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 May 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/ FERNANDO RODRIGO BARRON  
Name:   Fernando Rodrigo Barron  
Title: VP of Corporate Finance and Business Development  
Date: May 15, 2023  

 

 

 

 

AENZA S.A.A. AND SUBSIDIARIES

 

Consolidated Financial Statements

 

As of December 31, 2021 and 2022

(Including Independent Auditors’ Report)

 

1

 

 

INDEPENDENT AUDITORS’ REPORT

 

To the Shareholders and Directors of AENZA S.A.A.

 

Opinion

 

We have audited the accompanying consolidated financial statements of AENZA S.A.A. and subsidiaries (hereinafter the Company), which comprise the consolidated statement of financial position as of December 31, 2022, the consolidated statements of income, comprehensive income, changes in equity and cash flows for the year then ended, and the related notes, comprising a summary of significant accounting policies and other explanatory information.

 

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2022, and its consolidated results of its operations and its consolidated cash flows for the year then ended, in accordance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB).

 

Basis for Opinion

 

We conducted our audit in accordance with the International Standards on Auditing (ISAs) approved for their application in Peru by the Dean’s Council of the Peruvian Professional Associations of Public Accountants. Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the consolidated financial statements in Peru, together with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants, and we have fulfilled our other ethical responsibilities in accordance with these requirements, respectively. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

 

Emphasis of Matter

 

We draw attention to the following matters. Our opinion is not modified with respect to these matters.

 

As discussed in notes 5(a)(iv), 11(b) and 14(a)(i) to the consolidated financial statements as of December 31, 2022, the Company maintains an account receivable from Gasoducto Sur Peruano S.A. (hereinafter GSP or the Consortium) for S/ 542.3 million. The GSP is in a bankruptcy proceeding for its liquidation before the National Institute for the Defense of Competition and Protection of Intellectual Property (INDECOPI, for its Spanish acronym). The liquidation agreement, approved by the Board of Creditors on April 11, 2023, establishes that the Liquidator must execute before the Peruvian government the required actions that allow the recovery of the net carrying amount of the concession and, since such recovery, the payment of the GSP’s accounts receivable. The recovery of the account receivable will depend on the success of the liquidation process to be executed by the Liquidator appointed by the Board of Creditors.

 

2

 

 

As discussed in note 1(c) and 21(a) to the consolidated financial statements, the Company is involved in a series of criminal investigations conducted by the Public Ministry of Peru for corruption offenses related to the execution of certain infrastructure projects in which AENZA S.A.A. participated as a minority shareholder, directly or indirectly, through its subsidiaries Cumbra Perú S.A. and Unna Transporte S.A., with entities of the Odebrecht Group and projects related to the “Construction Club case”. On September 15, 2002, AENZA S.A.A. signed a Final Collaboration and Benefits Agreement with the Attorney General’s Office and the Peruvian Public Prosecutor’s Office, which is subject to court approval by the Peruvian Judiciary, in which it accepted the payment of a civil remedy to the Peruvian government for S/ 488.9 million. In addition, the subsidiary Cumbra Perú S.A. is subject to an administrative sanctions procedure from INDECOPI with respect to events that occurred between the years 2003 and 2016 relating to the “Construction Club” case, recognizing a provision in the consolidated financial statements for S/ 52.4 million.

 

Key Audit Matters

 

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

 

Valuation of Trade Account Receivable from Gasoducto Sur Peruano S.A.

 

The Company’s consolidated financial statements as of December 31, 2022, include an account receivable, net of provision for recovery, from the GSP for S/ 542.3 million,for further details, see notes 5(a)(iv), 11(b) and 14(a)(i) to the consolidated financial statements. The Company has a 20% investment in GSP, a company that entered into a concession contract with the Peruvian Government in 2014. In January 2017, the Peruvian Ministry of Energy and Mines terminated the concession contract early due to GSP not accrediting the financial closure of the project within the contractual term. In December 2017, GSP started a bankruptcy process, in which the Company is part of GSP’s creditors. In addition, the GSP Settlement Agreement was approved by the Creditors’ Meeting to execute this procedure, by which GSP estimates that it can recover from the Peruvian State the VCN of the concession assets and, consequently, the Company should recover the account receivable from GSP.

 

The account receivable from the GSP is a key audit matter due to the importance of the amount presented in the consolidated financial statements, for the required judgment on Management’s evaluation of the recoverable amount of this account receivable due to the possible courses of action that the Creditors’ Meeting can choose and the moment for its execution. In addition, the evaluation of the discount rate used to determine the amount of account receivable from GSP requires specialized skills and knowledge. In this type of long-term and complex proceedings, from a legal and economic perspective, the estimates made by management, including the recoverable amount of this account receivable and the estimated term for its recovery, could change in the future.

 

Our audit procedures in this area included, among others: evaluate the legal analysis performed by the Company’s management and its external legal advisors related to the early termination of the concession agreement and the corresponding conclusions that impacted the recoverable amount of the account receivable. Evaluate the report of the Company’s external legal advisors regarding the liquidation process under execution by the GSP’s Board of Creditors. Engage our legal and financial specialists to assist us in the evaluation of the significant judgments and assumptions used by the Company’s management at December 31, 2022, by developing an independent range of discount rates and comparing them to those used by the Company. Evaluate the adequacy of disclosures included in the Company’s consolidated financial statements.

 

3

 

 

Provisions for civil reparation to the Peruvian government and for the sanctioning administrative procedure from INDECOPI

 

The Company’s consolidated financial statements as of December 31, 2022, include a provision for civil remedy to the Peruvian government for S/ 488.9 million. Likewise, they include a provision for contingencies with INDECOPI for S/ 52.4 million with respect to the investigation of events that occurred between the years 2003 and 2016 related to the “Construction Club” case. As discussed in notes 1(c) and 21(a) to the consolidated financial statements, as a result of the criminal investigations conducted by the Public Ministry of Peru, the Company signed a Final Collaboration and Benefits Agreement, dated September 15, 2022, with the Peruvian Public Prosecutor’s Office and the Attorney General’s Office, establishing the payment of a civil remedy to the Peruvian government. Such collaboration agreement is subject to court approval by the Peruvian Judiciary. In relation to the administrative sanctions proceeding conducted by INDECOPI, the final administrative resolution by the Court of this supervisory board is still pending.

 

These provisions recognized under the final collaboration and benefits agreement with the Peruvian government and related to INDECOPI’s investigation are key audit matters due to the importance of the amounts recognized in the consolidated financial statements, the significant judgments used by the Company’s management to estimate these provisions, the complexity and duration of the legal and administrative proceedings in Peru and the potential future changes in the conditions of the agreements and/or amounts recognized in the consolidated financial statements until the completion of such proceedings.

 

Our audit procedures in this area included, among others: evaluate the report of the Company’s external legal advisors regarding the final collaboration and benefits agreement and the administrative sanctions proceeding from INDECOPI. Read the final collaboration and benefits agreement signed by and between the Peruvian Public Prosecutor’s Office, the Attorney General’s Office and the Company on September 15, 2022. Compare the amounts described in the final collaboration and benefits agreement with the amounts recognized in the consolidated financial statements. Evaluate the adequacy of disclosures included in the Company’s consolidated financial statements.

 

Revenue Recognition for Engineering and Construction Contracts under the Method for Measuring Progress

 

The Company’s consolidated financial statements for the year ended December 31, 2022, include revenue from construction contracts for S/ 2,451 million. As discussed in note 2.W to the consolidated financial statements, the Company recognized revenue from engineering and construction contracts over time using the output method to measure the physical percentage of completion which is based on surveys of performance by the Company´s experts.

 

The recognition of revenue from engineering and construction contracts over time and under the output method is a key audit matter due to the importance of the amount of revenue recognized in the audited period, the significant judgments used by the Company’s management to measure the physical progress of engineering and construction projects. Specialists were required to evaluate the physical progress.

 

Our audit procedures in this area included, among others: evaluate the professional qualifications and the knowledge, skills and ability of the Company’s specialists involved in engineering and construction projects. Evaluate a sample of revenue from engineering and construction contracts to: (i) inspect the contracts signed between the Company and its customers to assess the effects on revenue recognition of the contractual terms; (ii) analyze the recognition of revenue from engineering and construction contracts using the corresponding supporting documentation, such as work progress, valuations and invoices made, among others; (iii) interview and review documentation prepared by Company´s project personnel; (iv) engage our technical engineer specialist to assist us in the evaluation of physical percentage-of-completion. Evaluate the adequacy of disclosures included in the Company’s consolidated financial statements.

 

4

 

 

Other Information

 

Management is responsible for the other information. The other information comprises the information included in the 2022 integrated report but does not include the consolidated financial statements and our auditor’s report thereon.

 

Our opinion on the consolidated financial statements does not cover the other information and we do not express an opinion, a conclusion, or any form of assurance thereon.

 

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information, including the 2022 integrated report, and, in doing so, consider whether a material inconsistency exists between the other information and the consolidated financial statements, or the other information otherwise appears to be materially misstated.

 

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

 

Other Matters

 

The consolidated financial statements as of and for the year ended December 31, 2021 were audited by other auditors. The auditors’ report, dated March 4, 2022, expressed an unqualified opinion on these consolidated financial statements. In addition, the other auditors issued an opinion (double dated) on May 12, 2023 on these consolidated financial statements due to the of immaterial error corrections made after March 4, 2022 and related to the recognition of revenue from and costs of engineering and construction contracts, as disclosed in note 2.AA “Immaterial correction of balances previously presented as of December 31, 2021, which was audited by the other auditors. Such note includes the corrections made by the Company’s management to the previously reported consolidated financial statements as of December 31, 2021 and January 1, 2021.

 

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

 

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with the International Financial Reporting Standards issued by the International Accounting Standards Board, and for such internal control as management determines is necessary to enable the preparation of the consolidated financial statements that are free from material misstatement, whether due to fraud or error.

 

In preparing the consolidated financial statements, management is required to evaluate whether there are conditions or events that raise substantial doubt about the Company’s ability to continue as a going concern; to disclose, as applicable, matters related to going concern; and to use the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

 

Those charged with the Company’s governance are responsible for overseeing the Company’s financial reporting process.

 

 

 

 

AENZA S.A.A. and Subsidiaries

 

Consolidated Financial Statements

 

As of December 31, 2021 and 2022

 

Content   Page
     
Consolidated Statements of Financial Position   1
Consolidated Statements of Profit or Loss   2
Consolidated Statements of Other Comprehensinve Income   3
Consolidated Statements of Changes in Equity   4
Consolidated Statements of Cash Flows   5
Notes to the Consolidated Financial Statements   6 - 114

 

S/= Sol
US$= US dollar

 

 

 

 

AENZA S.A.A. and Subsidiaries

Consolidated Statement of Financial Position

As of December 31, 2021 and 2022

 

In thousands of soles  Note  2021   2022 
Assets           
Current assets           
Cash and cash equivalents  9   957,178    917,554 
Trade accounts receivable, net  10   834,632    1,078,582 
Accounts receivable from related parties  11   20,817    27,745 
Other accounts receivable, net  12   487,058    393,195 
Inventories, net  13   488,326    346,783 
Prepaid expenses      32,142    28,098 
Total current assets      2,820,153    2,791,957 
              
Non-current assets             
Trade accounts receivable, net  10   683,306    723,869 
Accounts receivable from related parties  11   643,897    542,392 
Prepaid expenses      23,607    17,293 
Other accounts receivable, net  12   201,360    285,730 
Inventories, net  13   -    65,553 
Investments in associates and joint ventures  14   31,173    14,916 
Investment property, net  15.A   63,011    61,924 
Property, plant and equipment, net  15.B   303,170    284,465 
Intangible assets and goodwill, net  16   743,391    787,336 
Right-of-use assets, net  15.C   47,717    50,207 
Deferred tax asset  23   276,346    295,638 
Total non-current assets      3,016,978    3,129,323 
Total assets      5,837,131    5,921,280 
Liabilities             
Current liabilities             
Borrowings  17   241,340    574,262 
Bonds  18   69,838    77,100 
Trade accounts payable  19   912,826    1,027,256 
Accounts payable to related parties  11   51,004    53,488 
Current income tax      94,958    69,652 
Other accounts payable  20   754,981    705,442 
Other provisions  21   155,545    132,926 
Total current liabilities      2,280,492    2,640,126 
              
Non-current liabilities             
Borrowings  17   338,560    305,631 
Bonds  18   1,191,084    792,813 
Trade accounts payable  19   -    9,757 
Other accounts payable  20   92,369    102,319 
Accounts payable to related parties  11   50,712    27,293 
Other provisions  21   329,497    569,027 
Deferred tax liability  23   98,407    128,308 
Total non-current liabilities      2,100,629    1,935,148 
Total liabilities      4,381,121    4,575,274 
              
Equity  22          
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      (68,629)   (97,191)
Retained earnings      (893,803)   (1,342,362)
Equity attributable to controlling interest             
in the Company      1,203,045    1,061,504 
Non-controlling interest  31   252,965    284,502 
Total equity      1,456,010    1,346,006 
Total liabilities and equity      5,837,131    5,921,280 

 

Notes from 6 to 126 are an integral part of these consolidated financial statements.

 

1

 

 

AENZA S.A.A. and Subsidiaries

Consolidated Statement of Profit or Loss

For the years ended December 31, 2021 and 2022

 

In thousands of soles  Note  2021   2022 
Revenue           
Revenue from construction activities     2,467,477   2,451,067 
Revenue from services provided      1,094,439    1,104,900 
Revenue from real estate and sale of goods      579,482    849,157 
Total revenue from ordinary activities arising from contracts with customers  24   4,141,398    4,405,124 
Cost             
Cost of construction activities      (2,373,482)   (2,465,279)
Cost of services provided      (900,317)   (926,076)
Cost of real estate and sale of goods      (454,484)   (566,138)
Cost of sales and services  25   (3,728,283)   (3,957,493)
Gross profit      413,115    447,631 
Administrative expenses  25   (179,613)   (162,598)
Other income and expenses  27   (4,477)   (290,614)
Operating (loss) profit      229,025    (5,581)
Financial expenses  26.A   (196,415)   (156,474)
Financial income  26.A   2,646    15,454 
Interest for present value of financial asset or liability  26.B   (63,032)   (86,014)
Share of the profit or loss of associates and joint ventures  accounted for using the equity method  14   (861)   1,907 
Loss before income tax      (28,637)   (230,708)
Income tax expense  28   (46,405)   (131,346)
Loss from continuing operations      (75,042)   (362,054)
Loss from discontinued operation, net of tax  35   (26,774)   - 
Loss for the year      (101,816)   (362,054)
              
(Loss) profit attributable to:             
Controlling interest in the Company      (141,770)   (451,151)
Non-controlling interest      39,954    89,097 
       (101,816)   (362,054)
              
Loss per share attributable to controlling interest in the
 Company during the year
  33   (0.163)   (0.403)
Diluted loss per share attributable to controlling interest in the Company during the year  33   (0.142)   (0.377)
Loss per share from continuing operations attributable to controlling interest in the Company during the year  33   (0.132)   (0.403)
Diluted loss per share from continuing operations attributable to controlling interest in the Company during the year  33   (0.115)   (0.377)

 

Notes from 6 to 126 are an integral part of these consolidated financial statements.

 

2

 

 

AENZA S.A.A. and Subsidiaries

Consolidated Statement of Other Comprehensive Income

For the years ended December 31, 2021 and 2022

 

      For the year ended as of
December 31,
 
In thousands of soles  Note  2021   2022 
Loss for the year      (101,816)   (362,054)
Other comprehensive income:             
Items that may be subsequently reclassified to profit or loss             
Cash flow hedge, net of tax      -    - 
Other comprehensive income recycled      -    (7,461)
Foreign currency translation adjustment, net of tax      (5,009)   (20,911)
Exchange difference from net investment in a foreign operation, net of tax      (428)   (289)
Other comprehensive income for the year, net of tax  29   (5,437)   (28,661)
Total comprehensive income for the year      (107,253)   (390,715)
Comprehensive income attributable to:             
Controlling interest in the Company      (147,425)   (479,713)
Non-controlling interest      40,172    88,998 
       (107,253)   (390,715)
Total comprehensive income for the year attributable to controlling interest in the Company:             
Continuing operations      (120,651)   (479,713)
Discontinued operations      (26,774)   - 
       (147,425)   (479,713)

 

Notes from 6 to 126 are an integral part of these consolidated financial statements.

 

3

 

 

AENZA S.A.A. and Subsidiaries

Consolidated Statement of Changes in Equity

For the years ended December 31, 2021 and 2022

 

In thousands of soles  Note  Number of
shares in thousands
  

Capital

  

Legal

reserve

  

 

Voluntary

reserve

  

 

Share

premium

  

 

Other

reserves

  

 

Retained

earnings

   Total  

Non-controlling

interest

   Total 
Balances as of January 1, 2021       871,918     871,918     132,011     29,974     1,131,574     (174,793)     (738,822)     1,251,862     329,930     1,581,792 
(Loss) profit for the year       -     -     -     -     -     -     (141,770)     (141,770)    39,954     (101,816)
Foreign currency translation adjustment      -    -    -    -    -    (5,230)   -    (5,230)   221    (5,009)
Exchange difference from net investment in a foreign operation      -    -    -    -    -    (425)   -    (425)   (3)   (428)
Comprehensive income of the year      -    -    -    -    -    (5,655)   (141,770)   (147,425)   40,172    (107,253)
Transactions with shareholders:                                                     
Dividend distribution  32   -    -    -    -    -    -    -    -    (42,974)   (42,974)
Acquisition of (profit distribution to) non-controlling interests, net      -    -    -    -    -    -    -    -    (27,104)   (27,104)
Additional acquisition of non-controlling      -    -    -    -    -    46,477    -    46,477    (46,477)   - 
Deconsolidation Adexus S.A.      -    -    -    -    -    -    52,131    52,131    -    52,131 
Reclasification of PUT option Morelco      -    -    -    -    -    65,342    (65,342)   -    -    - 
Dilution of non-controlling shareholders      -    -    -    -    -    -    -    -    (582)   (582)
Total transactions with shareholders      -    -    -    -    -    111,819    (13,211)   98,608    (117,137)   (18,529)
Balances as of December 31, 2021      871,918    871,918    132,011    29,974    1,131,574    (68,629)   (893,803)   1,203,045    252,965    1,456,010 
Balances as of January 1, 2022      871,918    871,918    132,011    29,974    1,131,574    (68,629)   (893,803)   1,203,045    252,965    1,456,010 
(Loss) profit for the year      -    -    -    -    -    -    (451,151)   (451,151)   89,097    (362,054)
Foreign currency translation adjustment      -    -    -    -    -    (20,814)   -    (20,814)   (97)   (20,911)
Other comprehensive income recycled      -    -    -    -    -    (7,461)   -    (7,461)   -    (7,461)
Exchange difference from net investment in a foreign operation      -    -    -    -    -    (287)   -    (287)   (2)   (289)
Comprehensive income of the year      -    -    -    -    -    (28,562)   (451,151)   (479,713)   88,998    (390,715)
Transactions with shareholders:                                                     
Dividend distribution  32   -    -    -    -    -    -    -    -    (19,847)   (19,847)

Acquisition of (profit distribution to)
non-controlling 

interests, net

      -    -    -    -    -    -    -    -    (36,879)   (36,879)
Capital increase for bond’s converstion      325,062    325,062    -    -    10,518    -    -    335,580    -    335,580 
Dilution of non-controlling shareholders      -    -    -    -    -    -    2,592    2,592    (735)   1,857 
Total transactions with shareholders      325,062    325,062    -    -    10,518    -    2,592    338,172    (57,461)   280,711 
Balances as of December 31, 2022      1,196,980    1,196,980    132,011    29,974    1,142,092    (97,191)   (1,342,362)   1,061,504    284,502    1,346,006 

 

Notes from 6 to 126 are an integral part of these consolidated financial statements.

 

4

 

 

AENZA S.A.A. and Subsidiaries

Consolidated Statement of Cash Flows

For the years ended December 31, 2021 and 2022

 

In thousands of soles  Note  2021   2022 
            
OPERATING ACTIVITIES           
Loss before income tax      (60,373)   (230,708)
Adjustments to profit not affecting cash flows from operating activities:             
Depreciation  15   98,795    74,988 
Amortization of intangible assets  16.F   106,512    102,035 
Impairment (reversal) of inventories      2,984    (1,972)
Impairment of accounts receivable and other accounts receivable  25(iii) y 27.C   29,389    182,114 
Debt condonation  27   -    (5,244)
Impairment of property, plant and equipment  25   8,088    10,187 
Impairment of intangible assets  16   -    2,530 
Other comprehensive income recycled      -    (7,461)
Other provisions      62,962    294,337 
Change in the fair value of the liability for put option      -    - 
Renegotiation of liability for acquisition of non-controlling Morelco  27   (70,322)   (3,706)
Financial expense, net      222,453    159,774 
Impairment of investment  27.C   -    14,804 
Incremental cost accrued      -    - 
Incremental cost of acquiring interest in joint operation      12,732    - 
Share of the profit and loss of associates and joint ventures accounted for using the equity method  14.A and B   861    (1,907)
Reversal of provisions  21   (13,027)   (11,930)
Disposal (reversal) of assets      2,410    137 
Profit on sale of property, plant and equipment      (3,937)   (3,889)
Loss on remeasurement of accounts receivable and accounts payable      106,613    87,477 
Net variations in assets and liabilities:             
Trade accounts receivable      (143,190)   (336,106)
Other accounts receivable      42,133    (133,349)
Other accounts receivable from related parties      (57,258)   22,572 
Inventories      59,201    78,899 
Prepaid expenses and other assets      (11,681)   16,545 
Trade accounts payable      (27,375)   130,929 
Other accounts payable      73,966    (86,194)
Other accounts payable to related parties      7,703    (4,737)
Other provisions      (27,964)   (41,000)
Interest paid      (146,369)   (145,773)
Payments for purchases of intangible assets - Concessions      (5,157)   (5,645)
Income tax paid      (75,641)   (124,047)
Net cash provided by operating activities      194,508    33,660 
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)   (53)
Acquisition of intangible assets      (53,808)   (159,512)
Loss of deconsolidation of investment      (11,223)   - 
Acquisition of property, plant and equipment      (38,087)   (63,155)
Net cash applied to investing activities      (88,189)   (198,172)
FINANCING ACTIVITIES             
Borrowing received      281,079    493,031 
Bonds issued  18(d)   357,424    - 
Amortization of borrowings received  17.F   (542,918)   (216,195)
Amortization of leases  17.F   (5,442)   (8,536)
Amortization of bonds issued      (48,858)   (56,745)
Payment for debt transaction costs      (5,681)   (13,736)
Dividends paid to non-controlling interest  32   (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, net  27.A   (33,232)   - 
Net cash (applied to) provided by financing activities      (50,425)   126,463 
(Net decrease) 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  9   957,178    917,554 
NON-CASH TRANSACTIONS:             
Capitalization of interests      1,244    937 
Acquisition of assets through finance leases      104    - 
Dividends declared to non-controlling interest  32   17,281    - 
Acquisition of right-of-use assets      7,988    21,567 
Capitalization of convertible bonds  22   -    335,580 
Reclassification to other accounts receivable by Concesionaria Via Expresa Sur      -    - 
Acquisition of supplier bonds      -    - 

 

Notes from 6 to 126 are an integral part of these consolidated financial statements.

 

5

 

 

AENZA S.A.A. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2022

 

1. General Information

 

A. Incorporation and Operations

 

AENZA S.A.A., (hereinafter the “Company” or “AENZA”) is the parent of the AENZA Corporation that includes the Company and its subsidiaries (hereinafter, the “Corporation”) and is mainly engaged in its investments in the different companies of the Corporation. In addition, the Company provides strategic and functional services and office leases to the companies of the Corporation. The Company registered office is at Av. Petit Thouars n.o 4957, Miraflores, Lima.

 

The Corporation is a conglomerate of companies whose operations encompass different business activities such as engineering and construction, energy, infrastructure (public concession ownership and operation) and real estate business. See details of the Corporation’s operating segments in Note 7.

 

B. Authorization for the Financial Statements Issuance

 

The consolidated financial statements for the year ended December 31, 2022 have been prepared and issued with authorization of Management and approved by the Board of Directors on May 15, 2023 and will be presented for consideration and approval to the General Shareholders’ Meeting that will be held within the terms established by Law. In Management’s opinion, the financial statements as of December 31, 2022, will be approved without any modifications.

 

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

 

As indicated in note 2.AA, from the date the financial statements for the year ended December 31, 2021 were submitted to the shareholders for approval, the Company revised the balances previously presented as of December 31, 2021.

 

The revised consolidated financial statements for the year ended December 31, 2021 have been prepared and issued with the authorization of Management and the Board of Directors on May 15, 2023 and will be submitted for consideration and approval by the General Shareholders’ Meeting to be convened promptly.

 

6

 

 

AENZA S.A.A. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2022

 

C. Compliance with laws and regulations

 

The Company is involved in a series of criminal investigations conducted by the Public Ministry of Peru and administrative proceedings conducted by the National Institute for the Defense of Competition and Protection of Intellectual Property (INDECOPI, for its Spanish Acronym) based on events that occurred between years 2003 and 2016. Such situations led to significant changes in the Company’s corporate governance structure, the opening of independent investigations and the adoption of measures to address and clarify these situations.

 

Criminal investigations derived from projects developed in partnership with companies of the Odebrecht Group

 

In connection with the Lava Jato case, the Company participated as a minority partner in six infrastructure projects with Odebrecht Group, directly or through its subsidiaries, in entities or consortia. The resulting contingency from these proceedings has been determined in the Final Collaboration and Benefits Agreement (“the Agreement”) signed with the Peruvian Public Prosecutor’s Office and Attorney General’s Office and includes the following projects: IIRSA Sur Tranches 2 and 3, IIRSA Norte, the Electric Train Construction Project (Tranches 1 and 2) and Gasoducto Sur Peruano (GSP)

 

Criminal investigations in relation to the Construction Club case

 

Cumbra Peru S.A. has been included, along with other construction companies, in the criminal investigation that the Public Ministry of Peru has been carrying out for the alleged crime of corruption of officials in relation to the so-called ‘Construction Club’. The resulting contingency from these proceedings has been determined in the Agreement with the Peruvian Public Prosecutor’s Office and the Attorney General’s Office.

 

Moreover, at the end of February 2020, the Public Ministry of Peru requested Unna Transporte S.A.C., be included in such criminal investigation. That request was approved in October 2021. Just like other executives of other construction companies, a former commercial manager of Cumbra Peru S.A., a former president of the Board of Directors, a former Director, and the former Corporate General Manager of the Company have been included in these criminal investigations.

 

The Company’s Management cannot guarantee the finding nor rule out the possibility of authorities or third parties finding additional adverse evidence not currently known with respect to other projects executed during the period under investigation. If applicable, these new facts could be included in the Agreement entered into with the Peruvian Public Prosecutor’s Office and the Attorney General’s Office.

 

Final Plea Agreement

 

On May 21, 2021, the Company entered into an Agreement with the Special Team of Peruvian prosecutors who are committed to full dedication to the knowledge of investigations related to corruption offenses of officials and related personnel, in which the company Odebrecht and others would have incurred (the “Prosecutor’s Office”) and with the ad hoc Public Prosecutor’s Office for investigations and processes related to crimes corruption of officials, money laundering and related activities allegedly committed by the Odebrecht company and others (the “Attorney General’s Office”).

 

On September 15, 2022, the Agreement was entered into between the Peruvian Public Prosecutor’s Office, the Attorney General’s Office and the Company, whereby AENZA S.A.A. accepted they were utilized by certain former executives to commit illicit acts in a series of periods until 2016, and committed to pay a civil compensation to the Peruvian Government of approximately S/ 488.9 million (approximately S/ 333.3 million and US$ 40.7 million, respectively) calculated according to the formulae established by Law 30737.

 

According to the Agreement, payment shall be made within twelve (12) years at a legal interest rate in soles and dollars (3% and 1% annual interest as of December 31, 2022, respectively). The Company also undertakes to establish a series of guarantees after the approval (by which the judge verify that the agreement are in accordance with Law) of the Agreement, composed of i) a trust agreement that includes shares issued by a subsidiary of the Company, ii) mortgage on a property owned by the Company, and iii) a guarantee account with funds equivalent to the annual installment for the following year. Among other conditions, the Agreement includes a restriction for AENZA S.A.A. and subsidiaries Cumbra Peru S.A. and Unna Transporte S.A.C. to participate in public construction and road maintenance contracts for 2 years from the approval of the Agreement. The other member companies of the Corporation are not subject to any impediment or prohibition to contract with the Peruvian Government. As of December 31, 2022, the Company recognized in its financial statements the total liabilities associated to the Agreement for S/488.9 million (Note 21.a) recognizing an expense of S/258.3 million under “Other Income and Expenses” and an exchange difference income of S/9.5 million under “Financial Expenses” in 2022 (Note 26.A) (As of December 31, 2021, the balance is S/240.1 million).

 

7

 

 

AENZA S.A.A. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2022

 

As of December 31, 2022, and as of the reporting date of the consolidated financial statements, in the opinion of the Company’s Management and legal advisors, the civil compensation covers the total contingency to which the Company is exposed to as a result of the investigations revealed since 2017. Nevertheless, the Agreement enforceability is subject to court approval and its terms and conditions are subject to confidentiality provisions.

 

Investigations and administrative process initiated by INDECOPI in relation to the Construction Club case

 

On July 11, 2017, the INDECOPI initiated an investigation against several Peruvian construction companies (including Cumbra Peru S.A.), about the existence of an alleged cartel called the Construction Club.

 

On February 11, 2020, the subsidiary Cumbra Peru S.A. was notified by the Technical Secretariat (the “TS”) of the Free Competition Defense Commission of INDECOPI with the resolution that begins a sanctioning administrative procedure involving a total of 35 companies and 28 natural persons, for alleged anticompetitive conduct in the market of Public Works.

 

On November 17, 2021, the Commission imposed a fine of approximately S/67 million against Cumbra Peru S.A., which is currently being challenged and is pending of resolution by the final administrative instance within the INDECOPI Court. As of December 31, 2022, Cumbra Peru S.A. recorded an provision amounting to S/52.4 million (as of December 31, 2021 a present value equivalent to S/52.6 million was recorded).

 

Investigations and administrative process initiated by INDECOPI in relation to the labor recruitment market

 

On February 7, 2022, Cumbra Peru S.A. and Unna Transporte S.A.C. were notified with Resolution 038-2021/CLC-INDECOPI, by means of which the National Directorate of Research and Promotion of Free Competition of INDECOPI decided to initiate an administrative sanctioning procedure regarding the alleged horizontal collusive practice in the modality of concerted sharing of suppliers in the market of hiring workers in the construction sector at national level from 2011 to 2017.

 

On April 7, 2022, Cumbra Peru S.A. and Unna Transporte S.A.C. proposed a cease-and-desist agreement for the early termination of the sanctioning administrative procedure, where they (i) accepted the alleged conduct, (ii) committed to comply with a free competition rules compliance program during years 2022, 2023, and 2024, and (iii) committed to paying a compensation amounting to S/ 2.7 million in two installments (the first one within 60 days after the notification of the Resolution approving the cessation undertaking and the second one within 12 months). By means of Resolution 054-2022/CLC-INDECOPI dated August 19, 2022, the INDECOPI approved the proposed cease-and-desist agreement and concluded the sanctioning procedure.

 

2. Basis of Preparation and Significant Accounting Policies

 

Significant accounting policies applied to prepare the consolidated financial statements are detailed below. These policies have been applied consistently to all years presented in these financial statements; unless otherwise indicated.

 

Going concern basis of accounting

 

Management continues to have a reasonable expectation that the Corporation has adequate resources to continue in operation for a reasonable period of time and that the going concern basis of accounting remains appropriate. Following the Post Covid stabilization process initiated in 2021, the Corporation was able to regain operational control of all its operations in 2022. As of December 31, 2022 AENZA’s consolidated backlog amounted to S/5,327.6 million (US$1,394.7 million). Corporation believes that backlog provides visibility for potential growth in the coming years and that is strategically targeted to key end-markets such as mining, infrastructure, power, energy and real estate. As a leading Peruvian conglomerate in Infrastructure, Energy, Real Estate, and Engineering & Construction segments with a diversified and difficult-to-replicate portfolio of best-in-class assets and an attractive growth strategy, the Corporation is well-positioned to capitalize upon the significant infrastructure deficit and other business opportunities in Latin America.

 

For the year ended 2022, the Corporation’s current assets as of December 31, 2022 were S/2,792 million and the Corporation’s cash and cash equivalents were S/917.6 million. As of December 31, 2022, Corporation had a total outstanding indebtedness of S/1,690.7 million (US$442.6 million). In 2022, the Corporation recognized a loss of the year of S/362.1 million, which were affected primarily by non-recurring costs in relation to past projects in the E&C segment and the provision related to the Plea Agreement signed on September 15, 2022. For the year ended December 31, 2022, the Company recognized in its financial statements the total liabilities associated with the Plea Agreement recognizing an expense of S/258.3 million. In this sense, AENZA is committed to pay a civil compensation to the Peruvian Government of approximately S/488.9 million. Additionally, on March 17, 2022, the Corporation entered into a bridge loan credit agreement for up to US$120 million that matures in October 2023.

 

The appropriateness of the going concern basis of accounting is dependent on the continued availability of borrowings. Management has the ability to take the following mitigation actions to preserve liquidity and optimize the Group’s cash flow:

 

-Reducing non-essential capital expenditures and deferring or cancelling discretionary spend;

 

-Financial restructuring, including a short-term and long-term structural solutions and capital increase.

 

Based on these factors, Management has a reasonable expectation that the Corporation has adequate resources headroom.

 

A. Basis of preparation

 

i. Basis of accounting

 

The consolidated financial statements of the Company and its Subsidiaries have been prepared in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standard Board (IASB) effective as of December 31, 2022.

 

ii. Basis of measurement

 

These consolidated financial statements have been prepared on the historical cost basis, according to the Corporation’s accounting records, except for derivative financial instruments and investment property, which are measured at fair value.

 

iii. Responsibility for the information

 

The information contained in these financial statements is the responsibility of the Management of the Corporation that expressly states that all the principles and criteria included in the IFRSs as issued by the IASB, effective as of December 31, 2021 and 2022, have been applied.

 

8

 

 

AENZA S.A.A. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2022

 

iv. Functional and presentation currency

 

These consolidated financial statements are presented in soles (S/), which is the Corporation’s functional currency. All amounts have been rounded to the nearest thousand, unless otherwise indicated. The functional currencies of the Subsidiaries domiciled in Chile and Colombia are CLP (Chilean Pesos) and COP (Colombian Pesos), respectively.

 

v. Use of judgments and estimates

 

In preparing these consolidated financial statements, Management has made judgments and estimates that affect the application of the accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized prospectively.

 

Judgments

 

Information about judgments made in applying accounting policies that have the most significant effects on the amounts recognized in the consolidated financial statements is included in the following notes:

 

Revenue recognition: identification of performance obligations and determination of revenue recognition at a point in time (Note 2.W).

 

Lease term: whether the Company and its Subsidiary are reasonably certain to exercise extension options in leases (note 2.Y).

 

Estimate of current tax payable and current tax expense in relation to an uncertain tax treatment (Note 2.R).

 

Assumptions and estimation uncertainties

 

Information about assumptions and estimation uncertainties as of December 31, 2021 and 2022, that have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities is included in the following notes:

 

Measurement of expected credit losses (ECL) allowance for trade receivables and contract assets: (Note 2.I);

 

Recognition and measurement of provisions and contingencies: key assumptions about the likelihood and magnitude of an outflow of resources (Note 2.T);

 

Recognition of deferred tax assets: availability of future taxable profit against which deductible temporary differences and tax losses carried forward can be utilized in previous periods (Note 2.R);

 

Allowance for inventory obsolescence (Note 2.J);

 

Allowance for useful lives and residual values of property, plant, and equipment (Note 2.L).

 

Measurement of fair values

 

A number of the Corporation’s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities.

 

The Company has an established control framework with respect to the measurement of fair values. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the Company assesses the evidence obtained from the third parties to support the conclusion that these valuations meet the requirements of IFRS, including the level in the fair value hierarchy in which the valuations should be classified. The Company regularly reviews significant unobservable inputs and valuation adjustments.

 

When measuring the fair value of an asset or a liability, the Corporation uses observable market data as far as possible. Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:

 

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 (i.e. as prices) or indirectly (i.e. derived from prices).

 

9

 

 

AENZA S.A.A. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2022

 

Level 3: Measurement based on inputs for the asset or liability that are not based on observable market data (i.e. unobservable inputs, generally based on internal estimates and assumptions of the Corporation).

 

If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.

 

The Corporation recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during the period which the change occurred.

 

B. Consolidation of financial statements

 

i. Subsidiaries

 

The Company ‘controls’ an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which control ceases.

 

Business acquisition-related costs are expensed as incurred. Balances, income, and expenses from transactions between Corporation companies are eliminated. Profits and losses resulting from inter-group transactions that are recognized as assets are also eliminated.

 

ii. Business Combinations

 

The Corporation accounts for business combinations using the acquisition method when control is transferred to the Corporation. The consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired. Any goodwill that arises is tested annually for impairment. Any gain on a bargain purchase is recognized in profit or loss immediately. Transaction costs are expensed as incurred.

 

iii. Non-controlling interests

 

For each business combination, the Corporation shall select between measuring the non-controlling interests in the acquiree at fair value or at their proportionate share of the acquiree’s identifiable net assets at the acquisition date. Changes in the Corporation’s interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.

 

iv. Associates

 

Associates are those entities in which the Corporation has significant influence, but not control or joint control, over the financial and operating policies. A joint venture is an arrangement in which the Corporation has joint control, whereby the Corporation has rights to the net assets of the arrangement, rather than rights to its assets and obligations for its liabilities.

 

Interests in associates and the joint venture are accounted for using the equity method. They are initially recognized at cost, which includes transaction costs. Subsequent to initial recognition, the consolidated financial statements include the Corporation’s share of the profit or loss and OCI of equity-accounted investees, until the date on which significant influence or joint control ceases.

 

v. Joint arrangements

 

Under IFRS 11, investments in joint arrangements are classified as either a joint operation or as a joint venture depending upon each investor’s rights and obligations arising from the arrangement. The Corporation has assessed the nature of its joint arrangements and determined that they are joint ventures.

 

Joint ventures are accounted for using the equity method. Under the equity method, interest in joint ventures is initially recognized at cost and adjusted thereafter to recognize the Corporation’s share of post-acquisition profits and losses, as well as movements in other comprehensive income. When the Corporation’s share in the losses of a joint venture equals or exceeds its interest in such joint venture (including any long-term share that is substantially part of the Corporation’s net investment in the joint venture), the Corporation does not recognize additional losses, unless it has assumed obligations or made payments on behalf of the joint ventures.

 

10

 

 

AENZA S.A.A. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2022

 

Unrealized gains on transactions between the Corporation and its joint ventures are eliminated to the extent of the Corporation’s interest in such joint ventures. Unrealized losses are also eliminated, unless the transaction provides evidence of an impairment of the transferred asset. Gains arising from the application of the equity of accounting method are recognized in the consolidated statement of profit or loss and other comprehensive income.

 

In the Corporation, joint operations mainly relate to consortia (entities without legal personality) created for the development of construction contracts. Considering that the only objective of this type of consortium is to develop a specific project, all revenue and costs are included within revenue from construction activities and cost of construction activities, respectively.

 

vi. Changes in ownership interest in a subsidiary that do not result in a loss of control

 

Transactions with non-controlling shareholders that do not result in loss of control are accounted for as equity transactions, i.e. as transactions with owners in their capacity as owners. The difference between the fair value of any consideration paid and the relevant share acquired of the carrying amount of net assets of the subsidiary is recorded in equity. Gains or losses on disposals of shares to non-controlling shareholders are also recorded in equity at the time of disposal.

 

vii. Disposal of subsidiaries

 

When the Corporation loses control of a subsidiary, any interest retained in said entity is remeasured at its fair value at the date it loses control of the subsidiary, and any change in respect to the carrying amount is recognized in profit or loss. Subsequently, said fair value is considered the initial carrying amount for purposes of accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognized in other comprehensive income in respect of that entity are accounted for as if the Corporation had directly disposed of the related assets or liabilities. This means that the amount previously recognized in other comprehensive income could be reclassified to profit or loss for the year.

 

viii. Transactions eliminated on consolidation

 

Intra-group balances and transactions, and any unrealized income and expenses arising from intra-group transactions, are eliminated. Unrealized gains arising from transactions with equity-accounted investees are eliminated against the investment to the extent of the Corporation’s interest in the investee. Unrealized losses are eliminated in the same way as unrealized gains, but only to the extent that there is no evidence of impairment.

 

C. Foreign currency translation

 

i. Functional and presentation currency

 

These consolidated financial statements are presented in soles (S/), which is the Corporation’s functional and presentation currency. All subsidiaries, joint arrangements, and associates use the Peruvian sol as their functional currency, except for foreign subsidiaries, for which the functional currency is the currency of the country in which they operate.

 

ii. Transactions and balances

 

Transactions in foreign currency are translated into functional currency at the exchange rates at the dates of the transactions or the valuation date in the case of items that are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions are recognized in the statement of profit or loss, except when deferred in other comprehensive income. Foreign exchange gains and losses of all monetary items are included in the statement of other comprehensive income under ‘Exchange difference, net’.

 

Exchange differences arising from foreign currency loans granted by the Company to its subsidiaries are recognized in profit or loss both in the consolidated financial statements of the Company and in the separate financial statements of the subsidiaries. In the consolidated financial statements, such exchange differences are recognized in other comprehensive income and are reclassified to profit or loss in the event of the disposal of the subsidiary or debt repayment to the extent such loans qualify as part of the “net investment in a foreign operation.”

 

11

 

 

AENZA S.A.A. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2022

 

iii. Corporation companies

 

The results and financial position of the Corporation entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the Corporation’s presentation currency are translated into the presentation currency as follows:

 

(i)assets and liabilities for each statement of financial position are translated at the closing rate at the date of that consolidated statement of financial position;
   

(ii)income and expenses for each statement of profit or loss are translated at the average exchange rate (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate prevailing on the date of the transaction);
   

(iii)capital is translated by using the historical exchange rate for each capital contribution made; and
   

(iv)all resulting exchange differences are recognized as separate components in other comprehensive income, under ‘Translation of net investment in foreign operations’.

 

Goodwill and fair value adjustments arising from the acquisition of a foreign operation are treated as assets and liabilities of the foreign entity and are translated at the closing exchange rate. Exchange differences are recognized in other comprehensive income.

 

D. Operating segments

 

Operating segments are reported in a manner consistent with the internal reporting provided to the Corporation’s Management.

 

If there are changes in the internal organization in a manner that causes the identification of operating segments to change, the Corporation shall restate the comparative information for earlier periods unless the information is not available.

 

E. Public service concessions

 

Concession agreements entered into between the Corporation and the Peruvian government whereby the Corporation, acting in its capacity as concessionaire, assumes obligations for the construction and improvement of infrastructure, and which qualify as public service concessions are accounted as defined by IFRIC 12 Service Concession Arrangements. Under these arrangements, the government controls and regulates the infrastructure services provided by the Company and establishes to whom these services are to be provided and at what prices. The concession agreement establishes the obligation to return the infrastructure to the grantor at the end of the concession term or when there is any expiration event. This feature gives the grantor the control over the risks and rewards of the residual value of the assets at the end of the concession term. For this reason, the Company will not recognize infrastructure as part of its premises, plant, and equipment. The consideration to be received from the Peruvian government for public infrastructure construction or improvement activities is recognized as a financial asset, intangible asset, or both, as set forth below:

 

i.It is recognized as a financial asset to the extent that it has an unconditional contractual right to receive cash or another financial asset either because the government guarantees to pay specified or determinable amounts or because the government covers the shortfall between the amounts received, as concessionaire, from users of the public service and specified or determinable amounts. These financial assets are initially recognized at fair value, and, subsequently, at amortized cost (financial asset model).

 

ii.It is recognized as an intangible asset to the extent that the agreement provides the Corporation with a contractual right to charge users for public services rendered. The resulting intangible asset measured at cost is amortized as described in Note 2.M (intangible asset model).

 

iii.It is recognized as a financial asset and an intangible asset when the Corporation is paid partly by a financial asset and partly by an intangible asset (bifurcated model).

 

12

 

 

AENZA S.A.A. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2022

 

F. Financial instruments

 

i. Recognition and initial measurement

 

Trade accounts receivable are initially recognized when they are originated. All other financial assets and financial liabilities are initially recognized when the Corporation becomes a party to the contractual provisions of the instrument.

 

A financial asset (unless it is a trade account receivable without a significant financing component) or financial liability is initially measured at fair value plus, for an item not measured at fair value through profit or loss (FVTPL), transaction costs that are directly attributable to its acquisition or issue. An account receivable without a significant financing component is initially measured at the transaction price.

 

ii. Classification and subsequent measurement

 

Financial assets

 

On initial recognition, assets are classified as measured at amortized cost or Fair Vale Through Profit and Loss (“FVTPL”). The classification depends on the purpose for which the financial assets were acquired based on the Company’s business model for managing the financial assets and the characteristics of the contractual cash flows of the financial asset.

 

Management determines the classification of its financial assets at the date of initial recognition and reevaluates this classification as of the date of each consolidated financial statement closing. As of December 31, 2021 and 2022, the Company only holds financial assets at amortized cost.

 

A financial asset is measured at amortized cost if both of the following conditions are met and is not measured at FVTPL:

 

-It is held within a business model whose objective is to hold the financial assets to collect contractual cash flows; and
   
-Its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

 

All financial assets not classified as measured at amortized cost or fair value through other comprehensive income as described above are measured at FVTPL. This includes all derivative financial assets that are not cash flow hedge. On initial recognition, the Corporation may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortized cost or at fair value through other comprehensive income as at FVTPL if doing so eliminates or significantly reduces an accounting mismatch or recognition that would otherwise arise.

 

Subsequent measurement and gains and losses:

 

Financial assets at FVTPL

These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognized in profit or loss.

   
Financial assets at amortized cost

These assets are subsequently measured at amortized cost using the effective interest method. The amortized cost is reduced by impairment losses. Interest income, foreign exchange gains and losses, and impairment are recognized in profit or loss. Any gain or loss on derecognition is recognized in profit or loss.

   
Debt investments at FVOCI These assets are subsequently measured at fair value. Interest income calculated using the effective interest method, foreign exchange gains and losses and impairment are recognized in profit or loss. Other net gains and losses are recognized in OCI. On derecognition, gains and losses accumulated in OCI are reclassified to profit or loss.

 

The Corporation classified its financial assets at amortized cost.

 

Financial liabilities

 

Financial liabilities are classified as measured at amortized cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held-for-trading, it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, and are recognized in profit or loss. Other financial liabilities are subsequently measured at amortized cost using the effective interest method. Interest income and foreign exchange gains and losses are recognized in profit or loss. Any gain or loss on derecognition is also recognized in profit or loss.

 

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AENZA S.A.A. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2022 

 

iii. Derecognition

 

Financial assets

 

The Corporation derecognizes a financial asset when the contractual rights to the cash flows from financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred, or it neither transfers nor retains substantially all of the risks and rewards of ownership and does not retain control over the transferred asset.

 

The Corporation enters into transactions whereby it transfers assets recognized in its consolidated statement of financial position, but retains either all or substantially all of the risks and rewards of the transferred assets. In these cases, the transferred assets are not derecognized.

 

Financial liabilities

 

The Corporation derecognizes a financial liability when its contractual obligations are discharged or canceled, or expire. The Corporation also derecognizes a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognized at fair value.

 

On derecognition of a financial liability, the difference between the carrying amount extinguished and the consideration paid (including any non-cash assets transferred or liabilities assumed) is recognized in profit or loss.

 

iv. Offsetting

 

Financial assets and financial liabilities are offset, and the net amount presented in the consolidated statement of financial position when, and only when, the Corporation currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realize the asset and settle the liability simultaneously.

 

v. Derivative financial instruments and hedge accounting

 

The Corporation considers a financial asset to be nonperforming when contractual payments are more than 365 days past due. However, in certain cases, the Corporation may consider a financial asset to be nonperforming when internal or external information indicates that it is unlikely that the contractual amounts due will be received before the Corporation executes the guarantees received. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.

 

Derivatives are initially measured at fair value. Subsequent to initial recognition, derivative financial instruments are measured at fair value, and changes therein are generally recognized in profit or loss. The Corporation designates certain derivatives as hedging instruments to hedge the variability in cash flows associated with highly probable forecast transactions arising from changes in foreign exchange rates and interest rates.

 

At inception of designated hedging relationships, the Corporation documents the risk management objective and strategy for undertaking the hedge. The Corporation also documents the economic relationship between the hedged item and the hedging instrument, including whether the changes in cash flows of the hedged item and hedging instrument are expected to offset each other.

 

As of December 31, 2021 and 2022, the Corporation does not hold derivative financial instruments.

 

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AENZA S.A.A. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2022

 

G. Impairment

 

i. Financial assets

 

Financial instruments and contract assets

 

The Corporation considers a financial asset to be nonperforming when contractual payments are more than 365 days past due. However, in certain cases, the Corporation may consider a financial asset to be nonperforming when internal or external information indicates that it is unlikely that the Corporation will receive the contractual amounts due before the Company executes the guarantees received. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.

 

IFRS 9 Financial Instruments requires that expected credit losses be recorded for all financial assets, except those carried at FVTPL, estimating them over twelve months or over the lifetime of the financial instrument (“lifetime”). Under this standard, the Company applies the general approach for trade and other accounts receivable, which requires assessing whether credit risk has significantly increased to determine whether the loss shall be estimated based on 12 months after the reporting date or during the lifetime of the asset.

 

Loss allowances for trade receivables are always measured at an amount equal to lifetime expected credit loss (“ECL’s”). When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECLs, the Corporation considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Corporation’s historical experience and informed credit assessment, loss of the time value of money and individual analysis of the clients (considering their geographical location).

 

At each reporting date, the Corporation assesses whether financial assets carried at amortized cost are credit-impaired. A financial asset is ‘credit-impaired’ when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.

 

Evidence that a financial asset is credit-impaired includes the following observable data:

 

significant financial difficulty of the issuer or debtor;

 

a breach of contract such as a default or being more than 90 and 180 days past due;

 

it is probable that the debtor will enter bankruptcy or other financial reorganization; or

 

the disappearance of an active market for a security because of financial difficulties.

 

For financial assets for which the Company has no reasonable expectation of recovering either all or a portion of the outstanding amount, the gross carrying amount of the financial asset is reduced. This is considered a (partial) derecognition of the financial asset.

 

The gross carrying amount of a financial asset is written off when the Corporation has no reasonable expectations of recovering a financial asset in its entirety or a portion thereof. For individual customers and for corporate customers, the Corporation individually makes an assessment with respect to the timing and amount of write-off based on whether there is a reasonable expectation of recovery. The Corporation expects no significant recovery from the amount written off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Corporation’s procedures for recovery of amounts due.

 

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AENZA S.A.A. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2022

 

ii. Non-financial assets

 

At each reporting date, the Corporation reviews the carrying amounts of its non-financial assets (other than investment property, inventories and deferred tax assets) to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. Goodwill and intangible assets with an indefinite useful life are tested annually for impairment.

 

For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or Cash Generating Unit’s (“CGU”). Goodwill arising from a business combination is allocated to CGU or group of CGUs that are expected to benefit from the synergies of the combination.

 

The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, discounted to their present value using an after-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. An impairment loss is recognized if the carrying amount of an asset or CGU exceeds its recoverable amount.

 

Impairment losses are recognized in profit or loss. They are allocated first to reduce the carrying amount of any goodwill allocated to the CGU, and then to reduce the carrying amounts of the other assets in the CGU on a pro rata basis.

 

An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

 

H. Cash and cash equivalents

 

In the consolidated statement of financial position and cash flows, cash and cash equivalents include cash on hand, demand deposits with banks, other highly liquid investments with maturities of three months or less and bank overdrafts. In the consolidated statement of financial position, bank overdrafts are included in the balance of other financial liabilities as current liabilities.

 

I. Trade accounts receivable

 

Trade accounts receivable are amounts due from customers for goods or services sold by the Corporation. If any trade account receivable is expected to be collected within one year, it is classified as current; otherwise, it is classified as non-current.

 

Trade accounts receivable are initially recognized at transaction value, and subsequently, they are measured at amortized cost using the effective interest method, less any provision for impairment, except for trade accounts receivable of less than one year that are recorded at face value which is similar to their fair values due to their short-term maturity.

 

It includes Management’s estimates corresponding to collection rights for services performed but not yet invoiced and/or approved by client, which have been valued using the percentage of completion method. It corresponds mainly to the Engineering and Construction segment (subsidiaries Cumbra Peru S.A. and Cumbra Ingenieria S.A.). In the Infrastructure segment, concerning concessions, it corresponds to future collections for public services, mainly represented by unconditional contractual rights to be received from the Grantor under the financial asset model (Note 2.E)

 

J. Inventories

 

The inventories include land, work-in-progress and finished buildings related to the real estate activity, materials used in the construction activity, and supplies traded as part of the exploration and extraction activity.

 

i. Real Estate Activity

 

Land used for the execution of real estate projects is recognized at acquisition cost. Work-in-progress and finished real estate include the costs of design, materials, direct labor, borrowing costs (directly attributable to the acquisition, construction, production of the qualifying asset), other indirect costs, and general expenses related to the construction.

 

The lands used for real estate projects with launch date in future periods are presented as non-current asset.

 

16

 

 

AENZA S.A.A. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2022

 

Net realizable value is the estimated selling price in the ordinary course of business, less applicable selling expenses. Annually, the Corporation reviews whether inventories have been impaired identifying three groups of inventories to measure their net realizable value: i) land bought for future real estate projects which are compared to their appraisal value, if the acquisition value is higher, a provision for impairment is recognized; ii) land under construction: in this case impairment is measured based on cost projections; if these costs are higher than selling prices of each real estate unit, an estimate for impairment is recorded; and iii) finished real estate units: these inventory items are compared to the selling prices less commercialization costs; if they are higher, a provision for impairment is recorded.

 

For the reductions in the carrying amount of these inventories to their net realizable value, a provision is recognized for impairment of inventories with a charge to profit or loss for the year in which those reductions occur.

 

ii. Exploration and extraction activities

 

Inventories are valued at the lower of production costs and net realizable value (“NRV”), on the basis of the weighted average method. The NRV represents the value at which it is estimated to realize oil, gas and its derivatives LPG and Saturated Acyclic Hidrocarbons, which is calculated on the basis of international prices less the discounts usually granted. Miscellaneous supplies, materials, and spare parts are valued at the lower of cost and replacement value, based on the average method. The cost of inventories excludes financing expenses and exchange differences. Inventories in transit are recorded at cost, using the specific identification method.

 

The Corporation registered a provision for materials impairment to profit and loss for the cases in which book value exceeds recoverable value.

 

iii. Other activities

 

Materials and supplies are recorded at the lower of cost (by the weighted average method) and their replacement cost. The cost of these items includes freight and non-refundable applicable taxes.

 

Impairment of these items is estimated on the basis of specific analyses performed by Management on their turnover. If it is identified that the carrying amount of inventories of materials and supplies exceeds their replacement value, the difference is charged to profit or loss in the period in which this situation is determined.

 

Management considers that, as of the date of the consolidated financial statements, it is not necessary to record provisions additional to those recognized in the financial statements to cover losses due to obsolescence of these inventories.

 

K. Investment properties

 

Investment properties are shown at cost less their accumulated depreciation and impairment losses, if any. Subsequent costs attributable to investment properties are capitalized only if it is probable that future economic benefits will flow to the Company and the cost of these assets can be measured reliably; otherwise, they are recognized as expenses when incurred.

 

Maintenance and repair expenses are recognized in profit or loss in the period when they are incurred. If the carrying amount of a property is greater than its estimated recoverable amount, it is immediately reduced to its recoverable amount.

 

Depreciation is calculated under the straight-line method at a rate that is considered sufficient to absorb the cost of assets at the end of the useful life and considering their significant components, with substantially different useful lives (each component is accounted for separately for depreciation purposes and is depreciated over its separate useful life). The estimated useful lives of those properties range from 5 to 50 years.

 

These investment properties have been leased under operating leases to third parties.

 

L. Property, plant, and equipment

 

i. Recognition and measurement

 

These assets are stated at historical cost less accumulated depreciation and accumulated losses, if any. Historical cost includes expenditure that is directly attributable to the acquisition of these items.

 

Assets under construction are capitalized as a separate component. Upon completion, the cost of these assets is transferred to their definitive category. Replacement units are assets whose depreciation begins when units are installed for use within the related asset.

 

ii. Subsequent expenditure

 

Subsequent expenditures are included in the carrying amount of the asset or they are recognized as a separate asset, as appropriate, only when it is probable that future economic benefits will flow to the Corporation, or are likely to extend the estimated useful life of the asset, and the cost of these assets can be measured reliably. Maintenance and repair expenses are presented in the consolidated statement of profit or loss in the period when incurred.

 

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AENZA S.A.A. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2022

 

iii. Depreciation

 

Depreciation is calculated using the straight-line method based on the estimated useful life of the asset. The estimated useful lives are as follows:

 

  Years
Buildings and premises 3 to 50
Machinery and equipment 2 to 20
Vehicles 2 to 10
Furniture and fixtures 2 to 10
Other equipment 2 to 10

 

Depreciation of machinery and equipment, and vehicles recognized as “Major equipment” is calculated based on their hours of use. Under this method, the total number of hours that the machinery and equipment can operate is estimated and an hourly value is established.

 

The residual value and the useful life of an asset are reviewed and adjusted, if necessary, at year-end. Profit or loss for the sale of assets are recognized in ‘Other income and expenses’ in the statement of profit or loss. Regarding joint operations that carry out construction activities, the difference between the proceeds from disposals of fixed assets and their carrying amount is shown within ‘Revenue from construction activities’ and ‘cost of construction activities’, respectively.

 

M. Intangible assets

 

i. Goodwill

 

Goodwill arises on the acquisition of subsidiaries and represents the excess of the purchase consideration, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of the acquirer’s previously held equity interest in the acquiree over the fair value of the net identifiable assets. If the purchase consideration, the amount of any non-controlling interest in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree is lower than the fair value of the net assets of the acquired subsidiary, then the difference is recognized in the statement profit or loss.

 

Goodwill arising from a business combination is allocated to each cash-generating unit (CGU), or group of CGUs, that are expected to benefit from the business combination. Goodwill is monitored at the operating segment level.

 

Goodwill is tested for impairment at least annually or more often if there is evidence of impairment. Any impairment is recognized as an expense in ‘Other income and expenses’ and cannot be reversed later.

 

ii. Trademarks

 

Separately acquired trademarks are shown at historical cost. Trademarks acquired in a business combination are recognized at fair value at the acquisition date. Management has determined that these trademarks have indefinite useful lives.

 

The trademark is tested for impairment at least annually or more often if there is evidence of impairment. Any impairment is recognized as an expense in ‘Other income and expenses, net’. The carrying amount written off due to impairment is reviewed at each reporting date to verify possible reversals of the impairment and is recognized in ‘Other income and expenses’.

 

iii. Concession rights

 

The intangible asset related to the right to charge users for the services covered by the concession (Notes 2.E and F) is initially recorded at the fair value of construction or improvement services and, prior to the beginning of amortization, an impairment test is performed; it is amortized using the straight-line method, from the date revenue from services starts using the effective period of the concession agreement.

 

iv. Contractual customer relationships

 

Contractual customer relationships are assets resulting from business combinations that were initially recognized at fair value, determined on the basis of the present value of the expected net cash flows from such relationships, over a period of time based on the estimated customer tenure (the estimation of useful life is based on the contract terms which fluctuates between 5 and 9 years). The useful life and the estimate of impairment of these assets are individually assessed.

 

v. Cost of well development

 

Costs incurred during the development phase associated with the preparation of the wells for the extraction of hydrocarbons from the lots located in Talara, are capitalized as part of intangible assets. These costs are amortized over the useful lives of the wells (estimated in remaining periods for Lots I and V and the unit-of-production method for Lots III and IV), until the end of the term of the contracts with Perupetro. The Lot I contract expired in 2021 and Lot V contract will expire in 2023.

 

18

 

 

AENZA S.A.A. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2022

 

The Corporation has established the Successful Efforts Method as its policy for the recognition and evaluation of exploration oil assets. During 2021, an exploratory well was drilled in Block IV, obtaining successful results. In 2022, no exploratory well drilling activities were carried out.

 

vi. Software

 

Software development costs that are directly attributable to the design and testing of identifiable and unique software controlled by the Corporation are recognized as intangible assets when the following criteria are met:

 

it is technically feasible to complete the software so that it will be available for use;

 

Management has the intention to complete the software and use or sell it;

 

there is an ability to use or sell the software;

 

it can be demonstrated that the software is likely to generate future economic benefits;

 

the technical, financial and other resources necessary to complete the development of the software to enable its use or sale are available; and

 

expenses attributable to the software during its development can be reliably measured.

 

Other development costs that do not meet these recognition criteria are recognized in profit or loss as incurred. Development costs previously recognized as an expense are not recognized as an asset in a subsequent period. Software development costs recognized as assets are amortized over their estimated useful lives, which range from 2 to 12 years.

 

vii. Surface rights

 

It refers to the rights held by the subsidiary Promotora Larcomar S.A. Land use rights are stated at historical cost less amortization and any accumulated impairment losses. The useful life of the surface rights is 60 years according to the signed contract and may be extended if agreed by parties. Amortization will begin when it becomes ready for its intended use by Management.

 

N. Trade accounts payable

 

Trade accounts payable are obligations to pay for goods or services acquired from suppliers in the ordinary course of business. Accounts payable are classified as current liabilities if payment is to be made in a year or less (or in the normal operating cycle of the business if it is higher); otherwise, they are presented as non-current liabilities.

 

Accounts payable are initially recognized at fair value, and subsequently, they are measured at amortized cost using the effective interest method, except for trade accounts payable of less than one year that are recorded at face value which is similar to their fair values due to their short-term maturity.

 

O. Financial liabilities at FVTPL

 

Financial liabilities designated at initial recognition at FVTPL are designated at the initial recognition date, and only if the criteria of IFRS 9 are met. The Corporation does not maintain financial liabilities at fair value.

 

P. Other financial liabilities

 

They correspond to loans and bonds issued by the Corporation, which are initially recognized at their fair value, net of transaction costs incurred. These financial liabilities are subsequently recorded at amortized cost. Any resulting difference between the funds received (net of transaction costs) and the redemption value is recognized in the statement of profit or loss during the loan term using the effective interest method.

 

Costs incurred to obtain these financial liabilities are recognized as transaction costs to the extent that it is probable that a part or the whole loan will be received. In this case, these charges defer until the loan is received.

 

Q. Borrowing costs

 

Borrowing costs are recognized in profit or loss in the period in which they have been incurred, except for intangible assets and inventories in which the borrowing costs are capitalized.

 

19

 

 

AENZA S.A.A. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2022

 

General and specific borrowing costs directly attributable to acquisitions, construction or development of qualifying assets, which are assets that necessarily take a substantial period of time (more than twelve months) to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. The Corporation suspends the capitalization of borrowing costs during the periods in which the development of activities of a qualifying asset has been suspended. The income obtained from the temporary investment of specific borrowings that have not yet been invested in qualifying assets is deducted from the borrowing costs eligible for capitalization.

 

R. Current and deferred income tax

 

Income tax of the period comprise current and deferred income tax. Tax is recognized in the statement of profit or loss, except to the extent that it relates to items recognized in the statement of other comprehensive income or directly in equity. In this case, the tax is also recognized in the statement of other comprehensive income or directly in equity, respectively.

 

The current tax is calculated on the basis of the tax laws enacted at the date of the statement of financial position in the countries where the Company and its subsidiaries operate and generate taxable income. Management, where applicable, makes provisions on the amounts expected to be paid to the tax authorities.

 

A provision is recognized for those matters for which the determination of taxes is uncertain, but it is considered probable that there will be a future outflow of economic resources to a tax authority. Provisions are measured at the best estimate of the amount expected to be paid. The assessment is based on the tax judgment of professionals within the Company supported by prior experience in relation to such activities and in certain cases based on specialized independent tax advice.

 

Deferred income tax is recognized on temporary differences arising from tax basis of assets and liabilities, and their balances in consolidated financial statements. A deferred income tax asset is only recognized to the extent that it is probable that future taxable profits will be available, against which temporary differences can be utilized. Deferred income tax is determined using tax rates and legislation enacted as of the date of the consolidated statement of financial position that are expected to be applied when the deferred tax is realized or paid. A deferred tax asset is only recognized so far as it is probable that there would be future tax benefits against which temporary differences can be utilized.

 

Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except for deferred tax liability where the timing of the reversal of the temporary difference is controlled by the Corporation and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax arising from the initial recognition of goodwill is not recognized; likewise, the deferred tax is not recorded if it arises from the initial recognition of an asset or liability in a transaction that is not a business combination that does not affect the accounting or tax profit or loss at the time of the transaction.

 

S. Employee benefits

 

The Corporation recognizes a liability when the employee has rendered services in exchange for which is entitled to receive future payments and an expense when the Corporation has consumed the economic benefit from the service rendered by the employee in exchange for the benefits in question.

 

The Corporation determines employee benefits in accordance with current labor and legal regulations and classifies them as short-term benefits, long-term benefits, and termination benefits.

 

Short-term benefits are those other than severance indemnities, the payment of which is settled in the twelve months following the end of the period in which the employees have rendered their services; they correspond to current compensation (wages, salaries, and social health contributions), annual and sick leave, profit sharing and incentives and other non-monetary benefits.

 

Long-term benefits are those benefits to be paid more than twelve months after the end of the period in which the services have been rendered. As of December 31, 2021 and 2022, the Corporation did not grant benefits under this category.

 

20

 

  

AENZA S.A.A. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2022

 

Termination benefits are those benefits payable as a result of: (i) the entity’s decision to terminate the employee’s contract before the retirement date, and (ii) the employee’s decision to voluntarily accept the termination of the employment relationship.

 

i. Short-term benefits

 

Current compensation

 

Current compensation consists of wages, salaries, social health contributions, legal bonuses and compensation for length of service (CTS, for its Spanish acronym). Wages, salaries and social health contributions are paid monthly based on the consideration for services rendered.

 

The Corporation entities recognizes the expense for legal bonuses and their related liabilities under laws and regulations currently in force in Peru, Chile, and Colombia. In Peru, legal bonuses correspond to two monthly payments which are accrued based on the consideration for the service. There are no legal bonuses in Chile; in Colombia, it is called service bonus and corresponds to a monthly remuneration per year.

 

Compensation for length of service (CTS) corresponds to the employee’s indemnity rights which are accrued based on the consideration for the service rendered calculated in accordance with the legislation in force in each country where the entities comprising the Corporation operate. They are determined as follows: (i) in Peru, it is equivalent to half the compensation in force at the date of payment and is made through deposit in bank accounts designated by the workers in the months of May and November of each year; (ii) in Colombia, it is equivalent to 8.33% of the monthly remuneration, and (iii) in Chile this benefit is not available.

 

Annual paid absences

 

Personnel’s annual vacations are recognized on an accrual basis. The provision for estimated liability corresponding to personnel’s annual vacations, resulting from services rendered by the employees, is recorded on the date of the statement of financial position and corresponds to: (i) one month for personnel in Peru, (ii) fifteen days for personnel in Colombia, and (iii) in the case of Chile, they are subject to the worker’s seniority and range from fifteen to thirty days.

 

Profit sharing and incentives

 

The workers’ profit sharing is determined on the basis of the legal provisions in force in each country where the entities of the Corporation operate, as follows: (i) in Peru, it is equivalent to 5% of the taxable base determined by each Company of the Corporation, in accordance with current income tax legislation, (ii) in Chile, workers’ profit sharing is a component of the remuneration (equivalent to 4.75 minimum wages per year) or 10% of the profit, to be determined by the employer, (iii) in Colombia, these benefits are not provided to employees.

 

ii.Termination benefits

 

The Corporation entities recognize liabilities and expenses for severance indemnities when they occur, based on the legal provisions in force in each country. Under Peruvian law, compensation for arbitrary dismissal for personnel with indefinite-term contracts is 1.5 times the monthly compensation for each year worked, up to a maximum of twelve monthly compensations.

 

Under Colombian legislation, for the first year worked, the equivalent of 30 days of salary is granted, and from the second year on, the compensation will be the equivalent of 20 days of salary for each additional year (or the proportion); under the legislation of Chile, the employee receives a compensation of thirty days of monthly salary for each year worked with a maximum of 330 days.

 

T. Other provisions

 

Provisions are recognized when the Corporation has a present obligation, either legal or constructive, as a result of past events, and when it is probable that an outflow of resources will be required to settle the obligation and it is possible to reliably estimate its amount. Provisions are reviewed at the end of each period. If the time value of money is significant, provisions are discounted using a pre-tax rate that reflects, when appropriate, specific risks of liabilities. The reversal of the discount due to the passage of time results in an increase of the obligation which is recognized with a charge to the statement of profit or loss as a finance cost.

 

21

 

 

AENZA S.A.A. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2022

 

Contingent obligations are disclosed when their existence will only be confirmed as a result of future events or when the amount cannot be measured reliably. Contingent assets are not recognized and are disclosed only if it is probable that the Corporation will generate economic benefits in the future.

 

Provision for the closure of oil production wells

 

Subsidiary Unna Energia S.A. recognizes a provision for the closure of operating units that correspond to the legal obligation to close oil production wells once the production phase has been completed. At the initial date of recognition, the liability that arises from said obligation is measured at fair value and discounted to present value, following the valuation techniques established in IFRS 13 Fair Value Measurement; accordingly, the same amount is simultaneously charged to the intangible account in the statement of financial position.

 

Subsequently, the liability will increase in each period to reflect the financial cost considered in the initial measurement of the discount, and the capitalized cost will be depreciated based on the useful life of the related asset. When a liability is settled, the subsidiary recognizes any gain or loss that may arise. The fair value changes estimated for the initial obligation and interest rates are recognized as an increase or decrease in the carrying amount of the obligation and related asset, according to IFRIC 1 Changes in Existing Decommissioning, Restoration and Similar Liabilities. Any reduction in this provision, and therefore, any reduction in the related assets which exceeds the carrying amount of the asset, will be immediately recognized in the statement of comprehensive income.

 

If the review of the obligation resulted in the need to increase the provision, and as a result, the carrying amount of the related asset also increases, the subsidiary takes into account whether this increase corresponds to an indication that the asset has become impaired and if so, impairment tests will be conducted (Note 2.G).

 

U. Put option arrangement

 

In the case of a put option contract on the equity of a subsidiary that allows the shareholder to reallocate its shares in a certain period, the amount payable under the option is initially recognized at the present value of the reimbursement under ‘Other accounts payable’, directly charged to equity. The charge to equity is recorded separately as put options subscribed on the non-controlling interest.

 

Subsequently, the financial liability is updated by changes in the assumptions on which the estimation of the expected cash flows is based and by the financial component due to the passage of time. The effects of this update are recognized in profit and loss.

 

In 2021, Cumbra Peru S.A. acquired the entire non-controlling interest of the subsidiary Morelco S.A.S. As of December 31, 2022, Cumbra Peru S.A. the liability was totally paid.

 

V. Capital

 

Common shares are classified as equity and are determined using the par value of the shares that have been issued.

 

Incremental costs directly attributable to the issuance of new shares or options are shown in equity as a deduction of the received amount, net of taxes.

 

W. Revenue from contracts with customers

 

Revenues from contracts with customers are recognized, for each performance obligation, either during a period of time or at a point in time, depending on which method best reflects the transfer of control of the underlying products or services to the obligation of particular performance with the customer.

 

The Corporation recognizes the revenue through the application of the five steps defined in the regulations: i) identifying the contract with the customer; ii) identifying performance obligations in the contract; iii) determining the transaction price; iv) allocating the transaction price to performance obligations; and v) recognizing revenue when (or as) a performance obligation is satisfied.

 

The following describes the Corporation’s policy of recognition for each type of revenue in line with IFRS 15:

 

i. Engineering and construction

 

Revenues from engineering and construction (E&C) contracts are recognized over time as the customer simultaneously receives and consumes the benefits provided by the Corporation’s performance, the Corporation’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced; and the Corporation’s performance does not create an asset with an alternative use. For these reason, the Corporation accounts for revenue over time by measuring the progress towards complete satisfaction of its performance obligations under each contract.

 

22

 

 

AENZA S.A.A. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2022

 

The Corporation applies the output method to measure the physical percentage-of-completion which is based on surveys of projects performance by the Corporation’s experts. The Corporation considers this method depicts the transfer of control of the goods or services to the customers, as it reflects also an enforceable right to payment by the Corporation for work performed to date.

 

The Corporation assesses whether one or more of the following factors has been satisfied: a) the contract, applicable law or other evidence provides a legal basis for the modification; b) additional costs were caused by circumstances that were unforeseen on the date of execution of the contract and not a result of deficiencies incurred by the Corporation’s performance; c) modification-related costs are identifiable and considered reasonable in view of the work performed; or d) evidence supporting the modification is objective and verifiable. When one or more of the foregoing factors is satisfied, the changes to the rights and obligations in the contract modification are considered by the Corporation to be enforceable.

 

The nature of some contracts, such as cost plus fee contracts, unit price contracts or similar contracts give rise to variable consideration that may include reimbursable costs, incentives and penalties. To include variable consideration related to a contract modification in the estimated transaction price, the Corporation must conclude that it is “highly probable” that a significant revenue reversal will not occur. The Corporation determines the likelihood of revenue reversal occurring (and therefore whether such price will be recovered) based on an analysis of whether any of the following factors are present: i) contractual entitlement; ii) past practice with the customer; iii) specific discussions or preliminary negotiations with the customer; or iv) verbal approval by the customer. If, as a result of such analysis, the Corporation concludes that it is “highly probable” that there will not be a significant reversal of the amount of revenue recognized, it recognizes the variable consideration relating to the contract modification. When the benefit of the contract cannot be reliably estimated, the associated revenue is recognized to the extent that the costs incurred are recoverable. Revenue is invoiced upon receipt of customer approval.

 

When it is probable that total contract costs will exceed the related revenue, the expected loss is recognized immediately.

 

The Corporation estimates the amount of revenue to be recognized as variable consideration using judgments and estimates to determine the most probable value, which is expected to best predict the amount of consideration to which the Corporation will be entitled.

 

ii. Real-estate

 

Sale of real estate - urban and industrial lots

 

Revenue from real estate sale contracts is recognized when control over the property has been transferred to the client with the delivery record. Revenue is measured based on the price agreed under the contract. Until this is met, the revenue received will be counted as customer advances. These sales contracts have two performance obligations: i) the one corresponding to the transfer of the property, which includes the common areas of the building where these real estates are located, and ii) the one corresponding to the transfer of the common area outside the real estate assets but that are part of the real estate projects, which are recognized when the common area has been delivered.

 

Sale of urban lots

 

Revenue related to sales of urban lots is recognized when control over the property is transferred to the customer. Until this is met, the revenue received will be counted as customer advances. Revenue is measured based on the transaction price agreed under the contract. These sales contracts have a single performance obligation for the sale of lots, which is executed upon delivery of the sale of the assets.

 

23

 

 

AENZA S.A.A. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2022

 

Sale of industrial lots

 

Revenue related to sales of industrial lots is recognized when control over the property has been transferred to the customer. Until this is met, the revenue received will be counted as customer advances. These sales contracts have two performance obligations: i) transfer of the industrial lot and ii) urban authorization of the industrial lot.

 

iii. Energy

 

Revenues from services rendered for oil and gas extraction, storage and dispatch of fuels and other services

 

Revenues from the rendering of oil and gas extraction, fuel storage and dispatch and other services rendered are recognized when the full specific service is provided, calculating the service actually provided as a portion of the total services to be provided. This type of revenue has a single performance obligation, that is performed when the service is provided at a point in time.

 

Revenues from sale of oil and oil byproducts

 

Revenue from the sale of oil and byproducts is recognized when the control of the assets is transferred to the customer, which is when the goods are delivered. In this type of revenue, there is a single performance obligation for the sale of oil and byproducts which is enforced at the delivery of the goods.

 

iv. Infrastructure

 

Revenue from concession services

 

Revenue from concession services corresponds to operation and maintenance services and is recognized according to its nature in the period in which the service is provided. In this type of revenue, there is a single performance obligation, enforced when the service is provided.

 

Revenues from toll collection

Revenues generated by Red Vial 5 S.A. from toll collection through vehicle control booths are grouped in three different toll stations, located along the Ancon - Huacho - Pativilca road sections. This type of transactions are recognized at a point of time due to the control is transferred to the time of toll collection.

 

X. Cost and expense recognition

 

Engineering and construction contracts

 

Contract costs include all the incurred direct costs such as materials, labor, subcontracting costs, manufacturing and supply costs of equipment, start-up costs, depreciation and amortization, and indirect costs. Periodically, the Company evaluates the reasonableness of the estimates used in the determination of the total estimated contract cost of the contract. If, as a result of this evaluation, the total estimated cost of the project exceeds expected revenues, an adjustment is made in order to reflect onerous contract and the corresponding effect in profit or loss of the period in which the loss is incurred.

 

Cost for sale of oil and byproducts

 

The costs of services provided, and the costs of sales of oil and byproducts are recognized when incurred, which in this case are incurred at the same time that related revenue is recognized. Other costs and expenses are recognized as they accrue, regardless of the moment when they are paid, and are recorded in the accounting periods to which they relate.

 

Cost for concession operation services

 

The costs for operation and maintenance services are recognized when incurred, at the same time that related revenue is recognized. Other costs and expenses are recognized as they accrue, regardless of the moment when they are paid, and are recorded in the accounting periods to which they relate.

 

Y. Leases

 

Lease contracts are analyzed for the purpose of identifying those containing the characteristics specified in IFRS 16 Leases for recognition, measurement, presentation and disclosure.

 

24

 

 

AENZA S.A.A. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2022

 

The Corporation evaluates in every lease contract the following:

 

If it conveys the right to control the use of an identified asset;

 

If the contract term is longer that twelve months;

 

If the underlying asset amount is a material amount, and,

 

That the fees to be paid are not entirely variable.

 

Leases in which the Corporation is a lessee

 

The Corporation recognizes a right-of-use asset and a lease liability at the lease commencement date.

 

The right-of-use asset is initially measured at the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred. The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the end of the lease term. The term of the lease includes the periods covered by an option to extend the contract if the Corporation is reasonably sure to exercise that option.

 

The lease liability is the total unpaid installments, measured at amortized cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Corporation’s estimate of the amount expected to be payable under a residual value guarantee, or if the Corporation changes its assessment of whether it will exercise a purchase, extension or termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset.

 

In the engineering and construction segment, interest expenses related to leasing contracts of the core business are reported in gross margin; the rest of the Corporation segments reports them in finance expenses.

 

Operating cash flows will be greater since cash payments for the main portion of the lease debt are classified within the financing activities. Only the portion of the payments that reflects interest can continue to be presented as operating cash flows.

 

Leases in which the Corporation is a lessor

 

Operating leases and assets are included in the consolidated statement of financial position according to the nature of the asset. Revenues from operating leases are recognized on a straight-line basis over the term of the lease agreement and the incentives granted to lessees are reduced from rental income. Accordingly, the Corporation, as lessor, has not changed the recognition of its leases.

 

Z. Dividend distribution

 

Dividend distribution to the shareholders is recognized as a liability in the financial statements in the period in which dividends are approved.

 

25

 

 

AENZA S.A.A. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2022

 

AA. Immaterial corrections of previously reported balances as of December 31, 2021

 

In connection with the preparation of its consolidated financial statements, the Corporation identified an error in the interpretation and application of the accounting treatment of revenue and cost recognition arising from contracts with customers in the engineering and construction segment in prior years. Management of the Corporation has evaluated and concluded that the correction of this error has resulted in non-material adjustment to the net income previously reported in the consolidated financial statements as of December 31, 2021. It should be noted that the aforementioned adjustments had no impact on total cash flows from operating, investing or financing activities.

 

A reconciliation between the previously reported amounts and the revised amounts as of December 31, 2021, and for the year then ended is presented below:

 

Consolidated Statement of Financial Position:

 

   As of December 31, 2021 
   Reported   Adjustment     Revised 
ASSETS              
Current assets              
Trade accounts receivables, net   590,280    244,352  (a)   834,632 
Work in progress, net   309,063    (309,063 )(b)   - 
Other current assets   1,985,521    -      1,985,521 
Total current assets   2,884,864    (64,711 )   2,820,153 
                  
Non-current assets                 
Deferred tax asset   275,076    1,270  (c)   276,346 
Other non-current assets   2,740,632    -      2,740,632 
Total non-current assets   3,015,708    1,270      3,016,978 
Total assets   5,900,572    (63,441 )   5,837,131 
                  
                  
LIABILITIES AND EQUITY                 
Current liabilities                 
Trade accounts payable   980,767    (67,941 )(b)   912,826 
Other provisions   154,829    716  (c)   155,545 
Other current liabilities   1,212,121    -      1,212,121 
Total current liabilities   2,347,717    (67,225 )   2,280,492 
                  
Non-current liabilities                 
Deferred tax liability   97,367    1,040  (c)   98,407 
Other non-current liabilities   2,002,222    -      2,002,222 
Total non-current liabilities   2,099,589    1,040      2,100,629 
Total liabilities   4,447,306    (66,185 )   4,381,121 
                  
Equity                 
Equity attributable to controlling interest in the Company   1,199,816    3,229      1,203,045 
Non-controlling interest   253,450    (485 )   252,965 
Total equity   1,453,266    2,744      1,456,010 
Total liabilities and equity   5,900,572    (63,441 )   5,837,131 

 

26

 

 

AENZA S.A.A. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2022

 

Consolidated statements of profit or Loss:

 

   For the year ended December 31, 2021 
   Reported   Adjustment     Revised 
Revenue from construction activities   2,272,561    194,916  (a)   2,467,477 
Revenue from services provided   1,094,439    -      1,094,439 
Revenue from real estate and sale of goods   579,482    -      579,482 
    3,946,482    194,916      4,141,398 
                  
Cost of construction activities   (2,178,648)   (194,834 )(b)   (2,373,482)
Cost of services provided   (918,212)   17,895  (b)   (900,317)
Cost of real estate and sale of goods   (454,484)   -      (454,484)
    (3,551,344)   (176,939 )   (3,728,283)
Gross profit   395,138    17,977      413,115 
                  
Administrative expenses   (179,613)   -      (179,613)
Other income and expenses   (4,477)   -      (4,477)
Operating profit   211,048    17,977      229,025 
                  
Financial expenses   (262,574)   -      (262,574)
Financial income   5,773    -      5,773 
Share of the profit or loss of associates and joint ventures accounted for using the equity method   (861)   -      (861)
Loss before income tax   (46,614)   17,977      (28,637)
Income tax expense   (43,700)   (2,705 )(c)   (46,405)
Loss from continuing operations   (90,314)   15,272      (75,042)
Loss from discontinued operations   (26,774)   -      (26,774)
Loss for the year   (117,088)   15,272      (101,816)
                  
(Loss) profit attributable to:                 
Controlling interest in the Company   (153,210)   11,440      (141,770)
Non-controlling interest   36,122    3,832      39,954 
    (117,088)   15,272      (101,816)
                  
Loss per share attributable to controlling interest in the Company during the year   (0.176)   0.013      (0.163)
                  
Total comprehensive income for the year                 
Comprehensive income attributable to:                 
Controlling interest in the Company   (159,592)   12,167      (147,425)
Non-controlling interest   36,089    4,083      40,172 
    (123,503)   16,250      (107,253)

 

Segment information by geographic area

 

   For the year ended
December 31, 2021
 
In thousands of soles  Reported   Adjustment   Revised 
Revenue            
Peru   3,255,214    29,460    3,284,674 
Chile   585,317    165,248    750,565 
Colombia   105,951    209    106,160 
    3,946,482    194,916    4,141,398 

 

27

 

 

AENZA S.A.A. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2022

 

As a result of this process, the balances in the consolidated statement of cash flows were revised as follows: 

 

   For the year ended December 31, 2021 
   Reported   Adjustment      Revised 
                
OPERATING ACTIVITIES               
(Loss) profit before income tax   (78,350)   17,977    (a, b)   (60,373)
Adjustments to profit not affecting cash flows from                  
operating activities:                  
Other provisions   62,246    716    (c)   62,962 
Incremental cost of acquiring interest in joint operation   -    12,732    (b)   12,732 
Other adjustments   490,819    -       490,819 
Net variations in assets and liabilities:                  
Trade accounts receivable and working in progress   (82,527)   (60,663)   (a, b)   (143,190)
Other accounts receivable   41,626    507    (a)   42,133 
Trade accounts payable   (55,131)   27,756    (b)   (27,375)
Other accounts payable   72,991    975    (c)   73,966 
Other variations   (257,166)   -       (257,166)
Net cash provided by operating activities   194,508    -       194,508 
                   
INVESTING ACTIVITIES                  
Net cash applied to investing activities   (88,189)   -       (88,189)
                   
FINANCING ACTIVITIES                  
Net cash applied to financing activities   (50,425)   -       (50,425)
Net decrease in cash   55,894    -       55,894 
Exchange difference   1,116    -       1,116 
Cash and cash equivalents at the beginning of the year   900,168    -       900,168 
Cash and cash equivalents at the end of the year   957,178    -       957,178 
                   
NON-CASH TRANSACTIONS:                  
Capitalization of interests   1,244    -       1,244 
Acquisition of assets through finance leases   104    -       104 
Dividends declared to non-controlling interest   17,281    -       17,281 
Acquisition of right-of-use assets   7,988    -       7,988 

 

(a)As discussed in Note 2.W, revenue from engineering and construction contracts is recognized over time as the Corporation fulfills its obligations, as there is a continuous transfer of control of the deliverable to the customer and revenue is recognized using the percentage-of-completion method for each contract through the date of the consolidated financial statements.

 

Revenue from additional work resulting from a modification or instruction received from the customer to make a change in the scope of work, price, or both will result in an increase in contract revenue which is also recognized using the percentage-of-completion method when the Corporation concludes that it is highly probable that there will not be a significant reversal of such revenue. Before the immaterial correction, the Corporation recognized a lower proportion of this additional revenue at the date of the consolidated financial statements depending on the status or stage in the process of obtaining formal, written approval for the additional work. After the immaterial correction, the Corporation recognized additional revenue based on the percentage of completion of the additional work, as long as the Corporation can conclude from its dealings with its clients that it is highly probable that there will not be a significant reversal of such revenue.

 

(b) Before the immaterial correction, the Corporation presented the net position of construction contracts as either an asset or a liability. The contract was considered an asset when the gross margin earned at the measurement date was less than the Corporation’s estimated gross margin at contract completion. This asset was presented as “Work in progress”. If the gross margin obtained was greater than the estimated gross margin at completion, it was presented as a liability under “Accounts payable - Provision for estimated contract costs by stage of completion, both with an effect on the cost of construction activities account.

 

In order to correct the immaterial error, the Corporation reversed the balances of the work in progress account from assets and the provision for construction contract costs from liabilities, recognized the costs incurred in the consolidated statement of profit or loss.

 

(c)Corresponds to the recognition of the tax effects related to the adjustments described in (a) and (b) above.

 

28

 

 

AENZA S.A.A. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2022

 

3. Standards, amendments, and interpretation of international financial reporting standards

 

A. New amendments to IFRS mandatory as of January 1, 2022

 

The following standards and interpretations and amendments to existing standards were issued with mandatory application for the accounting period beginning January 1, 2022, but were not relevant and did not have a material impact on the Corporation’s operations:

 

Effective date New standards or modifications
January 1, 2022 Amendments to IAS 37 - Onerous Contracts - Costs of Fulfilling a Contract
Annual Improvements to IFRS 2018-2020 (Amendments to IFRS 1, IAS 9, and IAS 41)
Amendments to IAS 16 - Property, Plant and Equipment - Revenue Before Expected Use
Amendments to IFRS 3 - Reference to the Conceptual Framework

 

B. New IFRSs and interpretations issued after the date of presentation of the consolidated financial statements

 

At the date of authorization of these consolidated financial statements, the Company has not applied the following new and revised Standards that have been issued but are not yet effective.

 

Effective date New standards or modifications
January 1, 2023 Amendments to IAS 1 - Classification of Liabilities as Current or Non-Current
IFRS 17 Insurance Contracts and its amendments.
Amendments to IAS 1 and Practical Statement 2 “Making Judgments Related to Materiality” - Disclosures of Accounting Policies
Amendments to IAS 8 - Definition of Accounting Estimates
Amendments to IAS 12 - Deferred Taxes Relating to Assets and Liabilities Arising from a Single Transaction
Adoption optional/ effective date deferred indefinitely Amendments to IFRS 10 and IAS 28 - Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

 

These accounting pronouncements issued but not yet effective are not expected to have a material impact on the Company’s consolidated financial statements.

 

4. Financial Risk Management

 

The Corporation’s Management is responsible for managing financial risks. The corporation Management manages the general administration of financial risks such risks include currency risk, price risk, fair-value and cash-flow interest rate risks, credit risk, the use of derivative and non-derivative financial instruments, and investment of liquidity surplus, as well as financial risks; all of which are regularly supervised and monitored.

 

29

 

 

AENZA S.A.A. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2022

 

A. Financial risk factors

 

The Corporation’s activities expose it to a variety of financial risks: market risks (including currency risk, price risk, fair-value and cash-flow interest rate risks), credit risk, and liquidity risk.

 

The Corporation’s general program for risk management is mainly focused on financial market unpredictability and seeks to minimize potential adverse effects on the Corporation’s financial performance.

 

(a) Market risk

 

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market prices. Market prices involve four types of risk: interest rate risk, exchange rate risk, commodity price risk and other price risks. Financial instruments affected by market risk include bank deposits, trade accounts receivable, other accounts receivable, other financial liabilities, bonds, trade accounts payable, other accounts payable and accounts receivable from and payable to related parties.

 

(i) Currency risk

 

Foreign exchange risk is the risk that the fair value of future cash flows of a financial instrument will be reduced by adverse fluctuations in exchange rates. Management is responsible for identifying, measuring, controlling and reporting the exposure to foreign exchange risk.

 

The Corporation is exposed to foreign exchange risk arising from local transactions in foreign currencies and from its foreign operations. As of December 31, 2021 and 2022, this exposure is focused mainly on fluctuations of the U.S. dollar, Chilean peso, and Colombian peso. The Corporation’s management monitors this risk by analyzing the country’s macroeconomic variables.

 

The balances of financial assets and liabilities denominated in foreign currencies correspond to balances in U.S. Dollars, Chilean pesos and Colombian pesos, which are stated exchange rate published on that date, according to the currency type:

 

   As of
December 31,
   As of
December 31,
 
   2021   2022 
   Buy   Sale   Buy   Sale 
U.S. Dollars (a)   3.975    3.998    3.808    3.820 
Chilean Peso (b)   0.004706    0.004733    0.004449    0.004463 
Colombian Peso (c)   0.000998    0.001004    0.000792    0.000794 

 

(a)U.S. Dollar as published by the Superintendencia de Banca y Seguros (hereinafter SBS).
(b)Chilean peso as published by Banco Central de Chile.
(c)Colombian peso as published by Banco de la Republica de Colombia.

 

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AENZA S.A.A. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2022

 

The consolidated statement of financial position as of December 31, includes the following balances:

 

In thousands of US dollars  2021   2022 
Assets        
Cash and cash equivalents   119,627    58,280 
Trade accounts receivable, net   92,016    124,593 
Accounts receivable from related parties   219,209    276,048 
Other accounts receivable   87,742    75,536 
    518,594    534,457 
Liabilities          
Borrowings   (101,975)   (215,076)
Bonds   (95,022)   (5,569)
Trade accounts payable   (123,128)   (119,104)
Accounts payable to related parties   (81,799)   (133,745)
Other accounts payable   (60,821)   (88,012)
Other provisions   (29,641)   (42,241)
    (492,386)   (603,747)

 

The Corporation assumes foreign exchange risk because it does not use derivative financial instruments to mitigate exchange rate fluctuations.

 

For the periods ended December 31, 2021 and 2022, the Corporation’s exchange gains and losses for the exposure of U.S. Dollar, the Chilean peso, and the Colombian peso against the Peruvian Sol was, (Note 26.A):

 

In thousands of soles        2021   2022 
Gain      383,199    449,864 
Loss      (430,410)   (450,133)
    (47,211)   (269)

 

If, as of December 31, 2022, the U.S. Dollars, the Chilean peso, and the Colombian peso had been strengthened/weakened by 5% against the Peruvian Sol, the pre-tax profit or loss for the year would have an impact equivalent to S/13 thousand (S/ 2.7 million in 2021). If, as of December 31, 2022, the U.S. Dollars, the Chilean peso, and the Colombian peso had been strengthened/weakened by 10% against the Peruvian Sol, the pre-tax profit or loss for the year would have an impact equivalent to S/27 thousand (S/ 4.7 million in 2021).

 

The consolidated statement of changes in equity comprises a foreign currency translation adjustment originated by its subsidiaries. The consolidated statement of financial position includes the following assets and liabilities in its currency (in thousands):

 

   2021   2022 
   Assets   Liabilities   Assets   Liabilities 

Chilean Pesos

   72,776,160    93,740,228    60,684,971    81,864,810 

Colombian Pesos

   59,773,077    31,057,046    96,944,436    59,114,296 

 

The Corporation’s foreign currency translation adjustment in 2022 was negative by S/20.9 million (negative by S/ 5 million in 2021).

 

(ii) Price risk

 

The Corporation is exposed to the risk of hydrocarbon price fluctuations which impacts on the selling price of the products that it commercializes, which are significantly affected by changes in global economic conditions, resource availability, and the cycles of related industries. Management considers reasonable these possible fluctuations in the hydrocarbons prices, based in the Corporation´s economic market environment.

 

If, as of December 31, 2022, the oil price had increased/decreased by 5%, the pre-tax profit for the year would have increased/decreased by S/ 28.4 million and S/ 29.8 million (S/42.3 million and S/39.7 million in 2021). This analysis assumes that all other variables remain constant. If, as of December 31, 2022, the oil price had increased/decreased by 10%, the pre-tax profit for the year would have increased/decreased by S/ 56.4 million and S/ 62 million (S/88.9 million and S/78.6 million in 2021).

 

31

 

 

AENZA S.A.A. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2022

 

(iii)Fair-value and cash-flow interest rate risk

 

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market interest rates.

 

The Corporation’s interest rate risk arises mainly from its long-term financial liabilities. Variable rate long-term financial liabilities expose the Corporation to cash-flow interest rate risk. Fixed-rate financial liabilities expose the Corporation to fair-value interest rate risk.

 

The Corporation assumes the interest rate risk, due to they do not use financial derivative instruments for mitigate variations in the interest rate risk.

 

The sensitivity to a reasonably possible change in interest rates is shown below. With all other variables held constant, the Corporation’s income before income taxes would be affected by the impact on variable rate borrowings. For the period ended December 31, 2022 and 2021 the impact on income before income taxes on a 10% increase or decrease amounts to approximately S/2.5 million and S/2.6 million, respectively (S/2 million and S/2.1 million, respectively, in 2021). The assumed movement in basis points related to the interest rate sensitivity analysis is based on the current market environment.

 

(b) Credit risks

 

Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or commercial contract, resulting in a financial loss.

 

Credit risk for the Corporation arises from its operating activities due to credit exposure to customers and from its financial activities, including deposits with banks and financial institutions, foreign exchange transactions, and other financial instruments. The maximum exposure to credit risk for the consolidated financial statements as of December 31, 2022 and 2021 is represented by the sum of cash and cash equivalents (Note 9), trade accounts receivable (Note 10), other accounts receivable (Note 12) and accounts receivable from related parties (Note 11).

 

Customer credit risk is managed by Management subject to the Corporation’s established policies, procedures and control related to customer credit risk management. The credit quality of a customer is assessed based on an extensive credit rating scorecard and individual credit limits are defined based on this assessment. The maximum credit risk exposure at the reporting date is the carrying value of each class of financial assets disclosed in Note 10.

 

The Corporation assesses the concentration of risk with respect to trade accounts receivable as low risk because sales are not concentrated in small customer groups and no customers account for 10% or more of the Corporation’s revenues.

 

Management monitors the credit risk of other receivables on an ongoing basis and assesses those receivables that show evidence of impairment to determine the required allowance for doubtful accounts.

 

Concerning loans to related parties, the Corporation has measures in place to ensure the recovery of these loans through the controls maintained by the Corporate Finance Management and the performance evaluation conducted by the Board of Directors (Note 11).

 

Management does not expect the Corporation to incur any losses from the performance of these counterparties, except for the ones already recorded in the consolidated financial statements.

 

(c) Liquidity risk

 

Prudent liquidity risk management implies holding enough cash and cash equivalent, and financing available through a proper number of credit sources, and the ability to close positions in the market. Historically, the Corporation’s cash flows from operations have enabled it to meet its obligations. The Corporation has implemented various actions to reduce its exposure to liquidity risk and has developed a Financial Plan based on several steps, which were designed with a commitment to compliance within a reasonable period of time. The Financial Plan is intended to meet the various obligations at the Company and Corporation entities levels.

 

The Corporate Finance Office monitors the cash flow projections made on liquidity requirements of the Corporation to ensure it exists sufficient cash to meet operational needs so that the Corporation does not breach borrowing limits or covenants, where applicable, on any of its borrowing facilities. Less significant financing transactions are controlled by the Finance Management of each subsidiary.

 

32

 

 

AENZA S.A.A. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2022

 

Such forecasting takes into consideration the Corporation’s debt financing plans, covenant compliance, compliance with ratio targets in the statement of financial position and, if applicable, with external regulatory or legal requirements.

 

Cash surplus on the amounts required for the administration of working capital are invested in checking accounts that generate interest and time deposits, selecting instruments with appropriate maturities or sufficient liquidity.

 

As of December 31, 2022, the Company has significant current payment obligations arising from the Collaboration and Benefits Agreement (Note 1.C) and the Bridge Loan (Note 17.A.i). For this purpose, Management is developing a financial plan with the aim of covering the short-term part of these obligations.

 

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

 

       Contractual cash flows 
   Carrying   Less than   1-2   2-5   More than     
In thousands of soles  amount   1 year   years   years   5 years   Total 
As of December 31, 2021                              
Other financial liabilities (except for finance leases and lease liability for right-of-use asset)   509,557    224,503    52,751    173,392    124,320    574,966 
Finance leases   9,836    5,624    4,613    296    -    10,533 
Lease liability for right-of-use asset   60,507    18,817    24,295    21,993    8,086    73,191 
Bonds   1,260,922    137,852    206,476    837,931    792,037    1,974,296 
Trade accounts payables (except non-financial liabilities)   912,826    912,826    -    -    -    912,826 
Accounts payables to related parties   101,716    51,004    50,712    -    -    101,716 
Other accounts payables and other provisions (except non-financial liabilities)   842,198    323,070    22,941    109,383    422,666    878,060 
    3,697,562    1,673,696    361,788    1,142,995    1,347,109    4,525,588 

 

       Contractual cash flows 
   Carrying   Less than   1-2   2-5   More than     
In thousands of soles  amount   1 year   years   years   5 years   Total 
As of December 31, 2022                              
Other financial liabilities (except for finance leases and lease liability for right-of-use asset)   819,973    599,310    71,732    216,392    -    887,434 
Finance leases   835    873    -    -    -    873 
Lease liability for right-of-use asset   59,085    19,075    31,705    23,386    113    74,279 
Bonds   869,913    141,246    185,114    419,969    707,800    1,454,129 
Trade accounts payables (except non-financial liabilities)   1,037,013    1,027,256    9,757    -    -    1,037,013 
Accounts payables to related parties   80,781    53,488    25,420    697    1,176    80,781 
Other accounts payables and other provisions (except non-financial liabilities)   712,071    186,326    64,307    89,868    470,129    810,630 
    3,579,671    2,027,574    388,035    750,312    1,179,218    4,345,139 

 

B. Capital management

 

The Corporation’s objective in managing capital is to safeguard its ability to continue as going concern in order to generate returns to its shareholders, benefits to stakeholders, and keep an optimal capital structure to reduce capital cost. Since 2017, due to the situation of the Corporation, Management has monitored deviations that might cause the non-compliance of covenants and may hinder renegotiation of liabilities (Note 17.A). In special situations and events, the Corporation identifies potential deviations, requirements and establishes a plan.

 

33

 

 

AENZA S.A.A. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2022

 

The Corporation may adjust the amount of dividends payable to shareholders, return capital to shareholders, issue new shares or sell assets to reduce its debt to maintain or adjust the capital structure.

 

The Corporation monitors its capital based on the leverage ratio. This ratio is calculated as net debt divided by the sum of net debt plus equity. The net debt corresponds to the total financial liabilities (including current and non-current indebtedness) adding the provision for civil compensation less cash and cash equivalents.

 

As of December 31, 2021 and 2022, the leverage ratio is as follows:

 

In thousands of soles  Note  2021   2022 
Total borrowing, bonds and civil compensation (*)  17 and 18   2,326,903    2,238,699 
Less: Cash and cash equivalents  9   (957,178)   (917,554)
Net debt (a)      1,369,725    1,321,145 
Total equity (b)      1,456,010    1,346,006 
Total net debt plus equity (a) + (b)      2,825,735    2,667,151 
Gearing ratio      0.48    0.50 

 

(*)The provision for civil compensation is included in other provisions (Note 21).

 

During the years ended December 31, 2021 and 2022, there were no changes in the objectives, policies or processes related to capital management.

 

5. Use of Judgments and Estimates

 

The estimates and judgments used are continuously evaluated and are based on historical experience and other factors, including the reasonable expectation of occurrence of future events depending on the circumstances.

 

A. Significant accounting estimates and criteria

 

The Corporation makes estimates and assumptions regarding the future. Resulting accounting estimates very rarely will be the same as the actual results. The following are the estimates and assumptions that have significant risk as to produce a material adjustment to the balances of assets and liabilities for next periods.

 

i. Impairment testing of goodwill and other finite useful-life fixed assets and indefinite useful-life intangible assets

 

Impairment testing is undertaken annually to determine if goodwill arising from business acquisitions and other useful-life indefinite intangible assets are impaired, in accordance with the policy described in Note 2.G. For this purpose, goodwill is allocated to the different CGUs to which it relates while other indefinite useful-life intangible assets are assessed individually.

 

The recoverable amounts of the CGU and of other indefinite useful-life intangible assets have been determined based on the higher of their value-in-use or fair value less costs to sell. This testing requires the exercise of Management’s professional judgment to analyze any potential indicators of impairment such as the use of estimates in determining the value in use, including preparing future cash flows, macro-economic forecasts as well as defining the interest rate at which said cash flows will be discounted.

 

If the Corporation experiences a significant drop in revenues or a drastic increase in costs or changes in other factors, the fair value of their business units might decrease. If Management determines that the factors reducing the fair value of the business units are permanent, those economic factors will be taken into consideration to determine the recoverable amount of those business units and therefore, goodwill, as well as other indefinite useful-life intangible assets may be deemed to be impaired, which could result in write-off being necessary.

 

34

 

 

AENZA S.A.A. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2022

 

As a result of these evaluations, as of December 31, 2021 and 2022, no provision for goodwill impairment was identified (Note 16.A) and; as of December 31, 2022, the Corporation recognized impairment of the Vial y Vives-DSD brands for S/2.5 million; however, no provision was identified for the Morelco brand. In 2021, no impairment was identified for these brands (Note 16.B).

 

As of December 31, 2021 and 2022, the Corporation conducted a sensitivity analysis increasing or decreasing the assumptions of gross margin, discount rate, and revenue and terminal growth rate by 10% (this percentage corresponds to the relevant evaluation range for management). This analysis assumes that all other variables remain constant.

  

Goodwill

 

In 2022, if the gross margin, discount rate, and perpetual growth rate were 10% below or above management’s estimates, collectively and/or independently, the Corporation would not have had to recognize a provision for impairment of goodwill of UGE Engineering and Construction (Morelco) because its fair value would have increased or decreased by S/13.5 million.

 

In 2021, if the gross margin and discount rate were 10% below or above management’s estimates, in the aggregate and/or independently, the Corporation would have had to recognize an impairment provision for goodwill of UGE Ingeniería y construcción (Morelco) within the range of S/4.6 million and S/15 million.

 

Trademarks

 

In 2022, if the revenue growth rate, discount rate and perpetual growth rate were 10% below or above management’s estimates, in the aggregate and/or independently, the Corporation would have had to recognize an impairment provision for the Vial y Vives-DSD brands in the range of S/3.1 million and S/3.9 million, and for the Morelco brand, the Corporation would not have had to recognize an impairment provision because its fair value would have increased or decreased in the range of S/2.1 million and S/16.1 million.

 

In 2021, if the revenue growth rate, discount rate and perpetual growth rate were 10% below or above management’s estimates, in the aggregate and/or independently, the Corporation would have had to recognize an impairment provision for the Vial y Vives-DSD brand in the range of S/3 million and S/3.1 million; and for the Morelco brand, the Corporation would not have had to recognize an impairment provision because its fair value would have increased or decreased in the range of S/10.2 million and S/11.4 million.

 

35

 

 

AENZA S.A.A. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2022

 

ii. Taxation

 

Determination of the tax obligations and expenses requires interpretations of the applicable tax legislation. The Corporation has professional advice on legal tax matters before making any decision on tax matters.

 

Deferred tax assets and liabilities are calculated based on the temporary differences arising between the taxable basis of assets and liabilities and the respective amounts stated in the financial statements of each entity comprising the Corporation, using the tax rates in effect in each of the years in which the difference is expected to reverse. Any change in tax rates will affect the deferred tax assets and liabilities. This change will be recognized in the consolidated statement of profit or loss in the period in which the change takes effect.

 

Deferred tax assets are recognized only to the extent that it is probable that future taxable profits will be available against which temporary differences and tax losses can be used. For this purpose, the Corporation takes into consideration all available information, including factors such as historical data, projected income, current operations, and tax planning strategies. A tax benefit related to a tax position is only recognized if the benefit will be realized.

 

The income tax for the year includes Management’s evaluation of the amount of taxes to be paid in uncertain tax positions, where the liabilities have not yet been agreed with the tax administration. The Corporation’s possible maximum exposure to tax contingency amounts to S/ 310.98 million.

 

iii. Percentage of completion revenue recognition

 

Revenue from services based on construction contracts are recognized by the percentage of completion method, according to the output method (Note 2.W.i). The Corporation needs to estimate the cost to be obtained upon completion of the work. Projections of these costs are determined by Management based on their execution budgets and adjusted periodically in order to use updated information to reflect actual performance in the work. In this regard, Management believes that the estimates made at the end of the year are reasonable.

 

Contract revenues are recognized as such in the consolidated statement of comprehensive income and the costs related to the construction contract are recognized as Costs of Construction in the consolidated statement of comprehensive income in the accounting periods in which the project was executed. Costs directly related to a specific contract include: labor costs at the construction site (including construction supervision), costs of materials used in construction, depreciation costs of equipment used in the contract, design and technical assistance costs directly related to the contract, among others (Note 2.X). However, any expected and likely cost overruns related to the contract over total expected income under the contract is recognized as expense immediately. In addition, any change in the estimates under the contract is recognized as a change in accounting estimates in the period in which the change is made and future periods, if applicable. In certain construction contracts, the terms of these agreements allow to retain an amount to customers until construction is completed.

 

As of December 31, 2021 and 2022, a sensitivity analysis was performed considering a 10% increase/decrease in the construction margins in the following sectors: i) buildings, ii) energy, iii) industry, iv) infrastructure, v) mining, vi) oil & gas, vii) water and sewage, and viii) various services, as shown below:

 

   2021   2022 
Revenue   2,467,477    2,451,067 
Gross profit   93,995    (14,212)
%   3.81    0.58 
Plus 10%   4.19    0.64 
Increase in profit (loss) before income tax   9,392    (1,475)
    103,387    (15,687)
Less 10%   3.43    0.52 
Decrease in (loss) profit before income tax   (9,392)   1,475 
    84,603    (12,737)

 

36

 

 

AENZA S.A.A. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2022

 

Provision for decommissioning and well closure

 

The provision for decommissioning and well closure is an obligation established by law for all operators. Accordingly, it is more likely than not that an outflow of resources will be required to settle the obligation and it is possible to reliably estimate its amount. The operator is responsible for this activity to the extent that the wells have been worked during the contract period.

 

As of December 31, 2021 and 2022, the estimate of the amount calculated by the Corporation is based on the following factors:

 

-Total number of wells to be plugged,
  
-Well decommissioning and plugging costs (these costs are estimated on the basis of plug and abandonment performed in previous periods and with quotations made for the Lot I abandonment plan), and
  
-Costs for facility abandonment and remediation areas

 

The Corporation estimates the present value of its future obligation for decommissioning and well closure costs (well closure liability) and increases the carrying amount of the asset to be retired in the future, which is shown in intangible assets item in the consolidated statement of financial position. The provision is recognized at the present value of the expected disbursements in local and foreign currency to settle the obligation using the Peruvian sovereign bond discount rate in local and foreign currency, respectively for 5, 15 and 30 years.

 

The pre-tax discount rates used for the calculation of the present value in 2022 were 5.41% (US dollars) and 7.21% (soles) for Lot I; 5.29% (US dollars) and 6.96% (soles) for Lot V (in 2021 1.48% and 4.54% for Lot I and 1.13% and 4.01% for Lot V, respectively); and 6.57% (US dollars) and 8.22% (soles) for Lots III and IV, based on the rate applicable to Peruvian sovereign bonds in soles and dollars between 3, 5 and 30 years respectively, in effect as of December 2021 and 2022. The liability for the closure of wells and other oil premises is readjusted to reflect changes arising from the passage of time and from reviews conducted either at the date of occurrence or the amount of the present value of the originally estimated obligations (Note 21).

 

If, as of December 31, 2021 and 2022, the estimated rate had increased or decreased by 10%, the impact on pre-tax profit would not have been significant. This analysis assumes that all other variables remain constant:

 

In thousands of soles  2021   2022 
10%   1,628    383 
(10%)   1,812    409 

 

iv. Impairment of investment in associate and account receivable to Gasoducto Sur Peruano S.A.

 

As a consequence of the termination of the concession agreement signed between Gasoducto Sur Peruano S.A. (hereinafter “GSP”) and the Peruvian State (Note 14.A), in 2019 the Company impaired the full value of its investment in GSP.

 

Regarding trade accounts receivable, to GSP (Note 11 and Note 14), the Management has determined its recoverability under the following assumptions: (i) the amount that GSP will recover as a result of a possible public auction y (ii) the liquidation of the company via the GSP Creditor´s meeting.

 

Accounts receivable related to GSP as of December 31, 2021 and 2022 amount to S/ 643.9 million and S/ 542.4 million, respectively (Note 11).

 

37

 

 

AENZA S.A.A. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2022

 

The calculation of the impairment estimate adheres to a process of liquidation of GSP in accordance with Peruvian legislation, according to which the value of the asset to be recovered is used first to cover the payments of liabilities in the different categories of creditors and the remainder, if it is the case, to cover the payment to the shareholders, taking into account the existing subordination agreements.

 

In 2018, in relation to the amount to be recovered by GSP, the Company assumed a recovery of the minimum amount established in the Concession Agreement, which is equivalent to 72.25% of the Net Carrying Amount (NCA) of the Concession assets. This amount represented a minimum payment to be obtained by GSP based on a public auction to be set up for the adequate transfer of the Concession’s assets to a new concessionaire, under the relevant contractual terms and conditions.

 

Beginning 2019, the recovery of NCA estimated by Management equals 50%, considering the agreements reached in the Final Collaboration and Benefits Agreement and a total term of eight years has been considered, which included the formation of the Creditors’ Meeting, the approval of the settlement plan, the presentation of the arbitration claim, as well as the entire arbitration process.

 

As of the date of this report, GSP is under liquidation. AENZA S.A.A. has pointed as chairman of the Creditors’ Meeting. On April 11, 2023, the Creditors’ Meeting approved with 77% of the votes, the Liquidation Agreement, which establishes the liquidator’s framework. Likewise, on April 12, 2023, the liquidator (Alva Legal Asesoria Empresarial S.A.C.) has notarially requested the initiation of the Direct Treatment procedure with the Ministry of Energy and Mines in accordance with the rules of the Concession Contract. The Company considers that the term of eight years for the recovery of the investment is adequate, considering the possibility of an arbitration process and the time it will take to execute the award. See assumptions and recognized values in Note 14.A.i. The Company’s management maintains the recovery estimate in 8 years, applying a discount rate of 5.85% (recovery term of eigth years with a discount rate of 2.73% as of December 31, 2021). These estimates generated during 2022 a present value effect of approximately S/72.2 million (S/32.8 million during 2021).

 

B. Significant judgments in applying accounting policies

 

Consolidation of entities in which the Corporation holds less than 50%

 

The Corporation owns some direct and indirect subsidiaries in which it has control, even having less than 50% of the voting rights. These entities are mainly related to indirect subsidiaries in the real estate business owned through Viva Negocio Inmobiliario S.A.C., having control over relevant activities affecting the subsidiaries’ returns, even though the Corporation holds interest between 30% and 50%. Additionally, the Corporation has de facto control by a contractual agreement with the majority investor over Promotora Larcomar S.A. of which it owns 46.55% of the equity interest.

 

Consolidation of entities in which the Corporation does not have joint control but holds rights and obligations over the assets and liabilities

 

The Corporation assesses, on an ongoing basis, the nature of the contracts signed with one or more parties. If the Corporation is not determined to have control or joint control but has rights to the assets and obligations for the liabilities under the arrangement, the Corporation recognizes its assets, liabilities, income and expenses and its interest in any jointly controlled assets or liabilities and any income or expenses arising from the arrangement as a joint operation in accordance with IFRS 11 - Joint Arrangements (Note 2.B.v).

 

6. Interests in Other Entities

 

The consolidated financial statements include the accounts of the Company and its subsidiaries. Additionally, the consolidated financial statements include interests in joint operations in which the Company or certain subsidiaries have joint control with their partners (Note 2.B).

 

38

 

 

AENZA S.A.A. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2022

 

A. Main subsidiaries

 

The following table shows the main direct and indirect subsidiaries classified by operating segment (Note 7):

 

Name Country Economic activity
Engineering and Construction:    
     
Cumbra Peru S.A. Peru, Chile, and Colombia Service of civil construction, electromechanical assembly, and building, management and implementation of real estate projects, and other related services.
GyM Chile S.p.A. Chile Investment funds, investment companies, and similar financial entities.
Vial y Vives - DSD S.A. Chile Construction engineering projects, civil construction, and related technical advisory, rental of agriculture and livestock, forest, construction and civil engineering machinery and equipment without operators.
Morelco S.A.S. Colombia, Ecuador, and Peru Provision of construction and assembly services, supply of equipment and materials, operation and maintenance, and engineering services in the specialties of mechanics, instrumentation, and civil works.
Cumbra Ingenieria S.A. Peru, Mexico, and Bolivia Engineering advisory and consultancy, project execution, and project studies and supervision, and work management.
Energy:    
Unna Energia S.A. Peru Oil and natural gas products and byproducts extraction, operation and exploitation services, as well as fuel storage and dispatch services.
Oiltanking Andina Services S.A. Peru Operation of the gas processing plant of Pisco - Camisea.
Transportadora de Gas Natural Comprimido Andino S.A.C. (TGNCA) Peru Trade of natural gas through a virtual system and compression service.
     
Name Country Economic activity
     
Infrastructure:    
Unna Transporte S.A.C. Peru Operation and maintenance of highways and concessions.
Tren Urbano de Lima S.A. Peru Concession to operate the metro transportation system of Lima Metropolitana.
Carretera Andina del Sur S.A. Peru Concession to construct, operate, and maintain Section 1 of “Interoceanica Sur” highway.
Red Vial 5 S.A. Peru Concession to restore, operate, and maintain the “Ancon - Huacho - Pativilca” Section of “Panamericana Norte” Highway.
Carretera Sierra Piura S.A.C. Peru Concession to operate and maintain the Buenos Aires - Canchaque provincial highway.
Concesionaria Via Expresa Sur S.A. Peru Concession to design, construct, operate, and maintain Via Expresa - Paseo de la Republica in Lima.
Real estate:    
Viva Negocio Inmobiliario S.A.C. Peru Development and management of real estate projects directly or jointly to other partners.
Parent company operation:    
CAM Holding S.p.A. Chile Investment company.
Qualys S.A. Peru Provision of human, economic and technological services to the Corporation’s companies.
Promotores Asociados de Inmobiliarias S.A. Peru It operates in the real estate industry and is engaged in development and sale of offices.
Negocios del Gas S.A. Peru Investment company for construction, operation, and maintenance of natural gas and natural gas liquids transportation systems.
Inversiones en Autopistas S.A. Peru Company holding shares, interests, or other any ownership or credit investment.
Operadores de Infraestructura S.A.C. Peru Activities related to the leasing of advertising space and commercial premises on Line 1 of the Lima Metro.

 

39

 

 

AENZA S.A.A. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2022

 

The following table shows the Corporation’s subsidiaries and related interest as of December 31, 2022:

 

In percentage  Percentage of
common shares
directly held by
Parent
Company (%)
   Percentage of
common shares
held by
Subsidiaries (%)
   Percentage of
common shares
held by
the Group (%)
   Percentage of
common shares
held by
non-controlling
interest (%)
 
Engineering and Construction:                
Cumbra Peru S.A.   99.39%   -    99.39%   0.61%
- Morelco S.A.S.   -    100.00%   100.00%   - 
- GyM Chile S.p.A.   -    100.00%   100.00%   - 
- Vial y Vives - DSD S.A.   -    99.16%   99.16%   0.84%
- Cumbra Inversiones Colombia S.A.S.   -    100.00%   100.00%   - 
Cumbra Ingenieria S.A.   89.41%   -    89.41%   10.59%
- Ecologia Tecnologia Ambiental S.A.C.   -    100.00%   100.00%   - 
- GM Ingenieria y Construccion de CV   -    100.00%   100.00%   - 
- GM Ingenieria Bolivia S.R.L.   -    98.57%   98.57%   1.43%
Energy:                    
Unna Energia S.A.   95.00%   -    95.00%   5.00%
- Oiltanking Andina Services S.A.   -    50.00%   50.00%   50.00%
- Transportadora de Gas Natural                    
Comprimido Andino S.A.C.   -    100.00%   100.00%   - 
Infrastructure:                    
Unna Transporte S.A.C.   100.00%   -    100.00%   - 
Tren Urbano de Lima S.A.   75.00%   -    75.00%   25.00%
Carretera Andina del Sur S.A.C   100.00%   -    100.00%   - 
Red Vial 5 S.A.   18.20%   48.80%   67.00%   33.00%
Carretera Sierra Piura S.A.C.   99.96%   0.04%   100.00%   - 
Concesionaria Via Expresa Sur S.A.   98.89%   0.02%   100.00%   - 
Real Estate:                    
Viva Negocio Inmobiliario S.A.C.   99.54%   43.32%   99.54%   0.46%
Parent company operations:                    
Qualys S.A.   100.00%   -    100.00%   - 
Promotora Larcomar S.A.   46.55%   -    46.55%   53.45%
Negocios del Gas S.A.   99.99%   0.01%   100.00%   - 
Agenera S.A.   99.00%   1.00%   100.00%   - 
Inversiones en Autopistas S.A.   1.00%   99.00%   100.00%   - 
Cam Holding S.p.A.   100.00%   -    100.00%   - 

 

40

 

 

AENZA S.A.A. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2022

 

The following table shows the Corporation’s subsidiaries and related interest as of December 31, 2021:

 

In percentage  Percentage of
common shares
directly held by
Parent
Company (%)
   Percentage of
common shares
directly held by
Subsidiaries (%)
   Percentage of
common shares
directly held by
the Group (%)
   Percentage of
common shares
directly held by
non-controlling interest (%)
 
Engineering and Construction:                
Cumbra Peru S.A.   99.39%   -    99.39%   0.61%
- Morelco S.A.S.   -    100.00%   100.00%   - 
- GyM Chile S.p.A.   -    100.00%   100.00%   - 
- Vial y Vives - DSD S.A.   -    94.49%   94.49%   5.51%
- Cumbra Inversiones Colombia S.A.S.   -    100.00%   100.00%   - 
Cumbra Ingenieria S.A.   89.41%   -    89.41%   10.59%
- Ecologia Tecnologia Ambiental S.A.C.   -    100.00%   100.00%   - 
- GM Ingenieria y Construccion de CV   -    100.00%   100.00%   - 
- GM Ingenieria Bolivia S.R.L.   -    100.00%   100.00%   1.43%
Energy:                    
Unna Energia S.A.   95.00%   -    95.00%   5.00%
- Oiltanking Andina Services S.A.   -    50.00%   50.00%   50.00%
- Transportadora de Gas Natural                    
Comprimido Andino S.A.C.   -    100.00%   100.00%   - 
Infrastructure:                    
Unna Transporte S.A.C.   100.00%   -    100.00%   - 
Tren Urbano de Lima S.A.   75.00%   -    75.00%   25.00%
Carretera Andina del Sur S.A.C   100.00%   -    100.00%   - 
Red Vial 5 S.A.   18.20%   48.80%   67.00%   33.00%
Carretera Sierra Piura S.A.C.   99.96%   0.04%   100.00%   - 
Concesionaria Via Expresa Sur S.A.   99.98%   0.02%   100.00%   - 
Real Estate:                    
Viva Negocio Inmobiliario S.A.C.   56.22%   43.32%   99.54%   0.46%
Parent company operations:                    
Qualys S.A.   100.00%   -    100.00%   - 
Promotora Larcomar S.A.   46.55%   -    46.55%   53.45%
Negocios del Gas S.A.   99.99%   0.01%   100.00%   - 
Agenera S.A.   99.00%   1.00%   100.00%   - 
Inversiones en Autopistas S.A.   1.00%   99.00%   100.00%   - 
Cam Holding S.p.A.   100.00%   -    100.00%   - 

 

41

 

 

AENZA S.A.A. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2022

 

B. Public service concessions

 

The Corporation has public service concessions. When applicable, the income attributable to the construction or restoration of infrastructure has been accounted for by applying the models described in Note 2.E (financial asset model and intangible assets).

 

In all Corporation’s concessions, the infrastructure returns to the Grantor at the end of the Agreement.

 

Find below the concessions held by the Corporation as of December 31, 2021 and 2022:

 

Name of Concessionaire Description Estimated investment Consideration Interest Concession termination Accounting model
Carretera Andina del Sur S.A. This company operates and maintains a highway of 750 km from San Juan de Marcona Port to Urcos, Peru, which is connected to the Interoceanica highway. The highway has five tolls and three weigh stations. US$ 99 million Transaction secured by the Peruvian Government comprising annual payments for highway maintenance and operation, under responsibility of the Ministry of Transportation and Communications (MTC). 100.00% 2032 Financial asset
             
Carretera Sierra Piura S.A.C. This company regularly operates and maintains a highway of 78 km, which connects Buenos Aires and Canchaque towns in Peru. The highway has one toll. US$ 31 million Transaction secured by the Peruvian Government regardless traffic volume. Revenue is secured by an estimated annual amount of US$ 1.4 million. 100.00% 2025 Financial asset
             
Concesionaria La Chira S.A. Design, financing, construction, operation, and maintenance of “Planta de Tratamiento de Aguas Residuales y Emisario Submarino La Chira” project. About 25% of sewage of Lima is treated under this project. S/ 450 million Transaction secured by the Peruvian Government consisting of monthly and quarterly payments settled by Sedapal´s collection trust. 50.00% 2036 Financial asset
             
Tren Urbano de Lima S.A. Concession to operate the Electric Mass Transportation System of Lima and Callao, Line 1 Villa El Salvador - Avenida Grau - San Juan de Lurigancho, the only railway system in Lima Metropolitana, including (i) operation and maintenance of existing trains (24 trains as initial investment and 20 additional trains) and (ii) operation and maintenance of the railway system (railway and infrastructure). S/ 566 million Transaction secured by the Peruvian Government through a quarterly payment made by the MTC based on kilometers per train. 75.00% 2041 Financial asset
             
Red Vial 5 S.A. Operation and maintenance of the highway connecting Lima to the northwest of Peru. This highway, known as Red Vial, is 183 km long from Ancon to Pativilca and has three tolls. US$ 187 million Collected from users (self-funded concession; revenue comes from toll collection). 67.00% 2028 Intangible
             
Concesionaria Via Expresa Sur S.A. Concession to design, finance, construction, operation, and maintenance of the infrastructure associated with the Via Expresa Sur project. This project comprises the second stage expansion of Via Expresa – Paseo de la Republica, between Av. Republica de Panama and and Panamericana highway. - By virtue of this agreement, the users had to pay the respective tolls and the Peruvian Government guaranteed to pay the amount to cover the deficit resulting from collection to users and the annual limits established in such an agreement. On December 16, 2022, the Municipality of Lima and Concesionaria Via Expresa Sur declared the expiration of the Concession Agreement. 100.00% 2053 Financial asset

 

42

 

 

AENZA S.A.A. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2022

 

C. Hydrocarbon and gas contracts

 

As of December 31, 2022, the subsidiary Unna Energia S.A. has mainly three contracts signed with Perupetro S.A. In 2021, it had four contracts signed with Perupetro S.A. and one contract signed with ENEL, as indicated below:

 

i. Service contract for exploration and exploitation of hydrocarbons (Lot V)

 

This contract was signed with Perupetro S.A. in 1993 for a period of twenty years. In March 2010 the Extension Agreement to the oil services contract was signed until October 2023. The lot is located in the provinces of Talara and Contralmirante Villar, departments of Piura and Tumbes, Grau region, northeastern Peru. As of December 31, 2022, the Company held a total of 95 wells of which 39 wells were active and 56 wells were inactive (as of December 31, 2021 it held 95 wells of which 40 wells were active and 55 wells were inactive).

 

ii. License agreement for the exploitation of hydrocarbons (Lot III)

 

Subscribed with Perupetro S.A. in March 2015 for a period of thirty years for oil, and forty years for non-associated natural gas counted from April 5, 2015, the date corresponding to the start of operations. The lot is located in the provinces of Talara and Paita, Grau region, northeastern Peru. As of December 31, 2022, the Company held a total of 505 wells of which 172 wells were active and 333 wells were inactive (as of December 31, 2021 it held 498 wells of which 134 wells were active and 364 wells were inactive).

 

iii. License agreement for the exploitation of hydrocarbons (Lot IV)

 

Subscribed with Perupetro S.A. in March 2015 for a period of thirty years for oil, and forty years for non-associated natural gas counted from April 5, 2015, the date corresponding to the start of operations. The lot is located in the provinces of Talara and Contralmirante Villar, department of Piura and Tumbes, Grau region, northeastern Peru. As of December 31, 2022, the Company had a total of 578 wells of which 361 wells were active and 217 wells were inactive (as of December 31, 2021 it had 528 wells of which 337 wells were active and 191 wells were inactive).

 

iv. Service contract for exploration and exploitation of hydrocarbons (Lot I)

 

Contract terminated on December 26, 2021, signed in 1991 by Cavelcas del Peru S.A. (CAVELCAS) and Perupetro S.A. for a period of twenty years. On July 31, 1995 CAVELCAS made the assignment of the contractual position for 100% of the participation to the Company, the latter assuming the technical, economic and financial responsibility of the operations. In March 2010 an extension agreement was signed for this contract until December 2021. To date, the Company is in the process of obtaining the approval of the Abandonment Plan, in order to execute the activities under its responsibility due to the termination of the Contract.

 

v. Contract for the operation of hydrocarbon supply terminals.

 

On July 16, 2014, Petroperu S.A. signed contracts for the operation of the North and Central hydrocarbon supply terminals with the subsidiary Unna Energia S.A. and Oiltanking Peru S.A.C., for the provision of reception, storage and dispatch services for a term of twenty years from the date of signing the contracts, for which the Terminales del Peru Consortium was formed, which began operating on September 2, 2014. Unna Energia S.A. is the operator and both consortium members exercise joint control of the business and have a 50% shareholding.

 

D. Joint operations

 

As of December 31, 2021 and 2022, the Corporation participates in 39 and 38 joint operations with third parties, respectively. The table below lists the main joint operations in which the Corporation participates.

 

43

 

 

AENZA S.A.A. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2022

 

   Percentage of interest 
Joint operations  2021   2022 
AENZA S.A.A.        
 - Concesionaria La Chira S.A.   50%   50%
Cumbra Peru S.A.          
- Consorcio Huacho Pativilca   67%   67%
- Consorcio GyM – CONCIVILES   67%   67%
- Consorcio Chicama - Ascope   50%   50%
- Consorcio Constructor Alto Cayma   50%   50%
- Consorcio Ermitaño   50%   50%
- Consorcio GyM-Stracon   50%   50%
- Consorcio HV GyM   50%   50%
- Consorcio La Chira   50%   50%
- Consorcio Lima Actividades Comerciales Sur   50%   50%
- Consorcio Lima Actividades Sur   50%   50%
- Consorcio Rio Urubamba   50%   50%
- Consorcio Alto Cayma   49%   49%
- Consorcio La Gloria   49%   49%
- Consorcio Norte Pachacutec   49%   49%
- Consorcio Italo Peruano   48%   48%
- Consorcio Vial Quinua   46%   46%
- Consorcio Constructor Ductos del Sur   29%   29%
- Consorcio Constructor Chavimochic   27%   27%
- Consorcio Inti Punku   49%   49%
- Consorcio Pasco   1%   1%
Unna Energia S.A.          
- Consorcio Terminales   50%   50%
- Terminales del Peru   50%   50%
Unna Transporte S.A.C.          
- Consorcio Ancon-Pativilca   -    - 
- Consorcio Peruano de Conservacion   50%   50%
- Consorcio Manperan   67%   67%
- Consorcio Vial Sierra   50%   50%
- Consorcio Vial Ayahuaylas   99%   99%
- Consorcio Vial ICAPAL   -    -
- Consorcio Vial Sullana   99%   99%
- Consorcio Vial del Sur   99%   99%
- Consorcio Obras Viales   99%   - 
Cumbra Ingenieria S.A.          
- Consorcio Vial la Concordia   88%   88%
- Consorcio GMI- Haskoningdhv   70%   70%
- Consorcio Supervisor Ilo   55%   55%
- Consorcio Poyry-GMI   40%   40%
- Consorcio Internacional Supervision Valle Sagrado   33%   33%
- Consorcio Ecotec - GMI - PIM   30%   30%
- Consorcio Ribereno Chinchaycamac   40%   40%
- Consorcio Supervisor GRH   83%   83%
- Consorcio Ecotec - GMI   20%   20%

 

All joint agreements listed above are operated in Peru.

 

44

 

 

AENZA S.A.A. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2022

 

The main activities of the joint operations correspond to:

 

Joint agreements Economic activity
AENZA S.A.A.

Construction, operation, and maintenance of the raw sewage treatment plant of La Chira to the south of Lima. The purpose of the project is to face enviromental problems of Lima, due to raw sewage flowing into the sea.

 

Cumbra Peru S.A.

Consortiums created only to come into construction contracts.

 

Unna Energia S.A.

Consorcio Terminales and Terminales del Peru provide services of reception, storage, shipment, and transportation of liquid hydrocarbons such as gasoline, fuel for aircrafts, diesel and residual fuel, among others.

 

Unna Transporte S.A.C.

Services of refurbishment, routinary and regular maintenance of highways, and highway preservation and conservation services.

 

Cumbra Ingenieria S.A.

Engineering advisory and consulting services, execution of studies and projects, project management, and work supervision.

 

 

7. Operating Segments

 

Operating segments are reported consistently with the internal reports that are reviewed by the Corporation’s chief decision-maker; that is, the Executive Committee, which is led by the Corporate General Manager. This Committee acts as the maximum authority in operations decision making and is responsible for allocating resources and assessing the performance of each operating segment.

 

The Corporation’s 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 based on the level of revenue are ‘engineering and construction’, ‘infraestructure’ and ‘energy´.

 

Income derived from operations abroad (Chile and Colombia) represents 19.5% of the Corporation’s total income in 2022 (20.7% in 2021 including Chile and Colombia).

 

Inter-segmental sale transactions are made at prices similar to those that would have been agreed to with non-related third parties. Revenues from external customers reported are measured in a manner consistent with the basis of preparation of the statement of profit or loss. Sale of goods are related to real estate segment. Revenues from services are related to other segments.

 

Corporation’s sales and accounts receivable are not concentrated in a few customers. There are no external customers representing 10% or more of the Corporation’s revenue.

 

The Corporation has determined four reportable segments. These operating segments are components of a company about which separate financial information is available that is regularly evaluated by the Corporate Governance Board (“CODM”) in deciding how to allocate resources and assess performance.

 

The operations of Corporation in each reportable segment are as follows:

 

(a)Engineering and construction: This segment includes traditional engineering services such as architectural planning, structural, civil and design engineering for advanced specialties including process design, simulation, and environmental services, as well as construction at three divisions: i) civil works, such as the construction of hydroelectric power stations and other large infrastructure facilities; (ii) electromechanical construction, such as concentrator plants, oil and natural gas pipelines, and electric transmission lines; iii) building construction, such as offices, residential buildings, hotels, and affordable housing projects, shopping centers, and industrial facilities.

 

45

 

  

AENZA S.A.A. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2022

 

(b)Energy: This segment includes oil exploration, exploitation, production, treatment, and trade in four oil deposits, separation and trade of natural gas and its byproducts at the gas processing plant, as well as the construction and assembly of oil facilities or those linked to the oil and gas industry. It also includes storage and dispatch of fuel and oil byproducts.

 

(c)Infrastructure: The Corporation has long-term concessions or similar contractual arrangements in Peru for three highways with tolls, Lima Metro, a sewage treatment plant in Lima, and operation and maintenance services for infrastructure assets.

 

(d)Real Estate: The Corporation mainly develops and sells properties for low- and middle-resource sectors, which are experiencing a significant increase in available income, as well as luxury properties to a lesser degree. It also develops commercial spaces and offices.

 

The Executive Committee uses adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) as the primary relevant indicator to understanding the operating performance of the Corporation and its operating segments.

 

Adjusted EBITDA is not a measurement of results based on International Financial Reporting Standards. The Corporation’s definition related to adjusted EBITDA may not be comparable to similar performance measures and disclosures from other entities.

 

The adjusted EBITDA is reconciled to net loss as follows:

 

In thousands of soles  2021   2022 
Net loss   (101,816)   (362,054)
Financial income and expenses   209,495    141,020 
Interests for present value of financial asset or liability   63,032    86,014 
Income tax   41,443    131,346 
Depreciation and amortization   205,307    177,023 
Adjusted EBITDA   417,461    173,349 
Adjustments to adjusted EBITDA for other items          
Impairment of investments   -    14,525 
Provisions: civil compensation and legal claims   30,457    256,198 
Put option on Morelco S.A.S. acquisition   (70,322)   - 
Adjusted EBITDA for other items   377,596    444,072 

 

The adjusted EBITDA with non recurring items per segment is as follows:

 

In thousands of soles  2021   2022 
Engineering and construction   47,295    (72,335)
Energy   173,664    184,199 
Infrastructure   197,066    262,626 
Real estate   36,912    137,671 
Parent company operations   (34,450)   10,550 
Intercompany eliminations   (42,891)   (78,639)
    377,596    444,072 

 

46

 

 

AENZA S.A.A. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2022

 

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

 

Operating segments financial position
Segment reporting

 

   Engineering       Infrastructure       Parent         
In thousands of soles  and
construction
   Energy   Toll
roads
   Transportation   Water
treatment
   Real estate   Company
operations
   Eliminations   Consolidated 
As of December 31, 2021                                    
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   610,651    67,662    38,418    106,856    1,003    9,958    84    -    834,632 
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   1,464,129    259,812    244,780    344,799    9,527    493,385    188,173    (184,452)   2,820,153 
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    1,447,556    (1,538,815)   31,173 
Investment property, net   -    -    -    -    -    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 and goodwill, 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   180,586    4,717    21,304    -    644    16,960    47,038    5,097    276,346 
Total non-current assets   923,625    516,390    412,205    669,898    20,408    111,528    2,218,273    (1,855,349)   3,016,978 
Total assets   2,387,754    776,202    656,985    1,014,697    29,935    604,913    2,406,446    (2,039,801)   5,837,131 
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   699,851    67,686    44,210    30,637    464    30,401    38,894    683    912,826 
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    17,922    -    347    1,058    476    -    94,958 
Other accounts payable   560,920    23,116    38,198    9,104    791    91,342    31,510    -    754,981 
Provisions   71,301    25,498    4,158    -    -    560    54,028    -    155,545 
Total current liabilities   1,663,735    160,173    192,152    106,467    1,639    211,581    155,913    (211,168)   2,280,492 
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   19,705    31,187    -    47,515    -    -    -    -    98,407 
Total non-current liabilities   182,818    208,159    259,374    741,202    27,533    29,742    939,590    (287,789)   2,100,629 
Total liabilities   1,846,553    368,332    451,526    847,669    29,172    241,323    1,095,503    (498,957)   4,381,121 
Equity attributable to controlling interest in the Company   528,033    378,653    149,904    125,271    763    139,728    1,308,104    (1,427,411)   1,203,045 
Non-controlling interest   13,168    29,217    55,555    41,757    -    223,862    2,839    (113,433)   252,965 
Total liabilities and equity   2,387,754    776,202    656,985    1,014,697    29,935    604,913    2,406,446    (2,039,801)   5,837,131 

  

47

 

 

AENZA S.A.A. and Subsidiaries

Notes to the Consolidated Financial Statements

December 31, 2021 and 2022

 

   Engineering       Infrastructure       Parent         
In thousands of soles  and
construction
   Energy   Toll roads   Transportation   Water
treatment
   Real estate   Company
operations
   Eliminations   Consolidated 
As of December 31, 2022                                    
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    118,867    898    146,316    561    -    1,078,582 
Accounts receivable from related parties   86,146    68    51,523    4,455    52    378    115,736    (230,613)   27,745 
Other accounts receivable   298,784    39,921    28,902    15,229    30    5,380    7,294    (2,345)   393,195 
Inventories, net   41,933    29,935    9,655    39,780    -    227,067    -    (1,587)   346,783 
Prepaid expenses   10,945    2,055    5,496    369    160    448    8,625    -    28,098 
Total current assets   1,345,057    256,777    259,972    350,447    4,050    491,076    319,123    (234,545)   2,791,957 
Long-term trade accounts receivable, net   2,806    -    16,215    699,487    1,392    3,969    -    -    723,869 
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    1,509,790    (1,510,650)   14,916 
Investment property, net   -    -    -    1,507    -    19,823    40,594    -    61,924 
Property, plant and equipment, net   102,822    176,596    6,193    848    150    7,531    1,286    (10,961)   284,465 
Intangible assets and goodwill, 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   175,702    4,572    26,787    -    415    23,781    59,316    5,065    295,638 
Total non-current assets   823,115    659,686    361,305    703,876    24,093    181,951    2,296,843    (1,921,546)   3,129,323 
Total assets   2,168,172    916,463    621,277    1,054,323    28,143    673,027    2,615,966    (2,156,091)   5,921,280 
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   740,142    124,259    52,916    52,292    223    35,939    16,950    4,535    1,027,256 
Accounts payable to related parties   297,505    2,734    46,257    22,421    296    12,227    20,291    (348,243)   53,488 
Current income tax   12,495    247    8,609    2,433    104    45,092    672    -    69,652 
Other accounts payable   490,494    19,724    49,187    9,146    1,298    115,661    24,837    (4,905)   705,442 
Provisions   81,288    20,535    1,722    1,197    -    540    27,644    -    132,926 
Total current liabilities   1,645,669    206,111    203,878    118,709    1,927    252,577    571,129    (359,874)   2,640,126 
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 
Long-term trade accounts payable   -    -    -    9,757    -    -    -    -    9,757 
Other long-term accounts payable   94,261    -    2,243    189    2,932    -    2,694    -    102,319 
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    4,947    -    -    491,463    -    569,027 
Deferred income tax liability   16,670    53,242    -    58,396    -    -    -    -    128,308 
Total non-current liabilities   153,469