UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13a-16 OR 15b-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
For the month of October 2021
Commission File Number 001-35991
AENZA S.A.A.
(Exact name of registrant as specified in its charter)
N/A
(Translation of registrant’s name into English)
Republic of Peru
(Jurisdiction of incorporation or organization)
Avenida Paseo de la República 4667, Lima 34,
Surquillo, Lima
Peru
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F ___X____ Form 40-F _______
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): [ ]
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): [ ]
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes _______ No ___X____
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): Not applicable.
October 29, 2021
Sincerely yours,
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
AENZA S.A.A.
By: /s/ DANIEL URBINA PEREZ
Name: Daniel Urbina Perez
Title: Chief Legal Officer
Date: October 29, 2021
Name: Daniel Urbina Perez
Title: Chief Legal Officer
Date: October 29, 2021
AENZA S.A.A AND SUBSIDIARIES
CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AT DECEMBER 31, 2020 AND SEPTEMBER 30, 2021 (UNAUDITED)
AENZA S.A.A AND SUBSIDIARIES
CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AT DECEMBER 31, 2020 AND SEPTEMBER 30, 2021 (UNAUDITED)
CONTENTS | Page |
Consolidated Statement of Financial Position | 1 |
Consolidated Statement of Income | 2 |
Consolidated Statement of Comprehensive Income | 3 |
Consolidated Statement of Changes in Equity | 4 |
Consolidated Statement of Cash Flows | 5 |
Notes to the Consolidated Financial Statements | 6 - 36 |
S/ | = | Peruvian Sol |
US$ | = | United States dollar |
AENZA S.A.A. AND SUBSIDIARIES | ||||||||||||||||
CONSOLIDATED STATEMENT OF FINANCIAL POSITION | ||||||||||||||||
(All amounts are expressed in thousands of S/ unless otherwise stated) | ||||||||||||||||
ASSETS | LIABILITIES AND EQUITY | |||||||||||||||
As of | As of | As of | As of | |||||||||||||
December 31, | September 30, | December 31, | September 30, | |||||||||||||
Note | 2020 | 2021 | Note | 2020 | 2021 | |||||||||||
Current assets | Current liabilities | |||||||||||||||
Cash and cash equivalents | 8 | 900,168 | 1,019,547 | Borrowings | 15 | 452,884 | 297,913 | |||||||||
Trade accounts receivables, net | 9 | 703,167 | 721,184 | Bonds | 16 | 58,446 | 424,461 | |||||||||
Work in progress | 10 | 186,433 | 273,088 | Trade accounts payable | 17 | 1,097,167 | 1,042,243 | |||||||||
Accounts receivable from related parties | 11 | 27,338 | 30,835 | Accounts payable to related parties | 11 | 43,818 | 42,963 | |||||||||
Other accounts receivable | 12 | 433,531 | 399,919 | Current income tax | 34,494 | 61,137 | ||||||||||
Inventories, net | 552,000 | 544,223 | Other accounts payable | 18 | 718,406 | 957,554 | ||||||||||
Prepaid expenses | 22,972 | 27,225 | Other provisions | 19 | 92,757 | 105,805 | ||||||||||
Total current assets | 2,825,609 | 3,016,021 | Total current liabilities | 2,497,972 | 2,932,076 | |||||||||||
Non-current assets | Non-current liabilities | |||||||||||||||
Trade accounts receivable, net | 9 | 730,666 | 765,660 | Borrowings | 15 | 445,436 | 408,040 | |||||||||
Accounts receivable from related parties | 11 | 620,071 | 671,838 | Bonds | 16 | 874,313 | 849,249 | |||||||||
Prepaid expenses | 22,264 | �� 18,873 | Trade accounts payable | 17 | 40,502 | 35,535 | ||||||||||
Other accounts receivable | 12 | 328,223 | 371,789 | Other accounts payable | 18 | 183,232 | 160,249 | |||||||||
Investments in associates and joint ventures | 13 | 35,516 | 35,688 | Accounts payable to related parties | 11 | 36,297 | 51,006 | |||||||||
Investment property | 26,073 | 22,952 | Other provisions | 19 | 336,609 | 376,937 | ||||||||||
Property, plant and equipment, net | 14 | 405,469 | 364,789 | Deferred income tax liability | 102,907 | 97,955 | ||||||||||
Intangible assets, net | 14 | 791,990 | 747,691 | Total non-current liabilities | 2,019,296 | 1,978,971 | ||||||||||
Right-of-use assets, net | 14 | 64,518 | 52,262 | Total liabilities | 4,517,268 | 4,911,047 | ||||||||||
Deferred income tax asset | 262,165 | 300,365 | ||||||||||||||
Total non-current assets | 3,286,955 | 3,351,907 | Equity | 20 | ||||||||||||
Capital | 871,918 | 871,918 | ||||||||||||||
Legal reserve | 132,011 | 132,011 | ||||||||||||||
Voluntary reserve | 29,974 | 29,974 | ||||||||||||||
Share Premium | 1,131,574 | 1,131,574 | ||||||||||||||
Other reserves | (169,234 | ) | (168,102 | ) | ||||||||||||
Retained earnings | (728,637 | ) | (832,123 | ) | ||||||||||||
Equity attributable to controlling interest in the Company | 1,267,606 | 1,165,252 | ||||||||||||||
Non-controlling interest | 327,690 | 291,629 | ||||||||||||||
Total equity | 1,595,296 | 1,456,881 | ||||||||||||||
Total assets | 6,112,564 | 6,367,928 | Total liabilities and equity | 6,112,564 | 6,367,928 |
The accompanying notes on pages 6 to 40 are an integral part of the consolidated financial statements.
- 1 -
AENZA S.A.A. AND SUBSIDIARIES | |||||||||||
CONSOLIDATED STATEMENT OF INCOME | |||||||||||
(All amounts are expressed in thousands of S/ unless otherwise stated) | |||||||||||
For the period | |||||||||||
ended September 30, | |||||||||||
Note | 2020 | 2021 | |||||||||
Revenues from construction activities | 1,218,445 | 1,572,793 | |||||||||
Revenues from services provided | 747,447 | 884,544 | |||||||||
Revenue from real estate and sale of goods | 257,145 | 407,449 | |||||||||
2,223,037 | 2,864,786 | ||||||||||
Cost of construction activities | (1,149,551 | ) | (1,515,536 | ) | |||||||
Cost of services provided | (658,657 | ) | (740,217 | ) | |||||||
Cost of real estate and sale of goods | (202,286 | ) | (324,936 | ) | |||||||
21 | (2,010,494 | ) | (2,580,689 | ) | |||||||
Gross profit | 212,543 | 284,097 | |||||||||
Administrative expenses | 21 | (121,444 | ) | (141,961 | ) | ||||||
Other income and expenses | 22 | (36,100 | ) | (6,610 | ) | ||||||
Operating profit | 54,999 | 135,526 | |||||||||
Financial expenses | 23 | (102,205 | ) | (184,915 | ) | ||||||
Financial income | 23 | 13,961 | 4,169 | ||||||||
Share of the profit or loss of associates and joint ventures accounted for using the equity method | 13 | 1,945 | 2,422 | ||||||||
Loss before income tax | (31,300 | ) | (42,798 | ) | |||||||
Income tax expense | (14,796 | ) | (37,142 | ) | |||||||
Loss for the period | (46,096 | ) | (79,940 | ) | |||||||
(Loss) profit attributable to: | |||||||||||
Owners of the Company | (55,143 | ) | (103,486 | ) | |||||||
Non-controlling interest | 9,047 | 23,546 | |||||||||
(46,096 | ) | (79,940 | ) | ||||||||
Loss per share attributable to owners of the | |||||||||||
Company during the period | 27 | (0.063 | ) | (0.119 | ) |
The accompanying notes on pages 6 to 40 are an integral part of the consolidated financial statements.
- 2 -
AENZA S.A.A. AND SUBSIDIARIES | ||||||||||||
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME | ||||||||||||
(All amounts are expressed in thousands of S/ unless otherwise stated) | ||||||||||||
For the period | ||||||||||||
ended September 30, | ||||||||||||
Note | 2020 | 2021 | ||||||||||
Loss for the period | (46,096 | ) | (79,940 | ) | ||||||||
Other comprehensive income: | ||||||||||||
Items that may be subsequently reclassified to profit or loss | ||||||||||||
Cash flow hedge, net of tax | (626 | ) | - | |||||||||
Foreign currency translation adjustment, net of tax | (14,465 | ) | 2,305 | |||||||||
Exchange difference from net investment in a foreign operation, net of tax | 144 | 74 | ||||||||||
Other comprehensive income for the period, net of tax | (14,947 | ) | 2,379 | |||||||||
Total comprehensive income for the period | (61,043 | ) | (77,561 | ) | ||||||||
Comprehensive income attributable to: | ||||||||||||
Owners of the Company | (65,850 | ) | (102,354 | ) | ||||||||
Non-controlling interest | 4,807 | 24,793 | ||||||||||
(61,043 | ) | (77,561 | ) |
The accompanying notes on pages 6 to 40 are an integral part of the consolidated financial statements.
- 3 -
AENZA S.A.A. AND SUBSIDIARIES | ||||||||||||||||||||||||||||||||||||||||
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY | ||||||||||||||||||||||||||||||||||||||||
FOR THE PERIOD ENDED SEPTEMBER 30, 2020 AND 2021 | ||||||||||||||||||||||||||||||||||||||||
(All amounts are expressed in thousands of S/ unless otherwise stated) | ||||||||||||||||||||||||||||||||||||||||
Attributable to the controlling interests of the Company | ||||||||||||||||||||||||||||||||||||||||
Number | ||||||||||||||||||||||||||||||||||||||||
of shares | Legal | Voluntary | Share | Other | Retained | Non-controlling | ||||||||||||||||||||||||||||||||||
In thousands | Capital | reserve | reserve | premium | reserves | earnings | Total | interest | Total | |||||||||||||||||||||||||||||||
Balances as of January 1, 2020 | 871,918 | 871,918 | 132,011 | 29,974 | 1,132,179 | (177,506 | ) | (510,766 | ) | 1,477,810 | 398,275 | 1,876,085 | ||||||||||||||||||||||||||||
(Loss) profit for the period | - | - | - | - | - | - | (55,143 | ) | (55,143 | ) | 9,047 | (46,096 | ) | |||||||||||||||||||||||||||
Cash flow hedge | - | - | - | - | - | (594 | ) | - | (594 | ) | (32 | ) | (626 | ) | ||||||||||||||||||||||||||
Foreign currency translation adjustment | - | - | - | - | - | (10,257 | ) | - | (10,257 | ) | (4,208 | ) | (14,465 | ) | ||||||||||||||||||||||||||
Exchange difference from net investment in a foreign operation | - | - | - | - | - | 144 | - | 144 | - | 144 | ||||||||||||||||||||||||||||||
Comprehensive income of the period | - | - | - | - | - | (10,707 | ) | (55,143 | ) | (65,850 | ) | 4,807 | (61,043 | ) | ||||||||||||||||||||||||||
Transactions with shareholders: | ||||||||||||||||||||||||||||||||||||||||
- Dividend distribution | - | - | - | - | - | - | - | - | (64,716 | ) | (64,716 | ) | ||||||||||||||||||||||||||||
- Contributions (devolution) of non-controlling shareholders, net | - | - | - | - | - | - | - | - | (11,419 | ) | (11,419 | ) | ||||||||||||||||||||||||||||
- Additional acquisition of non-controlling | - | - | - | - | (605 | ) | - | - | (605 | ) | (89 | ) | (694 | ) | ||||||||||||||||||||||||||
Total transactions with shareholders | - | - | - | - | (605 | ) | - | - | (605 | ) | (76,224 | ) | (76,829 | ) | ||||||||||||||||||||||||||
Balances as of September 30, 2020 | 871,918 | 871,918 | 132,011 | 29,974 | 1,131,574 | (188,213 | ) | (565,909 | ) | 1,411,355 | 326,858 | 1,738,213 | ||||||||||||||||||||||||||||
Balances as of January 1, 2021 | 871,918 | 871,918 | 132,011 | 29,974 | 1,131,574 | (169,234 | ) | (728,637 | ) | 1,267,606 | 327,690 | 1,595,296 | ||||||||||||||||||||||||||||
(Loss) profit for the period | - | - | - | - | - | - | (103,486 | ) | (103,486 | ) | 23,546 | (79,940 | ) | |||||||||||||||||||||||||||
Foreign currency translation adjustment | - | - | - | - | - | 1,058 | - | 1,058 | 1,247 | 2,305 | ||||||||||||||||||||||||||||||
Exchange difference from net investment in a foreign operation | - | - | - | - | - | 74 | - | 74 | - | 74 | ||||||||||||||||||||||||||||||
Comprehensive income of the period | - | - | - | - | - | 1,132 | (103,486 | ) | (102,354 | ) | 24,793 | (77,561 | ) | |||||||||||||||||||||||||||
Transactions with shareholders: | ||||||||||||||||||||||||||||||||||||||||
- Dividend distribution | - | - | - | - | - | - | - | - | (36,250 | ) | (36,250 | ) | ||||||||||||||||||||||||||||
- Contributions (devolution) of non-controlling shareholders, net | - | - | - | - | - | - | - | - | (24,604 | ) | (24,604 | ) | ||||||||||||||||||||||||||||
Total transactions with shareholders | - | - | - | - | - | - | - | - | (60,854 | ) | (60,854 | ) | ||||||||||||||||||||||||||||
Balances as of September 30, 2021 | 871,918 | 871,918 | 132,011 | 29,974 | 1,131,574 | (168,102 | ) | (832,123 | ) | 1,165,252 | 291,629 | 1,456,881 |
The accompanying notes on pages 6 to 40 are an integral part of the consolidated financial statements.
- 4 -
AENZA S.A.A. AND SUBSIDIARIES | |||||||||||
CONSOLIDATED STATEMENT OF CASH FLOWS | |||||||||||
(All amounts are expressed in thousands of S/ unless otherwise stated) | |||||||||||
For the period | |||||||||||
ended September 30, | |||||||||||
Note | 2020 | 2021 | |||||||||
OPERATING ACTIVITIES | |||||||||||
Loss before income tax | (31,300 | ) | (42,798 | ) | |||||||
Adjustments to profit not affecting cash flows from operating activities: | |||||||||||
Depreciation | 21 | 79,167 | 75,804 | ||||||||
Amortization | 21 | 75,164 | 74,153 | ||||||||
Impairment of inventories | 107 | - | |||||||||
Impairment of accounts receivable and other accounts receivable | 28,886 | 1,323 | |||||||||
Reversal of impairment of inventories | (1,567 | ) | - | ||||||||
Debt condonation | (205 | ) | - | ||||||||
Reversal of property, plant and equipment | (319 | ) | (1,939 | ) | |||||||
Impairment of intangible assets | 8 | - | |||||||||
Change in the fair value of the liability for put option | 969 | - | |||||||||
Other provisions | 31,093 | 8,026 | |||||||||
Financial expense,net | 160,282 | 205,813 | |||||||||
Impairment of work in progress | 13,595 | - | |||||||||
Share of the profit and loss of associates and joint ventures accounted for using the equity method | 13 | (1,945 | ) | (2,422 | ) | ||||||
Reversal of provisions | (7,108 | ) | (9,101 | ) | |||||||
Disposal of assets | 2,322 | 5,627 | |||||||||
(Profit) loss on sale of property, plant and equipment | (9 | ) | 111 | ||||||||
(Profit) loss on remeasurement of accounts receivable | (9,778 | ) | 69,471 | ||||||||
Net variations in assets and liabilities: | |||||||||||
Trade accounts receivable and working in progress | 114,478 | (135,177 | ) | ||||||||
Other accounts receivable | 42,885 | (70 | ) | ||||||||
Other accounts receivable from related parties | (30,836 | ) | (86,556 | ) | |||||||
Inventories | (50,485 | ) | 9,178 | ||||||||
Pre-paid expenses and other assets | 1,076 | (862 | ) | ||||||||
Trade accounts payable | (169,619 | ) | (61,760 | ) | |||||||
Other accounts payable | 68,456 | 173,132 | |||||||||
Other accounts payable to related parties | 15,823 | (4,097 | ) | ||||||||
Other provisions | (5,347 | ) | (4,681 | ) | |||||||
Interest payment | (99,912 | ) | (112,109 | ) | |||||||
Payments for purchases of intangibles - Concessions | (890 | ) | (2,280 | ) | |||||||
Payment of income tax | (83,799 | ) | (57,331 | ) | |||||||
Net cash provided by operating activities | 141,192 | 101,455 | |||||||||
INVESTING ACTIVITIES | |||||||||||
Sale of property, plant and equipment | 5,563 | 6,476 | |||||||||
Interest received | 3,163 | 1,703 | |||||||||
Dividends received | 701 | 2,236 | |||||||||
Payment for purchase of investments properties | (40 | ) | (124 | ) | |||||||
Payments for intangible purchase | (39,498 | ) | (25,669 | ) | |||||||
Payments for property, plant and equipment purchase | (24,746 | ) | (24,823 | ) | |||||||
Net cash applied to investing activities | (54,857 | ) | (40,201 | ) | |||||||
FINANCING ACTIVITIES | |||||||||||
Loans received | 66,466 | 208,224 | |||||||||
Bonds issued | - | 359,890 | |||||||||
Amortization of loans received | (194,079 | ) | (443,425 | ) | |||||||
Amortization of bonds issued | (28,022 | ) | (37,403 | ) | |||||||
Payment for transaction costs for debt | - | (6,534 | ) | ||||||||
Dividends paid to non-controlling interest | (55,085 | ) | (18,225 | ) | |||||||
Cash received (return of contributions) from non-controlling shareholders | (11,419 | ) | (24,604 | ) | |||||||
Net cash applied to financing activities | (222,139 | ) | 37,923 | ||||||||
Net increase (net decrease) in cash | (135,804 | ) | 99,176 | ||||||||
Exchange difference | 5,182 | 20,178 | |||||||||
Cash and cash equivalents at the beginning of the period | 950,701 | 900,168 | |||||||||
Cash and cash equivalents at the end of the period | 8 | 820,079 | 1,019,522 | ||||||||
NON-CASH TRANSACTIONS: | |||||||||||
Capitalization of interests | 5,129 | 1,792 | |||||||||
Acquisition of assets through finance leases | 55 | 58 | |||||||||
Dividends declared to non-controlling interest | 9,631 | 18,025 | |||||||||
Acquisition of right-of-use assets | 9,673 | 5,707 | |||||||||
Acquisition of supplier bonds | 25,871 | - |
The accompanying notes on pages 6 to 40 are an integral part of the consolidated financial statements.
- 5 -
AENZA S.A.A (FORMERLY GRAÑA Y MONTERO S.A.A.) AND SUBSIDIARIES
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AT DECEMBER 31, 2020 AND SEPTEMBER 30, 2021 (UNAUDITED)
1. GENERAL INFORMATION
a) Incorporation and operations
AENZA S.A.A., (hereinafter the “Company”) is the parent Company of the AENZA S.A.A. Corporation that includes the Company and its subsidiaries (hereinafter, the “Corporation”) and is mainly engaged in holding investments in Corporation companies. Additionally, the Company provides services of strategic and functional advice and office leases space to the Corporation companies.
The General Shareholder’s Meeting on November 2, 2020 approved the modification of the Company’s corporate name from Graña y Montero S.A.A. to AENZA S.A.A. which is effective as of February 4, 2021.
The Corporation is a conglomerate of companies with operations including different business activities, the most significant are engineering and construction, infrastructure (public concession ownership and operation) and real estate businesses. See details of operating segments in Note 7.
b) Authorization for the issue of the financial statements
The condensed interim consolidated financial statements for the period ended September 30, 2021 were authorized by Management and Board of Directors on October 29, 2021.
The consolidated financial statements for the year ended December 31, 2020, have been prepared and issued with authorization of Management and the Board of Directors on March 5, 2021, and were approved on the General Shareholders’ Meeting held on March 31, 2021.
Since the date the financial statements were submitted to our shareholders for their approval, until the date of presentation to the Securities and Exchange Commission of the financial information attached to the annual report 20F, subsequent events with material impact on our results occurred and as a result, and in compliance with International Financial Reporting Standards (IFRS), we have recorded such impacts herein, this was revealed through a relevant information communication on May 17, 2021. The events referred to previously, are related mainly to the considerable progress in the negotiations of the Company’s plea bargain agreement, which allowed us to reassess our estimate of our exposure to the contingencies including within its scope. As a result, the amounts included in our financial statements were restructured.
After the filing of the Form 20-F, the Company signed an “Acta de Acuerdo Preparatorio de Colaboracion y Beneficios” (the “Agreement”), with the “Procuraduria Publica ad Hoc”. who dedicate themselves exclusively to the knowledge of investigations related to Crimes of Corruption of Officials and related incurred by the company Odebrecht and others (the “Prosecutor's Office” and with the ad hoc Public Prosecutor's Office for investigations and processes related to crimes of corruption of officials, money laundering and related assets incurred by the company Odebrecht and others (the "Office of the Attorney General"). Pursuant to the Agreement, the Company assumed an obligation to pay a civil penalty, which is within the estimates included in such financial information. The effects of the Effective Collaboration Agreement will enter into force as of their judicial approval.
The consolidated restructured financial statements for the year ended December 31, 2020 have been prepared and issued with authorization of Management and the Board of Directors on June 9, 2021 to ensure consistency between the information presented to the markets in which the Company’s securities are traded, and were approved on the General Mandatory Shareholder’s Meeting held on July 6, 2021.
- 6 -
c) Acta de Acuerdo Preparatorio de Colaboración y Beneficios – “The Agreement”
Pursuant to the Agreement executed on May 21, 2021, AENZA S.A.A. accepts it was utilized by certain former executives to commit illicit acts until 2016, and commits to pay a civil penalty to the Peruvian State of S/321.9 million and US$40.7 million. The civil penalty is subject to (i) a repayment tenor of 12 years, (ii) the legal interest rate in domestic and foreign currency, (iii) a total collateral of S/197 million through a trust that includes shares issued by a subsidiary of AENZA, a mortgage on a real estate asset and debt service guaranty account. Among other conditions, the Agreement includes a restriction to participate in public construction and road maintenance contracts for 2 years. As of September 30, 2021, we registered the present value of the amounts described before, which amount to S/165.1 million and US$17.2 million (totaling S/236.2 million).
The civil penalty covers the total contingency to which the Company was exposed because of the investigations revealed in the notes to the financial statements since 2017. Nevertheless, the Agreement enforceability is subject to court approval and its terms and conditions are subject to confidentiality provisions in such agreement
d) | Changes in Shareholders and Board of Directors |
On June 15, 2021, the Company was informed that IG4 Capital Infrastructure Investments LP (“IG4”) announced an “Oferta Publica de Adquisición” (“OPA”), or tender offer, for a total of 107,198,601 common shares with voting rights equivalent to 12.99% of the total stock issued by AENZA S.A.A. Furthermore, the Company was informed by other shareholders representing collectively 12.72% of the common shares that 8.82% executed a vote sindication agreement with IG4 and that 3.4% transferred their shares to a trust in which IG4 holds the decision on voting rights (“derechos politicos”).
On August 10, 2021, the Company was informed that IG4 purchased a significant shareholding participation in AENZA S.A.A., amounting to 25.13% of the company’s capital stock, from which 12.29% was purchased within the OPA and 12.84% was purchased through the “Transaction Documents”, as such documents were denominated in the Offering Information Prospectus updated on July 12, 2021. Furthermore, on August 12, 2021, certain shareholders of AENZA S.A.A. executed an Amendment to the Contrato de Fideicomiso with IG4 as “fideicomisario” and La Fiduciaria S.A. as “Fiduciaria”, in which, among other aspects, IG4 purchased the voting rights of AENZA’s common shares representing approximately 8.74% of the company’s capital stock, subject to a tenor of 8 years, which could be automatically renewed for an additional period of 8 years.
On August 26, 2021, the Company’s Board of Directors agreed to appoint Mr. André Mastrobuono as new Chief Executive Officer, effective on October 1, 2021. Mr. Luis Díaz Olivero would execute its duties as CEO until such date.
On September 20, 2021, a General Shareholders Meeting was held, in which a renewed Board of Directors was elected for the 2021-2024 period. On the same day, in a Board Meeting, Mr. Juan Vicente Revilla Vergara was appointed as Chairman of the Board and Mr. Gustavo Nickel Buffara de Freitas was appointed as Vice Chairman. In addition, the Board approved the following changes in the Board Committees:
1. | Change of denomination of the Strategy and Investments Committee to the Finance, Risks and Investments Committee; |
2. | Merge the Audit Committee and the Risks and Compliance Committee into a new Audit and Compliance Committee, and transfer the supervision of risks to the Finance, Risks and Investments Committee; |
3. | Create the Environmental, Social and Governance (ESG) Committee; |
4. | Designate the members of the Board Committees: |
(a) | Audit and Compliance Committee: Carlos Rojas Perla (Chairman), Santiago Hernando Pérez y Antonio Carlos Valente Da Silva. |
(b) Environmental, Social and Governance (ESG) Committee: Gema Esteban Garrido (Chairman), Antonio Carlos Valente Da Silva y Esteban Viton Ramírez.
(c) | Talent Committee: Juan Vicente Revilla Vergara (Chairman), Gustavo Nickel Buffara de Freitas, Santiago Hernando Pérez y Esteban Viton Ramirez. |
(d) | Finance, Risks and Investments Committee: Pablo Ignacio Kühlenthal Becker (Chairman), Nicolás Bañados Lyon, Carlos Rojas Perla y Gustavo Nickel Buffara de Freitas |
e) New State of emergency due to COVID
On September 16, 2021, the Peruvian Government extended the State of National Emergency for a period of 30 days as a result of COVID-19. Likewise, certain economic activities are restricted, according to the alert level in each department of Peru, until October 31, 2021. Management considers that the measures taken by the national authorities have no impact on the continuity and development of the operations of the Company because the activities carried out by the Company are within the group of permitted activities and have not been significantly impacted by the pandemic.
The Company’s Management continues to monitor the evolution of the situation and the guidance of the national and international authorities, since events beyond the control of Management may arise that require modifying the established business plan. A further spread of Covid-19 and the consequent measures taken to limit the spread of the disease could affect the ability to conduct business in the normal way and, therefore, affect the financial position and results of operations.
Citizen immobilization, the restriction of activities of strategic companies as well as the paralysis of public entities have affected the execution of investment projects as well as the performance of exploration activities, until the date of approval of the financial statements, it is not expected that operations and going concern will be affected.
2. BASIS OF PREPARATION
The condensed interim consolidated financial statements for the period ended September 30, 2021 have been prepared in accordance with IAS 34 "Interim Financial Reporting". The condensed interim consolidated financial statements provide comparative information regarding prior periods; however, they do not include all the information and disclosures required in the annual consolidated financial statements, so they must be read together with the audited consolidated financial statements for the year ended December 31, 2020, which have been prepared in accordance with International Standards. of Financial Information (hereinafter "IFRS").
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The condensed interim consolidated financial statements are presented in thousands of Peruvian Soles, unless otherwise stated.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting policies used in the preparation of these condensed interim consolidated financial statements are consistent with those applied in the preparation of the consolidated financial statements at December 31, 2020.
4. FINANCIAL RISK MANAGEMENT
Financial risk management is carried out by the Corporation’s Management. Management oversees the general management of risks in specific areas, such as foreign exchange rate risk, price risk, cash flow and fair value interest rate risk, credit risk, the use of derivative and non-derivative financial instruments and the investment of excess liquidity, which are supervised and monitored periodically.
4.1 Financial risk factors
The Corporation’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, price risk, fair value interest rate risk and cash flow interest rate risk), credit risk and liquidity risk. The Corporation’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Corporation’s financial performance.
a) Market risks
i) Foreign exchange risk
The Corporation is exposed to exchange rate risk as a result of the transactions carried out locally in foreign currency and due to its operations abroad. As of December 31, 2020 and September 30, 2021, this exposure is mainly concentrated in fluctuations of U.S. dollar, the Chilean and Colombian Pesos.
The balances of financial assets and liabilities denominated in foreign currencies correspond to balances in U.S. dollars, which are expressed at the published bid and ask exchange rate in effect at that date, according to the currency exchange rate:
At | At | |||||||
December 31, | September 30, | |||||||
2020 | 2021 | |||||||
Soles (a) | 3.624 | 4.136 | ||||||
Chilean Pesos (b) | 711.24 | 811.90 | ||||||
Colombian Pesos (c) | 3,432.50 | 3,834.68 |
(a) Soles published by the Superintendency of Banking, Insurance and Pension Fund Administrators (SBS).
(b) Chilean pesos published by the Banco Central de Chile.
(c) Colombian pesos published by Banco of the Republica de Colombia.
The consolidated statement of financial position includes the following:
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As of December 31, 2020 | As of September 30, 2021 | |||||||||||||||
S/(000 | ) | USD(000) | S/(000 | ) | USD(000) | |||||||||||
Assets | 2,125,400 | 586,479 | 2,089,791 | 505,266 | ||||||||||||
Liabilities | 1,165,475 | 321,599 | 2,615,696 | 632,422 |
For the periods ended September 30, 2020 and 2021, the Corporation’s exchange gains and losses for the Peruvian Sol, the Chilean and Colombian Pesos exposure against the U.S. dollar was:
2020 | 2021 | |||||||
Gain | 321,590 | 355,243 | ||||||
Loss | (320,483 | ) | (372,876 | ) |
ii) Price risk
Management considers that the exposure of the Corporation to the price risk of its investments in mutual funds, bonds, and equity securities is low since the invested amounts are not significant. Any fluctuation in their fair value will not have any significant impact on the balances reported in the consolidated financial statements.
iii) Cash flow and fair value interest rate risk
The Corporation’s interest rate risk mainly arises from its long-term borrowings. Borrowings issued at variable rates expose the Corporation to cash flow interest rate risk. Borrowings issued at fixed rates expose the Corporation to fair value interest rate risk.
b) Credit risk
Credit risk arises from cash and cash equivalents and deposits with banks and financial institutions, as well as customer credit counterparties, including the outstanding balance of accounts receivable and committed transactions.
Concerning to loans to related parties, the Corporation has measures in place to ensure the recovery of these loans through the controls maintained by the Corporate Finance Management and the performance evaluation conducted by the Board of Directors.
Management does not expect the Corporation to incur any losses from the performance by these counterparties, except for the ones already recorded at the financial statements.
c) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and cash equivalents, the availability of funding through an adequate number of sources of committed credit facilities and the capacity to close out positions in the market. Historically, the Corporation cash flows enabled it to meet its obligations. Due to the COVID-19 pandemic (Note 1-e), the Corporation has implemented various actions to reduce its exposure to liquidity risk, and has developed a Financial Plan based on several steps, which were designed assuming attaining a plea bargain agreement within a reasonable time frame. The Financial Plan aims to enable compliance with the various obligations at the corporate and group companies’ levels.
The Corporation’s Corporate Finance Office monitors rolling forecasts of the Corporation’s liquidity requirements to ensure it exists sufficient cash to meet operational needs so that the Corporation does not breach borrowing limits or covenants, where applicable, on any of its borrowing facilities. Less significant financing transactions are controlled by the Finance Management of each subsidiary.
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Such forecasting takes into consideration the Corporation’s debt financing plans, covenant compliance, compliance with internal ratio targets in the statement of financial position and, if applicable, external regulatory or legal requirements, for example, foreign currency restrictions.
Surplus cash held by the operating entities over the balance required for working capital management is invested in interest-bearing checking accounts or time deposits, selecting instruments with appropriate maturities and sufficient liquidity.
The table below analyzes the Corporation’s financial liabilities into relevant maturity groupings based on the remaining period from the date of the consolidated statement of financial position to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows, which include interest to be applied according to the established schedule.
Less than | 1-2 | 2-5 | More than | |||||||||||||||||
As of December 31, 2020 | 1 year | years | years | 5 years | Total | |||||||||||||||
Other financial liabilities (except | ||||||||||||||||||||
for finance leases and lease | ||||||||||||||||||||
liability for right-of-use asset) | 433,318 | 183,796 | 197,785 | 23,953 | 838,852 | |||||||||||||||
Finance leases | 16,287 | 14,919 | 20,851 | 8,515 | 60,572 | |||||||||||||||
Lease liability for right-of-use asset | 24,714 | 32,006 | 19,847 | 11,131 | 87,698 | |||||||||||||||
Bonds | 137,090 | 168,673 | 385,919 | 971,543 | 1,663,225 | |||||||||||||||
Trade accounts payables (except | ||||||||||||||||||||
non-financial liabilities) | 1,001,470 | 40,502 | - | - | 1,041,972 | |||||||||||||||
Accounts payables to related parties | 43,818 | 35,461 | - | 836 | 80,115 | |||||||||||||||
Other accounts payables (except | ||||||||||||||||||||
non-financial liabilities) | 356,101 | 62,943 | 230,352 | 322,123 | 971,519 | |||||||||||||||
2,012,798 | 538,300 | 854,754 | 1,338,101 | 4,743,953 |
Less than | 1-2 | 2-5 | More than | |||||||||||||||||
As of September 30, 2021 | 1 year | years | years | 5 years | Total | |||||||||||||||
Other financial liabilities (except | ||||||||||||||||||||
for finance leases and lease | ||||||||||||||||||||
liability for right-of-use asset) | 283,202 | 59,790 | 163,119 | 147,391 | 653,502 | |||||||||||||||
Finance leases | 14,188 | 14,197 | 24,133 | 5,682 | 58,200 | |||||||||||||||
Lease liability for right-of-use asset | 22,795 | 17,445 | 28,308 | 10,877 | 79,425 | |||||||||||||||
Bonds | 1,254,506 | 173,457 | 450,584 | 826,629 | 2,705,176 | |||||||||||||||
Trade accounts payables (except | ||||||||||||||||||||
non-financial liabilities) | 1,009,563 | 6,879 | 22,548 | 9,732 | 1,048,722 | |||||||||||||||
Accounts payables to related parties | 42,963 | 51,006 | - | - | 93,969 | |||||||||||||||
Other accounts payables (except | ||||||||||||||||||||
non-financial liabilities) | 377,676 | 62,377 | 236,625 | 336,509 | 1,013,187 | |||||||||||||||
3,004,893 | 385,151 | 925,317 | 1,336,820 | 5,652,181 |
4.2 Capital management risk
The Corporation’s objectives when managing capital are to safeguard the Corporation’s ability to continue as a going concern in order to provide returns for shareholders, benefits for other stakeholders and to maintain an optimal capital structure to minimize the cost of capital. In 2017 the situation of the Corporation had lead Management to monitor deviations that might cause the non-compliance of covenants and may hinder the renegotiation of liabilities (Note 15). In extraordinary events as explained in Note 1, the Corporation identifies the possible deviations and requirements and establishes a plan.
In order to maintain or adjust the capital structure, the Corporation may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
The Corporation monitors capital based on the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including current and non-current borrowings), less cash and cash equivalents. Total capital is calculated as ‘equity’ as shown in the consolidated statement of financial position plus net debt.
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As of December 31, 2020 and September 30, 2021, the gearing ratio is presented below indicating the Corporation’s strategy to keep it in a range from 0.08 to 0.70.
At | At | |||||||
December 31, | September 30, | |||||||
2020 | 2021 | |||||||
Total financial liabilities and bonds (Note 15 and Note 16) | 1,831,079 | 1,979,663 | ||||||
Less: Cash and cash equivalents (Note 8) | (900,168 | ) | (1,019,547 | ) | ||||
Net debt | 930,911 | 960,116 | ||||||
Total equity | 1,595,296 | 1,456,881 | ||||||
Total capital | 2,526,207 | 2,416,997 | ||||||
Gearing ratio | 0.37 | 0.40 |
4.3 Fair value estimation
For the classification of the type of valuation used by the Corporation for its financial instruments at fair value, the following levels of measurement have been established.
- | Level 1: Measurement based on quoted prices in active markets for identical assets or liabilities. |
- | Level 2: Measurement based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices). |
- | Level 3: Measurement based on inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs, generally based on internal estimates and assumptions of the Corporation). |
The table below shows the Corporation’s liabilities measured at fair value:
Level 3 | ||||
As of December 31, 2020 | ||||
Financial liabilities | ||||
Other financial entities (Note 15-b) | 152,523 | |||
As of September 30, 2021 | ||||
Financial liabilities | ||||
Other financial entities (Note 15-b) | 169,534 |
5. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS
Estimates and judgments used are continuously evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
In preparing these condensed interim consolidated financial statements, the significant judgements made by management in applying the Corporation’s accounting policies and the key sources of uncertainty were the same as those that applied to the consolidated financial statements for the year ended December 31, 2020.
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6. SEASONALITY OF OPERATIONS
The Corporation does not present seasonality in the operations of any of its subsidiaries; however, economic activities temporarily restricted due to COVID-19 pandemic and government measures implemented to contain the spread of the virus. As a result, this situation affected negatively Corporation's revenues and financial position (Note 1.e).
7. OPERATING SEGMENTS
Operating segments are reported consistently with the internal reports that are reviewed by the Corporation’ chief decision-maker; that is, the Executive Committee, which is led by the Chief Executive Officer. This Committee acts as the highest authority in making operational decisions, responsible for allocating resources and evaluating the performance of each operating segment.
The Corporation's operating segments are assessed by the activities of the following business units: (i) engineering and construction, (ii) infrastructure, and (iii) real estate.
As set forth under IFRS 8, reportable segments by significance of income are: ‘engineering and construction’ and ‘infraestructure’. However, the Corporation has voluntarily decided to report on all its operating segments.
Inter-segmental sales transactions are entered into at prices that are similar to those that would have been agreed to with unrelated third parties. Revenues from external customers reported are measured in a manner consistent with the basis of preparation of the financial statements. Sales of goods are related to Real State segment. Revenues from services are related to other segments.
Corporation sales and receivables are not concentrated on a few customers. There is no external customer that represents 10% or more of the Goup’s revenue.
The table below shows the Corporation’s financial statements by operating segments:
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Operating segments financial position | ||||||||||||||||||||||||||||||||||||
Segment reporting | ||||||||||||||||||||||||||||||||||||
Infrastructure | ||||||||||||||||||||||||||||||||||||
As of December 31, 2020 | Engineering and construction | Energy | Toll roads | Transportation | Water treatment | Real estate | Parent Company operations | Eliminations | Consolidated | |||||||||||||||||||||||||||
Assets.- | ||||||||||||||||||||||||||||||||||||
Cash and cash equivalent | 382,850 | 60,165 | 117,893 | 207,975 | 7,408 | 73,531 | 50,346 | - | 900,168 | |||||||||||||||||||||||||||
Trade accounts receivables, net | 425,939 | 37,614 | 25,014 | 111,602 | 565 | 38,043 | 64,390 | - | 703,167 | |||||||||||||||||||||||||||
Work in progress, net | 186,433 | - | - | - | - | - | - | - | 186,433 | |||||||||||||||||||||||||||
Accounts receivable from related parties | 107,495 | 35 | 31,868 | 2,624 | 30 | 1,342 | 102,103 | (218,159 | ) | 27,338 | ||||||||||||||||||||||||||
Other accounts receivable | 323,084 | 27,900 | 23,631 | 13,220 | 197 | 10,446 | 35,051 | 2 | 433,531 | |||||||||||||||||||||||||||
Inventories, net | 58,653 | 36,016 | 8,496 | 31,861 | - | 418,341 | 360 | (1,727 | ) | 552,000 | ||||||||||||||||||||||||||
Prepaid expenses | 7,798 | 1,964 | 6,485 | 328 | 116 | - | 6,281 | - | 22,972 | |||||||||||||||||||||||||||
Total current assets | 1,492,252 | 163,694 | 213,387 | 367,610 | 8,316 | 541,703 | 258,531 | (219,884 | ) | 2,825,609 | ||||||||||||||||||||||||||
Long-term trade accounts receivable, net | 53,036 | - | 15,740 | 632,214 | - | 2,181 | 27,495 | - | 730,666 | |||||||||||||||||||||||||||
Long-term accounts receivable from related parties | 315,393 | - | 14,508 | - | 11,103 | - | 611,498 | (332,431 | ) | 620,071 | ||||||||||||||||||||||||||
Prepaid expenses | - | 981 | 19,009 | 2,048 | 736 | - | - | (510 | ) | 22,264 | ||||||||||||||||||||||||||
Other long-term accounts receivable | 134,719 | 70,694 | 531 | - | 7,346 | 54,237 | 60,696 | - | 328,223 | |||||||||||||||||||||||||||
Investments in associates and joint ventures | 109,870 | 8,080 | - | - | - | 6,095 | 1,322,865 | (1,411,394 | ) | 35,516 | ||||||||||||||||||||||||||
Investment property | 1,467 | - | - | - | - | 24,606 | 44,521 | (44,521 | ) | 26,073 | ||||||||||||||||||||||||||
Property, plant and equipment, net | 169,091 | 166,382 | 9,186 | 794 | 146 | 9,592 | 16,718 | 33,560 | 405,469 | |||||||||||||||||||||||||||
Intangible assets, net | 143,575 | 250,327 | 371,437 | 681 | - | 872 | 19,017 | 6,081 | 791,990 | |||||||||||||||||||||||||||
Right-of-use assets, net | 8,179 | 9,872 | 4,626 | 99 | - | 3,936 | 51,401 | (13,595 | ) | 64,518 | ||||||||||||||||||||||||||
Deferred income tax asset | 174,269 | 4,717 | 5,037 | - | 779 | 18,704 | 53,536 | 5,123 | 262,165 | |||||||||||||||||||||||||||
Total non-current assets | 1,109,599 | 511,053 | 440,074 | 635,836 | 20,110 | 120,223 | 2,207,747 | (1,757,687 | ) | 3,286,955 | ||||||||||||||||||||||||||
Total assets | 2,601,851 | 674,747 | 653,461 | 1,003,446 | 28,426 | 661,926 | 2,466,278 | (1,977,571 | ) | 6,112,564 | ||||||||||||||||||||||||||
Liabilities.- | ||||||||||||||||||||||||||||||||||||
Borrowings | 230,682 | 32,550 | 2,405 | 42 | - | 95,709 | 102,469 | (10,973 | ) | 452,884 | ||||||||||||||||||||||||||
Bonds | 4,546 | - | 32,819 | 21,081 | - | - | - | - | 58,446 | |||||||||||||||||||||||||||
Trade accounts payable | 861,833 | 51,225 | 51,221 | 32,637 | 61 | 42,565 | 57,625 | - | 1,097,167 | |||||||||||||||||||||||||||
Accounts payable to related parties | 185,104 | 1,083 | 17,738 | 21,531 | - | 19,074 | 15,708 | (216,420 | ) | 43,818 | ||||||||||||||||||||||||||
Current income tax | 26,922 | 1,351 | 1,638 | 3,606 | 166 | - | 811 | - | 34,494 | |||||||||||||||||||||||||||
Other accounts payable | 525,195 | 12,905 | 35,997 | 6,719 | 766 | 91,976 | 40,252 | 4,596 | 718,406 | |||||||||||||||||||||||||||
Provisions | 8,876 | 18,943 | 1,659 | - | - | 492 | 62,787 | - | 92,757 | |||||||||||||||||||||||||||
Total current liabilities | 1,843,158 | 118,057 | 143,477 | 85,616 | 993 | 249,816 | 279,652 | (222,797 | ) | 2,497,972 | ||||||||||||||||||||||||||
Borrowings | 25,273 | 103,154 | 2,291 | 59 | - | 11,021 | 328,753 | (25,115 | ) | 445,436 | ||||||||||||||||||||||||||
Long-term bonds | 22,911 | - | 248,029 | 603,373 | - | - | - | - | 874,313 | |||||||||||||||||||||||||||
Long-term trade accounts payable | - | - | - | - | - | - | 40,502 | - | 40,502 | |||||||||||||||||||||||||||
Other long-term accounts payable | 140,605 | - | 11,623 | 231 | 2,762 | 23,357 | 4,654 | - | 183,232 | |||||||||||||||||||||||||||
Long-term accounts payable to related parties | 104,432 | - | 836 | 36,297 | 24,207 | - | 186,886 | (316,361 | ) | 36,297 | ||||||||||||||||||||||||||
Provisions | 122,503 | 37,599 | 26,034 | 1,925 | - | - | 148,548 | - | 336,609 | |||||||||||||||||||||||||||
Deferred income tax liability | 25,576 | 36,793 | 1,518 | 39,020 | - | - | - | - | 102,907 | |||||||||||||||||||||||||||
Total non-current liabilities | 441,300 | 177,546 | 290,331 | 680,905 | 26,969 | 34,378 | 709,343 | (341,476 | ) | 2,019,296 | ||||||||||||||||||||||||||
Total liabilities | 2,284,458 | 295,603 | 433,808 | 766,521 | 27,962 | 284,194 | 988,995 | (564,273 | ) | 4,517,268 | ||||||||||||||||||||||||||
Equity attributable to controlling interest in the Company | 261,501 | 354,982 | 161,710 | 177,694 | 464 | 138,933 | 1,474,398 | (1,302,076 | ) | 1,267,606 | ||||||||||||||||||||||||||
Non-controlling interest | 55,892 | 24,162 | 57,943 | 59,231 | - | 238,799 | 2,885 | (111,222 | ) | 327,690 | ||||||||||||||||||||||||||
Total liabilities and equity | 2,601,851 | 674,747 | 653,461 | 1,003,446 | 28,426 | 661,926 | 2,466,278 | (1,977,571 | ) | 6,112,564 |
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Operating segments financial position | ||||||||||||||||||||||||||||||||||||
Segment reporting | ||||||||||||||||||||||||||||||||||||
Infrastructure | ||||||||||||||||||||||||||||||||||||
Engineering | Parent | |||||||||||||||||||||||||||||||||||
As of September 30, 2021 | and construction | Energy | Toll roads | Transportation | Water treatment | Real estate | Company operations | Eliminations | Consolidated | |||||||||||||||||||||||||||
Assets.- | ||||||||||||||||||||||||||||||||||||
Cash and cash equivalent | 335,319 | 111,936 | 109,887 | 174,421 | 6,694 | 92,950 | 188,340 | - | 1,019,547 | |||||||||||||||||||||||||||
Trade accounts receivables, net | 439,763 | 68,507 | 44,677 | 105,052 | 1,618 | 8,251 | 53,316 | - | 721,184 | |||||||||||||||||||||||||||
Work in progress, net | 273,088 | - | - | - | - | - | - | - | 273,088 | |||||||||||||||||||||||||||
Accounts receivable from related parties | 113,414 | 94 | 57,554 | 4,058 | 30 | 2,531 | 162,726 | (309,572 | ) | 30,835 | ||||||||||||||||||||||||||
Other accounts receivable | 286,482 | 29,474 | 30,182 | 20,637 | 819 | 5,858 | 26,465 | 2 | 399,919 | |||||||||||||||||||||||||||
Inventories, net | 55,466 | 39,683 | 7,778 | 32,760 | 38 | 407,235 | 2,997 | (1,734 | ) | 544,223 | ||||||||||||||||||||||||||
Prepaid expenses | 10,635 | 2,226 | 5,167 | 551 | 52 | - | 8,594 | - | 27,225 | |||||||||||||||||||||||||||
Total current assets | 1,514,167 | 251,920 | 255,245 | 337,479 | 9,251 | 516,825 | 442,438 | (311,304 | ) | 3,016,021 | ||||||||||||||||||||||||||
Investments available for sale | - | 6,198 | 2 | - | - | - | - | (6,200 | ) | - | ||||||||||||||||||||||||||
Total current assets | 1,514,167 | 258,118 | 255,247 | 337,479 | 9,251 | 516,825 | 442,438 | (317,504 | ) | 3,016,021 | ||||||||||||||||||||||||||
Long-term trade accounts receivable, net | 78,127 | - | 16,101 | 658,422 | - | - | 13,010 | - | 765,660 | |||||||||||||||||||||||||||
Long-term accounts receivable from related parties | 351,459 | - | 14,930 | - | 11,427 | - | 796,694 | (502,672 | ) | 671,838 | ||||||||||||||||||||||||||
Prepaid expenses | - | 981 | 15,773 | 1,932 | 697 | - | - | (510 | ) | 18,873 | ||||||||||||||||||||||||||
Other long-term accounts receivable | 176,801 | 85,497 | - | - | 7,346 | 59,356 | 42,789 | - | 371,789 | |||||||||||||||||||||||||||
Investments in associates and joint ventures | 108,144 | 9,373 | - | - | - | 5,442 | 1,242,366 | (1,329,637 | ) | 35,688 | ||||||||||||||||||||||||||
Investment property | - | - | - | - | - | 22,952 | 43,049 | (43,049 | ) | 22,952 | ||||||||||||||||||||||||||
Property, plant and equipment, net | 153,291 | 151,838 | 7,787 | 697 | 140 | 7,279 | 11,669 | 32,088 | 364,789 | |||||||||||||||||||||||||||
Intangible assets, net | 148,156 | 240,614 | 333,224 | 596 | - | 775 | 19,035 | 5,291 | 747,691 | |||||||||||||||||||||||||||
Right-of-use assets, net | 4,857 | 4,871 | 4,787 | 71 | 22 | 2,417 | 45,212 | (9,975 | ) | 52,262 | ||||||||||||||||||||||||||
Deferred income tax asset | 189,751 | 4,032 | 13,744 | - | 775 | 18,878 | 68,057 | 5,128 | 300,365 | |||||||||||||||||||||||||||
Total non-current assets | 1,210,586 | 497,206 | 406,346 | 661,718 | 20,407 | 117,099 | 2,281,881 | (1,843,336 | ) | 3,351,907 | ||||||||||||||||||||||||||
Total assets | 2,724,753 | 755,324 | 661,593 | 999,197 | 29,658 | 633,924 | 2,724,319 | (2,160,840 | ) | 6,367,928 | ||||||||||||||||||||||||||
Liabilities.- | ||||||||||||||||||||||||||||||||||||
Borrowings | 156,660 | 26,959 | 3,198 | 47 | 18 | 75,357 | 48,853 | (13,179 | ) | 297,913 | ||||||||||||||||||||||||||
Bonds | 4,492 | - | 34,429 | 23,400 | - | - | 368,338 | (6,198 | ) | 424,461 | ||||||||||||||||||||||||||
Trade accounts payable | 817,148 | 56,007 | 37,914 | 27,393 | 335 | 32,194 | 64,032 | 7,220 | 1,042,243 | |||||||||||||||||||||||||||
Accounts payable to related parties | 212,679 | 1,060 | 51,637 | 38,697 | 24 | 18,791 | 13,633 | (293,558 | ) | 42,963 | ||||||||||||||||||||||||||
Current income tax | 35,164 | 13,377 | 11,724 | - | 242 | 152 | 478 | - | 61,137 | |||||||||||||||||||||||||||
Other accounts payable | 701,903 | 20,412 | 40,881 | 9,224 | 826 | 117,921 | 61,116 | 5,271 | 957,554 | |||||||||||||||||||||||||||
Provisions | 14,952 | 15,572 | 1,670 | - | - | 595 | 73,016 | - | 105,805 | |||||||||||||||||||||||||||
Total current liabilities | 1,942,998 | 133,387 | 181,453 | 98,761 | 1,445 | 245,010 | 629,466 | (300,444 | ) | 2,932,076 | ||||||||||||||||||||||||||
Borrowings | 11,430 | 116,551 | 1,757 | 24 | 5 | 6,620 | 293,512 | (21,859 | ) | 408,040 | ||||||||||||||||||||||||||
Long-term bonds | 22,125 | - | 224,778 | 602,346 | - | - | - | - | 849,249 | |||||||||||||||||||||||||||
Long-term trade accounts payable | - | - | - | - | - | - | 35,535 | - | 35,535 | |||||||||||||||||||||||||||
Other long-term accounts payable | 119,521 | - | 9,286 | 219 | 3,136 | 25,399 | 2,688 | - | 160,249 | |||||||||||||||||||||||||||
Long-term accounts payable to related parties | 238,986 | - | 836 | 88,508 | 24,671 | - | 206,316 | (508,311 | ) | 51,006 | ||||||||||||||||||||||||||
Provisions | 133,847 | 45,560 | 31,112 | 2,651 | - | - | 163,767 | - | 376,937 | |||||||||||||||||||||||||||
Deferred income tax liability | 18,971 | 32,888 | - | 46,096 | - | - | - | - | 97,955 | |||||||||||||||||||||||||||
Total non-current liabilities | 544,880 | 194,999 | 267,769 | 739,844 | 27,812 | 32,019 | 701,818 | (530,170 | ) | 1,978,971 | ||||||||||||||||||||||||||
Total liabilities | 2,487,878 | 328,386 | 449,222 | 838,605 | 29,257 | 277,029 | 1,331,284 | (830,614 | ) | 4,911,047 | ||||||||||||||||||||||||||
Equity attributable to controlling interest in the Company | 182,809 | 397,820 | 155,950 | 120,444 | 401 | 137,409 | 1,390,212 | (1,219,793 | ) | 1,165,252 | ||||||||||||||||||||||||||
Non-controlling interest | 54,066 | 29,118 | 56,421 | 40,148 | - | 219,486 | 2,823 | (110,433 | ) | 291,629 | ||||||||||||||||||||||||||
Total liabilities and equity | 2,724,753 | 755,324 | 661,593 | 999,197 | 29,658 | 633,924 | 2,724,319 | (2,160,840 | ) | 6,367,928 |
- 14 -
Operating segment performance | ||||||||||||||||||||||||||||||||||||
Segment Reporting | ||||||||||||||||||||||||||||||||||||
Infrastructure | ||||||||||||||||||||||||||||||||||||
For the period ended September 30, 2020 | Engineering and construction | Energy | Toll roads | Transportation | Water treatment | Real estate | Parent Company operations | Elimination | Consolidated | |||||||||||||||||||||||||||
Revenue | 1,435,515 | 272,966 | 305,099 | 253,923 | 2,511 | 66,473 | 176,585 | (290,035 | ) | 2,223,037 | ||||||||||||||||||||||||||
Gross profit (loss) | 82,102 | 41,264 | 30,314 | 80,122 | 640 | 13,958 | 1,251 | (37,108 | ) | 212,543 | ||||||||||||||||||||||||||
Administrative expenses | (78,484 | ) | (11,758 | ) | (12,502 | ) | (9,932 | ) | (299 | ) | (14,150 | ) | (33,629 | ) | 39,310 | (121,444 | ) | |||||||||||||||||||
Other income and expenses, net | 3,756 | (5,632 | ) | (13,532 | ) | 66 | 13 | 730 | (20,882 | ) | (619 | ) | (36,100 | ) | ||||||||||||||||||||||
Operating profit (loss) | 7,374 | 23,874 | 4,280 | 70,256 | 354 | 538 | (53,260 | ) | 1,583 | 54,999 | ||||||||||||||||||||||||||
Financial expenses | (43,863 | ) | (14,724 | ) | (24,865 | ) | (4,721 | ) | (27 | ) | (8,665 | ) | (14,031 | ) | 8,691 | (102,205 | ) | |||||||||||||||||||
Financial income | 4,843 | 1,167 | 4,874 | 2,337 | 329 | 4,321 | 5,893 | (9,803 | ) | 13,961 | ||||||||||||||||||||||||||
Dividends | - | - | - | - | - | - | 2,342 | (2,342 | ) | - | ||||||||||||||||||||||||||
Share of profit or loss in associates | ||||||||||||||||||||||||||||||||||||
and joint ventures | (258 | ) | 1,686 | - | - | - | 32 | (2,749 | ) | 3,234 | 1,945 | |||||||||||||||||||||||||
(Loss) profit before income tax | (31,904 | ) | 12,003 | (15,711 | ) | 67,872 | 656 | (3,774 | ) | (61,805 | ) | 1,363 | (31,300 | ) | ||||||||||||||||||||||
Income tax | (3,003 | ) | (3,059 | ) | 140 | (20,651 | ) | (357 | ) | 878 | 12,732 | (1,476 | ) | (14,796 | ) | |||||||||||||||||||||
(Loss) profit for the year | (34,907 | ) | 8,944 | (15,571 | ) | 47,221 | 299 | (2,896 | ) | (49,073 | ) | (113 | ) | (46,096 | ) | |||||||||||||||||||||
(Loss) profit from attributable to: | ||||||||||||||||||||||||||||||||||||
Owners of the Company | (31,439 | ) | 6,504 | (13,785 | ) | 35,416 | 299 | (1,822 | ) | (49,035 | ) | (1,281 | ) | (55,143 | ) | |||||||||||||||||||||
Non-controlling interest | (3,468 | ) | 2,440 | (1,786 | ) | 11,805 | - | (1,074 | ) | (38 | ) | 1,168 | 9,047 | |||||||||||||||||||||||
(34,907 | ) | 8,944 | (15,571 | ) | 47,221 | 299 | (2,896 | ) | (49,073 | ) | (113 | ) | (46,096 | ) |
- 15 -
Operating segment performance | ||||||||||||||||||||||||||||||||||||
Segment Reporting | ||||||||||||||||||||||||||||||||||||
Infrastructure | ||||||||||||||||||||||||||||||||||||
For the Period ended September 30, 2021 | Engineering and construction | Energy | Toll roads | Transportation | Water treatment | Real estate | Parent Company operations | Elimination | Consolidated | |||||||||||||||||||||||||||
Revenue | 1,783,054 | 376,616 | 374,467 | 260,366 | 2,694 | 144,734 | 174,332 | (251,477 | ) | 2,864,786 | ||||||||||||||||||||||||||
Gross profit (loss) | 80,019 | 82,927 | 56,063 | 68,753 | 724 | 21,085 | 11,303 | (36,777 | ) | 284,097 | ||||||||||||||||||||||||||
Administrative expenses | (92,214 | ) | (10,500 | ) | (12,267 | ) | (11,493 | ) | (335 | ) | (10,941 | ) | (42,959 | ) | 38,748 | (141,961 | ) | |||||||||||||||||||
Other income and expenses, net | (3,224 | ) | (2,434 | ) | (1,808 | ) | 1,215 | (15 | ) | 992 | (1,046 | ) | (290 | ) | (6,610 | ) | ||||||||||||||||||||
Operating (loss) profit | (15,419 | ) | 69,993 | 41,988 | 58,475 | 374 | 11,136 | (32,702 | ) | 1,681 | 135,526 | |||||||||||||||||||||||||
Financial expenses | (79,538 | ) | (9,144 | ) | (21,100 | ) | (6,806 | ) | (91 | ) | (8,804 | ) | (83,774 | ) | 24,342 | (184,915 | ) | |||||||||||||||||||
Financial income | 1,441 | 3,147 | 2,979 | 382 | 384 | 2,454 | 17,894 | (24,512 | ) | 4,169 | ||||||||||||||||||||||||||
Dividends | - | - | - | - | - | - | 12,200 | (12,200 | ) | - | ||||||||||||||||||||||||||
Share of profit or loss in associates | ||||||||||||||||||||||||||||||||||||
and joint ventures | (1,712 | ) | 2,046 | - | - | - | 830 | 2,331 | (1,073 | ) | 2,422 | |||||||||||||||||||||||||
(Loss) profit before income tax | (95,228 | ) | 66,042 | 23,867 | 52,051 | 667 | 5,616 | (84,051 | ) | (11,762 | ) | (42,798 | ) | |||||||||||||||||||||||
Income tax | 7,596 | (18,248 | ) | (6,279 | ) | (16,384 | ) | (266 | ) | (1,850 | ) | (1,679 | ) | (32 | ) | (37,142 | ) | |||||||||||||||||||
(Loss) profit for the year | (87,632 | ) | 47,794 | 17,588 | 35,667 | 401 | 3,766 | (85,730 | ) | (11,794 | ) | (79,940 | ) | |||||||||||||||||||||||
(Loss) profit from attributable to: | ||||||||||||||||||||||||||||||||||||
Owners of the Company | (84,528 | ) | 42,838 | 10,989 | 26,750 | 401 | (1,525 | ) | (85,668 | ) | (12,743 | ) | (103,486 | ) | ||||||||||||||||||||||
Non-controlling interest | (3,104 | ) | 4,956 | 6,599 | 8,917 | - | 5,291 | (62 | ) | 949 | 23,546 | |||||||||||||||||||||||||
(87,632 | ) | 47,794 | 17,588 | 35,667 | 401 | 3,766 | (85,730 | ) | (11,794 | ) | (79,940 | ) |
- 16 -
There are no differences as compared to previous year-end consolidated financial statements based on segmentation or measurement of financial performance by segment.
8. CASH AND CASH EQUIVALENTS
This account comprises:
At December 31, | At September 30, | |||||||
2020 | 2021 | |||||||
Cash on hand | 996 | 892 | ||||||
Remittances in-transit | 2,340 | 2,094 | ||||||
Bank accounts (a) | 274,582 | 461,671 | ||||||
Current accounts | 161,227 | 178,759 | ||||||
Banco de la Nacion | 20,862 | 20,010 | ||||||
Savings deposits and mutual funds | 9,038 | 3,489 | ||||||
Time deposits (less than 3 months) | 83,455 | 259,413 | ||||||
Escrow account (b) | 622,250 | 554,890 | ||||||
Operational funds | 298,435 | 241,706 | ||||||
Reserve funds | 144,737 | 172,819 | ||||||
Consortium funds | 122,088 | 71,177 | ||||||
Guarantee funds | 56,990 | 69,189 | ||||||
900,168 | 1,019,547 |
(a) | The Corporation maintains current accounts with local and foreign banks that include time deposits have maturities less than 90 days and may be renewed upon maturity. These deposits earn interest that fluctuates between 0.18% and 0.90%. Additionally, it includes current accounts in the Banco de la Nacion for the exclusive use of paying tax obligations. |
(b) | The Corporation maintains trust accounts in local and foreign banks for the exclusive use of operations in projects and join operations. It also includes reserve funds for the payments of bonds issued by the subsidiaries Tren Urbano de Lima S.A. and Norvial S.A. amounting to S/115 million and S/23 million, respectively, as of September 30, 2021 (S/132 million and S/21 million, respectively, as of December 31, 2020). |
The above figures are reconciled with the amount of cash shown in the consolidated statement of cash flows at the end of the period as follows:
At | At | |||||||
December 31, | September 30, | |||||||
2020 | 2021 | |||||||
Cash and cash equivalent on consolidated statement of financial position | 900,168 | 1,019,547 | ||||||
Bank overdrafts (Note 15) | - | ) | (25 | ) | ||||
Balances per consolidated statement of cash flows | 900,168 | 1,019,522 |
- 17 -
9. TRADE ACCOUNTS RECEIVABLES, NET
This account comprises:
Total | Current | Non-current | ||||||||||||||||||||||
At | At | At | At | At | At | |||||||||||||||||||
December 31, | September 30, | December 31, | September 30, | December 31, | September 30, | |||||||||||||||||||
2020 | 2021 | 2020 | 2021 | 2020 | 2021 | |||||||||||||||||||
Receivables (net) (a) | 753,693 | 813,195 | 254,587 | 309,580 | 499,106 | 503,615 | ||||||||||||||||||
Unbilled receivables (net) - Subsidiaries (b) | 413,364 | 385,422 | 337,244 | 297,702 | 76,120 | 87,720 | ||||||||||||||||||
Unbilled receivables (net) - Concessions (c) | 266,776 | 288,227 | 111,336 | 113,902 | 155,440 | 174,325 | ||||||||||||||||||
1,433,833 | 1,486,844 | 703,167 | 721,184 | 730,666 | 765,660 |
a) | Receivables are presented net of impairment and present value discount. The value of the impairment amounts to S/43.6 million (S/47.2 million as of December 31, 2020). The ageing is detailed as follows: |
At | At | |||||||
December 31, | September 30, | |||||||
2020 | 2021 | |||||||
Current | 718,220 | 740,687 | ||||||
Past due up to 30 days | 5,737 | 35,747 | ||||||
Past due from 31 days up to 90 days | 6,801 | 13,223 | ||||||
Past due from 91 days up to 120 days | 2,279 | 8,129 | ||||||
Past due from 121 days up to 360 days | 4,185 | 1,336 | ||||||
Past due over 360 days | 16,471 | 14,073 | ||||||
753,693 | 813,195 |
As of September 30, 2021, the amount overdue for more than 360 days mainly includes invoices receivable from subsidiaries: Cumbra Peru S.A. for S/9.8 million, UNNA Transporte S.A.C. for S/2.5 million, Cumbra Ingenieria S.A. for S/1.7 million, and others for S/0.1 million (Cumbra Peru S.A. for S/12.5 million, UNNA Transporte S.A.C. for S/2.7 million, Cumbra Ingenieria S,A. for S/0.8 millones and others for S/0.5 millones, as of December 31, 2020).
b) | Unbilled receivables from subsidiaries correspond to the estimates for services rendered that were not billed, valuations in process or pending approval. The balance includes impairment for S/5.6 million and present value discount for S/7.7 million (impairment for S/5.9 million and present value discount for S/12.5 million, as of December 31, 2020), and detailed by subsidiary: |
At | At | |||||||
December 31, | September 30, | |||||||
2020 | 2021 | |||||||
Cumbra Peru S.A. | 315,878 | 277,951 | ||||||
UNNA Transporte S.A.C. | 6,298 | 10,808 | ||||||
Cumbra Ingenieria S.A. | 25,823 | 46,195 | ||||||
UNNA Energia S.A. | 1,512 | 2,524 | ||||||
Adexus S.A. | 63,853 | 47,936 | ||||||
Qualys S.A. | - | 8 | ||||||
413,364 | 385,422 |
c) | Unbilled receivables from concessions correspond to future invoice according to Concession Contract terms, as detailed below: |
- 18 -
At | At | |||||||
December 31, | September 30, | |||||||
2020 | 2021 | |||||||
Tren Urbano de Lima S.A. | 235,763 | 249,937 | ||||||
Survial S.A. | 10,611 | 12,490 | ||||||
Norvial S.A. | 15,436 | 18,643 | ||||||
Concesión Canchaque S.A.C. | 4,401 | 6,536 | ||||||
Concesionaria La Chira S.A. | 565 | 621 | ||||||
266,776 | 288,227 |
10. WORK IN PROGRESS
This account comprises:
At | At | |||||||
December 31, | September 30, | |||||||
2020 | 2021 | |||||||
Cumbra Peru S.A. | 170,965 | 264,244 | ||||||
Cumbra Ingenieria S.A. | 15,468 | 8,844 | ||||||
186,433 | 273,088 |
Work in progress costs include all those expenses incurred for construction contracts. The Corporation estimates that all costs incurred will be billed and collected.
The main projects of work in progress, grouped by subsidiary, are presented below:
At | At | |||||||
December 31, | September 30, | |||||||
2020 | 2021 | |||||||
Vial y Vives - DSD S.A. - Quebrada Blanca Project | 73,337 | 61,089 | ||||||
Vial y Vives - DSD S.A. - Modernization and expansion of Arauco Plant | 24,224 | 104,681 | ||||||
Cumbra Peru S.A. - Concentrator Plant and tunnel of Quellaveco | 68,701 | 91,422 | ||||||
Cumbra Peru S.A. - Talara Refinery | 15,468 | 12,123 | ||||||
Others | 4,703 | 3,773 | ||||||
186,433 | 273,088 |
11. TRANSACTIONS WITH RELATED PARTIES
a) Transactions with related parties
Major transactions for the periods ended September 30, 2020 and 2021 between the Company and its related parties are summarized as follows:
2020 | 2021 | |||||||
Revenue from sales of goods and services: | ||||||||
- Joint operations | 4,300 | 13,035 |
Inter-company services are agreed based on market terms and conditions as if they had been agreed with third parties.
- 19 -
b) Balances of transactions with related parties
As of December 31, | As of September 30, | |||||||||||||||
2020 | 2021 | |||||||||||||||
Receivable | Payable | Receivable | Payable | |||||||||||||
Current portion: | ||||||||||||||||
Joint operations | ||||||||||||||||
Consorcio Rio Urubamba | 9,357 | - | 10,007 | - | ||||||||||||
Consorcio Rio Mantaro | - | 7,655 | - | 8,618 | ||||||||||||
Consorcio Constructor Chavimochic | - | 6,208 | - | 9,440 | ||||||||||||
Consorcio Peruano de Conservacion | 3,156 | - | 615 | 2,377 | ||||||||||||
Consorcio Vial Quinua | - | 2,051 | - | 2,013 | ||||||||||||
Consorcio Chicama Ascope | 2,922 | - | 4,295 | - | ||||||||||||
Consorcio Inti Punku | - | 6,556 | 6,477 | - | ||||||||||||
Consorcio GyM Conciviles | 1,341 | 1,472 | 1,530 | 50 | ||||||||||||
Consorcio Manperan | 1,057 | 656 | 574 | 869 | ||||||||||||
Consorcio Italo Peruano | 1,520 | 217 | 1,381 | 135 | ||||||||||||
Consorcio Norte Pachacutec | 1,077 | 1,192 | 117 | 285 | ||||||||||||
Consorcio Ermitaño | 890 | 474 | 978 | 531 | ||||||||||||
Terminales del Peru | 501 | 161 | 96 | 161 | ||||||||||||
Consorcio CDEM | 1,111 | - | 34 | - | ||||||||||||
Consorcio GyM-Stracon | - | 644 | - | 98 | ||||||||||||
Consorcio TNT Vial y Vives - DSD Chile Ltda | - | 1,015 | - | 599 | ||||||||||||
Otros menores | 2,446 | 1,701 | 1,874 | 2,388 | ||||||||||||
25,378 | 30,002 | 27,978 | 27,564 | |||||||||||||
Other related parties | ||||||||||||||||
Ferrovias S.A. | - | 11,139 | - | 13,241 | ||||||||||||
Peru Piping Spools S.A.C. | 1,960 | 2,677 | 2,857 | 2,158 | ||||||||||||
1,960 | 13,816 | 2,857 | 15,399 | |||||||||||||
Current portion | 27,338 | 43,818 | 30,835 | 42,963 | ||||||||||||
Non-current portion | ||||||||||||||||
Gasoducto Sur Peruano S.A. | 620,071 | - | 671,838 | - | ||||||||||||
Ferrovias S.A. | - | 12,862 | - | 13,507 | ||||||||||||
Ferrovias Participaciones S.A. | - | 23,435 | - | 37,499 | ||||||||||||
Non-current | 620,071 | 36,297 | 671,838 | 51,006 |
Receivables and payables are mainly current and do not have specific guarantees.
Accounts receivable from related parties are mainly to sales of goods and services. These balances do not bear interest and as of September 30, 2021 do not require a provision for impairment. The account receivable from Gasoducto Sur Peruano S.A. is presented net of impairment and present value discount; the variation between December 2020 and September 2021, is mainly due to the effect of the exchange difference, generating an income of S/83.4 million; and the impact of the discount rate applied to the calculation of the present value, that generated an expense of S/31.6 million (Note 23).
Accounts payable to related parties mainly related to services of engineering, construction, maintenance and others. Such accounts are not interest bearing because they are short-term.
- 20 -
12. OTHER ACCOUNTS RECEIVABLE
This account comprises:
Total | Current | Non-current | ||||||||||||||||||||||
At | At | At | At | At | At | |||||||||||||||||||
December 31, | September 30, | December 31, | September 30, | December 31, | September 30, | |||||||||||||||||||
2020 | 2021 | 2020 | 2021 | 2020 | 2021 | |||||||||||||||||||
Advances to suppliers | 76,200 | 39,278 | 76,200 | 39,278 | - | - | ||||||||||||||||||
Income tax on-account payments | 48,054 | 50,375 | 48,052 | 50,373 | 2 | 2 | ||||||||||||||||||
VAT credit | 54,076 | 56,031 | 43,498 | 46,297 | 10,578 | 9,734 | ||||||||||||||||||
Guarantee deposits | 217,441 | 221,024 | 156,123 | 136,141 | 61,318 | 84,883 | ||||||||||||||||||
Claims to third parties | 212,565 | 238,430 | 108,748 | 112,751 | 103,817 | 125,679 | ||||||||||||||||||
Petroleos del Peru S.A.- Petroperu S.A. | 87,826 | 106,382 | 17,132 | 20,885 | 70,694 | 85,497 | ||||||||||||||||||
ITAN and other tax receivable | 63,003 | 40,439 | 30,468 | 6,789 | 32,535 | 33,650 | ||||||||||||||||||
Restricted funds | 29,121 | 40,038 | 2,092 | 32,692 | 27,029 | 7,346 | ||||||||||||||||||
Rental and sale of equipment - Cumbra Peru S.A. projects | 29,149 | 34,348 | 29,149 | 34,348 | - | - | ||||||||||||||||||
Accounts receivable from personneel | 10,957 | 13,468 | 10,957 | 13,376 | - | 92 | ||||||||||||||||||
Consorcio Panorama | 25,026 | 28,267 | - | - | 25,026 | 28,267 | ||||||||||||||||||
Other minors | 10,386 | 9,202 | 9,738 | 9,065 | 648 | 137 | ||||||||||||||||||
863,804 | 877,281 | 532,157 | 501,994 | 331,647 | 375,287 | |||||||||||||||||||
Impairment | (102,050 | ) | (105,573 | ) | (98,626 | ) | (102,075 | ) | (3,424 | ) | (3,498 | ) | ||||||||||||
761,754 | 771,708 | 433,531 | 399,919 | 328,223 | 371,789 |
The fair value of the other short-term accounts receivable is similar to their book value due to their short-term maturity. The non-current portion corresponds mainly to non-financial assets such as advances to suppliers and tax credits. Other non-current accounts receivable have maturities that vary between 2 and 5 years.
The maximum exposure to credit risk as of the reporting date is the carrying amount of each class of other accounts receivable mentioned.
13. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES
This account comprises:
At | At | |||||||
December 31, | September 30, | |||||||
2020 | 2021 | |||||||
Associates | 27,246 | 26,126 | ||||||
Joint ventures | 8,270 | 9,562 | ||||||
35,516 | 35,688 |
The movement of our investments in associates for the periods ended September 30, 2020 and 2021 is as follows:
2020 | 2021 | |||||||
Balance at January 1, | 37,035 | 35,516 | ||||||
Dividends received | (701 | ) | (2,236 | ) | ||||
Equity interest in results | 1,945 | 2,422 | ||||||
Conversion adjustment | 17 | (14 | ) | |||||
Balance at September 30, | 38,296 | 35,688 |
Concesionaria Chavimochic S.A.C.
The entity was awarded the concesion of the Chavimochic irrigation project, including a) design and construction of the work required for the third-phase of the Chavimochic irrigation project in the province of La Libertad; b) operation and maintenance of works; and c) water supply to the Project users. Construction activities started in 2015; the effective concession period is 25 years, and the total investment amounts was estimated in US$647 million.
- 21 -
The civil works of the third stage of the Chavimochic Irrigation Project were structured in two phases. To date, the works of the first phase (Palo Redondo Dam) are 70% completed. However, at the beginning of 2017, the procedure for early termination of the Concession Contract was initiated due to the breach of contract by the Grantor, and all activities were suspended in December 2017. Due to the fact that no agreement was reached, the Concessionaire initiated an arbitration process at the UNCID, which is currently in process.
Moreover, from 2018 to date, the Peruvian Government (“the Grantor”) has been evaluating the modification of the Concession Contract, to determine a mechanism that allow the completion of the project, without resolution as of to date.
Finally, the Grantor and the Ministry of Agriculture and Irrigation (MINAGRI), and the Chavimochic Special Project, have signed an Agreement in order to allow MINAGRI to subrogate the ownership of the Project, within the framework of the provisions of the Emergency Decree N ° 021-2020.
14. PROPERTY, PLANT AND EQUIPMENT, INTANGIBLE ASSETS AND RIGHT-OF-USE ASSETS
The movement in property, plant and equipment, intangible assets and right-of-use assets accounts for the periods ended September 30, 2020 and 2021, is as follows:
Property, | ||||||||||||
plant and | Intangibles | Right-of-use | ||||||||||
equipment | assets | assets | ||||||||||
(a) | (b) | (a) | ||||||||||
Net cost at January 1, 2020 | 463,990 | 854,227 | 90,581 | |||||||||
Additions | 27,396 | 44,081 | 9,673 | |||||||||
Reclassifications and disposals | (11,554 | ) | (23,807 | ) | (10,045 | ) | ||||||
Conversion adjustments | (2,190 | ) | (3,682 | ) | (3 | ) | ||||||
Deductions for sale of assets | (5,493 | ) | - | - | ||||||||
Depreciation, amortization | (57,547 | ) | (75,164 | ) | (19,812 | ) | ||||||
Net cost at September 30, 2020 | 414,602 | 795,655 | 70,394 | |||||||||
Net cost at January 1, 2021 | 405,469 | 791,990 | 64,518 | |||||||||
Additions | 24,881 | 28,558 | 5,707 | |||||||||
Reclassifications and disposals | (2,945 | ) | (85 | ) | (425 | ) | ||||||
Conversion adjustments | 409 | 1,381 | 39 | |||||||||
Deductions for sale of assets | (6,587 | ) | - | - | ||||||||
Depreciation, amortization | (56,438 | ) | (74,153 | ) | (17,577 | ) | ||||||
Net cost at September 30, 2021 | 364,789 | 747,691 | 52,262 |
(a) Property, plant and equipment and right-of-use assets
As of September 30, 2021, additions to property, plant and equipment mainly corresponds to machinery of the engineering and construction segment for S/13.6 million; works in progress corresponding to the drilling stage of the infrastructure segment for S/4.2 million; and equipment of the engineering and construction segment for S/2.5 million (as of September 30, 2020, machinery of the engineering and construction segment for S/12.4 million, works in progress of the infrastructure segment for S/5.8 million; and equipment of the engineering and construction segment for S/0.9 million).
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As of September 30, 2021, additions to right-of-use assets correspond mainly to lease agreements for the acquisition of equipment.
For the periods ended September 30, 2020 and 2021, the depreciation of property, plant and equipment, investment property and right-of-use assets is presented in the Statement of Income as follows:
2020 | 2021 | |||||||
Cost of services and goods (Note 21) | 73,265 | 70,621 | ||||||
Administrative expenses (Note 21) | 5,902 | 5,183 | ||||||
Total depreciation | 79,167 | 75,804 | ||||||
(-) Depreciation related to investment property | (1,808 | ) | (1,789 | ) | ||||
(-) Depreciation related to right-of-use assets (Note 14) | (19,812 | ) | (17,577 | ) | ||||
Total depreciation of property, plant and equipment | 57,547 | 56,438 |
(b) Intangible assets
As of September 30, 2021, the additions to intangibles correspond mainly to investments in the preparation of wells and other assets of the infrastructure segment for S/18.4 million; software development of the engineering and construction segment for S/4.7 million; and concessions, licenses and other assets corresponding to the infrastructure segment for S/14.6 million (as of September 30, 2020, investments in the preparation of wells for S/40.6 million, concessions and licenses corresponding to the infrastructure segment for S/2.3 million).
For the periods ended September 30, 2020 and 2021, the amortization of intangibles is broken down in the statement of income as follows:
2020 | 2021 | |||||||
Cost of sales and services (Note 21) | 72,009 | 70,817 | ||||||
Administrative expenses (Note 21) | 3,155 | 3,336 | ||||||
75,164 | 74,153 |
Goodwill
Management reviews businesses results based on the type of economic activity carried out. Goodwill allocated to cash-generating units are:
At | At | |||||||
December 31, | September 30, | |||||||
2020 | 2021 | |||||||
Engineering and construction | 38,211 | 39,036 | ||||||
Electromechanical | 20,735 | 20,735 | ||||||
58,946 | 59,771 |
The variation reported in engineering and construction segment is due to translation adjustment of foreign business of the subsidiary Cumbra Peru S.A.
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15. BORROWINGS
This item comprises:
Total | Current | Non-current | ||||||||||||||||||||||
At | At | At | At | At | At | |||||||||||||||||||
December 31, | September 30, | December 31, | September 30, | December 31, | September 30, | |||||||||||||||||||
2020 | 2021 | 2020 | 2021 | 2020 | 2021 | |||||||||||||||||||
Bank overdrafts (Note 8) | - | 25 | - | 25 | - | - | ||||||||||||||||||
Bank loans (a) | 571,659 | 377,671 | 409,272 | 253,048 | 162,387 | 124,623 | ||||||||||||||||||
Finance leases | 52,391 | 49,801 | 13,635 | 11,301 | 38,756 | 38,500 | ||||||||||||||||||
Lease liability for right-of-use asset | 72,726 | 67,462 | 19,950 | 18,841 | 52,776 | 48,621 | ||||||||||||||||||
Other financial entities (b) | 201,544 | 210,994 | 10,027 | 14,698 | 191,517 | 196,296 | ||||||||||||||||||
898,320 | 705,953 | 452,884 | 297,913 | 445,436 | 408,040 |
(a) Bank loans
As of December 31, 2020 and September 30, 2021, this item comprises bank loans in local and foreign currencies for working capital purposes. These obligations accrue fixed interest rates that fluctuate between 0.5% and 11% in 2020 and between 0.9% and 11% in 2021.
Current | Non-current | |||||||||||||||||||||||
At | At | At | At | |||||||||||||||||||||
Interest | Date of | December 31, | September 30, | December 31, | September 30, | |||||||||||||||||||
rate | maturity | 2020 | 2021 | 2020 | 2021 | |||||||||||||||||||
Cumbra Peru S.A. (i) | 0.90% / 8.5 | % | 2025 | 222,924 | 148,753 | 19,977 | 8,811 | |||||||||||||||||
UNNA Energia S.A. (ii) | 6.04% / 7.68 | % | 2027 | 24,950 | 22,463 | 99,474 | 114,645 | |||||||||||||||||
Viva Negocio Inmobiliario S.A. | 6.85% / 11.00 | % | 2023 | 90,197 | 70,491 | 3,318 | 1,167 | |||||||||||||||||
Adexus S.A. | 10.03 | % | 2021 | 19,224 | 11,341 | - | - | |||||||||||||||||
AENZA S.A.A. (iii) | 9.10% / 10.10 | % | 2021 | 51,977 | - | 39,618 | - | |||||||||||||||||
409,272 | 253,048 | 162,387 | 124,623 |
i) Financial Stability Framework Agreement
In July 2017, the Company and its subsidiaries (Cumbra Peru S.A., Construyendo Pais S.A., Vial y Vives-DSD S.A. and Concesionaria Via Expresa Sur S.A.) signed a Financial Stability Framework Agreement with the following financial entities: Scotiabank Peru S.A., Banco Internacional del Peru S.A.A., BBVA Banco Continental, Banco de Credito del Peru, Citibank del Peru SA and Citibank N.A. The Framework Agreement aims to: (i) grant Cumbra Peru S.A. a syndicated revolving line of credit for working capital for up to US$1.6 million and S/143.9 million, which may be increased by an additional US$14 million subject to certain conditions; (ii) grant Cumbra Peru S.A. a line of credit of up to US$51.6 million and S/33.6 million; (iii) grant the Company, Cumbra Peru S.A., Construyendo Pais S.A., Vial y Vives - DSD S.A. and Concesionaria Via Expresa Sur S.A. a non-revolving line of credit to finance repayment commitments subject to performance bonds; (iv) grant a syndicated line of credit in favor of the Company and Cumbra Peru S.A. for the issuance of performance bonds up to an amount of US$100 million (which may be increased by an additional US$50 million subject to compliance with certain conditions); and (v) commit to maintain existing standby letters of credit issued at the request of Cumbra Peru S.A. and the Company, as well as the request of Construyendo Pais S.A., Vial y Vives – DSD S.A. and Concesionaria Via Expresa Sur S.A. The loan matured in July 2020, which maturity was extended, most recently, until May 31, 2021. On August 12, 2021, the lenders agreed to extend the maturity date of the Framework Agreement, the Financing Agreement and the Syndicated Letter of Guarantee Facility to July 31, 2022.
In accordance with the Financial Stability Framework Agreement, the Company must comply quarterly with two ratios, related to its invoices and sales provisions: (i) the calculated value of 90% of its bills receivable, and (ii) the calculated value of 80% of its income provisions must be greater than 50% of the amount pending payment.
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In August 2021, USD20 million was paid, equivalent to S/81.3 million. As of September 30, 2021, the Company's balance payable under the Financial Stability Framework Agreement amounts to US$7.1 million, equivalent to S/29.5 million (US$30.7 million, equivalent to S/111 million, as of December 31, 2020)
As of September 30, 2021, the account receivable rate and unbilled receivable rate reached 273% and 320%, respectively. As of December 31, 2020 due to the stoppage of activities generated by the COVID-19 pandemic, the account receivable rate and unbilled receivable rate reached 56% and 142%, respectively. In relation to account receivable rate, the Company complied with the requirement of the Financial Stability Framework Agreement.
ii) UNNA Energia S.A. Loan
Terminales del Peru (hereinafter “TP”), a joint operation of the subsidiary UNNA Energia S.A., has a medium-term loan agreement with Banco de Credito del Peru (hereinafter BCP) up to US$30 million to finance the investments committed and up to US$70 million to finance the additional investments from the operation contract of the North and Center terminals for the period 2015 to 2019 with a maximum exposure limit of US$80 million. These facilities are repaid within 8 years. In April 2021, an additional cash transfer of US$7.3 million (equivalent to US$28.2 million) was requested for the additional investments. As of September 30, 2021, TP has a total amount of financing of US$47.8 million (equivalent to S/197.8 million) and due in 2027 (US$46.4 million, equivalent to S/168.2 million, as of December 31, 2020). As of September 30, 2021, the amount of financing equivalent to the 50% interest held by the subsidiary UNNA Energia S.A. amounts to US$23.9 million, equivalent to S/97.5 million ( US$23.2 million, equivalent to S/84.1 million, as of December 31, 2020).
In addition, in November 2019, TP signed a loan agreement to finance the additional investments from 2019 to 2023, for a credit line amount to US$46 million with BCP. The contract confirmed the participation of an assignee, so BD Capital (BDC) acquired 50% of the BCP contractual position through the subscription of the accession contract and in November 2019 disbursed to TP US$23 million. As of September 30, 2021, TP has a total amount of financing of US$19.3 million (equivalent to S/79.9 million) and due in 2026 (US$22 million, equivalent to S/80 million, as of December 31, 2020). As of September 30, 2021, the amount of financing equivalent to the 50% interest held by the subsidiary UNNA Energia S.A. amounts to US$9.7 million, equivalent to S/39.6 million (US$11 million, equivalent to S/40 million, as of December 31, 2020).
As of September 30, 2021 and the date of this report, TP is in compliance with the ratios established in the contract loan.
iii) CS Peru Infrastructure Holdings LLC Loan
In July 2019, the Company entered into a medium-term loan credit agreement for up to US$35 million with CS Peru Infrastructure Holdings LLC. The term of the loan is three years, with quarterly installments of principal starting on the 18th month. The loan accrued interest at the following rates per annum: (i) for the period from and including the July 31, 2019 (“Closing Date”) to but excluding the date that is 6 months after the Closing Date, 9.10%; (ii) for the period from and including the date that is 6 months after the Closing Date to but excluding the date that is 1 year after the Closing Date, 9.35%; (iii) for the period between the first annual anniversary of the Closing Date and the day before the thirtieth month of the Closing Date, 9.60%, and (iv) for the period from the thirtieth month of the Closing Date to the third annual anniversary of the Closing Date, 10.10%. The loan was used for working capital in the Company, Cumbra Peru S.A. and Adexus S.A.
As of December 31, 2020, the Company defaulted with the covenants established in the loan contract, as a consequence, the loan was presented as current liabilities.
In August 2021, the loan was paid in full. (US$25.7 million, equivalent to S/93.2 million, as of December 31, 2020).
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iv) Banco Santander Loan
On December 28, 2020, Técnicas Reunidas enforced two letters of credit for a total amount of US$23.7 million, which had been issued by Santander on behalf of our subsidiary Cumbra Perú S.A. as security pursuant to a construction contract. As a result, Cumbra Perú S.A. subscribed a loan with Banco Santander for principal amount of US$23.7 million (equivalent to S/85.9 million). The loan accrues interest at an annual rate of Libor + 8%. The term of the loan was 30 days. We subsequently negotiated payment in installments, with the last installment due on September 30, 2022. As of September 30, 2021, the principal amount of the loan is US$23.7 million, equivalent to S/98.1 million (US$23.7 million, equivalent to S/85.9 million, as of December 31, 2020). As of September 30, 2021, Cumbra Perú S.A. has complied with the corresponding covenants.
(b) Other financial entities
The balance is mainly composed of the monetization of Norvial dividends, as described below.
At May 29, 2018 the Company subscribes an agreement between the Company and Inversiones Concesiones Vial S.A.C. ("BCI Peru") -whith the intervention of Fondo de Inversiones BCI NV (“Fondo BCI”) and BCI Management Administradora General de Fondos S.A. (“BCI” Asset Management”) - to monetize future dividends from Norvial S.A. to the Company. With the signing of this agreement, the Company obligated itself to indirectly transfer its economic rights over 48.8% of the share capital of Norvial S.A. by transferring its class B shares (equivalent to 48.8% of the capital of Norvial S.A.) to a vehicle specially constituted for such purposes named Inversiones en Autopistas S.A. The amount of the transaction was US$42.3 million (equivalent to S/138 million) and was completed on June 11, 2018.
Likewise, it has been agreed that the Company will have purchase options on 48.8% of Norvial's economic rights that BCI Peru will maintain through its participation in Inversiones en Autopistas S.A. These options will be subject to certain conditions such as the expiration of different terms, recovery of the investment made with the funds of the BCI Fund (according to different economic calculations) and/or that a change of control occurs.
During the 2020 period, the Company reviewed the projected cash flows and effective interest rate of the financial liability with BCI Peru based on new information available on Norvial's projected traffic and determined that there was a material quantitative change that exceeds the +/-10%. For this reason, the liability with BCI Peru measured at amortized cost was derecognized during 2020 in the amount of US$46 million; the difference between this amount and the new liability amounted to US$3.9 million, which was recorded in other income and expenses (net) in the income statement. Simultaneously, the Company recorded the same liability amounting to US$42.1 million which is measured at fair value from the date of initial recognition.
As of September 30, 2021, the loan balance payable amounted to US$40.9 million, equivalent to S/169.5 million (as of December 31, 2020, the balance was US$42.1 million, equivalent to S/152.5 million).
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(c) Fair value of borrowings
The carrying amount and fair value of borrowings are broken down as follows:
Carrying amount | Fair value | |||||||||||||||
At | At | At | At | |||||||||||||
December 31, | September 30, | December 31, | September 30, | |||||||||||||
2020 | 2021 | 2020 | 2021 | |||||||||||||
Bank overdrafts | - | 25 | - | 25 | ||||||||||||
Bank loans | 571,659 | 377,671 | 589,737 | 401,659 | ||||||||||||
Finance leases | 52,391 | 49,801 | 54,343 | 50,077 | ||||||||||||
Lease liability for right-of-use asset | 72,726 | 67,462 | 88,779 | 73,957 | ||||||||||||
Other financial entities | 201,544 | 216,988 | 247,857 | 234,946 | ||||||||||||
898,320 | 711,947 | 980,716 | 760,664 |
As of December 31, 2020 and as of September 30, 2021, the fair value is based on cash flows discounted using a rate based on the borrowing rate of 4.2% and 10% and are included as Level 2 in the level of measurement.
16. BONDS
This item includes:
Total | Current | Non-current | ||||||||||||||||||||||
At | At | At | At | At | At | |||||||||||||||||||
December 31, | September 30, | December 31, | September 30, | December 31, | September 30, | |||||||||||||||||||
2020 | 2021 | 2020 | 2021 | 2020 | 2021 | |||||||||||||||||||
Tren Urbano de Lima S.A. (a) | 624,454 | 625,746 | 21,081 | 23,400 | 603,373 | 602,346 | ||||||||||||||||||
Norvial S.A. (b) | 280,848 | 259,207 | 32,819 | 34,429 | 248,029 | 224,778 | ||||||||||||||||||
AENZA S.A.A. (c) | - | 362,140 | - | 362,140 | - | - | ||||||||||||||||||
Cumbra Perú S.A. (d) | 27,457 | 26,617 | 4,546 | 4,492 | 22,911 | 22,125 | ||||||||||||||||||
932,759 | 1,273,710 | 58,446 | 424,461 | 874,313 | 849,249 |
(a) Tren Urbano de Lima S.A.
In February 2015, the subsidiary Tren Urbano de Lima S.A. issue corporate bonds under Regulation S of the United States of America. The issuance was made in VAC soles (adjusted for the Constant Update Value) for an amount of S/629 million. The bonds expire in November 2039 and accrue interest at a rate of 4.75% (plus the VAC adjustment), present a risk rating of AA + (local scale) granted by Support & International Associates Risk Classifier. As of September 30, 2021, an accumulated amortization amounting to S/102.7 million (S/90.6 million as of December 31, 2020) has been made.
As of September 30, 2021, the balance includes VAC adjustments and interest payable for S/116.2 million (S/103.4 million as of December 31, 2020).
The account movement for the periods ended September 30, 2020 and 2021 is as follows:
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2020 | 2021 | |||||||
Balance at January, 1 | 618,497 | 624,454 | ||||||
Amortization | (8,669 | ) | (12,179 | ) | ||||
Accrued interest | 35,695 | 36,150 | ||||||
Interest paid | (22,563 | ) | (22,679 | ) | ||||
Balance at September, 30 | 622,960 | 625,746 |
As of December 31, 2020 and as of September 30, 2021, Tren Urbano de Lima S.A. has complied with the corresponding covenants.
As of September 30, 2021, the fair value amounts to S/625.9 million (S/710 million, as of December 31, 2020), this is based on discounted cash flows using the rate of 5% (3.6% as of December 31, 2020) and corresponds to level 2 of the fair value hierarchy.
(b) Norvial S.A.
Between 2015 and 2016, the subsidiary Norvial S.A. issued the First Corporate Bond Program on the Lima Stock Exchange for a total S/365 million. Risk rating agencies Equilibrium y Apoyo & Asociados Internacionales graded this debt instrument AA.
The capital raised was used to finance the construction of the second phase of Red Vial No.5 and the financing of VAT arising from a project-related expenses.
The account movement for the periods ended September 30, 2020 and 2021 is as follows:
2020 | 2021 | |||||||
Balance at January, 1 | 305,545 | 280,848 | ||||||
Amortization | (17,880 | ) | (21,537 | ) | ||||
Accrued interest | 18,616 | 16,919 | ||||||
Interest paid | (18,529 | ) | (17,023 | ) | ||||
Balance at September, 30 | 287,752 | 259,207 |
As of December 31, 2020 and September 30, 2021, Norvial S.A. has complied with the covenants.
As of September 30, 2021, the fair value amounts to S/270 million (S/304.7 million as of December 31, 2020), is based on discounted cash flows using rate 7.9% (8.1% as of December 31, 2020) and is within level 2 of the fair value hierarchy.
(c) AENZA S.A.A.
In August 2021, AENZA S.A.A. issued bonds convertible (hereinafter, the "Bonds") into common shares with voting rights. The total amount of the issue was US$89.9 million, issuing 89,970 bonds, each with a nominal value of US$ 1,000.
The placement of these bonds was executed locally and is the result of the exercise of the preemptive subscription right provided by the applicable legislation, as well as their subsequent private offering. The Bonds have been made available to investors only in Peru pursuant to the provisions of the applicable Peruvian legislation
As of September 30, 2021, the principal balance amounts to US$ 89.9 million equivalent to S/366.1 million. The debt balance net of costs incurred amounts to S/362.1 million.
As of September 30, 2021, the fair value amounts to S/376.6 million, is based on discounted cash flows using rate 8.2% and is within level 3 of the fair value hierarchy.
(d) Cumbra Peru S.A.
At the beginning of 2020, the subsidiary Cumbra Peru S.A. prepared the First Private Bond Program, up to a maximum amount of US$8 million.
In the first quarter of the year 2020, bonds issued amounts to US$7.8 million (equivalent to S/25.9 million) under the debt swap modality, related to its outstanding trade accounts.
The bonds mature in December 2027 and bear interest at a rate of 8.5%, payment is semi-annual and have a risk rating of B-, granted by the rating company Moody’s Peru. As of September 30, 2021, the balance includes accrued interest payable for US$0.1 million, equivalent to S/0.4 million (US$0.6 million, equivalent to S/2.2 million, as of December 31, 2020).
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The account movement for the periods ended September 30, 2020 and 2021 is as follows:
2020 | 2021 | |||||||
Balance at January, 1 | - | 27,457 | ||||||
Additions | 25,871 | - | ||||||
Amortization | (1,473 | ) | (3,687 | ) | ||||
Exchange difference | 2,186 | 3,451 | ||||||
Accrued interest | 1,576 | 1,664 | ||||||
Interest paid | (1,002 | ) | (2,268 | ) | ||||
Balance at September, 30 | 27,158 | 26,617 |
As of September 30, 2021, the fair value amounts to S/26.9 million (S/28.6 million as of December 31, 2020), is based on discounted cash flows using a rate of 8.3% (7.1% as of December 31, 2020) and is within level 3 of the fair value hierarchy.
(d) AENZA S.A.A.
In August 2021, AENZA S.A.A. issued bonds convertible (hereinafter, the "Bonds") into common shares with voting rights. The total amount of the issue was US$89.9 million, issuing 89,970 bonds, each with a nominal value of US$ 1,000.
The placement of these bonds was executed locally and is the result of the exercise of the preemptive subscription right provided by the applicable legislation, as well as their subsequent private offering.
The Bonds have been made available to investors only in Peru pursuant to the provisions of the applicable Peruvian legislation
As of September 30, 2021, the principal balance amounts to US$ 89.9 million equivalent to S/366.1 million. The debt balance net of costs incurred amounts to S/362.4 million.
As of September 30, 2021, the fair value amounts to S/26.9 million (S/28.6 million as of December 31, 2020), is based on discounted cash flows using a rate of 8.3% (7.1% as of December 31, 2020) and is within level 3 of the fair value hierarchy.
17. TRADE ACCOUNTS PAYABLE
This item includes:
Total | Current | Non-current | ||||||||||||||||||||||
At | At | At | At | At | At | |||||||||||||||||||
December 31, | September 30, | December 31, | September 30, | December 31, | September 30, | |||||||||||||||||||
2020 | 2021 | 2020 | 2021 | 2020 | 2021 | |||||||||||||||||||
Invoices payable | 470,118 | 589,323 | 470,118 | 589,323 | - | - | ||||||||||||||||||
Provision of contract costs (a) | 618,797 | 436,897 | 618,797 | 436,897 | - | - | ||||||||||||||||||
Notes payable | 48,754 | 51,558 | 8,252 | 16,023 | 40,502 | 35,535 | ||||||||||||||||||
1,137,669 | 1,077,778 | 1,097,167 | 1,042,243 | 40,502 | 35,535 |
(a) The contract cost provisions include:
(i) | Goods and services received and not invoiced for S/308.5 million on engineering and construction segment, S/53.4 million on infrastructure segment, S/14.1 million on parent company operations segment and S/21 million on real estate segment (S/429.2 million, S/62.8 million, S/47 million and S/24.6 million respectively, as of December 31, 2020). |
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ii) | Estimate costs to come according to the the completion porcentage of projects on engineerina and construction segment amounting to S/40.1 million (S/95.7 million, as of December 31, 2020). |
18. OTHER ACCOUNTS PAYABLE
This item includes:
Total | Current | Non-current | ||||||||||||||||||||||
At | At | At | At | At | At | |||||||||||||||||||
December 31, | September 30, | December 31, | September 30, | December 31, | September 30, | |||||||||||||||||||
2020 | 2021 | 2020 | 2021 | 2020 | 2021 | |||||||||||||||||||
Advances received from customers (a) | 309,590 | 417,909 | 278,490 | 409,768 | 31,100 | 8,141 | ||||||||||||||||||
Consorcio Ductos del Sur - payable (b) | 88,206 | 67,606 | 28,836 | 16,396 | 59,370 | 51,210 | ||||||||||||||||||
Salaries and other payable | 77,386 | 130,667 | 77,386 | 130,667 | - | - | ||||||||||||||||||
Put option liability on Morelco acquisition | 118,622 | 135,382 | 79,096 | 90,271 | 39,526 | 45,111 | ||||||||||||||||||
Third-party loans | 11,608 | 11,084 | 9,533 | 9,007 | 2,075 | 2,077 | ||||||||||||||||||
Other taxes payable | 115,862 | 155,456 | 102,240 | 143,029 | 13,622 | 12,427 | ||||||||||||||||||
Acquisition of additional non-controlling interest | 27,596 | 33,786 | 27,596 | 33,786 | - | - | ||||||||||||||||||
Guarantee deposits | 23,744 | 26,144 | 23,744 | 26,144 | - | - | ||||||||||||||||||
Consorcio Rio Mantaro - payables | 58,129 | 69,414 | 58,129 | 69,414 | - | - | ||||||||||||||||||
Provision of interest for debt with suppliers | 16,425 | 20,348 | - | 212 | 16,425 | 20,136 | ||||||||||||||||||
Share purchase agreement - Inversiones Sur | 14,496 | 16,544 | - | - | - | 16,544 | ||||||||||||||||||
Other accounts payables | 39,974 | 33,463 | 33,356 | 28,860 | 21,114 | 4,603 | ||||||||||||||||||
901,638 | 1,117,803 | 718,406 | 957,554 | 183,232 | 160,249 |
(a) | Advances received from customers mainly corresponds to construction projects, and are applied to progress billings, in accordance with contract terms. |
Total | Current | Non-current | ||||||||||||||||||||||
At | At | At | At | At | At | |||||||||||||||||||
December 31, | September 30, | December 31, | September 30, | December 31, | September 30, | |||||||||||||||||||
2020 | 2021 | 2020 | 2021 | 2020 | 2021 | |||||||||||||||||||
Customer advances from Consortiums | 83,640 | 62,064 | 83,640 | 62,064 | - | - | ||||||||||||||||||
Customer advances from real estate projects | 78,286 | 108,201 | 78,286 | 108,201 | - | - | ||||||||||||||||||
Quellaveco Project | 86,415 | 29,767 | 71,571 | 29,767 | 14,844 | - | ||||||||||||||||||
Special National Transportation Infrastructure Project | 24,050 | 18,688 | 13,781 | 10,766 | 10,269 | 7,922 | ||||||||||||||||||
Gasoducto Piura Construction | 31,048 | 17,899 | 25,292 | 17,899 | 5,756 | - | ||||||||||||||||||
Pebbles Quebrada Blanca Phase 2 Project | - | 121,200 | - | 121,200 | - | - | ||||||||||||||||||
Evaporadores Modernización y ampliación de la Planta Arauco Project | - | 30,565 | - | 30,565 | - | - | ||||||||||||||||||
Others | 6,151 | 29,525 | 5,920 | 29,306 | 231 | 219 | ||||||||||||||||||
309,590 | 417,909 | 278,490 | 409,768 | 31,100 | 8,141 |
(b) | The balance of other accounts payable from Consorcio Constructor Ductos del Sur corresponds to payment obligations to vendors and main subcontractors for S/67.6 million (S/88.2 million as of December 31, 2020), the subsidiary Cumbra Peru S.A. as a result of the termination of Gasoducto Sur Peruano S.A. operations. |
The fair value of current accounts approximates their book value due to their short-term maturities. The non-current part mainly includes non-financial liabilities such as advances received from customers; the remaining balance is not significant in the financial statements.
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19. PROVISIONS
This item includes:
Total | Current | Non-current | ||||||||||||||||||||||
At | At | At | At | At | At | |||||||||||||||||||
December 31, | September 30, | December 31, | September 30, | December 31, | September 30, | |||||||||||||||||||
2020 | 2021 | 2020 | 2021 | 2020 | 2021 | |||||||||||||||||||
Legal claims (a) | 370,787 | 411,274 | 79,966 | 89,336 | 290,821 | 321,938 | ||||||||||||||||||
Tax claims | 5,630 | 9,695 | 1,954 | 4,660 | 3,676 | 5,035 | ||||||||||||||||||
Provision for well closure (b) | 52,949 | 61,773 | 10,837 | 11,809 | 42,112 | 49,964 | ||||||||||||||||||
429,366 | 482,742 | 92,757 | 105,805 | 336,609 | 376,937 |
(a) | Legal contingencies correspond mainly to: |
Civil compensation
Corresponds to the legal contingency estimated by management for exposure of the Company and its subsidiaries to a probable compensation in relation to their participation as minority partners in certain entities that developed infrastructure projects in Peru with companies belonging to the Odebrecht group and projects related to “Club de la Construcción”. As indicated in Note 1 c) through the Agreement signed on May 21, 2021, the entry into force of which is subject to judicial approval, the Company acknowledges that it was used by some of its former directors for the commission of illegal acts up to in 2016 and agrees, consequently, to pay a civil compensation to the State for a total amount of S / 321.9 million and US $ 40.7 million. As of September 30, 2021, the amount equivalent to the present value resulting from the amounts described above is recorded as one provision totals S/165.1 million and US$17.2 million, equivalent to a total S/236.2 million.
Proceso administrative Indecopi
On March 9, 2021, Cumbra Peru S.A. was notified with the Final Instruction Report prepared by the Technical Secretariat, which is subject to review by the Commission for the Defense of Free Competition of INDECOPI, related to the sanctioning administrative procedure mentioned in Note 1.c). In this regard, Company and its legal advisors estimate that, based on the findings of the Final Investigation Report, the fine to be imposed on Cumbra Peru S.A. in this case should not exceed S/39 million. As of September 30, 2021 the equivalent to the corresponding present value that results in S/24.5 million.
Securities Class actions NY SEC
During the first quarter of 2017 two securities class actions have been filed against the Company, and certain former employees in the Eastern District of New York. Both complaints allege false and misleading statements during the class period. In particular, they allege that the Company failed to disclose, among other things, that a) the Company knew that its partner Odebrecht was engaged in illegal activities, and b) the Company profited from such activities in violation of its own corporate governance standards.
As of July 2, 2020, the Company signed the settlement agreement with the plaintiffs' attorneys, by which the parties agree to terminate the class action, subject to the court approval and the payment of the transaction amount by the Company. The amount agreed for the termination of the class action is equivalent to US$20 million. The Company registered a provision of US$15 million (equivalent of S/49.8 million), the difference of US$5 million was covered by the professional liability insurance policy in accordance with the agreement signed with the insurance company. In september 2020 , the Company paid US$0.3 millones (equivalent to S/1.1 million). On September 14, 2021, the settlement agreement was approved by the Eastern District Court of New York.
On June 30, 2021, a first amendment to the agreement was signed, which stipulates a payment of US$0.6 million (equivalent to S/2.2 million), amortization of the oustanding balance on September 30, 2021, and annual interest of 8%.
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As of September 30, 2021, the Company maintains a provision of US$14.1 million, equivalent to S/58.3 million, plus interest (as of December 31, 2020, US$14.7 million, equivalent to S/53.1 million, plus interest).
On October 1, 2021, the second amendment to the agreement was signed, whereby US$5.5 million (equivalent to S/22.7 million) was paid plus accrued interest of US$0.9 million (equivalent to S/3.6 million), established as a new expiration date June 30, 2022, plus accrued interest at an interest rate of 9% per year was set.
Other legal provisions
As of September 30, 2021, corresponds to civil, labor, administrative and contentious administrative contingencies estimated at S/97.1 (S/76 million as of December 31, 2020). In addition, within the legal contingencies of civil nature, it mainly includes claims received from clients for S/50.1 million corresponding to the subsidiary Cumbra Peru S.A. (S/41.1 million, as of December 31, 2020).
(b) | The provision for closure as of September 30, 2021 mainly corresponds to: i) provisions for the closure of wells of UNNA Energia S.A. for S/52.5 million; ii) provision of costs associated with the closing of the concession contract of Norvial S.A. for S/5.1 million (S/48.4 million and S/4.5 million respectively, as of December 31, 2020). |
The account movement for the periods ended September 30, 2020 and 2021 are as follows:
Provision | ||||||||||||||||
Legal | Tax | for well | ||||||||||||||
claims | claims | closure | Total | |||||||||||||
At January 1, 2020 | 272,274 | 6,045 | 50,116 | 328,435 | ||||||||||||
Additions | 27,462 | 1,954 | 5,371 | 34,787 | ||||||||||||
Present value | 596 | - | 2,124 | 2,720 | ||||||||||||
Reversals of provisions | (5,562 | ) | (1,546 | ) | - | (7,108 | ) | |||||||||
Payments | (3,343 | ) | (823 | ) | (1,181 | ) | (5,347 | ) | ||||||||
Translation adjustments / Exchange difference | 4,275 | - | - | 4,275 | ||||||||||||
At September 30, 2020 | 295,702 | 5,630 | 56,430 | 357,762 | ||||||||||||
At January 1, 2021 | 370,787 | 5,630 | 52,949 | 429,366 | ||||||||||||
Additions | 23,380 | 2,686 | - | 26,066 | ||||||||||||
Present value | 14,346 | - | 3,655 | 18,001 | ||||||||||||
Reversals of provisions | (9,140 | ) | - | - | (9,140 | ) | ||||||||||
Reclasification | (5,755 | ) | 1,379 | 3,978 | (398 | ) | ||||||||||
Payments | (4,601 | ) | - | (80 | ) | (4,681 | ) | |||||||||
Translation adjustments / Exchange difference | 22,257 | - | 1,271 | 23,528 | ||||||||||||
At September 30, 2021 | 411,274 | 9,695 | 61,773 | 482,742 |
20. CAPITAL
As of September 30, 2021 and as of December 31, 2020, the capital of the Company is represented by 871,917,855 shares of a nominal value of S/1.00 each, all registered in the Public Registries.
As of September 30, 2021, a total of 140,719,490 shares were represented in ADS, equivalent to 28,143,898 ADSs at a rate of 5 shares per ADS.
As of December 31, 2020, a total of 190,863,050 shares were represented by ADS, equivalent to 38,172,610 ADSs at a rate of 5 shares per ADS.
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21. EXPENSES BY NATURE
For the periods ended September 30, 2020 and 2021, this item comprises:
Cost | ||||||||||||
of goods | Administrative | |||||||||||
and services | expenses | Total | ||||||||||
2020 | ||||||||||||
Salaries, wages and fringe benefits | 693,980 | 69,439 | 763,419 | |||||||||
Services provided by third-parties | 592,023 | 33,678 | 625,701 | |||||||||
Purchase of goods | 393,696 | 72 | 393,768 | |||||||||
Other management charges | 167,295 | 8,782 | 176,077 | |||||||||
Depreciation (Note 14) | 73,265 | 5,902 | 79,167 | |||||||||
Amortization (Note 14) | 72,009 | 3,155 | 75,164 | |||||||||
Impairment of accounts receivable | 15,441 | 321 | 15,762 | |||||||||
Taxes | 4,503 | 95 | 4,598 | |||||||||
Recovery of property, plant and equipment | (258 | ) | - | (258 | ) | |||||||
Inventory recovery | (1,460 | ) | - | (1,460 | ) | |||||||
2,010,494 | 121,444 | 2,131,938 | ||||||||||
2021 | ||||||||||||
Salaries, wages and fringe benefits | 994,167 | 82,689 | 1,076,856 | |||||||||
Services provided by third-parties | 801,789 | 37,849 | 839,638 | |||||||||
Purchase of goods | 508,471 | 83 | 508,554 | |||||||||
Other management charges | 131,840 | 12,677 | 144,517 | |||||||||
Depreciation (Note 14) | 70,621 | 5,183 | 75,804 | |||||||||
Amortization (Note 14) | 70,817 | 3,336 | 74,153 | |||||||||
Impairment of accounts receivable | 1,321 | 2 | 1,323 | |||||||||
Taxes | 3,600 | 142 | 3,742 | |||||||||
Recovery of property, plant and equipment | (1,939 | ) | - | (1,939 | ) | |||||||
Impairment of inventory | 2 | - | 2 | |||||||||
2,580,689 | 141,961 | 2,722,650 |
22. OTHER INCOME AND EXPENSES
For the periods ended September 30, 2020 and 2021, this item comprises:
2020 | 2021 | |||||||
Other income: | ||||||||
Sale of assets | 5,563 | 6,473 | ||||||
Recovery of provisions and impairments | 4,322 | 5,461 | ||||||
Insurance compensation | 44 | 2,293 | ||||||
Penalty income | - | 1,005 | ||||||
Supplier debt forgiveness | 205 | - | ||||||
Others | 3,942 | 1,792 | ||||||
14,076 | 17,024 |
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2020 | 2021 | |||||||
Other expenditures: | ||||||||
Asset impairment | 26,719 | 3 | ||||||
Civil repair to the Peruvian Government | 10,797 | - | ||||||
Net cost of fixed assets disposal | 5,186 | 6,572 | ||||||
Disposal of property, plant and equipment | 282 | 1,724 | ||||||
Provision for well closure | 3,075 | 3,024 | ||||||
Administrative fine (a) | 706 | 11,388 | ||||||
Others | 3,411 | 923 | ||||||
50,176 | 23,634 | |||||||
(36,100 | ) | (6,610 | ) |
(a) | The increase was mainly generated by fines corresponding to income tax assessments in Cumbra Peru for S/8.4 million and in AENZA for S/0.8 million. Additionally, in AENZA fines issued by the Superintendencia del Mercado de Valores for S/2 million. (In 2020, it corresponds to fines for income tax audits in Cumbra Peru for S/0.7 million). |
23. FINANCIAL INCOME AND EXPENSES
For the periods ended September 30, 2020 and 2021, this item comprises:
2020 | 2021 | |||||||
Financial income: | ||||||||
Interest on loans to third parties | 309 | 174 | ||||||
Profit for present value of financial asset or financial liability | 7,797 | 2,267 | ||||||
Exchange difference gain, net | 1,107 | - | ||||||
Interest on short-term bank deposits | 2,261 | 649 | ||||||
Others | 2,487 | 1,079 | ||||||
13,961 | 4,169 | |||||||
Financial expenses: | ||||||||
Interest expense on: | ||||||||
- Bank loans (a) | 39,962 | 50,113 | ||||||
- Bonds | 20,192 | 23,181 | ||||||
- Loans from third parties | 9,448 | 8,579 | ||||||
- Right-of-use | 4,212 | 3,161 | ||||||
- Financial lease | 2,380 | 2,515 | ||||||
Commissions and collaterals | 18,302 | 18,627 | ||||||
Interests from Tax Authority | 3,478 | 12,366 | ||||||
Loss for present value of financial asset or financial liability (b) | 6,057 | 44,120 | ||||||
Update of fair value of financial asset or financial liability (c) | - | 5,444 | ||||||
Exchange difference loss, net | - | 17,633 | ||||||
Derivative financial instruments | 64 | - | ||||||
Other financial expenses | 3,239 | 968 | ||||||
Less capitalized interest | (5,129 | ) | (1,792 | ) | ||||
102,205 | 184,915 |
(a) | The variation in interest corresponds mainly to Inversiones en Autopistas S.A. which increased by S/7.4 million due to the loan with BCI Peru (Nota 15 b) |
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(b) | The increase is mainly generated by the effect of the present value of the account receivable from Gasoducto Sur Peruano S.A. for S/31.6 million (Note 11), due to the variation of the discount rate applied, which increased from 1.65% to 2.66%. Additionally, increase by the effect of the present value of the account payable according to the Acta de Acuerdo Preparatorio de Colaboración y Beneficios – “The Agreement” for S/11.1 million (Note 1 c). |
(c) | The increase corresponds entirely to Inversiones en Autopistas S.A. for the recognition of the fair value of the loan with BCI Peru (Note 15 b). |
24. INCOME TAX
The condensed interim consolidated financial statements for the period ended September 30, 2021, income tax expense is recognized based on management’s estimate of the annual income tax rate expected for the full financial year. The estimated annual tax rate as of September 30, 2021 is 86.78% (47.27% for the period ended in September 30, 2020).
25. CONTINGENCIES, COMMITTMENTS AND GUARANTEES
In the opinion of Management and its legal advisors, the provisions registered mainly for civil lawsuits, labor dispute processes, contentious and administrative processes and tax claims are sufficient to cover the results of these probable contingencies (Note 19).
a) Tax contingencies
The Company considers that the maximum exposure for tax contingencies of the Corporate amounts to S/228.5 million according to the following detail:
The appeal at SUNAT for S/139.8 million which includes S/127.3 million for 2014 Income Tax (Aenza S.A.A. for S/82.7 million, Cumbra Perú S.A. for S/39.7 million and Viva Negocio Inmobiliario S.A. for S/4.9 million), and for Income Tax from 2014 to 2016 in Consorcio Constructor Chavimochic for S/12.5 million.
Appeal at the Tax Court for S/83.1 million (Cumbra Perú S.A., Income Tax 2012 and 2013 for S/60.8 million; Aenza S.A.A., Income Tax 2009, 2010 and 2013 for S/10.2 million; Cumbra Ingeniería S.A., Income Tax 2013 and 2016 for S/9.1 million; and Viva Negocio Inmobiliario S.A., Income Tax 2009 and 2016 for S/3 million).
Contentious administrative process at the Judiciary for S/5.6 million (Aenza S.A.A., for Income Tax and IGV of 2001 for S/3.9 million, Income Tax 2011 for S/1.1 million, and for IGV from 1998 to 2002 for S/0.6 million).
Management estimates that all the afore mentioned processes will be favorable considering their characteristics and the evaluation of their legal advisors.
b) Other contingencies
The Company considers that the maximum exposure for other contingencies of the Corporate amounts to S/41.5 million according to the following detail:
Administrative processes amounting to S/23.5 million (Tren Urbano de Lima S.A. for S/17 million, Cumbra Perú S.A. for S/5.4 million, Viva Negocio Inmobiliario S.A. for S/0.7 million and UNNA Energía S.A. for S/0.4 million).
Civil lawsuits, mainly related to indemnities for damages, contract terminations and obligations to pay a sum of money amounting to S/10.2 million (Norvial S.A. for S/5.7 million, Cumbra Ingeniería S.A. for S/2.6 million, Morelco SAS. for S/1.2 million, Cumbra Perú S.A. for S/0.3 million, and UNNA Transporte S.A.C for S/0.2 million).
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Contentious administrative process, corresponding mainly to non-compliance amounting to S/0.9 million for UNNA Energía S.A.
Labor dispute processes amounting to S/6.9 million (Morelco SAS for S/4.1 million, UNNA Energía S.A. and subsidiaries for S/2 million, UNNA Transporte S.A.C for S/0.4 million, Tren Urbano de Lima S.A. for S/0.2 million y Viva Negocio Inmobiliario S.A. for S/0.2 million).
c) Letters bonds and guarantees
The Corporation maintains guarantees and letters of credit in force in various financial entities guaranteeing operations for US$388.3 million (US$427.5 million, as of December 31, 2020).
26. DIVIDENDS
In compliance with certain covenants, the company will not pay, except for transactions with non-controlling interests. Certain of our debt or other contractual obligations may restrict our ability to pay dividends in the future. Additionally, “the Agreement” does not allow the distribution of dividends until 40% of the total amount of the committed civil penalty described in Note 1 c) has been amortized.
For the period ended September 30, 2021, the Corporation’s subsidiaries have paid dividends to its non-controlling interests in the amount of S/36.3 million (S/64.7 million for period ended in September 30, 2020).
27. LOSS PER SHARE
The basic loss per common share has been calculated by dividing the loss of the period attributable to the Corporation’s common shareholders by the weighted average of the number of common shares outstanding during that period. No diluted loss per common share has been calculated because there is no potential diluent common or investment shares (ie, financial instruments or agreements that entitle to obtain common or investment shares); therefore, it is the same as the loss per basic share.
For the periods ended September 30, 2020 and 2021, the basic loss per common share is as follows:
2020 | 2021 | |||||||
Loss attributable to owners of the Company | ||||||||
during the period | (55,143 | ) | (103,486 | ) | ||||
Weighted average number of shares in issue | ||||||||
at S/1.00 each, at September 30, | 871,917,855 | 871,917,855 | ||||||
Basic loss per share (in S/) | (*) | (0.063 | ) | (0.119 | ) |
(*) The Corporation does not have common shares with dilutive effects at September 30, 2020 and 2021.
28. EVENTS AFTER THE DATE OF THE STATEMENT OF FINANCIAL POSITION
Between September 31, 2021 and the date of approval of the condensed interim consolidated financial statements, there have been no subsequent events that may affect the reasonableness of the financial statements issued. |
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