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 April 2022
Commission File Number 001-35991
AENZA S.A.A.
(Exact name of registrant as specified in its charter)
N/A
(Translation of registrant’s name into English)
Republic of Peru
(Jurisdiction of incorporation or organization)
Avenida Paseo de la República 4667, Lima 34,
Surquillo, Lima
Peru
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F ___X____ Form 40-F _______
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): [ ]
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): [ ]
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes _______ No ___X____
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): Not applicable.
April 29, 2022
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
AENZA S.A.A.
By: /s/ DANIEL URBINA PEREZ
Name: Daniel Urbina Perez
Title: Chief Legal Officer
Date: April 29, 2022
AENZA S.A.A. AND SUBSIDIARIES
CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AT DECEMBER 31, 2021 (AUDITED) AND MARCH 31, 2022 (UNAUDITED)
AENZA S.A.A. AND SUBSIDIARIES
CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AT DECEMBER 31, 2021 (AUDITED) AND MARCH 31, 2022 (UNAUDITED)
CONTENTS | Page |
Consolidated Statement of Financial Position | 1 |
Consolidated Statement of Income | 2 |
Consolidated Statement of Comprehensive Income | 3 |
Consolidated Statement of Changes in Equity | 4 |
Consolidated Statement of Cash Flows | 5 |
Notes to the Consolidated Financial Statements | 6 - 37 |
S/ = Peruvian Sol
US$ = United States dollar
AENZA S.A.A. AND SUBSIDIARIES | ||||||||||||
CONSOLIDATED STATEMENT OF FINANCIAL POSITION | ||||||||||||
(All amounts are expressed in thousands of S/ unless otherwise stated) | ||||||||||||
ASSETS | As of | As of | ||||||||||
December 31, | March 31, | |||||||||||
Note | 2021 | 2022 | ||||||||||
Current assets | ||||||||||||
Cash and cash equivalents | 8 | 957,178 | 844,237 | |||||||||
Trade accounts receivables, net | 9 | 590,280 | 526,748 | |||||||||
Work in progress | 10 | 309,063 | 215,792 | |||||||||
Accounts receivable from related parties | 11 | 20,817 | 24,094 | |||||||||
Other accounts receivable | 12 | 487,058 | 365,807 | |||||||||
Inventories, net | 488,326 | 510,345 | ||||||||||
Prepaid expenses | 32,142 | 36,247 | ||||||||||
Total current assets | 2,884,864 | 2,523,270 | ||||||||||
Non-current assets | ||||||||||||
Trade accounts receivable, net | 9 | 683,306 | 696,058 | |||||||||
Accounts receivable from related parties | 11 | 643,897 | 576,029 | |||||||||
Prepaid expenses | 23,607 | 32,696 | ||||||||||
Other accounts receivable | 12 | 201,360 | 323,140 | |||||||||
Investments in associates and joint ventures | 13 | 31,173 | 30,745 | |||||||||
Investment property | 14 | 63,011 | 61,990 | |||||||||
Property, plant and equipment, net | 14 | 303,170 | 292,191 | |||||||||
Intangible assets, net | 14 | 743,391 | 732,004 | |||||||||
Right-of-use assets, net | 14 | 47,717 | 52,037 | |||||||||
Deferred income tax asset | 275,076 | 281,834 | ||||||||||
Total non-current assets | 3,015,708 | 3,078,724 | ||||||||||
Total assets | 5,900,572 | 5,601,994 | ||||||||||
The accompanying notes on pages 6 to 37 are an integral part of the consolidated financial statements. |
LIABILITIES AND EQUITY | As of | As of | ||||||||||
December 31, | March 31, | |||||||||||
Note | 2021 | 2022 | ||||||||||
Current liabilities | ||||||||||||
Borrowings | 15 | 241,340 | 198,309 | |||||||||
Bonds | 16 | 69,838 | 68,611 | |||||||||
Trade accounts payable | 17 | 980,767 | 867,047 | |||||||||
Accounts payable to related parties | 11 | 51,004 | 47,013 | |||||||||
Current income tax | 94,958 | 93,578 | ||||||||||
Other accounts payable | 18 | 754,981 | 750,636 | |||||||||
Other provisions | 19 | 154,829 | 120,835 | |||||||||
Total current liabilities | 2,347,717 | 2,146,029 | ||||||||||
Non-current liabilities | ||||||||||||
Borrowings | 15 | 338,560 | 311,713 | |||||||||
Bonds | 16 | 1,191,084 | 824,871 | |||||||||
Other accounts payable | 18 | 92,369 | 84,980 | |||||||||
Accounts payable to related parties | 11 | 50,712 | 31,436 | |||||||||
Other provisions | 19 | 329,497 | 339,136 | |||||||||
Deferred income tax liability | 97,367 | 98,751 | ||||||||||
Total non-current liabilities | 2,099,589 | 1,690,887 | ||||||||||
Total liabilities | 4,447,306 | 3,836,916 | ||||||||||
Equity | 20 | |||||||||||
Capital | 871,918 | 1,196,980 | ||||||||||
Legal reserve | 132,011 | 132,011 | ||||||||||
Voluntary reserve | 29,974 | 29,974 | ||||||||||
Share Premium | 1,131,574 | 1,142,092 | ||||||||||
Other reserves | (135,947 | ) | (138,826 | ) | ||||||||
Retained earnings | (829,714 | ) | (859,902 | ) | ||||||||
Equity attributable to controlling interest in the Company | 1,199,816 | 1,502,329 | ||||||||||
Non-controlling interest | 253,450 | 262,749 | ||||||||||
Total equity | 1,453,266 | 1,765,078 | ||||||||||
Total liabilities and equity | 5,900,572 | 5,601,994 |
- 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 March 31, | ||||||||||||
Note | 2021 | 2022 | ||||||||||
(as restated) | ||||||||||||
Revenues from construction activities | 516,668 | 673,432 | ||||||||||
Revenues from services provided | 252,868 | 242,960 | ||||||||||
Revenue from real estate and sale of goods | 95,536 | 132,726 | ||||||||||
865,072 | 1,049,118 | |||||||||||
Cost of construction activities | (477,097 | ) | (656,093 | ) | ||||||||
Cost of services provided | (207,887 | ) | (181,446 | ) | ||||||||
Cost of real estate and sale of goods | (76,573 | ) | (102,445 | ) | ||||||||
21 | (761,557 | ) | (939,984 | ) | ||||||||
Gross profit | 103,515 | 109,134 | ||||||||||
Administrative expenses | 21 | (44,173 | ) | (29,883 | ) | |||||||
Other income and expenses | 22 | (1,596 | ) | (1,847 | ) | |||||||
Operating profit | 57,746 | 77,404 | ||||||||||
Financial expenses | 23 | (68,239 | ) | (82,002 | ) | |||||||
Financial income | 23 | 1,699 | 5,078 | |||||||||
Share of the profit or loss of associates and joint ventures accounted for using the equity method | 13 | 1,006 | (425 | ) | ||||||||
(Loss) profit before income tax | (7,788 | ) | 55 | |||||||||
Income tax expense | (11,221 | ) | (18,945 | ) | ||||||||
Loss from continuing operations | (19,009 | ) | (18,890 | ) | ||||||||
Loss from discontinued operations | 3.2 | (8,374 | ) | - | ||||||||
Loss for the period | (27,383 | ) | (18,890 | ) | ||||||||
(Loss) profit attributable to: | ||||||||||||
Owners of the Company | (34,697 | ) | (30,188 | ) | ||||||||
Non-controlling interest | 7,314 | 11,298 | ||||||||||
(27,383 | ) | (18,890 | ) | |||||||||
Loss per share attributable to owners of the | ||||||||||||
Company during the period | 26 | (0.040 | ) | (0.031 | ) | |||||||
Loss per share from continuing operations | ||||||||||||
attributable to owners of the Company during the period | 26 | (0.030 | ) | (0.031 | ) | |||||||
The accompanying notes on pages 6 to 37 are an integral part of the consolidated financial statements. |
- 2 -
AENZA S.A.A. AND SUBSIDIARIES | ||||||||
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME | ||||||||
(All amounts are expressed in thousands of S/ unless otherwise stated) | ||||||||
For the period | ||||||||
ended March 31, | ||||||||
2021 | 2022 | |||||||
(as restated) | ||||||||
Loss for the period | (27,383 | ) | (18,890 | ) | ||||
Other comprehensive income: | ||||||||
Items that may be subsequently reclassified to profit or loss | ||||||||
Foreign currency translation adjustment, net of tax | (5,456 | ) | (2,505 | ) | ||||
Exchange difference from net investment in a foreign operation, net of tax | (29 | ) | (39 | ) | ||||
Other comprehensive income for the period, net of tax | (5,485 | ) | (2,544 | ) | ||||
Total comprehensive income for the period | (32,868 | ) | (21,434 | ) | ||||
Comprehensive income attributable to: | ||||||||
Owners of the Company | (39,048 | ) | (33,067 | ) | ||||
Non-controlling interest | 6,180 | 11,633 | ||||||
(32,868 | ) | (21,434 | ) | |||||
Comprehensive income for the period attributable to owners of the Company: | ||||||||
Continuing operations | (29,565 | ) | (33,067 | ) | ||||
Discontinued operations | (9,483 | ) | - | |||||
(39,048 | ) | (33,067 | ) | |||||
The accompanying notes on pages 6 to 37 are an integral part of the consolidated financial statements. |
- 3 -
AENZA S.A.A. AND SUBSIDIARIES | ||||||||||||||||||||||||||||||||||||||||
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY | ||||||||||||||||||||||||||||||||||||||||
FOR THE PERIOD ENDED MARCH 31, 2021 AND 2022 | ||||||||||||||||||||||||||||||||||||||||
(All amounts are expressed in thousands of S/ unless otherwise stated) | ||||||||||||||||||||||||||||||||||||||||
Attributable to the controlling interests of the Company | ||||||||||||||||||||||||||||||||||||||||
Number | ||||||||||||||||||||||||||||||||||||||||
of shares | Legal | Voluntary | Share | Other | Retained | Non-controlling | ||||||||||||||||||||||||||||||||||
In thousands | Capital | reserve | reserve | premium | reserves | earnings | Total | interest | Total | |||||||||||||||||||||||||||||||
Balances as of January 1, 2021 | 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 | - | - | - | - | - | - | (34,697 | ) | (34,697 | ) | 7,314 | (27,383 | ) | |||||||||||||||||||||||||||
Foreign currency translation adjustment | - | - | - | - | - | (4,322 | ) | - | (4,322 | ) | (1,134 | ) | (5,456 | ) | ||||||||||||||||||||||||||
Exchange difference from net investment in a foreign operation | - | - | - | - | - | (29 | ) | - | (29 | ) | - | (29 | ) | |||||||||||||||||||||||||||
Comprehensive income of the period | - | - | - | - | - | (4,351 | ) | (34,697 | ) | (39,048 | ) | 6,180 | (32,868 | ) | ||||||||||||||||||||||||||
Transactions with shareholders: | ||||||||||||||||||||||||||||||||||||||||
- Dividend distribution | - | - | - | - | - | - | - | - | (4,249 | ) | (4,249 | ) | ||||||||||||||||||||||||||||
- Contributions (devolution) of non-controlling shareholders, net | - | - | - | - | - | - | - | - | (10,761 | ) | (10,761 | ) | ||||||||||||||||||||||||||||
Total transactions with shareholders | - | - | - | - | - | - | - | - | (15,010 | ) | (15,010 | ) | ||||||||||||||||||||||||||||
Balances as of March 31, 2021 | 871,918 | 871,918 | 132,011 | 29,974 | 1,132,179 | (181,857 | ) | (545,463 | ) | 1,438,762 | 389,445 | 1,828,207 | ||||||||||||||||||||||||||||
Balances as of January 1, 2022 | 871,918 | 871,918 | 132,011 | 29,974 | 1,131,574 | (135,947 | ) | (829,714 | ) | 1,199,816 | 253,450 | 1,453,266 | ||||||||||||||||||||||||||||
(Loss) profit for the period | - | - | - | - | - | - | (30,188 | ) | (30,188 | ) | 11,298 | (18,890 | ) | |||||||||||||||||||||||||||
Foreign currency translation adjustment | - | - | - | - | - | (2,840 | ) | - | (2,840 | ) | 335 | (2,505 | ) | |||||||||||||||||||||||||||
Exchange difference from net investment in a foreign operation | - | - | - | - | - | (39 | ) | - | (39 | ) | - | (39 | ) | |||||||||||||||||||||||||||
Comprehensive income of the period | - | - | - | - | - | (2,879 | ) | (30,188 | ) | (33,067 | ) | 11,633 | (21,434 | ) | ||||||||||||||||||||||||||
Transactions with shareholders: | ||||||||||||||||||||||||||||||||||||||||
- Contributions (devolution) of non-controlling shareholders, net | - | - | - | - | - | - | - | - | (2,334 | ) | (2,334 | ) | ||||||||||||||||||||||||||||
- Capital increase | 325,062 | 325,062 | - | - | 10,518 | - | - | 335,580 | - | 335,580 | ||||||||||||||||||||||||||||||
Total transactions with shareholders | 325,062 | 325,062 | - | - | 10,518 | - | - | 335,580 | (2,334 | ) | 333,246 | |||||||||||||||||||||||||||||
Balances as of March 31, 2022 | 1,196,980 | 1,196,980 | 132,011 | 29,974 | 1,142,092 | (138,826 | ) | (859,902 | ) | 1,502,329 | 262,749 | 1,765,078 | ||||||||||||||||||||||||||||
The accompanying notes on pages 6 to 37 are an integral part of the consolidated financial statements. |
- 4 -
AENZA S.A.A. AND SUBSIDIARIES | ||||||||||||
CONSOLIDATED STATEMENT OF CASH FLOWS | ||||||||||||
(All amounts are expressed in thousands of S/ unless otherwise stated) | ||||||||||||
For the period | ||||||||||||
ended March 31, | ||||||||||||
Note | 2021 | 2022 | ||||||||||
OPERATING ACTIVITIES | ||||||||||||
(Loss) profit before income tax | (16,881 | ) | 55 | |||||||||
Adjustments to profit not affecting cash flows from | ||||||||||||
operating activities: | ||||||||||||
Depreciation | 14 a | ) | 25,319 | 18,895 | ||||||||
Amortization | 14 b | ) | 24,494 | 24,359 | ||||||||
Impairment of inventories | 190 | 173 | ||||||||||
Impairment of accounts receivable and other accounts receivable | 255 | 46 | ||||||||||
Reversal of impairment of inventories | (40 | ) | (111 | ) | ||||||||
Reversal of impairment of property, plant and equipment | (1,023 | ) | - | |||||||||
Reversal of impairment of intangible assets | (350 | ) | (595 | ) | ||||||||
Other provisions | 4,350 | 6,820 | ||||||||||
Financial expense,net | 68,643 | (7,531 | ) | |||||||||
Share of the profit and loss of associates and joint ventures accounted for using the equity method | 13 | (1,006 | ) | 425 | ||||||||
Reversal of provisions | (1,593 | ) | (776 | ) | ||||||||
Reversal of disposal of assets | (138 | ) | (33 | ) | ||||||||
(Profit) loss on sale of property, plant and equipment | (10 | ) | 37 | |||||||||
Loss on remeasurement of accounts receivable | 22,054 | 33,791 | ||||||||||
Net variations in assets and liabilities: | ||||||||||||
Trade accounts receivable and working in progress | (106,203 | ) | 145,409 | |||||||||
Other accounts receivable | (4,325 | ) | 12,673 | |||||||||
Other accounts receivable from related parties | 3,288 | 41,725 | ||||||||||
Inventories | (9,657 | ) | (21,229 | ) | ||||||||
Pre-paid expenses and other assets | 109 | (13,193 | ) | |||||||||
Trade accounts payable | 11,145 | (111,902 | ) | |||||||||
Other accounts payable | 31,140 | (31,349 | ) | |||||||||
Other accounts payable to related parties | (24,080 | ) | (20,076 | ) | ||||||||
Other provisions | (940 | ) | (428 | ) | ||||||||
Interest payment | (35,633 | ) | (38,627 | ) | ||||||||
Payments for purchases of intangibles - Concessions | (673 | ) | (908 | ) | ||||||||
Payment of income tax | (15,443 | ) | (33,700 | ) | ||||||||
Net cash (applied to) provided by operating activities | (27,008 | ) | 3,950 | |||||||||
INVESTING ACTIVITIES | ||||||||||||
Sale of property, plant and equipment | 3,462 | 4,030 | ||||||||||
Interest received | 656 | 742 | ||||||||||
Payment for purchase of investments properties | (75 | ) | - | |||||||||
Payments for intangible purchase | (2,954 | ) | (13,488 | ) | ||||||||
Payments for property, plant and equipment purchase | (4,987 | ) | (6,691 | ) | ||||||||
Net cash applied to investing activities | (3,898 | ) | (15,407 | ) | ||||||||
FINANCING ACTIVITIES | ||||||||||||
Loans received | 21,380 | 7,618 | ||||||||||
Amortization of loans received | (69,581 | ) | (54,442 | ) | ||||||||
Amortization of bonds issued | (12,712 | ) | (14,041 | ) | ||||||||
Payment for transaction costs for debt | - | (1,818 | ) | |||||||||
Dividends paid to non-controlling interest | (4,249 | ) | (3,230 | ) | ||||||||
Cash received (return of contributions) from non-controlling shareholders | (10,761 | ) | (2,333 | ) | ||||||||
Net cash applied to financing activities | (75,923 | ) | (68,246 | ) | ||||||||
Net decrease in cash | (106,829 | ) | (79,703 | ) | ||||||||
Exchange difference | 5,816 | (33,238 | ) | |||||||||
Cash and cash equivalents at the beginning of the period | 900,168 | 957,178 | ||||||||||
Cash and cash equivalents at the end of the period | 8 | 799,155 | 844,237 | |||||||||
NON-CASH TRANSACTIONS: | ||||||||||||
Capitalization of interests | 1,120 | 852 | ||||||||||
Acquisition of assets through finance leases | 24 | - | ||||||||||
Acquisition of right-of-use assets | 42 | 8,776 | ||||||||||
Capitalization of convertible bonds | - | 335,580 | ||||||||||
The accompanying notes on pages 6 to 37 are an integral part of the consolidated financial statements. |
- 5 -
AENZA S.A.A. AND SUBSIDIARIES
NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AT DECEMBER 31, 2021 (AUDITED) AND MARCH 31, 2022 (UNAUDITED)
1. | GENERAL INFORMATION |
a) | Incorporation and operations |
AENZA S.A.A., (hereinafter the “Company”) is the parent Company of the AENZA S.A.A. Corporation that includes the Company and its subsidiaries (hereinafter, the “Corporation”) and is mainly engaged in holding investments in Corporation companies. Additionally, the Company provides services of strategic and functional advice and office leases space to the Corporation companies.
The Corporation is a conglomerate of companies with operations including different business activities, the most significant are engineering and construction, infrastructure (public concession ownership and operation) and real estate businesses. See details of operating segments in Note 7.
b) | Authorization for the issue of the financial statements |
The condensed interim consolidated financial statements for the period ended March 31, 2022 were authorized by Management and Board of Directors on April 29, 2022.
The consolidated financial statements for the year ended December 31, 2021, were prepared and issued with authorization of Management and the Board of Directors on March 4, 2022, and were approved on the General Shareholders’ Meeting held on March 31, 2021.
c) | Acuerdo preparatorio de colaboracion eficaz – “The Agreement” |
Pursuant to the Agreement executed on May 21, 2021, AENZA S.A.A. accepts it was utilized by certain former executives to commit illicit acts until 2016, and commits to pay a civil penalty to the Peruvian State of S/321.9 million and US$41.1 million. The civil penalty is subject to (i) a repayment tenor of 12 years, (ii) the legal interest rate in domestic and foreign currency, (iii) a total collateral of S/197 million through a trust that includes shares issued by a subsidiary of AENZA, a mortgage on a real estate asset and debt service guaranty account. Among other conditions, the Agreement includes a restriction to participate in public construction and road maintenance contracts for 2 years. As of March 31, 2022, we registered the present value of the amounts described before, which amount to S/177.2 million and US$19.7 million (totaling S/474 million).
The civil penalty covers the total contingency to which the Company was exposed because of the investigations revealed in the notes to the financial statements since 2017. Nevertheless, the Agreement enforceability is subject to court approval and its terms and conditions are subject to confidentiality provisions in such agreement.
2. | BASIS OF PREPARATION |
The condensed interim consolidated financial statements for the period ended March 31, 2022 have been prepared in accordance with IAS 34 "Interim Financial Reporting". The condensed interim consolidated financial statements provide comparative information regarding prior periods; however, they do not include all the information and disclosures required in the annual consolidated financial statements, so they must be read together with the audited consolidated financial statements for the year ended December 31, 2021, which have been prepared in accordance with International Standards. of Financial Information (hereinafter "IFRS").
The condensed interim consolidated financial statements are presented in thousands of Peruvian Soles, unless otherwise stated.
- 6 -
3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
The accounting policies used in the preparation of these condensed interim consolidated financial statements are consistent with those applied in the preparation of the consolidated financial statements at December 31, 2021.
3.1. | Standards, amendments, and interpretation adopted by the Group |
Standards, amendments and interpretation that have entered in force as of January 1, 2022, have not had impact on the condensed interim consolidated financial statements as of March 31, 2022, and fo this reason thay have not been disclosed. The Corporation has not adopted in advance any amendment and modification that are not yet effective.
3.2. | Account balance reclassified as of March 31, 2021 |
Information on the subsidiary Adexus S.A. is presented., whose main activity is to provide information technology solutions mainly in Chile and Peru, as of March 31, 2020 the subsidiary was recognized as a non-current asset held for sale; However, as of March 31, 2021, it was reclassified as a discontinued operation.
As a result of this process, the amounts in the consolidated statement of income are reclassified as follows:
- 7 -
For the period ended | ||||||||||||
March 31, 2021 | ||||||||||||
Reported | Adexus | As restated | ||||||||||
Revenues from construction activities | 516,668 | - | 516,668 | |||||||||
Revenues from services provided | 280,061 | (27,193 | ) | 252,868 | ||||||||
Revenue from real estate and sale of goods | 109,065 | (13,529 | ) | 95,536 | ||||||||
905,794 | (40,722 | ) | 865,072 | |||||||||
Cost of construction activities | (477,097 | ) | - | (477,097 | ) | |||||||
Cost of services provided | (237,954 | ) | 30,067 | (207,887 | ) | |||||||
Cost of real estate and sale of goods | (88,079 | ) | 11,506 | (76,573 | ) | |||||||
(803,130 | ) | 41,573 | (761,557 | ) | ||||||||
Gross profit | 102,664 | 851 | 103,515 | |||||||||
Administrative expenses | (49,517 | ) | 5,344 | (44,173 | ) | |||||||
Other income and expenses | (1,609 | ) | 13 | (1,596 | ) | |||||||
Operating profit | 51,538 | 6,208 | 57,746 | |||||||||
Financial expenses | (71,153 | ) | 2,914 | (68,239 | ) | |||||||
Financial income | 1,728 | (29 | ) | 1,699 | ||||||||
Share of the profit or loss of associates and joint ventures accounted for using the equity method | 1,006 | - | 1,006 | |||||||||
(Loss) profit before income tax | (16,881 | ) | 9,093 | (7,788 | ) | |||||||
Income tax expense | (10,502 | ) | (719 | ) | (11,221 | ) | ||||||
(Loss) profit from continuing operations | (27,383 | ) | 8,374 | (19,009 | ) | |||||||
Loss from discontinued operations | - | (8,374 | ) | (8,374 | ) | |||||||
Loss for the period | (27,383 | ) | - | (27,383 | ) | |||||||
(Loss) profit attributable to: | ||||||||||||
Owners of the Company | (34,697 | ) | - | (34,697 | ) | |||||||
Non-controlling interest | 7,314 | - | 7,314 | |||||||||
(27,383 | ) | - | (27,383 | ) | ||||||||
Loss per share from continuing operations | ||||||||||||
attributable to owners of the Company during the period | (0.040 | ) | 0.010 | (0.030 | ) |
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, 2021 and as of March 31, 2022, this exposure is mainly concentrated in fluctuations of U.S. dollar, the Chilean and Colombian Pesos.
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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, | March 31, | |||||||
2021 | 2022 | |||||||
Soles (a) | 3.998 | 3.701 | ||||||
Chilean Pesos (b) | 844.69 | 787.98 | ||||||
Colombian Pesos (c) | 3,981.16 | 3,748.15 |
(a) Soles published by the Superintendency of Banking, Insurance and Pension Fund Administrators (SBS).
(b) Chilean pesos published by the Banco Central de Chile.
(c) Colombian pesos published by Banco de la Republica de Colombia.
The consolidated statement of financial position includes the following:
At | At | |||||||
December 31, | March 31, | |||||||
2021 | 2022 | |||||||
USD(000) | USD(000) | |||||||
Assets | 519,448 | 423,581 | ||||||
Liabilities | 512,947 | 425,900 |
For the periods ended March 31, 2021 and 2022, the Corporation’s exchange gains and losses for the Peruvian Sol, the Chilean and Colombian Pesos exposure against the U.S. dollar was:
2021 | 2022 | |||||||
Gain | 92,995 | 189,522 | ||||||
Loss | (95,000 | ) | (186,369 | ) |
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.
- 9 -
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. The Corporation has implemented various actions to reduce its exposure to liquidity risk, and has developed a Financial Plan based on several steps, which were designed assuming attaining a plea bargain agreement within a reasonable time frame. The Financial Plan aims to enable compliance with the various obligations at the corporate and group companies’ levels.
The Corporation’s Corporate Finance Office monitors rolling forecasts of the Corporation’s liquidity requirements to ensure it exists sufficient cash to meet operational needs so that the Corporation does not breach borrowing limits or covenants, where applicable, on any of its borrowing facilities. Less significant financing transactions are controlled by the Finance Management of each subsidiary.
Such forecasting takes into consideration the Corporation’s debt financing plans, covenant compliance, compliance with internal ratio targets in the statement of financial position and, if applicable, external regulatory or legal requirements, for example, foreign currency restrictions.
Surplus cash held by the operating entities over the balance required for working capital management is invested in interest-bearing checking accounts or time deposits, selecting instruments with appropriate maturities and sufficient liquidity.
The table below analyzes the Corporation’s financial liabilities into relevant maturity groupings based on the remaining period from the date of the consolidated statement of financial position to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows, which include interest to be applied according to the established schedule.
Less than | 1-2 | 2-5 | More than | |||||||||||||||||
As of December 31, 2021 | 1 year | years | years | 5 years | Total | |||||||||||||||
Other financial liabilities (except | ||||||||||||||||||||
for finance leases and lease | ||||||||||||||||||||
liability for right-of-use asset) | 224,503 | 52,751 | 173,392 | 124,320 | 574,966 | |||||||||||||||
Finance leases | 5,624 | 4,613 | 296 | - | 10,533 | |||||||||||||||
Lease liability for right-of-use asset | 18,817 | 24,295 | 21,993 | 8,086 | 73,191 | |||||||||||||||
Bonds | 137,852 | 206,476 | 837,931 | 792,037 | 1,974,296 | |||||||||||||||
Trade accounts payables (except | ||||||||||||||||||||
non-financial liabilities) | 912,826 | - | - | - | 912,826 | |||||||||||||||
Accounts payables to related parties | 51,004 | 50,712 | - | - | 101,716 | |||||||||||||||
Other accounts payables and other provisions | ||||||||||||||||||||
(except non-financial liabilities) | 323,070 | 22,941 | 109,383 | 422,666 | 878,060 | |||||||||||||||
1,673,696 | 361,788 | 1,142,995 | 1,347,109 | 4,525,588 | ||||||||||||||||
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Less than | 1-2 | 2-5 | More than | |||||||||||||||||
As of March 31, 2022 | 1 year | years | years | 5 years | Total | |||||||||||||||
Other financial liabilities (except | ||||||||||||||||||||
for finance leases and lease | ||||||||||||||||||||
liability for right-of-use asset) | 196,062 | 65,810 | 134,279 | 104,776 | 500,927 | |||||||||||||||
Finance leases | 5,269 | 3,561 | - | - | 8,830 | |||||||||||||||
Lease liability for right-of-use asset | 18,803 | 27,879 | 20,906 | 4,681 | 72,269 | |||||||||||||||
Bonds | 135,623 | 175,283 | 459,649 | 757,785 | 1,528,340 | |||||||||||||||
Trade accounts payables (except | ||||||||||||||||||||
non-financial liabilities) | 838,353 | - | - | - | 838,353 | |||||||||||||||
Accounts payables to related parties | 47,013 | 30,430 | - | 1,006 | 78,449 | |||||||||||||||
Other accounts payables and other provisions | ||||||||||||||||||||
(except non-financial liabilities) | 328,070 | 19,239 | 103,766 | 426,572 | 877,647 | |||||||||||||||
1,569,193 | 322,202 | 718,600 | 1,294,820 | 3,904,815 |
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, the Corporation identifies the possible deviations and requirements and establishes a plan.
In order to maintain or adjust the capital structure, the Corporation may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
The Corporation monitors capital based on the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including current and non-current borrowings), less cash and cash equivalents. Total capital is calculated as ‘equity’ as shown in the consolidated statement of financial position plus net debt.
As of December 31, 2021 and as of March 31, 2022, the gearing ratio is presented below.
At | At | |||||||
December 31, | March 31, | |||||||
2021 | 2022 | |||||||
Total financial liabilities and bonds (Note 15 and Note 16) | 1,840,822 | 1,403,504 | ||||||
Less: Cash and cash equivalents (Note 8) | (957,178 | ) | (844,237 | ) | ||||
Net debt | 883,644 | 559,267 | ||||||
Total equity | 1,453,266 | 1,765,078 | ||||||
Total capital | 2,336,910 | 2,324,345 | ||||||
Gearing ratio | 0.38 | 0.24 |
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). |
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The table below shows the Corporation’s liabilities measured at fair value:
Level 3 | ||||
As of December 31, 2021 | ||||
Financial liabilities | ||||
Other financial entities (Note 15-b) | 165,878 | |||
As of March 31, 2022 | ||||
Financial liabilities | ||||
Other financial entities (Note 15-b) | 156,637 |
5. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS
Estimates and judgments used are continuously evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
In preparing these condensed interim consolidated financial statements, the significant judgements made by management in applying the Corporation’s accounting policies and the key sources of uncertainty were the same as those that applied to the consolidated financial statements for the year ended December 31, 2021.
6. SEASONALITY OF OPERATIONS
The Corporation does not present seasonality in the operations of any of its subsidiaries; and develop its bussiness normally during the period.
7. OPERATING SEGMENTS
Operating segments are reported consistently with the internal reports that are reviewed by the Corporation’ chief decision-maker; that is, the Executive Committee, which is led by the Chief Executive Officer. This Committee acts as the highest authority in making operational decisions, responsible for allocating resources and evaluating the performance of each operating segment.
The Corporation's operating segments are assessed by the activities of the following business units: (i) engineering and construction, (ii) energy, (iii) infrastructure, and (iv) real estate.
As set forth under IFRS 8, reportable segments by significance of income are: ‘engineering and construction’ and ‘infraestructure’. However, the Corporation has voluntarily decided to report on all its operating segments.
Inter-segmental sales transactions are entered into at prices that are similar to those that would have been agreed to with unrelated third parties. Revenues from external customers reported are measured in a manner consistent with the basis of preparation of the financial statements. Sales of goods are related to real estate segment. Revenues from services are related to other segments.
Corporation sales and receivables are not concentrated on a few customers. There is no external customer that represents 10% or more of the Goup’s revenue.
The table below shows the Corporation’s financial statements by operating segments:
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Operating segments financial position | ||||||||||||||||||||||||||||||||||||
Segment reporting | ||||||||||||||||||||||||||||||||||||
Infrastructure | ||||||||||||||||||||||||||||||||||||
As of December 31, 2021 | Engineering and construction | Energy | Toll roads | Transportation | Water treatment | Real estate | Parent Company operations | Eliminations | Consolidated | |||||||||||||||||||||||||||
Assets.- | ||||||||||||||||||||||||||||||||||||
Cash and cash equivalent | 303,925 | 121,873 | 114,100 | 182,607 | 7,499 | 109,828 | 117,346 | - | 957,178 | |||||||||||||||||||||||||||
Trade accounts receivables, net | 366,299 | 67,662 | 38,418 | 106,856 | 1,003 | 9,958 | 84 | - | 590,280 | |||||||||||||||||||||||||||
Work in progress, net | 309,063 | - | - | - | - | - | - | - | 309,063 | |||||||||||||||||||||||||||
Accounts receivable from related parties | 95,390 | 121 | 48,012 | 4,309 | - | 3,166 | 52,644 | (182,825 | ) | 20,817 | ||||||||||||||||||||||||||
Other accounts receivable | 390,133 | 31,092 | 30,057 | 18,734 | 960 | 3,783 | 12,297 | 2 | 487,058 | |||||||||||||||||||||||||||
Inventories, net | 48,192 | 35,489 | 7,662 | 31,949 | 13 | 366,650 | - | (1,629 | ) | 488,326 | ||||||||||||||||||||||||||
Prepaid expenses | 15,838 | 3,575 | 6,531 | 344 | 52 | - | 5,802 | - | 32,142 | |||||||||||||||||||||||||||
Total current assets | 1,528,840 | 259,812 | 244,780 | 344,799 | 9,527 | 493,385 | 188,173 | (184,452 | ) | 2,884,864 | ||||||||||||||||||||||||||
Long-term trade accounts receivable, net | 851 | - | 15,654 | 666,801 | - | - | - | - | 683,306 | |||||||||||||||||||||||||||
Long-term accounts receivable from related parties | 335,150 | - | 19,700 | 42 | 11,536 | - | 584,596 | (307,127 | ) | 643,897 | ||||||||||||||||||||||||||
Prepaid expenses | - | 981 | 20,558 | 1,894 | 684 | - | - | (510 | ) | 23,607 | ||||||||||||||||||||||||||
Other long-term accounts receivable | 10,448 | 86,815 | - | - | 7,346 | 57,243 | 39,508 | - | 201,360 | |||||||||||||||||||||||||||
Investments in associates and joint ventures | 108,038 | 8,951 | - | - | - | 5,443 | 1,559,672 | (1,650,931 | ) | 31,173 | ||||||||||||||||||||||||||
Investment property | - | - | - | - | - | 22,416 | 42,558 | (1,963 | ) | 63,011 | ||||||||||||||||||||||||||
Property, plant and equipment, net | 142,228 | 153,456 | 7,056 | 749 | 181 | 6,845 | 1,653 | (8,998 | ) | 303,170 | ||||||||||||||||||||||||||
Intangible assets, net | 142,499 | 257,580 | 322,625 | 351 | - | 733 | 14,575 | 5,028 | 743,391 | |||||||||||||||||||||||||||
Right-of-use assets, net | 3,825 | 3,890 | 5,308 | 61 | 17 | 1,888 | 40,789 | (8,061 | ) | 47,717 | ||||||||||||||||||||||||||
Deferred income tax asset | 179,319 | 4,717 | 21,304 | - | 644 | 16,960 | 47,038 | 5,094 | 275,076 | |||||||||||||||||||||||||||
Total non-current assets | 922,358 | 516,390 | 412,205 | 669,898 | 20,408 | 111,528 | 2,330,389 | (1,967,468 | ) | 3,015,708 | ||||||||||||||||||||||||||
Total assets | 2,451,198 | 776,202 | 656,985 | 1,014,697 | 29,935 | 604,913 | 2,518,562 | (2,151,920 | ) | 5,900,572 | ||||||||||||||||||||||||||
Liabilities.- | ||||||||||||||||||||||||||||||||||||
Borrowings | 136,512 | 27,046 | 3,687 | 45 | 18 | 69,065 | 13,573 | (8,606 | ) | 241,340 | ||||||||||||||||||||||||||
Bonds | 4,896 | - | 36,637 | 24,496 | - | - | 3,809 | - | 69,838 | |||||||||||||||||||||||||||
Trade accounts payable | 767,792 | 67,686 | 44,210 | 30,637 | 464 | 30,401 | 38,894 | 683 | 980,767 | |||||||||||||||||||||||||||
Accounts payable to related parties | 130,848 | 1,079 | 47,340 | 42,185 | 19 | 19,155 | 13,623 | (203,245 | ) | 51,004 | ||||||||||||||||||||||||||
Current income tax | 59,407 | 15,748 | 17,920 | - | 347 | 1,058 | 478 | - | 94,958 | |||||||||||||||||||||||||||
Other accounts payable | 560,920 | 23,116 | 38,198 | 9,104 | 791 | 91,342 | 31,510 | - | 754,981 | |||||||||||||||||||||||||||
Provisions | 70,585 | 25,498 | 4,158 | - | - | 560 | 54,028 | - | 154,829 | |||||||||||||||||||||||||||
Total current liabilities | 1,730,960 | 160,173 | 192,150 | 106,467 | 1,639 | 211,581 | 155,915 | (211,168 | ) | 2,347,717 | ||||||||||||||||||||||||||
Borrowings | 5,382 | 121,693 | 1,721 | 15 | - | 5,315 | 205,244 | (810 | ) | 338,560 | ||||||||||||||||||||||||||
Long-term bonds | 21,386 | - | 215,296 | 602,201 | - | - | 352,201 | - | 1,191,084 | |||||||||||||||||||||||||||
Other long-term accounts payable | 54,026 | - | 8,163 | 219 | 2,862 | 24,427 | 2,672 | - | 92,369 | |||||||||||||||||||||||||||
Long-term accounts payable to related parties | 25,957 | - | 1,006 | 88,213 | 24,671 | - | 197,844 | (286,979 | ) | 50,712 | ||||||||||||||||||||||||||
Provisions | 56,362 | 55,279 | 33,188 | 3,039 | - | - | 181,629 | - | 329,497 | |||||||||||||||||||||||||||
Deferred income tax liability | 18,665 | 31,187 | - | 47,515 | - | - | - | - | 97,367 | |||||||||||||||||||||||||||
Total non-current liabilities | 181,778 | 208,159 | 259,374 | 741,202 | 27,533 | 29,742 | 939,590 | (287,789 | ) | 2,099,589 | ||||||||||||||||||||||||||
Total liabilities | 1,912,738 | 368,332 | 451,524 | 847,669 | 29,172 | 241,323 | 1,095,505 | (498,957 | ) | 4,447,306 | ||||||||||||||||||||||||||
Equity attributable to controlling interest in the Company | 524,807 | 378,653 | 149,904 | 125,271 | 763 | 139,728 | 1,420,221 | (1,539,531 | ) | 1,199,816 | ||||||||||||||||||||||||||
Non-controlling interest | 13,653 | 29,217 | 55,557 | 41,757 | - | 223,862 | 2,836 | (113,432 | ) | 253,450 | ||||||||||||||||||||||||||
Total liabilities and equity | 2,451,198 | 776,202 | 656,985 | 1,014,697 | 29,935 | 604,913 | 2,518,562 | (2,151,920 | ) | 5,900,572 |
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Operating segments financial position | ||||||||||||||||||||||||||||||||||||
Segment reporting | ||||||||||||||||||||||||||||||||||||
Infrastructure | ||||||||||||||||||||||||||||||||||||
As of March 31, 2022 | Engineering and construction | Energy | Toll roads | Transportation | Water treatment | Real estate | Parent Company operations | Eliminations | Consolidated | |||||||||||||||||||||||||||
Assets.- | ||||||||||||||||||||||||||||||||||||
Cash and cash equivalent | 288,228 | 92,780 | 121,567 | 165,496 | 7,634 | 106,798 | 61,734 | - | 844,237 | |||||||||||||||||||||||||||
Trade accounts receivables, net | 304,397 | 64,352 | 28,886 | 118,466 | 1,326 | 9,220 | 101 | - | 526,748 | |||||||||||||||||||||||||||
Work in progress, net | 215,792 | - | - | - | - | - | - | - | 215,792 | |||||||||||||||||||||||||||
Accounts receivable from related parties | 85,115 | 110 | 32,159 | 4,304 | - | 2,801 | 42,308 | (142,703 | ) | 24,094 | ||||||||||||||||||||||||||
Other accounts receivable | 266,058 | 29,207 | 34,477 | 16,649 | 627 | 7,022 | 11,765 | 2 | 365,807 | |||||||||||||||||||||||||||
Inventories, net | 53,165 | 35,809 | 8,094 | 36,254 | 13 | 378,588 | - | (1,578 | ) | 510,345 | ||||||||||||||||||||||||||
Prepaid expenses | 17,425 | 3,058 | 8,072 | 795 | 81 | - | 6,816 | - | 36,247 | |||||||||||||||||||||||||||
Total current assets | 1,230,180 | 225,316 | 233,255 | 341,964 | 9,681 | 504,429 | 122,724 | (144,279 | ) | 2,523,270 | ||||||||||||||||||||||||||
Long-term trade accounts receivable, net | 8,517 | - | 16,245 | 671,296 | - | - | - | - | 696,058 | |||||||||||||||||||||||||||
Long-term accounts receivable from related parties | 312,096 | - | 19,862 | 42 | 11,536 | - | 566,224 | (333,731 | ) | 576,029 | ||||||||||||||||||||||||||
Prepaid expenses | - | 981 | 29,696 | 1,858 | 671 | - | - | (510 | ) | 32,696 | ||||||||||||||||||||||||||
Other long-term accounts receivable | 138,578 | 83,092 | - | - | 7,346 | 55,606 | 38,518 | - | 323,140 | |||||||||||||||||||||||||||
Investments in associates and joint ventures | 107,423 | 9,723 | - | - | - | 5,443 | 1,545,885 | (1,637,729 | ) | 30,745 | ||||||||||||||||||||||||||
Investment property | - | - | - | - | - | 21,886 | 42,067 | (1,963 | ) | 61,990 | ||||||||||||||||||||||||||
Property, plant and equipment, net | 134,744 | 150,898 | 6,759 | 694 | 173 | 6,422 | 1,499 | (8,998 | ) | 292,191 | ||||||||||||||||||||||||||
Intangible assets, net | 142,171 | 259,721 | 309,989 | 322 | - | 673 | 14,363 | 4,765 | 732,004 | |||||||||||||||||||||||||||
Right-of-use assets, net | 3,309 | 10,849 | 4,428 | 52 | 13 | 1,360 | 38,226 | (6,200 | ) | 52,037 | ||||||||||||||||||||||||||
Deferred income tax asset | 172,900 | 4,929 | 23,733 | - | 651 | 18,059 | 56,494 | 5,068 | 281,834 | |||||||||||||||||||||||||||
Total non-current assets | 1,019,738 | 520,193 | 410,712 | 674,264 | 20,390 | 109,449 | 2,303,276 | (1,979,298 | ) | 3,078,724 | ||||||||||||||||||||||||||
Total assets | 2,249,918 | 745,509 | 643,967 | 1,016,228 | 30,071 | 613,878 | 2,426,000 | (2,123,577 | ) | 5,601,994 | ||||||||||||||||||||||||||
Liabilities.- | ||||||||||||||||||||||||||||||||||||
Borrowings | 97,121 | 32,467 | 3,230 | 42 | 14 | 54,978 | 16,912 | (6,455 | ) | 198,309 | ||||||||||||||||||||||||||
Bonds | 3,998 | - | 38,732 | 25,881 | - | - | - | - | 68,611 | |||||||||||||||||||||||||||
Trade accounts payable | 675,354 | 46,543 | 42,830 | 34,230 | 241 | 33,682 | 32,105 | 2,062 | 867,047 | |||||||||||||||||||||||||||
Accounts payable to related parties | 151,394 | 659 | 29,154 | 54,195 | 35 | 18,805 | 13,489 | (220,718 | ) | 47,013 | ||||||||||||||||||||||||||
Current income tax | 69,628 | 1,377 | 21,101 | - | 347 | 638 | 487 | - | 93,578 | |||||||||||||||||||||||||||
Other accounts payable | 507,534 | 22,801 | 41,354 | 9,038 | 900 | 106,726 | 62,283 | - | 750,636 | |||||||||||||||||||||||||||
Provisions | 72,502 | 26,259 | 3,849 | - | - | 547 | 17,678 | - | 120,835 | |||||||||||||||||||||||||||
Total current liabilities | 1,577,531 | 130,106 | 180,250 | 123,386 | 1,537 | 215,376 | 142,954 | (225,111 | ) | 2,146,029 | ||||||||||||||||||||||||||
Borrowings | 3,082 | 105,471 | 1,227 | 8 | - | 15,868 | 186,541 | (484 | ) | 311,713 | ||||||||||||||||||||||||||
Long-term bonds | 17,998 | - | 205,810 | 601,063 | - | - | - | - | 824,871 | |||||||||||||||||||||||||||
Other long-term accounts payable | 49,224 | - | 7,214 | 170 | 2,866 | 22,835 | 2,671 | - | 84,980 | |||||||||||||||||||||||||||
Long-term accounts payable to related parties | 25,729 | - | 1,006 | 47,936 | 25,434 | - | 188,555 | (257,224 | ) | 31,436 | ||||||||||||||||||||||||||
Provisions | 56,883 | 52,418 | 35,195 | 3,371 | - | - | 191,269 | - | 339,136 | |||||||||||||||||||||||||||
Deferred income tax liability | 15,716 | 33,969 | - | 49,066 | - | - | - | - | 98,751 | |||||||||||||||||||||||||||
Total non-current liabilities | 168,632 | 191,858 | 250,452 | 701,614 | 28,300 | 38,703 | 569,036 | (257,708 | ) | 1,690,887 | ||||||||||||||||||||||||||
Total liabilities | 1,746,163 | 321,964 | 430,702 | 825,000 | 29,837 | 254,079 | 711,990 | (482,819 | ) | 3,836,916 | ||||||||||||||||||||||||||
Equity attributable to controlling interest in the Company | 490,461 | 392,676 | 154,198 | 143,421 | 234 | 138,909 | 1,711,136 | (1,528,706 | ) | 1,502,329 | ||||||||||||||||||||||||||
Non-controlling interest | 13,294 | 30,869 | 59,067 | 47,807 | - | 220,890 | 2,874 | (112,052 | ) | 262,749 | ||||||||||||||||||||||||||
Total liabilities and equity | 2,249,918 | 745,509 | 643,967 | 1,016,228 | 30,071 | 613,878 | 2,426,000 | (2,123,577 | ) | 5,601,994 |
- 14 -
Operating segment performance | ||||||||||||||||||||||||||||||||||||
Segment Reporting | ||||||||||||||||||||||||||||||||||||
Infrastructure | ||||||||||||||||||||||||||||||||||||
For the period ended March 31, 2021 | Engineering and construction | Energy | Toll roads | Transportation | Water treatment | Real estate | Parent Company operations | Elimination | Consolidated | |||||||||||||||||||||||||||
Revenue | 578,572 | 111,477 | 114,349 | 85,824 | 862 | 29,238 | 16,425 | (71,675 | ) | 865,072 | ||||||||||||||||||||||||||
Gross profit (loss) | 45,943 | 22,433 | 13,387 | 24,821 | 277 | 3,788 | 4,695 | (11,829 | ) | 103,515 | ||||||||||||||||||||||||||
Administrative expenses | (31,563 | ) | (3,182 | ) | (4,334 | ) | (4,432 | ) | (197 | ) | (3,716 | ) | (8,786 | ) | 12,037 | (44,173 | ) | |||||||||||||||||||
Other income and expenses, net | (4,512 | ) | 109 | 391 | 1,267 | (9 | ) | 741 | 347 | 70 | (1,596 | ) | ||||||||||||||||||||||||
Operating profit (loss) | 9,868 | 19,360 | 9,444 | 21,656 | 71 | 813 | (3,744 | ) | 278 | 57,746 | ||||||||||||||||||||||||||
Financial expenses | (27,143 | ) | (3,392 | ) | (7,092 | ) | (2,864 | ) | (26 | ) | (3,468 | ) | (30,174 | ) | 5,920 | (68,239 | ) | |||||||||||||||||||
Financial income | 484 | 313 | 1,579 | 258 | 121 | 810 | 3,749 | (5,615 | ) | 1,699 | ||||||||||||||||||||||||||
Share of profit or loss in associates | ||||||||||||||||||||||||||||||||||||
and joint ventures | (652 | ) | 658 | - | - | - | - | (1,744 | ) | 2,744 | 1,006 | |||||||||||||||||||||||||
(Loss) profit before income tax | (17,443 | ) | 16,939 | 3,931 | 19,050 | 166 | (1,845 | ) | (31,913 | ) | 3,327 | (7,788 | ) | |||||||||||||||||||||||
Income tax | (1,811 | ) | (4,943 | ) | (2,230 | ) | (5,836 | ) | (73 | ) | 349 | 3,320 | 3 | (11,221 | ) | |||||||||||||||||||||
(Loss) profit from continuing operations | (19,254 | ) | 11,996 | 1,701 | 13,214 | 93 | (1,496 | ) | (28,593 | ) | 3,330 | (19,009 | ) | |||||||||||||||||||||||
Loss from discontinuing operations | - | - | - | - | - | - | (8,539 | ) | 165 | (8,374 | ) | |||||||||||||||||||||||||
(Loss) profit for the year | (19,254 | ) | 11,996 | 1,701 | 13,214 | 93 | (1,496 | ) | (37,132 | ) | 3,495 | (27,383 | ) | |||||||||||||||||||||||
(Loss) profit from attributable to: | ||||||||||||||||||||||||||||||||||||
Owners of the Company | (19,506 | ) | 10,611 | 340 | 9,910 | 93 | (1,601 | ) | (37,117 | ) | 2,573 | (34,697 | ) | |||||||||||||||||||||||
Non-controlling interest | 252 | 1,385 | 1,361 | 3,304 | - | 105 | (15 | ) | 922 | 7,314 | ||||||||||||||||||||||||||
(19,254 | ) | 11,996 | 1,701 | 13,214 | 93 | (1,496 | ) | (37,132 | ) | 3,495 | (27,383 | ) |
- 15 -
Operating segment performance | ||||||||||||||||||||||||||||||||||||
Segment Reporting | ||||||||||||||||||||||||||||||||||||
Infrastructure | ||||||||||||||||||||||||||||||||||||
For the Period ended March 31, 2022 | Engineering and construction | Energy | Toll roads | Transportation | Water treatment | Real estate | Parent Company operations | Elimination | Consolidated | |||||||||||||||||||||||||||
Revenue | 709,200 | 139,656 | 124,101 | 101,679 | 1,094 | 29,503 | 16,950 | (73,065 | ) | 1,049,118 | ||||||||||||||||||||||||||
Gross profit (loss) | 22,171 | 28,074 | 22,599 | 38,315 | 574 | 5,006 | 4,998 | (12,603 | ) | 109,134 | ||||||||||||||||||||||||||
Administrative expenses | (24,047 | ) | (3,157 | ) | (3,666 | ) | (2,830 | ) | (196 | ) | (3,148 | ) | (6,409 | ) | 13,570 | (29,883 | ) | |||||||||||||||||||
Other income and expenses, net | (5,395 | ) | 1,473 | 26 | 58 | - | 24 | (352 | ) | 2,319 | (1,847 | ) | ||||||||||||||||||||||||
Operating (loss) profit | (7,271 | ) | 26,390 | 18,959 | 35,543 | 378 | 1,882 | (1,763 | ) | 3,286 | 77,404 | |||||||||||||||||||||||||
Financial expenses | (19,520 | ) | (5,422 | ) | (8,397 | ) | (1,739 | ) | (26 | ) | (4,015 | ) | (43,750 | ) | 867 | (82,002 | ) | |||||||||||||||||||
Financial income | 2,405 | 278 | 851 | 1,173 | 17 | 645 | 4,757 | (5,048 | ) | 5,078 | ||||||||||||||||||||||||||
Share of profit or loss in associates | ||||||||||||||||||||||||||||||||||||
and joint ventures | (612 | ) | 772 | - | - | - | - | (2,331 | ) | 1,746 | (425 | ) | ||||||||||||||||||||||||
(Loss) profit before income tax | (24,998 | ) | 22,018 | 11,413 | 34,977 | 369 | (1,488 | ) | (43,087 | ) | 851 | 55 | ||||||||||||||||||||||||
Income tax | (7,615 | ) | (6,343 | ) | (3,686 | ) | (10,777 | ) | (135 | ) | 457 | 9,180 | (26 | ) | (18,945 | ) | ||||||||||||||||||||
(Loss) profit from continuing operations | (32,613 | ) | 15,675 | 7,727 | 24,200 | 234 | (1,031 | ) | (33,907 | ) | 825 | (18,890 | ) | |||||||||||||||||||||||
(Loss) profit for the year | (32,613 | ) | 15,675 | 7,727 | 24,200 | 234 | (1,031 | ) | (33,907 | ) | 825 | (18,890 | ) | |||||||||||||||||||||||
(Loss) profit from attributable to: | ||||||||||||||||||||||||||||||||||||
Owners of the Company | (32,265 | ) | 14,023 | 4,295 | 18,150 | 234 | (820 | ) | (33,942 | ) | 137 | (30,188 | ) | |||||||||||||||||||||||
Non-controlling interest | (348 | ) | 1,652 | 3,432 | 6,050 | - | (211 | ) | 35 | 688 | 11,298 | |||||||||||||||||||||||||
(32,613 | ) | 15,675 | 7,727 | 24,200 | 234 | (1,031 | ) | (33,907 | ) | 825 | (18,890 | ) |
- 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 March 31, | |||||||
2021 | 2022 | |||||||
Cash on hand | 936 | 1,006 | ||||||
Remittances in-transit | 2,222 | 2,256 | ||||||
Bank accounts | ||||||||
Current accounts | 142,029 | 150,839 | ||||||
Banco de la Nacion | 19,847 | 17,966 | ||||||
Savings deposits and mutual funds | 62 | 131 | ||||||
Time deposits (less than 3 months) (a) | 205,302 | 168,160 | ||||||
367,240 | 337,097 | |||||||
Escrow account (b) | ||||||||
Operational funds | 261,001 | 191,746 | ||||||
Reserve funds | 163,939 | 142,139 | ||||||
Consortium funds | 78,589 | 99,476 | ||||||
Guarantee funds | 83,251 | 70,517 | ||||||
586,780 | 503,878 | |||||||
Total Cash and Cash equivalents | 957,178 | 844,237 |
(a) | The Corporation maintains current accounts with local and foreign banks that include time deposits have maturities less than 90 days and may be renewed upon maturity. These deposits earn interest that fluctuates between 0.14% and 4.05%. 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 Red Vial 5 S.A. amounting to S/90 million and S/22 million, respectively, as of March 31, 2022 (S/110 million and S/22 million, respectively, as of December 31, 2021). |
9. TRADE ACCOUNTS RECEIVABLES, NET
This account comprises:
Total | Current | Non-current | ||||||||||||||||||||||
At | At | At | At | At | At | |||||||||||||||||||
December 31, | March 31, | December 31, | March 31, | December 31, | March 31, | |||||||||||||||||||
2021 | 2022 | 2021 | 2022 | 2021 | 2022 | |||||||||||||||||||
Receivables (net) (a) | 773,575 | 664,883 | 269,427 | 158,577 | 504,148 | 506,306 | ||||||||||||||||||
Unbilled receivables (net) - Subsidiaries (b) | 209,258 | 255,693 | 209,258 | 248,064 | - | 7,629 | ||||||||||||||||||
Unbilled receivables (net) - Concessions (c) | 290,753 | 302,230 | 111,595 | 120,107 | 179,158 | 182,123 | ||||||||||||||||||
1,273,586 | 1,222,806 | 590,280 | 526,748 | 683,306 | 696,058 |
a) | Receivables are presented net of impairment and present value discount. The balance of the account includes an impairment and present value discount amounts to S/44.7 million (S/45.3 million as of December 31, 2021). The ageing is detailed as follows: |
- 17 -
At | At | |||||||
December 31, | March 31, | |||||||
2021 | 2022 | |||||||
Current | 683,921 | 609,364 | ||||||
Past due up to 30 days | 41,222 | 17,491 | ||||||
Past due from 31 days up to 90 days | 11,668 | 2,094 | ||||||
Past due from 91 days up to 120 days | 15,814 | 2,860 | ||||||
Past due from 121 days up to 360 days | 7,070 | 19,351 | ||||||
Past due over 360 days | 13,880 | 13,723 | ||||||
773,575 | 664,883 | |||||||
As of March 31, 2022, the amount overdue for more than 360 days mainly includes invoices receivable from subsidiaries: Cumbra Peru S.A. for S/9.6 million, Unna Transporte S.A.C. for S/2.6 million, Cumbra Ingenieria S.A. for S/1.5 million (Cumbra Peru S.A. for S/9.5 million, Unna Transporte S.A.C. for S/2.7 million, Cumbra Ingenieria S,A. for S/1.6 millones and others for S/0.1 millones, as of December 31, 2021).
b) | The rights to be billed of subsidiaries, in the Engineering and Construction segment, are documents related to the estimates of the degree of progress for services rendered not billed, and services pending billing for the rest of the Subsidiaries, they are presented net of impairment for S/5.5 million, and discounted to present value for S/7 million (S/5.2 million for impairment, and S/5.9 million for present value, as of December 31, 2021), and detailed by subsidiary: |
At | At | |||||||
December 31, | March 31, | |||||||
2021 | 2022 | |||||||
Cumbra Peru S.A. | 170,063 | 215,426 | ||||||
Cumbra Ingenieria S.A. | 24,177 | 24,663 | ||||||
Unna Transporte S.A.C. | 10,291 | 8,785 | ||||||
Unna Energía S.A. | 4,718 | 6,771 | ||||||
Others | 9 | 48 | ||||||
209,258 | 255,693 |
c) | Unbilled receivables from concessions correspond to future invoice according to Concession Contract terms, as detailed below: |
At | At | |||||||
December 31, | March 31, | |||||||
2021 | 2022 | |||||||
Tren Urbano de Lima S.A. | 256,526 | 270,332 | ||||||
Carretera Andina del Sur S.A.C. | 12,667 | 11,621 | ||||||
Red Vial 5 S.A. | 16,451 | 16,349 | ||||||
Carretera Sierra Piura S.A.C. | 4,489 | 3,268 | ||||||
Concesionaria La Chira S.A. | 620 | 660 | ||||||
290,753 | 302,230 |
- 18 -
10. WORK IN PROGRESS, NET
This account comprises:
At | At | |||||||
December 31, | March 31, | |||||||
2021 | 2022 | |||||||
Cumbra Peru S.A. | 304,940 | 210,182 | ||||||
Cumbra Ingenieria S.A. | 4,123 | 5,610 | ||||||
309,063 | 215,792 |
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, | March 31, | |||||||
2021 | 2022 | |||||||
Cumbra Peru S.A. - Concentrator Plant and tunnel of Quellaveco | 82,253 | 91,479 | ||||||
Vial y Vives - DSD S.A. - Quebrada Blanca Project | 64,777 | 55,439 | ||||||
Vial y Vives - DSD S.A. - Modernization and expansion of Arauco Plant | 139,025 | 34,624 | ||||||
Cumbra Peru S.A. - Jorge Chavez Airport | 16,602 | 14,136 | ||||||
Cumbra Perú S.A. - Quebrada honda | - | 6,327 | ||||||
Cumbra Ingeniería S.A. - Talara paquete 4 | - | 5,610 | ||||||
Others | 6,406 | 8,177 | ||||||
309,063 | 215,792 |
11. TRANSACTIONS WITH RELATED PARTIES
a) Transactions with related parties
Major transactions for the periods ended March 31, 2021 and 2022 between the Company and its related parties are summarized as follows:
Inter-company services are agreed based on market terms and conditions as if they had been agreed with third parties.
2021 | 2022 | |||||||
Revenue from sales of goods and services: | ||||||||
- Joint operations | 2,871 | 10,120 | ||||||
- Associates | 229 | - | ||||||
3,100 | 10,120 | |||||||
- 19 -
b) Balances of transactions with related parties
As of December 31, | As of March 31, | |||||||||||||||
2021 | 2022 | |||||||||||||||
Receivable | Payable | Receivable | Payable | |||||||||||||
Current portion: | ||||||||||||||||
Joint operations | ||||||||||||||||
Consorcio Rio Urubamba | 9,792 | - | 9,416 | - | ||||||||||||
Consorcio Rio Mantaro | - | 7,043 | - | 5,987 | ||||||||||||
Consorcio Constructor Chavimochic | - | 9,301 | - | 8,925 | ||||||||||||
Consorcio Peruano de Conservacion | 654 | 2,392 | 655 | 2,642 | ||||||||||||
Consorcio Vial Quinua | - | 1,947 | - | 1,944 | ||||||||||||
Consorcio Chicama Ascope | - | - | 227 | 4 | ||||||||||||
Consorcio Inti Punku | 1,865 | 1,733 | 2,445 | 729 | ||||||||||||
Consorcio GyM Conciviles | 1,479 | 1,074 | 1,369 | 2,644 | ||||||||||||
Consorcio Manperan | 1,389 | 4,968 | 3,951 | 981 | ||||||||||||
Consorcio Italo Peruano | 1,394 | 106 | 1,304 | 109 | ||||||||||||
Consorcio Norte Pachacutec | 125 | 282 | 125 | 294 | ||||||||||||
Consorcio Ermitaño | 1,028 | 515 | 949 | 483 | ||||||||||||
Terminales del Peru | 92 | 399 | 84 | 399 | ||||||||||||
Consorcio CDEM | - | 1,545 | - | 433 | ||||||||||||
Consorcio GyM-Stracon | - | 143 | - | 105 | ||||||||||||
Consorcio TNT Vial y Vives - DSD Chile Ltda | - | 633 | - | 650 | ||||||||||||
Otros menores | 288 | 1,803 | 1,020 | 431 | ||||||||||||
18,106 | 33,884 | 21,545 | 26,760 | |||||||||||||
Other related parties | ||||||||||||||||
Ferrovias S.A. | - | 15,513 | - | 18,765 | ||||||||||||
Peru Piping Spools S.A.C. | 2,711 | 1,607 | 2,549 | 1,488 | ||||||||||||
2,711 | 17,120 | 2,549 | 20,253 | |||||||||||||
Current portion | 20,817 | 51,004 | 24,094 | 47,013 | ||||||||||||
Non-current portion | ||||||||||||||||
Gasoducto Sur Peruano S.A. | 643,897 | - | 576,029 | - | ||||||||||||
Ferrovias S.A. | - | 14,690 | - | 14,697 | ||||||||||||
Ferrovias Participaciones S.A. | - | 36,022 | - | 16,739 | ||||||||||||
Non-current | 643,897 | 50,712 | 576,029 | 31,436 |
Accounts receivable and payable are mainly of current maturity and have no specific guarantees; except for accounts receivable from Gasoducto Sur Peruano S.A. (GSP) and Ferrovias Participaciones S.A. These balances do not generate interest considering their maturity in the short term.
The non-current balance corresponds to the obligations arising from the early termination of the GSP project. As of March 31, 2022, the book value of the non-current account receivable registered by the parent Company, for S/372 million, was recorded using the discounted cash flow method, at a rate of 3.73% (2.73% in 2021) that originated a value of discount of S/94 million equivalent to US$26 million (S/400 million and S/77 million equivalent to US$20 million, as of December 31, 2021, respectively). Additionally, as a result of the early termination of the GSP and related facts, the subsidiary Cumbra Peru S.A. it has balances from the Consorcio Constructor Ductos del Sur (CCDS) to those who had previously deteriorated in 2016, it was integrated in the consolidation under the proportional participation method. As of March 31, 2022, the value of accounts receivable from CCDS corresponds mainly to collection rights to GSP for S/298 million, which includes S/271 million receivables from CCDS and S/27 million for lost profits (as of December 31, 2021, S/321 million which includes S/289 million and S/32 million, respectively).
- 20 -
12. OTHER ACCOUNTS RECEIVABLE
This account comprises:
Total | Current | Non-current | ||||||||||||||||||||||
At | At | At | At | At | At | |||||||||||||||||||
December 31, | March 31, | December 31, | March 31, | December 31, | March 31, | |||||||||||||||||||
2021 | 2022 | 2021 | 2022 | 2021 | 2022 | |||||||||||||||||||
Advances to suppliers | 33,769 | 40,349 | 33,769 | 40,349 | - | - | ||||||||||||||||||
Income tax on-account payments | 44,072 | 47,584 | 44,072 | 47,584 | - | - | ||||||||||||||||||
VAT credit | 47,295 | 48,998 | 38,924 | 40,822 | 8,371 | 8,176 | ||||||||||||||||||
Guarantee deposits | 199,132 | 214,519 | 185,334 | 157,954 | 13,798 | 56,565 | ||||||||||||||||||
Claims to third parties | 215,943 | 207,424 | 186,065 | 91,994 | 29,878 | 115,430 | ||||||||||||||||||
Petroleos del Peru S.A.- Petroperu S.A. | 106,077 | 100,553 | 19,262 | 17,461 | 86,815 | 83,092 | ||||||||||||||||||
ITAN and other tax receivable | 48,378 | 45,743 | 17,302 | 15,424 | 31,076 | 30,319 | ||||||||||||||||||
Restricted funds | 7,346 | 7,346 | - | - | 7,346 | 7,346 | ||||||||||||||||||
Rental and sale of equipment - Cumbra Peru S.A. projects | 32,827 | 29,964 | 32,827 | 29,964 | - | - | ||||||||||||||||||
Accounts receivable from personneel | 16,963 | 10,041 | 16,963 | 10,041 | - | - | ||||||||||||||||||
Consorcio Panorama | 27,193 | 25,277 | - | - | 27,193 | 25,277 | ||||||||||||||||||
Other minors | 38,993 | 38,461 | 38,854 | 38,324 | 139 | 137 | ||||||||||||||||||
817,987 | 816,259 | 613,371 | 489,917 | 204,616 | 326,342 | |||||||||||||||||||
Impairment | (129,569 | ) | (127,312 | ) | (126,313 | ) | (124,110 | ) | (3,256 | ) | (3,202 | ) | ||||||||||||
688,418 | 688,947 | 487,058 | 365,807 | 201,360 | 323,140 |
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, | March 31, | |||||||
2021 | 2022 | |||||||
Associates | 22,047 | 20,846 | ||||||
Joint ventures | 9,126 | 9,899 | ||||||
31,173 | 30,745 |
The movement of our investments in associates for the periods ended March 31, 2021 and 2022 is as follows:
2021 | 2022 | |||||||
Balance at January 1 | 35,516 | 31,173 | ||||||
Equity interest in results | 1,006 | (425 | ) | |||||
Conversion adjustment | 16 | (3 | ) | |||||
Balance at March 31 | 36,538 | 30,745 |
Concesionaria Chavimochic S.A.C.
The entity was awarded the concesion of the Chavimochic irrigation project, including a) design and construction of the work required for the third-phase of the Chavimochic irrigation project in the province of La Libertad; b) operation and maintenance of works; and c) water supply to the Project users. Construction activities started in 2015, the effective concession period is 25 years and the total investment amounts was estimated in US$647 million.
- 21 -
The civil works of the third stage of the Chavimochic Irrigation Project were structured in two phases. To date, the works of the first phase (Palo Redondo Dam) are 70% completed. However, at the beginning of 2017, the procedure for early termination of the Concession Contract was initiated due to the breach of contract by the Grantor, and all activities were suspended in December 2017. Due to the fact that no agreement was reached, the Concessionaire initiated an arbitration process at the UNCID, which is currently in process.
The Grantor and the Ministry of Agriculture and Irrigation (MINAGRI), and the Chavimochic Special Project, have signed an Agreement in order to allow MINAGRI to subrogate the ownership of the Project, within the framework of the provisions of the Emergency Decree N ° 021-2020.
Finally, as of the date of this report, the Grantor and Chavimochic concessionaire have signed an act of mutual agreement for the suspension of the issuance of the arbitration resolution for a period of 60 business days, in order to negotiate the restart of the Project works.
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 March 31, 2021 and 2022, is as follows:
Property, | ||||||||||||||||
plant and | Intangibles | Right-of-use | ||||||||||||||
Investment | equipment | assets | assets | |||||||||||||
property | (a) | (b) | (a) | |||||||||||||
Net cost at January 1, 2021 | 26,073 | 405,469 | 791,990 | 64,518 | ||||||||||||
Additions | 75 | 5,011 | 4,295 | 42 | ||||||||||||
Reclassifications and disposals | - | 859 | 551 | (267 | ) | |||||||||||
Conversion adjustments | (70 | ) | 709 | (1,718 | ) | 207 | ||||||||||
Deductions for sale of assets | - | (3,452 | ) | - | - | |||||||||||
Depreciation, amortization | (603 | ) | (18,893 | ) | (24,494 | ) | (5,823 | ) | ||||||||
Net cost at March 31, 2021 | 25,475 | 389,703 | 770,624 | 58,677 | ||||||||||||
Net cost at January 1, 2022 | 63,011 | 303,170 | 743,391 | 47,717 | ||||||||||||
Additions | - | 6,691 | 14,396 | 8,776 | ||||||||||||
Reclassifications and disposals | - | 50 | (6 | ) | (136 | ) | ||||||||||
Conversion adjustments | - | (635 | ) | (1,418 | ) | (9 | ) | |||||||||
Deductions for sale of assets | - | (3,522 | ) | - | - | |||||||||||
Depreciation, amortization | (1,021 | ) | (13,563 | ) | (24,359 | ) | (4,311 | ) | ||||||||
Net cost at March 31, 2022 | 61,990 | 292,191 | 732,004 | 52,037 | ||||||||||||
(a) | Property, plant and equipment and right-of-use assets |
As of March 31, 2022, additions to property, plant and equipment mainly corresponds to work in progress and units to be received corresponding to the drilling stage of the infrastructure segment for S/3.4 million; machinery of the engineering and construction segment for S/1.9 million; and equipment of the engineering and construction segment for S/1 million (as of March 31, 2021, machinery of the engineering and construction segment for S/3 million; and equipment of the engineering and construction segment for S/0.8 million).
During 2021, the net value corresponding to the building located in Surquillo has been reclassified to Investment Properties due to management's decision to lease the property located at Av Paseo de la Republica 4675.
- 22 -
As of March 31, 2022, additions to right-of-use assets correspond mainly to lease agreements for the acquisition of equipment.
For the periods ended March 31 2021 and 2022, the depreciation of property, plant and equipment, investment property and right-of-use assets is presented in the Statement of Income as follows:
2021 | 2022 | |||||||
Cost of services and goods (Note 21) | 19,320 | 17,760 | ||||||
Administrative expenses (Note 21) | 2,963 | 1,135 | ||||||
Depreciation discontinued operations | 3,036 | - | ||||||
Total depreciation | 25,319 | 18,895 | ||||||
(-) Depreciation related to investment property | (603 | ) | (1,021 | ) | ||||
(-) Depreciation related to right-of-use assets (Note 14) | (5,823 | ) | (4,311 | ) | ||||
Total depreciation of property, plant and equipment | 18,893 | 13,563 |
(b) | Intangible assets |
As of March 31 2022, the additions to intangibles correspond mainly to investments in the preparation of wells and other assets of the infrastructure segment for S/11.9 million; software development of the engineering and construction segment for S/1.5 million; and, concessions and licenses corresponding to the infrastructure segment for S/1 million (as of March 31 2021, investments in the preparation of wells and other assets for S/2.8 million; software development of the engineering and construction segment for S/1.4 million).
For the periods ended March 31 2021 and 2022, the amortization of intangibles is broken down in the statement of income as follows:
2021 | 2022 | |||||||
Cost of sales and services (Note 21) | 23,150 | 23,933 | ||||||
Administrative expenses (Note 21) | 974 | 426 | ||||||
Amortization discontinued operations | 370 | - | ||||||
Total amortization for the period | 24,494 | 24,359 |
Goodwill
Management reviews businesses results based on the type of economic activity carried out. Goodwill allocated to cash-generating units are:
2021 | 2022 | |||||||
Engineering and construction | 36,345 | 35,737 | ||||||
Electromechanical | 20,735 | 20,735 | ||||||
57,080 | 56,472 |
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, | March 31, | December 31, | March 31, | December 31, | March 31, | |||||||||||||||||||
2021 | 2022 | 2021 | 2022 | 2021 | 2022 | |||||||||||||||||||
Bank loans (a) | 343,679 | 283,966 | 217,935 | 169,533 | 125,744 | 114,433 | ||||||||||||||||||
Finance leases | 9,836 | 8,296 | 5,118 | 4,840 | 4,718 | 3,456 | ||||||||||||||||||
Lease liability for right-of-use asset | 60,507 | 61,123 | 14,541 | 14,980 | 45,966 | 46,143 | ||||||||||||||||||
Other financial entities (b) | 165,878 | 156,637 | 3,746 | 8,956 | 162,132 | 147,681 | ||||||||||||||||||
579,900 | 510,022 | 241,340 | 198,309 | 338,560 | 311,713 |
(a) | Bank loans |
As of December 31, 2021 and as of March 31, 2022, this item comprises bank loans in local and foreign currencies for working capital purposes. These obligations accrue fixed interest rates that fluctuate between 0.9% and 11% in 2021 and between 0.9% and 11.4% in 2022.
Current | Non-current | |||||||||||||||||||||||
At | At | At | At | |||||||||||||||||||||
Interest | Date of | December 31, | March 31, | December 31, | March 31, | |||||||||||||||||||
rate | maturity | 2021 | 2022 | 2021 | 2022 | |||||||||||||||||||
Cumbra Peru S.A. (i - iii) | 0.92% / 8.11 | % | 2025 | 129,905 | 91,347 | 4,526 | 2,897 | |||||||||||||||||
Unna Energía S.A. (ii) | 6.04% / 7.68 | % | 2027 | 23,351 | 27,291 | 120,635 | 99,421 | |||||||||||||||||
Viva Negocio Inmobiliario S.A. (iv) | 7.00% / 11.35 | % | 2024 | 64,679 | 50,895 | 583 | 12,115 | |||||||||||||||||
217,935 | 169,533 | 125,744 | 114,433 |
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 (hereinafter BCP), Citibank del Peru S.A. and Citibank N.A. The objectives of the Financial Stability Framework Agreement were: to guarantee Cumbra Peru S.A. a syndicated revolving line for working capital, a non-revolving line of credit to finance repayment commitments subject to performance bonds; guarantee lines of credit for the issuance of the performance bond and undertake to maintain the existing letters of credit issued at the request of Cumbra Peru S.A. The maturity date is July 31, 2022.
On March 29, 2022, S/28.2 million and US$0.3 million corresponding to the total balance of the Financial Stability Framework Agreement were paid. The Company has complied with the obligations and covenants established in 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 up to US$30 million to finance the investments committed and up to US$70 million to finance the additional investments from the operation contract of the North and Center terminals for the period 2015 to 2019, its period of availability is until December 31, 2022, with a maximum exposure limit of US$80 million. These facilities are repaid within 8 years. In April and December 2021, an additional cash transfer of US$7.3 million (equivalent to US$28.2 million) and US$4.3 million (equivalent to US$16.9 million), respectively, was requested for the additional investments. As of March 31, 2022, TP has a total amount of financing of US$51.8 million (equivalent to S/191.9 million) and due in 2027 (US$54.3 million, equivalent to S/217.4 million, as of December 31, 2021). As of March 31, 2022, the amount of financing equivalent to the 50% interest held by the subsidiary Unna Energia S.A. amounts to US$25.9 million, equivalent to S/95.9 million (US$27.2 million, equivalent to S/108.7 million, as of December 31, 2021).
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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 March 31, 2022, TP has a total amount of financing of US$17.5 million (equivalent to S/64.7 million) and due in 2026 (US$18.4 million, equivalent to S/73.6 million, as of December 31, 2021). As of March 31, 2022, the amount of financing equivalent to the 50% interest held by the subsidiary Unna Energia S.A. amounts to US$8.7 million, equivalent to S/32.3 million (US$9.2 million, equivalent to S/36.8 million, as of December 31, 2021).
As of March 31, 2022, TP is in compliance with the ratios established in the contract loan.
iii) | Banco Santander Peru S.A. Loan |
On December 28, 2020, Tecnicas Reunidas enforced two letters of credit for a total amount of US$23.7 million, which had been issued by Banco Santander Peru S.A. on behalf of our subsidiary Cumbra Peru S.A. as security pursuant to a construction contract. As a result, Cumbra Peru S.A. subscribed a loan with Banco Santander for principal amount of US$23.7 million (equivalent to S/85.9 million). The loan accrues interest at an annual rate of Libor + 8% and due on September 30, 2022. As of March 31, 2022, the principal amount of the loan is US$20.2 million, equivalent to S/74.8 million (US$20.2 million, equivalent to S/80.8 million, as of December 31, 2021).
As of March 31, 2022, Cumbra Peru S.A. is in compliance with the covenants under the Loan Agreement with Banco Santander Peru S.A.
On April 6 and 26, 2022, Cumbra Perú S.A. paid Banco Santander Peru S.A. US$1.5 million and US$18.7 million, respectively; Consequently, the entire debt was cancelled.
iv) | Viva Negocio Inmobiliario S.A. Loan |
The balance consists mainly of the financing of the following projects:
- | Los Parques de Comas: As of March 31, 2022, promissory notes for a total of S/9.7 million with BBVA Continental, with an interest rate between 7.94% and 9.32%, maturing between April 2022 and January 2023 (S/9.7 million, at December 31, 2021). |
- | El Nuevo Rancho: As of March 31, 2022, a promissory note with the Inter-American Finance Bank for S/17.9 million, with an interest rate of 11.35%, due in December 2024 (S/18.4 million, as of December 31, 2021). |
- | Los Parques del Mar: As of March 31, 2022, promissory notes with the Banco de Credito del Peru for a total of S/35 million, with an interest rate of 7%, due in July 2022 (S/35.7 million, as of December 31). December 2021). |
- | Los Parques de Carabayllo: As of March 31, 2022, loan with Eldo Peru S.A.C. for US$0.1 million equivalent to S/0.3 million, with an interest rate of 11%, maturing in April 2022 (US$0.35 million equivalent to S/1.4 million, as of December 31, 2021). |
(b) | Other financial entities |
The balance is composed of the monetization of Red Vial 5 S.A. dividends, as described below.
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At May 29, 2018 the Company subscribes an agreement between the Company and Inversiones Concesiones Vial S.A.C. ("BCI Peru") -whith the intervention of Fondo de Inversiones BCI NV (“Fondo BCI”) and BCI Management Administradora General de Fondos S.A. (“BCI” Asset Management”) - to monetize future dividends from Red Vial 5 S.A. to the Company. With the signing of this agreement, the Company obligated itself to indirectly transfer its economic rights over 48.8% of the share capital of Red Vial 5 S.A. by transferring its class B shares (equivalent to 48.8% of the capital of Red Vial S.A.) to a vehicle specially constituted for such purposes named Inversiones en Autopistas S.A. The amount of the transaction was US$42.3 million (equivalent to S/138 million) and was completed on June 11, 2018.
Likewise, it has been agreed that the Company will have purchase options on 48.8% of Red Vial 5 S.A.'s economic rights that BCI Peru will maintain through its participation in Inversiones en Autopistas S.A. These options will be subject to certain conditions such as the expiration of different terms, recovery of the investment made with the funds of the BCI Fund (according to different economic calculations) and/or that a change of control occurs.
During the 2020 period, the Company reviewed the projected cash flows and effective interest rate of the financial liability with BCI Peru based on new information available on Red Vial 5's projected traffic and determined that there was a material quantitative change that exceeds the +/-10%. For this reason, the liability with BCI Peru measured at amortized cost was derecognized during 2020 in the amount of US$46 million; the difference between this amount and the new liability amounted to US$3.9 million, which was recorded in other income and expenses (net) in the income statement. Simultaneously, the Company recorded the same liability amounting to US$42.1 million which is measured at fair value from the date of initial recognition.
As of March 31, 2022, the loan balance payable amounted to US$42.3 million, equivalent to S/156.6 million (as of December 31, 2021, the balance was US$41.5 million, equivalent to S/165.8 million). Accrued interest amounted to S/2.3 million (for the period ended in March 31, 2021, S/2.4 million).
(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, | March 31, | December 31, | March 31, | |||||||||||||
2021 | 2022 | 2021 | 2022 | |||||||||||||
Bank loans | 343,679 | 283,966 | 372,270 | 296,629 | ||||||||||||
Finance leases | 9,836 | 8,296 | 9,097 | 7,759 | ||||||||||||
Lease liability for right-of-use asset | 60,507 | 61,123 | 66,943 | 66,626 | ||||||||||||
Other financial entities | 165,878 | 156,637 | 165,878 | 156,637 | ||||||||||||
579,900 | 510,022 | 614,188 | 527,651 |
As of March 31, 2022, the fair value is based on cash flows discounted using debt rates between 4.5% and 10% (between 3.9% and 10% as of December 31, 2021) and are included as Level 2 in the level of measurement.
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16. BONDS
This item includes:
Total | Current | Non-current | ||||||||||||||||||||||
At | At | At | At | At | At | |||||||||||||||||||
December 31, | March 31, | December 31, | March 31, | December 31, | March 31, | |||||||||||||||||||
2021 | 2022 | 2021 | 2022 | 2021 | 2022 | |||||||||||||||||||
Tren Urbano de Lima S.A. (a) | 626,697 | 626,944 | 24,496 | 25,881 | 602,201 | 601,063 | ||||||||||||||||||
Red Vial 5 S.A. (b) | 251,933 | 244,542 | 36,637 | 38,732 | 215,296 | 205,810 | ||||||||||||||||||
Cumbra Perú S.A. (c) | 26,282 | 21,996 | 4,896 | 3,998 | 21,386 | 17,998 | ||||||||||||||||||
AENZA S.A.A. (d) | 356,010 | - | 3,809 | - | 352,201 | - | ||||||||||||||||||
1,260,922 | 893,482 | 69,838 | 68,611 | 1,191,084 | 824,871 |
(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 March 31, 2022, an accumulated amortization amounting to S/111.8 million (S/106.9 million as of December 31, 2021) has been made.
As of March 31, 2022, the balance includes VAC adjustments and interest payable for S/125.9 million (S/121.1 million as of December 31, 2021).
The account movement for the periods ended March 31, 2021 and 2022 is as follows:
2021 | 2022 | |||||||
Balance at January, 1 | 624,454 | 626,697 | ||||||
Amortization | (4,014 | ) | (4,808 | ) | ||||
Accrued interest | 11,757 | 12,848 | ||||||
Interest paid | (7,523 | ) | (7,793 | ) | ||||
Balance at March, 31 | 624,674 | 626,944 | ||||||
As of December 31, 2021 and as of March 31, 2022, Tren Urbano de Lima S.A. has complied with the corresponding covenants.
As of March 31, 2021, the fair value amounts to S/627.2 million (S/626.8 million, as of December 31, 2021), this is based on discounted cash flows using the rate of 5.1% (4.9% as of December 31, 2021) and corresponds to level 3 of the fair value hierarchy.
(b) Red Vial 5 S.A.
Between 2015 and 2016, the subsidiary Red Vial 5 S.A. issued the First Corporate Bond Program on the Lima Stock Exchange for a total S/365 million. Risk rating agencies Equilibrium y Apoyo & Asociados Internacionales graded this debt instrument AA.
The capital raised was used to finance the construction of the second phase of Red Vial No.5 and the financing of VAT arising from a project-related expenses.
- 27 -
The account movement for the periods ended March 31, 2021 and 2022 is as follows:
2021 | 2022 | |||||||
Balance at January, 1 | 280,848 | 251,933 | ||||||
Amortization | (6,940 | ) | (7,299 | ) | ||||
Accrued interest | 5,735 | 5,125 | ||||||
Interest paid | (5,822 | ) | (5,217 | ) | ||||
Balance at March, 31 | 273,821 | 244,542 |
As of December 31, 2021 and as of March 31, 2022, Red Vial 5 S.A. has complied with the covenants.
As of March 31, 2022, the fair value amounts to S/254 million (S/260 million as of December 31, 2021), is based on discounted cash flows using rate 8.4% as of March 31, 2022 (8.1% as of December 31, 2021) and is within level 2 of the fair value hierarchy.
(c) Cumbra Peru S.A.
At the beginning of 2020, the subsidiary Cumbra Peru S.A. prepared the First Private Bond Program, up to a maximum amount of US$8 million.
In the first quarter of the year 2020, bonds issued amounts to US$7.8 million (equivalent to S/25.9 million) under the debt swap modality, related to its outstanding trade accounts.
The bonds mature in December 2027 and bear interest at a rate of 8.5%, payment is semi-annual and have a risk rating of B-, granted by the rating company Moody’s Peru. As of March 31, 2022, the balance includes accrued interest payable for US$0.1 million, equivalent to S/0.4 million (US$0.3 million, equivalent to S/1 million, as of December 31, 2021).
The account movement for the periods ended March 31, 2021 and 2022 is as follows:
2021 | 2022 | |||||||
Balance at January, 1 | 27,457 | 26,282 | ||||||
Amortization | (1,758 | ) | (1,913 | ) | ||||
Exchange difference | 912 | (1,788 | ) | |||||
Accrued interest | 536 | 472 | ||||||
Interest paid | (1,120 | ) | (1,057 | ) | ||||
Balance at March, 31 | 26,027 | 21,996 |
As of March 31, 2022, the fair value amounts to S/22.5 million (S/27.1 million as of December 31, 2021), is based on discounted cash flows using a rate of 7.7% (7.4% as of December 31, 2021) and is within level 3 of the fair value hierarchy.
(d) AENZA S.A.A.
On August 2021 13, AENZA S.A.A. issued bonds convertible (hereinafter, the "Bonds") into common shares with voting rights. The total amount of the issue was US$89.9 million, issuing 89,970 bonds, each with a nominal value of US$ 1,000.
The placement of these bonds was executed locally and is the result of the exercise of the preemptive subscription right provided by the applicable legislation, as well as their subsequent private offering. The Bonds have been made available to investors only in Peru pursuant to the provisions of the applicable Peruvian legislation. The bonds mature in February 2024, bear interest at a rate of 8%, and are payable quarterly.
- 28 -
Pursuant to the terms and conditions of the convertible bond, they may be converted into shares as of the sixth month from the date of issuance, according to the following procedure: 1) the conversion day is the last business day of each month; 2) the conversion may be total or partial; 3) the conversion notice must be sent to the Bondholders' Representative no later than 5 business days prior to the conversion date; and 4) the conversion price will be the minimum between (i) US$0.33 (Zero and 33/100 Dollars) per Share, and (ii) 80% of the average price of the transactions occurring thirty (30) days prior to the Conversion Date, weighted by the volume of each transaction. The conversion will be made by dividing the current nominal value of each bond by the conversion price.
As of December 31, 2021, the principal balance amounted to US$89.9 million equivalent to S/359.7 million. The debt balance net of costs incurred amounted to S/356 million.
As of March 31, 2022, the Company converted all of the bonds into common shares (on February 28, 2022, for 11,000 bonds and on March 31, 2022, for 78,970 bonds), therefore the balance of the debt was fully canceled (Note 20).
17. TRADE ACCOUNTS PAYABLE
This item includes:
At | At | |||||||
December 31, | March 31, | |||||||
2021 | 2022 | |||||||
Invoices payable | 506,798 | 442,611 | ||||||
Provision of contract costs (a) | 468,360 | 418,186 | ||||||
Notes payable | 5,609 | 6,250 | ||||||
980,767 | 867,047 |
(a) | The contract cost provisions include: |
i) | Goods and services received not invoiced amounting to S/284.1 million for the engineering and construction segment, S/46.9 million for the infrastructure segment, S/21.2 million for the energy segment, S/21.2 million for the real estate and S/14 million for operations of the parent company (S/296.6 million, S/42.3 million, S/24.2 million, S/20.6 million and S/16 million, respectively, as of December 31, 2021). |
ii) | Estimate costs to come according to the the completion porcentage of projects on engineering and construction segment amounting to S/30.8 million (S/68.6 million, as of December 31, 2021). |
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18. OTHER ACCOUNTS PAYABLE
This item includes:
Total | Current | Non-current | ||||||||||||||||||||||
At | At | At | At | At | At | |||||||||||||||||||
December 31, | March 31, | December 31, | March 31, | December 31, | March 31, | |||||||||||||||||||
2021 | 2022 | 2021 | 2022 | 2021 | 2022 | |||||||||||||||||||
Advances received from customers (a) | 322,680 | 284,489 | 315,644 | 278,493 | 7,036 | 5,996 | ||||||||||||||||||
Consorcio Ductos del Sur - payable (b) | 77,665 | 71,045 | 29,242 | 27,070 | 48,423 | 43,975 | ||||||||||||||||||
Salaries and other payable | 126,466 | 141,013 | 126,466 | 141,013 | - | - | ||||||||||||||||||
Put option liability on Morelco acquisition | 27,986 | 25,907 | 27,986 | 25,907 | - | - | ||||||||||||||||||
Third-party loans | 2,076 | 2,075 | - | - | 2,076 | 2,075 | ||||||||||||||||||
Other taxes payable | 124,004 | 119,930 | 112,737 | 109,654 | 11,267 | 10,276 | ||||||||||||||||||
Acquisition of additional non-controlling interest | 25,253 | 17,465 | 25,253 | 17,465 | - | - | ||||||||||||||||||
Guarantee deposits | 26,017 | 25,248 | 26,017 | 25,248 | - | - | ||||||||||||||||||
Consorcio Rio Mantaro - payables | 58,502 | 55,167 | 58,502 | 55,167 | - | - | ||||||||||||||||||
Provision of interest for debt with suppliers | 3,056 | 3,397 | 285 | 393 | 2,771 | 3,004 | ||||||||||||||||||
Share purchase agreement - Inversiones Sur | 15,992 | 14,804 | - | - | 15,992 | 14,804 | ||||||||||||||||||
Other accounts payables | 37,653 | 75,076 | 32,849 | 70,226 | 4,804 | 4,850 | ||||||||||||||||||
847,350 | 835,616 | 754,981 | 750,636 | 92,369 | 84,980 |
(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, | March 31, | December 31, | March 31, | December 31, | March 31, | |||||||||||||||||||
2021 | 2022 | 2021 | 2022 | 2021 | 2022 | |||||||||||||||||||
Customer advances from Consortiums | 27,568 | 21,649 | 27,568 | 21,649 | - | - | ||||||||||||||||||
Customer advances for real estate projects | 80,188 | 95,558 | 80,188 | 95,558 | - | - | ||||||||||||||||||
Quellaveco Project | 10,841 | 10,859 | 10,841 | 10,859 | - | - | ||||||||||||||||||
Special National Transportation Infrastructure Project | 19,582 | 19,142 | 12,765 | 13,316 | 6,817 | 5,826 | ||||||||||||||||||
Gasoducto Piura Construction | 5,745 | 2,957 | 5,745 | 2,957 | - | - | ||||||||||||||||||
Pebbles Quebrada Blanca Phase 2 Project | 120,642 | 128,650 | 120,642 | 128,650 | - | - | ||||||||||||||||||
Evaporadores Modernización y ampliación de la Planta Arauco Project | 52,063 | - | 52,063 | - | - | - | ||||||||||||||||||
Others | 6,051 | 5,674 | 5,832 | 5,504 | 219 | 170 | ||||||||||||||||||
322,680 | 284,489 | 315,644 | 278,493 | 7,036 | 5,996 |
(b) | The balance of other accounts payable from Consorcio Constructor Ductos del Sur corresponds to payment obligations to vendors and main subcontractors for S/71 million (S/77.6 million as of December 31, 2021), the subsidiary Cumbra Peru S.A. as a result of the termination of Gasoducto Sur Peruano S.A. operations. |
The fair value of current accounts approximates their book value due to their short-term maturities. The non-current part mainly includes non-financial liabilities such as advances received from customers; the remaining balance is not significant in the financial statements.
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19. PROVISIONS
This item includes:
Total | Current | Non-current | ||||||||||||||||||||||
At | At | At | At | At | At | |||||||||||||||||||
December 31, | March 31, | December 31, | March 31, | December 31, | March 31, | |||||||||||||||||||
2021 | 2022 | 2021 | 2022 | 2021 | 2022 | |||||||||||||||||||
Legal claims (a) | 364,385 | 342,271 | 117,520 | 85,022 | 246,865 | 257,249 | ||||||||||||||||||
Tax claims | 37,466 | 38,488 | 16,776 | 15,535 | 20,690 | 22,953 | ||||||||||||||||||
Provision for well closure (b) | 82,475 | 79,212 | 20,533 | 20,278 | 61,942 | 58,934 | ||||||||||||||||||
484,326 | 459,971 | 154,829 | 120,835 | 329,497 | 339,136 |
(a) | Legal contingencies correspond mainly to: |
Civil compensation to Peruvian Government
Corresponds to the legal contingency estimated by management for exposure of the Company and two of its subsidiaries to a probable compensation in relation to their participation as minority partners in certain entities that developed infrastructure projects in Peru with companies belonging to the Odebrecht group and projects related to “Club de la Construccion”. As indicated in Note 1-c) through the Agreement signed on May 21, 2021, the entry into force of which is subject to judicial approval, the Company acknowledges that it was used by some of its former directors for the commission of illegal acts up to in 2016 and agrees, consequently, to pay a civil compensation to the State for a total amount of S/321.9 million and US$41.1 million. As of March 31, 2022, the amount equivalent to the present value resulting from the amounts descrived above is recorded as a provision of S/177.2 million and US$19.7 million, equivalent to a total S/250 million (As of December 31, 2021 was S/164.6 million and US$18.9 million equivalent to S/240.1 million).
Administrative process INDECOPI
i) | On March 9, 2021, Cumbra Peru S.A. was notified with an “Informe Final de Instruccion” prepared by INDECOPI’s Technical Secretary, in relation with the administrative sanction process against 33 construction companies and other 26 of their executives for allegedly arranging a coordination system through with they illegaly distributed several contract tenders conducted by Provias Nacional and other govenmental entities. Such report was subject to approval by INDECOPI’s “Comision de Defensa de la Libre Competencia”, which on November 15, 2021, through Resolution N°080-021-CLC-INDECOPI, ruled in favor to sanction the companies and their executives, included Cumbra Peru S.A. On December 9, 2021, Cumbra Peru filed an appeal against such ruling, suspending its application. As of March 31, 2022, the Company and its legal advisors estimated a provision of S/54.7 million (S/52.6 million as of December 31, 2021). |
ii) | On February 7, 2022, Cumbra Peru S.A. and Unna Transporte S.A.C. were notified by the National Directorate for the Investigation and Promotion of Free Competition under File 003-2020/CLC-IP, issuing Resolution 038-2021/DLC-INDECOPI of December 28, 2021, through which an administrative procedure is initiated penalty for the alleged execution of a horizontal collusive practice in the form of concerted distribution of suppliers in the contracting market for workers in the construction sector at the national level, during the period between the years 2011 to 2017. As of March 31, 2022, the Company and its legal advisors estimate a provision amounting to S/4.8 million in each of the subsidiaries. |
Shareholder class action lawsuits in the Eastern District Court of New York
During the first quarter of 2017 two securities class actions have been filed against the Company, and certain former employees in the Eastern District of New York.
- 31 -
On June 30, 2021, a first amendment to the agreement was signed, which stipulates a payment of US$0.6 million (equivalent to S/2.2 million), amortization of the oustanding balance on September 30, 2021, and annual interest of 8%. On September 14, 2021, the settlement agreement was approved by the Eastern District Court of New York.
On October 1, 2021, the second amendment to the agreement was signed, whereby US$5.5 million (equivalent to S/22.7 million) was paid plus accrued interest of US$0.9 million (equivalent to S/3.6 million), established as a new expiration date June 30, 2022, plus accrued interest at an interest rate of 9% per year was set.
As of December 31, 2021, the Company maintains a provision of US$8.6 million. As of March 31, 2022, this provision was transferred to other accounts payable and it is equivalent to S/33.3 million, and was full paid on April 8, 2022.
(b) | Provision for closure corresponds mainly to: |
i) | Provisions for closure of wells of Unna Energia S.A. for S/68.1 million and contractual compliance with Petroperu for S/3.1 million (as of December 31, 2021, S/71.1 million and S/3.4 million, respectively); |
ii) | In Red Vial 5 S.A. provision for costs associated with the closing of the concession contract and the process of claiming the tariff guarantee for toll suspension for S/5 million (as of December 31, 2021, S/5.1 million); and |
The account movement for the periods ended March 31, 2021 and 2022 are as follows:
Provision | ||||||||||||||||
Legal | Tax | for well | ||||||||||||||
claims | claims | closure | Total | |||||||||||||
At January 1, 2021 | 368,241 | 8,176 | 52,949 | 429,366 | ||||||||||||
Additions | 4,350 | - | 668 | 5,018 | ||||||||||||
Present value | 1,347 | - | 104 | 1,451 | ||||||||||||
Reversals of provisions | (1,593 | ) | - | - | (1,593 | ) | ||||||||||
Reclasification | 157 | - | - | 157 | ||||||||||||
Payments | (913 | ) | - | (27 | ) | (940 | ) | |||||||||
Translation adjustments / Exchange difference | 6,140 | - | 108 | 6,248 | ||||||||||||
At March 31, 2021 | 377,729 | 8,176 | 53,802 | 439,707 | ||||||||||||
At January 1, 2022 | 364,385 | 37,466 | 82,475 | 484,326 | ||||||||||||
Additions | 5,798 | 1,022 | - | 6,820 | ||||||||||||
Present value | 12,493 | - | (1,473 | ) | 11,020 | |||||||||||
Reversals of provisions | (776 | ) | - | - | (776 | ) | ||||||||||
Reclasification | (28,093 | ) | - | - | (28,093 | ) | ||||||||||
Payments | (290 | ) | - | (138 | ) | (428 | ) | |||||||||
Translation adjustments / Exchange difference | (11,246 | ) | - | (1,652 | ) | (12,898 | ) | |||||||||
At March 31, 2022 | 342,271 | 38,488 | 79,212 | 459,971 |
20. CAPITAL
In accordance with the terms and conditions of the convertible bond, holders of 11,000 Convertible Bonds, each with a par value of US$1,000 and for a principal amount equivalent to US$11 million, communicated the exercise of their conversion rights.
On February 28, 2022, the Company issued provisional certificates for 37,801,073 new common shares, with a nominal value of S/1.00 each, with voting rights, and they are fully subscribed and paid. Therefore, the Company increased its capital stock from S/871,917,855 to S/ 909,718,928; and with respect to the convertible bonds, as of February 28, 2022, the balance amounted to US$78.9 million.
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Additionally, on March 31, 2022, holders of 78,970 convertible bonds, each for a par value of US$1,000 and for a principal amount equivalent to US$78.9 million, have communicated the exercise of their conversion right. The company converted the bonds, as well as paid the accrued interest to the bondholders who have exercised their conversion rights. As a consequence, the Company issued provisional certificates for 287,261,051 new common shares. Therefore, the capital stock of the Company has increased from S/909,718,928 to S/1,196,979,979. After this last operation, the convertible bonds have been fully cancelled.
As of March 31, 2022, a total of 135,133,785 shares were represented in ADS, equivalent to 27,026,757 ADSs at a rate of 5 shares per ADS.
As of December 31, 2021, a total of 136,637,740 shares were represented in ADS, equivalent to 27,327,548 ADSs at a rate of 5 shares per ADS.
21. EXPENSES BY NATURE
For the periods ended March 31, 2021 and 2022, this item comprises:
Cost | ||||||||||||
of goods | Administrative | |||||||||||
and services | expenses | Total | ||||||||||
2021 | ||||||||||||
Salaries, wages and fringe benefits | 286,328 | 28,288 | 314,616 | |||||||||
Services provided by third-parties | 208,559 | 7,570 | 216,129 | |||||||||
Purchase of goods | 175,953 | - | 175,953 | |||||||||
Other management charges | 47,971 | 4,364 | 52,335 | |||||||||
Depreciation (Note 14.a) | 19,320 | 2,963 | 22,283 | |||||||||
Amortization (Note 14.b) | 23,150 | 974 | 24,124 | |||||||||
Impairment of accounts receivable | 202 | - | 202 | |||||||||
Taxes | 947 | 14 | 961 | |||||||||
Recovery of property, plant and equipment | (1,023 | ) | - | (1,023 | ) | |||||||
Inventory recovery | 150 | - | 150 | |||||||||
761,557 | 44,173 | 805,730 | ||||||||||
2022 | ||||||||||||
Salaries, wages and fringe benefits | 360,988 | 20,390 | 381,378 | |||||||||
Services provided by third-parties | 328,587 | 4,790 | 333,377 | |||||||||
Purchase of goods | 124,128 | 248 | 124,376 | |||||||||
Other management charges | 83,350 | 2,875 | 86,225 | |||||||||
Depreciation (Note 14.a) | 17,760 | 1,135 | 18,895 | |||||||||
Amortization (Note 14.b) | 23,933 | 426 | 24,359 | |||||||||
Impairment of accounts receivable | 46 | - | 46 | |||||||||
Taxes | 1,638 | 19 | 1,657 | |||||||||
Recovery of property, plant and equipment | (545 | ) | - | (545 | ) | |||||||
Impairment of inventory | 99 | - | 99 | |||||||||
939,984 | 29,883 | 969,867 |
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22. OTHER INCOME AND EXPENSES
For the periods ended March 31, 2021 and 2022, this item comprises:
2021 | 2022 | |||||||
Other income: | ||||||||
Sale of assets | 3,462 | 4,030 | ||||||
Valuation of well abandonment | - | 1,023 | ||||||
Penalty income | 465 | 215 | ||||||
Recovery of provisions and impairments | 1,491 | 78 | ||||||
Others | 1,768 | 486 | ||||||
7,186 | 5,832 | |||||||
Other expenditures: | ||||||||
Net cost of fixed assets disposal | 3,718 | 3,982 | ||||||
Civil penalty cover to the Peruvian Government | - | 2,281 | ||||||
Administrative fine | 4,790 | 736 | ||||||
Asset impairment | 53 | - | ||||||
Valuation of well abandonment | 71 | - | ||||||
Disposal of property, plant and equipment | - | 101 | ||||||
Others | 150 | 579 | ||||||
8,782 | 7,679 | |||||||
(1,596 | ) | (1,847 | ) |
23. FINANCIAL INCOME AND EXPENSES
For the periods ended March 31, 2021 and 2022, this item comprises:
2021 | 2022 | |||||||
Financial income: | ||||||||
Interest on loans to third parties | 54 | 47 | ||||||
Profit for present value of financial asset or financial liability | 897 | 772 | ||||||
Interest on short-term bank deposits | 174 | 510 | ||||||
Business interests | 90 | 167 | ||||||
Exchange difference gain, net | - | 3,153 | ||||||
Interest on mutual funds | 110 | 11 | ||||||
Others | 374 | 418 | ||||||
1,699 | 5,078 |
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2021 | 2022 | |||||||
Financial expenses: | ||||||||
Interest expense on: | ||||||||
- Bank loans (a) | 16,214 | 9,573 | ||||||
- Bonds (b) | 6,271 | 18,839 | ||||||
- Loans from third parties | 1,807 | 2,951 | ||||||
- Right-of-use | 988 | 936 | ||||||
- Financial lease | 218 | 153 | ||||||
Commissions and collaterals | 6,081 | 5,823 | ||||||
Interests from Tax Administration (c) | 8,778 | 2,315 | ||||||
Loss for present value of financial asset or financial liability (d) | 25,769 | 41,390 | ||||||
Exchange difference loss, net | 2,005 | - | ||||||
Other financial expenses | 1,228 | 874 | ||||||
Less capitalized interest | (1,120 | ) | (852 | ) | ||||
68,239 | 82,002 |
(a) | The variation in interest corresponds mainly to the fact that the Company decreased by S/3.1 million due to the loan with CS Peru Infrastructure Holdings LLC (Gramercy), which was canceled in August 2021, the difference of S/3.2 million corresponds to Cumbra Peru S.A.C. mainly explained by the amortization of capital of the Tranche A Syndicated Line and Santander Spain, canceled in August and November 2021, respectively. |
(b) | The increase corresponds mainly to the recording of interest and costs incurred by the Company for S/13.2 million due to the capitalization of the convertible bonds. |
(c) | The variation corresponds to Cumbra Peru S.A.C. which decreased by S/8.1 million due to the cancellation of default interest on the SUNAT fine (Income Tax 2013) and increased by S/1.6 million (Agreement between Vial y Vives - DSD S.A. and General Treasury of the Republic of Chile for VAT payment). |
(d) | The variation corresponds to the increase in the interest rate in the estimation of the present value of the civil compensation before the Ministerio de Justicia, impacting the Company for S/11.6 million, Unna Transporte S.A.C. for S/1.6 million and Cumbra Peru S.A.C. for S/2.3 million. |
24. CONTINGENCIES, COMMITTMENTS AND GUARANTEES
In the opinion of Management and its legal advisors, the provisions registered mainly for civil lawsuits, labor dispute processes, contentious and administrative processes and tax claims are sufficient to cover the results of these probable contingencies (Note 19).
a) Tax contingencies
The Company considers that the maximum exposure for tax contingencies of the Corporate amounts to S/304.7 million (S/303.1 million as of December 2021).
Management estimates that all the afore mentioned processes will be favorable considering their characteristics and the evaluation of their legal advisors.
b) Other contingencies
As of March 31, 2022, contingencies held by the Corporation are substantially the same as those existing as of December 31, 2021
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c) Letters bonds and guarantees
The Corporation maintains guarantees and letters of credit in force in various financial entities guaranteeing operations for US$462.8 million (US$471.9 million, as of December 31, 2021).
25. DIVIDENDS
In compliance with certain covenants, the company will not pay, except for transactions with non-controlling interests. Certain of our debt or other contractual obligations may restrict our ability to pay dividends in the future. Additionally, “the Agreement” does not allow the distribution of dividends until 40% of the total amount of the committed civil penalty described in Note 1 c) has been amortized.
For the period ended March 31, 2022, the Corporation’s subsidiaries do not have paid dividends to its non-controlling interests (for period ended in March 31, 2021, the subsidiaries paid S/4.2 million).
26. LOSS PER SHARE
The basic loss per common share has been calculated by dividing the loss of the period attributable to the Corporation’s common shareholders by the weighted average of the number of common shares outstanding during that period. No diluted loss per common share has been calculated because there is no potential diluent common or investment shares (ie, financial instruments or agreements that entitle to obtain common or investment shares); therefore, it is the same as the loss per basic share.
For the periods ended March 31, 2021 and 2022, the basic loss per common share is as follows:
2021 | 2022 | |||||||||||
Loss attributable to owners of the Company | ||||||||||||
during the period | (34,697 | ) | (30,188 | ) | ||||||||
Weighted average number of shares in issue | ||||||||||||
at S/1.00 each, at March 31 | 871,917,855 | 983,883,698 | ||||||||||
Basic loss per share (in S/) | ( | *) | (0.040 | ) | (0.031 | ) | ||||||
2021 | 2022 | |||||||||||
Loss from continuing operations attributable to owners | ||||||||||||
of the Company during the period | (26,323 | ) | (30,188 | ) | ||||||||
Weighted average number of shares in issue | ||||||||||||
at S/1.00 each, at March 31 | 871,917,855 | 983,883,698 | ||||||||||
Basic loss per share (in S/) | ( | *) | (0.030 | ) | (0.031 | ) | ||||||
(*) The Corporation does not have common shares with dilutive effects at March 31, 2021 and 2022.
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27. EVENTS AFTER THE DATE OF THE STATEMENT OF FINANCIAL POSITION
Bridge Loan Agreement
On March 17, 2022, the company entered into a bridge loan credit agreement for up to US$120 million, with a group of financial entities comprised by Banco BTG Pactual S.A. - Cayman Branch, Banco Santander Peru S.A., HSBC Mexico, S.A., Institución de Banca Múltiple, Grupo Financiero HSBC, and Natixis, New York Branch. The proceeds of this loan will be used, among other corporate purposes, to execute the mandatory redemption of the bonds convertible into shares of our company. The financing will be repaid over a period of 18 months, and will be secured, subject to the fulfillment of certain precedent conditions, by a flow trust (first lien), a trust over the shares of Viva Negocio Inmobiliario S.A. (second lien), and a pledge on our shares in Unna Energía S.A. (first lien).
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