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 March 2023

 

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)

 

Av. Petit Thouars 4957

Miraflores

Lima 34, 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 ☒         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): ☐

 

 

 

 

 

 

SIGNATURES

 

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/ FREDY CHALCO  
Name:  Fredy Chalco Aguilar  
Title: VP of Corporate Finance  
Date: March 1, 2023  

 

 

 

 

 

AENZA S.A.A. AND SUBSIDIARIES

 

CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2021 AND DECEMBER 31, 2022 (UNAUDITED)

 

(Free translation from the original in Spanish)

 

 

 

 

AENZA S.A.A. AND SUBSIDIARIES

 

CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2021 AND DECEMBER 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 - 42

 

S/= Peruvian Sol
US$= United States dollar

 

i

 

 

AENZA S.A.A. AND SUBSIDIARIES

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

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

 

      As of December 31, 
   Note  2021   2022 
ASSETS           
Current assets           
Cash and cash equivalents  8   957,178    917,554 
Trade accounts receivable, net  9   590,280    1,083,816 
Work in progress  10   309,063    - 
Accounts receivable from related parties  11   20,817    27,744 
Other accounts receivable  12   487,058    402,741 
Inventories, net      488,326    367,255 
Prepaid expenses      32,142    28,098 
Total current assets      2,884,864    2,827,208 
              
Non-current assets             
Trade accounts receivable, net  9   683,306    717,136 
Accounts receivable from related parties  11   643,897    542,392 
Prepaid expenses      23,607    17,293 
Other accounts receivable  12   201,360    285,730 
Inventories, net      -    65,553 
Investments in associates and joint ventures  13   31,173    14,917 
Investment property  14   63,011    60,417 
Property, plant and equipment, net  14   303,170    285,972 
Intangible assets, net  14   743,391    787,336 
Right-of-use assets, net  14   47,717    50,207 
Deferred tax asset      275,076    292,654 
Total non-current assets      3,015,708    3,119,607 
              
Total assets      5,900,572    5,946,815 
              
LIABILITIES AND EQUITY             
              
Current liabilities             
Borrowings  15   241,340    574,262 
Bonds  16   69,838    77,100 
Trade accounts payable  17   980,767    1,035,291 
Accounts payable to related parties  11   51,004    53,444 
Current income tax      94,958    69,575 
Other accounts payable  18   754,981    720,010 
Other provisions  19   154,829    131,729 
Total current liabilities      2,347,717    2,661,411 
              
Non-current liabilities             
Borrowings  15   338,560    305,631 
Bonds  16   1,191,084    792,813 
Other accounts payable  18   92,369    102,317 
Accounts payable to related parties  11   50,712    27,293 
Other provisions  19   329,497    570,224 
Deferred tax liability      97,367    128,308 
Total non-current liabilities      2,099,589    1,926,586 
Total liabilities      4,447,306    4,587,997 
              
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)   (95,036)
Retained earnings      (829,714)   (1,336,542)
Equity attributable to controlling interest in the Company      1,199,816    1,069,479 
Non-controlling interest      253,450    289,339 
Total equity      1,453,266    1,358,818 
Total liabilities and equity      5,900,572    5,946,815 

 

The accompanying notes on pages 6 to 42 are an integral part of the consolidated financial statements.

 

- 1 -

 

 

AENZA S.A.A. AND SUBSIDIARIES

 

CONSOLIDATED STATEMENT OF INCOME

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

 

      For the year ended 
      December 31, 
   Note  2021   2022 
            
            
Revenues from construction activities      2,272,561    2,433,775 
Revenues from services provided      1,094,439    1,104,900 
Revenue from real estate and sale of goods      579,482    849,157 
       3,946,482    4,387,832 
              
Cost of construction activities      (2,178,648)   (2,465,428)
Cost of services provided      (918,212)   (928,473)
Cost of real estate and sale of goods      (454,484)   (543,788)
   21   (3,551,344)   (3,937,689)
Gross profit      395,138    450,143 
              
Administrative expenses  21   (179,613)   (162,598)
Other income and expenses  22   (4,477)   (287,715)
Operating profit (loss)      211,048    (170)
              
Financial expenses  23   (262,574)   (254,249)
Financial income  23   5,773    25,854 
Share of the profit or loss of associates and joint ventures accounted for using the equity method  13   (861)   1,907 
Loss before income tax      (46,614)   (226,658)
Income tax expense      (43,700)   (129,869)
Loss from continuing operations      (90,314)   (356,527)
Loss from discontinued operation, net of tax      (26,774)   - 
Loss for the year      (117,088)   (356,527)
              
(Loss) profit attributable to:             
Owners of the Company      (153,210)   (455,244)
Non-controlling interest      36,122    98,717 
       (117,088)   (356,527)
              
Loss per share attributable to owners of the Company during the year  26   (0.176)   (0.398)
              
Loss per share from continuing operations attributable to owners of the Company during the year  26   (0.145)   (0.398)

 

The accompanying notes on pages 6 to 42 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 year ended 
   December 31, 
   2021   2022 
         
Loss for the year   (117,088)   (356,527)
Other comprehensive income:          
Items that may be subsequently reclassified to profit or loss          
Other comprehensive income recycled   -    (7,460)
Foreign currency translation adjustment, net of tax   (5,987)   (23,613)
Exchange difference from net investment in a foreign operation, net of tax   (428)   (289)
Other comprehensive income for the year, net of tax   (6,415)   (31,362)
Total comprehensive income for the year   (123,503)   (387,889)
           
Comprehensive income attributable to:          
Owners of the Company   (159,592)   (486,483)
Non-controlling interest   36,089    98,594 
    (123,503)   (387,889)
           
Comprehensive income for the year attributable to owners of the Company:          
Continuing operations   (132,818)   (486,483)
Discontinued operations   (26,774)   - 
    (159,592)   (486,483)

 

The accompanying notes on pages 6 to 42 are an integral part of the consolidated financial statements.

 

- 3 -

 

 

AENZA S.A.A. AND SUBSIDIARIES

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED DECEMBER 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    1,131,574    (169,234)   (728,637)   1,267,606    327,690    1,595,296 
(Loss) profit for the year   -    -    -    -    -    -    (153,210)   (153,210)   36,122    (117,088)
Foreign currency translation adjustment   -    -    -    -    -    (5,957)   -    (5,957)   (30)   (5,987)
Exchange difference from net investment in a foreign operation   -    -    -    -    -    (425)   -    (425)   (3)   (428)
Comprehensive income of the year   -    -    -    -    -    (6,382)   (153,210)   (159,592)   36,089    (123,503)
Transactions with shareholders:                                                  
- Dividend distribution   -    -    -    -    -    -    -    -    (42,974)   (42,974)
- Acquisition of (profit distribution to) non-controlling interests, net   -    -    -    -    -    -    -    -    (27,104)   (27,104)
- Additional acquisition of non-controlling   -    -    -    -    -    39,669    -    39,669    (39,669)   - 
- Deconsolidation Adexus S.A.   -    -    -    -    -    -    52,133    52,133    -    52,133 
- Dilution of non-controlling shareholders   -    -    -    -    -    -    -    -    (582)   (582)
Total transactions with shareholders   -    -    -    -    -    39,669    52,133    91,802    (110,329)   (18,527)
Balances as of December 31, 2021   871,918    871,918    132,011    29,974    1,131,574    (135,947)   (829,714)   1,199,816    253,450    1,453,266 
                                                   
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   -    -    -    -    -    -    (455,244)   (455,244)   98,717    (356,527)
Foreign currency translation adjustment   -    -    -    -    -    (23,492)   -    (23,492)   (121)   (23,613)
Other comprehensive income recycled   -    -    -    -    -    (7,460)   -    (7,460)   -    (7,460)
Exchange difference from net investment in a foreign operation   -    -    -    -    -    (287)   -    (287)   (2)   (289)
Comprehensive income of the period   -    -    -    -    -    (31,239)   (455,244)   (486,483)   98,594    (387,889)
Transactions with shareholders:                                                  
- Dividend distribution   -    -    -    -    -    -    -    -    (19,847)   (19,847)
- Acquisition of (profit distribution to) non-controlling interests, net   -    -    -    -    -    -    -    -    (36,879)   (36,879)
- Reclasification of PUT option Morelco   -    -    -    -    -    72,150    (72,150)   -    -    - 
- Capital increase   325,062    325,062    -    -    10,518    -    -    335,580    -    335,580 
- Dilution of non-controlling shareholders   -    -    -    -    -    -    2,598    2,598    (6,152)   (3,554)
- Prior year adjustments   -    -    -    -    -    -    17,968    17,968    173    18,141 
Total transactions with shareholders   325,062    325,062    -    -    10,518    72,150    (51,584)   356,146    (62,705)   293,441 
Balances as of December 31, 2022   1,196,980    1,196,980    132,011    29,974    1,142,092    (95,036)   (1,336,542)   1,069,479    289,339    1,358,818 

 

The accompanying notes on pages 6 to 42 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 year ended 
      December 31, 
   Note  2021   2022 
            
OPERATING ACTIVITIES           
Loss before income tax      (78,350)   (226,658)
Adjustments to profit not affecting cash flows from             
operating activities:             
Depreciation  14 a)   98,795    74,988 
Amortization of intangible assets  14 b)   106,512    102,035 
Impairment of inventories      2,984    1,437 
Impairment of accounts receivable and other accounts receivable      29,389    182,288 
Reversal of impairment of inventories      -    (3,409)
Debt condonation      -    (6,858)
Impairment of property, plant and equipment      8,088    8,200 
Impairment of intangible assets      -    2,530 
Other comprehensive income recycled      -    (7,460)
Decrease due to renegotiation of PUT Morelco      -    (3,706)
Other provisions      62,246    299,058 
Renegotiation of liability for acquisition of non-controlling Morelco      (70,322)   - 
Financial expense,net      222,453    158,485 
Impairment of investment      -    14,804 
Share of the profit and loss of associates and joint ventures accounted for using the equity method  13   861    (1,907)
Reversal of provisions      (13,027)   (15,935)
Disposal (reversal) of assets      2,410    3,490 
Loss (profit) on sale of property, plant and equipment      (3,937)   (3,889)
Loss on remeasurement of accounts receivable      106,613    81,130 
Net variations in assets and liabilities:             
Trade accounts receivable and working in progress      (82,527)   (317,316)
Other accounts receivable      41,626    (154,014)
Other accounts receivable from related parties      (57,258)   22,573 
Inventories      59,201    58,427 
Pre-paid expenses and other assets      (11,681)   33,174 
Trade accounts payable      (55,131)   130,817 
Other accounts payable      72,991    (71,716)
Other accounts payable to related parties      7,703    (10,192)
Other provisions      (27,964)   (41,000)
Interest paid      (146,369)   (144,236)
Payments for purchases of intangibles - Concessions      (5,157)   - 
Income tax paid      (75,641)   (124,047)
Net cash provided by operating activities      194,508    41,093 
              
INVESTING ACTIVITIES             
Proceeds from sale of property, plant and equipment      9,162    11,274 
Interest received      2,474    12,894 
Dividends received      3,445    380 
Acquisition of investment property      (152)   (52)
Acquisition of intangible assets      (53,808)   (165,157)
Loss of deconsolidation of investment      (11,223)   - 
Acquisition of property, plant and equipment      (38,087)   (64,626)
Net cash applied to investing activities      (88,189)   (205,287)
              
FINANCING ACTIVITIES             
Borrowing received      281,079    492,961 
Bonds issued      357,424    - 
Borrowing paid      (548,360)   (224,979)
Amortization of bonds issued      (48,858)   (56,745)
Transaction costs related to loans and borrowings      (5,681)   (13,736)
Dividends paid to non-controlling interest      (25,693)   (34,477)
Cash received (return of contributions) from non-controlling shareholders      (27,104)   (36,879)
Acquisition or sale of interest in a subsidiary of non-controlling shareholders      (33,232)   - 
Net cash (applied to) provided by financing activities      (50,425)   126,145 
Net increase in cash      55,894    (38,049)
Exchange difference      1,116    (1,575)
Cash and cash equivalents at the beginning of the year      900,168    957,178 
Cash and cash equivalents at the end of the year  8   957,178    917,554 
              
NON-CASH TRANSACTIONS:             
Capitalization of interests      1,244    937 
Acquisition of assets through finance leases      104    70 
Dividends declared to non-controlling interest      17,281    17,969 
Acquisition of right-of-use assets      7,988    18,829 
Capitalization of convertible bonds      -    335,580 

 

The accompanying notes on pages 6 to 42 are an integral part of the consolidated financial statements.

 

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AENZA S.A.A. AND SUBSIDIARIES

 

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AT DECEMBER 31, 2021 AND DECEMBER 31, 2022 (UNAUDITED)

 

1.GENERAL INFORMATION

 

a)Company’s incorporation and operations

 

AENZA S.A.A., (hereinafter the “Company” or “AENZA”) is the parent Company of the AENZA Corporation which comprise the Company and its subsidiaries (hereinafter, the “Corporation”) and is mainly engaged in holding investments in its subsidiaries. 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, energy, 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 consolidated financial statements for the year ended December 31, 2022, have been prepared and issued with authorization of Management and the Board of Directors on March 1, 2023 and will be submitted for the consideration and approval of the General Shareholders’ Meeting to be held within the term established by law. In Management’s opinion, the financial statements as of December 31, 2022 will be approved without modifications.

 

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, 2022.

 

c)Collaboration and Benefits Agreement – “The Agreement”

 

On September 15, 2022, the Collaboration and Benefits Agreement (the “Agreement” hereinafter) was signed by the Public Ministry, the Ad Hoc Public Attorney’s Office and the Company. Through this document, AENZA 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/488.9 million (S/333.3 million and US$40.7 million) under the scope of application of the Law No. 30737 implementing regulation.

 

Pursuant to the Agreement signed the payment will be made within a term of 12 years, under a legal interest rate in Soles and US Dollars (3.03% and 1.15% effective interest annual rate as of December 31, 2022, respectively); in addition, the Company compromise to establish a package of guarantees after court’s approval i) a trust that includes shares issued by a subsidiary of AENZA; ii) a real state asset and iii) a guaranty account with funds equivalent to the annual fees corresponding to the following year. Among other conditions, the Agreement includes a restriction for Aenza and the subsidiaries Cumbra Peru S.A., and Unna Transporte S.A.C. to participate in public construction and road maintenance contracts with the Peruvian State for two (2) years, counted from the court approval. The other companies of the Corporation are not subject to any impediment or prohibition to contract with the Peruvian State. As of December 31, 2022, the Company registered the full amount of the liability associated with the Agreement for S/488.9 million (see, Note 19-a).

 

As of December 31, 2022, issuance date of the condensed interim consolidated financial statements, in opinion of Corporate Management and its legal advisors, the civil penalty covers the total contingency to which the Company is exposed as a consequence of the investigations revealed in notes to the consolidated financial statements since year 2017. Nevertheless, the Agreement is subject to court approval and its terms and conditions are subject to confidentiality provisions in such agreement.

 

- 6 -

 

 

The Agreement includes a reserve clause to readjust the amount of civil damages determined with respect to three projects, as well as the payment schedule resulting from such readjustment. This clause is to be implemented, before the approval of the agreement, or within a maximum sixty (60) days term from the date of this agreement. The Company’s Management estimates that if this reserve is to be applied, the provision for civil damages could increase up to 5%.

 

d)Investigation and administrative proceeding initiated by INDECOPI in connection with the labor contracting market

 

On February 7, 2022, Cumbra Perú S.A. (formerly “GyM”) and Unna Transporte S.A.C. (formerly Concar) were notified with Resolution N° 038-2021/DLC-INDECOPI, whereby the Commission for the Defense of Free Competition of INDECOPI resolved to initiate an administrative sanctioning procedure regarding the alleged conduct of a horizontal collusive practice in the modality of concerted sharing of suppliers in the market for hiring workers in the construction sector at the national level between the years 2011 and 2017.

 

On April 7, 2022, Cumbra Peru S.A. and Unna Transporte S.A.C. submitted a proposal for a cease and desist commitment for the early termination of the administrative sanctioning procedure, in which (i) they acknowledged the imputed conduct, (ii) they committed to maintain in the years 2022, 2023 and 2024 a program of compliance with free competition rules, and (iii) they agreed to pay a compensation amounting to S/2,696.8 thousands in two installments (one after 60 days and the second after 12 months). By Resolution No. 054-2022/CLC-INDECOPI of August 19, 2022, the Commission for the Defense of Free Competition of INDECOPI approved the proposed cease and desist commitment and concluded the sanctioning procedure.

 

e)New measures for the State of Emergency due to COVID-19

 

Through Supreme Decree No. 044-2020-PCM dated March 15, 2020, a State of National Emergency was declared in Peru due to the outbreak of the coronavirus (COVID-19) in the country. Since COVID-19 has been classified as a pandemic by the World Health Organization as it has spread to more than one hundred countries simultaneously, the Peruvian State took as a measure a period of mandatory social immobilization until June 30, 2020.

 

Subsequently, Supreme Decrees were issued extending the state of emergency, the last extension in 2020 was through Supreme Decree N° 184-2020-PCM, which extended the State of National Emergency for a period of 31 calendar days ending on December 31, 2020. During 2021 and 2022, Supreme Decrees continued to be issued extending the state of emergency, thus Supreme Decree N° 015-2022 extended the state of emergency until February 25, 2023.

 

The Corporation has adopted all measures deemed necessary and appropriate for operational continuity, ensuring the safety and health protection of its employees and customers in accordance with the measures ordered by the competent authorities for the control of COVID-19.

 

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2.BASIS OF PREPARATION

 

The condensed interim consolidated financial statements for the year ended as of December 31, 2022 have been prepared in accordance with IAS 34 “Interim Financial Reporting”. The condensed interim consolidated financial statements provide comparative information regarding prior year; 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 as of 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.

 

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 as of 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 December 31, 2022, and for this reason they have not been disclosed. The Corporation has not adopted in advance any amendment and modification that are not yet effective.

 

4.FINANCIAL RISK MANAGEMENT

 

Financial risk management is carried out by Corporation’s Management which oversees 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 liquidity in excess, which is supervised and monitored on periodic bases.

 

4.1Financial risk factors

 

Corporation’s activities are exposed 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

 

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 2022, this exposure is mainly concentrated in fluctuations of Peruvian soles, Chilean and Colombian Pesos compared to U.S. dollar.

 

- 8 -

 

 

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 updated as of the report date, according to the type of currency:

 

   As of   As of 
   December 31,   December 31, 
   2021   2022 
         
Soles (a)   3.998    3.820 
Chilean Pesos (b)   844.69    855.86 
Colombian Pesos (c)   3,981.16    4,810.20 

 

(a)Soles published by the Superintendencia de Bancos, Seguros y Administradoras de Fondos de Pensiones (“SBS” by its acronym in Spanish).
(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 as of December 31, includes the following:

 

   2021   2022 
   USD(000)   USD(000) 
         
Assets   519,448    539,249 
Liabilities   512,947    541,589 

 

For the year ended as of December 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 were:

 

   2021   2022 
         
Gain   383,199    449,864 
Loss   (430,410)   (450,133)

 

ii)Price risk

 

Management considers that the exposure of the Corporation to the price risk of its investments in mutual funds, and equity securities is low since the invested amounts are not significant. Any fluctuation in their fair value will not have any significant impact on the balances reported in the consolidated financial statements.

 

iii)Cash flow and fair value interest rate risk

 

The Corporation’s interest rate risk mainly arises from its long-term borrowings. Borrowings issued at variable rates expose the Corporation to cash flow interest rate risk. Borrowings issued at fixed rates expose the Corporation to fair value interest rate risk.

 

b)Credit risk

 

Credit risk arises from cash and cash equivalents and deposits with banks and financial institutions, as well as customer credit counterparties, including the outstanding balance of accounts receivable and committed transactions.

 

- 9 -

 

 

Concerning to loans provided to related parties, the Corporation has measures in place to ensure the recovery of these loans through the controls maintained by Corporate Finance Management and performance evaluation conducted by the Board of Directors.

 

Management does not expect the Corporation to incur in losses arisen from the performance of these counterparties, except for those already recorded at the financial statements.

 

c)Liquidity risk

 

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

 

Corporate Finance Management supervise cash flow projections performed on liquidity requirements of the Corporation to ensure there is sufficient cash to cover operational needs so that Corporation does not breach the limits of indebtedness or guarantees (covenants), if applicable, on any of its borrowing facilities. Minor financing operations are controlled by Finance Management of each subsidiary.

 

Such projections take into consideration Corporation’s debt financing plans, covenant compliance, internal ratio targets compliance in the consolidated statement of financial position and, if applicable, external regulatory or legal requirements, for example, foreign currency restrictions.

 

Surplus cash over the balance required for working capital management is invested in interest-bearing bank accounts or time deposits, selecting instruments with adequate maturities and sufficient liquidity.

 

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

 

- 10 -

 

 

   Less than   1-2   2-5   More than     
As of December 31, 2022  1 year   years   years   5 years   Total 
                     
Other financial liabilities (except for finance leases and lease liability for right-of-use asset)   599,310    71,732    216,392    -    887,434 
Finance leases   873    -    -    -    873 
Lease liability for right-of-use asset   19,075    31,706    23,386    112    74,279 
Bonds   141,246    185,114    419,969    707,800    1,454,129 
Trade accounts payables (except non-financial liabilities)   1,035,142    -    -    -    1,035,142 
Accounts payables to related parties   53,444    25,420    697    1,176    80,737 
Other accounts payables and other provisions (except non-financial liabilities)   252,902    26,199    155,552    470,129    904,782 
    2,101,992    340,171    815,996    1,179,217    4,437,376 

 

4.2Capital management risk

 

Corporation’s objectives regarding capital management is to safeguard Corporation’s ability to continue operations as a going concern basis in order to provide returns for their shareholders, benefits for other stakeholders and maintain an optimal capital structure to minimize capital cost. Since 2017 Corporation context and situation has lead Management to monitor deviations that may cause non-compliance with covenants and hinder liabilities renegotiation (see, Note 15). In extraordinary events, Corporation identifies possible deviations, requirements and establishes a plan.

 

In order to maintain or adjust capital structure, Corporation may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce their debt.

 

Corporation monitors its capital on the basis of the leverage ratio. This ratio is calculated by dividing net debt into total capital. Net debt corresponds to the total of financial obligations (including current and non-current borrowings), less cash and cash equivalents. Total capital corresponds to the ‘equity’ as shown in the consolidated statement of financial position plus net debt.

 

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

 

   2021   2022 
Total financial liabilities and bonds (Note 15 and Note 16)   1,840,822    1,749,806 
Less: Cash and cash equivalents (Note 8)   (957,178)   (917,554)
Net debt (a)   883,644    832,252 
Total equity   1,453,266    1,358,818 
Total capital (b)   2,336,910    2,191,070 
           
Leverage ratio (a/b)   0.38    0.38 

 

4.3Fair value estimation

 

The following levels of measurement have been established in order to classify the type of valuation used by Corporation for on their financial instruments at fair value.

 

-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).

 

- 11 -

 

 

The table below shows 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 December 31, 2022     
      
Financial liabilities     
Other financial entities (Note 15-b)   162,750 

 

5.CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

 

Estimates and judgments used are continuously evaluated and are based on historical experience among other factors, including expectations of future events that are believed to be reasonable under current circumstances.

 

In preparing these condensed interim consolidated financial statements, the significant judgements made by management in applying Corporation’s accounting policies and the key sources of uncertainty were the same as those that applied to the consolidated financial statements for the year ended December 31, 2021.

 

6.SEASONALITY OF OPERATIONS

 

The Corporation does not present seasonality in the operations of any of its subsidiaries; and develop its business during the normal course of the year.

 

7.OPERATING SEGMENTS

 

Operating segments are reported consistently with the internal reports that are reviewed by Corporation’s, 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.

 

Corporation’s operating segments are assessed by the activities of the following business units: (i) engineering and construction, (ii) energy, (iii) infrastructure, and (iv) real estate.

 

As set forth under IFRS 8, reportable segments by significance of income are: ‘engineering and construction’, ‘energy’ and ‘infrastructure’. However, Management has voluntarily decided to report on all its operating segments.

 

Inter-segmental sales transactions are entered into prices similar to those that would have been agreed with unrelated third parties. Revenues from external customers reported are measured in a consistent manner under the basis for preparation of the consolidated 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 Corporation’s revenue.

 

- 12 -

 

 

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

 

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   309,063    -    -    -    -    -    -    -    309,063 
Accounts receivable from related parties   95,390    121    48,012    4,309    -    3,166    52,644    (182,825)   20,817 
Other accounts receivable   390,133    31,092    30,057    18,734    960    3,783    12,297    2    487,058 
Inventories, net   48,192    35,489    7,662    31,949    13    366,650    -    (1,629)   488,326 
Prepaid expenses   15,838    3,575    6,531    344    52    -    5,802    -    32,142 
Total current assets   1,528,840    259,812    244,780    344,799    9,527    493,385    188,173    (184,452)   2,884,864 
                                              
Long-term trade accounts receivable, net   851    -    15,654    666,801    -    -    -    -    683,306 
Long-term accounts receivable from related parties   335,150    -    19,700    42    11,536    -    584,596    (307,127)   643,897 
Prepaid expenses   -    981    20,558    1,894    684    -    -    (510)   23,607 
Other long-term accounts receivable   10,448    86,815    -    -    7,346    57,243    39,508    -    201,360 
Investments in associates and joint ventures   108,038    8,951    -    -    -    5,443    1,559,672    (1,650,931)   31,173 
Investment property   -    -    -    -    -    22,416    42,558    (1,963)   63,011 
Property, plant and equipment, net   142,228    153,456    7,056    749    181    6,845    1,653    (8,998)   303,170 
Intangible assets, net   142,499    257,580    322,625    351    -    733    14,575    5,028    743,391 
Right-of-use assets, net   3,825    3,890    5,308    61    17    1,888    40,789    (8,061)   47,717 
Deferred income tax asset   179,319    4,717    21,304    -    644    16,960    47,038    5,094    275,076 
Total non-current assets   922,358    516,390    412,205    669,898    20,408    111,528    2,330,389    (1,967,468)   3,015,708 
Total assets   2,451,198    776,202    656,985    1,014,697    29,935    604,913    2,518,562    (2,151,920)   5,900,572 
                                              
Liabilities                                             
Borrowings   136,512    27,046    3,687    45    18    69,065    13,573    (8,606)   241,340 
Bonds   4,896    -    36,637    24,496    -    -    3,809    -    69,838 
Trade accounts payable   767,792    67,686    44,210    30,637    464    30,401    38,894    683    980,767 
Accounts payable to related parties   130,848    1,079    47,340    42,185    19    19,155    13,623    (203,245)   51,004 
Current income tax   59,407    15,748    17,920    -    347    1,058    478    -    94,958 
Other accounts payable   560,920    23,116    38,198    9,104    791    91,342    31,510    -    754,981 
Provisions   70,585    25,498    4,158    -    -    560    54,028    -    154,829 
Total current liabilities   1,730,960    160,173    192,150    106,467    1,639    211,581    155,915    (211,168)   2,347,717 
                                              
Borrowings   5,382    121,693    1,721    15    -    5,315    205,244    (810)   338,560 
Long-term bonds   21,386    -    215,296    602,201    -    -    352,201    -    1,191,084 
Other long-term accounts payable   54,026    -    8,163    219    2,862    24,427    2,672    -    92,369 
Long-term accounts payable to related parties   25,957    -    1,006    88,213    24,671    -    197,844    (286,979)   50,712 
Provisions   56,362    55,279    33,188    3,039    -    -    181,629    -    329,497 
Deferred income tax liability   18,665    31,187    -    47,515    -    -    -    -    97,367 
Total non-current liabilities   181,778    208,159    259,374    741,202    27,533    29,742    939,590    (287,789)   2,099,589 
Total liabilities   1,912,738    368,332    451,524    847,669    29,172    241,323    1,095,505    (498,957)   4,447,306 
Equity attributable to controlling interest in the Company   524,807    378,653    149,904    125,271    763    139,728    1,420,221    (1,539,531)   1,199,816 
Non-controlling interest   13,653    29,217    55,557    41,757    -    223,862    2,836    (113,432)   253,450 
Total liabilities and equity   2,451,198    776,202    656,985    1,014,697    29,935    604,913    2,518,562    (2,151,920)   5,900,572 

 

- 13 -

 

 

Operating segments financial position

Segment reporting

 

           Infrastructure                 
As of December 31, 2022  Engineering and construction   Energy   Toll roads   Transportation   Water treatment   Real estate   Parent Company operations   Eliminations   Consolidated 
                                     
Assets                                    
Cash and cash equivalent   209,737    104,553    130,213    171,747    2,910    111,487    186,907    -    917,554 
Trade accounts receivables, net   697,512    80,245    34,183    124,208    791    146,316    561    -    1,083,816 
Accounts receivable from related parties   86,145    68    54,876    4,455    52    378    115,736    (233,966)   27,744 
Other accounts receivable   298,784    39,921    38,448    15,229    30    5,380    7,294    (2,345)   402,741 
Inventories, net   41,933    29,935    9,655    39,780    -    247,539    -    (1,587)   367,255 
Prepaid expenses   10,945    2,055    5,496    369    162    448    8,623    -    28,098 
Total current assets   1,345,056    256,777    272,871    355,788    3,945    511,548    319,121    (237,898)   2,827,208 
                                              
Long-term trade accounts receivable, net   2,806    -    16,215    694,146    -    3,969    -    -    717,136 
Long-term accounts receivable from related parties   299,268    -    15,858    42    14,015    -    602,004    (388,795)   542,392 
Prepaid expenses   -    826    14,549    1,731    632    -    65    (510)   17,293 
Other long-term accounts receivable   101,366    89,782    -    -    7,346    55,347    31,889    -    285,730 
Inventories, net   -    -    -    -    -    65,553    -    -    65,553 
Investments in associates and joint ventures   975    12,049    -    -    -    2,752    1,632,881    (1,633,740)   14,917 
Investment property   -    -    -    -    -    19,823    40,594    -    60,417 
Property, plant and equipment, net   102,822    176,596    6,193    2,355    150    7,531    1,286    (10,961)   285,972 
Intangible assets, net   131,431    363,066    274,597    238    -    615    13,414    3,975    787,336 
Right-of-use assets, net   8,745    12,795    7,106    23    143    2,580    38,485    (19,670)   50,207 
Deferred income tax asset   175,703    4,572    26,787    -    680    20,531    59,316    5,065    292,654 
Total non-current assets   823,116    659,686    361,305    698,535    22,966    178,701    2,419,934    (2,044,636)   3,119,607 
Total assets   2,168,172    916,463    634,176    1,054,323    26,911    690,249    2,739,055    (2,282,534)   5,946,815 
                                              
Liabilities                                             
Borrowings   19,191    38,612    3,844    17    6    43,118    480,735    (11,261)   574,262 
Bonds   4,554    -    41,343    31,203    -    -    -    -    77,100 
Trade accounts payable   740,292    124,259    52,916    62,049    223    34,067    16,950    4,535    1,035,291 
Accounts payable to related parties   297,505    2,734    46,257    22,421    296    12,183    23,645    (351,597)   53,444 
Current income tax   11,779    247    8,607    2,433    105    45,730    674    -    69,575 
Other accounts payable   491,210    19,724    58,733    9,146    699    115,661    24,837    -    720,010 
Provisions   81,288    20,535    1,722    -    -    540    27,644    -    131,729 
Total current liabilities   1,645,819    206,111    213,422    127,269    1,329    251,299    574,485    (358,323)   2,661,411 
                                              
Borrowings   6,480    100,597    3,462    -    138    10,852    192,435    (8,333)   305,631 
Long-term bonds   16,719    -    177,341    598,753    -    -    -    -    792,813 
Other long-term accounts payable   94,261    -    2,243    189    2,930    -    2,694    -    102,317 
Long-term accounts payable to related parties   7,886    57,300    1,176    27,294    21,663    -    189,451    (277,477)   27,293 
Provisions   11,453    49,701    11,463    6,144    -    -    491,463    -    570,224 
Deferred income tax liability   16,670    53,242    -    58,396    -    -    -    -    128,308 
Total non-current liabilities   153,469    260,840    195,685    690,776    24,731    10,852    876,043    (285,810)   1,926,586 
Total liabilities   1,799,288    466,951    409,107    818,045    26,060    262,151    1,450,528    (644,133)   4,587,997 
Equity attributable to controlling interest in the Company   363,206    417,970    170,031    177,208    851    287,306    1,285,548    (1,632,641)   1,069,479 
Non-controlling interest   5,678    31,542    55,038    59,070    -    140,792    2,979    (5,760)   289,339 
Total liabilities and equity   2,168,172    916,463    634,176    1,054,323    26,911    690,249    2,739,055    (2,282,534)   5,946,815 

 

- 14 -

 

 

Operating segment performance

Segment reporting

 

           Infrastructure                 
For the period ended
December 31, 2021
  Engineering and construction   Energy   Toll roads   Transportation   Water treatment   Real estate   Parent Company operations   Elimination   Consolidated 
                                     
Revenue   2,559,071    541,859    515,382    348,915    3,650    239,391    67,202    (328,988)   3,946,482 
Gross profit (loss)   121,058    110,078    81,964    81,993    1,322    42,025    3,372    (46,674)   395,138 
Administrative expenses   (125,094)   (14,575)   (14,460)   (14,267)   (449)   (14,911)   (46,193)   50,336    (179,613)
Other income and expenses, net   40,301    (4,400)   (3,683)   1,537    4    1,337    (38,705)   (868)   (4,477)
Operating Profit (loss)   36,265    91,103    63,821    69,263    877    28,451    (81,526)   2,794    211,048 
Financial expenses   (121,712)   (14,705)   (29,442)   (8,298)   (124)   (11,947)   (118,676)   42,330    (262,574)
Financial income   1,870    1,034    2,544    520    510    2,269    40,740    (43,714)   5,773 
Dividends   -    -    -    -    -    -    20,008    (20,008)   - 
Share of profit or loss in associates and joint ventures   (1,794)   2,833    -    -    -    831    11,280    (14,011)   (861)
(Loss) profit before income tax   (85,371)   80,265    36,923    61,485    1,263    19,604    (128,174)   (32,609)   (46,614)
Income tax   (11,435)   (22,469)   (10,012)   (19,382)   (500)   (6,644)   26,808    (66)   (43,700)
(Loss) profit from continuing operations   (96,806)   57,796    26,911    42,103    763    12,960    (101,366)   (32,675)   (90,314)
Loss from discontinuing operations   -    -    -    -    -    -    (26,716)   (58)   (26,774)
(Loss) profit for the period   (96,806)   57,796    26,911    42,103    763    12,960    (128,082)   (32,733)   (117,088)
                                              
(Loss) profit from attributable to:                                             
Owners of the Company   (93,600)   51,294    15,946    31,577    763    794    (128,035)   (31,949)   (153,210)
Non-controlling interest   (3,206)   6,502    10,965    10,526    -    12,166    (47)   (784)   36,122 
    (96,806)   57,796    26,911    42,103    763    12,960    (128,082)   (32,733)   (117,088)

 

- 15 -

 

 

Operating segment performance

Segment reporting

 

           Infrastructure                 
For the Period ended
December 31, 2022
  Engineering and construction   Energy   Toll roads   Transportation   Water treatment   Real estate   Parent Company operations   Elimination   Consolidated 
                                     
Revenue   2,661,906    633,792    614,525    388,811    4,412    367,276    68,091    (350,981)   4,387,832 
Gross profit (loss)   (40,734)   118,934    105,400    119,729    2,209    174,185    11,702    (41,282)   450,143 
Administrative expenses   (126,844)   (13,942)   (12,861)   (10,806)   (947)   (15,932)   (35,543)   54,277    (162,598)
Other income and expenses, net   75,282    3,538    25,291    (3,042)   -    (5,014)   (332,399)   (51,371)   (287,715)
Operating (loss) profit   (92,296)   108,530    117,830    105,881    1,262    153,239    (356,240)   (38,376)   (170)
Financial expenses   (76,460)   (20,280)   (26,922)   (7,235)   (153)   (15,212)   (166,160)   58,173    (254,249)
Financial income   2,234    3,447    2,119    2,440    223    9,507    68,901    (63,017)   25,854 
Dividends   -    -    -    -    -    -    22,302    (22,302)   - 
Share of profit or loss in associates and joint ventures   17,342    3,098    -    -    -    626    (12,510)   (6,649)   1,907 
(Loss) profit before income tax   (149,180)   94,795    93,027    101,086    1,332    148,160    (443,707)   (72,171)   (226,658)
Income tax   (10,654)   (30,905)   (19,587)   (31,836)   (481)   (46,773)   10,397    (30)   (129,869)
(Loss) profit from continuing operations   (159,834)   63,890    73,440    69,250    851    101,387    (433,310)   (72,201)   (356,527)
(Loss) profit for the period   (159,834)   63,890    73,440    69,250    851    101,387    (433,310)   (72,201)   (356,527)
                                              
(Loss) profit from attributable to:                                             
Owners of the Company   (157,961)   56,800    59,262    51,937    851    39,899    (433,451)   (72,581)   (455,244)
Non-controlling interest   (1,873)   7,090    14,178    17,313    -    61,488    141    380    98,717 
    (159,834)   63,890    73,440    69,250    851    101,387    (433,310)   (72,201)   (356,527)

 

- 16 -

 

 

8.CASH AND CASH EQUIVALENTS

 

As of December 31, this account comprises:

 

   2021   2022 
         
Cash on hand   936    727 
Deposits in-transit   2,222    2,955 
Bank accounts          
Current accounts   142,029    363,130 
Banco de la Nacion   19,847    19,280 
Time deposits and mutual funds (a)   205,364    114,998 
    367,240    497,408 
Escrow account (b)          
Operational funds   261,001    229,165 
Reserve funds   163,939    71,966 
Consortium funds   78,589    114,050 
Guarantee funds   83,251    1,283 
    586,780    416,464 
Total Cash and cash equivalents   957,178    917,554 

 

(a)The Corporation maintains current accounts with local and foreign financial institution that include time deposits with maturities less than 90 days and may be renewed upon maturity. As of December 31, 2022, these deposits earn interest that fluctuated between 3.4% and 7.6% (0.26% and 1.75%, as of December 31, 2021).

 

(b)The Corporation maintains trust accounts in local and foreign financial institutions for the exclusive use of operations in projects and join operations.

 

The reserve funds for the payments of bonds issued and other obligations of the Corporation corresponds to:

 

   2021   2022 
         
Tren Urbano de Lima S.A.   103,269    49,397 
Red Vial 5 S.A.   22,531    22,569 
AENZA S.A.A.   7,386    - 
Cumbra Ingenieria S.A.   12,760    - 
Unna Energia S.A.   17,993    - 
    163,939    71,966 

 

- 17 -

 

 

9.TRADE ACCOUNTS RECEIVABLE, NET

 

As of December 31, this caption comprises the following:

 

   Total   Current   Non-current 
   2021   2022   2021   2022   2021   2022 
                         
Receivables (net) (a)   773,575    894,571    269,427    366,007    504,148    528,564 
Unbilled receivables (net) - Subsidiaries (b)   209,258    584,217    209,258    584,217    -    - 
Unbilled receivables (net) - Concessions (c)   290,753    322,164    111,595    133,592    179,158    188,572 
    1,273,586    1,800,952    590,280    1,083,816    683,306    717,136 

 

The fair value of current accounts receivable it is similar to their carrying value because their average collection period is less than 60 days. These accounts receivable do not accrue interest and do not have specific guarantees.

 

As of December 31, trade accounts receivable corresponds to:

 

   2021   2022 
Tren Urbano de Lima S.A.   773,657    818,354 
Cumbra Peru S.A.   323,455    647,113 
Viva Negocio Inmobiliario S.A. (i)   9,958    150,285 
Unna Energia S.A.   67,662    80,245 
Cumbra Ingeniería S.A.   43,695    53,205 
Red Vial 5 S.A.   22,458    24,072 
Carretera Andina del  Sur S.A.C.   12,686    13,035 
Unna Transporte S.A.C.   14,439    9,852 
Carretera Sierra Piura S.A.C.   4,489    3,439 
Concesionaria La Chira S.A.   1,003    791 
Others   84    561 
    1,273,586    1,800,952 

 

i)As of December 31, 2022, the invoices receivable correspond mainly to the sale of the land to SEDAPAL in Inmobiliaria Almonte 2 S.A.C. (located in the district of Lurin, province of Lima, with an area of 209.59 hectares) for S/140 million, which will be payable in 7 installments, the last installment will be in August 2023.

 

(a)Accounts Receivables are shown net of impairment of S/44.7 million and discounted at present value for S/0.7 million. (S/44.4 million for impairment, and S/0.9 million for present value, as of December 31, 2021). Aging is breakdown as follows:

 

   2021   2022 
Current   683,921    853,531 
Past due up to 30 days   41,222    29,078 
Past due from 31 days up to 90 days   11,668    2,049 
Past due from 91 days up to 120 days   15,814    1,437 
Past due from 121 days up to 360 days   7,070    4,100 
Past due over 360 days   13,880    4,376 
    773,575    894,571 

 

As of December 31, 2022, overdue amount over 360 days mainly includes invoices receivable from subsidiaries: Cumbra Peru S.A. for S/3.4 million, Cumbra Ingenieria S.A. for S/0.9 million (Cumbra Peru S.A. for S/9.5 million, Unna Transporte S.A.C. for S/2.7 million and Cumbra Ingenieria S.A. for S/1.6 million, as of December 31, 2021).

 

- 18 -

 

 

(b)The unbilled amounts correspond to Engineering and Construction segment, based on estimates of completion percentage of progress for services rendered not billed yet, and provided services pending to be billed, these are presented net of impairment for S/3.8 million, and discounted to present value for S/2.8 million (S/5.2 million for impairment, and S/5.9 million for present value, as of December 31, 2021), and detailed by subsidiary:

 

   2021   2022 
Cumbra Peru S.A.   170,063    533,389 
Cumbra Ingenieria S.A.   24,177    38,922 
Unna Transporte S.A.C.   10,291    6,192 
Unna Energia S.A.   4,718    5,617 
Others   9    97 
    209,258    584,217 

 

Below are the unbilled receivables of subsidiaries grouped by the main projects:

 

   2021   2022 
Infrastructure        
Operation and maintenance of roads   9,192    5,440 
Others   1,099    752 
    10,291    6,192 
           
Energy   4,718    5,617 
           
Engineering and Construction          
Cumbra Peru S.A. - Inti Punku Consortium   16,873    167,360 
Vial y Vives - DSD S.A. - Engineering and Construction Works   40,714    151,690 
Cumbra Peru S.A. - Talara Refinery   43,677    77,448 
Morelco S.A.S. - Engineering and Construction Works   5,751    58,075 
Cumbra Peru S.A. - Concentrator Plant and tunnel of Quellaveco   50,148    54,996 
Cumbra Ingenieria S.A. - Mina Gold Fields La Cima S.A. Project   3,872    22,455 
Cumbra Peru S.A. - Toquepala Concentrator Maintenance Project   -    11,213 
Cumbra Peru S.A. - Rio Urubamba Consortium   -    7,417 
Cumbra Peru S.A. - Quebrada Honda Test Plant Project   346    5,417 
Cumbra Peru S.A. - Gasoducto Piura Project   13,220    2,320 
Others   19,639    13,920 
    194,240    572,311 
           
Parent Company Operation   9    97 
           
    209,258    584,217 

 

- 19 -

 

 

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

 

   2021   2022 
Tren Urbano de Lima S.A.   256,526    281,487 
Carretera Andina del  Sur S.A.C.   12,667    12,796 
Red Vial 5 S.A.   16,451    24,072 
Carretera Sierra Piura S.A.C.   4,489    3,018 
Concesionaria La Chira S.A.   620    791 
    290,753    322,164 

 

10.WORK IN PROGRESS

 

As of 2021, work in progress includes those costs incurred related to future activities under engineering and construction contracts and according to management’s estimates all costs incurred would be billed and collected. As of December 31, 2021 the balance was S/309.1 million.

 

The methodology established that contract revenue was recognized based on the performance of a physical portion of the contract compared to the total committed. In the financial statements, the net position of the contract was presented as either an asset or a liability. The contract is considered an asset when the amount of costs incurred, plus recognized gains, estimated losses and approved valuations was greater than the amount billed. This asset was presented as “Work in Progress”. If the resulting amount was less than the invoiced amount, it was presented as a liability under “Accounts payable – Provision for estimated contract costs by stage of completion” (See Note 17 (a)-ii).

 

During the year 2022, the Company identified an error in the application of its revenue and cost recognition in the subsidiaries of the “Engineering and Construction” segment in relation to the IFRS 15 accounting standard “Revenue from Contracts with Customers”. Thus, the adjustments to the aforementioned revenue and cost recognition methodology have an impact on the accounting and allocation of considerations to performance obligations and related costs for the years ended December 31, 2021. The total effect of this adjustment is shown in the Accumulated Results account as of December 31, 2022 for a total of S/17,968. The Company evaluated the application of its methodology and the adjustments implemented to it, determining that the related impact was not material to the Company’s consolidated financial statements for the year ended December 31, 2021.

 

The following is a detail and description of the differences identified as of December 31, 2021, which will be included in the closing financial statements as of December 31, 2022:

 

As of December 31, 2021  Statement of financial position   Statement
of income
 
   Assets   Liabilities   Retained earnings   Profit
of the year
 
i) Revenue shortfall from ordinary activities   261,644    -    61,059    200,585 
ii) Construction cost deficit - work in progress   (309,063)   -    (173,701)   (135,362)
iii) Construction cost overruns - provision for contract costs   -    (67,937)   95,697    (27,760)
iv) Tax effect of identified adjustments   -    5,589    3,440    (9,029)
v) Translation adjustment and effect on non-controlling interests   3,039    -    3,039    - 
Sub total   (44,380)   (62,348)   (10,466)   28,434 
Total effect on shareholders’ equity as of December 31, 2021                  17,968 

 

- 20 -

 

 

11.TRANSACTIONS WITH RELATED PARTIES

 

a)Transactions with related parties

 

Major transactions for the year ended December 31, 2021, and 2022 between the Company and its related parties are summarized as follows:

 

   2021   2022 
Revenue from sales of goods and services:        
- Joint operations   22,374    48,042 
    22,374    48,042 

 

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

 

b)As of December 31, this balances comprises the following:

 

   2021   2022 
   Receivable   Payable   Receivable   Payable 
Current portion:                
Joint operations                
Consorcio Rio Urubamba   9,792    -    9,606    - 
Consorcio Rio Mantaro   -    7,043    -    12,247 
Consorcio Constructor Chavimochic   -    9,301    -    9,421 
Consorcio Manperan   1,389    4,968    603    4,064 
Consorcio TNT Vial y Vives - DSD Chile Ltda   -    633    8,664    3,153 
Consorcio Inti Punku   1,865    1,733    4,030    3,104 
Consorcio Peruano de Conservación   654    2,392    752    2,629 
Consorcio Vial Quinua   -    1,947    -    1,945 
Consorcio Italo Peruano   1,394    106    1,524    - 
Consorcio GyM Conciviles   1,479    1,074    -    1,426 
Terminales del Perú   92    399    88    600 
Consorcio Ermitaño   1,028    515    547    - 
Consorcio Norte Pachacutec   125    282    57    246 
Consorcio GyM-Stracon   -    143    -    160 
Consorcio Huacho Pativilca   5    82    51    39 
Consorcio CDEM   -    1,545    -    - 
Consorcio La Gloria   150    -    160    - 
Otros menores   133    1,721    1,662    1,056 
    18,106    33,884    27,744    40,090 
                     
Other related parties                    
Ferrovias S.A.   -    15,513    -    13,354 
Peru Piping Spools S.A.C.   2,711    1,607    -    - 
    2,711    17,120    -    13,354 
Current portion   20,817    51,004    27,744    53,444 
                     
Non-current portion                    
Gasoducto Sur Peruano S.A.   643,897    -    542,392    - 
Ferrovias S.A.   -    14,690    -    15,054 
Ferrovias Participaciones S.A.   -    36,022    -    12,239 
Non-current   643,897    50,712    542,392    27,293 

 

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

 

- 21 -

 

 

The non-current account receivable mainly corresponds to the obligations arising from the early termination of the GSP project. As of December 31, 2022, the balance include: (i) account receivable book value net of impairment recorded by the parent Company for S/383 million, and present value of S/140 million (S/400 million and S/77 million, as of December 31, 2021, respectively) using the discounted cash flow method, at a rate of 5.86% (2.73% in 2021), (ii) in Cumbra Peru S.A. accounts receivable and unbilled receivables balances from Consorcio Constructor Ductos del Sur (CCDS) to GSP for S/299 million, which includes S/275 million receivables from CCDS and S/24 million for loss of profits (as of December 31, 2021, S/321 million which includes S/289 million and S/32 million, respectively).

 

12.OTHER ACCOUNTS RECEIVABLE

 

As of December 31, this caption comprises the following:

 

  Total   Current   Non-Current 
   2021   2022   2021   2022   2021   2022 
Guarantee deposits   198,670    227,822    184,872    143,444    13,798    84,378 
Credit from public institutions and recoverable taxes   133,428    141,891    93,981    102,689    39,447    39,202 
Petroleos del Peru S.A.- Petroperu S.A.   106,077    105,073    19,262    15,291    86,815    89,782 
Claims to third parties   151,346    76,432    124,724    32,611    26,622    43,821 
Advances to suppliers   33,769    56,987    33,769    56,987    -    - 
Restricted funds   7,346    52,014    -    44,668    7,346    7,346 
Inversiones Majes S.A.   27,193    21,081    -    -    27,193    21,081 
Accounts receivable from personneel   16,864    2,359    16,864    2,359    -    - 
Other minors   13,726    4,813    13,587    4,693    139    120 
    688,418    688,471    487,058    402,741    201,360    285,730 

 

The fair value of the other short-term accounts receivable is similar to their book value due to their short-term maturity. The non-current portion corresponds mainly to non-financial assets such as claims to third parties and tax credits. Other non-current accounts receivable maintain 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

 

As of December 31, this caption comprises the following:

 

   2021   2022 
Associates   22,047    2,754 
Joint ventures   9,126    12,163 
    31,173    14,917 

 

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Movement of our investments in associates for the year ended December 31, 2021, and 2022 is as follows:

 

   2021   2022 
Balance as of January 1   35,516    31,173 
Equity interest in results   (861)   1,907 
Dividends received   (3,445)   (380)
Capital reduction   -    (2,937)
Investment impairment   -    (14,526)
Investment disposal   -    (278)
Conversion adjustment   (37)   (42)
Balance as of December 31   31,173    14,917 

 

The most relevant associates are described below:

 

i.Gasoducto Sur Peruano S.A

 

In November 2015, the Company acquired a 20% interest in GSP and in turn, obtained a 29% interest in Consorcio Constructor Ductos del Sur (hereinafter “CCDS”) through its subsidiary Cumbra Peru S.A.

 

On July 22, 2014, GSP signed the concession contract with the Peruvian State for the construction, operation and maintenance of a natural gas pipeline transportation system to meet the demand of the cities in southern Peru (hereinafter the “Concession Contract”). Additionally, GSP signed an engineering, procurement and construction contract with CCDS.

 

The Company made an investment in GSP of US$242.5 million, and agreed to assume 20% of the performance bond established in the Concession Contract (for a total amount of US$262.5 million), and 21.49% of the guarantee for a bridge loan of US$600 million.

 

Early termination of the Concession Contract

 

On January 24, 2017, the Peruvian Ministry of Energy and Mines (hereinafter “MINEM”) declared the early termination of the Concession Contract, relying on the provisions of clause 6.7, as a consequence of not having accredited the financial closure within the contractual term, proceeding with the immediate execution of the entirety of the faithful performance guarantee.

 

The situation described in the previous paragraph generated the execution of the counter-guarantees granted by Aenza in favor of the issuer of the guarantees: US$52.5 million in the case of the performance bond and US$129 million for the corporate guarantee on the bridge loan granted to GSP. According to the Concession Contract, the guarantees were paid on behalf of GSP, therefore, the Company recognized the right to collect for US$181.5 million, which were recorded in 2016 as Receivables from Related Parties.

 

On October 11, 2017, the deed of agreement for the delivery of the assets of the Southern Peruvian gas pipeline concession was signed between GSP and MINEM. The assets included the works, equipment, facilities and engineering studies provided for the execution of the project.

 

Upon termination of the Concession Contract, and in accordance with the provisions of clause 20 thereof, the Peruvian State had the obligation to hire an internationally recognized auditing entity to calculate the net book value of the concession assets (hereinafter “NCV”), and to call up to three auctions on GSP’s assets. However, to date, the Peruvian State continues to fail to comply with these contractual obligations. The amount of the VCN was calculated at US$2,602 million by an independent auditing firm hired by GSP as of December 31, 2016.

 

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AENZA S.A.A. Collection Actions.

 

On December 21, 2018, the Company filed with the Peruvian State a request for direct treatment, whereby it required the payment of the VCN in favor of GSP. On October 18, 2019, the Company filed with ICSID a request for arbitration. On December 27, 2019, the Company withdrew from the arbitration in compliance with the preliminary agreement of effective collaboration signed with the Public Prosecutor’s Office and the Ad hoc Prosecutor’s Office on the same date (Note 1). The withdrawal of the request for arbitration before ICSID does not imply the loss of the Company’s collection rights against GSP, nor does it restrict, limit or obstruct GSP’s ability to exercise its rights against the State.

 

The Company and its internal and external legal advisors consider that the payment owed by the State to GSP for the NCV of the concession assets is not within the scope of the withholding provided for in Law 30737, since such payment does not include a net profit margin and does not correspond to the sale of assets.

 

GSP’s Insolvency Proceedings

 

On December 4, 2017, GSP entered into bankruptcy proceedings before the Peruvian National Institute for the Defense of Competition and Protection of Intellectual Property (“INDECOPI”). Aenza recorded the claim for accounts receivable of US$ 0.4 million and US$ 169.3 million, the latter held in trust in favor of the Company’s creditors. As of the date of this report, GSP is in the process of liquidation and Aenza is chairing the Board of Creditors. The approval of the Liquidation Agreement, which provides the framework for the liquidator’s work, is still pending.

 

As of December 31, 2022, the present value of accounts receivable from GSP is US$81.1 million, equivalent to S/ 322.6 million (as of December 31, 2021 it was US$ 88.6 million, equivalent to S/320 million) and maintains an accumulated impairment of US$82.8 million (S/329 million). The Company’s management maintains the recovery estimate at 8 years. However, it has updated the discount rate used in its estimates from 1.6% to 2.73%, resulting in a loss from discount restatement under amortized cost of US$7.5 million (S/29.8 million).

 

ii.Concesionaria Chavimochic S.A.C.

 

In May 2014, Concesionaria Chavimochic S.A.C. (hereinafter, the “Concessionaire”) - in which Aenza has a 26.5% interest, entered into a Concession Contract (hereinafter, the “Concession Contract”) with the Peruvian State for the design, construction, operation and maintenance of the major hydraulic works of the Chavimochic Project (hereinafter, the “Project”). The construction of the Project started in 2015, with a concession term of 25 years and an investment amount of approximately US$647 million.

 

Pursuant to the Concession Contract, the works of the third stage of the Project were structured in two phases. To date, the works of the first phase (Palo Redondo Dam) are 70% complete. However, since the beginning of 2017, the early termination procedure of the Concession Contract was initiated due to contractual breach by the Grantor, having suspended all activities in December 2017. Not having reached an agreement, the Concessionaire initiated an arbitration process before the United Nations International Commercial Law Commission (CNUDI by its acronym in Spanish).

 

On October 4, 2022, the Arbitral Award notified the parties with the award, which provided for the early termination of the Concession Contract and ordered, among others, that the Grantor pay the Concessionaire US$25.3 million as a consequence of its failure to provide the Project Control Delivery and, the execution of 70% of the Performance Bond or the payment of US$25 million for the Concessionaire’s failure to obtain financial closure.

 

Despite the Concessionaire’s requests for exclusion and integration of the award, the Tribunal did not issue a decision within the deadline, and the award was consented to.

 

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14.INVESTMENT PROPERTY, PROPERTY, PLANT AND EQUIPMENT, INTANGIBLE ASSETS AND RIGHT-OF-USE ASSETS

 

The movement in investment property, property, plant and equipment, intangible assets and right-of-use assets accounts for the year ended December 31, 2021 and 2022, are as follows:

 

       Property,         
   Investment   plant and   Intangibles   Right-of-use 
   property   equipment   assets   assets 
   (a)   (a)   (b)   (a) 
                 
Net cost as of January 1, 2021   26,073    405,469    791,990    64,518 
Additions   152    38,191    67,741    13,931 
Deconsolidation, net   -    (7,935)   (751)   (6,632)
Reclassifications and disposals   41,150    (50,839)   (2,080)   - 
Conversion adjustments   (48)   (5,252)   (6,997)   (401)
Deductions for sale of assets   -    (5,684)   -    - 
Depreciation, amortization   (4,316)   (70,780)   (106,512)   (23,699)
Net cost as of December 31, 2021   63,011    303,170    743,391    47,717 
                     
Net cost as oft January 1, 2022   63,011    303,170    743,391    47,717 
Additions   52    64,696    165,157    21,567 
Reclassifications and disposals   1,291    (15,778)   (3,164)   (256)
Conversion adjustments   -    (6,389)   (16,013)   (112)
Deductions for sale of assets   -    (7,385)   -    - 
Depreciation, amortization   (3,937)   (52,342)   (102,035)   (18,709)
Net cost as of December 31, 2022   60,417    285,972    787,336    50,207 

 

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

 

As of December 31, 2022, additions in property, plant and equipment, mainly correspond to energy segment, due to work in progress, machinery, buildings, other equipment, furniture and fixtures and vehicles in S/49.9 million. Additionally, additions in engineering and construction segment, for machinery, other equipment for S/8 million; additions in real estate segment, for work in progress, machinery and other equipment for S/3.4 million and additions in infrastructure segment, for buildings, machinery, furniture and fixtures and other equipment for S/3.3 million (As of December 31, 2021, correspond mainly to additions in engineering and construction, for machinery, other equipment, vehicles, furniture and fixture and buildings for a total of S/20.2 million, as well as additions in energy segment, for works in progress, replacement units, machinery, furniture and fixture, land and buildings in S/16.8 million).

 

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

 

As of December 31, 2022, additions to right-of-use assets mainly correspond to lease agreements in energy segment, for the acquisition of real estate, vehicles, machinery, and equipment for a total of S/13.4 million; and additions in infrastructure segment for vehicles for S/4.1 million (as of December 31, 2021, mainly correspond to additions in infrastructure segment for vehicles for a total of S/3.4 million).

 

- 25 -

 

 

For the year ended December 31, 2021 and 2022, depreciation of property, plant and equipment, investment property and right-of-use assets is presented in the consolidated statement of income as follows:

 

   2021   2022 
         
Cost of sale of goods and services (Note 21)   82,063    72,421 
Administrative expenses (Note 21)   5,425    2,567 
Depreciation from discontinued operations   11,307    - 
Total depreciation   98,795    74,988 
(-) Depreciation related to investment property (Note 14)   (4,316)   (3,937)
(-) Depreciation related to right-of-use assets (Note 14)   (23,699)   (18,709)
Total depreciation of property, plant and equipment   70,780    52,342 

 

(b)Intangible assets

 

As of December 31, 2022, additions mainly correspond to energy segment due to investments in the preparation of wells and other assets for S/148.1 million; additions to engineering and construction segment due to investment in software and development expenses for S/9.8 million and additions to infrastructure segment due to concessions and licenses for S/7 million; (as of December 31, 2021, additions mainly correspond to energy segment due to investments in the preparation of wells for S/51.3 million; additions to engineering and construction segment due to investment in software and development expenses for S/8.5 million; and additions to infrastructure segment due to concessions and licenses for S/6.2 million).

 

For the year ended December 31, 2021 and 2022, the breakdown of intangible amortization included in the consolidated statement of income is as follows:

 

   2021   2022 
Cost of sale of goods and services (Note 21)   101,578    99,210 
Administrative expenses (Note 21)   3,642    2,825 
Amortization from discontinued operations   1,292    - 
Total amortization   106,512    102,035 

 

Goodwill

 

Management reviews businesses results based on the type of economic activity developed. The cash-generating units are distributed in the following segments:

 

   2021   2022 
Engineering and construction   36,345    28,741 
Electromechanical   20,735    20,736 
    57,080    49,477 

 

- 26 -

 

 

15.BORROWINGS

 

As of December 31, this caption comprises the following:

 

   Total   Current   Non-current 
   2021   2022   2021   2022   2021   2022 
                         
Bank loans (a)   343,679    657,223    217,935    551,823    125,744    105,400 
Other financial entities (b)   165,878    162,750    3,746    8,725    162,132    154,025 
Lease liability for right-of-use asset   60,507    59,085    14,541    12,879    45,966    46,206 
Finance leases   9,836    835    5,118    835    4,718    - 
    579,900    879,893    241,340    574,262    338,560    305,631 

 

(a)Bank loans

 

As of December 31, 2021 and 2022, this item comprises bank loans in local and foreign currencies for working capital purposes. These obligations accrue fixed interest rates which fluctuate between 0.5% and 13.5% in 2022 (between 0.9% and 11% in 2021).

 

   Interest rate  Date of
maturity
  2021   2022 
               
AENZA S.A.A. (i)  Term SOFR 3M +
from 6.26% to 8.51%
  2023   -    463,773 
Unna Energia S.A. (ii)  6.04% / 7.68%  2027   143,986    126,064 
Viva Negocio Inmobiliario S.A. (iii)  7.00% / 11.35%  2024   65,262    51,314 
Morelco S.A.S. (iv)  9.95% / 10.93%  2023   -    10,674 
Vial y Vives - DSD S.A. (v)  0.52% / 13.54%  2025   22,990    5,398 
Cumbra Peru S.A. (vi-vii)  8.00%  2023   111,441    - 
          343,679    657,223 

 

i)AENZA S.A.A. 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., Institucion de Banca Multiple, Grupo Financiero HSBC, and Natixis, New York Branch. The financing will be repaid over a period of 18 months, in quarterly payments, and will be secured, subject to the fulfillment of certain precedent conditions, by a cash flow trust (first lien), a pledge on our shares in Unna Energia S.A. (first lien), and a trust fund over the shares of Viva Negocio Inmobiliario S.A. (second lien). On April 5, 2022, the Company received the full amount of the financing for US$120 million. The loan bears interest at the following interest rates: (i) for the first and second payment, Term SOFR + 6.26%; (ii) for the third and fourth payment, Term SOFR + 6.76%; (iii) for the fifth payment, Term SOFR + 7.51%; and (iv) for the sixth payment, Term SOFR + 7.51%. As of December 31, 2022, the total amount payable is S/463.8 million, includes principal of S/458.4 million, plus interest and net deferred charges of S/5.4 million. As of December 31, 2022, the Company has complied with the corresponding covenants established in the contract loan.

 

ii)Unna Energia S.A. Loan

 

Terminales del Peru (hereinafter “TP”), a joint operation of the subsidiary Unna Energia S.A., has a medium-term loan agreement with Banco de Credito del Peru (hereinafter “BCP”) up to US$30 million to finance the investments committed and up to US$70 million to finance the additional investments from the operation contract of the North and Center terminals for the period 2015 to 2019, its period of availability is until December 31, 2022, with a maximum exposure limit of US$80 million. These loans are repaid within 8 years. During 2022 additional cash transfer of US$8.5 million (equivalent to S/32.7 million) was requested for the additional investments. As of December 31, 2022, the amount of financing equivalent to the 50% interest held by the subsidiary Unna Energia S.A. amounts to US$26.2 million, equivalent to S/100.2 million (US$27.2 million, equivalent to S/108.7 million, as of December 31, 2021).

 

- 27 -

 

 

In addition, during November 2019, TP signed a loan agreement to finance the additional investments from 2019 to 2023, for a credit line amounting 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. As of December 31, 2022, the amount of financing equivalent to the 50% interest held by the subsidiary Unna Energia S.A. amounts to US$7.4 million, equivalent to S/28.1 million (US$9.2 million, equivalent to S/36.8 million, as of December 31, 2021).

 

As of December 31, 2021, and 2022, TP is in compliance with the ratios established in the contract loan.

 

iii)Viva Negocio Inmobiliario S.A. Loan

 

As of December 31, the balance includes the following:

 

   Interest rate   Date of
maturity
   2021   2022 
                 
Banco de Credito del Peru   7.00% / 7.94%   2023    35,679    36,562 
Banco Interamericano de Finanzas   11.35%   2024    18,456    12,636 
BBVA Continental   7.94%   2024    9,742    2,116 
Eldo Peru S.A.C.   11.00%   2022    1,385    - 
              65,262    51,314 

 

iv)Morelco S.A.S. Loan

 

As of December 31, the balance includes the following:

 

   Interest rate   Date of
maturity
   2022 
             
Bancolombia S.A.   10.39%   2023    4,330 
Banco de Bogota   9.95% / 10.93%   2023    6,344 
              10,674 
                

 

v)Vial y Vives - DSD S.A. Loan

 

As of December 31, the balance includes the following:

 

   Interest rate   Date of
maturity
   2021   2022 
                 
Eurocapital   13.54%   2025    4,352    3,389 
Tanner   5.94%   2023    6,390    1,077 
BCI Asset Management   0.52%   2023    7,055    473 
Finameris Servicios Financieros   1.50%   2023    978    459 
E. Capital S.A.   1.50%   2022    1,983    - 
Capital Express   1.25%   2022    1,488    - 
Finmas S.A.   1.50%   2022    744    - 
              22,990    5,398 

 

- 28 -

 

 

vi)Financial Stability Framework Agreement

 

In July 2017, the Company and its subsidiaries (Cumbra Peru S.A., Construyendo Pais S.A., Vial y Vives - DSD S.A. and Concesionaria Via Expresa Sur S.A.) signed a Financial Stability Framework Agreement with the following financial entities: Scotiabank Peru S.A., Banco Internacional del Peru S.A.A., BBVA Banco Continental, Banco de Credito del Peru, Citibank del Peru S.A. and Citibank N.A. The objectives of the Financial Stability Framework Agreement were to guarantee Cumbra Peru S.A. a syndicated revolving line for working capital, a non-revolving line of credit to finance repayment commitments subject to performance bonds; guarantee lines of credit for the issuance of the performance bond and undertake to maintain the existing letters of credit issued at the request of Cumbra Peru S.A. As of December 31, 2021, the Company complied with the obligations and covenants established in the Financial Stability Framework Agreement.

 

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 fully paid (as of December 31, 2021, the balance payable was US$7.4 million, equivalent to S/29.5 million).

 

vii)Banco Santander Peru S.A. Loan

 

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

 

In April 2022, Cumbra Peru S.A. paid the entire debt amounting to US$20.2 million.

 

- 29 -

 

 

(b)Other financial entities

 

Corresponds to the monetization of Red Vial 5 S.A. dividends, operation carried out on May 29, 2018, for the subscription of an investment contract 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.

 

In 2020, the Company recognized at fair value the liability amounting to US$42.1 million (equivalent to S/152.5 million).

 

As of December 31, 2022, the balance to be paid amounted to US$42.6 million, equivalent to S/162.8 million (as of December 31, 2021, balance was US$41.5 million, equivalent to S/165.8 million) and includes the effect of the fair value of S/16.6 million (as of December 31, 2021, S/12.4) (Note 23-b.ii). Accrued interest amounted to S/9.3 million (in 2021, S/10 million).

 

(c)Fair value of borrowings

 

As of December 31, the carrying amount and fair value of borrowings are detailed as follows:

 

   Carrying amount   Fair value 
   2021   2022   2021   2022 
                 
Bank loans   343,679    657,223    372,270    644,018 
Other financial entities   165,878    162,750    165,878    162,750 
Lease liability for right-of-use asset   60,507    59,085    66,943    58,719 
Finance leases   9,836    835    9,097    776 
    579,900    879,893    614,188    866,263 

 

As of December 31, 2022, the fair value is based on cash flows discounted using debt rates between 4.7% and 17.6% (between 3.9% and 10% as of December 31, 2021) and are included as Level 2 in the level of measurement, except for other financial entities which is measured within level 3.

 

- 30 -

 

 

16.BONDS

 

As of December 31, this caption comprised the following:

 

   Total   Current   Non-current 
   2021   2022   2021   2022   2021   2022 
                         
Tren Urbano de Lima S.A. (a)   626,697    629,956    24,496    31,203    602,201    598,753 
Red Vial 5 S.A. (b)   251,933    218,684    36,637    41,343    215,296    177,341 
Cumbra Peru S.A. (c)   26,282    21,273    4,896    4,554    21,386    16,719 
AENZA S.A.A. (d)   356,010    -    3,809    -    352,201    - 
    1,260,922    869,913    69,838    77,100    1,191,084    792,813 

 

(a)Tren Urbano de Lima S.A.

 

During 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 have a maturity ended in November 2039 and accrue an annual effective interest rate of 4.75% (plus the VAC adjustment), present a risk rating of AA+ (local scale) granted by Apoyo & Asociados Internacionales Clasificadora de Riesgo. As of December 30, 2022, an accumulated amortization amounting to S/126.8 million has been made (S/106.9 million as of December 31, 2021).

 

As of December 31, 2022, the balance includes VAC adjustments and interest payable for S/143.3 million (S/121.1 million as of December 31, 2021).

 

The account movement of such corporate bonds for the years ended December 31, 2021 and 2022 is as follows:

 

   2021   2022 
         
Balance as of January, 1   624,454    626,697 
Amortization   (16,376)   (19,848)
Accrued interest   49,013    54,918 
Interest paid   (30,394)   (31,811)
Balance as of December, 31   626,697    629,956 

 

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

 

As of December 31, 2022, the fair value amounts to S/630.7 million (S/626.8 million, as of December 31, 2021), this is based on discounted cash flows using an annual effective interest rate of 5.9% (cash flows using an annual effective interest rate of 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 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.

 

- 31 -

 

 

The account movement for the years ended December 31, 2021, and 2022 is as follows:

 

   2021   2022 
         
Balance as of January, 1   280,848    251,933 
Amortization   (28,836)   (33,085)
Accrued interest   22,315    19,744 
Interest paid   (22,394)   (19,908)
Balance as of December, 31   251,933    218,684 

 

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

 

As of December 31, 2022, the fair value amounts to S/224.8 million (as of December 31, 2021, S/260 million), is based on discounted cash flows using an annual effective interest rate 8.1% (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 an annual effective interest 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 December 30, 2022, the balance includes accrued interest payable for US$0.2 million, equivalent to S/0.8 million (US$0.3 million, equivalent to S/1 million, as of December 31, 2021).

 

The account movement for the years ended December 31, 2021, and 2022 is as follows:

 

   2021   2022 
         
Balance as of January, 1   27,457    26,282 
Amortization   (3,687)   (3,812)
Exchange difference   2,561    (1,030)
Accrued interest   2,219    1,858 
Interest paid   (2,268)   (2,025)
Balance as of December, 31   26,282    21,273 

 

As of December 31, 2022, the fair value amounts to S/19.7 million (S/27.1 million as of December 31, 2021), is based on discounted cash flows using a rate of 11.4% (7.4% as of December 31, 2021) and is within level 3 of the fair value hierarchy.

 

(d)AENZA S.A.A.

 

On August 13, 2021, AENZA S.A.A. issued bonds convertible (hereinafter, the “Bonds”) into common shares with voting rights. The total amount of the issue was US$89.9 million, issuing 89,970 bonds, each with a nominal value of US$ 1,000.

 

The placement of these bonds was executed locally and were made available to investors only in Peru pursuant to the provisions of the applicable current Peruvian legislation. The bonds maturity date was February 2024, bear an annual effective interest rate of 8%, and were payable on a quarterly basis.

 

- 32 -

 

 

Pursuant to the terms and conditions of the convertible bonds, issued, these may be converted into shares as of the sixth months from the date of issuance, according to the following procedure: 1) the conversion day was the last business day of each month; 2) the conversion may be totally or partially; 3) the conversion notice must be sent to the Bondholders’ Representative no later than 5 business days prior to the conversion date; and 4) the conversion price would be the minimum between (i) US$0.33 (Zero and 33/100 United States 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 debt balance net of costs incurred amounted to US$89.9 million equivalent to S/356 million. Thereafter the Corporation converted entirely all the bonds into common shares in two tranches, first on February 28, 2022, 11,000 bonds and secondly on March 31, 2022, 78,970 bonds(see, Note 20); due the conversion, the balance of the debt was fully paid.

 

17.TRADE ACCOUNTS PAYABLE

 

As of December 31, this caption is comprised by the following:

 

   2021   2022 
         
Invoices payable   506,798    523,175 
Cost provision (a)   468,360    506,726 
Notes payable   5,609    5,390 
    980,767    1,035,291 

 

(a)The cost provision include the following:

 

i)Goods and services received not invoiced amounting to S/385.6 million for the engineering and construction segment, S/47.6 million for the infrastructure segment, S/37 million for the energy segment, S/19 million for the real estate and S/12.8 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)Provision for estimated contract costs by stage of completion related mainly to projects of the engineering and construction segment for S/68.6 million, as of December 31, 2021. See explanation of the change in the methodology for revenue and cost recognition in Note 10.

 

- 33 -

 

 

18.OTHER ACCOUNTS PAYABLE

 

As of December 31, this caption is comprised by the following:

 

   Total   Current   Non-current 
   2021   2022   2021   2022   2021   2022 
                         
Advances received from customers (a)   322,680    365,730    315,644    350,194    7,036    15,536 
Other taxes payable   124,004    166,547    112,737    138,535    11,267    28,012 
Salaries and other payable
  to personnel
   126,466    99,225    126,466    99,225    -    - 
Arbitration payable   58,502    73,348    58,502    34,560    -    38,788 
Consorcio Ductos del Sur -
  payable (b)
   77,665    25,652    29,242    12,921    48,423    12,731 
Guarantee deposits   26,017    18,552    26,017    18,552    -    - 
Share purchase agreement -
  Inversiones Sur
   15,992    15,280    -    15,280    15,992    - 
Acquisition of additional
  non-controlling interest
   25,253    9,344    25,253    9,344    -    - 
Royalties payable   5,668    9,303    5,668    9,303    -    - 
Put option liability on Morelco
  acquisition
   27,986    4,905    27,986    4,905    -    - 
Other accounts payable   37,117    34,441    27,466    27,191    9,651    7,250 
    847,350    822,327    754,981    720,010    92,369    102,317 

 

(a)Advances received from customers mainly correspond to construction projects, and are applied to progress billings, in accordance with contract terms. The increase is mainly due to advances received from the client Lima Airport Partners S.R.L. for the Intipunku consortium in S/65 million and advances received from Buenaventura San Gabriel Project in S/33 million, and the decrease corresponds to the creditor Celulosa Arauco for the Evaporadores Mapa project S/51 million. respectively.

 

   Total   Current   Non-current 
   2021   2022   2021   2022   2021   2022 
                         
Customer advances from Consortiums   27,568    100,650    27,568    100,650    -    - 
Pebbles Quebrada Blanca
  Phase 2 Project
   120,642    91,107    120,642    91,107    -    - 
Customer advances for real estate projects   80,188    85,741    80,188    85,741    -    - 
Special National Transportation
  Infrastructure Project
   19,582    33,879    12,765    32,995    6,817    884 
San Gabriel - Buenaventura Project   -    33,206    -    18,743    -    14,463 
Quellaveco Project   10,841    5,984    10,841    5,984    -    - 
Evaporadores Modernización y
  ampliación de la Planta Arauco
  Project (MAPA)
   52,063    1,531    52,063    1,531    -    - 
Gasoducto Piura Construction   5,745    -    5,745    -    -    - 
Others   6,051    13,632    5,832    13,443    219    189 
    322,680    365,730    315,644    350,194    7,036    15,536 

 

(b)The balance of other accounts payable from Consorcio Constructor Ductos del Sur mainly corresponds to payment obligations to vendors and main subcontractors for S/25.6 million (S/77.6 million as of December 31, 2021) arisen by the subsidiary Cumbra Peru S.A. due to the termination of Gasoducto Sur Peruano S.A. operations (see, Note 11).

 

The fair value of current accounts is approximate to their book value due to short-term maturities. The non-current part mainly includes non-financial liabilities such as advances received from customers; the remaining balance is not significant in the financial statements.

 

19.OTHER PROVISIONS

 

As of December 31, this caption is comprised by the following:

 

   Total   Current   Non-current 
   2021   2022   2021   2022   2021   2022 
                         
Legal claims (a)   364,385    580,216    117,520    86,751    246,865    493,465 
Tax claims   37,466    53,577    16,776    33,127    20,690    20,450 
Provision for closure (b)   82,475    68,160    20,533    11,851    61,942    56,309 
    484,326    701,953    154,829    131,729    329,497    570,224 

 

- 34 -

 

 

(a)Legal contingencies are comprised by the following:

 

Civil compensation to Peruvian Government

 

Corresponds to the legal contingency estimated by management for exposure of the Company 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) on September 15, 2022, the collaboration and benefits agreement is signed, through which AENZA recognizes 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/488.9 million. The civil penalty will be made within a term of 12 years, under a legal interest rate in Soles and US Dollars (3.03% and 1.15% effective interest annual rate as of September 30, 2022, respectively); in addition, the Company compromise to establish a package of guarantees after the court approval i) a trust that includes shares issued by a subsidiary of AENZA; ii) a mortgage on a real state asset and iii) guaranty account with funds equivalent to the annual fees corresponding to the following year. Among other conditions, the Agreement includes a restriction for Aenza and the subsidiaries Cumbra Peru S.A., and Unna Transporte S.A. to participate in public construction and road maintenance contracts with the Peruvian State for two (2) years, counted from court’s approval. As of December 31, 2022, the Company recognized in its financial statements the integrity of the liability associated with the Agreement for S/488.9 million (S/333.3 million and US$40.7 million), in the caption “Other Provisions” within the consolidated statement of financial position, affecting results for the period, equivalent to the remaining portion of the total imputed, for approximately S/258.3 million in the caption “Other expenses” within the consolidated income statement. (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 a Final instruction Report prepared by the Technical Secretary of the National Institute of Competence, Protection and Intellectual Property - INDECOPI (by its acronym in Spanish and INDECOPI hereinafter) in relation to the administrative sanction process against 33 construction companies and other 26 of their executives for allegedly arranging a coordination system to illegally distribute several contract tenders conducted by Provias Nacional and other govenmental entities. On November 15, 2021 INDECOPI’s – Free Competence Defense Commission, 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 including the payment of imposed fines and compliance of corrective measures dictated. The Company and its legal advisors estimated a provision amounting to S/52.4 million that was recognized as of December 31, 2022 (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 INDECOPI under File 003-2020/CLC-IP, issued on Resolution 038-2021/DLC-INDECOPI of December 28, 2021, through which initiate a sanctioning administrative procedure for the alleged execution of a horizontal collusive practice in the form of concerted distribution of suppliers in the contracting market of construction workers industry across nation-wide, during the period comprehended between years 2011 to 2017.

 

On April 7, 2022, Cumbra Peru S.A. and Unna Transporte S.A.C. submitted a proposal for a cease and desist agreement for the early termination of the administrative sanctioning procedure, in which (i) they acknowledged the alleged conduct, (ii) they committed to maintain in the years 2022, 2023 and 2024 a program of compliance with free competition rules, and (iii) they agreed to pay a compensation amounting to S/2.7 million in two installments (one after 60 days and the second after 12 months). By Resolution No. 054-2022/CLC-INDECOPI dated August 19, 2022, the Commission for the Defense of Free Competition of INDECOPI approved the proposed cease and desist commitment and concluded the sanctioning procedure. As of December 31, 2022, the Company and its legal advisors estimated a provision amounting to S/1.4 million recognized as of December 31, 2022 (S/4.8 million as of December 31, 2021).

 

- 35 -

 

 

Shareholder class action lawsuits in the Eastern District Court of New York, United States of America

 

During the first quarter of 2017 two collective demands were filed against the Company, and certain former employees in the Eastern District of New York attending Securities Act legislation.

 

On July 2, 2020, the Company signed the definitive settlement agreement with plaintiffs’ counsel, whereby the parties agree to terminate the collective demand subject to Court’s approval and payment of the settlement amount by the Company. The amount settled for the termination of the class action is equivalent to US$20 million. On September 14, 2021, the settlement agreement was approved by the Eastern District Court of New York. During 2020, a payment of US$0.3 million (equivalent to S/1.1 million) and US$5 million was made and covered by the Company and by the professional liability assurance policy in accordance with the agreement signed with the insurer, respectively. The term of the agreement stablishes that the remaining US$14.7 million, plus 5% annual effective interest rate and 8% after June 30, 2021, must be paid by the Company before September 30, 2021.

 

On June 30, 2021, a first amendment to the agreement was signed, in which is stablished a payment of US$0.6 million (equivalent to S/2.2 million), amortization of the outstanding balance on September 30, 2021, and an annual effective interest rate of 8%. 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 per year at an annual effective interest rate of 9% was set.

 

As of December 31, 2021, the Company maintains a provision of US$8.6 million, equivalent to S/34.4 million, plus interests. This provision of S/33.3 million was full paid on April 8, 2022.

 

(b)Provision for closure corresponds mainly to:

 

i)Provisions for closure of wells of Unna Energia S.A. for S/56.5 million and contractual compliance with Petroperu for S/3.3 million (as of December 31, 2021, S/71.1 million and S/3.4 million, respectively);

 

ii)Provision for costs associated of the subsidiary Red Vial 5 S.A., related to the closing of the concession contract and the process of claiming the tariff guarantee for toll suspension for S/5.6 million (as of December 31, 2021, S/5.1 million).

 

- 36 -

 

 

The account movement for the year ended as of December 31, 2021 and 2022 are as follows:

 

   Legal   Tax   Provision     
   claims   claims   for closure   Total 
                 
As of January 1, 2021   326,868    8,176    52,949    387,993 
Additions   59,109    30,505    10,815    100,429 
Present value   19,627    -    9,780    29,407 
Reversals of provisions   (13,027)   -    (2,957)   (15,984)
Transfers   466    (299)   716    883 
Reclasification and compensation   (11,876)   -    3,335    (8,541)
Desconsolidation of subsidiary   (1,657)   -    -    (1,657)
Payments   (26,863)   (916)   (185)   (27,964)
Translation adjustments / Exchange difference   11,738    -    8,022    19,760 
As of December 31, 2021   364,385    37,466    82,475    484,326 
                     
As of January 1, 2022   364,385    37,466    82,475    484,326 
Additions   282,451    16,607    -    299,058 
Present value   1,042    -    (2,496)   (1,454)
Reversals of provisions   (5,807)   (434)   (9,694)   (15,935)
Reclasification   (5,587)   (62)   -    (5,649)
Payments   (40,253)   -    (747)   (41,000)
Translation adjustments / Exchange difference   (16,015)   -    (1,378)   (17,393)
As of December 31, 2022   580,216    53,577    68,160    701,953 

 

20.CAPITAL

 

On February 28, 2022, according with terms and conditions of the convertible bond, the holders of 11,000 Convertible Bonds, each with a nominal value of US$1,000 each and for a principal amount equivalent to US$11 million, communicated the decision to execute their conversion rights. As consequence, AENZA 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.

 

Additionally, on March 31, 2022, holders of 78,970 convertible bonds, each with a nominal value of US$1,000 each and for a principal amount equivalent to US$78.9 million, communicated their decision to execute their conversion rights. As consequence AENZA converted the bonds, as well as paid the accrued interest to the bondholders who have exercised their conversion rights. 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 paid (see, Note 16-d).

 

As of December 31, 2022, the total capital stock of the Company corresponds a total of 130,025,625 shares represented in ADS, equivalent to 26,005,125 ADSs at a rate of 5 shares per ADS.

 

As of December 31, 2021, the total capital stock of the Company corresponds a total of 136,637,740 shares represented in ADS, equivalent to 27,327,548 ADSs at a rate of 5 shares per ADS.

 

- 37 -

 

 

21.EXPENSES BY NATURE

 

For the year ended December 31, 2021, and 2022, this caption comprises the following:

 

  

Cost of goods and services

   Administrative expenses   Total 
2021            
Salaries, wages and fringe benefits   1,297,352    97,682    1,395,034 
Services provided by third-parties   1,118,929    56,462    1,175,391 
Purchase of goods   705,000    43    705,043 
Other management charges   222,648    16,203    238,851 
Depreciation  (Note 14.a)   82,063    5,425    87,488 
Amortization (Note 14.b)   101,578    3,642    105,220 
Impairment of accounts receivable   9,420    2    9,422 
Taxes   5,691    154    5,845 
Impairment of property, plant and equipment   5,679    -    5,679 
Impairment of Inventory   2,984    -    2,984 
    3,551,344    179,613    3,730,957 
                
2022               
Salaries, wages and fringe benefits   1,254,006    97,914    1,351,920 
Services provided by third-parties   1,364,793    42,158    1,406,951 
Purchase of goods   633,963    -    633,963 
Other management charges   323,775    9,580    333,355 
Depreciation  (Note 14.a)   72,421    2,567    74,988 
Amortization (Note 14.b)   99,210    2,825    102,035 
Impairment of accounts receivable   174,083    24    174,107 
Taxes   16,479    261    16,740 
Impairment of property, plant and equipment   931    7,269    8,200 
Recovery of inventory   (1,972)   -    (1,972)
    3,937,689    162,598    4,100,287 

 

22.OTHER INCOME AND EXPENSES

 

For the year ended December 31, 2021, and 2022, this item comprises:

 

   2021   2022 
Other income:        
Sale of fixed assets   9,618    11,274 
Accounts payable reversal   -    5,244 
Valuation of well retairment provision   -    2,155 
Change in contract of the call option   70,322    3,706 
Recovery of provisions and impairments   6,070    2,067 
Penalty income   1,883    4,715 
Insurance compensation   3,728    209 
Others   5,593    7,678 
    97,214 &nbs