S.A. [member] | Contentious administrative lawsuits [member]
Disclosure of commitments and contingencies [Line Items]
Contingent liabilities	560
Consorcio Terminales And Terminales Del Peru [member] | Administrative lawsuits [member]
Disclosure of commitments and contingencies [Line Items]
Contingent liabilities		1,440
GyM Ferrovias SA. [member] | Administrative lawsuits [member]
Disclosure of commitments and contingencies [Line Items]
Contingent liabilities		2,130
Consorcio Toromocho [member] | Administrative lawsuits [member]
Disclosure of commitments and contingencies [Line Items]
Contingent liabilities		200
Consortium [member] | Labor lawsuits [member]
Disclosure of commitments and contingencies [Line Items]
Contingent liabilities		1,660
GMI SA [member] | Labor lawsuits [member]
Disclosure of commitments and contingencies [Line Items]
Contingent liabilities		650
Vial y Vives - DSD [member] | Labor lawsuits [member]
Disclosure of commitments and contingencies [Line Items]
Contingent liabilities		320
Stracon GyM S.A. [member] | Labor lawsuits [member]
Disclosure of commitments and contingencies [Line Items]
Contingent liabilities		260
Morelco [member] | Labor lawsuits [member]
Disclosure of commitments and contingencies [Line Items]
Contingent liabilities		250
Consorcio Terminales [member] | Contentious administrative lawsuits [member]
Disclosure of commitments and contingencies [Line Items]
Contingent liabilities	9,700
Peru (member) | Tax contingent liability [member] | Top of range [member]
Disclosure of commitments and contingencies [Line Items]
Contingent liabilities		5,200
SUNAT [member]
Disclosure of commitments and contingencies [Line Items]
Tax penalties amount		19,100
Payment of debt	14,100
Contingency provision	5,000
SUNAT [member] | Tax contingent liability [member] | Top of range [member]
Disclosure of commitments and contingencies [Line Items]
Contingent liabilities	S/ 3,000	S/ 2,800	S/ 800

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Business Combinations - Additional Information (Detail)	1 Months Ended			12 Months Ended
	Aug. 31, 2016 PEN (S/)	Jan. 31, 2016 PEN (S/)	Jun. 30, 2015	Dec. 31, 2017 PEN (S/)	Dec. 31, 2016 PEN (S/)	Dec. 31, 2014 PEN (S/)	Dec. 31, 2016 USD ($)	Dec. 31, 2015 PEN (S/)	Dec. 31, 2015 USD ($)	Mar. 31, 2015 PEN (S/)	Mar. 31, 2015 USD ($)	Dec. 31, 2014 USD ($)	Dec. 23, 2014
Disclosure of detailed information about business combination [line items]
Goodwill				S/ 116,804,000	S/ 144,520,000			S/ 170,232,000
Estimated liability				6,078,592,000	6,556,899,000
Adexus S A [member]
Disclosure of detailed information about business combination [line items]
Interest in capital, joint ventures			44.00%
Percentage of additional interest in capital stock	39.03%	8.00%
Percentage of capital acquired	91.03%	52.00%
Business combination consideration transferred	S/ 14,000,000	S/ 8,300,000			43,079,000		$ 12,822,000
Losses arising from re-measurement at fair value of previously held interest	6,800,000
Acquisition transaction costs	S/ 1,400,000
Goodwill					S/ 930,000		$ 276,000
Non-controlling interest, ownership interest					8.97%
Morelco SAS [member]
Disclosure of detailed information about business combination [line items]
Percentage of capital acquired													70.00%
Business combination consideration transferred						S/ 277,100,000		258,600,000	$ 87,500,000			$ 93,700,000
Cash payments made for acquisition | $												78,500,000
Contingent liabilities recognised in business combination						45,700,000		32,000,000	9,100,000			15,100,000
Goodwill						S/ 105,800,000		S/ 103,000,000	$ 35,200,000			$ 36,100,000
Non-controlling interest, ownership interest						30.00%
Morelco SAS [member] | Purchased call options [member]
Disclosure of detailed information about business combination [line items]
Period over which shares of non-controlling interest be acquired						10 years
Morelco SAS [member] | Written put options [member]
Disclosure of detailed information about business combination [line items]
Estimated liability				105,400,000	S/ 109,900,000
Changes in the present value of the put option				S/ 5,190,000
Morelco SAS [member] | Written put options [member] | From 1 to 2 years [member]
Disclosure of detailed information about business combination [line items]
Expected redemption of the non-controlling interest						41.66%
Discount rate				2.03%	1.37%		1.37%
Morelco SAS [member] | Written put options [member] | Later than three years and not later than four years [member]
Disclosure of detailed information about business combination [line items]
Expected redemption of the non-controlling interest						41.66%
Morelco SAS [member] | Written put options [member] | Less than1 year [member]
Disclosure of detailed information about business combination [line items]
Discount rate				1.79%	0.78%		0.78%
Morelco SAS [member] | Written put options [member] | Later than two years and not later than three years [member]
Disclosure of detailed information about business combination [line items]
Discount rate				2.12%	1.76%		1.76%
Coasin Instalaciones Ltda [member]
Disclosure of detailed information about business combination [line items]
Percentage of capital acquired						100.00%						100.00%
Goodwill										S/ 6,400	$ 2,200

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Business Combinations - Summary of Provisional Determination of Fair Value of Identifiable Assets Acquired and Liabilities Assumed (Detail) S/ in Thousands, $ in Thousands	Dec. 31, 2017 PEN (S/)	Dec. 31, 2016 PEN (S/)	Dec. 31, 2016 USD ($)	Aug. 31, 2016 PEN (S/)	Jan. 31, 2016 PEN (S/)	Dec. 31, 2015 PEN (S/)
Fair value of assets and liabilities of Adexus S.A.:
Goodwill	S/ 116,804	S/ 144,520				S/ 170,232
Adexus S A [member]
Disclosure of detailed information about business combination [line items]
Purchase consideration		14,040	$ 4,179
Fair value of previously held interest		29,039	8,643
Total consideration		43,079	12,822	S/ 14,000	S/ 8,300
Fair value of assets and liabilities of Adexus S.A.:
Cash and cash equivalents		7,737	2,303
Trade receivables		107,426	31,972
Receivables from related parties		2,610	777
Other receivables		1,160	345
Inventories		1,647	490
Prepaid expenses		11,587	3,449
Long-term trade receivables		26,886	8,195
Other long-term receivables		2,063	614
Property, plant and equipment		41,988	12,496
Intangibles		32,204	9,585
Deferred income tax assets		18,115	5,198
Borrowings		(108,808)	(32,383)
Trade payables		(59,399)	(17,678)
Payables to related parties		(15,683)	(4,667)
Current income tax		(2,763)	(822)
Other payables		(10,291)	(3,063)
Other provisions		(1,926)	(573)
Contingent liabilities		(1,149)	(342)
Deferred income tax liabilities		(7,102)	(2,114)
Fair value of net identifiable assets		46,302	13,782
Non-controlling interest (8.97%)		(4,153)	(1,236)
Fair value of net assets attributable to the Group		42,149	12,546
Goodwill		S/ 930	$ 276

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Business Combinations - Summary of Provisional Determination of Fair Value of Identifiable Assets Acquired and Liabilities Assumed (Parenthetical) (Detail)	12 Months Ended
	Dec. 31, 2016
Adexus S A [member]
Disclosure of detailed information about business combination [line items]
Non-controlling interest, ownership interest	8.97%

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Dividends - Additional Information (Detail) - PEN (S/)			12 Months Ended
	Mar. 29, 2016	Mar. 27, 2015	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure of Dividends [Line Items]
Dividends paid			S/ 0	S/ 0
Dividend distribution	S/ 30,900,000	S/ 104,900,000	S/ 59,700,000	S/ 25,500,000	S/ 4,500,000
Dividend distribution, per share	S/ 0.0467	S/ 0.159

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Earnings (Losses) Per Share - Summary of Basic Earnings Per Share (Detail) - PEN (S/) S/ / shares in Units, S/ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Earnings per share [line items]
Profit (Losses) attributable to the controlling interest in the Company	S/ 148,738	S/ (509,699)	S/ 7,097
Weighted average number of shares in issue at S/1.00 each, at December 31,	660,053,790	660,053,790	660,053,790
Basic earnings (losses) per share (in S/)	S/ 0.225	S/ (0.772)	S/ 0.011

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Earnings (Losses) Per Share - Summary of Basic Earnings Per Share (Parenthetical) (Detail) - S/ / shares	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Earnings per share [line items]
Weighted average number of shares issued per share	S/ 1.00	S/ 1.00	S/ 1.00

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Transactions with non-controlling interests - Additional Information (Detail) - PEN (S/) S/ in Thousands			1 Months Ended				12 Months Ended
	Mar. 29, 2016	Mar. 27, 2015	Dec. 31, 2016	Jun. 30, 2015	Apr. 30, 2015	Mar. 31, 2015	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Nov. 30, 2016	May 31, 2016
Non-controlling interests [line items]
Acquisition of non-controlling interest			S/ 32,102				S/ 22,407	S/ 32,102
Carrying amount of non controlling interests			S/ 509,313				465,748	509,313
Dividends distributed	S/ 30,900	S/ 104,900					59,700	S/ 25,500	S/ 4,500
GyM S A [member]
Non-controlling interests [line items]
Interest sold				1.92%
Value of interest sold				S/ 385,000
Interest held				82.04%
Payment received for interest sold				S/ 385,000
Carrying amount of non controlling interests				S/ 3,600
Percentage of non controlling interest				17.96%
GyM S A [member] | Stracon GyM member]
Non-controlling interests [line items]
Interest sold						0.048%
Value of interest sold						S/ 97,000
Interest held						87.64%
Payment received for interest sold						S/ 377,000
Carrying amount of non controlling interests						S/ 23,700
Percentage of non controlling interest						12.36%
GyM S A [member] | Vial y Vives - DSD S.A [member]
Non-controlling interests [line items]
Percentage of capital acquired			1.49%					1.49%		6.77%	5.43%
Payment for acquisition of non-controlling interest			S/ 3,800					S/ 3,800		S/ 25,700	S/ 21,600
Carrying amount of non controlling interests			3,900					3,900		S/ 17,900	S/ 13,900
Increase (Decrease) through de-recognition of non-controlling interest equity			(15,400)
Acquisition of non-controlling interest			S/ 32,100				22,000	32,100
CAM Holding S.p.A. [Member]
Non-controlling interests [line items]
Interest sold					2.45%
Value of interest sold					S/ 2,045,000
Interest held					75.61%
Payment received for interest sold					S/ 880,000
Carrying amount of non controlling interests					S/ 20,400
Percentage of non controlling interest					24.39%
Los Parques de Comas [Member]
Non-controlling interests [line items]
Returns of contributions							6,800	6,300
Asociacion Parques del Mar [member]
Non-controlling interests [line items]
Returns of contributions							27,800
Klimt [member]
Non-controlling interests [line items]
Returns of contributions							S/ 8,000	7,100
Los Parques de Villa El Salvador II [member]
Non-controlling interests [line items]
Returns of contributions								S/ 12,600

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Transactions with Non-controlling Interests - Summary of Contributions of Non-controlling Shareholders (Detail) - PEN (S/) S/ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Non-controlling interests [line items]
Contributions from other subsidiaries	S/ 3,202	S/ 1,655	S/ 4,870
Increase (decrease) in equity of non controlling parties	(33,197)	(19,099)	10,329
Vial y Vives-DSD S.A. [member]
Non-controlling interests [line items]
Contributions received	8,654	6,380	20,446
Returns of contributions	(45,053)	(27,134)	(14,987)
Increase (decrease) in equity of non controlling parties	S/ (36,399)	S/ (20,754)	S/ 5,459

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Discontinued Operation - Additional Information (Detail) S/ in Millions, $ in Millions	Jun. 06, 2017 PEN (S/)	Jun. 06, 2017 USD ($)	Apr. 24, 2017 PEN (S/)	Apr. 24, 2017 USD ($)
GMD SA [member]
Disclosure Of Discontinued Operation [Line Items]
Percentage of interest in property	89.19%	89.19%
Agreed selling price	S/ 269.9	$ 84.7
Tecgas N.V. [member]
Disclosure Of Discontinued Operation [Line Items]
Percentage of interest in property			51.00%	51.00%
Agreed selling price			S/ 69.8	$ 21.5

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Discontinued Operation - Summary of Financial Performance and Cash Flow Information (Detail) - PEN (S/) S/ / shares in Units, S/ in Thousands	5 Months Ended	12 Months Ended
	May 31, 2017	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure Of Financial Performance And Cash Flow Information [Line Items]
Finance costs, net		S/ (185,445)	S/ (221,664)	S/ (168,083)
Operating loss from discontinued activities before taxation		3,562	11,995	9,142
Loss from discontinued activities attributable to owners of the Company		S/ 148,738	(509,699)	7,097
GMD SA [member]
Disclosure Of Financial Performance And Cash Flow Information [Line Items]
Revenue	S/ 7,204		18,651	21,318
Finance costs	10,567		24,129	23,829
Finance costs, net	(2,617)		(9,758)	(8,249)
Operating loss from discontinued activities before taxation	(5,980)		(15,236)	(10,760)
Income tax expense	(1,171)		(7,466)	(3,129)
Loss from discontinued ordinary activities after taxation	(7,151)		(22,702)	(13,888)
Loss from discontinued activities attributable to owners of the Company	S/ (6,381)		S/ (20,257)	S/ (12,393)
Basic	S/ (0.56)		S/ (1.77)	S/ (1.08)
Operating cash flows	S/ 10,220		S/ 78,286	S/ (14,193)
Investing cash flows	(11,189)		(30,712)	(17,499)
Financing cash flows	S/ 1,618		(48,516)	S/ (53,501)
Tecgas N.V. [member]
Disclosure Of Financial Performance And Cash Flow Information [Line Items]
Revenue			457,554
Finance costs			215
Operating loss from discontinued activities before taxation			(3,209)
Income tax expense			(4,078)
Loss from discontinued ordinary activities after taxation			S/ (7,287)

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Events After the Date of the Statement of Financial Position - Additional Information (Detail) S/ in Millions				12 Months Ended
	May 29, 2018 USD ($)	Mar. 31, 2018 USD ($) ft²	Mar. 28, 2018 USD ($)	Dec. 31, 2017 PEN (S/)	Dec. 31, 2017 USD ($)	Feb. 08, 2018 PEN (S/)	Jan. 26, 2018 PEN (S/)
Stracon GyM S.A. [member]
Disclosure of non-adjusting events after reporting period [line items]
Percentage of ownership disposed in subsidiary				87.59%	87.59%
Proceeds from ownership interest disposed				S/ 41.9	$ 76,800,000
Subsequent Event [Member]
Disclosure of non-adjusting events after reporting period [line items]
Area of land agreed to sell | ft²		4,208,769.24
Value of land agreed to sell | $		$ 92,600
Subsequent Event [Member] | INEN [Member]
Disclosure of non-adjusting events after reporting period [line items]
Arbitration expenses recognised | S/							S/ 1.4
Subsequent Event [Member] | GyM S A [member]
Disclosure of non-adjusting events after reporting period [line items]
Arbitration expenses recognised | S/						S/ 17.8	S/ 0.7
Subsequent Event [Member] | SEDAPAL [Member]
Disclosure of non-adjusting events after reporting period [line items]
Arbitration expenses recognised | S/						S/ 36.3
Subsequent Event [Member] | Stracon GyM S.A. [member]
Disclosure of non-adjusting events after reporting period [line items]
Percentage of ownership disposed in subsidiary			87.59%
Proceeds from ownership interest disposed | $			$ 76,800,000
Subsequent Event [Member] | Norvial S.A. [member]
Disclosure of non-adjusting events after reporting period [line items]
Monetize future dividends | $	$ 42,300,000

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Events After the Date of the Statement of Financial Position - Summary of Financial Performance and Cash Flow Information (Detail) - PEN (S/) S/ / shares in Units, S/ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015
Disclosure Of Financial Performance And Cash Flow Information [Line Items]
Finance costs, net	S/ (185,445)	S/ (221,664)	S/ (168,083)
Operating profit from discontinued activities before taxation	3,562	11,995	9,142
Profit from discontinued activities attributable to owners of the Company	148,738	(509,699)	7,097
Stracon GyM member]
Disclosure Of Financial Performance And Cash Flow Information [Line Items]
Revenue	1,027,804	1,222,707	1,476,764
Operating costs	(943,805)	(1,099,789)	(1,305,806)
Finance costs, net	(5,231)	(3,104)	(21,478)
Operating profit from discontinued activities before taxation	78,768	119,814	149,480
Income tax expense	(17,969)	(32,558)	(40,492)
Loss from discontinued ordinary activities after taxation	60,799	87,256	108,988
Profit from discontinued activities attributable to owners of the Company	S/ 53,254	S/ 76,428	S/ 95,463
Basic	S/ 0.778	S/ 1.117	S/ 1.395
Operating cash flows	S/ 118,418	S/ 49,105	S/ 166,438
Investing cash flows	(6,750)	(31,132)	(19,914)
Financing cash flows	S/ (97,802)	S/ (71,382)	S/ (120,655)

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Supplementary Oil and Gas Information - (Unaudited) - Net Proved Oil and Natural Gas Reserves (Detail)	12 Months Ended
	Dec. 31, 2017 MMcf MBbls	Dec. 31, 2016 MMcf MBbls
Oil [Member]
Reserve Quantities [Line Items]
Reserves, beginning balance | MBbls	25,191	23,727
Revisions of previous estimates | MBbls	2,451	2,472
Enhanced oil recovery | MBbls	0	0
Purchases | MBbls	0	0
Production | MBbls	(1,146)	(1,008)
Sales in place | MBbls	0	0
Reserves, ending balance | MBbls	26,496	25,191
Natural Gas [Member]
Reserve Quantities [Line Items]
Reserves, beginning balance | MMcf	10,521	50,103
Revisions of previous estimates | MMcf	17,011	(36,543)
Enhanced oil recovery | MMcf	0	0
Purchases | MMcf	0	0
Production | MMcf	(2,661)	(3,039)
Sales in place | MMcf	0	0
Reserves, ending balance | MMcf	9,354	10,521
Peru (member) | Oil [Member]
Reserve Quantities [Line Items]
Reserves, beginning balance | MBbls	25,191	23,727
Revisions of previous estimates | MBbls	2,451	2,472
Enhanced oil recovery | MBbls	0	0
Purchases | MBbls	0	0
Production | MBbls	(1,146)	(1,008)
Sales in place | MBbls	0	0
Reserves, ending balance | MBbls	26,496	25,191
Peru (member) | Natural Gas [Member]
Reserve Quantities [Line Items]
Reserves, beginning balance | MMcf	10,521	50,103
Revisions of previous estimates | MMcf	17,011	(36,543)
Enhanced oil recovery | MMcf	0	0
Purchases | MMcf	0	0
Production | MMcf	(2,661)	(3,039)
Sales in place | MMcf	0	0
Reserves, ending balance | MMcf	9,354	10,521

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Reserve Quantity Information (Detail)	Dec. 31, 2017 MMBbls MMcf	Dec. 31, 2016 MMBbls MMcf	Dec. 31, 2015 MMBbls MMcf
Oil [Member]
Reserve Quantities [Line Items]
Proved developed reserves Beginning of year | MMBbls	8,521	9,168	2,882
End of year | MMBbls	8,664	8,521	9,168
Proved undeveloped reserves Beginning of year | MMBbls	16,670	14,562	1,125
End of year | MMBbls	17,833	16,670	14,562
Natural Gas [Member]
Reserve Quantities [Line Items]
Proved developed reserves Beginning of year | MMcf	10,521	23,384	11,960
End of year | MMcf	9,354	10,521	23,384
Proved undeveloped reserves Beginning of year | MMcf		26,719	4,748
End of year | MMcf			26,719
Peru (member) | Oil [Member]
Reserve Quantities [Line Items]
Proved developed reserves Beginning of year | MMBbls	8,521	9,168	2,882
End of year | MMBbls	8,663	8,521	9,168
Proved undeveloped reserves Beginning of year | MMBbls	16,670	14,562	1,125
End of year | MMBbls	17,833	16,670	14,562
Peru (member) | Natural Gas [Member]
Reserve Quantities [Line Items]
Proved developed reserves Beginning of year | MMcf	10,521	23,384	11,960
End of year | MMcf	9,354	10,521	23,384
Proved undeveloped reserves Beginning of year | MMcf		26,719	4,748
End of year | MMcf			26,719

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Supplementary Information on Oil and Gas Exploration and Production (Unaudited) - Summary of Capitalized Costs for Oil and Gas Exploration and Production Activities (Detail) - PEN (S/) S/ in Thousands	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Disclosure of detailed information about segments by geographical area [line items]
Mineral property, wells and related equipment	S/ 84,960	S/ 39,069	S/ 54,582	S/ 47,267	S/ 44,974
Drilling and Works in progress and Replacement Units	10,767	6,188	5,682	11,290	11,444
Total Proved Properties	95,727	45,257	60,264	58,557	56,418
Unproved properties	0	0	0	0	0
Total Property, Plant and Equipment	95,727	45,257	60,264	58,557	56,418
Accumulated depreciation, depletion, and amortization, and valuation allowances	(36,672)	(17,774)	(17,875)	(13,735)	(13,864)
Net capitalized costs	S/ 59,054	S/ 27,482	S/ 42,389	S/ 44,822	S/ 42,554

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Supplementary Information on Oil and Gas Exploration and Production (Unaudited) - Summary of Capitalized Costs for Oil and Gas Exploration and Production Activities Include Both Amounts Expenses and Capitalized (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Acquisition costs of properties
Proved	$ 0	$ 0	$ 0	$ 0	$ 0
Unproved	0	0	0	0	0
Total acquisition costs	0	0	0	0	0
Development costs	(22,905)	(19,161)	(17,179)	(13,126)	(13,465)
Total	$ (22,905)	$ (19,161)	$ (17,179)	$ (13,126)	$ (13,465)

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Supplementary Information on Oil and Gas Exploration and Production (Unaudited) - Summary of Results of Operations from Oil and Gas Producing Activities (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Results of Operations for Oil and Gas Producing Activities, by Geographic Area [Line Items]
Revenues	$ 67,949	$ 50,556	$ 57,938	$ 59,233	$ 58,275
Additional Revenues of Gas Extraction Services					11,892
Total Revenues	67,949	50,556	57,938	59,233	70,167
Production Costs	(28,097)	(24,645)	(25,976)	(16,257)	(16,692)
Costs of Labor	(2,008)	(1,767)	(1,660)	(1,602)	(1,715)
Repairs and Maintenance	(2,076)	(1,563)	(1,828)	(958)	(1,024)
Materials, supplies, and fuel consumed and supplies utilize	(10,253)	(9,540)	(10,775)	(6,486)	(7,103)
External services, insurances, security and others	(6,634)	(6,388)	(6,938)	(3,605)	(3,297)
Operation office and staff expenses	(7,126)	(5,388)	(4,776)	(3,607)	(3,553)
Additional Natural Gas supply costs after price adjustment					(14,843)
Royalties	(15,016)	(7,402)	(7,982)
DD&A Expenses	(19,851)	(17,223)	(16,931)	(13,672)	(13,811)
Income (loss) before income taxes	4,984	1,286	7,048	29,304	24,821
Income tax expense	(1,470)	(373)	(1,974)	(8,791)	(7,446)
Results of operations from producing activities	$ 3,514	$ 913	$ 5,075	$ 20,513	$ 17,375
Percentage of income before income tax	29.50%	27.00%	28.00%	30.00%

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Supplementary Information on Oil and Gas Exploration and Production (Unaudited) - Summary of Standardized Measure of Discounted Future Cash Flows Relating to Proved Reserves (Detail) - USD ($) $ in Thousands	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves [Line Items]
Future Cash inflows	$ 1,436,101	$ 1,106,849	$ 1,461,565	$ 251,695	$ 360,386
Future production costs	(776,847)	(285,608)	(507,212)	(72,857)	(107,031)
Future development costs	(221,557)	(463,224)	(368,873)	(37,423)	(63,643)
Future production and development costs	(998,404)	(748,832)	(876,085)	(110,280)	(170,674)
Future income tax expenses	(129,121)	(105,615)	(153,178)	(37,264)	(56,913)
Future Net cash flows	308,577	252,402	432,301	104,151	132,799
10% annual discount for estimates timing of cash flows	(168,224)	(115,028)	(209,039)	(29,483)	(35,325)
Standardized measure of discounted Future Net Cash Flows	$ 140,353	$ 137,374	$ 223,262	$ 74,668	$ 97,474	$ 116,153

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Supplementary Information on Oil and Gas Exploration and Production (Unaudited) - Summary of Standardized Measure of Discounted Future Cash Flows Relating to Proved Reserves (Parenthetical) (Detail) - $ / Barrel	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves [Line Items]
Government royalties used in determining future cash inflows	38.54	45.59	77.33	83.96	87.25

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Supplementary Oil and Gas Information - (Unaudited) - Standardized Measure of Discounted Future Net Cash Flow Changes (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves [Line Items]
Standardized measure of discounted Future Net Cash Flows, beginning of the year	$ 137,374	$ 223,262	$ 74,668	$ 97,474	$ 116,153
Revenue less production and other costs	(96,045)	(75,202)	(103,058)	(75,490)	(89,810)
Net changes in future development costs	94,388	(53,464)	(185,387)	11,497	24,533
Changes in price, net of production costs	(109,168)	560	(284,832)	(53,214)	(34,973)
Development cost incurred	22,905	19,161	17,179	13,126	13,465
Revisions of previous quantity estimates	27,456	(54,052)	674,410	23,273	47,511
Accretion of discount	70,152	55,438	67,666	16,836	23,616
Net change in income taxes	(85)	21,327	(53,715)	9,286	3,593
Timing difference and other	(6,623)	(343)	(16,330)	31,879	(6,613)
Standardized measure of discounted Future Net Cash Flows, end of the year	$ 140,353	$ 137,374	$ 223,262	$ 74,668	$ 97,474