GRAM Grana y Montero SAA

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX-MONTH PERIOD ENDED AT JUNE 30, 2017 AND 2018 (UNAUDITED); AND, CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT DECEMBER 31, 2017 (AUDITED)

1.            GENERAL INFORMATION

Graña y Montero S.A.A. (hereinafter “the Company”) is the parent of the Graña y Montero Group (hereinafter “the Group”) and it is mainly engaged in holding investments in different Group companies. Additionally, the Company provides services of general management, financial management, commercial management, legal advisory and human resources management and office operating leasing to the Group’s companies.

The Group is a conglomerate of companies with operations including different business activities, 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 June 30, 2018 were prepared and authorized for issuance by the Chief Financial Officer on July 23, 2018.

2.            BASIS OF PREPARATION

These condensed interim consolidated financial statements for the period ended June 30, 2018 were 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, 2017, which have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

The condensed interim consolidated financial statements are presented in thousands of Peruvian Soles, unless otherwise stated.

3.            SIGNIFICANT ACCOUNTING POLICIES

The accounting policies used in the preparation of these condensed interim consolidated financial statements are consistent with those applied in the preparation of the consolidated financial statements at December 31, 2017, except for the new international financial information regulations (IFRS) effective as of January 1, 2018, which the Group is in the process of adoption.

4.            FINANCIAL RISK MANAGEMENT

Financial risk management is carried out by the Group’s Management. Management oversees the general management of risks in specific areas, such as foreign exchange rate risk, price risk, cash flow and fair value interest rate risk, credit risk, the use of derivative and non-derivative financial instruments and the investment of excess liquidity as well as financial risks and carries out periodic supervision and monitoring.

4.1	Financial risk factors

The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, price risk, fair value interest rate risk and cash flow interest rate risk), credit risk and liquidity risk. The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Group’s financial performance. The Group uses derivative financial instruments to hedge certain risk exposures in one of its subsidiaries and considers the use of other derivatives in the event that it identifies risks that may generate an adverse effect for the Group in the short and medium-term.

a)	Market risks

i.	Foreign Exchange risk

The Group is exposed to exchange rate risk as a result of the transactions carried out locally in foreign currency and due to its operations abroad. As of June 30, 2018, and December 31, 2017, this exposure is mainly concentrated in fluctuations of U.S. dollar, the Chilean and Colombian Pesos.

ii.	Price risk

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

iii.	Cash flow and fair value interest rate risk

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

b)	Credit risk

Credit risk arises from cash and cash equivalent and deposits with banks and financial institutions, as well as customer credit counterparties, including the outstanding balance of accounts receivable and committed transactions. For banks and financial institutions, only independently rated parties with a minimum rating of ‘A’ are accepted.

With respect to loans to related parties, the Group 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.

c)	Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and cash equivalents, the availability of funding through an adequate number of sources of committed credit facilities and the capacity to close out positions in the market. Historically, the Group cash flows enabled it to maintain sufficient cash to meet its obligations. However, as of December 31, 2016, the Group started to experienced liquidity risk due to the early termination of the GSP concession agreement and the obligations assumed. As a consequence, the Group started a disinvestment plan to be able to meet the obligations resulting from this scenario.

Group Corporate Finance monitors rolling forecasts of the Group’s liquidity requirements to ensure it has sufficient cash to meet operational needs, so that the Group does not breach borrowing limits or covenants, where applicable, on any of its borrowing facilities.

 

Less significant financing transactions are controlled by the Finance Management of each subsidiary.

Such forecasting takes into consideration the Group’s debt financing plans, covenant compliance, compliance with internal statement of financial position ratio targets and, if applicable, external regulatory or legal requirements; for example, foreign currency restrictions.

Surplus cash held by the operating entities over the balance required for working capital management are invested in interest-bearing checking accounts or time deposits, selecting instruments with appropriate maturities and sufficient liquidity.

The table below analyzes 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.

 

4.2	Capital management

 

The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern  in order to provide returns for shareholders, benefits for  other stakeholders and tomaintain an optimal capital structure to reduce the cost of capital. In 2017 the situation of the Group, has lead Management to monitor deviations that might cause the non-compliance of covenants and may hinder renegotiation of liabilities (Note12).

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

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 ‘equity’ as shown in the consolidated statement of financial position plus net debt.

As of December 31, 2017, and June 30, 2018, the gearing ratio is presented below indicating the Company’s strategy to keep it in a range from 0.10 to 0.70.

 

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 financial assets classified as at fair value through profit or loss has been determined with observable information of Level 1.

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, 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

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

In preparing these condensed interim consolidated financial statements, the significant judgements made by management in applying the 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, 2017.

6.          SEASONALITY OF OPERATIONS

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

7.          SEGMENT INFORMATION

Operating segments are reported consistently with the internal reports that are reviewed by the Group’ chief decision-maker; that is, the Executive Committee, which is led by the Chief Executive Officer. This Committee is responsible for allocating resources and evaluating the performance of each operating segment.

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

As set forth under IFRS 8, reportable segments by significance of income are: ‘engineering and construction’ and ‘infrastructure’. 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 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. There is no external customer that represents 10% or more of the Goup’s revenue.

The table below shows the Group’s financial statements by operating segments:

 

 

Operating segments financial position
Segment reporting
		Engineering				Infrastructure																								Parent
		and construction				Oil & Gas				Toll roads				Transportation				Water treatment				Real estate				Technical services				Company Operations				Eliminations				Consolidated
As of December 31, 2017
Assets.-
Cash and cash equivalent			184,401				43,878				121,901				161,073				4,204				85,187				21,904				3,632				-				626,180
Financial asset at fair value through profit or loss			181				-				-				-				-				-				-				-				-				181
Trade accounts receivables			368,303				64,364				128,124				108,706				604				45,897				274,103				419				2,204				992,724
Work in progress			578,723				-				-				-				-				-				-				6,030				-				584,753
Accounts receivable from related parties			230,607				2,746				62,525				3,072				8,852				69,382				9,947				66,059				(352,438	)			100,752
Other accounts receivable			518,123				55,959				66,765				31,381				1,922				40,026				38,527				12,742				-				765,445
Inventories			46,499				15,093				8,685				19,457				-				643,882				45,512				190				(8,607	)			770,711
Prepaid expenses			4,470				1,168				2,354				10,312				164				216				14,037				757				-				33,478
Non-current assets classified as held for sale			17,722				-				-				-				-				-				-				-				-				17,722
Total current assets			1,949,029				183,208				390,354				334,001				15,746				884,590				404,030				89,829				(358,841	)			3,891,946
Long-term trade accounts receivable			-				-				14,747				793,991				-				-				39,852				-				-				848,590
Long-term work in progress			58,997				-				28,413				-				-				-				-				-				-				87,410
Long-term accounts receivable from related parties			258,479				-				27,660				-				-				-				474				636,941				(149,624	)			773,930
Prepaid expenses			-				-				24,585				13,115				892				-				-				-				(510	)			38,082
Other long-term accounts receivable			75,030				53,917				11,159				255,179				7,348				9,811				1,712				56,696				-				470,852
Investments in associates and joint ventures			111,513				7,344				-				-				-				1				10,113				2,206,230				(2,066,530	)			268,671
Investment property			-				-				-				-				-				45,687				-				-				-				45,687
Property, plant and equipment			509,700				171,226				18,572				580				60				11,621				100,936				70,627				(17,587	)			865,735
Intangible assets			203,390				160,288				492,424				323				-				1,022				47,332				24,031				11,260				940,070
Deferred income tax asset			165,227				5,507				11,057				-				-				10,316				46,470				192,088				6,032				436,697
Total non-current assets			1,382,336				398,282				628,617				1,063,188				8,300				78,458				246,889				3,186,613				(2,216,959	)			4,775,724
Total assets			3,331,365				581,490				1,018,971				1,397,189				24,046				963,048				650,919				3,276,442				(2,575,800	)			8,667,670
Liabilities.-
Borrowings			591,987				46,924				2,589				-				-				162,031				139,821				113,412				-				1,056,764
Bonds			-				-				24,361				12,294				-				-				-				-				-				36,655
Trade accounts payable			955,015				62,659				85,329				81,161				132				43,724				189,553				36,412				(939	)			1,453,046
Accounts payable to related parties			114,198				3,664				60,857				83,841				14				37,396				14,428				88,546				(347,770	)			55,174
Current income tax			29,379				1,282				1,122				-				161				45,299				8,300				-				-				85,543
Other accounts payable			492,362				12,487				68,994				27,058				49				63,654				109,904				73,992				-				848,500
Provisions			6,682				5,204				-				-				-				20				1,597				-				-				13,503
Total current liabilities			2,189,623				132,220				243,252				204,354				356				352,124				463,603				312,362				(348,709	)			3,549,185
Borrowings			127,773				101,549				1,945				-				-				12,010				26,458				363,564				-				633,299
Long-term bonds			-				-				319,549				591,363				-				-				-				-				-				910,912
Other long-term accounts payable			379,043				-				52,349				349,987				158				32,058				36,409				2,469				-				852,473
Long-term accounts payable to related parties			4,306				-				836				89,023				23,445				-				30,739				32,102				(154,497	)			25,954
Provisions			8,587				16,707				-				-				-				-				3,365				5,255				-				33,914
Derivative financial instruments			-				383				-				-				-				-				-				-				-				383
Deferred income tax liability			26,633				8,957				8,606				20,789				210				-				7,277				-				-				72,472
Total non-current liabilities			546,342				127,596				383,285				1,051,162				23,813				44,068				104,248				403,390				(154,497	)			2,529,407
Total liabilities			2,735,965				259,816				626,537				1,255,516				24,169				396,192				567,851				715,752				(503,206	)			6,078,592
Equity attributable to controlling interest in the Company			487,923				299,411				323,987				106,256				(123	)			217,290				82,100				2,547,328				(1,940,842	)			2,123,330
Non-controlling interest			107,477				22,263				68,447				35,417				-				349,566				968				13,362				(131,752	)			465,748
Total liabilities and equity			3,331,365				581,490				1,018,971				1,397,189				24,046				963,048				650,919				3,276,442				(2,575,800	)			8,667,670

Operating segments financial position
Segment reporting
		Engineering				Infrastructure																								Parent
		and construction				Oil & Gas				Toll roads				Transportation				Water treatment				Real estate				Technical services				Company Operations				Eliminations				Consolidated
As of June, 2018
Assets.-
Cash and cash equivalent			213,690				28,773				84,442				145,203				4,897				59,792				13,563				98,052				-				648,412
Financial asset at fair value through profit or loss			212				-				-				-				-				-				-				-				-				212
Trade accounts receivables			162,038				89,299				90,279				182,111				1,227				29,135				283,571				287				-				837,947
Work in progress			398,063				-				-				-				-				-				-				16,841				-				414,904
Accounts receivable from related parties			210,291				2,608				43,637				2,652				8,852				60,637				20,335				60,145				(345,902	)			63,255
Other accounts receivable			542,353				54,469				56,875				46,917				653				46,462				51,555				28,452				-				827,736
Inventories			38,493				15,723				11,587				26,951				-				622,612				43,156				2,129				(8,659	)			751,992
Prepaid expenses			4,296				1,159				2,948				20,185				258				148				12,274				1,803				-				43,071
Non-current assets classified as held for sale			-				-				-				-				-				-				-				-				-				-
Total current assets			1,569,436				192,031				289,768				424,019				15,887				818,786				424,454				207,709				(354,561	)			3,587,529
Long-term trade accounts receivable			58,997				-				40,738				964,249				-				-				15,237				-				-				1,079,221
Long-term work in progress			-				-				29,928				-				-				-				-				-				-				29,928
Long-term accounts receivable from related parties			258,479				-				28,386				-				-				-				1,079				660,045				(187,907	)			760,082
Prepaid expenses			-				-				39,952				10,813				866				-				-				-				(510	)			51,121
Other long-term accounts receivable			252,262				61,220				9,991				130,768				7,346				8,352				774				18,170				-				488,883
Investments in associates and joint ventures			106,951				7,502				-				-				-				3,768				9,308				2,237,149				(2,097,848	)			266,830
Investment property			-				-				-				-				-				44,612				-				-				-				44,612
Property, plant and equipment			249,175				164,886				16,412				826				55				10,343				89,007				69,601				(7,785	)			592,520
Intangible assets			194,517				200,690				480,163				560				-				1,115				43,496				23,753				10,775				955,069
Deferred income tax asset			175,498				4,803				11,363				-				-				14,220				46,633				215,260				4,515				472,292
Total non-current assets			1,295,879				439,101				656,933				1,107,216				8,267				82,410				205,534				3,223,978				(2,278,760	)			4,740,558
Total assets			2,865,315				631,132				946,701				1,531,235				24,154				901,196				629,988				3,431,687				(2,633,321	)			8,328,087
Liabilities.-
Borrowings			329,521				46,995				2,721				117,873				-				148,258				157,659				151,154				-				954,181
Bonds			-				-				23,566				12,727				-				-				-				-				-				36,293
Trade accounts payable			899,039				99,764				63,775				110,726				151				27,560				192,272				43,406				-				1,436,693
Accounts payable to related parties			104,660				2,130				38,473				95,421				-				36,453				17,396				103,844				(338,255	)			60,122
Current income tax			30,550				1,970				29				-				206				21,493				20,363				-				-				74,611
Other accounts payable			384,447				21,466				57,341				27,655				67				128,067				79,735				56,616				-				755,394
Provisions			6,682				5,164				-				-				-				70				1,808				-				-				13,724
Total current liabilities			1,754,899				177,489				185,905				364,402				424				361,901				469,233				355,020				(338,255	)			3,331,018
Borrowings			14,061				90,705				1,211				-				-				11,494				10,575				464,687				-				592,733
Long-term bonds			-				-				310,398				594,720				-				-				-				-				-				905,118
Other long-term accounts payable			507,481				-				41,353				258,733				261				14,975				29,379				2,536				-				854,718
Long-term accounts payable to related parties			-				-				836				98,600				23,322				-				35,764				59,104				(195,557	)			22,069
Provisions			7,910				18,845				-				-				-				-				1,825				5,255				-				33,835
Derivative financial instruments			-				136				-				-				-				-				-				-				-				136
Deferred income tax liability			24,408				16,351				9,377				28,874				202				-				8,645				-				-				87,857
Total non-current liabilities			553,860				126,037				363,175				980,927				23,785				26,469				86,188				531,582				(195,557	)			2,496,466
Total liabilities			2,308,759				303,526				549,080				1,345,329				24,209				388,370				555,421				886,602				(533,812	)			5,827,484
Equity attributable to controlling interest in the Company			482,445				304,067				330,433				139,431				(55	)			214,313				65,455				2,531,781				(1,973,315	)			2,094,555
Non-controlling interest			74,111				23,539				67,188				46,475				-				298,513				9,112				13,304				(126,194	)			406,048
Total liabilities and equity			2,865,315				631,132				946,701				1,531,235				24,154				901,196				629,988				3,431,687				(2,633,321	)			8,328,087

Operating segment performance

 

Segment Reporting

 

		Engineering				Infrastructure																								Parent
		and construction				Oil & Gas				Toll roads				Transportation				Water treatment				Real estate				Technical services				Company operations				Eliminations				Consolidated
Period 2017 -
Revenue			1,064,317				207,272				212,413				119,188				1,509				317,227				505,172				31,383				(177,726	)			2,280,755
Gross profit (loss)			80,946				32,879				52,561				23,376				95				112,107				47,745				(23,053	)			(33,072	)			293,584
Administrative expenses			(80,407	)			(8,206	)			(16,140	)			(6,359	)			(206	)			(8,003	)			(47,259	)			(29,272	)			35,302				(160,550	)
Other income and expenses			2,193				291				455				5				-				(2,586	)			(113	)			1,072				(1,249	)			68
Gain from the sale of investments			-				-				-				-				-				47,115				-				47,370				4,215				98,700
Operating profit (loss)			2,732				24,964				36,876				17,022				(111	)			148,633				373				(3,883	)			5,196				231,802
Financial expenses			(19,714	)			(6,194	)			(4,071	)			(2,268	)			(1	)			(12,089	)			(14,257	)			(36,802	)			9,054				(86,342	)
Financial income			9,532				2,143				1,484				1,866				1				1,023				139				21,745				(13,591	)			24,342
Share of the profit or loss
in associates and joint ventures under the equity
method of accounting			33,686				877				-				-				-				455				248				163,144				(185,298	)			13,112
Profit (loss) before income tax			26,236				21,790				34,289				16,620				(111	)			138,022				(13,497	)			144,204				(184,639	)			182,914
Income tax			(2,127	)			(6,880	)			(9,282	)			(5,114	)			(74	)			(38,069	)			2,555				4,324				966				(53,701	)
Profit (loss) from continuing operations			24,109				14,910				25,007				11,506				(185	)			99,953				(10,942	)			148,528				(183,673	)			129,213
Profit from discontinued operations			43,510				-				-				-				-				-				2,317				-				177				46,004
Profit (loss) for the period			67,619				14,910				25,007				11,506				(185	)			99,953				(8,625	)			148,528				(183,496	)			175,217
Profit (loss) attributable to:
Owners of the Company			65,271				13,065				16,942				8,630				(185	)			55,444				(7,123	)			148,575				(151,926	)			148,693
Non-controlling interest			2,348				1,845				8,065				2,876				-				44,509				(1,502	)			(47	)			(31,570	)			26,524
			67,619				14,910				25,007				11,506				(185	)			99,953				(8,625	)			148,528				(183,496	)			175,217

 

- 13 -

---

 

Operating segment performance

 

Segment Reporting

 

		Engineering				Infrastructure																								Parent
		and construction				Oil & Gas				Toll roads				Transportation				Water treatment				Real estate				Technical services				Company Operations				Eliminations				Consolidated
Period 2018 -
Revenue			920,117				269,314				304,879				304,965				1,598				143,559				557,900				43,219				(303,808	)			2,241,743
Gross profit (loss)			34,849				61,750				50,068				53,173				209				25,059				30,293				(6,426	)			(10,827	)			238,148
Administrative expenses			(64,565	)			(9,824	)			(15,221	)			(5,361	)			(118	)			(9,147	)			(46,945	)			(32,912	)			19,475				(164,618	)
Other income and expenses			8,920				(15	)			2				2				-				(1,118	)			(4,745	)			628				2,672				6,346
Gain from the sale of investments			41,895				-				-				-				-				-				-				-				-				41,895
Operating profit (loss)			21,099				51,911				34,849				47,814				91				14,794				(21,397	)			(38,710	)			11,320				121,771
Financial expenses			(34,447	)			(7,366	)			(13,801	)			(3,719	)			-				(11,146	)			(16,636	)			(62,480	)			11,725				(137,870	)
Financial income			6,331				337				2,004				11,091				30				2,844				706				14,651				(23,908	)			14,086
Dividends			-				-				-				-				-				-				-				2,196				(2,196	)			-
Share of the profit or loss
in associates and joint ventures under the equity
method of accounting			(4,522	)			709				-				-				-				-				736				35,876				(35,224	)			(2,425	)
(Loss)/profit before income tax			(11,539	)			45,591				23,052				55,186				121				6,492				(36,591	)			(48,467	)			(38,283	)			(4,438	)
Income tax			(2,618	)			(13,564	)			(7,203	)			(16,788	)			(177	)			(1,837	)			7,952				22,547				810				(10,878	)
(Loss)/Profit from continuing operations			(14,157	)			32,027				15,849				38,398				(56	)			4,655				(28,639	)			(25,920	)			(37,473	)			(15,316	)
Profit from discontinued operations			8,591				-				-				-				-				-				-				-				-				8,591
(Loss)/profit for the period			(5,566	)			32,027				15,849				38,398				(56	)			4,655				(28,639	)			(25,920	)			(37,473	)			(6,725	)
Profit (loss) attributable to:
Owners of the Company			(7,582	)			29,496				13,149				28,799				(56	)			(2,978	)			(24,220	)			(25,851	)			(39,144	)			(28,387	)
Non-controlling interest			2,016				2,531				2,700				9,599				-				7,633				(4,419	)			(69	)			1,671				21,662
			(5,566	)			32,027				15,849				38,398				(56	)			4,655				(28,639	)			(25,920	)			(37,473	)			(6,725	)

 

- 14 -

---

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

 

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

8.           CASH AND CASH EQUIVALENTS

 

This account comprises:

 

		At				At
		December 31,				June 30,
		2017				2018
Cash on hand			16,468				2,145
In-transit remittances			2,798				2,458
Bank accounts			493,666				621,268
Time deposits			113,248				22,541
			626,180				648,412

 

The above figures reconcile to the amount of cash shown in the statement of cash flows.

Reconciliation to the cash flow statement:

		At				At
		December 31,				June 30,
		2017				2018
Cash and cash equivalent			626,180				648,412
Bank overdrafts (Note 12)			(120	)			-
Balances of the statement of cash flows			626,060				648,412

 

9.           TRANSACTIONS WITH RELATED PARTIES

 

a)   Transactions with related parties -

 

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

		At				At
		December 31,				June 30,
		2017				2018
Revenue from sales of goods and services:
- Associates			3,367				1,691
- Joint operations			18,138				15,782
			21,505				17,473

 

Inter-company services were agreed based on market terms as if they had been agreed to third parties.

- 15 -

---

b)   Balances of transactions with related parties

		At December 31, 2017								At June 30, 2018
		Receivable				Payable				Receivable				Payable
Current portion:
Joint operations:
Consorcio GyM Conciviles			43,435				-				18,722				-
Consorcio Rio Urubamba			8,964				-				8,987				-
Consorcio Peruano de Conservación			7,417				-				7,198				-
Consorcio Vial Quinua			-				2,162				-				2,119
Consorcio Italo Peruano			14,536				18,849				7,597				11,585
Consorcio La Gloria			1,688				1,358				1,353				1,025
Terminales del Perú			3,290				-				2,524				-
Consorcio Rio Mantaro			1,134				763				2,121				17,651
Consorcio Vial Sierra			2,355				1,854				3,592				-
Consorcio Constructor Chavimochic			1,959				5,817				2,121				5,961
Consorcio Energía y Vapor			-				72				-				-
Consorcio Ermitaño			1,067				6				1,066				478
Consorcio Menegua			39				-				40				-
Consorcio para la Atención y Mant. de Ductos			-				12,074				-				-
Consorcio Huacho Pativilca			-				2,377				-				387
Other minors			12,182				6,973				5,493				11,350
			98,066				52,305				60,814				50,556
Other related parties:
Gaseoducto Sur Peruano S.A			2,407				-				2,407				-
Perú Piping Spools S.A.C.			279				185				34				58
Ferrovías Argentina			-				2,684				-				5,084
Arturo Serna			-				-				-				4,424
			2,686				2,869				2,441				9,566
Current portion			100,752				55,174				63,255				60,122
Non-current portion:
Gasoducto Sur Peruano S.A			773,930				-				760,082				-
Ferrovías Participaciones			-				21,648				-				22,069
Arturo Serna			-				4,306				-				-
Non-current portion			773,930				25,954				760,082				22,069

Receivables and payables are mainly of current maturity and do not have specific guarantees, except for the receivable account from GSP. Accounts receivable from related parties have maturity periods of 60 days and arise from sales of goods and services. These balances are non-interest-bearing, and during 2018 do not require a provision for impairment.

 

Current 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.

- 16 -

---

10.          INVESTMENTS IN ASSOCIATES AND JOINT VENTURES