Amended Report of Foreign Issuer (6-k/a)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K/A

REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13a-16 OR 15b-16 OF
THE SECURITIES EXCHANGE ACT OF 1934

For the month of November 2017

Commission File Number 001-35591

GRAÑA Y MONTERO S.A.A.

(Exact name of registrant as specified in its charter)

GRAÑA Y MONTERO GROUP

(Translation of registrant’s name into English)

Republic of Peru

(Jurisdiction of incorporation or organization)

Avenida Paseo de la República 4667, Lima 34,
Surquillo, Lima

Peru

( Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F X Form 40-F __________

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): [ ]

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): [ ]

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes __________ No X

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): Not applicable.

November 15, 2017

EXPLANATORY NOTE:

The attached contains our unaudited consolidated financial statements as of and for the years ended December 31, 2016 and 2015. The attached unaudited consolidated financial statements contain adjustments to, and supersede, the unaudited consolidated financial statements for the same periods furnished on a Form 6-K on January 27, 2017. The attached unaudited consolidated financial statements are the same as the unaudited consolidated financial statements furnished in a Form 6-K on October 31, 2017, except that the attached contain notes that were not included in such Form 6-K. The attached unaudited consolidated financial statements are subject to audit, and therefore may change.

/s/ Claudia Drago Morante
Stock Market Representative
Graña y Montero S.A.A.

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.

GRAÑA Y MONTERO S.A.A.

By: /s/ CLAUDIA DRAGO MORANTE

Name: Claudia Drago Morante

Title: Stock Market Representative

November 15, 2017

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

UNAUDITED

GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES

CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AT DECEMBER 31, 2016 AND 2015 AND FOR THE PERIOD ENDED IN
THIS DATE

GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES

CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AT DECEMBER 31, 2016 AND 2015 AND FOR THE PERIOD ENDED IN
THIS DATE

CONTENTS

Condensed Interim Consolidated Statement of Financial Position

Condensed Interim Consolidated Income Statement

Condensed Interim Consolidated Statement of Comprehensive Income

Condensed Interim Consolidated Statement of Shareholders’ Equity

Condensed Interim Consolidated Statement of Cash Flows

Notes to the Condensed Interim Consolidated Financial Statements

S/ = New Peruvian Sol

US$ = United States dollar

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

UNAUDITED

GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

ASSETS		At				LIABILITIES AND EQUITY		At
		December 31,		December 31,				December 31,			December 31,
	Note	2015		2016			Note	2015			2016
Current assets						Current liabilities
Cash and cash equivalents			554,002		606,949	Borrowings	12		1,228,020			1,961,043
Financial asset at fair value through profit or loss			3,153		352	Bonds	13		37,083			46,091
Trade accounts receivables			1,050,791		1,086,913	Trade accounts payable			1,635,760			1,278,387
Unbilled work in progress			1,319,187		683,242	Accounts payable to related parties	9		77,830			80,217
Accounts receivable from related parties	9		280,153		181,664	Current income tax			34,116			62,160
Other accounts receivable			824,589		659,377	Other accounts payable			1,066,000			1,096,307
Inventories			1,159,154		1,107,702	Provisions	14		13,468			14,531
Prepaid expenses			40,023		51,348	Total current liabilities			4,092,277			4,538,736
			5,231,052		4,377,547
						Non-current liabilities
Non-current assets classified as held for sale			22,511		22,385	Borrowings	12		553,336			419,395
						Long-term bonds	13		757,008			921,623
Total current assets			5,253,563		4,399,932	Other long-term accounts payable			246,396			512,803
						Long-term accounts payable to related parties	9		20,136			65,320
Non-current assets						Provisions	14		35,618			31,155
Long-term trade accounts receivable			621,831		667,519	Derivative financial instruments			2,331			1,081
Long-term unbilled work in progress			59,754		197,586	Deferred income tax liability			101,664			75,983
Long-term accounts receivable from related parties			-		587,973	Total non-current liabilities			1,716,489			2,027,360
Prepaid expenses			22,386		23,526	Total liabilities			5,808,766			6,566,096
Other long-term accounts receivable			65,929		357,952
Available-for-sale financial assets	8		120,134		-	Equity
Investments in associates and joint ventures	10		646,884		886,856	Capital	15		660,054			660,054
Investment property			34,702		49,357	Legal reserve			132,011			132,011
Property, plant and equipment	11		1,111,757		1,113,599	Optional reserve			29,974			29,974
Intangible assets	11		881,020		960,286	Share Premium			897,532			882,464
Deferred income tax asset			173,851		292,375	Other reserves			(129,059	)		(167,572	)
Total non-current assets			3,738,248		5,137,029	Retained earnings			1,064,044			916,396
						Equity attributable to controlling interest in the Company			2,654,556			2,453,327
						Non-controlling interest			528,489			517,538
						Total equity			3,183,045			2,970,865
Total assets			8,991,811		9,536,961	Total liabilities and equity			8,991,811			9,536,961

The accompanying notes on pages 8 to 24 are an integral part of the consolidated financial statements.

-2-

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

UNAUDITED

GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES

CONSOLIDATED INCOME STATEMENT

		For the year
		ended December 31,
	Note	2015			2016
Revenues from construction activities			5,513,655			3,945,599
Revenues from services provided			1,901,498			1,895,296
Revenue from real estate and sale of goods			417,280			643,373
			7,832,433			6,484,268

Cost of construction activities			(5,310,003	)		(3,757,032	)
Cost of services provided			(1,523,358	)		(1,671,783	)
Cost of real estate and goods sold			(296,267	)		(440,786	)
	16		(7,129,628	)		(5,869,601	)
Gross profit			702,805			614,667

Administrative expenses	16		(413,380	)		(398,695	)
Other income and expenses			57,287			(13,270	)
Gain from the sale of investments	8		(8,289	)		46,336
Operating profit			338,423			249,038

Financial expenses			(176,802	)		(174,789	)
Financial income			38,107			20,792

Share of the profit or loss in associates and joint ventures under the equity method of accounting			17,603			(102,491	)
Profit before income tax			217,331			(7,450	)
Income tax	17		(75,619	)		(48,960	)
Profit for the period			141,712			(56,410	)

Profit attributable to:
Owners of the Company			88,154			(117,735	)
Non-controlling interest			53,558			61,325
			141,712			(56,410	)
Earnings per share from continuing operations attributable to owners of the Company during
the period			0.134			-0.178

The accompanying notes on pages 8 to 24 are an integral part of the consolidated financial statements.

-3-

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

UNAUDITED

GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

		For the year
		ended December 31,
	Note	2015			2016

Profit for the period			141,712			(56,410	)
Other comprehensive income: Items that will not be reclassified to profit or loss
Remeasurement of actuarial gains and losses, net of tax			(3,860	)		(1,530	)

Items that may be subsequently reclassified to profit or loss
Cash flow hedge, net of tax			723			883
Foreign currency translation adjustment, net of tax			(44,649	)		(890	)
Transfer to profit or loss of available-for-sale financial assets	8		19,973			(2,220	)
Exchange difference from net investment in a foreign operation			-			(41,461	)
Exchange difference from net investment in a foreign operation, net of tax			(5,221	)		9,427
			(29,174	)		(34,261	)
Other comprenhensive income for the period, net of tax			(33,034	)		(35,791	)
Total comprehensive income for the period			108,678			(92,201	)

Comprehensive income attributable to:
Owners of the Company			70,069			(157,368	)
Non-controlling interest			38,609			65,167
			108,678			(92,201	)

The accompanying notes on pages 8 to 24 are an integral part of the consolidated financial statements.

-4-

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

UNAUDITED

GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

FOR THE YEAR ENDED DECEMBER 31, 2015 AND 2016

	Attributable to the controlling interests of the Company
	Number								Premium			Other									Non-
	of shares				Legal		Optional		for issuance			reserves			Retained						controlling
	In thousands		Capital		reserve		reserve		of shares						earnings			Total			interest			Total


Balances as of January 1, 2015		660,054		660,054		132,011		-		899,311			(113,895	)		1,113,696			2,691,177			482,530			3,173,707
Profit for the period		-		-		-		-		-			-			88,154			88,154			53,558			141,712
Cash flow hedge		-		-		-		-		-			687			-			687			36			723
Adjustment for actuarial gains and losses		-		-		-		-		-			-			(2,921	)		(2,921	)		(939	)		(3,860	)
Foreign currency translation adjustment		-		-		-		-		-			(30,687	)		-			(30,687	)		(13,962	)		(44,649	)
Change in value of available-for-sale financial assets		-		-		-		-		-			19,973			-			19,973			-			19,973
Exchange difference from net investment in a foreign operation		-		-		-		-		-			(5,137	)		-			(5,137	)		(84	)		(5,221	)
Comprehensive income of the year		-		-		-		-		-			(15,164	)		85,233			70,069			38,609			108,678
Transactions with shareholders:
- Transfer to legal reserve		-		-		-		29,974		-			-			(29,974	)		-			-			-
- Dividend distribution		-		-		-		-		-			-			(104,911	)		(104,911	)		(4,535	)		(109,446	)
- Contributions of non-controlling shareholders		-		-		-		-		-			-			-			-			10,329			10,329
- Additional acquisition of non-controlling		-		-		-		-		(894	)		-			-			(894	)		(971	)		(1,865	)
- Sale to non-controlling interest		-		-		-		-		(885	)		-			-			(885	)		2,527			1,642
Total transactions with shareholders		-		-		-		29,974		(1,779	)		-			(134,885	)		(106,690	)		7,350			(99,340	)
Balances as of December 31, 2015		660,054		660,054		132,011		29,974		897,532			(129,059	)		1,064,044			2,654,556			528,489			3,183,045

Balances as of January 1, 2016		660,054		660,054		132,011		29,974		897,532			(129,059	)		1,064,044			2,654,556			528,489			3,183,045
Profit for the period		-		-		-		-		-			-			(117,735	)		(117,735	)		61,325			(56,410	)
Cash flow hedge		-		-		-		-		-			839			-			839			44			883
Adjustment for actuarial gains and losses		-		-		-		-		-			-			(1,120	)		(1,120	)		(410	)		(1,530	)
Foreign currency translation adjustment		-		-		-		-		-			(4,960	)		-			(4,960	)		4,070			(890	)
Change in value of available-for-sale financial assets		-		-		-		-		-			(2,220	)		-			(2,220	)		-			(2,220	)
Transfer to profit or loss of available-for-sale financial assets		-		-		-		-		-			(41,461	)		-			(41,461	)		-			(41,461	)
Exchange difference from net investment in a foreign operation		-		-		-		-		-			9,289			-			9,289			138			9,427
Comprehensive income of the period		-		-		-		-		-			(38,513	)		(118,855	)		(157,368	)		65,167			(92,201	)
Transactions with shareholders:
- Transfer to Optional reserve		-		-		-		-		-			-			-			-			-			-
- Dividend distribution		-		-		-		-		-			-			(30,853	)		(30,853	)		(25,473	)		(56,326	)
- Contributions (devolution) of non-controlling shareholders,net		-		-		-		-		-			-			-			-			(19,099	)		(19,099	)
- Additional acquisition of non-controlling		-		-		-		-		(15,167	)		-			-			(15,167	)		(35,972	)		(51,139	)
- Sale to non-controlling interest		-		-		-		-		99			-			-			99			236			335
- Acquisition of subsidiary Adexus		-		-		-		-		-			-			-			-			4,153			4,153
- Deconsolidation of former subsidiary		-		-		-		-		-			-			2,060			2,060			37			2,097
Total transactions with shareholders		-		-		-		-		(15,068	)		-			(28,793	)		(43,861	)		(76,118	)		(119,979	)
Balances as of December 31, 2016		660,054		660,054		132,011		29,974		882,464			(167,572	)		916,396			2,453,327			517,538			2,970,865

The accompanying notes on pages 8 to 24 are an integral part of the consolidated financial statements.

-5-

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

UNAUDITED

GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

			For the year ended December 31,
	Note		2015			2016
OPERATING ACTIVITIES
Profit before income tax				217,331			(7,450	)
Adjustments to profit not affecting cash flows from
operating activities:
Depreciation		11		217,070			205,522
Amortization of other assets		11		89,355			82,743
Impairment of inventories		16		17			36,353
Impairment of accounts receivable and other accounts receivable		16		5,806			419,584
Debt forgiveness				-			(431,484	)
Impairment of property, plant and equipment		16		9,677			9,263
Impairment of intangible assets				-			54,308
Financial expenses-CCDS				-			7,004
Expenses for liquidation of works - CCDS				-			164
Indemnification for lost profit				-			(33,600	)
Profit on fair value of financial asset at fair value through profit or loss				(2,740	)		31
Change in the fair value of the liability for put option				(18,627	)		(984	)
Other Provisions		14		6,398			6,500
Dividends income from available-for-sale financial assets				(7,215	)		-
Return receipt from Morelco				-			(6,658	)
Remeasurement of purchase consideration of Morelco				-			(7,166	)
Financial expense,net				129,365			106,742
Other provisions in CCDS				-			24,915
Share of the profit and loss in associates and joint ventures
under the equity method of accounting		10		(34,872	)		102,491
Reversal of provisions		14		(7,796	)		(20,853	)
Lower of fixed assets				-			3,951
Lower of investments				2,755			1,227
Profit on sale of property, plant and equipment				(17,385	)		(18,393	)
Loss on financial asset at fair value through profit or loss				279			221
Loss on sale of non-current asset held for sale				171			22
Profit on sale from available-for-sale financial assets				-			(46,337	)
Loss on sale of investments in subsidiaries				8,289			-
Loss on remeasurement of accounts receivable				-			20,274
Loss on remeasurement of investment				-			6,832
Net variations in assets and liabilities:
Trade accounts receivable				(99,446	)		108,358
Other accounts receivable				(188,053	)		(82,838	)
Other accounts receivable from related parties				(133,286	)		84,449
Inventories				(215,196	)		30,300
Pre-paid expenses and other assets				11,667			(146	)
Trade accounts payable				199,400			(85,781	)
Other accounts payable				(45,096	)		114,476
Other accounts payable to related parties				13,961			45,908
Other provisions				(6,770	)		(2,756	)
Interest payment				(114,027	)		(171,572	)
Payments related to Norvial Concession				(142,575	)		(97,711	)
Payment of income tax				(150,434	)		(125,433	)
Net cash applied to operating activities				(271,977	)		332,476

INVESTING ACTIVITIES
Sale of available-for-sale investment				26			107,341
Sale of a financial asset through profit or loss				4,604			-
Sale of property, plant and equipment				55,832			66,086
Sale of financial asset at fair value through profit or loss				-			1,427
Sale of non-current assets held for sale				8,801			117
Refunding for price adjustment				-			6,658
Return of contributions				481			1,963
Interest received				32,162			15,368
Dividends received		10		59,175			27,992
Payment for purchase of a non-current asset held for sale				(22,297	)		-
Payment for purchase of investments properties				(748	)		(17,543	)
Payments for intangible purchase				(32,883	)		(45,706	)
Payments for purchase and contributions on investment in associate and joint ventures				(463,103	)		(389,658	)
Payments for property, plant and equipment purchase				(193,156	)		(147,732	)
Net cash applied to investing activities				(551,106	)		(373,687	)

FINANCING ACTIVITIES
Loans received				4,442,858			3,941,750
Bonds issued				814,016			178,640
Amortization of loans received				(4,563,855	)		(3,914,570	)
Amortization of bonds issued				(16,480	)		(25,281	)
Payment for transaction costs for debt				(18,516	)		(650	)
Dividends paid to owners of the parent				(104,911	)		(30,853	)
Dividends paid to non-controlling interest				(4,535	)		(25,473	)
Cash received from non-controlling shareholders				10,329			8,034
Acquisition or sale of interest in a subsidiary of non-controlling shareholders				(223	)		(45,835	)
Net cash provided by financing activities				558,683			85,762
Net increase (net decrease) in cash				(264,400	)		44,551
Cash and cash equivalents at the beginning of the year				818,402			554,002
Cash and cash equivalents at the end of the period				554,002			598,553

NON-CASH TRANSACTIONS:
Indemnification for lost profit				-			33,600
Debt capitalization				-			8,308
Acquisition of assets through finance leases				92,093			65,336
Recognition of debt as guarantor				-			608,247
Change in fair value of available-for-sale financial assets				19,973			-
Adjustment for deconsolidation of former subsidiaries				9,298			-
Establishment of joint operation - Panorama Plaza de negocios (net assets)				36,180			-


The accompanying notes on pages 8 to 24 are an integral part of the consolidated financial statements.

-6-

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

UNAUDITED

GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AT DECEMBER 31, 2016 (UNAUDITED), AND AT DECEMBER 31, 2015 (AUDITED)

1	GENERAL INFORMATION

The Company is the parent company of the Graña y Montero Group (hereinafter the Group) and it is mainly engaged in holding the investments in the different companies of the Group. Additionally, the Company provides services of general management, financial management, commercial management, legal advisory and human resources management to the Group´s companies; it is also engaged in the leasing of offices to the Group’s companies.

The Group is a conglomerate of companies with operations including different business activities, of which the most significant are engineering and construction, infrastructure (public concession ownership and operation), real estate businesses and services.

These condensed interim consolidated financial statements as of December 31, 2016 have been prepared and authorized for issuance by the Chief Financial Officer on October 30, 2017.

2	BASIS OF PREPARATION

These condensed interim consolidated financial statements for the period ended December 31, 2016 have been prepared in accordance with (IAS 34) “Interim financial reporting”. The condensed interim consolidated financial statements should be read in conjunction with the annual consolidated financial statements for the year ended December 31, 2015, which have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

3	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting policies used in the preparation of these interim condensed consolidated financial statements are consistent with those applied in the preparation of the year-end financial statements at December 31, 2015.

4	FINANCIAL RISK MANAGEMENT

4.1	Financial risk factors

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

The condensed interim consolidated financial statements do not include all financial risk management information and disclosures required in the annual financial statements; these should be read in conjunction with the Group’s annual financial statements as of December 31, 2016. There have been no changes since year-end in the risk management department of the Group or in any risk management policies.

4.1.1

Market risk –

Compared to year end, no new material market risk hedging arrangements have occurred.

-7-

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

UNAUDITED

4.1.2

Credit risk –

Compared to year end, the Group has no exposure to any new relevant credit risk.

4.1.3

Liquidity risk -

Compared to year end, no major changes in undiscounted contractual cash flows have occurred.

The following table categorizes the Group’s financial liabilities into relevant maturity groupings based on the remaining period from the date of the statement of financial position to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows:

	Less than 1 year		From 1 to 2 years		From 2 to 5 years		Over 5 years		Total
At December 31, 2015
Other financial liabilities (except for finance leases)		1,102,855		181,729		223,713		-		1,508,297
Finance leases		157,957		118,311		42,513		10,431		329,212
Bonds		69,823		82,916		217,418		1,445,187		1,815,344
Trade accounts payables		1,635,760		-		-		-		1,635,760
Accounts payables to related parties		77,830		19,728		-		408		97,966
Other accounts payables		181,113		36,456		121,678		-		339,247
Other non-financial liabilities		-		2,331		-		-		2,331
		3,225,338		441,471		605,322		1,456,026		5,728,157
At December 31, 2016
Other financial liabilities (except for finance leases)		1,936,825		128,508		173,145		-		2,238,478
Finance leases		127,496		85,989		26,780		19,506		259,771
Bonds		113,299		180,431		365,697		1,334,485		1,993,912
Trade accounts payables		1,278,387		-		-		-		1,278,387
Accounts payables to related parties		80,217		28,082		37,238		-		145,537
Other accounts payables		303,827		49,064		131,556		-		484,447
Other non-financial liabilities		-		1,081		-		-		1,081
		3,840,051		473,155		734,416		1,353,991		6,401,613

4.2	Capital management -

The Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including current and non-current borrowings), less cash and cash equivalents. Total capital is calculated as total ‘equity’ as shown in the consolidated statement of financial position plus net debt.

As of December 31, 2015 and 2016, the gearing ratio is presented below indicating the Company’s strategy to keep it in a range from 0.10 to 0.70. The gearing ratio was as follows:

	December 31,			December 31,
	2015			2016

Total borrowing and bonds		2,575,447			3,348,152
Less: Cash and cash equivalents		(554,002	)		(606,949	)
Net debt		2,021,445			2,741,203
Total equity		3,183,045			2,970,865
Total capital		5,204,490			5,712,068

Gearing ratio		0.39			0.48

-8-

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

UNAUDITED

4.3	Fair value estimation -

For the classification of the type of valuation used by the Group for its financial instruments at fair value, the following levels of measurement have been established.

-	Level 1: Measurement based on quoted prices in active markets for identical assets or liabilities.

-	Level 2: Measurement based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices).

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

The fair value of the investment held in Transportadora de Gas del Perú S.A. (TGP) classified as available-for-sale financial asset was based on unobservable inputs in the market; the Group calculated its fair value based on its discounted cash flows as of the financial statement date. The information used to determine the fair value of this investment corresponds to Level 3 (Note 8).

Financial assets classified as at fair value through profit or loss corresponds to investments in mutual funds and bonds. Their fair value has been determined with observable information of Level 2.

Other financial instruments measured at fair value correspond to the interest rate swaps signed by subsidiary GMP S.A., by which a variable-interest instrument is changed to a fixed interest rate (cash flow hedge). The information used for determining the fair value of these instruments are Level 2 and has been determined based on the present value of discounted future cash flows applied to the interest-rate change projections of Citibank N.A.

The carrying amounts of cash and cash equivalents correspond to their fair values. The Company considers that the carrying amount of trade accounts receivable and payable is similar to their fair values. The fair value of financial liabilities, disclosed in Note 12-b), has been estimated by discounting the future contractual cash flows at the interest rate currently prevailing in the market and which is available to the Company for similar financial instruments (Level 2).

5	CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

Preparation of the condensed interim consolidated financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

In preparing these condensed interim consolidated financial statements, the significant judgements made by management in applying the Group’s accounting policies and the key sources of uncertainty were the same as those that applied to the consolidated financial statements for the year ended December 31, 2015.

6	SEASONALITY OF OPERATIONS

The Group shows no material seasonality in the operations of any of its subsidiaries; operations are carried out regularly during the course of the period.

-9-

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

UNAUDITED

7	SEGMENT REPORTING

Operating segments are reported consistent with the internal reports that are reviewed by the Corporate General Manager, who is the chief operating decision maker, responsible for allocating resources and evaluating the performance of each operating segment.

The Group's operating segments are assessed by the activity of the following business units: (i) engineering and construction, (ii) infrastructure, (iii) real estate, (iv) technical services and (v) the operation of the Parent Company (Holding).

As set forth under IFRS 8, reportable segments by significance of income are: ‘engineering and construction’ and ‘technical services’. However, the Group has voluntarily decided to report on all its operating segments as detailed in this Note.

Inter-segmental sales transactions are entered into at prices that are similar to those that would have been agreed to with unrelated third parties. Revenues from external customers reported to the Corporate General Manager are measured in a manner consistent with the basis of preparation of the financial statements.

Group sales and receivables are not concentrated on a few customers.

-10-

(All the amounts are expressed in thousand of S/. unless otherwise stated)
AUDITED

Operating segments financial position

Segment reporting

	Engineering		Infrastructure												Parent
	and construction		Energy		Toll roads		Mass transit		Water treatment		Real estate		Technical services		Company Operations		Eliminations			Consolidated
As of December 31, 2015
Assets.-
Cash and cash equivalents		172,116		42,638		58,640		111,454		9,094		74,459		60,193		25,408		-			554,002
Financial asset at fair value through profit or loss		3,153		-		-		-		-		-		-		-		-			3,153
Trade accounts receivables		614,917		43,260		22,045		63,516		-		59,108		247,945		-		-			1,050,791
Unbilled work in progress		1,301,501		-		-		-		17,686		-		-		-		-			1,319,187
Accounts receivable from related parties		316,188		12,145		18,820		301		-		34,724		48,520		132,735		(283,280	)		280,153
Other accounts receivable		599,127		25,857		5,699		25,668		10,250		20,535		102,204		35,249		-			824,589
Inventories		159,557		10,025		-		13,678		-		920,092		61,734		389		(6,321	)		1,159,154
Prepaid expenses		12,899		2,207		1,401		10,787		458		349		11,402		520		-			40,023
Non-current assets classified as held for sale		22,511		-		-		-		-		-		-		-		-			22,511
Total current assets		3,201,969		136,132		106,605		225,404		37,488		1,109,267		531,998		194,301		(289,601	)		5,253,563

Long-term trade accounts receivable		-		-		-		621,831		-		-		-		-		-			621,831
Long-term unbilled work in progress		-		40,727		19,027		-		-		-		-		-		-			59,754
Long-term accounts receivable from related parties		-		-		408		-		-		-		500		256,022		(256,930	)		-
Prepaid expenses		-		3,692		15,584		2,112		998		-		-		-		-			22,386
Other long-term accounts receivable		534		14,214		30,473		2,198		1,589		14,726		-		2,195		-			65,929
Available-for-sale financial assets		-		-		-		-		-		-		-		120,134		-			120,134
Investments in associates and joint ventures		122,717		8,265		-		-		-		28,732		9,228		2,582,913		(2,104,971	)		646,884
Investment property		-		-		-		-		-		34,702		-		-		-			34,702
Property, plant and equipment		606,158		198,774		1,624		217		-		11,303		170,660		130,113		(7,092	)		1,111,757
Intangible assets		302,992		137,130		364,819		311		-		1,043		37,564		23,561		13,600			881,020
Deferred income tax asset		126,550		1,325		3,003		-		-		1,171		39,825		656		1,321			173,851
Total non-current assets		1,158,951		404,127		434,938		626,669		2,587		91,677		257,777		3,115,594		(2,354,072	)		3,738,248
Total assets		4,360,920		540,259		541,543		852,073		40,075		1,200,944		789,775		3,309,895		(2,643,673	)		8,991,811

Liabilities.-
Borrowings		652,974		101,096		55,428		-		-		224,380		91,366		102,776		-			1,228,020
Bonds		-		-		5,537		31,546		-		-		-		-		-			37,083
Trade accounts payable		1,409,982		35,428		3,768		24,498		154		14,334		134,973		12,623		-			1,635,760
Accounts payable to related parties		118,381		3,990		40,578		9,962		10,560		58,790		39,476		79,709		(283,616	)		77,830
Current income tax		19,337		-		753		-		166		26		13,750		84		-			34,116
Other accounts payable		645,648		20,340		2,841		1,682		-		257,616		125,020		12,853		-			1,066,000
Provisions		-		6,341		-		-		-		-		7,127		-		-			13,468
Total current liabilities		2,846,322		167,195		108,905		67,688		10,880		555,146		411,712		208,045		(283,616	)		4,092,277

Borrowings		375,952		83,307		-		-		-		27,562		66,515		-		-			553,336
Long-term bonds		-		-		180,686		576,322		-		-		-		-		-			757,008
Other long-term accounts payable		176,644		-		493		-		-		-		68,045		1,214		-			246,396
Long-term accounts payable to related parties		-		-		-		94,172		24,035		120,083		38,332		-		(256,486	)		20,136
Provisions		24,624		7,034		-		-		-		-		3,960		-		-			35,618
Derivative financial instruments		-		2,331		-		-		-		-		-		-		-			2,331
Deferred income tax liability		52,016		4,250		107		9,723		270		11,937		3,164		20,197		-			101,664
Total non-current liabilities		629,236		96,922		181,286		680,217		24,305		159,582		180,016		21,411		(256,486	)		1,716,489
Total liabilities		3,475,558		264,117		290,191		747,905		35,185		714,728		591,728		229,456		(540,102	)		5,808,766
Equity attributable to controlling interest in the Company		720,722		255,032		198,345		78,127		4,890		158,605		162,550		3,067,987		(1,991,702	)		2,654,556
Non-controlling interest		164,640		21,110		53,007		26,041		-		327,611		35,497		12,452		(111,869	)		528,489
Total liabilities and equity		4,360,920		540,259		541,543		852,073		40,075		1,200,944		789,775		3,309,895		(2,643,673	)		8,991,811

-11-

(All the amounts are expressed in thousand of S/. unless otherwise stated)
NOT AUDITED

Operating segments financial position

Segment reporting

	Engineering		Infrastructure												Parent
	and construction		Energy		Toll roads		Mass transit		Water treatment		Real estate		Technical services		Company Operations		Eliminations			Consolidated
As of December 31, 2016
Assets.-
Cash and cash equivalents		93,543		35,396		110,007		139,414		3,229		58,892		53,521		112,397		550			606,949
Financial asset at fair value through profit or loss		352		-		-		-		-		-		-		-		-			352
Trade accounts receivables		334,426		84,996		23,579		97,079		256		83,704		465,077		-		(2,204	)		1,086,913
Unbilled work in progress		683,242		-		-		-		-		-		-		-		-			683,242
Accounts receivable from related parties		327,385		3,255		19,684		392		12,379		7,284		48,691		50,582		(287,988	)		181,664
Other accounts receivable		408,379		58,235		6,189		25,895		4,841		20,198		93,507		42,133		-			659,377
Inventories		76,059		12,561		-		16,862		-		946,657		68,678		387		(13,502	)		1,107,702
Prepaid expenses		9,204		2,614		1,428		17,265		167		329		20,034		307		-			51,348
Non-current assets classified as held for sale		22,385		-		-		-		-		-		-		-		-			22,385
Total current assets		1,954,975		197,057		160,887		296,907		20,872		1,117,064		749,508		205,806		(303,144	)		4,399,932

Long-term trade accounts receivable		149		-		-		629,310		-		-		38,060		-		-			667,519
Long-term unbilled work in progress		171,752		-		24,165		-		-		-		-		-		1,669			197,586
Long-term accounts receivable from related parties		-		-		408		-		-		-		492		757,203		(170,130	)		587,973
Prepaid expenses		-		-		20,554		2,029		943		-		-		-		-			23,526
Other long-term accounts receivable		42,511		29,533		22,924		225,565		7,347		17,887		1,077		11,108		-			357,952
Investments in associates and joint ventures		117,331		8,516		-		-		-		31,768		9,589		3,288,772		(2,569,120	)		886,856
Investment property		-		-		-		-		-		49,357		-		-		-			49,357
Property, plant and equipment		592,191		176,486		1,243		193		21		13,008		217,727		130,421		(17,691	)		1,113,599
Intangible assets		246,715		139,353		456,000		269		-		950		79,850		22,793		14,356			960,286
Deferred income tax asset		185,957		4,983		1,839		-		-		623		61,855		29,361		7,757			292,375
Total non-current assets		1,356,606		358,871		527,133		857,366		8,311		113,593		408,650		4,239,658		(2,733,159	)		5,137,029
Total assets		3,311,581		555,928		688,020		1,154,273		29,183		1,230,657		1,158,158		4,445,464		(3,036,303	)		9,536,961

Liabilities.-
Borrowings		582,260		82,063		-		-		-		206,456		158,151		932,113		-			1,961,043
Bonds		-		-		25,540		20,551		-		-		-		-		-			46,091
Trade accounts payable		876,847		59,830		2,310		23,882		599		30,617		278,538		6,704		(940	)		1,278,387
Accounts payable to related parties		119,989		3,902		27,757		33,009		237		66,190		44,211		67,685		(282,763	)		80,217
Current income tax		30,576		3,631		44		-		1,064		17,944		8,901		-		-			62,160
Other accounts payable		485,247		11,711		10,512		14,622		27		194,441		190,303		189,444		-			1,096,307
Provisions		6,615		6,441		-		-		-		131		1,344		-		-			14,531
Total current liabilities		2,101,534		167,578		66,163		92,064		1,927		515,779		681,448		1,195,946		(283,703	)		4,538,736

Borrowings		246,315		80,488		-		-		-		16,541		76,051		-		-			419,395
Long-term bonds		-		-		338,143		583,480		-		-		-		-		-			921,623
Other long-term accounts payable		147,839		-		493		246,522		-		32,000		83,516		2,433		-			512,803
Long-term accounts payable to related parties		41,672		-		-		87,200		23,445		40,074		42,667		395		(170,133	)		65,320
Provisions		12,283		17,115		-		-		-		-		1,757		-		-			31,155
Derivative financial instruments		-		1,081		-		-		-		-		-		-		-			1,081
Deferred income tax liability		28,278		3,546		1,518		16,983		283		15,564		9,498		313		-			75,983
Total non-current liabilities		476,387		102,230		340,154		934,185		23,728		104,179		213,489		3,141		(170,133	)		2,027,360
Total liabilities		2,577,921		269,808		406,317		1,026,249		25,655		619,958		894,937		1,199,087		(453,836	)		6,566,096
Equity attributable to controlling interest in the Company		616,915		265,241		220,337		96,019		3,528		234,449		221,155		3,232,799		(2,437,116	)		2,453,327
Non-controlling interest		116,745		20,879		61,366		32,005		-		376,250		42,066		13,578		(145,351	)		517,538
Total liabilities and equity		3,311,581		555,928		688,020		1,154,273		29,183		1,230,657		1,158,158		4,445,464		(3,036,303	)		9,536,961

-12-

(All amounts are expressed in thousands of S/. unless otherwise stated)
NOT AUDITED

Operating segment performance

Segment Reporting

	Engineering			Infrastructure																		Parent
	and construction			Energy			Toll roads			Mass transit			Water treatment			Real estate			Technical services			Company operations			Eliminations			Consolidated
Year 2015 -


Revenue		5,841,559			389,377			394,462			211,279			27,994			215,764			1,152,544			70,531			(471,077	)		7,832,433
Gross profit (loss)		357,274			63,530			78,544			48,804			2,225			51,755			178,303			(7,004	)		(70,626	)		702,805
Administrative expenses		(289,144	)		(18,214	)		(10,319	)		(10,529	)		(310	)		(20,521	)		(115,018	)		(29,882	)		80,557			(413,380	)
Other income and expenses		30,616			1,365			55			2			-			1,759			15,348			11,114			(2,972	)		57,287
Loss from the sale of investments								-			-			-			-			(8,289	)		-			-			(8,289	)
Operating profit (loss)		98,746			46,681			68,280			38,277			1,915			32,993			70,344			(25,772	)		6,959			338,423
Financial expenses		(127,383	)		(19,953	)		(4,713	)		(5,303	)		(45	)		(11,642	)		(32,246	)		(2,818	)		27,301			(176,802	)
Financial income		8,875			158			8,722			2,316			121			746			2,145			56,101			(41,077	)		38,107
Share of the profit or loss
in associates and joint ventures under the equity
method of accounting		(2,234	)		944			-			-			-			14,888			589			76,226			(72,810	)		17,603
Profit (loss) before income tax		(21,996	)		27,830			72,289			35,290			1,991			36,985			40,832			103,737			(79,627	)		217,331
Income tax		(29,441	)		(7,650	)		(18,794	)		(10,630	)		(520	)		(7,649	)		6,102			(9,208	)		2,171			(75,619	)
Profit (loss) for the year		(51,437	)		20,180			53,495			24,660			1,471			29,336			46,934			94,529			(77,456	)		141,712

Profit (loss) attributable to:

Owners of the Company		(64,379	)		17,072			40,010			18,495			1,471			12,377			40,322			95,271			(72,485	)		88,154
Non-controlling interest		12,942			3,108			13,485			6,165			-			16,959			6,612			(742	)		(4,971	)		53,558
		(51,437	)		20,180			53,495			24,660			1,471			29,336			46,934			94,529			(77,456	)		141,712

-13-

(All amounts are expressed in thousands of S/. unless otherwise stated)
NOT AUDITED

Operating segment performance

Segment Reporting

	Engineering			Infrastructure																		Parent
	and construction			Energy			Toll roads			Mass transit			Water treatment			Real estate			Technical services			Company operations			Eliminations			Consolidated
Year 2016 -


Revenue		4,159,538			382,211			264,384			247,040			18,459			411,518			1,416,443			62,070			(477,395	)		6,484,268
Gross profit (loss)		218,810			42,129			75,780			42,473			5,698			136,540			188,901			(171	)		(95,493	)		614,667
Administrative expenses		(257,861	)		(17,260	)		(10,185	)		(12,952	)		(786	)		(28,430	)		(119,003	)		(35,740	)		83,522			(398,695	)
Other income and expenses		(9,250	)		542			128			10			-			838			4,228			(5,843	)		(3,923	)		(13,270	)
Gain from the sale of investments		-			-			-			-			-			-			-			46,336			-			46,336
Operating profit (loss)		(48,301	)		25,411			65,723			29,531			4,912			108,948			74,126			4,582			(15,894	)		249,038
Financial expenses		(64,946	)		(10,801	)		(6,478	)		(2,810	)		(38	)		(14,388	)		(30,989	)		(58,635	)		14,296			(174,789	)
Financial income		11,216			1,040			1,145			8,037			86			2,816			4,220			18,686			(26,454	)		20,792
Share of the profit or loss
in associates and joint ventures under the equity
method of accounting		17,321			1,615			-			-			-			6,850			360			(198,418	)		69,781			(102,491	)
Profit (loss) before income tax		(84,710	)		17,265			60,390			34,758			4,960			104,226			47,717			(233,785	)		41,729			(7,450	)
Income tax		(10,858	)		(5,308	)		(15,490	)		(10,904	)		(1,433	)		(27,054	)		(18,388	)		33,242			7,233			(48,960	)
Profit (loss) for the year		(95,568	)		11,957			44,900			23,854			3,527			77,172			29,329			(200,543	)		48,962			(56,410	)

Profit (loss) attributable to:

Owners of the Company		(89,129	)		9,370			29,284			17,891			3,527			22,106			26,531			(199,667	)		62,352			(117,735	)
Non-controlling interest		(6,439	)		2,587			15,616			5,963			-			55,066			2,798			(876	)		(13,390	)		61,325
		(95,568	)		11,957			44,900			23,854			3,527			77,172			29,329			(200,543	)		48,962			(56,410	)

-14-

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

UNAUDITED

No major changes occurred in total assets as compared to the amount stated in the year-end financial statements.

There are no differences as compared to the year-end financial statements based on segmentation or measurement of financial performance by segment.

8	AVAILABLE-FOR-SALE FINANCIAL ASSETS

This account comprised the investment held by the Company, directly and indirectly, in Transportadora de Gas del Perú S.A. (TGP), a Peruvian entity engaged in providing gas transportation services.

At December 31, 2015, the fair value of the Group’s interest in TGP amounted to S/120.1 million; on March 31,2016 the Company decided to transfer its total interest of 1.64% to the company Enagás International S.L.U.; the amount of the transfer was for US$31.9 million (S/107.28 million).

9	TRANSACTIONS WITH RELATED PARTIES

a)	Transactions with related parties -

Major transactions between the Company and its related parties are summarized as follows:

	From the period ended December 31,
	2015		2016

Revenue from sale of goods and services:

- Associates		1,400		1,746
- Joint operations		52,384		36,901
		53,784		38,647

Inter-company services were agreed upon under market terms as if they had been agreed to with third parties.

b)	Balances of transactions with related parties

	At December 31,				At December 31,
	2015				2016
	Receivable		Payable		Receivable		Payable
Joint operations:
Consorcio Constructor Ductos del Sur		154,383		-		62,834		37,238
Consorcio GyM Conciviles		57,679		-		61,006		-
Consorcio Rio Urubamba		10,856		2,819		9,072		-
Consorcio Peruano de Conservación		6,270		-		8,784		-
Consorcio Vial Quinua		1,036		89		4,198		738
Consorcio Italo Peruano		465		21,907		4,174		17,325
Consorcio La Gloria		3,116		3,077		3,521		3,080
Terminales del Perú		9,459		-		3,215		259
Consorcio Rio Mantaro		6,021		15,941		3,191		6,886
Consorcio Vial Sierra		-		-		940		5,400
Consorcio Constructor Chavimochic		2,558		6,422		915		2,471
Consorcio Energía y Vapor		3,328		-		491		3,203
Consorcio Ermitaño		-				83		6,372
Consorcio Menegua		1,910		-		30		3,803
Consorcio para la Atención y Mantenimiento de Ductos		-		-		-		21,790
Consorcio Huacho Pativilca		80		5,041		-		3,434
Ingeniería y Construcción Sigdo Koppers-Vial		2,659		3,900		-		-
Complementarios Ltda.		84		6,956		-		-
Other minors		11,728		7,388		10,133		2,472
Carried forward:		271,632		73,540		172,587		114,471

-15-

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

	At December 31,					At December 31,
	2015					2016
	Receivable		Payable			Receivable			Payable

Brought forward:		271,632		73,540			172,587			114,471

Other related parties:
Adexus S.A.		8,521		-			-			-
Gaseoducto Sur Peruano S.A		-		-			587,973			-
Perú Piping Spools S.A.C		-		-			9,077			-
Ferrovias Participaciones		-		20,136			-			20,813
Ferrovias Argentina		-		-			-			2,835
Arturo Serna		-		4,290			-			7,418
		8,521		24,426			597,050			31,066
		280,153		97,966			769,637			145,537
Less non-current portion:
Gaseoducto Sur Peruano S.A		-		-			( 587,973	)		-
Consorcio Constructor Ductos del Sur		-		-			-			( 37,238	)
Ferrovias Participaciones		-		( 20,136	)		-			( 20,813	)
Ferrovias Argentina		-		-			-			( 2,835	)
Arturo Serna		-		-			-			( 4,434	)
Portion current		280,153		77,830			181,664			80,217

Accounts receivable and payable have no specific guarantees.

Accounts receivable from related parties mainly arise from sales transactions for goods and services with a maturity period of 60 days. These balances are non-interest-bearing because they have short- term maturities and do not require a provision for impairment.

Accounts payable to related parties mainly arise from transactions to provide services of engineering, construction, maintenance and others and have a maturity period of 60 days. Such accounts are not interest bearing because they are short-term.

10	INVESTMENTS IN ASSOCIATES AND JOINT VENTURES

As of December 31, 2016, associates in which the Group has significant influence are similar to those existing as of December 31, 2015, except for the acquisitions mentioned.

The movement of our investments in associates for the period ended December 31, 2015 and December 31, 2016 is as follows:

	2015			2016

Beginning balance		229,563			646,884
Acquisition and/or contributions received		481,639			-
Increase in capital		-			405,703
Decrease in capital		( 3,364	)		( 1,963	)
Change in corporate structure of Panorama project		( 39,180	)		-
Share of the profit and loss in associates
under the equity method of accounting		34,872			( 102,490	)
Dividends received		( 51,960	)		( 27,992	)
Acquisition of control - Adexus		-			( 46,126	)
Remediation in invesment		-			10,256
Other		( 4,686	)		2,584
Ending balance		646,884			886,856

-16-

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

UNAUDITED

In January and August 2016, the Company capitalized debt with Adexus by S / 8.3 million and S / 14 million respectively, increasing its participation in the first case from 44% to 52% and in the second capitalization from 52% to 91.03 % control is adquired. To date, the Company has incorporated in the Consolidated Financial Statements assets and liabilities of Adexus, the process of measuring the fair value of net asset is concluded by the end of December 2016.

On November 2015, subsidiary Negocios del Gas SA. adquired an interest of 20% of concessionaire Gasoducto Sur Peruano, which represents an investment of approximately US$248 million, at December 2015 the contribution was S/391 million and at December 2016 its contribution was increased in S/198.3 million.

Gasoducto del Sur Peruano S.A. (“GSP”), company owner of the concession "Improvements to the Energy Security of the Country and Development of the Peruvian Southern Gas Pipeline" (the "Concession") and of which our subsidiary Negocios de Gas S.A is a shareholder with 20%, received a notification on January 24, 2017, from the Ministry of Energy and Mines, as Grantor of the Concession, by which it terminated the concession agreement signed on July 23, 2014 (the “Concession Contract”). In case of the termination of the Concession, the Concession Contract states that the Net Book Value of the Concession’s assets (“VCN”) must be determined, and then call a public auction for the transfer of the Concession’s assets to a new concessionaire. From this amount, GSP is entitled to receive, within a maximum term of 12 months as of the termination of the Concession, a payment that can range from the guaranteed minimum of 72.25% of the VCN to the 100% of the VCN that is a function of the result of the auction.

According to the analysis made by the Graña y Montero Group with the information available to date, and under the agreements entered into with the other shareholders of GSP, in the event that the payment reaches 72.25% of the VCN we would recover more than 95% of the total commitments which include the equity invested in GSP amounting to US $ 220 million, the amount honored by the corporate guarantee granted to the bridge loan conferred to GSP by a syndicate of five banks amounting to US$

129 million, as well as the percentage honored in relation to the Guarantee of Fulfillment of the Concession Contract that amounts to US $ 52.5 million.

Graña y Montero S.A.A has registered the impacts of such termination in the Financial Statement to fiscal year 2016, which add up to US $ 35 million after tax, which is a result that considers receiving the minimum payment of 72.25% of the aforementioned VCN.

As a result of the termination of the Concession, Grupo Graña y Montero must meet three specific commitments:

(i)	US$ 150 million loan structured for 5 years with a syndicate of banks led by Credit Suisse.

(ii)	US $ 129 million corresponding to the corporate guarantee issued by Graña y Montero S.A.A in relation to the Bridge Loan in favor of GSP to which will be applied a first payment of US$ 30 million already agreed as part of the structuring of the balance.

(iii)

US$ 52.5 million owed to Chubb Insurance Company, the issuer of the Guarantee of Fulfillment of the Concession Contract, with which the necessary actions have been taken in order to determine the terms for the payment of this debt.

The terms of payment of these obligations are currently being negotiated.

11	PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS

For the period ended December 31,2015 and 2016, the movement in property, plant and equipment and intangible assets accounts was as follows:

-17-

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

UNAUDITED

	Property,
	plant and			Intangible
	equipment			assets

At January 1, 2015		1,147,018			778,743

Additions		297,956			183,136
Transfers, disposals and adjustments		(79,990	)		8,496
Deductions for sale of assets		(38,447	)		-
Depreciation, amortization		(214,780	)		(89,355	)
Net cost at December 31, 2015		1,111,757			881,020


At January 1, 2016		1,111,757			881,020

Additions	213,068		183,568
Acquisition of subsidiary - net	41,988		33,133
Transfers, disposals and adjustments	6,376		(384	)
Deductions for sale of assets	(47,126	)	-
Depreciation, amortization	(203,201	)	(82,743	)
Impairment	(9,263	)	(54,308	)
Net cost at December 31, 2016	1,113,599		960,286

As of December 31, 2015 and 2016, additions to property, plant and equipment comprise of acquisition of plant and equipment intended for the Group’s operations.

As of December 31, 2015 and 2016, the amounts registered in Intangible assets comprise of investments in building the second Ancón-Huacho-Pativilca road section of the Panamericana Norte highway (concession under intangible model ) and acquisitions by Adexus business combination.

Goodwill -

Management reviews the results of its business operations based on the type of economic activity carried out. The economic activities that have given rise to goodwill for the Group were engineering and construction, electro-mechanical works, mining services, IT services and telecommunications services.

Goodwill by cash-generating units is broken down as follows:

	At December 31,		At December 31,
	2015		2016
Engineering and construction		140,090		98,587
Electromechanical		20,737		20,737
Mining and construction services		13,366		13,366
Telecommunications services		6,443		6,728
IT equipment and services		4,172		5,102
		184,808		144,520

As a result of the impairment testing on goodwill performed by Management on an annual basis the recoverable amount of the related cash-generating unit (CGU) is determined based on its value in use. Value in use is determined based on the future cash flows expected to be generated by the assessed CGU. As a result of these assessments no provisions for impairment were required. As of December 31, 2016 same criteria were applied as those in test impairment at December 31, 2015.

-18-

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

UNAUDITED

12	BORROWINGS

This item comprises:

	Total				Current				Non-current
	At December 31, 2015		At December 31, 2016		At December 31, 2015		At December 31, 2016		At December 31, 2015		At December 31, 2016
Bank loans		-		8,396		-		8,396		-		-
Bank loans		1,480,071		2,131,901		1,082,860		1,835,340		397,211		296,561
Leases		301,285		240,141		145,160		117,307		156,125		122,834
		1,781,356		2,380,438		1,228,020		1,961,043		553,336		419,395

a)	Bank loans -

As of December 31, 2016 and 2015, this item comprises bank loans in local and foreign currencies for working capital purposes. These obligations bear interest at fixed rates which fluctuated between 1.0% and 14.4% in 2016 and between 1.0% and 13.1% in 2015.

						Current				Non-current
	Interest			Date of		At December 31				At December 31
	rate			maturity		2015		2016		2015		2016
Graña y Montero S.A.A.	Libor USD 3M +
	from 4.9% to 5.5		%		2016 / 2020		102,776		932,114		-		-
GyM S.A.		1.00% / 7.80	%		2016 / 2020		535,776		492,910		286,671		187,029
Viva GyM S.A.		6.75% / 8.90	%		2016 / 2017		220,423		201,609		8,372		-
GMP S.A.		3.65% / 6.04	%		2016 / 2020		95,824		77,857		70,220		71,453
CAM Holding S.A.		1.30% / 14.43	%		2016 / 2018		42,534		69,702		31,948		24,889
Adexus S.A.		5.9	%		2019		-		42,782		-		13,190
GMD S.A.		6.20% / 7.47	%		2016 / 2017		30,107		14,746		-		-
Norvial S.A.		8.37	%		2016		54,706		-		-		-
Others		5.56% / 7.18	%		2016		714		3,620		-		-
							1,082,860		1,835,340		397,211		296,561

As of December 31, 2016, the Company maintained unused credit limits for S/3,933 million, which expire within one year (S/4,666 million as of December 31, 2015).

b)	Fair value of borrowings -

The carrying amount and fair value of borrowings are broken down as follows:

Carrying amounts

Fair value

At December

31, 2015

At December

31, 2016

At December

31, 2015

At December

31, 2016

Total loans

1,781,356

2,380,438

1,802,183

2,391,375

The fair value is based on cash flows discounted using a rate based on the borrowing rate of 1.3% and 14.3% (4.8% and 13.1% in 2015). It should be noted that the interest rate used are those applicable and negotiated by each Company.

BONDS

This item is broken down as follows:

-19-

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

UNAUDITED

	Total				Current				Non-current
	At December 31, 2015		At December 31, 2016		At December 31, 2015		At December 31, 2016		At December 31, 2015		At December 31, 2016

GyM Ferrovías (a)		607,868		604,031		31,546		20,551		576,322		583,480
Norvial (b)		186,223		363,683		5,537		25,540		180,686		338,143
		794,091		967,714		37,083		46,091		757,008		921,623

a)	GyM Ferrovías S.A. -

In February 2015 subsidiary GyM Ferrovías issued corporate bonds under the U.S. Regulation S. This issue was carried out in Peruvian Soles VAC (the Spanish acronym for constant value update) for a total amount of S/629 million. The issues costs for this transactions were for S/22 million. Maturity of these bonds is November 2039 and bear interest at a rate of 4.75% (plus VAC adjustment), they have a risk rating of AA+ (local grading) granted by Apoyo & Asociados Internacionales Clasificadora de Riesgo and a collateral structure that includes a mortgage on the concession to which GyM Ferrovías is a concessionaire, security on the shares of GyM Ferrovías, Assignment of the collection rights arising from the Management Trust, a Cash Flow and Reserve Trust for the Service of the Debt, Operation and Maintenance and in-progress Capex. At December 31, 2016 the Group made a payment of S/38.4 million.

Capital raised from bond issue were used in amortizing a short-term loan with Banco de Crédito del Perú – BCP for S/400 million, funding the reserve accounts, payment of costs of bond issue and partial repayment of the subordinated loan obtained from parent Company by GyM Ferrovías.

At December 31, 2016 the balance includes accrued interest payable for S/32.9 million.

As part of the process of bond structuring, GyM Ferrovías engaged to adhere to the following covenants:

-	Debt service coverage ratio of not less than 1.2 times.

-	Keeping a constant minimum balance of trust equal to a quarter of operating and maintenance costs (including VAT)

-	Keeping a constant minimum balance of trust equal to two coupons as per schedule.

b)	Norvial S.A. -

In July 2015, Norvial S.A. issued the First Corporate Bond Program on the Lima Stock Exchange for a total S/365 million. The first issue was for S/80 million at 5 years, bearing an interest rate of 6.75% and funds were drawn on July 23, 2015. The second issue was for S/285 million at 11.5 years, bearing an interest rate of 8.375%, structured in 3 disbursements: the first disbursement of S/105 million was on July 23; the second disbursement of S/100 million was on January 25, 2016; the third disbursement of S / 80 million was received in July 25, 2016. The issues costs corresponding to the first issue and to the first and second disbursements of the second issue were for S/3.9 million. Risk rating agencies Equilibrium y Apoyo & Asociados Internacionales graded this debt instrument AA. This financing transaction has been secured by (i) a cash flow trust, related to the consideration and the regulatory rate; (ii) a mortgage on the concession in which Norvial S.A. is a concessionaire; (iii) a security on shares: (iv) collection rights and (v) in general, all those additional collaterals given to the secured creditors. The capital raised is intended to finance the construction of the Second Phase of Red Vial No.5 and the financing of VAT arising from a project-related expenses.

At December 31, 2016 the balance included interest payables for S/4.9 million (S/2.7 million at December 31, 2015)

As part of the process of bond structuring, Norvial engaged to adhere to the following covenants:

-20-

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

UNAUDITED

-	Debt service coverage ratio of not less than 1.3 times.

-	Proforma gearing ratio lower than 4 times.

As of December 31,2016 and December 31,2015 both Companies have complied with their covenants.

Fair value of the bonds of both Companies at December 31, 2016 amounted to S/1,055 million (at December 31,2015 amounted to S/769.5 million), which has been calculated based on the discounted cash flows, using rates between 4.20% and 7.99% (rates between 4.88% and 8.89% at December 31,2015 ) which are within level 2 of the fair value hierarchy.

14	PROVISIONS

This item is broken down based on the expectation of liquidation as follows:

	At December 31, 2015		At December 31, 2016
Current portion		13,468		14,531
Non-current portion		35,618		31,155
		49,086		45,686

The movement of this item for the period ended December 31, 2015 and 2016 is as follows:

Other provisions	Legal claims			Contingent liabilities from acquisitions			Provision for well closure			Total
At January 1, 2015		13,056			43,349			7,210			65,615	)
Additions		6,297			-			101			6,398
Reversals		-			(7,796	)		-			(7,796	)
Offsetting		-			( 1.216	)		-			(1,216	)
Deconsolidation of CAM Brasil		( 2,353	)		-			-			( 2,353	)
Payments		( 1,580	)		( 5,1 86	)		( 4	)		( 6,7 70	)
Translation adjustments		(420	)		(4,372	)		-			(4,792	)
At December 31, 2015		15,000			26,779			7,307			49,086	)

-21-

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

UNAUDITED

Other provisions	Legal claims			Contingent liabilities from acquisitions			Provision for well closure			Total

At January 1, 2016		15,000			26,779			7,307			49,086
Additions		6,500			-			12,304			18,804
Acquisition of subsidiaries		1,926			1,149			-			3,075
Reversals		( 2,970	)		( 17,883	)		(2,395	)		( 23,248	)
Payments		( 298	)		( 2,458	)		-			( 2,756	)
Translation adjustments		187			538			-			725
At December 31, 2016		20,345			8,125			17,216			45,686

The reverses relate mainly to contingent liabilities in 2016 from subsidiaries Morelco, VyV-DSD and CAM Chile for S/10.1 million, S/4.0 million and S/3.8 million, respectively (from subsidiaries CAM Chile for S/7.8 million in 2015).

CAPITAL

As of December 31, 2015 and 2016, the authorized, subscribed and paid-in capital, according to the Company’s bylaws as amended, is represented by 660,053,790 common shares at S/1.00 par value each.

As of December 31, 2015, the amount of 250,860,370 common shares is represented by 50,172,074 ADSs, at 5 shares per ADS.

As of December 31, 2016, the amount of 264,809,545 common shares is represented by 52,961,909 ADSs, at 5 shares per ADS.

16	EXPENSES BY NATURE

For the period ended December 31, 2015 and 2016, this item comprises:

	Goods and		Administrative
	services		expenses
2015:
Inventories, materials and consumables used		1,094,836		-
Personnel charges		2,128,130		215,101
Services provided by third-parties		2,924,711		137,980
Taxes		37,129		1,919
Other management charges		651,057		30,220
Depreciation		199,015		18,055
Amortization		81,841		7,514
Impairment		12,909		2,591
		7,129,628		413,380
2016:
Inventories, materials and consumables used		942,354		-
Personnel charges		1,544,128		234,474
Services provided by third-parties		2,364,899		117,777
Taxes		13,922		1,771
Other management charges		270,815		24,691
Depreciation		193,434		12,088
Amortization		74,849		7,894
Impairment		465,200		-
		5,869,601		398,695

-22-

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

UNAUDITED

17	INCOME TAX

These condensed interim consolidated financial statements for the period ended December 31, 2016, income tax expense is recognised based on management’s estimate of the weighted average annual income tax rate expected for the full financial year. The estimated average annual tax rate used for the year to December 31,2016 is 37.82% (35% for the period ended December 31, 2015). The variation of the effective rate as compared to the previous year is due to the effect of the permanent differences in the income tax calculation.

18	CONTINGENCIES, COMMITTMENTS AND GUARANTEES

As of December 31, 2016, contingencies held by the Group are substantially the same as those existing as of December 31, 2015.

In addition the Group had guarantee commitments with different financial institutions securing transactions in the amount of US$330.7 million.

DIVIDENDS

For the period ended December 31, 2016 , the Group has paid dividends to its non-controlling subsidiaries participate by S/25.5 million (S/4.5 million for the same period in 2015).

Dividends from the year ended December 31, 2015, of S/0.0467 per share totaling S/ 30,853,485 were approved at the General Shareholders’ meeting held on March 29, 2016, and and was paid on April 27, 2016.

20	BUSINESS COMBINATIONS

a)	Acquisition of Adexus S.A.

In June 2015 the Company acquired 44% interest in the capital stock of Chilean entity Adexus S.A., which is mainly engaged in providing IT solutions services. At December 31, 2015 the Company arrived at the conclusion that joint control existed and that the joint arrangement qualified as a joint venture; therefore, the investment was recorded under the equity method of accounting in the consolidated financial statements of the Group.

In January 2016 the Group acquired an additional interest of 8%, totaling 52% of total interest; the consideration agreed totaled S/8.3 million which was settled through debt capitalization. This larger interest did not affected the investment classification as a joint venture.

Subsequently, in August 2016, the Group acquired an additional interest of 39.03% to obtain total interest in its capital stock of 91.03%; thus gaining control over this entity. The consideration agreed totaled S/14 million which was initially stated as debt and then capitalized in the same period.

Upon obtaining control, the Company accounted for the transaction using the acquisition method of accounting set forth in IFRS 3 "Business Combination" and determined goodwill resulting from the acquisition. The balance at December 31, 2016 was stated at provisional values.

The table below itemizes the provisional determination of the fair value of the identifiable assets acquired, liabilities assumed, non-controlling interest held and goodwill at the acquisition date:

-23-

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

UNAUDITED

	Provisional fair values
	S/		US$000
Purchase consideration	14,040		4,179
Fair value of previously held interest	29,039		8,643
Total consideration (a)	43,079		12,822
Fair value of assets and liabilities of Adexus S.A.:
Cash and cash equivalents	7,737		2,303
Trade receivables	107,426		31,972
Receivables from related parties	2,610		777
Other receivables	1,160		345
Inventories	1,647		490
Prepaid expenses	11,587		3,449
Long-term trade receivables	26,886		8,195
Other long-term receivables	2,063		614
Property, plant and equipment	41,988		12,496
Intangibles	32,204		9,585
Deferred income tax assets	18,115		5,198
Borrowings	(108,808	)	(32,383	)
Trade payables	(59,399	)	(17,678	)
Payables to related parties	(15,683	)	(4,667	)
Current income tax	(2,763	)	(822	)
Other payables	(10,291	)	(3,063	)
Other provisions	(1,926	)	(573	)
Contingent liabilities	(1,149	)	(342	)
Deferred income tax liabilities	(7,102	)	(2,114	)
Fair value of net identifiable assets	46,302		13,782
Non-controlling interest (8.97%)	(4,153	)	(1,236	)
Fair value of net assets attributable to the Group (b)	42,149		12,546
Goodwill (a) - (b)	930		276

Losses arising from the re-measurement at fair value of the previously held interest amounted to S/6.8 million, which was recognized in the statement of income within “Other income and expenses, net”, at the date of acquisition of that additional interest.

Acquisition transaction costs amounting to S/1.4 million were charged to profit or loss within administrative expenses.

Revenue and net losses obtained for the period from the acquisition date to December 31, 2016 were S/113.2 million and S/3.7 million, respectively. If Adexus had been consolidated from January 1, 2016, the balances of revenue and net losses would have been S/272.7 million and S/20.2 million, respectively.

Provided that the distribution of the consideration is divided between the fair values on a provisional basis for the 2016 financial statements, the Group will complete the distribution process over a period that should not exceed one year as of the acquisition date of Adexus.

During such review period, additional assets and liabilities will be recognized as they may arise from updated data that may be obtained in relation with the information that existed at the acquisition date and that does not comprise new incidents occurred after the acquisition date; that is, if the Group were to adjust initial amounts recognized at the business combination dates.

21	EVENTS AFTER THE DATE OF THE STATEMENT OF FINANCIAL POSITION

On September 29, 2017, Company signed the corporate building sale agreement, located in Miraflores to Volcomcapital Petit Thouars S.A.C. for US$20.46 (S/66.8 million); as per stated in the purchase agreement also signed a lease agreement for the whole Building with a ten (10) year term, with the option to repurchase the building between the fifth and eighth year of the lease term. The sale was made in October 2017.

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