Grana & Montero S.A.A. (Form: F-1/A, Received: 06/18/2013 17:20:49)

Global Coordinators

Joint Bookrunner

Credit Suisse

J.P. Morgan

Morgan Stanley

BTG Pactual

As filed with the Securities and Exchange Commission on June 18, 2013

Registration No. 333-189067

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Amendment No. 1 to

FORM F-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

GRAÑA Y MONTERO S.A.A.

(Exact name of Registrant as specified in its charter)

Republic of Peru

1600

Not Applicable

(State or other jurisdiction of

incorporation or organization)

(Primary Standard Industrial

Classification Code Number)

(I.R.S. Employer

Identification No.)

Graña y Montero S.A.A.

Av. Paseo de la República 4667

Surquillo

Lima 34, Peru

(51) (1) 213 – 6565

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

CT Corporation System

111 Eighth Avenue

New York, New York 10011

1-800-223-7567

(Name, address, including zip code, and telephone number, including area code, of agent for service)

With copies to:

Juan Francisco Méndez

Simpson Thacher & Bartlett LLP

425 Lexington Avenue

New York, New York 10017

(212) 455-2579

Claudia Drago Morante

Chief Legal Officer

Graña y Montero S.A.A.

Av. Paseo de la República

Surquillo

Lima 34, Peru

(51) (1) 213–6565

Nicholas Kronfeld

Davis Polk & Wardwell LLP

450 Lexington Avenue

New York, New York 10017

(212) 450-4950

Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, please check the following box. ¨

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If delivery of the prospectus is expected to be made pursuant to Rule 434, check the following box. ¨

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act, or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the U.S. Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED , 2013

LOGO

American Depositary Shares

Graña y Montero S.A.A.

Representing Common Shares

This is an initial public offering of American depositary shares, or ADSs, of Graña y Montero S.A.A. Each ADS represents common shares.

We anticipate that the initial public offering price will be between US$ and US$ per ADS. We have applied to have the ADSs listed on the New York Stock Exchange under the symbol “GRAM”. Our common shares are listed on the Lima Stock Exchange (Bolsa de Valores de Lima) under the symbol “GRAMONC1”. On June 14, 2013, the last reported sales price of our common shares on the Lima Stock Exchange was S/.11.75 per common share (equivalent to approximately US$ per ADS based on the exchange rate on such date).

We have granted the underwriters an option for a period of 30 days to purchase from us a maximum of additional ADSs, representing common shares, to cover over-allotments of ADSs.

Investing in the ADSs involves risks. See “Risk Factors” beginning on page 17.

Price to Public

Underwriting
Discounts and
Commissions

Proceeds
to Us

Per ADS

US$

Total

US$

The underwriters will receive compensation in addition to the underwriting discount. See “Underwriting.”

Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

Neither the ADSs nor the offering has been or will be registered in the Republic of Peru and therefore are not and will not be subject to Peruvian laws applicable to public offerings in Peru. The information contained in this prospectus has not been approved or disapproved by the Peruvian Securities Commission (Superintendencia del Mercado de Valores). The ADSs may not be offered or sold in Peru except in compliance with the securities laws of Peru.

Delivery of the ADSs will be made on or about , 2013.

The date of this prospectus is , 2013

We are responsible for the information contained in this prospectus. We have not authorized anyone to give you any other information and we take no responsibility for any other information that others may give you.

Table of Contents


	Page

Summary		1

Risk Factors		17

Exchange Rates		38

Use of Proceeds		39

Capitalization		40

Dilution		41

Selected Financial Data		42

Management’s Discussion and Analysis of Financial Condition and Results of Operations		52

Industry		100

Business		111

Regulatory Matters		162

Management		175

Principal Shareholders		185


	Page

Related Party Transactions		187

Description of Our Share Capital		189

Dividends		194

Market Information		195

Description of American Depositary Shares		199

Taxation		210

Underwriting		215

Expenses of the Global Offering		224

Legal Matters		225

Experts		225

Where You Can Find More Information		226

Enforcement of Judgments Against Foreign Persons		227

Index to Consolidated Financial Statements		F-1

Through and including , 2013 (the 25th day after the date of this prospectus), U.S. federal securities law requires all dealers that effect transactions in our ADSs, whether or not participating in this offering, to deliver a prospectus. This requirement is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscription.

This prospectus has been prepared on the basis that all offers of ADSs in any Member State of the European Economic Area which has implemented the Prospectus Directive (each, a “Relevant Member State”) will be made pursuant to an exemption under the Prospectus Directive from the requirement to produce a prospectus for offers of the ADSs. Accordingly, any person making or intending to make any offer of ADSs within the European Economic Area that are the subject of the offering contemplated in this prospectus should only do so in circumstances in which no obligation arises for us or the underwriters to produce a prospectus for such offer. Neither we nor the underwriters have authorized, or hereby authorize, the making of any offer of ADSs in circumstances in which an obligation arises for us or the underwriters to publish a prospectus for such offer. “Prospectus Directive” means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State), and includes any relevant implementing measure in the Relevant Member State; and the expression “2010 PD Amending Directive” means Directive 2010/73/EU.

The distribution of this prospectus and the offering and sale of the ADSs in certain jurisdictions may be restricted by law. Persons who receive this prospectus must inform themselves about and observe any such restrictions. This prospectus does not constitute an offer of, or an invitation to purchase, any of the ADSs in any jurisdiction in which such offer or invitation would be unlawful.

PRESENTATION OF FINANCIAL AND OTHER INFORMATION

Certain Definitions

All references to “we,” “us,” “our,” “our company,” “the group” and “Graña y Montero” in this prospectus are to Graña y Montero S.A.A., a publicly-held corporation ( sociedad anónima abierta ) organized under the laws of Peru. In this prospectus, we refer to our principal subsidiaries as follows: (i) in our Engineering and Construction (E&C) segment: GyM S.A. as “GyM”; Stracon GyM S.A. as “Stracon GyM”; Ingeniería y Construcción Vial y Vives S.A. as “Vial y Vives”; and GMI S.A. as “GMI”; (ii) in our Infrastructure segment: Norvial S.A. as “Norvial”; Survial S.A. as “Survial”; Concesión Canchaque S.A. as “Canchaque”; GyM Ferrovías S.A. as “GyM Ferrovías”; Concesionaria La Chira S.A. as “La Chira”; and GMP S.A. as “GMP”; (iii) in our Real Estate segment: Viva GyM S.A. as “Viva GyM”; Inmobiliaria Almonte S.A.C. as “Almonte”; and (iv) in our Technical Services segment, GMD S.A. as “GMD”; Concar S.A. as “Concar”; and CAM Chile S.A. as “CAM.”

The term “U.S. dollar” and the symbol “US$” refer to the legal currency of the United States; the term “nuevo sol” and the symbol “S/.” refer to the legal currency of Peru; the term “Chilean peso” and the symbol “CLP” refer to the legal currency of Chile; and the term “Colombian peso” and the symbol “COP” refer to the legal currency of Colombia.

Financial Information

Our consolidated financial statements included in this prospectus have been prepared in nuevos soles and in accordance with International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”). Our annual consolidated financial statements for the years ended December 31, 2010, 2011 and 2012 have been audited by Dongo, Soria, Gaveglio y Asociados S.C. de R.L., a member firm of PricewaterhouseCoopers in accordance with the standards of the Public Company Accounting Oversight Board (United States). We have also included in this prospectus certain financial information for years prior to 2010 which have been prepared in accordance with generally accepted accounting principles in Peru (“Peruvian GAAP”). In accordance with Peruvian law, we were required to present our financial statements under IFRS beginning with our financial statements for the year ended December 31, 2010. Peruvian GAAP differs in certain respects from IFRS. Accordingly our financial information presented in accordance with Peruvian GAAP is not directly comparable to our financial information prepared in accordance with IFRS.

We manage our business in four segments: Engineering and Construction (E&C); Infrastructure; Real Estate; and Technical Services. For information on our results of operations per our business segments, see note 5 to our audited annual consolidated financial statements and note 7 to our unaudited interim consolidated financial statements included in this prospectus.

In this prospectus, we present EBITDA, a non-GAAP financial measure. A non-GAAP financial measure is generally defined as one that purports to measure financial performance, financial position or cash flows but excludes or includes amounts that would not be so adjusted in the most comparable IFRS measure. We present EBITDA because we believe it provides investors with a supplemental measure of the financial performance of our core operations that facilitates period-to-period comparisons on a consistent basis. Our management uses EBITDA, among other measures, for internal planning and performance measurement purposes. EBITDA should not be construed as an alternative to net profit or operating profit, as an indicator of operating performance, as an alternative to cash flow provided by operating activities or as a measure of liquidity (in each case, as determined in accordance with IFRS). EBITDA, as calculated by us, may not be comparable to similarly titled measures reported by other companies. For our definition EBITDA and a reconciliation of EBITDA to the most directly comparable IFRS financial measure, see “Selected Financial Data.”

We have translated some of the nuevos soles amounts contained in this prospectus into U.S. dollars for convenience purposes only. Unless otherwise indicated or the context otherwise requires, the rate used to translate nuevos soles amounts to U.S. dollars was S/.2.589 to US$1.00, which was the exchange rate reported for March 31, 2013 by the Peruvian Superintendency of Banks, Insurance and Private Pension Fund Administrators (Superintendencia de Banca, Seguros y AFPs, or “SBS”). We present our backlog in U.S. dollars. For contracts denominated in nuevos soles or other local currencies, amounts have been converted into U.S. dollars based on the exchange rate published by the SBS on December 31 of the corresponding year, and in the case of amounts as of March 31, 2013 based on the exchange rate published by the SBS on such date. When we present our ratios of

iii

backlog and revenues in this prospectus, we similarly convert our revenues, which are reported in nuevos soles, into U.S. dollars based on the exchange rate reported for December 31 of the corresponding year. For conversions of macroeconomic indicators (particularly in “Industry” in this prospectus), average annual exchange rates for the currencies of each of the countries addressed are used. The Federal Reserve Bank of New York does not report a noon buying rate for nuevos soles. The U.S. dollar equivalent information presented in this prospectus is provided solely for convenience of investors and should not be construed as implying that the nuevos soles or other currency amounts represent, or could have been or could be converted into, U.S. dollars at such rates or at any other rate. See “Exchange Rates” for information regarding historical exchange rates of nuevos soles to U.S. dollars.

Certain figures included in this prospectus have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables may not be arithmetic aggregations of the figures that precede them.

Backlog

This prospectus includes our backlog for our Engineering and Construction, Infrastructure, Real Estate and Technical Services segments. We do not include backlog in this prospectus in our Infrastructure segment for: (i) our Norvial toll road concession because its revenues from the concession are derived from toll fees charged to vehicles using the highway, and, as a result, such revenues are dependent on vehicular traffic levels; and (ii) our Energy line of business because: (a) its revenues from hydrocarbon extraction services are dependent on the amounts of oil and gas we produce and market prices, which fluctuate significantly; (b) our revenues from our gas processing plant are dependent on the amount of gas we process and market prices for natural gas liquids, which fluctuate significantly; and (c) our revenues from our fuel storage terminal operation partially depend on the volume of fuel dispatched, such revenues are not material to our consolidated results of operations and the concession for such services is scheduled to terminate in August 2014. When we present backlog on a segment basis, we do not include eliminations that are included in our consolidated backlog. Backlog is not a measure defined by IFRS, and our methodology for determining backlog may not be comparable to the methodology used by other companies in determining their backlog. For our definition of backlog, see “Business—Backlog. See also “Risk Factors—Risk Related to Our Company—Our backlog and our ratio of historical backlog to revenues may not be reliable indicators of future revenues or profit.”

Reserves Estimates

This prospectus includes estimates for proved reserves in Blocks I and V where GMP provides hydrocarbon extraction services to Perupetro S.A. (“Perupetro”). These reserves estimates were prepared for us by Netherland, Sewell & Associates, Inc. (“NSAI”), independent petroleum engineers. For further information on these reserves estimates, see “Business—Infrastructure—Principal Infrastructure Lines of Business—Energy—Oil and Gas Production—Estimated Proved Reserves” and NSAI’s report dated May 28, 2013, filed as an exhibit to the registration statement of which this prospectus forms a part.

Market Information

We make estimates in this prospectus regarding our competitive position and market share, as well as the market size and expected growth of the engineering and construction, infrastructure, real estate and technical services industries in Peru and elsewhere in Latin America. We have made these estimates on the basis of our management’s knowledge and statistics and other information, which we believe to be the most recently available as of the date of this prospectus, from government agencies, industry professional organizations, industry publications and other sources. We believe these estimates to be accurate as of the date of this prospectus. Our director, Hugo Santa María Guzmán , is a partner in APOYO Consultoría, and our director, Roberto Abusada Salah is a director of the Peruvian Economy Institute. We paid International Data Corporation (IDC), a market intelligence firm focused on the information technology market, for their IT services market study referenced in this prospectus. We also paid Great Place to Work® Institute (“Great Place to Work”), a human resources consulting, research and training firm, for our employees to participate in their market survey referenced in this prospectus (Copyright ©2013 Great Place to Work® Institute, Inc. All rights reserved.).

In this prospectus we present gross domestic product (“GDP”) both on a nominal and real basis. Real GDP is nominal GDP adjusted to exclude the effect of inflation. Unless otherwise indicated, references to GDP are to real GDP.

Offering Information

All amounts contained in this prospectus that have been adjusted to reflect the estimated net proceeds of the offering are based upon the sale of ADSs at an assumed public offering price of US$ per ADS (the mid-point of the price range set forth on the cover page of this prospectus). Unless otherwise indicated, all information contained in this prospectus assumes no exercise of the underwriters’ option to purchase up to additional ADSs, representing common shares, to cover over-allotments, if any.

Measurements and Other Data

In this prospectus, we use the following measurements:

•

m means one meter, which equals approximately 3.28084 feet;

•

m ² means one square meter, which equals approximately 10.7630 square feet;

•

km means one kilometer, which equals approximately 0.621371 miles;

•

hectare means one hectare, which equals approximately 2.47105 acres;

•

tonne means one metric ton, which equals approximately 2,204.6 pounds;

•

bbl or barrel of oil means one stock tank barrel, which is equivalent to approximately 0.15898 cubic meters;

•

boe means one barrel of oil equivalent, which equals approximately 160.2167 cubic meters, determined using the ratio of 5,658 cubic feet of natural gas to one barrel of oil;

•

cf means one cubic foot;

•

M, when used before bbl, boe or cf, means one thousand bbl, boe and cf, respectively;

•

MM, when used before bbl, boe or cf, means one million bbl, boe and cf, respectively;

•

MW means one megawatt, which equals one million watts; and

•

Gwh means one gigawatt hour, which equals one billion watt hours.

In this prospectus, we use the term accident incident rate with respect to our E&C segment, which is calculated as the number of injuries divided by the total number of hours worked by all full-time employees of our E&C segment during the relevant year divided by 200,000 (which reflects 40 hours worked per week in a 50-week year by 100 equivalent full-time workers).

FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements. Forward-looking statements convey our current expectations or forecasts of future events. These statements involve known and unknown risks, uncertainties and other factors, including those listed under “Risk Factors,” which may cause our actual results, performance or achievements to differ materially from the forward-looking statements that we make.

Forward-looking statements typically are identified by words or phrases such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “project,” “plan,” “believe,” “potential,” “continue,” “is/are likely to,” or other similar expressions. Any or all of our forward-looking statements in this prospectus may turn out to be inaccurate. Our actual results could differ materially from those contained in forward-looking statements due to a number of factors, including, among others:

•

global macroeconomic conditions, including commodity prices, and economic, political and social conditions in the markets in which we operate, particularly in Peru;

•

major changes in Peruvian government policies at the national, regional or municipal levels, including in connection with infrastructure concessions, investments in infrastructure and affordable housing subsidies;

•

social conflicts in Peru that disrupt infrastructure projects, particularly in the mining sector;

•

interest rate fluctuations, inflation and devaluation or appreciation of the nuevo sol in relation to the U.S. dollar (or other currencies in which we receive revenue);

•

our ability to continue to grow our operations, both in Peru and internationally;

•

the level of capital investments and financings available for infrastructure projects of the types that we perform, both in the private and public sectors;

•

competition in our markets, both from local and international companies;

•

our ability to complete acquisitions on favorable terms or at all and to integrate acquired businesses and manage them effectively post-acquisition;

•

performance under contracts, where a failure to meet schedules, cost estimates or performance targets on a timely basis could result in reduced profit margins or losses and impact our reputation;

•

developments, some of which may be beyond our control, that affect our reputation in our markets, including a deterioration in our safety record;

•

industry-specific operational risks, such as operator errors, mechanical failures and other accidents;

•

availability and costs of energy, raw materials, equipment and labor;

•

our ability to obtain financing on favorable terms;

•

our ability to attract and retain qualified personnel;

•

our ability to enter into joint operations, and rules involved in operating under joint operation or similar arrangements;

•

our exposure to potential liability claims and contract disputes, including as a result of environmental damage alleged to have been caused by our operations;

•

our and our clients’ compliance with environmental, health and safety laws and regulations, and changes in government policies and regulations in the countries in which we operate;

•

negotiations of claims with our clients of cost and schedule variances and change orders on major projects;

•

volatility in global prices of oil and gas;

•

the cyclical nature of some of our business segments;

•

limitations on our ability to operate our concessions profitably, including changes in traffic patterns, and limitations on our ability to obtain new concessions;

•

our ability to accurately estimate the costs of our projects;

•

changes in real estate market prices, customer demand, preference and purchasing power, and financing availability and terms;

•

our ability to obtain zoning and other license requirements for our real estate development;

•

changes in tax laws;

•

natural disasters, severe weather or other events that may adversely impact our business; and

•

other factors identified or discussed under “Risk Factors.”

The forward-looking statements in this prospectus represent our expectations and forecasts as of the date of this prospectus. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this prospectus.

vii

SUMMARY

This summary highlights selected information contained in this prospectus and may not include all of the information that is important to you. For a more complete understanding of our company and this offering, you should read this entire prospectus, including “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements included in this prospectus.

Overview

With 80 years of operations, we have a long track record of successfully completing the engineering and construction of many of Peru’s landmark private- and public-sector infrastructure projects, such as the Lima International Airport and the Peru LNG gas liquefaction plant, and we believe we have earned a reputation for operational excellence in our markets. We have developed a highly-experienced management team, a talented pool of more than 3,500 engineers and a skilled work force that share our core corporate values of quality, professionalism, reliability and efficiency. As a company listed on the Lima Stock Exchange since 1997, we also abide by the highest corporate governance standards for listed companies in Peru.

Beginning in the mid-1980s, we leveraged our engineering and construction expertise into complementary lines of business, such as the development, ownership, operation and maintenance of infrastructure assets (including the Lima Metro, Peru’s only urban railway system), real estate development, and the provision of technical services primarily to infrastructure-related assets. We believe our business mix creates significant opportunities across our lines of business, generates more stable revenues and earnings on a consolidated basis, and provides additional financial stability to our company.

As a result of our performance in Peru, we have been requested by clients to undertake the engineering and construction of large and complex projects outside our home market, such as the Pueblo Viejo gold mine for Barrick Gold in the Dominican Republic. Through the successful execution of those projects, we have developed operational experience in other Latin American countries. We have further expanded our activities in other key markets of the region through the acquisition of businesses with solid positions in those markets. In February 2011, we acquired a controlling interest in Compañía Americana de Multiservicios (CAM), which is headquartered in Chile and provides technical services to power utility companies in Chile, Peru, Colombia and Brazil. In October 2012, we acquired a controlling interest in Vial y Vives, an engineering and construction company specializing in the Chilean mining sector, thus consolidating our strong position in the Latin American mining E&C sector. We expect to continue to selectively undertake projects and pursue acquisitions and strategic alliances in Latin America to further expand our company outside Peru, with a particular focus on Chile and Colombia.

The tables below show the growth in our backlog, revenues and EBITDA from 2010 to 2012.


Backlog (in millions of US$)	Revenues (in millions of S/.)	EBITDA (in millions of S/.)

(1)	Includes US$256.3 million, S/.558 million and S/.36.4 million of backlog, revenues and EBITDA from a business we acquired in 2011.

(2)	Includes US$686.4 million, S/.675 million and S/.61.3 million of backlog, revenues and EBITDA from businesses we acquired in 2011 and 2012.

During 2012, we generated revenues of S/.5,231.9 million (US$2,020.8 million), EBITDA of S/.775.7 million (US$299.6 million), and net profit of S/.366.3 million (US$141.5 million) including net profit attributable to controlling interest of S/.290.0 million (US$112.0 million). From 2010 through 2012, our revenues and EBITDA grew at a compounded annual growth rate (CAGR) of 44.6% (34.9% excluding acquisitions) and 18.3% (13.6% excluding acquisitions), respectively. During the first quarter of 2013, we generated revenues of S/.1,268.1 million (US$489.8 million), EBITDA of S/.214.2 million (US$82.7 million), and net profit of S./83.4 million (US$32.2 million) including net profit attributable to controlling interest of S/.64.3 million (US$24.9 million). In addition, as of March 31, 2013, our backlog amounted to S/.11,110.2 million (US$4,291.3 million). Moreover, 79.3% of our backlog as of such date is comprised of contracts in the private sector, strategically targeted to our key end-markets, such as mining, infrastructure, power, energy and real estate. See “Business—Backlog.”

The table below sets forth selected financial information relating to our business.


	As of and for the year ended December 31,										As of and for the three months ended March 31,
	2010			2011			2012		2012		2012		2013		2013
											(unaudited)
	(in millions of S/., except as indicated)								(in millions of US$)		(in millions of S/., except as indicated)				(in millions of US$)
Revenues		2,502.7			4,241.3			5,231.9		2,020.8		1,100.4		1,268.1		489.8
EBITDA		553.9			662.0			775.7		299.6		158.9		214.2		82.7
Net profit		276.7			336.2			366.3		141.5		72.1		83.4		32.2
Net profit attributable to controlling interest		252.8			289.1			290.0		112.0		65.2		64.3		24.9
Dividends per common share (in S/.or US$)		0.05			0.10			0.16		0.06
Net debt		(340.0	)		(128.3	)		65.4		25.3		105.8		272.4		105.2
Net debt/EBITDA ratio		(0.6	)x		(0.2	)x		0.1x
Backlog (in millions of US$)(1)		1,313.2			2,493.9			4,165.9				2,682.4		4,291.3
Backlog/revenues ratio(1)(2)		1.7x			1.7x			2.2x

⁽¹⁾	Does not include, in our Infrastructure segment, our Norvial toll road concession or our Energy line of business. See “Business—Backlog.”

⁽²⁾	Backlog is calculated as of the last day of the applicable year. Revenues are calculated for such year and converted into U.S. dollars based on the exchange rate published by the SBS on December 31 of the corresponding year. Includes revenues only for businesses included in backlog.

Our Markets

We believe that Peru offers us attractive opportunities to continue to grow our businesses because of its strong macroeconomic outlook, stable political environment, solid public finances, increased private and public investments and growing middle class. Peru has experienced uninterrupted economic growth over the last 13 years (including in 2009 despite the global economic crisis). It has been South America’s fastest growing economy as measured by real GDP growth and one of only six investment grade countries worldwide with average annual real GDP growth over 6.5% from 2008 to 2012. According to the International Monetary Fund (IMF), the Peruvian economy is projected to grow at rates of 6.3% and 6.1% in 2013 and 2014, respectively.

The main drivers of Peru’s recent economic performance have been strong domestic demand and increased private and public investment, with private and public investment having grown at CAGRs of 7.1% and 11.3%, respectively, from 2008 to 2012. Despite this increase in investment, Peru still has a sizable infrastructure deficit of approximately US$90 billion, according to the Peruvian Association for the Promotion of National Infrastructure (AFIN). APOYO Consultoría, a business consultancy services company in Peru, has identified planned public and private investment in the key sectors of mining, power and energy, and infrastructure in Peru of US$62 billion between 2012 and 2016. Of these planned public and private investments, mining activity accounts for approximately 66.8%, power and energy accounts for approximately 25.4%, and infrastructure accounts for approximately 7.8%.

We believe that the main countries in Latin America outside our home market that we intend to focus on—Chile and Colombia—benefit from similar macroeconomic trends as Peru, and offer attractive growth opportunities for many of our business segments.

Our Business Segments

The following charts set forth the principal activities of each of our four business segments and their contribution to our consolidated revenues, EBITDA and net profit in U.S. dollars for 2012.

LOGO


Revenues	EBITDA	Net Profit



US$2,020.8 million	US$299.6 million	US$141.5 million

Engineering and Construction

Our Engineering and Construction (E&C) segment has an 80-year operating history and is currently the largest player in Peru as measured by 2012 revenues, according to our internal estimates based on Peru: The Top 10,000 Companies 2012, a publication which ranks the top 10,000 companies in Peru by revenue. Throughout our history, we (on our own or as a majority or minority partner in joint operations) have completed projects in almost every major sector of the Peruvian economy. Some of these landmark projects include the construction of the Peru LNG gas liquefaction plant for Hunt Oil and Repsol, one of the largest foreign direct investments in Peru’s history; the engineering and construction of the 605 km Mantaro-Socabaya transmission line for Hydro Quebec, which connected the country’s electrical grids; and the expansion of the Cuajone copper mine operated by Southern Copper, the largest copper mine and smelter complex in the world at that time. We also completed the Lima Metro, and have built many of the iconic buildings in the country, including the Westin Lima Hotel and the Gran Teatro Nacional, as well as approximately 8,000 affordable housing and housing units. In addition to our activities in Peru, clients often request us to execute the engineering and construction of complex projects abroad, including the construction of the Pueblo Viejo gold mine for Barrick Gold in the Dominican Republic, the engineering and construction of the Four Seasons Hotel in Mexico City and, more recently, the construction of the tailings dam for the Mina de Cobre Panamá project developed by First Quantum Minerals, the second largest foreign investment project in Panama’s history, after the Panama Canal.

We provide E&C services mainly for private-sector projects and, to a lesser extent, for public infrastructure projects. As of March 31, 2013, approximately 81.7% of our engineering and construction backlog was contracted under cost-plus fee or unit price contractual arrangements, which we believe are less risky than lump-sum and EPC contracts. Although contracting for engineering and construction usually consists of open bidding processes, we are often able to enter into direct bilateral contract negotiation with select clients, thanks to our reputation for quality of service, which helps mitigate competitive pricing pressures.

Infrastructure

We are an important toll road concessionaire in Peru, operating three toll roads. Moreover, we are the concessionaire for the Lima Metro, the largest mass-transit rail system in Peru, and a waste water treatment plant currently under construction. Additionally, we operate two producing oil fields under long-term government contracts and a gas processing plant.

Our principal toll road concession is Norvial, a 25-year concession ending in 2028 for a 183 kilometer stretch of the Panamericana Norte highway that provides the only northern highway exit from the city of Lima. Through a partnership with rail operator Ferrovías S.A.C., we were awarded the 30-year concession for the new Lima Metro, which began operations at the beginning of 2012. Under 30-year government service contracts that began in 1991, we also extract crude oil in two fields located in northwestern Peru. Our aggregate average daily production during 2012 and the first quarter 2013 was approximately 1,405 and 1,630 bbl per day, respectively. These fields had estimated proved reserves of 7,531.1 Mboe as of December 31, 2012 according to a reserve report prepared for us by Netherland, Sewell & Associates, Inc. (“NSAI”). We also own and operate a gas processing plant, with an aggregate capacity of 44 MMcf per day.

We continuously evaluate infrastructure projects and selectively participate in the bidding processes for a variety of concessions. We have been awarded, and are currently negotiating the contract for, the expansion of two major highways in Lima. The first is a 37-year concession awarded to a joint operation in which we have a 50% interest of the Via Expresa Javier Prado, a 20 km toll road that crosses the city from east to west, traversing through eight districts. This project has an estimated total completion cost of US$790 million. We were also awarded, and are currently negotiating the terms for, a 40-year concession for the Via Expresa Sur, a 4.6 km extension of one of the main roads in Lima, which crosses the city from north to south. This project has an estimated total completion cost of US$200 million.

Real Estate

Our Real Estate segment is the largest apartment building developer in Peru, in terms of number of units sold and value of sales in 2012, according to Tinsa, a market intelligence firm focused on the real estate market, and is focused on the development and sale of affordable housing and housing as well as other real estate projects. As of the date of this prospectus, we are in the process of developing 11 affordable housing projects (with an expected 160,000 m ² in aggregate), five housing projects (with an expected 22,000 m ² in aggregate); and five office buildings (with an expected 24,000 m ² in aggregate). Currently our largest development project is Cuartel San Martín, a 68,000 m2 former military base located in Lima’s upscale Miraflores district, where we are planning a premiere multi-use development that will include higher-income housing, office towers, a shopping mall, a luxury hotel and a conference center.

We also own and sell significant land parcels in Lima, with a land bank of approximately 888 hectares as of March 31, 2013. Our 50.4% interest in Almonte, an approximately 800-hectare development project located in the southern part of the city of Lima, and one of the largest privately owned pieces of land in the Lima metropolitan area, represents our most significant land bank.

Technical Services

Our Technical Services segment undertakes a broad range of activities, including operation and maintenance services for infrastructure assets; information technology (IT) services, including IT outsourcing, systems integration, application outsourcing and business process outsourcing services; and electricity networks services, including installation, operation and maintenance of electrical metering systems and related infrastructure. This segment’s mid-to long-term contracts add a more stable cash flow stream to our consolidated activities.

Operating in the road operation and maintenance sector since 1994, we believe we are an industry leader in Peru in the sector, with 14 maintenance contracts for more than 5,000 km of road, in addition to the operation and maintenance of the Lima Metro. We are the second largest IT services company in Peru, as measured by 2011 revenues, according to International Data Corporation, a market intelligence firm focused on the IT market. Through our acquisition of a controlling interest in CAM from Enersis S.A. in February 2011, we provide field and specialized services in the engineering, installation, operation and management of electrical metering systems and related infrastructure, primarily for power utility companies in Chile, Peru, Colombia and Brazil.

Our Strengths

We believe our company’s strengths provide us with significant competitive advantages. Our principal strengths include the following:

Leader in fast-growing markets

We are the largest engineering and construction company in Peru as measured by revenues during 2012, and the largest publicly-traded engineering and construction company in Latin America as measured by market capitalization as of December 31, 2012. Peru is undergoing a period of unparalleled development, with over 6.5% average annual real GDP growth between 2008 and 2012 and significant private and public investments in the mining, power, oil and gas, transportation, real estate and other infrastructure sectors. We have completed some of the most complex and large-scale infrastructure projects in the country, and we believe we are an integral part of Peru’s ongoing transformation with projects that contribute to the overall economic development of the country. We believe our expertise, reputation, scale and operational capabilities in Peru position us to take advantage of the country’s favorable economic conditions and growth opportunities. We believe we are also a significant infrastructure concessionaire in Peru, the largest apartment building developer in Peru and a leading IT company in Peru.

We believe we are well-positioned to leverage our platform in the Peruvian market to continue to grow our business in other countries in Latin America, primarily Chile and Colombia. Throughout our history, we have undertaken complex E&C projects in the region and have recently completed acquisitions in Chile. Moreover, we believe we are one of the leading mining E&C companies in Latin America.

Long-standing track record and reputation for operational excellence

During our 80-year history, we have focused on the successful and on-time execution of complex projects, through our “deliver before deadline” and “lean construction” initiatives. Our extensive experience has allowed us to gain deep market knowledge and expertise, which help us better serve our clients and manage risks in our contractual arrangements. We believe we have a reputation for operational excellence, and were named among the top ten most admired companies in Peru by PwC in 2012. In addition, KPMG ranked us seventh out of 100 companies with the best reputations in Peru in 2012. We believe that our track record and the reputation we have earned in our markets are key factors in winning new and repeat business, as well as in partnering with strategic industry players and attracting top talent to our company.

Complementary lines of business which generate more stable cash flows and create additional business opportunities across our segments

We have expanded our company by developing complementary lines of business, many of which have become leaders in their respective markets. These lines of business create significant business opportunities across our segments, enabling us to capture a greater share of infrastructure spending, and also generate cost synergies. One example is Norvial, a toll-road concession operated within our Infrastructure segment. In addition to managing the concession, we used our E&C segment to design and construct the expansion of the highway and, once constructed, we are now using our Technical Services segment to operate and maintain the highway. In addition to increasing our levels of consolidated activity, many of these lines of business enable us to achieve more stable cash flows through medium and long-term client service contracts and concessions, which counter in part the cyclicality of the engineering and construction business.

High growth and profitability with strong financial position

Our operations have grown significantly over the last several years, with our consolidated revenues and EBITDA growing at CAGRs of 44.6% (34.9% excluding acquisitions) and 18.3% (13.6% excluding acquisitions) from 2010 to 2012, respectively. We have achieved this growth with low levels of indebtedness, relying mainly on cash flow from operations to fund our growth. In 2012, our net debt to EBITDA ratio was 0.1x, and as of March 31, 2013, our net debt amounted to S/.272.4 million (US$105.2 million). In 2012 and the first quarter of 2013, we achieved an EBITDA margin ( i.e. , EBITDA as a percentage of revenues) of 14.8% and 16.9%, respectively.

Robust backlog and significant additional potential projects

We have a robust and growing backlog which amounted to US$4,165.9 million as of December 31, 2012, 67.0% higher than as of December 31, 2011, and US$4,291.3 million as of March 31, 2013, 3.0% higher than as of December 31, 2012. We believe that our backlog, which as of December 31, 2012 represented approximately 2.2x our related 2012 revenues, provides visibility as to our potential for growth in the coming years, although backlog may not always be an accurate indicator of future revenues. See “Risk Factors—Risk Related to Our Company—Our backlog and our ratio of historical backlog to revenues may not be reliable indicators of future revenues or profit.” Moreover, we believe our backlog is strategically targeted to our key end-markets. Approximately, 79.3% of our backlog as of March 31, 2013 is comprised of contracts with the private sector, strategically targeted to our key end-markets, such as mining, infrastructure, power, energy and real estate. In addition to our backlog, we also have significant potential projects in our pipeline. We have already been awarded concessions for the Via Expresa Javier Prado and Via Expresa Sur expansion projects, for which we are currently in the contract negotiation stage. We are also in the process of obtaining the necessary licenses to begin construction of our large multi-use real estate development project at Cuartel San Martín. Furthermore, we continuously evaluate bidding on contracts arising from the significant ongoing private and public investments in Latin America.

Proven ability to create and grow businesses organically and through acquisitions

We have proven our ability to extend our engineering and construction capabilities into complementary lines of business in a diverse range of industries, some of which began as innovative start-ups in response to client needs. For example, in 1984, we created a new IT business division, which grew and evolved through the years to become the second largest IT services company in Peru. Additionally, we also have successfully acquired and integrated new businesses. In February 2011, we acquired CAM, our electricity services business headquartered in Santiago, Chile, and have integrated its operations and personnel into our company, while improving its operational performance. More recently, in October 2012, we acquired Vial y Vives, an engineering and construction company specializing in the Chilean mining sector which complements our leading E&C practice in the mining sector. We believe that our proven ability to create new businesses, develop businesses organically and acquire and successfully integrate new businesses into our platform is a key competitive advantage as we continue to expand our operations in Latin America.

Highly experienced management, talented engineers and skilled workforce, with shared core corporate values

Our senior management team has an average tenure within our company of approximately 19 years. In 2012, Euromoney recognized us as the second best managed company in the construction and cement sectors in Latin America, and among the five best managed companies in Peru. We motivate our management through performance-based compensation, which align their interests with those of our shareholders. In addition, through our efforts to attract, train and retain our workforce, we have built a talented team of employees, including more than 3,500 engineers. We also have access to a network of approximately 62,000 manual laborers throughout Peru that can supplement our workforce when required by our construction pipeline. Thanks to our extensive and talented team, we have the capability and scale to undertake large and complex projects in Peru and elsewhere.

We have been listed on the Lima Stock Exchange since 1997. We abide by the highest corporate governance standards in Peru, and we are one of only 17 companies in Latin America, and one of only three in Peru, that form part of the Company’s Circle, which recognizes companies for their high corporate governance standards and is sponsored by the International Finance Corporation (IFC), the Organization for Economic Co-operation and Development (OECD) and the Global Corporate Governance Forum. In addition, we have developed a strong corporate culture based on principles of high-quality, professionalism, reliability and efficiency. We employ rigorous safety standards and procedures and emphasize environmental sustainability and social responsibility.

Our Strategies

Our vision is to be “the most reliable engineering services company in Latin America.” Our key strategies to achieve this vision include the following:

Be the contractor of choice for large-scale and complex projects in Peru and other key markets

We intend to enhance our position as a contractor of choice for large-scale and complex infrastructure projects in Peru and other key markets, by (i) utilizing the scale, expertise and market knowledge we have accumulated during our 80-year operating history to strengthen and expand our E&C segment; (ii) maintaining and further developing our long-standing client relationships based on our ongoing pursuit of operational excellence; (iii) continuing to strategically partner with global industry leaders, such as Bechtel and Fluor, with complementary capabilities for specific projects that we undertake; and (iv) leveraging our expertise in the mining sector with a view to becoming the premier mining services provider throughout Latin America.

Further expand our infrastructure-related businesses to increase activity across our business segments and generate more stable cash flows

We plan to continue to expand our infrastructure-related businesses to capitalize on private and public investments in Peru, including in toll roads, airports, ports, railroads, hospitals, water utility companies, and other power and oil and gas infrastructure assets. In addition to providing more recurring and predictable cash flows, our Infrastructure segment generates additional business opportunities for our E&C and Technical Services segments.

Maintain highly capitalized balance sheet

We seek to maintain a prudent and sustainable capital structure and a strong financial position to allow us to capitalize on additional business opportunities as they arise. We intend to remain financially disciplined by limiting substantially all our debt incurrence to identified projects with repayment sources.

Selectively pursue international opportunities, focusing on Chile and Colombia

We intend to leverage the capabilities and experience we have in Peru, particularly providing engineering and construction services to the mining, oil and gas and infrastructure end-markets, to continue evaluating and selectively pursuing opportunities in other markets. We expect to focus our efforts primarily on Chile and Colombia, which we believe offer attractive opportunities in these end-markets. We are currently in discussions in connection with potential opportunities in line with our strategy, although we cannot assure you that we will be able to take advantage of these opportunities. We intend to evaluate other international opportunities on a case-by-case basis.

Continue fostering our core corporate values throughout the organization

We will continue to instill our core corporate values throughout our organization, while also transmitting these values to surrounding communities. We will continue to attract and develop our human capital through various training, mentorship and reward programs in order to maintain our position as the best company in Peru to learn and work in the engineering and construction field. We also seek to promote social welfare by fostering relationships with the communities that surround our areas of operation. We strive to promote our corporate values to strengthen our organization and improve our performance as well as to have a positive impact on the markets where we operate.

Our Corporate Structure

The following organizational chart sets forth our principal operating subsidiaries along our four business segments.

LOGO

*	38.6% of the share capital in Viva GyM is held by our subsidiary GyM.

Risks We Face

Prospective investors should carefully consider the matters described under “Risk Factors” in this prospectus before investing in our ADSs. One or more of these factors could negatively impact our business and financial performance as well as our ability to implement our strategies successfully. Our business is subject to a number of risks, including the following principal risks:

•

global economic conditions could adversely affect our financial performance;

•

economic, social and political developments in Peru could adversely affect our business;

•

we may not be able to continue the historic growth of our business;

•

we face significant competition in each of our markets;

•

social conflicts may disrupt infrastructure projects;

•

we may not be able to successfully expand, including through acquisitions, outside of Peru;

•

our backlog may not be a reliable indicator of future revenues or profit;

•

our success depends on key personnel;

•

our success depends on our reputation for quality, reliability, timely delivery and safety;

•

increases in prices of energy, raw materials, equipment or wages could increase our operating costs;

•

we may not be able to obtain equity or debt financing on favorable terms;

•

failure to comply with, or changes in, laws or regulations, including environmental laws and regulations, could have a material adverse effect on our business;

•

our Engineering and Construction segment is vulnerable to the cyclical nature of the end-markets we serve;

•

our Engineering and Construction segment may be adversely affected if we incorrectly estimate the costs of our projects;

•

a substantial or extended decline in oil prices may adversely affect the financial performance of our Infrastructure segment;

•

our return on investment in concessions in our Infrastructure segment may not meet estimated returns, and we may not be successful in obtaining new concessions;

•

governmental entities may terminate prematurely concessions and similar contracts in our Infrastructure segment under various circumstances;

•

our Real Estate segment is exposed to risks associated with the development of real estate, including declines in our real estate prices, the availability and costs of financing that affects demand for our properties, increases in land prices, and the ability to obtain necessary licences and/or authorizations; and

•

the engagement with clients in our Technical Services segment may not be profitable or may be terminated or not renewed.

Corporate Information

Our principal executive office is located at Avenida Paseo de la República 4667, Lima 34, Peru, and our main telephone number is +511-213-6565. Our website address is www.granaymontero.com.pe. Information contained on, or accessible through, our website is not incorporated in this prospectus, and you should not consider any such information part of this prospectus.

The Offering

The following is a brief summary of the terms of this offering and should be read together with the more detailed information and financial data and statements contained elsewhere in this prospectus. For a more complete description of our ADSs and common shares, see “Description of our Share Capital” and “Description of American Depositary Shares” in this prospectus.


Issuer		Graña y Montero S.A.A.

Securities Offered		ADSs, representing of our common shares.

Offering Price		We expect the offering price will be between US$ and US$ per ADS.

Option to Purchase Additional ADSs		We are granting the underwriters an option, exercisable within 30 days, to purchase up to an aggregate of additional ADSs, representing common shares, to cover over-allotments of ADSs.

ADSs		Each ADS represents common shares held by Citibank del Perú S.A., as custodian of JPMorgan Chase Bank, N.A., the depositary. The ADSs will be evidenced by American depositary receipts, or ADRs, issued under a deposit agreement among us, JPMorgan Chase Bank, N.A. and the holders of the ADSs.

Use of Proceeds		We estimate that the net proceeds from this offering will be approximately US$ million, or approximately US$ million if the underwriters exercise their option to purchase additional ADSs in full. These amounts assume an initial public offering price of US$ per ADS (the midpoint of the price range set forth on the cover page of this prospectus), after deducting the estimated underwriting discounts and commissions and offering expenses. We intend to use the net proceeds from this offering for capital expenditures, including potential investments and acquisitions, and other general corporate purposes in our business segments, in order to take advantage of growth opportunities that we foresee in our markets. See “Use of Proceeds.”

Lock-up		We, our directors and officers and certain of our other shareholders, collectively owning 36.76% of our common shares as of April 30, 2013, have agreed not to sell any of our common shares or ADSs for a period of 180 days after the date of this prospectus without the prior approval of Credit Suisse Securities (USA) LLC, J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC . See “Underwriting.”


No Preemptive Rights Offer		Because shareholders representing at least 40% of the subscribed voting shares have agreed to waive their preemptive rights under Peruvian law in connection with this offering and such capital increase does not favor, directly or indirectly, certain shareholders to the detriment of others, there will not be a preemptive rights offer for our common shares. See “Description of our Share Capital—Preemptive and Accretion Rights.”

Shares Outstanding Immediately Prior to and Following the Offering		Immediately prior to the offering, we had 558,284,190 common shares issued and outstanding. After giving effect to the offering, we will have common shares outstanding (assuming no exercise of the option to purchase additional ADSs).

Voting		Subject to Peruvian law and the terms of the deposit agreement, a holder of ADSs will generally have the right to instruct the depositary how to vote the common shares represented by its ADSs. See “Description of our Share Capital” and “Description of American Depositary Shares.”

Dividends		Our dividend policy is to distribute between 30% and 40% of our net profit obtained from the preceding year. Under Peruvian law, the distribution of dividends requires the approval of our shareholders at our annual shareholders’ meeting. Holders of ADSs will be entitled to receive dividends, if any, paid on the common shares represented by the ADSs. Cash dividends on our common shares will be paid in nuevos soles and will be converted by the depositary into U.S. dollars and paid to the holders of ADSs, net of fees, expenses and any taxes. Under Peruvian law, dividends are subject to a withholding tax of 4.1% if paid to non-Peruvian holders. See “Dividends” and “Description of American Depositary Shares.”

Listing		We have applied to list our ADSs on the New York Stock Exchange under the symbol “GRAM”.

Risk Factors		See “Risk Factors” and the other information included in this prospectus for a discussion of factors you should consider before deciding to invest in our ADSs.

Summary Financial and Operating Data

The following information is only a summary and should be read together with “Presentation of Financial and Other Information,” “Selected Financial Data,” “Management’s Discussion and Analysis of Financial Conditions and Results of Operations” and the consolidated financial statements included in this prospectus.

The following summary financial data as of and for the years ended December 31, 2010, 2011 and 2012 have been derived from our audited annual consolidated financial statements included in this prospectus. Our annual consolidated financial statements for the years ended December 31, 2010, 2011 and 2012 have been audited by Dongo, Soria, Gaveglio y Asociados S.C. de R.L., a member firm of PricewaterhouseCoopers, in accordance with the standards of the Public Company Accounting Oversight Board (United States). The following summary financial data as of and for the three months ended March 31, 2012 and 2013 have been derived from our unaudited interim consolidated financial statements included in this prospectus. These financial statements have been prepared in accordance with IFRS issued by the IASB. Our results for the three months ended March 31, 2013 are not necessarily indicative of the results to be expected for the entire year 2013 or any other period.


	Year ended December 31,												Three months ended March 31,
	2010			2011(1)			2012			2012			2012			2013			2013
	(in millions of S/.)															(unaudited)
	(in millions of S/.)									(in millions of US$)(2)			(in millions of S/.)						(in millions of US$)(2)

Income Statement Data:
Revenues		2,502.7			4,241.3			5,231.9			2,020.8			1,100.4			1,268.1			489.8
Cost of sales		(2,057.8	)		(3,609.5	)		(4,519.8	)		(1,745.8	)		(946.1	)		(1,068.3	)		(412.6	)

Gross profit		444.8			631.7			712.1			275.0			154.3			199.8			77.2
Administrative expenses		(123.2	)		(199.6	)		(257.2	)		(99.3	)		(62.4	)		(76.2	)		(29.4	)
Other income and expenses(3)		2.7			4.3			75.9			29.3			12.7			8.5			3.3
Profit from sale of investments		75.0			4.8			—			—			0.6			—			—
Other (losses) gains, net		0.2			(2.8	)		(0.3	)		(0.1	)		—			(0.4	)		(0.2	)
Gain from business combination(3)		—			45.2			—			—			—			—			—

Operating profit		399.5			483.6			530.6			204.9			105.2			131.7			50.9
Financial (expense) income, net		(10.0	)		(6.2	)		(10.3	)		(4.0	)		2.4			(22.8	)		(8.8	)
Share of the profit and loss obtained by associates		11.5			0.2			0.6			0.2			—			14.7			5.7

Profit before income tax		401.0			477.6			520.8			201.2			107.6			123.6			47.8
Income tax		(124.3	)		(141.4	)		(154.6	)		(59.7	)		(35.5	)		(40.2	)		(15.5	)

Net profit		276.7			336.2			366.3			141.5			72.1			83.4			32.2
Net profit attributable to controlling interest(4)		252.8			289.1			290.0			112.0			65.2			64.3			24.9
Net profit attributable to non-controlling interest(4)		23.9			47.1			76.3			29.5			6.8			19.1			7.4

(1)

Includes the results of operations of CAM since February 24, 2011. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Factors Affecting Our Results of Operations—Acquisitions” and note 28 to our audited annual consolidated financial statements included in this prospectus.

(2)	Calculated based on an exchange rate of S/.2.589 to US$1.00 as of March 31, 2013.

(3)

In 2011, relates to gains recorded in connection with the CAM business acquisition as a result of the excess of fair value of the assets and liabilities we acquired in the acquisition of a controlling interest in CAM over the consideration paid and, in 2012 and the first quarter of 2012 and 2013, the reversal of provisions of CAM. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Factors Affecting Our Results of Operations—Acquisitions,” notes 25 and 28 to our audited annual consolidated financial statements and note 12 to our unaudited interim consolidated financial statements included in this prospectus.

(4)

We consolidate the results of our subsidiaries in our financial statements and we reflect the profit corresponding to the minority interests in our subsidiaries under “net profit attributable to non-controlling interests” in our income statement. With respect to our joint operations, we recognize in our financial statements the revenue and expenses including our share of any asset, liability, revenue or expense we hold jointly with partners. In addition to our joint operations, we also have investments in associated companies. We reflect the results of our associated companies under the equity method of accounting in our financial statements under the line item “share of the profit and loss in associates” in our income statement. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—General—Accounting for Subsidiaries, Joint Operations and Associated Companies” and note 2.2 to our audited annual consolidated financial statements included in this prospectus.


	As of December 31,						As of March 31,
	2011		2012		2012		2013		2013
							(unaudited)
	(in millions of S/.)				(in millions of US$)(1)		(in millions of S/.)		(in millions of US$)(1)
Balance Sheet Data:
Total current assets		2,502.3		3,011.4		1,163.2		2,852.1		1,101.6
Cash and cash equivalents		658.2		780.1		301.3		653.0		252.2
Accounts receivables		855.2		930.8		359.5		790.7		305.4
Outstanding work in progress		393.8		525.3		202.9		623.9		241.0
Inventories(2)		546.3		747.4		288.7		752.9		290.8
Total non-current assets		1,191.5		1,981.2		765.2		2,080.0		803.4
Long-term accounts receivables(3)		75.2		393.4		152.0		475.0		183.5
Property, plant and equipment		686.9		938.1		362.3		918.6		354.8
Intangible assets(4)		317.8		505.1		195.1		506.0		195.4
Total current liabilities		1,741.4		2,618.1		1,011.2		2,342.1		904.6
Short-term borrowings		231.0		452.8		174.9		349.4		135.0
Accounts payables(5)		1,313.6		1,995.2		770.6		1,887.3		729.0
Total non-current liabilities		499.3		597.6		230.8		801.3		309.5
Long-term borrowings		298.9		392.7		151.7		576.0		222.5
Shareholders’ equity		1,189.0		1,392.2		537.7		1,369.6		529.0
Non-controlling interest		264.1		384.7		148.6		419.1		161.9

(1)	Calculated based on an exchange rate of S/.2.589 to US$1.00 as of March 31, 2013.

(2)	Includes investments for the purchase of land by our Real Estate segment. These investments in land are recorded at book value and are not marked-to-market for changes in fair value. See note 12 to our audited annual consolidated financial statements included in this prospectus.

(3)

Includes payments required to be made by the Peruvian government for the amounts we invest to purchase trains and other infrastructure for the Lima Metro. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—General—Infrastructure” and note 8 to our audited annual consolidated financial statements included in this prospectus.

(4)	We recognize our investments in the construction of the highway of our Norvial concession as intangible assets. See note 2.15(c) to our audited annual consolidated financial statements included in this prospectus.

(5)

Includes S/.421.0 million, S/.848.1 million and S/.784.3 million in advance payments made by our clients as of December 31, 2011, December 31, 2012 and March 31, 2013, respectively, in connection with our E&C and Operation and Maintenance of Infrastructure Assets contracts. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—General—Engineering and Construction” and “—Technical Services” and note 18 to our audited annual consolidated financial statements included in this prospectus.


	As of and for the year ended December 31,											As of and for the three months ended March 31,
	2010			2011(1)			2012			2012		2012			2013			2013
															(unaudited)
	(in millions of S/., except as indicated)									(in millions of US$, except as indicated)(2)		(in millions of S/., except as indicated)						(in millions of US$, except as indicated)(2)
Other Data:
EBITDA(3)		553.9			662.0			775.7			299.6		158.9			214.2			82.7
Gross margin		17.8	%		14.9	%		13.6	%				14.0	%		15.8	%
EBITDA margin(3)(4)		22.1	%		15.6	%		14.8	%				14.4	%		16.9	%
Outstanding shares		558,284			558,284			558,284					558,284			558,284
Profit per share (in S/.or US$)		0.50			0.60			0.66			0.25		0.13			0.15			0.06
Profit attributable to controlling interest per share (in S/.or US$)		0.45			0.52			0.52			0.20		0.12			0.12			0.04
Dividend per share (in S/.or US$)		0.05			0.10			0.16			0.06
Net debt/EBITDA ratio		(0.6	)x		(0.2	)x		0.1x
Backlog (in millions of US$)(5)		1,313.2			2,493.9			4,165.9					2,682.4			4,291.3
Backlog/revenues ratio(5)(6)		1.7x			1.7x			2.2x

(1)

(2)	Calculated based on an exchange rate of S/.2.589 to US$1.00 as of March 31, 2013.

(3)	See “Selected Financial Data—Non-GAAP Financial Measure and Reconciliation” for a reconciliation of EBITDA to net profit.

(4)	Reflects EBITDA as a percentage of revenues.

(5)	Does not include, in our Infrastructure segment, our Norvial toll road concession or our Energy line of business. See “Business—Backlog.”

(6)

Backlog is calculated as of the last day of the applicable year. Revenues are calculated for such year and converted into U.S. dollars based on the exchange rate published by the SBS on December 31 of the corresponding year, which was S/.2.81 to US$1.00 as of December 31, 2010, S/.2.70 to US$1.00 as of December 31, 2011 and S/.2.55 to US$1.00 as of December 31, 2012. Includes revenues only for businesses included in our backlog.

The following tables set forth summary financial data for each of our business segments. For more information on the results of operations of our segments, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations” and note 5 to our audited annual consolidated financial statements and note 7 to our unaudited interim consolidated financial statements included in this prospectus.

Engineering and Construction


	As of and for the year ended December 31,								As of and for the three months ended March 31,
	2010		2011		2012		2012		2012		2013		2013
									(unaudited)
	(in millions of S/., except as indicated)						(in millions of US$)(1)		(in millions of S/., except as indicated)				(in millions of US$)(1)
Revenues		1,700.5		2,784.2		3,524.6		1,361.4		717.9		889.2		343.5
EBITDA(2)(3)		218.3		315.0		387.9		149.8		76.7		132.5		51.2
Net profit		111.2		166.4		188.5		72.8		39.6		60.2		23.3
Net profit attributable to controlling interest		104.1		153.1		165.1		63.8		39.5		48.3		18.7
Backlog (in millions of US$)		1,064.1		1,839.6		2,925.4				1,949.9		3,064.9
Backlog/revenues ratio(4)		1.8x		1.8x		2.1x

Infrastructure


	As of and for the year ended December 31,								As of and for the three months ended March 31,
	2010		2011		2012		2012		2012		2013		2013
									(unaudited)
	(in millions of S/., except as indicated)						(in millions of US$)(1)		(in millions of S/., except as indicated)				(in millions of US$)(1)
Revenues		354.7		404.2		524.5		202.6		127.8		127.7		49.3
EBITDA(2)		191.1		176.1		207.5		80.1		52.4		50.1		19.3
Net profit		88.1		81.8		84.0		32.4		23.2		14.5		5.6
Net profit attributable to controlling interest		73.6		68.2		66.7		25.8		18.6		11.9		4.6
Backlog (in millions of US$)(5)		47.2		195.9		413.4				222.0		443.0
Backlog/revenues ratio(4)(5)		3.0x		14.5x		7.0x

Real Estate


	Year ended December 31,								As of and for the three months ended March 31,
	2010		2011		2012		2012		2012			2013		2013
									(unaudited)
	(in millions of S/.)						(in millions of US$)(1)		(in millions of S/.)					(in millions of US$)(1)
Revenues		218.6		152.3		240.1		92.7		21.0			46.7		18.0
EBITDA(2)		27.4		37.5		70.5		27.2		3.3			14.8		5.7
Net profit		17.4		24.1		45.3		17.5		1.0			8.7		3.4
Net profit attributable to controlling interest		8.5		6.1		12.4		4.8		(0.2	)		3.2		1.2
Backlog (in millions of U.S.$)		1.8		58.2		108.4				95.3			115.2
Backlog/revenues ratio(4)		—		1.0		1.2

Technical Services


	As of and for the year ended December 31,								As of and for the three months ended March 31,
	2010		2011(6)		2012		2012		2012		2013		2013
									(unaudited)
	(in millions of S/., except as indicated)						(in millions of US$)(1)		(in millions of S/., except as indicated)				(in millions of US$)(1)
Revenues		285.0		977.0		1,083.3		418.4		265.0		244.1		94.3
EBITDA(2)		53.8		121.6		111.6		43.1		29.6		23.2		9.0
Net profit		24.7		61.1		61.5		23.8		13.7		8.4		3.3
Net profit attributable to controlling interest		23.9		53.9		50.6		19.5		12.7		8.0		3.1
Backlog (in millions of US$)		267.1		516.1		873.7				562.6		818.9
Backlog/revenues ratio(4)		2.6x		1.4x		2.1x

(1)	Calculated based on an exchange rate of S/.2.589 to US$1.00 as of March 31, 2013.

(2)	See “Selected Financial Data—Non-GAAP Financial Measure and Reconciliation” for a reconciliation of EBITDA to profit.

(3)	Our E&C segment EBITDA includes S/.7.7 million, S/.5.1 million, S/.9.2 million, S/.0.0 million and S/.1.4 million in 2010, 2011, 2012, the first quarter of 2012 and the first quarter of 2013, respectively, which represents GyM’s 38.9% equity interest in Viva GyM’s net profit.

(4)

Backlog is calculated as of the last day of the applicable year. Revenues are calculated for such year and converted into U.S. dollars based on the exchange rate published by the SBS on December 31 of the corresponding year, which was S/.2.81 to US$1.00 as of December 31, 2010, S/.2.70 to US$1.00 as of December 31, 2011 and S/.2.55 to US$1.00 as of December 31, 2012. Includes revenues only for businesses included in our backlog.

(5)

Does not include our Norvial toll road concession or our Energy line of business. Our ratio of backlog to revenues for our Infrastructure segment is not representative of what we would expect the ratio to be in future periods because in 2010 and 2011 we did not have revenues for La Chira waste water treatment plant and the Lima Metro and in 2012, and the first quarter of 2013 we only had pre-operation revenues for La Chira waste water treatment plant and revenues for the Lima Metro based on a limited number of trains during the first year of operation.

(6)

RISK FACTORS

Risks Related to Our Company

Global economic conditions could adversely affect our financial performance

The global financial crisis and ensuing global recession in 2008 and 2009 had a significant adverse effect on the development of large-scale infrastructure and real estate projects worldwide. The current sovereign crisis in Europe, coupled with the slow economic recovery in the United States, has generated economic uncertainty which could adversely affect private- and public-sector investments. Future global economic conditions, in particular fluctuations in commodity prices and financings costs, may impact our clients’ investment decisions. Should our clients choose to postpone or suspend new investments, or delay or cancel the execution of existing projects, as a result of global economic conditions, demand for our products and services, including our backlog, would decline, which may result in a decline in revenues and in under-utilization of our capacity. In addition, our business may be impacted by adverse economic developments even after economic conditions have improved because of the lag time between when investments decisions are made and the projects are executed. Furthermore, financial difficulties suffered by our clients, joint operation partners, subcontractors or suppliers due to global economic conditions could result in payment delays or defaults, or increase our costs or adversely impact our project execution. Accordingly, a global economic downturn could have a material adverse effect on our financial performance.

We may not be able to continue the historic growth of our business

We have experienced rapid growth in our operations in recent years and our strategy is to continue to grow our operations, including through international expansion. However, we may not be able to continue to grow our business at the same pace as in recent years, or at all. While our organic revenues grew at a CAGR of 34.9% from 2010 to 2012 (under IFRS), from 2003 to 2009 our organic revenues grew at a CAGR of 16.2% (under Peruvian GAAP). In addition, our organic revenues grew 13.3% during the first quarter of 2013 compared to the first quarter of 2012. The pace at which we are able to grow our business could be adversely affected by numerous factors, some of which are beyond our control, including, among others, a slowdown in Peru’s recent rapid economic growth and its substantial investment in infrastructure, increased competition, and our capacity to increase scale and manage growth in our company.

Growth can place significant demands on our management and operating structure, and too rapid growth may overwhelm our operating capacity. In addition, sustained growth will require us to recruit a large number of talented professionals and we cannot assure you that we will be able to hire sufficient engineers or other personnel with the expertise and experience we require. Nor can we assure you that as our company continues to grow we will be able to maintain our performance standards and corporate values across our entire organization. Failure to manage our growth effectively could adversely affect the quality of our products and services, which would have a material adverse effect on our business.

We face significant competition in each of our markets

Each of the markets in which we operate is competitive. We compete on the basis of, among other factors, price, performance, product and service quality, skill and execution capability, client relations, reputation and brand, and health, safety and environmental record. We face significant competition from both local and international players. Some of these competitors may have greater resources than us or specialized expertise in certain sectors. In addition, a portion of our business is derived from open bidding processes which can be highly competitive. Certain of our markets are highly fragmented with a large number of companies competing for market share. Our competitors may be more inclined to take greater or unusual risks or accept terms and conditions in a contract that we might not deem acceptable. Moreover, we cannot assure you that we will not face new competition from industry players entering or expanding their operations in our markets. If we are unable to compete effectively, our ability to continue to grow our business or maintain our market share would be affected. In addition, because one of the factors on which we generally compete is price, increased competition could impact our operating margins. Accordingly, our business and financial performance could be adversely affected by competition in our markets.

A major change in Peruvian government policies could affect our business

Our business is significantly affected by national, regional and municipal government policies and regulation, including with respect to infrastructure concessions or similar contracts to the private sector, public spending in infrastructure investment, and government housing subsidies, among others. Any adverse change in government policies with respect to these matters could result in a material adverse effect on our business and financial performance.

Social conflicts may disrupt infrastructure projects

Despite Peru’s ongoing economic growth and stabilization, high levels of poverty and unemployment and social and political tensions continue to be pervasive problems in the country. Peru has, from time to time, experienced social and political turmoil, including riots, nationwide protests, strikes and street demonstrations. In 2011 and 2012, certain regions experienced strikes and protests related mainly to the environmental impact of mining activities, which resulted in commercial disruptions. These protests led to the suspension of certain mining projects, including the suspension of a large mining project in the northern region of Cajamarca. We provided construction services in the initial phase of this project before it was suspended and intend to bid for future E&C service contracts if the project progresses. Social conflicts may disrupt, delay or suspend infrastructure projects in the future, which could have a material adverse effect on our business and financial performance.

New projects may require the prior approval of local indigenous communities

In September 2011, Peru enacted Law No. 29,785, regarding the Prior Consultation Right of Local Indigenous Communities, in accordance with the International Labor Organization Convention No. 169 (Ley del Derecho a la Consulta Previa a los Pueblos Indígenas y Originarios, Reconocido en el Convenio 169 de la Organización Internacional del Trabajo). This law establishes a prior consultation procedure ( procedimiento de consulta previa ) that the Peruvian government must carry out with local indigenous communities whose rights may be directly affected by new legislative or administrative measures, including the granting of certain permits or new concessions or similar contracts such as for mining, energy and oil and gas projects. Local indigenous communities do not have a veto right; upon completion of this prior consultation procedure, the Peruvian government retains the discretion to approve or reject the applicable legislative or administrative measure. We cannot assure you that these consultation procedures will not adversely affect new projects and concessions. Accordingly, our business and financial performance may be materially and adversely affected.

We may not be able to successfully expand outside of Peru

One of our key strategies is to continue to expand our operations outside of Peru, particularly in Chile and Colombia, and we expect that our international operations will become a more significant part of our consolidated business in future. We cannot assure you that we will be able to replicate our success in Peru in other countries. Our international expansion is subject to additional challenges, including: our ability to assimilate cultural differences and practices; our limited familiarity with local laws, regulators and contractors; our ability to attract and manage foreign personnel; the absence of a local workforce formed in our corporate values and familiar with our operations; competition in foreign markets, including from industry players with significantly greater local experience and reputation; and other risks specific to these countries. Many countries in Latin America have suffered significant economic, political and social crises in the past, and these events may occur again in the future. If we are unable to overcome these challenges, we may not be able to successfully expand internationally.

We may not be able to make successful acquisitions

Part of our strategy is to evaluate strategic acquisition opportunities to expand our operations and geographic footprint. We may not be able to identify appropriate acquisition opportunities, or, if we do, we may overpay for these acquisitions or may not otherwise be able to negotiate terms and conditions that are acceptable to us. We may also face difficulties obtaining financing to pay for acquisitions. In addition, we may not be able to obtain regulatory approvals, including antitrust approvals, required to consummate acquisitions. Furthermore, even if we are able to successfully consummate an acquisition, we may encounter challenges in integrating the acquired business effectively and profitably into our operations. The integration of an acquisition involves a number of factors that may affect our operations, including diversion of management’s attention, difficulties in retaining personnel and entry into unfamiliar markets. Acquired businesses may not achieve the levels of productivity anticipated or otherwise perform

as expected. Acquisitions may bring us into businesses we have not previously conducted and expose us to additional business risks that are different from those we have traditionally experienced, including new geographic, market, operating and financial risks. Moreover, acquisitions involve special risks, including the potential assumption of unanticipated liabilities and contingencies. Even if such liabilities are assumed by the sellers, we may have difficulties enforcing our rights, contractual or otherwise. We cannot assure you that future acquisitions will meet our strategic objectives.

Our backlog and our ratio of historical backlog to revenues may not be reliable indicators of future revenues or profit

Our backlog amount is subject to revision over time and our ability to realize revenues from our backlog is subject to a number of uncertainties. Cancellations, scope adjustments or deferrals may occur, from time to time, with respect to contracts reflected in our backlog and could reduce the amount of our backlog and the revenue and profits that we actually earn. Contracts may also remain in our backlog for an extended period of time and poor performance could also impact our profit from the contracts in our backlog. In addition, our backlog is expressed in U.S. dollars based on period-end exchange rates while a significant portion of our contracts are payable in nuevos soles or other local currencies. As a result, any depreciation of local currency would diminish the amount of revenues eventually earned relative to backlog. Three contracts in particular comprise 28.9% of our backlog as of March 31, 2013, and the termination of any of these three contracts would significantly reduce our backlog and future revenues and profits. Accordingly, the amount of our backlog is not necessarily indicative of future revenues or profits related to the performance of the related contracts.

The ratio of our historical backlog to revenues earned in subsequent years is volatile and substantially affected by a number of factors, some of which are outside our control, including levels of contract scope adjustments and our ability to enter into new contracts (which are substantially influenced by general economic conditions), delays and cancellations, foreign exchange rate movements, and our ability to increase the scale of our operations to expand the amount of work we carry out beyond that previously contracted. Accordingly, historical correlations between backlog and revenues may not recur in future periods. In particular, you should not assume that the ratio of our future E&C segment revenues for 2013 and 2014 to backlog as of December 31, 2012 that is currently expected to be realized in each of those years will be comparable to our historic ratios shown in “Business—Backlog—E&C Backlog.”

Our success depends on key personnel

Our success depends, to a significant degree, upon the services of our senior management, board of directors and other key personnel (including, among others, our Chairman and our Chief Executive Officer). Members of our management team are not subject to long-term employment agreements or non-competition agreements with us. We cannot assure you that we will be successful in retaining our current senior management or members of our board of directors, nor can we assure you that, in such event, we would be able to find suitable replacements. The loss of the services of some of our senior management or members of our board of directors could have a material adverse effect on our business and financial performance. In addition, the success of our business depends on our ongoing ability to attract, train and retain qualified engineers and other personnel. In recent years, the availability in Peru of qualified personnel who have the necessary expertise and experience has been lower than demand and, therefore, competition for human resources has become intense. We cannot assure that we will be able to hire and retain the number of qualified personnel required to meet the needs of, or to grow, our business. If we are unable to attract, train and retain the qualified personnel that we require at reasonable cost, our business and financial performance could be adversely affected.

Our success depends, to a large extent, on our reputation for the quality, reliability, timely delivery and safety of our products and services

We believe our track record and reputation are key factors in our clients’ evaluation of whether to engage our services and purchase our products, encouraging key industry players to partner with us, and recruiting and retaining talented personnel to our company. Our reputation is based, to a large extent, on the quality, reliability, timeliness and safety of our products and services. If our products do not meet expected standards or we fail to meet our deadlines, our relationship with our clients and partners could suffer, the reputation of our company could be adversely affected, we may not be invited to new bidding processes and our ability to capture new business could be severely diminished.

The nature of our business exposes us to potential liability claims and contract disputes

We may be subject to a variety of legal or administrative proceedings, liability claims or contract disputes. The government, clients and other third parties may present claims against us for injury or damage caused, directly or indirectly, by our operations, for example for alleged failures in our engineering and construction, the operation of our infrastructure concessions (such as our toll roads or the Lima Metro), and real estate developments we sell. Although we have adopted a range of insurance, risk management and risk avoidance programs designed to reduce potential liabilities, a catastrophic event resulting from the services we have performed or products we have provided could result in significant professional or product liability, warranty or other claims against us as well as reputational harm, especially if public safety is impacted. We may in the future be named as a defendant in legal proceedings where our clients or third parties may make a claim for damages or other remedies with respect to our projects or other matters. Any liability not covered by our insurance, or in excess of our insurance limits, could result in a significant loss for us, which may affect our financial performance.

We are susceptible to operational risks that could affect our business and financial performance

Our business is subject to numerous industry-specific operational risks, including natural disasters, adverse weather conditions, operator error or other accidents, mechanical and technical failures, explosions and other events, many of which are beyond our control. Such occurrences could result in injury or loss of life, severe damage to and destruction of property and equipment, business interruption, pollution and other environmental damage, clean-up responsibilities, regulatory requirements, investigations and penalties, and potential liability claims and contractual disputes. In addition, such occurrences could materially impact our reputation. Although we maintain comprehensive insurance covering our assets and operations at levels that our management believes to be adequate, our insurance coverage will not be sufficient in all circumstances or to protect against all hazards. The occurrence of such an operational risk could have a material adverse effect on our business and financial performance.

Deterioration in our safety record could adversely affect our business and financial performance

Our ability to retain existing clients and attract new business is dependent on our ability to safely operate our business. Existing and potential clients consider the safety record of their services providers to be of high importance in their decision to award service contracts. Some of our activities, in particular in our E&C segment, as well as our electricity networks services line of business, can be high risk by their nature. If one or more accidents were to occur at a site, the affected client may terminate or cancel our contract and may be less likely to continue to use our services. We cannot assure you that we will not experience accidents in the future, causing our safety record to deteriorate. Accidents may be more likely as we continue to grow, particularly if we are required to hire less experienced employees due to shortages of skilled labor. Moreover, often times we do not perform these activities by ourselves and accidents can happen due to errors committed by partners and subcontractors over whom we have no control. Because many of our clients require us to report our safety metrics to them as part of the bidding process and because a substantial part of our client base is comprised of major companies with high safety standards, a general deterioration in our safety record could have a material adverse impact on our business including our ability to bid for new contracts.

Any safety incidents or a deterioration in our safety record could adversely impact our ability to attract and retain qualified employees. In addition, we could also be subject to liability for damages as a result of accidents and could incur penalties or fines for violations of applicable safety laws and regulations.

Increases in the prices of energy, raw materials, equipment or wages could increase our operating costs

Our business requires significant purchases of energy, raw materials and components, including, among others, large quantities of fuel, cement and steel, as well as purchases or leases of equipment. Certain of these inputs used in our operations are susceptible to significant fluctuations in prices, over which we may have little control. The prices of some of these inputs are affected to a significant extent by the prices of commodities, such as oil and iron. Substantial increases in the prices of such commodities generally result in increases in our suppliers’ operating costs and, consequently, lead to increases in the prices they charge for their products. Moreover, we do not have long-term contracts for the supply of our key inputs, and, as result, if prices increase significantly or if we are required to find alternative suppliers, our costs to procure these inputs may increase significantly. In addition, growing demand for labor, especially when coupled with shortages of qualified employees in the countries where we operate, may result in significant wage inflation. To the extent that we are unable to pass along to our clients increases in the prices of our key inputs or increases in the wages that we must pay, our operating margins could be materially adversely impacted.

We may not be able to obtain financing on favorable terms

Our ability to undertake large investments (particularly in our Infrastructure and Real Estate segments) or consummate significant acquisitions will depend on the availability of equity and debt financing. We cannot assure you that we will be able to obtain new financings in the future on favorable terms or at all. Our ability to obtain financings will depend in part upon prevailing conditions in credit and capital markets, which are beyond our control. In 2008 and 2009, global markets suffered turmoil, which significantly constrained the availability of new financings. In addition, our ability to obtain new financing, or refinance existing debt, may at certain times be adversely affected by the cyclicality of our business, particularly our E&C segment, as has occurred in the past. Furthermore, in response to the ensuing global economic recession in 2009, many countries, in particular the United States as well as the countries where we operate, have maintained target interest rates at very low levels, and we cannot assure you that these interest rates will not rise significantly in the future, which would impact our costs of funding. If adequate funds are not available, or are not available on favorable terms, we may not be able to make future investments or take advantage of acquisitions or other opportunities.

We may not be able to recover on claims against clients for payment

If a client fails to pay our invoices on time or defaults in making its payments to us, we could incur significant losses. We occasionally bring claims against clients, principally the government, for delayed payments, additional costs that exceed the contract price or for amounts not included in the original contract price, including change orders. These types of claims can occur due to matters such as owner-caused delays or changes from the initial project scope, and, occasionally, they can be the subject of lengthy proceedings. When these types of events occur and unresolved claims are pending, we may invest significant working capital in projects to cover cost overruns pending the resolution of the relevant claims. A failure to promptly recover on these types of claims and change orders could have a material adverse effect on our financial performance.

If we are unable to enter into joint operations or other strategic alliances, our ability to compete for new business may be adversely affected

We may join with other companies to form joint operations or other strategic alliances to compete for a specific concession or contract, including with partners that contribute expertise in a specific field. Because a joint operation or alliance can often offer stronger combined qualifications than a company on a stand-alone basis, these arrangements can be important to the success of a particular bid. If we are unable to enter into joint operations or other strategic alliances, our ability to compete for new business may be adversely affected.

Our joint operations and other strategic alliances may be affected by disputes with, or the unsatisfactory performance by, our partners

Joint operations and other strategic alliances that we enter into as part of our business, including arrangements where operating control may be shared with unaffiliated third parties, may involve risks not otherwise present when we operate independently, including: sharing approval rights over major decisions; responsibility for our partners’ unpaid obligations or liabilities; and inconsistencies in our and our partners’ economic or business interests or goals. Any disputes between us and our partners may result in delays, litigation or operational impasses. We may also incur liabilities as a result of action taken by our partners. In addition, if we participate in joint operations or other strategic alliances where we are not the controlling party, we may have limited control over operation decisions and actions and the success of the joint operation or other strategic alliance will depend largely on the performance of our partners. These risks could adversely affect our ability to transact the business that is the subject of such joint operation or other strategic alliance, and could result in the termination of the applicable concession or contract. Under these circumstances, we may be required to make additional investments and provide additional services to ensure adequate performance and delivery. These additional obligations could result in reduced profits or, in some cases, increased liabilities or significant losses for us. In addition, failure by a partner to comply with applicable laws or regulations could negatively impact our business and, in the case of government contracts, could result in fines, suspension or even debarment from participating in bidding processes. As a result, our business and financial performance could be adversely affected by disputes involving our joint operation or other strategic alliances.

We are dependent upon third parties to complete many of our contractual obligations

We rely on third-party suppliers to provide much of the materials and equipment used in our businesses. A portion of the work performed under our infrastructure concessions and, to a lesser extent, other contracts is performed by third-party subcontractors. As a result, the timely completion and quality of our projects may depend on factors beyond our control, including the quality and timeliness of the delivery of materials supplied for use in the project and the technical skills of subcontractors hired for the project. If we are unable to find qualified suppliers or hire qualified subcontractors, our ability to meet our contractual obligations could be impaired. In addition, if the amount we are required to pay for supplies, equipment or subcontractors exceeds what we have estimated, we may suffer losses under our contract. If a supplier or a subcontractor fails to provide supplies, equipment or services as required under a negotiated arrangement for any reason, or provides supplies, equipment or services that are not of an acceptable quality, we may be required to source those supplies, equipment or services on a delayed basis or at a higher price than anticipated, which could impact our financial performance. In addition, faulty materials or equipment could result in claims against us for failure to meet contractual specifications, and failure by suppliers or subcontractors to comply with applicable laws and regulations could negatively impact our reputation and our business and, in the case of government contracts, could result in fines, suspension or even debarment from participating in bidding processes. These risks may be intensified during economic downturns if these suppliers or subcontractors experience financial difficulties. As a result, our business and financial performance may be adversely affected by our dependence on third party providers.

Debarment from participating in government bidding processes would have a material adverse effect on our business and financial performance

We would face debarment from participating in government bidding processes for one to three years if we were found to have violated certain provisions of the Peruvian State Contracting Law (Ley de Contrataciones del Estado). We are required to comply with a large number of contractual obligations with the government in our business, and we cannot assure you that we will be in full compliance at all times. Moreover, such a debarment would affect the ability of our entire company (including any of our subsidiaries), and not just the line of business where the alleged violation took place, to participate in government bids under the Peruvian State Contracting Law. In December 2012, Sedapal S.A., the public utility company responsible for the supervision of the water service in Lima, provided us with notice that they had terminated one of our E&C contracts, which resulted in the elimination of approximately US$51.5 million from our backlog as of such date, alleging that we had breached the terms of the contract by failing to meet agreed-upon deadlines. We believe this termination is invalid because we had previously initiated arbitration proceedings, which are currently ongoing, relating to Sedapal’s denials of our requests for term extensions and because we had previously terminated the contract on the grounds that Sedapal breached its payment obligations to us. Although we believe the likelihood of Sedapal winning this new arbitration is remote, a negative outcome would affect our company’s, including any of our subsidiaries’, participation in government bidding processes under the Peruvian State Contracting Law. Additionally, in December 2011, SUNAT (Superintendencia Nacional de Aduanas y Administración Tributaria), the Peruvian tax and customs authority, provided us with notice that they had terminated one of GMD’s contracts in our Technical Services segment, which resulted in the elimination of approximately US$4.2 million from our backlog as of such date, alleging a number of service deficiencies. In response to SUNAT’s contract termination, we initiated an arbitration against SUNAT and SUNAT counterclaimed for the payment of performance bonds in an aggregate amount of S/.1.6 million. A negative outcome in this arbitration, if we do not resolve the dispute with SUNAT, would also affect our company’s, including any of our subsidiaries’, participation in government bidding processes under the Peruvian State Contracting Law. Furthermore, in April 2013, Perupetro initiated an administrative proceeding against a subsidiary in our E&C segment, claiming that the subsidiary had submitted a bid to provide engineering services while not being in compliance with certain technical requirements. Although we believe that the likelihood of an adverse outcome in this proceeding is remote, an adverse outcome would affect our company’s, including any of our subsidiaries’, participation in government bidding processes under the Peruvian State Contracting Law. A significant part of our revenues on a consolidated basis is derived from public sector contracts in Peru. As a result, if our company is debarred from participating in government bidding processes, our business and financial performance would be materially and adversely affected.

Failure to comply with, or changes in, laws or regulations could have a material adverse effect on our business and financial performance

We operate in highly regulated industries. Our business and financial performance depends on our and our clients’ ability to comply on a timely and efficient basis with extensive national, regional and municipal laws and

regulations relating to, among other matters, environmental, health and safety, building and zoning, labor, tax and other matters. The cost of complying with these laws and regulations can be substantial. In addition, compliance with these laws and regulations can cause scheduling delays. Although we believe we are in compliance with all applicable concessions, other similar contracts, laws and regulations in all material respects, we cannot assure you we have been or will be at all times in full compliance. Failure by us or our clients to comply with our concessions, similar contracts or these laws and regulations could result in a range of adverse consequences for our business, including subjecting us to significant fines, civil liabilities and criminal sanctions, requiring us to comply with costly restorative orders, the shutdown of operations, and revocation of permits and termination of concessions or similar contracts. In addition, we cannot assure you that future changes to existing laws and regulations, or stricter interpretation or enforcement of existing laws and regulations, will not impair our ability to comply with such laws and regulations or increase our compliance costs. Accordingly, existing or future regulation in our markets could have a material adverse effect on our business and financial performance.

We may be held liable for environmental damage caused by our operations

The nature of certain of our operations requires us to assume risks of causing environmental and other damages. We may be held liable for the environmental damage we cause, including the incidental consequences of human exposure to hazardous substances or other environmental damage. We may be subject to clean up costs or penalties in the event of certain discharges into the environment and/or environmental contamination and damage. Our environmental liability insurance may not be sufficient or may not apply to certain types of environmental damage. Any substantial liability for environmental damage could have a material adverse effect on our financial performance.

New environmental regulation as a result of climate change could impact our business and financial performance

Growing concerns about climate change could result in the imposition of additional or more stringent environmental requirements or regulations. For example, there are ongoing international efforts to address greenhouse emissions, such as the Kyoto Protocol, which are in various stages of negotiation and implementation. If more stringent environmental regulation is adopted in the countries where we operate, we may be obliged to incur higher expenditures than anticipated, adversely affecting our financial performance. In addition, future remediation requirements in the event that we are found responsible for environmental damage may be substantial, which could impact our financial condition. Moreover, more stringent environmental regulation could increase the costs of projects for our clients or, in some cases, prevent a project from going forward, thereby potentially reducing the demand for our services. Accordingly, new environmental regulation could have a material adverse effect on our business and financial performance.

We may not be able to effectively protect against financial market risks

Our operations are exposed to financial market risks, such as risks related to exchange rates, commodity prices and, to a lesser extent, interest rates. Fluctuations in currency, commodity prices or interest rates could adversely affect our financial performance. We cannot assure you that derivative financial instruments will protect us from the adverse effects of financial market risks. While hedging transactions are intended to reduce market risks, such transactions may expose us to other risks, such as counterparty risk. We may not be able to adequately protect ourselves against financial market risks and may not ultimately realize an economic benefit from our hedging strategy.

The loss of a key client in some of our lines of business may affect our business and financial performance

In some of our lines of business, such as our Infrastructure and Technical Services segments, a substantial amount of the revenue we receive is concentrated among a limited number of clients, including the Peruvian government. If one or more of these major clients fail or delay in paying our fees, or if there is a significant reduction or cancellation of business by one or more of these major clients, our business and financial performance may be adversely affected. In particular we cannot assure you that Enersis, from whom we acquired our electricity networks services line of business in 2011, will not reduce its use of our services. If we are not able to capture new clients to replace the loss of business from existing key clients, our financial performance may be adversely affected.

Our use of the percentage-of-completion method of accounting for our Engineering and Construction segment could result in a reduction of previously recorded profits

In accordance with IFRS, we measure and recognize a large portion of our revenues under the percentage-of-completion accounting methodology. This methodology allows us to recognize revenues ratably over the life of a contract, without regard to the timing of receipt of cash payments, by comparing the amount of the costs incurred to date against the total amount of costs expected to be incurred. The effect of revisions to estimated costs, and thus revenues, is recorded when the amounts are known and can be reasonably estimated. These revisions can occur at any time and could be material. On a historical basis, we believe that we have made reasonably reliable estimates of the progress towards completion on our long-term contracts. However, given the uncertainties associated with these types of contracts and inherent in the nature of some of the industries in which we operate, it is possible for actual costs to vary from estimates previously made, which may result in reductions or reversals of previously recorded profits.

Labor unrest could adversely affect our financial performance

All of our manual laborers and a portion of our employees are members of labor unions. Our practice is generally to extend benefits we offer our unionized employees to non-unionized employees. In our E&C segment, collective bargaining agreements are negotiated at two levels, on an annual basis between the Peruvian National Federation of Civil Construction and the Peruvian Chamber of Construction, without our direct involvement, and on a per project basis directly between the unions and us in accordance with such annual agreement. We also have collective agreements with our employees in certain of our business segments, which are also negotiated periodically. Although we consider that our relationship with unions are currently positive, we cannot assure you that we will not experience work slowdowns, work stoppages, strikes or other labor disputes in the future, which could result in the interruption or delay of our operations. Such interruptions or delays could have an adverse impact on our business, including on the cost of our projects and our ability to make timely delivery. Moreover, our operations may also be affected by labor unrest in our clients’ or our partners’ workforce.

The proceeds from our insurance policies may not be sufficient and we may not be insured against all risks

We maintain insurance coverage both as a corporate risk management strategy and in order to satisfy the requirements under certain regulations and contracts. We cannot assure you that proceeds from our insurance policies, however, will be sufficient to cover the damages resulting from any event covered by such policies. Certain risks are not covered under the terms of our insurance policies, such as interruption of operations. In such event, we may incur significant expenses to rebuild our facilities, repair or replace our equipment, or cover other damages. In addition, if any of our third party insurers fail, abruptly cancel our coverage or otherwise cannot satisfy their insurance requirements to us, then our overall risk exposure and operational expenses could be increased. Moreover, we may not be able to renew our insurance policies on favorable terms, or at all. Although we have in the past been generally able to cover our insurance needs, we cannot assure you that we will be able to secure all necessary insurance in the future.

An increase in import duties and controls may have a material adverse effect on our financial performance

Our future success depends in part on our ability to select and purchase quality mechanical instruments and equipment at attractive prices. While we have historically been able to do so, such instruments and equipment may become subject to higher import taxes than currently apply. In addition, the Peruvian antitrust authority (Instituto Nacional de Defensa de la Competencia y de la Protección de la Propriedad Intelectual, or “INDECOPI”) is currently conducting an investigation regarding potential dumping of Chinese imports, which may result in new anti-dumping laws. We cannot assure you that there will not be further increases in import taxes, changes in laws related to imports or the imposition of quotas by countries from which we import mechanical instruments and equipment, which could have a material adverse effect on our business.

Additional Risks Related to our Engineering and Construction Business

We are vulnerable to the cyclical nature of the end-markets we serve

Demand for our engineering and construction services is dependent on conditions in the end-markets we serve, which include, among others, the mining, power, oil and gas, transportation, real estate and other infrastructure

sectors in Peru, as well as the mining sector in Chile. Consequently, our engineering and construction business is closely linked to the performance and growth of these sectors, and it is exposed to many of the risks faced by our clients operating in these sectors, over which we have no control. These industries tend to be cyclical in nature and, as a result, although downturns can impact our entire company, our engineering and construction business has historically been subject to periods of very high and low demand. For example, between 2000 and 2003, there was a significant decline in activity in the Peruvian real estate and construction sectors, which consequently affected our and our competitors’ business and financial performance during that time. Factors that can affect these sectors include, among others, macroeconomic conditions, climate conditions, the level of private and public investment, the availability of credit, changes in laws and regulations, and political and social stability. The mining and oil and gas sectors, in particular, are also driven by worldwide demand for the underlying commodities, including, among others, silver, gold, copper, oil and gas, which can be affected by such other factors as global economic conditions and geopolitical affairs. A decline in prices for minerals or oil and gas can have a significant impact on our clients’ exploration and production activities and, as a result, on their demand for our engineering and construction services. Accordingly, adverse developments in the end-markets served by our engineering and construction business could have a material adverse effect on our financial performance.

Decreases in capital investments by our clients may adversely affect the demand for our services

Our engineering and construction business is directly affected by changes in private-sector and, to a lesser extent, public-sector investments for large-scale infrastructure projects. In addition, our engineering and construction business is directly affected by the availability and cost of financings for these projects. In the markets where we operate, investments and financings for large-scale projects have historically been influenced by macroeconomic and other factors which are beyond our control, including in the case of public-sector investment, government spending levels. As a result, we cannot assure you that clients will not choose to limit or not undertake new projects or delay, suspend or cancel existing projects. Reductions in anticipated capital investments or available financing for large-scale projects could have a material adverse effect on our financial performance.

Our revenues may fluctuate based on project cycles, which we may not control

The substantial majority of the revenues from our engineering and construction business is generated from project awards, the timing of which may be unpredictable and outside of our control, especially considering the highly competitive bidding processes and complex and lengthy negotiations they involve. These processes can be impacted by a wide variety of outside factors including governmental approvals, financing contingencies and overall market and economic conditions. Moreover, because a significant portion of our revenues is generated from large-scale projects, our results of operations can fluctuate quarterly or yearly depending on whether and when project awards occur and the commencement and progress of work under awarded contracts. As a result, we are subject to the risk that revenues may not be derived from awarded projects as quickly as anticipated.

Our business may be adversely affected if we incorrectly estimate the costs of our projects

We conduct our engineering and construction business under various types of contractual arrangements where costs are estimated in advance. In some of our contracts ( i.e. , lump-sum, unit price and EPC) we bear the risk of some or all unanticipated cost overruns, including due to inflation or certain unforeseen events. Risks under contracts which could result in cost overruns include: difficulties in performance of our subcontractors, suppliers, or other third parties; changes in laws and regulations or difficulties in obtaining permits or other approvals; unanticipated technical problems; unforeseen increases in the cost of inputs, components, equipment, labor, or the inability to obtain these on a timely basis; delays caused by weather conditions; incorrect assumptions related to productivity or scheduling estimates; and project modifications that create unanticipated costs or delays. These risks tend to be exacerbated for longer term contracts since there is increased risk that the circumstances under which we based our original bid could change. In many of our contracts, we may not be able to obtain compensation for additional work performed or expenses incurred. Our failure to estimate accurately the resources and time required to complete a project could adversely affect our profitability. Even under our cost-plus contracts, our inability to complete projects within the estimated budget could affect our relationship with our clients and negatively impact awards of future contracts. As a result, if we incorrectly estimate the costs of our projects, our business and financial performance could be adversely affected.

We may be unable to deliver our services in a timely manner

The success of our engineering and construction business depends on our ability to meet the standards and schedules required by our clients. Significant delays that prevent us from providing our services on agreed time frames could adversely affect our client relations and reputation. Delays may occur for a number of reasons, including as a result of our inability to adequately foresee the needs of our clients; delays caused by our joint operation partners, subcontractors or suppliers; insufficient production capacity; equipment failure; shortage of qualified workers; changes to customs regulations; and natural disasters. Failure to finish construction by the contractual completion date set forth in the contract could result in costs that reduce our projected profit margins, including a requirement to pay daily penalties and damages. If we are unable to meet deadlines, either due to internal problems or as a result of events over which we have no control, we may lose the trust of our clients and, therefore, experience a decrease in the demand for our services. In such event, our business and financial performance could be adversely affected.

We may not be able to obtain compensation for additional work or expenses incurred as a result of client-requested change orders

Clients often determine, after commencement of the project, to change various elements of the project. Some of our contracts may also require that clients provide us with design or engineering information or with equipment or materials to be used on the project, and, in some cases, the client may provide us with deficient design or engineering information or equipment or materials or may provide the information or equipment or materials to us later than required by the project schedule. Our project contracts generally require the client to compensate us for additional work or expenses incurred due to client requested change orders or failure of the client to provide us with specified design or engineering information or equipment or materials. Under these circumstances, we generally negotiate with the client with respect to the amount of additional time required to make these changes and the compensation to be paid to us. We are subject to the risk that we are unable to obtain, through negotiation, arbitration, litigation or otherwise, adequate amounts to compensate us for the additional work or expenses incurred by us due to client-requested change orders or failure by the client to timely provide required items. A failure to obtain adequate compensation for these matters could require us to record an adjustment to amounts of revenue and gross profit that were recognized in prior periods. Any such adjustments, if substantial, could have a material adverse effect on our financial performance.

We may have difficulty obtaining performance bonds that we require in the normal course of our operations

In our engineering and construction business, it is industry practice for customers to require performance bonds or other forms of credit enhancement to secure, among other things, bids, advance payments and performance. We cannot assure you that in the future we will not encounter difficulties in obtaining such performance bonds or credit enhancements. The Peruvian market for these types of credit instruments is small; moreover, under Peruvian banking regulations, lenders are required to impose limits on the amount of credit they extend to a group of affiliated companies. Failure to provide performance bonds or credit enhancements on terms required by clients may result in our inability to compete for or win new projects.

Additional Risks Related to our Infrastructure Business

A substantial or extended decline in oil prices may adversely affect our financial performance

A substantial part of the revenues of our infrastructure business depends upon prevailing prices for oil. Historically, oil prices and markets have been volatile and are likely to continue to be volatile in the future. Oil is a commodity and its price is subject to wide fluctuations in response to relatively minor changes in supply and demand for oil, market uncertainty, and a variety of additional factors beyond our control. Those factors include, among others: global demand and supply; political developments in producing regions; weather conditions; governmental regulations; international conflicts and acts of terrorism; the price and availability of alternative sources of energy; and overall local and global economic conditions. Moreover, lower oil prices may not only decrease our revenues on a per unit basis, but may also reduce the amount of oil we can produce economically, if any, and, as such, may have a negative impact on the reserves of the fields in which we operate. As result, our financial performance could be materially and adversely affected by declines in oil prices.

Our reserves estimates depend on many assumptions that may turn out to be inaccurate

The process of estimating oil and gas reserves is complex. In order to prepare the reserves estimates presented in this prospectus, we and our independent petroleum engineers must project production rates and timing of development expenditures as well as analyze available geological, geophysical, production and engineering data, and the extent, quality and reliability of this data can vary. The process also requires economic assumptions about matters such as oil prices, drilling and operating expenses, capital expenditures, taxes, and availability of funds. Therefore, estimates of reserves are inherently imprecise. Actual future production, oil and gas prices, revenues, taxes, development expenditures, operating expenses and quantities of recoverable reserves will most likely vary from the estimates presented in this prospectus, and those variances may be material. Any significant variance could materially affect the estimated reserves of the fields in which we operate.

Our return on our investment in our concessions may not meet estimated returns

Our return on any investment in a concession is based on the terms and conditions of the concession, its duration and the amount of capital invested as well as the amount of revenues collected, debt service costs, payment of penalties and other factors. For example, traffic volume at toll roads may be affected by a number of factors beyond our control, including security conditions; general economic conditions; demographic changes; fuel prices; reduction in commercial or industrial activities in the regions served by the roads; and natural disasters. Decreased traffic at Norvial could adversely affect our financial performance. Although some of our concessions allow for adjustments based on economic conditions, certain concessions provide that adjustment requests be approved only if certain limited events specified in our concession contracts have occurred. If a request of adjustment is not granted, our financial performance could be affected. Given these factors and the possibility that governmental authorities could implement policies that affect our contractual return on investment in a way that we did not anticipate, we cannot assure you that our return on any investment under any concession will meet our estimates.

Governmental entities may terminate prematurely our concessions and similar contracts under various circumstances, some of which are beyond our control

Our ability to continue operating our concessions and similar public-sector contracts depends on governmental authorities, which may revoke the agreement for certain reasons set forth in the relevant documentation contract and in applicable legislation, including the failure to comply with any contractual terms (including the concessionaire’s default on debt) or applicable law. Moreover, the relevant governmental authority may terminate and/or repossess a concession at any time, if, in accordance with applicable law, it determines that it is in the public interest to do so. The relevant governmental authority may also assume the operation of a concession in certain emergency situations, such as war, public disturbance or threat to national security. In addition, in the case of force majeure , the relevant governmental authority may require us to implement certain changes to our operations. If the government terminates any of our concessions, under Peruvian law it is generally required to compensate us for the amount of our unrecovered investment, unless the concession is revoked pursuant to applicable law or the terms of the concession which would imply a serious breach of the concession’s terms by us. Such compensation process is likely to be time consuming and the amount paid to us may not fully compensate us. We cannot assure you that we would receive such compensation on a timely basis or in an amount equivalent to the value of our investment in a concession plus lost profits.

We are exposed to risks related to the operation and maintenance of our concessions and similar contracts

The operation and maintenance requirements under our concessions could encounter delays or cause us to exceed our budgeted costs for such projects, which could limit our ability to realize the expected return on these projects, increase our operating or capital expenses and adversely affect our business and financial performance. In addition, our operations may be adversely affected by interruptions or failures in the technology and infrastructure systems that we use to support our operations, including toll road collection and traffic measurement systems. The Lima Metro in particular may be susceptible to outages due to power loss, telecommunications failures and similar events. The failure of any of our technology systems may cause disruptions in our operations, adversely affecting our profitability. While we have business continuity plans in place to reduce the adverse impact of information technology system failures on our operations, we cannot assure you that these plans will be effective. Furthermore, accidents and natural disasters may also disrupt the construction, operation or maintenance of our projects and concessions, which could adversely affect our business and financial performance.

We may not be successful in obtaining new concessions

The market for infrastructure concessions in Peru is competitive. We compete with Peruvian and foreign companies for infrastructure concessions in Peru, some of whom may have greater financial and other resources or particular expertise pertinent to a specific concession. Moreover, our public-sector clients may face budget deficits that may prohibit the development of infrastructure concessions, which could affect our business. We may also not be able to obtain additional concessions if the government decides not to award new concessions, due to budget constraints or policy changes or because alternative financing mechanisms are used. Our inability to bid for or obtain new concessions may adversely affect our business and financial performance.

The contract with Petroperú S.A. (“Petroperú”) for our fuel storage terminal business expires in August 2014. During 2012, our fuel storage terminal business generated revenues of US$49.1 million, EBITDA of US$16.6 million and US$18.2 million in gross profit (we are entitled to 50% of the joint operation revenues, EBITDA or gross profit). Our results of operations will be adversely affected if this contract is not extended or renewed. Moreover, we cannot assure you whether or when we will undertake any of the projects that have been awarded to us but for which contract negotiations are ongoing, namely the concessions for the Via Expresa Javier Prado or Via Expresa Sur. We may not be able to negotiate contracts terms that are favorable to us or at all. In addition, these projects may suffer long delays or suspension as a result of political considerations or other factors.

Additional Risks Related to our Real Estate Business

We are exposed to risks associated with the development of real estate

Our real estate business is subject to the risks that generally affect the real estate industry, such as availability and prices of suitable land, environmental and zoning regulations, interruptions in supply and volatility of the prices of construction materials and equipment, and changes in the demand for real estate. Our real estate business is specifically affected by the following risks: macroeconomic conditions in Peru that may impact the growth of the real estate sector as a whole, particularly in the residential market, including an increase in unemployment or a decrease in wage levels; an increase in prevailing interest rates or lack of available credit; changes in government subsidies for affordable housing; unfavorable real estate market conditions, such as an oversupply of residential units or scarcity of suitable land in particular areas; the level of customer interest in our new projects or the sales price per unit necessary to sell the unit may be lower than expected; customer perception of the security, convenience and attractiveness of our projects and the areas in which they are located; cost overruns, many of which may be beyond our control, that exceed our estimates and affect our profit margins, including the price of labor, land, insurance, taxes and public charges; the construction and sale of units may not be completed on schedule; bankruptcy or significant financial difficulties of large industry players, which cause a loss of confidence in the industry; and restrictions on real estate development imposed by local, regional and national laws and regulations. The occurrence of any of the above events may have a material adverse effect on our business and financial performance.

Real estate prices may not continue to rise and may decline

Real estate prices in Peru have risen significantly over the last decade. We cannot assure you that this increase in real estate prices does not represent a bubble. Real estate prices in Peru may not continue to rise or may decline significantly, particularly if financing costs rise or consumer confidence in the real estate market erodes. If real estate prices decline significantly, our business and financial performance could be materially and adversely affected.

Our business may be adversely affected if we are not able to obtain the necessary licenses and/or authorizations for our developments in due time

Real estate development requires obtaining certain licenses, authorizations and registrations. In Peru, local authorities are responsible for issuing most of the licenses that are required during the development stage, including zoning, demolition and construction licenses, among others. Currently, we have approximately 21 real estate projects in various stages of development. We have not yet initiated the administrative processes before the appropriate authorities, or such procedures are pending approval, for nine of these developments, including our Cuartel San Martín multi-use development project, as they are still in the early stages of development. A denial or an extended delay by applicable administrative authorities may render land unsuitable for development or delay the completion of planned projects, increase our costs and adversely affect our business and financial performance.

Scarcity of financing and/or an increase in interest rates could decrease the demand for real estate properties

The scarcity of financing and/or an increase in interest rates may adversely affect the ability or willingness of prospective buyers to purchase our real estate properties. In most cases, the purchasers of our residential or commercial properties finance at least part of the purchase price with mortgage loans. In 2012, 53% of our residential units was sold to purchasers who received government subsidies to finance the purchase homes. An increase in interest rates, whether as a result of market conditions or government action or otherwise, may cause a decrease in the demand for our residential and commercial properties and for land development, as well as an increase of our own financing costs, which may adversely affect our business and financial performance.

We may experience difficulties in finding desirable land and increases in the price of land may increase our cost of sales and decrease our earnings

The continued growth of our real estate business depends in large part on our ability to continue to acquire land and to do so at a reasonable cost. As more developers enter or expand their operations in the Peruvian real estate sector, land prices could rise significantly and suitable land could become scarce due to increased demand or decreased supply. A resulting rise in land prices may increase our cost of sales and decrease our earnings. We may not be able to acquire suitable land at reasonable prices in the future, which may have a negative impact on our financial performance.

Changing market conditions may adversely affect our ability to sell home inventories in our land and at expected prices

There is a lag between the time we acquire land and the time that we can bring the developed properties to market. Lag time varies on a project-by-project basis. As a result, we face the risk that demand for real estate may decline or that other developments may occur during this period that affect market conditions, and that we will not be able to dispose of developed properties or undeveloped land at expected prices or profit margins or within anticipated time frames or at all. Significant expenditures associated with investments in real estate, such as maintenance costs, construction costs and debt payments, cannot generally be reduced if changes in market conditions cause a decrease in expected revenues from our properties. Moreover, the market value of home inventories and undeveloped land can fluctuate significantly because of changing market conditions. As a result of these and other factors beyond our control, we may be forced to sell properties or land at a loss or for prices that generate lower profit margins than we anticipate.

Additional Risks Related to our Technical Services Business

Our engagements with clients may not be profitable or may be terminated or not renewed

The pricing and other terms of many of our client contracts in our technical services business necessarily require us to make estimates and assumptions at the time we enter into these contracts that could differ from actual results. These estimates reflect our best judgments regarding the nature of the engagement and our expected costs to provide the contracted services. Because of the competitive nature of the markets in which we operate, particularly in IT services, the risks related to errors in these estimates are heightened. Any increased or unexpected costs of unanticipated delays or complications in connection with the performance of these engagements, including delays caused by factors outside our control, could make these contracts less profitable or not profitable, which would have an adverse effect on our profit margin. Our exposure to this risk increases generally in proportion to the scope of services provided under a contract.

In addition, the success of our technical services business is dependent on our ability to retain our clients. In our electricity networks services line of business in particular, Enersis, from whom we acquired control of the business in 2011 remains a key client; however, we cannot assure you that they will continue to use our services in the future. Also, in our IT services business in particular, we may lose clients due to their conversion to in-house service providers. We are also vulnerable to reduced volumes from our clients due to business downturns or for other reasons, which can reduce the scope and price of services we provide. A contract termination by a major client could cause us to experience a higher than expected number of unassigned employees, which would affect our profitability until we are able to reduce or reallocate our personnel. We may not be able to replace any client that elects to terminate or not renew its contract with us, and the termination or non-renewal of a significant number of our agreements, or of our most important contracts, may adversely affect our business and financial performance. In

addition, non-compliance on a contract with a public-sector client may lead to debarment from participating in government bidding processes and, consequently, inability to contract with other public-sector clients, not just for the line of business where the alleged violation took place, but also for all of our other businesses.

We may not be successful in obtaining new government contracts

We compete to provide services to the Peruvian government, and some of our competitors may have greater financial and other resources or particular expertise pertinent to a specific contract. In addition, we may not be able to obtain additional government service contracts if the government decides not to award additional public-sector road contracts or, to a lesser extent, contracts for the provision of IT and electrical networks services, due to budget constraints, policy changes or otherwise. Our inability to obtain new government contracts may adversely affect our business and financial performance.

We face risks related to the delivery of products and services by our suppliers

In the course of our IT services and electricity networks services, we depend on technology providers that may commit errors or omissions related to the delivery or the quality of equipment, services or products that are essential to our business. A significant error or failure to deliver such equipment, products or services made by one of our suppliers, particularly in our IT services business where we may have an exclusive arrangement with a specific supplier for a client, may adversely affect our business and financial performance.

Our IT security measures may be breached or compromised and we may sustain system outages

We rely on encryption, authentication technology and firewalls to provide security for confidential information, including personal data, transmitted to and by us over the internet. A breach of our network security measures could result in the misappropriation of proprietary or personal information or cause interruptions in our IT services or operations, could damage our reputation and harm our ability to deliver services to our clients. This may result in client dissatisfaction and a loss of business. Our security measures may be inadequate to prevent security breaches, and we may be required to expand significant capital and other resources to protect against the threat of security breaches and to alleviate problems caused by breaches as well as by any unplanned unavailability of our IT systems caused by other reasons, which may adversely affect our business and financial performance.

Our services may infringe upon the intellectual property rights of others

Our IT services, or third-party products we offer our clients, may infringe the intellectual property rights of third parties, and we may have infringement claims asserted against us. These claims may harm our reputation, increase our costs and prevent us from offering certain services or products. Any claims or litigation relating to intellectual property, even if ultimately decided in our favor, could be time-consuming and costly, injure our reputation or require us to enter into royalty or licensing arrangements. Any limitation on our ability to provide a service or product could result in our loss of revenue-generating opportunities and require us to incur additional expenses to develop new or modified solutions for future projects, which may adversely affect our business and financial performance.

Risks Relating to Peru

Economic, social and political developments in Peru could adversely affect our business and financial performance

The substantial majority of our operations are conducted in Peru and depend on economic and political developments in the country. As a result, our business may be materially and adversely affected by economic downturns, currency depreciation, inflation, interest rate fluctuation, government policies, regulation, taxation, social instability, political unrest, terrorism and other developments in or affecting the country, over which we have no control. In the past, Peru has experienced periods of severe economic recession, large currency devaluation and high inflation. We cannot assure you that Peru will not experience similar adverse economic developments in the future. In addition, Peru has experienced periods of political instability that has included a succession of regimes with differing economic policies and programs. Previous governments have imposed controls on prices, exchange rates, local and foreign investments and international trade, restricted the ability of companies to dismiss employees, expropriated private-sector assets and prohibited the remittance of profits to foreign investors. We cannot assure you that the Peruvian government will continue to pursue business-friendly and open-market policies that stimulate economic growth and social stability.

Fluctuations in the value of the nuevo sol could adversely affect financial performance

Fluctuations in the value of the nuevo sol relative to the U.S. dollar could adversely affect Peru’s economy. In addition, appreciation of the nuevo sol or depreciation of the U.S. dollar could increase, in terms of nuevos soles, our production costs. In 2012, 31.2% and 56.7% of our revenues were denominated in nuevos soles and U.S. dollars, respectively, whereas 47.6% and 39.0% of our costs of sales were denominated in nuevos soles and U.S. dollars, respectively. In the past the exchange rate between the nuevo sol and the U.S. dollar has fluctuated significantly. We cannot assure you that the value of nuevo sol against other currencies will not fluctuate significantly in the future, which could adversely affect the Peruvian economy and our business, financial condition and results of operations.

In addition, although Peruvian law currently imposes no restrictions on the ability to convert nuevos soles to foreign currency and transfer foreign currency outside of the country, in the 1980s and early 1990s, Peru imposed exchange controls, including controls affecting the remittance of dividends to foreign investors. We cannot assure you that exchange controls in Peru will not be implemented in the future. The imposition of exchange controls could have an adverse effect on the economy and on your ability to receive dividends from us as a holder of ADSs.

Inflation could adversely affect our financial performance

In the past, Peru has suffered through periods of hyperinflation, which have materially undermined the Peruvian economy and the government’s ability to create conditions that support economic growth. A return to a high inflation environment would also undermine Peru’s foreign competitiveness, with negative effects on the level of economic activity and employment.

As a result of reforms initiated in the 1990s, Peruvian inflation decreased significantly from four-digit inflation during the 1980s. The Peruvian economy experienced annual inflation of 2.1% in 2010, 4.7% in 2011 and 2.6% in 2012, as measured by the Peruvian Consumer Price Index (Índice de Precios al Consumidor del Perú).

If Peru experiences substantial inflation in the future, our costs of sales and administrative expenses could increase which could affect our operating margins. Inflationary pressures may lead to governmental intervention in the economy, including the introduction of government policies that may adversely affect the overall performance of the Peruvian economy. For example, in response to increased inflation, the Peruvian Central Bank, which sets the Peruvian basic interest rate, may increase or decrease the basic interest rate in an attempt to control inflation or foster economic growth.

Changes in tax laws may increase our tax burden and, as a result, negatively affect our financial performance

The Peruvian congress and government regularly implement changes to tax laws that may increase our tax burden. These changes may include modifications in our tax rates and, on occasions, the enactment of temporary taxes that in some cases have become permanent taxes. Tax reforms related to the Peruvian income tax, value added tax and tax code have recently been approved, but we are unable to estimate the impacts that these reforms may have on business. The effects of any tax reforms that could be proposed in the future and any other changes that result from the enactment of additional reforms have not been, and cannot be, quantified. However, any changes to our tax regime may result in increases in our overall costs and/or our overall compliance costs, which could negatively affect our financial performance.

Earthquakes, severe weather and other natural disasters could adversely affect our business and financial performance

Peru is located in an area that experiences seismic activity and occasionally is affected by earthquakes. For example, in 2007, an earthquake with a magnitude of 7.9 on the Richter scale struck the central coast of Peru, severally damaging the region south of Lima. Such conditions may result in physical damage to our properties and equipment, closure of one or more of our project sites and infrastructure concessions, inadequate work forces in our markets and temporary disruptions in the supply of construction materials. In addition, Peru has also experienced adverse climate conditions (due to climate change or otherwise) and adverse weather patterns, such as El Niño, an oceanic and atmospheric phenomenon that causes a warming of temperatures in the Pacific Ocean, resulting in heavy

rains off the coast of Peru and potentially flooding. Poor weather conditions can have significant adverse effects on our engineering and construction activities as well as on our operation and maintenance of infrastructure assets business. Any of these factors may materially adversely affect the Peruvian economy and our business and financial performance.

A resurgence of terrorism in Peru could adversely affect the Peruvian economy and, as a result, our business and results of operations

In the past, Peru experienced severe terrorist activity that reached its peak of violence against the government and private sector in the late 1980s and early 1990s. In the mid-1990s, terrorist groups suffered significant defeats, including the arrest of leaders, resulting in considerable limitations in their activities. Despite the suppression of terrorist activity, we cannot assure you that a resurgence of terrorism in Peru will not occur, or that if there is such a resurgence, it will not disrupt the economy of Peru and our business.

The Peruvian economy could be affected by adverse economic developments in regional or global markets

Financial and securities markets in Peru are influenced, to varying degrees, by economic and market conditions in regional or global markets. Although economic conditions vary from country to country, investors’ perceptions of events occurring in one country may adversely affect cash flows and securities from issuers in other countries, including Peru. For example, the Peruvian economy was adversely affected by the political and economic events that occurred in several emerging economies in the 1990s, including in Mexico in 1994, the Asian crisis in 1997, the economic crisis in Russia in 1998, the Brazilian currency devaluation in 1999 and the Argentine crisis in 2001, which affected the market value of securities issued by companies from markets throughout Latin America. In addition, Peru’s economy continues to be affected by events in the economies of its major regional partners and in developed economies that are trading partners or that affect the global economy. The 2008-2009 global economic recession, principally driven by the subprime mortgage market in the United States, substantially affected the international financial system, including Peru’s securities market and economy. Additionally, the current sovereign crisis in Europe, coupled with the slow economic recovery in the United States, may reduce the confidence of foreign investors, which may cause volatility in the securities markets and affect the ability of companies to obtain financing globally. Any interruption to the recovery of the developed economies, the continued effects of the recent global crisis, a worsening of the current crisis in Europe or a new economic or financial crisis could affect Peru’s economy, and, consequently, materially adversely affect our business and financial performance.

Risks relating to Chile, Colombia and other Latin American Countries

We face risks relating to our operations outside of Peru

Latin American economic, political and social conditions may adversely affect our business. Our financial performance may be significantly affected not only by general economic, political and social conditions in Peru but also in other markets where we operate or intend to operate, including Chile and Colombia.

These countries have suffered significant economic, political and social crises in the past, and these events may occur again in the future. We cannot predict whether changes in current administrations will result in changes in governmental policy and whether such changes will affect our business. Instability in the region has been caused by many different factors, including: significant governmental influence over local economies; substantial fluctuations in economic growth; high levels of inflation; changes in currency values; exchange controls or restrictions on expatriation of earnings; high domestic interest rates; wage and price controls; changes in governmental economic or tax policies, including retroactive changes; imposition of trade barriers, including import duties on information technology equipment; electricity rationing; liquidity of domestic capital and lending markets; unexpected changes in regulation; expropriations; and high levels of organized crime, terrorism and social conflicts, as well as overall political, social and economic instability.

Risks Relating to the Offering and our ADSs

The market price of our ADSs may fluctuate significantly, and you could lose all or part of your investment

Volatility in the market price of our ADSs may prevent you from being able to sell your ADSs at or above the price you paid for them. The market price and liquidity of the market for our ADSs may be significantly affected by

numerous factors, some of which are beyond our control and may not be directly related to our operating performance. These factors include, among others: actual or anticipated changes in our results of operations, or failure to meet expectations of financial market analysts and investors; investor perceptions of our prospects or our industries; operating performance of companies comparable to us and increased competition in our industries; new laws or regulations or new interpretations of laws and regulations applicable to our business; general economic trends in Peru; catastrophic events, such as earthquakes and other natural disasters; and developments and perceptions of risks in Peru and in other countries.

You may not be able to sell ADSs you own or the common shares underlying the ADSs at the time or the price you desire because an active or liquid market for these securities may not develop

Prior to this offering, there has not been a public market for our ADSs. We have applied to list our ADSs on the New York Stock Exchange. We cannot predict whether an active liquid public trading market for our ADSs will develop or be sustained. Active, liquid trading markets generally result in lower price volatility and respond more efficiently to orders from investors to purchase or sell securities. Liquidity of a securities’ market is often a function of the volume of the underlying shares that are publicly-held by unrelated parties. Our common shares are listed on the Lima Stock Exchange. Although ADS holders are entitled to withdraw common shares underlying our ADSs from the depositary at any time, the Lima Stock Exchange in Peru is generally a less liquid trading market than the New York Stock Exchange.

Substantial sales of ADSs or common shares after this offering could cause the price of our ADSs or common shares to decrease

Significant shareholders will continue to hold a large number of our common shares after this offering. We, our directors and officers and certain of our other shareholders, collectively owning 36.76% of our common shares as of April 30, 2013, will agree with the representatives of the underwriters not to offer, sell, contract to sell or otherwise dispose of or hedge any common shares or ADSs, without the prior written consent of the representatives of the underwriters, during the 180 calendar day period following the date of the prospectus, subject to certain exceptions. After this 180 day period expires, these securities will be eligible for sale. The market price of our ADSs could decline significantly if we or our significant shareholders sell securities in our company or the market perceives that we or our significant shareholders intend to do so.

We may raise additional capital in the future through the issuance of equity securities, which may result in dilution of the interests of our shareholders

We may need to raise additional capital and may opt for obtaining such capital through the public or private placement of debt securities or securities convertible into our common shares. In the event of a public or private debt financing, or the financing through the issuance of securities convertible into our common shares, such additional funds may be obtained with the exclusion of the preemptive rights of our shareholders, including the investors in our common shares, which may dilute the percentage interests of investors in our common shares.

No shareholder or group of shareholders holds a majority of our common shares

Our directors and senior management, directly and indirectly, own approximately 36.76% of our common shares as of April 30, 2013, and our Chairman owns, directly and indirectly, 21.05% of our common shares. After giving effect to this offering, assuming full exercise of the underwriters’ over-allotment option, our directors and senior management will, directly and indirectly, own approximately % of our common shares, including % of which will be owned, directly and indirectly, by our Chairman. No shareholder or group of shareholders currently owns a majority of our common shares. In addition, there is no shareholders’ agreement among any of our significant shareholders. Accordingly, no shareholder or group of shareholders may on its own determine the outcome of substantially all matters submitted for a vote to our shareholders. In addition, a new investor or group of investors may in the future seek to acquire a significant stake in, or control of, our company, subject to compliance with Peruvian tender offer requirements which require that a tender offer be made to all shareholders upon, among other matters, acquisition of 25%, 50% and 60% of our voting rights. If a new investor or group of investors acquires a significant stake in, or control of, our company, we cannot assure you that such investor or group of investors will not seek to change how our business is managed.

Holders of ADSs may be unable to exercise voting rights with respect to our common shares underlying the ADSs at our shareholders’ meetings

As a holder of ADSs representing common shares being held by the depositary in your name, you may exercise voting rights with respect to the common shares represented by the ADSs only in accordance with the deposit agreement relating to the ADSs. Holders of our common shares will receive notice of shareholders’ meetings through publication of a notice twenty-five days in advance, in accordance with Peruvian law, in the official gazette in Peru, a Peruvian newspaper of general circulation and the website of the Peruvian Securities Commission, and will be able to exercise their voting rights by either attending the meeting in person or voting by proxy. ADS holders will not receive notice directly from us. Instead, pursuant to the deposit agreement, we will notify the depositary, who will mail to holders of ADSs the notice of the meeting and a statement as to the manner in which voting instructions may be given. To exercise their voting rights, ADS holders must instruct the depositary how to exercise the voting rights for the common shares which underlie their ADSs. Due to these additional procedural steps involving the depositary, the process for exercising voting rights may take longer for ADS holders than for holders of our common shares.

Holders of ADSs also may not receive voting materials in time to instruct the depositary to vote the common shares underlying their ADSs. In addition, the depositary and its agents are not responsible for failing to carry out voting instructions of the holders of ADS or for the manner of carrying out such instructions, unless such failure can be attribute to gross negligence, bad faith or willful misconduct on the part of the depositary or its agents. Accordingly, holders of ADSs may not be able to exercise voting rights, and they will have little, if any, recourse if the underlying common shares are not voted as requested.

Our shareholders’ ability to receive cash dividends may be limited

Our shareholders’ ability to receive cash dividends may be limited by the ability of the depositary to convert cash dividends paid in nuevos soles into U.S. dollars. Under the terms of our deposit agreement with the depositary for the ADSs, the depositary will convert any cash dividend or other cash distribution we pay on the common shares underlying the ADSs into U.S. dollars, if it can do so on a reasonable basis and can transfer the U.S. dollars to the United States. If this conversion is not possible or if any government approval is needed and cannot be obtained, the deposit agreement allows the depositary to distribute the foreign currency only to those ADR holders to whom it is possible to do so. If the exchange rate fluctuates significantly during a time when the depositary cannot convert the foreign currency, you may lose some or all of the value of the dividend distribution.

Holders of ADSs may be unable to exercise preemptive or accretion rights with respect to the common shares underlying their ADSs

Under Peruvian corporate law, if we issue new common shares as part of a capital increase, unless otherwise agreed to by holders of 40% of our subscribed voting common shares and, provided that such capital increase does not favor, directly or indirectly, certain shareholders to the detriment of others, our shareholders will generally have the right to subscribe to a proportional number of common shares of the class held by them to maintain their existing ownership percentage, which is known as preemptive rights. In addition, shareholders are entitled to the right to subscribe for the unsubscribed common shares at the end of a preemptive rights offering, on a pro rata basis, which is known as accretion rights. You may not be able to exercise the preemptive or accretion rights relating to common shares underlying your ADSs unless a registration statement under the Securities Act is effective with respect to those rights or an exemption from the registration requirements of the Securities Act is available. We are not obligated to file a registration statement with respect to the common shares relating to these preemptive and accretion rights, and we cannot assure you that we will file any such registration statement. Unless we file a registration statement or an exemption from registration is available, you may receive only the net proceeds from the sale of your preemptive and accretion rights by the depositary or, if the preemptive and accretion rights cannot be sold, they will be allowed to lapse. As a result, U.S. holders of our ADSs may suffer dilution of their interest in our company upon future capital increases.

We are entitled to amend the deposit agreement and to change the rights of ADS holders under the terms of such agreement, without the prior consent of the ADS holders

We are entitled to amend the deposit agreement and to change the rights of the ADS holders under the terms of such agreement, without the prior consent of the ADS holders. Any change related to an increase in deposits or charges for book-entry securities services or any modification that might hinder the rights of the ADS holders will be effective within 30 days after the ADS holders have received notice of such change or modification and such holders will have no right to any compensation whatsoever.

If we are unable to implement and maintain effective internal control over financial reporting in the future, or if we fail to promptly remediate our current material weakness, our results of operations and the price of our ADSs could be adversely affected

We are not currently required to comply with Section 404 of the U.S. Sarbanes-Oxley Act of 2012 and, therefore, we have not made a formal assessment of the effectiveness of our internal control over financial reporting for that purpose. Section 404 of the U.S. Sarbanes-Oxley Act of 2002 will require us, for our fiscal year ending December 31, 2014 and subsequent years, to document and test the effectiveness of our internal control over financial reporting in accordance with an established internal control framework and to report on our conclusion as to the effectiveness of our internal controls. It will also require an independent registered public accounting firm to test our internal control over financial reporting and to report on and attest to the effectiveness of our internal control over financial reporting. Any delays or difficulty in satisfying our requirements could adversely affect our future results of operations and the price of our ADSs. Moreover, it may cost us more than we expect to comply with these control- and procedure-related requirements. Failure to comply with Section 404 could potentially subject us to sanctions or investigations by the SEC, the New York Stock Exchange or other regulatory authorities.

Any failure to implement required new or improved controls, or difficulties encountered in their implementation, could harm our operating results or cause us to fail to meet our reporting obligations. If we are unable to conclude that we have effective internal control over financial reporting, or if our independent registered public accounting firm is unable to provide us with an unqualified opinion regarding the effectiveness of our internal control over financial reporting as of December 31, 2014 and in subsequent years as required by Section 404, investors could lose confidence in the reliability of our consolidated financial statements, which could result in a decrease in the value of our ADSs.

We and our independent registered public accounting firm have identified a material weakness in our internal control over financial reporting, as a result of errors we found in our consolidated statement of cash flow for the year ended December 31, 2012. In order to present investors in this offering with our corrected cash flow statement, we have restated our audited annual consolidated financial statements included in this prospectus. These errors did not have any effect on the net increase (decrease) in cash for the year ended December 31, 2012. Furthermore, all underlying transactions were properly recorded in the 2012 statement of financial position, income statement, statement of comprehensive income and statement of changes in shareholders’ equity, which did not need to be revised or restated. For a description of the changes we made to our consolidated statement of cash flow, see note 32 to our audited annual consolidated financial statements included in this prospectus. A “material weakness” is a deficiency, or combination of deficiencies, in internal controls such that there is a reasonable possibility that a material misstatement in financial statements will not be prevented or detected in a timely basis. The identified material weakness is related to the insufficient training and experience of certain of our accounting personnel with respect to the application of IFRS. The measures that we intend to implement to address this material weakness include: enhancing the IFRS knowledge base of our accounting personnel; hiring additional personnel experienced in IFRS; and completing the implementation of Hyperion, an automated consolidation system. We cannot be certain that any remedial measures we take will ensure that we implement and maintain adequate internal controls over our financial reporting. In addition, we may in the future discover other areas of our internal controls that need improvement, particularly with respect to businesses that we acquire.

Peru has different corporate disclosure and accounting standards than those you may be familiar with in the United States

Financial reporting and securities disclosure requirements in Peru differ in certain significant respects from those required in the United States. There are also material differences among IFRS, Peruvian GAAP and U.S. GAAP. Accordingly, the information about us available to you will not be the same as the information available to holders of shares issued by a U.S. company. In addition, the Peruvian Securities Market Law, which governs open or publicly listed companies, such as us, imposes disclosure requirements that are more limited than those in the U.S. in certain important respects. Although Peruvian law imposes restrictions on insider trading and price manipulation, applicable Peruvian laws are different from those in the United States, and the Peruvian securities markets are not as highly regulated and supervised as the U.S. securities markets.

Our status as a foreign private issuer allows us to follow alternate standards to the corporate governance standards of the NYSE, which may limit the protections afforded to investors

We are a foreign private issuer within the meaning of the New York Stock Exchange corporate governance standards. Under New York Stock Exchange rules, a foreign private issuer may elect to comply with the practices of its home country and not to comply with certain corporate governance requirements applicable to U.S. companies with securities listed on the exchange. We currently follow certain Peruvian practices concerning corporate governance and intend to continue to do so. Accordingly, holders of our ADSs will not have the same protections afforded to shareholders of companies that are subject to all New York Stock Exchange corporate governance requirements.

For example, the New York Stock Exchange listing standards provide that the board of directors of a U.S. listed company must have a majority of independent directors at the time the company ceases to be a “controlled company.” Under Peruvian corporate governance practices, a Peruvian company is not required to have a majority of independent members on its board of directors. The listing standards for the New York Stock Exchange also require that U.S. listed companies, at the time they cease to be “controlled companies,” have a nominating/corporate governance committee and a compensation committee (in addition to an audit committee). Each of these committees

must consist solely of independent directors and must have a written charter that addresses certain matters specified in the listing standards. Under Peruvian law, a Peruvian company may, but is not required to, form special governance committees, which may be composed partially or entirely of non-independent directors. In addition, New York Stock Exchange rules require the independent non-executive directors of U.S. listed companies to meet on a regular basis without management being present. There is no similar requirement under Peruvian law.

The New York Stock Exchange’s listing standards also require U.S. listed companies to adopt and disclose corporate governance guidelines. In July 2002, the Peruvian Securities Commission and a committee comprised of regulatory agencies and associations prepared and published a list of suggested non-mandatory corporate governance guidelines called the “Principles of Good Governance for Peruvian Companies.” Although we have implemented these measures, we are not legally required to comply with the corporate governance guidelines, only disclose whether or not we are in compliance.

Minority shareholders in Peru are not afforded equivalent protections as minority shareholders in other jurisdictions and investors may face difficulties in commencing judicial and arbitration proceedings against our company or the controlling shareholder

Our company is organized and existing under the laws of Peru. Accordingly, investors may face difficulties in serving process on our company, our officers and directors or our significant shareholders in the United States of certain other jurisdictions, and in enforcing decisions granted by courts located in other jurisdictions against our company, our officers and directors or our significant shareholders that are based on securities laws of jurisdictions other than Peru.

In Peru, there are no proceedings to file class action suits or shareholder derivative actions with respect to issues arising between minority shareholders and an issuer, its controlling shareholders or directors and officers. Furthermore, the procedural requirements to file actions by shareholders differ from those of other jurisdictions, such as in the United States. As a result, it may be more difficult for our minority shareholders to enforce their rights against us, our directors, officers or significant shareholders as compared to the shareholders of a U.S. company. The deposit agreement provides that the depositary has no obligation to commence or become involved in any judicial proceedings and any other legal actions relating to the ADSs or the deposit agreement, either on behalf of the ADS holders or on behalf of any other person.

Judgments of Peruvian courts with respect to our common shares will be payable only in nuevos soles

If proceedings are brought in the courts of Peru seeking to enforce our obligations in respect of the common shares, we will not be required to discharge our obligations in a currency other than nuevos soles. Under Peruvian exchange control limitations, an obligation in Peru to pay amounts denominated in a currency other than nuevos soles may be satisfied in Peruvian currency only at the exchange rate, as determined by the Peruvian Central Bank, in effect on the date the judgment is obtained, and such amounts are then adjusted to reflect exchange rate variations through the effective payment date. The then prevailing exchange rate may not afford non-Peruvian investors with full compensation for any claim arising out of or related to our obligations under the ADSs.

Our newly issued common shares from this offering will initially be represented by “certificados provisionales” for which there may not be a liquid market

In accordance with Peruvian law, our common shares will be represented by preliminary stock certificates ( certificados provisionales ) until the capital increase is recorded with the Peruvian public registry and new common shares are listed on the Lima Stock Exchange and registered in the CAVALI S.A. ICLV book-entry settlement system. We cannot assure you that the Peruvian public registry will not delay the recording of our capital increase. In addition, the corporate resolution authorizing the capital increase may be subject to judicial challenges or other factors that prevent or delay the recording of the capital increase with the Peruvian public registry. Once the capital increase has been recorded, we will issue common shares in exchange for the preliminary stock certificates. Only after the capital increase has been recorded with the Peruvian public registry and we have issued common shares in exchange for the preliminary stock certificates, will you be able to cancel your ADSs and withdraw the deposited common shares.

If securities or industry analysts do not actively follow our business, or if they publish unfavorable research about our business, the price and trading volume of the ADSs could decline

The trading market for the ADSs will depend, in part, on the research and reports that securities or industry analysts publish about us or our business. If analysts do not cover our company, the trading price for the ADSs may be negatively impacted. If one or more of the analysts who covers us downgrades the ADSs or publishes unfavorable research about our business, the price of the ADSs would likely decline. If one or more of these analysts ceases coverage of our company or fails to publish reports on us regularly, demand for the ADSs could decrease, which could cause the price and trading volume of the ADSs to decline.

EXCHANGE RATES

The Peruvian nuevo sol is freely traded in the exchange market. Current Peruvian regulations on foreign investment allow foreign equity holders of Peruvian companies to receive and repatriate 100% of the cash dividends distributed by these companies. Non-Peruvian equity holders are allowed to purchase foreign currency at free market currency rates through any member of the Peruvian banking system and transfer such foreign currency outside Peru without restriction. Peruvian law in the past, however, has imposed restrictions on the conversion of Peruvian currency and the transfer of funds abroad, and we cannot assure you that Peruvian law will continue to permit such payments, transfers, conversions or remittances without restrictions.

The following table sets forth, for the periods indicated, certain information regarding the exchange rates for nuevos soles per U.S. dollar, as published by the SBS. The Federal Reserve Bank of New York does not report a noon buying rate for nuevos soles.


	High		Low		Average		Period end
2008		3.160		2.693		2.925		3.142
2009		3.259		2.853		3.012		2.891
2010		2.885		2.787		2.826		2.809
2011		2.834		2.694		2.755		2.697
2012		2.710		2.551		2.640		2.551
November		2.616		2.579		2.599		2.579
December		2.581		2.551		2.568		2.551
2013:
January		2.578		2.541		2.552		2.578
February		2.587		2.567		2.579		2.587
March		2.604		2.586		2.588		2.589
April		2.646		2.577		2.598		2.646
May		2.739		2.600		2.645		2.738
June (through June 14)		2.757		2.307		2.733		2.726

USE OF PROCEEDS

We estimate that the net proceeds to us from this offering will be approximately US$ million, or US$ million if the underwriters exercise the over-allotment option in full. These amounts assume an initial public offering price of US$ per ADS (the midpoint of the price range set forth on the cover page of this prospectus), after deducting the estimated underwriting discounts and commissions and offering expenses payable by us, and assumes no exercise of the underwriters’ over-allotment option.

We intend to use the net proceeds from this offering for capital expenditures, including potential investments and acquisitions, and other general corporate purposes in our business segments, in order to take advantage of growth opportunities that we foresee in our markets. We currently expect to use approximately (i) 60% of the net proceeds for investments in our Infrastructure segment, (ii) 10% of the net proceeds for the purchase of land in our Real Estate segment, (iii) 20% of the net proceeds for acquisitions, and (iv) the remainder for general corporate purposes. These estimates, however, are subject to change.

We routinely evaluate new infrastructure concessions, acquisitions, land purchases and other investment opportunities that are aligned with our strategic goals. We cannot assure you that we will find opportunities that we consider to be favorable to us, whether we will be able to take advantage of such opportunities should they arise, or the timing of and funds required by such opportunities. In addition, we expect to finance these opportunities with a combination of cash on hand, net proceeds from this offering, new borrowings and/or financial contributions from partners, depending on a variety of commercial considerations at such time. Accordingly, we will have significant flexibility in applying the net proceeds from this offering. As a result, our actual use of proceeds from this offering could vary significantly from the currently expected use.

Pending application of the net proceeds, we expect to invest the proceeds in low-risk marketable securities, bank deposits, money market funds and similar investments.

CAPITALIZATION

The following table sets forth our capitalization as of March 31, 2013:

•

on an actual basis; and

•

as adjusted to give effect to the sale of our ADSs in the offering at an assumed initial public offering price of US$ per ADS (the midpoint of the price range set forth on the cover page of this prospectus), after deducting estimated underwriting discounts and commissions and offering expenses payable by us.

The as adjusted information in the table below assumes no exercise of the underwriters’ over-allotment option.

The table below should be read in conjunction with our consolidated financial statements included in this prospectus.


	As of March 31, 2013
	Actual						As adjusted
	(in millions of S/.)			(in millions of US$)(1)			(in millions of S/.)	(in millions of US$)(1)
Indebtedness:
Short-term indebtedness		349.4			135.0
Long-term indebtedness		576.0			222.5

Total indebtedness		925.4			357.4

Shareholders’ equity:
Capital		558.3			215.6
Reserves		111.7			43.1
Retained earnings		696.4			269.0
Other reserves		3.9			1.5
Unrealized result		(0.6	)		(0.2	)
Equity attributable to controlling interest		1,369.6			529.0
Non-controlling interest		419.1			161.9

Total equity		1,788.7			690.9

Total capitalization		2,714.1			1,048.3

(1)	Calculated based on an exchange rate of S/.2.589 to US$1.00 as of March 31, 2013.

DILUTION

Purchasers of our ADSs in this offering will experience immediate and substantial dilution to the extent of any difference between the initial public offering price per ADS and the net book value per ADS upon the completion of the offering.

Net book value represents the amount of our total assets, less our total liabilities and excluding goodwill. Net book value per share is determined by dividing our net book value by the number of our outstanding common shares.

As of March 31, 2013, our net book value would have been approximately S/.1,788.7 million, or S/.3.2 per common share (equivalent to US$ per ADS). Based upon an assumed initial public offering price of US$ per ADS (the midpoint of the price range set forth on the cover page of this prospectus), the immediate dilution to purchasers of our ADSs in the offering will be S/. per common share or US$ per ADS or %. The following table illustrates this dilution per common share and per ADS:


	Per ADS	Per common share
Assumed initial public offering price	US$	S/.
Net book value as of March 31, 2013
Dilution to new investors

If the underwriters exercise the over-allotment option in full, net tangible book value would increase to S/. per common share or US$ per ADS and the immediate dilution to our purchasers of ADSs in the offering would be S/. per common share or US$ per ADS.

SELECTED FINANCIAL DATA

The following selected consolidated financial data should be read together with “Presentation of Financial and Other Information,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements included in this prospectus.

The following selected financial data as of and for the years ended December 31, 2010, 2011 and 2012 have been derived from our audited annual consolidated financial statements included in this prospectus. Our annual consolidated financial statements for the years ended December 31, 2010, 2011 and 2012 have been audited by Dongo, Soria, Gaveglio y Asociados S.C. de R.L., a member firm of PricewaterhouseCoopers, in accordance with the standards of the Public Company Accounting Oversight Board (United States). The following selected financial data as of and for the three months ended March 31, 2012 and 2013 have been derived from our unaudited interim consolidated financial statements included in this prospectus. These financial statements have been prepared in accordance with IFRS issued by the IASB. Our results for the three months ended March 31, 2013 are not necessarily indicative of the results to be expected for the entire year 2013. We applied the accommodation provided by the U.S. Securities and Exchange Commission (“SEC”) in respect of first-time application of IFRS and the following information is limited to our selected consolidated financial information for 2010, 2011 and 2012 and the three months ended March 31, 2012 and 2013 or any other period.


	Year ended December 31,												Three months ended March 31,
	2010			2011(1)			2012			2012			2012			2013			2013
																(unaudited)
	(in millions of S/.)									(in millions of US$)(2)			(in millions of S/.)						(in millions of US$)(2)
Income Statement Data:
Revenues		2,502.7			4,241.3			5,231.9			2,020.8			1,100.4			1,268.1			489.8
Cost of sales		(2,057.8	)		(3,609.5	)		(4,519.8	)		(1,745.8	)		(946.1	)		(1,068.3	)		(412.6	)

Gross profit		444.8			631.7			712.1			275.0			154.3			199.8			77.2
Administrative expenses		(123.2	)		(199.6	)		(257.2	)		(99.3	)		(62.4	)		(76.2	)		(29.4	)
Other income and expenses(3)		2.7			4.3			75.9			29.3			12.7			8.5			3.3
Profit from sale of investments		75.0			4.8			—			—			0.6			—			—
Other (losses) gains, net		0.2			(2.8	)		(0.3	)		(0.1	)		—			(0.4	)		(0.2	)
Gain from business combination(3)		—			45.2			—			—			—			—			—

Operating profit		399.5			483.6			530.6			204.9			105.2			131.7			50.9
Financial (expense) income, net		(10.0	)		(6.2	)		(10.3	)		(4.0	)		2.4			(22.8	)		(8.8	)
Share of the profit and loss obtained by associates under the equity method of accounting		11.5			0.2			0.6			0.2			—			14.7			5.7

Profit before income tax		401.0			477.6			520.8			201.2			107.6			123.6			47.8
Income tax		(124.3	)		(141.4	)		(154.6	)		(59.7	)		(35.5	)		(40.2	)		(15.5	)

Net profit		276.7			336.2			366.3			141.5			72.1			83.4			32.2
Net profit attributable to controlling interest(4)		252.8			289.1			290.0			112.0			65.2			64.3			24.9
Net profit attributable to non-controlling interest(4)		23.9			47.1			76.3			29.5			6.8			19.1			7.4

(1)

(2)	Calculated based on an exchange rate of S/.2.589 to US$1.00 as of March 31, 2013.

(3)

In 2011, relates to gains recorded in connection with the CAM business acquisition as a result of the excess of the fair value of the assets and liabilities we acquired in the acquisition of a controlling interest in CAM over the consideration paid and, in 2012 and the first quarters of 2012 and 2013, the reversal of provisions of CAM. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Factors Affecting Our Results of Operations—Acquisitions,” notes 25 and 28 to our audited annual consolidated financial statements and note 12 to our unaudited interim consolidated financial statements included in this prospectus.

(4)

We consolidate the results of our subsidiaries in our financial statements and we reflect the profit corresponding to the minority interests in our subsidiaries under “net profit attributable to non-controlling interests” in our income statement. With respect to our joint operations, we recognize in our financial statements the revenue and expenses including our share of any asset, liability, revenue or expense we hold jointly with partners. We reflect the results of our associated companies under the equity method of accounting in our financial statements under the line item “share of the profit and loss in associates” in our income statement. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—General—Accounting for Subsidiaries, Joint Operations and Associated Companies” and note 2.2 to our audited annual consolidated financial statements included in this prospectus.


	As of December 31,						As of March 31,
	2011		2012		2012		2013		2013
							(unaudited)
	(in millions of S/.)				(in millions of US$)(1)		(in millions of S/.)		(in millions of US$)(1)
Balance Sheet Data:
Total current assets		2,502.3		3,011.4		1,163.2		2,852.1		1,101.6
Cash and cash equivalents		658.2		780.1		301.3		653.0		252.2
Accounts receivables		855.2		930.8		359.5		790.7		305.4
Outstanding work in progress		393.8		525.3		202.9		623.9		241.0
Inventories(2)		546.3		747.4		288.7		752.9		290.8
Total non-current assets		1,191.5		1,981.2		765.2		2,080.0		803.4
Long-term accounts receivables(3)		75.2		393.4		152.0		475.0		183.5
Property, plant and equipment		686.9		938.1		362.3		918.6		354.8
Intangible assets(4)		317.8		505.1		195.1		506.0		195.4
Total current liabilities		1,741.4		2,618.1		1,011.2		2,342.1		904.6
Short-term borrowings		231.0		452.8		174.9		349.4		135.0
Accounts payables(5)		1,313.6		1,995.2		770.6		1,887.3		729.0
Total non-current liabilities		499.3		597.6		230.8		801.3		309.5
Long-term borrowings		298.9		392.7		151.7		576.0		222.5
Shareholders’ equity		1,189.0		1,392.2		537.7		1,369.6		529.0
Non-controlling interest		264.1		384.7		148.6		419.1		161.9

(1)	Calculated based on an exchange rate of S/.2.589 to US$1.00 as of March 31, 2013.

(2)	Includes investments for the purchase of land by our Real Estate segment. These investments in land are recorded at book value and are not marked-to-market for changes in fair value. See note 12 to our audited annual consolidated financial statements included in this prospectus.

(3)

(4)	We recognize our investments in the construction of the highway of our Norvial concession as intangible assets. See note 2.15(c) to our audited annual consolidated financial statements included in this prospectus.

(5)


	As of and for the year ended December 31,											As of and for the three months ended March 31,
	2010			2011(1)			2012			2012		2012			2013			2013
												(unaudited)
	(in millions of S/., except as indicated)									(in millions of US$, except as indicated)(2)		(in millions of S/., except as indicated)						(in millions of US$, except as indicated(2))
Other Data:
EBITDA		553.9			662.0			775.7			299.6		158.9			214.2			82.7
Gross margin		17.8	%		14.9	%		13.6	%				14.0	%		15.8	%
EBITDA margin(3)		22.1	%		15.6	%		14.8	%				14.4	%		16.9	%
Outstanding shares		558,284			558,284			558,284					558,284			558,284
Profit per share (in S/.or US$)		0.50			0.60			0.66			0.25		0.13			0.15			0.06
Profit attributable to controlling interest per share (in S/.or US$)		0.45			0.52			0.52			0.20		0.12			0.12			0.04
Dividend per share (in S/.or US$)		0.05			0.10			0.16			0.06
Net debt/EBITDA ratio		(0.6	)x		(0.2	)x		0.1x
Backlog (in millions of US$)(4)		1,313.2			2,493.9			4,165.9					2,682.4			4,291.3
Backlog/revenues ratio(4)(5)		1.7x			1.7x			2.2x

(1)

(2)	Calculated based on an exchange rate of S/.2.589 to US$1.00 as of March 31, 2013.

(3)	Reflects EBITDA as a percentage of revenues.

(4)	Does not include, in our Infrastructure segment, our Norvial toll road concession or our Energy line of business. See “Business—Backlog.”

(5)

Backlog is calculated as of the last day of the applicable year. Revenues are calculated for such year and converted into U.S. dollars based on the exchange rate published by the SBS on December 31 of the corresponding year, which was S/.2.81 to US$1.00 as of December 31, 2010, S/.2.70 to US$1.00 as of December 31, 2011 and S/.2.55 to US$1.00 as of December 31, 2012. Includes revenues only for businesses included in our backlog.

The following tables set forth summary financial data for each of our business segments. For more information on the results of operations of our segments, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations— Results of Operations” and note 5 to our audited annual consolidated financial statements and note 7 to our unaudited interim consolidated financial statements included in this prospectus.

1.	Engineering & Construction


	Year ended December 31,												Three months ended March 31,
	2010			2011			2012			2012			2012			2013			2013
													(unaudited)
	(in millions of S/.)									(in millions of US$)(1)			(in millions of S/.)						(in millions of US$)(1)

Income Statement Data:
Revenues		1,700.5			2,784.2			3,524.6			1,361.4			717.9			889.2			343.5
Cost of sales		(1,469.6	)		(2,454.9	)		(3,116.6	)		(1,203.8	)		(633.8	)		(768.1	)		(296.7	)

Gross profit		230.9			329.3			408.0			157.6			84.1			121.2			46.8
Administrative expenses		(82.5	)		(104.4	)		(159.8	)		(61.7	)		(33.1	)		(49.7	)		(19.2	)
Other income and expenses		(1.5	)		4.8			(1.9	)		(0.7	)		(0.5	)		7.1			2.7
Other (losses) gains, net		3.0			(2.2	)		1.3			0.5			—			—			—

Operating profit		149.8			227.5			247.6			95.6			50.5			78.6			30.3
Financial (expense) income, net		2.7			5.3			19.7			7.6			8.0			(9.4	)		(3.6	)
Share of the profit or loss in associates under the equity method of accounting		7.7			5.1			9.2			3.6			0.0			16.0			6.2

Profit before income tax		160.2			237.9			276.4			106.8			58.5			85.1			32.9
Income tax		(49.0	)		(71.5	)		(87.9	)		(34.0	)		(19.0	)		(24.9	)		(9.6	)

Net profit		111.2			166.4			188.5			72.8			39.6			60.2			23.3
Net profit attributable to controlling interest		104.1			153.1			165.1			63.8			39.5			48.3			18.7
Net profit attributable to non-controlling interest		7.1			13.3			23.4			9.0			0.0			11.9			4.6


	As of December 31,						As of March 31,
	2011		2012		2012		2013		2013
							(unaudited)
	(in millions of S/.)				(in millions of US$)(1)		(in millions of S/.)		(in millions of US$)(1)
Balance Sheet Data:
Total current assets		1,252.9		1,547.4		597.7		1,452.3		560.9
Cash and cash equivalents		400.5		423.3		163.5		381.6		147.4
Accounts receivables		539.2		555.8		214.7		455.1		175.8
Outstanding work in progress		218.7		417.1		161.1		489.4		189.0
Other current assets		94.6		151.2		58.4		126.2		48.7
Total non-current assets		452.7		875.8		338.3		871.0		336.4
Long-term accounts receivables		2.3		11.3		4.4		1.6		0.6
Property, plant and equipment		329.6		539.0		208.2		530.5		204.9
Other non-current assets		120.7		325.6		125.8		338.9		130.9
Total current liabilities		1,114.6		1,587.0		613.0		1,469.8		567.7
Short-term borrowings		70.4		120.0		46.3		116.0		44.8
Accounts payables(2)		931.9		1,356.5		523.9		1,286.2		496.8
Total non-current liabilities		155.0		260.8		100.7		224.0		86.5
Long-term borrowings		136.6		180.9		69.9		159.1		61.5
Other long-term liabilities		18.4		80.0		30.9		64.9		25.1
Shareholders’ equity		406.3		472.11		182.4		514.4		198.7
Non-controlling interest		29.8		103.3		39.9		114.9		44.4

2.	Infrastructure


	Year ended December 31,												Three months ended March 31,
	2010			2011			2012			2012			2012			2013			2013
																(unaudited)
	(in millions of S/.)									(in millions of US$)(1)			(in millions of S/.)						(in millions of US$)(1)
Income Statement Data:
Revenues		354.7			404.2			524.5			202.6			127.8			127.7			49.3
Cost of sales		(222.4	)		(258.0	)		(351.8	)		(135.9	)		(83.9	)		(89.1	)		(34.4	)

Gross profit		132.3			146.2			172.6			66.7			43.9			38.6			14.9
Administrative expenses		(19.8	)		(25.6	)		(30.5	)		(11.8	)		(8.3	)		(7.4	)		(2.9	)
Other income and expenses		2.2			(0.2	)		(0.8	)		(0.3	)		(0.1	)		0.0			0.0
Profit from the sale of investments		17.0			—			—			—			—			—			—

Other (losses) gains, net		(2.8	)		(2.1	)		(1.6	)		(0.6	)		0.6			(0.2	)		(0.1	)
Operating profit		128.9			118.3			139.7			54.0			36.1			30.9			12.0
Financial (expense) income, net		(10.7	)		(6.0	)		(17.3	)		(6.7	)		(3.4	)		(8.1	)		(3.1	)
Share of the profit or loss in associates under the equity method of accounting		0.4			0.2			—			—			—			0.1			—

Profit before income tax		118.6			112.5			122.3			47.2			32.7			22.9			8.9
Income tax		(30.5	)		(30.8	)		(38.4	)		(14.8	)		(9.5	)		(8.5	)		(3.3	)

Net profit		88.1			81.8			84.0			32.4			23.2			14.5			5.6
Net profit attributable to controlling interest		73.6			68.2			66.7			25.8			18.6			11.9			4.6
Net profit attributable to non-controlling interest		14.5			13.6			17.3			6.7			4.6			2.6			1.0


	As of December 31,						As of March 31,
	2011		2012		2012		2013		2013
							(unaudited)
	(in millions of S/.)				(in millions of US$)(1)		(in millions of S/.)		(in millions of US$)(1)
Balance Sheet Data:
Total current assets		302.4		319.1		123.3		330.3		127.6
Cash and cash equivalents		64.9		149.7		57.8		132.7		51.2
Accounts receivables		117.4		118.9		45.9		133.7		51.7
Outstanding work in progress		105.4		26.8		10.4		41.8		16.1
Other current assets		14.7		23.8		9.2		22.2		8.6
Total non-current assets		466.0		826.8		319.4		922.8		356.4
Long-term accounts receivables(3)		41.0		349.3		134.9		455.4		175.9
Property, plant and equipment		192.5		211.3		81.6		192.7		74.4
Other non-current assets		232.4		266.2		102.8		274.7		106.1
Total current liabilities		129.5		486.0		187.7		612.1		236.4
Short-term borrowings		33.4		38.7		14.9		62.1		24.0
Accounts payables		75.7		439.3		169.7		545.1		210.5
Total non-current liabilities		134.2		190.5		73.6		161.3		62.3
Long-term borrowings		127.1		146.3		56.5		134.4		51.9
Other long-term liabilities		7.0		44.2		17.1		26.9		10.4
Shareholders’ equity		402.6		355.5		137.3		371.0		143.3
Non-controlling interest		102.1		113.9		44.0		108.7		42.0

3.	Real Estate


	Year ended December 31,												Three months ended March 31,
	2010			2011			2012			2012			2012			2013			2013
																(unaudited)
	(in millions of S/.)									(in millions of US$)(1)			(in millions of S/.)						(in millions of US$)(1)
Income Statement Data:
Revenues		218.6			152.3			240.1			92.7			21.0			46.7			18.0
Cost of sales		(185.3	)		(106.9	)		(153.4	)		(59.3	)		(15.7	)		(28.3	)		(10.9	)

Gross profit		33.3			45.3			86.7			33.5			5.3			18.4			7.1
Administrative expenses		(6.8	)		(10.1	)		(17.4	)		(6.7	)		(3.0	)		(3.8	)		(1.5	)
Other income and expenses		0.2			(0.4	)		(1.7	)		(0.7	)		(0.1	)		(0.4	)		(0.1	)
Other (losses) gains, net		—			—			—			—			—			(0.2	)		(0.1	)

Operating profit		26.7			34.9			67.6			26.1			2.3			14.1			5.4
Financial (expense) income, net		(0.1	)		(0.5	)		(2.3	)		(0.9	)		(0.5	)		(2.0	)		(0.8	)

Share of the profit or loss in associates under the equity method of accounting		—			—			—			—			—			0.1			—
Profit before income tax		26.6			34.4			65.3			25.2			1.7			12.1			4.7
Income tax		(8.7	)		(10.2	)		(20.0	)		(7.7	)		(0.7	)		(3.4	)		(1.3	)

Net profit		17.9			24.1			45.3			17.5			1.0			8.7			3.4
Net profit attributable to controlling interest(4)		8.5			6.1			12.4			4.8			(0.2	)		3.2			1.2
Net profit attributable to non-controlling interest(4)		9.4			18.1			32.9			12.7			1.2			5.6			2.2


	As of December 31,						As of March 31,
	2011		2012		2012		2013			2013
							(unaudited)
	(in millions of S/.)				(in millions of US$)(1)		(in millions of S/.)			(in millions of US$)(1)
Balance Sheet Data:
Total current assets		450.7		636.0		245.7		635.3	245.4
Cash and cash equivalents		49.3		73.0		28.2		53.0	20.5
Accounts receivables		19.5		37.7		14.6		30.4	11.7
Other current assets(5)		381.9		525.3		202.9		551.9	213.2
Total non-current assets		46.1		71.4		27.6		67.0	25.9
Long-term accounts receivables		0.0		6.8		2.6		—	—
Property, plant and equipment		5.0		4.5		1.7		4.4	1.7
Investment property		36.5		36.0		13.9		36.4	14.1
Other non-current assets		4.5		24.2		9.3		26.2	10.1
Total current liabilities		197.5		263.6		101.8		230.1	88.9
Short-term borrowings		41.6		43.2		16.7		60.3	23.3
Accounts payables		146.7		211.8		81.8		166.5	64.3
Total non-current liabilities		96.4		62.6		24.2		70.2	27.1
Long-term borrowings		16.5		49.7		19.2		54.8	21.2
Other long-term liabilities		79.8		12.9		5.0		15.5	6.0
Shareholders’ equity		50.1		147.1		56.8		142.1	54.9
Non-controlling interest(4)		152.8		234.2		90.5		259.9	100.4

4.	Technical Services


	Year ended December 31,												Three months ended March 31,
	2010			2011(6)			2012			2012			2012			2013			2013
													(unaudited)
	(in millions of S/.)									(in millions of US$)(1)			(in millions of S/.)			(in millions of S/.)			(in millions of US$)(1)
Income Statement Data:
Revenues		285.0			977.0			1,083.3			418.4			265.0			244.1			94.3
Cost of sales		(223.9	)		(867.3	)		(979.4	)		(378.3	)		(234.2	)		(204.8	)		(79.1	)

Gross profit		61.0			109.7			103.9			40.1			30.8			39.3			15.2
Administrative expenses		(23.0	)		(72.1	)		(105.4	)		(40.7	)		(22.9	)		(29.2	)		(11.3	)
Other income and expenses		(0.1	)		6.2			73.6			28.4			12.5			3.9			1.5
Gain from business combination		—			45.2			—			—			—			—			—
Other (losses) gains, net		—			0.4			—			—			—			—			—


	Year ended December 31,												Three months ended March 31,
	2010			2011(6)			2012			2012			2012			2013			2013
													(unaudited)
	(in millions of S/.)									(in millions of US$)(1)			(in millions of S/.)			(in millions of S/.)			(in millions of US$)(1)
Operating profit		37.9			89.4			72.2			27.9			20.3			14.0			5.4
Financial (expense) income, net		(1.8	)		(8.5	)		(5.1	)		(2.0	)		(1.0	)		(2.7	)		(1.0	)

Share of the profit or loss in associates under the equity method of accounting		—			—			—			—			—			—			—
Profit before income tax		36.1			80.9			67.1			25.9			19.3			11.3			4.4
Income tax		(11.3	)		(19.8	)		(5.6	)		(2.2	)		(5.6	)		(2.9	)		(1.1	)

Net profit		24.7			61.1			61.5			23.8			13.7			8.4			3.3
Net profit attributable to controlling interest		23.9			53.9			50.6			19.5			12.7			8.0			3.1
Net profit attributable to non-controlling interest		0.8			7.2			10.8			4.2			1.0			0.4			0.2


	As of December 31,						As of March 31,
	2011		2012		2012		2013		2013
							(unaudited)
	(in millions of S/.)				(in millions of US$)(1)		(in millions of S/.)		(in millions of US$)(1)
Balance Sheet Data:
Total current assets		513.0		495.5		191.4		450.2		173.9
Cash and cash equivalents		73.4		85.3		32.9		72.4		28.0
Accounts receivables		276.7		259.6		100.3		206.3		79.7
Outstanding work in progress		69.8		81.4		31.4		92.8		35.8
Other current assets		93.2		69.2		26.7		78.8		30.4
Total non-current assets		183.7		192.2		74.2		196.6		75.9
Long-term accounts receivables		30.1		24.3		9.4		17.9		6.9
Property, plant and equipment		96.8		109.3		42.2		112.0		43.2
Other non-current assets		56.8		58.7		22.7		66.7		25.8
Total current liabilities		412.4		489.4		189.0		399.0		154.1
Short-term borrowings		85.0		96.0		37.1		97.6		37.7
Accounts payables		275.5		354.2		136.8		276.6		106.8
Total non-current liabilities		168.5		74.4		28.7		118.9		45.9
Long-term borrowings		14.6		12.4		4.8		11.0		4.2
Other long-term liabilities		153.9		61.9		23.9		107.9		41.7
Shareholders’ equity		91.7		103.0		39.8		108.3		41.8
Non-controlling interest		24.1		20.9		8.1		20.7		8.0

(1)	Calculated based on an exchange rate of S/.2.589 to US$1.00 as of March 31, 2013.

(2)

Includes advance payments, which reflects advance payments made by our clients in connection with our E&C and Operation and Maintenance of Infrastructure Assets contracts. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—General—Engineering and Construction” and “—Technical Services” and note 18 to our audited annual consolidated financial statements included in this prospectus.

(3)

Includes long-term accounts receivables, which includes payments required to be made by the Peruvian government for the amounts we invest to purchase trains and other infrastructure for the Lima Metro. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—General—Infrastructure” and note 8 to our audited annual consolidated financial statements included in this prospectus.

(4)

The net profit attributable to controlling interests of our Real Estate segment is significantly affected by the financing and commercial arrangements we use to purchase land and to develop real estate projects. Depending on the level of non-controlling interests used to finance our real estate projects, our Real Estate segment tends to have significant net profit attributable to non-controlling interests. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—General—Real Estate.”

(5)

Includes inventories, which includes investments for the purchase of land by our Real Estate segment. These investments in land are recorded at book value and are not marked-to-market for changes in fair value. See note 12 to our audited annual consolidated financial statements included in this prospectus.

(6)

Non-GAAP Financial Measure and Reconciliation

In this prospectus, we present EBITDA, a non-GAAP financial measure. A non-GAAP financial measure is generally defined as one that purports to measure financial performance, financial position or cash flows but excludes or includes amounts that would not be so adjusted in the most comparable IFRS measure. We define EBITDA as net profit plus: financial (expense) income, net; income tax; and depreciation and amortization. We present EBITDA because we believe it provides investors with a supplemental measure of the financial performance of our core operations that facilitates period-to-period comparisons on a consistent basis. Our management uses EBITDA, among other measures, for internal planning and performance measurement purposes. EBITDA should not be construed as an alternative to net profit or operating profit, as an indicator of operating performance, as an alternative to cash flow provided by operating activities or as a measure of liquidity (in each case, as determined in accordance with IFRS). EBITDA, as calculated by us, may not be comparable to similarly titled measures reported by other companies. The following table sets forth the reconciliation of our net profit to EBITDA on a consolidated basis.


	Year ended December 31,								Three months ended March 31,
	2010		2011(1)		2012		2012		2012			2013		2013
												(unaudited)
	(in millions of S/.)						(in millions of US$)(2)		(in millions of S/.)					(in millions of US$)(2)
Net profit		276.7		336.2		366.3		141.5		72.1			83.4		32.2
Financial expense (income), net		10.0		6.2		10.3		4.0		(2.4	)		22.8		8.8
Income tax		124.3		141.4		154.6		59.7		35.5			40.2		15.5
Depreciation and amortization		142.9		178.2		244.5		94.4		53.6			67.7		26.2

EBITDA		553.9		662.0		775.7		299.6		158.9			214.2		82.7

The following tables set forth the reconciliation of our net profit to EBITDA for each of our business segments and certain of our lines of business or subsidiaries within these segments.

1.	Engineering & Construction


	Year ended December 31,												Three months ended March 31,
	2010			2011			2012			2012			2012			2013		2013
													(unaudited)
	(in millions of S/.)									(in millions of US$)(2)			(in millions of S/.)					(in millions of US$)(2)
Net profit		111.2			166.4			188.5			72.8			39.6			60.2		23.3
Financial expense (income), net		(2.7	)		(5.3	)		(19.7	)		(7.6	)		(8.0	)		9.4		3.6
Income tax		49.0			71.5			87.9			34.0			19.0			24.9		9.6
Depreciation and amortization		60.8			82.4			131.1			50.6			26.2			37.9		14.7

EBITDA(3)		218.3			315.0			387.9			149.8			76.7			132.5		51.2

2.	Infrastructure

2.1

Full Segment


	Year ended December 31,								Three months ended March 31,
	2010		2011		2012		2012		2012		2013		2013
									(unaudited)
	(in millions of S/.)						(in millions of US$)(2)		(in millions of S/.)				(in millions of US$)(2)
Net profit		88.1		81.8		84.0		32.4		23.2		14.5		5.6
Financial expense (income), net		10.7		6.0		17.3		6.7		3.4		8.0		3.1
Income tax		30.5		30.8		38.4		14.8		9.5		8.5		3.3
Depreciation and amortization		61.8		57.6		67.9		26.2		16.2		19.1		7.4

EBITDA		191.1		176.1		207.5		80.2		52.4		50.1		19.3

2.2

All Toll Roads


	Year ended December 31,								Three months ended March 31,
	2010		2011		2012		2012		2012		2013		2013
									(unaudited)
	(in millions of S/.)						(in millions of US$)(2)		(in millions of S/.)				(in millions of US$)(2)
Net profit		25.5		21.4		29.4		11.4		6.7		6.4		2.5
Financial expense (income), net		9.8		5.9		5.2		2.0		1.5		2.0		0.8
Income tax		8.7		5.8		12.5		4.8		2.5		2.9		1.1
Depreciation and amortization		27.9		21.3		24.5		9.5		6.4		6.6		2.5

EBITDA		72.0		54.5		71.5		27.6		17.1		17.9		6.9

2.2(a)

Norvial


	Year ended December 31,								Three months ended March 31,
	2010		2011		2012		2012		2012		2013		2013
									(unaudited)
	(in millions of S/.)						(in millions of US$)(2)		(in millions of S/.)				(in millions of US$)(2)
Net profit		19.4		26.4		27.2		10.5		6.3		6.1		2.3
Financial expenses (income), net		6.2		4.8		3.8		1.5		1.1		2.0		0.8
Income tax		6.1		7.8		11.6		4.5		2.4		2.8		1.1
Depreciation and amortization		27.7		21.1		24.2		9.4		6.3		6.5		2.5

EBITDA		59.4		60.1		66.7		25.8		16.0		17.3		6.7

2.3

Mass Transit


	Year ended December 31,									Three months ended March 31,
	2011			2012			2012			2012			2013			2013
										(unaudited)
	(in millions of S/.)						(in millions of US$)(2)			(in millions of S/.)						(in millions of US$)(2)
Net profit(4)		(8.5	)		(11.0	)		(4.3	)		(2.1	)		(3.3	)		(1.3	)
Financial expense (income), net		(1.9	)		4.0			1.5			1.3			2.8			1.1
Income tax		(4.7	)		(3.6	)		(1.4	)		(0.7	)		(1.3	)		(0.5	)
Depreciation and amortization		0.1			0.5			0.2			0.1			0.1			0.1

EBITDA		(15.0	)		(10.2	)		(3.9	)		(1.4	)		(1.7	)		(0.7	)

2.4

Energy


	Year ended December 31,								Three months ended March 31,
	2010		2011		2012		2012		2012		2013		2013
									(unaudited)
	(in millions of S/.)						(in millions of US$)(2)		(in millions of S/.)				(in millions of US$)(2)
Net profit		62.6		69.1		63.4		24.5		18.2		10.8		4.2
Financial expense (income), net		0.9		1.9		1.8		0.7		0.6		2.5		0.9
Income tax		21.8		29.7		28.5		11.0		7.4		6.6		2.6
Depreciation and amortization		33.9		36.1		42.8		16.5		9.7		12.4		4.8

EBITDA		119.1		136.8		136.4		52.7		35.9		32.3		12.5

3.	Real Estate


	Year ended December 31,								Three months ended March 31,
	2010		2011		2012		2012		2012		2013		2013
									(unaudited)
	(in millions of S/.)						(in millions of US$)(2)		(in millions of S/.)				(in millions of US$)(2)
Net profit		17.9		24.1		45.3		17.5		1.0		8.7		3.4
Financial expense (income), net		0.1		0.5		2.3		0.9		0.5		1.9		0.8
Income tax		8.7		10.2		20.0		7.7		0.7		3.4		1.3
Depreciation and amortization		0.7		2.6		2.9		1.1		1.1		0.7		0.3

EBITDA		27.4		37.5		70.5		27.2		3.3		14.8		5.7

4.	Technical Services

4.1

Full Segment


	Year ended December 31,								Three months ended March 31,
	2010		2011(1)		2012		2012		2012		2013		2013
									(unaudited)
	(in millions of S/.)						(in millions of US$)(2)		(in millions of S/.)				(in millions of US$)(2)
Net profit		24.7		61.1		61.5		23.7		13.7		8.4		3.3
Financial expense (income), net		1.8		8.5		5.1		2.0		1.0		2.7		1.0
Income tax		11.3		19.8		5.6		2.2		5.6		2.9		1.1
Depreciation and amortization		15.9		32.2		39.4		15.2		9.3		9.2		3.6

EBITDA		53.8		121.6		111.6		43.1		29.6		23.2		9.0

4.2

Concar


	Year ended December 31,												Three months ended March 31,
	2010			2011			2012			2012			2012		2013			2013
													(unaudited)
	(in millions of S/.)									(in millions of US$)(2)			(in millions of S/.)					(in millions of US$)(2)
Net profit		17.5			34.9			12.6			4.9			6.7		1.7			0.7
Financial expense (income), net		(0.2	)		(0.5	)		(0.6	)		(0.2	)		0.0		(0.4	)		(0.2	)
Income tax		8.0			15.2			6.2			2.4			3.3		0.8			0.3
Depreciation and amortization		5.1			4.0			5.1			2.0			1.1		1.5			0.6

EBITDA		30.4			53.6			23.2			9.0			11.1		3.6			1.4

4.3

GMD


	Year ended December 31,								Three months ended March 31,
	2010		2011		2012		2012		2012		2013		2013
									(unaudited)
	(in millions of S/.)						(in millions of US$)(2)		(in millions of S/.)				(in millions of US$)(2)
Net profit		7.2		9.1		11.3		4.4		1.6		3.2		1.2
Financial expense (income), net		2.1		0.5		1.9		0.7		0.4		1.0		0.4
Income tax		3.3		4.8		5.3		2.1		0.8		1.4		0.6
Depreciation and amortization		10.8		17.2		15.9		6.2		3.8		3.7		1.4

EBITDA		23.4		31.6		34.5		13.3		6.5		9.3		3.6

4.4

CAM


	Year ended December 31,									Three months ended March 31,
	2011(1)			2012			2012			2012		2013		2013
										(unaudited)
	(in millions of S/.)						(in millions of US$)(2)			(in millions of S/.)				(in millions of US$)(2)
Net profit		17.1			37.5			14.5			5.5		3.5		1.4
Financial expense (income), net		8.5			3.8			1.5			0.5		2.1		0.8
Income tax		(0.2	)		(5.9	)		(2.3	)		1.6		0.6		0.2
Depreciation and amortization		10.9			18.5			7.1			4.4		4.0		1.5

EBITDA		36.4			53.9			20.8			12.0		10.3		4.0

(1)

(2)	Calculated based on an exchange rate of S/.2.589 to US$1.00 as of March 31, 2013.

(3)	Our E&C segment EBITDA includes S/.7.7 million, S/.5.1 million, S/.9.2 million, S/.0.0 million and S/.1.4 million in 2010, 2011, 2012, the first quarter of 2012 and the first quarter of 2013, respectively, which represents GyM’s 38.9% equity interest in Viva GyM’s net profit.

(4)

In the second half of 2011, we incurred expenses during the pre-operational phase of the Lima Metro, a period during which we did not generate revenues. In 2012, we generated losses as a result of the limited number of trains (five) we initially operated. As required by the concession, we have ordered 19 new trains and expect to generate profits once additional trains are in operation. For more information on our Lima Metro, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Factors Affecting Our Results of Operations—Infrastructure.”

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with our consolidated financial statements included in this prospectus. Our consolidated financial statements included in this prospectus have been prepared in accordance with IFRS issued by the IASB. The following discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those discussed in the forward-looking statements as a result of various factors, including, without limitation, those set forth under “Forward-Looking Statements” and “Risk Factors.”

Overview

We are the largest engineering and construction company in Peru as measured by revenues during 2012, and the largest publicly traded engineering and construction company in Latin America as measured by market capitalization as of December 31, 2012, with strong complementary businesses in infrastructure, real estate and technical services. With 80 years of operations, we have a long track record of successfully completing the engineering and construction of many of the country’s landmark private and public sector infrastructure projects. Beginning in the mid-1980s, we decided to leverage our engineering and construction expertise into complementary lines of business. We have also undertaken the engineering and construction of large and complex projects outside our home market throughout our history. More recently, we decided to expand our activities into other key markets of the Latin American region through the acquisition of businesses with solid positions in those markets.

Factors Affecting Our Results of Operations

General

Peruvian and Chilean Economic Conditions

95.2%, 85.1%, 82.8% and 84.6% of our revenues in 2010, 2011, 2012 and the first quarter of 2013 were derived from activities in Peru. Accordingly, our results of operations are substantially affected by economic conditions in the country and our growth is driven in significant part by growth in the Peruvian economy. In addition, 8.0%, 12.5% and 11.7% of our revenues in 2011, 2012 and the first quarter of 2013 were derived from activities in Chile, primarily as a result of the acquisition of a controlling interest in CAM in February 2011. We expect our percentage of Chilean revenues to continue to grow as a result of our acquisition of Vial y Vives in October 2012.

The Peruvian economy has been one of the fastest growing economies globally, with the Peruvian real GDP growing at an average rate of 7.3% during the three years from 2010 to 2012 as a result of, among other factors, robust domestic demand and increased private and public investment. With increasing disposable income and an expanding middle class, private consumption grew at an average annual rate of 6.0% in real terms from 2010 to 2012. Also, during this period, private investment increased at an average annual rate of 15.8% in real terms, driven by an increase in projects primarily in the mining, oil and gas, energy, transportation, telecommunications and manufacturing sectors. Inflation in Peru, as measured by the change in the consumer price index, was 2.1% in 2010, 4.7% in 2011 and 2.6% in 2012. The nuevo sol appreciated versus the U.S. dollar by 2.8%, 4.0% and 5.4% in 2010, 2011 and 2012. Given its recent performance with regard to fiscal balance, debt/GDP ratio, net reserves and high liquidity, Peru’s sovereign debt is rated investment grade and was upgraded to BBB by S&P and Fitch in August 2011 and October 2011, respectively, and to Baa2 by Moody’s in August 2012. According to the IMF the Peruvian economy is projected to grow at rates of 6.3% and 6.1% in 2013 and 2014, respectively.

The Chilean economy grew at an average annual rate of 5.9% during the three years from 2010 to 2012 in real terms, mainly driven by strong domestic demand. Private consumption grew at an average annual rate at 8.6% in real terms during the three years from 2010 to 2012, and total fixed investment grew at an annual average rate of 13.1% in real terms during this period. Inflation in Chile, as measured by the change in the consumer price index, was 3.0% in 2010, 4.4% in 2011 and 1.5% in 2012. The Chilean peso fluctuated versus the U.S. dollar, increasing by 7.5% in 2010, decreasing by 11.3% in 2011, and increasing by 8.2% in 2012. Chilean sovereign debt was rated A+ by Fitch in February 2012, AA- by S&P in December 2012 and Aa3 by Moody’s in December 2012, the highest sovereign debt ratings in Latin America. According to the IMF the Chilean economy is projected to grow at rates of 4.9% and 4.6% in 2013 and 2014, respectively.

From 2003 to 2009, our revenues grew at a CAGR of 17.2% under Peruvian GAAP, and from 2010 to 2012 our revenues grew at a CAGR of 44.6% (34.9% excluding acquisitions) under IFRS. We expect, but cannot assure you, that in the future our business will tend to grow in line with the performance of and investment in the end-markets we serve.

Fluctuations in Exchanges Rates

We estimate that in 2012, 31.2%, 56.7% and 12.1% of our revenues were denominated in nuevos soles, U.S. dollars and other currencies (principally Chilean pesos), respectively, while 47.6%, 39.0% and 13.5% of our cost of sales during the year were denominated in nuevos soles, U.S. dollars and other currencies. We estimate that in the first quarter of 2013, approximately 31.1%, 58.6% and 10.3% of our revenues were denominated in nuevos soles, U.S. dollars and other currencies, respectively, while 71.7%, 17.7% and 10.6% of our cost of sales during the first quarter of 2013 were denominated in nuevos soles, U.S. dollars and other currencies. In addition, as of March 31, 2013, 4.8%, 89.9% and 5.3% of our total debt was denominated in nuevos soles, U.S. dollars and other currencies, respectively. Accordingly, fluctuations in the value of these currencies can materially affect our results of operations. When the nuevo sol appreciates against the U.S. dollar, our operating margins tend to decrease; when the nuevo sol depreciates against the U.S. dollar, our operating margins tend to increase. Conversely, the appreciation of the nuevo sol against the U.S. dollar tends to decrease our indebtedness and financial expenses as expressed in nuevos soles; and the depreciation of the nuevo sol against the U.S. dollar tends to increase our indebtedness and financial expenses as expressed in nuevos soles. We enter into derivatives, from time to time, to hedge part of our financial exposure to currency fluctuations.

We have included estimates of the approximate effects of fluctuations in exchange rates on our consolidated and segment revenues and costs of sales in “—Results of Operations.” These estimates were calculated based on daily average exchange rates and estimated aggregate revenues and cost of sales denominated in U.S. dollars and Chilean pesos, and were not calculated on a transaction by transaction basis. For additional information on the effect of exchange rate fluctuations on our results of operations, see “—Quantitative and Qualitative Disclosures about Market Risk—Exchange Rate Risk.”

Cost of Labor, Third Party Services and Inputs

The largest components of our costs are: labor, which in 2012 represented 32.3% of our cost of sales and 48.8% of our administrative expenses; services provided by third parties, which in 2012 represented 30.7% of our cost of sales and 20.0% of our administrative expenses; and inputs (including raw materials), which in 2012 represented 25.2% of our cost of sales. During the first quarter of 2013, labor represented 27.0% of our cost of sales and 63.4% of our administrative expenses; services provided by third parties represented 35.4% of our cost of sales and 16.6% of our administrative expenses; and inputs (including raw materials) represented 16.9% of our cost of sales. For a breakdown of our cost of sales and administrative expenses, see note 23 to our audited annual consolidated financial statements and note 14 to our unaudited interim consolidated financial statements included in this prospectus.

Our cost of labor is influenced by, among other factors, the number of our employees, as well as inflation, competition we face for personnel in each of our business segments and the availability of qualified candidates. From 2010 to 2011 our personnel charges increased by 77.1%, and from 2011 to 2012 our personnel charges increased 38.1%. Services provided by third parties include: subcontracting in our E&C segment, such as carpentry work; advisory and consultancy work, including external audit and legal services; and renting of equipment. From 2010 to 2011 our costs related to services provided by third parties increased by 53.4%, and from 2011 to 2012 our costs related to services provided by third parties increased by 0.7%. The principal inputs we use are fuel, cement and steel, which in the aggregate represented a majority of our total input costs in 2012. Our costs for these inputs are affected by, among other factors, the growth of our operations, market prices, including global prices in the case of fuel, and transportation costs. We do not have long-term contracts for the supply of our key inputs. From 2010 to 2011, our input costs increased by 258.1%, and from 2011 to 2012 our input costs increased by 46.5%. These increases in our costs during the years from 2010 to 2012 were primarily due to our acquisition of a controlling interest in CAM in February 2011 and high organic growth in our business. Excluding the acquisition of CAM, our personnel charges, costs related to services provided by third parties and input costs in the aggregate increased by 57.5% in 2011 and by 28.4% in 2012.

Acquisitions

We acquired a 75.0% interest in CAM in February 2011 for US$10.8 million, after post-closing adjustments. Accordingly, CAM’s results are not reflected in our results of operations for 2010, only 10 months performance is reflected in 2011 and a full year performance is reflected in 2012. In 2012, CAM represented 12.1% of our consolidated revenues, 3.3% of our consolidated gross profit and 6.7% of our consolidated operating profit. The inclusion of CAM has increased our revenues and diversified our company in geographic terms; however, it has also impacted our consolidated gross margins as CAM’s gross margins tend to be significantly lower than those of our other business lines, reducing our consolidated gross margin by 160 basis points in 2011 and 110 basis points in 2012. In 2011, as a result of the excess of the fair value of the assets and liabilities we acquired in the CAM acquisition over the consideration paid, we recognized a gain of S/.45.2 million, which is reflected in “gain from business combination.” In 2012 and the first quarter of 2013, we reversed provisions amounting to S/.75.9 million and S/.3.9 million, respectively, relating to labor and tax contingencies and trade liabilities that we had reflected on our balance sheet in connection with the CAM acquisition because we determined that the underlying contingencies and liabilities had become remote, expired or been resolved; these reversals are reflected under “other income (expenses).” For further information, see notes 25 and 28(c) to our audited annual consolidated financial statements included in this prospectus.

In addition, we acquired a 74.0% interest in Vial y Vives in October 2012 for US$55.6 million. Accordingly, Vial y Vives’ results have not been fully reflected in our historical results of operations for 2012. We expect the acquisition of Vial y Vives to further increase and diversify our revenues, in addition to complementing our expertise in the E&C mining sector; however, the historic operating margins of Vial y Vives have tended to be lower than those of our E&C segment because of its relatively higher administrative expenses. In the first quarter of 2013, we reversed provisions amounting to S/.4.6 million relating to accounts receivables and labor contingencies.

Cyclicality

Our Engineering and Construction segment is cyclical as a result of being closely linked to the conditions, performance and growth of the end-markets we serve, which include, among others, the mining, power, oil and gas, transportation, real estate and other infrastructure sectors in Peru, as well as the mining sector in Chile. These industries tend to be cyclical in nature and tend to be affected by factors such as macroeconomic conditions, climate conditions, the level of private and public investment, the availability of credit, changes in laws and regulations and political and social stability. As a result, although downturns impact our entire company, our Engineering and Construction segment has historically been subject to periods of very high and low demand. For example, between 2000 and 2003, there was a significant decline in activity in the Peruvian real estate and construction sectors, which consequently affected our and our competitors’ business and financial performance during that time. The mining and oil and gas sectors, in particular, are also driven by worldwide demand for the underlying commodities, including, among others, silver, gold, copper, oil and gas, which can be affected by such other factors as global economic conditions and geopolitical affairs. Furthermore, prevailing prices and expectations about future prices for minerals or oil and gas, costs of exploration, production and delivery of product and similar factors can have a significant impact on our clients’ exploration and production activities and, as a result, on their demand for our engineering and construction services.

Our Real Estate segment is also cyclical and is significantly affected by changes in general and local economic conditions, such as employment levels and job growth, availability of financing for home buyers, interest rates, foreclosure rates, inflation, consumer confidence and housing demand. In addition, in our Infrastructure segment, our Energy line of business is cyclical and affected by global supply and demand for oil.

Seasonality

Our business, on a consolidated basis, has not historically experienced seasonality. In our Infrastructure segment, we have experienced moderate seasonality at (i) Norvial, due to heightened vehicular traffic activity during the summer season in the first quarter of the year, and (ii) GMP’s gas processing plant, which typically closes for maintenance during the rainy season in the first quarter of the year, as demand for gas is lower during this time.

Engineering and Construction

The principal driver of our E&C results is economic growth in Peru, particularly private and public investment in the country’s mining, power, oil and gas, transportation, real estate and other infrastructure sectors. See “—Peruvian and Chilean Economic Conditions.”

Appropriate pricing and budgeting of our engineering and construction projects is also key to our results of operations in our E&C segment and can be affected by such factors as competition, direct negotiations with clients as opposed to competitive bidding processes, the accuracy of our estimation of project costs and unexpected cost overruns. The types of contracts in this segment consist of cost-plus fee, unit price, lump-sum and EPC contracts. For a description of our E&C contracts, see “Business—Engineering and Construction—Contracts.” The nature of our contractual arrangements can affect our margins, both because, depending on the type of contract, the burden of cost overruns may be placed on the client or on us, and because certain contractual arrangements tend to have lower gross margins. For the years from 2010 to 2012, our E&C segment has trended towards contractual arrangements that pose less risk for us ( i.e. , cost-plus fee and, to a lesser extent, unit price), which provide more stability to our results but lower gross margins. The types of contractual arrangements we enter into in our E&C segment vary significantly from period to period.

Infrastructure

Traffic and Fees for Toll Roads

The majority of our toll roads revenues derive from the Norvial concession. Unlike our other toll road concessions, our revenues from the Norvial concession depend on traffic volume. Traffic volume on the Norvial road increased 10.6% from 2010 to 2011, 7.4% from 2011 to 2012 and 4.3% from the first quarter of 2012 to the first quarter of 2013 (based on vehicle equivalents, as defined in “Business—Infrastructure—Principal Infrastructure Activities—Toll Roads—Norvial”) and such increases are largely driven by economic activity levels in Peru. For the Norvial toll road, the toll rate is set out in the Norvial concession agreement and adjusted in accordance with a contractual formula that takes into account the nuevo sol/U.S. dollar exchange rate and Peruvian and United States inflation. Under our Survial and Canchaque road concessions, our revenues consist of annual fees paid by the Peruvian Ministry of Transport and Communications in consideration for the operation and maintenance of the roads, which can vary depending on the amount of road maintenance required due to road wear and tear.

Under the Norvial concession, we are required to expand certain stretches of the highway, by, among other things, adding two additional lanes. The first stage of construction was completed in 2008 and the second stage is expected to begin between 2014 and 2015. We estimate that Norvial’s capital investment for the second stage will be approximately US$100 million.

Mass Transit

We generate revenue from our Lima Metro concession based on kilometers travelled per train, with the fee per kilometer, the number of trains required to be in operation and the number of kilometers that we are required to travel established by the terms of the concession. Our revenues do not depend on passenger traffic volume. Our results in this concession are directly influenced by the timely acquisition, set up, reliability and proper operation of our trains as well as by the timing of the government’s completion of the 12.1 kilometer second stretch of Line One (which is being constructed by a joint operation in which our E&C segment participates). In the second half of 2011, we incurred expenses during the pre-operation phase of the Lima Metro, a period during which we did not generate revenues. In 2012, we generated losses as a result of the limited number of trains (five) we initially operated. However, we expected losses during the first year of operation of the Lima Metro and, as required by the concession, we have ordered 19 new trains and expect to generate profits once additional trains are in operation. We are scheduled to receive the new trains on a periodic basis and expect to have all trains (24) in operation by the third quarter of 2014. In addition, according to the government, the second stretch of Line One of the Lima Metro is expected to be completed by the third quarter of 2014.

We estimate that GyM Ferrovías will make a total of S/.830 million (US$320.6 million) in capital expenditures in connection with the Lima Metro. As of March 31, 2013, GyM Ferrovías had spent S/.410.8 million (US$158.7 million) of this amount. We expect to finance the additional capital expenditures required for the Lima Metro with a combination of cash from operations and the incurrence of indebtedness.

Energy

A significant part of the revenues in our Infrastructure segment depends on global prices for oil. Under our hydrocarbon extraction service contracts, we are entitled to a variable fee, which is based on the level of production of each field and a basket of international crude oil prices. Historically, oil prices have been volatile and are likely to be volatile again in the future. During 2010, 2011 and 2012, average Brent crude prices were approximately US$79.61, US$111.26 and US$111.63 per barrel and the average fee we received in these years was US$58.59, US$83.90 and US$86.13 per barrel of extracted oil, respectively. During the first quarters of 2012 and 2013, average Brent crude prices were approximately US$118.50 and US$112.60 per barrel, respectively, and the average fees we received during the first quarters of 2012 and 2013 were US$ 90.54 and US$87.24 per barrel of extracted oil, respectively. Because our activities are conducted in mature oil fields, which have been producing oil for over 100 years in the case of Block I and over 50 years in the case of Block V, our oil production depends primarily on the level of our capital expenditures undertaken for drilling and production purposes.

Our gas processing plant has a long-term delivery and gas processing and fractionation contract with Empresa Eléctrica de Piura S.A. (“EEPSA”), a thermal power generation subsidiary of the Endesa group. Under the contract, EEPSA delivers wet natural gas that it purchases from onshore and offshore gas operators in the area. We are responsible for all operating costs of the gas processing plant but are entitled to keep revenues from the sale of all resulting natural gas liquids to third parties after delivery of all dry gas and payment of a variable royalty to EEPSA. Volumes processed by our gas processing plant depend upon gas volumes demanded by EEPSA for its gas-fired turbines, which can vary significantly. Prices for natural gas liquids can also fluctuate significantly and are affected by market prices for crude oil.

In connection with our fuel storage terminal business, under a contract with Petroperú, we receive revenues related to monthly reserved volume in storage tanks for refined crude products (storage fee) and for volumes loaded and delivered into railroad cars or cistern trucks to each terminal (throughput fee). These fees are adjusted annually to account for U.S. inflation. Our fuel storage activities are carried out under a 15-year contract, which expires in August 2014. Consequently, the results of operations of our Infrastructure segment will be adversely affected if this contract is not extended or renewed. For a description of the revenues and EBITDA contribution of our fuel storage terminal business, see “Business—Infrastructure—Energy.”

Awarding and Timing of Infrastructure Concessions and Government Contracts

The results of operations of our Infrastructure segment are affected by our ability to win new concessions and government contracts, which depend in part on government policies and our ability to compete effectively. We currently have five concessions as well as long-term government contracts in this segment. Joint operations in which we participate have been awarded concessions, and are currently negotiating contracts for, the expansion of two major highways within the city of Lima. If we are able to enter into satisfactory contracts, we believe these concessions will significantly increase the results of operations of our Infrastructure segment. However, we cannot assure you that we will be able to negotiate these contracts on favorable terms or at all. In addition, our government contract to operate nine fuel storage terminals is scheduled to expire in August 2014, and we cannot assure you that it will be extended or renewed on favorable terms or at all.

Our results in our Infrastructure segment are also affected by the timing of the commencement of operations under our concessions, as well as when we are required to undertake significant capital investments or major construction works under the terms of our concessions. Under our Norvial and Lima Metro concessions, we are required to undertake capital investments during the initial years of the concessions for which we are compensated throughout the term of the concessions by our toll rate in the case of the Norvial concession and tariffs in the case of the Lima Metro concession. Under our Survial, Canchaque and La Chira concessions, we generate revenues in our Infrastructure segment from our construction activities during the pre-operational phase, and once operations commence we generate revenues from fees related to operation and maintenance. Survial, Canchaque and La Chira have financed their construction costs through the sale of government certificates of construction to financial institutions at a discount from face value. Certificates of construction are negotiable instruments that the Peruvian

government typically delivers upon completion of each stage of a project and which entitle the holder to receive payment from the government equal to the capital investment made in the corresponding stage upon completion of the entire project. Accordingly, the results of our Infrastructure segment may be affected by the discount rates obtained on the sale of government certificates of construction. For more information on our obligations and compensation under our concessions, see “Business—Infrastructure.”

Real Estate

The results of operations of our Real Estate segment are driven by the number of units we develop and deliver in a reporting period, our mix of unit sales (affordable housing versus housing), unit prices, land purchase prices and our costs of construction. These results are also affected by a number of factors that may impact the Peruvian real estate sector as a whole, including: the availability of government subsidies for affordable housing; prices of suitable land in particular areas; regulation of real estate development imposed by national, regional and local laws and regulators, and the time required to obtain applicable construction permits and licenses; the unemployment rate and wage levels; prevailing interest rates and availability of financing; the supply in the market; the level of customer interest in our new projects; and our costs, such as the price of labor, materials, insurance, taxes and other public charges. We delivered 2,142, 1,244, 1,368 and 304 units in 2010, 2011, 2012 and the first quarter of 2013, respectively.

The results of operations of our Real Estate segment are also significantly affected by our sales of land parcels. Due to the appreciation of land prices in Peru, and because we record our land holdings at book value ( i.e. , without marking to market), our recent land sales have resulted in high margins.

In addition, the net profit attributable to controlling interests of our Real Estate segment is significantly affected by the financing and commercial arrangements we use to purchase land and to develop real estate projects. Depending on the level of non-controlling interests used to finance our real estate projects, our Real Estate segment tends to have significant net profit attributable to non-controlling interests. See “—Results of Operations—General—Real Estate.”

Technical Services

The results of operations of our Technical Services segment, especially our activities relating to IT and electricity networks services, are affected by the economic growth of the countries in which we operate. As companies expand in response to economic growth, they tend to outsource certain activities in order to focus on their core businesses.

Our results in the operation and maintenance of infrastructure assets depend on our ability to obtain contracts from the government or infrastructure concessionaires, such as those in our Infrastructure segment, which depend on government policies and our ability to compete effectively. We obtained three public-sector road contracts at the end of 2010 as well as three new public-sector road contracts at the end of 2012; however, two public sector road contracts expired in December 2012 and were not renewed until May and June, respectively, of 2013, and, as a result, impacted our results of operations during the first quarter of 2013. We typically obtain higher revenues from these contracts during the commencement of services as we bring the road to proper operating condition, and lower revenues at the end of the contract term as services wind down.

The results of operations of our Electricity Networks Services are affected by our ongoing restructuring of the business after our acquisition of a controlling interest in CAM in February 2011.

Critical Accounting Estimates and Judgments

Estimates and judgments used in connection with the preparation of our financial statements 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.

Critical Accounting Estimates and Assumptions

We make estimates and assumptions concerning our future economic performance. These estimates and assumptions are required to be made because the information used in the presentation of the financial information is

currently not available, is dependent on future events, or cannot be calculated with a high degree of accuracy. The resulting accounting estimates will, by definition, seldom equal the related actual results. If outcomes in the next fiscal year are much different than current assumptions, a material adjustment might be required to the carrying amount of the assets and liabilities. However, our management considers that the estimates and assumptions used in connection with the preparation of our consolidated financial statements included in this prospectus do not have a significant risk of causing a material adjustment to the balances of assets and liabilities in subsequent years.

Percentage-of-Completion Revenue Recognition

Revenue from construction contracts is recognized under the percentage-of-completion method which requires the final margin from construction contracts to be estimated. Projections of these margins are performed by our management based on work execution budgets and adjusted periodically based on updated information reflecting the actual performance of work. The estimated contract revenue and total cost estimates are reviewed often as work advances and change orders are initiated and approved. In this regard, our management considers that the estimates made as of March 31, 2013 are reasonable. When change orders are presented and work is commenced pursuant to those change orders before the terms of the orders are formally agreed with the client, revenue is recognized equal to costs incurred (no profit component is recognized) until the additional work is completed and the change orders are formally approved.

Contract revenue is recognized as revenue in the income statement in the accounting periods in which the work is performed. Contract costs are recognized as cost of sales in the income statement in the accounting period in which the work to which they relate is performed. However, any expected and probable excess of total contract costs over total contract revenue for the relevant contract is recognized as an expense immediately. Furthermore, any changes in contract estimates are recognized as a change in accounting estimates and recognized in the period the change is made and in future periods if applicable. In certain construction contracts, the terms of these agreements allow for an amount to be withheld by the clients until construction has been completed. Under these contracts the full amount may not be received until the next quarter of the year. As of December 31, 2010, 2011 and 2012, a sensitivity analysis was performed considering a 10% increase or decrease in our gross margin (i.e., gross profit as a percentage of revenues). As of December 31, 2012, a 10% positive or negative change in our gross margin would result in a S/.37.2 million increase or decrease, respectively, in our profit before taxes.

Goodwill Impairment Reviews

Goodwill arises from the acquisition of subsidiaries and represents the excess of the cost of acquisition over the fair value of the acquiree’s net identifiable assets at the acquisition date. At March, 31, 2013 we had no goodwill impairment.

Impairment reviews are undertaken annually, or more frequently if there is a triggering event, to determine if goodwill arising from business acquisitions has suffered any impairment. For this purpose, goodwill is attributed to the different cash-generating units to which it relates. The recoverable amount of the cash-generating units has been determined based on its value-in-use calculations.

This evaluation requires the exercise of our management’s professional judgment to analyze any potential indicators of impairment as well as the use of estimates in determining the value-in-use, including the preparation of future cash flows, macro-economic forecasts as well as defining the interest rate at which said cash flows will be discounted.

If we experience a significant drop in revenues or a drastic increase in costs or changes in other factors, the fair value of business units might decrease. If our management determines the decrease is permanent we might have to write down our goodwill which would be recognized in earnings.

As of March 31, 2013, based on the impairment testing performed by our management, no goodwill impairment losses were required to be recognized because the recoverable amount of the cash-generating units subject to testing was substantially higher than their related carrying amounts. We have not had any impairment to goodwill over the last three years.

The most significant assumptions are gross margin, growth rate and the discount rate which are included in note 15 of our audited annual consolidated financial statements included in this prospectus.

We have performed a sensitivity analysis on the gross margin and discount rate which is included below:

Gross margin: Our fair value is significantly higher than book value. If the gross margin were adjusted down by 10%, the fair value would be 144% higher than the book value; conversely, if the gross margin were adjusted up by 10%, the fair value would be 151% higher than the book value.

Discount rate: Our fair value is significantly above our book value. If the discount rate were adjusted down by 10%, the fair value would be 136% higher than the book value; conversely if the discount rate were adjusted up by 10%, the fair value would be 93% higher than the book value.

Taxes

Determination of the tax obligations and expenses requires interpretations of the applicable tax laws and regulations. We seek legal tax counsel’s advice before making decisions on tax matters. Although our management considers its estimates to be prudent and appropriate, differences of interpretation may arise with the Peruvian tax authorities which may require future tax adjustments.

Deferred tax assets and liabilities are calculated by taking the temporary differences of the tax basis of assets and liabilities and the financial statement basis using the tax rates in effect for each of the years in which the differences are expected to reverse. Any change in tax rates will affect the deferred tax assets and liabilities. This change will be recognized in income in the period the change takes effect.

Our management makes estimates for our deferred income tax valuation allowance. This allowance may be increased or decreased if we determine it to be more likely than not that our valuation allowance needs to be adjusted. If a tax position is not more likely than not to ultimately be realized, no tax benefit is recorded.

We base estimates for the valuation allowance on all available evidence which includes historical data, projected income, current operations and tax planning strategies. The deferred tax asset is supported by the assumption that we will continue to generate income in the future. If our management determines that in the future revenues will not be sufficient to cover the deferred tax asset, we would adjust the valuation account for deferred tax income.

Provision for Well Closure Costs

We estimate the present value of our future obligation for well closure costs and increase the carrying amount of the asset that will be withdrawn in the future and that is reflected under “intangibles” in our balance sheet. The discount rate used for the present value calculation was 1.78%, based on the 10-year bond rate as of December 31, 2012. As of March 31, 2013, the present value of the estimated provision for closure activities for the 85 wells amounted to S/.4.9 million. Subsequently, this liability is attributed to profit or loss during the useful life of the assets that gave rise to it. The well closure liability is adjusted to reflect the changes that resulted from the passage of time and from revisions of either the date of occurrence or the amount of the present value of the obligations originally estimated. With a discount rate of 1.78%, intangibles in our balance sheet were S/.4,896,747. If the discount rate was adjusted down by 10%, the intangibles in our balance sheet would be S/.4,945,264; conversely if the discount rate was adjusted up by 10%, the intangibles in our balance sheet would be S/.4,848,900.

During 2012, we recorded an additional S/.4.9 million, charged to the intangible asset account, credited to the well closure liability. This is to reflect estimated obligations to close 70 productive wells included in the service agreements for Blocks I and V. This provision is increased monthly, charged to results, on an incremental value basis.

Critical Judgments in Applying Accounting Policies

CAM Acquisition

Under IFRS 3, an entity recognizes a profit on an acquisition when the fair value of the assets acquired, net of the liabilities assumed exceeds the consideration paid. This accounting standard presumes that recognition of a profit on a business acquisition is unusual; therefore, it requires the buyer to review the determination of the fair values of the acquired assets, liabilities and price paid before recognizing any gains. Furthermore, IFRS 3 authorizes a review period of 12 months from the acquisition date for an entity to adjust the determination of the fair values of the acquired assets and liabilities and, accordingly, adjust the goodwill or gain generated from the acquisition, as applicable.

On February 24, 2011, we acquired a controlling interest in CAM and, as a result of the process of allocating the purchase price paid, the fair value of the assets acquired, net of the liabilities assumed, was determined to have exceeded the consideration paid by S/.45.2 million. At the date of issue of our consolidated financial statements for the year ended December 31, 2012, the 12-month period requirement for fair value review had been met and our management considers that it has reasonably reviewed the values attributable to the assets and liabilities of the business acquired; accordingly, it has completed the process of allocating the consideration paid, and has therefore, recognized the above-mentioned profit on acquisition in the year-end profit or loss.

Estimated Useful Life of Machinery and Equipment

We review on an annual basis the useful lives of our machinery and equipment. The evaluation of the useful lives is made based on the hours of use and is performed by our applicable technical internal area. This estimation of work hours is performed based on historical data considering the estimated productive capacity of the asset and is expressed in a rate per unit of production or hour. Our management determined not to change the useful life during 2012 because, based on its own assessments, the useful lives already reflected the current economic conditions of our operating environment.

New Accounting Pronouncements

The following standards, which have been issued but were not yet effective during 2012, are relevant to our activities:

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IFRS 7, “Financial Instruments: Disclosures” as amended in October 2010 modifies the disclosures required so that the users of the financial statements may assess the risk exposure related to financial asset transfers and the effect of this risk on the entity’s financial position. For us, this amendment came into effect on January 1, 2013.

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IFRS 9, “Financial Instruments,” addresses the classification, measurement and recognition of financial assets and financial liabilities. It replaces the parts of International Accounting Standard (“IAS”) 39 that relate to the classification and measurement of financial instruments. IFRS 9 requires financial assets to be classified into two measurement categories: those measured at fair value and those measured at amortized cost. The classification depends on the entity’s business model for managing its financial instruments and the contractual cash flow characteristics of the instrument. For financial liabilities, the standard retains most of the IAS 39 requirements. Application of IFRS 9 will be mandatory from January 1, 2015.

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IFRS 10, “Consolidated Financial Statements,” replaces IAS 27 and Standing Interpretations Committee (“SIC) 12 and builds on existing principles by identifying the concept of control as the determining factor in whether an entity should be included within the consolidated financial statements of the parent company. The standard provides additional guidance to assist in the determination of control where this is difficult to assess. IFRS 10 came into effect on January 1, 2013.

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IFRS 11, “Joint Arrangements,” which replaces IAS 31, amends the classification of joint arrangements in only two categories (joint operations and joint ventures), depending on whether the investors have

contractual rights and obligations on the assets and liabilities of the arrangement (joint operation) or whether investors have a residual right on the equity of the arrangement (joint venture). This standard discontinues the application of proportional consolidation method. IFRS 11 came into effect on January 1, 2013.

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IFRS 12, “Disclosures of Interests in Other Entities” includes the disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, special purpose vehicles and other off-balance sheet vehicles. IFRS 12 came into effect on January 1, 2013.

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IFRS 13, “Fair Value Measurement,” aims to improve consistency and reduce complexity by providing a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across IFRS. The requirements do not extend the use of fair value accounting but provide guidance on how it should be applied where its use is already required or permitted by other standards within IFRS. IFRS 13 came into effect on January 1, 2013.

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Amendment to IAS 1, “Presentation of Financial Statements” relating to other comprehensive income requires for entities to group the items of “other comprehensive income” depending on whether they are reclassificable or not to the statement of comprehensive income. These amendments do not specify which items should be included in “other comprehensive income.” For us, this standard came into effect on January 1, 2013.

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IAS 19, “Employee Benefits” was amended in June 2011 by the IASB. The amendments eliminate the corridor approach and recognize financial expenses on a net basis. This amendment came into effect on January 1, 2013.

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IAS 27, “Separate Financial Statements” was amended in May 2011 by the IASB. The new standard includes the alignment of the separate financial statements which remain effective once the provisions of control were included in Normas Internacionales de Información Financiera (NIIF) 10. For us, this standard came into effect on January 1, 2013.

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IAS 28, “Investments in Associates and Joint Ventures” was amended in May 2011 by the IASB. The new standard includes guidelines to recognize joint ventures and associates under the equity method of accounting. This standard became effective for us on January 1, 2013.

We have carried out an initial assessment of the impact of these new standards on our financial position and results. The adoption of IFRS 11 required a more detailed analysis of the effect, given our participation in several arrangements with third parties. However, after such initial assessment, management considers that the standard will not have a material impact on our financial position or performance because our arrangements qualify as joint operations under IFRS 11. The accounting to be applied to our joint operations under IFRS 11 is similar to the accounting previously applied to these arrangements under IAS 31. We recognize, in relation to our interest in a joint operations, our assets and liabilities, including our share of any assets or liability held jointly with our partners as well as our share of revenues and expenses from the joint operations. The other standards described above only affect certain disclosures in our consolidated financial statements. There are no other IFRS or the International Financial Reporting Interpretations Committee (IFRIC) interpretations that are not yet effective that would be expected to have a significant impact on our consolidated financial statements.

Internal Controls and Procedures

We are not currently required to comply with Section 404 of the U.S. Sarbanes-Oxley Act of 2012 and, therefore, we have not made a formal assessment of the effectiveness of our internal control over financial reporting for that purpose. We and our independent registered public accounting firm have identified a material weakness in our internal control over financial reporting as a result of certain errors we found in our consolidated statement of cash flow for 2012. In order to present investors in this offering with our corrected cash flow statement, we have restated our audited annual consolidated financial statements included in this prospectus. For a description of the changes we made to our consolidated statement of cash flow, see note 32 to our audited annual consolidated financial statements included in this prospectus.

These errors did not have any effect on the net increase (decrease) in cash for the year ended December 31, 2012. Furthermore, all underlying transactions were properly recorded in the statement of financial position, income statement, statement of comprehensive income and statement of changes in shareholders’ equity, which did not need to be revised or restated.

A “material weakness” is a deficiency, or combination of deficiencies, in internal controls such that there is a reasonable possibility that a material misstatement in financial statements will not be prevented or timely detected. The material weaknesses in our internal control over financial reporting that we identified related to the insufficient training and experience of certain of our accounting personnel with respect to the application of IFRS. We are not aware of any other material weakness in our internal control over financial reporting.

The measures that we intend to implement to address the identified material weakness include: (i) enhancing the IFRS knowledge base of our accounting personnel through increased internal and external training; (ii) hiring additional personnel experienced in IFRS; and (iii) completing the implementation of Hyperion, an automated consolidation system, which we began in November 2012 and expect to complete by July 2013. We will be required under the U.S. Securities Exchange Act of 1934 to maintain disclosure controls and procedures and internal control over financial reporting. Section 404 of the U.S. Sarbanes-Oxley Act of 2002 will require us, for our fiscal year ending December 31, 2014 and subsequent years, to document and test the effectiveness of our internal control over financial reporting in accordance with an established internal control framework and to report on our conclusion as to the effectiveness of our internal controls. It will also require an independent registered public accounting firm to test our internal control over financial reporting and to report on and attest to the effectiveness of such controls. See “Risk Factors—Risks Relating to the Offering and our ADSs—If we are unable to implement and maintain effective internal control over financial reporting in the future, or if we fail to promptly remediate our current material weakness, our results of operations and the price of our ADSs could be adversely affected.”

Results of Operations

General

Accounting for Subsidiaries, Joint Operations and Associated Companies

Results of our subsidiaries, joint operations and associated companies are reflected in our financial results. We refer to our subsidiaries as those entities over which we exercise control. We consolidate the results of our

subsidiaries in our financial statements and we reflect the profit corresponding to the minority interests in our subsidiaries under “profit attributable to non-controlling interests” in our income statement. We refer to business activities in which we share control with unrelated entities as joint operations. Our joint operations are conducted through an agreement with a third party to carry out specific projects. We contribute our assets to these projects and derive revenue from their use. In our financial statements we recognize, in relation to our interest in a joint operation, our assets and liabilities, including our share of any asset or liability we hold jointly with our partner, as well as our share of revenue and expense from the joint operation. We refer to our associated companies as those entities over which we have significant influence but do not control. We reflect the results of our associated companies under the equity method of accounting in our financial statements under the line item “share of the profit and loss in associates” in our income statement. For further information, see note 2.2 to our audited annual consolidated financial statements included in this prospectus.

On March 1, 2012, as a result of our acquisition of control of Stracon GyM, we began to consolidate Stracon GyM’s results and reflect net profit attributable to the non-controlling interests with respect to the other owner of the company in our income statement. Prior to that date, the business operated by Stracon GyM was a joint operation, and, accordingly, we accounted for our share of revenue and expenses from Stracon GyM along with our assets and liabilities, including our share of any of the assets we held jointly, in our financial statements and did not reflect any non-controlling interests. For further information, see notes 25 and 28(b) to our audited annual consolidated financial statements included in this prospectus.

Intersegment Transactions

Some of our segments from time to time provide services to our other segments. In 2012, we obtained 2.2% of the revenues in our E&C segment from the engineering design of La Chira waste water treatment plant for our Infrastructure segment and the construction of real estate for our Real Estate segment; 35.4% of the revenues in our operation and maintenance of infrastructure assets line of business derived from services provided to Norvial, Survial, Canchaque and the Lima Metro; and 2.7% of the revenues in our IT services line of business derived from IT and outsourcing services provided to several of our other lines of businesses. In the first quarter of 2013, we obtained 2.9% of the revenues in our E&C segment from the engineering design and construction of La Chira waste water treatment plant for our Infrastructure segment and the construction of office buildings for our Real Estate segment and office buildings for corporate use, 27.5% of the revenues in our operation and maintenance of infrastructure assets line of business derived from services provided to Norvial, Survial, Canchaque and the Lima Metro, and 2.4% of the revenues of our IT services line of business derived from IT and outsourcing services provided to several of our lines of business. Accordingly, in such circumstances, the segment providing services recognizes revenues and the segment receiving such services recognizes costs of sales relating to the services provided. For example, in the case of La Chira, in which our E&C segment provides services to our Infrastructure segment, our E&C segment recognizes revenues and our Infrastructure segment recognizes costs of sales with respect to the fees charged by our E&C segment for those services. In consolidation, these intersegment revenues and cost of sales are eliminated in our financial results. Nonetheless, our Infrastructure segment, in particular, may recognize gross profits or losses based on the difference between the fees the segment charges in accordance with concession terms and costs it incurs relating to services provided by our other segments. For more information on our segments, see note 5 to our audited annual consolidated financial statements and note 7 to our unaudited interim consolidated financial statements included in this prospectus.

Engineering and Construction

We obtain revenues in our E&C segment from the engineering and construction services we provide to our clients, which we recognize under the percentage-of-completion method of accounting. For further information, see note 2.25 to our audited annual consolidated financial statements included in this prospectus. We receive unrestricted client advances in a substantial majority of our E&C projects, on average equal to approximately 30% of the contract price, which we record as an account payable. We typically invoice our clients on a periodic basis as each project progresses, deducting from the related advances on a proportional basis. For further information, see note 18 to our audited annual consolidated financial statements included in this prospectus. Our cost of sales in our E&C segment includes labor, subcontractor expenses, materials, equipment, and project-specific general expenses.

Infrastructure

In our Infrastructure segment, we recognize revenues and cost of sales as follows:

(1) Toll Roads:

•

For Norvial, we obtain revenues for toll fees collected, minus deductions required to be transferred to the government as described in “Business—Infrastructure—Principal Infrastructure Activities—Toll Roads—Norvial,” which we recognize upon receipt. Cost of sales for Norvial include fees paid to third parties (primarily our subsidiary Concar) for operation and maintenance services as well as the amortization of the road concession registered as an intangible asset in our financial statements; and

•

For Survial and Canchaque, we obtain revenues for routine and periodic maintenance services, which we recognize in the period in which the services are performed. Cost of sales for Survial and Canchaque include fees paid to third parties (primarily our subsidiary Concar) for operation and maintenance services. We do not recognize the Survial and Canchaque concessions as intangible assets and therefore do not amortize the concessions.

For further information, see notes 2.15(c) and 15 to our audited annual consolidated financial statements included in this prospectus.

(2) Mass Transit: We obtain revenues from our Lima Metro concession based on a tariff per kilometer traveled by our trains in operation in accordance with a schedule established in our concession agreement, which we recognize in the period in which the services are performed. Under the concession, the tariff is comprised of three components: (i) fees related to our operation and maintenance services; (ii) fees related to the Peruvian government’s repayment of the amounts we invest to purchase trains and other infrastructure for the Peruvian government; and (iii) fees related to interest we charge the Peruvian government in connection with the amounts we invest to purchase such trains and other infrastructure. In 2012, the fees related to items (i), (ii) and (iii) were S/.58.9 million, S/.0.0 million and S/.11.6 million, respectively; and in the first quarter of 2013, the fees related to items (i), (ii) and (iii) were S/.14.9 million, S/.0.0 million and S/.5.7million, respectively. We only recognize in our income statement the portion of the tariff that relates to items (i) and (iii). We record the amounts paid by us that relate to item (ii) as long-term accounts receivables from the Peruvian government. Accordingly, tariff payments received relating to item (ii) reduce our accounts receivables but do not impact our income statement or EBITDA, and we do not amortize our investments in our income statement as our investment in the concession is recorded as an account receivable with the government rather than a depreciable investment. For further information, see note 8 to our audited annual consolidated financial statements included in this prospectus. Cost of sales for the Lima Metro include fees paid to third parties (primarily our E&C segment, our subsidiary Concar and other subcontractors) for construction and operation and maintenance services, energy, and our financing costs related to the purchase of trains.

(3) Water Treatment: Beginning in March 2012, we obtained revenues from the engineering design and construction of La Chira waste water treatment plant, which we recognize based on the percentage-of-completion method of accounting. Once the plant begins operations, which is expected to occur at the beginning of 2015, we will obtain revenues only for operation and maintenance services, which we will recognize in the period in which the services are performed. During the construction phase, cost of sales for La Chira includes fees paid to third parties, primarily our E&C segment, for engineering and construction services. During the operation phase, cost of sales for La Chira will include personnel charges and maintenance of infrastructure.

(4) Energy: We obtain revenues from extraction services related to oil and gas production, fuel storage services, and the sale of natural gas liquids derived from our gas processing and fractionation services, which we recognize in the period in which the services are performed and, in the case of sale of natural gas liquids, when the sale is made. Cost of sales for our energy line of business includes labor, materials, amortization of oil wells, depreciation of the gas plant, maintenance and general expenses.

Real Estate

We obtain revenues in our Real Estate segment from sales of affordable housing and housing units, commercial buildings and land parcels, which we recognize at the time of delivery of the unit or building and, in the case of land parcels, at the time of the sale. We typically pre-sell our affordable housing and housing units prior to and during

construction, and use the related proceeds we receive to finance the construction of the units. These pre-sale funds are restricted and released from escrow to us periodically as construction progresses. Our Real Estate cost of sales includes the cost to purchase land, costs of architectural design and construction (which usually includes payments to third parties, primarily our E&C segment), licensing and permit costs, personnel costs, and fees to third parties related to sanitation or electrical engineering. In 2012 and the first quarter of 2013, our cost of land that is allocated to units delivered during these periods amounted to S/.23.8 million and S/.3.9 million, respectively. We recognize land purchases as inventory, and, accordingly, do not mark-to-market the value of our land for changes in fair value. For further information, see note 12 to our audited annual consolidated financial statements included in this prospectus.

In our Real Estate segment, we have significant net profit attributable to non-controlling interests. We hold a significant portion of our land bank through Almonte in which we have a 50.4% interest, and we consolidate Almonte’s results in our financial statements. In addition, we undertake a significant number of our real estate projects through entities in which we may have a majority interest, co-equal interest or minority interest; when we have control over these entities, we consolidate their results in our financial statements regardless of whether we own a majority of the capital. Furthermore, in connection with our affordable housing projects, we generally partner with real estate investment funds and insurance companies that provide between 60% and 70% of the total capital required to purchase the land and cover certain pre-construction costs in exchange for equity in the project. Although we typically own a minority interest in these projects, we consolidate their results in our financial statements because we exercise control over the project. Accordingly, we reflect the profit corresponding to our real estate partners under net profit attributable to non-controlling interests in our income statement. See “—Accounting for Subsidiaries, Joint Operations and Associated Companies.”

Technical Services

In our Technical Services segment, we recognize revenues and cost of sales as follows:

(1) Operation and Maintenance of Infrastructure Assets: We obtain revenues from our operation and maintenance of infrastructure assets line of business for the operation and maintenance services we provide to the government and concessionaires (currently concessions within our Infrastructure segment), which we recognize in the period in which the services are performed. We receive unrestricted advances with respect to our service contracts with the government, that vary from approximately 10% to 30% of the contract price, which we record as an account payable. We typically invoice our clients on a periodic basis as the project progresses, deducting from the related advances on a proportional basis. For further information, see note 18 to our audited annual consolidated financial statements included in this prospectus. Our cost of sales in this line of business includes personnel costs, services provided by third parties, machinery and other materials (primarily trucks), and depreciation of equipment utilized to provide services.

(2) IT Services: We obtain revenues from our IT services line of business for IT and outsourcing services we perform for government and private sector clients, which we recognize in the period in which the services are performed. Our IT services cost of sales includes personnel costs, services provided by third parties, equipment and other materials, depreciation of equipment utilized to provide services, and amortization of software.

(3) Electricity Networks Services: We obtain revenues from the electrical services we provide to our clients, which we recognize in the period in which the services are performed. Our cost of sales in this line of business includes personnel costs, services provided by third parties, machinery and other materials (primarily trucks and meters), and depreciation of equipment utilized to provide services.

Comparison of Results of Operations for First Quarters of 2012 and 2013

The following table sets forth the components of our consolidated income statement for the first quarters of 2012 and 2013.


	Three months ended March 31,
	2012			2013			Variation
	(unaudited)
	(in millions of S/.)						%
Revenues		1,100.4			1,268.1			15.2
Cost of sales		(946.1	)		(1,068.3	)		12.9

Gross profit		154.3			199.8			29.5
Administrative expenses		(62.4	)		(76.2	)		22.1
Other income (expenses)		12.7			8.5			(33.1	)
Other (losses) gains, net		—			(0.4	)		N/M
Profit from sale of investments		0.6			—			N/M

Operating profit		105.2			131.7			25.2
Financial (expense) income, net		2.4			(22.8	)		N/M
Share of profit and loss in associates		—			14.7			N/M

Profit before income tax		107.6			123.6			14.9
Income tax		(35.5	)		(40.2	)		13.2

Net profit		72.1			83.4			15.7
Net profit attributable to controlling interest		65.2			64.3			(1.4	)
Net profit attributable to non-controlling interest		6.8			19.1			180.9

Revenues

Our total revenues increased by 15.2%, or S/.167.7 million, from S/.1,100.4 million for the first quarter of 2012 to S/.1,268.1 million for the first quarter of 2013. This increase was due mainly to growth in our E&C segment, primarily due to an increase in contract mining and civil works activities and, to a lesser extent, to the revenues of Vial y Vives, in which we acquired a controlling interest in October 2012, as well as growth in our Real Estate segment, primarily due to an increase in units delivered.

We estimate that fluctuations among the nuevo sol and the U.S. dollar and the Chilean peso between the end of 2012 and the first quarter of 2013 resulted in an increase in our consolidated revenues, as expressed in nuevos soles, of approximately S/.9.4 million, or 0.7%, during the first quarter of 2013, as the nuevo sol depreciated against the U.S. dollar by approximately 0.9% and against the Chilean peso by approximately 2.2%.

The following table sets forth a breakdown of our revenues by segment for the first quarters of 2012 and 2013.


	Three months ended March 31,
	2012						2013						Variation
	(unaudited)
	(in millions of S/.)			% of Total			(in millions of S/.)			% of Total			%
Engineering and Construction		717.9			65.2			889.2			70.1			23.9
Infrastructure		127.8			11.6			127.7			10.1			(0.1	)
Real Estate		21.0			1.9			46.7			3.7			122.4
Technical Services		265.0			24.1			244.1			19.3			(7.9	)
Corporate		10.9			1.0			13.5			1.1			23.9
Eliminations		(42.2	)		(3.8	)		(53.2	)		(4.2	)		26.1

Total		1,100.4			100.0			1,268.0			100.0			15.2

Cost of Sales

Our total cost of sales increased by 12.9%, or S/.122.2 million, from S/.946.1 million for the first quarter of 2012 to S/.1,068.3 million for the first quarter of 2013. This increase was related to the growth in our revenues.

We estimate that fluctuations among the nuevo sol and the U.S. dollar and the Chilean peso between the end of 2012 and the first quarter of 2013 resulted in an increase in our consolidated cost of sales, as expressed in nuevos soles, of approximately S/.4.1 million, or 0.4%, during the first quarter of 2013.

Gross Profit

Our gross profit increased by 29.5%, or S/.45.5 million, from S/.154.3 million for the first quarter of 2012 to S/.199.8 million for the first quarter of 2013. Our gross margin for the first quarter of 2013 was 15.8% compared to 14.0% for the first quarter of 2012. This increase in our gross margin was mainly due to higher gross margins in our Real Estate segment, primarily as a result of higher prices at one of our affordable housing developments, as well as in the E&C segment, primarily due to higher margins in contract mining activities as a result of the stage of execution of certain projects.

The following table sets forth a breakdown of our gross profit by segment for the first quarters of 2012 and 2013.


	Three months ended March 31,
	2012						2013						Variation
	(unaudited)
	(in millions of S/.)			% of Total			(in millions of S/.)			% of Total			%
Engineering and Construction		84.1			54.5			121.2			60.7			44.1
Infrastructure		43.9			28.5			38.6			19.3			(12.1	)
Real Estate		5.3			3.4			18.4			9.2			247.2
Technical Services		30.8			20.0			39.3			19.7			27.6
Corporate		(2.6	)		(1.7	)		(4.2	)		(2.1	)		61.5
Eliminations		(7.2	)		(4.7	)		(13.5	)		(6.8	)		87.5

Total		154.3			100.0			199.8			100.0			29.5

Administrative Expenses

Our administrative expenses increased by 22.1%, or S/.13.8 million, from S/.62.4 million for the first quarter of 2012 to S/.76.2 million for the first quarter of 2013, primarily due to the consolidation of Vial y Vives, in which we acquired a controlling interest in October 2012 and which increased our administrative expenses by S/.5.5 million; the increase of administrative expenses in the E&C segment in line with the growth in revenues in this segment; and, to a lesser extent, an increase in administrative expenses in our Technical Services segment as a result of the preparation of concession bids. As a percentage of revenues, our administrative expenses grew to 6.0% in the first quarter of 2013 from 5.7% in the first quarter of 2012.

Other Income (Expenses)

Our other income (expenses) decreased S/.4.2 million, from S/.12.7 million for the first quarter of 2012 to S/.8.5 million for the first quarter of 2013. This decrease was primarily due to a lower reversal of provisions in connection with the CAM acquisition from S/.11.9 million in the first quarter of 2012 to S/.3.9 million in the first quarter of 2013, partially offset by an extraordinary gain of S/.2.3 million in our E&C segment from compensation received in connection with a government claim related to a project completed in 2011, as well as a reversal of provisions in connection with the Vial y Vives acquisition in the amount of S/.4.6 million. For further information, see “—Factors Affecting Our Results of Operations—Acquisitions.”

Operating Profit

Our operating profit increased 25.2% or S/.26.5 million, from S/.105.2 million for the first quarter of 2012 to S/.131.7 million for the first quarter of 2013. Our operating margin (i.e., operating profit as a percentage of revenues) was 10.4% for the first quarter of 2013 compared to 9.6% for the first quarter of 2012. Despite the increase in administrative expenses in our E&C and Technical Services segments and lower other income (expenses), our operating profit increased in the first quarter of 2013 due to higher gross profit, mainly in our E&C and Real Estate segments.

The following table sets forth a breakdown of our operating profit by segment for the first quarters of 2012 and 2013.


	Three months ended March 31,
	2012						2013						Variation
	(unaudited)
	(in millions of S/.)			% of Total			(in millions of S/.)			% of Total			%
Engineering and Construction		50.5			48.0			78.6			59.7			55.6
Infrastructure		36.2			34.4			30.9			23.5			(14.6	)
Real Estate		2.3			2.2			14.1			10.7			513.0
Technical Services		20.3			19.3			14.0			10.6			(31.0	)
Corporate		(3.4	)		(3.2	)		(8.1	)		(6.2	)		138.2
Eliminations		(0.6	)		(0.6	)		2.2			1.7			N/M

Total		105.2			100.0			131.7			100.0			25.2

Business Segments

The following discussion analyzes our key results of operations on a segment basis. For further information on our business segments, see note 7 to our unaudited interim consolidated financial statements included in this prospectus.

Engineering and Construction

The table below sets forth selected financial information related to our E&C segment.


	Three months ended March 31,
	2012		2013		Variation
	(unaudited)
	(in millions of S/.)				%
Revenues		717.9		889.2		23.9
Gross profit		84.1		121.2		44.1
Operating profit		50.5		78.6		55.6

Revenues. Our E&C revenues increased 23.9%, or S/.171.3 million, from S/.717.9 million for the first quarter of 2012 to S/.889.2 million for the first quarter of 2013, primarily due to the growth in revenues in our contract mining and civil works activities and, to a lesser extent, the S/.21.3 million in revenues from Vial y Vives in the first quarter of 2013, a company in which we acquired a controlling interest in October 2012. Excluding revenues from Vial y Vives, our E&C revenues increased 20.9% in the first quarter of 2013 as compared to the first quarter of 2012.

We estimate that fluctuations among the nuevo sol and the U.S. dollar between the end of 2012 and the first quarter of 2013 resulted in an increase in our E&C revenues, as expressed in nuevos soles, of approximately S/.5.9 million, or 0.7%, during the first quarter of 2013.

The following describes variations in our E&C revenues by business activities, types of contracts and end-markets:

E&C Activities: For the first quarter of 2013, approximately 4.9%, 21.0%, 28.1%, 25.7% and 20.2% of our E&C revenues were derived from engineering services, electromechanic construction, civil construction, contract mining and building construction activities, respectively. For the first quarter of 2012, approximately 5.3%, 23.8%, 27.2%, 20.3% and 23.4% of our E&C revenues were derived from engineering construction, electromechanic construction, civil construction, contract mining and building

construction activities, respectively. Despite variations in the proportional weight of our various E&C activities, the revenues derived from each of our E&C activities increased in absolute terms during the first quarter of 2013, with contract mining increasing significantly due to an increase in project awards. For a description of our E&C business activities, see “Business—Engineering and Construction—Principal Engineering and Construction Activities”;

E&C Contracts: For the first quarter of 2013, approximately 46.5%, 38.0%, 5.2% and 10.4% of our E&C revenues were derived from cost-plus fee, unit price, lump-sum and EPC contracts, respectively. For the first quarter of 2012, approximately 34.6%, 53.9%, 5.2% and 6.3% of our E&C revenues were derived from cost-plus fee, unit price, lump-sum and EPC contracts, respectively. During the first quarter of 2013 we continued to derive significant revenues from cost-plus fee and unit price contracts, with a significant increase in cost-plus fee contracts. For a description of our contractual arrangements, see “Business—Engineering and Construction—Contracts” and “—Factors Affecting Our Results of Operations—Engineering and Construction”; and

E&C End-Markets : For the first quarter of 2013, approximately 40.9%, 20.4%, 10.0%, 12.4%, 11.1%, 4.6% and 0.5%, of our E&C revenues were derived from mining, real estate buildings, power, oil and gas, transportation, water and sewage, and other end-markets, respectively. For the first quarter of 2012, approximately 43.4%, 23.3%, 16.1%, 7.7%, 5.6%, 3.2% and 0.8%, of our E&C revenues were derived from mining, real estate buildings, power, oil and gas, transportation, water and sewage, and other end-markets, respectively. During the first quarter of 2013 we continued to derive significant revenues from the mining end-market, and we experienced growth in revenues particularly from the transportation as well as the oil and gas end-markets. Revenues in the first quarter of 2013 derived from the power end-market declined moderately in absolute terms, despite the decrease in the proportional weight of this end-market.

The breakdown of E&C revenues by different business activities, types of contracts and end-markets tends to vary from period to period due to a variety of factors, including the timing of the execution of larger projects in any particular period, which is typically outside of our control.

Gross Profit . Our E&C gross profit increased 44.1%, or S/.37.1 million, from S/.84.1 million for the first quarter of 2012 to S/.121.2 million for the first quarter of 2013. Our E&C gross margin for the first quarter of 2013 was 13.6% compared to 11.7% for the first quarter of 2012. This increase in E&C gross margin was due to both the growth in revenue in this segment as well as higher margins in contract mining due to the stage of execution of certain projects, as we typically obtain higher margins during the early stages of these projects.

We estimate that fluctuations among the nuevo sol and the U.S. dollar between the end of 2012 and the first quarter of 2013 resulted in an increase in our E&C cost of sales, as expressed in nuevos soles, of approximately S/.1.3 million, or 0.2%, during the first quarter of 2013

Operating Profit . Our E&C operating profit increased 55.6%, or S/.28.1 million, from S/.50.5 million for the first quarter of 2012 to S/.78.6 million for the first quarter of 2013. Our E&C administrative expenses increased 50.1%, or S/.16.6 million, which resulted in administrative expenses as a percentage revenues of 5.6% for the first quarter of 2013 compared to 4.6% for the first quarter of 2012, due in part to the consolidation of Vial y Vives, in which we acquired a controlling interest in October 2012, in addition to an increase of administrative expenses in line with the growth of revenues for the period. Our E&C operating profit for the first quarter of 2013 was positively impacted by S/.7.1 million in other income from compensation received in connection with a government claim related to a project completed in 2011 in the amount of S/.2.3 million, as well as the reversal of provisions in connection with the Vial y Vives acquisition in the amount of S/.4.6 million. Our E&C operating margin for the first quarter of 2013 was 8.8% compared to 7.0% for the first quarter of 2012.

In addition, our E&C segment had S/.14.6 million in profit from minority interests held by Vial y Vives in two projects undertaken in Chile, which is reflected under “share of profit and loss in associates” in our interim unaudited consolidated financial statements.

Infrastructure

The table below sets forth selected financial information related to our Infrastructure segment.


	Three months ended March 31,
	2012		2013		Variation
	(unaudited)
	(in millions of S/.)				%
Revenues		127.8		127.7		(0.1	)
Gross profit		43.9		38.6		(12.1	)
Operating profit		36.1		30.9		(14.4	)

Revenues . The table below sets forth the breakdown of our Infrastructure revenues by principal lines of business.


	Three months ended March 31,
	2012		2013		Variation
	(unaudited)
	(in millions of S/.)				%
Toll Roads		28.6		29.9		4.5
Mass Transit		17.7		21.3		20.3
Water Treatment		11.1		12.1		9.0
Energy		70.4		64.4		(8.5	)

Total		127.8		127.7		(0.1	)

Our Infrastructure revenues decreased 0.1% or S/.0.1 million, from S/.127.8 million for the first quarter of 2012 to S/.127.7 million for the first quarter of 2013. The variation in our Infrastructure revenues principally reflected the following:

•

Toll Roads: a 4.5%, or S/.1.3 million, increase in revenues, from S/.28.6 million for the first quarter of 2012 to S/.29.9 million for the first quarter of 2013, primarily due to a 4.3% increase in vehicular traffic in Norvial;

•

Mass Transit: a 20.3%, or S/.3.6 million, increase in revenues, from S/.17.7 million for the first quarter of 2012 to S/.21.3 million for the first quarter of 2013, primarily due to a full quarter of operation of the Lima Metro in 2013 compared to the first quarter of 2012 in which we undertook trial runs during the month of January;

•

Water Treatment: a 9.0%, or S/.1.0 million, increase in revenues, from S/.11.1 million for the first quarter of 2012 to S/.12.1 million for the first quarter of 2013, primarily due to progress in the construction of the La Chira waste water treatment plant; and

•

Energy: a 8.5%, or S/.6.0 million, decrease in revenues, from S/.70.4 million for the first quarter of 2012 to S/.64.4 million for the first quarter of 2013 primarily due to lower production at our gas processing plant due to a decline in demand from EEPSA as a result of higher rainfall during this period and, to a lesser extent, lower levels of dispatch of fuel in our fuel storage terminals, partially offset by higher levels of oil production during the quarter.

We estimate that fluctuations among the nuevo sol and the U.S. dollar between the end of 2012 and the first quarter of 2013 resulted in an increase in our Infrastructure revenues, as expressed in nuevos soles, of approximately S/.0.5 million, or 0.4%, during the first quarter of 2013.

Gross Profit . The table below sets forth the breakdown of our Infrastructure gross profit by principal lines of business.


	Three months ended March 31,
	2012		2013		Variation
	(unaudited)
	(in millions of S/.)				%
Toll Roads		12.6		13.0		3.2
Mass Transit		1.1		0.3		(72.7	)
Water Treatment		0.9		1.6		77.8
Energy		29.3		23.7		(19.1	)

Total		43.9		38.6		(12.1	)

Our Infrastructure gross profit decreased 12.1%, or S/.5.3 million, from S/.43.9 million for the first quarter of 2012 to S/.38.6 million for the first quarter of 2013. Our Infrastructure gross margin was 30.2% for the first quarter of 2013 compared to 34.4% for the first quarter of 2012. The variation in our Infrastructure gross profit principally reflected the following:

•

Toll Roads : a 3.2%, or S/.0.4 million, increase in gross profit, from S/.12.6 million for the first quarter of 2012 to S/.13.0 million for the first quarter of 2013. This increase was primarily due to the increase in revenues from Norvial. Our Toll Roads gross margin was 43.5% for the first quarter of 2013 compared to 44.1% for the first quarter of 2012;

•

Mass Transit : a 72.7%, or S/.0.8 million decrease in gross profit, from S/.1.1 million gross profit for the first quarter of 2012 to S/.0.3 million gross profit for the first quarter of 2013, primarily due to an increase in costs in preparation for the entry into operation of new trains for the Lima Metro;

•

Water Treatment : a 77.8%, or S/.0.7 million, increase in gross profit for first quarter of 2013, from S/.0.9 million gross profit for the first quarter of 2012 to S/.1.6 million gross profit for the first quarter of 2013, primarily due to the progress of the construction of the La Chira waste water treatment plant. Our Water Treatment gross margin was 13.2% for the first quarter of 2013 compared to 8.1% for the first quarter of 2012; and

•

Energy : a 19.1%, or S/.5.6 million, decrease in gross profit, from S/.29.3 million for the first quarter of 2012 to S/.23.7 million for the first quarter of 2013, primarily due to the decline in Energy revenues. Our Energy gross margin was 36.8% for the first quarter of 2013 compared to 41.6% for the first quarter of 2012.

Operating Profit . The table below sets forth the breakdown of our Infrastructure operating profit by principal lines of business.


	Three months ended March 31,
	2012			2013			Variation
	(unaudited)
	(in millions of S/.)						%
Toll Roads		10.7			11.3			5.6
Mass Transit		(1.5	)		(1.8	)		20.0
Water Treatment		0.8			1.5			87.5
Energy		26.2			19.9			(24.0	)

Total		36.1			30.9			(14.4	)

Our Infrastructure operating profit decreased 14.4%, or S/.5.2 million, from S/.36.1 million for the first quarter of 2012 to S/.30.9 million for the first quarter of 2013. Our Infrastructure operating margin was 24.2% for the first quarter of 2013 compared to 28.3% for the first quarter of 2012. The variation in our Infrastructure operating profit principally reflected the following:

•

Toll Roads : a 5.6%, or S/.0.6 million, increase in operating profit, from S/.10.7 million for the first quarter of 2012 to S/.11.3 million for the first quarter of 2013, primarily due to the increase in gross profit in Norvial. Our Toll Roads operating margin was 37.8% for the first quarter of 2013 compared to 37.4% for the first quarter of 2012;

•

Mass Transit : a 20%, or S/.0.3 million, increase in operating loss, from an operating loss of S/.1.5 million for the first quarter of 2012 to an operating loss of S/.1.8 million for the first quarter of 2013, due to the decrease in gross profit. The operating losses in the first quarters 2012 and 2013 relate to the limited number of trains we operated during these initial periods;

•

Water Treatment : a 87.5%, or S/.0.7 million, increase in operating profit, from S/.0.8 million for the first quarter of 2012 to an operating profit of S/.1.5 million for the first quarter of 2013, due to the increase in gross profit. Our Water Treatment operating margin for the first quarter of 2013 was 12.4% compared to 7.2% for the first quarter of 2012; and

•

Energy : a 24.0%, or S/.6.3 million, decrease in operating profit, from S/.26.2 million for the first quarter of 2012 to S/.19.9 million for the first quarter of 2013, primarily due to the decrease in gross profit. Our Energy operating margin was 30.9% for the first quarter of 2013 compared to 37.2% for the first quarter of 2012.

Real Estate

The table below sets forth selected financial information related to our Real Estate segment.


	Three months ended March 31,
	2012		2013		Variation
	(unaudited)
	(in millions of S/.)				%
Revenues		21.0		46.7		122.4
Gross profit		5.3		18.4		247.2
Operating profit		2.3		14.1		513.0

Revenues . Our Real Estate revenues increased 122.4%, or S/.25.7 million, from S/.21.0 million for the first quarter of 2012 to S/.46.7 million for the first quarter of 2013. This increase was primarily due to an 85.4% increase in the number of affordable housing units delivered, with 304 units delivered in the first quarter of 2013 compared to 164 units delivered in the first quarter of 2012.

We estimate that fluctuations among the nuevo sol and the U.S. dollar between the end of 2012 and the first quarter of 2013 resulted in an increase in our Real Estate revenues, as expressed in nuevos soles, of approximately S/.24,000, or 0.1%, during the first quarter of 2013.

Gross Profit . Our Real Estate gross profit increased 247.2%, or S/.13.1 million, from S/.5.3 million for the first quarter of 2012 to S/.18.4 million for the first quarter of 2013, mainly as a result of higher gross margins in our Real Estate segment, primarily as a result of higher prices at one of our affordable housing developments and higher sales volumes. Our Real Estate gross margin was 39.4% for the first quarter of 2013 compared to 25.2% for the first quarter of 2012.

We estimate that fluctuations among the nuevo sol and the U.S. dollar between the end of 2012 and the first quarter of 2013 resulted in an increase in our Real Estate cost of sales, as expressed in nuevos soles, of approximately S/.30,000, or 0.1%, during the first quarter of 2013.

Operating Profit . Our Real Estate operating profit increased 513.0%, or S/.11.8 million, from S/.2.3 million for the first quarter of 2012 to S/.14.1 million for the first quarter of 2013, primarily as a result of the increase in our Real Estate gross profit.

Technical Services

The table below sets forth selected financial information related to our Technical Services segment.


	Three months ended March 31,
	2012		2013		Variation
	(unaudited)
	(in millions of S/.)				%
Revenues		265.0		244.1		(7.9	)
Gross profit		30.8		39.3		27.6
Operating profit		20.3		14.0		(31.0	)

Revenues . The table below sets forth the breakdown of our Technical Services revenues by principal lines of business.


	Three months ended March 31,
	2012		2013		Variation
	(unaudited)
	(in millions of S/.)				%
Operation and Maintenance of Infrastructure Assets		71.1		60.2		(15.3	)
IT Services		46.4		53.5		15.3
Electricity Networks Services		147.5		130.4		(11.6	)

Total		265.0		244.1		(7.9	)

Our Technical Services revenues decreased 7.9%, or S/.20.9 million, from S/.265.0 million for the first quarter of 2012 to S/.244.1 million for the first quarter of 2013. The variation in our Technical Services revenues principally reflected the following:

•

Operation and Maintenance of Infrastructure Assets : a 15.3%, or S/.10.9 million, decrease in revenues, from S/.71.1 million for the first quarter of 2012 to S/.60.2 million for the first quarter of 2013, primarily due to the expiration of two road maintenance contracts and lower revenues from three road maintenance contracts which were in final stages during the period, partially offset by increased revenues from three road maintenance contracts that were awarded at the end of 2012.

•

IT Services : a 15.3%, or S/.7.1 million, increase in revenues, from S/.46.4 million for the first quarter of 2012 to S/.53.5 million for the first quarter of 2013, primarily as a result of new information technology and outsourcing projects; and

•

Electricity Networks Services : a 11.6%, or S/.17.1 million, decrease in revenues, from S/.147.5 million for the first quarter of 2012 to S/.130.4 million for the first quarter of 2013, primarily due to the closure of CAM’s electrical products sales division as part of our restructuring of the business.

We estimate that fluctuations among the nuevo sol and the U.S. dollar between the end of 2012 and the first quarter of 2013 resulted in an increase in our Technical Services revenues, as expressed in nuevos soles, of approximately S/.153,000, or 0.1%, during the first quarter of 2013. We estimate that fluctuations among the nuevo sol and the Chilean peso between the end of 2012 and the first quarter of 2013 resulted in an increase in our Technical Services revenues, as expressed in nuevos soles, of approximately S/.2.8 million, or 2.2%, during the first quarter of 2013.

Gross Profit . The table below sets forth the breakdown of our Technical Services gross profit by principal lines of business.


	Three months ended March 31,
	2012		2013		Variation
	(unaudited)
	(in millions of S/.)				%
Operation and Maintenance of Infrastructure Assets		12.7		11.4		(10.2	)
IT Services		7.2		11.0		52.8
Electricity Networks Services		10.9		16.9		55.0

Total		30.8		39.3		27.6

Our Technical Services gross profit increased 27.6%, or S/.8.5 million, from S/.30.8 million for the first quarter of 2012 to S/.39.3 million for the first quarter of 2013. Our Technical Services gross margin was 16.1% for the first quarter of 2013 compared to 11.6% for the first quarter of 2012. The variation in our Technical Services gross profit principally reflected the following:

•

Operation and Maintenance of Infrastructure Assets : a 10.2%, or S/.1.3 million, decrease in gross profit, from S/.12.7 million for the first quarter of 2012 to S/.11.4 million for the first quarter of 2013, primarily due to the decrease in revenues. Our Operation and Maintenance of Infrastructure Assets gross margin was 18.9% for the first quarter of 2013 compared to 17.9% for the first quarter of 2012;

•

IT Services : a 52.8%, or S/.3.8 million, increase in gross profit, from S/.7.2 million for the first quarter of 2012 to S/.11.0 million for the first quarter of 2013, primarily related to growth in revenues and, in particular, higher margin services. Our IT Services gross margin was 20.6% for the first quarter of 2013 compared to 15.5% for the first quarter of 2012; and

•

Electricity Networks Services : a 55.0%, or S/.6.0 million, increase in gross profit, from S/.10.9 million for the first quarter of 2012 to S/.16.9 million for the first quarter of 2013, primarily due to restructuring initiatives to improve the operating processes of CAM subsequent to our acquisition of a controlling interest in the business. Our Electricity Networks Services gross margin was 13.0% for the first quarter of 2013 compared to 7.4% for the first quarter of 2012.

We estimate that fluctuations among the nuevo sol and the U.S. dollar between the end of 2012 and the first quarter of 2013 resulted in an increase in our Technical Services cost of sales, as expressed in nuevos soles, of approximately S/.177,000, or 0.2%, during the first quarter of 2013. We estimate that fluctuations among the nuevo sol and the Chilean peso between the end of 2012 and the first quarter of 2013 resulted in an increase in our Technical Services cost of sales, as expressed in nuevos soles, of approximately S/.2.4 million, or 2.2%, during the first quarter of 2013.

Operating Profit . The table below sets forth the breakdown of our Technical Services operating profit by principal lines of business.


	Three months ended March 31,				Variation
	2012		2013		Variation
	(unaudited)
	(in millions of S/.)				%
Operation and Maintenance of Infrastructure Assets		10.0		2.1		(79.0	)
IT Services		2.8		5.6		100.0
Electricity Networks Services		7.6		6.3		(17.1	)

Total		20.4		14.0		(31.4	)

Our Technical Services operating profit decreased 31.4%, or S/.6.4 million, from S/.20.4 million for the first quarter of 2012 to S/.14.0 million for the first quarter of 2013. Our Technical Services operating margin for the first quarter of 2013 was 5.7% compared to 7.7% for the first quarter of 2012. The variation in our Technical Services operating profit principally reflected the following:

•

Operation and Maintenance of Infrastructure Assets : a 79.0%, or S/.7.9 million, decrease in operating profit, from S/.10.0 million for the first quarter of 2012 to S/.2.1 million for the first quarter of 2013, primarily due to an increase in costs related to the preparation of infrastructure concession bids. Our Operation and Maintenance of Infrastructure Assets operating margin was 3.5% for the first quarter of 2013 compared to 14.1% for the first quarter of 2012;

•

IT Services : a 100.0%, or S/.2.8 million, increase in operating profit, from S/.2.8 million for the first quarter of 2012 to S/.5.6 million for the first quarter of 2013, primarily due to the increase the gross profit. Our IT Services operating margin was 10.5% for the first quarter of 2013 compared to 6.0% for the first quarter of 2012; and

•

Electricity Networks Services : a 17.1%, or S/.1.3 million, decrease in operating profit, from S/.7.6 million for the first quarter of 2012 to S/.6.3 million for the first quarter of 2013, primarily due to lower reversal of provisions in the first quarter of 2013 (S/.3.9 million) than in the first quarter of 2012 (S/.11.9 million) in connection with the CAM acquisition which offset the increase in gross profit between the two periods, as described in “—Factors Affecting Our Results with Operation—Acquisitions.” Our Electricity Network Services operating margin was 4.8% for the first quarter of 2013 compared to 5.2% for the first quarter of 2012.

Financial (Expense) Income, Net

Our net financial expense increased S/.25.2 million from net financial income of S/.2.4 million in the first quarter of 2012 to net financial expenses of S/.22.8 million in the first quarter of 2013. Excluding foreign exchange differences, our net financial expense increased 60.7%, or S/.3.4 million, from net financial expenses of S/.5.6 million for the first quarter of 2012 to net financial expenses of S/.9.0 million for the first quarter of 2013. This increase was primarily due to an increase in indebtedness incurred mainly to finance our investments in the Lima Metro from S/.633.1 million as of March 31, 2012 to S/.925.4 million as of March 31, 2013. Our exchange difference, net decreased S/.21.7 million, from a gain of S/.7.9 million for the first quarter of 2012 to a loss of S/.13.8 million for the first quarter of 2013. The depreciation of the nuevo sol against the U.S. dollar from the end of 2012 through the first quarter of 2013, resulted in an exchange loss on our income statement due to the effect on our U.S.-dollar liabilities as expressed in nuevos soles.

Income Tax

Our income tax increased 13.2%, or S/.4.7 million, from S/.35.5 million for the first quarter of 2012 to S/.40.2 million for the first quarter of 2013. This increase in income tax was primarily due to an increase in profit before tax. Our effective tax rates for the first quarters of 2012 and 2013 were 33.0% and 32.5%, respectively.

Net Profit

Our net profit increased 15.7%, or S/.11.3 million, from S/.72.1 million for the first quarter of 2012 to S/.83.4 million for the first quarter of 2013. Net profit attributable to controlling interests decreased 1.4%, while net profit attributable to non-controlling interests increased 180.9%. Net profit attributable to non-controlling interests increased primarily as a result of the consolidation of Vial y Vives not included in the first quarter of 2012, which is 26% owned by a minority investor, and a significantly higher percentage of minority interests in developments undertaken by Viva GyM. See “—General—Accounting for Subsidiaries, Joint Operations and Associated Companies.”

Comparison of Results of Operations for 2011 and 2012

The following table sets forth the components of our consolidated income statement for 2011 and 2012.


	Year ended December 31,						Variation
	2011			2012			Variation
	(in millions of S/.)						%
Revenues		4,241.3			5,231.9			23.4
Cost of sales		(3,609.5	)		(4,519.8	)		25.2

Gross profit		631.7			712.1			12.7
Administrative expenses		(199.6	)		(257.2	)		28.9
Other income (expenses)		4.3			75.9			1,665.1
Profit from the sale of investments		4.8			—			N/M
Other (losses) gains, net		(2.8	)		(0.3	)		(89.3	)
Gain from business combination		45.2			—			N/M

Operating profit		483.6			530.6			9.7
Financial (expense) income, net		(6.2	)		(10.3	)		66.1
Share of profit and loss in associates		0.2			0.6			200.0

Profit before income tax		477.6			520.8			9.0
Income tax		(141.4	)		(154.6	)		9.3

Net profit		336.2			366.3			9.0
Net profit attributable to controlling interest		289.1			290.0			0.3
Net profit attributable to non-controlling interest		47.1			76.3			62.0

Revenues

Our total revenues increased by 23.4%, or S/.990.6 million, from S/.4,241.3 million for 2011 to S/.5,231.9 million for 2012. This increase was due to growth in each of our business segments, particularly our E&C segment.

We estimate that fluctuations among the nuevo sol and the U.S. dollar and the Chilean peso between 2011 and 2012 resulted in a decrease in our consolidated revenues, as expressed in nuevos soles, of approximately S/.168.9 million, or 3.1%, during 2012, as the nuevo sol appreciated against the U.S. dollar by approximately 4.2% and the nuevo sol depreciated against the Chilean peso by approximately 4.9%.

The following table sets forth a breakdown of our revenues by segment for 2011 and 2012.


	Year ended December 31,												Variation
	2011						2012						Variation
	(in millions of S/.)			% of Total			(in millions of S/.)			% of Total			%
Engineering and Construction		2,784.2			65.6			3,524.6			67.4			26.6
Infrastructure		404.2			9.5			524.5			10.0			29.7
Real Estate		152.3			3.6			240.1			4.6			57.6
Technical Services		977.0			23.0			1,083.3			20.7			10.9
Corporate		39.8			0.9			44.7			0.9			12.2
Eliminations		(116.2	)		(2.7	)		(185.2	)		(3.5	)		59.4

Total		4,241.3			100.0			5,231.9			100.0			23.4

Cost of Sales

Our total cost of sales increased by 25.2%, or S/.910.3 million, from S/.3,609.5 million for 2011 to S/.4,519.8 million for 2012. This increase was primarily related to the growth in our revenues and, to a lesser extent, an increase in costs in our Technical Services segment, as described below.

We estimate that fluctuations among the nuevo sol and the U.S. dollar and the Chilean peso between 2011 and 2012 resulted in a decrease in our consolidated cost of sales, as expressed in nuevos soles, of approximately S/.113.5 million, or 2.4%, during 2012.

Gross Profit

Our gross profit increased by 12.7%, or S/.80.3 million, from S/.631.7 million for 2011 to S/.712.1 million for 2012. Our gross margin for 2012 was 13.6% compared to 14.9% for 2011. This decrease in our gross margin was primarily due to the full year impact of CAM in our Technical Services segment which reduced our margins in that segment and resulted in a decrease of 140 basis points in our consolidated gross margin; changes in the mix of contracting arrangements in our E&C segment with the proportion of less risky contracts for us ( i.e. , cost-plus fee and, to a lesser extent, unit price) increasing, thereby depressing our margins in that segment; and lower production and prices at our gas processing plant in our Infrastructure segment; partially offset by higher margins in our Real Estate segment. Our gross margin was also adversely affected due to expenses relating to the pre-operation phase of the Lima Metro during the second half of 2011, a period during which we did not generate revenues, and, in 2012, as a result of the limited number of trains we operated during the first year of operation.

The following table sets forth a breakdown of our gross profit by segment for 2011 and 2012.


	Year ended December 31,												Variation
	2011						2012						Variation
	(in millions of S/.)			% of Total			(in millions of S/.)			% of Total			%
Engineering and Construction		329.3			52.1			408.0			57.3			23.9
Infrastructure		146.2			23.1			172.6			24.2			18.1
Real Estate		45.3			7.2			86.7			12.2			91.3
Technical Services		109.7			17.4			103.9			14.6			(5.2	)
Corporate		2.0			0.3			(0.03	)		0.0			(101.3	)
Eliminations		(0.7	)		(0.1	)		(59.2	)		(8.3	)		8,357.1

Total		631.7			100.0			712.1			100.0			12.7

Administrative Expenses

Our administrative expenses increased by 28.9%, or S/.57.6 million, from S/.199.6 million for 2011 to S/.257.2 million for 2012, primarily due to the expansion of our administrative structure to support the growth of our business in each of our segments, particularly in our E&C segment. As a percentage of revenues, our administrative expenses grew to 4.9% in 2012 from 4.7% in 2011.

Other Income (Expenses)

Our other income (expenses) increased S/.71.6 million, from S/.4.3 million for 2011 to S/.75.9 million for 2012. This increase was primarily due to the reversal in 2012 of S/.72.8 million in provisions recognized in connection with our acquisition of a controlling interest in CAM. In addition, in 2011, we recognized a S/.45.2 million gain from sale of business combination in connection with the excess of the fair value of the assets and liabilities acquired in the CAM acquisition over the consideration paid, which is reflected under “gain from business combination.” For further information, see “—Factors Affecting Our Results of Operations—Acquisitions” and notes 25 and 28(c) to our audited annual consolidated financial statements included in this prospectus.

Operating Profit

Our operating profit increased 9.7%, or S/.47.0 million, from S/.483.6 million for 2011 to S/.530.6 million for 2012. Our operating margin ( i.e. , operating profit as a percentage of revenues) was 10.1% for 2012 compared to 11.4% for 2011, reflecting the decrease in gross margin, as well as higher administrative expenses in 2012 in our E&C segment relating to our acquisition of Vial y Vives; and extraordinary income in 2011 for Concar in our Technical Services segment arising from a S/.7.2 million arbitration award related to the Arequipa-Matarani road. Excluding the effects of the CAM acquisition, our operating profit increased by 8.1% and our operating margin for 2012 was 10.13% compared to 11.4% for 2011.

The following table sets forth a breakdown of our operating profit by segment for 2011 and 2012.


	Year ended December 31,												Variation
	2011						2012						Variation
	(in millions of S/.)			% of Total			(in millions of S/.)			% of Total			%
Engineering and Construction		227.5			47.0			247.6			46.7			8.8
Infrastructure		118.3			24.5			139.7			26.3			18.1
Real Estate		34.9			7.2			67.6			12.7			93.7
Technical Services		89.4			18.5			72.2			13.6			(19.2	)
Corporate		(8.9	)		(1.8	)		4.4			0.8			149.4
Eliminations		22.4			4.6			(0.9	)		(0.2	)		(103.9	)

Total		483.6			100.0			530.6			100.0			9.7

Business Segments

The following discussion analyzes our key results of operations on a segment basis. For further information on our business segments, see note 5 to our audited annual consolidated financial statements included in this prospectus.

Engineering and Construction

The table below sets forth selected financial information related to our E&C segment.


	Year ended December 31,				Variation
	2011		2012		Variation
	(in millions of S/.)				%
Revenues		2,784.2		3,524.6		26.6
Gross profit		329.3		408.0		23.9
Operating profit		227.5		247.6		8.8

Revenues . Our E&C revenues increased 26.6%, or S/.740.4 million, from S/.2,784.2 million for 2011 to S/.3,524.6 million for 2012, primarily due to a greater number of projects undertaken and an increase in average project size, driven by economic growth and increased investment in Peru.

We estimate that fluctuations among the nuevo sol and the U.S. dollar between 2011 and 2012 resulted in a decrease in our E&C revenues, as expressed in nuevos soles, of approximately S/.116.3 million, or 3.2%, during 2012.

The following describes variations in our E&C revenues by business activities, types of contracts and end-markets:

E&C Activities: For 2012, approximately 5.4%, 26.5%, 25.4%, 21.6% and 21.1% of our E&C revenues were derived from engineering services, electromechanic construction, civil construction, contract mining and building construction activities, respectively. For 2011, approximately 4.4%, 16.9%, 35.8%, 15.1% and 27.9% of our E&C revenues were derived from engineering construction, electromechanic construction, civil construction, contract mining and building construction activities, respectively. Revenues relating to electromechanic construction increased in part as a result of the temporary postponement in the execution of certain projects during 2011, and revenues relating to contract mining activity increased mainly as a result of an increase in project awards and the consolidation of Stracon GyM. Revenues in 2012 from civil construction declined moderately in absolute terms, and revenues from building construction were flat in absolute terms, despite the decrease in the proportional weight of these activities. For a description of our E&C business activities, see “Business—Engineering and Construction—Principal Engineering and Construction Activities”;

E&C Contracts: For 2012, approximately 37.9%, 48.5%, 5.0% and 8.6% of our E&C revenues were derived from cost-plus fee, unit price, lump-sum and EPC contracts, respectively. For 2011, approximately 23.9%, 61.7%, 14.2% and 0.2% of our E&C revenues were derived from cost-plus fee, unit price, lump-sum and EPC contracts, respectively. The growth in cost-plus fee contracts resulted in part from a trend towards the use of this contractual arrangement for complex projects. For a description of our contractual arrangements, see “Business—Engineering and Construction—Contracts” and “—Factors Affecting Our Results of Operations—Engineering and Construction”; and

E&C End-Markets : For 2012, approximately 40.0%, 18.7%, 16.2%, 8.7%, 9.4%, 2.2% and 4.8%, of our E&C revenues were derived from mining, real estate buildings, power, oil and gas, transportation, water and sewage, and other end-markets, respectively. For 2011, approximately 40.3%, 27.5%, 9.8%, 4.0%, 12.1%, 5.1% and 1.2%, of our E&C revenues were derived from mining, real estate buildings, power, oil and gas, transportation, water and sewage, and other end-markets, respectively. During 2012 we continued to derive significant revenues from the mining sector, and we experienced growth in revenues particularly from the power as well as the oil and gas sectors. Revenues in 2012 derived from the real estate and transportation end-markets declined moderately in absolute terms, despite the decrease in the proportional weight of these end-markets.

The breakdown of E&C revenues by different business activities, types of contracts and end-markets tends to vary from year to year due to a variety of factors, including the timing of the execution of larger projects in any particular year, which is typically outside of our control.

Gross Profit . Our E&C gross profit increased 23.9%, or S/.78.7 million, from S/.329.3 million for 2011 to S/.408.0 million for 2012. The increase in our E&C cost of sales was largely in line with our revenue growth in this segment. Our E&C gross margin for 2012 was 11.6% compared to 11.8% for 2011. Our E&C gross margin was affected by the trend in our contractual arrangements toward less risky contracts for us ( i.e. , cost-plus fee and, to a lesser extent, unit price) which provide more stable results at lower profit margins. See “—Factors Affecting Our Results of Operations—Engineering and Construction.”

We estimate that fluctuations among the nuevo sol and the U.S. dollar between 2011 and 2012 resulted in a decrease in our E&C cost of sales, as expressed in nuevos soles, of approximately S/.67.0 million, or 2.1%, during 2012.

Operating Profit . Our E&C operating profit increased 8.8%, or S/.20.1 million, from S/.227.5 million for 2011 to S/.247.6 million for 2012. Our E&C administrative expenses increased 53.2%, or S/.55.5 million, which resulted in administrative expenses as a percentage revenues of 4.5% for 2012 compared to 3.7% for 2011, due in part to extraordinary costs, including restructuring costs, incurred related to our acquisition of Vial y Vives. Our E&C operating profit was also impacted by S/.2.6 million in other income in 2011 and S/.0.6 million in other expenses in 2012, in each case from the sale of equipment and machinery. Our E&C operating margin for 2012 was 7.0% (7.1% excluding Vial y Vives) compared to 8.2% for 2011.

Infrastructure

The table below sets forth selected financial information related to our Infrastructure segment.


	Year ended December 31,				Variation
	2011		2012		Variation
	(in millions of S/.)				%
Revenues		404.2		524.5		29.7
Gross profit		146.2		172.6		18.1
Operating profit		118.3		139.7		18.1

Revenues . The table below sets forth the breakdown of our Infrastructure revenues by principal lines of business.


	Year ended December 31,				Variation
	2011		2012		Variation
	(in millions of S/.)				%
Toll Roads		115.2		123.3		7.1
Mass Transit		—		73.1		N/M
Water Treatment		—		41.0		N/M
Energy		289.0		287.0		(0.7	)

Total		404.2		524.5		29.7

Our Infrastructure revenues increased 29.7%, or S/.120.2 million, from S/.404.2 million for 2011 to S/.524.5 million for 2012. The variation in our Infrastructure revenues principally reflected the following:

•

Toll Roads : a 7.1%, or S/.8.2 million, increase in revenues, from S/.115.2 million for 2011 to S/.123.3 million for 2012, primarily due to an increase in vehicular traffic in Norvial of 7.4% from 2011 to 2012, which resulted in an increase of revenues of S/.7.0 million, and, to a lesser extent, the initiation of periodic maintenance services in Survial;

•

Mass Transit : S/.73.1 million in revenues for 2012, resulting from the initiation of operations of the Lima Metro in January 2012;

•

Water Treatment : S/.41.0 million in revenues for 2012, resulting from the commencement of the engineering design of La Chira waste water treatment plant in March 2012; and

•

Energy : a 0.7%, or S/.2.0 million, decrease in revenues, from S/.289.0 million for 2011 to S/.287.0 million for 2012 primarily due to lower production and sales prices in 2012 in our gas processing plant; partially offset by higher prices and, to a lesser extent, higher production in our oil extraction services. Our gas processing plant had high production levels and sales prices in 2011 as a result of the high energy requirements of EEPSA due to lower rainfall during the year.

We estimate that fluctuations among the nuevo sol and the U.S. dollar between 2011 and 2012 resulted in a decrease in our Infrastructure revenues, as expressed in nuevos soles, of approximately S/.11.4 million, or 2.1%, during 2012.

Gross Profit . The table below sets forth the breakdown of our Infrastructure gross profit by principal lines of business.


	Year ended December 31,						Variation
	2011			2012			Variation
	(in millions of S/.)						%
Toll Roads		40.1			53.3			32.9
Mass Transit		(9.9	)		(2.7	)		72.6
Water Treatment		—			11.2			N/M
Energy		116.0			110.8			(4.4	)

Total		146.2			172.6			18.1

Our Infrastructure gross profit increased 18.1%, or S/.26.4 million, from S/.146.2 million for 2011 to S/.172.6 million for 2012. Our Infrastructure gross margin was 32.9% for 2012 compared to 36.2% for 2011. The variation in our Infrastructure gross profit principally reflected the following:

•

Toll Roads : a 32.9%, or S/.13.2 million, increase in gross profit, from S/.40.1 million for 2011 to S/.53.3 million for 2012. This increase was primarily due to costs incurred by Survial in 2011, without corresponding revenues, with respect to the performance of certain periodic maintenance services prior to the government’s approval, with the government approving periodic maintenance work to begin in October 2012. Our Toll Roads gross margin was 43.2% for 2012 compared to 34.8% for 2011;

•

Mass Transit : a S/.7.2 million decrease in gross loss, from a S/.9.9 million gross loss for 2011 to a S/.2.7 million gross loss for 2012, primarily due to losses in 2011 as a result of cost of sales incurred in the pre-operation phase of the Lima Metro during the second half of the year, a period during which we did not generate revenues, and, in 2012, as a result of the limited number of trains we operated during the first year of operation. However, we have recently ordered 19 additional trains and, when these trains begin to operate, we expect to generate gross profit from the Lima Metro;

•

Water Treatment : S/.11.2 million in gross profit for 2012, due to the commencement of the engineering design of La Chira waste water treatment plant. Our Water Treatment gross margin for 2012 was 27.2%; and

•

Energy : a 4.4%, or S/.5.1 million, decrease in gross profit, from S/.116.0 million for 2011 to S/.110.8 million for 2012, primarily due to decreased activity at our gas processing plant in 2012 compared to 2011. Our Energy gross margin was 38.6% for 2012 compared to 40.1% for 2011.

We estimate that fluctuations among the nuevo sol and the U.S. dollar between 2011 and 2012 resulted in a decrease in our Infrastructure cost of sales, as expressed in nuevos soles, of approximately S/.4.1 million, or 1.1%, during 2012.

Operating Profit . The table below sets forth the breakdown of our Infrastructure operating profit by principal lines of business.


	Year ended December 31,						Variation
	2011			2012			Variation
	(in millions of S/.)						%
Toll Roads		33.1			47.0			42.0
Mass Transit		(15.1	)		(10.6	)		29.8
Water Treatment		(0.3	)		9.7			N/M
Energy		100.5			93.6			(6.9	)

Total		118.3			139.7			18.1

Our Infrastructure operating profit increased 18.1%, or S/.21.4 million, from S/.118.3 million for 2011 to S/.139.7 million for 2012. Our Infrastructure operating margin was 26.6% for 2012 compared to 29.3% for 2011. The variation in our Infrastructure operating profit principally reflected the following:

•

Toll Roads : a 42.0%, or S/.13.9 million, increase in operating profit, from S/.33.1 million for 2011 to S/.47.0 million for 2012, primarily due to the increase in our Toll Roads gross profit and, to a lesser extent, a reduction in administrative expenses at Survial as we are able to achieve efficiencies across our toll road concessions. Our Toll Roads operating margin was 38.1% for 2012 compared to 28.8% for 2011;

•

Mass Transit : a S/.4.5 million lower operating loss, from an operating loss of S/.15.1 million for 2011 to an operating loss of S/.10.6 million for 2012. The operating losses in 2011 relate to expenses incurred in the pre-operation phase of the Lima Metro in the second half of 2011, a period during which we did not generate revenues, and, in 2012, as a result of the limited number of trains we operated during the first year of operation;

•

Water Treatment : a S/.9.9 million increase in operating profit, from an operating loss of S/.(0.3) million for 2011 to an operating profit of S/.9.7 million for 2012, due to the commencement of the engineering design of La Chira waste water treatment plant. Our Water Treatment operating margin for 2012 was 23.6%; and

•

Energy : a 6.9%, or S/.6.9 million, decrease in operating profit, from S/.100.5 million for 2011 to S/.93.6 million for 2012, primarily due to the decrease in gross margin. Our Energy operating margin was 32.6% for 2012 compared to 34.8% for 2011.

Real Estate

The table below sets forth selected financial information related to our Real Estate segment.


	Year ended December 31,				Variation
	2011		2012		Variation
	(in millions of S/.)				%
Revenues		152.3		240.1		57.7
Gross profit		45.3		86.7		91.3
Operating profit		34.9		67.6		93.6

Revenues . Our Real Estate revenues increased 57.7%, or S/.87.8 million, from S/.152.3 million for 2011 to S/.240.1 million for 2012. This increase was primarily due to a 10.0% increase in the number of affordable housing and housing units delivered, with 1,368 units delivered in 2012 compared to 1,244 units delivered in 2011; and a shift in the mix of units delivered towards housing (as opposed to affordable housing) units, which have higher prices per unit; as well as an increase in land parcels sold by Almonte. We generated S/.10.1 million in 2011 and S/.45.6 million in 2012 from the sale of land parcels by Almonte.

We estimate that fluctuations among the nuevo sol and the U.S. dollar between 2011 and 2012 resulted in a decrease in our Real Estate revenues, as expressed in nuevos soles, of approximately S/.3.3 million, or 1.3%, during 2012.

Gross Profit . Our Real Estate gross profit increased 91.3%, or S/.41.4 million, from S/.45.3 million for 2011 to S/.86.7 million for 2012, primarily as a result of the land parcel sales by Almonte at a significant increase in land prices compared to the book value at which we had these assets recorded in our financial statements of S/.2.1 million. Our Real Estate gross margin was 36.1% for 2012 compared to 29.8% for 2011. Excluding the sale of land parcels by Almonte, our Real Estate gross profit increased 25.3% and our Real Estate gross margin was 24.0% for 2012 compared to 25.9% for 2011. This decrease in gross margin, after excluding the sales of land parcels by Almonte, was primarily due to costs in certain commercial real estate projects that initiated operations in 2012.

We estimate that fluctuations among the nuevo sol and the U.S. dollar between 2011 and 2012 resulted in a decrease in our Real Estate cost of sales, as expressed in nuevos soles, of approximately S/.5.7 million, or 3.6%, during 2012.

Operating Profit . Our Real Estate operating profit increased 93.6%, or S/.32.7 million, from S/.34.9 million for 2011 to S/.67.6 million for 2012, primarily as a result of the increase in our Real Estate gross profit described above. Our Real Estate operating margin was 28.1% for 2012 compared to 22.9% for 2011. Excluding the sale of land parcels by Almonte, our Real Estate operating margin was 14.0% for 2012 compared to 18.6% for 2011, primarily due to the lower gross margin and marketing costs in 2012 relating to a greater number of housing projects initiated in 2012.

Technical Services

The table below sets forth selected financial information related to our Technical Services segment.


	Year ended December 31,				Variation
	2011		2012		Variation
	(in millions of S/.)				%
Revenues		977.0		1,083.3		10.9
Gross profit		109.7		103.9		(5.2	)
Operating profit		89.4		72.2		(19.3	)

Revenues . The table below sets forth the breakdown of our Technical Services revenues by principal lines of business.


	Year ended December 31,				Variation
	2011		2012		Variation
	(in millions of S/.)				%
Operation and Maintenance of Infrastructure Assets		232.9		242.8		4.2
IT Services		185.9		208.0		11.9
Electricity Networks Services		558.2		632.5		13.3

Total		977.0		1,083.3		10.9

Our Technical Services revenues increased 10.9%, or S/.106.4 million, from S/.977.0 million for 2011 to S/.1,083.3 million for 2012. The variation in our Technical Services revenues principally reflected the following:

•

Operation and Maintenance of Infrastructure Assets : a 4.2%, or S/.9.9 million, increase in revenues, from S/.232.9 million for 2011 to S/.242.8 million for 2012, primarily due to the addition of three new road maintenance contracts related to 1,165 km of roads awarded at the end of 2012, which we expect to have a greater impact on our revenues in 2013;

•

IT Services : a 11.9%, or S/.22.1 million, increase in revenues, from S/.185.9 million for 2011 to S/.208.0 million for 2012, primarily as a result of economic growth of Peru, with government entities and businesses increasingly outsourcing IT services to focus on their core functions which led to both additional clients as well as additional activity for existing clients; and

•

Electricity Networks Services : a 13.3%, or S/.74.3 million, increase in revenues, from S/.558.2 million for 2011 to S/.632.5 million for 2012, primarily due to the consolidation of revenues for CAM for a full year in 2012 compared to ten months in 2011.

We estimate that fluctuations among the nuevo sol and the U.S. dollar between 2011 and 2012 resulted in a decrease in our Technical Services revenues, as expressed in nuevos soles, of approximately S/.4.5 million, or 1.0%, during 2012. We estimate that fluctuations among the nuevo sol and the Chilean peso between 2011 and 2012 resulted in a decrease in our Technical Services revenues, as expressed in nuevos soles, of approximately S/.33.4 million, or 5.1%, during 2012.

Gross Profit . The table below sets forth the breakdown of our Technical Services gross profit by principal lines of business.


	Year ended December 31,				Variation
	2011		2012		Variation
	(in millions of S/.)				%
Operation and Maintenance of Infrastructure Assets		55.6		41.2		(26.0	)
IT Services		29.6		39.0		31.76
Electricity Networks Services		24.5		23.7		(3.2	)

Total		109.7		103.9		(5.2	)

Our Technical Services gross profit decreased 5.2%, or S/.5.7 million, from S/.109.7 million for 2011 to S/.103.9 million for 2012. Our Technical Services gross margin was 9.6% for 2012 compared to 11.2% for 2011. The variation in our Technical Services gross profit principally reflected the following:

•

Operation and Maintenance of Infrastructure Assets : a 26.0%, or S/.14.4 million, decrease in gross profit, from S/.55.6 million for 2011 to S/.41.2 million for 2012, primarily due to the higher margins we obtained in 2011 as a result of the initiation of services of contracts awarded at the end of 2010. In general, the initiation of a road maintenance contract ( i.e. , bringing the road to proper operating condition) generates higher margins than subsequent routine maintenance; accordingly, we expect higher gross profit in 2013 with the addition of three new road maintenance contracts at the end of 2012. Our Operation and Maintenance of Infrastructure Assets gross margin was 16.9% for 2012 compared to 23.9% for 2011;

•

IT Services : a 31.8%, or S/.9.4 million, increase in gross profit, from S/.29.6 million for 2011 to S/.39.0 million for 2012, primarily related to growth in revenues and, in particular, higher margin services. Our IT Services gross margin was 18.8% for 2012 compared to 15.9% for 2011; and

•

Electricity Networks Services : a 3.2%, or S/.0.8 million, decrease in gross profit, from S/.24.5 million for 2011 to S/.23.7 million for 2012, primarily due to costs incurred in connection with certain contracts entered into by CAM prior to our acquisition of a controlling interest in it. We will seek to improve the Electricity Networks Services gross margin as we continue to integrate the business and implement further restructuring initiatives by improving operating processes to enhance efficiencies. Our Electricity Networks Services gross margin was 3.8% for 2012 compared to 4.4% for 2011.

We estimate that fluctuations among the nuevo sol and the U.S. dollar between 2011 and 2012 resulted in a decrease in our Technical Services cost of sales, as expressed in nuevos soles, of approximately S/.4.6 million, or 1.2%, during 2012. We estimate that fluctuations among the nuevo sol and the Chilean peso between 2011 and 2012 resulted in a decrease in our Technical Services cost of sales, as expressed in nuevos soles, of approximately S/.32.1 million, or 5.1%, during 2012.

Operating Profit . The table below sets forth the breakdown of our Technical Services operating profit by principal lines of business.


	Year ended December 31,				Variation
	2011		2012		Variation
	(in millions of S/.)				%
Operation and Maintenance of Infrastructure Assets		49.6		18.1		(63.4	)
IT Services		14.4		18.6		29.3
Electricity Networks Services		25.5		35.5		39.1

Total		89.4		72.2		(19.3	)

Our Technical Services operating profit decreased 19.3%, or S/.17.3 million, from S/.89.4 million for 2011 to S/.72.2 million for 2012. Our Technical Services operating margin for 2012 was 6.7% compared to 9.2% for 2011. The variation in our Technical Services operating profit principally reflected the following:

•

Operation and Maintenance of Infrastructure Assets : a 63.4%, or S/.31.4 million, decrease in operating profit, from S/.49.6 million for 2011 to S/.18.1 million for 2012, primarily due to the decrease in our gross profit and an increase in costs relating to the preparation of concession bids, as well as a S/.7.2 million gain in 2011 resulting from an arbitration award related to the Arequipa-Matarani road. Our Operation and Maintenance of Infrastructure Assets operating margin was 7.5% for 2012 compared to 21.3% for 2011;

•

IT Services : a 29.3%, or S/.4.2 million, increase in operating profit, from S/.14.4 million for 2011 to S/.18.6 million for 2012, primarily due to the increase in gross profit. Our IT Services operating margin was 8.9% for 2012 compared to 7.7% for 2011; and

•

Electricity Networks Services : a 39.1%, or S/.10.0 million, increase in operating profit, from S/.25.5 million for 2011 to S/.35.5 million for 2012, primarily due to the effects of the reversal of provisions in connection with the CAM acquisition, as described in “—Factors Affecting Our Results with Operations—Acquisitions,” which offset the decrease in gross profit. Our Electricity Networks Services operating margin was 5.6% for 2012 compared to 4.6% for 2011.

Financial (Expense) Income, Net

Our net financial expense increased 68.0%, or S/.4.2 million, from net financial expenses of S/.6.2 million in 2011 to net financial expenses of S/.10.3 million in 2012. Excluding exchange difference, our net financial expense increased 290.9%, or S/.23.4 million, from net expenses of S/.8.0 million for 2011 to net expenses of S/.31.5 million for 2012. This increase was primarily due to an increase in indebtedness incurred to finance our investments from S/.529.8 million as of December 31, 2011 to S/.845.5 million as of December 31, 2012. Our exchange difference, net increased S/.19.2 million, from a gain of S/.1.9 million for 2011 to a gain of S/.21.1 million for 2012. This increase in gain from exchange difference, net was primarily due to the appreciation of the nuevo sol versus the U.S. dollar in 2012, which decreased the value of our U.S. dollar liabilities in nuevos soles. For a breakdown of our financial expenses and income, see note 24 to our audited annual consolidated financial statements included in this prospectus.

Income Tax

Our income tax increased 9.3%, or S/.13.1 million, from S/.141.4 million for 2011 to S/.154.6 million for 2012. This increase in income tax was primarily due to an increase in profit before income tax. Our effective tax rates for 2012 and 2011 were 29.7% and 29.6%, respectively.

Net Profit

Our net profit increased 8.9%, or S/.30.1 million, from S/.336.2 million for 2011 to S/.366.3 million for 2012. Net profit attributable to controlling interests increased 0.3%, while net profit attributable to non-controlling interests increased 61.9%. Net profit attributable to non-controlling interests increased primarily as a result of the consolidation in 2012 of the results of Stracon GyM, as compared to the 2011 accounting for Stracon GyM as a joint operation, whereby we only recognized our share of the revenues and expenses from the joint operation, as well as the 49.6% non-controlling interest in Almonte, which provided significant profit from the sale of land parcels in 2012. See “—General—Accounting for Subsidiaries, Joint Operations and Associated Companies.”

Comparison of Results of Operations for 2010 and 2011

The following table sets forth the components of our consolidated income statements for 2010 and 2011.


	Year ended December 31,						Variation
	2010			2011			Variation
	(in millions of S/.)						%
Revenues		2,502.7			4,241.3			69.5
Cost of sales		(2,057.8	)		(3,609.5	)		75.4

Gross profit		444.8			631.7			42.0
Administrative expenses		(123.2	)		(199.6	)		62.1
Other income (expenses)		2.7			4.3			61.3
Profit from the sale of investments		75.0			4.8			(93.6	)
Other (losses) gains, net		0.2			(2.8	)		N/M
Gain from business combination		—			45.2			N/M

Operating profit		399.5			483.6			21.0
Financial (expense) income, net		(10.0	)		(6.2	)		(38.4	)
Share of the profit and loss in associates		11.5			0.2			(98.1	)

Profit before income tax		401.0			477.6			19.1
Income tax		(124.3	)		(141.4	)		13.8

Net profit		276.7			336.2			21.5
Net profit attributable to controlling interest		252.8			289.1			14.3
Net profit attributable to non-controlling interest		23.9			47.1			97.3

Revenues

Our total revenues increased by 69.5%, or S/.1,738.6 million, from S/.2,502.7 million for 2010 to S/.4,241.3 million for 2011. This increase was primarily due to growth in each of our segments other than Real Estate, in particular our E&C segment, as well as our acquisition of a controlling interest in CAM in February 2011. Excluding the revenues generated from the CAM acquisition, our total revenues would have increased 47.2%.

We estimate that fluctuations among the nuevo sol and the U.S. dollar and the Chilean peso between 2010 and 2011 resulted in a decrease in our consolidated revenues, as expressed in nuevos soles, of approximately S/.47.2 million, or 1.1%, during 2011, as the nuevo sol appreciated against the U.S. dollar by approximately 2.5% and the nuevo sol depreciated against the Chilean peso by approximately 2.9%.

The following table sets forth a breakdown of our revenues by segment for 2010 and 2011.


	Year ended December 31,												Variation
	2010						2011						Variation
	(in millions of S/.)			% of Total			(in millions of S/.)			% of Total			%
Engineering and Construction		1,700.5			67.9			2,784.2			65.6			63.7
Infrastructure		354.7			14.2			404.2			9.5			14.0
Real Estate		218.6			8.7			152.3			3.6			(30.3	)
Technical Services		285.0			11.4			977.0			23.0			242.8
Corporate		362.2			14.5			39.8			0.9			(89.0	)
Eliminations		(418.2	)		(16.7	)		(116.2	)		(2.7	)		(72.2	)

Total		2,502.7			100.0			4,241.3			100.0			69.5

Cost of Sales

Our total cost of sales increased by 75.4%, or S/.1,551.7 million, from S/.2,057.8 million for 2010 to S/.3,609.5 million for 2011. The increase was primarily related to the growth in our revenues, as well as the effect of the acquisition of a controlling interest in CAM, as described below.

We estimate that fluctuations among the nuevo sol and the U.S. dollar and the Chilean peso between 2010 and 2011 resulted in a decrease in our consolidated cost of sales, as expressed in nuevos soles, of approximately S/.21.9 million, or 0.6%, during 2011.

Gross Profit

Our gross profit increased by 42.0%, or S/.186.9 million, from S/.444.8 million for 2010 to S/.631.7 million for 2011. Our gross margin was 14.9% for 2011 compared to 17.8% for 2010. Our gross margin in 2011 was impacted by the inclusion of the results of CAM in our Technical Services segment, which resulted in a decrease of 160 basis points in our consolidated gross margin; changes in contractual arrangements in our E&C segment; and, to a lesser extent, expenses incurred in the pre-operation phase of the Lima Metro in our Infrastructure segment in the second half of 2011, which resulted in a decrease of 240 basis points in our consolidated gross margin. Excluding the effects of the acquisition of a controlling interest in CAM, our gross profit increased by 36.5% and our gross margin was 16.5% for 2011.

The following table sets forth a breakdown of our gross profit by segment for 2010 and 2011.


	Year ended December 31,												Variation
	2010						2011						Variation
	(in millions of S/.)			% of Total			(in millions of S/.)			% of Total			%
Engineering and Construction		230.9			51.9			329.3			52.1			42.6
Infrastructure		132.3			29.7			146.2			23.1			10.5
Real Estate		33.3			7.5			45.3			7.2			36.3
Technical Services		61.0			13.7			109.7			17.4			79.7
Corporate		18.6			4.2			2.0			0.3			(89.3	)
Eliminations		(31.3	)		(7.0	)		(0.7	)		(0.1	)		(97.7	)

Total		444.8			100.0			631.7			100.0			42.0

Administrative Expenses

Our administrative expenses increased by 62.1%, or S/.76.4 million, from S/.123.2 million for 2010 to S/.199.6 million for 2011, primarily due to the acquisition of a controlling interest in CAM. As a percentage of revenues, our administrative expenses decreased to 4.7% in 2011 from 4.9% in 2010.

Other Income (Expenses)

Our other income increased S/.1.6 million, from income of S/.2.7 million for 2010 to income of S/.4.3 million for 2011. This increase was primarily related to the sale of machinery and equipment in 2011.

Operating Profit

Our operating profit increased 21.0%, or S/.84.0 million, from S/.399.5 million for 2010 to S/.483.6 million for 2011. Our operating margin was 11.4% for 2011 compared to 16.0% for 2010. This decrease in operating margin was primarily due to a gain in 2010 of S/.58.0 million from the sale of the Larcomar shopping center, which resulted in an increase of 230 basis points in our consolidated operating margin in 2010; and compensation received from the expropriation of oil and gas assets in Bolivia of S/.17.0 million, which resulted in an increase of 70 basis points in our consolidated operating margin in 2010; partially offset by a gain of S/45.2 million as a result of the excess of the fair value of the assets and liabilities we acquired in the CAM acquisition over the consideration paid, as described in “—

Factors Affecting Our Results of Operations—Acquisitions,” which resulted in an increase of 110 basis points in our consolidated operating margin in 2011. Excluding these effects, our operating profit increased 35.1% and our operating margin for 2011 was 10.3% compared to 13.0% for 2010.

The following table sets forth a breakdown of our operating profit by segment for 2010 and 2011.


	Year ended December 31,												Variation
	2010						2011						Variation
	(in millions of S/.)			% of Total			(in millions of S/.)			% of Total			%
Engineering and Construction		149.8			37.5			227.5			47.0			51.9
Infrastructure		128.9			32.3			118.3			24.5			(8.2	)
Real Estate		26.7			6.7			34.9			7.2			30.5
Technical Services		37.9			9.5			89.4			18.5			135.8
Corporate		67.6			16.9			(8.9	)		(1.8	)		(113.2	)
Eliminations		(11.4	)		(2.9	)		22.4			4.6			296.5

Total		399.5			100.0			483.6			100.0			21.0

Business Segments

Engineering and Construction

The table below sets forth selected financial information related to our E&C segment.


	Year ended December 31,				Variation
	2010		2011		Variation
	(in millions of S/.)				%
Revenues		1,700.5		2,784.2		63.7
Gross profit		230.9		329.3		42.6
Operating profit		149.8		227.5		51.9

Revenues . Our E&C revenues increased 63.7%, or S/.1.083.7 million, from S/.1,700.5 million for 2010 to S/.2,784.2 million for 2011, primarily due to a greater number of projects undertaken and an increase in average project size related to economic growth and increased investment in Peru.

We estimate that fluctuations among the nuevo sol and the U.S. dollar between 2010 and 2011 resulted in a decrease in our E&C revenues, as expressed in nuevos soles, of approximately S/.53.3 million, or 1.9%, during 2011.

The following describes variations in our E&C revenues by business activities, types of contracts and end-markets:

E&C Activities : For 2011, approximately 4.4%, 16.9%, 35.8%, 15.0% and 27.9% of our E&C revenues were derived from engineering services, electromechanic construction, civil construction, contract mining and building construction, respectively. For 2010, approximately 5.7%, 23.0%, 33.6%, 17.4% and 20.0% of our E&C revenues were derived from engineering, electromechanic construction, civil construction, contract mining and building construction, respectively. Revenues in 2011 derived from electromechanic construction, increased in absolute terms compared to 2010 despite the decrease in the proportional weight of the activity. Revenues in 2011 derived from building construction increased significantly due mainly to the execution of several large-scale projects during the year;

E&C Contracts: For 2011, approximately 23.9%, 61.7%, 14.2% and 0.2% of our E&C revenues were derived from cost-plus fee, unit price, lump-sum and EPC contracts, respectively. For 2010,

approximately 9.8%, 66.8%, 23.4% and 0% of our E&C revenues were derived from cost-plus fee, unit price, lump-sum and EPC contracts, respectively. The growth in cost-plus fee contracts resulted in part from a trend towards the use of this contractual arrangement for complex projects;

E&C End-Markets : For 2011, approximately 40.3%, 27.5%, 9.8%, 4.0%, 12.9%, 5.1% and 1.2% of our E&C revenues were derived from mining, real estate buildings, power, oil and gas, transportation, water and sewage, and other end-markets, respectively. For 2010, approximately 38.9%, 20.8%, 11.1%, 2.8%, 22.0%, 2.6% and 1.8%, of our E&C revenues were derived from mining, real estate buildings, power, oil and gas, transportation, water and sewage, and other end-markets, respectively. During 2011 we continued to derive significant revenues from the mining sector, and we experienced growth in revenues from the real estate sector. Revenues in 2011 derived from the transportation end-market declined in part because of the completion of the construction of certain highways in 2010.

Gross Profit . Our E&C gross profit increased 42.6%, or S/.98.4 million, from S/.230.9 million for 2010 to S/.329.3 million for 2011. Our E&C gross margin was 11.8% for 2011 compared to 13.6% for 2010. Our E&C gross margin was affected by the trend in our contractual arrangements towards less risky contracts for us ( i.e. , cost-plus fee and, to a lesser extent, unit price) which provide more stable results at lower profit margins. See “—Factors Affecting Our Results of Operating—Engineering and Construction.”

We estimate that fluctuations among the nuevo sol and the U.S. dollar between 2010 and 2011 resulted in a decrease in our E&C cost of sales, as expressed in nuevos soles, of approximately S/.30.4 million, or 1.2%, during 2011.

Operating Profit . Our E&C operating profit increased 51.9% or S/.77.7 million, from S/.149.8 million for 2010 to S/.227.5 million for 2011. Our E&C operating margin was 8.2% for 2011 compared to 8.8% for 2010. E&C operating margin was primarily affected by the effect of our E&C gross margin, partially offset by S/.2.6 million in other income in 2011 from the sale of equipment and machinery compared to S/.1.5 million in 2010.

Infrastructure

The table below sets forth selected financial information related to our Infrastructure segment.


	Year ended December 31,				Variation
	2010		2011		Variation
	(in millions of S/.)				%
Revenues		354.7		404.2		14.0
Gross profit		132.3		146.2		10.5
Operating profit		128.9		118.3		(8.2	)

Revenues . The table below sets forth the breakdown of our Infrastructure revenues by principal lines of business.


	Year ended December 31,				Variation
	2010		2011		Variation
	(in millions of S/.)				%
Toll Roads		114.9		115.2		0.3
Mass Transit		—		—		—
Water Treatment		—		—		—
Energy		239.8		289.0		20.5

Total		354.7		404.2		14.0

Our Infrastructure revenues increased 14.0%, or S/.49.5 million, from S/.354.7 million for 2010 to S/.404.2 million for 2011. We did not have revenues from our Mass Transit or Water Treatment businesses in 2010 and 2011. The variation in our Infrastructure revenues principally reflected the following:

•

Toll Roads : a 0.3%, or S/.0.3 million, increase, from S/.114.9 million for 2010 to S/.115.2 million for 2011, primarily due to an increase in vehicular traffic in Norvial of 10.6% from 2010 to 2011; partially offset by a S/.18.4 million gain in Survial in 2010 related to the financing of the construction of the road. See “—Factors Affecting Our Results of Operations—Infrastructure—Traffic and Fees for Toll Roads”; and

•

Energy : a 20.5%, or S/.49.2 million, increase, from S/.239.8 million for 2010 to S/.289.0 million for 2011, primarily due to an increase in oil prices and, to a lesser extent, oil production.

We estimate that fluctuations among the nuevo sol and the U.S. dollar between 2010 and 2011 resulted in a decrease in our Infrastructure revenues, as expressed in nuevos soles, of approximately S/.6.7 million, or 1.6%, during 2011.

Gross Profit . The table below sets forth the breakdown of our Infrastructure gross profit by principal lines of business.


	Year ended December 31,					Variation
	2010		2011			Variation
	(in millions of S/.)					%
Toll Roads		53.3		40.1			(24.7	)
Mass Transit		—		(9.9	)		N/M
Water Treatment		—		—			—
Energy		79.1		116.0			46.7

Total		132.3		146.2			10.5

Our Infrastructure gross profit increased 10.5%, or S/.13.9 million, from S/.132.3 million for 2010 to S/.146.2 million for 2011. Our Infrastructure gross margin was 36.2% for 2011 compared to 37.3% for 2010. The variation in our Infrastructure gross profit principally reflected the following:

•

Toll Roads : a 24.7%, or S/.13.1 million, decrease, from S/.53.3 million for 2010 to S/.40.1 million for 2011. Our Toll Roads gross margin was 34.8% for 2011 compared to 46.4% for 2010. In 2010, Survial had a gain of S/.18.4 million related to the financing of the construction of the road and, in 2011, Survial incurred costs, without corresponding revenues, with respect to the performance of certain periodic maintenance services prior to the government’s approval;

•

Mass Transit : cost of sales of S/.9.9 million for 2011 relating to the pre-operation phase of the Lima Metro, a period during which we did not generate revenues; and

•

Energy : a 46.7%, or S/.36.9 million, increase, from S/.79.1 million for 2010 to S/.116.0 million for 2011. Our Energy gross profit increased primarily due to increase in global oil prices. Our Energy gross margin was 40.1% for 2011 compared to 33.0% for 2010.

We estimate that fluctuations among the nuevo sol and the U.S. dollar between 2010 and 2011 resulted in a decrease in our Infrastructure cost of sales, as expressed in nuevos soles, of approximately S/.2.3 million, or 0.9%, during 2011.

Operating Profit . The table below sets forth the breakdown of our Infrastructure operating profit by principal lines of business.


	Year ended December 31,					Variation
	2010		2011			Variation
	(in millions of S/.)					%
Toll Roads		44.1		33.1			(24.8	)
Mass Transit		—		(15.1	)		N/M
Water Treatment		—		(0.3	)		N/M
Energy		84.8		100.5			18.5

Total		128.9		118.3			(8.2	)

Our Infrastructure operating profit decreased 8.2%, or S/.10.6 million, from S/.128.9 million for 2010 to S/.118.3 million for 2011. Our Infrastructure operating margin was 29.3% for 2011 compared to 36.3% for 2010. The variation in our Infrastructure operating profit principally reflected the following:

•

Toll Roads : a 24.8 %, or S/.11.0 million, decrease, from S/.44.1 million for 2010 to S/.33.1 million for 2011, primarily due to the effects of the Toll Roads gross profit. Our Toll Roads operating margin was 28.8% for 2011 compared to 38.4% for 2010;

•

Mass Transit : a S/.15.1 million operating loss for 2011, relating to costs incurred during the pre-operation phase of the Lima Metro, a period during which we did not generate revenues; and

•

Energy : a 18.5%, or S/.15.7 million, increase, from S/.84.8 million for 2010 to S/.100.5 million for 2011. Our Energy operating margin was 34.8% for 2011 compared to 35.3% for 2010. Our Energy operating margin for 2010 was positively affected by a gain of S/.17.0 million in compensation for the expropriation of oil and gas assets in Bolivia.

Real Estate

The table below sets forth selected financial information related to our Real Estate segment.


	Year ended December 31,				Variation
	2010		2011		Variation
	(in millions of S/.)				%
Revenues		218.6		152.3		(30.3	)
Gross profit		33.3		45.3		36.0
Operating profit		26.7		34.9		30.7

Revenues . Our Real Estate revenues decreased 30.3%, or S/.66.3 million, from S/.218.6 million for 2010 to S/.152.3 million for 2011. This decrease was primarily due to a 41.9% decrease in the number of housing units delivered, with 1,244 units delivered in 2011 compared to 2,142 units delivered in 2010 as a result of the timing of the completion and delivery of our real estate projects; partially offset by the sale of land parcels by Almonte in 2011 which generated S/.10.1 million.

We estimate that fluctuations among the nuevo sol and the U.S. dollar between 2010 and 2011 resulted in a decrease in our Real Estate revenues, as expressed in nuevos soles, of approximately S/.1.2 million, or 0.8%, during 2011.

Gross Profit . Our Real Estate gross profit increased 36.0%, or S/.12.0 million, from S/.33.3 million for 2010 to S/.45.3 million for 2011, due to higher margins obtained in two affordable housing projects, as well as the sale of land parcels by Almonte in 2011, which reflected a significant appreciation in price compared to the book value recorded in our financial statements of S/.0.7 million. Our Real Estate gross margin was 29.8% for 2011 compared to 15.2% for 2010. Excluding the sale of land parcels by Almonte, our Real Estate gross profit increased 10.4% and our Real Estate gross margin was 25.9% for 2011.

We estimate that fluctuations among the nuevo sol and the U.S. dollar between 2010 and 2011 resulted in a decrease in our Real Estate cost of sales, as expressed in nuevos soles, of approximately S/.2.3 million, or 2.1%, during 2011.

Operating Profit . Our Real Estate operating profit increased 30.7%, or S/.8.2 million, from S/.26.7 million for 2010 to S/.34.9 million for 2011. Our Real Estate operating margin was 22.9% for 2011 compared to 12.2% for 2010. Our Real Estate operating margin was primarily affected by the effect of our Real Estate gross margin. Excluding the sale of land parcels by Almonte, our Real Estate operating margin was 18.6% for 2011.

Technical Services

The table below sets forth selected financial information related to our Technical Services segment.


	Year ended December 31,				Variation
	2010		2011		Variation
	(in millions of S/.)				%
Revenues		285.0		977.0		242.8
Gross profit		61.0		109.7		79.7
Operating profit		37.9		89.4		135.8

Revenues . The table below sets forth the breakdown of our Technical Services revenues by principal lines of business.


	Year ended December 31,				Variation
	2010		2011		Variation
	(in millions of S/.)				%
Operation and Maintenance of Infrastructure Assets		143.8		232.9		62.0
IT Services		141.2		185.9		31.6
Electricity Networks Services		—		558.2		N/M

Total		285.0		977.0		242.8

Our Technical Services revenues increased 242.8%, or S/.692.0 million, from S/.285.0 million for 2010 to S/.977.0 million for 2011, in large part as a result of the acquisition of a controlling interest in CAM. Excluding the revenues generated by CAM, our Technical Services revenues increased 47.2%. The variation in our Technical Services revenues principally reflected the following:

•

Operation and Maintenance of Infrastructure Assets : a 62.0%, or S/.89.1 million, increase, from S/.143.8 million for 2010 to S/.232.9 million for 2011, primarily due to three additional public-sector road contracts related to 2,872 km awarded at the end of 2010, which we began to execute in 2011;

•

IT Services : a 31.6% or S/.44.7 million, increase, from S/.141.2 million for 2010 to S/.185.9 million for 2011, primarily as a result of economic growth of Peru, with government entities and businesses increasingly outsourcing IT services to focus on their core functions, which led to both additional clients as well as increased activity for existing clients; and

•

Electricity Networks Services : S/.558.2 million in revenues in 2011 resulting from the CAM acquisition in February 2011.

We estimate that fluctuations among the nuevo sol and the U.S. dollar between 2010 and 2011 resulted in a decrease in our Technical Services revenues, as expressed in nuevos soles, of approximately S/.2.4 million, or 0.6%, during 2011. We estimate that fluctuations among the nuevo sol and the Chilean peso between 2010 and 2011 resulted in an increase in our Technical Services revenues, as expressed in nuevos soles, of approximately S/.16.3 million, or 2.9%, during 2011.

Gross Profit . The table below sets forth the breakdown of our Technical Services gross profit by principal lines of business.


	Year ended December 31,				Variation
	2010		2011		Variation
	(in millions of S/.)				%
Operation and Maintenance of Infrastructure Assets		35.0		55.6		58.9
IT Services		26.1		29.6		13.5
Electricity Networks Services		—		24.5		N/M

Total		61.0		109.7		79.7

Our Technical Services gross profit increased 79.7%, or S/.48.6 million, from S/.61.0 million for 2010 to S/.109.7 million for 2011. Our Technical Services gross margin was 11.2% for 2011 compared to 21.4% for 2010, primarily as a result of our acquisition of a controlling interest in CAM, which generates significantly lower margins than our other lines of business. The variation in our Technical Services gross profit principally reflected the following:

•

Operation and Maintenance of Infrastructure Assets : a 58.9%, or S/.20.6 million, increase, from S/.35.0 million for 2010 to S/.55.6 million for 2011. Our Operation and Maintenance of Infrastructure Assets gross margin was 23.9% for 2011 compared to 24.3% for 2010;

•

IT Services : a 13.5%, or S/.3.5 million, increase in gross profit from S/.26.1 million for 2010 to S/.29.6 million for 2011. Our IT Services gross margin was 15.9% for 2011 compared to 18.4% for 2010. This decrease in gross margin was primarily due to an extraordinary penalty payment in 2011 resulting from a fire at the facilities of one of our clients; and

•

Electricity Networks Services : S/.24.5 million in gross profit in 2011 resulting from our acquisition of a controlling interest in CAM. Our Electricity Networks Services gross margin was 4.4% for 2011.

We estimate that fluctuations among the nuevo sol and the U.S. dollar between 2010 and 2011 resulted in a decrease in our Technical Services cost of sales, as expressed in nuevos soles, of approximately S/.2.4 million, or 0.7%, during 2011. We estimate that fluctuations among the nuevo sol and the Chilean peso between 2010 and 2011 resulted in a decrease in our Technical Services cost of sales, as expressed in nuevos soles, of approximately S/.15.6 million, or 2.9%, during 2011.

Operating Profit . The table below sets forth the breakdown of our Technical Services operating profit by principal lines of business.


	Year ended December 31,				Variation
	2010		2011		Variation
	(in millions of S/.)				%
Operation and Maintenance of Infrastructure Assets		25.3		49.6		95.8
IT Services		12.6		14.4		13.9
Electricity Networks Services		—		25.5		N/M

Total		37.9		89.4		135.8

Our Technical Services operating profit increased 135.8%, or S/.51.5 million, from S/.37.9 million for 2010 to S/.89.4 million for 2011. Our Technical Services operating margin was 9.2% for 2011 compared to 13.3 % for 2010. The variation in our Technical Services operating profit principally reflected the following:

•

Operation and Maintenance of Infrastructure Assets : a 95.8%, or S/.24.3 million, increase, from S/.25.3 million for 2010 to S/.49.6 million for 2011, primarily due to an increase in our Operation and Maintenance of Infrastructure Assets gross profit; as well as a S/.7.2 million gain in 2011 resulting from an arbitration award related to the Arequipa-Matarani road. Our Operation and Maintenance of Infrastructure Assets operating margin was 21.3% for 2011 compared to 17.6% for 2010;

•

IT Services : a 13.9%, or S/.1.7 million, increase, from S/.12.6 million for 2010 to S/.14.4 million for 2011, primarily related to an increase in our IT Services gross profit. Our IT Services operating margin was 7.7% for 2011 compared to 8.9% for 2010; and

•

Electricity Networks Services : S/.25.5 million in operating profit in 2011 resulting from our acquisition of a controlling interest in CAM in 2011. Our Electricity Networks Services operating margin was 4.6% for 2011. Our operating profit was affected by a S/.45.2 million gain from the excess of the fair value of assets and liabilities acquired in the CAM acquisition over the price paid, as described in “—Factors Affecting Our Results of Operation—Acquisitions.”

Financial (Expense) Income, Net

Our net financial expense decreased 38.4%, or S/.3.8 million, from net financial expenses of S/.10.0 million in 2010 to net financial expenses of S/.6.2 million in 2011. Excluding exchange difference, our net financial expense decreased 55.8%, or S/.10.2 million, from net financial expenses of S/.18.2 million for 2010 to net financial expenses of S/.8.1 million for 2011. This decrease was primarily due to an increase in interest on short-term bank deposits as a result of higher deposit amounts. Our exchange difference, net decreased 76.9%, or S/.6.3 million, from a gain of S/.8.2 million for 2010 to a gain of S/.1.9 million for 2011. This decrease was primarily due to the depreciation of the Chilean peso versus the nuevo sol in 2011, which decreased the value of the Chilean peso assets in CAM in nuevos soles, partially offset by the appreciation of the nuevo sol versus the U.S. dollar during the year. For a breakdown of our financial expenses, see note 24 to our audited annual consolidated financial statements included in this prospectus.

Income Tax

Our income tax increased 13.8%, or S/.17.1 million, from S/.124.3 million for 2010 to S/.141.4 million for 2011. The increase was primarily due to an increase in profit before income tax. Our effective tax rates for 2011 and 2010 were 29.6% and 31.0%, respectively.

Net Profit

Our net profit increased 21.5%, or S/.59.5 million, from S/.276.7 million for 2010 to S/.336.2 million for 2011. Net profit attributable to controlling interests increased 14.3%, while net profit attributable to non-controlling interests increased 97.3%. Net profit attributable to non-controlling interests increased primarily as a result of the consolidation of our 75.0% interest in CAM and a greater percentage of minority interests in Viva GyM as a result of increased non-controlling interests used to finance our real estate projects.

Liquidity and Capital Resources

Our principal sources of liquidity have historically been cash flows from operating activities and, to a lesser extent, indebtedness. Our principal uses of cash (other than in connection with our operating activities) have historically been: capital expenditures in all our business segments, including acquisitions and investments in our infrastructure concessions; servicing of our debt; and payment of dividends. We believe that these sources of cash will be sufficient to cover our working capital needs in the ordinary course of business. We believe that our cash from operations, the net proceeds from this offering and our current financing sources are sufficient to satisfy our current capital expenditures and debt service obligations in 2013 and 2014. We anticipate financing future acquisitions, infrastructure investments and land purchases with a combination of cash from operations, net proceeds from the offering, additional indebtedness and/or financial contributions from partners.

At March 31, 2013, our cash and cash equivalents totaled S/.653.0 million (US$252.2 million), of which S/.94.0 million (US$36.3 million) was held by our foreign subsidiaries. We currently intend to distribute these funds to our company to the extent we believe they are not required for the local operations. We are not currently required to accrue or pay any material taxes associated with the repatriation of these funds. In addition, our foreign subsidiaries have no contractual restrictions, and we are not aware of any material legal restrictions, on their ability to transfer funds to us in the form of cash dividends, loans or advances.

Capital Expenditures

The table below provides our total capital expenditures incurred in 2010, 2011, 2012 and the first quarter of 2013.


	Year ended December 31,								Three months ended March 31,
	2010		2011		2012		2012		2013		2013
									(unaudited)
	(in millions of S/.)						(in millions of US$)		(in millions of S/.)		(in millions of US$)
Engineering and Construction(1)(2)		127.1		183.7		417.1		163.5		36.8		14.2
Infrastructure(3)(4)		52.6		172.0		301.9		118.3		122.1		47.2
Real Estate(5)		124.1		73.6		128.3		50.3		1.0		0.4
Technical Services(2)(6)		30.9		57.5		39.8		15.6		8.9		3.4
Corporate(4)		16.2		6.9		11.6		4.6		4.8		1.9

Total		350.9		493.7		898.7		352.3		173.6		67.1

(1)

In our consolidated financial statements, in accordance with IFRS, we record in “cash flow used in investing activities” with respect to equipment leases only the amounts paid during the period as opposed to the total amount of lease payments, which is included in the table above. In 2010, 2011, 2012 and the first quarter of 2013, the differences between the amounts reflected in the table above and the amounts reflected in our consolidated cash flow statements for our E&C segment amounted to S/.(86.3) million, S/.(103.2) million, S/.(23.2) million and S/.(15.4) million, respectively.

(2)	Includes S/.29.1 million and S/.181.0 million of capital expenditures related to acquisitions in 2011 and 2012 respectively.

(3)

Includes our disbursements of S/24.0 million in 2011, S/.215.7 million in 2012 and S/.95.8 million in the first quarter of 2013 for the purchase of 19 additional trains and the construction of the maintenance and repair yard for the Lima Metro, which in accordance with IFRS accounting for public service concessions are recorded in our consolidated financial statements as a “long-term accounts receivable.” See”—Results of Operations—General—Infrastructure.”

(4)	Our investments in 2011 of S/.75.1 million related to the Lima Metro (other than for trains) and S/.5.8 million related to La Chira waste water treatment plant are presented in the table above under “Infrastructure” as opposed to “Corporate” as recorded in our consolidated financial statements.

(5)	Includes S/.117.5 million, S/.70.7 million, and S/.126.8 million in investments in 2010, 2011 and 2012 respectively, for the purchase of land by our Real Estate segment, which in accordance with IFRS are recorded in our consolidated financial statements as “inventory.”

(6)

In our consolidated financial statements, in accordance with IFRS, we record as “cash flow used in investing activities” with respect to equipment leases only the amounts paid during the period as opposed to the total amount of lease payments which is included in the table above. In 2010, 2011, 2012 and the first quarter of 2013, the differences between the amounts reflected in the table above and the amounts reflected in our consolidated cash flow statements for our Technical Services segment amounted to S/4.4 million, S/.(34.6) million, S/(9.2) million and S/.(0.6) million, respectively.

Capital expenditures for our E&C segment of approximately S/.127.1 million (US$45.2 million), S/.183.7 million (US$68.1 million), S/.417.1 million (US$163.5 million) and S/.36.8 million (US$14.2 million) in 2010, 2011, 2012 and the first quarter of 2013, respectively, primarily correspond to the purchase of equipment and machinery and, to a lesser extent, investments relating to mining services contracts. In 2012, capital investments in this segment also include S/.139.2 million (US$54.6 million) with respect to the acquisition of a majority stake in Vial y Vives. Capital expenditures for our Infrastructure segment of approximately S/.52.6 million (US$18.7 million), S/.172.0 million (US$63.8 million), S/.301.9 million (US$118.3 million) and S/.122.1 million (US$47.2 million) in 2010, 2011, 2012 and the first quarter of 2013, respectively, correspond to periodic maintenance relating to our Norvial toll road concession and, in our Energy line of business, oil development drilling activities and, in 2012 and the first quarter of 2013, improvements for our gas processing plant. In 2011, 2012 and the first quarter of 2013, capital expenditures for our Infrastructure segment also included the purchase of trains for Line One of the Lima Metro and the construction of the railway maintenance and repair yard. Capital expenditures for our Real Estate segment of approximately S/.124.1 million (US$44.2 million), S/.73.6 million (US$27.3 million), S/.128.3 million (US$50.3 million) and S/.1.0 million (US$0.4 million) in 2010, 2011, 2012 and the first quarter of 2013, respectively, primarily correspond to the purchase of land for real estate projects, including the Cuartel San Martín, Parque de Comas,

Cispreses, Carabayllo and Villa El Salvador projects in 2010, the Parques de Caqueta and Pezet projects in 2011, the Villa El Salvador, Barranco, San Isidro office building and Parques de Callao projects in 2012. Capital expenditures for our Technical Services segment of approximately S/.30.9 million (US$11.0 million), S/.57.5 million (US$21.3 million), S/.39.8 million (US$15.6 million) and S/.8.9 million (US$3.4 million) in 2010, 2011, 2012 and the first quarter of 2013, respectively, primarily correspond to maintenance of equipment relating to Concar, CAM and GMD. In 2011, capital investments in this segment also include S/.29.1 million (US$10.8 million) with respect to the acquisition of a controlling stake in CAM.

Divestitures in 2010 consisted of approximately S/.149.9 million (US$53.4 million) relating primarily to the sale of the Larcormar shopping center for S/.107.0 million (US$38.1 million) and the San Isidro office building for S/.10.0 million (US$3.6 million), as well as compensation received from the expropriation of our oil and gas assets in Bolivia. Divestitures in 2011 consisted of approximately S/.33.0 million (US$12.2 million) relating to the sale of our participation in the IIRSA South and North concessions. Divestitures in 2012 consisted of approximately S/.23.5 million (US$9.1 million) relating to the sale of equipment from GyM to Stracon GyM. We had no divestitures during the first quarter of 2013 nor any currently in progress.

We have budgeted S/.1,218.9 million (US$470.8 million) in capital expenditures for 2013. Our current plans for our E&C segment contemplate capital expenditures in 2013 of approximately S/.240.6 million (US$92.9 million) mainly for the purchase of equipment and machinery. Our current plans for our Infrastructure segment contemplate capital expenditures in 2013 of approximately S/.387.0 million (US$149.5 million) principally for the purchase of additional trains and the construction of the maintenance and repair yard in connection with the Lima Metro as well as for investments in oil development drilling activities. Our current plans for our Real Estate segment contemplate capital expenditures in 2013 of approximately S/.212.5 million (US$82.1 million) for the purchase of land for real estate development projects. Our current plans for our Technical Services segment contemplate capital expenditures in 2013 of approximately S/.51.2 million (US$19.8 million) principally for the purchase of equipment used in our operations. Our current plans for our Corporate segment contemplate capital expenditures in 2013 of approximately S/.327.6 million (US$126.5 million), including S/.225.3 million (US$87.0 million) for potential acquisitions, S/.70.8 million (US$27.3 million) for new infrastructure concessions, and S/.31.5 million (US$12.2 million) for the construction of a new office building for corporate use. As we determine the capital expenditures currently reflected in our Corporate segment, we will assign these expenditures to the corresponding segment.

These estimates are subject to change. We routinely evaluate acquisitions, new infrastructure concessions, land purchases and other investment opportunities that are aligned with our strategic goals. We cannot assure you that we will find opportunities on terms that we consider to be favorable to us, whether we will be able to take advantage of such opportunities should they arise, or the timing of and funds required by such opportunities. In addition, we expect to finance these opportunities with a combination of cash on hand, net proceeds from this offering, new borrowings and/or financial contributions from partners, depending on a variety of commercial considerations at such time. See “Forward-Looking Statements.”

Cash Flows

The table below sets forth certain components of our cash flows for 2010, 2011, 2012 and the first quarters of 2012 and 2013.


	Year ended December 31,									Three months ended March 31,
	2010			2011			2012			2012			2013
										(unaudited)
	(in millions of S/.)
Net cash provided by (used in) operating activities		402.1			133.3			542.7			(87.1	)		(153.1	)
Net cash provided by (used in) investing activities		19.9			(85.6	)		(400.0	)		(80.8	)		(57.6	)
Net cash provided by (used in) financing activities		(127.0	)		(72.5	)		(20.8	)		37.6			88.7

Net increase (net decrease) in cash		295.0			(24.8	)		121.9			(130.4	)		(122.0	)

Cash Flow from Operating Activities

Net cash flow used in operating activities in the first quarter of 2013 was higher than in first quarter of 2012. For the first quarter of 2013 this reflects a decrease in other accounts payable of S/.22.7 million related to advance payments from clients in our E&C segment, an increase in other accounts receivable of S/.73.4 million mainly related to the purchase of trains for the Lima Metro, and a decrease in accounts payable of S/.129.8 million mainly in our E&C and Real Estate segment. Additionally, cash flow provided by operating activities was used to pay taxes in the amount of S/.119.8 million.

For the first quarter of 2012 we experienced an increase in other accounts receivables of S/.152.4 million primarily due to the purchase of trains for the Lima Metro, an increase in inventory of S/.54.3 million mainly due to the purchase of land for our Real Estate segment, and a decrease in other accounts payable to related parties of S/.57.4 million due to the reimbursement of cash to our joint operations and associates. In addition, we experienced an increase in accounts payable of S/.86.1 million and an increase in other accounts payable of S/.52.4 million due to an increase in advance payments from clients in our E&C segment. Additionally, cash flow provided by operating activities was used to pay taxes in the amount of S/.92.3 million.

Net cash flow provided by operating activities in 2012 was significantly higher than in 2011. This primarily reflects an increase in trade accounts payable of S/.224.9 million principally related to payments due to suppliers in our E&C segment mainly related to growth in our operations, and other accounts payable of S/.373.6 million mainly related to an increase in advance payments from clients of our E&C, Technical Services and Infrastructure segments, partially offset by an increase in other accounts receivables of S/.346.4 million mainly related to the purchase of trains for the Lima Metro in an amount equal to S/.305.8 million and an increase in inventory of S/.196.6 million mainly due to the purchase of land in our Real Estate segment in an amount equal to S/.126.8 million. Additionally, cash flow provided by operating activities was used to pay taxes in the amount of S/.159.4 million.

Net cash flow provided by operating activities in 2011 was significantly lower than in 2010, principally due to the high rate of organic growth (47.2% excluding the acquisition of a controlling interest in CAM) in our business during 2011. This growth is primarily reflected in an increase in trade accounts receivable of S/.177.1 million, an increase in inventory of S/.140.4 million mainly related to the purchase of land as well as construction in our Real Estate segment and an increase in trade accounts payable of S/.265.6 million. In addition, in 2011 we experienced a decrease of S/.68.5 million in other accounts payable principally related to a decline in advance payments from clients in our E&C and Technical Service segments as a result of the timing of the completion of projects and an increase in other accounts receivable of S/.183.5 million mainly due to an increase in our advance payments to suppliers and guarantee deposit for contracts in our E&C segment. Additionally, cash flow provided by operating activities was used to pay taxes in the amount of S/.139.3 million.

Net cash flow provided by operating activities in 2010 reflects an increase in accounts receivables of S/.66.2 million, an increase in inventory of S/.46.4 million, an increase in accounts payable of S/.28.3 million and an increase in other accounts payable of S/.123.6 million mainly related to advance payments from clients in our E&C and Technical Service segment, partially offset by a reduction of S/.70.3 million in other accounts payable to related parties due to reimbursement of cash to our joint operations and associates in our E&C segment. Additionally, cash flow provided by operating activities was used to pay taxes in the amount of S/.19.8 million.

Cash Flow from Investing Activities

Net cash flow used in investing activities in the first quarter of 2013 was lower than in the first quarter of 2012. This primarily reflects a lower amount of purchases of machinery and equipment.

Net cash flow used in investing activities in 2012 was significantly higher than in 2011. This primarily reflects an increase in payments for investment purchases in 2012, principally related to the acquisition of Vial y Vives, higher investment in oil drilling activities and a greater amount of purchases of machinery and equipment. Net cash flow used in investing activities in 2011 was significantly higher than in 2010, primarily due to the cash inflow in 2010 from the sale of the Larcomar shopping center and compensation received from the expropriation of our oil and gas assets in Bolivia, while in 2011 we acquired CAM, purchased a greater amount of machinery and equipment and made higher investments in oil drilling activities.

Cash Flow from Financing Activities

Net cash flow provided by financing activities in the first quarter of 2013 was higher than in first quarter of 2012. This primarily reflects increased borrowing under our syndicated loan in February 2013 in connection with the Lima Metro.

Net cash flow used in financing activities in 2012 was lower than in 2011. This primarily reflects an increased indebtedness incurred during the year. Net cash flow used in financing activities in 2011 was lower than in 2010. This primarily reflects higher indebtedness incurred in 2011, partially offset higher debt service payments and higher dividends paid during the year.

Indebtedness

As of March 31, 2013, we had a total outstanding indebtedness of S/.925.4 million (US$357.4 million) as set forth in the table below.


	Type	Currency													Range of Maturity Dates
Segment	Type	(in millions of US$)		(in millions of S/.)		(in millions of CLP)(1)		Total in millions of S/.		Total in millions of US$		Weighted average interest rate			Earliest		Latest

Engineering and Construction:	Leasing Promissory note		101.1		—		—		261.7		101.1		5.0	%		04/22/2013		01/02/2023
Engineering and Construction:	Leasing Promissory note		4.4		2.0		—		13.4		5.2		4.0	%		04/16/2013		06/25/2013

Infrastructure:	Leasing Long-term loan Promissory note		6.1		—		—		15.9		6.1		5.4	%		07/01/2013		02/01/2016
			55.9		—		—		144.8		55.9		6.6	%		06/01/2013		08/31/2020
			13.8		—		—		35.9		13.8		7.7	%		04/11/2013		09/20/2013

Real Estate:	Leasing		8.0		—		—		20.6		8.0		8.4	%		07/01/2022		07/01/2022
	Promissory note		21.7		38.3		—		94.4		36.5		6.7	%		04/10/2013		03/16/2017

Technical Services:	Leasing		7.5		—		296.4		21.1		8.1		5.3	%		06/02/2013		01/31/2016
	Promissory note		13.9		3.8		8,674.0		87.5		33.8		4.4	%		04/07/2013		07/12/2014

Corporate:	Leasing		1.5		—		—		3.8		1.5		4.8	%		12/04/2018		12/04/2018
	Promissory note		87.5		—		—		226.4		87.5		4.5	%		02/27/2018		02/27/2018
Total			321.4		44.1		8,970.4		925.4		357.4

(1)	Includes debt held by CAM and its subsidiaries that is denominated in Chilean pesos, Colombian pesos and Brazilian reais, all of which is presented in Chilean pesos in the table above.

As of April 30, 2013, S/.51.6 million (US$19.9 million) of our total indebtedness indicated in the table above has matured, of which S/.26.4 million (US$10.2 million) was repaid and S/.25.2 million (US$9.7 million) was renewed by extending the maturities. In addition, we incurred S/.155.5 million (US$60.1 million) of additional indebtedness related to our syndicated loan. The weighted average interest rate of this renewed indebtedness and additional indebtedness was 7.2% and the maturity dates ranged from May 8, 2013 to February 27, 2018.

Below is a description of our material outstanding indebtedness as of March 31, 2013. As of March 31, 2013, we were in compliance in all material respects with the financial covenants corresponding to our outstanding indebtedness.

We expect to finance future infrastructure investments, acquisitions and land purchases with a combination of cash from operations, net proceeds from this offering, new indebtedness and/or financial contributions from partners. Accordingly, we expect to incur additional indebtedness in the future.

Leasing . As of March 31, 2013, we were party to numerous leasing agreements with several financial institutions which in the aggregate amounted to approximately S/.323.1 million (US$124.8 million). We entered into such agreements primarily for the purpose of leasing the equipment and other assets necessary to run our operations. Upon maturity of each leasing agreement, we have the option to purchase or return the equipment or assets to the lessor. The amounts owed under these leasing agreements are generally repaid in monthly installments, subject to a minimum guaranteed payment corresponding to the minimum amount for which the equipment or assets could be sold to a third-party.

BBVA Banco Continental Bridge Loan . As of December 31, 2012, Graña y Montero had a short-term unsecured loan with BBVA Banco Continental entered into on October 5, 2012 in an outstanding principal amount of approximately US$60.7 million. This loan accrued interest at an annual rate of three month LIBOR plus 3.80% and matured in March 2013. The proceeds of the loan were used by our subsidiary GyM Ferrovías to purchase trains and other infrastructure assets. This loan was repaid on March 5, 2013 with proceeds from the syndicated loan described below.

Syndicated Loan . On February 27, 2013, Graña y Montero entered into a syndicated loan with certain lenders and BBVA Bancomer S.A., Institución de Banca Múltiple, Grupo Financiero BBVA Bancomer, as administrative agent, for an aggregate amount of up to US$150 million, to be used to repay the US$60 million bridge loan entered into with BBVA Banco Continental, for investments in and funding the operations of GyM Ferrovías and other general corporate purposes. As of the date of this prospectus, we had US$90 million outstanding under this loan. This loan accrues interest at an annual rate of three month LIBOR plus 4.25% and matures on February 27, 2018. Certain of our subsidiaries (GyM, GMP, Concar and Viva GyM) are guarantors under the loan. The agreement contains certain customary covenants, including restrictions on our and our guarantor subsidiaries’ ability to pay dividends if in default and the obligation to maintain the following financial covenants during the term of the agreement: (1) Borrower Consolidated Adjusted Debt Coverage Ratio (as defined therein) for the preceding four quarter period shall be less than 3.00:1.00 as of the end of each fiscal quarter; (2) Guarantor Consolidated Adjusted Debt Coverage Ratio (as defined therein), calculated for each guarantor, for the preceding four quarter period shall be less than 2.50:1.00 as of the end of each fiscal quarter; and (3) Consolidated Net Worth (as defined therein) as of the end of each fiscal quarter shall be at least equal to S/.1,292.8 million.

Citibank, N.A. Secured Loan . Our subsidiary GMP has a secured loan with Citibank, N.A. under a loan agreement dated September 19, 2008 and amended on August 27, 2012 in an outstanding principal amount of S/.68.3 million (US$26.4 million) as of March 31, 2013. This loan accrues interest at an annual rate of three month LIBOR plus: (i) 1.75% if, at the installment payment date, the exchange rate between the nuevo sol and U.S. dollar remains between S/.2.60 to S/.2.75 per US$1.00 or (ii) 1.95%, if otherwise. The loan matures in August 2020. The proceeds of the loan were used by our subsidiary GMP to finance the construction, equipment and operation of the Gas Pariñas plant in Talara. The agreement is secured by certain land, equipment and accounts receivable of GMP. The agreement contains certain customary covenants, including restrictions on the ability of GMP to pay dividends if it is in default under the loan and the obligation by GMP to maintain the following financial covenants during the term of the agreement: (1) Leverage Ratio (as defined therein) shall not be greater than 1.50; (2) Debt Service Coverage Ratio (as defined therein) shall not be less than 1.20; (3) Liquidity Ratio (as defined therein) shall not be less than 1.10; and (4) Debt Coverage Ratio (as defined therein) shall not be greater than 2.20.

Inter-American Development Bank and International Finance Corporation Loans . Norvial has two loans with the Inter-American Development Bank and with the International Finance Corporation under loan agreements entered into in April 2005, each in an outstanding principal amount of US$9.0 million as of March 31, 2013. These loans accrue interest at an annual rate of 6.9% and mature in November 2016. These loans benefit from a trust through which the cashflows from Norvial’s toll fees are collected. The proceeds of these loans were used for the construction, rehabilitation and maintenance of the Norvial road. The loan agreements contain certain customary covenants, including restrictions on Norvial’s ability to pay dividends and incur additional debt.

Derivative Financial Instruments

In February 2012, our subsidiary GyM Ferrovías entered into a forward rate agreement with BBVA S.A. for an initial amount of EUR 98.6 million to hedge the foreign exchange risk pertaining to expenditures incurred in euros to a foreign supplier for the development, maintenance and operation of the Lima Metro. GyM Ferrovías will receive EUR39.2 million outstanding under the agreement at a fixed exchange rate of S/.3.5952 per euro beginning in March 2013 and up to S/.3.6412 per euro in January 2014.

In August 2012, our subsidiary GMP entered into two interest rate swaps with Citibank, N.A. to hedge its exposure to fluctuations in LIBOR under its unsecured loan with Citibank, N.A. described above. These interest rate swaps establish a fixed annual rate of 5.05%, payable at each interest payment date under the loan.

In September 2012, our subsidiary Viva GyM entered into a forward foreign exchange agreement with Banco de Crédito del Perú to hedge the foreign exchange risk on the amount to be received in U.S. dollars as proceeds from a loan agreement with Banco de Crédito del Perú in connection with the construction of the Torre Real 8 project. Under the agreement, Viva GyM receives in nuevos soles the equivalent of US$3.6 million in 12 equal installments payments of US$300,000 determined at a fixed exchange rate of S/.2.5921 per U.S. dollar on the first installment in October 2012 and up to S/.2.6242 per U.S. dollar on the final installment in September 2013.

For additional information about our derivative financial instruments and borrowings, see notes 6.1 and 16 to our audited annual consolidated financial statements included in this prospectus.

Off-Balance Sheet Arrangements

There are no off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our results of operations, financial condition or liquidity. As of March 31, 2013, we maintain guarantee commitments with different financial institutions securing transactions for US$203.8 million and S/.26.5 million, mainly related to the purchase of additional trains for the Lima Metro. For additional information on these commitments, see note 27(c) to our audited annual consolidated financial statements and note 16 of our unaudited interim consolidated financial statements included in this prospectus.

Contractual Obligations

The following table sets forth our contractual obligations with payment terms as of March 31, 2013.


	Payments Due By Period
	(in millions of S/.)
	Less than 1 year		1-3 years		3-5 years		More than 5 Years		Total
Indebtedness(1)		233.7		98.0		245.8		24.9		602.3
Capitalized Lease Obligations(1)		115.8		39.2		106.8		61.4		323.1
Interest(2)		18.3		6.7		17.0		12.1		54.1
Purchase Obligations(3)		162.8		8.9		5.7		4.6		182.0

Total(4)		530.6		152.8		375.3		102.9		1,161.6

(1)	Includes principal only of our indebtedness and capitalized lease obligations.

(2)

Includes interest on our syndicated loan, which accrues at three month LIBOR plus 4.25% per year, based on an assumed interest rate of approximately 4.54%, the interest rate in effect on March 28, 2013. Also includes the effect of our interest swap agreements described in “—Derivative Financial Instruments.”

(3)

Includes the purchase of trains for the Lima Metro and payments due with respect to the increase in our interest in Almonte in 2009. Excludes S/.625.1 million (US$241.4 million) accounts payable within 90 days, except for certain material accounts payable, such as the purchase of land and purchase of trains.

(4)	Excludes building leases, which are not material.

Quantitative and Qualitative Disclosures about Market Risk

We are exposed to a number of market risks arising from our normal business activities, including the possibility that changes in currency exchange rates or interest rates will adversely affect future cash flows and profit or the value of our financial assets and liabilities. From time to time, we enter into derivative transactions to hedge against foreign currencies and interest rate fluctuations. For further information regarding our market risk, see note 3 to our audited annual consolidated financial statements included in this prospectus.

Exchange Rate Risk

We are exposed to market risk associated with changes in foreign currency exchange rates. Our revenues and costs, and our assets and liabilities, are denominated in nuevos soles, U.S. dollars, Chilean pesos and, to a lesser extent, other currencies. In 2012, 31.2%, 56.7% and 12.1% of our revenues were denominated in nuevos soles, U.S. dollars and other currencies (principally Chilean pesos), respectively, while 47.6%, 39.0% and 13.5% of our cost of sales during the year were denominated in nuevos soles, U.S. dollars and other currencies. In addition, as of December 31, 2012, 6.9%, 86.3% and 6.8% of our total debt was denominated in nuevos soles, U.S. dollars and other currencies, respectively. If, at December 31, 2012, the nuevo sol had strengthened/weakened by 10% against the U.S. dollar, with all other variables remaining constant, our net profit for the year would have increased/decreased by S/.2.0 million.

Interest Rate Risk

We may from time to time incur variable interest rate indebtedness, and accordingly our financial expenses are affected by changes in interest rates. Based upon our indebtedness at December 31, 2012, and taking into account our interest rate derivative instruments, a change in interest rates of one percent (or 100 basis points) would impact our net profit by S/.5.9 million annually. This sensitivity analysis does not take into account indebtedness that we incur subsequent to December 31, 2012.

Commodity Price Risk

We are exposed to market risk associated with changes in commodity prices, primarily for oil, steel and cement, which in aggregate represented a majority of our total input cost in 2012. We do not have long-term contracts for the supply of these key inputs. Based upon our consumption of these inputs during 2012, a 10% increase/decrease in the prices of each of oil, steel and cement would have increased/decreased our costs of sales by S/.71.0 million, S/.10.4 million and S/.5.5 million, respectively. However, based on our production of oil during 2012, a 10% increase/decrease in the price of oil would have increased/decreased our revenues by S/.82.5 million.

INDUSTRY

Our Main Market: Peru

Overview of the Peruvian Economy

Our results are substantially affected by economic conditions prevailing in Peru. The Peruvian economy has been one of the fastest growing economies globally during the period from 2008 to 2012. According to the Peruvian Central Bank, Peruvian real GDP grew at an average rate of 6.5% during that period, the highest rate in South America. The economic expansion during this period was a result of robust domestic demand, increase in investment, price stability, increase in foreign direct investment, improvement in public finances, and lower external debt, among other factors.

In addition, the country’s strong economic growth has led to a 47.8% increase in GDP per capita from US$4,427 in 2008 to US$6,543 in 2012. According to the National Statistical Institute of Peru (INEI), the country’s poverty rate (defined as the percentage of population with per capita consumption below S/.272 per month, as of May 2012) fell from 42.4% in 2007 to 27.8% in 2011 and is expected, as noted by the Peruvian Ministry of Economy and Finance, to continue declining at a steady rate. Inequality as measured by the Gini coefficient improved from 0.52 in 2007 to 0.48 in 2010, according to the World Bank. Also, the proportion of middle class families, those in socioeconomic categories B and C as measured by APOYO Consultoría, has expanded from 20.3% of total households in 2004 to 32.2% of total households in 2012.

The following table sets forth the main economic indicators of the Peruvian economy from 2008 to 2012.


In US$ billion, unless stated otherwise	2008			2009			2010			2011			2012
Nominal GDP		126.9			126.9			153.9			176.6			199.4
Nominal GDP / capita (US$)		4,426.6			4,361.2			5,206.3			5,885.1			6,542.5
Real growth rates (% based on local currency GDP		9.8	%		0.9	%		8.8	%		6.9	%		6.3	%
Private consumption		8.7	%		2.4	%		6.0	%		6.4	%		5.8	%
Private investment		25.9	%		(15.1	%)		22.1	%		11.7	%		13.6	%
Foreign direct investment		26.1	%		(7.1	%)		31.5	%		(2.6	%)		34.6	%
Public expenditure (consumption and investment)		11.4	%		18.1	%		16.3	%		(4.2	%)		14.1	%
Total private and public fixed investment(1)		27.1	%		(9.2	%)		23.2	%		5.1	%		14.9	%
Exports		8.2	%		(3.2	%)		1.3	%		8.8	%		4.8	%
Imports		20.1	%		(18.6	%)		24.0	%		9.8	%		10.4	%

Inflation (measured by change in CPI)		6.7	%		0.2	%		2.1	%		4.7	%		2.6	%
Average exchange rate (S/./US$)		2.93			3.01			2.83			2.75			2.64
End of period exchange rate (S/./US$)		3.14			2.89			2.81			2.70			2.55
Central Bank interest rate (end of period)		6.50	%		1.25	%		3.00	%		4.25	%		4.25	%

Population (million)(1)		28.7			29.1			29.6			30.0			30.5
Unemployment rate(1)		8.4	%		8.4	%		7.9	%		7.7	%		7.5	%
Total public debt		30.6			34.5			36.0			38.3			40.9
Public debt/nominal GDP (%)		25.9	%		26.1	%		23.3	%		21.2	%		19.8	%
Net reserves		31.2			33.1			44.1			48.8			64.0
Net reserves/nominal GDP (%)		24.6	%		26.1	%		28.7	%		27.6	%		32.1	%
Fiscal surplus (deficit)/nominal GDP (%)		2.4	%		(1.3	%)		(0.3	%)		1.9	%		2.1	%

Source: Peruvian Central Bank, SBS, Ministry of Economy and Finance, National Statistical Institute of Peru (INEI), IMF.

(1)	2012 projected by IMF.

Average annual inflation, measured by the change in the CPI index, was 3.3% in the period from 2008 to 2012. Peru’s price stability has also been reflected in its currency, the nuevo sol, which appreciated from an average of S/.2.93 per US$1.00 in 2008 to an average of S/.2.64 per US$1.00 in 2012, an appreciation of 9.8%. Given its sustained performance with regards to fiscal balance, debt/GDP ratio, net reserves and high liquidity (international reserves are higher than the equivalent of 18.7 months of imports of goods and services and 5.8 times the short-term debt service (which includes the portion of long term debt due that year and the short term debt, according to 2012 figures), Peru’s sovereign debt has been granted investment grade rating by S&P, Fitch and Moody’s. At the end of 2012, Peruvian sovereign debt had one of the highest credit ratings in the South American region, rated BBB by S&P (August 2011) and Fitch (October 2011) and Baa2 by Moody’s (August 2012).

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The following table sets forth real gross domestic product by expenditure for the years indicated.


	Year ended December 31
GDP by Expenditure (% of GDP unless otherwise stated)	2008		2009			2010		2011		2012
Government consumption		9.0		10.3			10.1		9.8		10.4
Private consumption		64.0		65.4			61.9		60.8		61.7
Total fixed investment		25.9		22.9			25.1		24.1		26.7
Public sector		4.3		5.2			5.9		4.5		5.2
Private sector		21.5		17.7			19.2		19.6		21.5
Change in inventories(1)		1.0		(2.1	)		0.2		1.4		0.3
Exports of goods and services		27.3		24.0			25.5		28.7		25.5
Imports of goods and services		27.1		20.4			22.8		24.8		24.5
Net exports		0.2		3.6			2.7		3.9		1.0
GDP (in billions of US$)		126.9		126.9			153.9		176.6		199.4

Source: Peruvian Central Bank.

(1)	Defined as the difference between the volume at the end of the period and the volume at the beginning of the period; valued at the average price over the period.

As a result of the improvement in national income and the expanding middle-income population, private consumption grew at an average annual rate of 5.9% in real terms, from 2008 to 2012. Also, during this period, private investment increased at an average rate of 11.6% in real terms, driven by an increase in projects, primarily in the mining, oil and gas, electricity, transportation, telecommunications and manufacturing sectors. Additionally, total fixed investment as a percentage of GDP increased from 25.9% in 2008 to 26.7% in 2012, reflecting an overall increase in private and public investment over that period. Domestic investments flowed mainly into mining projects, the Camisea gas project, the construction of new power plants and ongoing expansions in the cement, food, power and hotel industries.

The following chart sets forth major investment projects executed by sector in the period from 2008 to 2011.

Investment Projects by Sector, Executed during 2008 – 2011

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Total: US$43 billion

Source: Peruvian Central Bank—Annual reports

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Key Industry Sectors Relating to Our Business in Peru

Construction and Infrastructure

The Peruvian construction industry GDP is estimated at US$14 billion and accounted for 7.1% of the country’s nominal GDP in 2012 according to the Peruvian Central Bank. Construction GDP grew at an average of 11.7% annually in nominal terms during the five years from 2008 to 2012. This growth has been associated with private investments in the housing, mining and manufacturing sectors as well as public projects such as toll roads, infrastructure renovation and government-sponsored housing programs such as MiVivienda and TechoPropio, run by Fondo Mivivienda (the country’s government-owned mortgage financing institution that runs the TechoPropio program and other programs, collectively referred to as MiVivienda in this prospectus). The following table illustrates that from 2008 to 2012, the average real growth rate in both private investment and construction in Peru was approximately two times the average real GDP growth rate, historically moving in the same direction as the change in the growth rate of overall real GDP.

Growth of Real Private Investment GDP and Real Construction Sector GDP vs. Real GDP

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Source: Peruvian Central Bank.

Peru still lags behind other Latin American countries in infrastructure development. As shown in the table below, Peru ranks 111 out of 144 countries in terms of infrastructure quality.

Ranking of Infrastructure Quality 2012-2013


Country	Country
USA		25
Chile		31
Mexico		65
China		69
Brazil		107
Colombia		108
Peru		111

Source: 2012 Global Competitiveness Report, World Economic Forum, based on a total of 144 countries.

Additionally, Peru still faces a significant infrastructure investment gap. According to the Peruvian Association for the Promotion of National Infrastructure (AFIN), the country’s infrastructure investment gap is estimated at US$88 billion for the period from 2012 to 2021, with the breakdown shown in the chart below. The greatest deficits are in power, telecommunications and roads.

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Peru Infrastructure Investment Gap: 2012–2021

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Total: US$88 billion

Source:

Peruvian Association for the Promotion of National Infrastructure (AFIN). Infrastructure investment gap in Peru is calculated as the amount of investment needed to increase each sector’s coverage to all the unattended users (based on a cost-per-user component to define how much investment is needed).

The Peruvian government is encouraging public-private partnerships for infrastructure concessions as a way to promote the improvement of the country’s infrastructure. Proinversión, a Peruvian state agency engaged in the promotion of private investments in Peru which is the Peruvian State agency engaged in the promotion of business opportunities, estimated public and private investments in infrastructure in Peru of US$20 billion from 2011 through 2016. We believe we are well-positioned to win contracts related to these concessions. There remains a significant transportation infrastructure investment gap estimated at US$21 billion, according to the Peruvian School of Business Administration for Graduates (ESAN), which is measured as the cost needed to increase or improve the transportation network in order to meet currently unmet demand. As of April 2013, the total transportation project pipeline that will help close this gap was US$22 billion, of which US$5 billion corresponds to projects under construction or that are expected to commence construction by 2016, according to APOYO Consultoría. To facilitate infrastructure development, the government established the framework for private-public partnerships by Legislative Decree No. 1012 and its regulation by Supreme Decree No. 146-2008-EF, which envisaged public co-financing of private infrastructure initiatives. For example, the Municipality of Lima granted joint operations in which we participate two highway concessions for which we are currently negotiating definitive documentation, Vía Expresa Javier Prado and Vía Expresa Sur. We believe that our experience in operating concessions in Peru provides us with the expertise to win additional concessions and similar contracts as the government grants such concessions to foster improvements in the country’s infrastructure.

As of 2012, the national highway network in Peru consisted of 24,593 km, of which only 5,792 km have been granted in concessions through a total of 15 concessions. We are the concessionaries for three of these 15 concessions, representing approximately 1,012 km in total. The following map sets forth the road concessions granted to private companies as of 2012. For air and maritime transportation, the ports and airports’ system is comprised of nine concessions, two of which are group concessions of various airports.

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Concessions of Roads, Airports and Ports in Peru

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Source:

Peruvian Supervisory Agency for Investment in Public Transportation Infrastructure (Organismo Supervisor de la Inversión en Infraestructura de Transporte Público), Proinversión, APOYO Consultoría. Roads map as of August 2012; airports/ports map as of November 2012.

The real estate industry presents several construction opportunities for us as well, since Peru still has a housing deficit of approximately two million homes, according to estimates by National Statistical Institute of Peru (INEI), and limited mortgage penetration, with mortgages representing only 4.4% of GDP in 2012, based on data from SBS and the Peruvian Central Bank. The National Statistical Institute of Peru (INEI) calculates the national deficit based on the latest census data from 2007 and accounts for a lack of supply for current housing demand based on quantitative (number of families without homes) and qualitative (number of homes that do not meet basic standards of living set by the United Nations) deficits. As of December 31, 2012, we are developing 11 affordable housing projects, which are in various stages of development. We believe local banks are seeking to increase their mortgage lending, including for affordable housing.

The oil and gas infrastructure industry has seen significant growth due to the Camisea project. Additionally, state-owned Petroperú has engaged in expanding its oil transportation network (Oleoducto Nor Peruano) and refinery facilities (Refinería de Talara), with construction expected to require US$4.4 billion of investments, as estimated by Petroperú and the Ministry of Energy and Mines. We have significant experience performing the engineering and construction of oil and gas infrastructure, and plan to continue seeking future contracts in this sector.

We are the leading E&C company in Peru, as measured by revenues during 2012, according to our estimates based on Peru: The Top 10,000 Companies 2012. Other companies such as Cosapi (Peru), San Martín Contratistas Generales (subsidiary of Empresas Ica in Mexico), Ingenieros Civiles y Contratistas Generales SA (Peru) and Odebrecht (Brazil), have a significant presence in Peru. We believe we are well-positioned to maintain our leadership position.

Mining

Peru is a poly-metallic resources producer and exports several metals including silver, copper, zinc, gold and lead, among others. Peru is also a major contributor to global metal reserves. According to the U.S. Geological Survey of 2012, Peru holds 22.2% of global silver reserves, 11.2% of global copper reserves, 7.2% of global zinc reserves and 4.2% of global gold reserves as of January 2013. According to the Peruvian Central Bank, mining exports reached approximately US$27 billion and represented 58.4% of total Peruvian exports in 2012.

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Companies operating in Peru’s mining sector includes major global players such as Xstrata (Las Bambas, Antamina), Barrick Gold (Alto Chicama, Pierina and Laguna Norte), Freeport (Cerro Verde), Grupo Mexico (Southern Peru), Rio Tinto (La Granja), Newmont (Yanacocha, Conga), and Glencore (Quenuales, Perubar) among others, as well as local players such as Buenaventura, Volcan, and Hochschild Mining, among others.

Upcoming mining projects comprise estimated capital expenditures of approximately US$37 billion from 2013 to 2017, according to APOYO Consultoría. There are seven mining projects currently under construction and we participate in three of these projects as the E&C contractor. This demonstrates the strong growth potential of the local mining industry as well as private-sector commitment to exploration initiatives. As of February 2013, the Peruvian Ministry of Energy and Mines estimates 46 mining projects at various stages of development involving an estimated investment of US$55 billion. We are a leading E&C company for mining projects and we believe our recent acquisition of control of Vial y Vives, which specializes in E&C for the mining sector, will strengthen our ability to compete for contracts in this sector.

Mining Investment Projects by Level of Development


	Number of Projects		US$ billion
Expansion		9		7.7
With approved Environmental Impact Assessment (“EIA”)		9		19.6
With EIA under evaluation		4		0.7
Exploration		24		26.7
Total		46		54.7

Source: Peruvian Ministry of Energy and Mines.

Power and Utilities

The power and utilities market in Peru has shown sustained growth with maximum electricity demand reaching 5,291 MW and growing at an average annual rate of 6.0% during the five years from 2008 to 2012, according to the Economic Operations Committee of Peru’s National Interconnected System. The growth of the power and utilities market has led to the construction of power generation facilities, as well as the expansion of the power transmission and distribution network.

According to the Peruvian Ministry of Energy and Mines, Peru had an installed generation capacity of 6,968 MW as of 2012. The Peruvian market is served by 27 major generation companies. As of March 2012, the nation’s power transmission network spanned approximately 21,573 kilometers, according to OSINERGMIN. As of January 2012, there were 20 electric distribution companies across Peru.

Over the past five years, Peru has actively increased its efforts to extend electricity coverage throughout the country, particularly in rural areas. According to ESAN, the Peruvian power sector requires investments of approximately US$32 billion for the period from 2012 to 2021 to meet the country’s increased demand for power services. According to APOYO Consultoría, as of May 2013, there were 23 projects of construction/expansion of generation facilities representing a total investment of US$8.7 billion, of which 10 projects are already under construction and 10 are expected to begin construction between 2013 and 2017. According to Proinversion, an additional generation project in the southern region of Peru that requires investments of approximately US$1.2 billion is expected to be awarded this year. Furthermore, there are 8 projects in the pipeline for the power transmission sector amounting to total investments of approximately US$1 billion, of which four projects are already under construction and four are expected to begin construction between 2013 and 2017. In addition, according to Proinversion, two additional transmission projects that require investments of approximately US$0.8 billion are expected to be awarded this year. These 10 projects involve the construction of approximately 3,510 kilometers of transmission lines. Additionally, in the distribution sector, the Peruvian Ministry of Energy and Mines has developed a 10-year plan to expand the electricity coverage throughout Peru. This plan involves an investment of approximately US$1 billion in the expansion of rural electric systems from 2013-2022.

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We are currently building four hydroelectric plants in Peru. Our experience in designing and building power plants, including hydro plants, as well as the services we provide to the utilities sector provide us with a foundation to seek additional contracts in Peru’s power sector as it expands in the future.

Oil and Gas

The oil and gas industry has been one of the most dynamic sectors in Peru with a sector nominal GDP average annual growth rate of 18.5% during the five years from 2008 to 2012. Oil and gas activity includes the exploration and production, and transportation and commercialization of hydrocarbon products and derivatives.

According to the Peruvian Ministry of Energy and Mines, during 2012, local production of hydrocarbons was approximately 24 MMbbl, 32 MMboe of liquefied natural gas (LNG) and 74 MMboe of natural gas. These levels have grown an average of 10.5% annually from 2008 to 2012. Peruvian gas production increased considerably since 2004, when the Camisea project, the largest gas project in Peruvian history, began operations. The Peruvian Ministry of Energy and Mines reports that as of 2011 proven reserves of oil and gas amount to 3,323 MMboe. These reserves have increased since 2007, due to increased exploration activities, as evidenced in the chart below. The Peruvian government’s reserves methodology may differ materially from the one mandated by the SEC.

Hydrocarbons Proven Reserves and Production Evolution in Peru (in MMboe)

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Source: Peruvian Ministry of Energy and Mines.

The exploration and production sector is mainly served by global and regional companies including Pluspetrol, Repsol, Petrobras, BPZ Energy and Savia. Certain local companies also undertake production activities. We are involved in oil production, gas processing and fractionation, and operations of fuel storage and distribution. According to the Peruvian Ministry of Energy and Mines, state-owned Petroperú, is the largest local player in refining and transporting oil and gas (as measured by volume of oil and gas processed in 2012), operating the Talara and Conchan refineries, the North-Peruvian oil pipeline and service stations. It is currently expanding the Talara refinery, which, as of December 2012, is expected to require an investment of more than US$3 billion. There are other major projects under evaluation, such as the Gasoducto Sur Peruano (Peruvian Southern Gas Pipeline), which will cover a natural gas transport network over three Peruvian regions. According to Proinversion, as of March 2013 this project requires an estimated investment of approximately US$2.4 billion. The bidding process is expected to take place in the fourth quarter of 2013.

According to APOYO Consultoría, eleven projects in the oil and gas sector, totalling approximately US$9 billion, are under construction or are expected to begin construction by 2017. According to Proinversion five projects, totalling approximately US$3.2 billion, are expected to be awarded this year. In this context, the Peruvian Ministry of Economy and Finance expects an average real growth of the sector GDP of 10.5% during the three years from 2013 to 2015.

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Real Estate

The real estate market in Peru has grown during the past 10 years as the residential market faces increased demand from a large and growing middle-income population. Activity in the real estate sector has been driven mainly by a surge in home building in Lima, which comprised 80.5% of real estate construction activity by area in Lima as of July 2012, according to the Peruvian Chamber of Construction (CAPECO). Unit sales in Lima increased by 12.0% in 2012, according to data from Tinsa. Nevertheless, according to the latest available data (based on 2007 census) from National Statistical Institute of Peru (INEI) there is a housing deficit of two million houses in Peru (or 29.1% of unmet demand). Government-sponsored housing programs, including MiVivienda and Techo Propio, aim to reduce this deficit, by helping low-income families purchase houses under fully or partially financed mechanisms. The following graph sets forth the evolution of awarded loans by each program during the period from 2008 to 2012.

Value of MiVivienda and TechoPropio Loans Disbursed in 2008-2012, in US$ million

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Source: MiVivienda Fund statistics.

The MiVivienda and TechoPropio programs are funded by the Peruvian government and the development and sale of the housing projects is undertaken by private investors. The government defines a number of projects and units to be built and runs bidding contests among real estate developers to design and build such projects, and sell the corresponding units. We are involved in these initiatives and we compete with other real estate companies such as Los Portales, Centenario, Besco, Urbi, Imagina and Edifica. The penetration in the housing market remains low compared to other countries. The stock of mortgage loans as of 2012 represents only 4.5% of Peruvian GDP, in contrast to Chile, for instance, which shows a mortgage to GDP ratio of 17.9% for 2012. However, the stock of mortgages in Peru has been growing during recent years at an average annual rate of 22.9% during the five years from 2008 to 2012. During 2012, US$3 billion in mortgages were granted, of which 14.7% were MiVivienda and Techo Propio mortgages.

Peru’s real estate sector is expected to grow mainly due to Peru’s growing upper and middle classes, which have increased from 20.6% of households in 2004 to approximately 34.2% in 2012, representing a 107.6% increase covering approximately three million additional people, according to APOYO Consultoría.

Information Technology

The Peruvian IT market comprises three types of products/services: (1) IT services (including technical support, consulting and IT outsourcing services for firms); (2) software applications (including the development and commercialization of software programs, including both off-the–shelf and custom-made applications) many of which are custom-designed for specific industries; and (3) platforms (consisting of computer hardware and infrastructure, including equipment, basic software and communication devices). The local IT industry has been growing as technology is becoming a larger component of business processes. International Data Corporation (IDC), a market intelligence firm focused on the information technology market, estimates the IT services spending in Peru was US$395 million in 2011, excluding subcontracting, and is expected to grow at an average annual rate of 12.0% from 2012 to 2015.

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The main industry players include GMD (our IT company), IBM, HP, Oracle, Cosapi Data, Optical IP, Synapsis, and major telecommunications operators such as Telefónica del Perú and Claro. The Peruvian market is expected to follow global growth based on higher demand for access to technology solutions.

Our Other Markets: Chile and Colombia

Chile

Overview of the Chilean Economy

Our activities in Chile span across the E&C and power services sectors. The following table sets forth the main economic indicators of the Chilean economy for the period from 2008 to 2012.


Values in nominal US$ billion unless otherwise stated	2008			2009			2010			2011			2012
Nominal GDP		179.9			173.0			216.3			248.7			268.2
Nominal GDP / capita (US$)		10,729.5			10,216.7			12,650.9			14,421.5			15,408.9
Real GDP growth rate (%)		3.1	%		(0.9	%)		6.1	%		5.9	%		5.6	%
Inflation (%, measured by change in CPI)		7.1	%		(1.4	%)		3.0	%		4.4	%		1.5	%
Total private and public fixed investment		44.4			37.6			45.9			56.4			64.7
Average exchange rate (CLP/US$)		521.8			559.7			510.4			483.4			486.8
End of period exchange rate (CLP/US$)		629.1			506.4			468.4			521.5			478.6
Population (million)(1)		16.8			16.9			17.1			17.2			17.4
Unemployment rate		7.8			10.8			8.2			7.1			6.5
Public Debt / nominal GDP (%)		18.1	%		20.8	%		19.4	%		27.4	%		26.4	%
Net reserves / nominal GDP (%)		12.9	%		14.7	%		12.9	%		16.9	%		15.5	%
Fiscal surplus (deficit) / nominal GDP (%)		3.9	%		(4.3	%)		(0.5	%)		1.3	%		0.6	%

Source: Chilean Central Bank, Chilean Government Budget Office, IMF, Global Insight.

(1)	2012 Projected by the IMF.

The Chilean economy grew at an average annual rate of 4.0% during the five years from 2008 to 2012 in real terms. Considering only the post-crisis period (the three years from 2010 to 2012), the annual growth rate rises to 5.9%, one of the highest in South America. This expansion was mainly driven by a strong domestic demand in real terms: fixed investment grew on average at 9.0% per year and total consumption grew on average at 5.7% per year during the five years from 2008 to 2012. Inflation has remained stable since 2010, averaging 2.9% between 2008 and 2012, in line with the Chilean Central Bank’s inflation target of 3% +/- 1%. Chile’s sovereign debt has the highest rating in the region, rated AA- by S&P (December 2012), Aa3 by Moody’s (December 2012) and A+ by Fitch (January 2012).

Key Industry Sectors Relating to Our Business in Chile

Mining

Chile has one of the most significant mining sectors in Latin America, exporting several metals, including copper, silver, gold and nickel and it is the largest producer of copper worldwide. In 2012, Chile’s copper production represented 31.6% of the world’s global production and 27.9% of the world’s copper reserves, according to the Chilean Copper Commission (COCHILCO), a specialized agency that advises the Chilean government on matters concerning the production of copper and copper byproducts and metals and industrial minerals mining, except coal and fuels.

The largest copper producer in Chile (measured by 2011 production volume) is Corporación Nacional del Cobre (CODELCO), a state-owned company and the largest copper producer worldwide. There are also several privately owned companies not owned by the Chilean government that operate mines, both local and foreign. For example, Escondida (BHP Billiton) operates the highest-producing copper mine in the world.

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The pipeline of mining projects in Chile comprises approximately US$61 billion planned for the period 2013 to 2016, according to the Chilean Copper Commission (COCHILCO). Some of these projects have already granted E&C contracts, several of which were granted to us, including a primary crusher for Mina Caserones, developed by Minera Lumina Copiapo. However, most have yet to contract the associated E&C work, and we believe this is an opportunity for us.

Construction and Infrastructure

In 2012, Chile’s construction industry nominal GDP was approximately US$20 billion. Chile ranked as the top Latin American country in terms of infrastructure quality, according to the 2012 Global Competitiveness Report. Despite this ranking, Chile still faces a large infrastructure investment gap, as noted by the Chilean Chamber of Construction, of approximately US$48 billion for the period from 2012 to 2016.

In Chile, E&C companies include large local players such as Salfacorp, Socovesa, Sidgo Kopers, Echeverria Izquierdo, Ingevec, Besalco, Paz and Claro Vicuña Valenzuela. Regional players in the Chilean market include Odebrecht and Techint.

Power

The Chilean power system is comprised of four grids: Sistema Interconectado del Norte Grande (SING), Sistema Interconectado Central (SIC), Sistema de Aysén and Sistema de Magallanes. The SIC and the SING grids account for approximately 99.2% of Chile’s installed power generation capacity. The Chilean energy market is controlled by the private sector in all of its three subsectors (generation, transmission and distribution). The SIC grid’s energy production reached 48,868 Gwh in 2012. As of 2011, Chile has one of the highest energy costs in the region, according to the Economic Commission for Latin America & the Caribbean (ECLAC). According to Environment Evaluation Service (SEA), a public organism engaged in the administration and assessment of the environmental impact of projects, and Central Energía, current projects include more than US$6 billion of committed investments representing an expansion of 2,764 MW in Chile’s total generation capacity. Additionally, according to the Chilean Construction Commission (Cámara Chilena de la Construcción, or CChC), there is approximately US$12 billion in potential power generation pipeline projects from 2012 to 2016, which we believe is an opportunity for our E&C and Technical Services segments. As an example, we have recently completed the construction of the transmission line of the Maitencillo Caserones mines.

Colombia

Overview of the Colombian Economy

Our current activities in Colombia involve technical services provided primarily to the power services sector. The following table sets forth the main economic indicators of the Colombian economy for the period from 2008 to 2012.


Values in nominal US$ billion unless otherwise stated	2008			2009			2010			2011			2012
Nominal GDP		244.3			233.9			286.3			333.2			369.6
Nominal GDP / capita (US$)		5,496.1			5,200.2			6,291.4			7,234.9			7,930.8
Real GDP growth rate (%)		3.5	%		1.7	%		4.0	%		5.9	%		4.0	%
Inflation (%, measured by change in CPI)		7.7	%		2.0	%		3.2	%		3.7	%		2.4	%
Total private and public fixed investment		46.6			56.4			53.1			62.7			79.3
Average exchange rate (COP/US$)		1,965.1			2,157.6			1,899			1,848			1,798.1
End of period exchange rate (COP/US$)		2,243.6			2,044.2			1,913.9			1,942.7			1,768.2
Population (million)(1)		44.5			45.0			45.5			46.1			46.6
Unemployment rate		11.3	%		12.0	%		11.8	%		10.8	%		10.4	%
Public Debt / nominal GDP (%)		33.3	%		35.0	%		35.0	%		33.8	%		32.5	%
Net reserves / nominal GDP (%)		9.8	%		10.8	%		9.9	%		9.7	%		10.1	%
Fiscal surplus (deficit) / nominal GDP (%)		(1.7	)%		(3.8	)%		(3.5	)%		(2.1	)%		(1.8	%)

Source:

Colombian National Department of Administration of Statistics (DANE), Colombian Central Bank, Colombian Treasury Department, IMF, Global Insight.

(1)	2012 Projected by the IMF.

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Colombian real GDP grew at an average annual rate of 3.8% during the five years from 2008 to 2012. The country’s strong economic growth is evidenced by an increase in GDP per capita from US$5,496 in 2008 to US$7,931 in 2012. Inflation has remained stable over recent years, averaging 3.8% per year from 2008 to 2012, in line with the Colombian Central Bank’s inflation target of 3% +/- 1%. Additionally, Colombia’s price stability has also been reflected in its currency, the Colombian peso, which appreciated from an average of COP 1,965.1 per US$1.00 in 2008 to an average of COP 1,798.1 per US$1.00 in 2012. Colombia’s credit ratings were upgraded in 2011 to investment grade by the three major rating agencies. Its sovereign debt currently holds BBB- rating from Fitch and S&P, and Baa3 from Moody’s. Colombia is also recognized for its investor-friendly legal regime. A study published in 2012 by the World Bank and the International Finance Corporation ranked Colombia the first in Latin America and the Caribbean, and fifth in the world in terms of investor protections.

Key Industry Sectors Relating to Our Business in Colombia

Oil and Gas

The Colombian oil and gas sector GDP has grown at an average annual real growth rate of 14.0% during the five years from 2008 to 2012. According to the Colombian National Department of Administration of Statistics (DANE), as of December 2012, this sector accounted for 5.4% of the Colombian GDP. According to the Colombian Petroleum Association (“ACP”), a trade union for private oil companies in Colombia, as of 2011, the country had overall proven reserves of 3,225 MMboe, including oil as well as natural gas, which have increased 63.5% since 2007. The ACP reserves methodology may differ from the one mandated by the SEC. Production in Colombia reached 420 MMboe during 2012, having increased 55.1% since 2008. These production levels are mainly attributed to large regional players such as Ecopetrol and Pacific Rubiales, which together accounted for 86.1% of oil production during 2012, according to Colombian Ministry of Mines and Energy. There have been significant investments in the oil and gas sector in Colombia. As an example, Ecopetrol and Pacific Rubiales have made capital expenditures of US$31 billion and US$4 billion, respectively, during the five years from 2008 to 2012, consequently increasing exploration and drilling activities that have created a vast range of opportunities for engineering and construction contractors, who serve the exploration and production companies in Colombia. Several investment projects are currently focused on further developing the oil and gas infrastructure in Colombia. For instance, the expansion of the Bicentenario pipeline and the Oleoducto del Pacífico pipeline projects have total estimated investment amounts of approximately US$4 billion and US$8 billion, respectively, and are expected to be completed by 2020. Furthermore, Ecopetrol plans to invest US$80 billion from 2012 to 2020 in capital expenditures. Given our experience, we believe that we can capitalize on the expansion of the oil and gas sector in Colombia.

Infrastructure

Colombia ranked 108 of 144 countries in infrastructure quality according to the 2012 Global Competitiveness Report. According to Colombian national agencies including the Ministry of Transport, the National Infrastructure Agency and the National Planning Department, the infrastructure development plan for 2012 through 2021 envisions public and private investments of approximately US$55 billion, of which US$19 billion have been committed to projects in 2012 – 2014. According to the Colombian National Planning Department, this initiative includes US$42 billion to be spent on roads and railroads construction between 2012 and 2021, which we believe presents a future opportunity for our E&C and Infrastructure segments.

In Colombia, E&C companies include large local players such as Conalvias, Conconcreto, CSS Constructora, Construcciones Civiles, Montajes Morelco, Mincivil, Marval, Odinsa, and Constructora el Condor. Regional players in the Colombian market include Odebrecht and Empresas Ica.

Power

The Colombian power sector is comprised of a mix of government and privately owned companies. The country’s net installed capacity reached 14,478 MW, according to the Colombian Ministry of Mines and Energy, as of December 2012. As of September 2012, there were 43 electricity generation companies including several players such as EPM, Emgesa, Isagen and EEPSA. The transmission grid consists of approximately 8,738 miles of transmission lines and is comprised of nine companies. The distribution subsector is comprised of 32 distributors, mostly municipally-controlled companies.

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BUSINESS

Overview

The tables below show our revenue growth from 2003 to 2009 under Peruvian GAAP and from 2010 to 2012 (upon our conversion to IFRS) under IFRS.

2003-2009 Revenues under Peruvian GAAP

(in millions of S/.)

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2010-2012 Revenues under IFRS

(in millions of S/.)

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(1)	Includes S/.558 million of revenues from a business we acquired in 2011.

(2)	Includes S/.675 million of revenues from businesses we acquired in 2011 and 2012.

During 2012, we generated revenues of S/.5,231.9 million (US$2,020.8 million), EBITDA of S/.775.7 million (US$299.6 million), and net profit of S/.366.3 million (US$141.5 million) including net profit attributable to controlling interest of S/.290.0 million (US$112.0 million). From 2010 through 2012, our revenues and EBITDA grew at a compounded annual growth rate (CAGR) of 44.6% (34.9% excluding acquisitions) and 18.3% (13.6% excluding acquisitions), respectively. During the first quarter of 2013, we generated revenues of S/.1,268.1 (US$489.8 million), EBITDA of S/.214.2 million (US$82.7 million), and net profit of S/.83.4 million (US$32.2 million) including net profit attributable to controlling interest of S/.64.3 million (US$24.9 million). In addition, as of March 31, 2013, our backlog amounted to US$4,291.3 million.

Our History

Graña y Montero has been operating in Peru since 1933 and is listed on the Lima Stock Exchange since 1997. Set forth below are key highlights in our company’s history:

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Graña y Montero traces its origins to its predecessor company GRAMONVEL, founded 80 years ago by, and named after, engineers Alejandro Graña Garland, Carlos Montero Bernales and Carlos Graña Elizalde. We began primarily as a construction company.

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We expanded our operations internationally in 1943 with our contract to build a Nestle factory in Venezuela.

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In 1948, we began one of our largest projects since our founding—the construction of the city of Talara for the International Petroleum Company, which was completed in 1957.

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In 1949, GRAMONVEL merged with Morris y Montero to form Graña y Montero Contratistas Generales S.A. (now GyM S.A., our construction subsidiary), expanding its service offerings and increasing its capacity to undertake large-scale infrastructure projects.

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In 1968, José Graña Miró Quesada joined GyM S.A., and eventually became its chief executive officer in 1982, instilling our core corporate values of quality, professionalism, reliability and efficiency.

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In 1983, we began a diversification strategy by developing complementary lines of business. In 1984, we founded GMP, our oil and gas subsidiary. In 1985, we partnered with Sonda S.A. (a Chilean IT services company) to form GMD, our IT services subsidiary. Beginning in 1987, we founded our real estate development business, currently Viva GyM.

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In 1996, we reorganized our subsidiaries and founded Graña y Montero, which became the principal shareholder of all our subsidiaries. In 1997, we listed our company on the Lima Stock Exchange.

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In 1998, the company built Larcomar, a landmark shopping center in Lima that has become a popular tourist destination, which we sold in 2010.

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In 2003, 2006 and 2007, we were awarded the concessions for the construction, operation and maintenance of the Norvial, Canchaque and Survial toll roads, respectively.

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In 2007, we also developed the first large-scale affordable housing project in Lima, consisting of 3,400 apartment units and located in the district of El Agustino.

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In 2011, Graña y Montero acquired 75.0% of CAM, a leading company in the electricity sector based in Chile, and formerly part of the Latin American power generation and distribution company Enersis. In 2012, Graña y Montero acquired 74% of Vial y Vives, an engineering and construction company specializing in the Chilean mining sector.

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In 2012, we began operating the Lima Metro.

Our Corporate Structure

The following organizational chart sets forth our principal operating subsidiaries within our four business segments.

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*	38.6% of the share capital in Viva GyM is held by our subsidiary GyM.

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The following charts set forth the principal activities of each of our four business segments:

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The following is a brief description of our principal operating subsidiaries:

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Engineering and Construction:

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GyM S.A. (“GyM”), incorporated in Peru, is one of the oldest and largest construction companies in Peru. Graña y Montero owns 93.6% of GyM; the remaining 6.3% is held by former and current company executives.

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Stracon GyM S.A. (“Stracon GyM”), incorporated in Peru, provides services to the mining and construction industries. GyM owns 74.1% of Stracon GyM; the remaining 25.9% is held by Stracon S.A.C., an affiliate of a New Zealand contractor.

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Ingeniería y Construcción Vial y Vives S.A. (“Vial y Vives”), incorporated in Chile, is an engineering and construction company specializing in the mining sector. GyM owns 74.0% of Vial y Vives; Inversiones VyV S.A., a company controlled by the founders of Vial y Vives, owns 14.9%; and the remaining 11.0% is held by company executives.

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GMI S.A. (“GMI”), incorporated in Peru, is primarily engaged in engineering consultancy for projects in the mining, hydrocarbons, electrical, agricultural, industrial, tourism and transportation sectors. Graña y Montero owns 89.4% of GMI; 4.0% is held by current and former company executives; and the remaining 6.6% is held by third parties.

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Infrastructure:

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Toll Roads:

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Norvial S.A. (“Norvial”), incorporated in Peru, is the concessionaire of the 183 km stretch between Ancón and Pativilca of the Panamericana Norte road. Graña y Montero owns 50.1% of Norvial; JJC Contratistas Generales S.A., a Peruvian construction company, owns 33.0%; and Besco S.A., a Peruvian affiliate of the Chilean construction company Besalco S.A., owns the remaining 16.9%.

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Survial S.A. (“Survial”), incorporated in Peru, is the concessionaire of the 750 km highway between Marcona and Urcos in Peru. Graña y Montero owns 99.9% of Survial.

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Concesión Canchaque S.A. (“Canchaque”), incorporated in Peru, is the concessionaire of the 78 km highway between the towns of Buenos Aires and Canchaque in Peru. Graña y Montero owns 99.9% of Canchaque.

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Mass Transit:

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GyM Ferrovías S.A. (“GyM Ferrovías”), incorporated in Peru, is the concessionaire of the Lima Metro. Graña y Montero owns 75.0% of GyM Ferrovías; the other 25.0% is held by Ferrovías S.A.C., a railway infrastructure company.

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Water Treatment:

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Concesionaria La Chira S.A. (“La Chira”), incorporated in Peru, is the concessionaire of La Chira waste water treatment plant in southern Lima, Peru. Graña y Montero owns 50.0% of La Chira; the other 50.0% is held by Acciona Agua S.A, an affiliate of a waste water treatment and distribution company.

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Energy:

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GMP S.A. (“GMP”), incorporated in Peru, is engaged in the oil and gas business and currently provides hydrocarbon extraction services to Perupetro S.A., a Peruvian state oil company; owns a gas processing plant; and, through a joint operation with a Peruvian affiliate of Oiltanking GmbH, operates nine fuel terminals in Peru. Graña y Montero owns 95.0% of GMP; the remaining 5.0% is held by a company executive.

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Real Estate:

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Viva GyM S.A. (“Viva GyM”), incorporated in Peru, is focused on the development and sale of affordable housing and housing, as well as other real estate projects such as office buildings and shopping centers. Graña y Montero directly owns 59.5% of Viva GyM, with GyM owning an additional 38.6%; and the other 1.9% is owned by company executives.

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Inmobiliaria Almonte S.A.C. (“Almonte”), incorporated in Peru, is a real estate company which owns 800 hectares of land in southern Lima. Viva GyM owns 50.4% of Almonte; Inversiones Sur S.A., which is part of a Chilean economic group, owns 22.0%; and the other 27.6% is owned by third parties.

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Technical Services:

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GMD S.A. (“GMD”), incorporated in Peru, is a provider of IT services and business solutions. Graña y Montero owns 88.7% of GMD; 5.9% is held by company executives; and the remaining 5.5% is held by one of our directors.

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Concar S.A. (“Concar”), incorporated in Peru, is engaged in the operation and maintenance of infrastructure assets. Graña y Montero owns 99.6% of Concar.

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CAM Chile S.A. (“CAM”), incorporated in Chile, provides field and specialized electrical services in Chile as well as in Brazil, Colombia, and Peru. Graña y Montero owns 75.0% of CAM; and the other 25% is held by El Condor Combustibles S.A., which is part of a Chilean economic group.

For a description of the shareholdings of our executives and directors in our operating subsidiaries, see “Management—Share Ownership.”

Our Strengths

We believe our company’s strengths provide us with significant competitive advantages. Our principal strengths include the following:

Leader in fast-growing markets

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country’s favorable economic conditions and growth opportunities. We believe we are also a significant infrastructure concessionaire in Peru, the largest apartment building developer in Peru and a leading IT company in Peru.

Long-standing track record and reputation for operational excellence

Complementary lines of business which generate more stable cash flows and create additional business opportunities across our segments

High growth and profitability with strong financial position

Our operations have grown significantly over the last several years, with our consolidated revenues and EBITDA growing at CAGR of 44.6% (34.9% excluding acquisitions) and 18.3% (13.6% excluding acquisitions) from 2010 to 2012, respectively. We have achieved this growth with low levels of indebtedness, relying mainly on cash flow from operations to fund our growth. In 2012, our net debt to EBITDA ratio was 0.1x, and as of March 31, 2013, our net debt amounted to S/.272.4 million (US$105.2 million). In 2012 and the first quarter of 2013, we achieved an EBITDA margin ( i.e. , EBITDA as a percentage of revenues) of 14.8% and 16.9%, respectively.

Robust backlog and significant additional potential projects

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We are also in the process of obtaining the necessary licenses to begin construction of our large multi-use real estate development project at Cuartel San Martín. Furthermore, we continuously evaluate bidding on contracts arising from the significant ongoing private and public investments in Latin America.

Proven ability to create and grow businesses organically and through acquisitions

We have proven our ability to extend our engineering and construction capabilities into complementary lines of business in a diverse range of industries, some of which began as innovative start-ups in response to client needs. For example, in 1984, we created a new IT business division, which grew and evolved through the years to become the second largest IT company in Peru. Additionally, we also have successfully acquired and integrated new businesses. In February 2011, we acquired a controlling interest in CAM, our electricity services business headquartered in Santiago, Chile, and have integrated its operations and personnel into our company, while improving its operational performance. More recently, in October 2012, we acquired Vial y Vives, an engineering and construction company specializing in the Chilean mining sector which complements our leading E&C practice in the mining sector. We believe that our proven ability to create new businesses, develop businesses organically and acquire and successfully integrate new businesses into our platform is a key competitive advantage as we continue to expand our operations in Latin America.

Highly experienced management, talented engineers and skilled workforce, with shared core corporate values

We have been listed on the Lima Stock Exchange since 1997. We abide by the highest corporate governance standards in Peru, and we are one of only 19 companies in Latin America, and one of only three in Peru, that form part of the Company’s Circle, which recognizes companies for their high corporate governance standards and is sponsored by the International Finance Corporation (IFC), the Organization for Economic Co-operation and Development (OECD) and the Global Corporate Governance Forum. In addition, we have developed a strong corporate culture based on principles of high-quality, professionalism, reliability and efficiency. We employ rigorous safety standards and procedures and emphasize environmental sustainability and social responsibility. In 2012, our engineering and construction subsidiary GyM had an accident incidence rate of 0.29, calculated over 64,202,006 hours worked. In 2011, GyM had an accident incidence rate of 0.52, calculated over 52,979,699 hours worked, which was significantly lower than that of private construction companies in the United States for the year, which had an average of 3.90, as reported by the Bureau of Labor Statistics of the U.S. Department of Labor.

Our Strategies

Our vision is to be “the most reliable engineering services company in Latin America.” Our key strategies to achieve this vision include the following:

Be the contractor of choice for large-scale and complex projects in Peru and other key markets

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Further expand our infrastructure-related businesses to increase activity across our business segments and generate more stable cash flows

Maintain highly capitalized balance sheet

Selectively pursue international opportunities, focusing on Chile and Colombia

Continue fostering our core corporate values throughout the organization

We will continue to instill our core corporate values throughout our organization, while also transmitting these values to surrounding communities. We will continue to attract and develop our human capital through various training, mentorship and reward programs in order to maintain our position as the best company in Peru to learn and work in the engineering and construction field. We also seek to promote social welfare by fostering relationships with the communities that surround our areas of operation. In 2012, the Inter-American Federation of the Construction Industry recognized us for our corporate strategy and promotion of citizenship with the Latin American Social Responsibility award. We strive to promote our corporate values to strengthen our organization and improve our performance as well as to have a positive impact on the markets where we operate.

Engineering and Construction

Our E&C segment has an 80-year track record and is the largest player in Peru as measured by revenues during 2012, according to our estimates based on Peru: The Top 10,000 Companies 2012, undertaking a broad range of activities relating to: engineering; civil construction; electromechanic construction; building construction; and contract mining. We provide E&C services for a diverse range of end-markets, focusing on the mining, power, oil and gas, transportation, real estate and other infrastructure sectors. The following chart sets forth our 2012 revenues by end-market.

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2012 E&C Revenues by End-Market

LOGO

We mainly undertake private-sector projects, particularly projects with a high degree of complexity, which enable us to develop innovative and tailor-made solutions to our clients. We provide our clients with an integral service offering by leveraging our various areas of expertise and engaging in virtually all aspects of project execution, thereby capturing a larger share of investment projects.

In 1999, we began adopting the “lean construction” philosophy as a pillar in our design and construction projects. “Lean construction” aims to create value for customers by better understanding and considering clients’ needs to improve project design, functionality and cost optimization. “Lean construction” also provides techniques and tools that significantly reduce construction waste by improving planning reliability, process design, coordination and collaboration.

Although we primarily undertake engineering and construction projects in Peru, our clients often ask us to undertake the engineering and construction of large and complex projects in other countries such as Mexico, the Dominican Republic, Bolivia, Panama and Chile. As a result, we have developed extensive experience executing projects throughout Latin America. To further capitalize on our capabilities and expertise, we have decided to expand our activities into other key markets, such as Chile and Colombia, which are benefitting from high levels of investment and are aligned with our areas of strategic focus. In 2012 and the first quarter of 2013, approximately US$145.8 million and US$33.7 million of our E&C revenues were derived from international projects outside of Peru.

The acquisition of Vial y Vives has solidified our presence in Chile. While we have been undertaking projects in Chile since 1995, such as the construction of the transmission line and crusher of the Caserones mine for SCM Minera Lumina Copiapo, we believe we will benefit from Vial y Vives’ established and long-lasting presence in the country.

Given the prevalence of mining operations in our principal markets—Peru and Chile together are estimated to have projected investment flows of approximately US$96 billion between 2013 and 2016, according to the Peruvian Ministry of Energy and Mines, Cochilco, and APOYO Consultoria—we have significant expertise with respect to specialized engineering and construction services for the mining sector. As a result, we believe we are one of the leading mining construction companies in Latin America and we leverage this expertise both within our principal markets as well as to selectively undertake complex projects across the region.

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The table below sets forth selected financial information for our E&C business segment.


	As of and for the year ended December 31,											As of and for the three months ended March 31,
	2010			2011			2012			2012		2012			2013			2013
												(unaudited)
	(in millions of S/., except as indicated)									(in millions of US$)		(in millions of S/., except as indicated)						(in millions of US$)
Revenues		1,700.5			2,784.2			3,524.6			1,361.4		717.9			889.2			343.5
EBITDA		218.3			315.0			387.9			149.8		76.7			132.5			51.2
EBITDA margin		12.8	%		11.3	%		11.0	%				10.7	%		14.9	%
Net profit		111.2			166.4			188.5			72.8		39.6			60.2			23.3
Net profit attributable to controlling interest		104.1			153.1			165.1			63.8		39.5			48.3			18.7
Backlog (in millions of US$)		1,064.1			1,839.6			2,925.4					1,949.9			3,064.9
Backlog/revenues ratio(1)		1.8x			1.8x			2.1x

(1)	Backlog is calculated as of the last day of the applicable year. Revenues are calculated for such year and converted into U.S. dollars based on the exchange rate published by the SBS on December 31 of the corresponding year.

Principal Engineering and Construction Activities

The following chart sets forth our 2012 revenues by E&C activity.

2012 E&C Revenues by Activities

LOGO

Engineering Services

Our engineering activities consist of a broad range of services relating to engineering, supervision, geometrics and environmental consultancy, including pre-investment studies, pre-feasibility studies, process design, project development, supervision of executive designs and construction management, including construction site reviews.

Civil Construction

Our civil construction activities focus on infrastructure projects, including earthworks, the construction of roads, highways, transportation facilities ( e.g. , mass transit systems such as the Lima Metro), dams, hydroelectric plants, water supply and sewage projects, excavation, structural concrete construction and tunneling. Our civil construction projects are generally large and complex, requiring the use of large construction equipment and sophisticated managerial and engineering techniques.

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Electromechanic Construction

Our electromechanic construction activities include the construction and assembly of concentrator plants, pipelines, transmission lines, gas and oil networks, and substations, predominantly for energy projects and industrial plants.

Building Construction

Through our building construction activities, we respond to the demands of the Peruvian real estate market with a focus on the construction of hotels, affordable housing projects, residential buildings, office buildings, shopping centers, and industrial plants.

Contract Mining

Our contract mining activities consist of mine planning, development, construction works, operation (including earthworks, blasting, loading and hauling ore) and mine closure.

Major Projects

We have played an active role in the development of the infrastructure sector in Peru, as well as other countries in Latin America, including the construction of roads, hotels, hospitals, shopping centers, housing developments, concentrator plants, hydroelectric power plants, thermal power plants and transmission lines as well as water supply and sewage projects, irrigation projects and dam building, among others. Throughout our history, we have participated, on our own or through minority or majority interests in joint operations, in a diverse range of landmark projects, including the following:

•

in 1948, Talara city in northern Peru for the International Petroleum Company, consisting of 2,000 homes, schools, churches, a movie theater and airport;

•

in 1950, a 430 km stretch of the Panamericana Sur highway;

•

in 1952, the Rebagliati hospital, the largest public hospital in Peru;

•

in 1960, the Cañón del Pato hydroelectric power plant, the second largest hydroelectric plant in Peru in terms of installed capacity;

•

in 1961, the Jorge Chavez International Airport, Peru’s first international airport, located in Lima;

•

in 1969, the Cuajone mining project, the largest copper mine and smelter complex in the world at that time and, in 1997, the Ilo smelter and refinery for Southern Copper Corporation;

•

in 1974, the Sheraton Hotel in Lima, and, in 1995, the Sheraton Hotel in Santiago, Chile;

•

in 1988, the Chavimochic irrigation project, the most significant irrigation project in Peru;

•

in 1992, the Four Seasons Hotel in Mexico City, Mexico;

•

in 1995, the U.S. Embassy in Peru;

•

in 1998, the Mantaro-Socobaya 605 km transmission line, which connected the country’s electrical grids;

•

in 2000, the Marriot Hotel in Lima;

•

in 2002, began providing open pit mining services, which are ongoing, to Brocal;

•

in 2004, the Ralco hydroelectric power plant in Chile;

•

in 2004, the gas fractionation plant and, in 2008, its expansion for Consorcio Camisea, Camisea project, the largest energy project in Peru’s history;

•

in 2005, the San Cristobal concentrator plant in Bolivia;

•

in 2005, the Cerro Verde mine concentrator plant for Phelps Dodge;

•

in 2008, the Cerro Corona concentrator plant for GoldFields;

•

in 2008, the Parque Agustino real estate development project, the first major affordable housing project in Peru, which consists of 3,400 units;

•

in 2009, the Westin Lima Hotel, currently the tallest building in Peru;

•

in 2010, the Melchorita liquefaction plant for Peru LNG, Camisea project;

•

in 2010, the Bayóvar plant for Vale;

•

in 2010, the Gran Teatro Nacional, the most modern theater in Peru;

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•

in 2011, Pueblo Viejo Mine concentrator plant for Barrick Gold Corp. in the Dominican Republic;

•

in 2011, the first stretch of Line One of the Lima Metro for the Peruvian Ministry of Transport and Communications; and

•

in 2012, for project manager Bechtel, the Antapaccay copper concentrator developed by Xstrata Copper, the world’s fourth largest copper producer.

We currently have a diversified portfolio of ongoing projects, on our own or through majority or minority interests in joint operations, in a wide range of sectors in Peru and the other countries where we operate, including the following:

•

construction of a copper concentrator plant for the Las Bambas mining project, managed by Bechtel and developed by Xstrata Copper. Upon its scheduled completion in 2014, the project is expected to have a daily processing capacity of 140,000 tonnes;

•

construction of the Nueva Fuerabamba city, an integral real estate development project for the population surrounding the Las Bambas mining project. The city, which is scheduled to be substantially completed in the fourth quarter of 2013, will be located 3,800 meters above sea level, and is expected to include over 400 housing units, public buildings and basic services;

•

construction of a natural gas distribution network for Contugas, providing access to natural gas for five districts south of Lima. Scheduled to be completed in the third quarter of 2013, this network is expected to be the first gas distribution development outside Peru’s capital;

•

engineering, procurement and construction of the 510 MW Cerro del Águila S.A hydroelectric plant for IC Power, which is expected to represent approximately 10% of Peru’s installed generation capacity. The project, which is scheduled to be completed in 2015, is expected to include the construction of a 75 meter high dam and a 6 km tunnel;

•

construction of a 99.9 MW expansion of the Machu Picchu hydroelectric plant for Egemsa, which is expected to be completed in 2014;

•

engineering, procurement and construction of La Chira, a waste water treatment plant for the city of Lima for which we also have the concession through a joint operation with Acciona Agua. This project, which is scheduled to be completed in 2014, is expected to include a 3.5 km submarine pipeline;

•

engineering, procurement and construction of a concentrator plant for the La Inmaculada silver and gold project, developed by Hochschild Mining. This project, which is scheduled to be completed in 2014, is expected to have a daily processing capacity of 3,500 tonnes;

•

construction of a concentrator plant for the Toromocho copper mine, developed by Chinalco Mining. The project, which is scheduled to be completed in 2014, is expected to have a daily processing capacity of 117,000 tonnes;

•

construction of a primary crusher for Mina Caserones, developed by Minera Lumina Copiapo, which is expected to have a daily production capacity of 144,230 tonnes. This project is being executed in Chile and is scheduled to be completed in 2014;

•

construction of access facilities and a tailings dam for the Mina Constancia project, which is scheduled to be completed in 2017 and is being developed by Hudbay Minerals Inc.;

•

construction and structural assembly of the concentrator area for the Caserones Mine, developed by Minera Lumina Copper, which is scheduled to be completed in 2014;

•

design, engineering, procurement and construction of the new stock pile and 10,000 conveyor belts for the Escondida Mine, managed by Bechtel, which is scheduled to be completed in 2014;

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•

construction of a tailings dam for the Mina de Cobre Panamá project, developed by First Quantum Minerals. This project, which is scheduled to be completed in 2015, is the second largest foreign investment project in Panama’s history, after the Panama Canal;

•

expansion of a plant for Cementos Lima, the largest cement producer in Peru. This project is scheduled to be completed in the second quarter of 2013;

•

design, procurement and construction of the infrastructure for the second stretch of Line One of the Lima Metro for which we also have the concession through a joint operation with GyM Ferrovías. This project, which is scheduled to be completed in 2014, is expected to include the construction of 12.1 kilometer of elevated railway, 10 stations and corresponding electrical facilities; and

•

construction of the Parque Central affordable housing project, an urban development that is expected to consist of approximately 2,100 units with recreational areas and facilities.

Clients

We believe we have developed long-term relationships with many clients as a result of our performance over the years and are focused on the successful and on-time execution of complex projects, through our “deliver before deadline” and “lean construction” initiatives. Our extensive experience has earned us a reputation for operational excellence and allowed us to gain deep market knowledge and expertise, which help us better serve our clients. The principal clients of our E&C segment include renowned domestic and multinational mining, power, oil and gas, transportation and infrastructure development companies, such as Xstrata, Hochschild, Buenaventura, Luz del Sur, Kallpa, Transelec, Cementos Lima, Rio Alto, Chinalco Mining, Minera Lumina Copiapo, Hudbay Minerals, among others. We have a well-diversified client base as none of our engineering and construction clients accounted for 10% or more of our consolidated revenues in 2012.

Project Selection and Bidding

We win new engineering and construction contracts through public bidding processes or direct negotiation, from a variety of sources, including potential client requests, proposals from existing or former clients, opportunities sought by our commercial team and from requests by the Peruvian government. More than 80% of our 2012 revenues came from private-sector projects. The Peruvian government and its agencies typically award construction contracts through a public bidding process conducted in accordance with the Peruvian State Contracting Law (Ley de Contrataciones del Estado). In the private sector, in addition to obtaining new projects, another important source of revenue involves increases in the scope of work to be performed in connection with already existing projects. These arrangements are typically negotiated directly with the client, often during the course of the work we are already performing for that client.

We have a designated team that oversees the management of project proposals and a commercial team that reviews and evaluates potential projects in order to estimate costs. In considering whether to bid for a potential project, we principally consider the following factors: competition and the probability of being awarded the project; project size; the client; our experience undertaking similar projects; and the availability of resources, including human resources. As part of the project selection process, our commercial team performs a detailed cost analysis utilizing sophisticated software we developed to assist in determining whether the project is viable and cost-effective. If we choose to pursue a project, a budget leader is assigned to prepare the offer that is eventually presented to our potential client.

Despite the budgeting risks generally associated with engineering and construction contracts, our management believes that our experience generally allows us to estimate our project costs accurately. Our project management teams also periodically review project budgets for inconsistencies between budgeted and actual costs in order to recover for cost variations through contract renegotiation. Budgeting risks are also mitigated through advance payments. Considering that we receive advance payments for most of our E&C contracts, our E&C projects typically do not require significant working capital investment. Our E&C segment secures financing primarily to purchase machinery and equipment for our construction and contract mining services.

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We are required, in the majority of our construction contracts, to provide a performance bond to guarantee project performance and completion, which remain in effect for the contract’s duration. We are also required to provide performance bonds to secure any advance payments provided to us by our clients. These bonds are periodically reduced during the project’s execution in accordance with project advancement. After the expiration of the contract term, we are typically required to provide an additional performance bond that remains valid for one year.

Contracts

We principally enter into four types of engineering and construction contracts:

•

Cost-plus fee contracts . The contract price is based upon actual costs incurred for time and materials plus a fee, which may be a percentage of the costs incurred or a pre-determined fee. Sometimes, cost-plus fee contracts include a target price, and a contractual arrangement that determines our responsibility in the event the total cost of the project exceeds the target price or the benefit we receive if the total contract price results in cost savings. Cost-plus fee contracts tend to involve the least budgeting risk for us.

•

Unit price contracts . The contract price is based upon a price per unit ( i.e. , variable quantities of work priced at defined unit rates). Each line item of the project budget, such as cubic meter of earth excavated or cubic meter of concrete poured, has a defined price, but the quantities of the units may vary. Our bid price reflects our estimate of the costs that we expect to incur for each work unit. These contracts typically include an “escalation” clause which is essentially an adjustment mechanism to account for Peruvian inflation.

•

Lump-sum contracts . The contract price is fixed. Our bid is meant to cover all costs and include a profit. The principal risk in these types of contracts are errors in calculating our costs, including those of raw materials; miscalculation of the number of units or workers needed to complete the project; unanticipated technical complexities; or other unexpected events or circumstances that may increase our costs.

•

Engineering, procurement and construction (EPC) contracts . EPC contracts, known as “single source” or “turn-key” contracts, are also lump-sum contracts. Pursuant to EPC contracts, we provide a broad range of basic and detailed engineering services, including preparation of the technical project specifications, detailed drawings and construction specifications; technical studies; and identification of lists of materials and equipment necessary for the project. These contracts, which we utilize predominantly for our mining contracts, require a high-level of expertise and generally involve the most budgetary risks for us.

For further information, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations.”

Raw Materials

The principal inputs we use in our E&C segment are, among others, fuel, cement and steel. These and the other products we require in our E&C segment may be subject to the availability of raw materials, such as oil and iron, and commodity pricing fluctuations, which we monitor on a regular basis. We typically aim to enter into master supply agreements for a period of six months to one year. Although we obtain the majority of our inputs needs in Peru, we believe we have access to numerous global supply sources. The availability of these inputs, however, may vary significantly from year to year due to various factors including client demand, producer capacity, market conditions, transport costs and specific material shortages, and we may incur additional costs in obtaining them.

We purchase and lease the equipment we require for our E&C segment business from several local and international suppliers, currently with no significant concentration with any particular suppliers. While we do not have difficulty obtaining the equipment we need, we may face difficulties finding skilled personnel who are able to operate certain equipment and machinery.

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Competition

We generally compete with some of the largest contractors in Peru and the other countries where we operate. Because the E&C sector is highly competitive, the markets served by our business generally require substantial resources and highly-skilled and experienced technical personnel. The principal competitors of our E&C segment include Besalco S.A., Odebrecht S.A., Andrade Gutierrez S.A., Obrascón Huarte Lain S.A., JJC Contratistas Generales S.A., Cosapi S.A., Techint SAC, SSK Montajes e Instalaciones S.A.C., Skanska del Perú S.A., Mota-Engil Peru S.A., Grupo San Jose, Salfacorp S.A., Constructores Interamericanos S.A.C. (COINSA), and San Martín Contratistas Generales. For certain projects, due to the size of the project, expertise required and other factors, we may choose to partner with our competitors, including the aforementioned companies.

Competition for our E&C segment is driven by performance, skill and project execution capabilities for completing complex projects in a safe, timely and cost-efficient manner, as well as price.

Infrastructure

We are an important toll road concessionaire in Peru, operating three toll roads. Moreover, we are the concessionaire for the Lima Metro, the largest mass-transit rail system in Peru, and a waste water treatment plant. Additionally, we operate multiple fuel storage facilities, two producing oil fields under long-term government contracts and a gas processing plant

The table below sets forth selected financial information for our Infrastructure business segment.


	As of and for the year ended December 31,											As of and for the three months ended March 31,
	2010			2011			2012			2012		2012			2013			2013
												(unaudited)
	(in millions of S/., except as indicated)									(in millions of US$)		(in millions of S/., except as indicated)						(in millions of US$)
Revenues		354.7			404.2			524.5			202.6		127.8			127.7			49.3
EBITDA		191.1			176.1			207.5			80.2		52.4			50.1			19.3
EBITDA margin		53.9	%		43.6	%		39.6	%				41.0	%		39.2	%
Net profit		88.1			81.8			84.0			32.4		23.2			14.5			5.6
Net profit attributable to controlling interest		73.6			68.2			66.7			25.8		18.6			11.9			4.6
Backlog (in millions of US$)(1)		47.2			195.9			413.4					222.0			443.0
Backlog/revenues ratio(1)(2)		3.0x			14.5x			7.0x

(1)	Does not include our Norvial toll road concession or our Energy line of business. See “Business—Backlog.”

(2)

Backlog is calculated as of the last day of the applicable year. Revenues are calculated for such year and converted into U.S. dollars based on the exchange rate published by the SBS on December 31 of the corresponding year. Includes revenues only for businesses included in backlog. Our ratio of backlog to revenues for our Infrastructure segment is not representative of what we would expect the ratio to be in future periods because in 2010 and 2011 we did not have revenues for La Chira waste water treatment plant and the Lima Metro and in 2012, the first quarter of 2012 and the first quarter of 2013 we only had pre-operation revenues for La Chira waste water treatment plant and revenues for the Lima Metro based on a limited number of trains during the first year of operation.

Our strategy is to pursue concessions with the potential to generate business opportunities across our organization. Once we obtain a concession, our goal is to be involved virtually in all aspects of project execution through the participation of our different business segments, from the design and construction to the operation and maintenance of the infrastructure asset.

Through our Infrastructure segment we participate in a number of joint operations with the objective of bidding for government concessions or other long-term contracts. When bidding, we occasionally look for partners to reduce our risks and achieve the level of expertise needed to meet the demands of each particular project.

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The following table shows selected information about our current concessions and long-term contracts.


Project	Year Granted	Initiated Operations	Expiration	Characteristics	% Owned by Us			Status

Toll Roads:
Norvial	2003	2003	2028	183 km		50.1	%	Operating
Survial	2007	2008	2032	750 km		99.9	%	Operating
Canchaque	2006	2010	2021	78 km		99.9	%	Operating

Mass Transit:
Lima Metro	2011	2012	2041	33.6 km(1)		75.0	%	Operating

Water Treatment:
La Chira	2012	2014 (expected)	2037	Avg. treatment capacity of 6.3 m ³ /sec (expected)		50.0	%	Under construction

Energy(2):
Oil Production
Block I	1995	1995	2021	Avg. daily production of 1,253 bbl (2012)		100	%	Operating
Block V	1993	1993	2023	Avg. daily production of 150 bbl (2012)		100	%	Operating
Gas Processing(3)	2006	2006	N/A	Avg. daily processing capacity of 84 MMcf		100	%	Operating
Fuel Terminals	1998	1998	2014	Aggregate storage capacity of 2.6 MMbbl		50.0	%	Operating

(1)	Currently only five trains are operating on a first stretch of 21.5 km (13 mile); full operation with 24 trains is expected by the third quarter of 2014 on the full 33.6 km (20 mile) Line One.

(2)	Percentages owned in Energy reflect GMP’s ownership. We own 95% of GMP.

(3)	We own a gas processing plant and have a long-term delivery and gas processing contract with EEPSA.

Principal Infrastructure Lines of Business

Toll Roads

Peru’s economic development is underpinned by a strong government commitment to infrastructure investment, with a particular focus on improving the country’s road system through the award of new concessions to the private sector. As of January 2013, the total transportation project pipeline in Peru was US$22 billion, according to APOYO Consultoría. We believe this investment offers significant opportunities to our Infrastructure segment.

Our Infrastructure segment currently has three toll road concessions through our subsidiaries Norvial, Survial and Canchaque. All three toll roads are currently in operation and we have the authorizations, permits and licenses necessary to fulfill our obligations under each concession, including releases of rights of way. All of our toll road concessions have utilized the construction services of our E&C segment and the roads are currently operated and maintained by our Technical Services segment. The table below sets forth selected financial information relating to our toll roads.


	Year ended December 31,											Three months ended March 31,
	2010			2011			2012			2012		2012			2013			2013
												(unaudited)
	(in millions of S/.)									(in millions of US$)		(in millions of S/.)						(in millions of US$)
Revenues		114.9			115.2			123.3			47.6		28.6			29.9			11.6
EBITDA		72.0			54.5			71.5			27.6		17.1			17.9			6.9
EBITDA margin		62.7	%		47.3	%		58.0	%				59.7	%		59.8	%
Net profit		25.5			21.4			29.4			11.4		6.7			6.4			2.5

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The pie charts below set forth the breakdown of our revenues and EBITDA from our toll road concessions for 2012.


Revenues		EBITDA

Norvial

Under our Norvial concession, we operate and maintain part of the only major highway that connects Lima to the northwest of Peru. This 183-km road, known as Red Vial 5, runs from the cities of Ancón to Pativilca and has three toll stations. The concession was awarded to Norvial in 2003 for a 25-year term. We own 50.1% of Norvial; and our partners in this concession are JJC Contratistas Generales and Besco. The following map shows the location of the Red Vial 5 road in Peru.

LOGO

Norvial’s revenue derives from the collection of tolls. For the Norvial toll road, the toll rate is set out in the Norvial concession agreement and adjusted in accordance with a contractual formula that takes into account the nuevo sol/U.S. dollar exchange rate and Peruvian and U.S. inflation. We are required to transfer 5.5% of our monthly toll revenue to the Peruvian Ministry of Transport and Communications and pay a 1% regulatory fee to the Peruvian Supervisory Agency for Investment in Public Transportation Infrastructure.

Our obligations under the concession include expanding the already existing road by, among other things, adding two additional lanes. The first stage of construction was completed in 2008 and the second stage is expected

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to begin between 2014 and 2015. We estimate that our capital investment for the second stage will be approximately US$100 million. When the construction of the second stage begins, we will also be required to pay a one-time estimated fee of approximately US$1.8 million to the Peruvian Supervisory Agency for Investment in Public Transportation Infrastructure.

Unlike other toll roads in Peru, Norvial charges toll fees in both directions. Our road is highly transited both by heavy vehicles, primarily for the purpose of transporting goods, and also by passenger vehicles, which typically use the road to access tourist destinations. The following table sets forth average daily traffic volume and average toll fees charged for vehicle equivalents in respect to the Norvial toll road concession for 2010, 2011 and 2012.


	Year ended December 31,						Three months ended March 31,
	2010		2011		2012		2012		2013
Average daily traffic by vehicle equivalents ⁽¹⁾		14,641		16,290		17,799		17,667		19,577
Average toll fee charged for vehicle equivalents (in S/.)		13.28		13.23		13.15		12.93		12.63

(1)	Each automobile is counted as one equivalent vehicle and commercial vehicles (such as trucks or buses) represent the number of equivalent vehicles equal to the ratio between the toll rate applicable to commercial vehicles and that which is applicable to one automobile.

The table below sets forth selected financial information relating to Norvial.


	Year ended December 31,											Three months ended March 31,
	2010			2011			2012			2012		2012			2013			2013
												(unaudited)
	(in millions of S/.)									(in millions of US$)		(in millions of S/.)						(in millions of US$)
Revenues		71.0			78.7			85.7			33.1		20.8			22.2			8.6
EBITDA		59.4			60.1			66.7			25.8		16.0			17.3			6.7
EBITDA margin		83.7	%		76.4	%		77.9	%				77.1	%		77.8	%
Net profit		19.4			26.4			27.2			10.5		6.3			6.1			2.3

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Survial

Under our Survial concession, we operate and maintain a 750 km road from the San Juan de Marcona port to Urcos, Peru, which is connected to an interoceanic road that runs up to the Peruvian-Brazilian border. The road has five toll stations and three weigh stations. The concession was awarded to Survial in 2007 for a 25-year term. We own 99.9% of Survial. The following map shows the location of the road in Peru.

LOGO

Our obligations under the concession include the construction of the road, which was completed in 2010.

Our revenue from this concession consists of an annual fee paid to Survial by the Peruvian Ministry of Transport and Communications in consideration for the operation and maintenance of the road, which fee can vary depending on the amount of maintenance required due to road damages. In 2010, 2011, 2012 and the first quarter of 2013, the fee amounted to US$7.4 million, US$9.1 million, US$37.5 million and US$4.3 million, respectively. Our revenue in this concession does not depend on traffic volume.

Canchaque

Under our Canchaque concession, we operate and maintain a 78 km road from the towns of Buenos Aires to Canchaque, in Peru. The road has one toll station. The concession was awarded to Canchaque in 2006 for a 15-year term. We own 99.9% of Canchaque. Our obligations under the concession include the construction of the road, which was completed in 2009. Our revenue from this concession consists of an annual fee paid by the Peruvian Ministry of Transport and Communications in consideration for the operation and maintenance of the road, which fee can vary depending on the amount of road maintenance required due to road wear and tear. In 2010, 2011, 2012 and the first quarter of 2013, the fee amounted to US$0.9 million, US$1.5 million, US$1.7 million and US$2.5 million, respectively. Our revenue in this concession does not depend on traffic volume.

Additional Toll Road Projects

We continuously evaluate infrastructure projects and strategically present public-private partnership proposals and participate in bidding processes for road concessions. In 2012, we were awarded, and are currently negotiating the terms for, a 40-year concession for a 4.6 km extension of Via Expresa Sur, one of the main roads in Lima, which crosses the city from north to south. The road will connect downtown Lima to Panamericana Sur, a highway that runs from Ecuador to Chile. Our estimate of the total investment under the concession, as submitted in our bid, is of approximately US$200 million. Such investment will be made during the construction phase, which is expected to take up to five years. Our revenue will derive from the collection of a toll fee upon completion of the construction. The concession is expected to guarantee a minimum annual revenue of US$18 million during the first two years of the concession term and US$19.6 million for the third year and for an additional period, the term of which is being negotiated. If in a particular year, our annual revenue is lower than the minimum guaranteed, we expect the government to compensate us for the difference, up to an amount not to exceed US$10 million. Completion of the project is subject to expropriation of the land necessary for the construction of the road. Releases of right of way are still pending.

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A joint operation in which we have a 50% interest has been awarded, and is in the process of negotiating the terms for, a 37-year concession for Via Expresa Javier Prado, a 20 km toll road that crosses Lima from east to west, traversing through eight districts. According to estimates from the Municipality of Lima, the total investment in the concession is expected to amount to approximately US$790 million. Such investment will be made during the construction phase which is expected to take between five to seven years. Our revenue will derive from the collection of a toll fee upon completion of the construction. This concession was awarded to the joint operation at the end of the 1990s and negotiations were discontinued but were recently resumed in 2012.

We cannot assure you if or when the concession contracts will be agreed or whether the contractual terms will be favorable to us. See “Risk Factors—Risks Related to our Infrastructure Business.”

Mass Transit

In 2011, we were awarded a 30-year concession for the operation of Line One of the Lima Metro, Peru’s only urban railway system. The concession was awarded to our subsidiary GyM Ferrovías, in which we hold a 75% ownership interest, with the other 25% being held by Ferrovías S.A.C. Our obligations under the contract include: (i) the operation and maintenance of the five existing trains provided by the government; (ii) the acquisition of 19 new trains on behalf of the Peruvian government, which will be the legal owner of such trains; (iii) the operation and maintenance of the 19 new trains (24 trains in the aggregate); and (iv) the design and construction of the railway maintenance and repair yard, which is being built by our E&C segment.

The operation and maintenance of the trains is carried out by our Technical Services segment, which is currently operating the first stretch of Line One and will start operating the full Line One once the construction of the second stretch, currently planned for the third quarter of 2014, is complete. A joint operation in which our E&C segment participates was awarded the construction of the second stretch of Line One. The map below shows the route of Line One.

LOGO

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We expect to make a total of S/.830 million (US$320.6 million) in capital expenditures in connection with the acquisition of the new trains on behalf of the government and the construction of the maintenance and repair yard. As of March 31, 2013, we had spent S/.410.8 million (US$158.7 million) of this amount. We have ordered the 19 new trains and have received eight of them as of the date of this prospectus. We are awaiting the corresponding approval to begin operating these new trains. We expect to receive the remaining trains on a periodic basis and expect to have the 19 trains in operation by the third quarter of 2014.

Our revenue from this concession consists of a quarterly fee that we receive from the Ministry of Transport and Communications based on the kilometers travelled per train and adjusted for inflation, with the fee per kilometer, the number of trains required to be in operation and the number of kilometers that we are required to travel established by the terms of the concession. Our revenues do not depend on passenger traffic volume. According to the government, completion of the second stretch should take place by the third quarter of 2014. This, together with the operation of the new trains, will increase our revenue since we will operate more trains which will travel more kilometers, as established in the concession contract.

We currently operate five trains on the first stretch which enable us to travel 812,539 km per year based on required schedule and frequency. We expect to gradually place trains in operation and, by the third quarter of 2014, we expect to be in full operation with 24 trains that are expected to travel 2,603,453 km per year in the full Line One, based on required schedule and frequency. The following tables show (i) the length of Line One, the average frequency of the trains and the fee per kilometer travelled; and (ii) the increase in scheduled kilometers in relation to the number of trains in operation.


	Lima Metro - Line One
	Stretch One	Full Line One (expected)
Kilometers	21.5	33.6
Required average frequency	15 minutes	7 minutes
Fee per kilometer travelled (S./)	73.97	71.97


Operating Trains		Contracted Km per Year ⁽¹⁾
5		812,539
6		1,000,879
7		1,275,326
8		1,386,691
9		1,508,494
10		1,567,673
11		1,598,633
12		1,626,905
13		1,655,178
16		1,670,873
24(2)		2,603,453

(1)	Based on required schedule and frequency

(2)	Full Line One ( i.e. , stretches one and two) in operation

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Pursuant to the concession, we must comply with certain requirements in the operation of the trains. According to the concession, at least 95% of our trains must be running and available for use and not less than 85% of our trains that are available for use must arrive to destination on scheduled time. The table below shows our monthly average results during 2012 and the first quarter of 2013.

LOGO

Water Treatment

In 2012, we were awarded a 25-year concession for the construction, operation and maintenance of La Chira waste water treatment plant in the south of Lima. The project is aimed at addressing Lima’s environmental problems caused by sewage discharged directly into the sea. We hold a 50% share in this project and our partner Acciona Agua holds the remaining 50%.

We estimate that La Chira’s total investment in the concession will amount to approximately US$83.1 million. Once the project is completed, La Chira will be entitled to collect (i) an annual payment for the investment made in the construction of the project for an amount of S/.24.2 million (approximately US$9.3 million), and (ii) and annual payment for the operation and maintenance of the project for an amount of S/.6.8 million. These fees will be paid by Sedapal S.A., the public utility company responsible for the supervision of the water service in Lima, for a period of 25 years. We funded our construction costs related to La Chira through the sale of government certificates to financial institutions, and, as a result, will not receive future cashflows from item (i). See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Factors Affecting Our Results of Operations—Infrastructure.” A joint operation in which our E&C segment participates is undertaking the construction of the waste water treatment plant.

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Energy

We currently operate three energy businesses within our Infrastructure segment. We have two long-term hydrocarbon extraction service contracts with Perupetro, the Peruvian entity responsible for the administration and supervision of all exploration and production contracts in Peru, under which we operate two onshore oil producing fields in northern Peru. Aggregate average production of these fields in 2012 was of approximately 1,400 bbl per day. We also own and operate a gas processing plant which processes and fractions natural gas from its liquids in northern Peru and delivers dry gas to a gas-fired power generation company under a long-term processing and fractionation agreement. In addition, we are a 50% partner in Consorcio Terminales which has a contract with Petroperú, the other state owned oil and gas company, to operate nine fuel storage terminals, which we believe handled approximately one-third of the country’s refined fuel in 2012.

The table below sets forth selected financial information relating to our Energy line of business.


	Year ended December 31,											Three months ended March 31,
	2010			2011			2012			2012		2012			2013			2013
												(unaudited)
	(in millions of S/.)									(in millions of US$)		(in millions of S/.)						(in millions of US$)
Revenues		239.8			289.0			287.0			110.9		70.4			64.4			24.9
EBITDA		119.1			136.8			136.4			52.7		35.9			32.3			12.5
EBITDA margin		49.7	%		47.3	%		47.5	%				51.0	%		50.2	%
Net profit		62.6			69.1			63.4			24.5		18.2			10.8			4.2

The pie charts below set forth the breakdown of our revenues and EBITDA from our Energy line of business for 2012.


Revenues		EBITDA

Oil and Gas Production

We operate and extract oil from two fields (Block I and Block V) located in the province of Talara in northern Peru. Both fields are operated under long-term service contracts in which we provide hydrocarbon extraction services to Perupetro. Hydrocarbons extracted from each field belong to Perupetro, which in turn pays us a variable fee per barrel of lifted hydrocarbons, which fee is based on a basket of international crude prices and the level of production. The fee is paid on a monthly basis. Our activities are focused on proved reserves development and production and are conducted in mature oil fields, which have been producing oil for over 100 years in the case of Block I and over 50 years in the case of Block V. We believe our activities in these fields bear limited exploration risk.

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The following table shows selected information about our fields.


Property	Basin	GMP’s Ownership	Expiration	Developed Acres	Undeveloped Acres
Block I	Talara	100%	2021	25,154	4,808
Block V	Talara	100%	2023	6,320	2,496

Block I:

We operate and extract oil and natural gas from Block I under a 20-year hydrocarbon extraction service contract with Perupetro, which was extended for an additional 10-year term and expires in December 2021. Average daily production during 2012 was 1,253 barrels of crude oil. We operate 158 wells using various oil extraction systems and operate a network of production batteries and pipelines to collect, measure and deliver oil in fiscalization point close to the Talara refinery. The field is located in the province of Talara, department of Piura, in northern Peru, approximately five miles from the Talara refinery, the second largest refinery in the country. Block I is the oldest oil producing field in Peru and has been producing oil since around 1890.

Block V:

We operate and extract oil and natural gas from Block V under a 20-year hydrocarbon extraction service contract with Perupetro, which was extended for an additional 10-year term and expires in October 2023. Average daily production during 2012 in this field was 150 barrels of crude oil. We operate 41 wells in this field using various oil extraction systems. The Block V field is located in the province of Los Organos, department of Piura, Peru, close to the border with Ecuador. Block V has been producing oil since the 1950s.

The map below shows the geographic location of our oil producing blocks in northern Peru.

LOGO

Under our hydrocarbon extraction service contracts, we are entitled to a variable fee, which is based on the level of production of each field and a basket of international crude prices, which include Fortis Blend, Suez Blend and Oman crudes. During 2010, 2011 and 2012, we received an average fee of US$58.59, US$83.90 and US$86.13 per barrel of extracted oil, which was equivalent to approximately 73.6%, 75.4% and 77.2%, respectively, of average Brent crude prices in the same years. During the first quarter of 2013, we received an average fee of US$87.24 per barrel of extracted oil, which was equivalent to approximately 77.5% of average Brent crude prices in the quarter. According to our hydrocarbons development contracts, we are required to deliver all the oil and gas we produce, regardless of its quantity, to Perupetro. Therefore, we are not committed to provide a fixed and determinable quantity of oil or gas in the near future under existing contracts.

We produce natural gas as a byproduct of the production of crude oil. In Block I, we provide natural gas to Perupetro, which in turn sells it to EEPSA, and pays us a fee which varies depending on market conditions. In Block V, we reinject that natural gas produced into the wells. Our revenues for the sale of natural gas are not material relative to our oil production revenues.

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Estimated Proved Reserves:

The following table sets forth estimated proved crude oil and natural gas reserves in Blocks I and V as of December 31, 2012. We have only included estimates of proved and have not included any estimates of probable and possible reserves.


	Crude Oil (Mbbl)		Natural Gas (MMcf)		Crude Oil Equivalents (MBoe)
Block I:
Proved developed producing		2,112.5		9,374.3		3,769.3
Proved developed non-producing		260.8		716.4		387.4
Proved undeveloped		1,197.3		9,825.0		2,933.7

Total proved reserves		3,570.5		19,915.6		7,090.4
Block V:
Proved developed producing		388.7		—		388.7
Proved developed non-producing		0.0		—		—
Proved undeveloped		52.0		—		52.0

Total proved reserves		440.7		—		440.7
Total:
Proved developed producing		2,501.2		9,374.3		4,158.0
Proved developed non-producing		260.8		716.4		387.4
Proved undeveloped		1,249.3		9,825.0		2,985.7

Total proved reserves		4,011.2		19,915.6		7,531.1

Proved reserves are those quantities of oil and natural gas which, by analysis of geosciences and engineering data, can be estimated with reasonable certainty to be economically producible from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations. The term “reasonable certainty” implies a high degree of confidence that the quantities of oil and/or natural gas actually recovered will equal or exceed the estimate. To achieve reasonable certainty, NSAI employed methodologies that have been demonstrated to yield results with consistency and repeatability. The methodologies and economic data used in the estimation of the proved reserves in the fields include, but are not limited to, well logs, geologic maps and available down hole and production data, seismic data, and well test data.

Reserve amounts were determined based on the 12-month unweighted arithmetic average of the first-day-of-the-month Brent crude price for each month in the period January through December 2012, which, pursuant to our contractual agreements, resulted in oil and gas prices of US$87.25 per barrel and US$1.29 per Mcf, respectively, that for the purpose of reserve amount estimation were assumed to remain constant throughout the remaining terms of our service contracts.

Proved undeveloped reserves in the fields as of December 31, 2012 were 2,985.7 Mboe, consisting of 1,249.3 Mbbl of crude oil and 9,825.0 MMcf of natural gas. We estimate that during 2012 approximately 1,044.35 Mboe (635.5 Mbbl of crude oil and 408.85 Mboe of natural gas) of proved undeveloped reserves were converted into proved developed reserves. We estimate that during 2012, proved undeveloped reserves declined by 3.37%, or 104.05 Mboe, consisting of a decline of 183.58 Mbbl of crude oil and an increase of 79.53 Mboe (450 MMcf) of natural gas. Capital expenditures, for both drilling activities and workovers, made during 2012 and the first quarter of 2013 to convert undeveloped reserves to proved developed reserves amounted to approximately US$19.8 million and US$3.9 million, respectively.

The principal changes in proved undeveloped reserves during 2012 were:

•

Crude oil reserves : proved undeveloped crude oil reserves decreased 183.58 Mbbl during 2012, due to the elimination of four drilling locations in Block V, the effect of which was partially offset by six new drilling locations in Block I, in each case as a result of geological and engineering studies conducted throughout the year; and

•

Natural gas reserves : proved undeveloped natural gas reserves increased 79.53 Mboe (450 MMcf) during 2012 as a result of the higher natural gas/crude oil relationship found in the wells drilled over the last years.

For changes in proved developed and undeveloped reserves from December 31, 2009 to December 31, 2012, see supplementary data (unaudited) annexed to our audited annual consolidated financial statements included in this prospectus.

Qualifications of Technical Persons and Internal Controls Over Reserves Estimation Process

The reserves estimates shown in this prospectus have been independently prepared by Netherland, Sewell & Associates, Inc., independent petroleum engineers, in a report dated May 28, 2013, which was prepared in accordance with the definitions and guidelines of the SEC. NSAI was founded in 1961 and performs consulting petroleum engineering services under Texas Board of Professional Engineers Registration No. F-2699. Within NSAI, the technical persons primarily responsible for preparing the estimates set forth in the NSAI reserves report are Mr. Thomas M. Souers and Mr. Ruurdjan (Rudi) de Zoeten. Mr. Souers has been practicing consulting petroleum engineering at NSAI since 1991. Mr. Souers is a licensed professional engineer in the State of Texas

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(No. 65160) and has over 36 years of practical experience in petroleum engineering, with over 22 years of experience in the estimation and evaluation of reserves. He graduated from North Carolina State University in 1975 with a Bachelor of Science degree in Civil Engineering and from University of Florida in 1976 with a Masters of Science degree in Civil Engineering. Mr. de Zoeten has been practicing consulting petroleum geology at NSAI since 2008. Mr. de Zoeten is a licensed professional geoscientist in the State of Texas (No. 3179) and has over 24 years of practical experience in petroleum geosciences, with over five years of experience in the estimation and evaluation of reserves. He graduated from the University of Wisconsin, Madison in 1986 with a Bachelor of Science degree in Geology and from University of Texas at Austin in 1988 with a Masters of Arts degree in Geology. Both technical principals meet or exceed the education, training and experience requirements set forth in the Standards Pertaining to the Estimating and Auditing of Oil and Gas Reserves Information promulgated by the Society of Petroleum Engineers and both are proficient in applying industry standard practices to engineering and geoscience evaluations as well as applying SEC and other industry reserves definitions and guidelines.

Our reservoir engineers and geoscience professionals have worked closely with our independent petroleum engineers to ensure the integrity, accuracy and timeliness of the data, methods and assumptions used in the preparation of the reserves estimates. Mr. Victor Salirrosas is our Reservoir Engineer and head of our staff of reservoir engineers and geoscience professionals who have worked closely with the NSAI team and overseen the preparation of their reserves estimate report.

The reserves estimate report was submitted to our Committee of Reserves Development, which is formed by Mr. Humberto Barbis, Mr. Jose Pisconti Lomas (chief of geology) and independent consultants. The Committee of Reserves Development reviews the report and relays it for approval to the board of directors of GMP together with its recommendations with respect to the estimation and categorization of reserves.

Mr. Salirrosas holds a Petroleum Engineering degree from Universidad Nacional de Ingeniería in Lima, Peru and has 38 years of experience, most of it as a reservoir engineer at Perupetro and GMP. Mr. Salirrosas is also a professor of reservoir engineering and enhanced oil recovery in the Petroleum Engineering School of Universidad Nacional de Ingeniería in Lima, Peru. In addition, Mr. Barbis, our Exploration and Production Manager, holds a degree in Geology from Universidad Nacional de Ingeniería in Peru and has 40 years of experience in the oil industry, and Mr. Pisconti Lomas, Chief of Geology, holds a Petroleum Engineering degree and a Regional Geology master’s degree from Universidad Nacional Mayor de San Marcos and has 22 years of experience in the oil industry. Furthermore, the board of directors of GMP has in the past contracted two independent extraction consultants who are highly experienced in the oil and gas industry and who review the methodology used for the estimation of reserves.

Production, Revenues, Prices and Costs:

The following table sets forth information regarding our production, revenues, prices and production costs for 2010, 2011, 2012 and the first quarter of 2013.


	Year ended December 31,						Three months ended March 31,
	2010		2011		2012		2013
Production volumes ⁽¹⁾ :
Crude oil (Mbbl)
Block I		364.9		381.9		458.2		134.7
Block V		69.5		56.2		54.8		12.0

Total (crude oil Mbbl)		434.4		438.0		513.0		146.7
Natural gas (MMcf)
Block I		1,806.3		1,843.8		2,012.6		422.5
Block V		149.3		146.0		151.8		34.3

Total (natural gas MMcf)		1,955.6		1,989.8		2,164.4		456.8
Crude oil equivalents (Mboe)		347.6		353.7		384.7		81.2

Total Company		782.0		791.7		897.7		227.8
Average sales prices ⁽²⁾ :
Crude oil (US$/bbl)		58.6		83.9		86.1		87.2
Natural Gas (US$/Mcf)		1.4		1.4		1.4		1.5
Crude oil equivalents (US$/boe)		39.3		55.5		59.4		61.5

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	Year ended December 31,						Three months ended March 31,
	2010		2011		2012		2013
Costs and expenses ⁽²⁾ :
Production expenses (US$/boe)		7.5		7.9		7.8		7.4
General and administrative expenses (US$/boe)		4.5		4.7		5.2		4.0
Depreciation, depletion, amortization and accretion expenses (US$/boe)		4.5		8.4		13.9		15.2

(1)	Hydrocarbons extracted from our fields belong to Perupetro, which in turns pays us a per barrel fee for lifted hydrocarbons.

(2)

Crude oil sales volume differs from total production volume due to operational circumstances such as the inventory of product stored in our field batteries at the end of each monthly measurement. “Average sales prices” refers to the fees received in consideration for our extraction services, which do not equal the sales prices of crude oil. Average sales prices have been calculated using a basket price formula according to the service contracts of each block. Such formulation is at a discount to global oil prices and we do not otherwise pay royalties on the oil and gas extracted. Per unit costs have been calculated using sales volumes.

Acreage, Productive and Development Wells, Drilling:

The following table sets forth certain information regarding the total developed and undeveloped acreage as of March 31, 2013.


Formation	Developed Acreage		Undeveloped Acreage
Block I
Pariñas		2,271		70
Mogollón		2,420		450
Basal Salina		1,850		105
Mesa		1,272		1,800

Total Block I		7,813		2,425
Block V
Verdún		530		650
Ostrea		165		120
Mogollón		1,350		120

Total Block V		2,045		890

Total		9,858		3,315

As of March 31, 2013, we had a total of 233 producing wells. Our wells are oil wells, many of which also produce natural gas. We do not have interests in wells that only produce natural gas.

The following table shows the number of development and exploratory wells drilled during 2010, 2011, 2012 and the first quarter of 2013 in both Block I and Block V.


	Year ended December 31,						Three months ended March 31,
	2010		2011		2012		2013
Development Wells
Productive		14		11		12		3
Dry		—		—		—		—

Total		14		11		12		—
Exploratory Wells								—
Productive		—		2		—		—
Dry		—		—		—		—

Total		—		2		—		—

During 2010, 2011 and 2012 we invested US$9.4 million, US$14.2 million and US$18.7 million, respectively, in drilling activities. During the first quarter of 2013, we invested approximately US$3.7 million in drilling activities. Eleven of the twelve development wells drilled during 2012 were located in Block I with a depth average of approximately 8,300 feet. All of them are productive wells and they partially explain our production volume increase registered during 2012 compared to 2011. In 2011 we drilled two exploratory wells and the results of the exploratory formations on target were not productive. However, both wells still have production in their shallow formations.

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The company continues to drill an average of 1.1 wells per month in its quest to accelerate the recovery of proved reserves. Most of the drilling is done in Block I where environmental permits allow us to drill up to 121 new wells. From time to time, based on geological analysis, we try to obtain more oil by increasing the depth of our productive formations. In this way, we minimize exploratory risks.

Under the terms of our service contracts, at the time the contract terminates, we are required to close non-producing wells that we have drilled. As of December 31, 2012, we estimated that we will be required to close 70 wells in Block I in December 2021 and 15 wells in Block V in October 2023, out of approximately 400 wells currently not in production. We have created a provision in our financial statements for the costs relating to those well closings. See note 19 to our audited annual consolidated financial statements included in this prospectus.

Gas Processing Plant

We own a gas processing plant located 7 km north of the city of Talara in Piura, Peru. We currently have under a long-term delivery and gas processing and fractioning contract with EEPSA, according to which EEPSA delivers wet natural gas that it purchases from onshore and offshore gas operators in the area. We then process and fraction the gas into two products: (i) dry natural gas, which can be used as fuel in EEPSA’s gas-fired turbine; and (ii) natural gas liquids, which are sold in the Peruvian market. Under the terms of the agreement, we are responsible for all operating costs of the gas processing plant but are also entitled to keep revenues from the sale of the natural gas liquids to third parties after payment of a variable royalty, based on the volume of gas processed, to EEPSA. Our current gas processing and fractionation contract with EEPSA expires in 2023.

Our gas processing plant has the capacity to process up to 44 MMcf per day. We processed 29.7 MMcf per day during 2010, 31 MMcf per day during 2011 and 26 MMcf per day during 2012. Volumes processed by our gas processing plant ultimately depend upon gas volumes demanded by EEPSA for its gas-fired turbines. These volumes vary per month and depend upon the power dispatch curve of EEPSA among Peruvian power generation plants. In rainy months (December to April) where hydroelectric power generation in Peru is typically higher, gas volumes demanded by EEPSA are lower than in dryer months (May to November) in which activity of thermal generators tends to be higher.

Fuel Storage Terminals

We are a 50% partner in Consorcio Terminales and have a contract with Petroperú to operate the largest fuel storage terminal business in Peru. Our 50% partner is a Peruvian affiliate of Oiltanking GmbH, one of the world’s largest operators of independent terminals for bulk liquid storage. Our open-access terminals are equipped with modern technologies and offer our customers dependable and critical handling and storage services for refined petroleum liquid products, maintaining high quality, safety and environmental standards. We have seven terminals strategically located along Peru’s Pacific coast. We also have two inland facilities. We provide storage, handling and loading and uploading services for a broad range of refined petroleum liquid products, including gasoline, aircraft fuel, diesel and heavy fuel oil. We deliver the liquids into two types of transportation systems, railroad cars and cistern trucks. Because of the strategic location of our assets, our deep-water access, inland terminals and our aggregate storage capacity of 2.6 MMbbl, we believe that we are well-positioned to cover the needs of our clients, the two principal refineries in Peru. The map below shows the location of each of our fuel storage terminals in Peru.

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LOGO

Our activities under Consorcio Terminales are carried out under a 15-year contract, which we entered into in January 1998 and which has been extended until August 2014. We cannot assure you that the current contract will be renewed or that the terms of such potential renewal will not differ materially from those of our current contract.

Under the current contract, Consorcio Terminales receives revenues paid in connection with monthly reserved volume in tanks for refined crude products (storage fee) and for volumes loaded and delivered into railroad cars or cistern trucks to each terminal (throughput fee). The storage fee per barrel, is based upon reserved volumes whether they are received or not. The throughput fee is paid based on effective barrels delivered per month. During 2010, 2011, 2012 and the first quarter of 2013, Consorcio Terminales generated revenues of US$40.3 million, US$44.2 million, US$49.1 million and US$11.7 million (we are entitled to 50% of the joint operation revenues), respectively. Under the contract, Consorcio Terminales is responsible for paying the fuel terminals operating costs and also paying a royalty fee to Petroperú based on effective barrels delivered each month.

At the current stage of the contract, any capital expenditure we invest in the fuel storage terminals can be recouped from any present and future royalties we owe to Petroperú.

Other Terminal Operations

We are a 50% partner in Terminal Marino Pisco Camisea and have a contract with Pluspetrol to operate an export terminal for gasoline, diesel, propane and butane. In 2012, this terminal dispatched 127 ships 2.8 million tonnes of natural gas liquids. We are also a 25% partner in Terminal de Químicos de Matarani, which in 2012 dispatched 34,930 tonnes of sodium hydrosulfide for international mining companies. During 2010, 2011, 2012 and the first quarter of 2013, these activities generated revenues in the aggregate of approximately US$3.6 million, US$4.1 million, US$4.3 million and US$1.2 million, respectively.

Competition

Our ability to grow through successful bids for new infrastructure concessions or other long-term contracts could be affected as a result of competition. We view our competition as including both Peruvian and international infrastructure concession operators including joint operations with partners with specialized expertise in the relevant sector. Competition varies on a case-by-case basis, depending on the main purpose of the concession.

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Real Estate

Our Real Estate segment is the largest apartment building developer in Peru, in terms of number of units sold and value of sales in 2012, according to Tinsa, and is focused on the development and sale of affordable housing and housing as well as other real estate projects. Since commencing our operations in 1987, we have developed approximately 450,000 m ² of affordable housing (approximately 6,614 units); approximately 290,000 m ² of housing (approximately 1,400 units); approximately 115,000 m ² of office space (approximately 780 offices); and approximately 43,000 m ² of shopping centers (three shopping centers). Moreover, we are currently building approximately 160,000 m ² of affordable housing (approximately 2,520 units); approximately 22,000 m ² of housing (approximately 160 units); and approximately 24,000 m ² of office space (approximately 40 offices, with an average size of 600 m ² each). Our Real Estate segment also owns significant land parcels in Lima, comprising of approximately 888 hectares as of March 31, 2013, and we have sold undeveloped land in the past and intend to continue such sales in the future.

The table below sets forth selected financial information for our Real Estate business segment.


	Year ended December 31,											Three months ended March 31,
	2010			2011			2012			2012		2012			2013			2013
												(unaudited)
	(in millions of S/., except as indicated)									(in millions of US$)		(in millions of S/., except as indicated)						(in millions of US$)
Revenues		218.6			152.3			240.1			92.7		21.0			46.7			18.0
EBITDA		27.4			37.5			70.5			27.2		3.3			14.8			5.7
EBITDA margin		12.5	%		24.6	%		29.4	%				15.8			31.6	%
Net profit		17.9			24.1			45.3			17.5		1.0			8.7			3.4
Net profit attributable to controlling interest		8.5			6.1			12.4			4.8		(0.2	)		3.2			1.2
Backlog (in millions of US$)		1.8			58.2			108.4					95.5			115.2
Backlog/revenues ratio (1)		—			1.0	x		1.2	x

(1)	Backlog is calculated as of the last day of the applicable period. Revenues are calculated for such period and converted into U.S. dollars based on the exchange rate published by the SBS at such period.

We undertake a significant amount of the activities in our Real Estate segment with partners through financing and commercial arrangements we use to purchase land and to develop real estate projects. See “—Financing.” As a result, a significant amount of our net profit in the Real Estate segment is attributable to the non-controlling interest of our partners. See also “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—General—Real Estate.”

Principal Real Estate Activities

Our real estate developments include the following products:

•

affordable housing;

•

housing; and

•

commercial real estate.

We began developing affordable housing projects in 2001, following the Peruvian government’s efforts to address the country’s housing deficit, particularly for low-income families. We launched the first major affordable housing project in Peru in 2007, Parque Agustino in Lima’s El Agustino neighborhood. Since 2001, we have completed 11 affordable housing projects. As of December 31, 2012, we are developing 11 affordable housing projects, which are in various stages of development, including six which are in the construction phase and five for which we have purchased land, but are still in the process of obtaining the required approvals and permits. Two of our ongoing affordable housing projects consist of expansions of projects previously completed by us.

Affordable housing consists of apartments, usually ranging between 55 and 110 m ² , that are purchased through government subsidies. The Peruvian government has adopted the Nuevo Crédito MiVivienda and Techo Propio programs, among others, which promote access to affordable housing in Peru by providing government subsidies to

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individuals for the purchase of homes. In order for a unit to qualify for the Nuevo Crédito MiVivienda program, its selling price must range between 14 UIT and 70 UIT (approximately between S/.52,000 and S/.259,000). In order for a unit to qualify for the Techo Propio program, its selling price must range between 5.5 UIT and 14 UIT (approximately between S/.20,000 and S/.52,000).

In order to be eligible for an affordable housing subsidy under the Nuevo Crédito MiVivienda program, a purchaser must not own any other home or have benefitted from a housing subsidy program in the past, among other requirements. A purchaser must also provide a down payment between 10% and 30% of the total purchase amount. Housing subsidies under this program fluctuate between S/.5,000 and S/.12,500, which incentivize purchasers with reduced monthly rates so long as they pay their mortgage loan payments on a timely basis. In order to be eligible for an affordable housing subsidy under the Techo Propio program, a purchaser must have a monthly income that does not exceed 0.45 UIT (approximately S/.1,665) and must not have received any other government-sponsored housing benefit in the past, among other requirements. A Techo Propio purchaser must also show proven savings equal to at least 10% of the total purchase amount. Housing subsidies under this program fluctuate between three UIT and five UIT (approximately between S/.11,100 and S/.18,500). Purchasers of subsidized housing under both programs are also not required to pay a value-added tax normally applicable to residential purchases.

We develop substantially all of our affordable housing projects on land purchased from the private sector. To the extent these projects meet the requirements of a particular government subsidy program, purchasers can purchase units with government subsidies. Some of our affordable housing projects, however, such as Parque Agustino, are developed through government bidding processes. Government subsidy programs like Nuevo Crédito MiVivienda and Techo Propio have driven the demand for affordable housing in Peru, which has in turn increased our sales of affordable housing units.

Our housing developments consist of residential buildings comprised of apartments with a mid- to high-price range that do not qualify for government subsidies. Since 1987, we have developed 36 housing developments. As of December 31, 2012, we are developing five housing projects, including four which are in the construction stage and one for which we have purchased land, but are still in the process of obtaining the required approvals and permits. Our housing units typically range between 130 and 400 m ² in size.

Substantially all of our affordable housing and housing development projects are located in Lima. We have also purchased land to develop two affordable housing projects in Piura and Chimbote, two cities north of Lima. We intend to develop affordable housing projects in other cities outside of Lima.

The table below sets forth number of units sold and not yet delivered and number of units delivered, as well as the value of units sold and our sales revenue for the periods indicated.


	Year ended December 31,						Three months ended March 31,
	2010		2011		2012		2013
Number of Units Delivered(1):
Affordable Housing		1,964		1,243		1,255		304
Housing		171		1		113		—

Total		2,135		1,240		1,364		304
Number of Units Sold and Not Yet Delivered(1):
Affordable Housing		1,575		1,252		1,940		263
Housing		142		116		77		3

Total		1,717		1,368		2,017		266
Total m ² Delivered:
Affordable Housing		135,432		89,529		127,907		22,413
Housing		31,734		203		13,730		—

Total		167,167		89,732		141,637		22,413
Total m ² Sold and Not Yet Delivered:
Affordable Housing		96,470		65,764		123,958		12,054
Housing		15,660		16,440		10,109		319

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	Year ended December 31,						Three months ended March 31,
	2010		2011		2012		2013
Total		112,130		82,204		134,067		12,373
Value of Units Delivered (in millions of S/.):
Affordable Housing		145.8		135.2		153.5		42.5
Housing		68.1		—		35.0		—

Total		213.9		135.2		188.5		42.5

(1)	We typically pre-sell our affordable housing and housing units before construction begins and continue to sell during construction, although we recognize revenues at the time of delivery of units.

We develop and sell office and commercial buildings, such as shopping centers. On certain occasions, we have operated our commercial real estate and later sold it, such as Larcomar, a landmark shopping center which we built in 1998 and sold in 2010. We have also developed commercial real estate buildings in connection with our affordable housing and housing projects, such as the Parque Agustino shopping center. Since 1987, we have developed 11 office buildings, three shopping centers and one medical center. We are currently in the process of developing five office buildings in Lima, two of which are in the construction phase, including the Real Ocho project, a 16-floor office building (30% of which is owned by us and 70% of which is owned by Inversiones Centenario S.A.A.); and three for which we have purchased land, but are still in the process of obtaining the requires approvals and permits.

Land Bank

We typically purchase land to develop real estate projects with the intention to begin construction within a 12- to 18-month period after the purchase of the land. We may also, from time to time, purchase land for subsequent resale. As of March 31, 2013, we owned approximately 888 hectares, of which 97.5% is located in Lima and 2.5% outside of Lima. We continually evaluate opportunities to purchase new land for our real estate development projects.

We have a 50.0% interest in Cuartel San Martín with Urbi Propiedades S.A. of Intergroup Financial Services Corp. owning the remaining 50.0%. Cuartel San Martín is a 68,000 m ² former military base located in Lima’s upscale Miraflores district, where we plan to invest approximately US$680 million to develop a premiere mixed-use development consisting of approximately 98,000 m ² of housing, 68,000 m ² of office towers, a 61,000 m ² shopping mall, and a 48,000 m ² luxury hotel and conference center. Although we are still in the pre-construction approval phase and have not yet obtained all required building permits, we plan to begin construction of this project in the fourth quarter of 2013 and expect to complete the project through multiple stages within four years.

We have a 50.4% interest in Almonte, which owns approximately 800 hectares of undeveloped land in Lurin, located 30 km south of Lima. We previously sold 20 hectares of the land for industrial use, and we expect to sell 71 hectares of the remaining land for industrial use in the next five years. We also expect to develop affordable housing projects on the land once water and sewage services become available.

We also own a minority interest (approximately 20.8%) in Promoción Inmobiliaria del Sur S.A. (PRINSUR) of Inversiones Centenario, which owns approximately 990 hectares of undeveloped land also located in Lurin. We expect to develop affordable housing projects on the land once water and sewer services become available. Our proportional interest in this land is not included in our land bank.

Financing

We generally fund land purchases for our housing and commercial real estate projects through cash from our operations. For our affordable housing projects, we generally partner with real estate investment funds and insurance companies that provide between 60% and 70% of the total capital required to purchase the land and cover certain pre-construction costs in exchange for equity in the project. Once we acquire land for a particular real estate development project, we obtain working capital through a credit line from a financial institution, which we utilize to

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finance additional project needs as they arise. We also obtain financing through pre-construction sales for our affordable housing and housing projects and, to a lesser extent, our commercial real estate projects. Our affordable housing and housing projects generally require less outside financing because they are generally financed with pre-construction sales.

Sales and Marketing

We typically pre-sell our affordable housing and housing units prior to and during construction, and use the related proceeds we receive to finance the construction of the units. Our commercial and sales processes differ depending on the type of development and market segment of the development. We primarily sell our real estate development projects through an internal sales force that is assigned to particular projects and, to a lesser extent, external brokers on a non-exclusive, commission-fee basis. Our marketing efforts primarily consist of newspaper advertisements, radio and television commercials, billboards and promotional offers for referrals. We also advertise our real estate projects on our website.

We believe our brand is associated with product quality, professional operations and reliable post-sale customer service. We provide customer service call centers through which residents can report complaints or defects. Engineers respond with site visits, and repairs are made as long as the property continues to be covered by the applicable warranty or guarantee.

For our affordable housing projects, we provide post-sale customer service through our Ayni program, which aims to preserve the long-term value of our affordable housing developments by promoting a cooperative community life. Through this program, we distribute manuals that teach best practices for living in communities, offer leadership workshops, budget workshops, promote small business development, facilitate conflict resolution and provide other services. These services are provided for a six- to eight-month period following project delivery. In 2012, we initiated the Ayni contest for residents of our affordable housing projects with the aim of stimulating the sustainability of their community. Participants present an enhancement project for their community, such as a recreation center, and a jury selects the best project, which we fund and construct.

Competition

The Peruvian real estate development industry is highly competitive. The market is fragmented and no single company has a significant share of the national market. The principal competitors for our Real Estate segment are Paz Centenario Global S.A., Paz Centenario Inmobiliaria, Corporación Líder Perú S.A., Urbana Perú, Los Portales, Inmobiliari S.A., Imagina Grupo Inmobiliario, ENACORP, Besco S.A. and Gerpal. In the coming years, we expect more competition from domestic and foreign real estate development companies who recognize the growth potential in the Peruvian residential market. The main factors that drive competition are product design and amenities, price, location and post-sale service offerings.

Technical Services

Our Technical Services segment undertakes a broad range of activities, including (i) the operation and maintenance of infrastructure assets; (ii) information technology (IT) services for private clients and the government; and (iii) electricity networks services. Characterized by mid-to long-term contracts, our Technical Services segment further adds a more stable cash flow stream to our consolidated activities. The table below sets forth selected financial information for our Technical Services business segment.


	As of and for the year ended December 31,											As of and for the three months ended March 31,
	2010			2011			2012			2012		2012			2013			2013
												(unaudited)
	(in millions of S/., except as indicated)									(in millions of US$)		(in millions of S/., except as indicated)						(in millions of US$)
Revenues		285.0			977.0			1,083.3			418.4		265.0			244.1			94.3
EBITDA		53.8			121.6			111.6			43.1		29.6			23.2			9.0
EBITDA margin		18.9	%		12.4	%		10.3	%				11.2	%		9.5	%
Net profit		24.7			61.1			61.5			23.7		13.7			8.4			3.3

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As of and for the year ended
December 31,

As of and for the three months ended
March 31,

2010

2011

2012

2013

(unaudited)

(in millions of S/., except
as indicated)

(in millions
of US$)

(in millions of S/.,
except as indicated)

(in millions
of US$)

Net profit attributable to controlling interest

23.9

53.9

50.6

19.5

12.7

8.0

3.1

Backlog (in millions of US$)

267.1

516.1

873.7

562.6

818.9

Backlog/revenues ratio(1)

2.6x

1.4x

2.1x

(1)	Backlog is calculated as of the last day of the applicable year. Revenues are calculated for such year and converted into U.S. dollars based on the exchange rate published by the SBS on December 31 of the corresponding year.

The pie charts below set forth the breakdown of our revenues and EBITDA from our Technical Services for 2012.


Revenues		EBITDA

Operation and Maintenance of Infrastructure Assets

We began providing our operation and maintenance of infrastructure assets services in 1994 when we were awarded the concession for the Arequipa Matarani highway in southern Peru. With this experience, in 2003, we began providing operation and maintenance services to Norvial. In 2007, the Peruvian government initiated Proyecto Peru, a program aimed at maintaining roads not under concession to ensure their longevity. Proyecto Peru allowed us to develop new business opportunities providing maintenance services to more than 4,000 km of public roads in Peru. We believe the experience we have gained operating highway and transportation concessions positioned the company to capitalize on the Peruvian government’s initiatives to increase infrastructure development.

Our revenue in the operation and maintenance of infrastructure assets is generated either from fees we charge to Norvial, Survial, Canchaque and the Lima Metro to operate and maintain our concessions or from government payments through maintenance service contracts we have been awarded. As depicted in the chart below, we operate and maintain more than 5,000 km of Peruvian roads and highways, including our own highway concessions, in addition to the Lima Metro.

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Operation and Maintenance of Infrastructure Assets

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Total: 5,063 km

The table below sets forth selected financial information for our operation and maintenance of infrastructure assets activities.


	Year ended December 31,											Three months ended March 31,
	2010			2011			2012			2012		2012			2013			2013
												(unaudited)
	(in millions of S/.)									(in millions of US$)		(in millions of S/.)							(in millions of US$)
Revenues		143.8			232.9			242.8			93.8		71.0			60.2		23.2
EBITDA		30.4			53.6			23.2			9.0		11.1			3.6		1.4
EBITDA margin		21.2	%		23.0	%		9.6	%				15.6	%		6.1	%
Net profit		17.5			34.9			12.6			4.9		6.7			1.7		0.7

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The below map illustrates the roads in Peru for which we currently provide operation and maintenance services.

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We provide the following road operation and maintenance services:

•

Routine Maintenance . These services aim to preserve roads through ongoing maintenance, including: road demarcation; cleaning; drainage; road fissure treatment, which seals cracks in roads to prevent water infiltration; slurry sealing; and micro-paving, which seals asphalt to prevent aging and improve resistance to water and surface wear.

•

Periodic Maintenance . These services entail activities that are performed periodically, intended to prevent the occurrence or exacerbation of defects, conserve the structural integrity of roads and correct major defects.

•

Emergency maintenance . This maintenance work is performed whenever the need arises, such as when natural disasters damage road surfaces.

We also administer toll stations and weighing stations; offer road patrolling services; operate assistance call centers; and provide emergency medical services.

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The operation and maintenance services we provide to the Lima Metro aim to preserve the mass transit system through ongoing maintenance, including cleaning of the trains and stations and providing train operators, among other services.

With respect to operation and maintenance contracts with the Peruvian government, we obtain new contracts through public bidding. With respect to contracts with our Infrastructure segment, we participate in direct negotiation. Contract length typically ranges from three to five years.

IT Services

We began our IT services business in 1984 providing computer equipment to companies and evolved into a technology solutions provider in 2000, becoming one of the two largest providers of IT services in terms of 2011 revenues in Peru, according to International Data Corporation (IDC). In the early 1980s, Sonda, one of the main IT services providers in Latin America, was looking for a partner to represent Digital Equipment Corp. (currently, Hewlett-Packard) for the sale of hardware in Peru. Sonda’s need coincided with our diversification strategy and, therefore, we decided to jointly constitute GMD. In 1994, we bought out Sonda. Nowadays our main focus is the provision of business process and IT outsourcing services, and providing the necessary corresponding equipment, to well-known large companies and public institutions in Peru.

The infrastructure through which we operate our business includes two call centers with a total of 181 workstations and three data centers, amounting to 6,500 square feet. In addition, we have successfully entered into strategic partnerships with key international IT vendors such as Cisco Systems, Microsoft, Hewlett-Packard, Oracle, SAP, IBM, Citrix, VMware, CA Technologies and Louis Berger Group.

The table below sets forth selected financial information relating to our IT services.


	Year ended December 31,											Three months ended March 31,
	2010			2011			2012			2012		2012			2013			2013
												(unaudited)
	(in millions of S/.)									(in millions of US$)		(in millions of S/.)							(in millions of US$)
Revenues		141.2			185.9			208.0			80.3		46.4			53.5		20.7
EBITDA		23.4			31.6			34.5			13.3		6.5			9.3		3.6
EBITDA margin		16.5	%		17.0	%		16.6	%				14.0	%		17.4	%
Net profit		7.2			9.1			11.3			4.4		1.6			3.2		1.2

Services

We provide the following services to our clients:

•

Systems Integration: includes installation and maintenance of hardware; 24-hour technical service; monitoring performance of IT systems; implementation of information recovery systems; and installation of systems that enable collaboration across multiple platforms such as Windows, Apple, Android and Blackberry, among others. For example, we provide equipment maintenance services to Backus, an affiliate of SABMiller. Our technology solutions optimize the reliability and performance of our client’s infrastructure with the goal of helping them reduce costs, improve security and integrate new technologies.

•

IT Outsourcing: includes servers on demand in the cloud (our internet network) which provide virtual memory, processing and storage capacities; virtual working spaces, including operating systems and databases; email accounts on the cloud; technical support help desk; among others. For example, we provide help desk services to Barrick Gold Corporation, serving a total of 3,300 users in four countries. Moreover, all of the trading transactions on the Lima Stock Exchange are electronically processed through our facilities. Our outsourcing services are designed to facilitate our clients’ operational continuity by means of an appropriate IT platform, managed in accordance with high standards of security and quality.

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•

Application Outsourcing: includes corrective and continued maintenance of software; development of customized software (software factory); software testing and certification; and functional support through a service desk platform. For example, we have a software factory contract with an affiliate of Telefónica. Our application outsourcing services enable our clients to shift the burden of supporting, maintaining and operating their business software and systems.

•

Business Processes Outsourcing: consists of the outsourcing of specific business processes including billing, payments and collection; customer care services such as management of complaints; organization and control of voting processes; inventory, shipping and custody of documents; among others. For example, we provide billing services to an affiliate of Repsol, and provide document authentication services to BBVA Banco Continental. Moreover, in the latest local and regional presidential elections, we provided voting processing services to the Peruvian government.

The pie chart below shows our revenues by service for 2012.

Revenues by Service

Clients

We provide services to our clients pursuant to service level agreements which enable us to customize each contract to the needs of the particular client. We set specific parameters and standards which can include maximum times for response and levels of equipment performance, among others. The average term of our contracts is three to five years and we have achieved a significant level of contract renovation.

We have built a strong client base in Peru, including local affiliates of global companies, spanning a broad range of industries, including key clients from the energy, government, banking, insurance, pension funds, industrial, commercial, education and mining sectors. Our principal clients are affiliates of Barrick Gold Corporation, Repsol, BBVA Banco Continental, Honda, Telefónica, the Peruvian National Office of Electoral Processes (Oficina Nacional de Procesos Electorales), the Peruvian National Pension System (Sistema Nacional de Pensiones), the Peruvian SUNAT, AFP Integra- Sura Group, Backus, BELCORP and UNIQUE.

Competition

The IT services industry is highly competitive. The market includes both international companies and local or regional companies. Our main competitors, which are sometimes also our partners, include companies such as IBM, Tata Consultancy Services, Sonda, Indra, among others.

Electricity Networks Services

We offer field and specialized services consisting of installation and routine operation and maintenance of electricity infrastructure, primarily for power utility companies in Chile and, to a lesser extent, Colombia, Brazil and Peru. Field services include day-to-day services and troubleshooting required to maintain the electric grid. Specialized services require more sophisticated and more tailored technology and expertise. With over 20 years

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operating experience developing, installing, operating and maintaining metering systems, we have also developed a broad range of specialized solutions to reduce electricity theft, one of the main concerns for power utility companies in Latin America.

The table below sets forth selected financial information for our Electricity Networks Services.


	Year ended December 31,								Three months ended March 31,
	2011(1)			2012			2012		2012			2013			2013
									(unaudited)
	(in millions of S/.)						(in millions of US$)		(in millions of S/.)						(in millions of US$)
Revenues		558.2			632.5			244.3		147.5			130.4			50.4
EBITDA		36.4			53.9			20.8		12.0			10.3			4.0
EBITDA margin		6.5	%		8.5	%				8.1	%		7.9	%
Net profit		17.1			37.5			14.5		5.5			3.5			1.4

(1)	Due to our acquisition of a controlling interest in CAM on February 24, 2011, only includes results for 10 months in 2011.

The field services we provide include, among others, installing and maintaining medium- and high-voltage electricity networks and public lighting networks; connecting new residential, commercial and industrial customers to the electrical grid; disconnecting and reconnecting the power supply of our clients’ customers; meter reading; verification of electricity theft; and the installation of meters and anti-theft solutions. We also provide services that include changing and repairing damaged electrical equipment and maintaining, transferring and expanding the electrical grid. We have developed a sophisticated management system to monitor the efficiency of the field services we provide and increase the daily productivity of our field crews.

We also provide specialized services, which involve more technical expertise and specialized equipment, including the monitoring of electrical consumption for approximately 340,000 industrial, commercial and residential customers. We have developed specialized metering systems and anti-theft solutions for the Latin American markets. We believe we are one of two companies with a relevant market penetration of these anti-theft solutions for power utility companies in our markets. We also operate laboratories that offer an array of services in response to local regulation requirements, such as meter certification, equipment testing and theft reports.

In Brazil and Chile, we also operate the warehouse facilities of local power utility companies, which store and distribute the necessary equipment for operations, such as cables, insulators and meters. In addition, in Chile, we lease residential electricity meters to a power utility company, for which we also provide maintenance services. We have formed strategic alliances with equipment manufacturers in order to develop and commercialize specialized metering systems and anti-theft solutions.

The chart below sets forth the percentage of our 2012 revenues in each of the countries where we operate.

Revenue by Country

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Contracts and Clients

We typically provide our services pursuant to long-term contracts ranging between three and five years. Most of our contracts are awarded through a non-public bidding process, although some contracts are negotiated directly with the client.

Our principal clients are power utility companies and, to a lesser extent, industrial clients, predominantly in the private sector. In Peru, we also provide services to the telecommunications industry. Our principal clients are the distribution companies of Enersis. Over the years, we have worked with the principal power utility companies in the region, including Chilectra, Saesa, Chilquinta, AES, E-CL, Endesa Chile, Ampla, Coelce, Cemig, Coelba, Elektro, Light, Codensa, Emgesa, EEC, Enertolima, Emcalo, Edelnor, Electrocentro, Enosa, Claro and Telefonica.

Competition

The market for electricity networks services is highly fragmented and no single company has a significant share of the national market in the countries where we operate. We primarily compete with small, local privately-held service companies. We expect competition to increase in the coming years as electricity consumption grows in response to the economic growth, and relatively low per capita consumption, in the countries where we operate. The main factors that drive competition are safety; product and service quality; reliability; price; and ability to respond to increased industry regulations.

Backlog

We define our backlog as the U.S. dollar equivalent value of revenue we expect to realize in the future as a result of performing work under multi-period contracts that we have entered into. Backlog is not a measure defined by IFRS, and our methodology for determining backlog may not be comparable to the methodology used by other companies in determining their backlog. For contracts denominated in nuevos soles or other local currencies, amounts have been converted into U.S. dollars based on the exchange rate published by the SBS on December 31 of the corresponding year, and in the case of amounts as of March 31, 2013 based on the exchange rate published by the SBS on such date.

We do not include backlog in this prospectus in our Infrastructure segment for: (i) our Norvial toll road concession because its revenues from the concession are derived from toll fees charged to vehicles using the highway, and, as a result, such revenues are dependent on vehicular traffic levels; and (ii) our Energy line of business because: (a) its revenues from hydrocarbon extraction services are dependent on the amounts of oil and gas we produce and market prices, which fluctuate significantly; (b) our revenues from our gas processing plant are dependent on the amount of gas we process and market prices for natural gas liquids, which fluctuate significantly; and (c) our revenues from our fuel storage terminal operation partially depend on the volume of fuel dispatched, such revenues are not material to our consolidated results of operations and the concession for such services is scheduled to terminate in August 2014.

When we present backlog on a segment basis, we do not include eliminations that are included in our consolidated backlog. For a description of how we calculate our backlog, see our segment backlog presented below. See “Risk Factors—Risks Related to Our Company—Our backlog and our ratio of historical backlog to revenues may not be reliable indicators of future revenues or profit.”

Our consolidated backlog as of March 31, 2013 was US$4,291.3 million. As of March 31, 2013, we expect to recognize as revenues 37.1% of our backlog by December 31, 2013, 30.4% of our backlog by December 31, 2014 and 32.5% of our backlog thereafter. The following table sets forth the growth of our consolidated backlog from December 31, 2008 to March 31, 2013.

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Backlog Growth (in US$ million)

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The chart below sets forth our consolidated backlog breakdown by end-market, geography and client sector as of March 31, 2013.


Backlog by End Market		Backlog by Client Type

Backlog by Geography

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E&C Backlog

To include an engineering and construction contract in our backlog, we assume that each party will satisfy all of its respective obligations under the contract. We also make assumptions, in agreement with the client, regarding the total expected contract price in the case of unit price and cost-plus fee contracts and the amount of the contract that will be completed in each year. We adjust our backlog periodically to account for developments related to each project. For projects related to joint operations, we only include our percentage ownership of the joint operation’s backlog. Our E&C segment backlog does not include intersegment eliminations.

Our E&C backlog as of March 31, 2013 was US$3,064.9 million. As of March 31, 2013, we expect to recognize as revenues 37.4% of our backlog by December 31, 2013, 32.2% of our backlog by 2014 and 30.4% of our backlog thereafter. The following table sets forth the growth of our E&C backlog from December 31, 2008 to March 31, 2013.

E&C Backlog Growth (in US$ million)

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The following pie charts set forth our E&C backlog breakdown by end-market, geography, client sector and contract type as of March 31, 2013.

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The table below sets forth our ending E&C backlog for 2010, 2011, 2012 and the first quarter of 2013, accounting for opening backlog for each year, annual contract bookings and adjustments and annual revenues recognized.


	2010			2011			2012			Three months ended March 31, 2013
										(unaudited)
	(in millions of US$)
Opening backlog (end of prior period)		905.0			1,064.1			1,839.6			2,925.4
Contract bookings and adjustments during the year		764.5			1,807.8			2,467.4			483.0
Revenues recognized during the period		(605.4	)		(1,032.3	)		(1,381.6	)		(343.5	)

Ending backlog (end of current period)		1,064.1			1,839.6			2,925.4			3,064.9

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The table below sets forth our backlog at the reported years end and the ratio of such backlog to revenues earned in the subsequent two years.

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(1)	Revenues are reported under IFRS for such year and converted into U.S. dollars based on the exchange rate published by the SBS at the end of the corresponding year, which was S/.2.81 to US$1.00 as of December 31, 2010, S/.2.70 as of December 31, 2011 and S/.2.55 as of December 31, 2012.

The first section from the table above shows what the estimated backlog for the E&C segment had been as of each year-end period, between 2008 and 2011, as well as the portion of each year-end backlog that was estimated at the time to be executed in each of the next two years and thereafter. For example, E&C backlog as of December 31, 2008 was US$530 million, of which US$380 million was estimated at the time to be executed in 2009 (“T+1”), US$128 million in 2010 (“T+2”) and US$21 million in 2011 and thereafter.

The second section of the table shows actual E&C revenues for each of the years in the 2010-2012 period presented in accordance with IFRS.

The third section of the table shows E&C revenues to backlog ratios, calculated as the actual E&C revenues that were obtained in a year divided by what the estimated E&C backlog realization for that same year had been one year before and two years before. For example, the ‘T+1’ revenues to backlog ratio for 2009 was 1.20x (calculated as 2010 revenues of US$605 million divided by US$506 million, which was the portion of the backlog as of December 31, 2009 that was estimated at the time to be executed in 2010). This means that in 2010 we were able to generate actual E&C revenues of 1.20x times what the estimated E&C backlog for 2010 had been as of the previous year-end period.

Based on 2007 backlog of US$419 million, of which US$275 million was expected to be realized in 2008 and US$144 million in 2009, the ratios of E&C revenues (under Peruvian GAAP) to backlog for 2008 (T+1) and for 2009 (T+2) were 1.68x and 3.58x, respectively. Similarly, based on 2008 backlog of US$530 million, of which US$380 million was expected to be realized in 2009, the ratio of E&C revenues (under Peruvian GAAP) to backlog for 2009 (T+1) was 1.36x.

Our revenues in each of the reported years exceeded T+1 estimated backlog realization for the year because revenues were earned from, in addition to contracted amounts reflected in such backlog, new contracts signed during the year and change orders on backlog contracts. These positive effects were offset in part by delays in project execution and project cancellations. Our T+1 ratios have varied significantly from year to year because of the unpredictability and wide dispersion in size of new projects, change orders, delays and cancellations, and the variation in T+2 ratios is even greater because the effect of these factors increases with the passage of time. Our historical T+1 and T+2 ratios may not be indicative of future backlog realization ratios because the effect of these factors is unpredictable and we may not be able to generate revenues at multiples above our contracted backlog due to the factors explained above and because we may not be able to increase the scale of our operations to realize such incremental revenues. In particular, you should not assume that the ratio of our future E&C segment revenues for 2013 and 2014 to backlog as of December 31, 2012 that is currently expected to be realized in each of those years will be comparable to our historic ratios shown above. See “Risk Factors—Risks Related to Our Company—Our backlog and our ratio of historical backlog to revenues may not be reliable indicators of future revenues or profit.”

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Infrastructure Backlog

In reflecting an Infrastructure contract in our backlog, we assume that each party will satisfy all of its respective obligations under the contract. For our Infrastructure backlog, we only include contracted revenues expected to be paid during the next three years following the backlog calculation date. Infrastructure backlog in this prospectus does not include our Norvial toll road concession or our Energy line of business. Our Infrastructure segment backlog does not include intersegment eliminations. We calculate our Infrastructure backlog as follows:

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for the Lima Metro, we estimate the number of trains in operation in the applicable period. Our Infrastructure backlog assumes that: (i) for 2013, we will initially operate five trains and gradually add 11 trains beginning in June 2013, which in the aggregate will travel 1,436,000 km for that year; (ii) for 2014, we will initially operate 16 trains and expect to add 8 trains by the third quarter of 2014, which in the aggregate will travel 1,670,873 km for that year; and (iii) for 2015, we will operate 24 trains in both the first and second stretches of Line One, which in the aggregate will travel 2,603,453 for that year. The above assumptions are based on terms under our concession;

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for our Survial and Canchaque concessions, we assume our contractually agreed upon annual fee, adjusted for inflation. For our 2014 and 2015 backlog, we utilize the same adjustment amount that was utilized for our 2013 fee, which has already been negotiated; and

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for La Chira, the agreed-upon fee that the government will pay for the construction of the waste water treatment plant is reflected as backlog for 2013 and 2014. For 2015, backlog is calculated to include the fees we will receive under the concession for our operation and maintenance, with no adjustment for inflation because 2015 is expected to be the plant’s first year of operations.

Our Infrastructure backlog as of March 31, 2013 was US$443.0 million. As of March 31, 2013, we expect to recognize as revenues 24.6% of our backlog by December 31, 2013, 30.3% of our backlog by December 31, 2014 and 45.1% of our backlog in 2015. The following chart sets forth the growth of our Infrastructure backlog from December 31, 2010 to March 31, 2013.

Infrastructure Backlog Growth (in US$ million)

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*	The Lima Metro commenced operations on January 9, 2012.

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The following pie charts set forth our Infrastructure backlog breakdown by line of business as of March 31, 2013.

Backlog by Line of Business

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The table below sets forth our ending Infrastructure backlog for 2010, 2011, 2012 and for the first quarter of 2013, accounting for opening backlog for each year, annual contract bookings and adjustments and annual revenues recognized (excluding Norvial and our Energy line of business).


	2010			2011			2012			Three months ended March 31, 2013
										(unaudited)
	(in millions of US$)
Opening backlog (end of prior period)		—			47.2			195.9			413.4
Contract bookings and adjustments during the year		62.9			162.2			277.0			45.4
Revenues recognized during the period		(15.6	)		(13.5	)		(59.5	)		(15.9	)

Ending backlog (end of current period)		47.2			195.9			413.4			443.0

Real Estate Backlog

Our Real Estate segment backlog reflects sales contracts with buyers for units that have not yet been delivered and will be recognized as revenues once they are delivered.

Our Real Estate segment backlog as of March 31, 2013 was US$115.2 million. As of March 31, 2013, we expect to recognize as revenues 74.3% of our backlog by December 31, 2013, 19.4% of our backlog in 2014 and 6.4% of our backlog thereafter.

The following pie chart sets forth our Real Estate backlog breakdown by type of real estate activities as of March 31, 2013.

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The table below sets forth our ending Real Estate backlog for 2010, 2011, 2012 and for the first quarter of 2013, accounting for opening backlog for each year, annual contract bookings and adjustments and annual revenues recognized.


	2010			2011			2012			Three months ended March 31, 2013
										(unaudited)
	(in millions of US$)
Opening backlog (end of prior period)		25.8			1.8			58.2			108.4
Contract bookings and adjustments during the year		53.8			112.8			144.4			24.8
Revenues recognized during the year		(77.8	)		(56.5	)		(94.1	)		(18.0	)

Ending backlog (end of current period)		1.8			58.2			108.4			115.2

Technical Services Backlog

In reflecting a Technical Services contract in our backlog, we assume that each party will satisfy all of its respective obligations under the contract and that work under the contract will be completed on a straight-line basis. Our Technical Services segment backlog does not include intersegment eliminations.

Our Technical Services backlog as of March 31, 2013 was US$818.9 million. As of March 31, 2013, we expect to recognize as revenues 37.4% of our backlog by December 31, 2013, 26.3% of our backlog in 2014 and 36.3% of our backlog thereafter. The following chart sets forth the growth of our Technical Services backlog from December 31, 2008 to March 31, 2013.

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Technical Services Backlog Growth (in US$ million)

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*	Includes CAM, which we acquired on February 24, 2011.

The table below sets forth our ending Technical Services backlog for 2010, 2011, 2012 and for the first quarter of 2013, accounting for opening backlog for each year, annual contract bookings and adjustments and annual revenues recognized.


	2010			2011			2012			Three months ended March 31, 2013
										(unaudited)
	(in millions of US$)
Opening backlog (end of prior period)		100.1			267.1			516.1			873.7
Contract bookings and adjustments during the year		268.5			611.2			782.3			39.4
Revenues recognized during the year		(101.5	)		(362.2	)		(424.7	)		(94.3	)

Ending backlog (end of current period)		267.1			516.1			873.7			818.9

The following pie charts set forth our Technical Services backlog breakdown by geography, end-market and client sector as of March 31, 2013.


Backlog by End-Market	Backlog by Geography	Backlog by Client Sector

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Employees

We have developed an extensive and talented team, including more than 3,500 engineers, that gives us the capability and scale to undertake large and complex projects. We also have access to a network of approximately 62,000 manual laborers throughout Peru that can supplement our workforce when required by our projects. Moreover, we have the flexibility to engage our own workers on projects outside Peru, avoiding the need to seek new employees in other countries.

As of December 31, 2012, we had a total of 28,257 full-time employees, including approximately 12,000 manual laborers, a number that fluctuates depending on our project backlog. At such date, we also worked with 4,452 employees of subcontractors. Occasionally, we employ subcontractors for particular aspects of our projects, such as carpenters, specialists in elevator installation and specialists in glassworks. We are not dependent upon any particular subcontractor or group of subcontractors. As of December 31, 2012, 24% of our employees worked outside Peru. The following table sets forth a breakdown of our employees by category as of December 31, 2012.


Salaried Employees	Engineering and Construction		Infrastructure		Real Estate		Technical Services		Corporate		Total
Engineers		2,229		127		30		1,260		11		3,657
Other professionals		902		72		45		861		38		1,918
Technical specialists		1,014		245		36		4,520		9		5,824
Manual laborers(1)		11,885										11,885
Joint operations employees(2)		3,545		1,428								4,973

Subtotal		19,575		1,872		111		6,641		58		28,257
Subcontracted employees		4,452		—		—		—		—		4,452

Total		24,027		1,872		111		6,641		58		32,709

(1)	The number of manual laborers, who form part of our network of approximately 40,000 manual laborers, varies in relation to the number and size of projects we have in process at any particular time.

(2)	Includes engineers, professionals, technical specialists and manual laborers employed by our joint operations.

The following chart sets forth the growth of our total employees from December 31, 2010 to December 31, 2012.

Total Employees

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Our talent development system has allowed us to develop a team of professionals who are able to design and implement sophisticated projects. Our talent development system is based on three main pillars: (i) specialized training for all levels, including senior management; (ii) mentoring; and (iii) feedback from managers to employees.

We have implemented programs to attract young and qualified candidates. Our Trainee, Academic Excellence and Young Engineers programs, offer various types of internships and training opportunities to engineering students

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and recent graduates, rewarding the most successful candidates with the opportunity to work as full-time, permanent employees. Our focus is not only to attract talented people but also to retain them. Therefore, during the last five years we have worked together with Great Place to Work®, a human resources consulting, research and training firm, to measure our employee’s satisfaction with the working environment. According to studies carried out by Great Place to Work® during 2012, 70% of our engineers, technical specialists and other professional employees confirmed that we are a “great place to work.” Moreover, our subsidiaries Viva GyM and GMP were recognized by Great Place to Work® as being among the 45 best companies to work for in Peru.

Through our Corporate Learning Center, we offer continued education opportunities through a wide selection of courses and training programs targeted at each level. We believe the knowledge that our employees gain through these programs is reflected in the way they work and relate to our clients, adding value in every step. During 2012, we invested US$7.7 million in continuing education, reaching approximately 304,000 hours of capacitation activities for our employees.

We place significant emphasis on instilling our core corporate values of quality, professionalism, reliability and efficiency and on promoting safety, environmental sustainability and social responsibility throughout the entire organization. Our Code of Conduct and Charter of Ethics regulate the conduct of our employees while promoting the foregoing values. In addition, our employees participate in ethics seminars on a periodic basis.

Substantially all of our manual laborers and some other employees are members of labor unions. Our practice is generally to extend the benefits we offer our unionized employees to non-unionized employees. We consider our current relationship with unions to be positive.

In our E&C segment, collective bargaining agreements are negotiated at two levels: on an annual basis between the National Federation of Civil Construction and the Peruvian Chamber of Construction, without our direct involvement; and on a per project basis directly between the unions and our project committees, in accordance with such annual agreement. In addition, some of our personnel in our gas processing plant belongs to the labor union Unicode Workers Union GMP S.A. We currently have collective bargaining agreements with some of our gas processing plant workers. In the case of our operation and maintenance of infrastructure assets business, some of our personnel in CAM Perú are subject to a collective bargaining agreement. These collective bargaining agreements are negotiated on an annual basis.

Safety

In 2012, our E&C subsidiary GyM had an accident incidence rate of 0.29, calculated over 64,202,006 hours worked. In 2011, GyM had an accident incidence rate of 0.52, calculated over 52,979,699 hours worked, which was lower than that of private construction companies in the United States for the year, which had an average of 3.90, as reported by the Bureau of Labor Statistics of the United States Department of Labor. In 2010, 2011 and 2012, we had two, two and six fatalities, respectively.

Our occupational health and safety management system in our subsidiaries GyM, GMP and GMI is certified by OHSAS 18001. We believe a safe job site contributes to our reputation and ability to gain new business while enhancing employee morale and reducing costs and exposure to liability. We train our employees in safety, environment, occupational health and related topics, and have trained and certified experts in risk management and prevention who disseminate and regulate risk prevention standards and procedures. We have more than 400 staff members across our subsidiaries dedicated to health, safety and environmental matters, and at least two and up to 35 health, safety and environmental employees are assigned to each E&C project we undertake depending on the nature of the project and the client’s requirements. Moreover, each project manager is responsible for compliance with our safety requirements and for the protection of our employees.

To ensure safe conditions, we perform preventive and routine maintenance on all of our properties, worksites, systems and machinery, and make repairs and replacements when necessary or appropriate. We also conduct routine and required inspections of those properties in accordance with applicable regulation. Furthermore, we continually monitor, test, and record the effectiveness of our safety measures and assure that the highest risk segments receive the highest priority for scheduling internal inspections or tests for integrity.

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Insurance and Contingency Planning

We have insurance coverage for fire; strike, riot, malicious damage, vandalism and terrorism; loses or damages to construction machinery and equipment; destruction or disappearance of property; civil liability, including physical harm to third parties; professional liability; transportation; vehicle theft, collision, rollover, fire and accidents; and directors and officers liability. Additionally, we carry different policies for specific risks related to our business segments. Our management considers this coverage to be sufficient to cover probable losses and damages, taking into consideration the nature of our activities, the risks involved in our transactions and the advice of our insurance brokers.

We also have contingency plans in place in order to protect our company and the interests of our clients. In the event of an emergency, we have procedures in place designed to minimize any resulting interruption in service to our most critical business processes.

Moreover, in the event of an emergency, we have systems and procedures in place that minimize the impact of unplanned downtime to our IT services’ clients. Our data centers have redundant facility systems and infrastructure to provide continued operation on each of them, complying with international standards such as ISO/IEC 27001 and ISO 9001.

Warranties

For certain of our contracts, we are required to provide performance bonds to ensure compliance with contractual obligations such as construction works, operation and maintenance of infrastructure assets, among others. The amount of the performance bond varies on a case-by-case basis, depending on the value of the project. Performance bonds are usually renewed annually until the contractual obligation which they intend to guarantee is fully satisfied.

As part of our real estate sales contracts, we provide a six-months warranty for latent defects, which covers hidden flaws not discoverable through inspection. The warranty extends to a five-year term if the defects are caused by: (i) the use of materials below the requisite quality standards; (ii) poor execution; or (iii) faulty land. We also provide a five-year warranty for structural defects, and assume the terms and conditions of our finishes suppliers’ warranties.

We provide warranties in connection with our IT services. All government contracts include a latent defects clause, in accordance with Article 51 of the Procurement Act which establishes a minimum warranty of one year, although, for some contracts, we provide warranties for two or three years. For contracts involving the sale of equipment or licensing, we provide the manufacturer’s warranty and, if a claim arises, we transfer the claim to the manufacturer unless we provided an extended warranty. For software development contracts, we provide a one to three years good performance warranty.

We have had no material disbursement or expenditure related to our warranties in the recent past.

Quality Assurance

The quality of our services is backed by the following certifications:

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Engineering and Construction: ISO 14001 and ISO 9001

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Infrastructure:

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GMP: ISO 14001 and ISO 9001

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Technical Services:

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Operation and Maintenance of Infrastructure Assets: ISO 9001

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IT Services: ISO 9001, ISO 27000 and CMMI-3

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Electricity Networks Services: ISO 14001 and ISO 9001

Properties, Plants and Equipment

Approximately 89% of our assets is located in Peru, with the balance located primarily in Chile. At December 31, 2012, the book value of all our land (excluding real estate inventories) and buildings, machinery and equipment was US$367.7 million. We currently lease certain machinery and equipment from vendors. The term of our leasing contracts ranges from two to five years, depending on the nature of the equipment. Leased machinery and equipment are capitalized for accounting purposes. Our principal executive offices, which we lease, are located at Av. Paseo de la República 4667, Surquillo, Lima 34, Peru. We are constructing additional office space for our corporate use, which we expect to complete in the beginning of 2014.

Legal and Administrative Proceedings

We may, from time to time, become subject to various legal and administrative proceedings that are incidental to the ordinary conduct of our business. We are currently not party to any material legal or administrative proceedings.

Corporate Social Responsibility

We aim to attract and develop our human capital through various training, mentorship and rewards programs in order to maintain our position as the best place to learn and work in the engineering field in Peru. We also seek to promote social good by continuing to foster relationships with the communities that surround the areas of operation of each of our business segments. As part of our citizenship building efforts, among other things, we provide: necessary tools for improving the employability and economic livelihood of citizens; create basic infrastructure to promote the use of public spaces as cultural spaces and training grounds for citizens; and create spaces that not only provide benefits, but also encourage citizens to actively participate in their maintenance.

Our social responsibility efforts have been recently recognized by the award of prizes such as the “Latin American Award for Corporate Social Responsibility 2012” awarded by the Inter-American Federation of the Construction Industry (FIIC), the “Business Creativity Award” granted by the Peruvian University of Applied Sciences (UPC) and the recognition as the “Peruvian Model Company” by the Lima Chamber of Commerce (CCL).

Our model of sustainable development is based upon building relationships of trust. In our projects we consider the needs of local communities with respect to generating employment; the expectations of our customers regarding the particular goals of the project; the demand of the state for a trained service provider; and investors who wish to entrust their capital to a company that follows best practices in corporate governance and social responsibility. The following is description of our main corporate social responsibility projects:

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Our social support program “Ayni” is intended to achieve the sustainability of our affordable housing projects by encouraging the responsible and committed participation of the owners of the units. This program has provided social training to more than 6,000 families in order to strengthen their leadership skills, integration and mutual respect.

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Through our “Metro Culture” program, we transform our trains and train stations into centers of social and cultural education. According to a 2012 poll, 97% of the Lima Metro users think that we have contributed to the development of the city and 92% believes that we have generated better citizens.

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Our “Road Management” program provides members of surrounding communities with the necessary civic and technical tools to make use of the roads and contribute to their maintenance by, for example, providing education on road safety and environmental protection. Moreover, we work on turning regular roads into touristic routes through the development and dissemination of guides, websites and training local communities to help develop skills in tourism.

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Our “Development of Local Labor Capacity” program ( Programa Desarrollando Capacidades Laborales en las Zonas de Influencia) improves the employability of the local population, providing training that directly promotes their employment in our projects as well as providing other construction-related workshops which contribute to their development in community affairs. Since its creation in 2006, 18,000 persons have participated in this program, receiving more than seven hundred thousand hours of training.

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REGULATORY MATTERS

Set forth below is a description of the regulatory framework applicable to our company. We believe we are in compliance, in all material respects, with applicable laws and regulations in all of our business segments.

Engineering and Construction

Regulatory Framework Applicable to Contracts with the Public Sector

Peru’s State Contracting Law, approved by Legislative Decree No. 1017 (Ley de Contrataciones del Estado) and its regulation approved by Supreme Decree No. 184-2008-EF, govern services and construction agreements entered into with public entities. Article 10 of the Supreme Decree No. 184-2008-EF establishes that, at the beginning of the contracting process, the contracting public entity must prepare a technical file describing the characteristics of the services it intends to purchase and the selection process for its counterparts, among other specifications such as a feasibility statement in accordance with the Peruvian Public Investment National System.

The selection processes are established in Articles 15, 16, 17 and 18 of Peru’s State Contracting Law as follows:

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public biddings ( licitación pública ) applicable to goods, supplies and works;

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public tenders ( concurso público ) applicable to services;

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direct award ( adjudicación directa ) applicable to goods, services and works, which can be public or directed at select participants depending if the value is equal to or higher than 50% of the maximum amount set forth in the state budget regulation for direct award; and

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lowest amount award ( adjudicación de menor cuantía ) applicable to goods, services and works whose value is lower than one-tenth of the minimum limit established by the state budget regulation.

With the exception set forth in Article 22 of the Supreme Decree No. 184-2008-EF, the selection processes include the following phases: notice; registration of participants; submission and reply of inquiries; submission and reply of comments; preparation of the terms and conditions of the selection process; submission of bids; evaluation and qualification of bids; and adjudication.

Article 9 of Peru’s State Contracting Law establishes that participants of any of the foregoing selection processes must be registered in the Peruvian National Registry of Suppliers (Registro Nacional de Proveedores) and must not be disqualified from contracting with the state. Article 252 of the Supreme Decree No. 184-2008-EF establishes that this registration is renewable as long as a request is submitted to the Peruvian National Registry of Suppliers 60 days prior to expiration of the registry.

Bidders may participate in the selection process as part of a joint operation, in which case all members of the joint operation must be registered in the Peruvian National Registry of Suppliers and will be jointly liable for all consequences arising from the joint operation’s participation in the selection process and the execution of the agreement.

GyM and GMI are registered in the Peruvian National Registry of Suppliers as a construction and a consulting company, respectively.

Article 40 of the Supreme Decree No. 184-2008-EF establishes the types of contracts that may be entered into by public entities:

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lump-sum ( sistema a suma alzada ), applicable when the amounts, magnitudes and quality are determined in the terms and conditions of the selection process. The bidder submits its proposal indicating a fixed amount and a term for the completion of the agreement;

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unit price, rates or percentages ( sistema de precio unitario, tarifas o porcentajes ), applicable when the nature of the service to be provided does not allow accurate determination of the required quantities; and

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lump-sum and unit price, rates or percentages mix ( esquema mixto de suma alzada y precios unitarios ), applicable when accurate determination of the quantities required for some of the components cannot be made.

Article 41 of the Supreme Decree No. 184-2008-EF establishes that, in the case of goods and works, the terms and conditions of the selection process must indicate the execution type of the agreement as follows:

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“turn-key” ( llave en mano ), when completion is subject to the construction, equipment and operations, and, if applicable, the submission of the technical file in connection with the bidding process; and

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bid contest ( concurso oferta ), when completion is subject to the submission of the technical file, the completion of the work or land, as applicable. This completion type is only applicable to lump-sum contracts and public bidding selection process.

Peru’s State Contracting Supervising Agency (Organismo Supervisor de las Contrataciones del Estado, or “OSCE”), a public-sector entity within the Peruvian Ministry of Economy and Finance, supervises and oversees the selection processes carried out by public entities; manages the Peruvian National Registry of Suppliers; imposes penalties to suppliers that violate the provisions set forth in Peru’s State Contracting Law, its regulation and other related provisions; and informs the government’s General Controller (Contraloría General de la República) regarding violations to the regulation when damages are caused against the state.

Regulatory Framework Applicable to Contracts with the Private Sector

Parties to a private-sector agreement may freely determine the contract type and its contents as long as it complies with certain legal requirements, including the provisions set forth in Article 1353 of the Peruvian Civil Code. GyM, GMI and Stracon GyM participate in private-sector contracts for engineering and constructions.

Construction Activities in Peru

Legal Framework

Legislative Decree No. 727 declared that construction activities in Peru are in the public interest and of preferential national interest. According to Section F of the Fourth review of the United Nations International Statistical Industrial Classification (ISIC), construction activities typically consist of the construction of dwellings, buildings and stores; and the construction of large scale infrastructure projects such as highways, bridges, tunnels, railways, irrigation systems, sewage systems, industrial facilities, pipelines and electric lines, among others. GyM has developed numerous projects in the construction sector. Currently, the company focuses on buildings (ISIC Division 41), civil works (ISIC Division 42) and specialized activities (ISIC Division 43).

Construction entities must comply with the National Building Regulation (Reglamento Nacional de Edificaciones approved by Supreme Decree No. 011-2006- VIVIENDA), which establishes that urban allotments and buildings must be developed in compliance with the rules governing safety, functionality, accessibility, habitability and environmental impact. According to Article 25 of the National Building Regulation, construction companies, such as GyM and GMI, are responsible for (i) executing works in accordance with project specifications and applicable regulation; (ii) possessing the organization and infrastructure that guarantee the feasibility of the project; (iii) appointing the party responsible for the construction to assume its technical representation; (iv) providing the resources and materials to complete the project pursuant to the terms of the agreement and required standards and within the approved budget; (v) executing subcontracts within contractual limitations; and (vi) delivering to the client documented information regarding the executed works.

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Notwithstanding any legal actions that the construction company may take against suppliers, manufacturers or subcontractors, the construction company may be responsible for the construction including the work executed by subcontractors and for the use of defective materials or supplies.

Penalties for violating the National Building Regulation are determined by the municipal government in the jurisdiction where the project is developed, and set forth in its corresponding regulations. In addition, they may also pursue criminal actions or civil claims if applicable.

Safety Regulation in Construction Projects

The Law on Safety and Health at Work (Law No. 29783) is intended to promote workplace accident prevention and applies to all business sectors. The principal safety rules applicable to construction projects include the following:

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companies with 20 or more employees must establish a committee for the promotion of workplace safety and health that oversees the implementation of the required internal safety and health regulation policy;

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all projects must have a safety and health plan consisting of all the technical and administrative mechanisms to guarantee the physical integrity and health of workers and third parties during project execution;

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occupational diseases detected during project execution must be recorded and the competent authority must be notified in accordance with the regulation of the Law on Safety and Health at Work approved by Supreme Decree No. 005-2012-TR, and with Ministerial Resolution No. 510-2005- MINSA;

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companies must provide for medical examinations of its employees prior to, during and at the termination of their employment;

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companies must show a safety and health plan; an index of frequency; and the company’s performance in safety and health in order to be awarded public and private projects;

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use of individual protective equipment, including gloves, safety goggles, boots and helmets, is mandatory when risks to safety and health cannot be prevented by other means; and

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personnel responsible for safety must comply with all requirements in Rule NTP S50.04S for fire prevention.

The Peruvian Ministry of Labor and Employment Promotion and the Peruvian Ministry of Health are the competent organisms in the safety and health fields, respectively.

Safety Regulations Applicable to Subsectors

In addition to the Law on Safety and Health at Work applicable to all our business sectors, our Engineering and Construction segment must also comply with the regulations set forth below.

Power and Utilities

GyM and CAM Peru must comply with the rules of Ministerial Resolution No. 161-2007-MEM-DM for its activities relating to the construction of hydroelectric plants, transmission lines and substations. OSINERGMIN is the authority responsible for supervising and enforcing compliance of the foregoing rules. The most relevant of the safety rules with which GyM and CAM Peru must comply include: (i) providing employees with necessary information regarding safety measures related to the tasks they perform; (ii) providing employees with adequate safety equipment; and (iii) evaluating and remedying potential sources of danger.

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Mining

GyM and Stracon GyM must comply with the Mining Occupational Health and Safety Regulation, approved by Supreme Decree No. 055-2010-EM and other related regulations for their mining-related construction activities including the construction of mineral processing plants and other mining-related buildings, among others. In developing mining projects, our subsidiaries’ personnel must follow the safety programs and be familiar with internal rules from their mining client. The Peruvian Ministry of Labor and Employment Promotion and OSINERGMIN are the authorities responsible for supervising and enforcing compliance of the foregoing rules. The most relevant of the safety rules with which GyM and Stracon GyM must comply include: (i) creating an internal safety and health regulation policy and selecting a manager responsible for its implementation; (ii) monitoring and recording workplace accidents and occupational diseases; (iii) providing information to employees regarding the safety risks related to their work; (iv) providing employees necessary first aid and medical attention in the event of a workplace accident; (v) providing employees the necessary tools, equipment or materials to perform their activities safely; (vi) evaluating risks in order to establish accident prevention and mitigation plans.

Oil and Gas

GyM must comply with Supreme Decree No. 043-2007-EM for its activities relating to the construction of gas processing plants. The Peruvian Ministry of Labor and Employment Promotion is the authority responsible for supervising and enforcing compliance of the foregoing rules. See “Regulatory Matters—Infrastructure—Peruvian Hydrocarbon Regulation—Environmental Regulation” for more information on environmental regulation applicable to the oil and gas sector. The most relevant of the safety rules with which GyM must comply include: (i) assuring that senior project managers are responsible for the safety and health of workers; (ii) assigning specialized personnel responsible for safety and health matters; and (iii) monitoring and recording workplace accidents on a monthly basis.

Industrial Construction

GyM must comply with the Industrial Safety Regulation approved by Supreme Decree No. 42-F (Reglamento de Seguridad Industrial) for its activities relating to the construction of industrial plants. The most relevant of the safety rules with which GyM must comply include: (i) overseeing that worksites are constructed, equipped and managed to provide security and protection to employees; (ii) instructing employees about risks to which they are exposed related to their work and adopting necessary measures to avoid accidents and damage to employee health; and (iii) overseeing inspections to verify the proper installation of safety equipment.

Registries and Permits

According to Supreme Decree No. 004-2007-TR, civil contractors must be registered in the National Civil Construction Contractors and Subcontractor Registry, and comply with the rules of Ministerial Resolution No. 195-2007-TR which establishes the requirements for registration, including registering through the corresponding local agency and filing an affidavit indicating compliance with the registration requirements before the effective date of registration. GyM and Stracon GyM are currently registered in the National Civil Construction Contractors and Subcontractor Registry.

According to Supreme Decree No. 005-2008-EM mining contractors must register with the National Mining Contractors and Specialized Companies Registry. GyM and Stracon GyM are currently registered. Proper registration requires the filing of a request with the Regional Agency of Energy and Mines with jurisdiction in the area where the mining activities will take place. In addition, within five days upon commencement of construction, GyM and Stracon GyM must provide in writing their employees with the following information: (i) the company’s legal name; (ii) the scope of the contract; (iii) the place of execution; (iv) the applicable health and safety regulations; (v) the Safe Work Written Procedures (PETS); and, (vi) risk insurance policies.

Labor Law Requirements in Civil Construction

Labor law requirements in civil construction consist of the specific legal framework for civil construction workers and the general legal framework applicable to the administrative personnel in the civil construction sector set forth in the Single Revised Text of the Labor Productivity and Competitiveness approved by D.S No. 003-97-TR.

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Seasonality of services is one of the main features in the specific legal framework due to the temporary nature of construction contracts. Consequently, certain general rules such as the trial period are not applicable to construction workers.

The principal terms and conditions relating to collective bargaining from our civil construction workers have been agreed upon and recorded in the 2012-2013 agreement, dated August 16, 2012, and entered into between the Peruvian Chamber of Construction and the Federation of Civil Construction Workers (Federación de Trabajadores en Construcción Civil). The 2012-2013 agreement included the following benefits: (i) remuneration increase; (ii) bonuses and premiums rewarding high specialization degrees; (iii) bonuses for workers that work at elevations above 3,000 meters or below zero-level elevation (below a second basement or five meters under the zero-level elevation).

The Supreme Decree No. 009-97-SA, Law No. 26790 and Supreme Decree No. 003-98-SA require construction companies to have complementary high risk insurance for workers that perform high risk tasks. As of the date of this prospectus, GyM and Stracon GyM have this insurance coverage.

Environmental Regulations

Section 24 of the General Environmental Law approved by Law No. 28611 (the “General Environmental Law”) provides that all human activity likely to cause significant environmental impact is subject of regulation by the National System of Environmental Impact Assessment. The Peruvian Ministry of the Environment, through the Environmental Supervising and Enforcement Agency (Organismo de Evaluación y Supervisión Ambiental, or “OEFA”) supervises the compliance and enforces environmental rules related to mining, oil and gas, and electricity.

In addition to being responsible for the impact that their activities, by action or omission, may cause the environment, GyM and Stracon GyM are also subject to an environmental impact assessment and must obtain an environmental certification necessary to obtain project permits or licenses. These companies must also adopt measures for the management of hazardous materials intrinsic to their activities to mitigate the negative environmental impact their activities may have.

Civil Construction

The Supreme Decree No. 015-2012-VIVIENDA regulates the environmental aspects of projects related to housing, urbanism, construction and sanitation activities in urban or rural areas. The National Directorate of Housing, Urbanism, Construction and Sanitation supervises the compliance and enforces the applicable rules. Projects are categorized according to their environmental impact during and after their execution and different rules are established for each category including compliance with the following environmental studies prior to initiating construction works: (i) projects expected to cause minor environmental impacts require an environmental impact statement; (ii) projects expected to cause moderate environmental impacts require an semi-detailed environmental impact assessment; and (iii) projects expected to cause a major environmental impact require a detailed environmental impact assessment.

Other Subsectors

Depending on the subsector in which they operate, GyM and Stracon GyM are required to follow specific environmental provisions issued by the competent authorities.

Tax Legal Regime Applicable to Construction

Section 63 of Peruvian Income Tax Law approved by Supreme Decree No. 179-2004-EF, establishes that construction companies engaged in construction contracts for a period longer than one fiscal year can choose to be taxed under any of the following systems:

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allocate to each fiscal year the gross income resulting from applying the percentage of gross margin estimated for the work over the amounts collected for the same work; or

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allocate to each fiscal year the gross income calculated by deducting the costs corresponding to the tasks performed during that year from the amount collected or that is expected to be collected corresponding to that work.

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In both situations, a special accounting registry must be kept for each project, which is meant to keep a record of the costs, expenses and income of each project in an account separate from the general analytical accounts ( cuentas analíticas de gestión ).

Until December 31, 2012, construction companies could defer revenues related to each individual project until the total completion of the project, provided the project was completed in three years or less. In such cases, the income was to be recognized in the fiscal year in which the project concluded or was delivered. In case the project was scheduled to conclude in a period exceeding three years, the results would be determined in the third year in accordance with the progress of the works over the three-year period. Beginning in the fourth year, results were determined following the foregoing methods.

Starting on January 1, 2013, in accordance with Legislative Decree No. 1112, which amended the Peruvian Income Tax Law, construction companies that adopted the deferral method are authorized to continue with the use of such method only with respect to income arising from the execution of work contracts initiated prior to January 1, 2013, until its completion and for execution of work contracts initiated on or after January 1, 2013 the deferral method is no longer accepted.

The Peruvian Income Tax Law also provides that the difference that may result from a comparison between the real gross income and the income assessed pursuant to any of the methods described above shall be allocated to the fiscal year in which the work concluded. Additionally, the company must apply the same system to all its construction contracts and must receive prior authorization from tax authorities to change the applied system.

Prevention of Money Laundering and Financing of Terrorism

Regulations for money laundering and terrorism financing prevention (SBS Resolution No. 486-2008) require construction and real estate companies to implement a money laundering and terrorism financing prevention system, including the appointment of a compliance officer, setting up a registry of operations and notifying the Financial Intelligence Unit of the SBS, the entity responsible for of supervising and enforcing compliance, of any suspicious activity.

Infrastructure

Private Investment in Public Infrastructure and Services

In Peru, promotion of private investment in public infrastructure and services is undertaken by Proinversión and commonly awarded through multi-party concession agreements among the concessionaire, Proinversión and the respective public entity. Private investment in public infrastructure is regulated by the Single Revised Text approved by Supreme Decree No. 059-96-PCM (Texto Único Ordenado or “TUO”) and its additional regulation approved by Supreme Decree No. 108-2006-EF.

In accordance with the TUO and its regulation, concessionaires are entitled to receive from the state: (i) in the case of self-financing projects, fees and tolls charged to end-users; (ii) in the case of co-financed projects, subsidies and payments from the public entity awarding the concession; and (iii) any other financing structure agreed upon by the parties.

The regulation of private-public partnerships allows public entities to participate, together with private investors, in the development or operation of public infrastructure and services. The regulation of private-public partnerships establishes that projects classified as self-financing and those classified as co-financed must comply

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with the requirements and procedures set forth in the Public Investment National System Law (Ley del Sistema Nacional de Inversión Pública) and in the Indebtedness National System law (Ley del Sistema Nacional de Endeudamiento) as amended.

Each of our subsidiaries Norvial, Survial, Canchaque and GyM Ferrovías has entered into a concession agreement with Proinversión and the Peruvian Ministry of Transport and Communications. La Chira has entered into concession agreements with Proinversión and Sedapal S.A. The abovementioned agreements were entered into in accordance with the provisions set forth in the TUO and its regulation, and with the regulation of private-public partnerships when applicable.

Infrastructure Construction and Safety

Infrastructure concessionaires must assure that the construction companies they hire to construct infrastructure projects comply with the foregoing rules relating to construction projects. In addition, companies engaged in road construction must comply with the guidelines issued by the Road and Railways General Directorate of the Peruvian Ministry of Transport and Communications and with the National Road Infrastructure Management Regulation regarding road construction, maintenance and safety. These regulations establish procedures for authorizing road construction and approving work contracts, among others.

Environmental Regulations

Peruvian environmental laws and regulations have become increasingly stringent over the last decade. All industries and projects are subject to Peruvian laws and regulations concerning water, air and noise pollution, and the discharge of hazardous substances. The principal legislation governing environmental matters is the General Environmental Law; the Law of the National System of the Environmental Impact Evaluation approved by General Law No. 27,446 (the “SEIA”); the regulations of the SEIA Law approved by Supreme Decree No. 019-2009-MINAM; and several environmental regulations that have been issued under the General Environmental Law, SEIA and other laws by the government with the collaboration of the Peruvian Ministry of the Environment.

Since the enactment of the General Environmental Law in October 15, 2005, several technical environmental regulations have been issued and this environmental regulatory framework is generally revised and updated regularly. Some regulations apply generally to Peruvian industries and some technical regulations are issued for specific industries.

The main environmental rules applicable to infrastructure projects include those described above in “Engineering and Construction—Environmental Regulation”

Peruvian Hydrocarbon Regulation

Our hydrocarbon operations are subject to governmental regulations as described below.

Exploration and Production

GMP is engaged in two major activities relating to the exploration and production of oil and gas: exploration and production of oil fields; and providing services to the oil industry.

Exploration and Production of Oil Fields

Peru’s hydrocarbon legislation regarding oil and gas exploration and production activities includes, among others, the Hydrocarbon Organic Law and the regulations governing the qualification of petroleum companies; the exploration and production of hydrocarbons; the transportation of hydrocarbons; hydrocarbons pipelines and safety requirements in such activities.

The foregoing regulations define the roles of Peruvian government agencies which regulate the oil and gas industry; provides the framework for the promotion and development of hydrocarbon activities based on the principles of private-sector competition and access to all economic activities; and sets the safety and security standards as well as the legal proceedings for carrying out operations.

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The Peruvian Constitution establishes that the government is the sole proprietor of underground hydrocarbons within its national territory. However, the Peruvian government has granted Perupetro, a state-owned company authorized to negotiate and enter into agreements for the exploration and/or production of hydrocarbons, the ownership right over the hydrocarbons extracted which allows Perupetro to enter into such agreements. Furthermore, the Peruvian Ministry of Energy and Mines, the Environmental Evaluation and Supervision Agency (“OEFA”) and OSINERGMIN constitute public entities that play an active role in oil and gas regulation.

The Peruvian Ministry of Energy and Mines is responsible for devising energy and mining policies; supervising activities in the energy and mining sectors; and promoting investments in those sectors. Within the Peruvian Ministry of Energy and Mines, the General Directorate of Hydrocarbons (DGH) is responsible for regulating the development of oil and gas fields and the General Directorate of Energy-Related Environmental Affairs (DGAAE) is responsible for reviewing and approving regulations related to environmental risks associated with hydrocarbon exploration and production activities.

OEFA is a public entity ascribed to the Peruvian Ministry of the Environment and is responsible for evaluating and ensuring compliance with applicable environmental rules covering hydrocarbon activities, as well as for sanctioning proceedings. OSINERGMIN is a public entity ascribed to the Presidency of the Council of Ministers’ office and is responsible for ensuring compliance with safety and security standards in the hydrocarbon industry, as well as for sanctioning proceedings. GMP is subject to the supervision, authority and regulations enacted by the foregoing agencies.

Regarding hydrocarbon exploration and production activities, companies are required to enter into either a licensing or a services agreement with Perupetro; other contractual arrangements are permitted with prior approval from the Peruvian Ministry of Energy and Mines. The foregoing agreements are governed by private law and must be approved by the Peruvian Ministry of Energy and Mines and the Peruvian Ministry of Economy and Finance. In licensing agreements, licensees obtain authorizations to explore and produce hydrocarbons in a determined area, are granted ownership over the extracted hydrocarbons and are subject to the payment of royalties. Licensees may trade the hydrocarbons with no limitations on sales prices, except in the event of a national emergency.

Services agreements grant contractors the right to perform hydrocarbon exploration and production activities in a determined area and receive compensation according to the production of hydrocarbons. The contractor is technically and financially responsible for the operations, but Perupetro maintains the ownership over the hydrocarbons extracted. These are the type of contracts GMP is party to, with respect to Block I and Block V.

Services agreements are intended for the development, production and transportation of hydrocarbons, as well as for certain storage activities. Services agreement commonly include a minimum performance schedule guaranteed by performance bonds and require corporate guarantees to be issued to secure the contractor’s compliance to the provisions established by the parties.

Additionally, a company must be qualified by Perupetro prior to entering into hydrocarbon exploration and production agreements. In order to qualify, a company must meet the standards under the Regulations on the Qualification of Petroleum Companies, requiring companies to demonstrate that they have the technical, legal and financial capacity to comply with all the obligations they will assume under the agreement with Perupetro. Such capacities are measured according to the characteristics of the area to be explored or produced, the expected investment required for the project, and the strict fulfillment of the rules regarding prior consultation, citizen participation and environmental issues related to the operation’s performance. Upon a positive evaluation, the company is issued a qualification certificate that allows it to initiate the negotiations of the agreement; notwithstanding the company remains responsible for obtaining all other licenses, permits and approvals required by applicable regulation.

Under the current regulation, 30 years is the maximum term of services agreements for the production of crude oil. On the other hand, natural gas and condensates-related services agreement have a maximum term of 40 years. Graña y Montero acts as GMP’s guarantor in both our Block I and Block V production services agreements.

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GMP must comply with Supreme Decree No. 043-2007-EM for its activities relating to exploration and production of hydrocarbons. The Peruvian Ministry of Labor and Employment Promotion is the authority responsible for the supervision and enforcement of the foregoing rules. See “Regulatory Matters—Infrastructure—Peruvian Hydrocarbon Regulation—Environmental Regulation” for more information on environmental regulation applicable to the oil and gas sector.

Services to the Petroleum Industry

Peruvian regulation provides that all companies that enter into a service agreement with any company that holds a licensing or services agreement must be registered as a subcontractor in the Hydrocarbons Public Registry in case they render any of the following services: (i) geological studies, geophysical studies, petroleum engineering related to drilling operations, production and well services; or (ii) construction of oil pipelines, gas pipelines, refineries and their maintenance, and specialized transportation by land, air, sea or river. In order to register a company as a subcontractor in the Hydrocarbons Public Registry, prior authorization from the General Directorate of Hydrocarbons (DGH) of the Peruvian Ministry of Energy and Mines is required.

On June 1, 2004, GMP was included as a subcontractor for the petroleum industry in the Hydrocarbons Registry of Lima’s Public Registry of Legal Entities; such registry remains in force as of the date of this prospectus.

Environmental Regulations

The Peruvian Ministry of Energy and Mines is responsible for enacting environmental regulation for the oil and gas sector. The Oil and Gas Environmental Protection Regulation, approved by Supreme Decree No. 015-2006-EM, sets out the legal framework and specific rules applicable to the exploration, production, refinement, processing, transportation, commercialization, storage and distribution of hydrocarbons, with the aim of preventing, controlling and remedying the negative environmental impacts arising from the foregoing activities.

The Peruvian Ministry of the Environment establishes general rules applicable to different activities in several sectors, in contrast to the specific rules enacted by the Peruvian Ministry of Energy and Mines regarding the oil and gas sector. Environmental laws and regulations are enforced by the National Environmental Enforcement Agency, OEFA (Organismo de Evaluación y Fiscalización Ambiental) which was created in 2008. Sanctions range from warnings and fines to suspensions of activities and mitigation of environmental damages, among others. In this regard, a breach of the obligations contemplated in the Environmental Impact Assessments in the hydrocarbons sector may originate fines up to 30,000 Tax Units (approximately US$42 million) according to the applicable law.

The main environmental rules applicable to GMP’s hydrocarbon projects include:

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filing environmental impact study or adopting the necessary measures to prevent and/or mitigate the environmental impact resulting from their activities;

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meeting minimum size, environmental and safety requirements applicable to worksites;

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handling and storing of hydrocarbons pursuant to safety and environmental requirements;

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establishing programs to monitor environmental issues; and

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providing training on environmental matters related to employee and personnel activities and responsibilities, especially with respect to regulations and procedures established for environmental protection and the environmental and legal consequences of non-compliance.

Operation of Terminals

In accordance with the Glossary, Acronyms and Abbreviations for the Hydrocarbons Subsector approved by Supreme Decree No. 032-2002-EM, a terminal is a facility that includes storage tanks, submarine lines or docks for receiving or dispatching liquid hydrocarbons and facilities related to activities of storage and reception and/or dispatch of liquid hydrocarbon from/to vessels.

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Consorcio Terminales is a joint operation among GMP and Oiltanking Peru S.A.C. which currently operates nine of Petroperú’s terminals in Peru: (i) the South Terminals of Pisco, Mollendo, Ilo, Juliaca and Cuzco; and (ii) the North Terminals of Eten, Salaverry, Chimbote and Supe. Consorcio Terminales provides hydrocarbons handling and storage services in Peru for gasoline, aviation fuel and diesel, among others.

The operation of both the South and North Terminals, was granted through the “South Terminal Operation Agreement” and the “North Terminal Operation Agreement” (the “Operation Agreements”) dated February 2, 1998, by and among Petroperú and Consorcio Terminales. The Operation Agreements resulted from two tenders in accordance with Legislative Decree No. 674, and mandate that Consorcio Terminales, as operator of the terminals, be responsible for the storage, handling, additivation and dispatch of hydrocarbons in such facilities.

The initial term of the Operation Agreements was fifteen years; however the parties agreed to extend the duration of the agreement to an additional eighteen months ending in August 2014. The purpose of this extension was to undertake the additional investments that were necessary to satisfy the national demand increase and to perform operative and safety-related improvements to the facilities.

In executing its operations, Consorcio Terminales is committed to develop and follow a work program which must include an investment schedule. The work program performed included the installation of fire protection systems and loading systems, among others and was secured by a performance bond.

GMP’s activities as a part of Consorcio Terminales fall under the scope of the Hydrocarbons Storage Safety Regulation (Supreme Decree No. 052-93-EM). Consorcio Terminales is registered in the Hydrocarbon Registry of OSINERGMIN and is authorized to perform transportation activities such as loading and unloading hydrocarbons from vessels on the terminals. This regulation establishes the conditions under which GMP can operate and maintain storage facilities for hydrocarbons. For instance, the regulation specifies the technical requirements for storage systems, which vary depending upon the kinds of hydrocarbons stored. Moreover, pursuant to this regulation, GMP must establish procedures to minimize potential risks that these facilities present for employees, third parties and properties.

Gas Processing Plants

In accordance with the Glossary, Acronyms and Abbreviations for the Hydrocarbons Subsector approved by Supreme Decree No. 032-2002-EM, a processing plant is a facility where the natural characteristics of hydrocarbons are changed to break them into the different compounds that comprise them, as well as the subsequent transformations to convert the hydrocarbons into fuel of specific qualities and suitable for transportation. This includes the facilities where the impurities, hydrogen sulfide, carbon dioxide, water and hazardous components are removed from natural gas.

Our processing and fractionation activities fall under the scope of regulations governing hydrocarbons refinement and processing including regulations on the design, construction, operation and maintenance of refineries and hydrocarbons processing plants, the oil refining process, the manufacture of natural asphalts, oil and lubricants, basic petrochemical activities and the processing of natural gas and condensates. In order to comply with these regulations, GMP must take cautionary measures in order to protect the safety of its employees and its facilities, protect the environment, preserve energy resources and ensure the quality of the products or services it delivers. For instance, GMP’s plant operations must be authorized by the General Direction of Hydrocarbons and comply with fire safety regulations. In the event of an accident, GMP must notify the Peruvian Ministry of Energy and Mines, the Peruvian Ministry of Labor and the Peruvian Social Security Administration.

Terms of our Concessions

Our concessions are subject to certain terms and conditions established in each concession agreement. During the term of the concessions, we are responsible for the construction and maintenance of the infrastructure necessary

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to their operation. The concession agreements establish minimum capital stock requirements for our concessionaire subsidiaries as follows: US$15 million, US$8 million, US$0.8 million, S/.46 million and S/.100 million for Norvial, Survial, Canchaque, La Chira and the Lima Metro, respectively.

The concession agreements establish grounds for termination including mutual agreement of the parties thereto, force majeure and breach of certain contractual obligations. Additionally, in the case of La Chira and the Lima Metro, the agreement can be terminated unilaterally by the grantor, with the payment of compensation. On the expiration date, all of the assets that are essential for the operation of the concession are considered the state’s property and no compensation is paid to the concessionaire.

In the event that changes in legislation or regulations that are exclusively related to the financial conditions of the earnings and/or costs associated with the investment, operation or conservation of the infrastructure, affect the economic terms of the contract by 10% or more, the concession agreements set forth economic terms adjustment mechanisms aimed at restoring the economic and financial equilibrium. See “Business—Infrastructure—Principal Infrastructure Lines of Business.”

Real Estate

Since 1987, we have been operating in the Peruvian real estate sector. In 2008, we incorporated Viva GyM to concentrate the group’s activities in this sector including promoting and managing real estate projects including affordable housing and housing and commercial real estate projects.

Zoning Regulations

Article 79 of the Municipalities Organic Law (Law No. 27972) establishes that municipal governments are the exclusive authority responsible for approving urban and rural development plans, as well as the zoning of the urban areas under their jurisdiction. Peruvian regulation establishes that urban zoning refers to the division of a municipal jurisdiction in zones for specific usages, such as residential, commercial, industrial or mixed-use.

The main zoning rules applicable to our real estate projects include the following:

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obtaining a construction license from the corresponding local municipality before commencing construction, reconstruction, conservation or repair of any property; and

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obtaining an inspection certificate issued by INDECI (National Institute of Civil Defense), the entity in charge of supervising that companies comply with the National Construction Regulation nationwide.

Environmental Regulations

The Environmental Protection Regulation for real estate, urbanism, construction and regularization related projects (Supreme Decree No. 015-2012-VIVIENDA) sets out to prevent, mitigate, control and remedy negative environmental impacts that may arise from real estate developments. Prior to initiating construction works, companies are required to obtain an environmental authorization from the Housing, Urbanism, Regularization or Construction National Directorate of the Peruvian Ministry of Housing, Construction and Sanitation and to comply with the provisions set forth in the corresponding environmental impact assessment.

The main environmental rules applicable to our real estate projects include the following:

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undertaking an environmental impact assessment; and

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requesting the environmental classification of our projects, which depends on the environmental risks associated therewith.

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Licenses

Article 10 of the Regulation of Urban Habilitation and Buildings Law, Law No. 29090 establishes the license requirements for urban habilitation and construction, depending on land size, the dimensions of the work to be undertaken and the financial target.

Upon completion of the real estate development and construction, as the case may be, the following requirements must be met:

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for urban development, the reception of the works ( recepción de la obra ) must be requested to the corresponding municipal government in compliance with Article 19 of the Habilitation and Construction Law; and

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for construction, the conformity of the works ( conformidad de obra ) must be requested to the corresponding municipal government in compliance with Article 28 of the Habilitation and Construction Law, accompanying the request with the construction plans and the construction statement (a description of the technical conditions and characteristics of the work performed).

Exclusive and Common Property Real Estate Units Regimes

The Regularization Buildings Factory Declaration Proceeding and Real Estate Units Regimen of Exclusive and Common Property Law (Law No. 27157) establishes the legal regime applicable to real estate comprised of assets with exclusive and common property, including, among others, (i) apartment buildings; (ii) condominiums; (iii) units under co-ownership; and (iv) commercial spaces, such as galleries and malls. The foregoing construction projects must include internal by-laws prepared or approved by the sponsor or builder, or by the owners with the vote of the majority of participating owners, the content of which is regulated in Article 42 of the Regularization Buildings Factory Declaration Proceeding and Real Estate Units Regimen of Exclusive and Common Property Law. Articles 40 and 41 of the foregoing law itemize the assets and services that qualify as common.

Owners of the real estate units have the opportunity to choose between the exclusive and common property regime, and the independent and co-ownership regime. The internal by-laws, the owner’s assembly minutes, all construction plans, architectural division plans, perimetric boundaries and the construction statement must be registered in the Real Estate Registry of the corresponding jurisdiction. Upon completion of the proper registries, units are registered independently from one another.

Fondo Mivivienda

The acquisition of affordable housing units developed by Viva GyM is often financed by Fondo Mivivienda S.A., a publicly owned financial institution established in 1998 by Law No. 26912, with the purpose of (i) promoting and financing the acquisition, bettering and construction of houses, especially those of social interest; (ii) carrying out activities related to the fostering of capital flows to the housing financing market; (iii) participating in the primary and secondary markets of mortgage credits; and (iv) contributing to the development of the capital markets.

Prevention of Money Laundering and Financing of Terrorism

SBS Resolution No. 486-2008, as amended from time to time, requires construction and real estate companies to implement a money laundering and terrorism financing prevention system, including appointing a compliance officer, setting a registry of operations and notifying the Financial Intelligence Unit of the SBS, the entity responsible for supervising and enforcing compliance to the resolution referred to herein, of any suspicious activity.

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Technical Services

Public- and Private-Sector Contracts

Concar provides services in compliance with Peru’s State Contracting Law and its regulation approved by Supreme Decree No. 184-2008-EF, as amended, when dealing with public counterparties; and with the regulation set forth in the Civil Code when dealing with private counterparties. Such regulations establish the different types of selection processes which companies may undergo when contracting with the state, as well as the rules and conditions applicable to such processes. They also establish general rules applicable to contractual relationships among private parties. See Section “Regulatory Matters—Engineering and Construction” of this prospectus for more information on the applicable legal frameworks. Concar is registered with the Peruvian National Registry of Suppliers, required to act as supplier for public entities.

Intellectual Property

Certain operations of GMI and GMD are protected by Peruvian Copyright Law approved by Legislative Decree No. 822, specifically the engineering drawings and software registered in the INDECOPI Copyright Registry. However, the company’s business and profitability are not dependent on patents or licenses; industrial, commercial or financial contracts; or new manufacturing processes.

Dimension Testing Services

CAM Perú S.R.L. provides the dimension testing service of electrical meters, for which it must be a registered testing entity as provided by Technical and Commercial Regulations Commission Resolution No. 0065-1999/INDECOPI-CRT. As of the date of this prospectus, Cam Perú S.R.L, is registered as an accredited dimension testing of electrical meters services provider. The pertaining registration can be renewed for consecutive periods, provided that a request is filled 60 days prior to expiration. If Cam Peru S.R.L. does not comply with the rules approved by the INDECOPI, said governmental authority may impose a suspension or revoke the registry.

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MANAGEMENT

General

Our business and affairs are managed by our board of directors in accordance with our by-laws, shareholder meeting rules of procedure, board of directors rules of procedure, internal rules of conduct and Peruvian Corporate Law No. 26887 (“Peruvian Corporate Law”). Our by-laws provide for a board of directors of between five and nine members. Our shareholders may appoint an alternate director for each director to act on his or her behalf when absent from meetings or unable to exercise his or her duties. Alternate directors have the same responsibilities, duties and powers of directors to the extent they are called to replace them.

Directors are elected at a shareholders’ meeting and hold office for three years. Directors may be elected to multiple terms. Our current board of directors is composed of nine directors and no alternates. If a director resigns or otherwise becomes unable to continue with the duties, a majority of our directors may appoint one of the alternate directors, or in the absence of alternate directors, any other person, to serve as director for the remaining term of the board. In the first board meeting held after the annual shareholders’ meeting where members of the board are elected, the board of directors must elect among its members a chairman and a vice chairman if the shareholders’ meeting did not elect them.

The board of directors typically meets in regularly scheduled quarterly meetings and when called by any director or our Chief Executive Officer. Resolutions must be adopted by a majority of the directors present at the meeting and the chairman is entitled to cast the deciding vote in the event of a tie.

Duties and Liabilities of Directors

Pursuant to Article 177 of Peruvian Corporate Law, directors are jointly and severally liable to a corporation, shareholders and third parties for any damages caused by abuse of power, fraud, willful misconduct or gross negligence. In addition, pursuant to Article 3 of Law No. 29720, directors of companies listed on the Lima Stock Exchange are also strictly liable for any damages caused as a result of any transactions in which they were involved and which resulted in damages or other losses to the corporation, as determined by a competent court of law. A director cannot be found liable if the director expressed disagreement at the time the vote was cast or upon learning of such transaction and if there is a record expressing such opposition.

Article 180 of the Peruvian Corporate Law requires a director with a conflicting interest on a specific matter to disclose such interest and abstain from the deliberation and decision-making process with respect to such matter. A director who violates this requirement is liable for any damages caused to us and may be removed by a majority of the board of directors upon request of any member of the board or by a majority vote of the shareholders.

Pursuant to Article 181 of Peruvian Corporate Law, shareholders are entitled to protect the interest of a company through derivative law suits against directors in order to remedy or prevent a wrong to the corporation. In addition, pursuant to Article 4 of Law No. 29720, with respect to companies listed on the Lima Stock Exchange, a shareholder holding shares which represent at least 10% of the paid capital may bring said action against the directors.

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Board of Directors

The following sets forth our directors and their respective positions as of the date of this prospectus. All directors were elected at our annual shareholders’ meeting held on March 30, 2011, and their term expires in March 2014, on the third anniversary from the date of election.


Name	Position	Year of Birth	Year of First Appointment
José Graña Miró Quesada	Chairman of the Board	1945	1996
Carlos Montero Graña	Vice Chairman of the Board	1942	1996
Roberto Abusada Salah	Director (Independent)	1946	1998
José Chlimper Ackerman	Director (Independent)	1955	2006
José Antonio Colomer Guiu	Director (Independent)	1952	2011
Hugo Santa María Guzmán	Director (Independent)	1963	2011
Luis Miró Quesada Valega	Director	1942	2011
Mario Alvarado Pflucker	Director, Chief Executive Officer	1957	2003
Hernando Graña Acuña	Director	1951	1996

The following sets forth selected biographical information for each of the members of our board of directors. The business address of each of our current directors is Av. Paseo de la República 4667, Surquillo, Lima 34, Perú.

José Graña Miró Quesada . Mr. Graña joined the group in 1968 and has been a director and Chairman of our board of directors since August 1996. He is an architect and graduated from Universidad Nacional de Ingeniería. For graduate studies, he attended ESAN and the Universidad de Piura Senior Management Program. In addition, Mr. Graña serves as Chairman of the board of directors of our subsidiary Viva GyM and as a director of our subsidiaries GyM and GMD. In addition, Mr. Graña serves as a director of Empresa Editora El Comercio S.A., Prensa Popular S.A., Servicios Especiales de Edición S.A. and Mexichem Amanco Holding. He has previously served as a member of the board of directors of our subsidiaries Concar, GMP, as well as GMI Refinería La Pampilla S.A.A., Edegel S.A.A. and Telefónica S.A.A. He served as Chairman and First Executive of Graña y Montero S.A.A. until March 2011, when he decided to retire from his executive responsibilities and the position of President was eliminated.

Carlos Montero Graña . Mr. Montero has been a director since August 1996 and is currently the Vice Chairman of our board of directors. He graduated from Universidad Nacional de Ingeniería as a civil engineer. For graduate studies, he attended the Universidad de Piura Senior Management Program. Mr. Montero is also the Chairman of the board of directors of our subsidiary Concar and a director of our subsidiaries Survial and GyM. He has previously served as Vice Executive Chairman of our subsidiary GyM until 2007.

Roberto Abusada Salah . Mr. Abusada has been a director since March 1998. He holds a Ph.D. in Economics, having studied at Pontificia Universidad Católica del Perú, Cornell University and Harvard University. In addition, Mr. Abusada is the Chairman of the board of directors of our subsidiary GMD and a director of TECSUP. He has previously served as a director of Post Graduate Studies in Economy at Pontificia Universidad Católica del Perú, member of the board of directors of the Peruvian Central Bank and Corporación Andina de Fomento (CAF), as well as Peru’s Vice-Minister of Economy. He is a founder and director of the Peruvian Institute of Economy (IPE).

José Chlimper Ackerman . Mr. Chlimper has been a director since March 2006. He received a degree in Economics and Business Administration from North Carolina State University. In addition, Mr. Chlimper is the Chairman of the board of directors and CEO of Agrokasa S.A. and a member of the board of directors of Corporación Drokasa S.A., Maestro Home Center Perú S.A., Aeropuertos del Perú S.A., ComexPerú, Instituto de Formación Bancaria (IFB) and our subsidiary GyM. He is Chairman of the board of directors of Compec. He is a member of the Agrarian Consultative Council for the master’s degree in Agrobusiness at Universidad del Pacífico. He has previously served as councilman for the municipality of Lima, President of the Fondo de Las Américas, Peru’s Minister of Agriculture and member of the board of directors of the Peruvian Central Bank.

José Antonio Colomer Guiu . Mr. Colomer has been a director since March 2009. He received a certificate in Corporate Management and another in Leadership and Innovation from Universidad de Navarra in Spain, a certificate in Business Administration and Marketing from ESADE in Spain and a certificate in Quality and Strategic Marketing from AEDEM—Alta Escuela de Dirección de Empresas in Spain. In addition, Mr. Colomer is a member of the board of directors of BBVA Banco Continental, Holding Continental, MAPFRE/Catalunya and our subsidiary Viva GyM. He is also President of ASF S.L. He has previously served as member of the board of directors of BBVA Provincial Venezuela and FC Barcelona.

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Hugo Santa María Guzmán . Mr. Santa María has been a director since March 2011. He is an Economist from Universidad del Pacífico and has a doctorate in Economics from Washington University in St. Louis, Missouri. He is also the Chairman of the board of directors of MiBanco and a director of APOYO Comunicación Corporativa, as well as a partner and chief economist at APOYO Consultoría. Mr. Santa María previously served as director of Fondo Consolidado de Reserva (FCR) and Compañía Minera Atacocha.

Luis Miró Quesada Valega . Mr. Miró Quesada has been a director since March 2011. He has been a member of the board of directors of Empresa Editora El Comercio S.A. since 1990. Mr. Miró Quesada has also been director and President of Grupo TV S.A.C, Plural TV S.A.C. and Compañía Peruana de Radiodifusión S.A. since 2007, as well as director of Zetta Comunicadores del Perú S.A. EMA since 1995.

Mario Alvarado Pflucker . Mr. Alvarado joined the group in 1980 and has been Chief Executive Officer of Graña y Montero since 1996 and a director since April 2003. He is a Civil Engineer with a master’s degree in Administration Engineering from George Washington University and graduate studies in the CEO Management program at Kellogg School of Management, Northwestern University. In addition, he is a member of the board of directors of our subsidiaries GyM, Vial y Vives, Viva GyM, CAM Chile, Survial, GyM Ferrovías, Almonte, as well as Larrain Vial Safi. He is also a member of the Consultive Council of the Tecnológico de Monterrey (Peru Site). Mr. Alvarado has previously served as member of the board of directors of Amerika Financiera S.A.

Hernando Graña Acuña . Mr. Graña joined the group in 1977 and has been a director since August 1996. He is an Industrial Engineer with a master’s degree in Mining Engineering from University of Minnesota. In addition, he is the Chairman of the board of directors of our subsidiary GyM, as well as a director of our subsidiaries GMI, Stracon GyM, Norvial, Survial, CAM Chile, Vial y Vives and La Chira. Since 1996, Mr. Graña has served as Chief Commercial Officer of GyM.

Board Committees

We have three board committees comprised of members of our board of directors.

Audit and Process Committee

Our Audit and Process Committee is comprised of three directors, all of which are independent in accordance with the SEC rules applicable to foreign private issuers. The current members of our Audit and Process Committee are Mr. Roberto Abusada Salah, Mr. José Chlimper Ackerman and Mr. José Antonio Colomer. These directors have extensive business and economic experience in Peru; however, in accordance with SEC rules, we disclose that they do not qualify as “financial experts.” Our Audit and Process Committee oversees our corporate accounting and financial reporting process. Immediately prior to the closing of this offering, the Audit and Process Committee will be responsible for:

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reviewing our financial statements;

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evaluating our internal controls and procedures, and identifying deficiencies;

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recommending to our annual shareholders’ meeting the appointment of our external auditors, determining their compensation, retention and oversight, and resolving any disagreements that may arise between management and our external auditors;

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evaluating the company’s compliance with the Board of Director’s internal regulation, as well as with general principles of corporate governance;

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informing our board of directors regarding any issues that arise with respect to the quality or integrity of our financial statements, our compliance with legal or regulatory requirements, the performance and independence of the external auditors, or the performance of the internal audit function;

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establishing procedures for the reception, retention and treatment of complaints regarding accounting, internal controls or other auditing matters, including the confidential, anonymous submission by our employees of concerns regarding questionable accounting or auditing matters;

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independently engaging its own counsel and any other advisers it deems necessary to fulfill its functions; and

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establishing policies and procedures to pre-approve audit and permissible non-audit services.

Our board of directors will adopt a written charter for our Audit and Process Committee, which will be available on our website at www.granaymontero.com.pe upon the closing of this offering.

Human Resource Management and Social Responsibility Committee

Our Human Resource Management and Social Responsibility Committee is comprised of three directors, all of which are independent in accordance with SEC rules applicable to foreign private issuers. The current members of the committee are Mr. José Chlimper Ackerman, Mr. Roberto Abusada Salah and Mr. Hugo Santa María Guzmán. The Human Resource Management and Social Responsibility Committee is responsible for:

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reporting to our board of directors on the appointment and dismissal of senior executives;

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reviewing and approving corporate goals and objectives relevant to CEO compensation, evaluating the CEO’s performance in light of those goals and objectives, and determining and approving CEO compensation;

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establishing compensation arrangements for senior executives in accordance with the financial results of the company;

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proposing measures to ensure transparency in the remuneration of directors and senior executives;

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evaluating our human resources policies;

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reporting to our board of directors on matters regarding related party transactions that could result in a conflict of interest;

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establishing our social responsibility policies;

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appointing third party independent compensation consultants, and establishing the compensation of and overseeing the third party independent compensation consultants; and

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supervising and reporting to our board of directors on social responsibility practices and management.

As a foreign private issuer, we are not required to maintain a compensation committee that complies with all of the U.S. laws and regulations and NYSE requirements applicable to U.S. issuers.

Investment and Risk Committee

Our Investment and Risk Committee is comprised of three directors. The current members of the committee are Mr. José Graña Miró Quesada, Mr. José Antonio Colomer Guiu and Mr. Luis Miró Quesada Valega. The Investment and Risk Committee is responsible for:

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establishing our investment policies;

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approving our annual investment plan;

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analyzing the projects that would require an investment greater than US$5 million; and

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assessing and seeking to mitigate the risks encountered by our company.

Operating Board Committees

We also have four operating board committees that meet monthly and are comprised of members of our board of directors, including at least one independent member per committee.

Engineering and Construction Committee

Our Engineering and Construction Committee supervises the operations of our E&C segment, and is comprised of five directors. The current members of the committee are Mr. José Graña Miró Quesada, Mr. Mario Alvarado Pflucker, Mr. José Chlimper Ackerman, Mr. Hernando Graña Acuña and Mr. Carlos Montero Graña.

Infrastructure Committee

Our Infrastructure Committee supervises the operations of our Infrastructure segment and is comprised of five directors. The current members of the committee are Mr. José Graña Miró Quesada, Mr. Mario Alvarado Pflucker, Mr. Hugo Santa María Guzmán, Mr. Luis Miró Quesada Valega and Mr. Hernando Graña Acuña.

Real Estate Committee

Our Real Estate Committee supervises the operations of the Real Estate segment and is comprised of three directors. The current members of the committee are Mr. José Graña Miró Quesada, Mr. Mario Alvarado Pflucker and Mr. José Antonio Colomer Guiu.

Technical Services Committee

Our Technical Services Committee supervises the operations of our Technical Services segment and is comprised of four directors. The current members of the committee are Mr. José Graña Miró Quesada, Mr. Mario Alvarado Pflucker, Mr. Roberto Abusada Salah and Mr. Carlos Montero Graña.

Executive Officers

Our executive officers oversee our business and are responsible for the execution of the decisions of the board of directors. The following table presents information concerning the current executive officers of the company and their respective positions:


Name	Position	Year of Birth	Year of Appointment	Year of First Employment at the Company
Mario Alvarado Pflucker	Chief Executive Officer	1957	1996	1980
Mónica Miloslavich Hart	Chief Financial Officer	1966	2009	1993
Antonio Rodriguez Canales	Chief Investment Officer	1963	2010	1999
Claudia Drago Morante	Chief Legal Officer	1970	2007	1997
Juan José Arrieta Ocampo	Corporate Social Responsibility Manager	1954	2011	1999
José Carlos Ascarza Revoredo	Chief Human Resources Officer	1975	2012	2004
Dennis Gray Febres	Corporate Finance and Investor Relations Officer	1975	2011	2011
Jorge Luis Izquierdo Ramírez	Corporate Learning Center Manager	1973	2011	1999

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Name	Position	Year of Birth	Year of Appointment	Year of First Employment at the Company
Antonio Cueto Saco	Mergers and Acquisitions Officers	1966	2013	1996
Gonzalo Ferraro Rey	President of the Infrastructure Area	1956	2013	1996
Hernando Graña Acuña	Executive President of GyM	1951	2005	1977
Francisco Dulanto Swayne	Executive President of GMP	1949	2011	1974
Juan Manuel Lambarri Hierro	Chief Executive Officer of GyM	1958	2001	1982
Luis Díaz Olivero	Chief Executive Officer of GMP;	1970	2011	1993
	Corporate Infrastructure Officer		2013
Jaime Dasso Botto	Chief Executive Officer of GMD	1966	2000	1991
Walter Silva Santisteban Requejo	Chief Executive Officer of GMI	1954	1998	1981
Jaime Targarona Arata	Chief Executive Officer of CONCAR	1968	2005	1996
Rolando Ponce Vergara	Chief Executive Officer of Viva GyM	1963	2008	1993
Klaus Winkler Speringer	Executive Vice President of CAM;	1968	2011	2011*
	Country Manager – Chile		2013
César Neyra Rodriguez	Manager of Internal Auditing and Management Processes	1958	2003	2003

*	Appointed by CAM in 2007.

The following sets forth selected biographical information for each of our executive officers:

Mario Alvarado Pflucker . See “—Board of Directors.”

Mónica Miloslavich Hart . Ms. Miloslavich joined the group in 1993 and she has been our Chief Financial Officer since 2009. She is an Economist graduated from Universidad de Lima and received a postgraduate diploma from Tecnológico de Monterrey. She previously served as Chief Financial Officer of Graña y Montero Edificaciones S.A.C. from 1998 to 2004 and Chief Financial Officer of our subsidiary GyM from 2004 to 2009. Additionally, Ms. Miloslavich is a member of the board of directors of our subsidiary GyM Ferrovías.

Antonio Rodriguez Canales . Mr. Rodriguez joined the group in 1999 and he has been our Chief Investment Officer since 2010. He is an Accountant graduated from Universidad de Lima, with a master’s degree in Business Administration from ESAN and a master’s degree in Business Administration from The Birmingham Business School in the United Kingdom. He previously served as Chief Executive Officer of Larcomar from 1999 to 2010. Currently, he is a director of our subsidiaries Concar, CAM Chile, Survial and GMD.

Claudia Drago Morante . Ms. Drago joined the group in 1997 and she has been our Chief Legal Officer since 2007. She received a Bachelor of Laws from Universidad de Lima and pursued postgraduate studies in Finance and Corporate Law at ESAN, received a postgraduate diploma from Tecnológico de Monterrey and completed the Management Program for Lawyers at Yale School of Management. She has previously served as Legal Counsel of Graña y Montero from 2000 to 2007 and of our subsidiary GMD from 1997 to 2000. Ms. Drago is Graña y Montero’s representative to the Lima Stock Exchange and the Secretary of the board of directors.

Juan José Arrieta Ocampo . Mr. Arrieta joined the group in 1999 and has been our Corporate Social Responsibility Manager since 2011. He received a Bachelor’s degree in Sociology from Pontificia Universidad Católica del Perú, a postgraduate diploma in Business Administration from ESAN and a postgraduate diploma from Tecnológico de Monterrey. He previously served as our Human Resources and Social Responsibility Manager from 2007 to 2011 and as Human Resources Manager of our subsidiary GyM from 1999 to 2007.

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José Carlos Ascarza Revoredo . Mr. Ascarza joined the group in 2004 and has been our Chief Human Resources Officer since 2012. He is an Industrial Engineer graduated from Universidad de Lima and received a postgraduate diploma from Tecnológico de Monterrey. He previously served as Human Resources Manager at our subsidiary GyM from 2007 to 2012.

Dennis Gray Febres . Mr. Gray joined the group in 2011 and has since been our Corporate Finance and Investor Relations Manager. He is an Economist with a degree from Universidad del Pacífico specializing in Finance and received a postgraduate diploma from Tecnológico de Monterrey. He previously served as Corporate Vice President of Finance at Citibank del Perú, General Manager of Citicorp Perú S.A.B. and Product Development Manager at Banco de Crédito del Perú.

Jorge Luis Izquierdo Ramírez . Mr. Izquierdo joined the group in 1999 and he has been our Corporate Learning Center Manager since 2011, having previously served as manager of the Project Management Office. He is a Civil Engineer with a degree from the Pontificia Universidad Católica del Perú and a master’s degree in Construction Management from the University of California, Berkeley.

Antonio Cueto Saco . Mr. Cueto joined the group in 1996 and has been the Mergers and Acquisitions Officer since April 2013. He is an Economist graduated from Pontificia Universidad Católica del Perú and received a master’s degree in Management and Finance from HEC in France. He previously held the positions of Corporate Country Manager in Chile from February 2011 to April 2013, Business Development Manager of Graña y Montero from 2007 to 2011, Commercial Manager and Project Manager of our subsidiary GyM from 2000 to 2007 and General Manager of Servisel S.A. from 1996 to 2000.

Gonzalo Ferraro Rey . Mr. Ferraro joined the group in 1996 and has been President of the Infrastructure Area since April 2013. He has also held a number of managerial positions, including Corporate Infrastructure Manager from 2010 to 2013. He is an Industrial Engineer graduated from Universidad Nacional de Ingeniería and Universidad de Lima, he completed additional graduate studies at the Universidad de Piura Senior Management Program and received a postgraduate diploma from Tecnológico de Monterrey. Mr. Ferraro is currently the Chairman of the board of directors of subsidiaries Survial, Norvial, La Chira, GyM Ferrovías, as well as Concesionaria Vía Expresa Sur, and a member of the board of directors of our subsidiary GMP.

Hernando Graña Acuña . See “—Board of Directors.”

Francisco Dulanto Swayne . Mr. Dulanto joined the group in 1974 and is the Executive President and Chairman of the board of directors of GMP. He graduated from Universidad Nacional de Ingeniería and pursued graduate studies at ESAN and the Universidad de Piura Senior Management Program. He also received a postgraduate diploma from Tecnológico de Monterrey. He served as Chief Executive Officer of our subsidiary GMP between 1984 and 2011; as well as President of the Society of Petroleum Engineers (SPE), Lima Section, in 1991; and director of the Sociedad Nacional de Minería y Petróleo y Energía.

Juan Manuel Lambarri Hierro . Mr. Lambarri joined the group in 1982 and has been the Chief Executive Officer of our subsidiary GyM since 2001. He is a Civil Engineer graduated from Pontificia Universidad Católica del Perú. He also pursued graduate studies from Universidad de Piura Senior Management Program and received a postgraduate diploma from Tecnológico de Monterrey. He is currently a member of the board of directors of our subsidiaries GyM, Stracon GyM, Vial y Vives and GMI.

Luis Francisco Díaz Olivero . Mr. Díaz joined the group in 1993 and has been the Chief Executive Officer of our subsidiary GMP since March 2011 as well as our Corporate Infrastructure Officer since April 2013. He is also a member of the board of directors of GMP. He is an Industrial Engineer with a master’s degree in Business Administration from the University of Pittsburgh and received a postgraduate diploma from Tecnológico de Monterrey. He previously served as Deputy Chief Executive Officer of GMP from 2009 to 2011, Chief Financial Officer of Graña y Montero from 2004 to 2009, and Financial Manager of our subsidiary GyM from 2001 to 2004.

Jaime Dasso Botto . Mr. Dasso joined the group in 1991 and has been the Chief Executive Officer of our subsidiary GMD since 2000. He is an electronic engineer and received a master’s degree in Software Development

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from Stevens Institute of Technology in the United States of America and a postgraduate diploma from Tecnológico de Monterrey. He previously served as Commercial Manager of GMD from 1994 to 1999. Currently, he is a member of the board of directors of GMD and the Chairman of the board of directors of our subsidiaries GSD and Concar.

Walter Silva Santisteban Requejo . Mr. Silva Santisteban joined the group in 1981 and has been the Chief Executive Officer of our subsidiary GMI since 1998. He is a Civil Engineer graduated from Universidad Nacional de Ingeniería and received a postgraduate diploma from Tecnológico de Monterrey. Currently, he is a member of the board of directors of GMI and Ecotec.

Jaime Targarona Arata . Mr. Targarona joined the group in 1996 and has been the Chief Executive Officer of Concar since 2005. He is a Civil Engineer graduated from Universidad Autónoma de Guadalajara (Mexico), with a master’s degree in Business Administration from Universidad San Ignacio de Loyola. He also completed the Universidad de Piura Senior Management Program and received a postgraduate diploma from Tecnológico de Monterrey. He previously held positions as Civil Engineer on different projects, Commercial Manager of our subsidiary GyM’s Special Projects Divisions and as Chief Executive Officer of Graña y Montero Mexico. Additionally, Mr. Targarona is a member of the board of directors of our subsidiaries Concar and GMI.

Rolando Ponce Vergara . Mr. Ponce joined the group in 1993 and has been the Chief Executive Officer of our subsidiary Viva GyM since 2008. He is a Civil Engineer graduated from Universidad Ricardo Palma and received a master’s degree in Construction and Real Estate Business Management from Pontificia Universidad Católica de Chile – Politécnica de Madrid (Spain) and a postgraduate diploma from Tecnológico de Monterrey. He has previously served as manager of GyM’s Real Estate Division. Mr. Ponce joined the group in 1993 and is currently a member of the board of directors of our subsidiaries Viva GyM and Almonte.

Klaus Winkler Speringer . Mr. Winkler joined the group in 2011 and has been the Executive Vice President of CAM Chile S.A. since 2007 as well as Country Manager – Chile since April 2013. He is a Commercial Engineer graduated from Universidad Gabriela Mistral in Chile. He also has a master’s degree in Business Administration from Stanford University and a postgraduate diploma from Tecnológico de Monterrey. He previously served as Chief Executive Officer of Compañía Americana de Multiservicios Ltda. (currently, CAM Chile) from 2007 to 2011; and held several managerial positions over 15 years in Endesa group in Chile, Spain and the United States.

César Neyra Rodriguez . Mr. Neyra joined the group in 2003 and has been our Manager of Internal Auditing and Management Processes since 2003. He received an Accounting degree from Universidad Nacional Federico Villareal and a master’s degree in Business Administration and Finance from Universidad del Pacífico. He has also studied Quality Improvement Systems and graduated from the Six Sigma Methodology program at Caterpillar University in Mexico and the United States of America.

Executive Commission

The Executive Commission is comprised by the group’s senior executives mentioned above, with the exception of Mr. César Neyra Rodríguez, Mr. Dennis Gray Febres and Mr. Jorge Luis Izquierdo Ramírez. The Executive Commission evaluates, at the management level, among other matters, our strategic plan, annual budget, and annual investment plan.

Kinship

Mr. José Graña Miró Quesada, the Chairman of our board of directors, is a first degree cousin with directors Hernando Graña Acuña and Luis Miró Quesada Valega.

Compensation of Directors and Executive Officers

Director compensation must be approved by a majority of shareholders at our annual shareholders’ meeting.

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In 2012, total compensation paid to our board of directors amounted to S/.4,544,861 including compensation paid to directors that serve on our subsidiaries’ board of directors. In 2012 total compensation paid to our executive officers amounted to S/.24,308,652. See “Industry and Regulatory Matters—Labor Regulations” for additional information on profit sharing regulatory requirements.

Neither we nor any of our subsidiaries have entered into any agreement that provides for any benefit or compensation to any director or senior executive upon expiration of his or her term. Under Peruvian law, unless we dismiss someone for justified cause, we are required to pay the dismissed employee (but not directors) 1.5x annual salary for every year with the company for a period not to exceed 12 years. We are not required to make such payments in the event of voluntary termination. Although we have no ongoing obligation to do so, in the past we have provided, and in the future we may provide, such benefits to our executive officers upon their retirement. We have not set aside or reserved any amounts to provide for pension, retirement or other similar benefits.

Executive Compensation Plan

We establish and pay executive compensation in compliance with applicable labor and tax regulations and corporate governance standards and in accordance with market conditions.

We establish pay scales taking into consideration executives’ responsibilities, including the degree of complexity of those responsibilities, power of decision-making and scope of supervision entrusted.

The fixed salary component of compensation is established for each position based on a pay scale. Fixed salary includes family allowance and cost of living payments, if applicable. We evaluate executives at least once a year to develop action plans in furtherance of continuously improving management performance.

The variable component of compensation is paid to executives and other employees for meeting specific goals, and is related both to his or her performance and our financial results. Variable compensation is typically paid as an annual bonus.

In addition, labor regulation establishes a mandatory profit sharing provision of 5% of our total annual taxable income, to be distributed among all employees, calculated based on a formula established by law that considers the days worked in the year and remuneration.

Our executives also receive additional benefits, typically non-pecuniary. The benefits granted include: (i) a vehicle owned and maintained by the company, with the purpose of facilitating transportation of executives in the performance of their functions; (ii) a fuel allowance to offset transportation costs in the performance of their functions; and (iii) an insurance policy, including work accident and high risk coverage.

In addition, we have established a plan for certain executives effective March 2013 that awards cash bonuses for the exclusive use of purchasing shares of our company or of our subsidiaries. The executive must agree to hold the shares for a specific period. If the executive is no longer employed with the company during such period, we are entitled to repurchase the shares at the original purchase price. This benefit is awarded at the discretion and subject to the approval of the Human Resource Management and Social Responsibility Committee of our board of directors.

Share Ownership

As of April 30, 2013, the most recent date for which information is available, persons who are currently members of our board of directors and our executive officers held as a group 205,216, 925 of our common shares. This amount represented 36.76% of our outstanding share capital as of such date.

Our directors and executive officers hold, in the aggregate, less than 1% of our outstanding share capital, with the exception of: Mr. José Graña Miró Quesada who owns 117,538,203 common shares, representing 21.05% of our outstanding share capital, through GH Holding Group; Mr. Carlos Montero Graña who owns 33,785,285 common shares, representing 6.05% of our outstanding share capital, through Bethel Enterprises; Mr. Mario Alvarado Pflucker who owns 22,432,223 common shares, representing 4.02% of our outstanding share capital, through Byron

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Development; Mr. Hernando Graña Acuña who owns 15,150,061 common shares, representing 2.71% of our outstanding share capital; and Mr. Francisco Dulanto Swayne who owns 12,684,187 common shares, representing 2.27% of our outstanding share capital.

Our other directors and executive officers who in the aggregate hold less than 1% interest in our company are Mr. Juan Manuel Lambarri Hierro, Mr. Walter Silva Santisteban, Mr. Luis Díaz Olivero, Mr. Gonzalo Ferraro Rey, Mr. Antonio Rodríguez Canales, Ms. Mónica Miloslavich Hart, Ms. Claudia Drago Morante, Mr. Juan José Arrieta Ocampo, Mr. Jaime Targarona Arata, Mr. Luis Miró Quesada Valega and Mr. Roberto Abusada Salah.

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PRINCIPAL SHAREHOLDERS

As of April 30, 2013, our issued and outstanding share capital was comprised of 558,284,190 common shares.

The following table sets forth the beneficial ownership of our common shares before the offering and after the offering, assuming no exercise of the underwriters’ over-allotment option.


	Common Shares Owned Before the Offering					Common Shares Owned After the Offering
Shareholder	Number of shares		Percentage owned			Number of shares	Percentage owned
GH Holding Group(1)		117,538,203		21.05	%
RI-CARTADM (Prima AFP-Grupo Crédito)		65,889,092		11.80	%
IN-CARTADM (AFP Integra-Sura Group)		64,017,772		11.47	%
HO-CARTADM (AFP Horizonte-Grupo BBVA)(2)		51,993,936		9.31	%
Bethel Enterprises Inc.(3)		33,785,285		6.05	%
PR-CARTADM (Profuturo AFP-Grupo Scotiabank)		32,251,888		5.78	%
Other shareholders(4)		192,808,014		34.54	%

Total		558,284,190		100	%			100	%

(1)	Mr. José Graña Miró Quesada indirectly owns 117,538,203 common shares, representing 21.05% of our outstanding share capital, through GH Holding Group.

(2)

On April 23, 2013, AFP Horizonte was acquired by a consortium formed by AFP Integra and AFP Profuturo. AFP Integra and AFP Profuturo have announced their intent to divide the assets of AFP Horizonte equally; however, it is expected that AFP Horizonte will maintain its current operation for a period of up to 180 days following the acquisition.

(3)	Mr. Carlos Montero Graña indirectly owns 33,785,285 common shares, representing 6.05% of our outstanding share capital, through Bethel Enterprises Inc.

(4)	The following directors and executive officers hold directly or indirectly common shares of our outstanding share capital:

(a)

Mr. Mario Alvarado Pflucker, director and Chief Executive Officer, indirectly owns 22,432,223 common shares, representing 4.02% of our outstanding share capital, through Byron Development;

(b)

Mr. Hernando Graña Acuña, director, Executive President of GyM and director in certain of our subsidiaries, owns 15,150,061 common shares, representing 2.71% of our outstanding share capital;

(c)

Mr. Francisco Dulanto Swayne, Executive President and director of GMP, owns 12,684,187 common shares, representing 2.27% of our outstanding share capital;

(d)

Mr. Juan Manuel Lambarri Hierro, Chief Executive Officer of GyM, Mr. Walter Silva Santisteban, Chief Executive Officer of GMI, Mr. Luis Díaz Olivero, Chief Executive Officer of GMP, Mr. Gonzalo Ferraro Rey, our Corporate Infrastructure Manager, Mr. Antonio Rodríguez Canales, our Chief Investment Officer, Ms. Mónica Miloslavich Hart, our Chief Financial Officer, Ms. Claudia Drago Morante, our Chief Legal Officer, Mr. Juan José Arrieta Ocampo, our Corporate Social Responsibility Manager, Mr. Jaime Targarona Arata, Chief Executive Officer of Concar, Mr. Luis Miró Quesada Valega, one of our directors, and Mr. Roberto Abusada Salah, one of our directors and Chairman of the board of directors of GMD, hold in aggregate less than 1% of our outstanding share capital.

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Certain of our shareholders directly or indirectly own shares of our subsidiaries: Mr. Francisco Dulanto Swayne, Executive President of GMP, owns 5,060,105 common shares of GMP, representing 5.0% of its outstanding capital share; Mr. Juan Manuel Lambarri, Chief Executive Officer of GyM, owns 5,091,699 and 3,093,857 common shares of GyM and Viva GyM, representing 2.25% and 1.37% of their outstanding capital share, respectively; Mr. Jaime Targarona Arata, Chief Executive Officer of Concar, owns 47,692 common shares of Concar, representing 0.43% of its outstanding capital share; Mr. Roberto Abusada Salah, one of our directors and Chairman of the board of directors of GMD, owns 700,952 common shares of GMD, representing 5.47% of its outstanding capital share; and Mr. Rolando Ponce Vergara, Chief Executive Officer of Viva GyM, owns 1,218,017 common shares of Viva GyM, representing 0.54% of its outstanding capital share.

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RELATED PARTY TRANSACTIONS

Peruvian Law Concerning Related Party Transactions

Peruvian law sets forth certain restrictions and limitations on transactions with certain related parties.

For instance, from a tax standpoint, the value of those transactions must be equal to the fair market value assessed under transfer pricing rules, i.e. , the value agreed to by non-related parties under the same or similar circumstances. Similarly, companies with securities registered in the Peruvian Public Registry of Securities (Registro Público del Mercado de Valores), such as us, are required to comply with the following rules:

•

The directors and managers of the company cannot, without the prior authorization of the board of directors, (i) receive in the form of a loan money or assets of the company; or (ii) use, for their own benefit or for the benefit of related parties, assets, services or credits of the company.

•

The execution of agreements that involve at least 5% of the assets of the company with persons or entities related to directors, managers or shareholders that own, directly or indirectly, 10% of the share capital, requires the prior authorization of the board of directors (with no participation of the director involved in the transaction, if any).

•

The execution of agreements with a party controlled by the company’s controlling shareholder requires the prior authorization of the board of directors and an evaluation of the terms of the transaction by an external independent company (audit companies or other to be determined by the Peruvian Securities Commission).

The external independent company that reviews the transaction should not be related to the parties involved therein, nor to directors, managers or shareholders that own at least 10% of the share capital of the company.

As a general policy, we do not enter into transactions with directors and executive officers on terms more favorable than what we would offer third parties. Any related party transaction we have entered into in the past has been in the ordinary course of business and on an arm’s length basis.

Article 32 of the internal regulations of our board of directors establishes a review procedure for identifying, approving and accounting for related party transactions. Related party transactions are defined as any transaction that exceeds US$50,000 entered into by and among our company and any shareholder that owns 1% or more of our company’s or of our subsidiaries’ outstanding shares, directors, senior executives and persons related to them. The Human Resource Management and Social Responsibility Committee is responsible for identifying, analyzing and approving each such transaction considering market conditions and potential benefits for us and the related party. For more information, see “Management.”

Related Party Transactions

The following set forth the related party transactions we have entered in 2010, 2011, 2012 and the first quarter of 2013:

•

construction agreement, dated December 2011, entered into by and among GyM as contractor and Teresa Graña and Francisca Graña, daughters of José Graña Miró Quesada, as owners, for an amount of US$1,199,841;

•

landscaping design services agreement entered into among Claudia Gutierrez de Alvarado, Mario Alvarado Pflucker’s spouse, as designer, and Viva GyM, as customer, for an aggregate amount of US$18,320 between 2010 and March 31, 2013 (part of which will be paid upon completion in 2015);

•

architectural services agreements entered into among Mr. Oscar Borasino, Mario Alvarado Pflucker’s brother-in-law, as architect, and Viva GyM, as customer, for an aggregate amount of US$153,412 between 2010 and March 31, 2013;

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•

advertising services agreements entered into among Servicios Empresariales El Administrador E.I.R.L., a company related to Rolando Ponce Vergara’s brother, as advertising intermediary, and Viva GyM as customer, for an aggregate amount of US$66,412 between 2010 and March 31, 2013; and

•

between 2010 and March 31, 2013, our company and our subsidiaries GMP, GyM, GMD, Viva GyM, GMI, Survial, Canchaque, Norvial and Concar paid an aggregate amount of US$2,471,566 to Editora El Comercio S.A.A., of which José Graña Miró Quesada is a shareholder, for advertising, publishing and editing services.

During the three years prior to the date of this prospectus, our subsidiary Viva GyM had entered into purchase agreements for an aggregate amount of US$5,827,200 for the sale of apartments with the following related parties: Ms. Claudia Gutierrez Benavides, the spouse of Mario Alvarado; Mr. Salvador Gutierrez Benavides, the brother-in-law of Mario Alvarado Pflucker; Mr. Oscar Borasino Peschiera, the brother-in-law of Mario Alvarado Pflucker; Mr. Alejandro Miró Quesada Cisneros, José Graña Miró Quesada’s cousin; Ms. Elizabeth Dulanto de Miró Quesada, José Graña Miró Quesada’s cousin-in-law; Mr. Hernando Graña Acuña, one of our directors and a director of GyM, GMI and Stracon GyM, Vial y Vives, GMP, Norvial, La Chira, GyM Ferrovías and CAM Chile, and Executive Officer of GyM; Ms. Yamile Brahim Graña, José Graña Miró Quesada’s niece; Ms. Maria Teresa Graña Canepa, José Graña Miró Quesada’s daughter; Ms. Maria Francisca Graña Canepa, José Graña Miró Quesada’s daughter; Mr. Luis Alonso Brahim Graña, José Graña Miró Quesada’s nephew; Mr. Rolando Ponce Vergara, Chief Executive Officer and director of Viva GyM; Ms. Jenny Ponce Gilardi, Rolando Ponce Vergara’s aunt; Ms. Mónica Miloslavich Hart, our Chief Financial Officer and director of Norvial, Survial and GyM Ferrovías; Mr. Roberto Abusada Salah, one of our directors and Chairman of the board of directors of GMD; Ms. Elisa Alvarado Pflucker, Mario Alvarado Pflucker’s sister; Mr. Daniel Graña Tori, Hernando Graña Acuña’s son; Mr. Santiago Graña Taboada, Hernando Graña Acuña’s nephew; Mr. Sergio Graña Tori, Hernando Graña Acuña’s son; Mr. Martin Ferraro Murdoch, Gonzalo Ferraro Rey’s son; Ms. Maria Teresa Saavedra Villanueva, Rolando Ponce Vergara’s spouse; Mr. Juan Manuel Lambarri Hierro, Chief Executive Officer of GyM and director of GyM, Stracon GyM, Vial y Vives, Viva GyM and GMI; Ms. Viviana Figueroa Alvear, Juan Manuel Lambarri Hierro’s spouse; Mr. Luis Diaz Imiela-Gentimur, Luis Díaz Olivero’s father; Mr. Enrique Ponce and Ms. Mercedes Vergara, Rolando Ponce Vergara’s parents; Jorge Luis Izquierdo Ramírez, our Corporate Learning Center Manager; and Ms. Cristina Abusada Dahuod, Roberto Abusada Salah’s niece.

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DESCRIPTION OF OUR SHARE CAPITAL

Set forth below is certain information relating to our share capital, including brief summaries of certain material provisions of our by-laws, Peruvian Corporate Law and certain other laws and regulations of Peru, all as in effect as of the date hereof.

General

We are a publicly-held corporation under Peruvian Corporate Law and registered with the Public Registry of Corporations in Lima. We are currently listed on the Lima Stock Exchange.

Our by-laws provide that our principal corporate purposes are to engage in any and all activities related to the construction and real estate businesses; to provide services related to the mining and hydrocarbons industries; to participate in all stages of development of public services and other infrastructure concessions; and to provide management and corporate services to related and third parties. In addition, our company can realize investments and corporate transactions, including the acquisition, holding and transfer of securities of Peruvian and foreign companies.

Common Shares

As of April 30, 2013, we had 558,284,190 common shares outstanding. As of April 30, 2013, there were 1,271 owners of record of our common shares. Our common shares have a par value of S/.1.00 per share and have been fully subscribed and are fully paid. Our common shares are registered in the Securities Public Registry of the Peruvian Securities Commission and are listed on the Lima Stock Exchange.

Shareholders’ Liability

Under Peruvian Corporate Law, holders of our common shares cannot vote on matters with respect to which they have a conflict of interest.

Under Article 133 of the Peruvian Corporate Law, a shareholder must abstain from voting when faced with a conflict of interest. A resolution approved in disregard of this provision may be challenged under Article 139 of the Peruvian Corporate Law and the shareholders that participated in the determination in breach of this provision, if their vote was key in attaining the required majority, may be held jointly liable.

Redemption and Rights of Withdrawal

Under Article 200 of the Peruvian Corporate Law, holders of our common shares have redemption rights if: (i) we change our corporate purpose; (ii) a change occurs in the place of organization to a foreign country; or (iii) any transformation, merger or significant spin-off occurs with respect to our company.

Preemptive and Accretion Rights

If we increase our share capital, holders of our common shares have the right to subscribe to new common shares on a pro rata basis. Holders of common shares have preemptive rights in order to maintain their share interest in our share capital, unless the capital increase (i) results from a conversion of debt to common shares, (ii) is approved by shareholders representing at least 40% of the subscribed voting shares provided that the capital increase does not favor, directly or indirectly, certain shareholders to the detriment of others, or (iii) results from a corporate reorganization.

Shareholders who are in default of any payments relating to subscribed but unpaid shares may not exercise their preemptive rights.

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Voting Rights and Dividends

Holders of common shares are entitled to one vote per share, with the exception of the election of the board of directors, where each holder is entitled to one vote per share per nominee. Each holder’s votes may be cast for a single nominee or distributed among the nominees at the holder’s discretion. To that effect, each of our common shares gives the holder the right to as many votes as there are directors to be elected. Shareholders may pool votes in favor of one person or distribute them among various persons. Those candidates for the board who receive the most votes are elected directors. Holders of common shares may attend and vote at shareholders’ meetings either in person or through a proxy.

Holders of common shares have the right to participate in the distribution of dividends and shareholder equity resulting from liquidation. Our by-laws do not establish a maximum time limit for the payment of the dividends. However, according to Article 232 of the Peruvian Corporate Law, the right to collect past-due dividends in the case of companies that are publicly held companies, such as ours, expires ten years after the date on which the dividend payment was due.

Our share capital may be increased by a decision of holders of common shares at a shareholders’ meeting. Capital reductions may be voluntary or mandatory and must be approved by holders of common shares at a shareholders’ meeting. Capital reductions are mandatory when accumulated losses exceed 50% of the capital and to the extent such accumulated losses are not offset by accumulated earnings and capital increases within the following fiscal year. Capital increases and reductions must be communicated to the Peruvian Securities Commission, the Lima Stock Exchange and SUNAT. Voluntary capital reductions must also be published in the official gazette El Peruano and in a widely circulated newspaper in the city in which we are located.

Liquidation Rights

If we are liquidated, our shareholders have the right to receive net assets resulting from the liquidation, after we comply with our obligation to pay all our creditors and after discounting any existing dividend liabilities. For this reason, we cannot assure that we will be able to reimburse 100% of the book value of the common shares in case of bankruptcy or liquidation.

Ordinary and Extraordinary Meetings

Pursuant to Peruvian Corporate Law and our by-laws, the annual shareholders’ meeting must be held during the three-month period after the end of each fiscal year. Additional shareholders’ meetings may be held during the year. Because we are a publicly-held corporation, we are subject to the special control of the Peruvian Securities Commission, as provided in Article 253 of the Peruvian Corporate Law. If we do not hold the annual shareholders’ meeting during the three-month period after the end of each fiscal year or any other shareholders’ meeting required by our by-laws, a public notary or a competent judge shall call for such a meeting at the request of at least one shareholder of the common shares. Such meeting will take place within a reasonable period of time.

Pursuant to the Peruvian Corporate Law, other shareholders’ meetings are convened by the board of directors when deemed convenient by the company or when it is requested by notarized letter, by the holders of at least 20% of our common shares. If, at the request of holders of at least 20% of the common shares, the shareholders’ meeting is not convened by the board of directors within 15 days of the receipt of such request, or the board expressly or implicitly refuses to convene the shareholders’ meeting, a public notary or a competent judge will call pursuant to Law No. 29560 for such meeting at the request of holders of at least 20% of our common shares. If a public notary or competent judge calls for a shareholders’ meeting, the place, time and hour of the meeting, the agenda and the person who will preside shall be indicated on the meeting notice. If the meeting called is other than the annual shareholders’ meeting or a shareholders’ meeting required by the Peruvian Corporate Law or the by-laws, the agenda will contain those matters requested by the shareholders who requested the meeting.

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Notices of Meetings

Since we are a publicly-held corporation, notice of shareholders’ meetings must be given by publication of a notice. The publication shall occur at least 25 days prior to any shareholders’ meeting in the Peruvian Official Gazette, El Peruano, and in a widely circulated newspaper in the city in which we are located.

Quorum and Voting Requirements

According to Article 33 of our by-laws and Article 257 of the Peruvian Corporate Law, shareholders’ meetings called for the purpose of considering a capital increase or decrease, the issuance of obligations, a change in the by-laws, the sale in a single act of assets with an accounting value that exceeds 50% of our share capital, a merger, division, reorganization, transformation or dissolution, are subject to a first, second and third quorum call, with each of the second and third quorum call to occur upon the failure of the preceding one. A quorum for the first call requires the presence of shareholders holding 50% of our total common shares. For the second call, the presence of shareholders holding at least 25% of our total common shares is adequate, while for the third call there is no quorum requirement. These decisions require the approval of the majority of the common shares represented at the shareholders’ meeting. Shareholders’ meetings convened to consider all other matters are subject to a first and second quorum call, with the second quorum call to occur upon the failure of the first quorum.

In accordance with Peruvian Corporate Law, only those holders of common shares whose names are registered in the company’s stock ledger not less than 10 days in advance of a meeting will be entitled to attend the shareholders’ meeting and to exercise their rights.

Limitations on the Rights of Non-residents or Foreign Shareholders

There are no limitations under our by-laws or Peruvian Corporate Law on the rights of non-residents or foreign shareholders to own securities or exercise voting rights with respect to our securities.

Disclosure of Shareholdings and Tender Offer Regulations

Disclosure of Shareholdings

There are no provisions in our by-laws governing the ownership threshold above which share ownership must be disclosed.

However, according to Article 10 of CONASEV Resolution Nº 090-2005-EF-94.10, as amended, we must inform the Peruvian Securities Commission of the members of our economic group, comprised by our subsidiaries, and a list of our holders of common shares owning more than a 5% share interest, as well as any change to such information.

Tender Offer Regulations

Peruvian securities regulations include mandatory takeover rules applicable to the acquisition of control of a publicly held company.

Subject to certain conditions, such regulations generally establish the obligation to launch a tender offer when a person or group of persons acquires a significant interest in a publicly held company. According to the provisions set forth in CONASEV Resolution No. 009-2006-EF-94.10, a person acquires a significant interest in a listed company when such person (a) holds or has the power to exercise directly or indirectly 25%, 50% or 60% of the voting rights in a listed company, or (b) has the power to appoint or remove the majority of the board members or to amend its by-laws.

A tender offer may be launched prior or following an acquisition of the significant interest. The tender offer may be launched after the “significant interest” is acquired if it is acquired (a) by means of an indirect transaction, defined as a relevant acquisition or interest increase through the acquisition of securities issued by a company that in turn holds share capital of the target company; (b) as a consequence of a public sale offer, or (c) in no more than four transactions within a three-year period.

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This mandatory procedure has the effect of alerting other shareholders and the market that an individual or financial group has acquired a significant percentage of a company’s voting shares, and gives other shareholders the opportunity to sell their shares at the price offered by the purchaser. The purchaser is required to launch a tender offer unless: (a) shareholders representing 100% of the voting rights consent in writing, (b) voting shares are acquired by a depositary in order to subsequently issue ADSs, or (c) voting shares are acquired pursuant to the exercise of preemptive rights.

Changes in Capital

Our by-laws do not establish special conditions to increase or reduce our share capital beyond what is required under Peruvian Corporate Law.

Anti-Takeover Provisions

Our by-laws do not contain any provision that would have the effect of delaying, deferring or preventing a change of control.

Form and Transfer

Common shares may be either physical share certificates in registered form or book-entry securities in the CAVALI S.A. ICLV book-entry settlement system also in registered form.

Furthermore, the Peruvian Corporate Law forbids publicly-held corporations, such as us, from including in their by-laws stipulations limiting the transfer of their shares or restraining their trading in other ways. According to Article 18 of our by-laws, we cannot recognize a shareholders’ agreement that contemplates limitations, restrictions or preferential rights on the transfer of shares, even if such an agreement is recorded in our stock ledger ( matrícula de acciones ) or in CAVALI. As of the date of this offering, no shareholders’ agreement is recorded in our stock ledger.

Arbitration

Our by-laws include an arbitration clause applicable to disputes arising from the interpretation of our by-laws or Peruvian Corporate Law and their complementary provisions, among our company, our management and our shareholders. Any such arbitration will be subject to the regulations of the Arbritration Center of the Lima Chamber of Commerce. The material terms of the arbitration clause are as follows:

•

any dispute, controversy or claim arising out of the performance and the interpretation of the by-laws and any action or remedy set forth in the Peruvian Corporate Law (Ley General de Sociedades) among us, our current or former shareholders and/or our current or former management shall be settled by arbitration;

•

any dispute, controversy or claim between us and a third party shall be also settled by arbitration, if agreed upon by all parties either expressly or tacitly;

•

arbitrations shall be conducted before a panel of three arbitrators;

•

arbitrators shall consider only the applicable law for their award (arbitration in law and not arbitration in equity);

•

each party to a dispute shall appoint an arbitrator within 10 business days from receiving the notice of arbitration. The two selected arbitrators shall appoint the third arbitrator. If one of the parties fails to appoint its arbitrator within 10 business days, the Center of Arbitration of the Lima Chamber of Commerce shall appoint the arbitrator;

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•

the rules of the Center of Arbitration of the Lima Chamber of Commerce shall apply to the arbitration; and

•

the arbitration clause is not applicable to the cases that must be submitted to the jurisdiction of the courts or of the Superintendencia del Mercado de Valores, such as when arbitration would present hardship to minority shareholders or when Peruvian law otherwise requires it.

The arbitration clause does not apply to claims based on violations of U.S. securities laws in connection with this offering, unless agreed by the parties to a claim. Our Peruvian Counsel, Muñiz, Ramirez, Perez-Taiman & Olaya Abogados, has provided us with their opinion to that effect.

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DIVIDENDS

Dividend Policy

Our current dividend policy, adopted on March 26, 2013, is to distribute between 30% and 40% of the net profit from the preceding year. Holders of our common shares are entitled to receive dividends on a pro rata basis in accordance with their respective number of shares held. Our dividend policy can be modified by a favorable vote of a majority of our shareholders and any changes become effective 30 days after approval.

Article 23 of our by-laws establishes that dividends distribution must be approved by our shareholders during the annual shareholders’ meeting. The recommendation of our board of directors is required for the distribution of interim dividends, which must be subsequently ratified at a shareholders’ meeting.

Under Peruvian law, companies may distribute up to 100% of their profit (after payment of income tax) subject to a 10% legal reserve until the legal reserve equals 20% of shareholders’ equity. According to Article 40 of the Peruvian Corporate Law, in order to distribute dividends, profits must be determined in accordance with the individual financial statements of the company.

Payment of Dividends

Dividends are paid to holders of our common shares as of a record date determined by us. In order to allow for the settlement of securities, under the rules of the Peruvian Securities Commission, investors who purchase shares of a publicly-held company three business days prior to a dividend payment date do not have the right to receive such dividend payment. Dividends on issued and outstanding common shares are distributed pro rata.

Our syndicated loan agreement contains certain customary covenants, including restrictions on our ability to pay dividends if we are in default under the agreement. Our subsidiaries have also agreed to limitations on their ability to pay dividends based on compliance with certain financial ratios. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Indebtedness.”

Holders of common shares are not entitled to interest on accrued dividends. In addition, under Article 232 of the Peruvian Corporate Law, the right to collect accrued dividends declared by a publicly-held company expires ten years from the original dividend payment date.

Previous Dividend Payments

The following table sets forth the amounts of cash dividends declared and paid since 2008 for our common shares.


	Dividends Paid		Per Share
	(in S/.)
2008		25,979,911		0.0606690
2009		29,437,792		0.05272905
2010		26,879,790		0.04814715
2011		55,015,923		0.098544656
2012		86,722,433		0.155337434
2013 (through June 14)		86,986,244		0.1558099716

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MARKET INFORMATION

Market Price of Our Common Shares and ADSs

Our ADSs

Prior to this offering, there has been no public market for our ADSs. We intend to apply to have our ADSs listed on The New York Stock Exchange. We cannot assure you that an active trading market will develop for our ADSs or that our ADSs will trade in the public market subsequent to the offering at or above the initial public offering price.

Our Shares

Our common shares are registered in the Public Registry of Securities held with the Peruvian Securities Commission and are listed on the Lima Stock Exchange under the symbols “GRAMONC1”. On June 14, 2013, the closing price on the Lima Stock Exchange was S/.11.75 per common share. Our shares represent 4.06% of the General Index of the Lima Stock Exchange (IGBVL) 2013 portfolio. As of April 30, 2013, 53 record holders of our common shares were located in the United States, according to CAVALI.

The following table sets forth for the five most recent full years and for the current year the high and low closing prices of our common shares on the Lima Stock Exchange as reported by the Lima Stock Exchange.


	High		Low
	(in S/.)
2008		5.75		2.00
2009		3.13		1.79
2010		7.21		2.90
2011		6.90		4.60
2012		9.70		6.30
2013:
January		10.90		9.76
February		11.65		11.00
March		11.85		11.33
April		11.65		11.13
May		12.79		10.85
June (through June 14)		11.75		10.80

The following table sets forth for each quarter of the two most recent years and for the current year the high and low closing prices and average daily trading volume of our common shares on the Lima Stock Exchange as reported by the Lima Stock Exchange.


	High		Low		Average Daily Trading Volume
	(in S/.)
2011:
First quarter		6.90		6.00		577,037
Second quarter		6.55		4.60		476,050
Third quarter		6.30		5.24		407,276
Fourth quarter		6.70		5.29		318,511

2012:
First quarter		8.75		6.30		377,697
Second quarter		9.12		8.00		363,810
Third quarter		8.53		8.10		175,856
Fourth quarter		9.70		8.65		189,604
2013:
First quarter		11.85		9.76		241,633

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The following table sets forth for each of the most recent six months the high and low closing prices of our common shares on the Lima Stock Exchange as reported by the Lima Stock Exchange.


	High		Low
	(in S/.)

2012:
September		8.80		8.29
October		9.02		8.65
November		9.50		8.78
December		9.70		9.36

2013:
January		10.90		9.76
February		11.65		11.00
March		11.85		11.33
April		11.65		11.13
May		12.79		10.85
June (through June 14)		11.75		10.80

Trading in the Peruvian Securities Market

Lima Stock Exchange

As of December 31, 2012, there were 282 companies listed on the Lima Stock Exchange. Established in 1970, the Lima Stock Exchange is Peru’s only securities exchange. On November 19, 2003, the members of the Lima Stock Exchange approved to convert its corporate status to a publicly held corporation. As of December 31, 2012, Lima Stock Exchange had a share capital of S/.59,715,840, divided into 56,405,407 class “A” shares and 3,310,433 class “B” shares of par value S/.1.00 each. Class “A” shares are entitled to one vote per share while class “B” shares do not have voting rights. As of December 31, 2012, the Lima Stock Exchange had 131 class “A” shareholders and 72 class “B” shareholders.

Trading on the Lima Stock Exchange is primarily done on an electronic trading system that became operational in August 1995. From the first Monday of November through the second Sunday of March of each year, trading hours are Monday through Friday (except holidays) as follows: 8:20 a.m.–8:30 a.m. (pre-market ordering); 8:30 a.m.–2:55 p.m. (trading); 2:55 p.m.–3:00 p.m. (after-market sales); and 3:00 p.m.–3:10 p.m. (after-market trading). At all other times, trading hours are from Monday to Friday (except holidays) as follows: 9:00 a.m.–9:30 a.m. (pre-market ordering); 9:30 a.m.–3:55 p.m. (trading); 3:55 p.m.–4:00 p.m. (after-market sales); and 4:00 p.m.–4:10 p.m. (after-market trading).

Substantially all of the transactions on the Lima Stock Exchange are traded on the electronic system. Transactions during the electronic sessions are executed through brokerage firms and stock brokers on behalf of their clients. Brokers submit orders in the order in which they are received. The orders must specify the type of

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security as well as the amount and price of the proposed sale or purchase. In order to control price volatility, the Lima Stock Exchange imposes a 15 minute suspension on trading when the price of a security varies on a single day by more than 15% for Peruvian companies and 30% for non-Peruvian companies.

Certain information regarding trading on the Lima Stock Exchange is set forth in the table below:


	2008		2009		2010		2011		2012
Market capitalization (in millions of nuevos soles)(1)		179,163		310,116		451,796		327,823		391,181
Volume (in millions of nuevos soles)		23,041		16,944		19,013		21,587		19,951
Average daily trading volume (in millions of nuevos soles)		93		68		76		86		79

(1)	End-of-period figures for trading on the Lima Stock Exchange.

The stock market capitalization of companies listed on the Lima Stock Exchange was US$153.4 billion at the end of 2012, compared to US$57.1 billion, US$107.3 billion, US$160.9 billion and US$121.6 billion at the end of 2008, 2009, 2010 and 2011, respectively.

Total market volume in 2012 was US$7.6 billion, reflecting a 2.6% decrease compared with 2011. Equity market volume, which represented 80.2% of total market volume, ended the year at US$6.1 billion, 2.1% less than the previous year. The repo market, which represented 12.3% of total market volume, reported volume of US$937 million in 2012, reflecting an increase of 1.9%.

The total number of operations in the market in 2012 decreased by 19.5%, closing the year at 249,148 operations. The number of operations in the equity market in 2012 declined by 32.9% amounting to 237,137 operations.

The General Index of the Lima Stock Exchange (Índice General de la Bolsa de Valores de Lima) decreased, in U.S. dollars terms, 59.8% in 2008, but increased 101.0% in 2009 and 65.0% in 2010, reaching 23,274 points as of December 31, 2010, the highest value over the past three years. In 2011, the index reported losses amounting to 17.0%, while 2012 registered an increase of 5.9%.

Regulation of the Peruvian Securities Market

The regulatory framework for the Peruvian securities market is established in the Securities Market Law approved by Legislative Decree No. 861, whose unified sole text was enacted by Supreme Decree No. 093-2002-EF, as amended (Ley del Mercado de Valores), and the resolutions issued from time to time by the Peruvian Securities Commission. The purpose of the Securities Market Law is to promote the ordered development and transparency of the securities markets, adequate protection for investors and the principles under which the Peruvian securities market is intended to operate. The Securities Market Law contains the general rules for: (i) primary and secondary public offerings of securities; (ii) public offering of securities for acquisitions; (iii) local and international offerings, including simultaneous offerings; (iv) the Public Registry of Securities (the Registro Público del Mercado de Valores); (v) reporting obligations of material information ( hechos de importancia ) by the issuers of securities recorded in the Public Registry of Securities and by the entities that are subject to the regulation and supervision of the Peruvian Securities Commission; (vi) the enforcement of insider trading; (vii) privileged information and confidentiality regulations and prohibitions against price manipulation, (viii) the broker-dealers; (ix) the Lima Stock Exchange; (x) CAVALI (the settlement and registry entity for transactions executed on the Lima Stock Exchange); (xi) other entities that are required to be registered at the Public Registry of Securities; (xii) capital market instruments and operations, including securitizations; and (xiii) mutual funds and investments funds publicly placed and their respective management companies.

The Peruvian securities market is regulated and supervised by the Peruvian Securities Commission, a governmental entity reporting to the Peruvian Ministry of Economy and Finance, with functional, administrative, economic, technical and budgetary autonomy. The Peruvian Securities Commission is governed by the

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Superintendent, designated by the Peruvian Ministry of Economy and Finance, and by a five member board of directors convened by the Superintendent (who acts as Chairman of the board). The other four members are appointed by the government under applicable legislation. The Peruvian Securities Commission issues from time to time resolutions which provide specific regulations or may impose sanctions in cases of violations of the Securities Market Law or the resolutions issued by the Peruvian Securities Commission.

The Peruvian Securities Commission, in order to achieve the Securities Market Law´s purposes, has broad regulatory and supervisory powers, including (i) issuing general mandatory rules; (ii) supervision and oversight of compliance with applicable legislation (including the power to order inspections and require the submission of information and documentation by entities that are under its jurisdiction and summon and interrogate any person that may contribute to its investigations); (iii) imposing sanctions; (iv) managing the Public Registry of Securities; (v) authorizing public offerings of securities and the recording at the Public Registry of Securities that may be the subject of such public offerings and the respective programs for issuances; (vi) authorizing the incorporation and functioning of entities under its scope of supervision; and (vii) monitoring the content and accuracy of the financial and other information that is filed with the Peruvian Securities Commission. The Peruvian Securities Commission is responsible for the enactment, interpretation and enforcement of rules and regulations issued under the Securities Market Law.

Disclosure Obligations

Issuers of securities registered with the Peruvian Securities Commission are required to disclose material information relating to the issuer. Pursuant to the Securities Market Law and relevant regulations enacted thereunder, all material information in connection with the issuer of registered securities (such as our common shares), its activities or securities issued or secured by such issuer which may influence the liquidity or price of such securities must be disclosed. Accordingly, issuers must file with the Peruvian Securities Commission mainly two types of information: (a) financial information, including unaudited interim financial statements on a quarterly basis (which are not required to be subject to limited review by external auditors), and audited annual consolidated financial statements on an annual basis, and (b) material information relating to the issuer and its activities that may significantly affect the price, offering or trading of the issued securities, and in general, all the information that may be relevant for investors to be able to make investment decisions.

In order to comply with the foregoing disclosure obligations, issuers must disclose information to the Peruvian Securities Commission and, if the securities are listed, with the Lima Stock Exchange as soon as practicable but not later than one business day after having become aware of such information.

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DESCRIPTION OF AMERICAN DEPOSITARY SHARES

General

JPMorgan Chase Bank, N.A., as depositary, will issue the ADSs which you will be entitled to receive in this offering. Each ADS will represent an ownership interest in common shares which we will deposit with the custodian, Citibank del Perú S.A., as agent of the depositary, under the deposit agreement among us, the depositary and you as an ADS holder. In the future, each ADS will also represent any securities, cash or other property deposited with the depositary but which they have not distributed directly to you. Unless certificated ADRs are specifically requested by you, all ADSs will be issued on the books of our depositary in book-entry form and periodic statements will be mailed to you which reflect your ownership interest in such ADSs. In this description, references to ADRs, shall include the statements you will receive which reflect your ownership of ADSs.

The depositary’s office is located at 1 Chase Plaza, Floor 58, New York, New York 10005-1401, United States.

You may hold ADSs either directly or indirectly through your broker or other financial institution. If you hold ADSs directly, by having an ADS registered in your name on the books of the depositary, you are an ADR holder. This description assumes you hold your ADSs directly. If you hold the ADSs through your broker or financial institution nominee, you must rely on the procedures of such broker or financial institution to assert the rights of an ADR holder described in this section. You should consult with your broker or financial institution to find out what those procedures are.

As an ADR holder, we will not treat you as a shareholder of ours and you will not have any shareholder rights. Peruvian law governs shareholder rights. ADR holders have no direct ownership interest in our common shares and only have such rights as specified in the deposit agreement. Your rights are those of an ADR holder. Such rights derive from the terms of the deposit agreement to be entered into among us, the depositary and all registered holders from time to time of ADSs issued under the deposit agreement. The obligations of the depositary and its agents are also set out in the deposit agreement. Because the depositary or its nominee will actually be the registered owner of the common shares, you must rely on the depositary or its nominee to exercise the rights of a shareholder on your behalf. The deposit agreement and the ADSs are governed by the law of the State of New York. However, our obligations to the holders of common shares represented by the ADSs will continue to be governed by the laws of Peru, which may be different from the law of the State of New York.

The following is a summary of what we believe to be the material terms of the deposit agreement. This summary is qualified in its entirety by reference to, and should be read in conjunction with, the entire deposit agreement and the form of ADR which contains the complete terms of your ADSs. You can read a copy of the deposit agreement, a form of which is filed as exhibit 4.2 to the registration statement of which this prospectus forms a part. You may also obtain a copy of the deposit agreement at the SEC’s Public Reference Room which is located at 100 F Street, NE, Washington, DC 20549, United States. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-732-0330. You may also find the registration statement and the attached deposit agreement on the SEC’s website at http://www.sec.gov.

Dividends and Other Distributions

We may make various types of distributions with respect to our securities. The depositary has agreed that, to the extent practicable, it will pay to you the cash dividends or other distributions it or the custodian receives on common shares or other deposited securities, after converting any cash received into U.S. dollars and, in all cases, making any necessary deductions provided for in the deposit agreement. You will receive these distributions in proportion to the number of underlying securities that your ADSs represent.

Except as stated below, the depositary will deliver such distributions to ADR holders in proportion to their interests in the following manner:

Distribution of Cash. The depositary will distribute any U.S. dollars available to it resulting from a cash dividend or other cash distribution or the net proceeds of sales of any other distribution or portion thereof (to the

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extent applicable), on an averaged or other practicable basis, subject to (i) appropriate adjustments for taxes withheld, (ii) such distribution being impermissible or impracticable with respect to certain registered ADR holders, and (iii) deduction of the depositary’s and/or its agents’ expenses in (1) converting any foreign currency to U.S. dollars to the extent that it determines that such conversion may be made on a reasonable basis, (2) transferring foreign currency or U.S. dollars to the United States by such means as the depositary may determine to the extent that it determines that such transfer may be made on a reasonable basis, (3) obtaining any approval or license of any governmental authority required for such conversion or transfer, which is obtainable at a reasonable cost and within a reasonable time, and (4) making any sale by public or private means in any commercially reasonable manner. If exchange rates fluctuate during a time when the depositary cannot convert a foreign currency, you may lose some or all of the value of the distribution.

Distribution of Common Shares. In the case of a distribution of common shares, the depositary will issue additional ADRs to evidence the number of ADSs representing such common shares. Only whole ADSs will be issued. Any common shares which would result in fractional ADSs will be sold and the net proceeds will be distributed in the same manner as cash to the ADR holders entitled thereto.

No distribution of ADRs as described above will be made if it violates U.S. securities laws, or any other law, or if it is not operationally practicable. If the depositary does not distribute new ADRs as described above, it will use its best efforts to sell the common shares received and distribute the proceeds of the sale in the same manner as a cash distribution.

Rights to Receive Additional Common Shares. In the case of a distribution of rights to subscribe for additional common shares or other rights, if we provide evidence satisfactory to the depositary that it may lawfully distribute such rights, the depositary will distribute warrants or other instruments in the discretion of the depositary representing such rights. If we do not furnish such evidence, the depositary may:

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sell such rights if practicable and distribute the net proceeds in the same manner as cash distributions to the ADR holders entitled thereto; or

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if the sale of such rights cannot practicably be accomplished by reason of the non-tranferability of the rights, limited markets therefor, their short duration or otherwise, do nothing and allow such rights to lapse, in which case ADR holders will receive nothing.

Other Distributions. In the case of a distribution of securities or property other than those described above, the depositary may either (i) distribute such securities or property in any manner it deems equitable and practicable or (ii) to the extent the depositary deems distribution of such securities or property not to be equitable and practicable, sell such securities or property and distribute any net proceeds in the same manner it distributes cash. If the depositary determines that any distribution described above is not practicable with respect to any specific registered ADR holder, the depositary may choose any method of distribution that it deems practicable for such ADR holder, including the distribution of foreign currency, securities or property, or it may retain such items, without paying interest on or investing them, on behalf of the ADR holder as deposited securities, in which case the ADSs will also represent the retained items.

U.S. dollars will be distributed by checks drawn on a bank in the United States for whole U.S. dollars and cents. Fractional cents will be withheld without liability and dealt with by the depositary in accordance with its then current practices.

We have no obligation to file a registration statement under the Securities Act in order to make any rights , securities or other property available to ADR holders.

The depositary is not responsible if it decides that it is unlawful or impractical to make a distribution available to any ADR holders.

The depositary may use a division, branch or affiliate of JPMorgan Chase Bank, N.A. to direct manage and/or execute any public and/or private sale of securities.

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There can be no assurance that the depositary will be able to convert any currency at a specified exchange rate or sell any property, rights, common shares or other securities at a specified price, nor that any of such transactions can be completed within a specified time period.

Issuance of ADSs upon Deposit of Common Shares

The depositary will issue ADSs if you or your broker deposit common shares or evidence of rights to receive common shares with the custodian and pay the fees and expenses owing to the depositary in connection with such issuance. In the case of the ADSs to be issued under this prospectus, we will deposit such common shares.

Common shares deposited in the future with the custodian must be accompanied by the delivery of certain documentation and shall, at the time of such deposit, be registered in the name of JPMorgan Chase Bank, N.A., as depositary for the benefit of holders of ADRs or in such other name as the depositary shall direct.

The custodian will hold all deposited common shares (including those being deposited by us or on our behalf in connection with the offering to which this prospectus relates) for the account of the depositary. ADR holders thus have no direct ownership interest in our common shares and only have such rights as are contained in the deposit agreement. The custodian will also hold any additional securities, property and cash received on or in substitution for the deposited common shares. The deposited common shares and any such additional items are referred to as “deposited securities.”

Upon each deposit of common shares, receipt of related documentation and compliance with the other provisions of the deposit agreement, including the payment of the fees and charges of the depositary and any taxes or other fees or charges owing, the depositary will issue an ADR or ADRs in the name or upon the order of the person entitled thereto evidencing the number of ADSs to which such person is entitled. All of the ADSs issued will, unless specifically requested to the contrary, be part of the depositary’s direct registration system, and a registered holder will receive periodic statements from the depositary which will show the number of ADSs registered in such holder’s name. An ADR holder can request that the ADSs not be held through the depositary’s direct registration system and that a certificated ADR be issued.

The term common shares in this section shall also refer to preliminary stock certificates ( certificados provisionales ), which will be converted to common shares once the capital increase is registered with the Peruvian public registry and new common shares are listed on the Lima Stock Exchange and registered in the CAVALI S.A. ICLV book-entry settlement system.

Withdrawal of Common Shares upon Cancellation of ADSs

When you turn in your ADR certificate at the depositary’s office, or when you provide proper instructions and documentation in the case of direct registration ADSs, the depositary will, upon payment of certain applicable fees, charges and taxes, deliver the underlying common shares to you upon your written order. Delivery of common shares in certificated form will be made at the custodian’s office. At your risk, expense and request, the depositary may deliver deposited securities at such other place as you may request.

The depositary may only restrict the withdrawal of deposited securities in connection with:

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temporary delays caused by closing our transfer books or those of the depositary or the deposit of common shares in connection with voting at a shareholders’ meeting, or the payment of dividends;

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the payment of fees, taxes and similar charges; or

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compliance with any Peruvian, U.S. or other foreign laws or governmental regulations relating to the ADRs or to the withdrawal of deposited securities.

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Notwithstanding the foregoing, no withdrawal of deposited securities shall be permitted until the preliminary stock certificates ( certificados provisionales ) have been converted to common shares once the capital increase has been recorded with the Peruvian public registry.

This right of withdrawal may not be limited by any other provision of the deposit agreement.

Record Dates

The depositary may, after consultation with us if practicable, fix record dates for the determination of the registered ADR holders who will be entitled (or obligated, as the case may be) to:

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receive any distribution on or in respect of common shares;

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give instructions for the exercise of voting rights at a meeting of holders of common shares;

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pay the fee assessed by the depositary for administration of the ADR program and for any expenses as provided for in the ADR; or

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receive any notice or to act in respect of any other matter, in each case, subject to the provisions of the deposit agreement.

Voting Rights

A holder of an ADR representing common shares will generally have the right under the deposit agreement to instruct the depositary to exercise the voting rights for the underlying common shares represented by such ADRs. The voting rights of holders of common shares are described under “Description of our Share Capital.”

If you are an ADR holder and the depositary asks you to provide it with voting instructions, you may instruct the depositary how to exercise the voting rights for the common shares which underlie your ADSs. As soon as practicable after receiving notice of any meeting or solicitation of consents or proxies from us, the depositary will distribute to the registered ADR holders a notice stating such information as is contained in the voting materials received by the depositary and describing how you may instruct the depositary to exercise the voting rights for the common shares which underlie your ADSs, including instructions for giving a discretionary proxy to a person designated by us. For instructions to be valid, the depositary must receive them in the manner and on or before the date specified. The depositary will try, as far as is practical, subject to the provisions of and governing the underlying common shares or other deposited securities and Peruvian law, to vote or to have its agents vote the common shares or other deposited securities as you instruct. The depositary will only vote or attempt to vote as you instruct. The depositary will not itself exercise any voting discretion. Furthermore, neither the depositary, nor its agents, are responsible for any failure to carry out any voting instructions, for the manner in which any vote is cast or for the effect of any vote, other than for failure caused directly by gross negligence, bad faith or willful misconduct on the part of the depositary or its agents. Notwithstanding anything contained in the deposit agreement or any ADR, the depositary may, to the extent not prohibited by law or applicable regulations, or by the requirements of the stock exchange on which the ADSs are listed, in lieu of distribution of the materials provided to the depositary in connection with any meeting of, or solicitation of consents or proxies from, holders of deposited securities, distribute to the registered holders of ADRs a notice that provides such holders with, or otherwise publicizes to such holders, instructions on how to retrieve such materials or receive such materials upon request ( i.e. , by reference to a website containing the materials for retrieval or a contact for requesting copies of the materials).

There is no assurance that you will receive voting materials in time to instruct the depositary to vote and it is possible that you, or persons who hold their ADSs through brokers, dealers or other third parties, will not have the opportunity to exercise a right to vote.

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Reports and Other Communications

The depositary will make available for inspection by ADR holders at the offices of the depositary and the custodian the deposit agreement, the provisions of or governing deposited securities, and any written communications from us which are both received by the custodian or its nominee as a holder of deposited securities and made generally available to the holders of deposited securities.

Additionally, if we make any written communications generally available to holders of our common shares, and we furnish copies thereof (or English translations or summaries) to the depositary, it will distribute the same to registered ADR holders.

Fees and Expenses

The depositary may charge each person to whom ADSs are issued, including, without limitation, issuances against deposits of common shares, issuances in respect of common share distributions, rights and other distributions, issuances pursuant to a stock dividend or stock split declared by us or issuances pursuant to a merger, exchange of securities or any other transaction or event affecting the ADSs or deposited securities, and each person surrendering ADSs for withdrawal of deposited securities or whose ADRs are cancelled or reduced for any other reason, US$5.00 or less for each 100 ADSs (or any portion thereof) issued, delivered, reduced, cancelled or surrendered, as the case may be. The depositary may sell (by public or private sale) sufficient securities and property received in respect of a common share distribution, rights and/or other distribution prior to such deposit to pay such charge.

The following additional charges shall be incurred by the ADR holders, by any party depositing or withdrawing common shares or by any party surrendering ADSs or to whom ADSs are issued (including, without limitation, issuance pursuant to a stock dividend or stock split declared by us or an exchange of stock regarding the ADRs or the deposited securities or a distribution of ADSs), whichever is applicable:

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a fee of US$1.50 per ADR or ADRs for transfers of certificated or direct registration ADRs;

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a fee of US$0.05 or less per ADS for any cash distribution made pursuant to the deposit agreement;

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a fee of US$0.05 or less per ADS per calendar year (or portion thereof) for services performed by the depositary in administering the ADRs (which fee may be charged on a periodic basis during each calendar year and shall be assessed against holders of ADRs as of the record date or record dates set by the depositary during each calendar year and shall be payable in the manner described in the next succeeding provision);

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a fee for the reimbursement of such fees, charges and expenses as are incurred by the depositary and/or any of the depositary’s agents (including, without limitation, the custodian and expenses incurred on behalf of holders in connection with compliance with foreign exchange control regulations or any law or regulation relating to foreign investment) in connection with the servicing of the common shares or other deposited securities, the sale of securities, the delivery of deposited securities or otherwise in connection with the depositary’s or the custodian’s compliance with applicable law, rule or regulation (which charge shall be assessed on a proportionate basis against holders as of the record date or dates set by the depositary and shall be payable at the sole discretion of the depositary by billing such holders or by deducting such charge from one or more cash dividends or other cash distributions);

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a fee for the distribution or sale of securities pursuant to paragraph 10 of the deposit agreement, such fee being in an amount equal to the US$0.05 per ADS issuance fee for the execution and delivery of ADSs which would have been charged as a result of the deposit of such securities (treating all such securities as if they were common shares) but which securities or the net cash proceeds from the sale thereof are instead distributed by the depositary to those holders entitled thereto;

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stock transfer or other taxes and other governmental charges;

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cable and facsimile transmission and delivery charges incurred at your request in connection with the deposit or delivery of common shares;

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transfer or registration fees for the registration of transfer of deposited securities on any applicable register in connection with the deposit or withdrawal of deposited securities; and

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expenses of the depositary in connection with the conversion of foreign currency into U.S. dollars.

We will pay all other charges and expenses of the depositary and any agent of the depositary (except the custodian) pursuant to agreements from time to time between us and the depositary. The charges described above may be amended from time to time by agreement between us and the depositary.

Our depositary has agreed to reimburse us for certain expenses we incur that are related to establishment and maintenance of the ADR program, including investor relations expenses and exchange application and listing fees. The amounts of reimbursements available to us are not based upon the amounts of fees the depositary collects from investors. The depositary collects its fees for issuance and cancellation of ADSs directly from investors depositing common shares or surrendering ADSs for the purpose of withdrawal or from intermediaries acting on their behalf. The depositary collects fees for making distributions to investors by deducting those fees from the amounts distributed or by selling a portion of distributable property to pay the fees. The depositary may collect its annual fee for depositary services by deduction from cash distributions, or by directly billing investors, or by charging the book-entry system accounts of participants acting for them. The depositary will generally set off the amounts owing from distributions made to holders of ADSs. If, however, no distribution exists and payment owing is not timely received by the depositary, the depositary may refuse to provide any further services to holders that have not paid those fees and expenses owing until such fees and expenses have been paid. At the discretion of the depositary, all fees and charges owing under the deposit agreement are due in advance and/or when declared owing by the depositary.

Payment of Taxes

ADS holders or ADR holders, as the case may be, must pay any tax or other governmental charge (including any penalties and/or interest) payable by the custodian or the depositary on any ADS or ADR, deposited security or distribution. By holding or having held an ADS or an ADR, as the case be, the holders agree to indemnify, defend and save harmless each of the depositary and its agents in respect thereof. If an ADS holder or ADR holder, as the case may be, owes any tax or other governmental charge, the depositary may (i) deduct the amount thereof from any cash distributions, or (ii) sell deposited securities (by public or private sale) and deduct the amount owing from the net proceeds of such sale. In either case the ADS holder or ADR holder, as the case may be, remains liable for any shortfall. If any tax or governmental charge is unpaid, the depositary may also refuse to effect any registration, registration of transfer, split up or combination of deposited securities or withdrawal of deposited securities until such payment is made. If any tax or governmental charge is required to be withheld on any cash distribution, the depositary may deduct the amount required to be withheld from any cash distribution or, in the case of a non-cash distribution, sell the distributed property or securities (by public or private sale) to pay such taxes and distribute any remaining net proceeds to the ADS holders or the ADR holders entitled thereto.

By holding an ADR or an ADS, as the case may be, or an interest therein, you will be agreeing to indemnify us, the depositary, the custodian and any of our or their respective directors, employees, agents and affiliates against, and hold each of them harmless from, any claims by any governmental authority with respect to taxes, additions to tax, penalties or interest arising out of any refund of taxes, reduced rate of withholding at source or other tax benefit obtained.

Reclassifications, Recapitalizations and Mergers

If we take certain actions that affect the deposited securities, including (i) any change in par value, split up, consolidation, cancellation or other reclassification of deposited securities or (ii) any distributions not made to holders of ADRs or (iii) any recapitalization, reorganization, merger, consolidation, liquidation, receivership, bankruptcy or sale of all or substantially all of our assets, then the depositary may choose to:

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amend the form of ADR;

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distribute additional or amended ADRs;

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distribute cash, securities or other property it has received in connection with such actions;

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sell any securities or property received and distribute the proceeds as cash; or

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none of the above.

If the depositary does not choose any of the above options, any of the cash, securities or other property it receives will constitute part of the deposited securities and each ADS will then represent a proportionate interest in such property.

Amendment and Termination

We may agree with the depositary to amend the deposit agreement and the ADSs without your consent for any reason. ADR holders must be given at least 30 days’ notice of any amendment that imposes or increases any fees or charges (other than stock transfer or other taxes and other governmental charges, transfer or registration fees, cable, telex or facsimile transmission costs, delivery costs or other such expenses), or otherwise prejudices any substantial existing right of ADR holders. Such notice need not describe in detail the specific amendments effectuated thereby, but must give ADR holders a means to access the text of such amendment. If an ADR holder continues to hold an ADR or ADRs after being so notified, such ADR holder is deemed to agree to such amendment and to be bound by the deposit agreement as so amended. Notwithstanding the foregoing, if any governmental body or regulatory body should adopt new laws, rules or regulations which would require amendment or supplement of the deposit agreement or the form of ADR to ensure compliance therewith, we and the depositary may amend or supplement the deposit agreement and the ADR at any time in accordance with such changed laws, rules or regulations, which amendment or supplement may take effect before a notice is given or within any other period of time as required for compliance. No amendment, however, will impair your right to surrender your ADSs and receive the underlying securities, except in order to comply with mandatory provisions of applicable law.

The depositary may, and shall at our written direction, terminate the deposit agreement and the ADRs by mailing notice of such termination to the registered holders of ADRs at least 30 days prior to the date fixed in such notice for such termination; provided, however, if the depositary shall have (1) resigned as depositary under the deposit agreement, notice of such termination by the depositary shall not be provided to registered holders unless a successor depositary shall not be operating under the deposit agreement within 60 days of the date of such resignation, and (2) been removed as depositary under the deposit agreement, notice of such termination by the depositary shall not be provided to registered holders of ADRs unless a successor depositary shall not be operating under the deposit agreement on the 60th day after our notice of removal was first provided to the depositary. After termination, the depositary’s only responsibility will be (1) to deliver deposited securities to ADR holders who surrender their ADRs, and (2) to hold or sell distributions received on deposited securities. As soon as practicable after the expiration of six months from the termination date, the depositary will sell the deposited securities which remain and hold the net proceeds of such sales (as long as it may lawfully do so), without liability for interest, in trust for the ADR holders who have not yet surrendered their ADRs. After making such sale, the depositary shall have no obligations except to account for such proceeds and other cash.

Limitations on Obligations and Liability to ADR Holders

Prior to the issue, registration, registration of transfer, split-up, combination, or cancellation of any ADRs, or the delivery of any distribution in respect thereof, and from time to time, we or the depositary or the custodian may require:

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payment with respect thereto of (i) any stock transfer or other tax or other governmental charge, (ii) any stock transfer or registration fees in effect for the registration of transfers of common shares or other deposited securities upon any applicable register and (iii) any applicable fees and expenses described in the deposit agreement;

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the production of proof satisfactory to it of (i) the identity of any signatory and genuineness of any signature and (ii) such other information, including without limitation, information as to citizenship, residence, exchange control approval, beneficial ownership of any securities, compliance with applicable law, regulations, provisions of or governing deposited securities and terms of the deposit agreement and the ADRs, as it may deem necessary or proper; and

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compliance with such regulations as the depositary may establish consistent with the deposit agreement.

The issuance of ADRs, the acceptance of deposits of common shares, the registration, registration of transfer, split-up or combination of ADRs or the withdrawal of common shares, may be suspended, generally or in particular instances, when the ADR register or any register for deposited securities is closed or when any such action is deemed advisable by the depositary or when reasonably requested by us in order to enable us to comply with applicable law; provided that the ability to withdraw common shares may only be limited under the following circumstances: (i) temporary delays caused by closing transfer books of the depositary or our transfer books or the deposit of common shares in connection with voting at a shareholders’ meeting, or the payment of dividends, (ii) the payment of fees, taxes, and similar charges, and (iii) compliance with any laws or governmental regulations relating to ADRs or to the withdrawal of deposited securities.

The deposit agreement expressly limits the obligations and liability of the depositary, ourselves and our respective agents. Neither we nor the depositary nor any such agent will be liable if:

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any present or future law, rule, regulation, fiat, order or decree of the United States, Peru or any other country, or of any governmental or regulatory authority or securities exchange or market or automated quotation system, the provisions of or governing any deposited securities, any present or future provision of our charter, any act of God, war, terrorism, nationalization, expropriation, currency restrictions, work stoppage, strike, civil unrest, revolutions, rebellions, explosions, computer failure or other circumstance beyond our, the depositary’s or our respective agents’ control shall prevent or delay, or shall cause any of them to be subject to any civil or criminal penalty in connection with, any act which the deposit agreement or the ADRs provide shall be done or performed by us, the depositary or our respective agents (including, without limitation, voting);

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it exercises or fails to exercise discretion under the deposit agreement or the ADRs issued thereunder including, without limitation, any failure to determine that any distribution or action may be lawful or reasonably practicable;

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it performs its obligations under the deposit agreement and ADRs issued thereunder without gross negligence, bad faith or willful misconduct;

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it takes any action or refrains from taking any action in reliance upon the advice of or information from legal counsel, accountants, any person presenting common shares for deposit, any registered holder of ADRs, or any other person believed by it to be competent to give such advice or information; or

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it relies upon any written notice, request, direction, instruction or document believed by it to be genuine and to have been signed presented or given by the proper party or parties.

Neither the depositary nor its agents have any obligation to appear in, prosecute or defend any action, suit or other proceeding in respect of any deposited securities or the ADRs. We and our agents shall only be obligated to appear in, prosecute or defend any action, suit or other proceeding in respect of any deposited securities or the ADRs, which in our opinion may involve us in expense or liability, if indemnity satisfactory to us against all expense (including fees and disbursements of counsel) and liability is furnished as often as may be required. The

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depositary and its agents may fully respond to any and all demands or requests for information maintained by or on its behalf in connection with the deposit agreement, any registered holder or holders of ADRs, any ADRs or otherwise related to the deposit agreement or ADRs to the extent such information is requested or required by or pursuant to any lawful authority, including, without limitation, laws, rules, regulations, administrative or judicial processes, banking, securities or other regulators. The depositary shall not be liable for the acts or omissions made by, or the insolvency of any securities depository, clearing agency or settlement system in connection with or arising out of book-entry settlement of deposited securities or otherwise. Furthermore, the depositary shall not be responsible for, and shall incur no liability in connection with or arising from, the insolvency of any custodian that is not a branch or affiliate of JPMorgan Chase Bank, N.A. The depositary and the custodian may use third party delivery services and providers of information regarding matters such as pricing, proxy voting, corporate actions, class action litigation and other services in connection with the ADRs and the deposit agreement, and use local agents to provide extraordinary services such as attendance at annual meetings of issuers of securities. The depositary and the custodian are required to use reasonable care in the selection and retention of such third party providers and local agents, but neither the depositary nor the custodian will be responsible for any error or omissions made by such third party providers or local agents in providing the relevant information or services. The depositary shall not be responsible for, and shall incur no liability in connection with or arising from, any act or omission to act on the part of the custodian except to the extent that (A) the custodian has been determined by a final non-appealable judgment of a court of competent jurisdiction to have (i) committed fraud or willful misconduct in the provision of custodial services to the depositary or (ii) failed to use reasonable care in the provision of custodial services to the depositary as determined in accordance with the standards prevailing in the jurisdiction in which the custodian is located and (B) we or the registered holders of ADRs have incurred direct damages as a result of such act or omission to get on the part of the custodian.

The depositary shall be under no obligation to inform holders of ADSs regarding the requirements of Peruvian law, rules or regulations or any changes therein or thereunder.

Additionally, none of us, the depositary or the custodian will be liable for the failure by any registered holder of ADRs or beneficial owner therein to obtain the benefits of credits on the basis of non-U.S. tax paid against such holder’s or beneficial owner’s income tax liability. Neither we nor the depositary shall incur any liability for any tax consequences that may be incurred by holders or beneficial owners on account of their ownership of ADRs or ADSs.

The depositary shall not incur any liability for the content of any information submitted to it by us or on our behalf for distribution to the holders of ADRs or for any inaccuracy of any translation thereof, for any investment risk associated with acquiring an interest in the deposited securities, for the validity or worth of the deposited securities, for the credit-worthiness of any third party, for allowing any rights to lapse upon the terms of the deposit agreement or for the failure or timeliness of any notice from us. Further, the depositary shall not have any liability for the price received in connection with any sale of securities or the timing thereof.

Neither the depositary nor its agents will be responsible for any failure to carry out any instructions to vote any of the deposited securities, for the manner in which any such vote is cast or for the effect of any such vote. None of us, the depositary, or our agents shall be liable to registered holders of ADRs or beneficial owners of interests in ADSs for any indirect, special, punitive or consequential damages (including, without limitation, lost profits) of any form incurred by any person or entity, whether or not foreseeable and regardless of the type of action in which such a claim may be brought.

The depositary shall not be liable for any acts or omissions made by a successor depositary whether in connection with a previous act or omission of the depositary or in connection with any matter arising wholly after the removal or resignation of the depositary, provided that in connection with the issue out of which such potential liability arises the depositary performed its obligations without negligence while it acted as depositary.

In the deposit agreement each party thereto (including, for avoidance of doubt, each holder and beneficial owner and/or holder of interests in ADRs) irrevocably waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in any suit, action or proceeding against the depositary and/or us directly or indirectly arising out of or relating to the common shares or other deposited securities, the ADSs or the ADRs, the deposit agreement or any transaction contemplated therein, or the breach thereof (whether based on contract, tort, or common law or any other theory).

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The depositary may rely upon instructions from us or our counsel in respect of any governmental or agency approval or license required for any currency conversion, transfer or distribution.

The depositary may own and deal in any class of our securities and in ADSs.

Disclosure of Interest in ADSs

To the extent that the provisions of, or governing, any deposited securities may require disclosure of or impose limits on beneficial or other ownership of deposited securities, other common shares and other securities and may provide for blocking transfer, voting or other rights to enforce such disclosure or limits, you agree to comply with all such disclosure requirements and ownership limitations and to comply with any reasonable instructions we may provide in respect thereof. We reserve the right to instruct you to deliver your ADSs for cancellation and withdrawal of the deposited securities so as to permit us to deal with you directly as a holder of common shares and, by holding an ADS or an interest therein, you will be agreeing to comply with such instructions.

Books of Depositary

The depositary or its agent will maintain a register for the registration, registration of transfer, combination and split-up of ADRs, which register shall include the depositary’s direct registration system. Registered holders of ADRs may inspect such records at the depositary’s office at all reasonable times, but solely for the purpose of communicating with other holders in the interest of the business of our company or a matter relating to the deposit agreement. Such register may be closed from time to time, when deemed expedient by the depositary.

The depositary will maintain facilities for the delivery and receipt of ADRs.

Pre-Release of ADSs

In its capacity as depositary, the depositary shall not lend common shares or ADSs; provided, however, that the depositary may (i) issue ADSs prior to the receipt of common shares and (ii) deliver common shares prior to the receipt of ADSs for withdrawal of deposited securities, including ADSs which were issued under (i) above but for which common shares may not have been received (each such transaction a “pre-release”). The depositary may receive ADSs in lieu of common shares under (i) above (which ADSs will promptly be canceled by the depositary upon receipt by the depositary) and receive common shares in lieu of ADSs under (ii) above. Each such pre-release will be subject to a written agreement whereby the person or entity (the “applicant”) to whom ADSs or common shares are to be delivered (1) represents that at the time of the pre-release the applicant or its customer owns the common shares or ADSs that are to be delivered by the applicant under such pre-release, (2) agrees to indicate the depositary as owner of such common shares or ADSs in its records and to hold such common shares or ADSs in trust for the depositary until such common shares or ADSs are delivered to the depositary or the custodian, (3) unconditionally guarantees to deliver to the depositary or the custodian, as applicable, such common shares or ADSs, and (4) agrees to any additional restrictions or requirements that the depositary deems appropriate. Each such pre-release will be at all times fully collateralized with cash, U.S. government securities or such other collateral as the depositary deems appropriate, terminable by the depositary on not more than five business days’ notice and subject to such further indemnities and credit regulations as the depositary deems appropriate. The depositary will normally limit the number of ADSs and common shares involved in such pre-release at any one time to 30% of the ADSs outstanding (without giving effect to ADSs outstanding under (i) above), provided, however, that the depositary reserves the right to change or disregard such limit from time to time as it deems appropriate. The depositary may also set limits with respect to the number of ADSs and common shares involved in pre-release with any one person on a case-by-case basis as it deems appropriate. The depositary may retain for its own account any compensation received by it in conjunction with the foregoing. Collateral provided in connection with pre-release transactions, but not the earnings thereon, shall be held for the benefit of the registered holders of ADRs (other than the applicant).

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Appointment

In the deposit agreement, each registered holder of ADRs and each person holding an interest in ADSs, upon acceptance of any ADSs (or any interest therein) issued in accordance with the terms and conditions of the deposit agreement will be deemed for all purposes to:

•

be a party to and bound by the terms of the deposit agreement and the applicable ADR or ADRs; and

•

appoint the depositary as its attorney-in-fact, with full power to delegate, to act on its behalf and to take any and all actions contemplated in the deposit agreement and the applicable ADR or ADRs, to adopt any and all procedures necessary to comply with applicable laws and to take such action as the depositary in its sole discretion may deem necessary or appropriate to carry out the purposes of the deposit agreement and the applicable ADR and ADRs, the taking of such actions to be the conclusive determinant of the necessity and appropriateness thereof.

Governing Law

The deposit agreement and the ADRs will be governed by and construed in accordance with the laws of the State of New York. In the deposit agreement, we have submitted to the jurisdiction of the courts of the State of New York and appointed an agent for service of process on our behalf. By holding an ADS or an interest therein, registered holders of ADRs and beneficial owners of ADSs each irrevocably agree that any legal suit, action or proceeding against or involving us or the depositary, arising out of or based upon the deposit agreement or the transactions contemplated thereby, may only be instituted in a state or federal court in New York, New York, and each irrevocably submits to the exclusive jurisdiction of such courts in any such suit, action or proceeding.

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TAXATION

Peruvian Tax Considerations

The following is a general summary of material Peruvian tax matters under Peruvian law, as in effect on the date of this prospectus and describes the principal tax consequences of ownership of ADSs by non-resident individuals or entities (“Non-Peruvian Holders”). Legislative, judicial or administrative changes or interpretations may, however, be forthcoming. Any such changes or interpretations could affect the tax consequences to holders of ADSs and could alter or modify the conclusions set forth herein. This summary is not intended to be a comprehensive description of all of the tax considerations that may be relevant to a decision to make an investment in the ADSs. In addition, it does not describe any tax consequences arising under the laws of any taxing jurisdiction other than Peru or applicable to an individual or entity resident of Peru or to a person with a permanent establishment in Peru. To the extent that the discussion relates to matters of Peruvian tax law, except as otherwise provided, it represents the opinion of Muñiz, Ramírez, Pérez-Taiman & Olaya Abogados.

For purposes of Peruvian taxation:

•

individuals are residents of Peru, if they are Peruvian nationals who have established their place of residence in Peru or if they are foreign nationals with a permanence of 183 days in Peru in any 12-month period (in the latter case, the condition of Peruvian resident can only be acquired as of the 1st of January of the year following the fulfillment of residence conditions); and

•

legal entities are residents of Peru if they are established or incorporated in Peru.

Cash Dividends and Other Distributions

Cash dividends paid to Non-Peruvian Holders with respect to common shares and amounts distributed with respect to ADSs are currently subject to Peruvian withholding income tax at a rate of 4.1%. As a general rule, the distribution of additional common shares representing profits, the distribution of shares which differ from the distribution of earnings or profits, as well as the distribution of preemptive rights with respect to common shares, which are carried out as part of a pro rata distribution to all shareholders, will not be subject to Peruvian income tax or withholding taxes.

Capital Gains

Pursuant to Article 6 of the Peruvian income tax law, individuals and entities resident in Peru are subject to Peruvian income tax on their worldwide income while Non-Peruvian Holders are subject to Peruvian income tax only on their Peruvian source income.

Peruvian income tax law provides that income derived from the disposal of securities issued by Peruvian entities is considered Peruvian source income and is therefore subject to income tax. Under current Peruvian income tax law, capital gains resulting from the disposal of ADRs that represent shares issued by Peruvian entities are considered Peruvian source income and therefore are subject to Peruvian income tax. Peruvian income tax law also provides that the taxable income resulting from the disposal of securities is equal to the difference between the sale price of the securities (which may not be less than their fair market value) and their tax basis.

Notwithstanding the foregoing, capital gains resulting from the disposal of ADSs or beneficial interest in ADSs that represent shares issued by a Peruvian entity are not considered Peruvian source income, and therefore are not subject to Peruvian income tax.

In the event ADSs are exchanged into common shares and such common shares are disposed of, capital gains resulting therefrom will be subject to an income tax rate of either 5% or 30%, depending on where the transaction takes place. If the transaction is consummated in Peru, any capital gain will be subject to an income tax rate of 5%; and if the transaction is consummated outside of Peru, any capital gain will be subject to a 30% income tax rate. Peruvian income tax law regulations have stated with respect to the transfer of common shares that transactions are

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deemed to be consummated in Peru if the common shares are transferred through the Lima Stock Exchange. Any gain resulting from the conversion of ADSs into common shares or common shares into ADSs will not be subject to taxation in Peru.

Any Non-Peruvian Holder who acquires common shares will have the following tax basis: (i) for common shares purchased by the transferor, the acquisition price paid for the shares; (ii) for common shares received by the transferor as a result of a share capital increase because of a capitalization of net profits, the par value of such common shares; (iii) for other common shares received free of any payment, tax basis will be: (x) zero or the cost borne by the transferor, in the case of individuals and (y) the fair market value at the time of the acquisition, in the case of entities, and (iv) for common shares of the same type acquired at different opportunities and at different values, the tax basis will be the weighted average cost. In cases where common shares are sold by Non-Peruvian Holders outside the Lima Stock Exchange, the tax basis must be certified by the Peruvian tax administration prior to the time payment is made to the transferor; otherwise it would not be possible to deduct the tax basis and the 30% Peruvian income tax would apply to the total sale price. Under Peruvian income tax law, tax basis certification is granted by the Peruvian tax authorities within 30 business days after the filing of the corresponding application. If the Peruvian tax authorities do not respond within such 30 day period, the tax basis calculation presented for approval by the transferor is deemed automatically approved.

In any transaction relating to Peruvian securities through the Lima Stock Exchange, CAVALI (the Peruvian clearing house) will act as withholding agent of the Peruvian income tax. If the purchaser is resident in Peru and the sale is not performed through the Lima Stock Exchange, the purchaser will act as withholding agent. In other cases, the transferor shall be obliged to self-assess the tax and pay it to the Peruvian tax authorities within the first 12 business days of the month following the transfer.

Other Considerations

No Peruvian estate or gift taxes are imposed on the gratuitous transfer of ADSs or common shares. No stamp, transfer or similar tax applies to any transfer of common shares, except for commissions payable by seller and buyer to the Lima Stock Exchange (0.15% of value sold), fees payable to the Peruvian Securities Commission (0.1% of value sold), brokers’ fees (about 0.05% to 0.50% of value sold) and value added tax (at the rate of 18%) on commissions and fees. Any investor who sells its common shares on the Lima Stock Exchange will incur these fees and taxes upon purchase and sale of the common shares.

United States Federal Income Tax Considerations

The following summary describes certain United States federal income tax consequences to a United States Holder (as defined below) of the purchase, ownership and disposition of our common shares and ADSs as of the date hereof. Except where noted, this summary deals only with common shares and ADSs held as capital assets (generally, property held for investment). As used herein, the term “United States Holder” means a beneficial owner of common shares or ADSs that is for United States federal income tax purposes:

•

an individual citizen or resident of the United States;

•

a corporation (or other entity treated as a corporation for United States federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia;

•

an estate the income of which is subject to United States federal income taxation regardless of its source; or

•

a trust if it (1) is subject to the primary supervision of a court within the United States and one or more United States persons have the authority to control all substantial decisions of the trust, or (2) has a valid election in effect under applicable United States Treasury regulations to be treated as a United States person.

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This summary does not represent a detailed description of the United States federal income tax consequences applicable to you if you are subject to special treatment under the United States federal income tax laws, including if you are:

•

a dealer in securities or currencies;

•

a financial institution;

•

a regulated investment company;

•

a real estate investment trust;

•

an insurance company;

•

a tax-exempt organization;

•

a person holding our common shares or ADSs as part of a hedging, integrated or conversion transaction, a constructive sale or a straddle;

•

a trader in securities that has elected the mark-to-market method of accounting for your securities;

•

a person liable for alternative minimum tax;

•

a person who owns or is deemed to own 10% or more of our voting stock;

•

a partnership or other pass-through entity for United States federal income tax purposes; or

•

a person whose “functional currency” is not the U.S. dollar.

The discussion below is based upon the provisions of the Internal Revenue Code of 1986, as amended (the “Code”), and regulations, rulings and judicial decisions thereunder as of the date hereof, and such authorities may be replaced, revoked or modified so as to result in United States federal income tax consequences different from those discussed below. There is currently no income tax treaty between the United States and Peru that would provide for United States federal income tax consequences different than the consequences under the foregoing authorities. In addition, this summary is based, in part, upon representations made by the depositary to us and assumes that the deposit agreement, and all other related agreements, will be performed in accordance with their terms.

If a partnership (or other entity treated as a partnership for United States federal income tax purposes) holds our common shares or ADSs, the tax treatment of a partner in the partnership will generally depend upon the status of the partner and the activities of the partnership. If you are a partner of a partnership holding our common shares or ADSs, you should consult your tax advisors.

This summary does not contain a detailed description of all the United States federal income tax consequences to you in light of your particular circumstances and does not address the effects of any state, local or non-United States tax laws. If you are considering the purchase, ownership or disposition of our common shares or ADSs, you should consult your own tax advisors concerning the United States federal income tax consequences to you in light of your particular situation as well as any consequences arising under the laws of any other taxing jurisdiction.

ADSs

If you hold ADSs, for United States federal income tax purposes, you generally will be treated as the owner of the underlying common shares that are represented by such ADSs. Accordingly, deposits or withdrawals of common shares for ADSs will not be subject to United States federal income tax.

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Taxation of Dividends

The gross amount of distributions, other than certain pro rata distributions of common shares, on the ADSs or common shares (including amounts withheld to reflect Peruvian withholding taxes) will be taxable as dividends, to the extent paid out of our current or accumulated earnings and profits, as determined under United States federal income tax principles.

To the extent that the amount of any distribution (including amounts withheld to reflect Peruvian withholding taxes) exceeds our current and accumulated earnings and profits for a taxable year, as determined under United States federal income tax principles, the distribution will first be treated as a tax-free return of capital, causing a reduction in the adjusted basis of the ADSs or common shares, and the balance in excess of adjusted basis will be taxed as capital gain recognized on a sale or exchange. However, we do not expect to keep earnings and profits in accordance with United States federal income tax principles. Therefore, you should expect that a distribution will generally be treated as a dividend. Such dividends (including any withheld taxes) will be includable in your gross income as ordinary income on the day actually or constructively received by you, in the case of the common shares, or by the depositary, in the case of ADSs. Such dividends will not be eligible for the dividends received deduction allowed to corporations under the Code.

With respect to non-corporate United States Holders, certain dividends received from a qualified foreign corporation may be subject to reduced rates of taxation. A non-United States corporation is treated as a qualified foreign corporation with respect to dividends received from that corporation on common shares (or ADSs backed by such shares) that are readily tradable on an established securities market in the United States. United States Treasury Department guidance indicates that upon the listing of our ADSs on the NYSE, our ADSs will be considered readily tradable on an established securities market in the United States. Based on existing guidance, it is not entirely clear whether our common shares will be considered readily tradable on an established securities market in the United States because only the ADSs, not the underlying common shares, will be listed on a securities market in the United States. We believe that dividends we pay on our common shares that are represented by ADSs, but not our common shares that are not so represented, will meet such conditions required for the reduced tax rates. There can be no assurance that our ADSs will be considered readily tradable on an established securities market in later years. Non-corporate United States Holders that do not meet a minimum holding period requirement during which they are not protected from the risk of loss or that elect to treat the dividend income as “investment income” pursuant to Section 163(d)(4) of the Code will not be eligible for the reduced rates of taxation regardless of our status as a qualified foreign corporation. In addition, the rate reduction will not apply to dividends if the recipient of a dividend is obligated to make related payments with respect to positions in substantially similar or related property. This disallowance applies even if the minimum holding period has been met. You should consult your own tax advisors regarding the application of these rules given your particular circumstances.

The amount of any dividend paid in nuevos soles will equal the U.S. dollar value of the nuevos soles received, calculated by reference to the exchange rate in effect on the date the dividend is actually or constructively received by you, in the case of the common shares, or by the depositary, in the case of ADSs, regardless of whether the nuevos soles are converted into U.S. dollars at that time. If the nuevos soles received as a dividend are converted into U.S. dollars on the date they are received, you generally will not be required to recognize foreign currency gain or loss in respect of the dividend income. If the nuevos soles received as a dividend are not converted into U.S. dollars on the date of receipt, you will have a tax basis in the nuevos soles equal to their U.S. dollar value on the date of receipt. Any gain or loss realized on a subsequent conversion or other disposition of the nuevos soles will be treated as United States source ordinary income or loss.

Subject to certain conditions and limitations, Peruvian withholding taxes on dividends may be treated as foreign taxes eligible for credit against your United States federal income tax liability. For purposes of calculating the foreign tax credit, dividends paid on the ADSs or common shares will be treated as foreign source income and will generally constitute passive category income. However, in certain circumstances, if you have held the ADSs or common shares for less than a specified minimum period during which you are not protected from risk of loss, or are obligated to make payments related to the dividends, you will not be allowed a foreign tax credit for any Peruvian withholding taxes imposed on dividends paid on the ADSs or common shares. If you do not elect to claim a United States foreign tax credit, you may instead claim a deduction for Peruvian income tax withheld, but only for a taxable year in which you elect to do so with respect to all foreign income taxes paid or accrued in such taxable year. The rules governing the foreign tax credit are complex. You are urged to consult your tax advisors regarding the availability of the foreign tax credit under your particular circumstances.

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Taxation of Capital Gains

For United States federal income tax purposes, you will recognize taxable gain or loss on any sale or exchange of ADSs or common shares in an amount equal to the difference between the amount realized for the ADSs or common shares and your tax basis in the ADSs or common shares, in each case as determined in U.S. dollars. Such gain or loss will generally be capital gain or loss. Capital gains of non-corporate United States Holders derived with respect to capital assets held for more than one year are eligible for reduced rates of taxation. The deductibility of capital losses is subject to limitations.

If a Peruvian income tax is withheld on the sale or other disposition of our ADSs or common shares, your amount realized will include the gross amount of the proceeds of that sale or other disposition before deduction of the Peruvian income tax. See “Peruvian Tax Considerations—Capital Gains” for a description of when a sale or other disposition of our ADSs or common shares may be subject to taxation by Peru. Any gain or loss recognized by you will generally be treated as United States source gain or loss for foreign tax credit purposes. Consequently, in the case of gain from the disposition of ADSs or common shares that is subject to Peruvian income tax, you may not be able to benefit from the foreign tax credit for that Peruvian income tax ( i.e. , because the gain from the disposition would be United States source), unless you can apply the credit (subject to applicable limitations) against United States federal income tax payable on other income from foreign sources. Alternatively, you may take a deduction for the Peruvian income tax if you do not take a credit for any foreign taxes paid or accrued during the taxable year. You are urged to consult your tax advisors regarding the tax consequences if Peruvian income tax is imposed on a disposition of ADSs or common shares, including the availability of the foreign tax credit under your particular circumstances.

Passive Foreign Investment Company

We do not believe that we are, for United States federal income tax purposes, a passive foreign investment company (a “PFIC”), and we expect to operate in such a manner so as not to become a PFIC. If, however, we are or become a PFIC, you could be subject to additional United States federal income taxes on gain recognized with respect to the ADSs or common shares and on certain distributions, plus an interest charge on certain taxes treated as having been deferred under the PFIC rules. Non-corporate United States Holders will not be eligible for reduced rates of taxation on any dividends received from us (as discussed above under “—Taxation of Dividends”) if we are a PFIC in the taxable year in which such dividends are paid or in the preceding taxable year.

Information Reporting and Backup Withholding

In general, information reporting will apply to dividends in respect of our ADSs or common shares and the proceeds from the sale, exchange or redemption of our ADSs or common shares that are paid to you within the United States (and in certain cases, outside the United States), unless you are an exempt recipient. Backup withholding may apply to such payments if you fail to provide a taxpayer identification number or certification of other exempt status or fail to report in full dividend and interest income.

Any amounts withheld under the backup withholding rules will be allowed as a refund or a credit against your United States federal income tax liability provided the required information is furnished to the Internal Revenue Service in a timely manner.

The above description is not intended to constitute a complete analysis of all tax consequences relating to the acquisition, ownership or disposition of our ADSs or common shares. You should consult your own tax advisors concerning the overall tax consequences to you, including the consequences under laws other than United States federal income tax laws, of an investment in our ADSs or common shares.

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UNDERWRITING

Under the terms and subject to the conditions contained in an underwriting agreement dated , 2013, we have agreed to sell to the underwriters named below, for whom Credit Suisse Securities (USA) LLC, J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC are acting as representatives, and the underwriters have agreed to purchase, at a public offering price less the underwriting discounts and commissions set forth on the cover page of this prospectus, the following respective numbers of ADSs:


Underwriter		Number of ADSs
Credit Suisse Securities (USA) LLC
J.P. Morgan Securities LLC
Morgan Stanley & Co. LLC

Banco BTG Pactual S.A.—Cayman Branch

Total

Banco BTG Pactual S.A.—Cayman Branch, acting on behalf of BTG Pactual US Capital LLC, is acting as an underwriter in this offering. Banco BTG Pactual S.A.—Cayman Branch is not a broker-dealer registered with the SEC and therefore may not make sales of any ADSs in the United States or to U.S. persons except in compliance with applicable U.S. laws and regulations. To the extent that Banco BTG Pactual S.A.—Cayman Branch intends to effect sales of ADSs in the United States, it will do so only through BTG Pactual US Capital LLC or one or more U.S. registered broker-dealers, or otherwise as permitted by applicable U.S. law.

The underwriting agreement provides that the underwriters are obligated to purchase all the ADSs in the offering if any are purchased, other than those ADSs covered by the over-allotment option to purchase additional ADSs described below. The underwriting agreement also provides that if an underwriter defaults, the purchase commitments of non-defaulting underwriters may be increased or the offering may be terminated.

All sales of the ADSs in the United States will be made by U.S. registered broker/dealers.

We have granted to the underwriters a 30-day option to purchase on a pro rata basis up to additional ADSs from us at the initial public offering price less the underwriting discounts and commissions. The option may be exercised only to cover any over-allotments of ADSs.

The underwriters propose to offer the ADSs initially at the public offering price on the cover page of this prospectus and to selling group members at that price less a selling concession of US$ per ADS. The underwriters and selling group members may allow a discount of US$ per ADS on sales to other broker/dealers. After the initial public offering, the representatives may change the public offering price and concession and discount to broker/dealers.

The following table summarizes the compensation we will pay to the underwriters:

Per ADS

Total

Without
Exercise of
Over-allotment
Option

With
Exercise of
Over-allotment
Option

Without
Exercise of
Over-allotment
Option

With
Exercise of
Over-allotment
Option

Underwriting discounts and commissions

US$

The representatives have informed us that the underwriters do not expect sales to accounts over which the underwriters have discretionary authority to exceed 5% of the ADSs being offered.

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We estimate that the total expenses of this offering, including registration, filing and listing fees, printing fees, legal and accounting expenses, but excluding underwriting discounts and commissions, will be approximately US$4,385,000. See “Expenses of the Offering.”

We have agreed to reimburse the underwriters for their road show expenses, the legal fees and expenses of underwriters’ counsel (including legal fees and expenses for qualifying the offering with the Financial Industry Regulatory Authority) and other out-of-pocket expenses of the underwriters payable by us, in an aggregate amount not to exceed US$2.1 million.

We have agreed that we will not offer, sell, issue, contract to sell, pledge, or otherwise dispose of, directly or indirectly, or file with the SEC a registration statement under the Securities Act, relating to, any of our ADSs, common shares or securities convertible into or exchangeable or exercisable for, or that represent the right to receive, our ADSs or common shares, or enter into any swap, hedge or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of our ADSs or common shares, or publicly disclose that we will or may enter into any transaction described above, without the prior written consent of the representatives of the underwriters for a period of 180 days after the date of this prospectus, whether any transaction described above is to be settled by delivery of ADSs, common shares or such other securities, in cash or otherwise, except for issuances pursuant to the sale of ADSs or common shares to the underwriters. However, in the event that either (1) during the last 17 days of the “lock-up” period, we release earnings results or material news or a material event relating to us occurs or (2) prior to the expiration of the “lock-up” period, we announce that we will release earnings results during the 16-day period beginning on the last day of the “lock-up” period, then in either case the expiration of the “lock-up” will be extended until the expiration of the 18-day period beginning on the date of the release of the earnings results or the occurrence of the material news or event, as applicable, unless the representatives of the underwriters waive, in writing, such an extension.

Our directors and officers and certain of our other shareholders, collectively owning 36.76% of our common shares as of April 30, 2013, have agreed that they will not offer, sell, contract to sell, pledge or otherwise transfer or dispose of, directly or indirectly, any of our ADSs, common shares or securities convertible into or exchangeable or exercisable for, or that represent the right to receive, ADSs or common shares, enter into any transaction which would have the same effect, or enter into any swap, hedge or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of our ADSs or common shares, or publicly disclose the intention to enter into any transaction described above, without the prior written consent of the representatives of the underwriters for a period of 180 days after the date of this prospectus, whether any transaction described above is to be settled by delivery of ADSs, common shares or such other securities, in cash or otherwise. However, in the event that either (1) during the last 17 days of the “lock-up” period, we release earnings results or material news or a material event relating to us occurs or (2) prior to the expiration of the “lock-up” period, we announce that we will release earnings results during the 16-day period beginning on the last day of the “lock-up” period, then in either case the expiration of the “lock-up” will be extended until the expiration of the 18-day period beginning on the date of the release of the earnings results or the occurrence of the material news or event, as applicable, unless the representatives of the underwriters waive, in writing, such an extension.

The representatives, in their sole discretion, may release the ADSs and other securities subject to the lock-up agreements described above in whole or in part at any time with or without notice.

We have agreed to indemnify the underwriters against liabilities under the Securities Act, or contribute to payments that the underwriters may be required to make in that respect.

We have applied to have our ADSs approved for listing on the New York Stock Exchange under the symbol “GRAM”. Our common shares are listed on the Lima Stock Exchange under the symbol “GRAMONC1”.

In connection with the offering, the underwriters may engage in stabilizing transactions, over-allotment transactions, syndicate covering transactions and penalty bids in accordance with Regulation M under the Exchange Act.

•

Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified maximum.

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•

Over-allotment involves sales by the underwriters of ADSs in excess of the number of ADSs the underwriters are obligated to purchase, which creates a syndicate short position. The short position may be either a covered short position or a naked short position. In a covered short position, the number of ADSs over-allotted by the underwriters is not greater than the number of ADSs that they may purchase in the over-allotment option. In a naked short position, the number of ADSs involved is greater than the number of ADSs in the over-allotment option. The underwriters may close out any covered short position by either exercising their over-allotment option and/or purchasing ADSs in the open market.

•

Syndicate covering transactions involve purchases of the ADSs in the open market after the distribution has been completed in order to cover syndicate short positions. In determining the source of ADSs to close out the short position, the underwriters will consider, among other things, the price of ADSs available for purchase in the open market as compared to the price at which they may purchase ADSs through the over-allotment option. If the underwriters sell more ADSs than could be covered by the over-allotment option, a naked short position, the position can only be closed out by buying ADSs in the open market. A naked short position is more likely to be created if the underwriters are concerned that there could be downward pressure on the price of the ADSs in the open market after pricing that could adversely affect investors who purchase in the offering.

•

Penalty bids permit the representatives to reclaim a selling concession from a syndicate member when the ADSs originally sold by the syndicate member is purchased in a stabilizing or syndicate covering transaction to cover syndicate short positions.

These stabilizing transactions, syndicate covering transactions and penalty bids may have the effect of raising or maintaining the market price of our ADSs or preventing or retarding a decline in the market price of the ADSs. As a result the price of our ADSs may be higher than the price that might otherwise exist in the open market. These transactions may be effected on the NYSE or otherwise and, if commenced, may be discontinued at any time.

The underwriters and/or their affiliates may enter into derivative transactions with clients, at their request, in connection with the common shares or the ADSs. The underwriters and/or their affiliates may also purchase some of the ADSs to hedge their risk exposure in connection with such transactions. These transactions may have an effect on demand, price or other terms of the offering.

The underwriters and/or their respective affiliates have provided, currently provide or may provide in the future various investment banking, commercial banking, financial advisory and/or similar services to us on a regular basis, and maintain normal business relationships with us in their capacity as credit institutions or as lenders under credit facilities, for which they have received and may continue to receive customary fees and commissions. Affiliates of certain of the underwriters are lenders under the US$150 million syndicated term loan with BBVA Bancomer S.A., Institución de Banca Múltiple, Grupo Financiero BBVA Bancomer, as administrative agent, and the other lenders party thereto.

In the ordinary course of their various business activities, the underwriters and their respective affiliates, officers, directors and employees may purchase, sell or hold a broad array of investments and actively trade securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments for their own account and for the accounts of their customers, and such investment and trading activities may involve or relate to our assets, securities and/or instruments (directly, as collateral securing other obligations or otherwise) and/or persons and entities with relationships with us.

A prospectus in electronic format may be made available on the web sites maintained by one or more of the underwriters, or selling group members, if any, participating in this offering and one or more of the underwriters participating in this offering may distribute prospectuses electronically. The representatives may agree to allocate a number of ADSs to underwriters and selling group members for sale to their online brokerage account holders. Internet distributions will be allocated by the underwriters and selling group members that will make internet distributions on the same basis as other allocations.

Selling Restrictions

Argentina

This prospectus has not been registered with the Comisión Nacional de Valores and may not be offered publicly in Argentina. The prospectus may not be publicly distributed in Argentina. Neither we nor the underwriters will solicit the public in Argentina in connection with this prospectus.

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Australia

This prospectus is not a formal disclosure document and has not been, nor will be, lodged with the Australian Securities and Investments Commission. It does not purport to contain all information that an investor or their professional advisers would expect to find in a prospectus or other disclosure document (as defined in the Corporations Act 2001 (Australia)) for the purposes of Part 6D.2 of the Corporations Act 2001 (Australia) or in a product disclosure statement for the purposes of Part 7.9 of the Corporations Act 2001 (Australia), in either case, in relation to the securities.

The securities are not being offered in Australia to “retail clients” as defined in sections 761G and 761GA of the Corporations Act 2001 (Australia). This offering is being made in Australia solely to “wholesale clients” for the purposes of section 761G of the Corporations Act 2001 (Australia) and, as such, no prospectus, product disclosure statement or other disclosure document in relation to the securities has been, or will be, prepared.

This prospectus does not constitute an offer in Australia other than to persons who do not require disclosure under Part 6D.2 of the Corporations Act 2001 (Australia) and who are wholesale clients for the purposes of section 761G of the Corporations Act 2001 (Australia). By submitting an application for our securities, you represent and warrant to us that you are a person who does not require disclosure under Part 6D.2 and who is a wholesale client for the purposes of section 761G of the Corporations Act 2001 (Australia). If any recipient of this prospectus is not a wholesale client, no offer of, or invitation to apply for, our securities shall be deemed to be made to such recipient and no applications for our securities will be accepted from such recipient. Any offer to a recipient in Australia, and any agreement arising from acceptance of such offer, is personal and may only be accepted by the recipient. In addition, by applying for our securities you undertake to us that, for a period of 12 months from the date of issue of the securities, you will not transfer any interest in the securities to any person in Australia other than to a person who does not require disclosure under Part 6D.2 and who is a wholesale client.

Brazil

The offer of ADSs described in this prospectus will not be carried out by any means that would constitute a public offering in Brazil under Law No. 6,385, of December 7, 1976, as amended, and under CVM Rule (Instrução) No. 400, of December 29, 2003, as amended. The offer and sale of the ADSs have not been and will not be registered with the Comissão de Valores Móbilearios in Brazil. The ADSs have not been offered or sold, and will not be offered or sold in Brazil, except in circumstances that do not constitute a public offering or distribution under Brazilian laws and regulations.

Chile

The offer of the ADSs begins on , 2013, and is governed by the General Rule (Norma de Carácter General) 336 of June 27, 2012, issued by the Chilean Superintendency of Securities and Insurance (“SVS”). The offer relates to securities not registered with the Securities Registry or the Registry of Foreign Securities of the SVS, so the ADSs are not subject to the oversight of the SVS. Since the ADSs are unregistered securities in Chile, we have no obligation to deliver in Chile public information regarding the ADSs. The ADSs may not be sold in a public offering in Chile unless they are registered in the Securities Registry or the Registry of Foreign Securities of the SVS.

La oferta de los valores comienza el de 2013 y está acogida a la Norma de Carácter General 336 de fecha 27 de junio de 2012 de la Superintendencia de Valores y Seguros de Chile. La oferta versa sobre valores no inscritos en el Registro de Valores o en el Registro de Valores Extranjeros que lleva la SVS, por lo que los valores no están sujetos a la fiscalización de dicho organismo. Por tratarse de valores no inscritos, no existe obligación por parte del emisor de entregar en Chile información pública respecto de los valores. Estos valores no pueden ser objeto de oferta pública a menos que sean inscritos en el Registro de Valores correspondiente.

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Colombia

The ADSs have not been and will not be offered in Colombia through a public offering of securities pursuant to Colombian laws and regulations, nor will they be registered in the Colombian National Registry of Securities and Issuers or listed on a regulated securities trading system such as the Colombian Stock Exchange.

Dubai International Financial Center

This prospectus relates to an Exempt Offer in accordance with the Offered Securities Rules of the Dubai Financial Services Authority (“DFSA”). This prospectus is intended for distribution only to persons of a type specified in the Offered Securities Rules of the DFSA. It must not be delivered to, or relied on by, any other person. The DFSA has no responsibility for reviewing or verifying any documents in connection with Exempt Offers. The DFSA has not approved this prospectus nor taken steps to verify the information set forth herein and has no responsibility for the prospectus. The ADSs to which this prospectus relates may be illiquid and/or subject to restrictions on their resale. Prospective purchasers of the ADSs offered should conduct their own due diligence on the ADSs. If you do not understand the contents of this prospectus you should consult an authorized financial advisor.

European Economic Area

In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a “Relevant Member State”) an offer of securities described in this prospectus may not be made to the public in that Relevant Member State, except that an offer to the public in that Relevant Member State of any such securities may be made at any time under the following exemptions under the Prospectus Directive, if they have been implemented in that Relevant Member State:

•

to any legal entity which is a qualified investor as defined in the Prospectus Directive;

•

to fewer than 100 or, if the Relevant Member State has implemented the relevant provision of the 2010 PD Amending Directive, 150, natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus Directive, subject to obtaining the prior consent of the representatives for any such offer; or

•

in any other circumstances falling within Article 3(2) of the Prospectus Directive.

provided that no such offer of ADSs shall require us or any representative to publish a prospectus pursuant to Article 3 of the Prospectus Directive.

For the purposes of this provision, the expression an “offer of securities to the public” in relation to any ADSs in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the securities to be offered so as to enable an investor to decide to purchase or subscribe for the securities, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State, the expression “Prospectus Directive” means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State), and includes any relevant implementing measure in the Relevant Member State, and the expression “2010 PD Amending Directive” means Directive 2010/73/EU.

Hong Kong

The ADSs may not be offered or sold in Hong Kong by means of any document other than (i) in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap. 32, Laws of Hong Kong), or (ii) to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder, or (iii) in other circumstances which do not result in the document being a “prospectus” within the meaning of the Companies Ordinance (Cap. 32, Laws of Hong Kong) and no advertisement, invitation or document relating to the ADSs may be issued or may be in the possession of any

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person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the laws of Hong Kong) other than with respect to ADSs which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder.

Japan

The ADSs offered in this prospectus have not been registered under the Securities and Exchange Law of Japan. The ADSs have not been offered or sold and will not be offered or sold, directly or indirectly, in Japan or to or for the account of any resident of Japan, except (i) pursuant to an exemption from the registration requirements of the Securities and Exchange Law and (ii) in compliance with any other applicable requirements of Japanese law.

Kuwait

Unless all necessary approvals from the Kuwait Capital Markets Authority pursuant to Law No. 7/2010, its Executive Regulations and the various Resolutions and Announcements issued pursuant thereto or in connection therewith have been given in relation to the marketing, of and sale of the ADSs, these may not be offered for sale, nor sold in the State of Kuwait. Neither this prospectus nor any of the information contained herein is intended to lead to the conclusion of any contract of whatsoever nature within the State of Kuwait.

Mexico

The ADSs described in this prospectus are not being offered, sold or traded in Mexico pursuant to, and do not constitute, an oferta pública (public offering) in accordance with the Ley del Mercado de Valores, as amended (Mexican Securities Market Law, or “LMV”), or Disposiciones de carácter general aplicables a las emisoras de valores y a otros participantes del mercado de valores (the general rules, regulations and other general provisions issued by the Comisión Nacional Bancaria y de Valores (Mexican Banking and Securities Commission, or “CNBV”), or “General Issuer’s Rules”), nor is the offering contemplated hereby being authorized by the CNBV; therefore, any such ADSs may not be offered or sold publicly, or otherwise be the subject of brokerage activities, in Mexico, except pursuant to a private placement exemption or other exemptions set forth in the Mexican Securities Market Law. As such, this offering can be made to any person in Mexico so long as the offering is conducted on a direct and personal basis and it complies, among other requirements as set forth under the LMV and the General Issuer’s Rules, with the following:

(i)

it is made to persons who are inversionistas institucionales (institutional investors) within the meaning of Article 2, Roman numeral XVII, of the LMV and regarded as such pursuant to the laws of Mexico, or inversionistas calificados (qualified investors) within the meaning of Article 2, Roman numeral XVI, of the LMV, and have the income, assets or qualitative characteristics provided for under Article 1, Roman numeral XIII of the General Issuer’s Rules, which require maintenance, in average over the past year, of investments in securities (within the meaning of the LMV) for an amount equal or greater than 1,500,000 Unidades de Inversión (Investment Units or “UDIs”), or in each of the last two years had a gross annual income equal to or greater than 500,000 UDIs; or

(ii)

it is made to persons who are stockholders of companies which fulfill their corporate purpose exclusively or substantially with such securities ( e.g. , investment companies authorized to invest in such securities); or

(iii)

it is made pursuant to a plan or applicable program for our or our affiliates’ employees or groups of employees; or

(iv)

it is made to less than 100 persons, to the extent such persons do not qualify under (i), (ii) or (iii) above.

In identifying proposed purchasers for the ADSs in Mexico, the underwriters will only contact persons or entities whom they reasonably believe are within one of the four categories described in the immediately preceding paragraph in items (i) through (iv). The underwriters may further require you to expressly reiterate that you fall into

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one of the above mentioned categories, that you further understand that the private offering of ADSs has less documentary and information requirements than public offerings do, and to waive the right to claim on any lacking thereof.

This prospectus may not be publicly distributed in Mexico, whether through mass media to indeterminate subjects or otherwise, and they are not intended to serve as an application for the registration of the ADSs before the CNBV or listing of the ADSs before the Bolsa Mexicana de Valores, S.A.B. de C.V. (Mexican Stock Exchange, or “BMV”), nor as a prospectus in connection with a public offering in Mexico. This prospectus is solely our responsibility and has not been reviewed or authorized by the CNBV. The CNBV has not assessed or passed on the investment quality of ADSs, our solvency, liquidity or credit quality or the accuracy or completeness of the information provided in this prospectus. In making an investment decision, all investors, including any Mexican investors who may acquire ADSs from time to time, must rely on their own review and examination of our company. The acquisition of the ADSs by an investor who is a resident of Mexico will be made under its own responsibility.

Panama

The ADSs have not been, and will not be, registered for public offering in Panama with the Panamanian Superintendency of the Securities Market (Superintendencia del Mercado de Valores, previously the National Securities Commission of Panama) under Decree-Law 1 of July 8, 1999, as reformed by Law 67 of 2011 (the “Panamanian Securities Act”). Accordingly, the ADSs may not be offered or sold in Panama nor to persons domiciled in Panama, except in certain limited transactions exempted from the registration requirements of the Panamanian Securities Act. The ADSs do not benefit from tax incentives accorded by the Panamanian Securities Act, and are not subject to regulation or supervision by the Panamanian Superintendency of the Securities Market as long as the ADSs are privately offered to no more than 25 persons domiciled in Panama and result in the sale to no more than 10 of such persons.

People’s Republic of China

This offering has not been approved or registered in the People’s Republic of China (the “PRC”). This prospectus may not be circulated or distributed in the PRC and the ADSs may not be offered or sold, and will not be offered or sold to any person for re-offering or resale, directly or indirectly, to any person in the PRC, except to the extent consistent with applicable laws and regulations of the PRC. For the purpose of this paragraph, the PRC does not include Taiwan and the special administrative regions of Hong Kong and Macau.

Peru

The ADSs and the information contained in this prospectus have not been and will not be registered with or approved by the Peruvian Securities Commission or the Lima Stock Exchange. Accordingly, the ADSs cannot be offered or sold in Peru, except if such offering is considered a private offering under the securities laws and regulations of Peru.

Qatar

The ADSs have not been and will not be offered, sold or delivered, at any time, directly or indirectly in the State of Qatar in a manner that would constitute a public offering. The ADSs are not and will not be listed on the Qatar Exchange.

This prospectus has not been, and will not be, reviewed or approved by or filed or registered with the Qatar Financial Markets Authority, Qatar Central Bank or the Qatar Financial Centre Regulatory Authority and may not be publicly distributed. This prospectus is intended for the original recipient only and must not be provided to any other person. It is not for general circulation in the State of Qatar and may not be reproduced or used for any other purpose.

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Singapore

This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the ADSs may not be circulated or distributed, nor may the ADSs be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the “SFA”), (ii) to a relevant person pursuant to Section 275(1), or any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA, in each case subject to compliance with conditions set forth in the SFA.

Switzerland

No ADSs will be publicly offered or distributed in Switzerland. ADSs shall be offered in Switzerland privately only to a select circle of investors without the use of any public means of information or advertisement.

This prospectus does not constitute an offer prospectus within the meaning of Art. 652a of the Swiss Code of Obligations. It has not been filed with or approved by any Swiss regulatory authority or stock exchange. The ADSs will not be registered in Switzerland or listed at any Swiss stock exchange. This document may not be distributed or used in Switzerland without our prior written approval.

United Arab Emirates

The ADSs will be sold outside the United Arab Emirates and are not part of a public offering and are being offered to a limited number of institutional and private investors in the United Arab Emirates. We have not been reviewed, approved or licensed by the United Arab Emirates Central Bank or any other relevant licensing authorities or governmental agencies in the United Arab Emirates. This document is strictly private and confidential and has not been reviewed, deposited or registered with any licensing authority or governmental agency in the United Arab Emirates, and is being issued to a limited number of institutional and private investors and must not be provided to any person other than the original recipient and may not be reproduced or used for any other purpose. Our ADSs may not be offered or sold directly or indirectly to the public in the United Arab Emirates.

United Kingdom

Each underwriter has represented and agreed that:

(a)

it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000 (“FSMA”)) received by it in connection with the issue or sale of the ADSs in circumstances in which Section 21(1) of the FSMA does not apply to us; and

(b)

it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the ADSs in, from or otherwise involving the United Kingdom.

Global Coordinators and Joint Bookrunner

The addresses of the global coordinators are as follows:

Credit Suisse Securities (USA) LLC

Eleven Madison Avenue

New York, NY 10010

United States of America

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J.P. Morgan Securities LLC

383 Madison Avenue

New York, NY 10179

United States of America

Morgan Stanley & Co. LLC

1585 Broadway

New York, NY 10036

United States of America

The address of the joint bookrunner is as follows:

Banco BTG Pactual S.A. – Cayman Branch

c/o BTG Pactual US Capital LLC

601 Lexington Avenue, 57 ^th Floor

New York, NY 10022

United States of America

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EXPENSES OF THE GLOBAL OFFERING

We estimate that our expenses in connection with the offering, other than underwriting discounts and commissions, will be as follows:


	Amount (in US$)		Percentage of Net Proceeds of the Offering (%)
SEC registration fee		65,000		0.0
New York Stock Exchange listing fees		130,000		0.0
FINRA filing fee		70,000		0.0
Printing expenses		170,000		0.0
Legal fees and expenses		2,100,000		0.5
Accountant fees and expenses		1,400,000		0.4
Miscellaneous fees		450,000		0.1

Total		4,385,000		1.1

All amounts in the table are estimated except for the SEC registration fee and the FINRA filing fee.

The depositary has agreed to pay some of these expenses on our behalf, subject to the closing of the offering.

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LEGAL MATTERS

The validity of the ADSs will be passed upon for us by Simpson Thacher & Bartlett LLP, New York, New York and for the underwriters by Davis Polk & Wardwell LLP, New York, New York. The validity of the common shares and other matters governed by Peruvian law will be passed upon for us by Muñiz, Ramírez, Pérez-Taiman & Olaya Abogados and for the underwriters by Rubio Leguia Normand.

EXPERTS

Our consolidated financial statements as of December 31, 2011 and 2012 and for each of the three years in the period ended December 31, 2012 included in this prospectus have been so included in reliance on the report (which contains an explanatory paragraph relating to the company’s restatement of its statement of cash flows as described in Note 32 to the consolidated financial statements) of Dongo, Soria, Gaveglio y Asociados Sociedad Civil de Responsabilidad Limitada, a member firm of PricewaterhouseCoopers, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.

Estimated proved reserves included in this prospectus were prepared by Netherland, Sewell & Associates, Inc., independent petroleum engineers. We have included these estimates in reliance on the authority of such firm as experts in such matters.

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WHERE YOU CAN FIND MORE INFORMATION

We have filed with the SEC a registration statement (including amendments and exhibits to the registration statement) on Form F-1 under the U.S. Securities Act. This prospectus, which is part of the registration statement, does not contain all of the information set forth in the registration statement and the exhibits and schedules to the registration statement. For further information, we refer you to the registration statement and the exhibits and schedules filed as part of the registration statement. If a document has been filed as an exhibit to the registration statement, we refer you to the copy of the document that has been filed.

Upon completion of this offering, we will become subject to the informational requirements of the U.S. Securities Exchange Act of 1934, or the Exchange Act. Accordingly, we will be required to file reports and other information with the SEC, including annual reports on Form 20-F and reports on Form 6-K. You may inspect and copy reports and other information to be filed with the SEC at the public reference facilities maintained by the SEC at 100 F Street, N.E., Washington, D.C. Copies of the materials may be obtained from the Public Reference Room of the SEC at 100 F Street, N.E., Washington, D.C. 20549 at prescribed rates. The public may obtain information on the operation of the SEC’s Public Reference Room by calling the SEC in the United States at 1-800-SEC-0330. In addition, the SEC maintains an Internet website at http://www.sec.gov, from which you can electronically access the registration statement and its materials.

As a foreign private issuer, we are not subject to the same disclosure requirements as a domestic U.S. registrant under the Exchange Act. For example, we are not required to prepare and issue quarterly reports. However, we intend to furnish our shareholders with annual reports containing consolidated financial statements audited by our independent auditors and to make available to our shareholders quarterly reports containing unaudited financial data for the first three quarters of each fiscal year. In addition, as a foreign issuer, we are not subject to the proxy rules under Section 14 of the Exchange Act and our officers and directors will not be subject to Section 16 of the Exchange Act relating to insider short-swing profit disclosure and recovery regime.

We will send the depositary a copy of all notices that we give relating to meetings of our shareholders or to distributions to shareholders or the offering of rights and a copy of any other report or communication that we make generally available to our shareholders. The depositary will make all these notices, reports and communications that it receives from us available for inspection by registered holders of ADSs at its office. The depositary will mail copies of those notices, reports and communications to you if we ask the depositary to do so and furnish sufficient copies of materials for that purpose.

We will file financial statements and other periodic reports with the Peruvian Securities Commission in Peru. Issuers of securities registered with the Peruvian Securities Commission are required to disclose material information relating to the issuer. Pursuant to the Securities Market Law and relevant regulations enacted thereunder, all material information in connection with the issuer of registered securities, its activities or securities issued or secured by such issuer which may influence the liquidity or price of such securities must be disclosed. Accordingly, issuers must file with the Peruvian Securities Commission mainly two types of information: (a) financial information, including unaudited interim financial statements on a quarterly basis (which are not required to be subject to limited review), and audited annual consolidated financial statements on an annual basis, and (b) material information relating to the issuer and its activities that may significantly affect the price, offering or negotiation of the issued securities, and in general, all the information that may be relevant for investors to be able to make investment decisions.

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ENFORCEMENT OF JUDGMENTS AGAINST FOREIGN PERSONS

Graña y Montero is a publicly-held corporation ( sociedad anónima abierta ) organized and existing under the laws of Peru. All of our directors and officers reside in Peru or elsewhere outside the United States, and a significant portion of the assets of such persons may be, and substantially all of our assets are, located in Peru or elsewhere outside the United States. As a result, it may not be possible for investors to effect service of process within the United States upon us or upon our directors or officers, or to enforce against them, or us, in U.S. federal or state courts judgments predicated upon the provisions of civil liabilities of U.S. federal securities laws.

We have been advised by our Peruvian counsel, Muñiz, Ramírez, Pérez-Taiman & Olaya Abogados, that there is uncertainty as to the enforceability, in original actions in Peruvian courts, of liabilities predicated upon the U.S. federal securities laws. In addition, we have been advised by Muñiz, Ramírez, Pérez-Taiman & Olaya Abogados that any final and conclusive judgment for a fixed and definitive sum obtained against us in any foreign court having jurisdiction in respect of any suit, action or proceeding against us for the enforcement of any of our obligations under the common shares that are governed by New York law will, upon request, be deemed valid and enforceable in Peru through an exequatur judiciary proceeding (which does not involve the reopening of the case), provided that: (i) there is in effect a treaty between the country where said foreign court sits and Peru regarding the recognition and enforcement of foreign judgments; or (ii) in the absence of such a treaty, the original judgment is ratified by the Peruvian Courts (Cortes de la República del Perú), provided that the following conditions and requirements are met:

•

the judgment does not resolve matters under the exclusive jurisdiction of Peruvian courts (and the matters contemplated in respect of this prospectus or the common shares are not matters under the exclusive jurisdiction of Peruvian courts);

•

such court had jurisdiction under its own conflicts of law rules and under general principles of international procedural jurisdiction;

•

Graña y Montero received service of process in accordance with the laws of the place where the proceeding took place, was granted a reasonable opportunity to appear before such foreign court, and was guaranteed due process rights;

•

the judgment has the status of res judicata as defined in the jurisdiction of the court rendering such judgment;

•

no pending litigation in Peru between the same parties for the same dispute was initiated before the commencement of the proceeding that concluded with the foreign judgment;

•

the foreign judgment is not incompatible with another judgment that fulfills the requirements of recognition and enforceability established by Peruvian Corporations law, unless such foreign judgment was rendered first;

•

the foreign judgment is not contrary to Peruvian public policy or good morals;

•

it is not proven that such foreign court denies enforcement of Peruvian judgments or engages in a review of the merits thereof; and

•

such judgment has been (i) duly apostilled by the competent authority of the jurisdiction of the issuing court, in case of jurisdictions that are party to the Hague Apostille Convention, and is accompanied by a certified and officially translated copy of such judgment into Spanish; and (ii) the applicable court taxes or fees have been paid.

Our properties and subsidiaries have no immunity from a court’s jurisdiction, except, to the extent applicable, immunities set forth in Article 616 of the Peruvian Code of Civil Procedure (Código Procesal Civil) for attachments on assets dedicated to the rendering of public services.

227

We have no reason to believe that any of our obligations relating to the common shares would be contrary to Peruvian public policy, good morals and international treaties binding upon Peru or generally accepted principles of international law. No treaty exists between the United States and Peru for the reciprocal enforcement of foreign judgments. Peruvian courts, however, have enforced judgments rendered in the United States based on legal principles of reciprocity and comity.

Our by-laws include an arbitration clause applicable to disputes arising from the interpretation of our by-laws or Peruvian Corporate Law and their complementary provisions, among us, our management and our shareholders. We have been advised. The arbitration clause does not apply to claims based on violations of United States securities laws in connection with this offering, unless agreed to by the parties to a claim. Our Peruvian Counsel, Muñiz, Ramirez, Perez-Taiman & Olaya Abogados, has provided us with their opinion to that effect.

228

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


Years Ended December 31, 2010, 2011 and 2012

Report of Independent Registered Public Accounting Firm			F-2

Consolidated Statement of Financial Position			F-3

Consolidated Income Statement			F-4

Consolidated Statement of Comprehensive Income			F-5

Consolidated Statement of Changes in Shareholders’ Equity			F-6

Consolidated Statement of Cash Flows			F-7

Notes to the Consolidated Financial Statements			F-8

Supplementary Data: Oil and Gas Producing Activities			F-89

Three Months Ended March 31, 2012 and 2013

Unaudited Consolidated Statement of Financial Position			F-95

Unaudited Consolidated Income Statement			F-96

Unaudited Consolidated Statement of Comprehensive Income			F-97

Unaudited Consolidated Statement of Changes in Shareholders’ Equity			F-98

Unaudited Consolidated Statement of Cash Flows			F-99

Notes to the Consolidated Financial Statements			F-100

F-1

Report of Independent Registered Public Accounting Firm

June 3, 2013

To Graña y Montero S.A.A. shareholders and Board of Directors:

In our opinion, the accompanying consolidated statement of financial position and the related consolidated income statement, consolidated statements of comprehensive income, shareholder’s equity and cash flows present fairly, in all material respects, the financial position of Graña y Montero S.A.A. and its subsidiaries at December 31, 2012 and December 31, 2011, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2012 in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

As discussed in Note 32 to the consolidated financial statements, the company has restated its statement of cash flows for the year ended December 31, 2012 to correct certain errors.

Countersigned by

/s/ Felix U. Horna (partner)

Felix U. Horna

Peruvian Certified Public Accountant

Registration No. 01-13774

Dongo-Soria Gaveglio y Asociados Sociedad Civil de Responsabilidad Limitada

Av Santo Toribio 143, 7th Floor, San Isidro, Lima, Peru T: +51 (1) 211 6500, F: +51 (1) 211-6565 www.pwc.com / pe

Dongo-Soria Civil Gaveglio and Asociados Sociedad Civil de Responsabilidad Limitada is a member firm of the global network PricewaterhouseCoopers International Limited (PwCIL). Each of the firms is a separate and independent legal entity and does not act on behalf of PwCIL or any other member firm of the network.

Entered in the Item No. 11028527, Registry of Legal Entities of Lima and Callao

F-2

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

GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF FINANCIAL POSITION


ASSETS							LIABILITIES AND NET SHAREHOLDERS’ EQUITY

			As of December 31,							As of December 31,
	Note		2011		2012			Note		2011			2012
			S/.000		S/.000					S/.000			S/.000
Current assets							Current liabilities
Cash and cash equivalents		7		658,187		780,114	Borrowings		16		230,973			452,819
Available-for-sale financial asset				5,347		5,005	Trade accounts payable		17		754,520			937,287
Trade accounts receivables, net		8		488,310		444,593	Accounts payable to related parties		10		19,665			42,734
Outstanding work in progress		9		393,826		525,251	Current taxes				172,333			158,834
Accounts receivable from related parties		10		25,310		49,761	Other accounts payable		18		539,422			1,015,129
Other accounts receivable		11		341,591		436,451	Other provisions		19		24,466			11,312

Inventories		12		546,265		747,416	Total current liabilities				1,741,379			2,618,115

Prepaid expenses				43,439		22,839

Total current assets				2,502,275		3,011,430	Non-current liabilities

							Borrowings		16		298,875			392,655
Non-current assets							Other accounts payable		18		58,128			52,776
Long-term trade accounts receivable		8		—		305,887	Other provisions		19		109,476			51,315
Other long-term accounts receivable		11		75,215		87,484	Derivative financial instruments		6		3,645			18,696
Investments in associates		13		25,953		37,446	Deferred income tax liability		21		29,136			82,179

Investment Property				36,528		35,972	Total non-current liabilities				499,260			597,621

Property, plant and equipment		14		686,913		938,093	Total liabilities				2,240,639			3,215,736

Intangible assets		15		317,797		505,108
Derivative financial instruments		6		—		128	Equity		20
Deferred income tax asset		21		49,044		71,078	Capital				390,488			558,284

Total non-current assets				1,191,450		1,981,196	Legal reserve				78,104			107,011

							Premium for share issuance				4,880			6,656
							Other comprehensive income				(310	)		(3,716	)
							Retained earnings				715,860			723,972

							Equity attributable to controlling interest in the Company				1,189,022			1,392,207
							Non-controlling interest				264,064			384,683

							Total equity				1,453,086			1,776,890

				3,693,725		4,992,626					3,693,725			4,992,626

The accompanying notes on pages 7 to 86 are an integral part of the consolidated financial statements.

F-3

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

GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF INCOME STATEMENT


			For the year ended December 31,
	Note		2010			2011			2012
			S/.000			S/.000			S/.000
Revenues from construction activities				1,605,181			2,650,334			3,341,539
Revenues from services provided				651,225			1,316,682			1,536,275
Revenue from real estate and sale of goods				246,269			274,250			354,071

		5		2,502,675			4,241,266			5,231,885

Cost of construction activities				(1,399,118	)		(2,360,521	)		(2,969,687	)
Cost of services provided				(416,429	)		(1,077,236	)		(1,335,092	)
Cost of goods and others sold				(242,299	)		(171,760	)		(215,040	)

		23		(2,057,846	)		(3,609,517	)		(4,519,819	)

Gross profit				444,829			631,749			712,066

Administrative expenses		23		(123,159	)		(199,582	)		(257,180	)
Other income and expenses		25		2,684			4,330			75,944
Profit from the sale of investments		1 y 13		74,959			4,769			—
Other (losses) gains, net				230			(2,845	)		(277	)
Gain from business combination		28		—			45,152			—

Operating profit				399,543			483,573			530,553

Financial expenses		24		(154,806	)		(188,456	)		(297,975	)
Financial income		24		144,817			182,305			287,644
Share of the profit or loss in associates under the equity method of accounting		13		11,474			223			604

Profit before income tax				401,028			477,645			520,826
Income tax		26		(124,342	)		(141,447	)		(154,575	)

Net Profit for the year				276,686			336,198			366,251

Net Profit attributable to:
Controlling interest in the Company				252,802			289,076			289,954
Non-controlling interest				23,884			47,122			76,297

				276,686			336,198			366,251

Net Profit attributable to controlling interest in the Company				252,802			289,076			289,954

Weighted average number of shares in issue at S/.1.00 each, at December 31, 2012				558,284,190			558,284,190			558,284,190

(S/.0.70 each, at December 31, 2011 and 2010)
Basic and diluted earning per share (S/.)				0.453			0.518			0.519

The accompanying notes on pages 7 to 86 are an integral part of the consolidated financial statements.

F-4

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

GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME


			For the year ended December 31,
	Note		2010			2011			2012
			S/.000			S/.000			S/.000
Net Profit for the year				276,686			336,198			366,251

Other comprehensive income:
Increase in fair value of available-for-sale investments, net of tax				7,460			—			—
Cash flow hedge, net of tax		20		(342	)		695			(2,369	)
Adjustment for actuarial gains and losses, net of tax		20		—			—			(3,678	)
Foreign currency translation adjustment, net of tax				(382	)		(3,940	)		(2,019	)

Total other comprehensive income				6,736			(3,245	)		(8,066	)

Total Comprehensive Income				283,422			332,953			358,185

Comprehensive income attributable to:
Controlling interest in the Company				259,555			285,796			282,870
Non-controlling interest				23,867			47,157			75,315

				283,422			332,953			358,185

The accompanying notes on pages 7 to 86 are an integral part of the consolidated financial statements.

F-5

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

GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2012, 2011 AND 2010


	Number of shares		Attributable to the controlling interests of the Company
	Number of shares		Capital			Legal reserve		Premium for issuance of shares			Other comprehensive income			Retained earnings			Total			Non-controlling interest			Total
	In thousands		S/.000			S/.000		S/.000			S/.000			S/.000			S/.000			S/.000			S/.000
Balances as of January 1, 2010		558,284		390,628			41,165		4,862			(3,783	)		292,175			725,047			193,775			918,822

Net profit for the year		—		—			—		—			—			252,802			252,802			23,884			276,686
Increase in fair value of available-for-sale investments		—		—			—		—			7,460			—			7,460			—			7,460
Cash flow hedge		—		—			—		—			(325	)		—			(325	)		(17	)		(342	)
Conversion adjustment		—		—			—		—			(382	)		—			(382	)		—			(382	)

Comprehensive income of the year		—		—			—		—			6,753			252,802			259,555			23,867			283,422

Transactions with shareholders:
- Transfer to legal reserve		—		—			13,440		—			—			(13,440	)		—			—			—
- Acquisiton of treasury shares				(110	)				229			—			—			119			—			119
- Dividends distribution		—		—			—		—			—			(26,880	)		(26,880	)		—			(26,880	)
- Contribution of non-controlling shareholders (Note 31 d)		—		—			—		—			—			—			—			(1,073	)		(1,073	)
- Decrease in non-controlling interest for sale of subsidiary		—		—			—		—			—			—			—			(25,670	)		(25,670	)
- Other															2,020			2,020			(1,852	)		168

Total transactions with shareholders		—		(110	)		13,440		229			—			(38,300	)		(24,741	)		(28,595	)		(53,336	)

Balances as of December 31, 2010		558,284		390,518			54,605		5,091			2,970			506,677			959,861			189,047			1,148,908

Balances as of January 1, 2011		558,284		390,518			54,605		5,091			2,970			506,677			959,861			189,047			1,148,908

Net profit for the year		—		—			—		—			—			289,076			289,076			47,122			336,198
Cash flow hedge		—		—			—		—			660			—			660			35			695
Adjustment for conversion		—		—			—		—			(3,940	)		—			(3,940	)		—			(3,940	)

Comprehensive income of the year		—		—			—		—			(3,280	)		289,076			285,796			47,157			332,953

Transactions with shareholders:
- Transfer to legal reserve		—		—			23,499		—			—			(23,499	)		—			—			—
- Dividend distribution		—		—			—		—			—			(55,015	)		(55,015	)		(14,850	)		(69,865	)
- Purchase of subsidiaries (Note 28 c)		—		—			—		—			—			—			—			24,722			24,722
- Contributions of non-controlling shareholders (Note 31 d)		—		—			—		—			—			—			—			(13,328	)		(13,328	)
- Subsidiaries constitution (Note 31 d)		—		—			—		—			—			—			—			30,776			30,776
- Sale and purchase of treasury shares		—		(30	)		—		(211	)		—			—			(241	)		—			(241	)
- Others		—		—			—		—			—			(1,379	)		(1,379	)		540			(839	)

Total transactions with shareholders		—		(30	)		23,499		(211	)		—			(79,893	)		(56,635	)		27,860			(28,775	)

Balances as of December 31, 2011		558,284		390,488			78,104		4,880			(310	)		715,860			1,189,022			264,064			1,453,086

Balances as of January 1, 2012		558,284		390,488			78,104		4,880			(310	)		715,860			1,189,022			264,064			1,453,086

Net profit for the year		—		—			—		—			—			289,954			289,954			76,297			366,251
Cash flow hedge		—		—			—		—			(2,251	)		—			(2,251	)		(118	)		(2,369	)
Adjustment for actuarial gains and losses		—		—			—		—			—			(3,678	)		(3,678	)		—			(3,678	)
Adjustment for conversion		—		—			—		—			(1,155	)		—			(1,155	)		(864	)		(2,019	)

Comprehensive income of the year		558,284		—			—		—			(3,406	)		286,276			282,870			75,315			358,185

Transactions with shareholders:
- Transfer to legal reserve		—		—			28,907		—			—			(28,907	)		—			—			—
- Dividend distribution		—		—			—		—			—			(86,723	)		(86,723	)		—			(86,723	)
- Dividend distribution to subsidiaries		—		—			—		—			—			—			—			(37,512	)		(37,512	)
- Capitalization		—		167,485			—		—			—			(167,485	)		—			—			—
- Subsidiaries constitution		—		—			—		—			—			—			—			5,750			5,750
- Purchase of subsidiaries (Note 28)		—		—			—		—			—			—			—			41,704			41,704
- Debt capitalization		—		—			—		—			—			—			—			12,232			12,232
- Contributions of non-controlling shareholders		—		—			—		—			—			—			—			26,096			26,096
- Acquisition of non-controlling interest in Survial S.A.		—		—			—		364			—			—			364			(4,757	)		(4,393	)
- Sale of non-controlling interest in GyM S.A. and Concar S.A.		—		—			—		291			—			—			291			902			1,193
- Sale and purchase of treasury shares		—		140			—		1,292			—			—			1,432			—			1,432
- Others		—		171			—		(171	)		—			4,951			4,951			889			5,840

Total transactions with shareholders		—		167,796			28,907		1,776			—			(278,164	)		(79,685	)		45,304			(34,381	)

Balances as of December 31, 2012		558,284		558,284			107,011		6,656			(3,716	)		723,972			1,392,207			384,683			1,776,890

The accompanying notes on pages 7 to 86 are an integral part of the consolidated financial statements.

F-6

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

GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS


	For the year ended December 31,
	2010			2011			2012
	S/.000			S/.000			S/.000 (restated)
OPERATING ACTIVITIES
Profit before income tax		401,028			477,645			520,826
Adjustments to profit not affecting cash flows from operating activities:
Depreciation		91,982			127,023			173,018
Impairment of intangibles		—			3,436			—
Amortization of other assets		50,942			51,223			71,485
Impairment of inventory		—			—			9,822
Impairment of accounts receivable		—			—			2,719
Share of the profit and loss in associates under the equity method of accounting		(11,474	)		(223	)		(604	)
Business combination gain		—			(45,152	)		—
Recover provision from CAM		—			—			(67,556	)
Profit on sale of property, plant and equipment		(4,316	)		1,661			(1,261	)
Profit on sale of investments in associates		(74,959	)		(4,769	)		—
Net variations in assets and liabilities:
Increase in trade accounts receivable		(66,219	)		(177,076	)		(49,909	)
Decrease in other accounts receivable		13,490			(183,468	)		(346,429	)
Decrease in other accounts receivable from related parties		(19,556	)		(812	)		(24,451	)
Decrease in inventories		(46,385	)		(140,410	)		(196,643	)
Increase in pre-paid expenses and other assets		8,532			(4,256	)		21,644
Increase in trade accounts payable		28,304			265,626			224,935
Increase (decrease) in other accounts payable		123,581			(68,469	)		373,637
Increase (decrease) in other accounts payable to related parties		(70,308	)		2,022			23,069
Decrease in current income tax		(19,785	)		(139,311	)		(159,408	)
Decrease in other provisions		—			(5,973	)		(3,759	)
Payments for intangible purchase - Concessions		(2,805	)		(25,378	)		(28,406	)

Net cash provided by operating activities		402,052			133,339			542,729

INVESTING ACTIVITIES
Sale of investment in associates		21,900			26,565			—
Sale of investment in subsidiaries		107,162			—			—
Sale of available-for-sale investment		—			—			342
Sale of property, machinery and equipment		20,849			6,436			23,471
Dividends received		8,117			34,709			2,057
Payment for purchase of property investments		—			—			(956	)
Payments for intangible purchase		(5,170	)		(44,146	)		(10,851	)
Payments for investments in associates (Note 13)		(973	)		—			—
Direct cash inflow from acquisition (Payment for investment purchase) (Note 28)		(7,746	)		31,660			(133,648	)
Payments for fixed asset purchase		(124,212	)		(140,803	)		(280,402	)

Net cash (applied to) provided by investing activities		19,927			(85,579	)		(399,987	)

FINANCING ACTIVITIES
Loans received		48,939			185,701			610,399
Amortization of loans received		(129,874	)		(181,307	)		(490,398	)
Interest payment		(18,009	)		(24,198	)		(46,659	)
Dividends paid		(26,880	)		(55,015	)		(86,723	)
Dividends paid to non-controlling interest		—			(14,850	)		(37,512	)
Cash received (contribution return) to non-controlling shareholders (Note 31 d)		(1,073	)		(13,328	)		26,096
Acquisition of interest in a subsidiary of non-controlling shareholders		—			—			(4,393	)
Sale of interest in subsidiary to non-controlling interest		—			—			1,193
Capital contribution		—			30,776			5,750
Repurchase of shares		(119	)		(241	)		1,432

Net cash applied to financing activities		(127,016	)		(72,462	)		(20,815	)

(Net decrease) net increase in cash		294,963			(24,702	)		121,927
Cash and cash equivalents at the beginning of the year		387,926			682,889			658,187

Cash and cash equivalents at the end of the year		682,889			658,187			780,114

NON-CASH TRANSACTIONS:
Capitalization of retained earnings		—			—			167,485
Debt capitalization		—			—			12,232
Acquisition of assets through finance leases		108,027			146,580			123,815
Net assets transferred for acquisition to Stracon GyM		—			—			24,994

The accompanying notes on pages 7 to 85 are an integral part of the consolidated financial statements.

F-7

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

GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2012, 2011 AND 2010

1	GENERAL INFORMATION

Incorporation and operations -

Graña y Montero S.A.A. (hereinafter the Company) was established in Peru on August 12, 1996 as a result of the equity spin-off of Inversiones GyM S.A. (formerly Graña y Montero S.A.). The Company’s legal address is Av. Paseo de la República 4675, Surquillo and it is listed on the Lima Stock Exchange.

The Company is the parent company of the Graña y Montero Group (hereinafter the Group) and its principal activity is the holding of 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 Group companies; it is also engaged in the leasing of offices to Group companies and third parties.

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 technical services. See details of operating segments in Note 5.

Subsidiaries and Joint Operations -

The consolidated financial statements of the Group include the accounts of the Company and of its subsidiaries. Additionally, the consolidated financial statements of the Group include Joint Operations accounts in which the Company or certain subsidiaries maintain joint control with their Joint Operations partners. See Note 2.2.d.

Subsidiaries -


Name	Country	Economic activity

GyM S.A.	Peru, Chile and Dominican Republic	Civil construction, electro-mechanic assembly buildings, management and implementing housing development projects and other related services.

GMP S.A.	Peru	Services of producing, treating and selling oil, natural gas and by-products as well as storage and dispatch of fuel. Oil and gas fields have undergone feasibility studies demonstrating that it is feasible to obtain resources from production; under this assumption, a concession was granted to the Company by the Peruvian government.

GMD S.A.	Peru	Information technology services. (Include Telefónica Servicios Digitales S.A. (TSD) - 100%

GMI S.A.	Peru	Advisory and consultancy services in engineering, carrying out studies and projects, managing projects and supervision of works.

Concar S.A.	Peru	Operating and maintaining roads under concession.

Survial S.A.	Peru	Carrying out the concession agreement of road section 1 (“Tramo 1”) of the Southern Inter-oceanic highway.

Concesión Canchaque S.A.	Peru	Implementing the concession agreement for the Buenos Aires - Canchaque highway.

VIVA GyM	Peru	Real estate business, management services and managing projects and other activities related to the real-estate and construction sector.

F-8

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


Name	Country	Economic activity

Norvial S.A.	Peru	Holding the concession of the “Ancón - Huacho - Pativilca” road section of the Panamericana Norte Highway.

Promotora Larcomar S.A.	Peru	Construction of a hotel complex on a plot of land located in the district of Miraflores.

Generadora Arabesco S.A.	Peru	Implementing projects related to electric power-generating activities.

GyM Ferrovías S.A.	Peru	Lima Electric Train concession operator.

CAM Holding S.p.A.	Chile, Peru, Brazil and Colombia	Specialized in providing services to the electric power sector.

Concesionaria La Chira S.A.	Peru	Engaged in activities related to waste water treatment plants (WTP) and Emisor Submarino La Chira (outfall)

Ingeniería y Construcción Vial y Vives S.A.	Chile	Developing activities related to the construction of engineering projects, civil construction projects and electromechanical assemblies, as well as architectural design and installations in general.

Stracon GyM S.A.	Peru	Engaged in mining contracting activities, providing mining services and carrying out drilling, demolition and any other activity related to construction and mining operations.

Promotores Asociados S.A.	Peru	Operating in the real-estate industry and engaged in the development and selling office facilities in Peru.

Larcomar S.A.	Peru	A company that owns the land use right of Larcomar Shopping Center and assigned to Fashion Center S.A.

Fashion Center S.A.	Peru	A company engaged in developing and operating the project for the conditioning and commercial and recreational use of Parque Salazar in the district of Miraflores, in Lima.

The following are the Group’s subsidiaries and related interests at December 31:


	Percentage of interest
Subsidiaries	2010			2011			2012
GyM S.A.		93.84	%		93.84	%		93.67	%
GMP S.A.		95.00	%		95.00	%		95.00	%
GMD S.A.		88.68	%		88.68	%		88.68	%
GMI S.A.		89.41	%		89.41	%		89.41	%
Concar S.A.		99.97	%		99.97	%		99.57	%
Survial S.A.		73.00	%		73.00	%		99.99	%
Concesión Canchaque S.A.		99.97	%		99.97	%		99.97	%
Viva GyM		52.43	%		52.43	%		59.12	%
Norvial S.A. (*)		50.01	%		50.01	%		50.10	%
Promotora Larcomar S.A. (*)		42.80	%		42.80	%		42.80	%
Generadora Arabesco S.A.		99.00	%		99.00	%		99.00	%
GyM Ferrovias S.A.		—			75.00	%		75.00	%
Fashion Center S.A. (***)		65.71	%		65.71	%		—
CAM Holding S.P.A.		—			100.00	%		100.00	%
Concesionaria La Chira S.A. (*)		—			50.00	%		50.00	%
Ingenieria y Construcción Vial y Vives S.A. (**)		—			—			74.00	%
Stracon GyM S.A. (**)		—			—			74.15	%
Promotores Asociados		99.99	%		99.99	%		99.99	%
Larcomar S. A.		79.66	%		79.66	%		79.66	%
Oiltanking Andina S.A. () (*)		—			—			50.00	%
Cam Chile (**)		—			75.00	%		75.00	%
Telefónica Servicios Digitales S.A. (TSD) (**)		100.00	%		100.00	%		100.00	%

(*)	Management has control over these subsidiaries because it has total financial and operating decision-making power. Graña y Montero has the largest number of representatives on the Board and the general management of the companies. There were no transactions with the non-controlling interest.

(**)	These entities are indirect subsidiaries as of December 31, 2012. (See Notes 13 and 28).

F-9

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

(***)

In July 2010, the Group sold its of 65.71% interest in Fashion Center S.A. for S/.107,162 thousand, which carrying amount was S/.49,191 thousand. This transaction resulted in a profit of S/.57.971 million and the cash inflows from this sale are stated in the consolidated statement of cash flows within “sale of investments” under investing activities.

In the subsidiaries described above, the Company has maintained control directly or indirectly through its subsidiaries both during in 2012 and 2011, except for Ingeniería y Construcción Vial y Vives S.A., and Stracon GyM S.A., which were acquired in 2012.

Joint Operations -

As of December 31, 2012, the Group participates in 55 Joint Operations (49 as of December 31, 2011 and 39 as of December 31, 2010). The following table contains all the Joint Operations in which the Group is participating:


	Percentage of interest
Joint Operations	2010			2011			2012
Graña y Montero S.A.A.
- Asociación en participación Torre Siglo XXI		58.00	%		58.00	%		58.00	%
- Asociación Edificio T6		50.00	%		50.00	%		50.00	%

GyM S.A.
- Consorcio Pasco		70.00	%		70.00	%		70.00	%
- Consorcio Constructor Alto Cayma		50.00	%		50.00	%		50.00	%
- Consorcio Rio Pallca - Huanza		40.00	%		40.00	%		40.00	%
- Consorcio Tren eléctrico		33.00	%		33.00	%		33.00	%
- Consorcio GyM Concar		10.00	%		10.00	%		10.00	%
- Consorcio GyM Ayahuaylas		10.00	%		10.00	%		10.00	%
- Consorcio Alto Cayma		40.00	%		40.00	%		49.00	%
- Consorcio Vial Ayacucho		50.00	%		50.00	%		50.00	%
- Consorcio Vial Sullana		10.00	%		10.00	%		10.00	%
- Consorcio ICAPAL		10.00	%		10.00	%		10.00	%
- Consorcio Lima Actividades Comerciales		50.00	%		50.00	%		50.00	%
- Consorcio GyM - COSAPI		50.00	%		50.00	%		50.00	%
- Consorcio Lima Actividades Comerciales Sur		50.00	%		50.00	%		50.00	%
- Consorcio Atocongo		—			40.00	%		40.00	%
- Consorcio Norte Pachacutec		—			49.00	%		49.00	%
- Consorcio La Chira		—			50.00	%		50.00	%
- Consorcio Río Urubamba		—			60.00	%		60.00	%
- Consorcio Vial Quinua		—			46.00	%		46.00	%
- Consorcio Rio Mantaro		—			50.00	%		50.00	%
- Consorcio GyM - CONCIVILES		—			—			66.70	%
- Consorcio Toromocho		—			—			55.00	%
- Consorcio Marcona (*)		70.00	%		70.00	%		70.00	%
- Consorcio IIRSA-Norte		17.00	%		17.00	%		—
- Consorcio GyM Sade Skanska (*)		50.00	%		50.00	%		50.00	%
- Consorcio Heroes Navales (*)		50.00	%		50.00	%		50.00	%
- Consorcio GyM Evisac (*)		70.00	%		70.00	%		70.00	%
- Consorcio Chiquintirca (*)		40.00	%		40.00	%		40.00	%
- Consorcio La Gloria (*)		49.00	%		49.00	%		49.00	%
- Consorcio Cementero - Yura (*)		37.50	%		37.50	%		37.50	%
- Consorcio La Zanja (*)		70.00	%		70.00	%		70.00	%

F-10

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


	Percentage of interest
Joint Operations	2010			2011			2012
GyM S.A.
- Consorcio Tiwu (*)		—			70.00	%		70.00	%
- Consorcio STRACON JV (*)		70.00	%		70.00	%		70.00	%

GMP S.A.
- Consorcio Terminales		50.00	%		50.00	%		50.00	%

CONCAR S.A.
- Consorcio Vial Sullana		90.00	%		90.00	%		90.00	%
- Consorcio ICAPAL		90.00	%		90.00	%		90.00	%
- Consorcio GyM Ayahuaylas		90.00	%		90.00	%		90.00	%
- Consorcio GyM Concar		90.00	%		90.00	%		90.00	%
- Consorcio Ancón-Pativilca		50.00	%		50.00	%		50.00	%
- Consorcio Peruano de Conservación		50.00	%		50.00	%		50.00	%
- Consorcio Red Vial 1		70.00	%		70.00	%		70.00	%

GMD S.A.
- Consorcio Telefónica del Perú S.A.A. - GMD S.A.		50.00	%		50.00	%		50.00	%
- Consorcio Ransa		50.00	%		50.00	%		50.00	%
- Consorcio Cosapi-Data		50.00	%		50.00	%		50.00	%
- Consorcio Lima Actividades Sur		50.00	%		50.00	%		50.00	%
- Consorcio TLBG		—			66.45	%		66.45	%
- Consorcio Procesos digitales		—			24.25	%		24.25	%
- Consorcio Indra		—			50.00	%		50.00	%
- Consorcio Fábrica de Software		—			—			50.00	%
- Consorcio Gestión de Procesos Electorales (ONPE)		50.00	%		50.00	%		50.00	%
- Consorcio GMD - Cosapi - Data (RENIEC)		—			—			70.00	%
- Consorcio Corporación TX (*)		50.00	%		50.00	%		—

VIVA GyM S.A.
- Consorcio Cuartel San Martín		—			—			50.00	%

GMI S.A.
- Consorcio Vial Ayahuaylas		—			—			5.00	%
- Consorcio Norte Pachacútec		—			—			1.00	%

(*)	The Joint Operations listed above are currently undergoing a closing process and therefore, in the current year have not shown any significant commercial operations.

The Group’s consolidated financial statements do not include any other additional entities than those mentioned above, such as trust funds or special purpose entities.

Acquisition of subsidiaries -

In 2012, the Group, through some of its subsidiaries obtained control over certain entities. It obtained control over a Chilean entity called Ingeniería y Construcción Vial y Vives S.A. (hereinafter Vial y Vives) for a purchase price of US$55.6 million; and it acquired control of a business of an entity called Stracon GyM at a purchase price of US$16.4 million. In 2011, the Group acquired control of CAM Holding S.p.A. at a purchase price of US$10.8 million. The detail of the related transactions and their resulting accounting impact are described in Note 28.

Authorization for issue of the financial statements -

The consolidated financial statements of Graña y Montero S.A.A. for the year ended December 31,

2012 have been prepared and authorized for issuance by its Chief Financial Officer on June 3, 2013 and will be submitted to the Board of Directors within the term established by law.

F-11

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

2	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

2.1

Basis of preparation

The consolidated financial statements of Graña y Montero S.A.A. have been prepared in accordance with International Financial Reporting Standards (IFRS) and IFRIC interpretations as issued by the International Accounting Standards Board.

The consolidated financial statements have been prepared under the historical cost convention, except for derivative financial instruments and available-for-sale financial assets which are measured at fair value. The financial statements are presented in thousands of New Peruvian Soles, unless otherwise stated.

The preparation of the consolidated financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Group’s accounting policies.The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 4.

2.2

Consolidation of financial statements

Subsidiaries -

Subsidiaries are all entities over which the Company has the power to govern the financial and operating policies, generally accompanying a shareholding of more than one half of the voting rights.

Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities assumed and the equity instruments issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The Group recognizes any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest’s proportionate share of the recognized amounts of acquiree’s identifiable net assets.

Acquisition-related costs are expensed as incurred.

F-12

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

Goodwill is initially measured as the excess of the aggregate of the consideration transferred and the fair value of non-controlling interest over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognized in profit or loss at the time of acquisition.

Balances, income and expenses from transactions between Group companies are eliminated. Profits and losses resulting from inter-company transactions that are recognized as assets are also eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

Changes in ownership interests in subsidiaries without change of control -

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

Disposal of subsidiaries -

When the Group ceases to have control over a subsidiary any retained interest in the entity is re-measured to its fair value at the date when control is lost, with the change in carrying amount recognized in profit or loss at such date. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognized in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognized in other comprehensive income are reclassified to profit or loss.

Joint Operations -

Jointly controlled operations involve the use of assets and other resources of the venturers rather than the establishment of a separate entity. Each venturer uses its own assets, incurs its own expenses and liabilities, and raises its own finance. Because the assets, liabilities, income and expenses are recognized in the financial statements of the venturer, no adjustments or other consolidation procedures are required in respect of these items when the venturer presents consolidated financial statements.

Associates -

Associates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting. Under the equity method, the investment is initially recognized at cost, and the carrying amount is increased or decreased to recognize the Group’s share of the profit or loss of the investee after the date of acquisition. The Group’s investment in associates includes goodwill identified on acquisition, if the associate was acquired and not established with capital contributions.

If ownership interest in an associate of the Group is reduced but significant influence is retained, only a proportionate share of the amounts previously recognized in other comprehensive income is reclassified to profit or loss where appropriate.

F-13

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

The Group’s share of post-acquisition profit or loss is recognized in the income statement, and its share of post acquisition movements in other comprehensive income is recognized in other comprehensive income with a corresponding adjustment to the cost of the investment. When the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognize further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.

The Group determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognizes the amount adjacent to ‘share of profit of an associate’ in the income statement.

Profits and losses resulting from upstream and downstream transactions between the Group and its associates are recognized in the Group’s financial statements only to the extent of unrelated investor’s interests in the associates. Unrealized losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the Group.

2.3

Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker of the Group. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Corporate General Manager.

If an entity changes the structure of its internal organization in a manner that causes the composition of its reportable segments to change, the Group restates the information for earlier periods unless the information is not available. Operating segments are identified based on the internal information effective at the date of the financial statements.

2.4

Foreign currency translation

Functional and presentation currency -

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which each entity operates (the functional currency). The consolidated financial statements are presented in New Peruvian Soles, which is the Company’s functional currency and the Group’s presentation currency. All subsidiaries and Joint Operations use the New Peruvian Sol as their functional currency, except for subsidiaries abroad, for which the functional currency is the currency of the country in which they operate.

Transactions and balances -

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the date of the transactions or valuation when items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the changes at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the income statement, except when deferred in equity as qualifying cash flow hedges.

Foreign exchange gains and losses that relate to borrowings, cash and cash equivalents and other monetary items are presented in the income statement within exchange difference, net.

F-14

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

Group companies -

The results, assets and liabilities of Group entities (none of which has the currency of a hyper-inflationary economy) that have a functional currency different from the presentation currency are changed into the presentation currency as follows:

assets and liabilities for each statement of the financial position presented are changed using the closing rate at the date of the statement of financial position;

ii)

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

iii)

Capital is changed by using the historical exchange rate for each capital contribution made; and

iv)

all resulting exchange differences are recognized as separate components in other comprehensive income. As of December 31, 2012 and 2011 the translation of foreign investments, with a currency other than the nuevo sol (Global change), did not generate relevant conversion differences.

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

2.5

Public services concessions

Concession agreements signed between the Group and the Peruvian Government are where the Group, as a concessionaire, assumes obligations for the construction or improvement of infrastructure and which qualify as public service concessions as defined by IFRIC 12, “Service Concession Arrangements”. The consideration to be received from the Government for the services of constructing or improving public infrastructure is recognized as a financial asset or as an intangible asset, as set forth below.

The following criteria are applied to the accounting of public service concession arrangements in accordance with IFRIC 12.

The government controls and regulates the infrastructure services provided by the Group and dictates to whom it must provide them and at what price. The concession agreement establishes the obligation for the Group to return the property to the grantor at the end of the concession period or when there is an expiration event. This feature gives the grantor control of the risks and rewards of the residual value of the assets at the end of the concession period. For this reason, the Group will not recognize the infrastructure as part of property, plant and equipment. However, the Group has the right of access and management rather than a right of use.

The Group manages two types of recognition for these concessions, it:

recognizes a financial asset to the extent that it has a contractual right to receive cash or another financial assets either because the Government secures the payment of specified or determinable amounts or because the Government will cover any difference arising from the amounts actually received from public service users in relation with the specified or determinable amounts. These financial assets are recognized initially at fair value and subsequently at amortized cost.

F-15

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

recognizes an intangible asset to the extent that the service agreement grants the Group a contractual right to charge users of the public service. The resulting intangible asset is measured at cost and it is amortized as described in Note 2.15.

The following are the concessions recognized by the Group as a financial asset:

Survial S.A. concession

Under the Survial concession, the Company operates and maintains a 750 km road from the San Juan de Marcona port to Urcos, Peru, which is connected to an interoceanic road that runs up to the Peruvian-Brazilian border. The road has five toll stations and three weigh stations. The concession was awarded to Survial in 2007 for a 25-year term. The Company owns 99.9% of Survial.

The obligations under the concession include the construction of the road, which was completed in 2010. The revenue from this concession consists of an annual fee paid to Survial by the Peruvian Ministry of Transport and Communications in consideration for the operation and maintenance of the road, which fee can vary depending on the amount of maintenance required due to road damages. The revenue in this concession does not depend on traffic volume.

This concession is recognized as a financial asset because Survial has the unconditional contractual right to receive cash or other financial asset; such operation is secured contractually by the Peruvian Government. Survial receives specific and determinable amounts of cash and measures the financial asset at amortized cost, taking into consideration the effective interest rate set forth in IAS 39, ‘Financial Instruments: Recognition and Measurement’.

ii)

Canchaque S.A.C. concession

Under the Canchaque concession, the Company operates and maintains a 78 km road from the towns of Buenos Aires to Canchaque, in Peru. The road has one toll station. The concession was awarded to Canchaque in 2006 for a 15-year term. The Company owns 99.9% of Canchaque. The obligations under the concession include the construction of the road, which was completed in 2009. Revenue from this concession consists of an annual fee paid by the Peruvian Ministry of Transport and Communications in consideration for the operation and maintenance of the road, which fee can vary depending on the amount of road maintenance required due to road wear and tear. The revenue received by the Company in this concession does not depend on traffic volume.

This concession granted to the Company comprises public services and investments qualifying as a financial asset as the Company has the unconditional right to receive cash or other financial assets from the collection of annual payments for maintenance and operation. Canchaque recognizes such financial asset at amortized cost, using in its calculation the interest rate set forth under IAS 39 Financial instruments: recognition and measurement.

iii)

La Chira S.A. concession

In 2011, the Company was awarded a 25-year concession for the construction, operation and maintenance of La Chira waste water treatment plant in the south of Lima. The project is aimed at addressing Lima’s environmental problems caused by sewage discharged directly into the sea. The Company holds a 50% share in this project and the Company’s partner Acciona Agua holds the remaining 50%. La Chira’s annual revenues under the concession are in the form of a fee paid by Sedapal S.A., the public utility company responsible for the supervision of the water service in Lima.

F-16

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

The concession is recognized as a financial asset at its amortized cost, taking into consideration the effective interest rate calculation set forth in IAS 39, ‘Financial Instruments: Recognition and Measurement’.

iv)

GyM Ferrovías S.A. concession

In 2011, the Company was awarded a 30-year concession for the operation of Line One of the Lima Metro, Peru’s only urban railway system. The concession was awarded to the subsidiary GyM Ferrovías, in which the Company holds a 75% ownership interest, with the other 25% being held by Ferrovías S.A.C. The obligations under the contract include (i) the operation and maintenance of the five existing trains provided by the government; (ii) the acquisition of 19 new trains on behalf of the Peruvian government, which will be the legal owner of such trains; (iii) the operation and maintenance of the 19 additional trains; and (iv) the design and construction of the railway maintenance and repair yard. Revenue from this concession consists of a quarterly fee that received from the Ministry of Transport and Communications based on the kilometers travelled per train. The revenue does not depend on passenger traffic volume.

The concession given to the Company comprises public services and investments qualifying as a financial asset as the Company has the unconditional right to receive cash or other financial asset for the collection of the secured kilometers.

The following are the concession is recognized by the Group as an intangible asset:

Norvial S.A. concession

Under the Norvial concession, the Company operates and maintains part of the only highway that connects Lima to the northwest of Peru. This 183-km road known as Red Vial 5, runs from the cities of Ancón to Pativilca and has three toll stations. The concession was awarded to Norvial in 2003 for a 25-year term. The Company owns 50.1% of Norvial. Norvial’s revenue derives from the collection of tolls. The toll fee is determined by the Peruvian Ministry of Transport and Communications and adjusted on a yearly basis in accordance with a contractual formula that takes into account the nuevo sol/U.S. dollar exchange rate and Peruvian and U.S. inflation. The Company is required to transfer 5.5% of monthly toll revenue to the Peruvian Ministry of Transport and Communications and pay a 1% regulatory fee to the Peruvian Supervisory Agency for Investment in Public Transportation Infrastructure. The obligations under the concession include expanding the already existing road by, among other things, adding two additional lanes. The first stage of construction was completed in 2008 and the second stage is expected to begin between 2014 and 2015. When the construction of the second stage begins, the Company will also be required to pay a one-time estimated fee of approximately US$1.8 million to the Peruvian Supervisory Agency for Investment in Public Transportation Infrastructure.

The concession given to the Company comprises public services and investments qualifying as an intangible asset because the concession agreement grants the right to charge a predefined and adjustable rate to users. The cost of the intangible comprises the investment committed, executed or to be executed to the extent their amount and borrowing costs can be estimated reliably.

See revenue recognition policy in Note 2.25-vii.

F-17

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

2.6

Cash and cash equivalents

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

2.7

Financial assets

2.7.1

Classification

The Group classifies its financial assets in the following categories: financial assets at fair value through profit or loss, financial assets held-to-maturity, loans and account receivables and financial assets available for sale. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition. As of the date of the financial statements, the Group has classified its financial assets in the following two categories:

Loans and accounts receivable -

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months after the statement of financial position. These are classified as non-current assets. The Group’s loans and receivables comprise ‘trade and other receivables’ and ‘cash and cash equivalents’.

Available-for-sale financial assets -

Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless Management intends to dispose of it within 12 months of the date of the statement of financial position.

Available-for-sale financial assets are measured at fair value and changes in their value are recognized in other comprehensive income.

2.7.2

Recognition and measurement

Regular purchases and sales of financial assets are recognized on the trade-date, the date on which the Group commits to purchase or sell the asset. Investments are initially recognized at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Investments are derecognized when the rights to receive cash flows from the investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. Available-for-sale financial assets are subsequently carried at fair value. Loans and receivables are subsequently carried at amortized cost using the effective interest method.

If the fair value of available-for-sale assets cannot be estimated initially, they are maintained at cost.

Changes in the fair value of financial assets classified as available for sale are recognized in other comprehensive income.

When a financial asset classified as available for sale is sold or impaired, the accumulated fair value adjustments recognized in equity are included in the income statement.

F-18

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

Interest on available-for-sale securities, calculated using the effective interest method are recognized in the statement of comprehensive income as part of “other income”. Dividends on available-for-sale equity instruments are recognized in the statement of comprehensive income as part of “other income” when the Group’s right to receive payments is established.

2.8

Offsetting financial instruments

Financial assets and liabilities are offset and its net amount is reported in the statement of financial position when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously.

2.9

Impairment of financial assets

Assets carried at amortized cost -

The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or a group of financial assets is impaired. If a financial asset or a group of financial assets is impaired, the impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

Evidence of impairment may include, for example, indications that a debtor or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganization, and where observable data indicate that there is a measurable decrease in the estimated future cash flows.

For the loans and receivables category, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognized in the statement of comprehensive income. If a loan or an account receivable has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. As a practical expedient, the Group may measure impairment on the basis of an instrument’s fair value using an observable market price, as long as it is verifiable.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized (such as an improvement in the debtor’s credit rating), the reversal of the previously recognized impairment loss is recognized in the income statement.

Assets classified as available for sale -

The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or a group of financial assets is impaired. For debt securities, the Group uses the criteria referred to in (a) above. In the case of equity investments, a significant or prolonged decline in the fair value of the security below its cost is also evidence that the assets are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss - measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognized in profit or loss - is removed from equity and recognized in profit or loss. Impairment losses recognized in the income statement on equity instruments are not reversed through the income statement. If, in a subsequent period, the fair value of a debt instrument classified as available for sale increases and the increase can be objectively related to an event occurring after the impairment loss was recognized in profit or loss, the impairment loss is reversed through the profit or loss of the period.

F-19

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

2.10

Derivative financial instruments and hedging activities

Derivatives are initially recognized at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. The method of recognizing the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The Group designates certain derivatives as hedges of a particular risk associated with a recognized asset or liability or a highly probable forecast transaction (cash flow hedge).

The Group documents, at the inception of the transaction, the relationship between hedging instruments and hedged items, as well as its risk management objectives and strategy for undertaking various hedging transactions. The Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.

The fair values of various derivative instruments used for hedging purposes and changes in the account reserves for hedging in equity are disclosed in Note 3.3. The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining hedged item is more than 12 months and as a current asset or liability when the remaining maturity of the hedged item is less than 12 months. Trading derivatives are classified as a current asset or liability.

Cash flow hedge -

The effective portion of changes in the fair value of derivatives that are designated and qualify as fair value hedges is recognized as other comprehensive income. The gain or loss relating to the ineffective portion is recognized immediately in the statement of comprehensive income within ‘other comprehensive income’.

Amounts accumulated in equity are reclassified to profit or loss in the periods when the hedged item affects profit or loss (for example, when the forecast sale that is hedged takes place). The gain or loss relating to the effective portion of interest rate swaps hedging variable rate borrowings is recognized in the income statement. However, when the forecast transaction that is hedged results in the recognition of a non-financial asset (for example, inventory or fixed assets), the gains and losses previously deferred in equity are transferred from equity and are included in the initial measurement of the cost of the non-financial asset. The deferred amounts are ultimately recognized in cost of goods sold in the case of inventory or in depreciation in the case of fixed assets.

When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognized when the forecast transaction is ultimately recognized in the income statement. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the statement of comprehensive income within ‘other (losses) gains- net’.

2.11

Trade accounts receivable

Trade accounts receivable are amounts due from customers for goods sold or services performed by the Company’s subsidiaries. If collection is expected in one year or less, they are classified as current assets. If not, they are presented as non-current assets.

Trade accounts receivable are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method, less provision for impairment.

F-20

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

2.12 Inventories

Inventory mainly includes land, work in progress and finished property which is assigned to the real- estate activity carried out by the Group. It also includes material used in the construction activity. Goods and supplies correspond to goods that the Group trades as part of its IT segment. Materials and supplies used in construction activities and IT equipment are determined under the weighted average cost method.

Land intended to carry out real estate projects is recognized at acquisition cost. Work in progress and finished property comprise design costs, material, labor costs, other indirect costs and general expenses related to the construction and do not include exchange differences.

Net realizable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses. For the reductions in the carrying amount of inventories to their net realizable value, a provision is made for inventory impairment with a charge to the results of the period in which such reductions are made.

IT equipment is stated at the lower of cost or net realizable value. Such cost does not exceed its net realizable value.

2.13 Investment properties

Investment properties are shown at cost less accumulated depreciation and impairment losses, if any. Subsequent costs attributable to investment properties are capitalized only if it is probable that future economic benefits will flow to the Company and the cost of these assets can be measured reliably; if not, they are recognized as expenses when incurred.

Repair and maintenance expenses are recognized in profit and loss when they are incurred. A property’s carrying amount is written down immediately to its recoverable amount if the property’s carrying amount is greater than its estimated recoverable amount. The cost and accumulated depreciation on disposals are eliminated from the respective accounts and the resulting gain or loss is recognized in profit or loss for the period. The depreciation of this asset is calculated under the straight-line method at a rate that is considered sufficient to absorb the property’s cost over its estimated useful life. The estimated useful life of this property is approximately 25 years.

The investment property maintained by the Group corresponds to a land owned by the subsidiary Viva GyM S.A. This investment is leased out under operating leases with third parties (see Note 2.32).

2.14 Property, plant and equipment

Property, plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of these items.

Subsequent costs are included in the asset’s carrying amount or are recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced asset is derecognized. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.

Assets in the construction stage are capitalized as a separate component. At their completion, the cost of such assets is transferred to their definitive category.

Replacement units comprises long-term repairs which started to be depreciated at the date they replace for the related part.

F-21

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

Land is not depreciated. Depreciation of machinery and equipment and vehicles recognized as “Major equipment” are depreciated based on their hours of use. Under this method, the total number of work hours that machinery and equipment is capable to produce is estimated and a charge per hour is determined. The depreciation of other assets that do not qualify as “Major equipment” is calculated under the straight-line method to allocate their cost less their residual values over their estimated useful lives, as follows:


	Years
Buildings		33
Machinery and equipment		From 4 to 10
Vehicles		From 4 to 10
Furniture and fixtures		From 2 to 10
Other equipment		From 2 to 10
Replacement units		5

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each date of the statement of financial position. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognized in “Other (losses) gains, net” in the income statement.

2.15

Intangible assets

Goodwill -

Goodwill arises on the acquisition of subsidiaries and represents the excess of the cost of acquisition as compared to the fair value of the Group’s share in the net identifiable assets at the acquisition date.

Goodwill acquired in a business combination is allocated to each of the cash-generating units (CGU), or group of CGUs, that is expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored at the operating segment level.

Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential impairment. The carrying value of goodwill is compared to the recoverable amount, which is the higher of value in use and the fair value less costs to sell. Any impairment is recognized immediately as an expense and is not subsequently reversed.

Trademarks -

Separately acquired trademarks are shown at historical cost. Trademarks acquired in a business combination are recognized at fair value at the acquisition date. Trademarks have a finite useful life and are carried at cost less accumulated amortization. Amortisation is calculated using the straight-line method to allocate the cost of trademarks to profit or loss over their estimated useful lives, which has been estimated to be 30 years.

Concessions -

The intangible asset related to the right to charge users for the services under the Norvial concession is amortized under the straight-line method, from the date when toll collection started or from the date it is recognized as an asset using the lower of its estimated expected useful life or effective period of the concession agreement. See Note 2.5 regarding details of the Norvial concession.

F-22

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

Contractual relationships with customers -

Contractual relationships with customers are assets resulting from businesses that were initially recognized at fair value, as determined based on the future cash flows expected from those relationships over a period of time based on an estimation of the time period those customers remain customers for the Group. These assets are assessed periodically in order to determine whether they have been impaired, either from termination or deterioration of the relationship.

Block I and Block V -

The Company operates and extracts oil from two fields (Block I and Block V) located in the province of Talara in northern Peru. Both fields are operated under long-term service contracts in which the Company provides hydrocarbon extraction services to Perupetro, the state oil company. Hydrocarbons extracted from each field belong to Perupetro, which in turn pays the Company a variable fee per barrel of lifted hydrocarbons, which fee is based on a basket of international crude prices and the level of production. The fee is paid on a monthly basis. The Company’s activities are focused on proved reserves development and production and are conducted in mature oil fields, which have been producing oil for over 100 years in the case of Block I and over 50 years in the case of Block V. Such service contracts do not qualify as public services concessions, as defined by IFRIC 12. The extraction services that the Company provides and the infrastructure that it maintains are not a service that is provided to the public. Such infrastructure is not designed for public use and the services provided are exclusively for Perupetro.

As part of the company’s obligations under the service contracts, it is required to incur certain costs to prepare the wells to extract the hydrocarbons. The Company has capitalized as an intangible asset the development stage costs associated with preparing the wells for extraction. These costs are being amortized based on the useful life of the wells, which is less than the overall period of the service contract with Perupetro.

Internally generated software and development costs -

Costs associated with maintaining computer software programs are recognized as an expense as incurred. Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the Group are recognized as intangible assets when the following criteria are met:

•

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

•

management intends to complete the software product and use or sell it;

•

there is an ability to use or sell the software product;

•

it can be demonstrated how the software product will generate probable future economic benefits;

•

adequate technical, financial and other resources to complete the development and to use or sell the software product are available; and

•

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

Directly attributable costs that are capitalised as part of the software product include the software development employee costs and an appropriate portion of relevant overheads.

Other development expenditures that do not meet these criteria are recognised as an expense as incurred. Development costs previously recognised as an expense are not recognised as an asset in a subsequent period. Computer software development costs recognised as assets are amortised over their estimated useful lives, which does not exceed three years.

F-23

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

Land use rights -

This item comprises the rights of use of a physical space for the construction of future projects. The useful life of land use rights is 60 years under the agreement signed and their effective period can be extended if agreed by the parties. Amortization begins when it becomes ready for its intended use by Management.

2.16

Impairment of non-financial assets

Assets that have an indefinite useful life are not subject to amortization and are tested annually for impairment. Assets that are subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at each reporting date.

2.17

Trade payables

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business. Accounts payable are classified as current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities.

Trade payables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method.

2.18

Borrowings

Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortized cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognized in the income statement over the period of the borrowings using the effective interest method.

Fees paid for entering into loan facilities are recognized as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs.

2.19

Borrowing costs

General and specific borrowing costs directly attributable to acquisitions, construction or development of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization. All other borrowing costs are recognized in profit or loss in the period in which they are incurred.

F-24

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

2.20

Current and deferred income tax

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

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the date of the statement of financial position in the countries where the Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. Management, where appropriate, establishes provisions on the basis of amounts expected to be paid to the tax authorities.

Deferred income tax is recognized, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognized if they arise from the initial recognition of goodwill; deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.

Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized.

Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except for deferred income tax liability where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority.

The deferred income tax arising from the temporary differences in subsidiaries, associates and interest in joint-controlled businesses is not recognized following the exception of IAS 12 in this regard, since the period for reversal of temporary differences is controlled by the Group and it is probable that these temporary differences will not be reversed in the near future.

2.21

Employee Benefits

Profit sharing -

The Group recognizes a liability and an expense for statutory workers’ profit sharing, based on the Peruvian legal regulations in force. Workers’ profit sharing is equivalent to 5% of the taxable income determined by each of the Group’s entities, according to the income tax law currently in force. Regarding the branch based in the Dominican Republic, the profit sharing rate is 10%.

Bonuses -

The Group recognizes an expense and the related liability for statutory bonuses based on applicable laws and regulations effective in Peru. Statutory bonuses comprise an additional one-month salary paid every year in July and December, respectively.

F-25

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

Severance indemnities -

The employees severance payments for time of service of the Group’s staff comprise their indemnification rights, calculated in accordance with the regulations in force, which have to be credited to the bank accounts designated by workers in May and November each year. The compensation for time of service amounts to an additional one-month’s salary effective at the date of bank deposits. The Group has no obligations to make any additional payments once the annual deposits to which workers are entitled to have been made.

Vacation leave -

Annual vacation leave is recognized on an accrual and cumulative basis. Provision for the estimated obligations of annual vacations is recognized at the date of the statement of financial position.

Pension plans -

The subsidiary CAM has commitments of pension plans with its workers. These commitments comprise both defined benefit and defined contribution plans. A defined benefit plan defines an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation.

The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates as per IAS 19 that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension obligation. The discount rate reflects the time value of money but not the actuarial or investment risk. Additionally, the discount rate does not reflect the risk that the future events or circumstances may differ from actuarial assumptions.

Actuarial gains and losses arising from experience adjustments of pension benefits, are stated directly in other comprehensive income items.

Past-service costs are recognised immediately in income, unless the changes to the pension plan are conditional on the employees remaining in service for a specified period of time. In this case, the past-service costs are amortised on a straight-line basis over this period.

2.22

Provisions

General -

Provisions are recognized when the Group has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. If the time value of money is significant, provisions are discounted using a pre-tax rate that reflects, when applicable, the specific risks related to the liability. Reversal of the discount due to the passage of time results in the obligation being recognized with a charge to the income statement as a financial expense. Restructuring provisions comprise lease termination penalties and employee termination payments. Provisions are not recognized for future operating losses.

Contingent obligations are disclosed only when their existence will be confirmed with future events or when their amount cannot be reliably estimated. Contingent assets are not recognized and only revealed if it is probable that future economic benefits will flow to the Company.

F-26

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

Provision for the closure of production wells -

Group entities recognize a provision for the closure of operating units that correspond to the legal obligation to close oil production wells once the production phase has been completed. At the initial date of recognition, the liability that arises from said obligation is measured at fair value discounted to present value, the same amount is simultaneously charged to the intangible account in the statement of financial position.

Subsequently, the liability will increase in each period to reflect the financial cost considered in the initial measurement of the discount, and the capitalized cost is depreciated based on the useful life of the related asset. When a liability is settled, the Group’s entities will recognize any gain or loss that may arise. The fair value changes estimated for the initial obligation and interest rates are recognized as an increase or decrease of the carrying amount of the obligation and related asset, according to IAS 38, “Intangible assets”. Any decrease in the provision, and any decrease of the asset that may exceed the carrying amount of said asset is immediately recognized in the income statement.

If the review of the estimated obligation results in the need to increase the provison and, accordingly, increase the carrying amount of the asset, the Group’s entities will also take into consideration if said increase corresponds to an indicator that asset has been impaired and, if so, impairment tests are carried out, according to the guidelines of IAS 36, “Impairment of assets” (Note 2.16).

2.23

Earnings per share

Basic and diluted earnings per share are calculated considering that the Group does not have financial instruments with dilutive effects, as shown below:

The numerator corresponds to the net profit of the period for the Group.

ii)

The denominator is the weighted average number of shares in issue at the date of the Group’s consolidated financial statements.

2.24

Capital

Common shares are classified as equity.

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

Where any Group company purchases the company’s equity shares (treasury shares), the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the company’s equity holders until the shares are cancelled or reissued. Where such shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the Group’s equity holders.

2.25

Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable. Revenue is stated net of sales rebates, discounts and after eliminating sales between Group companies.

The Group recognizes revenue when the amount of revenue can be reliably measured; when it is probable that future economic benefits will flow to the entity; and when specific criteria have been met for each of the Group’s activities.

F-27

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

The Group’s revenue recognition policy is described as follows:

Revenue from construction activities -

Revenues from construction contracts are recognized using the percentage-of-completion method based on the costs incurred method or the units of work method, considering total costs and revenues estimated at the end of the project, in accordance with IAS 11, Construction Contracts. Under this method, revenues are determined based on the contract costs incurred in comparison to total contract costs, representing the profits that can be attributed to the portion of work completed.

Revenue is billed once approval is received by the owners of the work in progress.

With respect to services that have been provided but not billed, due to a lack of approval on behalf of owners the Company recognizes a deferred revenue liability for revenue with an increase in accounts receivable.

Accounts receivable derived from work services are shown net of the advances received from customers to the extent the related contracts include liquidation provisions.

ii)

Revenue from engineering, advisory and consulting services -

Revenue from services is recognized in the accounting period when they are provided, based on the services performed to date as a percentage of the total services to be performed.

iii)

Sales of real-estate properties -

Revenue from sales of real estate properties is recognized in the results of the period when sales occur, that is, when the properties are delivered and the risks and rewards inherent to ownership are transferred to the buyer and the collection of the corresponding receivables is reasonably assured.

iv)

Revenue from IT Services -

The sale of computer equipment includes some services to be provided in a subsequent date to the asset sale as installation and maintenance. When sales agreements include multiple elements, the amount of the revenue is attributed to each element based on the related fair values. The fair value of each element is determined based on the market price prevailing for each element when sold separately. Revenue derived from computer equipment is recognized when the related risks and rewards are transferred to the customer, which occurs upon delivery. Revenue relating to each service element is recognized as a percentage of the total services to be performed during the period of service.

Interest income -

Revenue from interest is recognized on a time-proportion basis, using the effective interest method.

vi)

Dividend income -

Dividend income is recognized when the right to receive payment is established.

vii)

Revenue for concession services -

Revenue for concession services is recognized in the accounting period when they are provided, based on the services performed or as a percentage of the total services to be performed (see Note 2.5).

F-28

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

2.26

Construction contract costs

Construction contract costs are recognized as an expense in the period in which they are incurred.

Contract costs include all direct costs such as materials, labor, subcontracting costs, manufacturing and supply costs of equipment, start-up costs and indirect costs. Periodically, the Company evaluates the reasonableness of the estimates used in the determination of the percentage-of-completion. If, as a result of this evaluation, there are modifications to the revenue or cost previously estimated, or if the total estimated cost of the project exceeds expected revenues, an adjustment is made in order to reflect the effect in results of the period in which the adjustment or loss is incurred.

When the outcome of a construction work cannot be estimated reliably, the revenue of the contract is recognized only up to the amount of the contractual costs incurred and that are likely to be recovered.

Changes in contract relating to the work to be performed, lawsuits and payment of incentives are included in the revenue from the contract to the extent that they have been agreed with the client and can be measured reliably.

2.27

Leases

Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the profit or loss of the period on a straight-line basis over the period of the lease.

The Group leases certain property, plant and equipment. Leases of property, plant and equipment where the Group has substantially assumed all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalized at the lease’s commencement at the lower of the fair value of the leased property and the present value of the minimum lease payments.

Each lease payment is allocated between the liability and finance charges in order to obtain a constant rate on the balance pending payment. The corresponding rental obligations, net of finance charges, are included in other long-term payables. The interest element of the finance cost is charged to the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The property, plant and equipment acquired under finance leases are depreciated over the shorter of the useful life of the asset and the lease term.

2.28

Dividend distribution

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

2.29

Contingent liabilities and assets

Contingent liabilities are not recognized in the financial statements, they are only disclosed in the Notes to the financial statements, unless it is probable that the use of resources is remote. Contingent assets are not recognized in the financial statements and are only disclosed when it is probable that an inflow of resources will flow to the Company.

2.30

Significant non-operating items

Significant non-operating items are disclosed in the financial statements when they are necessary to provide a better understanding of the Group’s financial performance. These material items are income or expenses shown separately due to the significance or their nature or amount.

F-29

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

2.31

Standards, amendments and interpretations not yet effective

Standards, amendments and interpretations adopted by the Group

There are no IFRSs or IFRIC interpretations that are effective for the first time for the financial year beginning on or after January 1, 2012 that would be expected to have a material impact on the Group.

Standards, amendments and interpretations issued but not yet effective for 2012 and which were not early adopted -

The following standards are relevant to the Group’s activities:

•

IFRS 7, ‘Financial instruments: Disclosures’ as amended in October 2010. The IASB modified the disclosures required so that the users of the financial statements may assess the risk exposure related to financial asset transfers and the effect of these risk on the entity’s financial position. For the Company, this amendments will come into effect on January 1, 2013.

•

IFRS 9, ‘Financial instruments’, addresses the classification, measurement and recognition of financial assets and financial liabilities. It replaces the parts of IAS 39 that relate to the classification and measurement of financial instruments. IFRS 9 requires financial assets to be classified into two measurement categories: those measured at fair value and those measured at amortized cost. The classification depends on the entity’s business model for managing its financial instruments and the contractual cash flow characteristics of the instrument. For financial liabilities, the standard retains most of the IAS 39 requirements. Application of IFRS 9 will be mandatory from January 1, 2015.

•

IFRS 10, ‘Consolidated financial statements’, replaces IAS 27 and SIC 12 and builds on existing principles by identifying the concept of control as the determining factor in whether an entity should be included within the consolidated financial statements of the parent company. The standard provides additional guidance to assist in the determination of control where this is difficult to assess. IFRS 10 will be applied with effect from January 1, 2013.

•

IFRS 11, ‘Joint arrangements’, which replaces IAS 31 and amends the classification of joint arrangements in only two categories (joint operations and joint ventures), depending on whether the investors have contractual rights and obligations on the assets and liabilities of the arrangement (joint operation) or whether investors have a residual right on the equity of the arrangement (joint venture). This standard discontinues the application of proportional consolidation method. IFRS 11 will be applied with effect from 1 January 2013.

•

IFRS 12, ‘Disclosures of interests in other entities’ includes the disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, special purpose vehicles and other off balance sheet vehicles. IFRS 12 will be applied with effect from January 1, 2013.

•

IFRS 13, ‘Fair value measurement’, aims to improve consistency and reduce complexity by providing a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across IFRSs. The requirements do not extend the use of fair value accounting but provide guidance on how it should be applied where its use is already required or permitted by other standards within IFRSs. The application of this standard is mandatory from January 1, 2013.

F-30

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

•

Amendment to IAS 1, ‘Presentation of financial statements’ relating to other comprehensive income. The major change resulting from this amendment is the requirement for entities to group the items of “other comprehensive income” (OCI) depending on whether they are reclassifiable or not to the income statement. These amendments do not specify which items should be incuded in OCI.

•

IAS 19, ‘Employee benefits’ was amended in June 2011 by the IASB. The amendments eliminate the corridor approach and recognize financial expenses on a net basis. This amendments will be effective for the Company on January 1, 2013.

•

IAS 27, ‘Separte financial statements’. It was amended in May 2011 by the IASB under the new heading ‘Separate financial statements’. The new standard include the alignment of the separate financial statements which remain effective once the provisions of control were included in IFRS 10. For the company, this standard is effective as of January 1, 2013.

•

The Group has carried out an initial assessment of the impact of these new standards on its financial position and results. The adoption of IFRS 11 required a more detailed analysis of the effect, given the Groups participation in several arrangements with third parties, in this case, joint operations. However, after such initial assessment, Management considers that the standard will not have a material impact on the Group’s financial position or performance because the Group only has joint operations and does not apply the proportional consolidation method as defined under IFRS 11. The accounting to be applied to these joint operations under IFRS 11 is similar to the accounting previously applied to these arrangements under IAS 31. The Group recognizes, in relation to its interest in a joint operation, its assets and liabilities, including its share of any asset or liability held jointly with its partner as well as its share of revenue and expense from the joint operation.

The other standards described above will only affect certain disclosures in the financial statements.

There are no other IFRS or IFRIC interpretations that are not yet effective that would be expected to have a significant impact on the Group’s financial statements.

2.32

Reclassifications

The following reclassifications have been carried out in the financial statements of 2011 to make them comparable with the balances of the financial statements of 2012:

•

The cost of the investment in Shopping Mall Parque El Agustino classified in 2011 under property, plant and equipment, owned by subsidiary Viva GyM and amounting to S/.36.5 million (Note 14),was reclassified to Investment property in 2012.

•

The balances of work in progress - construction and rights to be billed were classified in 2011 in the statement of financial position as inventories and trade accounts receivable, respectively. In 2012 they were reclassified as “work in progress due from customers” (Note 9).

3	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 exchange rate risk, price risk, 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.

F-31

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

3.1

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 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 effect for the Group in the short- and medium-term.

Market risks -

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 December 31, 2012, this exposure is mainly concentrated in fluctuations of the U.S. dollar and Chilean pesos. As of December 31 and January 1, 2011, it is mainly concentrated in U.S. dollars.

Management has set up a policy to require Group companies to manage their foreign exchange risk against their functional currency. The Group companies are required to hedge their entire foreign exchange risk exposure with the Group treasury. To manage their foreign exchange risk arising from future commercial transactions and recognized assets and liabilities, Group companies use forward contracts, entered into with Group treasury. Foreign exchange risk arises when future commercial transactions or recognised assets or liabilities are denominated in a currency other than the entity’s functional currency.

In order to reduce its exposure, efforts are made to maintain an appropriate balance between assets and liabilities, as well as between income and expenses in foreign currency. It should be Noted that Management has alternatively approved a policy to use derivative financial instruments to protect from foreign exchange risk.

As of December 31, 2012, the consolidated statement of financial position includes assets and liabilities in foreign currency equivalent to S/.1,673 million and S/.1,568 million, respectively (S/.1,040 million and S/.1,374 million, respectively, as of December 31, 2011).

The Group’s exchange gains and losses for 2012 amounted to S/.264 million and S/.243 million, respectively (S/.166 million and S/.164 million respectively in 2011).

If at December 31, 2012, the new Peruvian sol had strengthened/weakened by 10% against the U.S. dollar, with all variables held constant, the pre-tax profit for the year would have increased/decreased by S/.2 million (S/.0.19 million in 2011 and S/.0.82 million in 2010).

ii)

Price risk -

The Company is exposed to the risk of prices of construction materials because steel is a major component of cost associated with the commodities necessary to provide its services, which is managed via negotiations with the respective suppliers. No significant liabilities relating to the purchase of commodities have been shown at December 31, 2012, 2011 and 2010; accordingly, the Company has not considered it relevant to include a sensitivity analysis of the effect of commodity price fluctuations on its performance.

Also, the Company is exposed to the risk of prices of services provided as a result of the concessions it has signed ( See Note 2.5 b-i). The regulated rate system, applicable to the Group concessions, Sets maximum rates (agreed in local currency) for each concession. This rate will be regularly adjusted every 12 months and in the event that more than 10% variance occurs from the last regular price adjustment, the rate can be modificed on an exceptional basis.

F-32

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

At December 31, 2012, 2011 and 2010, the maximum rate has been collected.

Concessions maintain an ongoing monitoring and adjustment of its revenues to make sure their annual billing do not exceed the maximum rate allowable.

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 on its liabilities. Group policy is to maintain most of its borrowings in fixed rate instruments; 86% of total debt in 2012 (85% in 2011) was contracted at fixed rates. During 2012 and 2011 the Group’s borrowings at variable rates were denominated in U.S. dollars and the Group policy is to manage this risk by using interest-rate swaps , which are recognized under hedge accounting.

Management considers it unnecessary to prepare a sensitivity analysis of the variable-rate debt and the variable portion of the hedging derivative because it only comprises a 14% of the total debt for 2012 (15% in 2011) and any increase or decrease in interest rate would not have a material effect on the Group’s results. No relevant hedge ineffectiveness occurred in fiscal 2012 and 2011.

Credit risk -

Credit risk arises from cash and cash equivalents and deposits with banks and financial institutions, as well as customer credit counterparties, including the balances outstanding of accounts receivable and committed transactions. For banks and financial institutions, only independently rated parties with a minimum rating of ‘A’ are accepted. The Management of each of the Group’s companies evaluate the credit quality of the client taking into consideration its financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings in accordance with limits set by the board. The utilization of credit limits is regularly monitored.

With respect to loans to related parties, the Group has measures in place to ensure the recovery of said loans through the controls maintained by the Corporate Finance Management and the performance evaluation conducted by the Board.

No credit limits were exceeded during the reporting period, and Management does not expect the Group to incur any losses from non-performance by these counterparties.

Liquidity risk -

Prudent liquidity risk 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. In this sense, the Group has no significant liquidity risks given the fact that historically its operating cash flows have enabled it to maintain sufficient cash to meet its obligations.

Group Corporate Finance monitors rolling forecasts of the Group’s liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities (Note 16), 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, currency restrictions.

F-33

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

Surplus cash held by the operating entities over and above 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 following table 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.


	Less than 1 year		From 1 to 2 years		From 2 to 5 years		Over 5 years		Total
	S/.000		S/.000		S/.000		S/.000		S/.000
As of December 31, 2011
Borrowing (except forfinance leases)		162,033		77,205		80,171		—		319,409
Finance leases		74,455		52,130		104,258		17,376		248,219
Trade accounts payable		754,520		—		—		—		754,520
Other accounts payable		327,047		21,861		—		—		348,908
Accounts payable to related parties		19,665		—		—		—		19,665

		1,337,720		151,196		184,429		17,376		1,690,721


As of December 31, 2012
Borrowing (except for finance leases)		343,072		82,980		62,992		25,440		514,484
Finance leases		124,709		103,373		130,246		22,119		380,447
Trade accounts payable		937,287		—		—		—		937,287
Other accounts payable		340,547		38,135		—		—		378,682
Accounts payables to related parties		42,734		—		—		—		42,734

		1,756,628		150,084		217,466		96,286		2,220,464

3.2

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 to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to 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, 2011, no gearing ratio was part of the analysis because cash surpluses were higher than financial obligations and equity had not been used to secure compliance with financial obligations as it is shown in the table below. As of December 31, 2012, due to the fact that the Company has acquired significant borrowings, the Company’s strategy was to maintain a gearing ratio between 0.03 and 1.00.

F-34

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

As of December 31, 2011 and 2012 the gearing ratio was as follows:


	December 31, 2011			December 31, 2012
	S/.000			S/.000
Total borrowing		529,848			845,474
Less: Cash and cash equivalents		(658,187	)		(780,114	)

Net debt		(128,339	)		65,360
Total equity		1,453,086			1,776,890

Total capital		1,324,747			1,842,250

Gearing ratio		0.00			0.04

3.3

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 (level 1), 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 only financial instruments measured at fair value by the Group are the interest rate swaps signed with subsidiary GMP S.A., by which a variable-interest instrument is changed to a fixed interest rate and forward foreign exchange contracts signed by subsidiaries GyM Ferrovías S.A. and Viva GyM S.A. to hedge its exposure to changes in the exchange rate of the Euros and U.S. dollars. The measurement at fair value of these instruments corresponds to the characteristics of 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 New York.

The investment maintained in Transportadora de Gas del Perú S.A. (TGP) has been recorded at cost; however, the fair value of this investment approximates its cost.

The carrying amount of cash and cash equivalents corresponds to its fair value. The Company considers that the carrying amount of the short- and long-term accounts receivable and payable is similar to their fair values. The fair value of financial liabilities, disclosed in Note 16-c), 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.

4	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.

4.1

Critical accounting estimates and assumptions

The Group makes estimates and assumptions concerning the future economic performance. These estimates and assumptions are required to be made because the information used in the presentation of the financial information is currently not available, is dependent on future events, or cannot be

F-35

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

calculated with a high degree of accuracy. The resulting accounting estimates will, by definition, seldom equal the related actual results. If outcomes in the next fiscal year are much different than current assumptions a material adjustment might be required to the carrying amount of the assets and liabilities. However, Management considers that the estimates and assumptions do not have a significant risk of causing a material adjustment to the balances of assets and liabilities in the following year.

Goodwill impairment reviews -

Impairment reviews are undertaken annually to determine if goodwill arising from business acquisitions has suffered any impairment, in accordance with the policy described in Note 2.15-a). For this purpose, goodwill is attributed to the different CGUs to which it relates. The recoverable amount of the CGUs has been determined based on its value-in-use calculations. This evaluation requires the exercise of Management’s professional judgment to analyze any potential indicators of impairment as well as the use of estimates in determining the value in use, including the preparation of future cash flows, macro-economic forecasts as well as defining the interest rate at which said cash flows will be discounted.

Value in use is usually determined on the basis of discounted estimated future net cash flows. Determination as to whether and how much an asset is impaired involves management estimates on highly uncertain matters such as future commodity prices, the effects of inflation on operating expenses, discount rates, production profiles and the outlook for global or regional market supply-and-demand conditions for crude oil, natural gas and refined products.

If the Group experiences a significant drop in revenues or a drastic increase in costs or changes in other factors the fair value of business units might decrease. If management determines the factors that reduce the fair value of the business are permanent, those economic factors will be taken into consideration to determine the recoverable amount of the business units and, therefore, goodwill may be deemed to be impaired, which may cause a writedown of goodwill to be necessary.

Based on the impairment testings performed by Group Management, no goodwill impairment losses were required to be recognized because the recoverable amount of the CGUs subject to testing was substantially higher than their related carrying amounts.

The most significant assumptions are gross margin, growth rate and discount rate which are included in Note 15. We have performed a sensitivity analysis on the gross margin and discount rate which is included below.

a.)

Gross margin

The Group’s fair value is significantly above its book value and if the gross margin was adjusted down by 10% the fair value would be 144% higher than the book value and if the gross margin was adjusted up by 10% the fair value would be 151% higher than book value. Therefore the Group’s businesses would still be greater than the book value even under a significant decline in the Group’s gross margin and the Group would not need to impair its goodwill.

b.)

Discount Rate

The Group’s fair value is significantly above its book value and if the discount rate was adjusted down by 10% the fair value would be 136% higher than the book value and if the discount rate was adjusted up by 10% the fair value would be 93% higher than book value. Therefore the Group’s businesses would still be greater than the book value even under a significant upward adjustment to the discount rate in value and the Group would not need to impair its goodwill.

F-36

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

Taxes -

Determination of the tax obligations and expenses requires interpretations of the applicable tax laws and regulations. The Company seeks legal tax counsel’s advice before making any decision on tax matters. Although Management considers its estimates to be prudent and appropriate, differences of interpretation may arise with the Peruvian Tax Authorities which may require future tax adjustments.

Deferred tax assets and liabilities are calculated by taking the temporary differences of the tax basis of assets and liabilities and the financial statement basis using the tax rates in effect for each of the years in which the difference is expected to reverse. Any change in tax rates will affect the deferred tax assets and liabilities. This change will be recognized in income in the period the change takes effect.

Management makes estimates for our deferred income tax valuation allowance. This allowance may be increased or decreased if the Group determines it to be more likely than not that our valuation allowance needs to be adjusted. If a tax position is not more likely than not to ultimately be realized, no tax benefit is recorded.

The Group bases its estimates for the valuation allowance on all available evidence which includes historical data, projected income, current operations and tax planning strategies. The deferred tax asset is supported by the assumption that the Group will continue to generate income in the future. If management determines in the future revenues will not be sufficient to cover the deferred tax asset, it would adjust the valuation account for deferred tax income.

Percentage of completion revenue recognition -

Revenue from construction contracts is recognized under the percentage-of-completion method which requires the final margin from construction contracts to be estimated. Projections of these margins are performed by Management based on work execution budgets and adjusted periodically based on updated information reflecting the actual performance of work. The estimated contract revenue and total cost estimates are reviewed often as work advances and change orders are initiated and approved. In this regard, Management considers that the estimates made at the year-end closing are reasonable. When unapproved change orders are presented, revenue is recognize equal to costs incurred (no profit component recognized) until the additional work has been approved.

Contract revenue is recognized as revenue in the income statement in the accounting periods in which the work is performed. Contract costs are recognized as cost of sales in the income statement in the accounting period in which the work to which they relate is performed. However, any expected and probable excess of total contract costs over total contract revenue for the contract is recognized as an expense immediately. Furthermore, any changes in contract estimates are recognized as a change in accounting estimates and recognized in the period the change is made and in future periods if applicable. In certain construction contracts, the terms of these agreements allow for an amount to be withheld by the customers until construction has been completed. Under these contracts the full amount may not be recognized until the next operating cycle. As of December 31, 2012, 2011 and 2010, a sensitivity analysis was performed considering a 10% increase/decrease in the Group’s gross margins, as follows:


	2010			2011			2012
	S/.000			S/.000			S/.000
Sales		1,605,181			2,650,334			3,341,539
Gross profit		206,063			289,813			371,852
%		12.84			10.93			11.13
Over 10%		14.12			12.03			12.24

		226,669			318,794			409,037

Increase in profits before taxes		20,606			28,981			37,185

Less 10%		11.55			9.84			10.02

		185,457			260,832			334,667

Decrease in profit before taxes		(20,606	)		(28,981	)		(37,185	)

Provision for well closure costs -

F-37

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

The Company estimates the present value of its future obligation for well closure costs, or “ well closure liability, and increases the carrying amount of the asset that will be withdrawn in the future and that is shown under the heading of intangibles in the statement of financial position. The discount rate used for the present value calculation was 1.78% based on the 10 year bond rate as of December, 2012. On December 31, 2012 the present value of the estimated provision for closure activities for the 85 wells amounted to S/.4.9 million. Subsequently, this liability is attributed to profit or loss during the useful life of the assets that gave rise to it. The well closure liability is adjusted to reflect the changes that resulted from the passage of time and from revisions of either the date of occurrence or the amount of the present value of the obligations originally estimated. With a discount rate of 1.78% the Company’s intangible balance isS/. 4.896,747. If the discount rate was adjusted down by 10% the intangible balance would be S/. 4’945,264and if the discount rate was adjusted up by 10% the intangible balance would be S/. 4’848,910.

F-38

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

During 2012, the Company recorded S/.4.9 million, charged to the intangible asset account, credited to the well closure liability. This is to reflect estimated obligations to close 70 productive wells included in the service agreements for Blocks I and IV. This provision is increased monthly, charged to results, on an incremental value basis.

4.2

Critical judgments in applying the entity’s accounting policies

For the transactions recognized in the financial statements of 2012 and 2011 no special exercise of judgment was required, except for the accounting treatment of the acquisition of the CAM Group described in the following paragraphs:

CAM acquisition -

Under IFRS 3, an entity recognizes a profit on an acquisition when the fair value of the assets acquired, net of the liabilities assumed exceeds the consideration paid. This accounting standard presumes that recognition of a profit on a business acquisition is unusual; therefore, it requires the buyer to review the determination of the fair values of the acquired assets, liabilities and price paid before recognizing any gains. Furthermore, IFRS 3 authorizes a review period of 12 months from the acquisition date for an entity to adjust the determination of the fair values of the acquired assets and liabilities and, therefore, adjust the goodwill or gain generated from the acquisition, as applicable.

On February 24, 2011, the Group acquired the CAM Group and as a result of the process of allocating the purchase price paid, the fair value of the assets acquired, net of the liabilities assumed, was determined to have exceeded the consideration paid by S/.45.2 million. At the date of issue of the financial statements, the 12-month period requirement for fair value review had been met and Management considers that it has reasonably reviewed the values attributable to the assets and liabilities of the business acquired; accordingly, it has completed the process of allocating the consideration paid, and has therefore, recognized the above-mentioned profit on acquisition in the year-end profit or loss.

In this context, Management considers that the profit on acquisition resulted from a bargain purchase in which the selling party, an entity with different business units additional to the business sold, was required to dispose of its investment because of a restructuring process intended to, among other matters, focus on business activities other than the CAM Group’s current businesses.

Estimated useful life of machinery and equipment -

The Company reviews on an annual basis the useful lives of its machinery and equipment. The evaluation of the useful lives is made based on the hours of use and is performed by the technical internal area. This estimation of work hours is performed based on historical data considering the estimated productive capacity of the asset and is expressed in a rate per unit of production or hour. Management determined not to change the useful life over the current year because, based on its own assessments, the useful lives already reflected the current economic conditions of the Company’s operating environment.

5	SEGMENT REPORTING

Operating segments are reported consistently 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.

F-39

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

During 2012, in line with the Group’s business monitoring strategy, Corporate Management has revised its operating segments and has decided to consider the operations of subsidiary GMP within the infrastructure segment, which includes the following business units (i) energy, (ii) tolls roads, (iii) mass transit; and (vi) water treatment. As a result of the new regrouping the services segment has been renamed as technical services segment.

Given this change, prior-year comparative information has been restated to reflect the revised structure of operating segments.

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.

Until 2010 the Group’s revenues were substantially derived from local operations. In 2011, with the purchase of the CAM subsidiary and Vial y Vives (Note 28), the revenues derived from foreign operations (Chile, Brazil, Colombia) comprise 17.21% of the Group’s total revenue in 2012 (14.93% in 2011).

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

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

The following segments set forth the principal activities of each of the Group:

Engineering and construction: This segment includes: (i) engineering, from traditional engineering services such as structural, civil and design engineering, and architectural planning to advanced specialties including process design, simulation, and environmental services; (ii) civil works, such as the construction of hydroelectric power stations and other large infrastructure facilities; (iii) electromechanic construction, such as concentrator plants, oil and natural gas pipelines, and transmission lines; (iv) building construction, such as office buildings, residential buildings, hotels, affordable housing projects, shopping centers and industrial facilities; (v) contract mining, such as earthworks, blasting, loading and hauling ore.

Infrastructure: The Group has long-term concessions or similar contractual arrangements in Peru for three toll roads, the Lima Metro, a waste water treatment plant in Lima, multiple fuel storage facilities, two producing oil fields, and a gas processing plant.

Real Estate: The Group develops and sells homes targeted to low- and middle-income population sectors which are experiencing a significant increase in disposable income, as well as, to a lesser extent, office and commercial space.

Technical Services: The Group provides: (i) operation and maintenance services for infrastructure assets; (ii) information technology (IT) services, including IT outsourcing, systems integration, application outsourcing and business process outsourcing services; and (iii) electricity networks services (maintenance).

Parent Company Operation: The Holding provides managing, logistics and accounting services, among others, to the different related entities of the Group.

Below are shown the financial statements of the Group according to its operating segments:

F-40

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

Assets and liabilities by operating segments

Segment reporting


	Engineering and construction		Infrastructure												Parent Company Operations
	Engineering and construction		Energy		Toll Roads		Mass transit		Water treatment		Real estate		Technical services		Parent Company Operations		Eliminations			Consolidated
	S/.000		S/.000		S/.000		S/.000		S/.000		S/.000		S/.000		S/.000		S/.000			S/.000
As of December 31, 2011
Assets -
Cash and cash equivalents		400,479		39,085		23,478		1,705		608		49,254		73,401		70,177		—			658,187
Available-for-sale financial asset		—		—		—		—		—		—		—		5,347		—			5,347
Trade Accounts receivable		270,058		20,565		7,656		—		1,501		435		188,056		39		—			488,310
Outstanding work in progress		218,657		—		12,567		92,846		—		—		69,756		—		—			393,826
Accounts receivable from related parties		63,137		44,822		—		—		—		799		51,308		86,770		(221,526	)		25,310
Other accounts receivable		205,984		17,074		15,252		5,751		4,772		18,315		37,308		37,135		—			341,591
Inventories		76,415		7,234		—		168		—		381,860		79,365		2,243		(1,020	)		546,265
Prepaid expenses		18,183		1,071		509		4,082		1,615		—		13,830		4,149		—			43,439

Total current assets		1,252,913		129,851		59,462		104,552		8,496		450,663		513,024		205,860		(222,546	)		2,502,275

Borrowings		—		—		—		—		—		—		—		—		—			—
Other long-term accounts receivable		2,335		13,661		27,388		—		—		—		30,125		62,558		(60,852	)		75,215
Investments in associates		76,929		3,653		—		—		—		816		2		692,019		(747,466	)		25,953
Investment property		—		—		—		—		—		36,528		—		—		—			36,528
Plant and equipment		329,637		187,857		2,331		2,302		—		5,049		96,815		67,726		(4,804	)		686,913
Intangible assets		39,174		53,440		153,608		6,658		2,774		303		29,381		15,295		17,164			317,797
Derivative financial instruments		—		—		—		—		—		—		—		—		—			—
Deferred income tax asset		4,619		—		7,515		4,704		83		3,394		27,409		—		1,320			49,044

Non-current assets		452,694		258,611		190,842		13,664		2,857		46,090		183,732		837,598		(794,638	)		1,191,450

Total assets		1,705,607		388,462		250,304		118,216		11,353		496,753		696,756		1,043,458		(1,017,184	)		3,693,725

Liabilities -
Borrowings		70,436		14,403		19,029		—		—		41,609		84,971		525		—			230,973
Accounts payable		546,721		22,406		1,411		7,668		41		13,387		161,780		1,106		—			754,520
Accounts payable to related parties		23,918		329		18,103		16,219		8		57,020		34,551		91,043		(221,526	)		19,665
Current taxes		112,165		16,666		3,718		49		—		9,172		27,474		3,089		—			172,333
Other accounts payable		361,308		5,007		1,758		2,701		—		76,300		79,190		13,158		—			539,422
Other provisions		—		—		—		—		—		—		24,466		—		—			24,466

Total current liability		1,114,548		58,811		44,019		26,637		49		197,488		412,432		108,921		(221,526	)		1,741,379

Long-term debt		136,606		60,599		66,539		—		—		16,536		14,625		3,970		—			298,875
Other accounts payable		—		—		445		—		—		79,555		38,383		597		(60,852	)		58,128
Other provisions		6,702		—		—		—		—		—		102,774		—		—			109,476
Derivative financial instruments		—		3,645		—		—		—		—		—		—		—			3,645
Deferred income tax liability		11,670		2,939		—		—		—		285		12,741		1,530		(29	)		29,136

Total non-current liabilities		154,978		67,183		66,984		—		—		96,376		168,523		6,097		(60,881	)		499,260

Total liabilities		1,269,526		125,994		111,003		26,637		49		293,864		580,955		115,018		(282,407	)		2,240,639

Equity		406,293		248,376		79,862		68,684		5,652		50,103		91,747		918,057		(679,752	)		1,189,022
Non-controlling interest		29,788		14,092		59,439		22,895		5,652		152,786		24,054		10,383		(55,025	)		264,064

Total liabilities and Equity		1,705,607		388,462		250,304		118,216		11,353		496,753		696,756		1,043,458		(1,017,184	)		3,693,725

F-41

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

Assets and liabilities by operating segments

Segment reporting


	Engineering and construction		Infrastructure												Parent Company Operations
	Engineering and construction		Energy		Toll Roads		Mass transit		Water treatment		Real estate		Technical services		Parent Company Operations		Eliminations			Consolidated
	S/.000		S/.000		S/.000		S/.000		S/.000		S/.000		S/.000		S/.000		S/.000			S/.000
As of December 31, 2012
Assets -
Cash and cash equivalents		423,332		30,650		90,644		28,312		68		73,004		85,287		48,491		326			780,114
Available-for-sale financial asset		—		—		—		—		—		—		—		5,005		—			5,005
Accounts receivable		181,107		26,922		6,560		20		43,692		19,336		166,895		61		—			444,593
Work in progress receivable		417,073		—		11,722		15,029		—		—		81,427		—		—			525,251
Accounts receivable from related parties		67,913		—		300		159		134		4,867		52,243		304,812		(380,667	)		49,761
Other accounts receivable		306,744		16,783		17,970		6,326		—		13,479		40,444		34,705		—			436,451
Inventories		145,301		8,287		—		6,419		—		523,722		64,048		1,392		(1,753	)		747,416
Prepaid expenses		5,882		1,309		583		7,220		—		1,589		5,149		1,107		—			22,839

Current assets		1,547,352		83,951		127,779		63,485		43,894		635,997		495,493		395,573		(382,094	)		3,011,430

Long-term account receivable		—		—		—		305,887		—		—		—		—		—			305,887
Other long-term accounts receivable		11,256		14,696		13,833		11,206		3,720		6,803		24,274		1,696		—			87,484
Investments in associates		113,601		—		—		—		—		17,151		2		801,824		(895,132	)		37,446
Property investment		—		—		—		—		—		35,972		—		—		—			35,972
Property, machinery and equipment		539,018		205,853		2,034		3,365		—		4,470		109,259		76,317		(2,223	)		938,093
Intangible assets		197,205		95,283		146,186		7,830		2,406		772		24,461		14,855		16,110			505,108
Derivative financial instruments		—		—		—		—		—		128		—		—		—			128
Deferred income tax asset		14,751		—		6,184		8,287		—		6,110		34,190		—		1,556			71,078

Non-current assets		875,831		315,832		168,237		336,575		6,126		71,406		192,186		894,692		(879,689	)		1,981,196

Total assets		2,423,183		399,783		296,016		400,060		50,020		707,403		687,679		1,290,265		(1,261,783	)		4,992,626

Liabilities -
Short-term debt		119,960		16,216		14,226		—		8,271		43,216		96,015		154,915		—			452,819
Accounts payable		663,454		21,996		744		15,111		27		70,571		163,495		1,889		—			937,287
Accounts payable to related parties		42,973		1,610		13,970		290,601		15,763		9,231		46,376		14,189		(391,979	)		42,734
Current taxes		110,515		4,506		1,977		873		167		8,614		28,187		3,995		—			158,834
Other accounts payable		650,079		10,640		68,658		223		—		131,967		144,373		9,189		—			1,015,129
Other provisions		—		401		—		—		—		—		10,911		—		—			11,312

Current liability		1,586,981		55,369		99,575		306,808		24,228		263,599		489,357		184,177		(391,979	)		2,618,115

Long-term debt		180,857		97,777		48,513		—		—		49,657		12,427		3,424		—			392,655
Other accounts payable		—		14,640		—		—		—		12,858		24,681		597		—			52,776
Other provisions		16,133		7,558		—		—		—		—		27,624		—		—			51,315
Derivative financial instruments		—		5,999		—		12,697		—		—		—		—		—			18,696
Deferred income tax liability		63,858		2,563		24		—		722		68		9,634		5,310		—			82,179

Total non-current liabilities		260,848		128,537		48,537		12,697		722		62,583		74,366		9,331		—			597,621

Total liabilities		1,847,829		183,906		148,112		319,505		24,950		326,182		563,723		193,508		(391,979	)		3,215,736

Equity		472,097		192,411		90,124		60,416		12,535		147,054		103,015		1,086,774		(772,219	)		1,392,207
Non-controlling interest		103,257		23,466		57,780		20,139		12,535		234,167		20,941		9,983		(97,585	)		384,683

Total liabilities and Equity		2,423,183		399,783		296,016		400,060		50,020		707,403		687,679		1,290,265		(1,261,783	)		4,992,626

F-42

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

Operating segment performance

Segment Reporting


				Infrastructure
	Engineering and construction			Energy			Toll Roads			Mass transit		Water treatment		Real estate			Technical services			Parent Company operations			Eliminations			Consolidated
	S/.000			S/.000			S/.000			S/.000		S/.000		S/.000			S/.000			S/.000			S/.000			S/.000
Year 2010 -
Revenues		1,700,473			239,815			114,878			—		—		218,604			284,976			362,170			(418,241	)		2,502,675

Gross profit		230,858			79,059			53,270			—		—		33,264			61,046			18,625			(31,293	)		444,829
Administrative expenses		(82,540	)		(10,550	)		(9,237	)		—		—		(6,755	)		(22,984	)		(10,360	)		19,267			(123,159	)
Other income (expenses)		(1,515	)		2,098			58			—		—		239			(141	)		1,347			598			2,684
Profit from the sale of investments		—			16,988			—			—		—		—			—			57,971			—			74,959
Other (losses) gains, net		3,019			(2,789	)		—			—		—		—			—			—			—			230

Profit before interests and taxes (EBIT)		149,822			84,806			44,091			—		—		26,748			37,921			67,583			(11,428	)		399,543
Financial expenses		(82,759	)		(13,427	)		(25,310	)		—		—		(4,704	)		(8,890	)		(23,031	)		3,315			(154,806	)
Financial income		85,451			12,543			15,488			—		—		4,579			7,052			21,697			(1,993	)		144,817
Other		7,685			386			—			—		—		—			—			211,496			(208,093	)		11,474

Profit before income tax (EBT)		160,199			84,308			34,269			—		—		26,623			36,083			277,745			(218,199	)		401,028
Income tax		(49,026	)		(21,754	)		(8,746	)		—		—		(8,714	)		(11,339	)		(27,345	)		2,582			(124,342	)

Net Profit for the year		111,173			62,554			25,523			—		—		17,909			24,744			250,400			(215,617	)		276,686

Profit attributable to:

Controlling interest in the Company		104,083			59,427			14,150			—		—		8,467			23,924			249,912			(207,161	)		252,802
Non-controlling interest		7,090			3,127			11,373			—		—		9,442			820			488			(8,456	)		23,884

Net Profit for the year		111,173			62,554			25,523			—		—		17,909			24,744			250,400			(215,617	)		276,686

F-43

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

Operating segment performance

Segment Reporting


				Infrastructure
	Engineering and construction			Energy			Toll Roads			Mass transit			Water treatment			Real estate			Technical services			Parent Company operations			Eliminations			Consolidated
	S/.000			S/.000			S/.000			S/.000			S/.000			S/.000			S/.000			S/.000			S/.000			S/.000
Year 2011 -
Revenues		2,784,185			289,041			115,189			—			—			152,266			976,956			39,840			(116,211	)		4,241,266

Gross profit		329,276			115,950			40,134			(9,888	)		—			45,334			109,671			1,995			(723	)		631,749
Administrative expenses		(104,358	)		(13,065	)		(7,086	)		(5,226	)		(269	)		(10,093	)		(72,061	)		(5,555	)		18,131			(199,582	)
Other income (expenses)		4,762			(318	)		88			—			—			(357	)		6,240			(11,056	)		4,971			4,330
Profit from the sale of investments		—			—			—			—			—			—			—			4,769			—			4,769
Other (losses) gains, net		(2,165	)		(2,054	)		—			—			—			22			406			946			—			(2,845	)
Gain from business combination		—			—			—			—			—			—			45,152			—			—			45,152

Profit before interests and taxes (EBIT)		227,515			100,513			33,136			(15,114	)		(269	)		34,906			89,408			(8,901	)		22,379			483,573
Financial expenses		(105,906	)		(14,608	)		(21,043	)		(5,819	)		(15	)		(7,718	)		(25,523	)		(16,266	)		8,442			(188,456	)
Financial income		111,180			12,714			15,108			7,704			5			7,175			17,014			19,847			(8,442	)		182,305
Other		5,100			223			—			—			—			—			—			133,291			(138,391	)		223

Profit before income tax (EBT)		237,889			98,842			27,201			(13,229	)		(279	)		34,363			80,899			127,971			(116,012	)		477,645
Income tax		(71,514	)		(29,730	)		(5,822	)		4,703			83			(10,232	)		(19,812	)		(3,990	)		(5,133	)		(141,447	)

Net Profit for the year		166,375			69,112			21,379			(8,526	)		(196	)		24,131			61,087			123,981			(121,145	)		336,198

Profit attributable to:

Controlling interest in the Company		153,125			64,726			9,944			(6,394	)		(98	)		6,079			53,901			124,032			(116,239	)		289,076
Non-controlling interest		13,250			4,386			11,435			(2,132	)		(98	)		18,052			7,186			(51	)		(4,906	)		47,122

Net Profit for the year		166,375			69,112			21,379			(8,526	)		(196	)		24,131			61,087			123,981			(121,145	)		336,198

F-44

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

Operating segment performance

Segment Reporting


	Engineering and construction			Infrastructure																		Parent Company operations
	Engineering and construction			Energy			Toll Roads			Mass transit			Water treatment			Real estate			Technical services			Parent Company operations			Eliminations			Consolidated
	S/.000			S/.000			S/.000			S/.000			S/.000			S/.000			S/.000			S/.000			S/.000			S/.000
Year 2012 -
Revenues		3,524,585			287,040			123,345			73,067			41,007			240,110			1,083,323			44,654			(185,246	)		5,231,885

Gross profit		408,021			110,847			53,341			(2,712	)		11,155			86,706			103,935			(26	)		(59,201	)		712,066
Administrative expenses		(159,845	)		(14,739	)		(6,361	)		(7,926	)		(1,485	)		(17,409	)		(105,363	)		(3,971	)		59,919			(257,180	)
Other income (expenses)		(1,928	)		(927	)		61			21			—			(1,711	)		73,585			8,426			(1,583	)		75,944
Other (losses) gains, net		1,326			(1,603	)		—			—			—			—			—			—			—			(277	)

Profit before interests and taxes (EBIT)		247,574			93,578			47,041			(10,617	)		9,670			67,586			72,157			4,429			(865	)		530,553
Financial expenses		(179,089	)		(25,041	)		(16,517	)		(15,278	)		(6,560	)		(14,469	)		(29,093	)		(17,009	)		5,081			(297,975	)
Financial income		198,755			23,277			11,354			11,287			129			12,165			24,028			15,909			(9,260	)		287,644
Others		9,178			—			—			—			—			—			—			252,288			(260,862	)		604

Profit before income tax (EBT)		276,418			91,814			41,878			(14,608	)		3,239			65,282			67,092			255,617			(265,906	)		520,826
Income tax		(87,918	)		(28,457	)		(12,526	)		3,584			(972	)		(19,967	)		(5,638	)		(4,235	)		1,554			(154,575	)

Net Profit for the year		188,500			63,357			29,352			(11,024	)		2,267			45,315			61,454			251,382			(264,352	)		366,251

Profit attributable to:

Controlling interest in the Company		165,116			58,029			15,800			(8,268	)		1,134			12,375			50,623			250,923			(255,778	)		289,954
Non-controlling interest		23,384			5,328			13,552			(2,756	)		1,133			32,940			10,831			459			(8,574	)		76,297

Net Profit for the year		188,500			63,357			29,352			(11,024	)		2,267			45,315			61,454			251,382			(264,352	)		366,251

F-45

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

Operating segment cash flows

Segment Reporting


	Engineering and construction			Infrastructure																Parent Company operations
	Engineering and construction			Energy			Toll roads			Mass transit		Water treatment		Real estate			Technical services			Parent Company operations			Eliminations			Consolidated
	S/.000			S/.000			S/.000			S/.000		S/.000		S/.000			S/.000			S/.000			S/.000			S/.000
Year 2010 -

Profit before income tax		160,199			84,308			34,269			—		—		26,623			36,083			276,050			(216,504	)		401,028
Adjustment
Depreciation and amortization		60,788			33,900			27,943			—		—		663			15,857			3,773			—			142,924
Accounts receivable		(56,455	)		(3,911	)		18,115			—		—		1,770			(35,369	)		9,631			—			(66,219	)
Inventories		34,750			(749	)		—			—		—		(77,962	)		(3,834	)		1,410			—			(46,385	)
Accounts payable		10,657			113			(19,099	)		—		—		8,683			16,646			5,508			5,796			28,304
Other variations		118,486			(26,477	)		(27,043	)		—		—		(43,117	)		37,782			(309,662	)		192,431			(57,600	)

Cash flows from operating activities		328,425			87,184			34,185			—		—		(83,340	)		67,165			(13,290	)		(18,277	)		402,052

Sale of assets		8,642			21,802			—			—		—		2,438			—			117,029			—			149,911
Dividends received		16,714			2,868			—			—		—		—			—			118,611			(130,076	)		8,117
Purchase of assets		(40,785	)		(39,661	)		(13,779	)		—		—		(7,473	)		(35,288	)		(20,037	)		18,922			(138,101	)
Other payments		—			—			—			—		—		—			8,277			(50,000	)		41,723			—

Cash flows from investing activities		(15,429	)		(14,991	)		(13,779	)		—		—		(5,035	)		(27,011	)		165,603			(69,431	)		19,927

Debt repayment		(49,637	)		(40,555	)		10,894			—		—		10,507			19,052			(65,951	)		34,755			(80,935	)
Dividend distribution		(71,639	)		—			(16,225	)		—		—		(18,731	)		(12,226	)		(26,880	)		118,821			(26,880	)
Acquisition of interest in non-controlling subsidiary		—			—			—			—		—		—			—			—			—			—
Sale of interest in non-controlling subsidiary		—			—			—			—		—		—			—			—			—			—
Other payments		—			—			3,625			—		—		70,750			500			—			(94,076	)		(19,201	)

Cash flows from financing activities		(121,276	)		(40,555	)		(1,706	)		—		—		62,526			7,326			(92,831	)		59,500			(127,016	)

Cash (decrease) increase		191,720			31,638			18,700			—		—		(25,849	)		47,480			59,482			(28,208	)		294,963
Cash at the beginning of the year		209,334			11,472			12,369			—		—		70,828			28,361			27,354			28,208			387,926

Cash at the end of the year		401,054			43,110			31,069			—		—		44,979			75,841			86,836			—			682,889

F-46

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

Operating segment cash flows

Segment Reporting


	Engineering and construction			Infrastructure												Real estate			Technical services			Parent Company operations			Eliminations			Consolidated
	Engineering and construction			Energy			Toll roads			Mass transit			Water treatment			Real estate			Technical services			Parent Company operations			Eliminations			Consolidated
	S/.000			S/.000			S/.000			S/.000			S/.000			S/.000			S/.000			S/.000			S/.000			S/.000
Year 2011 -
Profit before income tax		237,889			98,842			27,201			(13,229	)		(279	)		34,363			80,899			127,971			(116,012	)		477,645
Adjustment
Depreciation and amortization		82,351			36,112			21,316			73			87			2,607			32,160			3,540			—			178,246
Accounts receivable		(170,212	)		3,181			42,364			(92,846	)		(1,501	)		(178	)		(674	)		—			42,790			(177,076	)
Inventories		(52,330	)		(630	)		—			—			—			(56,086	)		(10,359	)		—			(21,005	)		(140,410	)
Accounts payable		328,670			8,650			(761	)		5,245			(1,615	)		(598	)		(20,374	)		302			(53,893	)		265,626
Other variations		(255,857	)		(28,247	)		(60,221	)		7,564			(4,986	)		5,703			(110,623	)		(124,648	)		100,623			(470,692	)

Cash flows from operating activities		170,511			117,908			29,899			(93,193	)		(8,294	)		(14,189	)		(28,971	)		7,165			(47,497	)		133,339

Sale of assets		5,251			77			(152	)		—			—			—			2,214			28,047			(2,436	)		33,001
Dividends received		20,891			—			—			—			—			245			1,766			133,291			(121,484	)		34,709
Purchase of assets		(80,544	)		(51,083	)		(363	)		(6,432	)		(2,598	)		(36,585	)		(22,916	)		(144,892	)		192,124			(153,289	)

Cash flows from investing activities		(54,402	)		(51,006	)		(515	)		(6,432	)		(2,598	)		(36,340	)		(18,936	)		16,446			68,204			(85,579	)

Debt repayment		(41,245	)		1,775			(15,379	)		4,048			11,500			71,396			59,527			(583	)		(86,645	)		4,394
Dividend distribution		(70,983	)		(67,329	)		(12,690	)		—			—			(3,102	)		(7,263	)		(69,866	)		161,368			(69,865	)
Acquisiton of interest in non-controlling subsidiary		—			—			—			—			—			—			—			—			—			—
Sale of interest in non-controlling subsidiary		—			—			—			—			—			—			—			—			—			—
Other payments		(4,456	)		(5,373	)		(8,906	)		97,282			—			(13,490	)		(6,797	)		30,179			(95,430	)		(6,991	)

Cash flows from financing activities		(116,684	)		(70,927	)		(36,975	)		101,330			11,500			54,804			45,467			(40,270	)		(20,707	)		(72,462	)

Cash increase (decrease)		(575	)		(4,025	)		(7,591	)		1,705			608			4,275			(2,440	)		(16,659	)		—			(24,702	)
Cash at the beginning of the year		401,054			43,110			31,069			—			—			44,979			75,841			86,836			—			682,889

Cash at the end of the year		400,479			39,085			23,478			1,705			608			49,254			73,401			70,177			—			658,187

F-47

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

Operating segment cash flows

Segment Reporting


	Engineering and construction			Infrastructure												Real estate			Technical services			Parent Company operations			Eliminations			Consolidated
	Engineering and construction			Energy			Toll roads			Mass transit			Water treatment			Real estate			Technical services			Parent Company operations			Eliminations			Consolidated
	S/.000			S/.000			S/.000			S/.000			S/.000			S/.000			S/.000			S/.000			S/.000			S/.000
Year 2012 -
Profit before income tax		276,418			91,814			41,878			(14,608	)		3,239			65,282			67,092			255,618			(265,907	)		520,826
Adjustment
Depreciation and amortization		131,133			42,821			24,494			454			104			2,922			39,447			2,075			1,053			244,503
Accounts receivable		(62,061	)		(6,356	)		1,941			(5,464	)		(37,419	)		(18,902	)		5,868			(22	)		72,506			(49,909	)
Inventories		(61,468	)		(908	)		—			(6,251	)		—			(154,804	)		14,197			851			11,740			(196,643	)
Accounts payable		159,597			(26,566	)		(667	)		9,866			(14	)		58,190			(5,976	)		782			29,723			224,935
Other variations		126,885			5,047			51,143			47,270			31,836			52,416			(33,573	)		(433,651	)		(48,356	)		(200,983	)

Cash flows from operating activities		570,504			105,852			118,789			31,267			(2,254	)		5,104			87,055			(174,347	)		(199,242	)		542,729

Sale of assets		(60,205	)		392			(17	)		(458	)		—			(1,032	)		(961	)		9,637			76,115			23,471
Dividends received		4,119			—			—			—			—			—			—			252,288			(254,350	)		2,057
Purchase of assets		(393,856	)		(63,113	)		101			(3,940	)		—			(3,126	)		(30,582	)		(166,389	)		235,390			(425,515	)

Cash flows from investing activities		(449,942	)		(62,721	)		84			(4,398	)		—			(4,158	)		(31,543	)		95,536			57,155			(399,987	)

Debt repayment		17,465			38,991			(23,108	)		—			8,271			34,728			(2,934	)		153,845			(107,257	)		120,001
Dividend distribution		(100,820	)		(87,429	)		(20,750	)		—			—			(10,571	)		(29,956	)		(124,235	)		249,526			(124,235	)
Contribution of non-controlling shareholders		—			—			—			—			—			—			—			26,096			5,750			31,846
Acquisition of interest in non-controlling subsidiary		—			—			—			—			—			—			—			(4,393	)		—			(4,393	)
Sale of interest in non-controlling subsidiary		—			—			—			—			—			—			—			1,193			—			1,193
Other payments		(14,354	)		(3,128	)		(7,849	)		(262	)		(6,557	)		(1,353	)		(10,736	)		4,619			(5,607	)		(45,227	)

Cash flows from financing activities		(97,709	)		(51,566	)		(51,707	)		(262	)		1,714			22,804			(43,626	)		57,125			142,412			(20,815	)

Cash increase (decrease)		22,853			(8,435	)		67,166			26,607			(540	)		23,750			11,886			(21,686	)		326			121,927

Cash at the beginning of the year		400,479			39,085			23,478			1,705			608			49,254			73,401			70,177						658,187

Cash at the end of the year		423,332			30,650			90,644			28,312			68			73,004			85,287			48,491			326			780,114

F-48

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

Segments by Geographical areas


	2010		2011		2012
	S/.000		S/.000		S/.000
Revenues
Peru		2,382,001		3,607,374		4,334,487
Chile		—		339,030		652,178
Brazil		—		58,477		92,505
Colombia		—		102,069		114,269
Dominican Republic		120,674		133,304		37,605
Others		—		1,012		841

		2,502,675		4,241,266		5,231,885



	2010		2011			2012
	S/.000		S/.000			S/.000
Non-current assets (*)
Peru		855,923		965,617			1,258,358
Chile		—		183,774			371,081
Brazil		—		9,461			6,082
Colombia		—		7,475			9,264
Dominican Republic		3,304		746			—
Others		—		(99,882	)		(128,166	)

		859,227		1,067,191			1,516,619

(*)	Includes investment in associates, investment properties, property plant and equipment and intangible assets.

F-49

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

6	FINANCIAL INSTRUMENTS

6.1

Financial instruments by category -

The classification of financial liabilities per category is as follows:


	December 31,
	2011		2012
	S/.000		S/.000
Assets according to the statement of financial position
Loans and accounts receivable:
- Cash and cash equivalents		658,187		780,114
- Trade and other accounts receivable not including advances to suppliers		955,852		1,060,445
- Financial assets related to concession agreements (1)		122,245		389,600
- Accounts receivable from related parties		25,310		49,761

		1,761,594		2,279,920

Available-for-sale financial assets		5,347		5,005

Hedging derivatives:
- Derivative financial instruments		—		128

(1)	Financial assets related to concession agreements are recorded in the statement of financial position within the line items of short term other accounts receivable and long term other accounts receivable.


Liabilities according to the statement of financial position
Other financial liabilities
- Borrowings	303,250	501,692
- Finance leases	226,598	343,782
- Trade and other accounts payable (excluding non-financial liabilities)	931,095	1,129,317
- Trade accounts payable – Concessions
- Accounts payable to related parties	19,665	42,734

	1,480,608	2,017,525

Hedging derivative:
- Derivative financial instruments	3,645	18,696

In seeking to mitigate the exposure resulting from the expenditures incurred in Euros to a foreign supplier for the purchase of the infrastructure required under the concession agreement signed between a subsidiary, GyM Ferrovías S.A., (see Note 2.5) and the Peruvian Government, this subsidiary entered into a cross currency swap contract by which the purchase of Euros at a future date is secured at a fixed exchange rate. This contract is accounted for as a fair value hedge by the Group and it recognizes the fair value of the financial instrument (cross currency swap) in profit or loss and, as a counterpart, it recognizes the fair value of the firm commitment associated with the contract with the foreign supplier. At December 31, 2012 the derivative financial instrument constitutes a liability at a fair value of S/.12.7 million.

F-50

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

6.2

Quality of financial assets -

The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external risk ratings (if available) or to historical information about counterparty default rates:

The credit quality of financial assets is presented as follows:


	December 31,
	2011		2012
	S/.000		S/.000
*Cash and cash equivalents ()**
Banco de Crédito del Perú (A+)		269,982		426,762
Banco Continental (A+)		145,266		156,419
Banco Santander (Chile) (A)		—		40,745
Banco Interbank (A)		60,336		33,864
Banco Scotiabank (A+)		19,730		26,648
Banco de la Nación (A)		33,006		24,784
Banco de Chile (A+)		24,045		16,828
Banco Santander (A)		61,873		9,024
Citibank (A)		3,158		4,610
Banco BCI (Chile) (A)		—		3,451
Banco Interamericano de Finanzas (A)		2,543		30
Other lesser amounts		36,195		33,859

Total cash and cash equivalent		656,134		777,024

The ratings in the above table “A and A+” represent high quality credit ratings. For banks located in Peru, the ratings were derived from risk rating agencies authorized by the Banking and Insurance Superintendency of Peru (Superintendencia de Banca, Seguros y AFP). For banks located in Chile, the ratings were derived from risk rating agencies authorized by the Stock and Insurance Superintendency of Chile (Superintendencia de Valores y Seguros).

(*)	The rest of cash equivalents in the statement of financial position corresponds to cash.

The credit quality of customers is assessed in three categories (internal classification):

new customers/related parties (less than 6 months),

existing customers/related parties (with more than 6 months of trade relationship) with no previous default history; and

existing customers/related parties (with more than 6 months of trade relationship) with previous default history.

At December 31, 2012 and 2011 the majority of the Group’s portfolio has been risk-rated as category B. Also, of the total number of accounts in compliance with contract terms and conditions, none of them have been re-negotiated.

With respect to available-for-sale financial assets, the counterparty held an external credit rating of AAA at December 31, 2012 and 2011.

F-51

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

7	CASH AND CASH EQUIVALENTS

This account comprises:


	December 31,
	2011		2012
	S/.000		S/.000
Cash on hand		2,053		3,090
Checking accounts		317,885		501,912
Time deposits		332,220		273,404
In-transit remittances		—		1,641
Mutual funds		6,029		67

		658,187		780,114

8	TRADE ACCOUNTS RECEIVABLE

This account comprises:


	December 31,
	2011		2012
	S/.000		S/.000
Invoices receivable		488,310		444,593
GyM Ferrovías S.A. Collection Rights		—		305,887

		488,310		750,480
Less: non-current portion		—		(305,887	)

Current trade accounts receivable		488,310		444,593

The fair value of receivables is similar to their carrying amount since their average collection turnover is less than 60 days. These receivables are of current maturity, are not interest-bearing and have no specific guarantees.

Invoices receivable are related to percentage of completion estimates. As of December 31, 2012 and 2011, trade receivable balances are shown net of the advances received from customers of S/.849 million and S/.327 million, respectively. These advances are substantially related to the subsidiary GyM S.A. and their terms vary based on each contract. At December 31, 2012, a significant portion of these advances of S/.555 million corresponds to the funds given by certain customers with which a monthly revolving advances system has been agreed that are settled with the billing of the immediately previous month. Other advances that are netted from accounts receivable correspond to funds netted gradually as services are provided; which in the event of an anticipated termination of the contractual relationship will be offset with the balances due for work progress.

Long-term accounts receivable comprise the collection rights of GyM Ferrovías S.A., which under the concession signed with the Peruvian Government comprising Line 1 of the Lima Metro/(train line) is required to acquire, on its behalf, certain infrastructure needed for the implementation of the transport system to be operated once completed. This account will be amortized with the cash flows resulting from the consideration to be received by the subsidiary at the inception of the concession under the “price per kilometer traveled” (PKT). For this purpose, the subsidiary has applied certain criteria to determine the amount of the interest to be accrued on these balances and the beginning of this amortization. These balances bear interest at a 7.7% rate and their amortization is expected to begin in 2015 at the time the infrastructure begins operation. Additionally, these balances also include the collection rights of concessions related to Survial S.A., Canchaque S.A.C. and La Chira S.A. (see Note 2.5-a).

F-52

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

The aging detail of trade accounts receivable is as follows:


	December 31,
	2011		2012
	S/.000		S/.000
Current		351,116		436,215
Past due up to 30 days		89,106		153,440
Past due for over 30 days		48,088		160,825

		488,310		750,480

As of December 31, 2012, trade accounts receivable totalling S/.314 million (S/.137.1 million as of December 31, 2011) are past due but not impaired, and the customers do not have a historical record of default.

The maximum exposure to credit risk at the reporting date is the carrying amount of the accounts receivable.

At December 2012, the Group recorded in profit or loss for the period an impairment of trade accounts receivable amounting to S/.2.7 million resulting from the assessment of the customer portfolio of subsidiary CAM Holding S.P.A, which, after a specific review and assessment of balances outstanding by Management, has certain customers who were undergoing financial difficulties and shown payment delinquency during 2012. Such provision for impairment shows no movement from the date of CAM Holding acquisition.

9	WORK IN PROGRESS DUE FROM CUSTOMERS

This account comprises:


	December 31,
	2011		2012
	S/.000		S/.000
Rights receivable:		333,436		465,741
Work in progress		60,390		59,510

		393,826		525,251

Rights receivable correspond to the unbilled rights for services rendered. Each month, under the percentage of completion method, the Company estimates the advancement of work to date. Based on its monthly estimates, the Company recognizes revenue. Until such revenue is billed, it is recorded in the account rights receivable.

The balance of work in progress includes costs that the Group incurred related to future activity on the construction contracts. Such contract costs are recognized as an asset since the costs will be recovered in the near future.

F-53

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

10	TRANSACTIONS WITH RELATED PARTIES

Transactions with related parties -

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


	2010		2011		2012
	S/.000		S/.000		S/.000
Revenue from sale of goods and services:
- Associates		77,518		52,158		49,252
- Joint Operations		110,427		177,254		51,385

		187,945		229,412		100,637

Inter-company services are agreed at arm’s length as if the services had been agreed with third parties.

Key management compensation -

Key management includes directors (executives and non-executives), members of the Executive Committee and Internal Audit Management. The compensation paid or payable to key management in 2012 amounted to S/.60.04 million (S/.32.7 million as of December 31, 2011).

F-54

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

Balances at the end of the year resulting from the sale/purchase of goods/services -


	December 31,
	2011				2012
	Receivable		Payable		Receivable		Payable
	S/.000		S/.000		S/.000		S/.000
Related:
Proyectos Inmobiliarios Consultores (PICSA)		233		—		223		—
Sierra Morena		—		405		—		243

		233		405		223		243

Joint Operations:
Consorcio Rio Mantaro		—		—		8,974		—
Consorcio Grupo 12		—		—		8,699		—
Consorcio Brocal Pasco		232		591		4,711		—
Consorcio La Gloria		1,654		1,144		3,430		3,443
Consorcio GyM Conciviles		—		—		2,197		2,426
Consorcio Toromocho		—		—		1,819		3,432
Consorcio Rio Urubamba		—		—		1,790		—
Consorcio Tren Electrico		2,039		—		1,622		—
Consorcio Atocongo		—		1,110		1,650		—
Consorcio Marcona		643		290		1,600		2,168
Consorcio Constructor Alto Cayma		3,602		291		1,533		—
Consorcio Lima		2,800		178		1,232		—
Consorcio GyM Concar		—		—		1,088		—
Consorcio - Sermesa Zhejian		—		—		1,013		—
Consorcio Rios Pallca		1,975		—		975		—
Consorcio Norte Pachacutec		—		505		971		800
Consorcio Tiwu		1,067		—		963		1,716
Consorcio Vial Ipacal		1,333		1,358		694		700
Consorcio Terminales		—		—		628		—
Consorcio Vial Quinua		1,885		—		561		4,422
Consorcio CAM Lima		—		—		458		231
Consorcio Sermesa		—		—		405		—
Consorcio Pacifico		—		—		280		—
Consorcio Vial Sullana		531		835		348		341
Consorcio La Zanja		2,149		—		309		349
Consorcio Ancon Pativilca
(consolidada con CONCAR)		—		951		303		1,054
Consorcio Ferrovias Argentina		—		—		—		7,118
Consorcio La Chira		—		1,482		—		7,868
Consorcio Alto Cayma		—		—		—		942
Constructores Transmantaro		2,791		3,628		—		677
Consorcio GyM Cosapi		140		827		—		321
Comerciales Sur		334		2,891		—		—
Consorcio Proyecto Chiquitilca		108		139		—		—
Consorcio Heroes Navales		108		—		—		—
Consorcio GyM - Stracon		64		515		—		—
Consorcio Vial Ayacucho		32		1,327		—		—
Other		1,127		1,043		977		962

		24,614		19,105		49,230		38,970

Other related parties:
Besco		—		—		—		2,155
El Condor Combustibles		—		—		—		1,366
Other minor		463		155		308		—

		463		155		308		3,521

		25,310		19,665		49,761		42,734

F-55

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

Accounts receivable from related parties mainly arise from sales transactions for goods and services with maturity periods of 60 days. Such accounts 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 maturity periods of 60 days. Such accounts are not interest bearing because they are short-term.

Transactions with non-controlling interest are disclosed in Note 31.

11	OTHER ACCOUNTS RECEIVABLE

This account comprises:


	December 31,
	2011			2012
	S/.000			S/.000
Advances to suppliers		137,300			181,790
Fiscal credit		82,452			76,991
Deposits in guarantees for contracts		68,529			57,716
Income tax on-account payment		—			68,502
Accounts receivable from sale of investments (Note 13)		27,908			26,739
Petróleos del Perú S.A.- Petroperú S.A.		19,425			23,236
Claims to Sunat		—			17,388
Accounts receivable from personnel		13,922			12,946
Account receivable from Ferrocarriles del Estado - Chile		9,996			9,209
Claims to third-parties		4,519			7,221
Temporary taxes on net assets (Note 26-f)		1,093			4,643
Restricted fund		2,713			3,822
Right to recover taxes (Brazil and Colombia)		—			3,168
Legal credits CAM Brasil		—			2,955
Accounts receivable from suppliers (Transportadora de Gas del Perú)		—			2,290
Project reimbursements		—			1,926
Loans receivable		2,009			1,760
Compensation funds		7,188			1,637
Marineer zona franca		6,397			—
Loans receivable from Consorcio SEC		3,769			—
Others		29,586			19,996

		416,806			523,935

Less non-current portion:
Fiscal credit		(24,675	)		(48,493	)
Petróleos del Perú S.A.		(13,661	)		(14,696	)
Ferrocarriles del Estado SEC		—			(9,209	)
Legal credits CAM Brasil		—			(2,955	)
Accounts receivable from Transportadora de Gas del Perú		—			(2,290	)
Right to recover taxes		—			(2,010	)
Debtors for sale, according to legal agreement (Chile)		—			(662	)
Loans receivable		—			(659	)
Others		(36,879	)		(6,510	)

		(75,215	)		(87,484	)

Current portion		341,591			436,451

Other non-current accounts receivable have maturities from 2 to 5 years. In the particular case of fiscal credit, Company Management estimates that this balance will be applied against the fiscal debit from future operations over the medium term.

F-56

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

The following contains a description of major accounts receivable:

Advances to suppliers -

Mainly corresponds to advances that the subsidiary GyM S.A. provided for approximately S/.171.5 million to import equipment to be used in different projects, which are detailed as follows, based on the related project:


	December 31,
	2011		2012
	S/.000		S/.000
Project:
Consorcio Tren Eléctrico		28,484		58,203
Consorcio Rio Mantaro		—		27,067
Consorcio GyM Conciviles		—		26,730
Central Hidroeléctrica Machu Picchu		45,569		15,132
Inversiones y Construcciones GyM Ltda		5,665		9,110
Ciudad Nueva Fuerabambas		5,311		10,525
Ampliación Red Principal Calidda		4,645		8,759
Servicios para proyectos inmobiliarios		2,906		4,663
Edificio Real 8		—		3,442
GyM Chile SPA		—		1,709
Stracon GyM		—		1,557
Mantenimiento Periodico/Red Vial 1		—		1,474
Consorcio Peruano de Conservación		—		1,421
Consorcio Rio Urubamba		—		1,194
Consorcio Atocongo		—		925
Consorcio La Gloria		4,591		827
Central de Equipos		—		683
Planta de Emulsión		—		459
Consorcio Constructor Alto Cayma		3,896		417
Gran Teatro Nacional (segunda etapa)		4,948		—
Proyecto La Chira		4,772		—
Link Tower		2,536		—
Universidad del Pacifico		2,282		—
Teatro Colegio Roosevelt		1,961		—
Universidad UCAL		1,447		—
Ampliación Clínica San Felipe		1,154		—
Hotel Libertador		78		—
Other smaller projects		17,055		7,493

		137,300		181,790

Fiscal credit -

Mainly corresponds to the subsidiaries Survial S.A., GyM S.A. and GyM Ferrovías S.A. for S/.25 million, S/.14.9 million and S/.14 million, respectively, (Survial S.A., Grupo CAM and Viva GyM S.A. for S/.34.7 million, S/.11 million and S/.6.1 million, respectively in 2011). Based on its estimates, Management considers that this fiscal credit will be recovered during the ordinary course of the future operations of these subsidiaries.

F-57

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

Guarantee deposits -

Guarantee deposits are the funds retained by customers for work contracts mainly of subsidiary GyM S.A. which secures compliance with the contracts and are recovered once the work has been completed. Such deposits mainly correspond to the following projects:


	December 31,
	2011		2012
	S/.000		S/.000
Project:
Stracon GyM		—		16,516
Campamentos Congas		10,691		8,783
Conga Reticulation Camp 3000/4500 K		—		7,738
Consorcio GyM Cosapi		4,593		7,501
Pueblo Viejo (Dominican Republic)		20,934		7,212
Proyecto Machupicchu		3,195		4,513
Ampla Brasil		—		1,402
Consorcio GyM Cosapi		—		909
Conga- Campamento 400 personas K12		—		387
Edificio Real 8		—		351
Distrito S		—		319
Local Euromotors		—		289
Proyecto Power Chilca		5,678		—
Movimientos de Tierra Antapaccay		5,590		—
Proyecto Conga		2,054		—
Clínica Delgado Etapa I		1,790		—
Edificio Educativo Universidad Pacifico		1,554		—
Universidad UCAL		1,173		—
Others		11,277		1,796

		68,529		57,716

Petroleos del Perú S.A. - Petroperú SA.

These balances comprise additional investments established in the operating agreement and completed by Consorcio Terminales (a joint venture of the subsidiary GMP S.A.) for the modernization and extension of 9 terminals subject to the agreement. These investments which are presently works in progress will be transferred to Petróleos del Perú S.A. - Petroperú S.A., once a technical audit has been completed and after obtaining the written approval and accreditation of said institution; the value thus determined will be considered for billing. During fiscal 2012 and 2011, said Consortium has incurred additional investments of US$11.5 million and US$7.6 million, respectively; which will be collected over the effective period of the agreement, once Petróleos del Perú - Petroperú S.A., confirms the investment made as a result of technical audits.

This agreement consists in the operation of the oil terminals of Petroleos del Peru to store and distribute the oil to the different customers of this entity of the State.

Compensation Fund -

The balance receivable from the compensation fund corresponds to subsidiary GMP S.A. and relates to the Fund created by the Government to prevent the high volatility of the price of crude oil and its by-products from affecting the end users. In 2012 GMP S.A. received payments of S/.9.3 million (S/.20.4 million in 2011) and applications of contribution items amounting to S/.3.7 million (S/.18.1 million in 2011). In January 2011, the Fund provided this subsidiary with the amount of S/.7.2 million.

F-58

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

General -

Other receivables do not present past due amounts or impairment and the non-current balances are supported by contractual agreements with third-parties and in the particular case of the fiscal credit, its maturity has been determined based on the period, estimated by Management for using said fiscal credit.

The fair value of other short - term accounts receivable is similar to their carrying amount due to the fact of short term maturity.

At December 31, 2012, the fair value of other accounts receivable from Petróleos del Perú S.A., originates from the subsidiary GMP S.A., does not bear interest and, therefore, was discounted at the market rate prevailing at the date of the disbursements, which on average is 6% per annum (5.26% in 2011). This rate corresponds to the weighted average borrowing rate of the subsidiary.

The maximum exposure to credit risk as of the date of the report is the carrying amount of each class of other accounts receivable mentioned. The Group does not request collaterals as guarantee.

12	INVENTORIES

This account comprises:


	December 31,
	2011		2012
	S/.000		S/.000
Land		214,899		326,451
Work in progress - real estate		151,361		181,956
Construction materials		77,992		148,565
Materials and supplies		84,530		78,755
Finished properties		17,483		11,689

		546,265		747,416

Land -

As of December 31, 2012, this item mainly includes a plot of land of 823 hectares (S/.90.2 million) located in the district of Lurin, a province of Lima, intended for industrial and public housing development purposes (S/.85.8 million at December 31, 2011); a plot of land located in the district of Comas (S/.53.4 million), in which it is intended to implement a large green area project called Los Parques de Comas, with approximately 8,000 affordable houses (S/.51.1 million as of December 31, 2011); and Cuartel San Martín (S/.76.2 million), located in Av. El Ejército, Urb. Santa Cruz Miraflores which will be a development complex consisting of a 5-star hotel, convention, business, cultural, commercial and residential building center (S/.67 million as of December 31, 2011).

Work in progress - real estate -

As of December 31, 2012, this item mainly includes project “Parque Central Club Residencial” (S/.23.6 million), comprising 22 multi-family buildings of 12 floors each, located in Cercado de Lima, and the affordable housing project “Los Parques de Carabayllo” (S/.19.3 million) comprising 24 buildings of 4 floors each, located in Carabayllo. The affordable housing project “Los Parques de San Martin” (S/.39.6 million) comprising 20 multi-family buildings of 5, 10 and 12 floors, located in San Martin de Porres, the affordable housing project “Los Parques de Villa El Salvador” (S/.15.4 million) comprising 20 buildings of 5 floors, both projects located in Villa El Salvador, and the traditional housing project “Cipreses (S/.44.2 million). As of December 31, 2011, this item mainly included project “Parque Central Club Residencial” (S/.34.87 million), “Los Parques de Carabayllo” (S/.15.8 million), and “Los Parques de San Martin” (S/.30.63 million).

F-59

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

During the year, Company has capitalized financing costs in these construction works amounting to S/.4.3 million (S/.8.4 million in 2011), related to qualifying assets.

Construction materials -

The higher balance at December 31, 2012, as compared to 2011, is mainly due to the construction materials of the subsidiary Stracon GyM, which was acquired in March 2012 by consolidating its balances at the end of 2012, which amounted to S/.29.3 million; additionally, this balance includes the construction materials for the new construction work in Machupicchu for S/.12.8 million and the Joint Operations established in 2012 (Vial La Quinua, Río Urubamba, Río Mantaro, GyM Conciviles and Toromocho) for a total of S/.26.2 million.

Others -

In 2012, the cost of inventory recognized as expenses is included within the cost of sales and amounted to S/.144.5 million (S/.101.3 million in 2011).

At December 31, 2012, the Group recognizes a provision for the impairment of inventories amounting to S/.9.8 million, recognized in profit or loss for the period.

13	INVESTMENTS IN ASSOCIATES

This account comprises:


							Carrying amount
			Interest in capital				At December 31,
Entity	Class		2011		2012		2011		2012
			%		%		S/.000		S/.000
Prinsur		Common		23.86		23.86		14,807		14,807
Investment Real Once S.A.		Common		29.07		29.07		4,276		4,276
Oiltanking Andina S.A.C.		Common		50.00		—		3,652		—
Sierra Morena S.A.		Common		33.33		33.33		1,605		310
Inmobiliaria Viena S.A.		Common		13.99		13.99		20.00		20
Consorcio Vial y Vives Mena y Ovalle Ltda.		Common		—		50.00		—		143
Ingeniería y Construcción
Bechtel Vial y Vives Ltda.		Common		—		40.00		—		2,660
Constructora SK-VyV Ltda.		Common		—		50.00		—		12,584
Ingeniería y Construcción Bechtel
Vial y Vives OGP-1 Ltda.		Common		—		40.00		—		288
Inmobiliaria San Silvestre S.A.		Common		21.73		21.73		1,557		2,324
Other								36		34

								25,953		37,446

Investment in Inmobiliaria Viena S. A.

Management has evaluated the degree of influence that the Group has over Inmobiliaria Viena S.A. and has determined that the Group has a significant influence regardless of the fact that its ownership interest is less than 20%, since it has a Board member with voting rights. Consequently, this investment has been classified as an associate.

The most significant investments that are not quoted in a stock exchange are described as follows:

Ingeniería y Construcción Bechtel - Vial y Vives Limitada -

The entity is mainly engaged in providing construction and acquisition services as well as other related services to Bechtel Chile Limitada, its partner to carry out construction work.

F-60

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

Constructora SK - VyV -

The entity is mainly engaged in the execution of civil construction work and industrial assembly, construction, buildings and carrying out engineering works, in general, and any other business agreed upon by the partners for the project “Caserones” of the client Minera Lumina Cooper.

Prinsur -

An entity whose major asset is a plot of land of 24,957,300 m2 located in Lurin, which will be used for real estate developments. Based on recent appraisals of the property, Management believes that the commercial value of this propery is higher that its carrying amount.

Investments Real Once S.A. -

Entity of which the major asset is a building used for real estate rental which is located in Centro Empresarial de San Isidro.

Oiltanking Andina S.A.C. -

This entity was treated as an associate until 2011; however, at January 1, 2012, this entity entered into a merger with Oiltanking Andina Services S.A. which was mainly engaged in operating and responding to emergencies for Terminal Marino Pisco Camisea. The subsidiary GMP S.A. has control over the casting vote; therefore, this entity is consolidated as a subsidiary since January 1, 2012.

General -

The Group’s share in the assets, liabilities, revenues and expenses, and gains and losses of its major associates are as follows:


									Gain/
Entity	Country		Assets		Liability		Revenue		Loss
			S/.000		S/.000		S/.000		S/.000
As of December 31, 2011
Prinsur S.A.		Peru		3,449		571		—		4
Inversiones Real Once S.A.		Peru		21,591		21,533		898		6
Oiltanking Andina S.A.C.		Peru		7,854		539		4,766		448
Sierra Morena S.A.		Peru		4,870		49		—		3
Inmobiliaria San Silvestre S.A.		Peru		6,614		487		9		13
Inmobiliaria Viena S.A.		Peru		422		31		762		1,053

				44,800		23,210		6,435		1,527

As of December 31, 2012
Prinsur		Peru		3,449		569		7		5
Consorcio Vial y Vives Mena y Ovalle Ltda.		Chile		437		72		110		58
Ingenieria y Construccion Bechtel Vialy Vives Ltda.		Chile		10,392		3,560		20,846		3,920
Constructora SK-VyV Ltda.		Chile		114,447		89,278		255,129		13,874
Ingenieria y Construccion Bechtel Vialy Vives OGP-1 Ltda.		Chile		7,888		7,165		6,337		688
Sierra Morena S.A.		Peru		976		46		—		59
Inversiones Real Once S.A.		Peru		21,049		7,201		3,946		2,428
Inmobiliaria San Silvestre S.A.		Peru		11,579		480		4,973		1
Inmobiliaria Viena S.A.		Peru		240		—		1		152

				170,457		108,371		291,349		21,185

F-61

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

The movement of the investments is as follows:


	2010			2011			2012
	S/.000			S/.000			S/.000
Opening balance		88,508			82,234			25,953
Acquisition and/or contributions received		973			—			15,128
Equity interest in results		11,474			223			604
Dividends received		(8,117	)		(34,709	)		—
Return of capital		—			—			(2,057	)
Sale of investments		(10,667	)		(21,948	)		—
Others		63			153			(2,182	)

Final balance		82,234			25,953			37,446

In 2012, 2011 and 2010 the following significant movements were carried out:

•

In October 2012, as a result of the acquisition of 74% of shares capital in Ingenieria y Construccion Vial y Vives (Vial y Vives), the Group recognized its investments in the associates maintained by Vial y Vives. Such investments mainly comprise investments in Ingeniería y Construccion Bechtel, Vial y Vives Limitada and Constructora SK-VyV Ltda. for S/.2.6 million and S/.12.5 million, respectively. Additionally, these investments also include Consorcios Vial y Vives Mena y Ovalle Ltda. and Ingenieria y Construccion Bechtel Vial y Vives OGP-1 Ltda.

•

In December 2011, the Group sold the investments it maintained in Concesionaria Interoceánica Tramo 2 S.A., Concesionaria Interoceánica Tramo 3 S.A. and Concesionaria IIRSA Norte S.A. for S/.26.7 million, which net of their cost amounting to S/.21.9 million, generated a profit of S/.4.8 million, which is presented in the item “Profit on sale of investments” in the statement of comprehensive income.

•

In 2011, the investment in CONIRSA S.A. was diluted by the receipt of dividends of S/.18.6 million from GyM S.A. (S/.8.1 million in 2010). Additionally, the parent company operations received dividends of S/.16.1 million by IIRSA Sur S.A Tramo 2 and IIRSA Sur S.A. Tramo 3.

•

In 2010, investments in associates resulted in the recognition of S/.11.4 million under the equity method; of which, S/.9.8 million are derived from Concesionaria IIRSA Sur S.A. - Tramo 3, Concesionaria IIRSA Sur S.A. - Tramo 2, Concesionaria IIRSA Norte S.A. and CONIRSA S.A.

•

In 2010, the investment maintained in Oiltanking Investments Bolivia S.A., which carrying amount was S/.5.1 million, was sold for S/.21.9 million and a profit was recognized of S/.16.8 million, which is shown in “Profit on sale of investments” in the income statement.

•

In 2010, the Company completed a spin-off of subsidiary Fashion Center S.A., comprising a plot of land of 8,997.40 m2, in order to contribute it to Promotora Larcomar S.A. Subsequent to this spin-off, the Company sold its entire interest in Fashion Center S.A. for a total of S/.107.162 million, resulting in a gain of S/.57.971 million, shown in “Profit on sale of investments” in the income statement. Prior to this sale, the Company had merged Inversiones Larcomar S.A., a transaction which resulted in the decrease in this investment by S/.5.6 million.

F-62

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

14	PROPERTY, PLANT AND EQUIPMENT

The movement in property, plant and equipment accounts and its corresponding accumulated depreciation for the year ended December 31, 2012 and 2011 is as follows:


	Land			Buildings			Machinery			Vehicles			Furniture and fixtures			Other equipment			Replacement units		In-transit units			Work in progress			Total
	S/.000			S/.000			S/.000			S/.000			S/.000			S/.000			S/.000		S/.000			S/.000			S/.000
At January 1, 2011
Cost		20,260			83,939			497,710			144,596			16,646			74,615			5,384		9,515			30,488			883,153
Accumulated depreciation		—			(11,170	)		(249,578	)		(67,966	)		(9,771	)		(46,644	)		—		—			—			(385,129	)

Net cost		20,260			72,769			248,132			76,630			6,875			27,971			5,384		9,515			30,488			498,024

Net initial cost		20,260			72,769			248,132			76,630			6,875			27,971			5,384		9,515			30,488			498,024
Additions		—			6,393			117,924			80,160			6,621			17,929			630		11,158			46,568			287,383
Acquisition of subsidiary - net cost		—			1,031			45,656			4,930			3,969			1,123			—		—			16,447			73,156
Deductions for sale of assets		—			(2,160	)		(31,625	)		(10,299	)		(1,134	)		(2,829	)		—		(51	)		—			(48,098	)
Adjustments and/or reclassifications for cost – asset disposal		(2,220	)		(29,379	)		(8,473	)		(1,540	)		1,471			1,327			—		(1,472	)		(710	)		(40,996	)
Write-offs and transfers		(366	)		26,441			7,971			4,380			928			(623	)		3,057		(12,228	)		(29,560	)		—
Depreciation charge		—			(5,701	)		(71,960	)		(29,899	)		(4,283	)		(15,180	)		—		—			—			(127,023	)
Depreciation for sales deductions		—			834			25,327			6,782			948			1,843			—		—			—			35,734
Adjustments and/or reclassifications of asset depreciation		—			193			3,793			1,483			(3,222	)		65			—		—			—			2,312
Depreciation for disposals and transfers		—			220			3,759			—			(202	)		165			—		—			—			3,942
Foreign currency translation effect		—			—			—			—			—			—			—		—			2,479			2,479

Net final cost		17,674			70,641			340,504			132,627			11,971			31,791			9,071		6,922			65,712			686,913

At December 31, 2011
Cost		17,674			86,265			629,163			222,227			28,501			91,542			9,071		6,922			65,712			1,157,077
Accumulated depreciation		—			(15,624	)		(288,659	)		(89,600	)		(16,530	)		(59,751	)		—		—			—			(470,164	)

Net cost		17,674			70,641			340,504			132,627			11,971			31,791			9,071		6,922			65,712			686,913

F-63

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

The movement in property, plant and equipment accounts and its corresponding accumulated depreciation for the year ended December 31, 2012 and 2011 is as follows:


	Land		Buildings			Machinery			Vehicles			Furniture and fixtures			Other equipment			Replacement units			In-transit units			Work in progress			Total
	S/.000		S/.000			S/.000			S/.000			S/.000			S/.000			S/.000			S/.000			S/.000			S/.000
At January 1, 2012
Cost		17,674		86,265			629,163			222,227			28,501			91,542			9,071			6,922			65,712			1,157,077
Accumulated depreciation		—		(15,624	)		(288,659	)		(89,600	)		(16,530	)		(59,751	)		—			—			—			(470,164	)

Net cost		17,674		70,641			340,504			132,627			11,971			31,791			9,071			6,922			65,712			686,913

Initial net cost		17,674		70,641			340,504			132,627			11,971			31,791			9,071			6,922			65,712			686,913
Additions		3,713		17,955			136,853			82,363			7,161			29,962			784			28,033			97,393			404,217
Acquisition of subsidiaria - Vial y Vives		—		—			21,745			75			1,547			379			—			—			—			23,746
Acquisition of subsidiaria - Stracon GyM		—		—			24,504			47,233			31			—			—			—			—			71,768
Transfers		—		(608	)		(21,555	)		20,459			(216	)		22,045			1,218			(15,609	)		(65,489	)		(59,755	)
Deduction for sale of assets		—		(5,790	)		(45,868	)		(16,284	)		(633	)		(6,281	)		(63	)		—			—			(74,919	)
Adjustments and/or reclassifications for cost – asset disposal		—		1,791			(3,216	)		1,994			1,675			(1,729	)		(806	)		(23	)		683			369
Depreciation charge		—		(6,664	)		(81,798	)		(53,306	)		(8,738	)		(21,642	)		(47	)		—			—			(172,195	)
Depreciation for sales deductions		—		1,198			34,234			10,987			537			5,704			—			—			—			52,660
Adjustments and/or reclassifications for asset depreciation		—		—			1,821			(1,185	)		5,248			644			5			—			—			6,533
Depreciation for transfers		—		362			22,427			(2,565	)		236			(20,449	)		(11	)		—			—			—
Foreign currency translation effect		—		—			—			—			—			—			—			—			(1,244	)		(1,244	)

Net final cost		21,387		78,885			429,651			222,398			18,819			40,424			10,151			19,323			97,055			938,093

At December 31, 2012
Cost		21,387		99,613			741,626			358,067			38,066			135,918			10,204			19,323			97,055			1,521,259
Accumulated depreciation		—		(20,728	)		(311,975	)		(135,669	)		(19,247	)		(95,494	)		(53	)		—			—			(583,166	)

Net cost		21,387		78,885			429,651			222,398			18,819			40,424			10,151			19,323			97,055			938,093

F-64

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

In 2012 and 2011, additions to cost correspond to acquisition of fixed assets under finance leases or direct acquisition.

In 2012 the sale of fixed assets amounted to S/.23.5 million (S/.6.4 million in 2011), resulting in a profit of S/.1.2 million (profit of S/.0.7 million in 2011), which is shown in the income statement under “other (losses), gains, net”.

In 2012, the Group assessed the classification of certain ítems of property, plant and equipment based on their actual function. As a result, the Group identified the need to reclassify the value of property maintained by the subsidiary Viva GyM from property, plant and equipment to property investments for S/.36 million (S/.2.2 million land and S/.33.8 million building).

Depreciation charged for the year which is depreciation on fixed assets and investment properties is broken down in the income statement as follows:


	2011		2012
	S/.000		S/.000
Cost of services provided		113,063		159,526
Administrative expenses		13,960		13,492

		127,023		173,018

Depreciation distributed to comprehensive income contains S/.1,512 thousand comprising the depreciation for the year on investment properties and the capitalization of S/.689 thousand to inventories under the heading Real Estate work in progress.

The net carrying amount of machinery and equipment, vehicles and furniture and fixtures acquired under finance leases or leaseback agreements are broken down as follows:


	December 31,
	2011			2012
	S/.000			S/.000
Cost		396,100			621,974
Accumulated depreciation		(161,626	)		(268,372	)

Net cost		234,474			353,602

Borrowings are guaranteed with property, plant and equipment for S/.444.6 million (S/.336.8 million as of December 31, 2011).

F-65

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

15	INTANGIBLE ASSETS

The movement of intangible assets and that of their corresponding accumulated amortization, as of December 31, 2012 and 2011, is as follows:


	Goodwill			Trademarks			Concession			Contractual relations with clients			Costs of generated internally software and development costs			Block I and Block V			Development expenses			Land use right		Other assets			Totals
	S/. 000			S/. 000			S/. 000			S/. 000			S/. 000			S/. 000			S/. 000			S/. 000		S/. 000			S/. 000
At January 1, 2011
Cost		46,904			—			365,046			6,391			8,907			96,298			3,623			13,288		—			540,457
Accumulated amortization and impairment		(21,995	)		—			(180,845	)		(2,467	)		(4,404	)		(48,154	)		(3,623	)		—		—			(261,488	)

Net cost		24,909			—			184,201			3,924			4,503			48,144			—			13,288		—			278,969

Net initial cost		24,909			—			184,201			3,924			4,503			48,144			—			13,288		—			278,969
Additions		—			—			25,378			175			17,864			18,029			—			—		21,376			82,822
Acquisition of subsidiary - net cost		—			—			—			10,952			—			—			—			—		—			10,952
Impairment charge		—			—			—			—			(3,436	)		—			—			—		—			(3,436	)
Disposals - cost		—			—			(385	)		—			—			—			—			—		—			(385	)
Amortization charge		—			—			(26,902	)		(2,440	)		(4,400	)		(17,394	)		—			—		(87	)		(51,223	)
Disposal of intangibles - amortization		—			—			98			—			—			—			—			—		—			98

Net final cost		24,909			—			182,390			12,611			14,531			48,779			—			13,288		21,289			317,797

At December 31, 2011
Cost		46,904			—			390,039			17,518			26,771			114,327			3,623			13,288		21,376			633,846
Accumulated amortization and impairment		(21,995	)		—			(207,649	)		(4,907	)		(12,240	)		(65,548	)		(3,623	)		—		(87	)		(316,049	)

Net cost		24,909			—			182,390			12,611			14,531			48,779			—			13,288		21,289			317,797

At January 1, 2012
Net initial cost		24,909			—			182,390			12,611			14,531			48,779			—			13,288		21,289			317,797
Additions		—			—			28,406			—			3,998			4,897			—			—		1,956			39,257
Acquisition of subsidiary - net cost		67,020			75,845			—			33,000			—			—			—			—		—			175,865
Deductions		—			—			(263	)		—			(20	)		—			—			—		(13,962	)		(14,245	)
Transfer		—			—			—			—			—			59,686			—			—		69			59,755
Disposals - cost		—			—			(537	)		—			(7,654	)		—			—			—		(38	)		(8,229	)
Amortization charge		—			(410	)		(31,413	)		(7,147	)		(10,427	)		(21,828	)		—			—		(260	)		(71,485	)
Disposals -amortization		—			—			29			—			6,307			—			—			—		57			6,393

Net final cost		91,929			75,435			178,612			38,464			6,735			91,534			—			13,288		9,111			505,108

At December 31, 2012
Cost		113,924			75,845			417,645			50,518			23,095			178,910			3,623			13,288		9,401			886,249
Accumulated amortization and impairment		(21,995	)		(410	)		(239,033	)		(12,054	)		(16,360	)		(87,376	)		(3,623	)		—		(290	)		(381,141	)

Net cost		91,929			75,435			178,612			38,464			6,735			91,534			—			13,288		9,111			505,108

F-66

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

Goodwill -

Management reviews the results of its businesses based on the type of economic activity carried out. Economic activities which have given rise to goodwill in the Group are construction, electro-mechanical, engineering services and sale of IT equipment and services.

Goodwill per cash-generating unit is broken down as follows:


	December 31,
	2011		2012
	S/.000		S/.000
Construction - Engineering (Note 28 a)		—		53,654
Construction - Mining services (Note 28 b)		—		13,366
Construction - Electromechanical		20,737		20,737
Information goods and services (Note 28 d)		4,172		4,172

		24,909		91,929

Goodwill from the electromechanical engineering business corresponds to the acquisition in prior years of the subsidiary GMA S.A., which was later merged with subsidiary GyM S.A.

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 provisons for impairment was required.

The main criteria used by the Group to determine the value in use are as follows:


	Mining construction services			Engineering construction			Electro- mechanical			IT equipment and services
2011 -
Gross margin		—			—			11.8	%		30.6	%
Growth rate		—			—			1	%		0	%
Discount rate		—			—			14	%		11.3	%

2012 -
Gross margin		10.2	%		38.9	%		11.15	%		34.92	%
Growth rate		5	%		5	%		1	%		1.6	%
Discount rate		14	%		12	%		14	%		11	%

A 14% rate was applied as the discount rate on the expected cash flows from the Electro-mechanical construction business unit.

These assumptions have been used for the analysis of each cash-generating unit (CGU) included in the operating segments for a period of 5 years and considering a recoverable residual value with no growth.

Management determines the budgeted gross margins based on past results and market development expectations. Average growth rates are consistent with those prevailing in the industry. Discount rates used are pre-tax and reflect the specific risk relating to the assessed CGUs.

F-67

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

Concessions -

The intangible asset includes the value attributable to the concession for the Ancón-Huacho-Pativilca road section of the Panamericana Norte highway. The intangibles arising from this concession at December 31, 2012 mainly comprise the EPC contract for S/.98.2 million, highway improvement for S/.31.2 million, and equity trust for S/.7.9 million. By those contracts the Concessionaire has to construct, improve and rehabilitate the road infrastructure over the effective period of the concession.

Amortization of intangible assets -

The amortization of intangibles is distributed in the income statement as follows:


	2011		2012
	S/.000		S/.000
Cost of sales		44,553		60,517
Administrative expenses		6,670		10,968

		51,223		71,485

Block I and V

Comprising the investments in oil production, development and right to enter into concession agreements won by subsidiary GMP S.A., by which rights are obtained to oil and hydrocarbon exploration services for Blocks I and V, with a carrying amount at December 31, 2012 amounting to to S/.82.5 million and S/.9 million, respectively (S/.39.9 million and S/.8.2 million at December 31, 2011, respectively). These blocks are amortized from the period revenue is obtained from their operation until the corresponding agreements reach maturity, that is, in 2021 for Block I and 2023 for Block V.

16	BORROWINGS

This item comprises:


	Total				Current				Non- current
	As of December 31,				As of December 31,				As of December 31,
	2011		2012		2011		2012		2011		2012
	S/.000		S/.000		S/.000		S/.000		S/.000		S/.000
Bank loans		303,250		501,692		161,083		337,196		142,167		164,496
Finance leases		226,598		343,782		69,890		115,623		156,708		228,159

Total debt		529,848		845,474		230,973		452,819		298,875		392,655

Bank loans -

As of December 31, 2012 and 2011 this item comprises bank loans in local and foreign currency for working capital purposes. These obligations bear interest at fixed rates which fluctuate between 2% and 9% (2.5% and 7.7% in 2011).

In April 2005, the subsidiary Norvial S.A. signed with IFC and IDB, respectively, two agreements called “Loan Agreements” by which these multilateral financial institutions agree to provide financing for the engineering, construction, completion and acceptance of the works of the first stage of the Concession Agreement amounting to US$36 million (S/. 123.5 million). As of December 31, 2012, the balance of these loans amounts to S/.47.8 million (S/.50.8 million as of December 31, 2011).

Fair values are based on the cash flows discounted by using borrowing rates of 5.61% and 6.45%.

F-68

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

Subsidiary GMP S.A., maintains a loan with Citibank N.A. as per the loan agreement signed on September 19, 2008 (amended on August 29, 2012), which was applied to the financing of the construction, equipment and operating the new Gas Pariñas Plant of the subsidiary. The major amendments to the original agreement include: an increase in the financed amount to S/.72 million US$28 million, an extension of the repayment period and a reduction of accrued interest. The guarantees given to secure this obligation are: a mortgage on the land on which the Gas Pariñas Plant has been constructed; a pledge on the equipment and assignment of the cash flows to be obtained from sales to customers (Repsol, Llama Gas, Zeta Gas and Herco). Said loan reaches maturity in August 2020 , as per the new conditions agreed upon.

This debt bears interest at Libor (3m) + 1.75%, if the exchange rate, at the installment payment date, remains within the range from S/.2.60 to S/.2.75 per US$1 or (ii) 1.95%, if the above range is not maintained. In order to reduce the exposure to Libor variation, the Company signed an interest rate swap with Citibank N.A., which establishes a fixed rate of 4.80% or 5.05%, based on each of the above cases. At December 31, 2012, the balance of this loan is S/.69.2 million (S/.37.8 million as of December 31, 2011).

In September 2012 subsidiary Viva GyM S.A. has signed financial instrument contracts (forward foreign exchange contracts) to hedge the next 12 monthly foreign currency denominated cash disbursements to be provided by Banco de Crédito del Perú through a line of credit. The purpose of the hedge is to set a fixed exchange rate of the U.S. dollars to be received by the Company, with the loan proceeds obtained from BCP, and consequently, the Company would obtain a fixed amount in Peruvian nuevos Soles to cover the construction costs of a building (Torre Real 8) expressed in said currency.

The total amount subject to hedging is US$3.6 million (broken down in 12 monthly payments of US$300 thousand each). Given the fact that the hedged transaction is considered a highly probable transaction, the initial recognition of this transaction will not affect the the Company’s results for the year. Foreign exchange movements that may have an effect on the Company’s results may arise from the remeasurement of the obligation in foreign currency at each reporting date until its settlement.

The Company also obtained a loan in October 2012 from Banco Continental for a total S/.156 million (US$60 million) at a rate of 4.15%, with maturity in January 2013. This loan was acquired for working capital and the acquisition of new business from its subsidiary GyM Ferrovías S.A. and GyM S.A., respectively.

As of December 31, 2012, the Company maintains unused credit limits for S/.1,728 million, which expire within one year (S/.1,594 million as of December 31, 2011).

Finance lease obligations -

The minimum payments to be made by maturity and present value of the finance lease obligations are as follows:


	December 31,
	2011			2012
	S/.000			S/.000
Up to 1 year		78,572			124,709
From 1 to 5 years		169,647			255,738

		248,219			380,447
Future financial charges on finance leases		(21,621	)		(36,665	)

Present value of the obligations for finance lease contracts		226,598			343,782

F-69

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

The present value of finance lease obligations is as follows:


	December 31,
	2011		2012
	S/.000		S/.000
Up to 1 year		69,890		115,623
From 1 to 5 years		156,708		228,159

		226,598		343,782

Fair value of borrowings -

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


	Carrying amount current and non-current portion				Fair value
	As of December 31,				As of December 31,
	2011		2012		2011		2012
	S/.000		S/.000		S/.000		S/.000
Loans from multilateral organizations		50,795		47,815		64,379		50,567
Other loans		479,053		797,659		486,203		828,208

		529,848		845,474		550,582		878,775

Fair values are based on the cash flows discounted by using borrowing rates of 5.61% and 6.45%.

17	TRADE ACCOUNTS PAYABLE

This item comprises:


	December 31,
	2011		2012
	S/.000		S/.000
Invoices payable		729,639		936,718
Notes payable		24,881		569

		754,520		937,287

As of December 31, 2012 and 2011, invoices payable mainly originate from the acquisition of material, supplies and services for the development of works.

F-70

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

18	OTHER ACCOUNTS PAYABLE

This item comprises:


	December 31,
	2011			2012
	S/.000			S/.000
Advances received from customers		420,975			848,057
Salaries and profit sharing payable		77,074			135,137
Loans from third-parties		27,541			21,559
Deposits in guarantee		6,295			7,539
Account payable for the purchase of fixed assets		4,075			6,370
Post-retirement benefits		1,239			5,593
Unbilled services		—			3,841
Legal claims		—			798
Deferred Income		—			458
Other accounts payables		60,351			38,553

		597,550			1,067,905

Less:
Non-current portion		(58,128	)		(52,776	)

Current portion		539,422			(1,015,129	)

Advances received from customers are discounted from billing, in accordance with the terms of the agreements. These advances mainly comprise:


	December 31,
	2011		2012
	S/.000		S/.000
Projects:
Consorcio Tren Eléctrico Lima		151,595		243,961
Consorcio Rio Mantaro		—		117,315
Ministerio de Transportes y Comunicaciones		43,618		67,366
GyM Chile SPA		—		63,036
Los Cipreses		20,855		53,064
Contrato Cora Cora		—		48,658
EPC Planta Minera Inmaculada		—		44,170
Consorcio Vial La Quinua		34,977		22,463
Los Parques del Agustino 2		—		22,389
Consorcio Rio Urubamba		8,676		15,801
Central Hidroeléctrica Machu Picchu		63,904		15,536
Chilectra S.A.		—		15,389
Southern Perú Cooper Corporation		—		14,640
Inversiones y Construccion GyM		—		13,041
Pezet 961		3,039		11,911
Parque Central Club Residencial		7,819		9,999
Edificio Real 8		—		8,372
Consorcio GyM Conciviles		—		8,307
Los Parques San Martín y Piura		—		7,012
Neo 10 y Real 8-9		26,022		6,539
Consorcio Vial Ipacal		1,481		6,321
Consorcio Vial Sullana		580		5,161
Los Parques de Villa El Salvador		1,592		4,809
Contrato Red Vial 1		—		4,476
Los Parques de Carabayllo		1,239		1,138
Los Parques de Comas		204		204
Los Parques del Agustino		84		384
Rio Pallca		9,562		—
Consorcio Cerro del Águila		7,125		—
Consorcio La Gloria		3,804		—
Oficina de Normalización Previsional		2,818		—
Other projects		31,981		16,595

		420,975		848,057

F-71

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

The fair value of the other short - term accounts payable is similar to their carrying amounts due the fact to the short maturity.

19	OTHER PROVISIONS

The movement of these accounts for 2012 and 2011 is as follows:


	December 31,
	2011			2012
	S/.000			S/.000
Legal claims		6,700			11,380
Contingent liabilities CAM Chile and affiliates		24,466			—
Contingent liabilities Vial y Vives (Note 28)		—			11,130
Provisions for the year for the acquisition of CAM (Note 28)		102,776			35,220
Provision for well closure		—			4,897

		133,942			62,627
Less:
Non-current portion		(109,476	)		(51,315	)

Current portion		24,466			11,312

Legal Claims

Legal claims as of December 31, 2012 and 2011 comprise provisions for labor-related obligations and tax claims recognized by subsidiaries GyM S.A., GMP S.A. and CAM Chile amounting to S/.5 million, S/.3 million and S/.3 million, respectively, see Note 27.

GyM -SUNAT. These provisions have been accounted based on management estimates of the amounts the Company would most likely be required to pay for theses cases. Regarding the tax claims, due to the fact those amounts depend on the tax authority,the Group does not have an estimated timing of when these outflows will take place.

Contingent Liabilities CAM Chile and affiliates

In addition, in 2011, contingent liabilities were maintained from CAM Chile and affiliates involving services to be billed for S/.12.9 million and statutory bonuses and other workers’ benefits amounting to S/.11.5 million. In 2012, given the fact that the contingent liabilities became executable obligations, they were reclassified to other accounts payable. The outflow expected during 2013 amounts to S/.10.7 million and from 2014 to 2016 S/.11.9 million, S/.9.8 million and S/.2.8 million respectively.

Contingent Liabilities Vial y Vives

As a result of the due diligence process, certain labor contingent liabilities were recorded for the acquisition of 74% of the outstanding shares of Vial y Vives. Each of these contingencies was assigned a probability of occurrence based on management and attorney assessments. The expected outflows expected to take place in 2013 amounts to S./.11.1 million.

Provisions for the year for the acquisition of CAM

In 2012 the Company completed a reversal of approximately S/.68 million in provisions that had been accrued in conjunction with labor and tax contingencies identified in conjunction with the purchase price allocation relating to the 2011 acquisition of CAM Chile and affiliates. Such provisions were written off in 2012, as the related labor and tax contingencies expired during the year. (See Note 25).

F-72

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

Provision for well closure

In 1994 and 1995 GMP S.A. (“GMP”) contracted with Perupetro to provide hydrocarbon extraction services in Block I and Block V located in northwestern Peru. The contract states that GMP is responsible for the permanent abandonment of the following wells:

(i) wells drilled by GMP that have not been productive; and

(ii) old wells that have been seized or produced during the term of the contracts and that have mechanical problems or that no longer have oil reserves.

The permanent abandonment of these wells will begin in 2013 and will be implemented based on the following prioritization:

(i) wells drilled by GMP in Block I and Block V that are not productive; and

(ii) productive wells operated by GMP that are currently abandoned due to mechanical problems, high water production, low oil production or wells with a level of uneconomical production reserves.

A preliminary estimate was made of the wells that should be permanently closed: 70 wells from Block I and 15 wells from Block V. The closure processes will start in 2013 and be completed in 2021 and 2023, respectively. As of December 31, 2012, the discounted value of the estimated provision for closure activities for the 85 wells amounted to S/.4.9 million at a discount rate of 1.78%. Management expects an outflow related to the provision recorded in 2013 amounting to S/.0.4 million and from 2014 to 2017 amounting to S/.0.5 million. We are under no obligation for the remaining 315 wells that are not currently in production.

It should be noted that at the end of the effective periods of the agreements for Blocks I and V, there will be greater information and certainty regarding the amount of wells that should be permanently closed.

The gross movement of other provision is broken down as follows:


Other provisions	Legal claims		Contingent liabilities from acquisitions			Provisions for the for the acquisition of CAM			Provision for well closure		Total
	S/.000		S/.000			S/.000			S/.000		S/.000
At January 1, 2011		6,700		—			—			—		6,700
Additions		—		—			—			—		—
Additions from business combinations		—		24,466			102,776			—		127,242

At December 31, 2011		6,700		24,466			102,776			—		133,942

Additions		4,680		—			—			4,897		9,577
Additions from business combinations		—		11,130			—			—		11,130
Reclassifications		—		(24,466	)		—			—		(24,466	)
Write-offs		—		—			(67,556	)		—		(67,556	)

At December 31, 2012		11,380		11,130			35,220			4,897		62,627

20	SHAREHOLDERS’ EQUITY

Capital -

As of December 31, 2012 and 2011, the authorized, subscribed and paid-in capital, according to the Company’s bylaws and amendments, is represented by 558,284,190 common shares at S/.1.00 par value each.

F-73

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

As of December 31, 2012 the Company’s capital structure is as follows:


Percentage of individual interest in capital	Number of shareholders		Total percentage of interest
Up to 1.00		1,135		19.90
From 1.01 to 5.00		14		39.83
From 5.01 to 10.00		3		19.22
Over 10		1		21.05

		1,153		100.00

As of December 31, 2012 the year-end quoted price of the Company’s shares was S/.9.70 per share and a trading frequency of 95% (quoted price of S/.6.66 per share and a trading frequency of 90%).

At the General Shareholders’ Meeting held on March 31, 2007, the Company established the policy of maintaining in portfolio up to 2% of its own shares for the purpose of selling them in the open market and using the cash proceeds for the sale to partially pay annual bonuses of the principal executives of the Group. As of December 31, 2011, in application of said policy, the Company maintained 200,000 shares as treasury shares; however, at December 31, 2012 the Company decided to change its policy because all shares were sold and no longer maintains the above-mentioned shares.

b) Legal reserve -

In accordance with Peruvian Company Law, the legal reserve is formed by the transfer of 10% of the annual net profit, up to a maximum of 20% of the paid-in capital. In the absence of profits or freely available reserves, this legal reserve must be applied to offset losses but it has to be replenished with the profits of subsequent years. This reserve can also be capitalized but its subsequent replenishment is equally mandatory.

c) Share issue premiums -

This item mainly includes both changes in the price paid and the carrying amount of acquisitions/sales of treasury shares.

d) Other comprehensive income -

Comprising the fair value of the variable-fixed interest rate hedge signed by GMP S.A. as well as the adjustments of foreign currency translation related to foreign subsidiaries. These movements are shown net of income tax, except for the translation adjustment.

The analysis of the movement of provisions is as follows:


Other provisions	Cash flow hedge			Translation adjustment			Increase in fair value of available-for sale assets		Total
	S/.000			S/.000			S/.000		S/.000
At January 1, 2010		(3,783	)		—			—		(3,783	)
Additions *		(325	)		(382	)		7,460		6,753

At December 31, 2010		(4,108	)		(382	)		7,460		2,970

Additions *		660			(3,940	)		—		(3,280	)

At December 31, 2011		(3,448	)		(4,322	)		7,460		(310	)

Additions *		(2,251	)		(1,155	)		—		(3,406	)

At December 31, 2012		(5,699	)		(5,477	)		7,460		(3,716	)

F-74

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

*	Amounts in the above table represent only amounts attributable to the controlling interest in the Company. Below is the movement included in additions for each year:


	2010			2011			2012
	S/.000			S/.000			S/.000
Controlling interest		6,753			(3,280	)		(3,406	)
Non-controlling interest		(17	)		35			(982	)
Adjustment for actuarial gains and losses, net of tax		0			0			(3,678	)

Total value in OCI		6,736			(3,245	)		(8,066	)

21	DEFERRED INCOME TAX

Deferred income tax is broken down by its estimated reversal period as follows:


	December 31,
	2011			2012
	S/.000			S/.000
Deferred income tax asset:
Reversal expected in the following 12 months		21,636			35,574
Reversal expected after 12 months		27,408			35,504

Total deferred tax asset		49,044			71,078

Deferred income tax liability:
Reversal expected in the following 12 months		(8,220	)		(38,464	)
Reversal expected after 12 months		(20,916	)		(43,715	)

Total deferred tax liability		(29,136	)		(82,179	)

Deferred income tax asset (liability), net		(19,908	)		(11,101	)

The gross movement of the deferred income tax item is as follows:


	2011			2012
	S/.000			S/.000
As of January 1		(32,828	)		19,908
Acquisition of subsidiary (CAM Group)		3,869			—
Acquisition of subsidiary (Vial y Vives)		—			(14,195	)
Acquisition of subsidiary (Stracon GyM)		—			(6,653	)
Credit (charge) to results		41,795			(8,666	)
Tax charged to other comprehensive income		(298	)		(1,158	)
Other increases		7,370			(337	)

Total as of December 31		19,908			(11,101	)

The movement of deferred tax assets and liabilities in the year, without taking into account the offsetting of balances, is as follows:

F-75

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


Deferred income tax liability	Difference from depreciat- ion rates			Fair value gains			Results from deferred works			Investments in subsidiaries			Difference from depreciate- ion rates on leases			Others			Total
	S/.000			S/.000			S/.000			S/.000			S/.000			S/.000			S/.000
At January 1, 2011		9,329			(413	)		16,768			7,581			10,266			5,634			49,165
Charge (credit) to results		(4,872	)		56			(20,686	)		(5,580	)		—			(6,040	)		(37,122	)
Acquisition of subsidiary CAM Group (Note 28)		6,545			—			6,692			—			—			4,569			17,806
Charge (credit) to other comprehensive income		53			—			—			—			—			(873	)		(820	)
Other increases		—			—			—			—			—			107			107

At December 31, 2011		11,055			(357	)		2,774			2,001			10,266			3,397			29,136

Charge (credit) to results		1,335			—			22,346			(3,389	)		(1,221	)		7,120			26,191
Acquisition of subsidiary Stracon GyM (Note 28)		2,184			—			4,472			—			—			—			6,656
Acquisition of subsidiary Vial y Vives (Note 28)		—			14,195			—			—			—			—			14,195
Charge (credit) to other comprehensive income		(2,640	)		—			2,805			3,557			2			(4,335	)		(611	)
Other increases		—			—			—			—			—			6,612			6,612

At December 31, 2012		11,934			13,838			32,397			2,169			9,047			12,794			82,179


Deferred income tax asset	Provisions		Accelerated tax depreciation			Tax losses			Impairment loss			Results from deferred work		Vacation leave		Others			Total
			S/.000			S/.000			S/.000			S/.000		S/.000		S/.000			S/.000
At January 1, 2011		1,692		4,919			6,809			40			—		1,322		1,555			16,337
Charge (credit) to results		4,695		1,918			(4,883	)		—			737		53		2,153			4,673
Acquisition of subsidiary
CAM Group (Note 28)		7,442		—			2,074			7,103			—		—		5,056			21,675
Charge (credit) to other comprehensive income		—		(659	)		—			1,742			—		—		28			1,111
Other increases		—		—			—			—			—		—		5,248			5,248

At December 31, 2011		13,829		6,178			4,000			8,885			737		1,375		14,040			49,044

Charge (credit) to results		1,996		3,759			12,471			(8,653	)		13,456		1,506		(7,010	)		17,525
Acquisition of subsidiary (Note 28)		—		4			—			—			—		—		—			4
Charge (credit) to other comprehensive income		—		154			—			—			—		—		1,614			1,768
Other increases		134		299			—			—			—		55		2,249			2,737

At December 31, 2012		15,959		10,394			16,471			232			14,193		2,936		10,893			71,078

F-76

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

As of December 31, 2012, total tax losses amounted to S/.93 million, of which S/.12.5 million are expected to be applied in 2013, S/.18.7 million in 2014 and the remaining balance in the following periods.

22	WORKERS’ PROFIT SHARING

As established under current legislation, workers’ profit sharing of Graña y Montero S.A.A., consortiums and local subsidiaries is 5% of the net income. This share is deductible for the purposes of income tax.calculation.

In the case of the Dominican Republic, workers’ profit sharing rate is 10%. In the specific case of Chile, workers’ profit sharing is a component of remuneration and not a determinable percentage of profit. In Brazil and Colombia workers’ profit sharing does not exist.

In 2012, workers’ profit sharing amounted to S/.22.7 million (S/.23.6 million in 2011).

The distribution of workers’ profit sharing in the income statement at December 31 is as follows:


	2011		2012
	S/.000		S/.000
Cost of sales		19,134		18,633
Administrative expenses		4,431		4,088

Total at December 31		23,565		22,721

23	EXPENSES BY NATURE

For the years ending December 31 this item comprises the following:


	Cost of sales		Adminis- trative expenses		Total
	S/.000		S/.000		S/.000
2010:
Purchase of goods		31,585		—		31,585
Personnel charges		596,635		75,128		671,763
Services provided by third-parties		899,170		35,351		934,521
Taxes		30,256		326		30,582
Other management charges		180,076		3,813		183,889
Depreciation		86,723		5,259		91,982
Amortization		47,660		3,282		50,942
Variation of inventories		185,741		—		185,741

		2,057,846		123,159		2,181,005

2011:
Purchase of goods		28,468		—		28,468
Personnel charges		1,056,356		114,267		1,170,623
Services provided by third-parties		1,379,555		40,730		1,420,285
Taxes		4,190		191		4,381
Other management charges		233,549		23,764		257,313
Depreciation		113,063		13,960		127,023
Amortization		44,553		6,670		51,223
Variation of inventories		749,783		—		749,783

		3,609,517		199,582		3,809,099

F-77

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


	Cost of sales		Administrative expenses		Total
	S/.000		S/.000		S/.000
2012:
Purchase of goods		252,186		—		252,186
Personnel charges		1,458,715		125,558		1,584,273
Services provided by third-parties		1,389,371		51,378		1,440,749
Taxes		7,238		863		8,101
Other management charges		292,740		52,425		345,165
Depreciation		159,526		13,492		173,018
Amortization		60,517		10,968		71,485
Impairment (inventories and accounts receivable)		11,192		2,496		13,688
Variation of inventories		888,334		—		888,334

		4,519,819		257,180		4,776,999

24	FINANCIAL INCOME AND EXPENSES

For the years ending December 31 these items included the following:


	2010			2011			2012
	S/.000			S/.000			S/.000
Financial income:
Interest on loans granted to related parties		2,177			875			3,005
Interest on short-term bank deposits		4,809			8,749			2,007
Commercial income / other income		1,056			3,943			51
Interest on loans		1,002			1,470			14,644
Income from reimbursement of performance bond		1,595			1,108			968
Commissions and guarantees		89			626			290
Interest on third-party loans		—			—			350
Recovered interest - INSS Brazil		—			—			2,589
Exchange difference gains		134,089			165,534			263,669
Other		—			—			71

		144,817			182,305			287,644

Financial expenses:
Interest expense:
- Bank loans		7,140			8,636			25,897
- Finance lease		2,746			8,476			19,119
- Multilateral loans		8,124			7,086			6,422
- Third party loans		—			—			1,333
Expense from exchange losses		125,874			163,657			242,543
Other financial expenses		12,913			9,043			7,441
Less capitalized interest		(1,991	)		(8,442	)		(4,780	)

		154,806			188,456			297,975

25	OTHER INCOME AND EXPENSES

At the acquisition date of CAM (Note 28-c), as part of the purchase price allocation process and based on external lawyers reports, we accounted for S/.102.7 million for contingent liabilities mainly related to labor and tax issues considered as posible and probable as stated by IAS 37, which have expiration dates according to legal requirements between 2012 and 2016.

F-78

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

At December 31, 2012 the amount recognized as other income and expenses amounted to S/.75,944 thousands (S/.3,616 thousands and S/.2,684 thousands in 2011 and in 2010, respectively). This primarily reflects the write-off of provisions that were recognized in 2011 for the business combination with CAM, the liabilities that expired according with the corresponding applicable laws in each country during the year amounting to S/.68 million relating to labor-related and tax contingencies (from Brazil and Colombia for S/.32 million and S/.8 million, respectively) and trade liabilities amounting to S/.28 million. The probability of payment became remote during the course of 2012, as the statute of limitations for such issues expired.

26	INCOME TAX EXPENSES

In accordance with current legislation, each Group company is individually subject to the taxes applicable to it. Management considers that it has determined the taxable income under the general regime of income tax in accordance with the current tax legislation in each country.

The income tax expense shown in the consolidated income statement comprises:


	2010		2011			2012
	S/.000		S/.000			S/.000
Current tax:
- Current tax on profit of the year		102,133		184,410			145,909
- Prior year adjustments		—		(1,168	)		—

Total current tax		102,133		183,242			145,909

Deferred tax:
- Generation and reversal of temporary differences		22,209		(41,795	)		8,666

Total deferred tax		22,209		(41,795	)		8,666

Income tax expense		124,342		141,447			154,575

The Group’s income tax on profit before taxes differs from the theoretical amount that would have resulted from applying the weighted-average income tax rate applicable to the profit of the consolidated companies, as follows:


	2010			2011			2012
	S/.000			S/.000			S/.000
Profit before income tax		401,028			477,645			520,826

Income tax by applying local applicable tax rates on profit generated in the respective countries		120,308			143,294			156,248
Tax effect on:
- Non-taxable income		(74,849	)		(67,353	)		(11,550	)
- Non-deductible expenses		78,883			65,506			19,756
- Prior year adjustment		—			—			(7,432	)
- Others		—			—			(2,447	)

Income tax charge		124,342			141,447			154,575

Peruvian tax authorities have the right to examine, and, if necessary, amend the income tax determined by the Company in the last four years, as from January 1 of the year after the date when the tax returns are filed (years subject to examination). Years 2008 through 2012 are subject to examination by the tax authorities. Since differences may arise over the interpretation by the tax authorities of the regulations applicable to the Company, it is not possible at present to estimate if any additional tax liabilities will arise as a result of any eventual examinations. Any additional tax, fines and interest, if they occur, will be recognized in the results of the period when such differences with the tax authorities are resolved. Management considers that no significant liabilities will arise as a result of these possible tax examinations.

F-79

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

As established under regulations in force in Peru, for purposes of determining income tax and the general sales tax, transfer pricing must be taken into account for operations with related parties and/or tax havens, which must have documentation and information supporting the methods and valuation criteria applied in their determination. Peruvian tax authorities are entitled to request such information from the taxpayer.

Temporary tax on net assets -

The temporary tax on net assets is applied to third category income generators subject to the Peruvian Income Tax General Regime. Effective 2012, the tax rate is 0.4%, applicable to the amount of the net assets exceeding S/.1 million.

The amount effectively paid may be used as a fiscal credit against payments on account of income tax under the General Regime or against the provisional tax payment of the income tax of the related period.

The weighted-average tax rate was 29.68% (29.61% in 2011). The increase in the effective rate as compared to the previous year is due to the effect of the permanent differences in the income tax calculation.

27	CONTINGENCIES, COMMITTMENTS AND GUARANTEES

As of December 31, 2012 the Group presents the following contingencies:

Tax contingencies -

During the course of 2012, Graña y Montero S.A.A. was subject to tax audit for fiscal 2007, 2008 and 2009. As a result of this tax records examination, the Peruvian tax authorities (SUNAT) have issued resolutions of determination and penalties against which the Company has filed the respective appeals, which are pending resolution and the outcome of which Management and legal counsel consider will be favorable.

As a result of this tax records examination for fiscal years 1999 and 2001 of subsidiary GyM S.A., SUNAT has issued resolutions of determination and penalties totaling S/.29 million.

The Company has made a provision of S/.5 million which is the best estimate of the expected future expenses to be incurred any potential tax contingency and is included in the account “Other provisions”. Management considers that the outcome of the remaining court actions will be favorable, based on the analysis of their characteristics, performed by its legal counsel.

Other contingencies -

As of December 31, 2012, civil court actions have been brought against the Company mainly relating to claims of Municipalities in respect of work execution with no municipal authorization and failure to pay municipal rights for S/.4.7 million (S/.7.7 million in 2011).

Also, similar actions have been brought against joint-controlled businesses in which the Company has an interest, mainly relating to work executed without the respective municipal authorization; these actions total approximately S/.0.8 million (S/.2 million in 2011).

The Company’s Management considers that the above-mentioned court actions will be declared unfounded, and therefore, no liabilities will arise in addition to those already paid as of December 31, 2012.

F-80

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

In February 2003 the Company was served notice of General Management Resolution No.004-2003-GG-OSITRAN issued by the Peruvian regulator of infrastructure and public transport investment - (OSITRAN) by which payment of S/.250,000 plus interest was ordered on the grounds of alleged withholdings of the Transport Fund (Fondo Vial) by the Company. To date, the Company has challenged said resolution and the conciliation hearing date remains to be set by the Administrative Court. Management considers that the outcome of this claim will be favorable to the Company and will not affect future financial results.

Commitments and Guarantees

As of December 31, 2012, the Group maintains guarantee commitments with different financial institutions securing transactions for US$170.8 million and S/.6.3 million.

28	BUSINESS COMBINATIONS

Acquisition of Vial y Vives

In October 2012, the Group’s subsidiary GyM S.A. acquired 74% of equity shares in Vial y Vives S.A.C., an entity based in Chile, which is mainly engaged in carrying out activities related to construction, engineering works, civil work projects and electromechanical assemblies, architecture, installations. This acquisition is part of the Group’s plan to increase its presence in markets that present high growth potential, as in Chile, and in attractive industries, such as mining and energy.

The price paid by GyM for the acquisition of Vial y Vives amounted to US$55.6 million (equivalent to S/.142 million) and resulted in the recognition of goodwill for S/.53.7 million, at the acquisition date, which is detailed as follows:


	S/.000			US$000
Cash and cash equivalents		10,445			4,094
Marketable securities		61,664			24,172
Trade accounts recievable, net		10,862			4,258
Other accounts receivable		4,002			1,569
Inventories		2,182			855
Prepaid expenses		1,020			400
Property, plant and equipment		23,746			9,309
Intangibles (“Order Backlog” and Brand)		98,869			38,757
Investments		15,128			5,930
Deferred income tax		535			210
Accounts payable from related parties		(9,550	)		(3,744	)
Trade accounts payable		(3,806	)		(1,492	)
Other accounts payable		(17,115	)		(6,709	)
Provisions		(4,965	)		(1,946	)
Advances from clients		(47,085	)		(18,457	)
Contingent liabilities		(11,130	)		(4,363	)
Deferred income tax liability		(14,730	)		(5,774	)

Fair value of net assets		120,072			47,069

Non-controlling interest (26.42%)		(31,757	)		(12,449	)
Goodwill		53,654			21,033

Total paid for acquisition		141,969			55,653

Cash payment for the acquisition		141,969			55,653
Cash and cash equivalent of the acquired subsidiary		(10,445	)		(4,094	)

Direct cash outflow from acquisition		131,524			51,559

The income and the profit generated for the period from the acquisition date to December 31, 2012 amounted to S/.23.9 million and S/.1.7 million, respectively.

F-81

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

If Vial y Vives had been consolidated from January 1, 2012, the income and results generated would have been S/.59.6 million and S/.7.9 million, respectively.

Acquisition of Stracon GyM -

On March 1, 2012 GyM obtained control over certain business which it carry jointly with an entity called Stracon S.A.C. (hereinafter Stracon), as well as the control over certain interests owned by Stracon both individually and with other partners.

This acquisition was made effective through an entity that GyM and Stracon formed for this purpose. In fact, both entities established Stracon GyM S.A. (hereinafter Stracon - GyM), over which GyM exercises control and to which both the above-mentioned companies contributed with equity packages comprising various assets and liabilities associated with the mining industry.

This acquisition is part of the Group’s strategy to group in one single entity all businesses related to the mining industry, including existing businesses that were conducted jointly with Stracon, own business, and business owned by Stracon conducted with third parties. This strategy is intended to generate synergies, economies of scale and tax efficiencies from the integration of the mining-related businesses and taking advantage of the individual experience of both entities now conducting this restructured business.

The structure of this transaction consisted of transactions made by both entities to obtain a certain percentage of interest in Stracon - GyM, and an additional contribution of GyM. As a result of the several contributions that each party engages to make , the share capital structure of Stracon - GyM was attributed to shareholders as follows: 74.15% to GyM and 25.85% to Stracon. GyM has control over the overall operation and it applies IFRS 3 to account for this transaction.

The consideration paid by GyM for the purchase of Stracon - GyM is comprised of the fair value of net assets contributed plus a cash amount for a total of US$16.4 million (equivalent to S/.42 million, see Note 1-c) and resulting in the recognition of goodwill of S/.13.4 million at the acquisition date, is as follows:


	S/.000			US$000
Cash and cash equivalents		885			347
Trade accounts receivable, net		120,184			47,131
Other accounts receivable		3,862			1,515
Inventories		16,674			6,539
Prepaid expenses		24			9
Property, plant and equipment		206,153			80,844
Intangibles (“Order Backlog” and customer relationships)		9,976			3,912
Deferred income tax assets		674			264
Other assets		36			14
Financial obligations		(64,058	)		(25,121	)
Trade accounts payable		(39,267	)		(15,399	)
Accounts payable to related parties		(81,820	)		(32,086	)
Other accounts payable		(1,316	)		(516	)
long-term liabilities		(126,202	)		(49,491	)
Deferred income tax liability		(7,327	)		(2,873	)

Fair value of net assets		38,478			15,089

Non-controlling interest (25.85%)		(9,947	)		(3,901	)
Goodwill		13,366			5,242

Consideration given for the acquisition		41,897			16,430

Consideration given for the acquisition		41,897			16,430
Book value of net assets transferred		(24,994	)		(9,802	)

		16,903			6,628
Cash paid in 2011		13,894			5,448
Cash paid in 2012		3,009			1,180
Cash and cash equivalent of the acquired subsidiary		(885	)		(347	)

Direct cash outflow from acquisition		2,124			833

F-82

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

Acquisition of Compañía América de Multiservicios Limitada - CAM -

On January 19, 2011, CAM Holding SPA and Inversiones y Construcción GyM Limitada, two subsidiaries created by the Group to carry out this transaction, signed an agreement of “Assignment of Capital Stock” with Enersis S.A. and Chilectra S.A. (the “selling parties”) under which they transfered their respective holdings of 99.958802% and 0.041197%, respectively, in the capital stock of Compañía América de Multiservicios Limitada - CAM (hereinafter CAM). As consideration, Group subsidiaries paid the sellers an initial price of US$20.2 million, subject to adjustments based on several variables, such as changes in equity of CAM between the date the price was set and the date the transaction was executed.

CAM is en entity based in Chile and formed in 1998 with three business units: energy consumption measurement, implementation of electric power work and logistical services, that are provided directly or through subsidiaries operating in 5 countries in South America (Chile, Argentina, Brazil, Peru and Colombia).

On February 24, 2011, the CAM purchase transaction was closed. Immediately following the closing, the Company sold to a partner 25% of the capital stock of CAM under the same terms and conditions under which it was acquired. Such partner paid US$5.0 million for the 25% interest. The final purchase price paid by the Group was reduced by both the effect of the incoming partner, as well as certain seller adjustments to the final purchase price. Taking into account these adjustments, the price paid by the Group for the 75% interest in CAM’s capital stock amounted to US$10.8 million.

This purchase has been performed as part of the Group’s strategy to position its investments in Chile, and enter into profitable business segments which generate an increase in the operations of the Group.

The Group distributed the price paid based on the fair values of the assets acquired and liabilities assumed on February 24, 2011, the date of acquisition. A breakdown of this calculation is shown as follows:


	S/.000			US$000
Fair value of assets and liabilities of CAM:
Cash and cash equivalents		60,675			22,497
Trade and other accounts receivable		220,783			81,862
Inventories		57,150			21,190
Other accounts receivable		20,311			7,531
Long-term trade accounts receivable		27,696			10,269
Property, plant and equipment		73,156			27,125
Intangibles (“Order Backlog”)		10,952			4,061
Deferred income tax		21,675			8,037
Other assets		13,010			4,824
Short- and long-term loans		(35,781	)		(13,267	)
Trade and other accounts payable		(155,464	)		(57,643	)
Contingent liabilities		(24,466	)		(9,072	)
Provisions		(102,776	)		(38,107	)
Deferred income		(12,946	)		(4,800	)
Other accounts payable		(15,076	)		(5,410	)
Long-term trade accounts payable		(29,675	)		(11,003	)
Deferred income tax liability		(17,806	)		(6,602	)
Other long-term liabilities		(12,529	)		(4,645	)

Fair value of net assets		98,889			36,847

Non-controlling interest (25%) (*)		(24,722	)		(9,167	)
Gain on acquistion		(45,152	)		(16,742	)

Total paid for purchase		29,015			10,938

Cash payment for the acquisition		29,015			10,938
Cash and cash equivalent of the acquired subsidiary		(60,675	)		(22,497	)

Direct cash inflow from acquisition		(31,660	)		(11,559	)

(*)

Non-controlling interest was determined as the proportion of assets acquired and liabilities assumed from CAM.

F-83

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

This acquisition has generated a gain of S/.45.2 million which resulted in, as established by IFRS 3, a review of the values initially attributed to assets and liabilities of the acquired entity. As of the date of the financial statements, the Group completed this review and in accordance with Note 4.2, concluded its distribution process of the amount paid for the purchase and accordingly, it recognized this gain in the income statement under “Business combination gain”.

The contribution of CAM to the income and profit of the Group from February 24 to December 31, 2011 amounts to S/.466.7 million and S/.29.4 million, respectively. If CAM had been consolidated with effect from January 1, 2011, income and profit would have been S/.558.2 million and S/.21 million, respectively.

Acquisition of Telefónica Servicios Digitales S.A. (TSD) -

In December 2010, the subsidiary GMD S.A. acquired all of the share capital of Telefónica Servicios Digitales S.A. (TSD), an entity engaged in digitalizing and automating bank processes. The purpose of the purchase was to generate a wider range of activities for the Group, by creating a business line related to digitalization and certification of documents; the market mainly consists of companies in the financial industry and public-sector entities. The price paid for this transaction amounted to US$3.6 million (equivalent to S/.10 million) and resulted in the recognition of goodwill for S/.4.2 million which is broken down as follows:


	S/.000
Cash and cash equivalent		2,290
Trade and other receivables, net		2,152
Other receivables		19
Property, plant and equipment		700
Intangibles (“Order Backlog”)		2,302
Deferred taxes		(329	)
Trade and other payables		(1,270	)

		5,864

Goodwill		4,172

Total cost of business combination		10,036

Cash payment for the acquisition		10,036
Cash and cash equivalent of the acquired subsidiary		(2,290	)

Direct cash outflow from acquisition		7,746

Revenues and profit or loss generated for 2010 amounted to S/.45 thousand and S/.10 thousand, respectively.

If TSD had been consolidated as from January 1, 2010, the revenue and profits or loss generated would have been S/.8.4 million and S/.2 million, respectively.

29	DIVIDENDS

At the General Shareholders’ meeting held on March 30, 2012, it was agreed to distribute dividends amounting to S/.86,722,434 (S/.0.156 per share), which correspond to the profits of 2011.

F-84

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

Additionally, at the General Shareholders’ meeting held on March 30, 2011, it was agreed to distribute dividends for S/.55,015,923 (S/.0.098 per share), which correspond to the profits of 2010.

F-85

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

A dividend of December 31, 2012, for S/.0.155 per share, amounting to S/.87,015,231, will be submitted to the Annual General Shareholders’ meeting which will be held on March 26, 2013. The financial statements do not reflect these dividends payable.

30	EARNINGS PER SHARE

Basic earnings per share are calculated by dividing the net profit of the period attributable to common shareholders of the Group by the weighted average number of common shares in issue during the year. No diluted earnings per common share were calculated because there are no common or investment shares with potential dilutive effects (i.e., financial instruments or agreements that give the right to obtain common or investments shares); therefore, it is equal to basic earnings per share. The basic earnings per share are broken down as follows:


	2011		2012
	S/.000		S/.000
Profit attributable to the controlling interest in the Company		289,076		289,954

Weighted average number of shares in issue at S/.1.00 each, at December 31, 2012 (S/.0.7 each at December 31, 2011 and at December 31, 2010)		558,284,190		558,284,190

Basic and diluted earnings per share (in S/.)		0.518		0.519

31	TRANSACTIONS WITH NON-CONTROLLING INTERESTS

(a)

Acquisition of an additional interest in a subsidiary

In May 2012, the Group acquired the remaining 26.99% of the shares issued of Survial S.A. at a sales price of S/.4,393 thousand. The Group holds now 99.99% of the total share capital of Survial S.A. The carrying amount of the Group’s non-controlling interests at the acquisition date was S/.4,757,000. The Group derecognized these non-controlling interests for S/.4,757,000 and recorded and increase in capital attributable to parent owners of S/.364 thousand.

The effect of the changes in the interest held by Survial S.A. in the share capital attributable to the Company’s controllers is broken down as follows:


	At December
	31, 2012
	S/.000
Carrying amount of acquired non-controlling interest		4,757
Consideration paid to non-controlling interest		(4,393	)

Lower consideration paid attributable to the Company’s controllers		364

(b)

Disposal of interests in subsidiary with no loss of control

In January 2012, the Company sold 0.17% (S/.708,000) of its total interest of 93.84% held in GyM S.A. for S/.555,000. The carrying amount of the non-controlling interest in GyM S.A. at the disposal date was S/.25,682,000 (that is, 6.16% interest).

In January 2012, the Company sold 0.40% (194,000) of its total interest of 99.97% held in Concar S.A. for S/.638,000. The carrying amount of the non-controlling interest in Concar S.A. at the disposal date was S/.14,500 (that is, 0.03% interest).

F-86

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

The effect of the changes in the interests held by GyM S.A. and Concar S.A. in the share capital attributable to the Company’s controllers is broken down as follows:


	At December
	31, 2012
	S/.000
Carrying amount of non-controlling interest sold		(902	)
Consideration received from non-controlling interests		1,193

Increase in equity of the Company’s controllers		291

There were no transactions with non-controlling interest in 2010 and 2011.

(c)

Effects of transactions with non-controlling interests on equity attributable to Parent owners for the year ended December 31, 2012.


	At December
	31, 2012
	S/.000
Changes in equity attributable to Company controllers arising from:
acquisition of additional interest in subsidiary		(364	)
Disposal of interest in a subsidiary without loss of control		291

Decrease in equity of the Company controllers		(73	)

(d)

Contributions of non-controlling shareholders

Comprising the contributions made by the partners of subsidiary Viva GyM S.A. for their real estate projects. At December 31 the amounts contributed were the following:


	2010			2011			2012
	S/.000			S/.000			S/.000
Contributions		18,377			—			30,224
Returns of contributions		(19,450	)		(13,328	)		(4,128	)

Increase in equity of non-controlling interest		(1,073	)		(13,328	)		26,096

Contribution returns mainly correspond to profit attributable to the party for the housing project El Agustino I, which has been completed and most of the apartments have been delivered to the customers.

(e)

Subsidiaries constitution -

This item corresponds to the constitution of subsidiaries GyM Ferrovías and Concesionaria La Chira. In 2011, capital contributions were made for these entities amounting to S/.30,776 thousand, which comprise 100% of GyM Ferrovías amounting to S/.25,026 thousand and 50% of Concesionaria La Chira amounting to S/.5,750 thousand. In 2012, the remaining 50% of the capital contribution related to Concesionaria La Chira was made, which amounted to S/.5,750 thousand.

(f)

Debt capitalization -

Comprising the capitalization of debt arising from obligations maintained by Stracon GyM with its investors, GyM and Stracon S.A.C., amounting to S/.12.2 millons.

F-87

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

(g)

Dividends

At December 31, 2012 and 2011 dividends were distributed for S/.37.5 million and S/.14.9 million, respectively. In 2010, no dividends were distributed.

32	RESTATEMENT

The Company has restated its consolidated statement of cash flows for the year ended December 31, 2012 to correct two errors. These errors had no effect on the net increase (decrease) in cash of the Company during 2012 and no effect on the Company’s statement of financial position, income statement, statement of comprehensive income or statement of changes in shareholders’ equity for 2012.

The first correction is to appropriately reflect the cash flow impact of the Stracon GyM acquisition transaction completed in March 2012. See note 28b. This transaction was consummated primarily through GyM’s and Stracon’s contribution of assets and liabilities to Stracon GyM, and therefore was substantially a non-cash transaction. The assets and liabilities contributed by the Company to Stracon GyM had been held on the Company’s books prior to this transaction. As a result, the contribution of these assets and liabilities should not have produced an effect on the statement of cash flow as they had no effect on cash and were not part of the changes in balance sheet accounts from one period to another. However, the Company erroneously reflected those assets and liabilities in the statement of cash flow by making eliminations to certain amounts of the cash flow statement, as if the assets and liabilities represented new assets and liabilities acquired during the period. Because these assets and liabilities existed prior to this transaction, there was no need to eliminate these non-cash amounts in the mechanical calculation of the determination of the cash effect of changes in assets and liabilities during the period.

The effect of correcting this error was an increase in net cash flows provided by operating activities of S./103,427, an increase in net cash applied to investing activities of S./95,675 and a decrease of net cash applied to financing activities of S./ 7,752. There was no effect on the net increase (decrease) in cash for 2012.

The second correction is to appropriately reflect in the statement of cash flows the impact of entering into new finance leases during 2012. See note 16b. Finance leases entered into by the Company are non-cash transactions.

In order to reflect finance leases as non-cash transactions, these transactions must be eliminated in the preparation of the statement of cash flows. In the process of accounting for the finance leases entered into during 2012, the Company erroneously applied an incorrect elimination amount to the statement of cash flows.

This error resulted in a misstatement of net cash provided by (applied to) investing activities and net cash provided by (applied to) financing activities. The effect of correcting this error was an increase in net cash applied to investing activities of S./102, 059 and a decrease of net cash applied to financing activities of S./102,059. There was no effect on the net increase (decrease) in cash for 2012.

These two errors also impact the statement of cash flow segment disclosures in note 5. The Engineering and Construction segment cash flow statement for the year ended December 31, 2012 has also been restated to reflect the above described corrections.

In the aggregate, the two errors had no effect on the net increase (decrease) in cash of the Company during 2012. In addition, all underlying transactions were properly recorded in the statement of financial position, income statement, statement of comprehensive income and statement of changes in shareholders’ equity for 2012.

The Company has restated its statement of cash flows for the year ended December 31, 2012 as follows:


	As Reported			Correction			Restated
	S/.000			S/.000			S/.000
Net cash provided by operating activities		439,302			103,427			542,729
Net cash (applied to) provided by investing activities		(202,253	)		(197,734	)		(399,987	)
Net cash applied to financing activities		(115,122	)		94,307			(20,815	)

(Net decrease) net increase in cash		121,927			—			121,927
Cash and cash equivalents at the beginning of the year		658,187			—			658,187

Cash and cash equivalents at the end of the year		780,114			—			780,114

NON-CASH TRANSACTIONS:
Capitalization of retained earnings		167,485			—			167,485
Debt capitalization		12,232			—			12,232
Acquisition of assets through finance leases		—			123,815			123,815
Acquisition of Stracon GyM		—			24,994			24,994

33	EVENTS AFTER THE DATE OF THE STATEMENT OF FINANCIAL POSITION

On February 27, 2013 the Group entered into a syndicated loan for US$150 million (S/.387.5 million). As of February 28, 2013, the group had US$90 million (S/.232.7 million) outstanding under this loan. On March 5, 2013, the Group used part of the proceeds from this loan to repay in full US$60 million bridge loan reflected in its short-term indebtedness.

Dividends for the year ended December 31, 2012 of S/.0.156 per share, totalling S/.86,986,244, were approved at the General Shareholders’ meeting held on March 26, 2013.

No other subsequent events have occurred that are required to be disclosed in the Notes to the financial statements.

F-88

Supplementary Data (Unaudited)

Oil and Gas Producing Activities

In accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification Topic 932, “Extractive Activities—Oil and Gas,” and regulations of the U.S. Securities and Exchange Commission (SEC), the Company has included certain supplemental disclosures about its oil and gas exploration and production operations.

A. Reserve Quantity Information

Graña y Montero Petrolera S.A. net proved reserves in the fields in which they operate and changes in those reserves for operations are disclosed below. The net proved reserves represent best estimate of proved oil and natural gas reserves. For, 2012 reserve estimates have been evaluated by independent qualified reserves consultants, Netherland, Sewell & Associates, Inc. (NSAI). For 2011 and 2010 the reserve estimates were prepared by internal engineers. The estimates for all years presented conform to the definitions found in FASB ASC Topic 932 and Rule 4-10(a) of Regulation S-X.

Proved oil reserves are those quantities of oil, which, by analysis of geosciences and engineering data, can be estimated with reasonable certainty to be economically producible, based on prices used to estimate reserves, from a given date forward from known reservoirs, and under existing economic conditions, operating methods, and government regulation prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain.

The term “reasonable certainty” implies a high degree of confidence that the quantities of oil actually recovered will equal or exceed the estimate. To achieve reasonable certainty, the Company’s engineers and independent petroleum consultants relied on technologies that have been demonstrated to yield results with consistency and repeatability. The technologies and economic data used to estimate the Company’s proved reserves include, but are not limited to, well logs, geologic maps, seismic data, well test data, production data, historical price and cost information and property ownership interests.

F-89


PROVED RESERVES (1)	Total						Peru
	Oil (MBBL)			Gas (MMCF)			Oil (MBBL)			Gas (MMCF)

Proved developed and undeveloped reserves, December 31, 2009		6,178			18,927			6,178			18,927
Revisions of previous estimates		(524	)		1,907			(524	)		1,907
Improved recovery		0			0			0			0
Purchases		0			0			0			0
Production		(434	)		(1,806	)		(434	)		(1,806	)
Sales in place		0			0			0			0

Proved developed and undeveloped reserves, December 31, 2010		5,220			19,028			5,220			19,028
Revisions of previous estimates		(72	)		1,261			(72	)		1,261
Improved recovery		0			0			0			0
Purchases		0			0			0			0
Production		(438	)		(1,844	)		(438	)		(1,844	)
Sales in place		0			0			0			0

Proved developed and undeveloped reserves, December 31, 2011		4,710			18,445			4,710			18,445
Revisions of previous estimates		(186	)		3,483			(186	)		3,483
Improved recovery		0			0			0			0
Purchases		0			0			0			0
Production		(513	)		(2,013	)		(513	)		(2,013	)
Sales in place		0			0			0			0

Proved developed and undeveloped reserves, December 31, 2012		4,011			19,916			4,011			19,916

(1)

Proved reserves estimated in oil and gas properties located in Block I and V (Talara) under two service contracts with Petroperu S.A. The rights to produce hydrocarbons expire in December 2021 for Block I and October 2023 for Block V. The proved reserves estimated in this report constitute all of the proved reserves under contracts by Graña y Montero Petrolera S.A.

(2)

The revisions in reserves estimates are based on new information obtained as a result of drilling activities and workovers. The principal factors affecting the revisions to the reserves estimates are changes in the historical relation between crude oil and natural gas found in our productive wells as well as changes in our drilling activities program and workovers, based on geological and engineering studies undertaken. In 2010 and 2011, the decreases in crude oil estimates were principally due to changes in well production. In 2012, the decrease in crude oil reserves estimates was principally due to changes in the drilling activities program based on geological and engineering studies, which changes consisted of the elimination of four drilling locations in Block V, partially offset by six new drilling locations in Block I. During 2010, 2011 and 2012, natural gas reserves estimates increased as a result of the higher natural gas/crude oil relationship in the wells drilled over the last years.

RESERVE QUANTITY INFORMATION FOR THE YEAR ENDED DECEMBER 31, 2010

Total

Peru

Oil (MBBL)

Gas
(MMCF)

Oil (MBBL)

Gas
(MMCF)

Proved developed reserves

Beginning of year

3,388

8,588

3,388

8,588

End of year

3,389

9,470

3,389

9,470

Proved undeveloped reserves

Beginning of year

2,790

10,339

2,790

10,339

End of year

1,831

9,558

1,831

9,558

F-90

RESERVE QUANTITY INFORMATION FOR THE YEAR ENDED DECEMBER 31, 2011

Total

Peru

Oil (MBBL)

Gas
(MMCF)

Oil (MBBL)

Gas
(MMCF)

Proved developed reserves

Beginning of year

3,389

9,470

3,389

9,470

End of year

3,277

9,070

3,277

9,070

Proved undeveloped reserves

Beginning of year

1,831

9,558

1,831

9,558

End of year

1,433

9,375

1,433

9,375

RESERVE QUANTITY INFORMATION FOR THE YEAR ENDED DECEMBER 31, 2012

Total

Peru

Oil (MBBL)

Gas
(MMCF)

Oil (MBBL)

Gas
(MMCF)

Proved developed reserves

Beginning of year

3,277

9,070

3,277

9,070

End of year

2,762

10,091

2,762

10,091

Proved undeveloped reserves

Beginning of year

1,433

9,375

1,433

9,375

End of year

1,249

9,825

1,249

9,825

B. Capitalized Costs Relating to Oil and Gas Producing Activities

The following table sets forth the capitalized costs relating to the Company’s natural gas and crude oil producing activities for the years indicated:

Total

2010

2011

2012

(in US$ thousands)

Proved properties

Mineral property, wells and related equipment

29,393

31,837

53,255

Drilling and Works in progress and Replacement Units

8,760

15,081

12,834

Total Proved Properties

38,154

46,919

66,090

Unproved properties

Total Property, Plant and Equipment

38,154

46,919

66,090

Accumulated depreciation, depletion, and amortization, and valuation allowances

(6,781

)

(8,662

)

(10,990

)

Net capitalized costs

31,373

38,256

55,099

F-91

C. Costs Incurred in Oil and Natural Gas Property Acquisition, Exploration and Development Activities

The following table sets forth costs incurred related to the Company’s oil and natural gas activities for the years ended December 31, 2010, 2011 and 2012 (in thousands):


	Total
	2010			2011			2012
	(in US$ thousands)

Acquisition costs of properties
Proved		0			0			0
Unproved		0			0			0

Total acquisition costs (1)		0			0			0

Exploration costs		0			0			0
Development costs		(6,642	)		(8,534	)		(10,869	)

Total		(6,642	)		(8,534	)		(10,869	)

(1)	The company has not incurred in any cost related to Oil and Gas property acquisition during 2010, 2011 and 2012.

F-92

D. Results of Operations for Oil and Natural Gas Producing Activities

The results of operations for oil and natural gas producing activities, excluding overhead costs and interest expenses, are as follows for the years indicated:


	Total
	2010			2011			2012
	(in US$ thousands)

Revenues (1)		31,862			44,221			52,172


Production Costs		(9,807	)		(12,812	)		(13,802	)
Costs of Labor		(1,286	)		(1,703	)		(2,024	)
Repairs and maintenance		(567	)		(773	)		(911	)
Materials, supplies, and fuel consumed and supplies utilized		(3,768	)		(4,318	)		(4,482	)
External services, insurances, security and others		(2,352	)		(3,097	)		(2,975	)
Operation office and staff expenses		(1,834	)		(2,921	)		(3,410	)

Depreciation, Depletion and Amortization expenses		(6,858	)		(8,635	)		(10,949	)

Income (loss) before income taxes		15,197			22,774			27,421

Income tax expense (2)		(4,559	)		(6,832	)		(8,226	)

Results of operations from producing activities		10,638			15,942			19,195

(1)	Revenues after deductions for Graña y Montero Petrolera S.A.’s share of government royalties according to contract obligations but prior to other any deductions. There are no sales or transfers to the Company’s other operations.

(2)	30% of income before income tax.

E. Standardized Measure of Discounted Future Net Cash Flows

The standardized measure of discounted future net cash flows, related to the proved reserves is based on estimates of net proved reserves and the period during which they are expected to be produced. Future cash inflows are computed by applying the twelve month period unweighted arithmetic average of the price as of the first day of each month within that twelve month period, unless prices are defined by contractual arrangements, after royalty share of estimated annual future production from proved oil and gas reserves.

Future production and development costs to be incurred in producing and further developing the proved reserves are based on year end cost indicators. Future income taxes are computed by applying year end statutory tax rates.

F-93


	Total
	2010			2011			2012
	(in US$ thousands)

Future Cash inflows		330,772			432,181			375,655

Future production costs		(83,249	)		(75,402	)		(94,793	)
Future development costs		(40,014	)		(35,915	)		(43,663	)
Future production and development costs		(123,263	)		(111,317	)		(138,455	)

Future income tax expenses		(62,253	)		(96,259	)		(71,160	)

Future Net cash flows		145,256			224,605			166,040

10% annual discount for estimates timing of cash flows		(54,024	)		(79,001	)		(49,887	)

Standardized measure of discounted Future Net Cash Flows		91,232			145,604			116,152

(1)

For oil volumes, per barrel prices after deductions of Graña y Montero Petrolera S.A.’s share government royalties used in determining future cash inflows for the years ended December 31, 2010, 2011 and 2012 were US$ 62.00, US$ 86.29 and US$ 87.25, respectively. For gas volumes, gas price is linked to the oil price according to the gas purchase contract (US$ 1.29 per MCF are held constant throughout the lives of the properties).

(2)	Production costs and developments costs relating to future production of proved reserves are based on the continuation of existing economic conditions. Future decommissioning costs are included.

(3)	Taxation is computed using the appropriate year-end statutory corporate income tax rates.

(4)	Future net cash flows from oil production are discounted at 10% regardless of assessment of the risk associated with its producing activities.

F. Changes in standardized Measure of Discounted Future Net Cash Flows


	Year Ended December 31,
	2010			2011			2012
	(in US$ thousands)

Standardized measure of discounted Future Net Cash Flows, beginning of the year.		84,683			91,232			145,604

Revenue less production and other costs		(41,669	)		(57,033	)		(65,974	)

Net changes in future development costs		10,867			7,149			18,441

Changes in price, net of production costs		44,387			80,540			(15,482	)

Development cost incurred		6,642			8,534			10,869

Revisions of previous quantity estimates		(22,513	)		4,637			(2,245	)

Accretion of discount		19,658			26,085			23,931

Net change in income taxes		(3,444	)		(23,444	)		10,452

Timming difference and other		(7,379	)		7,903			(9,444	)

Standardized measure of discounted Future Net Cash Flows, end of the year.		91,232			145,604			116,152

F-94

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

GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES

UNAUDITED CONDENSED INTERIM CONSOLIDATED STATEMENT OF FINANCIAL POSITION


ASSETS

	Note		At December 31, 2012			At March 31, 2013
			(unaudited)
			S/.000			S/.000
Current assets
Cash and cash equivalents				780,114			653,040
Available-for-sale financial asset				5,005			6,063
Trade accounts receivable				444,593			316,656
Outstanding work in progress				525,251			623,920
Accounts receivable from related parties		8		49,761			45,679
Other accounts receivable				436,451			428,349
Inventories				747,416			752,870
Prepaid expenses				22,839			25,486

Total current assets				3,011,430			2,852,063


Non-current assets
Long-term trade accounts receivable				305,887			411,676
Other long-term accounts receivable				87,484			63,316
Investments in associates		9		37,446			59,799
Property investment				35,972			36,385
Property, plant and equipment		10		938,093			918,621
Intangible assets		10		505,108			505,995
Derivative financial instruments				128			35
Deferred income tax asset				71,078			84,215

Total non-current assets				1,981,196			2,080,042




				4,992,626			4,932,105


LIABILITIES AND SHAREHOLDERS’ EQUITY

	Note		At December 31, 2012			At March 31, 2013
			(unaudited)
			S/.000			S/.000
Current liabilities
Borrowings		11		452,819			349,424
Trade accounts payable				937,287			807,123
Accounts payable to related parties		8		42,734			43,327
Current taxes				158,834			98,536
Other accounts payable				1,015,129			1,036,879
Other provisions		12		11,312			6,842

Total current liabilities				2,618,115			2,342,131


Non-current liabilities
Borrowings		11		392,655			576,005
Other accounts payable				52,776			79,991
Other provisions		12		51,315			52,549
Derivative financial instruments				18,696			16,702
Deferred income tax liability				82,179			76,007

Total non-current liabilities				597,621			801,254

Total liabilities				3,215,736			3,143,385


Equity		13
Capital				558,284			558,284
Legal reserve				107,011			111,657
Other reserves				6,656			3,869
Unrealized result				(3,716	)		(581	)
Retained earnings				723,972			696,364

Equity attributable to controlling interest in the Company				1,392,207			1,369,593
Non-controlling interest				384,683			419,127

Total equity				1,776,890			1,788,720




				4,992,626			4,932,105

The accompanying notes on pages 7 to 24 are an integral part of the condensed interim consolidated financial statements.

F-95

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

GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES

UNAUDITED CONDENSED INTERIM CONSOLIDATED INCOME STATEMENT


			For the three-month period
			ended March 31,
	Note		2012			2013
			(unaudited)
			S/.000			S/.000

Revenues from construction activities				676,657			845,259
Revenues from services provided				379,049			361,630
Revenues from real estate and sale of goods				44,713			61,184

				1,100,419			1,268,073


Cost of construction activities		14		(603,734	)		(726,937	)
Cost of services provided		14		(315,405	)		(299,605	)
Cost of goods and others sold		14		(26,993	)		(41,719	)

				(946,132	)		(1,068,261	)

Gross profit				154,287			199,812

Administrative expenses		14		(62,392	)		(76,181	)
Other income				12,712			8,519
Profit from the sale of investments				627			—
Other (losses) gains, net				—			(438	)

Operating profit				105,234			131,712


Financial expenses				(43,820	)		(84,457	)
Financial income				46,205			61,648
Share of the profit or loss in associates under the equity method of accounting				—			14,738

Profit before income tax				107,619			123,641
Income tax		15		(35,548	)		(40,218	)

Profit for the period				72,071			83,423


Profit attributable to:
Controlling interest in the Company				65,230			64,347
Non-controlling interest				6,841			19,076

				72,071			83,423


Attributable profit				65,230			64,347


Weighted average number of shares in issue at S/.1.00 each at March 31)				558,284,190			558,284,190


Basic and diluted earning per share (S/.)				0.117			0.115

The accompanying notes on pages 7 to 24 are an integral part of the condensed interim consolidated financial statements.

F-96

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

GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES

UNAUDITED CONDENSED INTERIM CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME


	For the three-month period
	ended March 31,
	2012			2013
	(unaudited)
	S/.000			S/.000

Profit for the period		72,071			83,423


Items that will be reclassified subsequently to statement of income -
Cash flow hedge:
Gain (loss) arising during the period net of tax (expense)		388			2,156
Translation adjustment		5,245			2,803

		5,633			4,959

Items that will not be reclassified subsequently to statement of income -
Actuarial losses, net of taxes		(919	)		(1,103	)

Total comprehensive income		4,714			3,856

Comprehensive income for the period		76,785			87,279


Comprehensive income attributable to:
Company controlling shareholders		68,355			67,482
Non-controlling interest		8,430			19,797

		76,785			87,279

The accompanying notes on pages 7 to 24 are an integral part of the condensed interim consolidated financial statements.

F-97

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

GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES

UNAUDITED CONDENSED INTERIM CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY FOR THE PERIODS ENDED MARCH 31, 2012 AND MARCH 31, 2013


	Attributable to the Company’s controlling shareholders
	Capital		Legal reserve		Premium for issue of shares			Other comprehensive income			Retained earnings			Total			Non-controlling interest			Total
	S/.000		S/.000		S/.000			S/.000			S/.000			S/.000			S/.000			S/.000

Balances at January 1 , 2012		390,488		78,104		4,880			(310	)		715,860			1,189,022			264,064			1,453,086

Profit for the period		—		—		—			—			65,230			65,230			6,841			72,071
Cash flow hedge		—		—		—			369			—			369			19			388
Actuarial losses, net of taxes		—		—		—			—			(919	)		(919	)		—			(919	)
Translation adjustment		—		—		—			3,675			—			3,675			1,570			5,245

Comprehensive income for the period		—		—		—			4,044			64,311			68,355			8,430			76,785

Transactions with shareholders:
- Dividend distribution		—		—		—			—			(86,722	)		(86,722	)		(13,844	)		(100,566	)
- Contributions of non-controlling interest		—		—		—			—						—			14,736			14,736
- Effect of Stracon GyM consolidation		—		—		—			—			—			—			3,455			3,455
- Acquisition of Stracon G y M with contributions		—		—		—			—			—			—			9,947			9,947
- Capitalization		167,485		—		—			—			(167,485	)		—			—			—
- Sale and purchase of treasury shares		140		—		1,292			—			—			1,432			—			1,432
- Consolidation of subsidiary - LQS		—		—		—			—			—			—			10,604			10,604
- Other		171		—		(171	)		—			1,299			1,299			—			1,299

Total transactions with shareholders		167,796		—		1,121			—			(252,908	)		(83,991	)		24,898			(59,093	)

Balances at March 31, 2012		558,284		78,104		6,001			3,734			527,263			1,173,386			297,392			1,470,778


Balance at January 1, 2013		558,284		107,011		6,656			(3,716	)		723,972			1,392,207			384,683			1,776,890

Net profit for the period		—		—		—			—			64,347			64,347			19,076			83,423
Cash flow hedge		—		—		—			2,048			—			2,048			108			2,156
Actuarial losses, net of taxes		—		—		—			—			(1,103	)		(1,103	)		—			(1,103	)
Translation adjustment		—		—		—			2,190			—			2,190			613			2,803

Comprehensive income for the period		—		—		—			4,238			63,244			67,482			19,797			87,279

Transactions with shareholders:
Transfer to legal reserve		—		4,646		—			—			(4,646	)		—			—			—
- Dividend distribution		—		—		—			—			(86,986	)		(86,986	)		(1,465	)		(88,451	)
- Contributions of non-controlling interest		—		—		—			—			—			—			23,495			23,495
- Acquisition of non-controlling interest of GMD, VIVA and Concar		—		—		(2,787	)		—			—			(2,787	)		(542	)		(3,329	)
- Deconsolidation of subsidiary - LQS		—		—		—			—			—			—			(6,841	)		(6,841	)
- Other		—		—		—			—			(323	)		(323	)		—			(323	)

Total transactions with shareholders		—		4,646		(2,787	)		—			(91,955	)		(90,096	)		14,647			(75,449	)

Balances at March 31, 2013		558,284		111,657		3,869			522			695,261			1,369,593			419,127			1,788,720

The accompanying notes on pages 7 to 24 are an integral part of the condensed interim consolidated financial statements.

F-98

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

GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES

UNAUDITED CONDENSED INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS


	For the three-month period
	ended March 31,
	2012			2013
	(unaudited)
	S/.000			S/.000

CASH FLOWS FROM OPERATING ACTIVITIES
Profit before taxes		107,619			123,641
Adjustment to net results not affecting cash flows from operating activities
Depreciation		37,383			45,752
Amortization of other assets		16,243			21,981
Write-off of other provisions		(11,953	)		(3,870	)
Share of the profit or loss in associates under the equity method		—			(14,738	)
Gains from sales of property, plant and equipment		(713	)		(246	)
Foreign exchange losses on operating activities		2,129			1,776
Net changes in assets and liabilities:
Decrease (increase) in trade accounts receivable		(8,141	)		28,684
Increase in other accounts receivable		(152,373	)		(73,426	)
Decrease (increase) in accounts receivable from related parties		(24,260	)		4,082
(Increase) in inventories		(54,300	)		(5,973	)
(Increase) decrease in prepaid expenses and other assets		19,612			(2,947	)
(Decrease) increase in trade accounts payable		86,073			(129,822	)
(Decrease) increase in other accounts payable		53,327			(22,746	)
Increase (decrease) in other payables to related parties		(57,353	)		593
(Decrease) in current income tax		(92,342	)		(119,826	)
Increase in other provisions		2,359			635
Payment for purchase of intangibles - Concessions		(10,453	)		(6,626	)

Net cash applied to operating activities		(87,143	)		(153,076	)


CASH FLOWS FROM INVESTING ACTIVITIES
Sale of property, plant and equipment		2,618			598
Payment for purchase of properties investment		(203	)		(762	)
Dividends received		—			1,285
Payment for purchase of intangibles		(11,663	)		(4,579	)
Payment for purchase of fixed assets		(71,589	)		(54,150	)

Net cash applied to investing activities		(80,837	)		(57,608	)


CASH FLOWS FROM FINANCING ACTIVITIES
Loans received		137,108			386,087
Amortization of loans received		(95,676	)		(303,574	)
Payment of interest		(6,175	)		(11,067	)
Dividends paid to non-controlling interest		(13,844	)		(1,465	)
Acquisition of interest in subsidiary in non-controlling interest		—			(3,329	)
Capital contribution of non-controlling interest		14,736			22,004
Re-purchase of shares		1,432			—

Net cash provided from financing activities		37,581			88,656

Net decrease in cash		(130,399	)		(122,028	)
Cash (outflows) inflows from LQS consolidation		1,625			(3,270	)
Exchange losses on cash and cash equivalents		(2,129	)		(1,776	)
Cash and cash equivalents at the beginning of the period		658,187			780,114

Cash and cash equivalents at the end of the period		527,284			653,040


Non-cash transactions:
Acquisition of assets under finance lease		1,380			8,533
Dividends declared (Note 17)		86,722			86,986
Capitalization		167,485			—
Increase of participation in associate (Note 9)		—			1,491
Net assets transferred for acquisition to Stracon GyM		24,994			—

The accompanying notes on pages 7 to 24 are an integral part of the condensed interim consolidated financial statements.

F-99

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

GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2012 (UNAUDITED) AND 2013

1	GENERAL INFORMATION

The Company is the parent company of the Graña y Montero Group (hereinafter the Group) and its principal activity is the holding of 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 Group companies; it is also engaged in the leasing of offices to Group companies and third parties.

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 operation), real estate businesses and technology services.

These condensed interim consolidated financial statements as of March 31, 2013 have been prepared and authorized for issuance by the Chief Financial Officer on June 3, 2013.

2	BASIS OF PREPARATION

These condensed interim consolidated financial statements for the three-month period ended March 31, 2013 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, 2012, 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, 2012, except for income taxes, which for the interim period have been recognized applying the tax rate that would be applicable for 2013.

IFRS and amendments to IFRS applicable for the first time for the period covered in these interim financial statements. -

New IFRS or amendments to IFRS mandatory from January 1, 2013 have been considered by the Group in the preparation of these interim consolidated financial statements; however, they have not resulted in changes in the prior-year accounting policies. Major new IFRS or amendments to IFRS relevant to the Group activities are as follows:

•

IFRS 7, ‘Financial instruments: Disclosures’ as amended in October 2010. The IASB modified the disclosures required so that the users of the financial statements may assess the risk exposure related to financial asset transfers and the effect of these risk on the entity’s financial position. This standard did not result in significant changes in the disclosures in the interim consolidated financial statements.

•

IFRS 10, “Consolidated financial statements” – The application of this standard has not resulted in changes in the consolidation criteria applied by the Group.

F-100

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

•

IFRS 11, “Joint arrangements” – The application of this standard has not resulted in changes in the criteria applied by the Group in the recognition of interests in joint arrangements. Until 2012, the Group’s interest in these types of arrangements, mostly joint operations, were recognized as joint operations within the scope of IAS 31. As a result of the assessment of the assets and obligations for the liabilities arising from contracts, the Group has arrived at the conclusion that its interest in those contracts continue to be classified as joint operations. Therefore, the Group recognizes in its financial statements its share in the assets, liabilities, revenues and expenses of this type of contracts.

•

IFRS 12, “Disclosures of interests in other entities”. This standard did not result in significant changes in the disclosures in interim consolidated financial statements.

•

IFRS 13, ‘Fair value measurement’, aims to improve consistency and reduce complexity by providing a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across IFRSs. The requirements do not extend the use of fair value accounting but provide guidance on how it should be applied where its use is already required or permitted by other standards within IFRSs. See changes in disclosures in interim consolidated financial statements in note 4.3.

•

Amendment to IAS 1, ‘Presentation of financial statements’ relating to other comprehensive income. The major change resulting from this amendment is the requirement for entities to group the items of “other comprehensive income” (OCI) depending on whether they are reclassifiable or not to the statement of comprehensive income. See changes on disclosures in OCI.

•

IAS 19, ‘Employee benefits’ was amended in June 2011 by the IASB. The amendments eliminate the corridor approach and recognize financial expenses on a net basis. The adoption of this standard did not result in significant changes in the disclosures in interim consolidated financial statements nor have a material impact on the Group’s financial position or performance.

•

IAS 28, ‘Investments in Associates and Joint Ventures’. It was amended in May 2011 by the IASB. The new standard includes guidelines to recognize joint ventures and associates under the equity method. The adoption of this standard did not result in significant changes in the disclosures in interim consolidated financial statements nor have a material impact on the Group’s financial position or performance.

4	FINANCIAL RISK MANAGEMENT

4.1 Financial risk factors

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, 2012. 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.

F-101

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

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, except for changes in the structure of the Group’s liabilities, resulting from an increase in the long-term debt relating to a syndicated loan which matures in 2018 (Note 11); the proceeds of this debt were used to repay a short-term loan and to finance investment activities of subsidiary GyM Ferrovías.

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
	S/.000		S/.000		S/.000		S/.000		S/.000

As of December 31,2012
Borrowing (except forfinance leases) (*)		343,072		82,980		62,992		25,440		514,484
Finance leases (*)		124,709		103,373		130,246		22,119		380,447
Trade accounts payable		937,287		—		—		—		937,287
Other accounts payable		340,547		38,135		—		—		378,682
Accounts payable torelated parties		42,734		—		—		—		42,734

		1,788,349		224,488		193,238		47,559		2,253,634


As of March 31, 2013
Borrowing (except forfinance leases) (*)		238,646		101,241		251,361		25,818		617,066
Finance leases (*)		129,094		42,645		118,215		72,543		362,497
Trade accounts payable		807,123		—		—		—		807,123
Other accounts payable		398,190		3,618		29,303		—		431,111
Accounts payables torelated parties		43,327		—		—		—		43,327

		1,616,380		147,504		398,879		98,361		2,261,124

(*)	Includes interest.

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.

F-102

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

As of March 31, 2013 and at December 31, 2012 the gearing ratio was as follows:


	At December 31, 2012			At March 31, 2013
	S/.000			S/.000

Total borrowings		845,474			925,429
Less: Cash and cash equivalents		(780,114	)		(653,040	)

Net debt		65,360			272,389

Total equity		1,776,890			1,788,720

Total capital		1,842,250			2,061,109


Gearing ratio		0.04			0.13

The gearing ratio is maintained within the limits set by Group Management, between 0.04 and 1.00. The increase in this ratio resulted from a slight increase in debt ratios and a decrease in cash and cash equivalent balances that were used in investments within the Group.

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.

•

The only financial instruments measured at fair value by the Group are interest rate swaps (variable to fixed), forward foreign exchange contracts (mostly euros and U.S. dollars) and available-for-sale investments. The measurement at fair value of these instruments corresponds to the characteristics of Level 2 and has been determined based on the present value of discounted future cash flows. During the three-month period ended March 31, 2013 there were no changes in the levels of measurement of financial instruments at fair value.

The carrying amount of cash and cash equivalents corresponds to its fair value. The Group considers that the carrying amount of short-term accounts receivable and payable approximates fair value. The fair value of financial liabilities 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 Group for similar financial instruments.

Fair value hierarchy -

The following table presents the Group’s financial assets and liabilities that are measured at fair value as of March 31, 2013.


	Level 1		Level 2		Level 3		Total
	S/.000		S/.000		S/.000		S/.000
Assets:
Derivative financial instruments		—		35		—		35

Total assets		—		35		—		35

F-103

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


	Level 1		Level 2		Level 3		Total
	S/.000		S/.000		S/.000		S/.000

Liabilities:
Derivative financial instruments - Cashflow hedging		—		16,702		—		16,702

Total liabilities		—		16,702		—		16,702

There were no transfers between Levels 1, 2 and 3 during the period.

Valuation techniques used to derive Level 2 fair values -

Level 2 hedging derivatives comprise forward foreign exchange contracts and interest rate swaps. These forward foreign exchange contracts have been fair valued using forward exchange rates that are quoted in an active market. Interest rate swaps are fair valued using forward interest rates extracted from observable yield curves. The effects of discounting are generally insignificant for Level 2 derivatives.

Group’s valuation processes -

The Corporate General Manager reviews the fair value of derivatives instruments by using the information provided by local financial institutions. Management performs this review at each reporting date. This information is reviewed at first by subsdiriaries’ management, and subsequently by the Corporate General Manager.

The Group has its financial instruments only in Level 2.

5	CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

The 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, 2012, with the exception of changes in estimates that are required in determining the provision for income taxes for this interim period.

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 year.

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.

F-104

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

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.

F-105

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

Assets and liabilities by operating segments


	Engineering and construction		Infrastructure												Parent Company Operations
	Engineering and construction		Energy		Toll Roads		Mass transit		Water treatment		Real estate		Technical services		Parent Company Operations		Eliminations			Consolidated
	S/.000		S/.000		S/.000		S/.000		S/.000		S/.000		S/.000		S/.000		S/.000			S/.000
As of December 31, 2012
Assets -
Cash and cash equivalents		423,332		30,650		90,644		28,312		68		73,004		85,287		48,491		326			780,114
Available-for-sale financial assets		—		—		—		—		—		—		—		5,005		—			5,005
Trade accounts receivable		181,107		26,922		6,560		20		43,692		19,336		166,895		61		—			444,593
Work in progress receivable		417,073		—		11,722		15,029		—		—		81,427		—		—			525,251
Accounts receivable from related parties		67,913		—		300		159		134		4,867		52,243		304,812		(380,667	)		49,761
Other accounts receivable		306,744		16,783		17,970		6,326		—		13,479		40,444		34,705		—			436,451
Inventories		145,301		8,287		—		6,419		—		523,722		64,048		1,392		(1,753	)		747,416
Prepaid expenses		5,882		1,309		583		7,220		—		1,589		5,149		1,107		—			22,839

Total current assets		1,547,352		83,951		127,779		63,485		43,894		635,997		495,493		395,573		(382,094	)		3,011,430


Accounts receivable - long term		—		—		—		305,887		—		—		—		—		—			305,887
Other accounts receivable - long term		11,256		14,696		13,833		11,206		3,720		6,803		24,274		1,696		—			87,484
Investments in associates		113,601		—		—		—		—		17,151		2		801,824		(895,132	)		37,446
Investment properties		—		—		—		—		—		35,972		—		—		—			35,972
Property, plant and equipment		539,018		205,853		2,034		3,365		—		4,470		109,259		76,317		(2,223	)		938,093
Intangible assets		197,205		95,283		146,186		7,830		2,406		772		24,461		14,855		16,110			505,108
Derivative financial instruments		—		—		—		—		—		128		—		—		—			128
Deferred income tax asset		14,751		—		6,184		8,287		—		6,110		34,190		—		1,556			71,078

Total non-current assets		875,831		315,832		168,237		336,575		6,126		71,406		192,186		894,692		(879,689	)		1,981,196

Total assets		2,423,183		399,783		296,016		400,060		50,020		707,403		687,679		1,290,265		(1,261,783	)		4,992,626


Liabilities-
Borrowings		119,960		16,216		14,226		—		8,271		43,216		96,015		154,915		—			452,819
Trade accounts payable		663,454		21,996		744		15,111		27		70,571		163,495		1,889		—			937,287
Accounts payable to related parties		42,973		1,610		13,970		290,601		15,763		9,231		46,376		14,189		(391,979	)		42,734
Current taxes		110,515		4,506		1,977		873		167		8,614		28,187		3,995		—			158,834
Other accounts payable		650,079		10,640		68,658		223		—		131,967		144,373		9,189		—			1,015,129
Other provisions		—		401		—		—		—		—		10,911		—		—			11,312

Total current liabilities		1,586,981		55,369		99,575		306,808		24,228		263,599		489,357		184,177		(391,979	)		2,618,115


Borrowings		180,857		97,777		48,513		—		—		49,657		12,427		3,424		—			392,655
Other accounts payable		—		14,640		—		—		—		12,858		24,681		597		—			52,776
Other provisions		16,133		7,558		—		—		—		—		27,624		—		—			51,315
Derivative financial instruments		—		5,999		—		12,697		—		—		—		—		—			18,696
Deferred income tax liability		63,858		2,563		24		—		722		68		9,634		5,310		—			82,179

Total non-current liabiilities		260,848		128,537		48,537		12,697		722		62,583		74,366		9,331		—			597,621

Total liabilities		1,847,829		183,906		148,112		319,505		24,950		326,182		563,723		193,508		(391,979	)		3,215,736

Equity attributable to controlling interest in the Company		472,097		192,411		90,124		60,416		12,535		147,054		103,015		1,086,774		(772,219	)		1,392,207
Non-controlling interest		103,257		23,466		57,780		20,139		12,535		234,167		20,941		9,983		(97,585	)		384,683

Total Liabilities and Equity		2,423,183		399,783		296,016		400,060		50,020		707,403		687,679		1,290,265		(1,261,783	)		4,992,626

F-106

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

Assets and liabilities by operating segments


	Engineering and Construction		Infrastructure												Parent company operation
	Engineering and Construction		Energy		Toll roads		Mass Transit		Water treatment		Real Estate		Technical Services		Parent company operation		Eliminations			Consolidated
	S/.000		S/.000		S/.000		S/.000		S/.000		S/.000		S/.000		S/.000		S/.000			S/.000
As of March 31, 2013
Assets -
Cash and cash equivalents		381,636		21,658		93,566		16,508		920		52,975		72,401		13,376		—			653,040
Available-for-sale financial assets		—		1,058		—		—		—		—		—		5,005		—			6,063
Trade accounts receivable		122,089		22,246		6,645		20		55,711		5,844		104,043		58		—			316,656
Work in progress receivable		489,382		—		11,969		29,793		—		—		92,776		—		—			623,920
Accounts receivable from related parties		63,242		—		1,467		159		256		2,132		41,622		423,921		(487,120	)		45,679
Other accounts receivable		269,731		15,772		11,694		18,652		1,108		22,433		60,585		31,197		(2,823	)		428,349
Inventories		115,970		8,132		—		6,010		—		549,876		74,234		273		(1,625	)		752,870
Prepaid expenses		10,203		574		412		5,924		57		2,059		4,586		1,671		—			25,486

Total current assets		1,452,253		69,440		125,753		77,066		58,052		635,319		450,247		475,501		(491,568	)		2,852,063


Accounts receivable - long term		—		—		—		411,676				—		—		—		—			411,676
Other accounts receivable - long term		1,565		14,485		18,419		5,797		5,000		—		17,932		118		—			63,316
Investments in associates		124,033		6,212		—		—		—		18,713		3		790,824		(879,986	)		59,799
Investment properties		—		—		—		—		—		36,385		—		—		—			36,385
Property, plant and equipment		530,498		186,803		1,932		3,929		—		4,427		111,952		80,780		(1,700	)		918,621
Intangible assets		197,139		96,317		146,365		7,870		2,380		804		23,818		14,807		16,495			505,995
Derivative financial instruments		—		—		—		—		—		35		—		—		—			35
Deferred income tax asset		17,724		—		5,947		9,623		—		6,603		42,912		—		1,406			84,215

Total non-current assets		870,959		303,817		172,663		438,895		7,380		66,967		196,617		886,529		(863,785	)		2,080,042

Total assets		2,323,212		373,257		298,416		515,961		65,432		702,286		646,864		1,362,030		(1,355,353	)		4,932,105


Liabilities -
Borrowings		115,962		20,128		16,111		—		25,843		60,271		97,555		13,554		—			349,424
Trade accounts payable		606,949		17,049		617		12,443		19		19,072		148,735		2,239		—			807,123
Accounts payable to related parties		28,358		1,047		10,651		414,587		13,107		9,164		48,714		4,819		(487,120	)		43,327
Current taxes		67,673		2,863		1,371		168		117		3,324		18,408		4,612		—			98,536
Other accounts payable		650,906		5,919		69,323		289		—		138,240		79,107		93,095		—			1,036,879
Other provisions		—		400		—		—		—		—		6,442		—		—			6,842

Total current liabilities		1,469,848		47,406		98,073		427,487		39,086		230,071		398,961		118,319		(487,120	)		2,342,131


Borrowings		159,131		88,411		46,000		—		—		54,767		10,991		216,705		—			576,005
Other accounts payable		—		—		—		—		—		13,399		64,616		597		1,379			79,991
Other provisions		16,450		7,818		—		—		—		—		28,281		—		—			52,549
Derivative financial instruments		—		5,478		—		11,224		—		—		—		—		—			16,702
Deferred income tax liability		48,440		1,660		39		—		714		2,054		15,025		8,075		—			76,007

Total non-current liabilities		224,021		103,367		46,039		11,224		714		70,220		118,913		225,377		1,379			801,254

Total liabilities		1,693,869		150,773		144,112		438,711		39,800		300,291		517,874		343,696		(485,741	)		3,143,385


Equity attributable to controlling interest in the company		514,410		206,761		93,503		57,937		12,816		142,084		108,279		1,008,392		(774,589	)		1,369,593
Non-controlling interest		114,933		15,723		60,801		19,313		12,816		259,911		20,711		9,942		(95,023	)		419,127

Total liabilities and equity		2,323,212		373,257		298,416		515,961		65,432		702,286		646,864		1,362,030		(1,355,353	)		4,932,105

F-107

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

Operating segment performance


	Engineering			Infrastructure																		Parent
	and construction			Energy			Toll Roads			Mass transit			Water Treatment			Real state			Technical services			Company Operations			Eliminations			Consolidated
	S/.000			S/.000			S/.000			S/.000			S/.000			S/.000			S/.000			S/.000			S/.000			S/.000

For the three-month period ended March 31, 2012 -

Revenues		717,942			70,364			28,620			17,688			11,117			21,006			264,966			10,868			(42,152	)		1,100,419
Gross profit		84,122			29,316			12,630			1,078			868			5,318			30,773			(2,587	)		(7,231	)		154,287
Administrative expenses		(33,114	)		(3,638	)		(1,970	)		(2,573	)		(93	)		(2,957	)		(22,932	)		(1,758	)		6,643			(62,392	)
Other income (expenses)		(495	)		(131	)		27			—			—			(95	)		12,475			931						12,712
Profit from the sale of investments		—			627			—			—			—			—			—			—			—			627

Profit before interests and taxes (EBIT)		50,513			26,174			10,687			(1,495	)		775			2,266			20,316			(3,414	)		(588	)		105,234
Financial expenses		(27,508	)		(2,868	)		(2,780	)		(1,634	)		(19	)		(1,803	)		(5,549	)		(1,659	)		—			(43,820	)
Financial income		35,493			2,288			1,320			288			10			1,262			4,576			1,449			(481	)		46,205
Share of the profit or loss in associates under the equity method of accounting		35			—			—			—			—			—			—			167,249			(167,284	)		—

Profit before income tax (EBT)		58,533			25,594			9,227			(2,841	)		766			1,725			19,343			163,625			(168,353	)		107,619
Income tax		(18,955	)		(7,424	)		(2,547	)		697			(230	)		(691	)		(5,595	)		(1,038	)		235			(35,548	)

Net profit for the period		39,578			18,170			6,680			(2,144	)		536			1,034			13,748			162,587			(168,118	)		72,071


Profit attributable to:
Controlling interest in the
Group		39,549			16,440			3,533			(1,608	)		268			(194	)		12,703			162,622			(168,083	)		65,230
Non-controlling interest		29			1,730			3,147			(536	)		268			1,228			1,045			(35	)		(35	)		6,841

Net Profit for the period		39,578			18,170			6,680			(2,144	)		536			1,034			13,748			162,587			(168,118	)		72,071

F-108

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

Operating segment performance


	Engineering			Infrastructure																		Parent
	and									Mass			Water			Real			Technical			Company
	construction			Energy			Toll Roads			transit			treatment			estate			services			Operations			Eliminations			Consolidated
	S/.000			S/.000			S/.000			S/.000			S/.000			S/.000			S/.000			S/.000			S/.000			S/.000
For the three-month period ended March 31, 2013 -
Revenue		889,239			64,363			29,929			21,299			12,122			46,711			244,097			13,544			(53,231	)		1,268,073
Gross profit		121,152			23,698			13,010			286			1,627			18,424			39,281			(4,154	)		(13,512	)		199,812
Administrative expenses		(49,689	)		(3,719	)		(1,668	)		(1,957	)		(98	)		(3,793	)		(29,211	)		(1,515	)		15,469			(76,181	)
Other income (expenses)		7,113			(120	)		—			130			—			(354	)		3,918			(2,408	)		240			8,519
Other (losses) gains, net		—			41			—			(289	)		—			(190	)		—			—			—			(438	)

Profit before interests and taxes (EBIT)		78,576			19,900			11,342			(1,830	)		1,529			14,087			13,988			(8,077	)		2,197			131,712
Financial expenses		(50,601	)		(5,224	)		(4,652	)		(5,770	)		(728	)		(5,290	)		(7,984	)		(5,113	)		905			(84,457	)
Financial income		41,185			2,684			2,617			2,960			—			3,269			5,329			8,625			(5,021	)		61,648
Share of the profit or loss in associates under the equity method of accounting		15,986			89			—			—			—			71			—			17,473			(18,881	)		14,738

Profit before income tax (EBT)		85,146			17,449			9,307			(4,640	)		801			12,137			11,333			12,908			(20,800	)		123,641
Income tax		(24,906	)		(6,638	)		(2,907	)		1,335			(240	)		(3,431	)		(2,914	)		(1,648	)		1,131			(40,218	)

Net profit for the period		60,240			10,811			6,400			(3,305	)		561			8,706			8,419			11,260			(19,669	)		83,423


Profit attributable to:
Controlling interest in the Group		48,291			10,684			3,379			(2,479	)		280			3,154			8,000			11,299			(18,261	)		64,347
Non-controlling interest		11,949			127			3,021			(826	)		281			5,552			419			(39	)		(1,408	)		19,076

Net profit for the period		60,240			10,811			6,400			(3,305	)		561			8,706			8,419			11,260			(19,669	)		83,423

F-109

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

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	TRANSACTIONS WITH RELATED PARTIES

Transactions with related parties -

Major transactions between the Group and its related parties included in the interim consolidated financial statements are summarized as follows:


	From the three-month period ended March 31
	2012		2013
	S/.000		S/.000
Revenue from sale of goods and services:
- Associates		—		373
- Joint operations		18,918		11,790

		18,918		12,163

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

Key management compensation -

Key management includes directors (executives and non-executives) and members of the Executive Committee. The compensation paid or payable to key management in the first quarter of 2013 amounted to S/.8.7 million (S/.7.6 million at March 31, 2012).

Balances of transactions with related parties -


	At December 31				At March 31,
	2012				2013
	Receivable		Payable		Receivable		Payable
	S/.000		S/.000		S/.000		S/.000

Associates:
Proyectos Inmobiliarios Consultores (PICSA)		223		—		192		—
Sierra Morena		—		243		—		—

		223		243		192		—

F-110

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


	At December 31				At March 31,
	2012				2013
	Receivable		Payable		Receivable		Payable
	S/.000		S/.000		S/.000		S/.000

Joint operations:
Consorcio Grupo 12		8,699		—		8,407		1,414
Consorcio Río Mantaro		8,974		—		6,748		402
Consorcio Brocal Pasco		4,711		—		4,311		—
Consorcio La Gloria		3,430		3,443		3,722		3,443
Consorcio GyM Conciviles		2,197		2,426		2,982		1,819
Consorcio Ríos Pallca		—		—		2,971		—
Consorcio Tiwu		963		1,716		1,792		990
Consorcio Río Urubamba		1,790		—		1,769		—
Consorcio Atocongo		1,650		—		1,650		—
Consorcio Constructor Alto Cayma		1,533		—		1,461		—
Consorcio Toromocho		1,819		3,432		1,373		—
Consorcio Lima		1,232		—		1,256		—
Consorcio Tren Eléctrico		1,622		—		665		1,286
Consorcio Ancon Pativilca		303		1,054		579		3,041
Consorcio Vial Ipacal		694		700		433		432
Consorcio Terminales		628		—		419		—
Consorcio La Chira		—		—		373		13,109
Consorcio La Zanja		309		349		300		424
Consorcio Vial Quinua		561		4,422		287		3,143
Consorcio Marcona		1,600		2,168		257		825
Consorcio Ferrovías Argentina		—		7,118		—		6,467
Consorcio La Chira		—		7,868		—		—
Figari Gold Eduardo		—		—		—		1,681
Other		6,515		4,274		3,732		3,769

		49,230		38,970		45,487		42,245

Other related parties:
Besco		—		2,155		—		—
El Cóndor Combustibles		—		1,366		—		1,082
Other smaller		308		—		—		—

		49,761		42,734		45,679		43,327

Accounts receivable and payable are of current maturity and 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.

9	INVESTMENTS IN ASSOCIATES

As of March 31, 2013, associates in which the Group has significant influence are substantially the same as those existing as of December 31, 2012.

In 2013, Logística de Químicos del Sur S.A.C. (hereinafter LQS) was de-consolidated from the Group and is recorded as an equity method investment as of March 31, 2013. The effect of this transaction on total assets and total shareholders´equity is not material to the financial statements for any periods presented.

F-111

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

The movement of our investments in associates for the three-month period ended March 31, 2013 and the year ended December 31, 2012 is as follows:


	At December 31, 2012			At March 31, 2013
	S/.000			S/.000

Beginning balance		25,953			37,446
Acquisition and/or contributions received		15,128			1,491
Share of the profit and loss in associates under the equity method of accounting		604			14,738
Dividends received		(2,057	)		(1,285	)
LQS investment		—			7,409
Other		(2,182	)		—

Ending balances		37,446			59,799

10	PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS

The movement in property, plant and equipment and intangible assets accounts was as follows


	Property, plant and equipment			Intangible assets
	S/.000			S/.000

For the three-month period ended March 31, 2012
At January 1, 2012		686,913			317,797
Additions		72,969			22,116
Acquisition of subsidiary - net		71,541			23,342
Transfers, disposals and adjustments		23,297			(12,792	)
Deductions for sale of assets		(1,905	)		—
Depreciation, amortization and impairment charges		(37,033	)		(16,243	)

Net cost at March 31, 2012		815,782			334,220


For the three-month period ended March 31, 2013
At January 1, 2013		938,093			505,108
Additions		62,683			11,205
Transfers, disposals and adjustments		(36,400	)		11,663
Deductions for sale of assets		(352	)		—
Depreciation, amortization and impairment charges		(45,403	)		(21,981	)

Net cost at March 31, 2013		918,621			505,995

Additions to property, plant and equipment comprise of acquisition of plant and equipment intended for the Group’s operations.

The 2012 adjustment to Property, plant and equipment and Intangible assets related to the acquisition of subsidiary relates to the acquisition of subsidiary Stracon GyM S.A. This transaction is described in detail in the annual consolidated financial statements as of December 31, 2012.

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 construction, electro-mechanical, engineering services and sale of IT equipment and services.

F-112

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

Goodwill by cash-generating units as of March 31, 2013 is broken down as follows:


	S/.000

Construction - Engineering		53,654
Construction - Mining services		13,366
Construction - Electromechanical		20,737
Information goods and services		4,172

		91,929

Management has tested impairment of its cash-generating units to which goodwill is allocated at March 31, 2013 applying criteria similar to those performed as of December 31, 2012. As a result of this evaluation, no impairment adjustments were considered necessary.

11	BORROWINGS

This item comprises:


	Total				Current				Non-current
	At December 31, 2012		At March 31, 2013		At December 31, 2012		At March 31, 2013		At December 31, 2012		At March 31, 2013
	S/.000		S/.000		S/.000		S/.000		S/.000		S/.000

Bank loans		501,692		602,327		337,196		233,660		164,496		368,667
Leases		343,782		323,102		115,623		115,764		228,159		207,338

		845,474		925,429		452,819		349,424		392,655		576,005

Bank loans obtained in 2013 -

On February 27, 2013, the Company entered into a syndicated loan agreement for up to a maximum amount of US$150 million (S/.387.5 million) with twelve financial institutions (ten of them foreign financial institutions).

As of March 31, 2013, the amount disbursed under the syndicated loan amounted to US$90 million (equivalent of S/.232.7 million). The funds obtained have been used for, among other corporate purposes, paying off a short-term loan of US$60 million (equivalent of S/.155.3 million) granted by BBVA Continental and providing working capital to its subsidiary GyM Ferrovías S.A. The syndicated loan will be paid in seventeen quarterly installments starting May 2014 until February 2018 and bears an annual interest of LIBOR (3 months) + 4.25%. This loan is fully and unconditional guaranteed by four of the Company’s subsidiaries: GyM S.A., Graña y Montero Petrolera S.A., Concar S.A. and Viva GyM S.A. (the guarantors).

F-113

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

Material covenants the Group has to meet under this loan are assessed at each calendar quarter-end and include the following:

•

Borrower Consolidated Adjusted Debt Coverage Ratio. The Borrower shall maintain a Consolidated Adjusted Debt Coverage Ratio of less than 3.00:1.00 as of the end of each fiscal quarter and rolling four fiscal quarter period then ended.

•

Guarantor Consolidated Adjusted Debt Coverage Ratio. Each Guarantor shall maintain a Consolidated Adjusted Debt Coverage Ratio of less than 2.50:1.00 as of the end of each fiscal quarter and rolling four fiscal quarter period then ended.

•

Minimun Net Worth . The Borrower shall maintain a Consolidated Net Worth at least equal to the Consolidated Net Worth reported in the financial statements of the Borrower dated as of September 30, 2012, which is S/.1,292.8 million.

As of March 31, 2013, the Group was in compliance with the covenants required by the syndicated loan.

Fair value of borrowings -

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


	Carrying amounts				Fair value
	At December 31, 2012		At March 31, 2013		At December 31, 2012		At March 31, 2013
	S/.000		S/.000		S/.000		S/.000

Loans from multilateral organizations		47,815		35,566		50,567		37,716
Other loans		797,659		889,863		828,208		898,820

		845,474		925,429		878,775		936,536

Fair values are based on the cash flows discounted by using borrowing rates ranging from 4.53% to 7.95%. It should be noted that the interest rate used are those applicable and negotiated by each Company.

12	OTHER PROVISIONS

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


	At December 31, 2012		At March 31, 2013
	S/.000		S/.000

Current portion		11,312		6,842
Non-current portion		51,315		52,549

		62,627		59,391

The movement of this item for the three-month period ended March 31, 2013 and 2012 is as follows:


	Legal claims		Contingent liabilities			Provisions for tax and legal actions			Provisions for oil well closure		Total
	S/.000		S/.000			S/.000			S/.000		S/.000
For the three-month period ended March 31, 2012 -
At January 1, 2012		6,702		24,466			102,776			—		133,944
Additions		2,357		—			—			—		2,357
Reclassifications		—		(24,466	)		—			—		(24,466	)
Write-offs		—		—			(11,953	)		—		(11,953	)

At March 31, 2012		9,059		—			90,823			—		99,882

F-114

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


	Legal claims		Contingent liabilities		Provisions for tax and legal actions			Provisions for oil well closure		Total
	S/.000		S/.000		S/.000			S/.000		S/.000

For the three-month period ended March 31, 2013 -
At January 1, 2013		11,380		11,130		35,220			4,897		62,627
Additions		260		316		58			—		634
Disposals		—		—		(3,870	)		—		(3,870	)

At March 31, 2013		11,640		11,446		31,408			4,897		59,391

As of January 1, 2012, contingent liabilities were maintained with CAM Chile and affiliates for services to be billed of S/.12.9 million and statutory bonuses and other worker benefits amounting to S/.11.5 million, which in the first quarter of 2012 became executable, and therefore, they were reclassified to other accounts payable.

Write-offs for the three-month period ended March 31, 2012 mainly consists of write-offs of provisions recognized in conjunction with the purchase price allocation related to the 2011 acquisition of CAM Chile and affiliates, since these contingencies expired over the period.

13	CAPITAL

As of March 31, 2013 and December 31, 2012, the authorized, subscribed and paid-in capital, according to the Company’s bylaws as amended, is represented by 558,284,190 common shares at S/.1.00 par value each.

At the General Shareholders’ Meeting held on March 30, 2012, the decision was made to capitalize retained earnings and as a result capital increased from S/.390,798,933 to S/.558,284,190. As a consequence of this transaction the nominal value of shares increased from S/.0.7 to S/.1.00 per share.

14	EXPENSES BY NATURE

This item comprises:


	Cost of works		Administrative- expenses		Total
	S/.000		S/.000		S/.000

For the three-month period ended March 31, 2012:
Purchase of goods		42,605		—		42,605
Personnel charges		254,471		34,184		288,655
Services provided by third-parties		314,805		11,419		326,224
Taxes		2,252		124		2,376
Other management charges		179,576		11,826		191,402
Depreciation		34,791		2,591		37,382
Amortization		13,995		2,248		16,243
Inventory variance		103,637		—		103,637

		946,132		62,392		1,008,524

F-115

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


	Cost of works		Administrative- expenses		Total
	S/.000		S/.000		S/.000

For the three-month period ended March 31, 2013:
Purchase of goods		18,521		—		18,521
Personnel charges		288,835		48,262		337,097
Services provided by third-parties		378,223		12,616		390,839
Taxes		3,016		209		3,225
Other management charges		155,361		10,092		165,453
Depreciation		42,416		3,336		45,752
Amortization		20,364		1,617		21,981
Inventory variance		161,525		49		161,574

		1,068,261		76,181		1,144,442

15	INCOME TAX EXPENSES

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 expected estimated average annual tax rate used for the year to 31 december 2013 is 32.53% (33.03% for the three-month period ended March 31, 2012).

16	CONTINGENCIES, COMMITMENTS AND GUARANTEES

As of March 31, 2013, the Group’s contingencies show no variations with respect to the disclosures in the financial statement for the year ended December 31, 2012 which amounted to S/.29.8 million, The commitments and guarantees as of March 31, 2013 amount to US$203.8 milion (equivalent of S/.527.62 million) and S/.26.53 milion, showing a variation with respect to the disclosures in the financial statement for the year ended December 31, 2012.

17	DIVIDENDS

At the General Shareholders’ meeting held on March 26, 2013, no dividend distribution for the quarter ended March 31, 2013 was approved and therefore no liabilities have been recognized in the interim financial statements.

Dividends from the year ended December 31, 2012, of S/.0.156 per share totaling S/.86,986,244 , were approved at the General Shareholders’ meeting held on March 26, 2013. The interim financial statements do reflect dividends payable as of March 31, 2013.

Dividends from the year ended December 31, 2011, of S/.0.155 per share totaling S/.86,722,434, were approved at the General Shareholders’ meeting held on March 30, 2012. The interim financial statements do reflect dividends payable as of March 31, 2012.

For the three-month period ended March 31, 2013, the Group paid dividends on its subsidiaries to its non-controlling entities for S/.1.5 million (S/.13.8 million for the same period of 2012).

18	EVENTS AFTER THE DATE OF THE STATEMENT OF FINANCIAL POSITION

Between March 31, 2013 and the date of approval of the financial statements, no subsequent events have occurred that are required to be disclosed in the notes to the interim financial statements.

F-116

LOGO

PART II

INFORMATION NOT REQUIRED IN THE PROSPECTUS

Item 6. Indemnification of Directors and Officers

According to the Registrant’s by-laws, the directors and the chief executive officer of the company shall be indemnified by the company for any reasonable expenses incurred and for any loss or damage suffered in connection with any action, lawsuit or proceeding to which they have been a party as a result of their position as director or chief executive officer, to the extent such action, lawsuit or proceeding is not attributable to them. We maintain liability insurance which insure our directors and officers against liability which he or she may incur in his or her capacity as such.

Item 7. Recent Sales of Unregistered Securities

Within the past three years, the Registrant has not sold any securities, other than its common shares in transactions on the Lima Stock Exchange in the aggregate amounts of 443,872 common shares in 2010, 157,026 common shares in 2011, 1,200,000 common shares in 2012, with no securities sold in 2013 to the date of this Registration Statement. The Registrant believes that these sales did not require registration under the Securities Act because these securities were offered and sold outside the United States in reliance upon the exemption from the registration requirements of the Securities Act contained in Regulation S under the Securities Act or, alternatively, in transactions exempt from the registration requirements of the Securities Act pursuant to Section 4(2) thereof.

Item 8. Exhibits and Financial Statement Schedules

(a)

Exhibits


Exhibit Number		Description of Document

1.1		Form of Underwriting Agreement

3.1*		By-laws of the Registrant, as currently in effect

4.1		Registrant’s Form of American Depositary Receipt (included in Exhibit 4.2)

4.2		Form of Deposit Agreement among the Registrant, JPMorgan Chase Bank, N.A., as depositary, and the holders from time to time of American depositary shares issued thereunder.

5.1*		Form of Opinion of Muñiz, Ramírez, Pérez-Taiman & Olaya Abogados regarding the validity of the common shares being registered

8.1*		Form of Opinion of Simpson Thacher & Bartlett LLP regarding certain U.S. tax matters

8.2*		Form of Opinion of Estudio Muñiz, Ramírez, Pérez-Taiman & Olaya regarding certain Peruvian tax matters

10.1		Credit Agreement, dated as of February 27, 2013, among the Registrant, the initial lenders named therein, BBVA Bancomer S.A. Institucion de Banca Multiple, Grupo Financiero BBVA Bancomer, BBVA Continental and BBVA Securities Inc.

21.1*		Subsidiaries of the Registrant

23.1		Consent of Dongo, Soria, Gaveglio y Asociados Sociedad Civil de Responsabilidad Limitada, a member firm of PricewaterhouseCoopers

23.2*		Consent of Muñiz, Ramírez, Pérez-Taiman & Olaya Abogados, Peruvian legal counsel of the Registrant

23.3		Consent of Simpson Thacher & Bartlett LLP (included in Exhibit 8.1)

II-1


Exhibit Number		Description of Document

23.4*		Consent of Netherland, Sewell & Associates, Inc.

23.5*		Consent of International Data Corporation

23.6*		Consent of Great Place to Work Institute, Inc.

24.1		Powers of Attorney (included in signature pages in Part II of this registration statement)

99.1*		Reserve Report of Netherland, Sewell & Associates, Inc.

*	Previously filed.

(b)

Financial Statement Schedules

All schedules are omitted because the required information is included in the Registrant’s financial statements in the prospectus part of this Registration Statement.

Item 9. Undertakings

The undersigned registrant hereby undertakes:

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the provisions described in Item 6 of this Registration Statement, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted against the Registrant by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

1. For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement at the time it was declared effective.

2. For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

For the purposes of Item 512(F) of Regulation S-K, the Registrant hereby also undertakes to provide to the underwriters at the closing specified in the underwriting agreement, certificates in such denominations registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

II-2

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form F-1 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Lima, Peru, on June 18, 2013.


GRAÑA Y MONTERO S.A.A.

By:		/s/ Mario Alvarado Pflucker
Name:		Mario Alvarado Pflucker
Title:		Chief Executive Officer

By:		/s/ Mónica Miloslavich Hart
Name:		Mónica Miloslavich Hart
Title:		Chief Financial Officer and Principal Accounting Officer

II-3

Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed by the following persons on June 18, 2013 in the capacities indicated.

Signature


*				Chief Executive Officer / Director
Mario Alvarado Pflucker

*				Chief Financial Officer and Principal Accounting Officer
Mónica Miloslavich Hart

*				Director
José Graña Miró Quesada

*				Director
Carlos Montero Graña

*				Director
Luis Miró Quesada Valega

*				Director
José Chlimper Ackerman

*				Director
Roberto Abusada Salah

*				Director
José Antonio Colomer Guiu

*				Director
Hernando Graña Acuña

*				Director
Hugo Santa María Guzmán

/s/ Mario Alvarado Pflucker
Mario Alvarado Pflucker

/s/ Mónica Miloslavich Hart
Mónica Miloslavich Hart

* Signed by Mario Alvarado Pflucker and Mónica Miloslavich Hart, as attorneys-in-fact

II-4

SIGNATURE OF AUTHORIZED REPRESENTATIVE IN THE UNITED STATES

Pursuant to the Securities Act of 1933, the undersigned, the duly authorized representative in the United States of GRAÑA Y MONTERO S.A.A., has signed this registration statement or amendment thereto in New York, New York, on June 18, 2013.


Authorized Representative

By:		/s/ Donald J. Puglisi
		Donald J. Puglisi
		Managing Director
		Puglisi and Associates

II-5

EXHIBIT 1.1

GRAÑA Y MONTERO S.A.A.

[ ] American Depositary Shares

Representing

[ ] Common Shares

UNDERWRITING AGREEMENT

[ ], 2013

C REDIT S UISSE S ECURITIES (USA) LLC

Eleven Madison Avenue

New York, N.Y. 10010-3629

J.P. M ORGAN S ECURITIES LLC

383 Madison Avenue

New York, NY 10179

M ORGAN S TANLEY & C O . LLC

1585 Broadway,

New York, NY 10036

As Representatives of the Several Underwriters

Dear Sirs:

1. Introductory . Graña y Montero S.A.A., a Peruvian corporation (“ Company ”) agrees with the several Underwriters named in Schedule A hereto (“ Underwriters ”) for whom Credit Suisse Securities (USA) LLC, J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC are acting as representatives (“ Representatives ”) to issue and sell to the several Underwriters an aggregate of [ ] American Depositary Shares (“ ADSs ”), each ADS representing [ ] common shares, par value S/.1.00 per share (the “ Common Shares ”), of the Company (such [ ] ADSs being hereinafter referred to as the “ Firm Securities ”), and also agrees to issue and sell to the Underwriters, at the option of the Underwriters, an aggregate of not more than [ ] additional ADSs (“ Optional Securities ”). The Common Shares will be represented by Certificados Provisionales (the “ Certificados ”) issued by the Company on the Closing Date, as defined below, until the date on which the Company’s capital increase is registered with the Peruvian Public Registry, upon which registration the Certificados will be automatically substituted by Common Shares. The Firm Securities and the Optional Securities are herein collectively called the “ Offered Securities ”. Unless the context otherwise requires, each reference to the Firm Securities, the Optional Securities or the Offered Securities herein also includes the underlying Common Shares (hereinafter referred to as the “ Firm Shares ,” “ Optional Shares ” and “ Offered Shares ”).

The ADSs purchased by the Underwriters pursuant to this Agreement will be evidenced by American Depositary Receipts (“ ADRs ”) to be issued pursuant to a deposit agreement (the “ Deposit Agreement ”), to be entered into among the Company, J.P. Morgan Chase Bank, N.A., as depositary (the “ Depositary ”), and holders from time to time of the ADSs.

2. Representations and Warranties of the Company . The Company represents and warrants to, and agrees with, the several Underwriters that:

(i) Filing and Effectiveness of Registration Statement; Certain Defined Terms . The Company has filed with the Commission a registration statement on Form F-1 (No. 333-189067) covering the registration of the Offered Securities under the Act, including a related preliminary prospectus or prospectuses. At any particular time, this initial registration statement, in the form then on file with the Commission, including all information contained in the registration statement (if any) pursuant to Rule 462(b) and then deemed to be a part of the initial registration statement, and all 430A Information and all 430C Information, that in any case has not then been superseded or modified, shall be referred to as the “ Initial Registration Statement ”. The Company may also have filed, or may file with the Commission, a Rule 462(b) registration statement covering the registration of Offered Securities. At any particular time, this Rule 462(b) registration statement, in the form then on file with the Commission, including the contents of the Initial Registration Statement incorporated by reference therein and including all 430A Information and all 430C Information, that in any case has not then been superseded or modified, shall be referred to as the “ Additional Registration Statement ”. A registration statement on Form F-6 (No. 333-[ ]) relating to the ADSs has been filed with the Commission and has become effective (such registration statement on Form F-6, including all exhibits thereto, as amended through the time such registration statement becomes effective, being hereinafter called the “ ADS Registration Statement ”). The Company has also filed, in accordance with Section 12 of the Exchange Act, a registration statement (such registration statement as amended through the time such registration statement becomes effective, being hereinafter called the “ Exchange Act Registration Statement ”), on Form 8-A (No. 001-[ ]) under the Exchange Act to register, under Section 12(b) of the Exchange Act, the Common Shares and the ADSs. For purposes of this Agreement, all references to the Initial Registration Statement, the Additional Registration Statement, the ADS Registration Statement, the Exchange Act Registration Statement, any preliminary prospectus or any amendment or supplement, or the Final Prospectus (including any prospectus wrapper) shall be deemed to include the copy filed with the Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval system (“ EDGAR ”).

As of the time of execution and delivery of this Agreement, the Initial Registration Statement has been declared effective under the Act and is not proposed to be amended, and the Exchange Act Registration Statement has become effective, as provided under Section 12 of the Exchange Act. Any Additional Registration Statement has or will become effective upon filing with the Commission pursuant to Rule 462(b) and is not proposed to be amended. The Offered Securities all have been or will be duly registered under the Act pursuant to the Initial Registration Statement, the ADS Registration Statement and, if applicable, the Additional Registration Statement.

For purposes of this Agreement:

“ 430A Information ”, with respect to any registration statement, means information included in a prospectus and retroactively deemed to be a part of such registration statement pursuant to Rule 430A(b).

“ 430C Information ”, with respect to any registration statement, means information included in a prospectus then deemed to be a part of such registration statement pursuant to Rule 430C.

“ Act ” means the Securities Act of 1933, as amended.

“ Applicable Time ” means [ ]:00 pm (New York City time) on the date of this Agreement.

“ Closing Date” has the meaning defined in Section 3 hereof.

“ Commission ” means the Securities and Exchange Commission.

“ Effective Time ” with respect to the Initial Registration Statement or, if filed prior to the execution and delivery of this Agreement, the Additional Registration Statement means the date and time as of which such Registration Statement was declared effective by the Commission or has become effective upon filing pursuant to Rule 462(c). If an Additional Registration Statement has not been filed prior to the execution and delivery of this Agreement but the Company has advised the Representatives that it proposes to file one, “ Effective Time ” with respect to such Additional Registration Statement means the date and time as of which such Registration Statement is filed and becomes effective pursuant to Rule 462(b).

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended.

“ Final Prospectus ” means the Statutory Prospectus that discloses the public offering price, other 430A Information and other final terms of the Offered Securities and otherwise satisfies Section 10(a) of the Act.

“ General Use Issuer Free Writing Prospectus ” means any Issuer Free Writing Prospectus that is intended for general distribution to prospective investors, as evidenced by its being so specified in Schedule B to this Agreement.

“ Issuer Free Writing Prospectus ” means any “issuer free writing prospectus,” as defined in Rule 433, relating to the Offered Securities in the form filed or required to be filed with the Commission or, if not required to be filed, in the form retained in the Company’s records pursuant to Rule 433(g).

“ Limited Use Issuer Free Writing Prospectus ” means any Issuer Free Writing Prospectus that is not a General Use Issuer Free Writing Prospectus.

The Initial Registration Statement and the Additional Registration Statement, if any, are referred to collectively as the “ Registration Statements ” and individually as a “ Registration Statement ”. A “ Registration Statement ” with reference to a particular time means the Initial Registration Statement and any Additional Registration Statement as of such time. A “ Registration Statement ” without reference to a time means such Registration Statement as of its Effective Time. For purposes of the foregoing definitions, 430A Information with respect to a Registration Statement shall be considered to be included in such Registration Statement as of the time specified in Rule 430A.

“ Rules and Regulations ” means the rules and regulations of the Commission.

“ Securities Laws ” means, collectively, the Sarbanes-Oxley Act of 2002 (“ Sarbanes-Oxley ”), the Act, the Exchange Act, the Rules and Regulations, the auditing principles, rules, standards and practices applicable to auditors of “issuers” (as defined in Sarbanes-Oxley) promulgated or approved by the Public Company Accounting Oversight Board, the International Accounting Standards Board (“ IASB ”) and the rules (“ Exchange Rules ”) of the New York Stock Exchange (“ NYSE ”).

“ Statutory Prospectus ” with reference to a particular time means the prospectus included in a Registration Statement immediately prior to that time, including any 430A Information or 430C Information with respect to such Registration Statement. For purposes of the foregoing definition, 430A Information shall be considered to be included in the Statutory Prospectus as of the actual time that form of prospectus is filed with the Commission pursuant to Rule 424(b) or Rule 462(c) and not retroactively.

Unless otherwise specified, a reference to a “rule” is to the indicated rule under the Act.

(ii) Compliance with Securities Act Requirements . (i) (A) At their respective Effective Times, (B) on the date of this Agreement and (C) on each Closing Date, each of the Initial Registration Statement, the Additional Registration Statement (if any) and the ADS

Registration Statement conformed and will conform in all material respects to the requirements of the Act and did not and will not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and (ii) on its date, at the time of filing of the Final Prospectus pursuant to Rule 424(b) or (if no such filing is required) at the Effective Time of the Additional Registration Statement in which the Final Prospectus is included, and on each Closing Date, the Final Prospectus will conform in all material respects to the requirements of the Act and the Rules and Regulations and will not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. The preceding sentence does not apply to statements in or omissions from any such document based upon written information furnished to the Company by any Underwriter through the Representatives specifically for use therein; it being understood and agreed that the only such information is that described as such in Section 8(c) hereof.

(iii) Ineligible Issuer Status. (i) At the time of the initial filing of the Initial Registration Statement and (ii) at the date of this Agreement, the Company was not and is not an “ineligible issuer,” as defined in Rule 405, including (x) the Company or any other subsidiary in the preceding three years not having been convicted of a felony or misdemeanor or having been made the subject of a judicial or administrative decree or order as described in Rule 405 and (y) the Company in the preceding three years not having been the subject of a bankruptcy petition or insolvency or similar proceeding, not having had a registration statement be the subject of a proceeding under Section 8 of the Act and not being the subject of a proceeding under Section 8A of the Act in connection with the offering of the Offered Securities, all as described in Rule 405.

(iv) General Disclosure Package . As of the Applicable Time, neither (i) the General Use Issuer Free Writing Prospectus(es) issued at or prior to the Applicable Time, the preliminary prospectus, dated [ ], 2013 (which is the most recent Statutory Prospectus distributed to investors generally) and the other information, if any, stated in Schedule B to this Agreement to be included in the General Disclosure Package, all considered together (collectively, the “ General Disclosure Package ”), nor (ii) any individual Limited Use Issuer Free Writing Prospectus, when considered together with the General Disclosure Package, included any untrue statement of a material fact or omitted to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The preceding sentence does not apply to statements in or omissions from any Statutory Prospectus or any Issuer Free Writing Prospectus in reliance upon and in conformity with written information furnished to the Company by any Underwriter through the Representatives specifically for use therein; it being understood and agreed that the only such information furnished by any Underwriter consists of the information described as such in Section 8(c) hereof.

(v) Issuer Free Writing Prospectuses . Each Issuer Free Writing Prospectus, as of its issue date and at all subsequent times through the completion of the public offer and sale of the Offered Securities or until any earlier date that the Company notified or notifies the Representatives as described in the next sentence, did not, does not and will not include any information that conflicted, conflicts or will conflict with the information then contained in the Registration Statement. If at any time following issuance of an Issuer Free Writing Prospectus there occurred or occurs an event or development as a result of which such Issuer Free Writing Prospectus conflicted or would conflict with the information then contained in the Registration Statement or as a result of which such Issuer Free Writing Prospectus, if republished immediately following such event or development, would, when considered together with the General Disclosure Package, include an untrue statement of a material fact or omitted or would omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, (i) the Company has promptly notified or will promptly notify the Representatives and (ii) the Company has promptly amended or will promptly amend or supplement such Issuer Free Writing Prospectus to eliminate or correct such conflict, untrue statement or omission.

(vi) Good Standing of the Company. The Company has been duly incorporated and is existing as a corporation in good standing under the laws of Peru (to the extent that good standing is applicable under Peruvian law), with power and authority (corporate and other) to own or lease its properties and conduct its business as described in the General Disclosure Package, and the Company is duly qualified to do business in Peru and is duly qualified to do business as a foreign corporation in each other jurisdiction in which its ownership or lease of property or the conduct of its business requires such qualification, except where the failure to be so qualified or in good standing or have such power or authority would not, individually or in the aggregate, have a material adverse effect on the condition (financial or otherwise), results of operations, business, properties or prospects of the Company and its subsidiaries taken as a whole or on the performance by the Company of its obligations under the Transaction Documents (as defined below) (“ Material Adverse Effect ”).

(vii) Subsidiaries. Each subsidiary of the Company has been duly incorporated and is existing and in good standing under the laws of the jurisdiction of its incorporation (to the extent that good standing is applicable under the law of the relevant jurisdiction of incorporation), with power and authority (corporate and other) to own or lease its properties and conduct its business as described in the General Disclosure Package, and each subsidiary of the Company is duly qualified to do business as a foreign corporation in good standing in all other jurisdictions in which its ownership or lease of property or the conduct of its business requires such qualification, except where the failure to be so qualified or in good standing or have such power or authority would not, individually or in the aggregate, have a Material Adverse Effect; all of the issued and outstanding capital stock or other equity interests of each subsidiary of the Company has been duly authorized and validly issued and is fully paid and nonassessable; and the capital stock or other equity interests of each subsidiary owned by the Company, directly or through subsidiaries, is owned free from liens, encumbrances and defects.

(viii) Offered Securities . The Offered Securities and all other outstanding shares of capital stock of the Company have been duly authorized; the authorized equity capitalization of the Company is as set forth in the General Disclosure Package; all outstanding shares of capital stock of the Company are, and, when the Offered Securities have been delivered and paid for in accordance with this Agreement on each Closing Date, such Offered Securities will have been, validly issued, fully paid and nonassessable, will conform to the information in the General Disclosure Package and to the description of such Offered Securities contained in the Final Prospectus; except as disclosed in the General Disclosure Package, the stockholders of the Company have no preemptive rights with respect to the Offered Securities; none of the outstanding Common Shares of the Company have been issued in violation of any preemptive or similar rights of any security holder; the Offered Shares to be sold by the Company hereunder, when issued and delivered against payment therefor, may be freely deposited by the Company with the Depositary by book entry transfer at Cavali ICLV S.A. or otherwise in accordance with applicable law against issuance of ADRs evidencing the ADSs; the ADSs to be sold by the Company hereunder, when issued and delivered against payment therefor, will be freely transferable by the Company to or for the account of the Underwriters; and there are no restrictions on subsequent transfers of such ADSs under the laws of the Peru or the United States, except as described in the General Disclosure Package and Final Prospectus.

(ix) No Finder’s Fee. There are no contracts, agreements or understandings between the Company and any person (other than this Agreement) that would give rise to a valid claim against the Company or any Underwriter for a brokerage commission, finder’s fee or other like payment in connection with this offering.

(x) Registration Rights. There are no contracts, agreements or understandings between the Company and any person granting such person the right to require the Company to file a registration statement under the Act with respect to any securities of the Company owned or to be owned by such person or to require the Company to include such securities in the securities registered pursuant to a Registration Statement or in any securities being registered pursuant to any other registration statement filed by the Company under the Act.

(xi) Listing. The Offered Securities have been approved for listing on the NYSE, subject to notice of issuance.

(xii) Authorization of Deposit Agreement . The Deposit Agreement has been duly authorized, executed and delivered by the Company and constitutes a valid and legally binding agreement of the Company, enforceable against the Company in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws of general applicability affecting creditors’ rights or by equitable principles relating to enforceability. Upon due execution and delivery by the Depositary of ADRs evidencing Offered Securities and the deposit of Offered Shares in respect thereof in accordance with the provisions of the Deposit Agreement, such ADRs will be duly and validly issued and the persons in whose names the ADRs are registered will be entitled to the rights specified therein and in the Deposit Agreement; and the Deposit Agreement and the ADRs conform in all material respects to the descriptions thereof contained in the General Disclosure Package and Final Prospectus.

(xiii) Absence of Further Requirements. No consent, approval, authorization, or order of, or filing or registration with, any Peruvian, U.S. or other person, governmental agency, body or court or stock exchange is required for the consummation of the transactions contemplated by this Agreement and the Deposit Agreement (collectively, the “ Transaction Documents ”) in connection with the offering, issuance and sale of the Offered Securities, except for (i) the registration of the capital increase with the applicable Peruvian Public Registry; and (ii) the registration of the Offered Securities under the Act and such consents, approvals, authorizations, orders and registrations or qualifications as may be required by the Financial Industry Regulatory Authority, Inc. (“ FINRA ”) and under applicable state securities laws in connection with the purchase and distribution of the Offered Securities by the Underwriters.

(xiv) Title to Property . Except as disclosed in the General Disclosure Package and the Final Prospectus, the Company and its subsidiaries have good and marketable title to all material real properties and all other material properties and assets owned by them, in each case free from liens, charges, encumbrances and defects that would materially affect the value thereof or materially interfere with the use made or to be made thereof by them and, except as disclosed in the General Disclosure Package and the Final Prospectus, the Company and its subsidiaries hold any material leased real or personal property under valid and enforceable leases with no terms or provisions that would materially interfere with the use made or to be made thereof by them.

(xv) Absence of Defaults and Conflicts Resulting from Transaction. The execution, delivery and performance of the Transaction Documents, the issuance and sale of the Offered Securities, the deposit of the Offered Shares with the Depositary against issuance of the ADRs evidencing the Offered Securities and the consummation of the transactions contemplated by the Transaction Documents in connection with the offering will not result in a breach or violation of any of the terms and provisions of, or constitute a default or a Debt Repayment Triggering Event (as defined below) under, or result in the imposition of any lien, charge or encumbrance upon any property or assets of the Company or any of its subsidiaries pursuant to, (i) the charter or by-laws or similar organizational documents of the Company or any of its subsidiaries, (ii) any statute, rule, regulation or order of any governmental agency or body or any court, domestic or foreign, having jurisdiction over the Company or any of its subsidiaries or any of their properties, or (iii) any agreement or instrument to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the properties of the Company or any of its subsidiaries is subject, except for, in the case of (ii) and (iii), such as would not, individually or in the aggregate, have a Material Adverse Effect; a “ Debt Repayment Triggering Event ” means any event or condition that gives, or with the giving of notice or lapse

of time would give, the holder of any note, debenture, or other evidence of indebtedness (or any person acting on such holder’s behalf) the right to require the repurchase, redemption or repayment of all or a portion of such indebtedness by the Company or any of its subsidiaries.

(xvi) Absence of Existing Defaults and Conflicts. Neither the Company nor any of its subsidiaries is (i) in violation of its respective charter or by-laws or similar organizational documents, (ii) in violation of any statute, rule, regulation or order of any governmental agency or body or any court, domestic or foreign, having jurisdiction over the Company or any of its subsidiaries or any of their properties, (iii) in default (or with the giving of notice or lapse of time would be in default) under any existing obligation, agreement, covenant or condition contained in any indenture, loan agreement, mortgage, lease or other agreement or instrument to which any of them is a party or by which any of them is bound or to which any of the properties of any of them is subject, or (iv) has sent or received any communication regarding termination of, or intent not to renew any material indenture, mortgage, deed of trust, loan agreement, contract or other agreement or instrument to which it is a party or by which it is bound or to which any of its properties or assets is subject, and no such termination or non-renewal has been threatened by the Company, or to the Company’s knowledge, any other party to any such material indenture, mortgage, deed of trust, loan agreement, contract or other agreement or instrument, except for, in the case of (ii) and (iii), such as would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

(xvii) Authorization of Agreement. This Agreement has been duly authorized, executed and delivered by the Company.

(xviii) Possession of Licenses and Permits. The Company and its subsidiaries possess, and are in compliance in all material respects with, all certificates, authorizations, franchises, licenses and permits (“ Licenses ”) necessary or material to the conduct of the business as described in the General Disclosure Package and have not received any notice of proceedings relating to the revocation or modification of any Licenses that, if determined adversely to the Company or any of its subsidiaries, would individually or in the aggregate have a Material Adverse Effect.

(xix) Absence of Labor Dispute. No labor dispute with the employees of the Company or any of its subsidiaries exists or, to the knowledge of the Company, is imminent, in each case that could individually or in the aggregate have a Material Adverse Effect.

(xx) Possession of Intellectual Property. The Company and its subsidiaries own, possess or can acquire on reasonable terms, adequate trademarks, trade names and other rights to inventions, know-how, patents, copyrights, confidential information and other intellectual property (collectively, “ intellectual property rights ”) necessary to conduct the business as described in the General Disclosure Package, and have not received any notice of infringement of or conflict with asserted rights of others with respect to any intellectual property rights that, if determined adversely to the Company or any of its subsidiaries, would individually or in the aggregate have a Material Adverse Effect.

(xxi) Taxation . The Company is a “foreign corporation” (as defined in Section 7701 of the United States Internal Revenue Code of 1986, as amended (the “ Code ”)) for U.S. federal income tax purposes, and has never been a “domestic corporation” (as defined in Section 7701 of the Code) for U.S. federal income tax purposes. The Company and each of its subsidiaries have filed all federal, state, local and foreign tax returns required to be filed through the date of this Agreement or have requested extensions thereof and have paid all taxes required to be paid thereon, except for (i) any failure to file returns or pay taxes that would not, individually or in the aggregate, have a Material Adverse Effect or (ii) any failure to pay taxes that are currently being contested in good faith and for which reserves required by the International Financial Reporting Standards (“ IFRS ”) have been created in the financial statements of the Company). No tax deficiency has been determined adversely to the Company or any of its subsidiaries which has had

(nor does the Company nor any of its subsidiaries have any notice or knowledge of any tax deficiency which could reasonably be expected to be determined adversely to the Company or its subsidiaries and which would individually or in the aggregate have) a Material Adverse Effect.

(xxii) Enforceability of Transaction Documents . The Transaction Documents are or shall be in proper legal form under the laws of Peru for the enforcement thereof in Peru against the Company, and to ensure the legality, validity, enforceability or admissibility into evidence in a legal or administrative proceeding in Peru of the Transaction Documents, it is not necessary that the Transaction Documents or any other document related hereto be filed or recorded with any court or other authority in Peru (except that an official translation into Spanish of such documents may be required for purposes of enforcement proceedings in Peru) or that any registration tax, stamp duty or similar tax be paid in Peru on or in respect of the Transaction Documents or any other document other than court costs, including (without limitation) filing fees and deposits to guarantee judgment required by a Peruvian court of law and except as may be limited by (i) bankruptcy, insolvency, fraudulent transfer, reorganization, liquidation, moratorium or other similar laws relating to or affecting the rights and remedies of creditors generally, and (ii) the prohibition contained in article 254 of the Peruvian Business Act ( Ley General de Sociedades ) that affects the enforceability of any obligations limiting the transferability or negotiation of the Company’s Common Shares issued by shareholders of the Company.

(xxiii) Enforcement of Foreign Judgments . Pursuant to the terms of this Agreement and the Deposit Agreement, the Company has agreed to submit to the jurisdiction of any state or federal court in the state of New York in which the relevant suit or proceeding may be instituted. Any final judgment for a fixed or readily calculable sum of money rendered in any state or federal court in the state of New York having jurisdiction in respect of any suit, action or proceeding against the Company based upon this Agreement and the Deposit Agreement or the transactions contemplated thereby would be declared enforceable against the Company by the courts of Peru without reexamination of the merits of the cause of action in respect of which the original judgment was given or retrial of the matters adjudicated upon or payment of any stamp, registration or similar tax or duty, provided that it is ratified by the Peruvian Courts ( Cortes de la República del Perú ) if the following conditions and requirements are met: (i) such judgment is not related to matters under the exclusive jurisdiction of Peruvian courts (such as matters involving real estate property); (ii) the issuing court had jurisdiction under its own conflicts of law rules and under general principles of international law on jurisdiction; (iii) the defendant was adequately served and was guaranteed due process under the laws of the jurisdiction of the issuing court; (iv) the judgment is res judicata under the laws of the jurisdiction of the issuing court; (v) there is no pending litigation in Peru between the same parties for the same issue, which has been initiated before the commencement of the proceedings that concluded with such judgment; (vi) such judgment is not incompatible with a priorly rendered foreign judgment that fulfills the requirements of recognition and enforceability established by Peruvian law; (vii) such judgment is not contrary to Peruvian national sovereignty, public order or good morals; (viii) it has not been proven that the issuing court has denied enforcement of Peruvian judgments or engaged in a review of the merits thereof; (ix) such judgment has been (a) duly apostilled by the competent authority of the jurisdiction of the issuing court, in case of jurisdictions that are parties to the Hague Apostille Convention, or (b) certified by Peruvian consular authorities, in case of jurisdictions that are not parties to the Hague Apostille Convention, and is accompanied by a certified and officially translated copy of such judgment into Spanish; and (x) payment of the applicable court taxes or filing fees.

(xxiv) Absence of Peruvian Stamp and Other Taxes . No Peruvian transaction tax, stamp duty or other issuance or transfer taxes or duties and no Peruvian capital gains, income, withholding or other similar taxes are payable or required to be collected by or on behalf of the Underwriters in connection with (i) the execution, delivery, performance and enforcement of the Transaction Documents or of any other document to be furnished hereunder or thereunder, (ii) the consummation by the Company of the transactions contemplated by the Transaction Documents, (iii) the deposit with the Depositary of the Common Shares against issuance of the Offered Securities, or (iv) the resale and delivery of the Offered Securities by the Underwriters in the manner contemplated in the Registration Statement, the General Disclosure Package and the Final Prospectus.

(xxv) Environmental Laws . (a)(i) neither the Company nor any of its subsidiaries is in violation of, or has any liability under, any federal, state, local or non-U.S. statute, law, rule, regulation, ordinance, code, other requirement or rule of law (including common law), or decision or order of any domestic or foreign governmental agency, governmental body or court, relating to pollution, to the use, handling, transportation, treatment, storage, discharge, disposal or release of Hazardous Substances, to the protection or restoration of the environment or natural resources (including biota), to health and safety including as such relates to exposure to Hazardous Substances, and to natural resource damages (collectively, “ Environmental Laws ”), (ii) neither the Company nor any of its subsidiaries owns, occupies, operates or uses any real property contaminated with Hazardous Substances, (iii) neither the Company nor any of its subsidiaries is conducting or funding any investigation, remediation, remedial action or monitoring of actual or suspected Hazardous Substances in the environment, (iv) neither the Company nor any of its subsidiaries is liable or allegedly liable for any release or threatened release of Hazardous Substances, including at any off-site treatment, storage or disposal site, (v) neither the Company nor any of its subsidiaries is subject to any claim by any governmental agency or governmental body or person relating to Environmental Laws or Hazardous Substances, and (vi) the Company and its subsidiaries have received and are in compliance with all, and have no liability under any, permits, licenses, authorizations, identification numbers or other approvals required under applicable Environmental Laws to conduct their respective businesses, except in each case covered by clauses (i) – (vi) such as would not individually or in the aggregate reasonably be expected to have a Material Adverse Effect; (b) to the knowledge of the Company there are no facts or circumstances that would reasonably be expected to result in a violation of, liability under, or claim pursuant to any Environmental Law that would reasonably be expected to have a Material Adverse Effect; (c) to the knowledge of the Company there are no requirements proposed for adoption or implementation under any Environmental Law that would reasonably be expected to have a Material Adverse Effect; and (d) in the ordinary course of its business, the Company periodically evaluates the effect, including associated costs and liabilities, of Environmental Laws on the business, properties, results of operations and financial condition of it and its subsidiaries, and, on the basis of such evaluation, the Company has reasonably concluded that such Environmental Laws will not, individually or in the aggregate, have a Material Adverse Effect. For purposes of this subsection “ Hazardous Substances ” means (A) petroleum and petroleum products, by-products or breakdown products, radioactive materials, asbestos-containing materials, polychlorinated biphenyls and mold, and (B) any other chemical, material or substance defined or regulated as toxic or hazardous or as a pollutant, contaminant or waste under Environmental Laws.

(xxvi) Accurate Disclosure. The statements in the General Disclosure Package and the Final Prospectus under the headings “Taxation”, “Description of Our Share Capital”, “Description of American Depositary Shares” and “Enforcement of Judgments Against Foreign Persons”, insofar as such statements summarize legal matters, agreements, documents or proceedings discussed therein, are accurate and fair summaries in all material respects of such legal matters, agreements, documents or proceedings and present the information required to be shown.

(xxvii) Absence of Manipulation . The Company has not taken, directly or indirectly, any action that is designed to or that has constituted or that would reasonably be expected to cause or result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Offered Securities.

(xxviii) Statistical and Market-Related Data and Forward-Looking Statements. The opinions, analyses, and forecasts about the Company and any third-party statistical and market-related data included in a Registration Statement, the Final Prospectus or the General Disclosure Package are based on or derived from sources that the Company believes to be reliable and accurate in all material respects, and the Company has obtained the written consent to the use of

any such data from such sources to the extent required. Any other financial and statistical information provided in a Registration Statement, the Final Prospectus or the General Disclosure Package is in all material respects accurately presented and prepared on a basis consistent with the financial statements and books and records of the Company and its consolidated subsidiaries. No forward-looking statement (within the meaning of Section 27A of the Act and Section 21E of the Exchange Act) contained in a Registration Statement, the Final Prospectus or the General Disclosure Package has been made or reaffirmed without a reasonable basis or has been disclosed other than in good faith.

(xxix) Internal Controls and Compliance with the Sarbanes-Oxley Act. Except as set forth in the General Disclosure Package, the Company, its subsidiaries and the Company’s Board of Directors (the “ Board ”) are in compliance with all applicable Sarbanes-Oxley and Exchange Rules. The Company maintains a system of internal controls, including, but not limited to, disclosure controls and procedures, internal controls over accounting matters and financial reporting, an internal audit function and legal and regulatory compliance controls (collectively, “ Internal Controls ”) that comply with all applicable Securities Laws and are sufficient to provide reasonable assurances that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with IFRS and to maintain accountability for assets, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The Internal Controls are, or upon consummation of the offering of the Offered Securities will be, overseen by the Audit Committee (the “ Audit Committee ”) of the Board in accordance with all applicable Exchange Rules. Except as disclosed in the General Disclosure Package and the Final Prospectus, the Company has not publicly disclosed or reported to the Audit Committee or the Board, and within the next 135 days the Company does not reasonably expect to publicly disclose or report to the Audit Committee or the Board, a significant deficiency, material weakness, change in Internal Controls or fraud involving management or other employees who have a significant role in Internal Controls (each, an “ Internal Control Event ”), any violation of, or failure to comply with, the Securities Laws, or any matter which, if determined adversely, would individually or in the aggregate have a Material Adverse Effect.

(xxx) Independent Auditors . Dongo, Soria, Gaveglio y Asociados Sociedad Civil de Responsabilidad Limitada, a member firm of PricewaterhouseCoopers, who have audited the consolidated financial statements of the Company included in the General Disclosure Package, are an independent registered public accounting firm with respect to the Company and its subsidiaries within the applicable rules and regulations adopted by the Commission and the Public Company Accounting Oversight Board and as required by the Act.

(xxxi) Litigation . Except as disclosed in the General Disclosure Package and the Final Prospectus, there are no pending actions, suits or proceedings (including any inquiries or investigations by any court or governmental agency or body, domestic or foreign) against or affecting the Company, any of its subsidiaries or any of their respective properties or directors or officers that, if determined adversely to the Company or any of its subsidiaries, would individually or in the aggregate have a Material Adverse Effect, or would materially and adversely affect the ability of the Company to perform its obligations under the Transaction Documents; and no such actions, suits or proceedings (including any inquiries or investigations by any court or governmental agency or body, domestic or foreign) are threatened or, to the Company’s knowledge, contemplated.

(xxxii) Financial Statements. The financial statements included in each Registration Statement and the General Disclosure Package present fairly in all material respects the financial position of the Company and its consolidated subsidiaries as of the dates shown and their results of operations and cash flows for the periods shown, and, except as otherwise disclosed in the General Disclosure Package, such financial statements have been prepared in conformity with IFRS applied on a consistent basis and the schedules included in each Registration Statement present fairly the information required to be stated therein in all material respects.

(xxxiii) No Material Adverse Change in Business. Except as disclosed in the General Disclosure Package and the Final Prospectus, since the end of the period covered by the latest audited financial statements included in the General Disclosure Package, there has been no change, nor any development or event involving a prospective change, in the condition (financial or otherwise), results of operations, business, properties or prospects of the Company and its subsidiaries, taken as a whole, that is material and adverse. Except as disclosed in or contemplated by the General Disclosure Package and the Final Prospectus, since such date there has been no dividend or distribution of any kind declared, paid or made by the Company on any class of its capital stock. Except as disclosed in or contemplated by the General Disclosure Package and the Final Prospectus, since such date there has been no material adverse change in the capital stock, short-term indebtedness, long-term indebtedness, net current assets or net assets of the Company and its subsidiaries.

(xxxiv) Reserves . The information underlying the estimates of reserves included in the General Disclosure Package, including, without limitation, production, costs of operation and development, current prices for production, agreements relating to current and future operations and sales of production, was true and correct in all material respects on the dates such estimates were made and such information was supplied and was prepared in accordance with customary industry practices; estimates of such reserves and present values, as described in the General Disclosure Package and the Final Prospectus, comply in all material respects with the applicable requirements of Regulation S-X and Regulation S-K under the Act.

(xxxv) Investment Company Act. The Company is not and, after giving effect to the offering and sale of the Offered Securities and the application of the proceeds thereof as described in the General Disclosure Package, will not be an “investment company” as defined in the Investment Company Act of 1940 (the “ Investment Company Act ”).

(xxxvi) Ratings. No “nationally recognized statistical rating organization” as such term is defined for purposes of Section 3(a)(62) of the Exchange Act (i) has imposed (or has informed the Company that it is considering imposing) any condition (financial or otherwise) on the Company’s retaining any rating assigned to the Company or any securities of the Company or (ii) has indicated to the Company that it is considering any of the actions described in Section 7(c)(ii) hereof.

(xxxvii) PFIC Status. The Company believes that it was not a “passive foreign investment company” (“ PFIC ”) as defined in Section 1297 of the Code, for its most recently completed taxable year and, based on the Company’s current projected income, assets and activities, the Company does not expect to be classified as a PFIC for any subsequent taxable year.

(xxxviii) Use of Funds . None of the Company or any of its subsidiaries or any director, officer or employee acting on behalf of the Company or any of its subsidiaries has (i) used any corporate funds of the Company or any of its subsidiaries for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds of the Company or any of its subsidiaries; (iii) made any payment or taken any action from any funds of the Company or any of its subsidiaries which violated any applicable provision of Peruvian anti-corruption law or of the U.S. Foreign Corrupt Practices Act of 1977 (the “ FCPA ”), to the extent applicable; (iv) violated or is in violation of any provision of the Bribery Act 2010 of the United Kingdom; or (v) made any bribe, unlawful rebate, unlawful payoff, unlawful influence payment, kickback or other unlawful payment. The Company and its subsidiaries have instituted and maintain policies and procedures designed to ensure continued compliance with all applicable anti-corruption legislation.

(xxxix) Money Laundering Laws . The operations of the Company and its subsidiaries are and have been conducted in compliance with applicable financial recordkeeping and reporting requirements of the money laundering statutes of Peru and all other applicable jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued and administered or enforced by any governmental agency (collectively, “ Money Laundering Laws ”) and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any of its subsidiaries with respect to the Money Laundering Laws is pending or, to the knowledge of the Company, threatened.

(xl) No Conflicts with Sanctions Laws . None of the Company, any of its subsidiaries or, to the knowledge of the Company or any of its subsidiaries, any director, officer, agent, employee or affiliate of the Company or any of its subsidiaries is currently the subject or the target of any sanctions administered or enforced by the U.S. Government, (including, without limitation, the Office of Foreign Assets Control of the U.S. Department of the Treasury (“ OFAC ”)), the United Nations Security Council (“ UNSC ”), the European Union, Her Majesty’s Treasury (“ HMT ”), or other relevant sanctions authority (collectively, “ Sanctions ”), nor is the Company or any of its subsidiaries located, organized or resident in a country or territory that is the subject of Sanctions; and the Company will not directly or indirectly use the net proceeds of the offering of the Offered Securities hereunder, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture or consortium partner, or other person or entity (i) to fund any activities of or business with any person, or in any country or territory, that, at the time of such funding, is the subject of Sanctions or (ii) in any other manner that will result in a violation by any person of Sanctions.

(xli) Payment of Dividends . Except in the events of cash distributions due to the redemption of the Offered Shares, capital reductions or dissolution and liquidation of the Company, all dividends and other distributions declared and payable on the Offered Shares, in cash or in shares, may, under current Peruvian law and regulations, including any foreign exchange or foreign currency approvals, be paid to the Depositary and to the holders of the Offered Securities, as the case may be, in Peruvian nuevos soles and may be converted freely into foreign currency that may be transferred out of Peru in accordance with the Deposit Agreement. All cash dividends made to holders of the Offered Securities who are non-residents of Peru are subject to a Peruvian withholding income tax, at a rate of 4.1% over the cash dividend paid and are otherwise currently free and clear of any other tax, duty, withholding or deduction in Peru. All dividends and other distributions do not require any governmental authorization in Peru.

(xlii) Immunity . Except for specific immunities set forth in Article 616 of the Peruvian Code of Civil Procedure (Código Procesal Civil) legislative Decree 768, of which the sole unified text was approved through Ministerial Resolution 010-93-JUS for attachments on certain assets dedicated to the rendering of indispensable public services pursuant to which such assets may not be subject to preliminary attachments that may affect the normal rendering of such services, neither the Company nor any of its subsidiaries, nor any of their respective assets or revenues, has immunity, including sovereign immunity, from any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution or otherwise) or from jurisdiction of any court of (i) any jurisdiction in which it owns or leases property or assets, (ii) the United States or the State of New York or (iii) Peru or any political subdivision thereof. To the extent that the Company or any of its subsidiaries or any of their respective assets or revenues may have or may hereafter have immunity from any such court, the Company has, pursuant to Section 17 of this Agreement, waived, and it will waive, or will cause its subsidiaries to waive, such immunity to the extent permitted by law.

(xliii) Valid Choice of Law . The choice of laws of the State of New York as the governing law of this Agreement is a valid choice of law under the laws of Peru and will be recognized by the courts of Peru, except as may be limited by article 2,049 of the Peruvian Civil Code, under which provisions of foreign law shall be excluded if they are incompatible with international public policy or good morals, in which case, the laws of Peru will apply.

(xliv) Absence of Exchange Controls . No exchange control authorization or any other authorization, approval, consent or license of any governmental authority or agency is required for (i) the payment of Peruvian nuevos soles by the Company to the Depositary pursuant to the terms of the Deposit Agreement or (ii) the conversion of such nuevos soles into United States dollars or the payment of such United States dollars to the holders of Offered Securities for purposes of paying dividends or other distributions, except, in the case of clause (ii), in the events of cash distributions due to the redemption of the Offered Shares, capital reductions or dissolution and liquidation of the Company.

3. Purchase, Sale and Delivery of Offered Securities . On the basis of the representations, warranties and agreements and subject to the terms and conditions set forth herein, the Company agrees to sell to each Underwriter, and each Underwriter agrees, severally and not jointly, to purchase from the Company at a purchase price of US$[ ] per ADS, that number of Firm Securities set forth opposite the name of such Underwriter in Schedule A hereto.

The Company will deliver the Firm Securities to or as instructed by the Representatives for the accounts of the several Underwriters through the facilities of the Depository Trust Company (“ DTC ”) against payment of the purchase price by the Underwriters in federal (same day) funds by wire transfer to an account at a bank acceptable to the Representatives drawn to the order of the Company, at [ ] A.M., New York time, on [ ], 2013, or at such other time not later than seven full business days thereafter as the Representatives and the Company determine, such time being herein referred to as the “ First Closing Date ”. For purposes of Rule 15c6-1 under the Securities Exchange Act of 1934, the First Closing Date (if later than the otherwise applicable settlement date) shall be the settlement date for payment of funds and delivery of securities for all the Offered Securities sold pursuant to the offering. The Firm Securities so to be delivered or evidence of their issuance will be made available for checking at the office of Davis Polk & Wardwell LLP at 450 Lexington Avenue, New York, New York 10017, at least 24 hours prior to the First Closing Date.

In addition, upon written notice from the Representatives given to the Company from time to time not more than 30 days subsequent to the date of the Final Prospectus, the Underwriters may purchase all or less than all of the Optional Securities at the same purchase price per ADS to be paid for the Firm Securities. The Company agrees to sell to the Underwriters the Optional Securities and such Optional Securities shall be purchased from the Company for the account of each Underwriter in the same proportion as the number of Firm Securities set forth opposite such Underwriter’s name bears to the total number of Firm Securities (subject to adjustment by the Representatives to eliminate fractions). No Optional Securities shall be sold or delivered unless the Firm Securities previously have been, or simultaneously are, sold and delivered. The right to purchase the Optional Securities or any portion thereof may be exercised from time to time and to the extent not previously exercised may be surrendered and terminated at any time upon notice by the Representatives to the Company.

Each time for the delivery of and payment for the Optional Securities, being herein referred to as an “ Optional Closing Date ”, which may be the First Closing Date (the First Closing Date and each Optional Closing Date, if any, being sometimes referred to as a “ Closing Date ”), shall be determined by the Representatives but shall be not earlier than two full business days or later than five full business days after written notice of election to purchase Optional Securities is given, provided that if such notice is given earlier than one full business day prior to the First Closing Date, the applicable Optional Closing Date may be the First Closing Date. The Company will deliver the Optional Securities being purchased on each Optional Closing Date to or as instructed by the Representatives for the accounts of the several Underwriters in a form reasonably acceptable to the Representatives, against payment of the purchase price therefor in federal (same day) funds by wire transfer to an account at a bank acceptable to the Representatives drawn to the order of the Company. The Optional Securities being purchased on each Optional Closing Date or evidence of their issuance will be made available for checking at the above office at a reasonable time in advance of such Optional Closing Date.

4. Offering by Underwriters . It is understood that the several Underwriters propose to offer the Offered Securities for sale to the public as set forth in the Final Prospectus.

5. Certain Agreements of the Company . The Company agrees with the several Underwriters that:

(a) Additional Filings. Unless filed pursuant to Rule 462(c) as part of the Additional Registration Statement in accordance with the next sentence, the Company will file the Final Prospectus, in a form approved by the Representatives, with the Commission pursuant to and in accordance with subparagraph (1) (or, if applicable and if consented to by the Representatives, subparagraph (4)) of Rule 424(b) not later than the earlier of (A) the second business day following the execution and delivery of this Agreement or (B) the fifteenth business day after the Effective Time of the Initial Registration Statement. The Company will advise the Representatives promptly of any such filing pursuant to Rule 424(b) and provide satisfactory evidence to the Representatives of such timely filing. If an Additional Registration Statement is necessary to register a portion of the Offered Securities under the Act but the Effective Time thereof has not occurred as of the execution and delivery of this Agreement, the Company will file the Additional Registration Statement or, if filed, will file a post-effective amendment thereto with the Commission pursuant to and in accordance with Rule 462(b) on or prior to 10:00 P.M., New York time, on the date of this Agreement or, if earlier, on or prior to the time the Final Prospectus is finalized and distributed to any Underwriter, or will make such filing at such later date as shall have been consented to by the Representatives.

(b) Filing of Amendments; Response to Commission Requests. The Company will promptly advise the Representatives of any proposal to amend or supplement at any time the Initial Registration Statement, any Additional Registration Statement or any Statutory Prospectus and will not effect such amendment or supplementation without the Representatives’ reasonable consent; and the Company will also advise the Representatives promptly of (i) the effectiveness of any Additional Registration Statement (if its Effective Time is subsequent to the execution and delivery of this Agreement), (ii) any amendment or supplementation of a Registration Statement or any Statutory Prospectus, (iii) any request by the Commission or its staff for any amendment to any Registration Statement, for any supplement to any Statutory Prospectus or for any additional information, (iv) the institution by the Commission of any stop order proceedings in respect of a Registration Statement or the threatening of any proceeding for that purpose, and (v) the receipt by the Company of any notification with respect to the suspension of the qualification of the Offered Securities in any jurisdiction or the institution or threatening of any proceedings for such purpose. The Company will use its commercially reasonable efforts to prevent the issuance of any such stop order or the suspension of any such qualification and, if issued, to obtain as soon as possible the withdrawal thereof.

(c) Continued Compliance with Securities Laws. If, at any time when a prospectus relating to the Offered Securities is (or but for the exemption in Rule 172 would be) required to be delivered under the Act by any Underwriter or dealer, any event occurs as a result of which the Final Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or if it is necessary at any time to amend the Registration Statement or supplement the Final Prospectus to comply with the Act, the Company will promptly notify the Representatives of such event and will promptly prepare and file with the Commission and furnish, at its own expense, to the Underwriters and the dealers and any other dealers upon request of the Representatives, an amendment or supplement which will correct such statement or omission or an amendment which will effect such compliance. Neither the Representatives’ consent to, nor the Underwriters’ delivery of, any such amendment or supplement shall constitute a waiver of any of the conditions set forth in Section 7 hereof.

(d) Rule 158. As soon as practicable, but not later than the Availability Date (as defined below), the Company will make generally available to its security holders an earnings statement covering a period of at least 12 months beginning after the Effective Date of the Initial Registration Statement (or, if later, the Effective Time of the Additional Registration Statement) which will satisfy the provisions of Section 11(a) of the Act and Rule 158 under the Act. For the purpose of the preceding sentence, “ Availability Date ” means the 45th day after the end of the fourth fiscal quarter following the fiscal quarter that includes such Effective Time, except that, if such fourth fiscal quarter is the last quarter of the Company’s fiscal year, “ Availability Date ” means the 90th day after the end of such fourth fiscal quarter.

(e) Furnishing of Prospectuses. The Company will furnish to the Representatives copies of each Registration Statement (one of which will be signed and will include all exhibits), each related Statutory Prospectus, and, so long as a prospectus relating to the Offered Securities is (or but for the exemption in Rule 172 would be) required to be delivered under the Act, the Final Prospectus and all amendments and supplements to such documents, in each case in such quantities as the Representatives reasonably request. The Final Prospectus shall be so furnished on or prior to 3:00 P.M., New York time, on the business day following the execution and delivery of this Agreement. All other such documents shall be so furnished as soon as available. The Company will pay the expenses of printing and distributing to the Underwriters all such documents.

(f) Blue Sky Qualifications. The Company will arrange for the qualification of the Offered Securities for sale under the laws of such jurisdictions as the Representatives reasonably designate and will continue such qualifications in effect so long as required for the distribution of the Offered Securities, provided that the Company shall not be required to (i) qualify as a foreign corporation or other entity or as a dealer in securities in any such jurisdiction where it would not otherwise be required to so qualify, (ii) file any general consent to service of process in any such jurisdiction or (iii) subject itself to taxation in any such jurisdiction if it is not otherwise so subject.

(g) Reporting Requirements. During the period of 5 years hereafter, the Company will furnish to the Representatives and, upon request, to each of the other Underwriters, as soon as practicable after the end of each fiscal year, a copy of its annual report to stockholders for such year; and the Company will furnish to the Representatives as soon as available, a copy of each report and any definitive proxy statement of the Company filed with the Commission under the Exchange Act or mailed to stockholders. However, so long as the Company is subject to the reporting requirements of either Section 13 or Section 15(d) of the Exchange Act and is timely filing reports with the Commission on EDGAR, it is not required to furnish such reports or statements to the Underwriters.

(h) Payment of Expenses. The Company agrees with the several Underwriters that the Company will pay all expenses incident to the performance of the obligations of the Company under this Agreement, including but not limited to any filing fees and other expenses (including reasonable and documented fees and disbursements of local and international counsels to the Underwriters) incurred in connection with qualification of the Offered Securities for sale under the laws of such jurisdictions as the Representatives designate and the preparation and printing of memoranda or other documents relating thereto, costs and expenses related to the review by the Financial Industry Regulatory Authority (“ FINRA ”) of the Offered Securities (including filing fees and the reasonable and documented fees and expenses of counsel for the Underwriters relating to such review), reasonable and documented costs and expenses relating to investor presentations or any “road show” in connection with the offering and sale of the Offered Securities including, without limitation, any reasonable and documented expenses of the Representatives and the Company’s officers and employees, such as travel, meals and group events and the chartering of airplanes, fees and expenses incident to listing the Offered Securities on the NYSE, fees and expenses of local and international counsels to the Company, fees and expenses of the Company’s independent public accountants, fees and expenses of local and international counsels to the Underwriters, fees and expenses in connection with the registration of the Offered Securities under

the Act and the Exchange Act and expenses incurred in printing and distributing preliminary prospectuses and the Final Prospectus (including any amendments and supplements thereto) to the Underwriters and for expenses incurred for preparing, printing and distributing any Issuer Free Writing Prospectuses to investors or prospective investors. In addition, the Company shall at all times be responsible for the Underwriters’ documented out-of-pocket expenses in addition to those expenses listed in the foregoing sentence, provided that the Underwriters shall not incur (x) such additional out-of-pocket expenses in excess of US$750,000 in the aggregate or (y) any individual or series of related expenditures in excess of US$75,000, in each case without the prior written consent of the Company, which consent shall not be unreasonably withheld.

(i) Use of Proceeds. The Company will use the net proceeds received by it in connection with this offering in the manner described under the “Use of Proceeds” heading of the General Disclosure Package and the Company does not intend to use any of the proceeds from the sale of the Offered Securities hereunder to repay any outstanding debt owed to any affiliate of any Underwriter.

(j) Absence of Manipulation. The Company will not take, directly or indirectly, any action designed to or that would constitute or that might reasonably be expected to cause or result in, stabilization or manipulation of the price of any securities of the Company to facilitate the sale or resale of the Offered Securities.

(k) Taxes. (A) The Company will indemnify and hold harmless the Underwriters against any documentary, stamp or similar issue tax, including any interest and penalties, on the creation, issue and sale of the Offered Securities and on the execution and delivery of this Agreement. (B) Except as otherwise required by applicable law, all payments to be made by the Company under this Agreement to the Underwriters shall be paid free and clear of any deduction or withholding for or on account of, any present or future taxes, levies, imposts, duties, fees, assessments or other charges of whatever nature (including any amounts that result from the payment of fees, compensation or reimbursement of costs contemplated in this Agreement or in the Deposit Agreement), imposed by Peru, or by any department, agency or other political subdivision or taxing authority thereof, and all interest, penalties or similar liabilities with respect thereto (collectively, “ Peruvian Taxes ”). If any Peruvian Taxes are required by law to be deducted or withheld by the Company in connection with such payments, the Company shall pay such additional amounts as may be necessary in order that the net amounts received after such withholding or deduction shall equal the amounts that would have been received if no withholding or deduction had been made; provided, however, no additional amounts shall be payable on account of (i) any Peruvian Taxes which would not have been imposed but for the existence of any present or former connection between an Underwriter and Peru, including the Underwriter having been a resident thereof or being or having been present or engaged in trade or business therein or having had a permanent establishment therein (other than a connection arising solely from the receipt of payments under this Agreement) or (ii) any Peruvian Taxes imposed or withheld by reason of the failure by any Underwriter to comply with a request of the Company addressed to the Underwriters to provide certification, information, documents or other evidence concerning the nationality, residence or identity of the Underwriters or to make any declaration or similar claim or satisfy any other reporting requirement relating to such matters, which is required by a statute, treaty, regulation or administrative practice of the jurisdiction imposing such Peruvian Taxes as a precondition to exemption from all or part of such Peruvian Taxes.

(l) (A) Restriction on Sale of Securities by Company. For the period specified below (the “ Lock-Up Period ”), the Company will not, directly or indirectly, take any of the following actions with respect to its ADSs or Common Shares or any securities convertible into or exchangeable or exercisable for any of its ADSs or Common Shares (“ Lock-Up Securities ”): (i) offer, sell, issue, contract to sell, pledge or otherwise dispose of Lock-Up Securities, (ii) offer, sell, issue, contract to sell, contract to purchase or grant any option, right or warrant to purchase Lock-Up Securities, (iii) enter into any swap, hedge or any other agreement that transfers, in

whole or in part, the economic consequences of ownership of Lock-Up Securities, (iv) establish or increase a put equivalent position or liquidate or decrease a call equivalent position in Lock-Up Securities within the meaning of Section 16 of the Exchange Act or (v) file with the Commission a registration statement under the Act relating to Lock-Up Securities, or publicly disclose the intention to take any such action, without the prior written consent of the Representatives, whether any such transaction described in (i) to (iv) above is to be settled by delivery of the Lock-Up Securities or such other securities, in cash or otherwise, except for issuances pursuant to the sale of ADSs or Common Shares to the Underwriters, grants of employee stock options pursuant to the terms of a plan in effect on the date hereof, issuances of Lock-Up Securities pursuant to the exercise of such options or the exercise of any other employee stock options outstanding on the date hereof. The initial Lock-Up Period will commence on the date hereof and continue for 180 days after the date hereof or such earlier date that the Representatives consent to in writing; provided, however, that if (1) during the last 17 days of the initial Lock-Up Period, the Company releases earnings results or material news or a material event relating to the Company occurs or (2) prior to the expiration of the initial Lock-Up Period, the Company announces that it will release earnings results during the 16-day period beginning on the last day of the initial Lock-Up Period, then in each case the Lock-Up Period will be extended until the expiration of the 18-day period beginning on the date of release of the earnings results or the occurrence of the materials news or material event, as applicable, unless the Representatives waive, in writing, such extension. The Company will provide the Representatives with notice of any announcement described in clause (2) of the preceding sentence that gives rise to an extension of the Lock-Up Period.

(B) Agreement to Announce Lock-Up Waiver. If the Representatives, in their sole discretion, agree to release or waive the restrictions set forth in a lock-up letter described in Section 7(k) hereof for an officer or director of the Company and provide the Company with notice of the impending release or waiver at least three business days before the effective date of the release or waiver, the Company agrees to announce the impending release or waiver by a press release substantially in the form of Exhibit H hereto through a major news service at least two business days before the effective date of the release or waiver.

(m) Deposit of Shares . The Company will, prior to the First Closing Date or the Additional Closing Date, as the case may be, deposit the Offered Shares with the Depositary in accordance with the provisions of the Deposit Agreement and otherwise comply with the Deposit Agreement so that ADSs will be issued by the Depositary against receipt of such Offered Shares and delivered to the Underwriters at the First Closing Date or the Additional Closing Date, as the case may be.

(n) Registration of the Capital Increase . At the request of the Representatives, the Company will furnish to the Representatives evidence of registration of the Company’s capital increase with the Peruvian Public Registry, as soon as reasonably practicable.

6. Free Writing Prospectuses . The Company represents and agrees that, unless it obtains the prior consent of the Representatives, and each Underwriter represents and agrees that, unless it obtains the prior consent of the Company and the Representatives, it has not made and will not make any offer relating to the Offered Securities that would constitute an Issuer Free Writing Prospectus, or that would otherwise constitute a “free writing prospectus,” as defined in Rule 405, required to be filed with the Commission. Any such free writing prospectus consented to by the Company and the Representatives is hereinafter referred to as a “ Permitted Free Writing Prospectus .” The Company represents that it has treated and agrees that it will treat each Permitted Free Writing Prospectus as an “issuer free writing prospectus,” as defined in Rule 433, and has complied and will comply with the requirements of Rules 164 and 433 applicable to any Permitted Free Writing Prospectus, including timely Commission filing where required, legending and record keeping. The Company represents that it has satisfied and agrees that it will satisfy the conditions in Rule 433 to avoid a requirement to file with the Commission any electronic road show.

7. Conditions of the Obligations of the Underwriters . The obligations of the several Underwriters to purchase and pay for the Firm Securities on the First Closing Date and the Optional Securities to be purchased on each Optional Closing Date will be subject to the accuracy of the representations and warranties of the Company herein (as though made on such Closing Date), to the accuracy of the statements of Company officers made pursuant to the provisions hereof, to the performance by the Company of its obligations hereunder and to the following additional conditions precedent:

(a) Accountants’ Comfort Letter. The Representatives shall have received letters, dated, respectively, the date hereof and each Closing Date, of PriceWaterhouseCoopers confirming that they are a registered public accounting firm and independent public accountants within the meaning of the Securities Laws and substantially in the form of Exhibit A hereto (except that, in any letter dated a Closing Date, the specified date referred to in Exhibit A hereto shall be a date no more than three days prior to such Closing Date).

(b) Effectiveness of Registration Statement. The Registration Statement, the ADS Registration Statement and the Exchange Act Registration Statement shall have become effective. If the Effective Time of the Additional Registration Statement (if any) is not prior to the execution and delivery of this Agreement, such Effective Time shall have occurred not later than 10:00 P.M., New York time, on the date of this Agreement or, if earlier, the time the Final Prospectus is finalized and distributed to any Underwriter, or shall have occurred at such later time as shall have been consented to by the Representatives. The Final Prospectus shall have been filed with the Commission in accordance with the Rules and Regulations and Section 5(a) hereof. Prior to such Closing Date, no stop order suspending the effectiveness of a Registration Statement shall have been issued and no proceedings for that purpose shall have been instituted or, to the knowledge of the Company or the Representatives, shall be contemplated by the Commission.

(c) No Material Adverse Change. Subsequent to the execution and delivery of this Agreement, there shall not have occurred (i) any change, or any development or event involving a prospective change, in the condition (financial or otherwise), results of operations, business, properties or prospects of the Company and its subsidiaries taken as a whole which, in the judgment of the Representatives, is material and adverse and makes it impractical or inadvisable to market the Offered Securities; (ii) any downgrading in the rating of any debt securities of the Company by any “nationally recognized statistical rating organization” (as defined for purposes of Section 3(a)(62) of the Exchange Act), or any public announcement that any such organization has under surveillance or review its rating of any debt securities of the Company (other than an announcement with positive implications of a possible upgrading, and no implication of a possible downgrading, of such rating); (iii) any change in U.S., Peruvian or international financial, political or economic conditions or currency exchange rates or exchange controls the effect of which is such as to make it, in the judgment of the Representatives, impractical to market or to enforce contracts for the sale of the Offered Securities, whether in the primary market or in respect of dealings in the secondary market; (iv) any suspension or material limitation of trading in securities generally on the NYSE, or any setting of minimum or maximum prices for trading on such exchange; (v) any suspension of trading of any securities of the Company on any exchange or in the over-the-counter market; (vi) any banking moratorium declared by any U.S. federal, New York or Peruvian authorities; (vii) any major disruption of settlements of securities, payment or clearance services in the United States or Peru; or (viii) any attack on, outbreak or escalation of hostilities or act of terrorism involving the United States or Peru, any declaration of war by Congress or any other national or international calamity or emergency if, in the judgment of the Representatives, the effect of any such attack, outbreak, escalation, act, declaration, calamity or emergency is such as to make it impractical or inadvisable to market the Offered Securities or to enforce contracts for the sale of the Offered Securities.

(d) Opinion and 10b-5 Letter of United States Counsel for the Company. The Representatives shall have received an opinion, and a negative assurance letter, dated such Closing Date, of Simpson Thacher & Bartlett LLP, U.S. counsel for the Company, substantially in the form of Exhibit B hereto.

(e) Opinion and 10b-5 Letter of Peruvian Counsel for the Company. The Representatives shall have received an opinion, and a negative assurance letter, dated such Closing Date, of Estudio Muñiz, Ramirez, Perez-Taiman & Olaya, Peruvian counsel for the Company, substantially in the form of Exhibit C hereto.

(f) Opinion and 10b-5 Letter of United States Counsel for the Underwriters. The Representatives shall have received from Davis Polk & Wardwell LLP, U.S. counsel for the Underwriters, such opinion or opinions, and a negative assurance letter, dated such Closing Date, with respect to such matters as the Representatives may require and in form and substance satisfactory to the Representatives, and the Company shall have furnished to such counsel such documents as they request for the purpose of enabling them to pass upon such matters.

(g) Opinion and 10b-5 Letter of Peruvian Counsel for the Underwriters. The Representatives shall have received from Estudio Rubio, Leguía, Normand, Peruvian counsel for the Underwriters, such opinion or opinions, and a negative assurance letter, dated such Closing Date, with respect to such matters as the Representatives may require and in form and substance satisfactory to the Representatives, and the Company shall have furnished to such counsel such documents as they request for the purpose of enabling them to pass upon such matters.

(h) Opinion of Depositary’s Counsel . The Representatives shall have received an opinion from Ziegler, Ziegler & Associates LLP, counsel for the Depositary, substantially in the form of Exhibit D hereto.

(i) Reserve Engineers’ Comfort Letter . The Representatives shall have received a letter, dated the date of this Agreement, of Netherland, Sewell & Associates, Inc., substantially in the form of Exhibit E hereto.

(j) CFO Certificate . The Representatives shall have received certificates, dated, respectively, the date hereof and the Closing Date, from the Chief Financial Officer of the Company, relating to certain certified information, substantially in the form of Exhibit F hereto.

(k) Officer’s Certificate. The Representatives shall have received a certificate, dated such Closing Date, of an executive officer of the Company and a principal financial or accounting officer of the Company in which such officers shall state that, to the knowledge of such officer after due inquiry, the representations and warranties of the Company in this Agreement are true and correct; the Company has complied with all agreements and satisfied all conditions on its part to be performed or satisfied hereunder at or prior to such Closing Date; no stop order suspending the effectiveness of any Registration Statement has been issued and no proceedings for that purpose have been instituted or, to the best of their knowledge and after reasonable investigation, are contemplated by the Commission; the Additional Registration Statement (if any) satisfying the requirements of subparagraphs (1) and (3) of Rule 462(b) was timely filed pursuant to Rule 462(b), including payment of the applicable filing fee in accordance with Rule 111(a) or (b) of Regulation S-T of the Commission; and, subsequent to the date of the most recent financial statements in the General Disclosure Package, there has been no material adverse change, nor any development or event involving a prospective material adverse change, in the condition (financial or otherwise), results of operations, business, properties or prospects of the Company and its subsidiaries taken as a whole except as set forth in the General Disclosure Package or as described in such certificate.

(l) Lock-Up Agreements. On or prior to the date hereof, the Representatives shall have received lock-up letters, each substantially in the form of Exhibit G hereto, from each of the officers and directors and shareholders of the Company listed on Schedule C hereto.

(m) Execution of Deposit Agreement . The Company and the Depositary shall have executed and delivered the Deposit Agreement and the Deposit Agreement shall be in full force and effect and the Company and the Depositary shall have taken all actions necessary to permit the deposit of the Offered Shares and the issuance of the Offered Securities in accordance with the Deposit Agreement.

(n) Depositary’s Certificates . The Depositary shall have furnished or caused to be furnished to the Representatives at such Closing Date, certificates satisfactory to the Representatives evidencing the deposit with it of the Offered Shares being so deposited against issuance of ADRs evidencing the Offered Securities to be delivered by the Company at such Closing Date, and the execution, countersignature (if applicable), issuance and delivery of ADRs evidencing such Offered Securities pursuant to the Deposit Agreement and such other matters related thereto as the Representatives may reasonably request.

(o) No Legal Impediment to Issuance . No action shall have been taken and no statute, rule, regulation or order shall have been enacted, adopted or issued by any federal, state or foreign governmental or regulatory authority that would, as of such Closing Date, prevent the issuance or sale of the Offered Securities; and no injunction or order of any federal, state or foreign court shall have been issued that would, as of such Closing Date, prevent the issuance or sale of the Offered Securities.

(p) Exchange Listing . The Offered Securities shall have been approved to be listed on the NYSE.

(q) Additional Documents . On or prior to any Closing Date, the Company shall have furnished to the Representatives such further certificates (including incumbency certificates) and documents as the Representatives may reasonably request in connection with this Agreement.

The Company will furnish the Representatives with such conformed copies of such opinions, certificates, letters and documents as the Representatives reasonably request. The Representatives may in their sole discretion waive on behalf of the Underwriters compliance with any conditions to the obligations of the Underwriters hereunder, whether in respect of an Optional Closing Date or otherwise.

8. Indemnification and Contribution . (a) Indemnification of Underwriters. The Company will indemnify and hold harmless each Underwriter, its partners, members, directors, officers, employees, agents, affiliates and each person, if any, who controls such Underwriter within the meaning of Section 15 of the Act or Section 20 of the Exchange Act (each an “ Indemnified Party ”), against any and all losses, claims, damages or liabilities, joint or several, to which such Indemnified Party may become subject, under the Act, the Exchange Act, other Federal or state statutory law or regulation or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any part of any Registration Statement at any time, any Statutory Prospectus as of any time, the Final Prospectus or any Issuer Free Writing Prospectus, or arise out of or are based upon the omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse each Indemnified Party for any legal or other expenses reasonably incurred by such Indemnified Party in connection with investigating or defending against any loss, claim, damage, liability, action, litigation, investigation or proceeding whatsoever (whether or not such Indemnified Party is a party thereto), whether threatened or commenced, and in connection with the enforcement of this provision with respect to any of the above as such expenses are incurred; provided, however, that the Company will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement in or omission or alleged omission from any of such documents in reliance upon and in conformity with written information furnished to the Company by any Underwriter through the Representatives specifically for use therein; it being understood and agreed that the only such information furnished by any Underwriter consists of the information described as such in subsection (b) below.

(b) Indemnification of Company. Each Underwriter will severally and not jointly indemnify and hold harmless the Company, each of its directors and each of its officers who signs a Registration Statement and each person, if any, who controls the Company within the meaning of Section 15 of the Act or Section 20 of the Exchange Act, (each, an “ Underwriter Indemnified Party ”) against any losses, claims, damages or liabilities to which such Underwriter Indemnified Party may become subject, under the Act, the Exchange Act, or other Federal or state statutory law or regulation or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any Registration Statement at any time, any Statutory Prospectus at any time, the Final Prospectus or any Issuer Free Writing Prospectus or arise out of or are based upon the omission or the alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information furnished to the Company by such Underwriter through the Representatives specifically for use therein, and will reimburse any legal or other expenses reasonably incurred by such Underwriter Indemnified Party in connection with investigating or defending against any such loss, claim, damage, liability, action, litigation, investigation or proceeding whatsoever (whether or not such Underwriter Indemnified Party is a party thereto), whether threatened or commenced, based upon any such untrue statement or omission, or any such alleged untrue statement or omission as such expenses are incurred; it being understood and agreed that the only such information furnished by any Underwriter consists of the following information in the Final Prospectus furnished on behalf of each Underwriter: the concession and reallowance figures appearing in the sixth paragraph under the heading “Underwriting” and the information contained in the eighth and sixteenth paragraphs under the heading “Underwriting”.

(c) Actions against Parties; Notification. Promptly after receipt by an indemnified party under this Section of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against an indemnifying party under subsection (a) or (b) above, notify the indemnifying party of the commencement thereof; but the failure to notify the indemnifying party shall not relieve it from any liability that it may have under subsection (a) or (b) above except to the extent that it has been materially prejudiced (through the forfeiture of substantive rights or defenses) by such failure; and provided further that the failure to notify the indemnifying party shall not relieve it from any liability that it may have to an indemnified party otherwise than under subsection (a) or (b) above. In case any such action is brought against any indemnified party and it notifies an indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel (in addition to any local counsel) satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party will not be liable to such indemnified party under this Section for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation. No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened action in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party unless such settlement (i) includes an unconditional release of such indemnified party from all liability on any claims that are the subject matter of such action and (ii) does not include a statement as to, or an admission of, fault, culpability or a failure to act by or on behalf of an indemnified party.

(d) Contribution. If the indemnification provided for in this Section is unavailable or insufficient to hold harmless an indemnified party under subsection (a) or (b) above, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of the losses, claims, damages or liabilities referred to in subsection (a) or (b) above (i) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the Underwriters on the other from the offering of the Securities or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company on the one hand and the Underwriters on the other in connection with the statements or omissions which resulted in such losses,

claims, damages or liabilities as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and the Underwriters on the other shall be deemed to be in the same proportion as the total net proceeds from the offering (before deducting expenses) received by the Company bear to the total underwriting discounts and commissions received by the Underwriters. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or the Underwriters and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The amount paid by an indemnified party as a result of the losses, claims, damages or liabilities referred to in the first sentence of this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any action or claim which is the subject of this subsection (d). Notwithstanding the provisions of this subsection (d), no Underwriter shall be required to contribute any amount in excess of the amount by which the total underwriting discounts and commissions received by such Underwriter with respect to the offering of the Offered Securities exceeds the amount of any damages that such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters’ obligations in this subsection (d) to contribute are several in proportion to their respective underwriting obligations and not joint. The Company and the Underwriters agree that it would not be just and equitable if contribution pursuant to this Section 8(e) were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in this Section 8(d).

9. Default of Underwriters . If any Underwriter or Underwriters default in their obligations to purchase Offered Securities hereunder on either the First or any Optional Closing Date and the aggregate number of Offered Securities that such defaulting Underwriter or Underwriters agreed but failed to purchase does not exceed 10% of the total number of Offered Securities that the Underwriters are obligated to purchase on such Closing Date, the Representatives may make arrangements satisfactory to the Company for the purchase of such Offered Securities by other persons, including any of the Underwriters, but if no such arrangements are made by such Closing Date, the non-defaulting Underwriters shall be obligated severally, in proportion to their respective commitments hereunder, to purchase the Offered Securities that such defaulting Underwriters agreed but failed to purchase on such Closing Date. If any Underwriter or Underwriters so default and the aggregate number of Offered Securities with respect to which such default or defaults occur exceeds 10% of the total number of Offered Securities that the Underwriters are obligated to purchase on such Closing Date and arrangements satisfactory to the Representatives and the Company for the purchase of such Offered Securities by other persons are not made within 36 hours after such default, this Agreement will terminate without liability on the part of any non-defaulting Underwriter or the Company, except as provided in Section 10 (provided that if such default occurs with respect to Optional Securities after the First Closing Date, this Agreement will not terminate as to the Firm Securities or any Optional Securities purchased prior to such termination). As used in this Agreement, the term “Underwriter” includes any person substituted for an Underwriter under this Section. Nothing herein will relieve a defaulting Underwriter from liability for its default.

10. Survival of Certain Representations and Obligations . The respective indemnities, agreements, representations, warranties and other statements of the Company or its officers and of the several Underwriters set forth in or made pursuant to this Agreement will remain in full force and effect, regardless of any investigation, or statement as to the results thereof, made by or on behalf of any Underwriter, the Company or any of their respective representatives, officers or directors or any controlling person, and will survive delivery of and payment for the Offered Securities. If the purchase of the Offered Securities by the Underwriters is not consummated for any reason other than solely because of the termination of this Agreement pursuant to Section 9 hereof, the Company will reimburse the Underwriters for all out-of-pocket expenses (including fees and disbursements of counsel) reasonably incurred and documented by them in connection with the offering of the Offered Securities, and the respective obligations of the Company and the Underwriters pursuant to Section 8 hereof shall remain in effect. In addition, if any Offered Securities have been purchased hereunder, the representations and warranties in Section 2 and all obligations under Section 5 shall also remain in effect.

11. Notices . All communications hereunder will be in writing and, if sent to the Underwriters, will be mailed, delivered or telegraphed and confirmed to Credit Suisse Securities (USA) LLC, Eleven Madison Avenue, New York, N.Y. 10010-3629 Facsimile: (212) 325-4296, Attention: LCD-IBD, J.P. Morgan Securities LLC., 383 Madison Avenue, New York, NY 10179 Facsimile: (212) 622-8358, Attention: Equity Syndicate Desk, and Morgan Stanley & Co. LLC, 1585 Broadway, New York, NY 10036 Attention: Equity Syndicate Desk, with a copy to the Legal Department or, if sent to the Company, will be mailed, delivered or telegraphed and confirmed to it at Graña y Montero S.A.A., Av. Paseo de la República Surquillo Lima 34, Peru, Attention: Claudia Drago Morante; provided, however, that any notice to an Underwriter pursuant to Section 8 will be mailed, delivered or telegraphed and confirmed to such Underwriter.

12. Successors . This Agreement will inure to the benefit of and be binding upon the parties hereto and their respective personal representatives and successors and the officers and directors and controlling persons referred to in Section 7, and no other person will have any right or obligation hereunder.

13. Representation . The Representatives will act for the several Underwriters in connection with the transactions contemplated by this Agreement, and any action under this Agreement taken by the Representatives will be binding upon all the Underwriters.

14. Counterparts . This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same Agreement.

15. Absence of Fiduciary Relationship. The Company acknowledges and agrees that:

(a) No Other Relationship. The Representatives have been retained solely to act as underwriters in connection with the sale of the Offered Securities and that no fiduciary, advisory or agency relationship between the Company and the Representatives has been created in respect of any of the transactions contemplated by this Agreement or the Final Prospectus, irrespective of whether the Representatives have advised or are advising the Company on other matters;

(b) Arms’ Length Negotiations. The price of the Offered Securities set forth in this Agreement was established by the Company following discussions and arms-length negotiations with the Representatives and the Company is capable of evaluating and understanding and understands and accepts the terms, risks and conditions of the transactions contemplated by this Agreement;

(c) Absence of Obligation to Disclose. The Company has been advised that the Representatives and their affiliates are engaged in a broad range of transactions which may involve interests that differ from those of the Company and that the Representatives have no obligation to disclose such interests and transactions to the Company by virtue of any fiduciary, advisory or agency relationship; and

(d) Waiver. The Company waives, to the fullest extent permitted by law, any claims it may have against the Representatives for breach of fiduciary duty or alleged breach of fiduciary duty and agrees that the Representatives shall have no liability (whether direct or indirect) to the Company in respect of such a fiduciary duty claim or to any person asserting a fiduciary duty claim on behalf of or in right of the Company, including stockholders, employees or creditors of the Company.

16. Applicable Law . This Agreement and any claim, controversy or dispute relating to or arising out of this Agreement shall be governed by, and construed in accordance with, the laws of the State of New York.

The Company hereby submits to the non-exclusive jurisdiction of the Federal and state courts in the Borough of Manhattan in The City of New York in any suit or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. The Company irrevocably and unconditionally waives any objection to the laying of venue of any suit or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby in Federal and state courts in the Borough of Manhattan in the City of New York and irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such suit or proceeding in any such court has been brought in an inconvenient forum. The Company has appointed CT Corporation System, at its offices located at 111 Eighth Avenue, New York, New York 10011, as their authorized agent (“ Authorized Agent ”) upon whom process may be served in any suit, action or proceeding arising out of or based upon this Agreement or the transactions contemplated herein that may be instituted in any U.S. federal or state court in New York City, by any Underwriter, the directors, officers, employees, affiliates and agents of any Underwriter, or by any person who controls any Underwriter within the meaning of Section 15 of the Act or Section 20 of the Exchange Act. Such appointment shall be irrevocable. The Company hereby represents and warrants that its Authorized Agent has accepted such appointment and has agreed to act as said agent for service of process, and the Company agrees to take any and all action, including the filing of any and all documents that may be necessary to continue such appointment in full force and effect as aforesaid. Service of process in compliance with applicable requirements upon the Company’s Authorized Agent shall be deemed, in every respect, effective service of process upon the Company. Notwithstanding the foregoing, any action arising out of or based upon this Agreement may be instituted by any Underwriter, the directors, officers, employees, affiliates and agents of any Underwriter, or by any person who controls any Underwriter within the meaning of Section 15 of the Act or Section 20 of the Exchange Act, in any court of competent jurisdiction in Peru. The parties hereto each hereby waive any right to trial by jury in any action, proceeding or counterclaim arising out of or relating to this Agreement.

The obligation of the Company pursuant to this Agreement in respect of any sum due to any Underwriter shall, notwithstanding any judgment in a currency other than United States dollars, not be discharged until the first business day, following receipt by such Underwriter of any sum adjudged to be so due in such other currency, on which (and only to the extent that) such Underwriter may in accordance with normal banking procedures purchase United States dollars with such other currency; if the United States dollars so purchased are less than the sum originally due to such Underwriter hereunder, the Company agrees, as a separate obligation and notwithstanding any such judgment, to indemnify such Underwriter against such loss. If the United States dollars so purchased are greater than the sum originally due to such Underwriter hereunder, such Underwriter agrees to pay to the Company an amount equal to the excess of the dollars so purchased over the sum originally due to such Underwriter hereunder.

17. Waiver of Immunity . To the extent that the Company has or hereafter may acquire any immunity (sovereign or otherwise) from any legal action, suit or proceeding, from jurisdiction of any court or from set-off or any legal process (whether service or notice, attachment in aid or otherwise) with respect to itself or any of its property, the Company hereby irrevocably waives and agrees not to plead or claim such immunity in respect of its obligations under this Agreement to the extent permitted by applicable law.

If the foregoing is in accordance with the Representatives’ understanding of our agreement, kindly sign and return to the Company one of the counterparts hereof, whereupon it will become a binding agreement between the Company and the several Underwriters in accordance with its terms.


Very truly yours,

G RAÑA Y M ONTERO S.A.A.

By:
		Name:
		Title:

The foregoing Underwriting Agreement is hereby confirmed and accepted as of the date first above written.

Acting on behalf of themselves and as the Representatives of the several Underwriters.


C REDIT S UISSE S ECURITIES (USA) LLC

By:
		Name:
		Title:


J.P. M ORGAN S ECURITIES LLC

By:
		Name:
		Title:


M ORGAN S TANLEY & C O . LLC

By:
		Name:
		Title:

SCHEDULE A


Underwriter		Number of Firm Securities to be Purchased
Credit Suisse Securities (USA) LLC
J.P. Morgan Securities LLC
Morgan Stanley & Co. LLC
Banco BTG Pactual S.A. – Cayman Branch
[ ]

Total

SCHEDULE B

1. General Use Free Writing Prospectuses (included in the General Disclosure Package)

“General Use Issuer Free Writing Prospectus” includes each of the following documents:

1. [ list other documents if applicable ]

2. Other Information Included in the General Disclosure Package

The following information is also included in the General Disclosure Package:

[1. The initial price to the public of the Offered Securities.

2. The number of Offered Securities.

3. [ list other information if applicable ]]

SCHEDULE C

List of Lock-Up Signatories

Directors :

José Graña Miró Quesada

Juan Carlos Antonio Montero Graña

Roberto Abusada Salah

José Chlimper Ackerman

José Antonio Colomer Guiu

Hugo Santa María Guzmán

Luis Miró Quesada Valega

Mario Alvarado Pflucker

Hernando Graña Acuña

Officers :

Mario Alvarado Pflucker

Mónica Miloslavich Hart

Antonio Rodriguez Canales

Claudia Drago Morante

Juan José Arrieta Ocampo

José Carlos Ascarza Revoredo

Dennis Gray Febres

Jorge Luis Izquierdo Ramírez

Antonio Cueto Saco

Gonzalo Ferraro Rey

Hernando Graña Acuña

Francisco Dulanto Swayne

Juan Manuel Lambarri Hierro

Luis Díaz Olivero

Jaime Dasso Botto

Walter Silva Santisteban Requejo

Jaime Targarona Arata

Rolando Ponce Vergara

Klaus Winkler Speringer

César Neyra Rodriguez

Control group entities :

GH Holding Group (José Graña Miró Quesada)

Bethel Enterprises Inc. (Juan Carlos Antonio Montero Graña)

Byron Development (Mario Alvarado Pflucker)

EXHIBIT A

[To come]

EXHIBIT B

[To come]

EXHIBIT C

[To come]

EXHIBIT D

[To come]

EXHIBIT E

[To come]

EXHIBIT F

[To come]

EXHIBIT G

, 2013

Graña y Montero S.A.A.

Av. Paseo de la República 4667

Oficina C-401, Surquillo

Lima 34, Perú

Credit Suisse Securities (USA) LLC

Eleven Madison Avenue

New York, NY 10010-3629

J.P. Morgan Securities LLC

383 Madison Avenue

New York, NY 10179

Morgan Stanley & Co. LLC

1585 Broadway

New York, NY 10036

Dear Sirs:

As an inducement to the Underwriters to execute the Underwriting Agreement (the “ Underwriting Agreement ”) among Graña y Montero S.A.A. and Credit Suisse Securities (USA) LLC, J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC, as representatives of the Underwriters named therein (the “ Representatives ”), pursuant to which an offering will be made that is intended to result in the establishment of a public market for American depositary shares (the “ ADSs ”) representing common shares, par value S/.1.00 per common share (the “ Common Shares ”) of Graña y Montero S.A.A., and any successor (by merger or otherwise) thereto, (the “ Company ”), the undersigned hereby agrees with each Underwriter to be named in the Underwriting Agreement that during the period specified in the following paragraph (the “ Lock-Up Period ”), without the prior written consent of the Representatives, the undersigned will not offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, any ADSs or Common Shares of the Company, or securities convertible into or exchangeable or exercisable for any ADSs or Common Shares of the Company (the “ Lock-Up Securities ”), enter into a transaction which would have the same effect, or enter into any swap, hedge or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of the Lock-Up Securities, whether any such aforementioned transaction is to be settled by delivery of the Lock-Up Securities or such other securities, in cash or otherwise, or publicly disclose the intention to make any such offer, sale, pledge or disposition, or to enter into any such transaction, swap, hedge or other arrangement, without, in each case, the prior written consent of the Representatives. In addition, the undersigned agrees that, without the prior written consent of the Representatives, it will not, during the Lock-Up Period, make any demand for or exercise any right with respect to, the registration of any Lock-Up Securities or any security convertible into or exercisable or exchangeable for the Lock-Up Securities.

The initial Lock-Up Period will commence on the date of this Lock-Up Agreement and continue and include the date 180 days after the public offering date set forth on the final prospectus used to sell the ADSs (the “ Public Offering Date ”) pursuant to the Underwriting Agreement, to which the Underwriters are or expect to become parties; provided, however, that if (1) during the last 17 days of the initial Lock-Up Period,

the Company releases earnings results or material news or a material event relating to the Company occurs or (2) prior to the expiration of the initial Lock-Up Period, the Company announces that it will release earnings results during the 16-day period beginning on the last day of the initial Lock-Up Period, then in either case the Lock-Up Period will be extended until the expiration of the 18-day period beginning on the date of release of the earnings results or the occurrence of the material news or material event, as applicable, unless the Representatives waive, in writing, such extension.

The undersigned agrees that, prior to engaging in any transaction or taking any other action that is subject to the terms of this Lock-Up Agreement during the period from the date of this Lock-Up Agreement to and including the 34 ^th day following the expiration of the initial Lock-Up Period, it will give notice thereof to the Company and will not consummate such transaction or take any such action unless it has received written confirmation from the Company that the Lock-Up Period (as may have been extended pursuant to the previous paragraph) has expired.

Any Lock-Up Securities received upon exercise of options granted to the undersigned will also be subject to this Lock-Up Agreement. The following transfers of Lock-Up Securities may be made: (i) transfers as a bona fide gift or gifts, (ii) transfers or distributions to family members, stockholders of the undersigned or a trust for the direct or indirect benefit of the undersigned and/or a family member of the undersigned, (iii) upon the death of the undersigned, transfers by the estate of the undersigned, and (iv) transfers to any business entity that controls, is controlled by, or is under common control of the undersigned; provided that in the case of clauses (i) to (iv) the transferee, donee or distributee agrees to be bound in writing by the terms of this Lock-Up Agreement prior to such transfer and no filing by any party (donor, donee, transferor, transferee, distributor or distributee) under the Securities Exchange Act of 1934 (the “ Exchange Act ”) shall be required or shall be voluntarily made in connection with such transfer (other than a filing on a Form 5 made after the expiration of the Lock-Up Period).

In furtherance of the foregoing, the Company and its transfer agent and registrar are hereby authorized to decline to make any transfer of Lock-Up Securities if such transfer would constitute a violation or breach of this Lock-Up Agreement.

If the undersigned is an officer or director of the Company, (i) the Representatives agree that, at least three business days before the effective date of any release or waiver of the foregoing restrictions in connection with a transfer of Lock-Up Securities, the Representatives will notify the Company of the impending release or waiver, and (ii) the Company has agreed in the Underwriting Agreement to announce the impending release or waiver by press release through a major news service at least two business days before the effective date of the release or waiver. Any release or waiver granted by the Representatives hereunder to any such officer or director shall only be effective two business days after the publication date of such press release. The provisions of this paragraph will not apply if (a) the release or waiver is effected solely to permit a transfer not for consideration and (b) the transferee has agreed in writing to be bound by the same terms described in this Lock-Up Agreement to the extent and for the duration that such terms remain in effect at the time of the transfer.

This Lock-Up Agreement shall be binding on the undersigned and the successors, heirs, personal representatives and assigns of the undersigned. This Lock-Up Agreement shall lapse and become null and void if the Public Offering Date shall not have occurred on or before October 31, 2013. This Lock-Up Agreement shall be governed by, and construed in accordance with, the laws of the State of New York.

Very truly yours,


By:
		Name:
		Title:

EXHIBIT H

[Form of Press Release]

Graña y Montero S.A.A.

[Date]

Graña y Montero S.A.A. (“Company”) announced today that Credit Suisse Securities (USA) LLC, J.P. Morgan Securities LLC and Morgan Stanley & Co. LLC, the lead book-running managers in the Company’s recent public sale of American Depositary Shares (“ADSs”) representing the Company’s common shares, are [waiving] [releasing] a lock-up restriction with respect to ADSs of the Company held by [certain officers or directors] [an officer or director] of the Company. The [waiver] [release] will take effect on , 20 , and the ADSs may be sold on or after such date.

This press release is not an offer for sale of the securities in the United States or in any other jurisdiction where such offer is prohibited, and such securities may not be offered or sold in the United States absent registration or an exemption from registration under the United States Securities Act of 1933, as amended.

EXHIBIT 4.2

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TABLE OF CONTENTS


		Page
PARTIES			1
RECITALS			1

Section 1.	Certain Definitions
(a)	ADR Register		1
(b)	ADRs; Direct Registration ADRs		1
(c)	ADS		1
(d)	Custodian		1
(e)	Deliver, execute, issue et al.		1
(f)	Delivery Order		2
(g)	Deposited Securities		2
(h)	Direct Registration System		2
(i)	Holder		2
(j)	Securities Act of 1933		2
(k)	Securities Exchange Act of 1934		2
(l)	Shares		2
(m)	Transfer Office		2
(n)	Withdrawal Order		2
Section 2.	ADRs		2
Section 3.	Deposit of Shares		3
Section 4.	Issue of ADRs		4
Section 5.	Distributions on Deposited Securities		4
Section 6.	Withdrawal of Deposited Securities		4
Section 7.	Substitution of ADRs		4
Section 8.	Cancellation and Destruction of ADRs; Maintenance of Records		5
Section 9.	The Custodian		5
Section 10.	Co-Registrars and Co-Transfer Agents		6
Section 11.	Lists of Holders		6
Section 12.	Depositary’s Agents		6
Section 13.	Successor Depositary		6
Section 14.	Reports		7
Section 15.	Additional Shares		7
Section 16.	Indemnification		8
Section 17.	Notices		9
Section 18.	Miscellaneous		9
Section 19.	Consent to Jurisdiction; Appointment of Agent for Service of Process		10
TESTIMONIUM			12
SIGNATURES			12

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		Page
EXHIBIT A
FORM OF FACE OF ADR			A-1

Introductory Paragraph			A-1

(1)	Issuance and Pre-Release of ADSs		A-2
(2)	Withdrawal of Deposited Securities		A-3
(3)	Transfers of ADRs		A-4
(4)	Certain Limitations		A-5
(5)	Taxes		A-5
(6)	Disclosure of Interests		A-6
(7)	Charges of Depositary		A-7
(8)	Available Information		A-8
(9)	Execution		A-9

Signature of Depositary			A-9

Address of Depositary’s Office			A-9

FORM OF REVERSE OF ADR			A-10

(10)	Distributions on Deposited Securities		A-10
(11)	Record Dates		A-11
(12)	Voting of Deposited Securities		A-11
(13)	Changes Affecting Deposited Securities		A-12
(14)	Exoneration		A-13
(15)	Resignation and Removal of Depositary; the Custodian		A-15
(16)	Amendment		A-15
(17)	Termination		A-16
(18)	Appointment		A-17
(19)	Waiver		A-17

– ii –

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DEPOSIT AGREEMENT dated as of , 2013 (the “Deposit Agreement”) among GRAÑA Y MONTERO S.A.A. and its successors (the “Company”), JPMORGAN CHASE BANK, N.A., as depositary hereunder (the “Depositary”), and all holders from time to time of American Depositary Receipts issued hereunder (“ADRs”) evidencing American Depositary Shares (“ADSs”) representing deposited Shares (defined below). The Company hereby appoints the Depositary as depositary for the Deposited Securities (as defined below) and hereby authorizes and directs the Depositary to act in accordance with the terms set forth in this Deposit Agreement. All capitalized terms used herein have the meanings ascribed to them in Section 1 or elsewhere in this Deposit Agreement. The parties hereto agree as follows:

1. Certain Definitions .

(a) “ ADR Register ” is defined in paragraph (3) of the form of ADR.

(b) “ ADRs ” mean the American Depositary Receipts executed and delivered hereunder. ADRs may be either in physical certificated form or Direct Registration ADRs (as hereinafter defined). ADRs in physical certificated form, and the terms and conditions governing the Direct Registration ADRs, shall be substantially in the form of Exhibit A annexed hereto (the “ form of ADR ”). The term “ Direct Registration ADR ” means an ADR, the ownership of which is recorded on the Direct Registration System. References to “ADRs” shall include certificated ADRs and Direct Registration ADRs, unless the context otherwise requires. The form of ADR is hereby incorporated herein and made a part hereof; the provisions of the form of ADR shall be binding upon the parties hereto.

(c) Subject to paragraph (13) of the form of ADR, each “ ADS ” evidenced by an ADR represents the right to receive Shares and a pro rata share in any other Deposited Securities.

(d) “ Custodian ” means the agent or agents of the Depositary (singly or collectively, as the context requires) and any additional or substitute Custodian appointed pursuant to Section 9.

(e) The terms “ deliver ”, “ execute ”, “ issue ”, “ register ”, “ surrender ”, “ transfer ” or “ cancel ”, when used with respect to Direct Registration ADRs, shall refer to an entry or entries or an electronic transfer or transfers in the Direct Registration System, and, when used with respect to ADRs in physical certificated form, shall refer to the physical delivery, execution, issuance, registration, surrender, transfer or cancellation of certificates representing the ADRs.

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(f) “ Delivery Order ” is defined in Section 3.

(g) “ Deposited Securities ” as of any time means all Shares at such time deposited under this Deposit Agreement and any and all other Shares, securities, property and cash at such time held by the Depositary or the Custodian in respect or in lieu of such deposited Shares and other Shares, securities, property and cash.

(h) “ Direct Registration System ” means the system for the uncertificated registration of ownership of securities established by The Depository Trust Company (“ DTC ”) or any successor thereto and utilized by the Depositary pursuant to which the Depositary may record the ownership of ADRs without the issuance of a certificate, which ownership shall be evidenced by periodic statements issued by the Depositary to the Holders entitled thereto. For purposes hereof, the Direct Registration System shall include access to the Profile Modification System maintained by DTC which provides for automated transfer of ownership between DTC and the Depositary.

(i) “ Holder ” means the person or persons in whose name an ADR is registered on the ADR Register.

(j) “ Securities Act of 1933 ” means the United States Securities Act of 1933, as from time to time amended.

(k) “ Securities Exchange Act of 1934 ” means the United States Securities Exchange Act of 1934, as from time to time amended.

(l) “ Shares ” mean the common shares of the Company (including any such shares initially represented by preliminary stock certificates ( certificados provisionales )), and shall include the rights to receive Shares specified in paragraph (1) of the form of ADR.

(m) “ Transfer Office ” is defined in paragraph (3) of the form of ADR.

(n) “ Withdrawal Order ” is defined in Section 6.

2. ADRs . (a) ADRs in certificated form shall be engraved, printed or otherwise reproduced at the discretion of the Depositary in accordance with its customary practices in its American depositary receipt business, or at the request of the Company typewritten and photocopied on plain or safety paper, and shall be substantially in the form set forth in the form of ADR, with such changes as may be required by the Depositary or the Company to comply with their obligations hereunder, any applicable law, regulation or usage or to indicate any special

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limitations or restrictions to which any particular ADRs are subject. ADRs may be issued in denominations of any number of ADSs. ADRs in certificated form shall be executed by the Depositary by the manual or facsimile signature of a duly authorized officer of the Depositary. ADRs in certificated form bearing the facsimile signature of anyone who was at the time of execution a duly authorized officer of the Depositary shall bind the Depositary, notwithstanding that such officer has ceased to hold such office prior to the delivery of such ADRs.

(b) Direct Registration ADRs . Notwithstanding anything in this Deposit Agreement or in the form of ADR to the contrary, ADSs shall be evidenced by Direct Registration ADRs, unless certificated ADRs are specifically requested by the Holder.

(c) Holders shall be bound by the terms and conditions of this Deposit Agreement and of the form of ADR, regardless of whether their ADRs are Direct Registration ADRs or certificated ADRs.

3. Deposit of Shares . In connection with the deposit of Shares hereunder, the Depositary or the Custodian may require the following in form reasonably satisfactory to it: (a) a written order directing the Depositary to issue to, or upon the written order of, the person or persons designated in such order a Direct Registration ADR or ADRs evidencing the number of ADSs representing such deposited Shares (a “Delivery Order”); (b) proper endorsements or duly executed instruments of transfer in respect of such deposited Shares; (c) instruments assigning to the Depositary, the Custodian or a nominee of either any distribution on or in respect of such deposited Shares or indemnity therefor; and (d) proxies entitling the Custodian to vote such deposited Shares. As soon as practicable after the Custodian receives Deposited Securities pursuant to any such deposit or pursuant to paragraph (10) or (13) of the form of ADR, the Custodian shall present such Deposited Securities for registration of transfer into the name of the Depositary, the Custodian or a nominee of either, to the extent such registration is practicable, at the cost and expense of the person making such deposit (or for whose benefit such deposit is made) and shall obtain evidence satisfactory to it of such registration. Deposited Securities shall be held by the Custodian for the account and to the order of the Depositary at such place or places and in such manner as the Depositary shall determine. Deposited Securities may be delivered by the Custodian to any person only under the circumstances expressly contemplated in this Deposit Agreement. To the extent that the provisions of or governing the Shares make delivery of certificates therefor impracticable, Shares may be deposited hereunder by such delivery thereof as the Depositary or the Custodian may reasonably accept, including, without limitation, by causing them to be credited to an account maintained by the Custodian for such purpose with the Company or an accredited intermediary, such as a bank, acting as a registrar for the Shares, together with delivery of the documents, payments and Delivery Order referred to herein to the Custodian or the Depositary.

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4. Issue of ADRs . After any such deposit of Shares, the Custodian shall notify the Depositary of such deposit and of the information contained in any related Delivery Order by letter, first class airmail postage prepaid, or, at the request, risk and expense of the person making the deposit, by cable, telex or facsimile transmission. After receiving such notice from the Custodian, the Depositary, subject to this Deposit Agreement, shall properly issue at the Transfer Office, to or upon the order of any person named in such notice, an ADR or ADRs registered as requested and evidencing the aggregate ADSs to which such person is entitled.

5. Distributions on Deposited Securities . To the extent that the Depositary determines in its reasonable discretion that any distribution pursuant to paragraph (10) of the form of ADR is not practicable with respect to any Holder, the Depositary may, after consultation with the Company if practicable, make such distribution as it so deems practicable, including the distribution of foreign currency, securities or property (or appropriate documents evidencing the right to receive foreign currency, securities or property) or the retention thereof as Deposited Securities with respect to such Holder’s ADRs (without liability for interest thereon or the investment thereof).

6. Withdrawal of Deposited Securities . In connection with any surrender of an ADR for withdrawal of the Deposited Securities represented by the ADSs evidenced thereby, the Depositary may require proper endorsement in blank of such ADR (or duly executed instruments of transfer thereof in blank) and the Holder’s written order directing the Depositary to cause the Deposited Securities represented by the ADSs evidenced by such ADR to be withdrawn and delivered to, or upon the written order of, any person designated in such order (a “Withdrawal Order”). Directions from the Depositary to the Custodian to deliver Deposited Securities shall be given by letter, first class airmail postage prepaid, or, at the request, risk and expense of the Holder, by cable, telex or facsimile transmission. Delivery of Deposited Securities may be made by the delivery of certificates (which, if required by law shall be properly endorsed or accompanied by properly executed instruments of transfer or, if such certificates may be registered, registered in the name of such Holder or as ordered by such Holder in any Withdrawal Order) or by such other means as the Depositary may deem practicable, including, without limitation, by transfer of record ownership thereof to an account designated in the Withdrawal Order maintained either by the Company or an accredited intermediary, such as a bank, acting as a registrar for the Deposited Securities.

7. Substitution of ADRs . The Depositary shall execute and deliver a new Direct Registration ADR in exchange and substitution for any mutilated certificated ADR

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upon cancellation thereof or in lieu of and in substitution for such destroyed, lost or stolen certificated ADR, unless the Depositary has notice that such ADR has been acquired by a bona fide purchaser, upon the Holder thereof filing with the Depositary a request for such execution and delivery and a sufficient indemnity bond and satisfying any other reasonable requirements imposed by the Depositary.

8. Cancellation and Destruction of ADRs; Maintenance of Records . All ADRs surrendered to the Depositary shall be cancelled by the Depositary. The Depositary is authorized to destroy ADRs in certificated form so cancelled in accordance with its customary practices.

The Depositary agrees to maintain or cause its agents to maintain records of all ADRs surrendered and Deposited Securities withdrawn under Section 6 hereof and paragraph (2) of the form of ADR, substitute ADRs delivered under Section 7 hereof, and canceled or destroyed ADRs under this Section 8, in keeping with the procedures ordinarily followed by stock transfer agents located in the City of New York or as required by the laws or regulations governing the Depositary.

9. The Custodian . Any Custodian in acting hereunder shall be subject to the directions of the Depositary and shall be responsible solely to it. The Depositary reserves the right to add, replace or remove a Custodian. The Depositary will give prompt notice of any such action, which will be advance notice if practicable.

Any Custodian may resign from its duties hereunder by at least 30 days written notice to the Depositary. The Depositary may discharge any Custodian at any time upon notice to the Custodian being discharged. The Depositary will promptly inform the Company of any such discharge. Any Custodian ceasing to act hereunder as Custodian shall deliver, upon the instruction of the Depositary, all Deposited Securities held by it to a Custodian continuing to act. If upon the effectiveness of such resignation there would be no Custodian acting hereunder, the Depositary shall, promptly after receiving such notice, use commercially reasonable efforts to appoint a substitute custodian or custodians, each of which shall thereafter be a Custodian hereunder. Promptly after the appointment of a successor Custodian, the Depositary shall provide the Company with notice of such appointment. Notwithstanding anything to the contrary contained in this Deposit Agreement (including the ADRs), the Depositary shall not be responsible for, and shall incur no liability in connection with or arising from, any act or omission to act on the part of the Custodian except to the extent that the Custodian has (i) committed fraud or willful misconduct in the provision of custodial services to the Depositary or (ii) failed to use reasonable care in the provision of custodial services to the Depositary as determined in accordance with the standards prevailing in the jurisdiction in which the Custodian is located.

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10. Co-Registrars and Co-Transfer Agents . The Depositary may appoint and remove (i) co-registrars to register ADRs and transfers, combinations and split-ups of ADRs and to countersign ADRs in accordance with the terms of any such appointment and (ii) co-transfer agents for the purpose of effecting transfers, combinations and split-ups of ADRs at designated transfer offices in addition to the Transfer Office on behalf of the Depositary. Each co-registrar or co-transfer agent (other than JPMorgan Chase Bank, N.A.) shall give notice in writing to the Company and the Depositary accepting such appointment and agreeing to be bound by the applicable terms of this Deposit Agreement.

11. Lists of Holders . The Company shall have the right to inspect transfer records of the Depositary and its agents and the ADR Register, take copies thereof and require the Depositary and its agents to supply copies of such portions of such records as the Company may request. The Depositary or its agent shall furnish to the Company promptly upon the written request of the Company, a list of the names, addresses and holdings of ADSs by all Holders as of a date within seven days of the Depositary’s receipt of such request.

12. Depositary’s Agents . The Depositary may perform its obligations under this Deposit Agreement through any agent appointed by it, provided that the Depositary shall notify the Company of such appointment and shall remain responsible for the performance of such obligations as if no agent were appointed, subject to paragraph (14) of the form of ADR.

13. Successor Depositary . The Depositary may at any time resign as Depositary hereunder by written notice of its election so to do delivered to the Company, such resignation to take effect upon the appointment of a successor depositary and its acceptance of such appointment as hereinafter provided. The Depositary may at any time be removed by the Company by providing no less than 60 days prior written notice of such removal to the Depositary, such removal to take effect the later of (i) the 60th day after such notice of removal is first provided and (ii) the appointment of a successor depositary and its acceptance of such appointment as hereinafter provided. Notwithstanding the foregoing, if upon the resignation or removal of the Depositary a successor depositary is not appointed within the applicable 60-day period, then the Depositary may elect to terminate this Deposit Agreement and the ADR and the provisions of said paragraph (17) shall thereafter govern the Depositary’s obligations hereunder. In case at any time the Depositary acting hereunder shall resign or be removed, the Company shall use its best efforts to appoint a successor depositary, which shall be a bank or trust company having an office in the Borough of Manhattan, The City of New York. Every successor depositary shall execute and deliver to its predecessor and to the Company an instrument in writing accepting its appointment hereunder, and thereupon such successor depositary, without any

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further act or deed, shall become fully vested with all the rights, powers, duties and obligations of its predecessor. The predecessor depositary, only upon payment of all sums due to it and on the written request of the Company, shall (i) execute and deliver an instrument transferring to such successor all rights and powers of such predecessor hereunder (other than its rights to indemnification and fees owing, each of which shall survive any such removal and/or resignation), (ii) duly assign, transfer and deliver all right, title and interest to the Deposited Securities to such successor, and (iii) deliver to such successor a list of the Holders of all outstanding ADRs. Any such successor depositary shall promptly mail notice of its appointment to such Holders. Any bank or trust company into or with which the Depositary may be merged or consolidated, or to which the Depositary shall transfer substantially all its American depositary receipt business, shall be the successor of the Depositary without the execution or filing of any document or any further act.

14. Reports . On or before the first date on which the Company gives notice, by publication or otherwise, of any meeting of holders of Shares or other Deposited Securities, or of any adjourned meeting of such holders, or of the taking of any action in respect of any cash or other distributions or the offering of any rights to such holders, the Company shall transmit to the Depositary a copy thereof in English or with an English translation or summary. The Company has delivered to the Depositary, the Custodian and any Transfer Office, a copy of all provisions of or governing the Shares and any other Deposited Securities issued by the Company or any affiliate of the Company and, promptly upon any change thereto, the Company shall deliver to the Depositary, the Custodian and any Transfer Office, a copy (in English or with an English translation) of such provisions as so changed. The Depositary and its agents may rely upon the Company’s delivery of all such communications, information and provisions for all purposes of this Deposit Agreement and the Depositary shall have no liability for the accuracy or completeness of any thereof. The Company agrees to be responsible for fulfilling, and complying with, any and all registration and reporting requirements of the Superintendencia del Mercado de Valores and any applicable Peruvian governmental and/or regulatory authorities and/or agencies required under applicable Peruvian Law as a requirement for, or as consequence of, the entering into or the execution of this Deposit Agreement.

15. Additional Shares . Neither the Company nor any company controlling, controlled by or under common control with the Company shall issue additional Shares, rights to subscribe for Shares, securities convertible into or exchangeable for Shares or rights to subscribe for any such securities or shall deposit any Shares under this Deposit Agreement, except under circumstances complying in all respects with the Securities Act of 1933. In the event of any issuance of additional securities the Company shall have no obligation to register such additional securities under the Securities Act of 1933 to the extent the Company in its discretion deems it necessary or advisable in order to avoid any requirement to register such additional securities under the

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Securities Act of 1933. At the reasonable request of the Depositary, the Company will furnish the Depositary with legal opinions, in forms and from counsels reasonably acceptable to the Depositary, dealing with such issues requested by the Depositary. The Depositary will use reasonable efforts to comply with written instructions of the Company not to accept for deposit hereunder any Shares identified in such instructions at such times and under such circumstances as may reasonably be specified in such instructions in order to facilitate the Company’s compliance with securities laws in the United States.

16. Indemnification . The Company shall indemnify, defend and save harmless each of the Depositary, the Custodian and their respective directors, officers, employees, agents and affiliates against, against any loss, liability or expense (including reasonable fees and expenses of counsel) which may arise out of acts performed or omitted, in connection with the provisions of this Deposit Agreement and of the ADRs, as the same may be amended, modified or supplemented from time to time in accordance herewith (i) by either the Depositary or a Custodian or their respective directors, officers, employees, agents and affiliates, except for any liability or expense directly arising out of the negligence or willful misconduct of the Depositary or its directors, officers or affiliates acting in their capacities as such hereunder, or (ii) by the Company or any of its directors, officers, employees, agents and affiliates.

The indemnities set forth in the preceding paragraph shall also apply to any liability or expense which may arise out of any misstatement or alleged misstatement or omission or alleged omission in any registration statement, proxy statement, prospectus (or placement memorandum), or preliminary prospectus (or preliminary placement memorandum) relating to the offer or sale of ADSs, except to the extent any such liability or expense arises out of (i) information relating to the Depositary or its agents (other than the Company), as applicable, furnished in writing by the Depositary and not changed or altered by the Company expressly for use in any of the foregoing documents or (ii) if such information is provided, the failure to state a material fact necessary to make the information provided not misleading.

Except as provided in the next succeeding paragraph or in Section 9 hereof, the Depositary shall indemnify, defend and save harmless the Company and its agents acting in such capacities hereunder against any direct loss, liability or expense (including reasonable fees and expenses of counsel) to the extent such loss is due to the negligence willful misconduct of the Depositary or, subject to the limitations provided for in Section 9 hereof, its agents acting in their capacities as such hereunder on behalf of the Depositary.

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Notwithstanding any other provision of this Deposit Agreement or the ADRs to the contrary, neither the Depositary nor any of its agents shall be liable for any indirect, special, punitive or consequential damages (including, without limitation, lost profits) of any form incurred by any person or entity, whether or not foreseeable and regardless of the type of action in which such a claim may be brought.

The obligations set forth in this Section 16 shall survive the termination of this Deposit Agreement and the succession or substitution of any indemnified person.

17. Notices . Notice to any Holder shall be deemed given when first mailed, first class postage prepaid, to the address of such Holder on the ADR Register or received by such Holder. Failure to notify a Holder or any defect in the notification to a Holder shall not affect the sufficiency of notification to other Holders or to the beneficial owners of ADSs held by such other Holders. Notice to the Depositary or the Company shall be deemed given when first received by it at the address or facsimile transmission number set forth in (a) or (b), respectively, or at such other address or facsimile transmission number as either may specify to the other by written notice:

(a)

JPMorgan Chase Bank, N.A.

1 Chase Manhattan Plaza, Floor 58

New York, NY, 10005-1401

Attention: ADR Administration

Fax: (212) 552-2614

(b)

Graña y Montero S.A.A.

Av. Paseo de la República 4667

4th Piso, Surquillo

Lima 34, Perú

Attention: Claudia Drago Morante

Fax: +51-1-213-6590

18. Miscellaneous . This Deposit Agreement is for the exclusive benefit of the Company, the Depositary, the Holders, and their respective successors hereunder, and shall not give any legal or equitable right, remedy or claim whatsoever to any other person. The Company advises the Depositary that because none of the services rendered hereunder are rendered or have effects in Peru (other than those of the Custodian in accepting Shares and otherwise acting in accordance herewith) the services provided hereunder are not subject to the Peruvian Consumer Protection Code (Law No. 29571). The Holders and owners of ADRs from time to time shall be parties to this Deposit Agreement and shall be bound by all of the provisions hereof. If any such provision is invalid, illegal or unenforceable in any respect, the remaining provisions shall in no way be affected thereby. This Deposit Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of which shall constitute one instrument.

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19. Consent to Jurisdiction . The Company irrevocably agrees that any legal suit, action or proceeding against the Company brought by the Depositary or any Holder, arising out of or based upon this Deposit Agreement or the transactions contemplated hereby, may be instituted in any state or federal court in New York, New York, and irrevocably waives any objection which it may now or hereafter have to the laying of venue of any such proceeding, and irrevocably submits to the non-exclusive jurisdiction of such courts in any such suit, action or proceeding. The Company also irrevocably agrees that any legal suit, action or proceeding against the Depositary brought by the Company, arising out of or based upon this Deposit Agreement or the transactions contemplated hereby, may only be instituted in a state or federal court in New York, New York.

The Company has appointed CT Corporation System, 111 Eighth Avenue, New York, New York 10011, as its authorized agent (the “Authorized Agent”) upon which process may be served in any action or proceeding arising out of or based on this Deposit Agreement or the transactions contemplated hereby which may be instituted in any state or federal court in New York, New York by the Depositary or any Holder, expressly consents to the exclusive jurisdiction of any such court in respect of any such action, and waives any other requirements of or objections to personal jurisdiction with respect thereto. Such appointment shall be irrevocable. The Company represents and warrants that the Authorized Agent has agreed to act as said agent for service of process and the Company agrees to take any and all action, including the filing of any and all documents and instruments, that may be necessary to continue such appointment in full force and effect as aforesaid. The Company further hereby irrevocably consents and agrees to the service of any and all legal process, summons, notices and documents in any suit, action or proceeding against the Company, by service by mail of a copy thereof upon the Authorized Agent (whether or not the appointment of such Authorized Agent shall for any reason prove to be ineffective or such Authorized Agent shall fail to accept or acknowledge such service), with a copy mailed to the Company by registered or certified air mail, postage prepaid, to its address provided in Section 17(b) hereof. The Company agrees that the failure of the Authorized Agent to give any notice of such service to it shall not impair or affect in any way the validity of such service or any judgment or award rendered in any action or proceeding based thereon. If, for any reason, the Authorized Agent named above or its successor shall no longer serve as agent of the Company to receive service of process, notice or papers in New York, the Company shall promptly appoint a successor acceptable to the Depositary, so as to serve and will promptly advise the Depositary thereof. In the event the Company fails to

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continue such designation and appointment in full force and effect, the Company hereby waives personal service of process and/or notice upon it and consents that any such service of process and/or notice may be made by certified or registered mail, return receipt requested, directed to the Company at its address last specified for notices hereunder, and service of process and/or notice so made shall be deemed completed five (5) days after the same shall have been so mailed. Notwithstanding the foregoing, any action based on this Deposit Agreement or the transactions contemplated hereby may be instituted by the Depositary and Holders in any competent court in the Republic of Peru and/or the United States.

By holding an ADS or an interest therein, Holders and owners of ADSs each irrevocably agree that any legal suit, action or proceeding against or involving the Company or the Depositary, arising out of or based upon this Deposit Agreement or the transactions contemplated hereby, may only be instituted in a state or federal court in New York, New York, and by holding an ADS or an interest therein each irrevocably waives any objection which it may now or hereafter have to the laying of venue of any such proceeding, and irrevocably submits to the exclusive jurisdiction of such courts in any such suit, action or proceeding.

To the extent that the Company or any of its properties, assets or revenues may have or may hereafter be entitled to, or have attributed to it, any right of immunity, on the grounds of sovereignty or otherwise, from any legal action, suit or proceeding, from the giving of any relief in any respect thereof, from setoff or counterclaim, from the jurisdiction of any court, from service of process, from attachment upon or prior to judgment, from attachment in aid of execution or judgment, or from execution of judgment, or other legal process or proceeding for the giving of any relief or for the enforcement of any judgment, in any jurisdiction in which proceedings may at any time be commenced, with respect to its obligations, liabilities or other matters under or arising out of or in connection with the Shares or Deposited Securities, the ADSs, the ADRs or this Deposit Agreement, the Company, to the fullest extent permitted by law, hereby irrevocably and unconditionally waives, and agrees not to plead or claim, any such immunity and consents to such relief and enforcement.

EACH PARTY TO THIS DEPOSIT AGREEMENT (INCLUDING, FOR AVOIDANCE OF DOUBT, EACH HOLDER AND BENEFICIAL OWNER AND/OR HOLDER OF INTERESTS IN ADRS) HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING AGAINST THE DEPOSITARY AND/OR THE COMPANY DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THE SHARES OR OTHER DEPOSITED SECURITIES, THE ADSs OR THE ADRs, THE DEPOSIT AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREIN OR THEREIN, OR THE BREACH HEREOF OR THEREOF (WHETHER BASED ON CONTRACT, TORT, COMMON LAW OR ANY OTHER THEORY).

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IN WITNESS WHEREOF, GRAÑA Y MONTERO S.A.A. and JPMORGAN CHASE BANK, N.A. have duly executed this Deposit Agreement as of the day and year first above set forth and all holders of ADRs shall become parties hereto upon acceptance by them of ADRs issued in accordance with the terms hereof.


GRAÑA Y MONTERO S.A.A.

By:
Name: Title

JPMORGAN CHASE BANK, N.A.

By:
Name: Title: Vice President

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EXHIBIT A

ANNEXED TO AND INCORPORATED IN

DEPOSIT AGREEMENT

[FORM OF FACE OF ADR]

No. of ADSs:

Number

Each ADS represents

CUSIP:

AMERICAN DEPOSITARY RECEIPT

evidencing

AMERICAN DEPOSITARY SHARES

representing

COMMON SHARES

GRAÑA Y MONTERO S.A.A.

(Incorporated under the laws of the Republic of Peru)

JPMORGAN CHASE BANK, N.A., a national banking association organized under the laws of the United States of America, as depositary hereunder (the “Depositary”), hereby certifies that is the registered owner (a “Holder”) of American Depositary Shares (“ADSs”), each (subject to paragraph (13)) representing common shares (including the rights to receive Shares described in paragraph (1), “Shares” and, together with any other securities, cash or property from time to time held by the Depositary in respect or in lieu of deposited Shares, the “Deposited Securities”), of Graña y Montero S.A.A., a corporation organized under the laws of the Republic of Peru (the “Company”), deposited under the Deposit Agreement dated as of , 2013 (as amended from time to time, the “Deposit Agreement”) among the Company, the Depositary and all Holders from time to time of American Depositary Receipts issued thereunder (“ADRs”), each of whom by accepting an ADR becomes a party thereto. The Deposit Agreement and this ADR (which includes the provisions set forth on the reverse hereof) shall be governed by and construed in accordance with the laws of the State of New York.

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(1) Issuance and Pre-Release of ADSs . This ADR is one of the ADRs issued under the Deposit Agreement. Subject to the other provisions hereof, the Depositary may so issue ADRs for delivery at the Transfer Office (as hereinafter defined) only against deposit of: (a) Shares in form satisfactory to the Custodian; (b) rights to receive Shares from the Company or any registrar, transfer agent, clearing agent or other entity recording Share ownership or transactions; or, (c) in accordance with the next paragraph hereof.

In its capacity as Depositary, the Depositary shall not lend Shares or ADSs; provided, however, that, unless requested in writing by the Company to cease doing so during reasonable periods necessary in order to enable compliance with applicable law, the Depositary may (i) issue ADSs prior to the receipt of Shares and (ii) deliver Shares prior to the receipt of ADSs for withdrawal of Deposited Securities, including ADSs which were issued under (i) above but for which Shares may not have been received (each such transaction a “Pre-Release”). The Depositary may receive ADSs in lieu of Shares under (i) above (which ADSs will promptly be canceled by the Depositary upon receipt by the Depositary) and receive Shares in lieu of ADSs under (ii) above. Each such Pre-Release will be subject to a written agreement whereby the person or entity (the “Applicant”) to whom ADSs or Shares are to be delivered (a) represents that at the time of the Pre-Release the Applicant or its customer owns the Shares or ADSs that are to be delivered by the Applicant under such Pre-Release, (b) agrees to indicate the Depositary as owner of such Shares or ADSs in its records and to hold such Shares or ADSs in trust for the Depositary until such Shares or ADSs are delivered to the Depositary or the Custodian, (c) unconditionally guarantees to deliver to the Depositary or the Custodian, as applicable, such Shares or ADSs, and (d) agrees to any additional restrictions or requirements that the Depositary deems appropriate. Each such Pre-Release will be at all times fully collateralized with cash, U.S. government securities or such other collateral as the Depositary deems appropriate, terminable by the Depositary on not more than five (5) business days’ notice and subject to such further indemnities and credit regulations as the Depositary deems appropriate. The Depositary will normally limit the number of ADSs and Shares involved in such Pre-Release at any one time to thirty percent (30%) of the ADSs outstanding (without giving effect to ADSs outstanding under (i) above), provided, however, that the Depositary reserves the right to change or disregard such limit from time to time as it deems appropriate. The Depositary may also set limits with respect to the number of ADSs and Shares involved in Pre-Release with any one person on a case-by-case basis as it deems appropriate. The Depositary may retain for its own account any compensation received by it in conjunction with the foregoing. Collateral provided in connection with Pre-Release transactions, but not the earnings thereon, shall be held for the benefit of the Holders (other than the Applicant).

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Every person depositing Shares under the Deposit Agreement represents and warrants that (a) such Shares and the certificates therefor are duly authorized, validly issued and outstanding, fully paid, non-assessable and legally obtained by such person (b) all pre-emptive and comparable rights, if any, with respect to such Shares have been validly waived or exercised, (c) that the person making such deposit is duly authorized so to do, (d) the Shares presented for deposit are free and clear of any lien, encumbrance, security interest, charge, mortgage or adverse claim and (e) that such Shares (A) are not “restricted securities” as such term is defined in Rule 144 under the Securities Act of 1933 (“Restricted Securities”) unless at the time of deposit the requirements of paragraphs (c), (e), (f) and (h) of Rule 144 shall not apply and such Shares may be freely transferred and may otherwise be offered and sold freely in the United States or (B) have been registered under the Securities Act of 1933. To the extent the person depositing Shares is an “affiliate” of the Company as such term is defined in Rule 144, the person also represents and warrants that upon the sale of the ADSs, all of the provisions of Rule 144 which enable the Shares to be freely sold (in the form of ADSs) will be fully complied with and, as a result thereof, all of the ADSs issued in respect of such Shares will not be on the sale thereof, Restricted Securities. Such representations and warranties shall survive the deposit and withdrawal of Shares and the issuance and cancellation of ADSs in respect thereof and the transfer of such ADSs. The Depositary will not knowingly accept for deposit under the Deposit Agreement any Shares required to be registered under the Securities Act of 1933 and not so registered; the Depositary may refuse to accept for such deposit any Shares identified by the Company in order to facilitate compliance with the requirements of the Securities Act of 1933 or the rules made thereunder

(2) Withdrawal of Deposited Securities . Subject to paragraphs (4) and (5), commencing with the time the preliminary stock certificates (certificados provisionales) have been converted into Shares upon surrender of (i) a certificated ADR in form satisfactory to the Depositary at the Transfer Office or (ii) proper instructions and documentation in the case of a Direct Registration ADR, the Holder hereof is entitled to delivery at, or to the extent in dematerialized form from, the Custodian’s office of the Deposited Securities at the time represented by the ADSs evidenced by this ADR, provided that the Depositary may deliver Shares prior to the receipt of ADSs for withdrawal of Deposited Securities, including ADSs which were issued under (1) above but for which Shares may not have been received (until such ADSs are actually deposited, “Prereleased Shares”) only if all the conditions in (1) above related to such Pre-Release are satisfied). At the request, risk and expense of the Holder hereof, the Depositary may deliver such Deposited Securities at such other

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place as may have been requested by the Holder. Notwithstanding any other provision of the Deposit Agreement or this ADR, the withdrawal of Deposited Securities may be restricted only for the reasons set forth in General Instruction I.A.(1) of Form F-6 (as such instructions may be amended from time to time) under the Securities Act of 1933. Some or all of the Shares may be held by the Custodian through CAVALI S.A. ICLV (“CAVALI”) book-entry settlement system. Under applicable Peruvian law, Shares deposited with CAVALI cannot be withdrawn from CAVALI without complying with applicable regulations in Peru. It is expected that a Holder wishing to hold Shares directly will be required to establish or maintain an account at CAVALI to receive delivery of such Shares. As of the date of this Deposit Agreement, CAVALI permits accounts to be held by individuals and entities through brokers or other custodians that are participants in CAVALI, and regulations regarding CAVALI do not discriminate between (a) citizens or residents and (b) non-citizens or non-residents of Peru.

(3) Transfers of ADRs . The Depositary or its agent will keep, at a designated transfer office (the “Transfer Office”), (a) a register (the “ADR Register”) for the registration, registration of transfer, combination and split-up of ADRs, and, in the case of Direct Registration ADRs, shall include the Direct Registration System, which at all reasonable times will be open for inspection by Holders and the Company for the purpose of communicating with Holders in the interest of the business of the Company or a matter relating to the Deposit Agreement and (b) facilities for the delivery and receipt of ADRs. The term ADR Register includes the Direct Registration System. Title to this ADR (and to the Deposited Securities represented by the ADSs evidenced hereby), when properly endorsed (in the case of ADRs in certificated form) or upon delivery to the Depositary of proper instruments of transfer, is transferable by delivery with the same effect as in the case of negotiable instruments under the laws of the State of New York; provided that the Depositary, notwithstanding any notice to the contrary, may treat the person in whose name this ADR is registered on the ADR Register as the absolute owner hereof for all purposes and neither the Depositary nor the Company will have any obligation or be subject to any liability under the Deposit Agreement to any holder of an ADR, unless such holder is the Holder thereof. Subject to paragraphs (4) and (5), this ADR is transferable on the ADR Register and may be split into other ADRs or combined with other ADRs into one ADR, evidencing the aggregate number of ADSs surrendered for split-up or combination, by the Holder hereof or by duly authorized attorney upon surrender of this ADR at the Transfer Office properly endorsed (in the case of ADRs in certificated form) or upon delivery to the Depositary of proper instruments of transfer and duly stamped as may be required by applicable law; provided that the Depositary may close the ADR Register at any time or from time to time when deemed expedient by it or when reasonably requested by the Company in order to enable the Company to comply with applicable law. At the request of a Holder, the Depositary shall, for the

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purpose of substituting a certificated ADR with a Direct Registration ADR, or vice versa, execute and deliver a certificated ADR or a Direct Registration ADR, as the case may be, for any authorized number of ADSs requested, evidencing the same aggregate number of ADSs as those evidenced by the certificated ADR or Direct Registration ADR, as the case may be, substituted.

(4) Certain Limitations . Prior to the issue, registration, registration of transfer, split-up or combination of any ADR, the delivery of any distribution in respect thereof, or, subject to the last sentence of paragraph (2), the withdrawal of any Deposited Securities, and from time to time in the case of clause (b)(ii) of this paragraph (4), the Company, the Depositary or the Custodian may require: (a) payment with respect thereto of (i) any stock transfer or other tax or other governmental charge, (ii) any stock transfer or registration fees in effect for the registration of transfers of Shares or other Deposited Securities upon any applicable register and (iii) any applicable charges as provided in paragraph (7) of this ADR; (b) the production of proof satisfactory to it of (i) the identity of any signatory and genuineness of any signature and (ii) such other information, including without limitation, information as to citizenship, residence, exchange control approval, beneficial ownership of any securities, compliance with applicable law, regulations, provisions of or governing Deposited Securities and terms of the Deposit Agreement and this ADR, as it may deem necessary or proper; and (c) compliance with such regulations as the Depositary may establish consistent with the Deposit Agreement. The issuance of ADRs, the acceptance of deposits of Shares, the registration, registration of transfer, split-up or combination of ADRs or, subject to the last sentence of paragraph (2), the withdrawal of Deposited Securities may be suspended, generally or in particular instances, when the ADR Register or any register for Deposited Securities is closed or when any such action is deemed advisable by the Depositary or when reasonably requested by the Company in order to enable the Company to comply with applicable law.

(5) Taxes . If any taxes or other governmental charges (including any penalties and/or interest) shall become payable by or on behalf of the Custodian or the Depositary with respect to this ADR, any Deposited Securities represented by the ADSs evidenced hereby or any distribution thereon, such tax or other governmental charge shall be paid by the Holder hereof to the Depositary and by holding or having held an ADR the Holder and all prior Holders hereof, jointly and severally, agree to indemnify, defend and save harmless each of the Depositary and its agents in respect thereof. The Depositary may refuse to effect any registration, registration of transfer, splitup or combination hereof or, subject to the last sentence of paragraph (2), any withdrawal of such Deposited Securities until such payment is made. The Depositary may also deduct from any distributions on or in respect of Deposited Securities, or may sell by public or private sale for the account of the Holder hereof

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any part or all of such Deposited Securities (after attempting by reasonable means to notify the Holder hereof prior to such sale), and may apply such deduction or the proceeds of any such sale in payment of such tax or other governmental charge, the Holder hereof remaining liable for any deficiency, and shall reduce the number of ADSs evidenced hereby to reflect any such sales of Shares. In connection with any distribution to Holders, the Company will remit to the appropriate governmental authority or agency all amounts (if any) required to be withheld and owing to such authority or agency by the Company; and the Depositary and the Custodian will remit to the appropriate governmental authority or agency all amounts (if any) required to be withheld and owing to such authority or agency by the Depositary or the Custodian. The Depositary will forward to the Company such information from its records maintained by it in its capacity as depositary hereunder as the Company may reasonably request to enable the Company to file any necessary reports with governmental authorities or agencies that are required in order to enable Holders to benefit from any applicable tax withholding treaties. If the Depositary determines that any distribution in property other than cash (including Shares or rights) on Deposited Securities is subject to any tax that the Depositary or the Custodian is obligated to withhold, the Depositary may dispose of all or a portion of such property in such amounts and in such manner as the Depositary deems necessary and practicable to pay such taxes, by public or private sale, and the Depositary shall distribute the net proceeds of any such sale or the balance of any such property after deduction of such taxes to the Holders entitled thereto. Each Holder of an ADR or an interest therein agrees to indemnify the Depositary, the Company, the Custodian and any of their respective directors, employees, agents and affiliates against, and hold each of them harmless from, any claims by any governmental authority with respect to taxes, additions to tax, penalties or interest arising out of any refund of taxes, reduced rate of withholding at source or other tax benefit obtained.

(6) Disclosure of Interests . To the extent that the provisions of or governing any Deposited Securities may require disclosure of or impose limits on beneficial or other ownership of Deposited Securities, other Shares and other securities and may provide for blocking transfer, voting or other rights to enforce such disclosure or limits, Holders and all persons holding ADRs agree to comply with all such disclosure requirements and ownership limitations and to comply with any reasonable Company instructions in respect thereof. The Depositary agrees to forward, upon the request and at the expense of the Company, any written request for beneficial ownership information from the Company to the Holders, and at the Company’s expense, to promptly forward to the Company any responses received by the Depositary. The Company reserves the right to instruct Holders to deliver their ADSs for cancellation and withdrawal of the Deposited Securities so as to permit the Company to deal directly with the Holder thereof as a holder of Shares and Holders agree to comply with such instructions. The Depositary agrees to cooperate with the Company in its

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efforts to inform Holders of the Company’s exercise of its rights under this paragraph and agrees to consult with, and provide reasonable assistance without risk, liability or expense on the part of the Depositary, to the Company on the manner or manners in which it may enforce such rights with respect to any Holder.

(7) Charges of Depositary . The Depositary may charge, and collect from, (i) each person to whom ADSs are issued, including, without limitation, issuances against deposits of Shares, issuances in respect of Share Distributions, Rights and Other Distributions (as such terms are defined in paragraph (10)), issuances pursuant to a stock dividend or stock split declared by the Company, or issuances pursuant to a merger, exchange of securities or any other transaction or event affecting the ADSs or the Deposited Securities, and (ii) each person surrendering ADSs for withdrawal of Deposited Securities or whose ADSs are cancelled or reduced for any other reason, U.S.$5.00 or less for each 100 ADSs (or portion thereof) issued, delivered, reduced, cancelled or surrendered (as the case may be). The Depositary may sell (by public or private sale) sufficient securities and property received in respect of Share Distributions, Rights and Other Distributions prior to such deposit to pay such charge. The following additional charges shall be incurred by the Holders, by any party depositing or withdrawing Shares or by any party surrendering ADSs, to whom ADSs are issued (including, without limitation, issuance pursuant to a stock dividend or stock split declared by the Company or an exchange of stock regarding the ADSs or the Deposited Securities or a distribution of ADSs pursuant to paragraph (10)), whichever is applicable (i) a fee of U.S.$0.05 or less per ADS for any Cash distribution made pursuant to the Deposit Agreement, (ii) a fee of U.S.$1.50 per ADR or ADRs for transfers made pursuant to paragraph (3) hereof, (iii) a fee for the distribution or sale of securities pursuant to paragraph (10) hereof, such fee being in an amount equal to the fee for the execution and delivery of ADSs referred to above which would have been charged as a result of the deposit of such securities (for purposes of this paragraph (7) treating all such securities as if they were Shares) but which securities or the net cash proceeds from the sale thereof are instead distributed by the Depositary to Holders entitled thereto, (iv) an aggregate fee of U.S.$0.05 or less per ADS per calendar year (or portion thereof) for services performed by the Depositary in administering the ADRs (which fee may be charged on a periodic basis during each calendar year and shall be assessed against Holders as of the record date or record dates set by the Depositary during each calendar year and shall be payable at the sole discretion of the Depositary by billing such Holders or by deducting such charge from one or more cash dividends or other cash distributions), and (v) a fee for the reimbursement of such fees, charges and expenses as are incurred by the Depositary and/or any of its agents (including, without limitation, the Custodian and expenses incurred on behalf of Holders in connection with compliance with foreign exchange control regulations or any law or regulation relating to foreign investment) in connection with the servicing of the Shares or other Deposited Securities, the sale of

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securities (including, without limitation, Deposited Securities), the delivery of Deposited Securities or otherwise in connection with the Depositary’s or its Custodian’s compliance with applicable law, rule or regulation (which fees and charges shall be assessed on a proportionate basis against Holders as of the record date or dates set by the Depositary and shall be payable at the sole discretion of the Depositary by billing such Holders or by deducting such charge from one or more cash dividends or other cash distributions). The Company will pay all other charges and expenses of the Depositary and any agent of the Depositary (except the Custodian) pursuant to agreements from time to time between the Company and the Depositary, except (i) stock transfer or other taxes and other governmental charges (which are payable by Holders or persons depositing Shares), (ii) cable, telex and facsimile transmission and delivery charges incurred at the request of persons depositing, or Holders delivering Shares, ADRs or Deposited Securities (which are payable by such persons or Holders), (iii) transfer or registration fees for the registration or transfer of Deposited Securities on any applicable register in connection with the deposit or withdrawal of Deposited Securities (which are payable by persons depositing Shares or Holders withdrawing Deposited Securities; there are no such fees in respect of the Shares as of the date of the Deposit Agreement), and (iv) in connection with the conversion of foreign currency into U.S. dollars, JPMorgan Chase Bank, N.A. shall deduct out of such foreign currency the fees and expenses charged by it and/or its agent (which may be a division, branch or affiliate) so appointed in connection with such conversion. Such charges may at any time and from time to time be changed by agreement between the Company and the Depositary.

The Depositary anticipates reimbursing the Company for certain expenses incurred by the Company that are related to the establishment and maintenance of the ADR program upon such terms and conditions as the Company and the Depositary may agree from time to time. The Depositary may make available to the Company a set amount or a portion of the Depositary fees charged in respect of the ADR program or otherwise upon such terms and conditions as the Company and the Depositary may agree from time to time.

The right of the Depositary to receive payment of fees, charges and expenses as provided above shall survive the termination of the Deposit Agreement. As to any Depositary, upon the resignation or removal of such Depositary, such right shall extend for those fees, charges and expenses incurred prior to the effectiveness of such resignation or removal.

(8) Available Information . The Deposit Agreement, the provisions of or governing Deposited Securities and any written communications from the Company, which are both received by the Custodian or its nominee as a holder of Deposited Securities and made generally available to the holders of Deposited Securities, are

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available for inspection by Holders at the offices of the Depositary and the Custodian and at the Transfer Office. The Depositary will distribute copies of such communications (or English translations or summaries thereof) to Holders when furnished by the Company. The Company is subject to the periodic reporting requirements of the Securities Exchange Act of 1934 and accordingly files certain reports with the United States Securities and Exchange Commission (the “Commission”). Such reports and other information may be inspected and copied at public reference facilities maintained by the Commission located at the date hereof at 100 F Street, NE, Washington, DC 20549.

(9) Execution . This ADR shall not be valid for any purpose unless executed by the Depositary by the manual or facsimile signature of a duly authorized officer of the Depositary.

Dated:


JPMORGAN CHASE BANK, N.A., as Depositary

By
Authorized Officer

The Depositary’s office is located at 1 Chase Manhattan Plaza, Floor 58, New York, New York, 10005-1401

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[FORM OF REVERSE OF ADR]

(10) Distributions on Deposited Securities . Subject to paragraphs (4) and (5), to the extent practicable, the Depositary will distribute to each Holder entitled thereto on the record date set by the Depositary therefor at such Holder’s address shown on the ADR Register, in proportion to the number of Deposited Securities (on which the following distributions on Deposited Securities are received by the Custodian) represented by ADSs evidenced by such Holder’s ADRs: (a) Cash . Any U.S. dollars available to the Depositary resulting from a cash dividend or other cash distribution or the net proceeds of sales of any other distribution or portion thereof authorized in this paragraph (10) (“Cash”), on an averaged or other practicable basis, subject to (i) appropriate adjustments for taxes withheld, (ii) such distribution being impermissible or impracticable with respect to certain Holders, and (iii) deduction of the Depositary’s and/or its agents’ fees and expenses in (1) converting any foreign currency to U.S. dollars by sale or in such other manner as the Depositary may determine to the extent that it determines that such conversion may be made on a reasonable basis, (2) transferring foreign currency or U.S. dollars to the United States by such means as the Depositary may determine to the extent that it determines that such transfer may be made on a reasonable basis, (3) obtaining any approval or license of any governmental authority required for such conversion or transfer, which is obtainable at a reasonable cost and within a reasonable time, and (4) making any sale by public or private means in any commercially reasonable manner. (b) Shares . (i) Additional ADRs evidencing whole ADSs representing any Shares available to the Depositary resulting from a dividend or free distribution on Deposited Securities consisting of Shares (a “Share Distribution”) and (ii) U.S. dollars available to it resulting from the net proceeds of sales of Shares received in a Share Distribution, which Shares would give rise to fractional ADSs if additional ADRs were issued therefor, as in the case of Cash. (c) Rights . (i) Warrants or other instruments in the discretion of the Depositary representing rights to acquire additional ADRs in respect of any rights to subscribe for additional Shares or rights of any nature available to the Depositary as a result of a distribution on Deposited Securities (“Rights”), to the extent that the Company timely furnishes to the Depositary evidence satisfactory to the Depositary that the Depositary may lawfully distribute the same (the Company has no obligation to so furnish such evidence), or (ii) to the extent the Company does not so furnish such evidence and sales of Rights are practicable, any U.S. dollars available to the Depositary from the net proceeds of sales of Rights as in the case of Cash, or (iii) to the extent the Company does not so furnish such evidence and such sales cannot practicably be accomplished by reason of the non-transferability of the Rights, limited markets therefor, their short duration or otherwise, nothing (and any Rights may lapse). (d) Other Distributions . (i) Securities or property available to the Depositary resulting from any distribution on Deposited Securities other than Cash, Share Distributions and Rights (“Other Distributions”), by any means that the

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Depositary may deem equitable and practicable, or (ii) to the extent the Depositary deems distribution of such securities or property not to be equitable and practicable, any U.S. dollars available to the Depositary from the net proceeds of sales of Other Distributions as in the case of Cash. The Depositary reserves the right to utilize a division, branch or affiliate of JPMorgan Chase Bank, N.A. to direct, manage and/or execute any public and/or private sale of securities hereunder. Such division, branch and/or affiliate may charge the Depositary a fee in connection with such sales, which fee is considered an expense of the Depositary contemplated above and/or under paragraph (7) hereof. Any U.S. dollars available will be distributed by checks drawn on a bank in the United States for whole dollars and cents. Fractional cents will be withheld without liability and dealt with by the Depositary in accordance with its then current practices.

(11) Record Dates . The Depositary may, after consultation with the Company if practicable, fix a record date (which, to the extent applicable, shall be as near as practicable to any corresponding record date set by the Company) for the determination of the Holders who shall be responsible for the fee assessed by the Depositary for administration of the ADR program and for any expenses provided for in paragraph (7) hereof as well as for the determination of the Holders who shall be entitled to receive any distribution on or in respect of Deposited Securities, to give instructions for the exercise of any voting rights, to receive any notice or to act in respect of other matters and only such Holders shall be so entitled or obligated.

(12) Voting of Deposited Securities . As soon as practicable after receipt from the Company of notice of any meeting or solicitation of consents or proxies of holders of Shares or other Deposited Securities, the Depositary shall distribute to Holders a notice stating (a) such information as is contained in such notice and any solicitation materials, (b) that each Holder on the record date set by the Depositary therefor will, subject to any applicable provisions of Peruvian law, be entitled to instruct the Depositary as to the exercise of the voting rights, if any, pertaining to the Deposited Securities represented by the ADSs evidenced by such Holder’s ADRs and (c) the manner in which such instructions may be given, including instructions to give a discretionary proxy to a person designated by the Company. Upon actual receipt by the ADR department of the Depositary of instructions of a Holder on such record date in the manner and on or before the time established by the Depositary for such purpose, the Depositary shall endeavor insofar as practicable and permitted under the provisions of or governing Deposited Securities and Peruvian law (the Depositary having no obligation to interpret Peruvian law) to vote or cause to be voted the Deposited Securities represented by the ADSs evidenced by such Holder’s ADRs in accordance with such instructions. The Company understands that, as a result, the Depositary may be presenting votes on behalf of some instructing Holders that may be contrary to votes it presents on behalf of other instructing Holders. To the extent

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not prohibited by Peruvian law, the Company agrees to accept such any and all such votes. The Depositary will not itself exercise any voting discretion in respect of any Deposited Securities. There is no guarantee that Holders generally or any Holder in particular will receive the notice described above with sufficient time to enable such Holder to return any voting instructions to the Depositary in a timely manner or that the Depositary will be able to vote as instructed by each Holder to the extent there are any limitations under Peruvian law. Notwithstanding anything contained in the Deposit Agreement or any ADR, the Depositary may, to the extent not prohibited by law or regulations, or by the requirements of the stock exchange on which the ADSs are listed, in lieu of distributing the materials provided to the Depositary in connection with any meeting of, or solicitation of consents or proxies from, holders of Deposited Securities, distribute to the Holders a notice that provides Holders with, or otherwise publicizes to Holders, instructions on how to retrieve such materials or receive such materials upon request ( i.e. , by reference to a website containing the materials for retrieval or a contact for requesting copies of the materials). Voting instructions will not be deemed received until such time as the ADR department responsible for proxies and voting has received such instructions notwithstanding that such instructions may have been physically received by JPMorgan Chase Bank, N.A., as Depositary, prior to such time.

(13) Changes Affecting Deposited Securities . Subject to paragraphs (4) and (5), the Depositary may, in its discretion, and shall if reasonably requested by the Company, amend this ADR or distribute additional or amended ADRs (with or without calling this ADR for exchange) or cash, securities or property on the record date set by the Depositary therefor to reflect any change in par value, split up, consolidation, cancellation or other reclassification of Deposited Securities, any Share Distribution or Other Distribution not distributed to Holders or any cash, securities or property available to the Depositary in respect of Deposited Securities from (and the Depositary is hereby authorized to surrender any Deposited Securities to any person and, irrespective of whether such Deposited Securities are surrendered or otherwise cancelled by operation of law, rule, regulation or otherwise, to sell by public or private sale any property received in connection with) any recapitalization, reorganization, merger, consolidation, liquidation, receivership, bankruptcy or sale of all or substantially all the assets of the Company, and to the extent the Depositary does not so amend this ADR or make a distribution to Holders to reflect any of the foregoing, or the net proceeds thereof, whatever cash, securities or property results from any of the foregoing shall constitute Deposited Securities and each ADS evidenced by this ADR shall automatically represent its pro rata interest in the Deposited Securities as then constituted. Promptly upon the occurrence of any of the aforementioned changes affecting Deposited Securities, the Company shall notify the Depositary in writing of such occurrence and as soon as practicable after receipt of such notice from the Company, may instruct the Depositary to give notice thereof, at the Company’s expense, to Holders in accordance with the provisions hereof. Upon receipt of such instruction, the Depositary shall give notice to the Holders in accordance with the terms thereof, as soon as reasonably practicable.

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(14) Exoneration . The Depositary, the Company, their agents and each of them shall: (a) incur no liability (i) if any present or future law, rule, regulation , fiat, order or decree of the United States, the Republic of Peru or any other country, or of any governmental or regulatory authority or any securities exchange or market or automated quotation system, the provisions of or governing any Deposited Securities, any present or future provision of the Company’s charter, any act of God, war, terrorism, nationalization, expropriation, currency restrictions, work stoppage, strike, civil unrest, revolutions, rebellions, explosions, computer failure or other circumstance beyond its control shall prevent or delay, or shall cause any of them to be subject to any civil or criminal penalty in connection with, any act which the Deposit Agreement or this ADR provides shall be done or performed by it or them (including, without limitation, voting pursuant to paragraph (12) hereof), or (ii) by reason of any exercise or failure to exercise any discretion given it in the Deposit Agreement or this ADR (including, without limitation, any failure to determine that any distribution or action may be lawful or reasonably practicable); (b) assume no liability except to perform its obligations to the extent they are specifically set forth in this ADR and the Deposit Agreement without gross negligence or willful misconduct; (c) in the case of the Depositary and its agents, be under no obligation to appear in, prosecute or defend any action, suit or other proceeding in respect of any Deposited Securities or this ADR; (d) in the case of the Company and its agents hereunder be under no obligation to appear in, prosecute or defend any action, suit or other proceeding in respect of any Deposited Securities or this ADR, which in its opinion may involve it in expense or liability, unless indemnity satisfactory to it against all expense (including fees and disbursements of counsel) and liability be furnished as often as may be required; or (e) not be liable for any action or inaction by it in reliance upon the advice of or information from legal counsel, accountants, any person presenting Shares for deposit, any Holder, or any other person believed by it to be competent to give such advice or information. The Depositary shall not be liable for the acts or omissions made by, or the insolvency of, any securities depository, clearing agency or settlement system. The Depositary shall not be responsible for, and shall incur no liability in connection with or arising from, the insolvency of any Custodian that is not a branch or affiliate of JPMorgan Chase Bank, N.A. The Depositary shall not have any liability for the price received in connection with any sale of securities, the timing thereof or any delay in action or omission to act nor shall it be responsible for any error or delay in action, omission to act, default or negligence on the part of the party so retained in connection with any such sale or proposed sale. Further, the Depositary and its agents disclaim to the maximum extent permitted by law any and all liability for the price received in connection with

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any sale of securities or the timing thereof. Notwithstanding anything to the contrary contained in this Deposit Agreement (including the ADRs), the Depositary shall not be responsible for, and shall incur no liability in connection with or arising from, any act or omission to act on the part of the Custodian except to the extent that the Custodian has (i) committed fraud or willful misconduct in the provision of custodial services to the Depositary or (ii) failed to use reasonable care in the provision of custodial services to the Depositary as determined in accordance with the standards prevailing in the jurisdiction in which the Custodian is located. The Depositary, its agents and the Company may rely and shall be protected in acting upon any written notice, request, direction, instruction or document believed by them to be genuine and to have been signed, presented or given by the proper party or parties. The Depositary shall be under no obligation to inform Holders or any other holders of an interest in an ADS about the requirements of Peruvian law, rules or regulations or any changes therein or thereto. The Depositary and its agents will not be responsible for any failure to carry out any instructions to vote any of the Deposited Securities, for the manner in which any such vote is cast or for the effect of any such vote. The Depositary may rely upon instructions from the Company or its counsel in respect of any governmental or agency approval or license required for any currency conversion, transfer or distribution. The Depositary and its agents may own and deal in any class of securities of the Company and its affiliates and in ADRs. Notwithstanding anything to the contrary set forth in the Deposit Agreement or an ADR, the Depositary and its agents may fully respond to any and all demands or requests for information maintained by or on its behalf in connection with the Deposit Agreement, any Holder or Holders, any ADR or ADRs or otherwise related hereto or thereto to the extent such information is requested or required by or pursuant to any lawful authority, including without limitation laws, rules, regulations, administrative or judicial process, banking, securities or other regulators. None of the Depositary, the Custodian or the Company shall be liable for the failure by any Holder or beneficial owner to obtain the benefits of credits on the basis of non-U.S. tax paid against such Holder’s or beneficial owner’s income tax liability. The Depositary and the Company shall not incur any liability for any tax consequences that may be incurred by Holders and beneficial owners on account of their ownership of the ADRs or ADSs. The Depositary shall not incur any liability for any failure to determine that any distribution or action may be lawful or reasonably practicable, for the content of any information submitted to it by or on behalf of the Company for distribution to the Holders or for any inaccuracy of any translation thereof, for any investment risk associated with acquiring an interest in the Deposited Securities, for the validity or worth of the Deposited Securities, for the credit-worthiness of any third party, for allowing any rights to lapse upon the terms of this Deposit Agreement or for the failure or timeliness of any notice from the Company. Notwithstanding anything herein or in the Deposit Agreement to the contrary, the Depositary and the Custodian(s) may use third party delivery services and providers of information regarding matters such as

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pricing, proxy voting, corporate actions, class action litigation and other services in connection herewith and the Deposit Agreement, and use local agents to provide extraordinary services such as attendance at annual meetings of issuers of securities. Although the Depositary and the Custodian will use reasonable care (and cause their agents to use reasonable care) in the selection and retention of such third party providers and local agents, they will not be responsible for any errors or omissions made by them in providing the relevant information or services. The Depositary shall not be liable for any acts or omissions made by a successor depositary whether in connection with a previous act or omission of the Depositary or in connection with any matter arising wholly after the removal or resignation of the Depositary, provided that in connection with the issue out of which such potential liability arises the Depositary performed its obligations without negligence while it acted as Depositary. By holding an ADS or an interest therein, Holders and owners of ADSs each irrevocably agree that any legal suit, action or proceeding against or involving the Company or the Depositary, arising out of or based upon this Deposit Agreement or the transactions contemplated hereby, may only be instituted in a state or federal court in New York, New York, and by holding an ADS or an interest therein each irrevocably waives any objection which it may now or hereafter have to the laying of venue of any such proceeding, and irrevocably submits to the exclusive jurisdiction of such courts in any such suit, action or proceeding. The Company has agreed to indemnify the Depositary and its agents under certain circumstances. Neither the Depositary, the Company nor any of their respective agents shall be liable to Holders or beneficial owners of interests in ADSs for any indirect, special, punitive or consequential damages (including, without limitation, lost profits) of any form incurred by any person or entity, whether or not foreseeable and regardless of the type of action in which such a claim may be brought. No disclaimer of liability under the Securities Act of 1933 is intended by any provision hereof.

(15) Resignation and Removal of Depositary; the Custodian . The Depositary may resign as Depositary by written notice of its election so to do delivered to the Company, such resignation to take effect upon the appointment of a successor depositary and its acceptance of such appointment as provided in the Deposit Agreement. The Depositary may at any time be removed by the Company by no less than 60 days prior written notice of such removal, to become effective upon the later of (i) the 60th day after delivery of the notice to the Depositary and (ii) the appointment of a successor depositary and its acceptance of such appointment as provided in the Deposit Agreement. The Depositary may appoint substitute or additional Custodians and the term “ Custodian ” refers to each Custodian or all Custodians as the context requires.

(16) Amendment . Subject to the last sentence of paragraph (2), the ADRs and the Deposit Agreement may be amended by the Company and the Depositary,

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provided that any amendment that imposes or increases any fees or charges (other than stock transfer or other taxes and other governmental charges, transfer or registration fees, cable, telex or facsimile transmission costs, delivery costs or other such expenses), or that shall otherwise prejudice any substantial existing right of Holders, shall become effective 30 days after notice of such amendment shall have been given to the Holders. Every Holder of an ADR at the time any amendment to the Deposit Agreement so becomes effective shall be deemed, by continuing to hold such ADR, to consent and agree to such amendment and to be bound by the Deposit Agreement as amended thereby. In no event shall any amendment impair the right of the Holder of any ADR to surrender such ADR and receive the Deposited Securities represented thereby, except in order to comply with mandatory provisions of applicable law. Any amendments or supplements which (i) are reasonably necessary (as agreed by the Company and the Depositary) in order for (a) the ADSs to be registered on Form F-6 under the Securities Act of 1933 or (b) the ADSs or Shares to be traded solely in electronic book-entry form and (ii) do not in either such case impose or increase any fees or charges to be borne by Holders, shall be deemed not to prejudice any substantial rights of Holders. Notwithstanding the foregoing, if any governmental body or regulatory body should adopt new laws, rules or regulations which would require amendment or supplement of the Deposit Agreement or the form of ADR to ensure compliance therewith, the Company and the Depositary may amend or supplement the Deposit Agreement and the ADR at any time in accordance with such changed laws, rules or regulations. Such amendment or supplement to the Deposit Agreement in such circumstances may become effective before a notice of such amendment or supplement is given to Holders or within any other period of time as required for compliance. Notice of any amendment to the Deposit Agreement or form of ADRs shall not need to describe in detail the specific amendments effectuated thereby, and failure to describe the specific amendments in any such notice shall not render such notice invalid, provided, however, that, in each such case, the notice given to the Holders identifies a means for Holders to retrieve or receive the text of such amendment (i.e., upon retrieval from the Commission’s, the Depositary’s or the Company’s website or upon request from the Depositary).

(17) Termination . The Depositary may, and shall at the written direction of the Company, terminate the Deposit Agreement and this ADR by mailing notice of such termination to the Holders at least 30 days prior to the date fixed in such notice for such termination; provided, however, if the Depositary shall have (i) resigned as Depositary hereunder, notice of such termination by the Depositary shall not be provided to Holders unless a successor depositary shall not be operating hereunder within 60 days of the date of such resignation, or (ii) been removed as Depositary hereunder, notice of such termination by the Depositary shall not be provided to Holders unless a successor depositary shall not be operating hereunder on the 60 ^th day after the Company’s notice of removal was first provided to the Depositary. After

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the date so fixed for termination, the Depositary and its agents will perform no further acts under the Deposit Agreement and this ADR, except to receive and hold (or sell) distributions on Deposited Securities and deliver Deposited Securities being withdrawn. As soon as practicable after the expiration of six months from the date so fixed for termination, the Depositary shall sell the Deposited Securities and shall thereafter (as long as it may lawfully do so) hold in a segregated account the net proceeds of such sales, together with any other cash then held by it under the Deposit Agreement, without liability for interest, in trust for the pro rata benefit of the Holders of ADRs not theretofore surrendered. After making such sale, the Depositary shall be discharged from all obligations in respect of the Deposit Agreement and this ADR, except to account for such net proceeds and other cash. After the date so fixed for termination, the Company shall be discharged from all obligations under the Deposit Agreement except for its obligations to the Depositary and its agents.

(18) Appointment. Each Holder and each person holding an interest in ADSs, upon acceptance of any ADSs (or any interest therein) issued in accordance with the terms and conditions of the Deposit Agreement shall be deemed for all purposes to (a) be a party to and bound by the terms of the Deposit Agreement and the applicable ADR(s), and (b) appoint the Depositary its attorney-in-fact, with full power to delegate, to act on its behalf and to take any and all actions contemplated in the Deposit Agreement and the applicable ADR(s), to adopt any and all procedures necessary to comply with applicable law and to take such action as the Depositary in its sole discretion may deem necessary or appropriate to carry out the purposes of the Deposit Agreement and the applicable ADR(s), the taking of such actions to be the conclusive determinant of the necessity and appropriateness thereof.

(19) Waiver . EACH PARTY TO THE DEPOSIT AGREEMENT (INCLUDING, FOR AVOIDANCE OF DOUBT, EACH HOLDER AND BENEFICIAL OWNER AND/OR HOLDER OF INTERESTS IN ADRS) HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY SUIT, ACTION OR PROCEEDING AGAINST THE DEPOSITARY AND/OR THE COMPANY DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THE SHARES OR OTHER DEPOSITED SECURITIES, THE ADSs OR THE ADRs, THE DEPOSIT AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREIN OR THEREIN, OR THE BREACH HEREOF OR THEREOF (WHETHER BASED ON CONTRACT, TORT, COMMON LAW OR ANY OTHER THEORY).

A-17

EXHIBIT 10.1

U.S.$150,000,000

CREDIT AGREEMENT

Dated as of February 27, 2013

Among

GRAÑA Y MONTERO S.A.A.,

as Borrower ,

THE INITIAL LENDERS NAMED HEREIN,

as Initial Lenders ,

BBVA BANCOMER S.A., INSTITUCIÓN DE

BANCA MULTIPLE, GRUPO FINANCIERO BBVA BANCOMER,

as Administrative Agent ,

BBVA CONTINENTAL,

as Collateral Agent ,

and

BBVA SECURITIES INC.,

as Sole Lead Arranger and Bookrunner

GyM Credit Agreement

Table of Contents


		Page

ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS

Section 1.01	Certain Defined Terms		1
Section 1.02	Computation of Time Periods; Other Definitional Provisions		16
Section 1.03	Accounting Terms		17
Section 1.04	Currency Equivalents Generally		17

ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES

Section 2.01	The Advances		17
Section 2.02	Making the Advances		17
Section 2.03	Fees		18
Section 2.04	Termination or Reduction of the Commitments		19
Section 2.05	Repayment		19
Section 2.06	Interest		19
Section 2.07	Interest Rate Determination		19
Section 2.08	Prepayments		19
Section 2.09	Increased Costs		21
Section 2.10	Illegality		22
Section 2.11	Payments and Computations		22
Section 2.12	Taxes		23
Section 2.13	Sharing of Payments, Etc.		26
Section 2.14	Evidence of Debt; Notes		26
Section 2.15	Use of Proceeds		27
Section 2.16	Replacement of Lenders		27

ARTICLE III
CONDITIONS TO EFFECTIVENESS AND LENDING

Section 3.01	Conditions Precedent to Effectiveness of Section 2.01		28
Section 3.02	Conditions Precedent to Each Borrowing		30
Section 3.03	Determinations Under Section 3.01		31

ARTICLE IV
REPRESENTATIONS AND WARRANTIES

Section 4.01	Representations and Warranties of the Borrower		31

ARTICLE V
COVENANTS OF THE BORROWER

Section 5.01	Affirmative Covenants		37


				GyM Credit Agreement


Section 5.02	Negative Covenants	41
Section 5.03	Financial Covenants	46

ARTICLE VI
EVENTS OF DEFAULT

Section 6.01	Events of Default	46

ARTICLE VII
THE AGENTS

Section 7.01	Authorization and Action	48
Section 7.02	Agent’s Reliance, Etc.	49
Section 7.03	BBVA Bancomer, BBVA Continental and Affiliates	50
Section 7.04	Lender Credit Decision	50
Section 7.05	Indemnification	50
Section 7.06	Successor Agent	51

ARTICLE VIII
MISCELLANEOUS

Section 8.01	Amendments, Etc.	52
Section 8.02	Notices, Etc.	53
Section 8.03	No Waiver; Remedies	55
Section 8.04	Costs and Expenses	55
Section 8.05	Right of Set-off	56
Section 8.06	Binding Effect	57
Section 8.07	Assignments and Participations	57
Section 8.08	Confidentiality	60
Section 8.09	Governing Law	60
Section 8.10	Execution in Counterparts	60
Section 8.11	Release of Collateral	60
Section 8.12	Jurisdiction, Etc.	61
Section 8.13	Judgment Currency	62
Section 8.14	Patriot Act Notice	62
Section 8.15	Waiver of Jury Trial	62
Section 8.16	Affiliate Activities	62
Section 8.17	No Advisory or Fiduciary Responsibility	63


		ii		GyM Credit Agreement

Schedules


Schedule I	-	List of Applicable Lending Offices
Schedule 3.01(b)	-	Disclosed Litigation
Schedule 4.01(a)	-	Equity Interests in Loan Parties
Schedule 4.01(c)	-	Equity Interests in Subsidiaries
Schedule 4.01(m)	-	Existing Indebtedness
Schedule 4.01(o)	-	Existing Liens
Schedule 4.01(aa)	-	Labor Matters
Schedule 4.01(dd)	-	Calculation of Consolidated EBITDA
Schedule 5.02(f)	-	Investments

Exhibits


Exhibit A-1	-	Form of Promissory Note
Exhibit A-2	-	Form of Note Filling Agreement
Exhibit B	-	Form of Notice of Borrowing
Exhibit C	-	Form of Assignment and Acceptance
Exhibit D	-	Form of Peruvian Account Pledge
Exhibit E	-	Form of Guaranty
Exhibit F	-	Form of Opinion of In-House Counsel to the Loan Parties
Exhibit G	-	Form of Opinion of New York Counsel to the Loan Parties


		iii		GyM Credit Agreement

CREDIT AGREEMENT

Dated as of February 27, 2013

Graña y Montero S.A.A., a sociedad anónima abierta organized under the laws of Perú (the “ Borrower ”), the banks, financial institutions and other institutional lenders (the “ Initial Lenders ”) listed on the signature pages hereof, BBVA Continental (“ BBVA Continental ”), as collateral agent for the Secured Parties (as hereinafter defined) (together with any successor collateral agent appointed pursuant to Article VII, the “ Collateral Agent ”), and BBVA Bancomer S.A., Institución de Banca Multiple, Grupo Financiero BBVA Bancomer (“ BBVA Bancomer ”), as administrative agent (together with any successor administrative agent appointed pursuant to Article VII, the “ Administrative Agent ”, and, together with the Collateral Agent, the “ Agents ”) for the Lenders (as hereinafter defined), agree as follows:

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

Section 1.01 Certain Defined Terms . As used in this Agreement, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):

“ Administrative Agent ” has the meaning specified in the recital of parties hereto.

“ Advance ” means an advance by a Lender to the Borrower pursuant to Article II.

“ Administrative Agent’s Account ” means the account of the Administrative Agent maintained by the Administrative Agent at JPMorgan Chase New York, 270 Park Avenue, New York 10017, USA, Account No. 400001942, ABA No. 021 000 021, Account Name: BBVA Bancomer, S.A., Mexico D.F., Reference: Graña y Montero, Attention: Concepción Zúñiga.

“ Agents ” has the meaning specified in the recital of parties hereto.

“ Affiliate ” means, as to any Person, any other Person that, directly or indirectly, Controls, is Controlled by or is under common Control with such Person or is a director or officer of such Person. “Affiliate”, as applied to an Agent or a Lender, means each direct or indirect parent corporation and controlling person (within the meaning of the Exchange Act) of such Lender or Agent and each direct or indirect Subsidiary of each such parent corporation and each of their respective directors, officers and agents.

“ Agreement Value ” means, as to any Person, for each Hedge Agreement, after taking into account the effect of any legally enforceable netting agreement relating to such Hedge Agreement of such Person, (a) for any date on or after the date such Hedge Agreement has been closed out and a termination value determined in accordance therewith, such termination value and (b) for any date prior to the date referenced in foregoing clause (a), the amount determined as the mark-to-market value for such Hedge Agreement, as determined by such Person based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Hedge Agreement


				GyM Credit Agreement

(which may include a Lender or any Affiliate of a Lender) or, absent any such provision in such Hedging Agreement, the amount required to be recorded as a liability on the balance sheet of such Person with respect to such Hedging Agreement in accordance with IFRS.

“ Alternate Rate ” means, on any date of determination, a rate per annum which shall at all times be equal to the highest of:

(a) the Prime Rate in effect on such day;

(b) the Federal Funds Rate in effect on such day plus ¹ / ₂ of 1.00%; and

“ Applicable Lending Office ” means, with respect to each Lender, the office of such Lender specified as its “Lending Office” opposite its name on Schedule I or in the Assignment and Acceptance pursuant to which it became a Lender, or such other office of such Lender as such Lender may from time to time specify to the Borrower and the Administrative Agent.

“ Applicable Margin ” means 4.25% per annum .

“ Assignment and Acceptance ” means an assignment and acceptance entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 8.07 or by the definition of Eligible Assignee), and accepted by the Administrative Agent, in accordance with Section 8.07 and in substantially the form of Exhibit C or any other form approved by the Administrative Agent.

“ Basel III ” means the bank capital and liquidity standards released by the Basel Committee in December 2010, any subsequent standards or guidelines that supplement, clarify, or are ancillary or related thereto and any successor thereof set forth by the Basel Committee, or as implemented by a Lender’s prudential supervisory authority.

“ Basel Committee ” means The Basel Committee on Banking Regulations and Supervisory Practices.

“ BBVA Bancomer ” has the meaning specified in the recital of parties hereto.

“ BBVA Continental ” has the meaning specified in the recital of parties hereto.

“ Board of Directors ” means the board of directors (including the Consejo de Administración, as applicable) of a Person duly appointed by the holders of the Voting Stock of such Person.

“ Borrower ” has the meaning specified in the recital of parties hereto.


		2		GyM Credit Agreement

“ Borrowing ” means a borrowing consisting of Advances made on the same day by the Lenders.

“ Business Day ” means a day of the year on which banks are not required or authorized by law to close in New York City, Mexico Distrito Federal or Lima, Perú or, if the applicable Business Day relates to any Advance or date of determination of the LIBO Rate, on which dealings are carried on in the London, England interbank market.

“ Capitalized Leases ” means all leases that have been or should be, in accordance with IFRS, recorded as capitalized leases.

“ Cash Equivalents ” means any of the following, to the extent owned by any Loan Party free and clear of all Liens other than Permitted Liens and having a maturity of not greater than 90 days from the date of issuance thereof: (a) Dollar-denominated investments in (i) readily marketable direct obligations of the Government of the United States or any agency or instrumentality thereof or obligations unconditionally guaranteed by the full faith and credit of the Government of the United States, (ii) insured certificates of deposit of or time deposits with any commercial bank that is a Lender or a member of the Federal Reserve System, issues (or the parent of which issues) commercial paper rated as described in clause (iii) below, is organized under the laws of the United States or any State thereof and has combined capital and surplus of at least U.S.$1,000,000,000, (iii) commercial paper issued by any corporation organized under the laws of any State of the United States and rated at least “ Prime-1 ” (or the then equivalent grade) by Moody’s, “ A-1 ” (or the then equivalent grade) by S&P’s or “ F-1 ” (or the then equivalent grade) by Fitch, (iv) Investments, classified in accordance with IFRS as current assets of such Loan Party, in money market funds that are registered under the Investment Company Act of 1940, as amended, that are administered by financial institutions that have the highest rating obtainable from Moody’s, S&P or Fitch and the portfolios of which are limited solely to Investments of the character, quality and maturity described in clauses (a)(i), (ii) and (iii) of this definition, (v) marketable securities issued or expressly and unconditionally guaranteed by the government of Perú with a credit rating of at least “ BBB -” (or the then equivalent grade) by S&P or the equivalent rating by Moody’s or Fitch and (vi) marketable securities issued by any corporation organized under the laws of Perú or by any Peruvian Financial Institution and rated at least “ BBB- ” (or the then equivalent grade) by S&P or the equivalent rating by Moody’s or Fitch and (b) Peruvian Sol denominated investments in (i) securities issued or expressly and unconditionally guaranteed by the government of Perú with a local currency credit rating of at least “ BBB -” (or the then equivalent grade) by S&P or the equivalent rating by Moody’s or Fitch, (ii) certificates of deposit issued by any Peruvian Financial Institution with a local currency credit rating of at least “ BBB -” (or the then equivalent grade) by S&P or the equivalent rating by Moody’s or Fitch or (iii) commercial paper issued by any corporation organized under the laws of Perú and rated at least “ BBB ” (or the then equivalent grade) by S&P or the equivalent rating by Moody’s or Fitch.

“ Casualty Event ” means any event that gives rise to the receipt by any Loan Party of any insurance proceeds or condemnation awards in respect of any equipment, fixed assets or real property (including any improvements thereon) to replace or repair such equipment, fixed assets or real property.


		3		GyM Credit Agreement

“ Change of Control ” means (a) any person, entity or “group” (within the meaning of Section 13(d) or 14(d) of the Exchange Act, but excluding any employee benefit plan of such person, entity or “group” and their respective Subsidiaries and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan), other than the G&M Holders, shall at any time (i) have acquired direct or indirect beneficial ownership (as defined in SEC Rules 13(d)-3 and 13(d)-5) of Equity Interests having the power to vote or direct the voting of such Equity Interests having more than the percentage of the ordinary voting power of the Borrower owned in the aggregate, directly or indirectly, beneficially, by the G&M Holders or (ii) Control the Borrower, or (b) the G&M Holders shall at any time fail to have the right or the ability, directly or indirectly, by voting power, contract or otherwise to elect or designate for election at least two members of the Board of Directors of the Borrower.

“ Change of Law ” means the adoption of any applicable law, rule or regulation, or any change therein, or any change in the interpretation or administration thereof, in each case, after the date hereof by any Governmental Authority or by any Person with oversight or authority over banks or financial institutions; provided that notwithstanding anything herein to the contrary, (a) all requests, rules, guidelines or directives under or issued in connection with the Dodd-Frank Wall Street Reform and Consumer Protection Act, all interpretations and applications thereof and any compliance by a Lender with any request or directive relating thereto and (b) all requests, rules, guidelines or directives promulgated under or in connection with, all interpretations and applications of, or and any compliance by a Lender with any request or directive relating to International Settlements, the Basel Committee (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case, pursuant to Basel III, shall, in each case, under clauses (a) and (b) above be deemed to be a “Change of Law”, regardless of the date adopted, issued, promulgated or implemented.

“ Code ” means the Internal Revenue Code of 1986, and the regulations promulgated thereunder, each as amended or modified from time to time.

“ Collateral ” means all “Collateral” referred to in the Collateral Documents and all other property that is or is intended to be subject to any Lien in favor of the Collateral Agent for the benefit of the Secured Parties.

“ Collateral Agent ” has the meaning specified in the recital of parties hereto.

“ Collateral Documents ” means the Peruvian Account Pledge and any other agreement that creates or purports to create a Lien in favor of the Collateral Agent for the benefit of the Secured Parties.

“ Commitment ” has the meaning specified in Section 2.01.

“ Communications ” has the meaning specified in Section 8.02(b).


		4		GyM Credit Agreement

“ Confidential Information ” means information that a Loan Party furnishes to the Administrative Agent or any Lender in a writing designated as confidential, but does not include any such information that is or becomes generally available to the public or that is or becomes available to the Administrative Agent on a non-confidential basis or such Lender from a source other than a Loan Party.

“ Consolidated ” refers to the consolidation of accounts in accordance with IFRS.

“ Consolidated Adjusted Debt ” means, with respect to any Loan Party, as of any date of determination, (a) Consolidated Debt of such Loan Party as of such date (other than any comfort letter not constituting Indebtedness) less (b) the aggregate amount of Debt obligations of each Project Company that is a Subsidiary of (or is partially owned by) such Loan Party (other than any such obligation for which the holder thereof has recourse to such Loan Party (but only to the extent of such recourse)) as of such date.

“ Consolidated Adjusted Debt Coverage Ratio ” means, with respect to any Loan Party, as of any date of determination, the ratio of (a) Consolidated Adjusted Debt of such Loan Party as of such date to (b) Consolidated Adjusted EBITDA of such Loan Party for the rolling four fiscal quarter period most recently ended as of such date.

“ Consolidated Adjusted EBITDA ” means, with respect to any Loan Party, for any period, Consolidated EBITDA of such Loan Party for such period less any EBITDA attributable to a Project Company that is a Subsidiary of (or is partially owned by) such Loan Party for such period.

“ Consolidated Debt ” means, with respect to any Loan Party, as of any date of determination, the Debt of such Loan Party and its Subsidiaries on a Consolidated basis as of such date.

“ Consolidated EBITDA ” means, with respect to any Loan Party, for any period, the EBITDA of such Loan Party and its Subsidiaries on a Consolidated basis for such period.

“ Consolidated Net Worth ” means, with respect to any Loan Party, as of any date of determination, for such Loan Party and its Subsidiaries on a Consolidated basis, Shareholders’ Equity of such Loan Party and its Subsidiaries as of such date.

“ Consolidated Total Assets ” means, with respect to any Loan Party, as of any date of determination, for such Loan Party and its Subsidiaries on a Consolidated basis, the total amount of all assets of such Loan Party and its Subsidiaries as of such date, calculated based on the most recent consolidated balance sheet required to be delivered to the Administrative Agent pursuant to this Agreement.

“ Control ” means, with respect to any Person, the possession, directly or indirectly, including by contract or otherwise, of either (a) the power to vote 50% or more of the Voting Stock of such Person or (b) more than 50% of the issued and outstanding capital stock having ordinary voting power to elect a majority of the Board of Directors of such Person (irrespective of whether at the time capital stock of any other class or classes of such Person shall or might have voting power upon the occurrence of any contingency). “ Controlling ” and “ Controlled ” have meanings correlative thereto.


		5		GyM Credit Agreement

“ Debt ” means, with respect to any Person, as of any date of determination, without duplication, the sum of (a) short term financial debt ( obligaciones financieras under Pasivo Corriente ) of such Person outstanding as of such date, including bank loans, commercial paper, bonds, financial leases, current portion of long-term debt, (b) long term financial debt ( obligaciones financieras under Pasivo No Corriente ) of such Person outstanding as of such date, including long-term bank loans, bonds and financial leases and (c) all obligations of such Person under financial instrument derivatives (i nstrumentos financieros derivados ) (including, for the avoidance of doubt, under any Hedge Agreements) outstanding as of such date, in each case, in accordance with IFRS as reflected on the financial statements most recently delivered pursuant to Section 5.01(i).

“ Debt Service ” means, for any period, the sum of all payments of interest, principal, expenses, financing costs, termination costs and fees and all other amounts made or required to be made by the Borrower during such period pursuant to the terms and conditions of the Loan Documents.

“ Debt Service Coverage Ratio ” means, as of any date of determination, the ratio, for the Borrower on an unconsolidated basis, of (i) operating income ( utilidad (pérdida) operativa ) of the Borrower for the relevant period ending on such date plus any amounts attributable to depreciation and amortization of the Borrower for such period plus interest income ( ingresos financieros ) minus capital expenditures minus tax payments minus working capital variations minus cash deposited in the Debt Service Reserve Account to (ii) the amount of Debt Service, in each case, for the rolling four fiscal quarter period most recently ended as of such date and for which financial statements are available pursuant to Section 5.01(i).

“ Debt Service Reserve Account ” means account number 0011-0586-0100026578 maintained by the Borrower with Collateral Agent in Perú pursuant to the Peruvian Account Pledge and designated as the “Debt Service Reserve Account”.

“ Default ” means any Event of Default or any event that would constitute an Event of Default but for the passage of time or the requirement that notice be given or both.

“ Default Interest ” has the meaning specified in Section 2.06(b).

“ Defaulting Lender ” means, at any time, a Lender as to which the Administrative Agent has notified the Borrower that (a) such Lender has failed for 5 Business Days or more to comply with its obligations under this Agreement to make an Advance (each a “funding obligation”), (b) such Lender has notified the Administrative Agent in writing, or has stated publicly, that it will not comply with any such funding obligation or (c) such Lender is insolvent, or an event described in Section 6.01(e) has occurred and is continuing with respect to such Lender; provided that a Lender shall not qualify as a Defaulting Lender solely as a result of the acquisition or maintenance of an ownership


		6		GyM Credit Agreement

interest in such Lender or its parent company, or of the exercise of control over such Lender or any Person controlling such Lender, by a Governmental Authority or instrumentality thereof; provided , further , that clauses (a) and (b) above shall not apply to a failure comply with a funding obligation arising from a good faith dispute under this Agreement. Any determination that a Lender is a Defaulting Lender under clauses (a) through (c) above shall be made by the Administrative Agent in its sole discretion acting in good faith. The Administrative Agent will promptly send to all parties hereto a copy of any notice to the Borrower referred to above.

“ Designated Jurisdiction ” means any country or territory to the extent that such country or territory itself is the subject of any Sanction.

“ Disclosed Litigation ” has the meaning specified in Section 3.01(b).

“ Disposition ” or “ Dispose ” means the sale, transfer, license, lease or other disposition (including any sale of Equity Interests) of any property by any Person, including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith.

“ EBITDA ” means, with respect to any Person, for any period, operating income (u tilidad (pérdida) operativa ) of such Person for such period minus profits from sales of investments ( ingresos por venta de inversiones ) minus profits from sales of property, plant and equipment ( ingresos por venta de inmuebles, maquinaria y equipo ) minus profits related to business acquisitions ( ganancia en combinacion de negocios ) (net of costs of such sales and combinations) plus any amounts attributable to depreciation and amortization of such Person for such period, in each case, in accordance with IFRS as reflected on the financial statements most recently delivered pursuant to Section 5.01(i).

“ Effective Date ” has the meaning specified in Section 3.01.

“ Eligible Assignee ” means (a) a Lender, (b) an Affiliate of a Lender, (c) a commercial bank or financial institution, (d) a commercial bank organized under the laws of any other country that is a member of the Organization for Economic Cooperation and Development or the Cayman Islands or has concluded special lending arrangements with the International Monetary Fund associated with its General Arrangements to Borrow, or a political subdivision of any such country, and having total assets in excess of U.S.$500,000,000, so long as such bank is acting through a branch or agency located in the country in which it is organized or another country that is described in this clause (d) or (e) a Peruvian Financial Institution; provided , however , that neither a Loan Party nor an Affiliate of a Loan Party shall qualify as an Eligible Assignee.

“ Environmental Action ” means any action, suit, demand, demand letter, claim, notice of non-compliance or violation, notice of liability or potential liability, investigation, proceeding, consent order or consent agreement relating in any way to any Environmental Law, Environmental Permit or Hazardous Materials or arising from alleged injury or threat of injury to health, safety or the environment, including (a) by any governmental or regulatory authority for enforcement, cleanup, removal, response,


		7		GyM Credit Agreement

remedial or other actions or damages and (b) by any governmental or regulatory authority or any third party for damages, contribution, indemnification, cost recovery, compensation or injunctive relief.

“ Environmental Law ” means any federal, state, local, national, regional or foreign statute, law, ordinance, rule, regulation, code, order, judgment, decree or judicial or agency interpretation, policy or guidance, including of Perú or the United States or any of their respective applicable political subdivisions, relating to pollution or protection of the environment, health, safety or natural resources, including those relating to the use, handling, transportation, treatment, storage, disposal, release or discharge of Hazardous Materials.

“ Environmental Permit ” means any permit, approval, identification number, license or other authorization required under any Environmental Law.

“ Equity Interests ” means, with respect to any Person, shares of capital stock of (or other ownership or profit interests in) such Person, warrants, options or other rights for the purchase or other acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person, securities convertible into or exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or other acquisition from such Person of such shares (or such other interests), and other ownership or profit interests in such Person (including partnership, member or trust interests therein), whether voting or non-voting, and whether or not such shares or other interests are authorized or otherwise existing on any date of determination.

“ Event of Default ” has the meaning specified in Section 6.01.

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

“ Existing Indebtedness ” means Indebtedness of each Loan Party outstanding immediately before the occurrence of the Effective Date.

“ Existing Liens ” has the meaning specified in Section 4.01(o).

“ Federal Funds Rate ” means, for any period, a fluctuating interest rate per annum equal for each day during such period to:

(a) the weighted average of the rates on overnight federal funds transactions with members of the U.S. Federal Reserve System arranged by federal funds brokers, as published for such day (or, if such day is not a Business Day, for the immediately preceding Business Day) by the Federal Reserve Bank of New York; or

(b) if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by the Administrative Agent from three federal funds brokers of recognized standing selected by it.


		8		GyM Credit Agreement

“ Fitch ” means Fitch Ratings, Inc.

“ Fund ” means any Person (other than an individual) that is or will be engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business.

“ Governmental Authority ” means any nation or government, any state, province, city, municipal entity or other political subdivision thereof, and any governmental, executive, legislative, judicial, administrative or regulatory agency, department, authority, instrumentality, commission, board, bureau or similar body, whether federal, state, provincial, territorial, local or foreign.

“ Governmental Authorization ” means any authorization, approval, consent, franchise, license, covenant, order, ruling, permit, certification, exemption, notice, declaration or similar right, undertaking or other action of, to or by, or any filing, qualification or registration with, any Governmental Authority.

“ Guaranties ” means the Guaranty delivered pursuant to Section 3.01(f)(iv), together with each other guaranty and guaranty supplement delivered pursuant to Section 5.01(j).

“ Guarantor ” means each of GyM S.A., Graña y Montero Petrolera S.A., Concar S.A., Viva GyM S.A. and each other Subsidiary of the Borrower that executes and delivers a Guaranty pursuant to Section 5.01(j).

“ G&M Holders ” means, collectively, (a) GH Holding Group Corp., Bethel Enterprises Inc., Byron Development S.A. or any of their respective Affiliates and (b) Hernando Graña Acuña and any trust or entity 100% owned and Controlled by or established for the sole benefit of, or the estate of, Hernando Graña Acuña or his spouse or lineal descendants.

“ Hazardous Materials ” means (a) petroleum and petroleum products, byproducts or breakdown products, radioactive materials, asbestos-containing materials, polychlorinated biphenyls and radon gas and (b) any other chemicals, materials or substances designated, classified or regulated as hazardous or toxic or as a pollutant or contaminant under any Environmental Law.

“ Hedge Agreements ” means interest rate swap, cap or collar agreements, interest rate future or option contracts, currency swap agreements, currency future or option contracts and other hedging agreements.

“ Historical Financial Statements ” has the meaning specified in Section 4.01(f).

“ IFRS ” means the International Financial Reporting Standards, as adopted, and in effect from time to time, by the International Accounting Standards Board, consistently applied throughout the periods involved.


		9		GyM Credit Agreement

“ IGV ” means the Peruvian value-added tax ( Impuesto General a las Ventas ), which is currently regulated by Legislative Decree N° 821, the amended and restated version of which was approved by Supreme Decree N° 055-99-EF, as in effect on the date hereof.

“ Indebtedness ” of any Person means, without duplication, (a) all indebtedness of such Person for borrowed money, (b) all Obligations of such Person for the deferred purchase price of property or services (other than trade payables not overdue by more than 60 days incurred in the ordinary course of such Person’s business), (c) all Obligations of such Person evidenced by notes, bonds, debentures or other similar instruments, (d) all Obligations of such Person created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (e) all Obligations of such Person as lessee under Capitalized Leases, (f) all Obligations, contingent or otherwise, of such Person in respect of acceptance, letter of credit or similar facilities, (g) all Obligations of such Person to purchase, redeem, retire, defease or otherwise make any payment in respect of any Equity Interests in such Person or any other Person or any warrants, rights or options to acquire such Equity Interests, valued, in the case of Redeemable Preferred Interests, at the greater of its voluntary or involuntary liquidation preference plus accrued and unpaid dividends, (h) all Obligations of such Person in respect of Hedge Agreements, valued at the Agreement Value thereof, (i) all Indebtedness and other payment obligations of others referred to in clauses (a) through (h) above or clause (j) below (collectively, “ Guaranteed Debt ”) guaranteed directly or indirectly in any manner by such Person, or in effect guaranteed directly or indirectly by such Person through an agreement (i) to pay or purchase such Guaranteed Debt or to advance or supply funds for the payment or purchase of such Guaranteed Debt, (ii) to purchase, sell or lease (as lessee or lessor) property, or to purchase or sell services, primarily for the purpose of enabling the debtor to make payment of such Guaranteed Debt or to assure the holder of such Guaranteed Debt against loss, (iii) to supply funds to or in any other manner invest in the debtor (including any agreement to pay for property or services irrespective of whether such property is received or such services are rendered) or (iv) otherwise to assure a creditor against loss; provided that Guaranteed Debt shall not include any comfort letter that does not impose any of the obligations referred to in any of clauses (a) through (h) above or clause (j) below and (j) all Indebtedness and other payment obligations referred to in clauses (a) through (i) above (including Guaranteed Debt) secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property (including accounts and contract rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness. For the avoidance of doubt, “Indebtedness” shall include Debt.

“ Indemnified Costs ” has the meaning specified in Section 7.05.

“ Indemnified Party ” has the meaning specified in Section 8.04(b).

“ Initial Lenders ” has the meaning specified in the recital of the parties hereto.


		10		GyM Credit Agreement

“ Interest Period ” means, initially, the period commencing on the Effective Date or the date of each Advance (if such Advance is made after the Effective Date) and ending on the date three months after the Effective Date, and, thereafter, each subsequent period commencing on the last day of the immediately preceding Interest Period and ending three months after such date; provided , however , that:

(i) Interest Periods commencing on the same date for Advances comprising part of the same Borrowing shall be of the same duration;

(ii) whenever the last day of any Interest Period would otherwise occur on a day other than a Business Day, the last day of such Interest Period shall be extended to occur on the immediately succeeding Business Day; provided , however , that, if such extension would cause the last day of such Interest Period to occur in the immediately succeeding calendar month, the last day of such Interest Period shall occur on the immediately preceding Business Day; and

(iii) whenever the first day of any Interest Period occurs on a day of an initial calendar month for which there is no numerically corresponding day in the calendar month that succeeds such initial calendar month by the number of months equal to the number of months in such Interest Period, such Interest Period shall end on the last Business Day of such succeeding calendar month.

“ Investment ” in any Person means any loan or advance to such Person, any purchase or other acquisition of any Equity Interests or Indebtedness of such Person, any capital contribution to such Person or any other direct or indirect investment in such Person, including any acquisition by way of a merger or consolidation (or similar transaction) and any arrangement pursuant to which the investor incurs Indebtedness of the types referred to in clause (i) or (j) of the definition of Indebtedness in respect of such Person.

“ ITF ” means the Peruvian Impuesto a las Transacciones Financieras regulated by Law Nº 28194, the amended and restated version of which was approved by Supreme Decree N° 047-2004-EF, as in effect on the date hereof.

“ Lenders ” means the Initial Lenders and each Person that shall become a party hereto pursuant to Section 8.07, for so long as such Initial Lender or Person shall be a party hereto.

“ LIBO Rate ” means, with respect to each day during each Interest Period, the rate per annum determined on the basis of the rate for deposits in Dollars for a period equal to such Interest Period commencing on the first day of such Interest Period appearing on the Reuters Screen LIBOR01 Page as of 11:00 a.m., London time, two Business Days prior to the beginning of such Interest Period. In the event that such rate does not appear on the Reuters Screen LIBOR01 Page (or otherwise on such screen), the LIBO Rate shall be determined by reference to such other comparable publicly available service for displaying eurodollar rates as may be selected by the Administrative Agent or, in the absence of such availability, by reference to the respective rates at which Dollar deposits


		11		GyM Credit Agreement

are offered to the Administrative Agent at or about 11:00 a.m., New York time, two Business Days prior to the beginning of such Interest Period in the interbank eurodollar market where its eurodollar and foreign currency and exchange operations are then being conducted for delivery on the first day of such Interest Period for the number of days comprised therein. Notwithstanding the foregoing, if at any time the rate determined pursuant to this definition is below zero, the LIBO Rate will be deemed to be zero.

“ Lien ” means any lien, security interest, assignment in trust or other charge or encumbrance of any kind, or any other type of preferential arrangement, including the lien or retained security title of a conditional vendor and any easement, right of way or other encumbrance on title to real property.

“ Loan Documents ” means (a) this Agreement, (b) the Notes, (c) the Note Filling Agreements, (d) the Guaranties and (e) the Collateral Documents.

“ Loan Parties ” means the Borrower and each Guarantor.

“ Material Adverse Change ” means any material adverse change in the business, condition (financial or otherwise), operations, performance or properties of the Borrower and its Subsidiaries taken as a whole.

“ Material Adverse Effect ” means a material adverse effect on (a) the business, condition (financial or otherwise), operations, performance or properties of the Borrower and its Subsidiaries taken as a whole, (b) the rights and remedies of any Agent or Lender under any Loan Document or (c) the ability of any Loan Party to perform its Obligations under any Loan Document.

“ Material Contract ” means, with respect to any Person, each contract to which such Person is a party involving aggregate consideration payable to or by such Person of U.S.$5,000,000 (or its equivalent in other currencies) or more in any year or otherwise material to the business, condition (financial or otherwise), operations, performance, properties or prospects of such Person.

“ Maturity Date ” means February 27, 2018.

“ Moody’s ” means Moody’s Investors Service, Inc.

“ Net Cash Proceeds ” means, with respect to any asset Disposition or Casualty Event, the gross proceeds received by any Loan Party therefrom (including any insurance proceeds, condemnation awards, cash, Cash Equivalents, deferred payment pursuant to, or by monetization of, a note receivable or otherwise), as and when received minus the sum of (without duplication) (a) taxes paid or reasonably estimated to be payable as a result thereof, (b) all reasonable and customary out-of-pocket fees and expenses incurred in connection with such transaction or event and (c) the principal amount of, premium, if any, and interest on (as well as all reasonable and customary out-of-pocket fees and expenses incurred in connection therewith) any Indebtedness secured by a Lien on the asset (or a portion thereof) Disposed of or impacted by such Casualty Event, which Indebtedness is actually so repaid.


		12		GyM Credit Agreement

“ Note ” means an incomplete promissory note of the Borrower ( pagaré incompleto ) payable to the order of a Lender, in substantially the form of Exhibit A-1, to be completed pursuant to the relevant Note Filling Agreement with the aggregate Indebtedness of the Borrower to such Lender resulting from the Advances made by such Lender, and with a guarantee ( aval ) thereon duly executed by each Guarantor.

“ Note Filling Agreement ” means a note filling agreement ( acuerdo de llenado ) executed by the Borrower and the relevant Lender, in substantially the form of Exhibit A-2, regulating the manner in which such Lender will complete the Note held by it prior to exercising any right under such Note.

“ Notice of Borrowing ” has the meaning specified in Section 2.02.

“ Obligation ” means, with respect to any Person, any payment, performance or other obligation of such Person of any kind, including any liability of such Person on any claim, whether or not the right of any creditor to payment in respect of such claim is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, disputed, undisputed, legal, equitable, secured or unsecured, and whether or not such claim is discharged, stayed or otherwise affected by any proceeding referred to in Section 6.01(e). Without limiting the generality of the foregoing, the Obligations of any Loan Party under the Loan Documents include (a) the obligation to pay principal, interest, charges, expenses, fees, attorneys’ fees and disbursements, indemnities and other amounts payable by such Loan Party under any Loan Document and (b) the obligation of such Loan Party to reimburse any amount in respect of any of the foregoing that any Lender, in its sole discretion, may elect to pay or advance on behalf of such Loan Party.

“ OFAC ” means the Office of Foreign Assets Control of the United States Department of the Treasury.

“ Other Taxes ” has the meaning specified in Section 2.12.

“ Payment Account ” means account number 0011-0586-0100026551 maintained by the Borrower with the Collateral Agent in Perú pursuant to the Peruvian Account Pledge and designated as the “Payment Account”.

“ Patriot Act ” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L. 107-56, signed into law October 26, 2001.

“ Permitted Liens ” means all Liens permitted to be incurred under Section 5.02(a).

“ Person ” means an individual, partnership, corporation (including a business trust), joint stock company, trust, unincorporated association, joint venture, limited liability company or other entity, or a government or any political subdivision or agency thereof.

“ Perú ” means the Republic of Perú.


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“ Peruvian Account Pledge ” means the Peruvian Account Pledge ( Contrato de Constitución de Garantía Mobiliaria sobre Saldos en Cuenta ), substantially in the form of Exhibit D and dated as of the date hereof, between the Borrower and the Collateral Agent.

“ Peruvian Financial Institution ” means a financial institution organized under and existing pursuant to and in accordance with the laws of Perú and authorized to conduct banking activities in Perú by the Peruvian Superintendency of Banking, Insurance and Private Pension Fund Managers.

“ Peruvian Income Tax Law ” means the Peruvian Ley del Impuesto sobre la Renta of Perú regulated by Legislative Decree N° 774, the amended and restated version of which was approved by Supreme Decree N° 179-2004-EF, as in effect on the date hereof.

“ Peruvian Sol ”, “ Sol ” and “ PEN ” mean the lawful currency of Perú.

“ Peruvian Superintendency of Banking, Insurance and Private Pension Fund Managers ” means the Superintendencia de Banca, Seguros y AFP of Perú.

“ Preferred Interests ” means, with respect to any Person, Equity Interests issued by such Person that are entitled to a preference or priority over any other Equity Interests issued by such Person upon any distribution of such Person’s property and assets, whether by dividend or upon liquidation.

“ Prime Rate ” means the prime commercial per annum lending rate provided by Banco Bilbao Vizcaya Argentaria New York Branch as in effect from time to time in New York City, New York for loans in Dollars, such rate to be adjusted on and as of the effective date of any change in such Prime Rate.

“ Process Agent ” has the meaning specified in Section 8.12.

“ Project Company ” means any special purpose vehicle, Controlled (directly or indirectly) or partially owned by a Loan Party, created to develop a project under a concession agreement, private public partnership scheme or a private long term contract, after the Effective Date; provided , however , that each of GyM Ferrovias S.A., Concesionaria La Chira S.A. and the special purpose vehicles created to develop the Via Expresa Javier Prado-La Marina-Faucett and the Via Expresa Sur projects shall be considered a Project Company.

“ Redeemable ” means, with respect to any Equity Interest, any such Equity Interest that (a) the issuer has undertaken to redeem at a fixed or determinable date or dates, whether by operation of a sinking fund or otherwise, or upon the occurrence of a condition not solely within the control of the issuer or (b) is redeemable at the option of the holder.

“ Register ” has the meaning specified in Section 8.07(c).


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“ Regulation D ” means Regulation D of the Board of Governors of the U.S. Federal Reserve System, as in effect from time to time.

“ Reinvestment Period ” has the meaning specified in Section 2.08(b)(i).

“ Related Parties ” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents, trustees, administrators, managers, advisors and representatives of such Person and of such Person’s Affiliates.

“ Required Lenders ” means at any time Lenders owed greater than 50% of the then aggregate unpaid principal amount of the Advances owing to Lenders, or, if no such principal amount is then outstanding, Lenders having greater than 50% of the Commitments, excluding, in each case, any Defaulting Lenders.

“ Sanction(s )” means any international economic sanction administered or enforced by OFAC, the United Nations Security Council, the European Union, Her Majesty’s Treasury or other relevant sanctions authority.

“ S&P ” means Standard & Poor’s, a division of The McGraw-Hill Companies, Inc.

“ SEC ” means the United States Securities and Exchange Commission or any successor thereto.

“ Secured Obligations ” means all the Obligations of the Loan Parties owing to any of the Secured Parties and existing under the Loan Documents.

“ Secured Parties ” means the Lenders and the Agents.

“ Shareholders’ Equity ” means, as of any date of determination, shareholders’ equity of the Borrower and its Subsidiaries on a Consolidated basis as of such date.

“ Solvent ” and “ Solvency ” mean, with respect to any Person on a particular date, that on such date (a) the fair value of the property of such Person is greater than the total amount of liabilities, including contingent liabilities, of such Person, (b) the present fair salable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay such debts and liabilities as they mature and (d) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person’s property would constitute an unreasonably small capital. The amount of contingent liabilities at any time shall be computed as the amount that, in the light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

“ Subsidiary ” of any Person means any corporation, partnership, joint venture, limited liability company, trust or estate of which (or in which) more than 50% of (a) the


		15		GyM Credit Agreement

issued and outstanding capital stock having ordinary voting power to elect a majority of the Board of Directors of such corporation (irrespective of whether at the time capital stock of any other class or classes of such corporation shall or might have voting power upon the occurrence of any contingency), (b) the interest in the capital or profits of such limited liability company, partnership or joint venture or (c) the beneficial interest in such trust or estate is at the time directly or indirectly owned or controlled by such Person, by such Person and one or more of its other Subsidiaries or by one or more of such Person’s other Subsidiaries.

“ Supplemental Collateral Agent ” has the meaning specified in Section 7.01(b).

“ Taxes ” has the meaning specified in Section 2.12.

“ Termination Date ” means the earlier of May 27, 2013 and the date of termination in whole of the Commitments pursuant to Section 2.04 or 6.01.

“ United States ” or “ U.S. ” means the United States of America.

“ U.S. Dollars ”, “ U.S.$ ”, “ Dollars ” and “ $ ” means the lawful currency of the United States.

“ Voting Stock ” means capital stock issued by a corporation, or equivalent interests in any other Person, the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even if the right so to vote has been suspended by the happening of such a contingency.

“ Wholly-Owned Subsidiary ” means, with respect to any Person at any time, any Subsidiary of such Person all of the Equity Interests of which are at such time directly or indirectly owned by such Person, any director or retired employee of such Person, any other Wholly-Owned Subsidiary of such Person and/or any other Affiliate of such Person; provided that the aggregate amount of the Equity Interests of such Subsidiary held directly or indirectly by all such directors and retired employees and Affiliates that are not Wholly-Owned Subsidiaries of any Loan Party shall be no greater than 10% of all of the Equity Interests of such Subsidiary.

Section 1.02 Computation of Time Periods; Other Definitional Provisions . In this Agreement and the other Loan Documents in the computation of periods of time from a specified date to a later specified date, the word “ from ” means “from and including” and the words “ to ” and “ until ” each mean “to but excluding.” References in the Loan Documents to any agreement or contract “ as amended ” shall mean and be a reference to such agreement or contract as amended, amended and restated, supplemented or otherwise modified from time to time in accordance with its terms. The word “ including ”, unless context otherwise requires (such as in the computation of periods of time), means “including without limitation”. Any reference to any Person (other than any G&M Holder) shall be constructed to include such Person’s successors or assigns (subject to any restrictions on assignment set forth herein) and, in the case of any Governmental Authority, any other Governmental Authority that shall have succeeded to any or all of the functions thereof. The words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and concession and contract rights.


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Section 1.03 Accounting Terms . All accounting terms (a) not specifically defined herein shall be construed in accordance with IFRS and (b) shall refer to the quarterly financial statements of the relevant Loan Party delivered pursuant to Section 5.01(i).

Section 1.04 Currency Equivalents Generally . Any amount specified in this Agreement (other than in Articles II, VII and VIII) or any of the other Loan Documents to be in U.S. Dollars shall also include the equivalent of such amount in any currency other than U.S. Dollars, such equivalent amount to be determined at the rate of exchange quoted by BBVA Bancomer in New York, New York at the close of business on the Business Day immediately preceding any date of determination thereof, to prime banks in New York, New York for the spot purchase in the New York foreign exchange market of such amount in U.S. Dollars with such other currency.

ARTICLE II

AMOUNTS AND TERMS OF THE ADVANCES

Section 2.01 The Advances . Each Lender severally agrees, on the terms and conditions hereinafter set forth, to make Advances to the Borrower from time to time on any Business Day during the period from the Effective Date until the Termination Date in an aggregate amount outstanding not to exceed at any time the amount set forth opposite such Lender’s name on the signature pages hereof or, if such Lender has entered into any Assignment and Acceptance, set forth for such Lender in the Register maintained by the Administrative Agent pursuant to Section 8.07(c), as such amount may be reduced pursuant to the terms of this Agreement (such Lender’s “ Commitment ”); provided that the Borrower may not request more than three Borrowings under this Agreement. Each Borrowing shall be in an aggregate amount of U.S.$10,000,000 or an integral multiple of U.S.$1,000,000 in excess thereof. Amounts repaid or prepaid on account of the Advances may not be reborrowed.

Section 2.02 Making the Advances . (a) Each Borrowing shall be made on notice, given not later than 11:00 A.M. (New York City time) on the third Business Day prior to the date of the proposed Borrowing, by the Borrower to the Administrative Agent, which shall give to each Lender prompt notice thereof by electronic communication. Each such notice of a Borrowing (a “ Notice of Borrowing ”) shall be by electronic communication and confirmed promptly in writing, in substantially the form of Exhibit B, specifying therein the requested (i) date of such Borrowing and (ii) aggregate amount of such Borrowing. Each Lender shall, before 11:00 A.M. (New York City time) on the date of such Borrowing, make available for the account of its Applicable Lending Office to the Administrative Agent at the Administrative Agent’s Account, in same day funds, such Lender’s ratable portion of such Borrowing. After the Administrative Agent’s receipt of such funds and upon fulfillment of the applicable conditions set forth in Article III, the Administrative Agent will make such funds available to the Borrower at the Borrower’s account in Lima, Perú or to the Collateral Agent at the Collateral Agent’s account in New York for further credit to the Borrower at the Borrower’s account in Lima, Perú, in each case, that is designated in writing by the Borrower.


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(b) Anything in clause (a) above to the contrary notwithstanding, the Borrower may not request Advances for any Borrowing if the obligation of the Lenders to make Advances shall then be suspended pursuant to Section 2.09(c) or 2.10.

(c) Each Notice of Borrowing shall be irrevocable and binding on the Borrower. The Borrower shall indemnify each Lender against any loss, cost or expense incurred by such Lender as a result of any failure to fulfill on or before the date specified in such Notice of Borrowing for such Borrowing the applicable conditions set forth in Article III, including any loss (excluding loss of anticipated profits and (without duplication) margin), cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by such Lender to fund the Advance to be made by such Lender as part of such Borrowing when such Advance, as a result of such failure, is not made on such date.

(d) Unless the Administrative Agent shall have received notice from a Lender prior to the date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender’s ratable portion of such Borrowing, the Administrative Agent may assume that such Lender has made such portion available to the Administrative Agent on the date of such Borrowing in accordance with clause (a) above and the Administrative Agent may, in reliance upon such assumption, make available to the Borrower on such date a corresponding amount. If and to the extent that such Lender shall not have so made such ratable portion available to the Administrative Agent, such Lender and the Borrower severally agree to repay to the Administrative Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to the Borrower until the date such amount is repaid to the Administrative Agent, at (i) in the case of the Borrower, the interest rate applicable at the time to Advances comprising such Borrowing and (ii) in the case of such Lender, the Federal Funds Rate. If such Lender shall repay to the Administrative Agent such corresponding amount, such amount so repaid shall constitute such Lender’s Advance as part of such Borrowing for purposes of this Agreement.

(e) The failure of any Lender to make the Advance to be made by it as part of any Borrowing shall not relieve any other Lender of its obligation, if any, hereunder to make its Advance on the date of such Borrowing, but no Lender shall be responsible for the failure of any other Lender to make the Advance to be made by such other Lender on the date of any Borrowing.

Section 2.03 Fees . (a) Facility Fee . The Borrower agrees to pay to the Administrative Agent for the account of each Lender a facility fee on the aggregate undrawn amount of such Lender’s Commitment (calculated (i) from the Effective Date in the case of each Initial Lender or (ii) from the later of the Effective Date and the effective date specified in the Assignment and Acceptance pursuant to which it became a Lender in the case of each other Lender, in each case, until the Termination Date) at a rate per annum equal to 1.275%, payable in arrears on the last day of the first Interest Period hereunder.

(b) Agents’ Fees . The Borrower shall pay to each Agent for its own account such fees as may from time to time be agreed between the Borrower and such Agent.


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Section 2.04 Termination or Reduction of the Commitments . (a) Optional . The Borrower may, on at least five Business Days’ notice to the Administrative Agent, permanently terminate in whole or reduce in part the unused portion of the Commitments, without premium or penalty.

(b) Mandatory . From time to time upon each repayment or prepayment of the Advances, each Lender’s Commitment shall be automatically and permanently reduced, without premium or penalty, by an amount equal to the amount by which such Lender’s Commitment immediately prior to such reduction exceeds the aggregate unpaid principal amount of the Advances. On the Termination Date, each Lender’s Commitment shall be automatically and permanently reduced to U.S.$0.

Section 2.05 Repayment . The Borrower hereby unconditionally promises to repay to the Administrative Agent, for the account of the Lenders, the outstanding principal amount of the Advances in 17 consecutive quarterly installments commencing on the first anniversary of the Effective Date, each such installment in an amount equal to the product of (a) the aggregate outstanding principal amount of the Advances as of the Termination Date and (b) 1/17, as the amount of any such installment may be reduced as a result of any prepayment of the Advances pursuant to Section 2.08. The Borrower shall repay on the Maturity Date, all Advances and other amounts then outstanding hereunder.

Section 2.06 Interest . (a) Payment of Interest . The Borrower shall pay interest on the unpaid principal amount of each Advance owing to each Lender from the date of such Advance until such principal amount shall be paid in full, at a rate per annum equal at all times during each Interest Period for such Advance to the sum of (i) the LIBO Rate for such Interest Period for such Advance plus (ii) the Applicable Margin, payable in arrears on the last day of such Interest Period.

(b) Default Interest . Upon the occurrence and during the continuance of an Event of Default, the Borrower shall, automatically and without any further action by any Agent or any Lender, pay interest (“ Default Interest ”) on the outstanding principal amount of the Advances owing to each Lender, payable in arrears on the dates referred to in Section 2.06(a) and on demand, at a rate per annum equal at all times to 2% per annum above the rate per annum required to be paid on such Advance pursuant to Section 2.06(a). For the avoidance of doubt, following the acceleration of the Advances, or the giving of notice by the Administrative Agent to accelerate the Advances, pursuant to Section 6.01, Default Interest shall accrue and be payable hereunder.

Section 2.07 Interest Rate Determination . The Administrative Agent shall give prompt notice to the Borrower and the Lenders of the applicable interest rate determined by the Administrative Agent for purposes of Section 2.06(a).

Section 2.08 Prepayments . (a) Optional . The Borrower may, upon at least 10 Business Days’ notice to the Administrative Agent stating the proposed date and aggregate principal amount of the prepayment, and if such notice is given the Borrower shall, prepay the outstanding principal amount of the Advances in whole or ratably in part, without premium or penalty, together with accrued interest to the date of such prepayment on the principal amount


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prepaid; provided , however , that (i) each partial prepayment shall be in an aggregate principal amount of U.S.$5,000,000 or an integral multiple of U.S.$1,000,000 in excess thereof and (ii) the Borrower shall be obligated to reimburse the Lenders in respect thereof pursuant to Section 8.04(c).

(b) Mandatory .

(i) If (A) any Loan Party Disposes of any property (other than pursuant to clause (i), (ii), (iii), (iv) or (v) of Section 5.02(e)) or (B) any Casualty Event occurs, which in the aggregate results in the realization or receipt by any Loan Party of Net Cash Proceeds in excess of U.S.$20,000,000, the Borrower shall make a prepayment in an aggregate principal amount of Advances equal to the product of (I) 100% of such Net Cash Proceeds less the percentage of such Net Cash Proceeds reinvested in accordance with this Section 2.08(b)(i) (such net percentage, the “ Asset Percentage ”) and (II) the Net Cash Proceeds realized or received with respect to (y) a Disposition, within 60 days and (z) a Casualty Event, within five Business Days, in each case, after receipt of such Net Cash Proceeds by such Loan Party; provided that, no such prepayment shall be required pursuant to this Section 2.08(b)(i) with respect to such portion of such Net Cash Proceeds that the Borrower shall have, on or prior to such date, given written notice to the Administrative Agent of its (or such Loan Party’s) reinvestment of, or written intent to reinvest or entry into a legally binding commitment to reinvest, such Net Cash Proceeds in assets useful for its business within 90 days following receipt of such Net Cash Proceeds (the “ Reinvestment Period ”) (and, in the case of any such written intent or binding commitment, the reinvestment contemplated by such written intent or binding commitment shall have been consummated within 180 days (or such longer period as requested by the Borrower and agreed by the Required Lenders following the last day of the Reinvestment Period)); provided that (1) so long as an Event of Default shall have occurred and be continuing, no Loan Party shall be permitted to make any such reinvestments (other than pursuant to a legally binding commitment that such Loan Party entered into at a time when no Event of Default is continuing) and (2) if any proceeds are not so reinvested by the deadlines specified above or if any such proceeds are no longer intended to be or cannot be so reinvested at any time after delivery of a notice of reinvestment election, an amount equal to the Asset Percentage of any such Net Cash Proceeds shall be applied to the prepayment of the Advances.

(ii) The Borrower shall be required to prepay all Advances upon the occurrence of a Change of Control.

(iii) If any Governmental Authority (A) condemns, nationalizes, seizes, attaches, compulsorily acquires, confiscates or otherwise expropriates (directly or indirectly through measures tantamount to expropriation) all or substantially all of the property or the assets of any Loan Party or of the share capital of any Loan Party, (B) assumes custody or control of all or substantially all of the property or the assets, or of the business or operations, of any Loan Party or of the share capital of any Loan Party, (C) takes or directs any action for the dissolution or disestablishment of any Loan Party or any action that would prevent any Loan Party from carrying on all or substantially all of its business or operations or (D) takes any administrative action or enacts any law to effect any of the foregoing, then, in each case, the Borrower shall be required to prepay all Advances within 45 days after such occurrence.


		20		GyM Credit Agreement

(c) Each principal portion of any prepayment shall be applied to the principal installments due hereunder in inverse order of maturity.

Section 2.09 Increased Costs . (a) If, due to either (i) a Change of Law or (ii) the compliance with any guideline or request from any central bank or other Governmental Authority (whether or not having the force of law) issued after the date hereof, there shall be any increase in the cost to any Lender of agreeing to make or making, funding or maintaining Advances (excluding for purposes of this Section any such increased costs resulting from (A) Taxes or Other Taxes (as to which Section 2.12 shall govern) and (B) changes in the basis of taxation of overall net income or overall gross income by the United States or by the foreign jurisdiction or state under the laws of which such Lender is organized, resident for tax purposes or has its Applicable Lending Office or another permanent establishment to which income from the Advances is attributable or any political subdivision thereof), then the Borrower shall from time to time, upon demand by such Lender (with a copy of such demand to the Administrative Agent), pay to the Administrative Agent for the account of such Lender additional amounts sufficient to compensate such Lender for such increased cost. A certificate as to the amount of such increased cost, submitted to the Borrower and the Administrative Agent by such Lender, shall be conclusive and binding for all purposes, absent manifest error.

(b) If any Lender determines that a Change of Law or compliance with any law or regulation or any guideline or request from any central bank or other Governmental Authority (whether or not having the force of law) issued after the date hereof affects or would affect the amount of capital required or expected to be maintained by such Lender or any corporation controlling such Lender and that the amount of such capital is increased by or based upon the existence of such Lender’s commitment to lend hereunder and other commitments of this type, then, upon demand by such Lender (with a copy of such demand to the Administrative Agent), the Borrower shall pay to the Administrative Agent for the account of such Lender, from time to time as specified by such Lender, additional amounts sufficient to compensate such Lender or such corporation in the light of such circumstances, to the extent that such Lender reasonably determines such increase in capital to be allocable to the existence of such Lender’s commitment to lend hereunder. A certificate as to such amounts submitted to the Borrower and the Administrative Agent by such Lender shall be conclusive and binding for all purposes, absent manifest error.

(c) If prior to the first day of any Interest Period, (i) the Administrative Agent shall have reasonably determined (which determination shall be conclusive and binding upon the Borrower) that, by reason of circumstances affecting the London interbank Eurodollar market, adequate and reasonable means do not exist for ascertaining the LIBO Rate for such Interest Period, or (ii) the Administrative Agent shall have received notice from the Required Lenders that (A) deposits in Dollars (in the applicable amounts) are not being offered to such Lenders in the London interbank Eurodollar market for such Interest Period or (B) the LIBO Rate determined or to be determined for such Interest Period will not adequately and fairly reflect the cost to such Lenders of making or maintaining their Advances during such Interest Period, the Administrative Agent shall give electronic notice thereof, confirmed promptly in writing, to the


		21		GyM Credit Agreement

Borrower and the Lenders. During the next 30 days, the Borrower and the Administrative Agent shall negotiate in good faith with a view to agreeing upon an interest rate to be substituted for the LIBO Rate. If a substituted interest rate is agreed upon and approved by all Lenders, it shall be effective from the first day of such Interest Period until the start of the next such Interest Period during which the applicable condition in clause (i) or (ii) above shall not be met. If the Borrower and the Administrative Agent fail to agree upon a substituted interest rate within such 30-day period, or all Lenders fail to approve the substituted interest rate, the interest rate during such Interest Period (and any subsequent Interest Period until the start of the next such Interest Period during which the applicable condition in clause (i) or (ii) above shall not be met) effective from the commencement of such Interest Period shall be the Alternate Rate plus the Applicable Margin. The Administrative Agent shall notify the Borrower of each determination of the Alternate Rate as promptly as practicable.

Section 2.10 Illegality . Notwithstanding any other provision of this Agreement, if any Lender shall notify the Administrative Agent that a Change of Law or compliance by any Lender (or its Applicable Lending Office) with any request or directive (whether or not having the force of law) of any Governmental Authority makes it unlawful, or any central bank or other Governmental Authority asserts that it is unlawful, for any Lender or to perform its obligations hereunder to make Advances or to fund or maintain Advances hereunder, (a) the interest rate on the outstanding Advances of each affected Lender shall be the Alternate Rate plus the Applicable Margin and (b) the obligation of the Lenders to make Advances shall be suspended, in each case, until the Administrative Agent shall notify the Borrower and the Lenders that the circumstances causing such suspension no longer exist.

Section 2.11 Payments and Computations . (a) The Borrower shall make each payment hereunder and under the other Loan Documents, irrespective of any right of counterclaim or set-off, not later than 11:00 A.M. (New York City time) on the day when due in U.S. Dollars from the Payment Account or the Debt Service Reserve Account, as applicable under the terms of this Agreement and the other Loan Documents, to the Administrative Agent at the Administrative Agent’s Account in same day funds. The Administrative Agent will promptly thereafter cause to be distributed like funds relating to the payment of principal or interest or facility fees ratably (other than amounts payable pursuant to Section 2.09, 2.10, 2.12 or 8.04(c)) to the Lenders for the account of their respective Applicable Lending Offices, and like funds relating to the payment to any Lender of any other amount payable to such Lender for the account of its Applicable Lending Office, in each case, to be applied in accordance with the terms of this Agreement. Upon its acceptance of an Assignment and Acceptance and recording of the information contained therein in the Register pursuant to Section 8.07(d), from and after the effective date specified in such Assignment and Acceptance, the Administrative Agent shall make all payments hereunder and under the other Loan Documents in respect of the interest assigned thereby to the Lender assignee thereunder, and the parties to such Assignment and Acceptance shall make all appropriate adjustments in such payments for periods prior to such effective date directly between themselves.

(b) The Borrower hereby authorizes each Lender, if and to the extent payment owed to such Lender is not made when due hereunder or under the Note held by such Lender, to charge from time to time against any or all of the Borrower’s accounts with such Lender any amount so due.


		22		GyM Credit Agreement

(c) All computations of interest and of facility fees shall be made by the Administrative Agent on the basis of a year of 360 days, in each case, for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest or facility fees are payable. Each determination by the Administrative Agent of an interest rate hereunder shall be conclusive and binding for all purposes, absent manifest error.

(d) Whenever any payment hereunder or under the Notes shall be stated to be due on a day other than a Business Day, such payment shall be made on the immediately succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest or facility fee, as the case may be; provided , however , that, if such extension would cause payment of interest on or principal of Advances to be made in the immediately succeeding calendar month, such payment shall be made on the immediately preceding Business Day.

(e) Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Lenders hereunder that the Borrower will not make such payment in full, the Administrative Agent may assume that the Borrower has made such payment in full to the Administrative Agent on such date and the Administrative Agent may, in reliance upon such assumption, cause to be distributed to each Lender on such due date an amount equal to the amount then due such Lender. If and to the extent the Borrower shall not have so made such payment in full to the Administrative Agent, each Lender shall repay to the Administrative Agent forthwith on demand such amount distributed to such Lender together with interest thereon, for each day from the date such amount is distributed to such Lender until the date such Lender repays such amount to the Administrative Agent, at the LIBO Rate.

(f) The Administrative Agent shall apply amounts received by it, including amounts received by the Collateral Agent under the Collateral Documents and forwarded to the Administrative Agent, first to the payment or reimbursement of amounts owed to the Agents in such capacity under the Loan Documents, second to the payment or reimbursement of amounts owed to the Lenders under the Loan Documents other than principal and interest on the Advances, third to the payment of accrued and unpaid interest on the Advances and fourth to the payment of outstanding principal amount of the Advances.

Section 2.12 Taxes . (a) Any and all payments by any Loan Party hereunder or under the Loan Documents or any other documents to be delivered hereunder shall be made, in accordance with Section 2.11 or the applicable provisions of such other documents, free and clear of and without deduction for any and all present or future taxes (including value-added taxes and withholding taxes), levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding , (i) in the case of each Lender and each Agent, taxes imposed on or measured by net income (however denominated), and franchise taxes imposed on it in lieu of net income taxes, by the jurisdiction under the laws of which such Lender or Agent (as the case may be) is resident for tax purposes or in which such Lender’s Applicable Lending Office or another permanent establishment to which income hereunder is attributable is located, or any political subdivision thereof and (ii) in the case of each Lender, withholding taxes in excess of the reduced withholding tax rate pursuant to paragraph (a) of article 56° of the Peruvian Income Tax Law (other than withholding taxes (A) imposed as a result of a Change of


		23		GyM Credit Agreement

Law or (B) resulting from any act or omission of any Loan Party that results, directly or indirectly, in a Lender not qualifying for the reduced withholding rate) (all such non-excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities in respect of payments hereunder or under the Notes being hereinafter referred to as “ Taxes ”). If any Loan Party shall be required by law to deduct or withhold any Taxes from or in respect of any sum payable hereunder or under any Loan Document or any other documents to be delivered hereunder to any Lender or any Agent, then (A) such Loan Party shall (I) assume directly the payment of such Taxes in accordance with article 47 of the Peruvian Income Tax Law so that after such Loan Party has made all required deductions and withholdings such Lender or Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions or withholdings been made or (II) the sum payable shall be increased as may be necessary so that after such Loan Party and the Administrative Agent have made all required deductions and withholdings (including deductions and withholdings applicable to additional sums payable under this Section) such Lender or such Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions or withholdings been made, (B) such Loan Party shall assume directly the payment of such Taxes or make all such deductions and withholdings, as the case may be, and (C) such Loan Party shall pay the full amount assumed, deducted or withheld to the relevant taxation authority or other authority in accordance with applicable law.

(b) In addition, each Loan Party shall pay any present or future stamp or documentary taxes or any other excise or property, intangible or mortgage recording or similar taxes, charges or levies that arise from any payment made by such Loan Party hereunder or under the other Loan Documents or any other documents to be delivered hereunder or from the execution, delivery or registration of, performing under, or otherwise with respect to, any Loan Document or any other documents to be delivered hereunder (hereinafter referred to as “ Other Taxes ”).

(c) Each Loan Party shall indemnify each Lender and each Agent for and hold it harmless against the full amount of Taxes or Other Taxes (including Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section 2.12) imposed or asserted by any jurisdiction on amounts payable by the Loan Parties hereunder or under any Loan Document or any other documents to be delivered hereunder to any Lender or Agent (as the case may be) and any liability (including penalties, additions to tax, interest and expenses) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally imposed or asserted by the applicable jurisdiction. This indemnification shall be made within 30 days from the date such Lender or such Agent (as the case may be) makes written demand therefor.

(d) Within 30 days after the date of any payment of Taxes, the appropriate Loan Party shall furnish to the Administrative Agent, at its address referred to in Section 8.02, the original or a certified copy of a receipt evidencing such payment, to the extent such a receipt is issued therefor, or other written proof of payment thereof that is reasonably satisfactory to the Administrative Agent. In the case of any payment hereunder or under any other Loan Document or any other documents to be delivered hereunder by or on behalf of any Loan Party, if such Loan Party determines that no Taxes are payable in respect thereof, such Loan Party shall furnish, or shall cause such payor to furnish, to the Administrative Agent, at such address, an opinion of counsel acceptable to the Administrative Agent stating that such payment is exempt from Taxes.


		24		GyM Credit Agreement

(e) Notwithstanding anything to the contrary contained herein or any Loan Document, each of the Borrower, each Agent and each Lender (and each of their respective employees, representatives and other agents) may disclose to any and all Persons, without limitation of any kind, the U.S. tax treatment and U.S. tax structure of the transactions contemplated hereby and all materials of any kind (including opinions or other tax analyses) that are provided to the Borrower or such Agent or Lender (or any of their respective employees, representatives or other agents) relating to such U.S. tax treatment and U.S. tax structure.

(f) If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section 2.12 (including by the payment of additional amounts pursuant to this Section 2.12), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section 2.12 with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including taxes) of such indemnified party and without interest (other than any interest paid by the relevant governmental authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall repay to such indemnified party the amount paid over pursuant to this clause (f) ( plus any penalties, interest or other charges imposed by the relevant governmental authority) in the event that such indemnified party is required to repay such refund to such governmental authority. Notwithstanding anything to the contrary in this clause (f), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this clause (f) the payment of which would place the indemnified party in a less favorable net after-tax position than the indemnified party would have been in if the indemnification payments or additional amounts giving rise to such refund had never been paid. This clause (f) shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person. Notwithstanding the foregoing, it is understood and agreed that nothing in this Section 2.12 shall interfere with the rights of any Lender to conduct its fiscal or tax affairs in such manner as it deems fit.

(g) Any Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Agent), executed originals of any form reasonably requested in writing by the Borrower or the Agent and prescribed by applicable law as a basis for claiming exemption from or a reduction in withholding Tax, duly completed, together with such supplementary documentation as may be reasonably requested in writing by the Borrower or the Agent and prescribed by applicable law to permit the Borrower or the Administrative Agent to determine the withholding or deduction required to be made; provided that the completion, execution and submission of such documentation shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense, would materially prejudice the legal or commercial position of such Lender or would require the disclosure of any information that the Lender is not required to furnish to the competent Peruvian tax authority in respect of the lowest withholding rate applicable to any payment by the Borrower under the Loan Documents.


		25		GyM Credit Agreement

Section 2.13 Sharing of Payments, Etc. If any Lender shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) on account of the Advances owing to it (other than pursuant to Section 2.09, 2.10, 2.12, 2.16 or 8.04(c)) in excess of its ratable share of payments on account of the Advances obtained by all the Lenders, such Lender shall forthwith purchase from the other Lenders such participations in the Advances owing to them as shall be necessary to cause such purchasing Lender to share the excess payment ratably with each of them; provided , however , that (a) if all or any portion of such excess payment is thereafter recovered from such purchasing Lender, such purchase from each Lender shall be rescinded and such Lender shall repay to the purchasing Lender the purchase price to the extent of such recovery together with an amount equal to such Lender’s ratable share (according to the proportion of (i) the amount of such Lender’s required repayment to (ii) the total amount so recovered from the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered and (b) the provisions of this Section 2.13 shall not be construed to apply to any payment obtained by a Lender (i) as consideration for the assignment of or sale of a participation in any of its Advances or (ii) in respect of any arrangement between such Lender and any third party in respect of any securitization, hedge or other transaction under which payments are to be made between such Lender and such third party by reference to this Agreement. The Borrower agrees that any Lender purchasing a participation from another Lender pursuant to this Section 2.13 may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set-off) with respect to such participation as fully as if such Lender were the direct creditor of the Borrower in the amount of such participation.

Section 2.14 Evidence of Debt; Notes . (a) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Advance owing to such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder.

(b) The Register maintained by the Administrative Agent pursuant to Section 8.07(c) shall include a control account, and a subsidiary account for each Lender, in which accounts (taken together) shall be recorded (i) the date and amount of each Borrowing made hereunder, (ii) the terms of each Assignment and Acceptance delivered to and accepted by it, (iii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iv) the amount of any sum received by the Administrative Agent from the Borrower hereunder and each Lender’s share thereof.

(c) Entries made in good faith by the Administrative Agent in the Register pursuant to clause (b) above, and by each Lender in its account or accounts pursuant to clause (a) above, shall be prima facie evidence of the amount of principal and interest due and payable or to become due and payable from the Borrower to, in the case of the Register, each Lender and, in the case of such account or accounts, such Lender, under this Agreement, absent manifest error; provided , however , that the failure of the Administrative Agent or such Lender Party to make an entry, or any finding that an entry is incorrect, in the Register or such account or accounts shall not limit or otherwise affect the obligations of the Borrower under this Agreement.


		26		GyM Credit Agreement

(d) As additional evidence of the Borrower’s obligation to pay the principal of and interest on the Advances as provided in this Agreement, the Borrower and each Guarantor shall execute and deliver to the Administrative Agent for each Lender on or prior to the initial Borrowing pursuant to Section 2.02, one duly executed Note of the Borrower made payable to the order of such Lender, and the relevant Note Filling Agreement, each dated the date of the initial Borrowing. Each such Note shall be executed by the Borrower and executed por aval by each Guarantor, shall qualify as a pagaré under Peruvian Law. Each Note Filling Agreement shall be executed by the Borrower and the relevant Lender. If such Lender exercises any right in any court in Perú under any Note delivered pursuant to this Agreement, it shall not be required for such purpose to evidence to any Loan Party or any other Person that such Note represents obligations of the Loan Parties under this Agreement nor that any condition herein has been fulfilled. In addition, each Loan Party hereby agrees and covenants that it will execute and deliver any and all amendments or endorsements to the Notes, or replace the Notes with amended or endorsed Notes, and take all further action that may in the reasonable judgment of the Administrative Agent or the Required Lenders, be necessary, or that the Administrative Agent or the Required Lenders may reasonably request from time to time, in order to ensure that the Notes duly reflect the terms of this Agreement.

(e) Notwithstanding the discharge in full of any Note, if the amount (including default interest) paid or payable to a Lender under such Note (whether arising from the enforcement thereof in Perú or otherwise) is less than the amount due and payable to such Lender in accordance with this Agreement with respect to the Advances, or portion thereof, evidenced by such Note, the Borrower agrees, to the fullest extent it may effectively do so, to pay to such Lender upon demand such difference in accordance with Section 2.11 and as otherwise specified in this Agreement. Notwithstanding article 1233° of the Peruvian Civil Code (Legislative Decree N° 295) of the Republic of Perú, the obligations under any Note shall not be extinguished even if such Note is prejudiced under the laws of Perú due to negligence of a Secured Party.

Section 2.15 Use of Proceeds . The proceeds of the Advances shall be available (and the Borrower agrees that it shall use such proceeds) solely for (a) the repayment of a U.S.$60,000,000 bridge facility entered into by the Borrower on October 5, 2012, (b) for investments in and funding the operations of GyM Ferrovias S.A. and (c) general corporate purposes of the Borrower and its Subsidiaries.

Section 2.16 Replacement of Lenders . In the event that any Lender (a) demands payment of costs or additional amounts pursuant to Section 2.09, (b) asserts that it is unlawful for such Lender to make Advances pursuant to Section 2.10 or (c) becomes a Defaulting Lender, then (subject to such Lender’s right to rescind such demand or assertion within 10 days after the notice from the Borrower referred to below) the Borrower may, upon 20 days’ prior written notice to such Lender and the Administrative Agent so long as no Default is then continuing, elect to cause such Lender to assign its Advances and Commitments in full to one or more Persons selected by the Borrower so long as (i) each such Person satisfies the criteria of an Eligible Assignee, (ii) such Lender receives payment in full in cash of the outstanding principal


		27		GyM Credit Agreement

amount of all Advances made by it and all accrued and unpaid interest thereon and all other amounts due and payable to such Lender as of the date of such assignment as if such Lender were receiving on such date of a prepayment in full of such Lender’s Advances (including amounts owing pursuant to Sections 2.09, 2.12 and 8.04) and (iii) each such assignee agrees to accept such assignment and to assume all obligations of such Lender hereunder in accordance with Section 8.07. If the Borrower is unable to find a replacement Lender pursuant to this Section 2.16, then the Borrower may elect in its sole discretion to prepay the Advances of such affected Lender, without any premium or penalty.

ARTICLE III

CONDITIONS TO EFFECTIVENESS AND LENDING

Section 3.01 Conditions Precedent to Effectiveness of Section 2.01 . The obligation of the Lenders to fund Advances under Section 2.01 shall become effective on and as of the first date (the “ Effective Date ”) on which the following conditions precedent have been satisfied:

(a) There shall have occurred no Material Adverse Change since December 31, 2011 or any material adverse change in the political, economic or financial condition of Perú or with respect to the international capital markets or the loan syndication market generally since the date hereof.

(b) There shall exist no action, suit, investigation, litigation or proceeding affecting any Loan Party pending or threatened before any court, governmental agency or arbitrator that (i) could be reasonably likely to have a Material Adverse Effect other than the matters described on Schedule 3.01(b) (the “ Disclosed Litigation ”) or (ii) purports to affect the legality, validity or enforceability of any Loan Document or the consummation of the transactions contemplated hereby, and there shall have been no adverse change in the status, or financial effect on any Loan Party, of the Disclosed Litigation from that described on Schedule 3.01(b).

(c) The Lenders shall have completed a due diligence investigation of the Loan Parties in scope, and with results, reasonably satisfactory to the Lenders.

(d) All governmental and third party consents and approvals necessary in connection with the transactions contemplated hereby (including exchange control approvals and any other consents required or advisable from the Central Bank of Perú) shall have been obtained (without the imposition of any conditions that are not acceptable to the Lenders) and shall remain in effect, and no law or regulation shall be applicable in the reasonable judgment of the Lenders that restrains, prevents or imposes materially adverse conditions upon the transactions contemplated hereby.

(e) On the Effective Date, the following statements shall be true and the Administrative Agent shall have received for the account of each Lender a certificate signed by a duly authorized officer of the Borrower, dated the Effective Date, stating that:

(i) the representations and warranties contained in Section 4.01 are correct on and as of the Effective Date, and

(ii) no event has occurred and is continuing that constitutes a Default.


		28		GyM Credit Agreement

(f) The Administrative Agent shall have received on or before the Effective Date the following, each dated on or within three Business Days prior to such day (except as otherwise specified), in form and substance satisfactory to the Administrative Agent and (except for the Notes and the Note Filling Agreements) in sufficient copies for each Lender:

(i) this Agreement, duly executed and delivered by the parties hereto;

(ii) each Note to the order of each Lender duly executed delivered by the Borrower and each Guarantor por aval , and each Note Filling Agreement duly executed in connection therewith by the Borrower and each Lender;

(iii) the Peruvian Account Pledge, duly executed and delivered by the parties thereto;

(iv) a guaranty in substantially the form of Exhibit E dated as of a date on or prior to the Effective Date (the “ Guaranty ”), duly executed by each Guarantor;

(v) certified copies of (A) the document issued by the Public Registry certifying that the powers of attorney of the representatives of each Loan Party approving and executing the Loan Documents to which it is a party are in full force and effect ( Certificado de Vigencia ) dated on or within 30 days prior to the Effective Date, (B) the charter and by-laws of each Loan Party as in effect on the date of the document referred to in (A) and (C) all documents evidencing other necessary corporate action and governmental approvals, if any, with respect to the Loan Documents, and a certificate of the General Manager or an authorized officer of each Loan Party certifying the absence of any change or amendment to the powers of attorney referred to in clause (A) above and the charter and by-laws of such Loan Party referred to in clause (B) above since the date of the document referred to in clause (A) above;

(vi) a certificate of the Secretary or an Assistant Secretary of each Loan Party certifying the names and true signatures of the officers of such Loan Party authorized to sign the Loan Documents and the other documents to be delivered hereunder;

(vii) a letter from the Process Agent dated as of a date on or prior to the Effective Date indicating its acceptance of the appointment by each Loan Party pursuant to Section 8.12(b);

(viii) an opinion of in-house counsel to the Loan Parties, substantially in the form of Exhibit F and as to such other matters as any Lender through the Administrative Agent may reasonably request;

(ix) an opinion of Milbank, Tweed, Hadley & McCloy LLP, New York counsel for the Loan Parties, substantially in the form of Exhibit G and as to such other matters as any Lender through the Administrative Agent may reasonably request;


		29		GyM Credit Agreement

(x) an opinion of Rodrigo, Elias & Medrano Abogados, Perú counsel for the Administrative Agent, in form and substance reasonably satisfactory to the Administrative Agent; and

(xi) an opinion of Shearman & Sterling LLP, New York counsel for the Administrative Agent, in form and substance reasonably satisfactory to the Administrative Agent.

(g) The Administrative Agent shall have received copies of all of the Historical Financial Statements.

(h) All applicable taxes and stamp duties due and payable, if any, arising in connection with the execution, delivery and performance of this Agreement and the other Loan Documents shall have been paid in full.

(i) The Administrative Agent shall have received all documentation and other information requested at least five Business Days prior to the Effective Date with respect to each Loan Party required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including the Patriot Act.

Section 3.02 Conditions Precedent to Each Borrowing . The obligation of each Lender to make an Advance on the occasion of each Borrowing (including the initial Borrowing) shall be subject to the conditions precedent that the Effective Date shall have occurred and on the date of such Borrowing (a) the following statements shall be true (and each of the giving of the applicable Notice of Borrowing and the acceptance by the Borrower of the proceeds of such Borrowing shall constitute a representation and warranty by the Borrower that on the date of such Borrowing such statements are true):

(i) the representations and warranties contained in Section 4.01 are correct in all material respects (unless any such representation or warranty is qualified by or subject to a materiality qualification (including “Material Adverse Effect” or similar term of qualification), in which case such representation or warranty shall be correct) on and as of the date of such Borrowing, before and after giving effect to such Borrowing and to the application of the proceeds therefrom, as though made on and as of such date (or, if stated to have been made as of an earlier date, were true and correct (in all material respects, as the case may be) as of such earlier date); and

(ii) no event has occurred and is continuing, or would result from such Borrowing or from the application of the proceeds therefrom, that constitutes a Default or would constitute a Default; and

(b) the Administrative Agent shall have received a Notice of Borrowing from the Borrower in accordance with Section 2.02(a); and

(c) with respect to the initial Borrowing, (i) the Borrower shall have paid all accrued fees and expenses of the Agents and the Lenders (including the accrued fees and expenses of counsel to the Agents) as of the earlier of (A) the date of such Borrowing and (B) five calendar days after the Effective Date and (ii) the Borrower shall have delivered the Peruvian Account Pledge to the Registro Mobiliario de Contratos in Perú.


		30		GyM Credit Agreement

Section 3.03 Determinations Under Section 3.01 . For purposes of determining compliance with the conditions specified in Section 3.01, each Lender shall be deemed to have consented to, approved or accepted or to be satisfied with each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to the Lenders unless an officer of the Administrative Agent responsible for the transactions contemplated by the Loan Documents shall have received notice from such Lender prior to the date that the Borrower, by notice to the Lenders, designates as the proposed Effective Date, specifying its objection thereto. The Administrative Agent shall promptly notify the Lenders of the occurrence of the Effective Date.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

Section 4.01 Representations and Warranties of the Borrower . The Borrower represents and warrants as follows:

(a) Each Loan Party (i) is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation, (ii) is duly qualified and in good standing as a foreign corporation in each other jurisdiction in which it owns or leases property or in which the conduct of its business requires it to so qualify or be licensed, except where the failure to be so qualified or in good standing could not reasonably be expected to have a Material Adverse Effect and (iii) has all requisite corporate power and authority (including all governmental licenses, permits and other approvals) to own or lease and operate its properties and to carry on its business as now conducted and as proposed to be conducted. All of the outstanding Equity Interests in each Loan Party have been validly issued, are fully paid (other than, with respect to Viva GyM S.A., 770,788 shares of the total 225,459,833 shares outstanding, which are 52.54% paid as of the Effective Date) and non-assessable and are owned by the Persons listed on Schedule 4.01(a) free and clear of all Liens, except those created under the Collateral Documents.

(b) The execution, delivery and performance by each Loan Party of the Loan Documents to which it is a party, and the consummation of the transactions contemplated hereby, are within such Loan Party’s corporate powers, have been duly authorized by all necessary corporate action, and do not contravene (i) such Loan Party’s charter or by-laws or (ii) any law or contractual restriction binding on or affecting such Loan Party; and will not result in the imposition of any Lien on any assets of any Loan Party.

(c) Set forth on Schedule 4.01(c) is a complete and accurate list of all Subsidiaries of each Loan Party, showing as of the date hereof (as to each such Subsidiary) the jurisdiction of its incorporation, the number of shares of each class of its Equity Interests authorized, and the number outstanding, on the date hereof and the percentage of each such class of its Equity Interests owned (directly or indirectly) by such Loan Party and the number of shares covered by all outstanding options, warrants, rights of conversion or purchase and similar rights at the date hereof. All of the outstanding Equity Interests in each Loan Party’s Subsidiaries has


		31		GyM Credit Agreement

been validly issued, are fully paid and non-assessable and are owned by such Loan Party or one or more of its Subsidiaries free and clear of all Liens, except those created under the Collateral Documents.

(d) No authorization or approval or other action by, and no notice to or filing with, any Governmental Authority or any other third party is required for (i) the due execution, delivery and performance by the Loan Parties of this Agreement or any other Loan Document, (ii) the grant by any Loan Party of the Liens granted by it pursuant to the Collateral Documents, (iii) the perfection or maintenance of the Liens created under the Collateral Documents (including the first priority nature thereof) or (iv) the exercise by any Agent or any Lender of its rights under the Loan Documents or the remedies in respect of the Collateral pursuant to the Collateral Documents (other than the filings listed in Section 3.01 and, with respect to clause (ii) above, registration of the Peruvian Account Pledge in accordance with Section 5.01(k)(ii)).

(e) This Agreement and each other Loan Document, other than the Notes and the Note Filling Agreements, has been, and each of the Notes and the Note Filling Agreements when delivered hereunder will have been, duly executed and delivered by each Loan Party party thereto. Each Loan Document is, and each of the Notes and the Note Filling Agreements when delivered hereunder will be, the legal, valid and binding obligation of each Loan Party party thereto, enforceable against such Loan Party in accordance with its respective terms, except, in each case, as such enforceability may be limited by bankruptcy, insolvency, reorganization, liquidation, moratorium or other similar laws of general application and equitable principles relating to or affecting creditors’ rights.

(f) Each of (i) the balance sheet of the Borrower as at December 31, 2011, and the related statements of income and cash flows of the Borrower for the fiscal year then ended, in each case, on an unconsolidated basis, accompanied by an opinion of Dongo-Soria, Gaveglio y Asociados S.C.R.L., a partner of Pricewaterhouse Coopers International Limited, independent public accountants, (ii) the Consolidated balance sheet of the Borrower and its Subsidiaries as at December 31, 2011, and the related Consolidated statements of income and cash flows of the Borrower and its Subsidiaries for the fiscal year then ended, accompanied by an opinion of Dongo-Soria, Gaveglio y Asociados S.C.R.L., a partner of Pricewaterhouse Coopers International Limited, independent public accountants, (iii) the balance sheet of the Borrower as at December 31, 2012, and the related statements of income and cash flows of the Borrower for the 12 months then ended, in each case, on an unconsolidated basis, duly certified by the chief financial officer of the Borrower and (iv) the Consolidated balance sheet of the Borrower and its Subsidiaries as at December 31, 2012, and the related Consolidated statements of income and cash flows of the Borrower and its Subsidiaries for the 12 months then ended, duly certified by the chief financial officer of the Borrower, copies of which have been furnished to each Lender, fairly present, subject, in the case of said balance sheets as at December 31, 2012, and said statements of income and cash flows for the 12 months then ended, to year-end audit adjustments, the financial condition of the Borrower or the Consolidated financial condition of the Borrower and its Subsidiaries, as applicable, as at such dates and results of the operations of the Borrower and the Consolidated results of the operations of the Borrower and its Subsidiaries for the periods ended on such dates, all in accordance with IFRS consistently applied (collectively, the “ Historical Financial Statements ”). Since December 31, 2011, there has been no Material Adverse Change.


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(g) There is no pending or threatened action, suit, investigation, litigation or proceeding, including any Environmental Action, affecting any Loan Party before any court, governmental agency or arbitrator that (i) could be reasonably likely to have a Material Adverse Effect (other than the Disclosed Litigation) or (ii) purports to affect the legality, validity or enforceability of any Loan Document or the consummation of the transactions contemplated hereby, and there has been no adverse change in the status, or financial effect on any Loan Party, of the Disclosed Litigation from that described on Schedule 3.01(b).

(h) The Borrower is not engaged in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U issued by the Board of Governors of the U.S. Federal Reserve System), and no proceeds of any Advance will be used to purchase or carry any margin stock or to extend credit to others for the purpose of purchasing or carrying any margin stock.

(i) All filings and other actions necessary or desirable to perfect and protect the security interest in the Collateral created under the Collateral Documents have been duly made or taken and are in full force and effect (subject to registration of the Peruvian Account Pledge as set forth in Section 4.01(d) with the Registro Mobiliario de Contratos in Perú), and the Collateral Documents create in favor of the Collateral Agent for the benefit of the Secured Parties a valid and, together with such filings and other actions, perfected first priority security interest in the Collateral (subject to Permitted Liens), securing the payment of the Secured Obligations, and all filings and other actions necessary or desirable to perfect and protect such security interest have been duly taken. The Loan Parties are the legal and beneficial owners of the Collateral free and clear of any Lien, except for Permitted Liens.

(j) Each Loan Party has filed, has caused to be filed or has been included in all tax returns (national, departmental, local, municipal and foreign) required to be filed and has paid all taxes, assessments, fees and other charges (including interest and penalties) due with respect to the years covered by such returns. Each Loan Party has made all payments, if any, with respect to statutory employee profit sharing and the Public and/or Private Pension System and as required by applicable law in Peru to the Social Health System ( ESSALUD ) and/or the Private Health System ( EPS ). There is no proposed tax assessment against any Loan Party that, if made, could reasonably be expected to have a Material Adverse Effect.

(k) Each Loan Party is in compliance in all material respects with all applicable laws, ordinances, rules, regulations and requirements of all governmental authorities (including all Governmental Authorizations and approvals necessary to the ownership of its properties or to the conduct of its business, Environmental Laws, laws with respect to social security and pension fund obligations and all applicable anti-money laundering, anti-bribery and anti-corruption laws and regulations).

(l) Each Material Contract to which a Loan Party is party has been duly authorized, executed and delivered by each Loan Party party thereto and, to the knowledge of the Borrower, each other party thereto, is in full force and effect and is binding upon and enforceable against each Loan Party party thereto and, to the knowledge of the Borrower, each other party thereto, in accordance with its terms, except, in each case, as such enforceability may be limited by bankruptcy, insolvency, reorganization, liquidation, moratorium or other similar laws of


		33		GyM Credit Agreement

general application and equitable principles relating to or affecting creditors’ rights, and there exists no material default under any such Material Contract by any Loan Party party thereto or, to the knowledge of the Borrower, any other party thereto.

(m) Set forth on Schedule 4.01(m) is a complete and accurate list of all Existing Indebtedness with a value of at least U.S.$5,000,000, showing as of the date hereof the obligor and the principal amount outstanding thereunder.

(n) Except for the obligation with respect to (i) the withholding of Impuesto a la Renta on interest and other payments by the Borrower hereunder applicable pursuant to the Ley del Impuesto a la Renta , (ii) the payment of the IGV in connection with interest payments, which obligation is currently exempted by law and (iii) the ITF applicable to the operations performed pursuant to this Agreement or the Notes, no income, stamp or other taxes (other than taxes on, or measured by, net income or net profits) or levies, imposts, deductions, charges, compulsory loans or withholdings whatsoever are or will be, under applicable law in Perú, imposed, assessed, levied or collected by Perú or any political subdivision or taxing authority thereof or therein either (A) on or by virtue of the execution or delivery of this Agreement or the Notes or (B) on any payment to be made by the Borrower pursuant to this Agreement or the Notes.

(o) Set forth on Schedule 4.01(o) is a complete and accurate list of all Liens on the property or assets of any Loan Party (the “ Existing Liens ”), securing Indebtedness with a value in excess of U.S.$5,000,000, showing as of the date hereof the lienholder thereof, the principal amount of the obligations secured thereby and the property or assets of such Loan Party subject thereto.

(p) Each Loan Party has good and marketable title to its respective real properties and good title to all of its other respective assets, including the properties and assets reflected in the Consolidated balance sheet of such Loan Party referred to in Section 4.01(f) (other than inventory sold in the ordinary course of business), subject to no Lien except for Permitted Liens. All leases necessary for the conduct of the business of the Loan Parties are valid and in full force and effect, except as could not reasonably be expected to have a Material Adverse Effect.

(q) No Loan Party is in default under any material provision of any indenture, mortgage, deed of trust, credit agreement, loan agreement or any other material agreement or instrument to which such Loan Party is party or by which such Loan Party or any of its properties or assets is or may be bound.

(r) Each Loan Party is subject to civil and commercial law with respect to its obligations under this Agreement and the Notes, and the execution, delivery and performance by each such Loan Party of this Agreement and the Notes constitute private and commercial acts ( jure gestionis acts) rather than public or governmental acts ( jure imperii acts). None of the Loan Parties nor any of their respective properties has any immunity from jurisdiction of any court or from set-off or any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) under the laws of Perú.


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(s) Each Loan Party’s obligations under this Agreement, the Notes and the Guaranties constitute direct, unconditional, unsubordinated and secured obligations of such Loan Party and do rank and will rank pari passu in priority of payment with all other senior, unsubordinated Indebtedness of such Loan Party.

(t) The Loan Documents are in proper legal form under the law of Perú for the enforcement thereof against the Borrower under the law of Perú, and to ensure the legality, validity, enforceability or admissibility in evidence of the Loan Documents in Perú (i) an official translation into Spanish of any such document (other than the Notes, the Note Filling Agreements and the Peruvian Account Pledge) by a translator authorized by the Peruvian courts and service upon the Borrower (in the manner prescribed by Peruvian law) must be prepared as a condition to the initiation of any proceeding for the enforcement thereof in the courts of Perú, which preparation and service may be initiated subsequent to the circumstances giving rise to such initiation of proceedings, (ii) the filing of such Loan Document with such court is required, (iii) any public document issued in any country other than in Perú must be duly legalized by Apostille or consularized before the competent Peruvian consulate and before the Ministry of Foreign Relations of Perú and (iv) prior to the institution of any proceedings in the city of Lima, Perú (other than executory proceedings such as the enforcement in Perú of a judgment obtained abroad and other specific procedures such as the foreclosure of the Notes in the proceso único de ejecución under the Peruvian Civil Procedure Code), the claim must be submitted to a mediator pursuant to Law No. 26872 and its regulatory Decree No. 014-2008-JUS (as amended) and, if no settlement is reached at such mediation, the minutes of the failed mediation must be filed with the relevant court. Subject to the immediately preceding sentence, all formalities required in the United States and Perú for the validity and enforceability (including any necessary registration, recording or filing with any court or other Governmental Authority) of each Loan Document have been accomplished, and no taxes are required to be paid for the validity and enforceability thereof. It is not necessary that any Loan Document or any other document be registered, filed or recorded with any court or other authority in Perú, other than (A) the notarization as a public deed ( escritura pública ) of the Peruvian Account Pledge, which notarization has already occurred, and (B) the registration of the Peruvian Account Pledge with the Registro Mobiliario de Contratos in Perú.

(u) The Borrower, a non-bank entity located outside the United States, understands that it is the policy of the Board of Governors of the U.S. Federal Reserve System that extensions of credit by international banking facilities (as defined in Section 204.8(a) of Regulation D) may be used only to finance the non-U.S. operations of a customer (or its foreign affiliates) located outside the United States as provided in Section 204.8(a)(3)(vi) of Regulation D. Therefore, the Borrower acknowledges that the proceeds of the Advances by the International Banking Facility of the Lender will be used solely to finance the Borrower’s operations outside the United States or that of the Borrower’s foreign affiliates.

(v) Neither the Borrower nor any of its Subsidiaries is required to register as an “investment company” as such term is defined in the Investment Company Act of 1940, as amended.

(w) Each Loan Party is Solvent.


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(x) The provisions in this Agreement and the Loan Documents as to (i) the choice of New York law as the governing law thereof, (ii) the irrevocable appointment of the Process Agent to receive service of process on behalf of each Loan Party, (iii) the submission by each Loan Party to the jurisdiction of the New York Courts and (iv) the manner of effecting service of process as set forth therein, are legal, valid, binding on and enforceable under the laws of Perú; provided that (i) the choice of New York law as the governing law under this Agreement and the Loan Documents would be upheld as a valid choice of law by the courts of Perú, except for the limitations contained in Article 2049° of the Peruvian Civil Code, in Article 2088° of the Peruvian Civil Code and in Article 2.1 of the Peruvian Insolvency System General Act, Law No. 27809 and (ii) the submission to the jurisdiction of the New York courts is legal, valid and binding on and enforceable under the laws of Perú, except for the limitations contained in Article 2060° of the Peruvian Civil Code and the fact that under Peruvian law, Peruvian courts have exclusive jurisdiction over actions relating to rights over real property located in Peru and civil actions arising from the commission of criminal offenses in Perú or the consequences of which occur in Perú.

(y) No information, exhibit or report furnished by or on behalf of the Loan Parties to the Agents or the Lenders in connection with the negotiation of this Agreement or pursuant to the terms of this Agreement (taken as a whole with all other information, exhibits and reports so furnished) contained any untrue statement of a material fact or omitted to state a material fact necessary to make the statements made therein not misleading.

(z) None of the Loan Parties, any of their Subsidiaries or, to the knowledge of any Loan Party, any Related Party of any of the foregoing, (i) is currently the subject of any Sanctions, (ii) is located, organized or residing in any Designated Jurisdiction or (iii) is or has been (within the previous five years) engaged in any transaction with any Person who is now or was then the subject of Sanctions or who is located, organized or residing in any Designated Jurisdiction. No Advance or proceeds from any Advance has been used, directly or indirectly, to lend, contribute, provide or has otherwise been made available to fund any activity or business in any Designated Jurisdiction or to fund any activity or business of any Person located, organized or residing in any Designated Jurisdiction or who is the subject of any Sanctions, or in any other manner that will result in any violation by any Person (including any Lender or the Administrative Agent) of Sanctions.

(aa) No Loan Party is engaged in any unfair labor practice that could reasonably be expected to have a Material Adverse Effect. There is (i) no unfair labor practice complaint pending against a Loan Party or, to the knowledge of any Loan Party, threatened against such Loan Party, before any Governmental Authority with responsibility, authority or jurisdiction for such matters, and no grievance or significant arbitration proceeding arising out of or under any collective bargaining agreement is so pending against any Loan Party or, to the knowledge of any Loan Party, threatened against any Loan Party and (ii) except as disclosed on Schedule 4.01(aa) no strike, labor dispute, slowdown or stoppage pending against any Loan Party or, to the knowledge of any Loan Party, threatened against any Loan Party, which, in each case, could reasonably be expected to have a Material Adverse Effect.

(bb) No Loan Party or any of its properties is entitled to any right of immunity in any jurisdiction from suit, court jurisdiction, judgment, attachment (whether before or after judgment), set-off or execution of a judgment or from any other legal process or remedy relating to its Obligations.


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(cc) All insurance required pursuant to Section 5.01(c) has been obtained and is in full force and effect.

(dd) On the Effective Date, (i) the Consolidated EBITDA of the Guarantors represents 74.1% of the Consolidated EBITDA of the Borrower and (ii) the Consolidated EBITDA of the main Subsidiaries of the Guarantors (excluding any Guarantor) represents 8.52% of the Consolidated EBITDA of the Guarantors, in each case, for the rolling four fiscal quarter period most recently ended as of the Effective Date and calculated as set forth on Schedule 4.01(dd).

ARTICLE V

COVENANTS OF THE BORROWER

Section 5.01 Affirmative Covenants . So long as any Advance shall remain unpaid or any Lender shall have any Commitment hereunder, the Borrower will, and will cause each Loan Party to:

(a) Compliance with Laws, Etc . Comply, in all material respects, with all applicable laws, rules, regulations and orders, such compliance to include compliance with Environmental Laws, as well as all applicable anti-money laundering, anti-bribery and anti-corruption laws and regulations.

(b) Payment of Taxes, Etc . Pay and discharge, before the same shall become delinquent, (i) all material taxes, assessments and governmental charges or levies imposed upon it or upon its property and (ii) all material lawful claims that, if unpaid, might by law become a Lien upon its property; provided , however , that no such Loan Party shall be required to pay or discharge any such tax, assessment, charge or claim that is being contested in good faith and by proper proceedings and as to which appropriate reserves are being maintained, unless and until any Lien resulting therefrom attaches to its property and becomes enforceable against its other creditors.

(c) Maintenance of Insurance . Maintain insurance with responsible and reputable insurance companies or associations in such amounts and covering such risks as is usually carried by companies engaged in similar businesses and owning similar properties in the same general areas in which such Loan Party operates; provided , however , that such Loan Party may self-insure to the same extent as other companies engaged in similar businesses and owning similar properties in the same general areas in which such Loan Party operates and to the extent consistent with prudent business practice.

(d) Preservation of Corporate Existence, Etc. Preserve and maintain its corporate existence, legal structure, legal name, rights (charter and statutory), authorizations, consents, permits, approvals, licenses, privileges and franchises; provided , however , that such Loan Party may consummate any merger or consolidation permitted under Section 5.02(c); provided , further , that no such Loan Party shall be required to preserve any right, authorization, consent, permit, approval, license, privilege or franchise if such Loan Party shall determine that the preservation thereof is no longer desirable in the conduct of the business of such Loan Party and that the loss thereof could not reasonably be expected to have a Material Adverse Effect.


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(e) Visitation Rights . At any time during normal business hours, at reasonable intervals and at the expense of the Lenders, upon five Business Days prior notice to any Loan Party, permit the Administrative Agent (or any agents or representatives thereof), to examine and make copies of and abstracts from the records and books of account of, and visit the properties of, such Loan Party, and to discuss the affairs, finances and accounts of such Loan Party with any of its officers or directors and with its independent certified public accountants; provided that when an Event of Default exists, the Administrative Agent or any of the Lenders (or any agents or representatives thereof) may do any of the foregoing at the expense of the Borrower at any time during normal business hours and upon reasonable advance notice.

(f) Keeping of Books . Keep proper books of record and account, in which full and correct entries shall be made of all financial transactions and the assets and business of such Loan Party in accordance with IFRS in effect from time to time.

(g) Maintenance of Properties, Etc. Maintain and preserve all of its material properties that are used or useful in the conduct of its business in good working order and condition, ordinary wear and tear excepted.

(h) Transactions with Affiliates . Conduct all transactions otherwise permitted under the Loan Documents with any of its Affiliates on terms that are fair and reasonable and no less favorable to such Loan Party than it would obtain in a comparable arm’s-length transaction with a Person not an Affiliate.

(i) Reporting Requirements . Furnish to the Lenders:

(i) as soon as available and in any event within 45 days after the end of each of the four fiscal quarters of each fiscal year of the Borrower, Consolidated and consolidating balance sheets of such Loan Party and its Subsidiaries as of the end of such quarter and Consolidated and consolidating statements of income and cash flows of such Loan Party and its Subsidiaries for the period commencing at the end of the previous fiscal year and ending with the end of such quarter, duly certified (subject to year-end audit adjustments) by the chief financial officer of such Loan Party as having been prepared in accordance with IFRS and certificates of the chief financial officer of such Loan Party as to compliance with the terms of this Agreement and setting forth in reasonable detail the calculations necessary to demonstrate compliance with Section 5.03;

(ii) as soon as available and in any event within 120 days after the end of each fiscal year of such Loan Party, a copy of the annual audit report for such year for such Loan Party and its Subsidiaries, containing Consolidated and consolidating balance sheets of such Loan Party and its Subsidiaries as of the end of such fiscal year and Consolidated and consolidating statements of income and cash flows of such Loan Party and its Subsidiaries for such fiscal year, in each case, accompanied by an opinion as to such audit report of Dongo-Soria, Gaveglio y Asociados S.C.R.L., a partner of Pricewaterhouse Coopers International Limited or other independent public accountants of recognized standing reasonably acceptable to the Required Lenders, in each case, certified in a manner to which the Required Lenders have not reasonably objected;


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(iii) together with each of the financial statements delivered under clauses (i) and (ii) above, a certificate from the Borrower stating whether there exists any material default under any Material Contract to which a Loan Party is party by any Loan Party party thereto or, to the knowledge of the Borrower, any other party thereto (and if so, a statement of the chief financial officer of the applicable Loan Party setting forth details of such material default and the action that such Loan Party has taken and proposes to take with respect thereto);

(iv) as soon as possible and in any event within five days after the occurrence of each Default continuing on the date of such statement, a statement of the chief financial officer of such Loan Party setting forth details of such Default and the action that such Loan Party has taken and proposes to take with respect thereto;

(v) promptly after the sending or filing thereof, copies of all material reports that such Loan Party sends to any of its securityholders, and copies of all material reports and registration statements that such Loan Party files with the SEC or any national securities exchange in Perú, the United States or any other securities exchange or regulator, if any; provided that the Borrower’s obligations under this clause (v) shall be deemed to have been satisfied if the Borrower shall have notified the Administrative Agent of the sending or filing of any such report or registration statement by electronic mail, with, if applicable, electronic versions (i.e., soft copies) of such report or registration attached thereto or included therein;

(vi) promptly after the commencement thereof, notice of all actions and proceedings before any court, governmental agency or arbitrator affecting such Loan Party or any of its Subsidiaries of the type described in Section 4.01(g), and promptly after the occurrence thereof, notice of any adverse change in the status or the financial effect on any Loan Party of the Disclosed Litigation from that described on Schedule 3.01(b);

(vii) promptly after the filing thereof, notice of the filing of any material claim under any policy of insurance;

(viii) on the last day of each Interest Period, a certificate from the chief financial officer of the Borrower indicating the Debt Service Coverage Ratio;

(ix) at any time that the Borrower is required to comply with Section 5.01(m), evidence in form and substance satisfactory to the Administrative Agent that the Borrower has deposited an amount equal to its next quarterly Debt Service payment in the Debt Service Reserve Account no later than 85 days prior to the due date of such Debt Service payment;

(x) such other information respecting such Loan Party as the Administrative Agent may from time to time reasonably request.


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(j) Additional Guarantors . The Borrower may, at its expense:

(i) designate a Subsidiary as an additional guarantor by causing such Subsidiary to duly execute and deliver to the Collateral Agent a guaranty or guaranty supplement, in form and substance satisfactory to the Collateral Agent, guaranteeing the other Loan Parties’ obligations under the Loan Documents; and

(ii) within 60 days after such designation, deliver to the Collateral Agent, upon the request of the Collateral Agent in its sole discretion, a signed copy of a favorable opinion, addressed to the Collateral Agent and the other Secured Parties, of counsel for the Loan Parties acceptable to the Collateral Agent as to the matters contained in clause (i) above, as to such guaranties and guaranty supplements being legal, valid and binding obligations of each Loan Party party thereto enforceable in accordance with their terms.

(k) Further Assurances . (i) Promptly upon request by any Agent, or any Lender through the Administrative Agent, do, execute, acknowledge, deliver, record, re-record, file, re-file, register and re-register any and all such further acts, deeds, conveyances, pledge agreements, assignments, financing statements and continuations thereof, termination statements, notices of assignment, transfers, certificates, assurances and other instruments as any Agent, or any Lender through the Administrative Agent, may reasonably require from time to time in order to (A) carry out more effectively the purposes of the Loan Documents, (B) perfect and maintain the validity, effectiveness and priority of any of the Collateral Documents and any of the Liens intended to be created thereunder and (C) assure, convey, grant, assign, transfer, preserve, protect and confirm more effectively unto the Secured Parties the rights granted or now or hereafter intended to be granted to the Secured Parties under any Loan Document or under any other instrument executed in connection with any Loan Document to which any Loan Party is or is to be a party; and

(ii) Fully perform each obligation provided under the Peruvian Account Pledge and any other registration required or desirable under applicable law for the creation of a perfected first priority security interest in the Collateral (including the registration of the Peruvian Account Pledge with the Registro Mobiliario de Contratos in Perú within 60 days after the Effective Date, such period to be extended in the sole discretion of the Administrative Agent so long as the Borrower is making commercially reasonable efforts to complete such registration).

(l) Payment Account . At any time that the Borrower is not required to comply with Section 5.01(m), the Borrower shall deposit an amount equal to its next due Debt Service payment in the Payment Account no later than 30 days prior to the date such Debt Service payment is due.

(m) Debt Service Reserve Account . In the event that the Debt Service Coverage Ratio for any interest payment date is less than 1.25:1.00, the Borrower shall deposit an amount equal to its next due Debt Service payment in the Debt Service Reserve Account no later than 85 days prior to the date such Debt Service payment is due; provided that the foregoing obligation shall cease to apply upon the Borrower’s maintenance of a Debt Service Coverage Ratio of at least 1.25:1.00 for two consecutive interest payment dates.


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Section 5.02 Negative Covenants . So long as any Advance shall remain unpaid or any Lender shall have any Commitment hereunder, the Borrower will not, and will cause each other Loan Party not to:

(a) Negative Pledge . Create or suffer to exist any Lien on or with respect to any of its properties, whether now owned or hereafter acquired, or assign any right to receive income, other than:

(i) Liens created pursuant to the Loan Documents;

(ii) Liens for taxes, assessments and governmental charges or levies to the extent not required to be paid under Section 5.01(b);

(iii) Liens imposed by law, such as materialmen’s, mechanics’, carriers’, workmen’s and repairmen’s Liens and other similar Liens arising in the ordinary course of business securing obligations that (A) are not overdue for a period of more than 30 days and (B) individually or together with all other Permitted Liens outstanding on any date of determination do not materially adversely affect the use of the property to which they relate;

(iv) pledges or deposits in the ordinary course of business to secure obligations under workers’ compensation laws or similar legislation or to secure public or statutory obligations;

(v) deposits to secure the performance of bids, trade contracts and leases (other than Indebtedness), statutory obligations, surety bonds (other than bonds related to judgments or litigation), performance bonds and other obligations of a like nature incurred in the ordinary course of business;

(vi) Liens securing judgments (or the payment of money) not constituting a Default under Section 6.01(f) or 6.01(g) or securing appeal or other surety bonds related to such judgments;

(vii) easements, rights of way and other encumbrances on title to real property that do not render title to the property encumbered thereby unmarketable or materially adversely affect the use of such property for its present purposes;

(viii) Liens created or arising over any property (including Equity Interests of any Person) which is acquired, constructed or improved by such Loan Party; provided that (A) any such Lien is created or arises on or before 120 days after the completion of such acquisition, construction or improvement, (B) the Indebtedness secured thereby comprises only principal amounts raised for the purposes of such acquisition, construction or improvement, together with any costs, expenses, interest and fees incurred in relation thereto or a guaranty given in respect thereof and (C) any such Lien is confined solely to the property so acquired, constructed or improved, including any Equity Interest or other interest in any Person created for the purpose of acquiring, constructing or developing and holding such property;


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(ix) Liens over any property (including Equity Interests of any Person) at the time of the acquisition of such property by such Loan Party; provided that (A) any such Lien was not (or is not) created in connection with or in contemplation of such acquisition, (B) such Lien does not apply to any other property of such Loan Party and (C) such Lien secures only those obligations which it secures on the date of such acquisition;

(x) Liens on property (including Equity Interests) of another Person in existence at the time such other Person becomes a Subsidiary of a Loan Party; provided that (A) the Liens may not extend to any other property owned by such Person and (B) such Liens were not (or are not) created in connection with or in contemplation of such Person becoming a Subsidiary;

(xi) Liens on the administrative office of the Borrower located at (A) Contralmirante Montero 500 and 502, Av. Paseo de la República 4667, 4675, 4673, 4681, 4685, 4691 and 4699 and Av. General Federico Recavarren 905, 907, 909, 911, 915 and 925, Surquillo, Lima, Perú and (B) Av. Petit Thouars No. 4951-4957, Miraflores, Lima, Perú;

(xii) Liens on property of Viva GyM S.A. solely in connection with financings for the purpose of construction, development or acquisition of a project or asset (including mortgages on or assignments in trust of real property, pledges or assignments in trust of such project cash flows or Equity Interests in entities formed in connection with such construction, development or acquisition and Liens on undeveloped land);

(xiii) purchase money Liens upon or in any real property or equipment acquired or held by such Loan Party in the ordinary course of business to secure the purchase price of such property or equipment or to secure Indebtedness incurred solely for the purpose of financing the acquisition of such property or equipment, or Liens existing on such property or equipment at the time of its acquisition (other than any such Liens created in contemplation of such acquisition that were not incurred to finance the acquisition of such property) or extensions, renewals or replacements of any of the foregoing for the same or a lesser amount; provided , however , that no such Lien shall extend to or cover any properties of any character other than the real property or equipment being acquired, and no such extension, renewal or replacement shall extend to or cover any properties not theretofore subject to the Lien being extended, renewed or replaced; provided , further , that the aggregate principal amount of the Indebtedness secured by the Liens referred to in this clause (xiii) shall not exceed the amount specified therefor in Section 5.02(b)(v)(C) at any time outstanding;

(xiv) the Existing Liens;


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(xv) other Liens securing Indebtedness; provided that the aggregate principal amount of the Indebtedness secured by the Liens referred to in this clause (xv) shall not exceed (A) with respect to the Borrower, the amount specified therefore in Section 5.02(b)(v) (or its equivalent in other currencies) at any time outstanding and (B) with respect to any other Loan Party, an amount not to exceed U.S.$20,000,000 in the aggregate for such Loan Party (or its equivalent in other currencies) at any time outstanding; provided , further , that no such Lien shall extend to or cover any Collateral; and

(xvi) the replacement, extension or renewal of any Lien permitted by clauses (viii) through (xv) above upon or in the same property theretofore subject thereto or the replacement, extension or renewal (without increase in the principal amount or change in any direct or contingent obligor) of the Indebtedness secured thereby.

(b) Indebtedness . Solely with respect to the Borrower, create, incur, assume or suffer to exist any Indebtedness, except:

(i) Indebtedness in respect of Hedge Agreements permitted under Section 5.02(k);

(ii) Indebtedness owed to a Wholly-Owned Subsidiary of the Borrower;

(iii) Indebtedness under this Agreement;

(iv) Indebtedness that constitutes Guaranteed Debt in respect of any Indebtedness of any Project Company; and

(v) other Indebtedness in an aggregate amount not to exceed U.S.$50,000,000 (or its equivalent in other currencies) (of which up to (A) U.S.$20,000,000 (or its equivalent in other currencies) may be secured, (B) U.S.$20,000,000 (or its equivalent in other currencies) may be incurred in respect of Capitalized Leases and (C) U.S.$20,000,000 (or its equivalent in other currencies) may be secured by Liens permitted by Section 5.02(a)(xiii)) at any one time outstanding.

(c) Mergers, Etc. Merge or consolidate with or into any Person, except that any Loan Party may (i) merge or consolidate with or into (A) any other Loan Party or (B) any other Person or Persons, whether in one transaction or in a series of related transactions, if the surviving entity is or becomes a Loan Party, (ii) sell or otherwise transfer all or substantially all of its property to any other Person or Persons, whether in one transaction or in a series of related transactions, if the surviving entity is or becomes a Loan Party and (iii) undergo a corporate reorganization if the surviving entity of such reorganization is or becomes a Loan Party; provided that, in each case, no Default shall have occurred and be continuing at the time of such proposed transaction or would result therefrom; provided , further , that, in the case of any such merger or consolidation to which a Guarantor is a party, the Subsidiaries of the Person formed by such merger or consolidation shall include the Subsidiaries of the Guarantor party to such merger or consolidation.


		43		GyM Credit Agreement

(d) Accounting Changes . Make or permit any change in accounting policies or reporting practices, except as required by IFRS.

(e) Sales, Etc. of Assets . Sell, lease, transfer or otherwise dispose of any assets, or grant any option or other right to purchase, lease or otherwise acquire any assets, except (i) sales of inventory in the ordinary course of its business and the granting of any option or other right to purchase, lease or otherwise acquire inventory in the ordinary course of its business, (ii) sales, transfers or other dispositions of assets among Loan Parties, (iii) in a transaction authorized by Section 5.02(c), (iv) sales or other dispositions of inventory, damaged, obsolete or worn out assets by any Loan Party and scrap, in each case, sold or disposed of in the ordinary course of business and (v) with respect to any Loan Party, sales of assets for fair value in an aggregate amount not to exceed U.S.$20,000,000 in any year, taken together with all such other sales by such Loan Party during such year.

(f) Investments in Other Persons . Make or hold any Investment in any Person, except:

(i) Investments by any Loan Party in another Loan Party;

(ii) Investments by any Loan Party in its Wholly-Owned Subsidiaries, or any Person that, upon the making of such Investment, would become a Wholly-Owned Subsidiary of a Loan Party;

(iii) loans and advances to employees in the ordinary course of the business of the Borrower as presently conducted in an aggregate principal amount not to exceed U.S.$2,500,000 at any time outstanding;

(iv) Investments by any Loan Party in Cash Equivalents;

(v) Investments existing or contemplated on the date hereof and described on Schedule 5.02(f);

(vi) Investments by the Borrower in Hedge Agreements permitted under Section 5.02(b)(i);

(vii) Investments by Viva GyM S.A. in the ordinary course of business as presently conducted in any Person engaged in the construction, development or acquisition of real property projects so long as such Investments are necessary in the reasonable discretion of Viva GyM S.A. for the development and/or completion thereof;

(viii) Investments in GyM Ferrovias S.A. made by the Borrower solely with the proceeds of Advances in accordance with Section 2.15(b); and

(ix) so long as no Default shall have occurred and be continuing (or would result therefrom), Investments by any Loan Party in any Person; provided that the aggregate amount of the Investments made by (A) the Guarantors and (B) the Loan Parties, in each case, in any year shall not exceed U.S.$100,000,000 and U.S.$200,000,000, respectively, unless the Debt Service Coverage Ratio as of the date


		44		GyM Credit Agreement

any incremental Investment in excess of the foregoing thresholds is made is at least 1.25:1.00; provided , further , that solely for purposes of determining whether such incremental Investment may be made on such date, EBITDA of the Borrower shall be increased by the amount of any dividend that any Person from which the Borrower has the right to receive dividends as a result of holding Equity Interests in such Person would have been able to declare (calculated in accordance with IFRS for the rolling four fiscal quarter period most recently ended as of such date for which financial statements are available pursuant to Section 5.01(i), and as permitted hereunder), and the Administrative Agent shall have received from the Borrower a calculation in reasonable detail as to the addition of any such dividend amount to EBITDA of the Borrower as part of the calculation of the Debt Service Coverage Ratio for purposes of this clause (ix).

(g) Dividends, Etc . Declare or make any dividend payment or other distribution of assets, properties, cash rights, obligations or securities on account of any Equity Interests of such Loan Party, or purchase, redeem or otherwise acquire for value any Equity Interests of the Borrower or any warrants, rights or options to acquire any such Equity Interests, now or hereafter outstanding, except that:

(i) any Loan Party (other than the Borrower) may declare and make any dividend payment or other distribution to the Borrower;

(ii) any dividend payment or other distribution as may be required by law; and

(iii) any dividend payment or other distribution by the Borrower so long as no Default shall have occurred and be continuing at the time of any such declaration and payment or distribution or would result therefrom.

(h) Change in Nature of Business . Make any material change in the nature of its business as carried on at the date hereof and any business substantially related, ancillary, complimentary or incidental thereto.

(i) Payment Restrictions Affecting Subsidiaries . Directly or indirectly, enter into or suffer to exist, or permit any Guarantor or any of its Subsidiaries to enter into or suffer to exist, any agreement or arrangement limiting the ability of any Guarantor or any of its Subsidiaries to declare or pay dividends or other distributions in respect of its Equity Interests or repay or prepay any Indebtedness owed to, make loans or advances to, or otherwise transfer assets to or invest in, the Borrower, any Guarantor or any Subsidiary of any Loan Party (whether through a covenant restricting dividends, loans, asset transfers or investments, a financial covenant or otherwise), except (i) the Loan Documents, (ii) any agreement or corporate resolution (A) in effect on the date hereof or (B) entered into because of existing policies (including dividend policies) and/or agreements of such Loan Party and any of its Subsidiaries, (iii) customary restrictions in an agreement related to the sale of assets to the extent such sale is permitted pursuant to Section 5.02(e) that limit the transfer of such assets pending the consummation of such sale, (iv) financing obligations of such Loan Party and any of its Subsidiaries to the extent such restrictions apply after the occurrence of a default or event of default under such financing obligations and (v) any transaction entered into by a Guarantor for the purpose of construction, development or acquisition of a project or asset.


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(j) OFAC Sanctions . Use the proceeds of the Advances, or lend, contribute or otherwise make available such proceeds to any Person, for the purpose of directly or indirectly financing activities with any individuals or entities subject to Sanctions, or financing activities in or with countries subject to Sanctions. No Loan Party will engage in any transaction that violates Sanctions or have any dealings with individuals or entities subject to Sanctions or investments in countries subject to Sanctions.

(k) No Speculative Hedge Agreements . Enter into any Hedge Agreement for speculative purposes.

Section 5.03 Financial Covenants . So long as any Advance shall remain unpaid or any Lender shall have any Commitment hereunder:

(a) Borrower Consolidated Adjusted Debt Coverage Ratio . The Borrower shall maintain a Consolidated Adjusted Debt Coverage Ratio of less than 3.00:1.00 as of the end of each fiscal quarter and rolling four fiscal quarter period then ended.

(b) Guarantor Consolidated Adjusted Debt Coverage Ratio . Each Guarantor shall maintain a Consolidated Adjusted Debt Coverage Ratio of less than 2.50:1.00 as of the end of each fiscal quarter and rolling four fiscal quarter period then ended.

(c) Minimum Net Worth . The Borrower shall maintain a Consolidated Net Worth at least equal to the Consolidated Net Worth reported in the financial statements of the Borrower dated as of September 30, 2012.

ARTICLE VI

EVENTS OF DEFAULT

Section 6.01 Events of Default . If any of the following events (“ Events of Default ”) shall occur and be continuing:

(a) the Borrower shall fail to pay any principal of, or interest on, any Advance, or make any other payment of fees or other amounts under this Agreement or any Note, in each case, when the same becomes due and payable; provided that in the case of a failure to pay any amount other than principal of, or interest on, any Advance, such failure continues for five or more days;

(b) any representation or warranty made by any Loan Party herein or by any Loan Party (or any of its officers) in connection with this Agreement shall prove to have been incorrect in any material respect when made;

(c) (i) any Loan Party shall fail to perform or observe any term, covenant or agreement contained in Section 5.01(d), (h), (i)(iii) or (iv), (l) or (m), 5.02 or 5.03 or (ii) any Loan Party shall fail to perform or observe any other term, covenant or agreement contained in this Agreement on its part to be performed or observed if such failure shall remain unremedied


		46		GyM Credit Agreement

for 30 or more days after the earlier of the date on which (A) any officer of the Borrower or such Loan Party becomes aware of such failure or (B) written notice thereof shall have been given to the Borrower by the Administrative Agent or any Lender;

(d) any Loan Party shall fail to pay any principal of, premium or interest on or any other amount payable in respect of any Indebtedness of such Loan Party that is outstanding in a principal amount (or, in the case of any Hedge Agreement, an Agreement Value) of at least U.S.$20,000,000 (or its equivalent in other currencies) either individually or in the aggregate for such Loan Party (but excluding Indebtedness outstanding hereunder), when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to such Indebtedness; or any other event shall occur or condition shall exist under any agreement or instrument relating to any such Indebtedness and shall continue after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such event or condition is to accelerate, or to permit the acceleration of, the maturity of such Indebtedness or otherwise to cause, or to permit the holder thereof to cause, such Indebtedness to mature; or any such Indebtedness shall be declared to be due and payable or required to be prepaid or redeemed (other than by a regularly scheduled required prepayment or redemption), purchased or defeased, or an offer to prepay, redeem, purchase or defease such Indebtedness shall be required to be made, in each case prior to the stated maturity thereof;

(e) any Loan Party shall generally not pay its debts as such debts become due, or shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors; or any proceeding shall be instituted by or against a Loan Party seeking to adjudicate it bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, concurso mercantil , insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian, síndico, conciliador or other similar official for it or for any substantial part of its property and, in the case of any such proceeding instituted against it (but not instituted by it), either such proceeding shall remain undismissed or unstayed for a period of 60 or more days, or any of the actions sought in such proceeding (including the entry of an order for relief against, or the appointment of a receiver, trustee, custodian, síndico, conciliador or other similar official for, it or for any substantial part of its property) shall occur; or any Loan Party shall take any corporate action to authorize any of the actions set forth above in this clause (e);

(f) judgments or orders for the payment of money in excess of U.S.$20,000,000 (or its equivalent in other currencies), in the aggregate shall be rendered against any Loan Party and either (i) enforcement proceedings shall have been commenced by any creditor upon such judgment or order or (ii) there shall be any period of 10 or more consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect;

(g) any non-monetary judgment or order shall be rendered against any Loan Party that could be reasonably expected to have a Material Adverse Effect, and there shall be any period of 60 or more consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect;


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(h) the obligations of each Loan Party under this Agreement, the Notes and the Guaranties shall fail to rank at least pari passu in priority of payment with all other senior, unsubordinated Indebtedness of such Loan Party;

(i) any material provision of this Agreement or the Notes shall cease to be valid and binding on or enforceable against any of the Loan Parties, or any Loan Party shall so assert or state in writing, or the obligations of any of the Loan Parties under this Agreement or the Notes shall in any way become illegal;

(j) any provision of any Loan Document after delivery thereof pursuant to Section 3.01 or 5.01 shall for any reason cease to be valid and binding on or enforceable against any Loan Party party to it, or any such Loan Party shall so state in writing, or the material obligations of any of the Loan Parties under any Loan Document shall in any way become illegal; or

(k) any Collateral Document or financing statement after delivery thereof pursuant to Section 3.01 or 5.01 shall for any reason (other than pursuant to the terms thereof) cease to create a valid and perfected first priority lien on and security interest in the Collateral purported to be covered thereby (subject to Permitted Liens);

then, and in any such event, the Administrative Agent (i) shall at the request, or may with the consent, of the Required Lenders, by notice to the Borrower, declare each Lender’s unused Commitment and the obligation of each Lender to make Advances to be terminated, whereupon the same shall forthwith terminate, and (ii) shall at the request, or may with the consent, of the Required Lenders, by notice to the Borrower, declare all or any portion of the Notes, all interest thereon and all other amounts payable under this Agreement to be forthwith due and payable, whereupon the Notes, all such interest and all such amounts shall become and be forthwith due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Borrower; provided , however , that in the event of an actual or deemed entry of an order for relief with respect to the Borrower under clause (e) above, (A) the obligation of each Lender to make Advances shall automatically be terminated and (B) the Notes, all such interest and all such amounts shall automatically become and be due and payable, without presentment, demand, protest or any notice of any kind, all of which are hereby expressly waived by the Borrower.

ARTICLE VII

THE AGENTS

Section 7.01 Authorization and Action . (a) Each Lender hereby appoints and authorizes each Agent to take such action as agent on its behalf and to exercise such powers and discretion under this Agreement and the other Loan Documents as are delegated to the Agent by the terms hereof and thereof, together with such powers and discretion as are reasonably incidental thereto and authorizes the Collateral Agent to act on the instruction of the Administrative Agent. As to any matters not expressly provided for by the Loan Documents


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(including enforcement or collection of the Obligations of the Loan Parties), no Agent shall be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so acting or refraining from acting) upon the instructions of the Required Lenders, and such instructions shall be binding upon all Lenders and all holders of Notes; provided , however , that no Agent shall be required to take any action that exposes such Agent to personal liability or that is contrary to any Loan Document or applicable law. Each Agent agrees to give to each Lender prompt notice of each notice given to it by the Borrower pursuant to the terms of this Agreement.

(b) Any Agent may execute any of its duties under this Agreement or any other Loan Document (including for purposes of holding or enforcing any Lien on the Collateral (or any portion thereof) granted under the Collateral Documents or of exercising any rights and remedies thereunder at the direction of the Collateral Agent) by or through agents, employees or attorneys-in-fact and shall be entitled to advice of counsel and other consultants or experts concerning all matters pertaining to such duties. The Collateral Agent may also from time to time, when the Collateral Agent deems it to be necessary or desirable, appoint one or more collateral co-agents, collateral subagents or attorneys-in-fact (each, a “ Supplemental Collateral Agent ”) with respect to all or any part of the Collateral; provided , however , that no such Supplemental Collateral Agent shall be authorized to take any action with respect to any Collateral unless and except to the extent expressly authorized in writing by the Collateral Agent; provided , further , that the Borrower shall not be obligated to pay any incremental expenses of such Supplemental Collateral Agent without its written consent, such consent not to be unreasonably withheld. Should any instrument in writing from the Borrower or any other Loan Party be required by any Supplemental Collateral Agent so appointed by the Collateral Agent to more fully or certainly vest in and confirm to such Supplemental Collateral Agent such rights, powers, privileges and duties, the Borrower shall, or shall cause such Loan Party to, execute, acknowledge and deliver any and all such instruments promptly upon request by the Collateral Agent. If any Supplemental Collateral Agent, or successor thereto, shall die, become incapable of acting, resign or be removed, all rights, powers, privileges and duties of such Supplemental Collateral Agent, to the extent permitted by law, shall automatically vest in and be exercised by the Collateral Agent until the appointment of a new Supplemental Collateral Agent. No Agent shall be responsible for the negligence or misconduct of any agent, attorney-in-fact or Supplemental Collateral Agent that it selects in accordance with the foregoing provisions of this Section 7.01(b) in the absence of such Agent’s gross negligence or willful misconduct.

Section 7.02 Agent’s Reliance, Etc . Neither any Agent nor any of their respective directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or them under or in connection with the Loan Documents, except for its or their own gross negligence or willful misconduct. Without limitation of the generality of the foregoing, each Agent: (a) may consult with legal counsel (including counsel for any Loan Party), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts, (b) makes no warranty or representation to any Lender and shall not be responsible to any Lender for any statements, warranties or representations (whether written or oral) made in or in connection with the Loan Documents, (c) shall not have any duty to ascertain or to inquire as to the performance, observance or satisfaction of any of the terms, covenants or conditions of any Loan Document on the part of any Loan Party or the existence at


		49		GyM Credit Agreement

any time of any Default under the Loan Documents or to inspect the property (including the books and records) of any Loan Party, (d) shall not be responsible to any Lender for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of, or the perfection or priority of any lien or security interest created or purported to be created under or in connection with, any Loan Document or any other instrument or document furnished pursuant thereto and (e) shall incur no liability under or in respect of any Loan Document by acting upon any notice, consent, certificate or other instrument or writing (which may be by telegram, telecopy or electronic communication) believed by it to be genuine and signed or sent by the proper party or parties.

Section 7.03 BBVA Bancomer, BBVA Continental and Affiliates . With respect to its Commitment, the Advances made by it and the Note issued to it, BBVA Bancomer and BBVA Continental shall have the same rights and powers under this Agreement and, as applicable, shall be subject to the same obligations as any other Lender and may exercise and, as applicable, must comply with the same as though it were not an Agent; and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated, include BBVA Bancomer or BBVA Continental in its individual capacity. BBVA Bancomer, BBVA Continental and their respective Affiliates may accept deposits from, lend money to, act as trustee under indentures of, accept investment banking engagements from and generally engage in any kind of business with, any Loan Party, any of its Subsidiaries and any Person who may do business with or own securities of any Loan Party or any such Subsidiary, all as if BBVA Bancomer or BBVA Continental were not an Agent and without any duty to account therefor to the Lenders. No Agent shall have any duty to disclose any information obtained or received by it or any of its Affiliates relating to any Loan Party or any of its Subsidiaries to the extent such information was obtained or received in any capacity other than as Agent.

Section 7.04 Lender Credit Decision . Each Lender acknowledges that it has, independently and without reliance upon any Agent or any other Lender and based on the financial statements referred to in Section 4.01 and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon any Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement.

Section 7.05 Indemnification . (a) Each Lender severally agrees to indemnify each Agent (to the extent not reimbursed by the Borrower), ratably according to the respective principal amounts of the Advances then made by each of them (or if no Advances are at the time outstanding, ratably according to the respective amounts of their Commitments), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever that may be imposed on, incurred by, or asserted against such Agent in any way relating to or arising out of the Loan Documents or any action taken or omitted by such Agent under the Loan Documents (collectively, the “ Indemnified Costs ”); provided that no Lender shall be liable for any portion of the Indemnified Costs resulting from such Agent’s gross negligence or willful misconduct as found in a final, non-appealable judgment by a court of competent jurisdiction. Without limitation of the foregoing, each Lender agrees to reimburse each Agent promptly upon demand


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for its ratable share of any costs and expenses (including fees and expenses of counsel) payable by the Borrower under Section 8.04, to the extent that such Agent is not promptly reimbursed for such costs and expenses by the Borrower. In the case of any investigation, litigation or proceeding giving rise to any Indemnified Costs, this Section 7.05 applies whether any such investigation, litigation or proceeding is brought by any Lender or any other Person.

(b) For purposes of this Section 7.05, each Lender’s ratable share of any amount shall be determined, at any time, according to the sum of (i) the aggregate principal amount of the Advances outstanding at such time and owing to such Lender and (ii) the aggregate unused portions of such Lender’s Term Commitments at such time. The failure of any Lender to reimburse any Agent promptly upon demand for its ratable share of any amount required to be paid by the Lenders to such Agent as provided herein shall not relieve any other Lender of its obligation hereunder to reimburse such Agent for its ratable share of such amount, but no Lender shall be responsible for the failure of any other Lender to reimburse such Agent for such other Lender’s ratable share of such amount. Without prejudice to the survival of any other agreement of any Lender hereunder, the agreement and obligations of each Lender contained in this Section 7.05 shall survive the payment in full of principal, interest and all other amounts payable hereunder and under the other Loan Documents.

Section 7.06 Successor Agent . Any Agent may resign at any time by giving written notice thereof to the Lenders and the Borrower and may be removed at any time with or without cause by the Required Lenders; provided , however , that any removal of the Administrative Agent will not be effective until it has also been replaced as Collateral Agent and released from all of its obligations in respect thereof. Upon any such resignation or removal, the Required Lenders shall have the right to appoint a successor Agent. If no successor Agent shall have been so appointed by the Required Lenders, and shall have accepted such appointment, within 30 days after the retiring Agent’s giving of notice of resignation or the Required Lenders’ removal of the retiring Agent, then the retiring Agent may, on behalf of the Lenders, appoint a successor Agent, which in the case of the Administrative Agent shall be a commercial bank organized under the laws of the United States of America or of any State thereof and having a combined capital and surplus of at least U.S.$250,000,000. Upon the acceptance of any appointment as Agent hereunder by a successor Agent and, in the case of a successor Collateral Agent, upon the execution and filing or recording of such financing statements, mortgages, agreements, or amendments thereto, or other instruments or notices, as may be necessary or desirable, or as the Required Lenders may request, in order to continue the perfection of the Liens granted or purported to be granted by the Collateral Documents, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, discretion, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations under the Loan Documents. If within 45 days after written notice is given of the retiring Agent’s resignation or removal under this Section no successor Agent shall have been appointed and shall have accepted such appointment, then on such 45th day (a) the retiring Agent’s resignation or removal shall become effective, (b) the retiring Agent shall thereupon be discharged from its duties and obligations under the Loan Documents and (c) the Required Lenders shall thereafter perform all duties of the retiring Agent under the Loan Documents until such time, if any, as the Required Lenders appoint a successor Agent as provided above. After any retiring Agent’s resignation or removal hereunder as Agent, the provisions of this Article VII shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under the Loan Documents.


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ARTICLE VIII

MISCELLANEOUS

Section 8.01 Amendments, Etc. No amendment or waiver of any provision of this Agreement or any other Loan Document, nor consent to any departure by any Loan Party therefrom, shall in any event be effective unless the same shall be in writing and signed by the Required Lenders, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided , however , that:

(a) no amendment, waiver or consent shall, unless in writing and signed by all of the Lenders, do any of the following at any time:

(i) waive any of the conditions specified in Section 3.01 or, in the case of the initial borrowing hereunder, Section 3.02;

(ii) change the number of Lenders or the percentage of (A) the Commitments or (B) the aggregate unpaid principal amount of the Advances that, in each case, shall be required for the Lenders or any of them to take any action hereunder;

(iii) release one or more Guarantors (or otherwise limit such Guarantors’ liability with respect to the Obligations owing to the Agents and the Lenders under the Guaranties) if such release or limitation is in respect of a material portion of the value of the Guaranties to the Lenders;

(iv) release any material portion of the Collateral in any transaction or series of related transactions (other than any release permitted under any Collateral Document);

(v) change the order of application of any prepayment of Advances from the application thereof set forth in the applicable provisions of Section 2.05 or 2.08, respectively; or

(vi) amend this Section 8.01; and

(b) no amendment, waiver or consent shall, unless in writing and signed by the Required Lenders and each Lender specified below for such amendment, waiver or consent:

(i) increase the Commitments of a Lender without the consent of such Lender;

(ii) reduce the principal of, or stated rate of interest on, the Advances owed to a Lender or any fees or other amounts stated to be payable hereunder or under the other Loan Documents to such Lender without the consent of such Lender; or

(iii) postpone any date scheduled for any payment of principal of, or interest on, the Advances pursuant to Section 2.05 or 2.06 or any date fixed for any payment of fees hereunder, in each case, payable to a Lender without the consent of such Lender;


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provided , further , that (A) no amendment, waiver or consent shall, unless in writing and signed by an Agent in addition to the Lenders required above to take such action, affect the rights or duties of such Agent under this Agreement or the other Loan Documents and (B) anything herein to the contrary notwithstanding, during such period as a Lender is a Defaulting Lender, to the fullest extent permitted by applicable law such Lender shall not be entitled to vote in respect of amendments and waivers under Sections 8.01(a) and (b) and the Commitments and the outstanding Advances or other extensions of credit of such Lender hereunder shall not be taken into account in determining whether the Required Lenders or all of the Lenders, as the case may be, have approved any such amendment or waiver (and the definition of Required Lenders shall automatically be deemed modified accordingly for the duration of such period); provided that any such amendment or waiver that would increase or extend the term of any Commitment of such Defaulting Lender, or extend the date fixed for the payment of principal or interest owing to such Defaulting Lender hereunder, or reduce the principal amount of any obligation owing to such Defaulting Lender, or reduce the amount of or the rate or amount of interest on any amount owing to such Defaulting Lender, or alter the terms of this proviso, shall require the consent of such Defaulting Lender.

Section 8.02 Notices, Etc. (a) All notices and other communications provided for hereunder shall be either (i) in writing (including telegraphic, telecopy or electronic communication) and mailed, telegraphed, telecopied or delivered or (ii) as and to the extent set forth in Section 8.02(b) and in the proviso to this Section 8.02(a), in an electronic medium and delivered as set forth in Section 8.02(b), if to any Loan Party, to the Borrower at its address atAv. Paseo de la República 4675, Surquillo, Lima, Perú, Attention: Mónica María Miloslavich Hart and Claudia Inés Drago Morante, Fax: (511) 213-6590, E-mail Address: mmiloslavich@gym.com.pe and cdrago@gym.com.pe; if to any Initial Lender, at its Applicable Lending Office specified opposite its name on Schedule I; if to any other Lender, at its Applicable Lending Office specified in the Assignment and Acceptance pursuant to which it became a Lender; and if to the Administrative Agent or the Collateral Agent, at its address at Montes Urales 620 2°piso, Lomas de Chapultepec, 11000 Mexico, D.F., Attention: Concepción Zuñiga / Martha Patricia Velazquez, Fax: +5255 5201-2317, E-mail Address: c.zuniga@bbva.com / martha.velazquez@bbva.com; or, as to the Borrower, the Administrative Agent or the Collateral Agent, at such other address as shall be designated by such party in a written notice to the other parties and, as to each other party, at such other address as shall be designated by such party in a written notice to the Borrower and the Administrative Agent; provided , however , that materials and information described in Section 8.02(b) shall be delivered to the Administrative Agent in accordance with the provisions thereof or as otherwise specified to the Borrower by the Administrative Agent. All such notices and other communications shall, when mailed, telegraphed, telecopied, or e-mailed, be effective when deposited in the mails, delivered to the telegraph company, transmitted by telecopier or sent by electronic communication, respectively, except that notices and communications to any Agent pursuant to Article II, III or VII shall not be effective until received by such Agent. Delivery by telecopier or other electronic communication of an executed counterpart of a signature page to any amendment or waiver of any provision of this Agreement or the Notes shall be effective as delivery of an original executed counterpart thereof.


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(b) The Borrower hereby agrees that it will provide to the Administrative Agent all information, documents and other materials that it is obligated to furnish to the Administrative Agent pursuant to the Loan Documents, including all notices, requests, financial statements, financial and other reports, certificates and other information materials, but excluding any such communication that (i) relates to the payment of any principal or other amount due under this Agreement prior to the scheduled date therefor, (ii) provides notice of any Default or Event of Default under this Agreement or (iii) is required to be delivered to satisfy any condition precedent to the effectiveness of this Agreement and/or any Borrowing or other Extension of Credit thereunder (all such non-excluded communications being referred to herein collectively as “ Communications ”), by transmitting the Communications in an electronic/soft medium in a format acceptable to the Administrative Agent to an electronic mail address specified by the Administrative Agent to the Borrower. In addition, the Borrower agrees to continue to provide the Communications to the Administrative Agent in the manner specified in the Loan Documents but only to the extent requested by the Administrative Agent. The Borrower further agrees that the Administrative Agent may make the Communications available to the Lenders by posting the Communications on IntraLinks or a substantially similar electronic transmission system (the “ Platform ”).

(c) THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE”. THE AGENT PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE COMMUNICATIONS, OR THE ADEQUACY OF THE PLATFORM AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS OR OMISSIONS IN THE COMMUNICATIONS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY THE AGENT PARTIES IN CONNECTION WITH THE COMMUNICATIONS OR THE PLATFORM. IN NO EVENT SHALL THE ADMINISTRATIVE AGENT OR ANY OF ITS AFFILIATES OR ANY OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ADVISORS OR REPRESENTATIVES (COLLECTIVELY, “ AGENT PARTIES ”) HAVE ANY LIABILITY TO THE BORROWER, ANY LENDER OR ANY OTHER PERSON OR ENTITY FOR DAMAGES OF ANY KIND, INCLUDING DIRECT OR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOSSES OR EXPENSES (WHETHER IN TORT, CONTRACT OR OTHERWISE) ARISING OUT OF THE BORROWER’S OR THE ADMINISTRATIVE AGENT’S TRANSMISSION OF COMMUNICATIONS THROUGH THE INTERNET, EXCEPT TO THE EXTENT THE LIABILITY OF ANY AGENT PARTY IS FOUND IN A FINAL NON-APPEALABLE JUDGMENT BY A COURT OF COMPETENT JURISDICTION TO HAVE RESULTED PRIMARILY FROM SUCH AGENT PARTY’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.

The Administrative Agent agrees that the receipt of the Communications by the Administrative Agent at its e-mail address set forth above shall constitute effective delivery of the Communications to the Administrative Agent for purposes of the Loan Documents. Each Lender agrees that notice to it (as provided in the next sentence) specifying that the


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Communications have been posted to the Platform shall constitute effective delivery of the Communications to such Lender for purposes of the Loan Documents. Each Lender agrees to notify the Administrative Agent in writing (including by electronic communication) from time to time of such Lender’s e-mail address to which the foregoing notice may be sent by electronic transmission and (ii) that the foregoing notice may be sent to such e-mail address. Nothing herein shall prejudice the right of the Administrative Agent or any Lender to give any notice or other communication pursuant to any Loan Document in any other manner specified in such Loan Document.

Section 8.03 No Waiver; Remedies . No failure on the part of any Lender or any Agent to exercise, and no delay in exercising, any right hereunder or under any Note or any other Loan Document shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law.

Section 8.04 Costs and Expenses . (a) The Borrower agrees to pay on demand (i) all costs and expenses of each Agent in connection with the preparation, execution, delivery, administration, modification and amendment of, or any consent or waiver under, the Loan Documents and the other documents to be delivered hereunder (including (A) all due diligence, collateral review, syndication (including printing, distribution and bank meetings), transportation, computer, duplication, appraisal, audit, insurance, consultant, search, filing and recording fees and expenses, subject to prior approval for the Borrower (such approval not to be unreasonably withheld) for expenses in excess of U.S.$3,000 (or its equivalent in other currencies) in the aggregate and (B) the reasonable fees and expenses of counsel for each Agent with respect thereto and with respect to advising such Agent as to its rights and responsibilities, or the perfection, protection or preservation of rights or interests, under the Loan Documents, with respect to negotiations with any Loan Party or with other creditors of any Loan Party arising out of any Default or any events or circumstances that may give rise to a Default and with respect to presenting claims in or otherwise participating in or monitoring any bankruptcy, insolvency or other similar proceeding involving creditors’ rights generally and any proceeding ancillary thereto) and (ii) all costs and expenses of each Agent and each Lender in connection with the enforcement of the Loan Documents, whether in any action, suit or litigation, or any bankruptcy, insolvency or other similar proceeding affecting creditors’ rights generally (including the reasonable fees and expenses of counsel for the Administrative Agent and each Lender with respect thereto).

(b) The Borrower agrees to indemnify, defend and save and hold harmless each Agent and each Lender and each of their Affiliates and their shareholders, officers, directors, employees, agents and advisors (each, an “ Indemnified Party ”) from and against, and shall pay, any and all claims, damages, losses, liabilities and expenses (including reasonable fees and expenses of counsel) incurred by or asserted or awarded against any Indemnified Party, in each case arising out of or in connection with or by reason of (including in connection with any investigation, litigation or proceeding or preparation of a defense in connection therewith) (i) the Notes, this Agreement, any other Loan Document, any of the transactions contemplated herein or the actual or proposed use of the proceeds of the Advances or (ii) the actual or alleged presence of Hazardous Materials on any property of any Loan Party or any of its Subsidiaries or any Environmental Action relating in any way to any Loan Party or any of its Subsidiaries, except to


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the extent such claim, damage, loss, liability or expense is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Party’s gross negligence or willful misconduct. In the case of an investigation, litigation or other proceeding to which the indemnity in this Section 8.04(b) applies, such indemnity shall be effective whether or not such investigation, litigation or proceeding is brought by the Borrower, its directors, equityholders or creditors or an Indemnified Party or any other Person, whether or not any Indemnified Party is otherwise a party thereto and whether or not the transactions contemplated hereby are consummated. The Borrower also agrees not to assert any claim for special, indirect, consequential or punitive damages against any Indemnified Party on any theory of liability arising out of or otherwise relating to the Notes, this Agreement, any other Loan Document, any of the transactions contemplated herein or the actual or proposed use of the proceeds of the Advances.

(c) If any payment of principal of any Advance is made by the Borrower to or for the account of a Lender other than on the last day of the Interest Period for such Advance, as a result of a payment pursuant to Section 2.08, 2.09 or 2.10, acceleration of the maturity of the Advances pursuant to Section 6.01 or for any other reason, or by an Eligible Assignee to a Lender other than on the last day of the Interest Period for such Advance upon an assignment of rights and obligations under this Agreement pursuant to Section 8.07 as a result of a demand by the Borrower pursuant to Section 2.16, or if the Borrower fails to make any payment or prepayment of an Advance for which a notice of prepayment has been given or that is otherwise required to be made, whether pursuant to Section 2.05, 2.08 or 6.01 or otherwise, the Borrower shall, upon demand by such Lender (with a copy of such demand to the Administrative Agent), pay to the Administrative Agent for the account of such Lender any amounts required to compensate such Lender for any additional losses, costs or expenses that it may reasonably incur as a result of such payment or failure to pay or prepay, including any loss (excluding loss of anticipated profits), cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by any Lender to fund or maintain such Advance.

(d) If any Loan Party fails to pay when due any costs, expenses or other amounts payable by it under any Loan Document, including fees and expenses of counsel and indemnities, such amount may be paid on behalf of such Loan Party by the Administrative Agent or any Lender, in its sole discretion.

(e) Without prejudice to the survival of any other agreement of the Borrower hereunder or under any other Loan Document, the agreements and obligations of the Borrower contained in Sections 2.09, 2.12 and 8.04 shall survive the payment in full of principal, interest and all other amounts payable hereunder and under any other Loan Document.

Section 8.05 Right of Set-off . Upon (a) the occurrence and during the continuance of any Event of Default and (b) the making of the request or the granting of the consent specified by Section 6.01 to authorize the Administrative Agent to declare the Advances due and payable pursuant to the provisions of Section 6.01, each Agent and each Lender and each of their respective Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and otherwise apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Agent, such Lender or such Affiliate to or for the credit or the account of the


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Borrower against any and all of the Obligations of the Borrower now or hereafter existing under the Loan Documents, irrespective of whether such Agent or such Lender shall have made any demand under this Agreement and although such Obligations may be unmatured. Each Agent and each Lender agrees promptly to notify the Borrower after any such set-off and application; provided , however , that the failure to give such notice shall not affect the validity of such set-off and application. The rights of each Agent and each Lender and their respective Affiliates under this Section are in addition to other rights and remedies (including other rights of set-off) that such Agent, such Lender and their respective Affiliates may have.

Section 8.06 Binding Effect . This Agreement shall become effective (other than Section 2.01, which shall only become effective upon satisfaction of the conditions precedent set forth in Section 3.01) when it shall have been executed by the Borrower and the Administrative Agent and when the Administrative Agent shall have been notified by each Initial Lender that such Initial Lender has executed it and thereafter shall be binding upon and inure to the benefit of the Borrower, the Administrative Agent and each Lender and their respective successors and assigns, except that the Borrower shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of each Lender.

Section 8.07 Assignments and Participations . (a) Each Lender may assign to one or more Persons all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment, the Advances owing to it and the Note held by it); provided , however , that (i) each such assignment shall be of a constant, and not a varying, percentage of all rights and obligations under this Agreement, (ii) except in the case of an assignment to a Person that, immediately prior to such assignment, was a Lender or an assignment of all of a Lender’s rights and obligations under this Agreement, the amount of the Commitment of the assigning Lender being assigned pursuant to each such assignment (determined as of the date of the Assignment and Acceptance with respect to such assignment) shall in no event be less than U.S.$5,000,000 or an integral multiple of U.S.$1,000,000 in excess thereof, (iii) each such assignment shall be to an Eligible Assignee, (iv) each such assignment made as a result of a demand by the Borrower pursuant to Section 2.16 shall be arranged by the Borrower after consultation with the Administrative Agent and shall be either an assignment of all of the rights and obligations of the assigning Lender under this Agreement or an assignment of a portion of such rights and obligations made concurrently with another such assignment or other such assignments that together cover all of the rights and obligations of the assigning Lender under this Agreement, (v) no Lender shall be obligated to make any such assignment as a result of a demand by the Borrower pursuant to Section 2.16 unless and until such Lender shall have received one or more payments from either the Borrower or one or more Eligible Assignees in an aggregate amount at least equal to the amount specified in Section 2.16 and (vi) the parties to each such assignment shall execute and deliver to the Administrative Agent, for its acceptance and recording in the Register, an Assignment and Acceptance, together with any Note subject to such assignment and a processing and recordation fee of U.S.$3,500; provided , however , that for each such assignment made as a result of a demand by the Borrower pursuant to Section 2.16, the Borrower shall pay to the Administrative Agent the applicable processing and recordation fee. Upon such execution, delivery, acceptance and recording, from and after the effective date specified in each Assignment and Acceptance, (A) the assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, have the rights and obligations of a Lender hereunder and (B) the


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Lender assignor thereunder shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights (other than its rights under Sections 2.09, 2.10, 2.12, 2.13 and 8.04 to the extent any claim thereunder relates to an event arising prior to such assignment) and be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto).

(b) By executing and delivering an Assignment and Acceptance, the Lender assignor thereunder and the assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (i) other than as provided in such Assignment and Acceptance, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with any Loan Document or the execution, legality, validity, enforceability, genuineness, sufficiency or value of, or the perfection or priority of any lien or security interest created or purported to be created under or in connection with, any Loan Document or any other instrument or document furnished pursuant hereto, (ii) such assigning Lender makes no representation or warranty and assumes no responsibility with respect to the financial condition of any Loan Party or the performance or observance by any Loan Party of any of its obligations under any Loan Document or any other instrument or document furnished pursuant hereto, (iii) such assignee confirms that it has received a copy of this Agreement, together with copies of the financial statements referred to in Section 4.01 and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such Assignment and Acceptance, (iv) such assignee will, independently and without reliance upon any Agent, such assigning Lender or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement, (v) such assignee confirms that it is an Eligible Assignee, (vi) such assignee appoints and authorizes each Agent to take such action as agent on its behalf and to exercise such powers and discretion under the Loan Documents as are delegated to such Agent by the terms hereof and thereof, together with such powers and discretion as are reasonably incidental thereto and (vii) such assignee agrees that it will perform in accordance with their terms all of the obligations that by the terms of this Agreement are required to be performed by it as a Lender.

(c) The Administrative Agent shall maintain at its address referred to in Section 8.02 a copy of each Assignment and Acceptance delivered to and accepted by it and a register for the recordation of the names and addresses of the Lenders and the Commitment of, and principal amount of the Advances owing to, each Lender from time to time (the “ Register ”). The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and the Borrower, each Agent and the Lenders may treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrower or any Lender at any reasonable time and from time to time upon reasonable prior notice.

(d) Upon its receipt of an Assignment and Acceptance executed by an assigning Lender and an assignee representing that it is an Eligible Assignee, together with any Note subject to such assignment, the Administrative Agent shall, if such Assignment and Acceptance has been completed and is in substantially the form of Exhibit C, (i) accept such


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Assignment and Acceptance, (ii) record the information contained therein in the Register and (iii) give prompt notice thereof to the Borrower. Within five Business Days after its receipt of such notice, the Borrower, at its own expense, shall execute and deliver to the Administrative Agent in exchange for the surrendered Note a new Note to the order of such Eligible Assignee and the relevant Note Filling Agreement and, if the assigning Lender has retained a Commitment hereunder, a new Note to the order of the assigning Lender and the relevant Note Filling Agreement, in each case, with respect to the Notes, with por aval guarantee executed by each Guarantor. Each such new Note or Notes and Note Filling Agreement or Note Filling Agreements shall be dated the effective date of such Assignment and Acceptance and shall otherwise be in substantially the form of Exhibit A-1 and Exhibit A-2, respectively.

(e) Each Lender may sell participations to one or more banks or other entities (other than the Borrower or any of its Affiliates) in or to all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment, the Advances owing to it and the Note held by it); provided , however , that (i) such Lender’s obligations under this Agreement (including its Commitment to the Borrower hereunder) shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (iii) such Lender shall remain the holder of any such Note for all purposes of this Agreement, (iv) the Borrower, the Agents and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement and (v) no participant under any such participation shall have any right to approve any amendment or waiver of any provision of any Loan Document, or any consent to any departure by the Borrower therefrom, except to the extent that such amendment, waiver or consent would reduce the principal of, or interest on, the Advances or any fees or other amounts payable hereunder, in each case to the extent subject to such participation, or postpone any date fixed for any payment of principal of, or interest on, the Advances or any fees or other amounts payable hereunder, in each case to the extent subject to such participation, or release all or substantially all of the Collateral or the value of the Guaranties. The Borrower agrees that each participant shall be entitled to the benefits of Sections 2.09 and 2.12 (subject to the requirements and limitations therein, including the requirements under Section 2.12(g) (it being understood that the documentation required under Section 2.12(g) shall be delivered to the participating Lender)) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to Section 8.07(a); provided that such participant (A) agrees to be subject to the provisions of Section 2.16 as if it were an assignee under Section 8.07(a) and (B) shall not be entitled to receive any greater payment under Section 2.09 or 2.12, with respect to any participation, than its participating Lender would have been entitled to receive, except to the extent such entitlement to receive a greater payment results from a Change of Law that occurs after the participant acquired the applicable participation.

(f) Any Lender may, in connection with any assignment or participation or proposed assignment or participation pursuant to this Section, disclose to the assignee or participant or proposed assignee or participant, any information relating to the Borrower furnished to such Lender by or on behalf of the Borrower; provided that, prior to any such disclosure, the assignee or participant or proposed assignee or participant shall agree to preserve the confidentiality of any Confidential Information relating to the Borrower received by it from such Lender.


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(g) Notwithstanding any other provision set forth in this Agreement, any Lender may at any time create a security interest in all or any portion of its rights under this Agreement (including the Advances owing to it and the Note held by it) in favor of any Federal Reserve Bank in accordance with Regulation A of the Board of Governors of the U.S. Federal Reserve System.

(h) Notwithstanding anything to the contrary contained herein, any Lender that is a Fund may create a security interest in all or any portion of the Advances owing to it and any Note held by it to the trustee for holders of obligations owed, or securities issued, by such Fund as security for such obligations or securities; provided that, unless and until such trustee actually becomes a Lender in compliance with the other provisions of this Section, (i) no such pledge shall release the pledging Lender from any of its obligations under the Loan Documents and (ii) such trustee shall not be entitled to exercise any of the rights of a Lender under the Loan Documents even though such trustee may have acquired ownership rights with respect to the pledged interest through foreclosure or otherwise.

Section 8.08 Confidentiality . Neither any Agent nor any Lender shall disclose any Confidential Information to any Person without the consent of the Borrower, other than (a) to such Agent’s or such Lender’s Affiliates and their officers, directors, employees, agents and advisors and to actual or prospective Eligible Assignees and participants, or to actual or prospective counterparties in respect of any other arrangement between such Lender or Agent and such counterparty in respect of any securitization, hedge or other transaction under which payments are to be made between such Lender and such counterparty by reference to this Agreement, and then only on a confidential basis, (b) as required by any law, rule or regulation or judicial process, (c) as requested or required by any state, Federal or foreign authority or examiner (including the National Association of Insurance Commissioners or any similar organization or quasi-regulatory authority) regulating such Lender, (d) in connection with any litigation or proceeding to which such Agent or such Lender or any of its Affiliates may be a party or (e) in connection with the exercise of any right or remedy under this Agreement or any other Loan Document.

Section 8.09 Governing Law . This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York.

Section 8.10 Execution in Counterparts . This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Agreement by telecopier or other electronic communication shall be effective as delivery of a manually executed counterpart of this Agreement.

Section 8.11 Release of Collateral . Upon the sale, lease, transfer or other disposition of any item of Collateral of any Loan Party (including as a result of the sale, in accordance with the terms of the Loan Documents, of the Loan Party that owns such Collateral) in accordance with the terms of the Loan Documents, the Collateral Agent will, at the Borrower’s expense, execute and deliver to such Loan Party such documents as such Loan Party may reasonably request to evidence the release of such item of Collateral from the assignment and security interest granted under the Collateral Documents in accordance with the terms of the Loan Documents.


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Section 8.12 Jurisdiction, Etc. (a) Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of any New York State court or federal court of the United States sitting in New York City, and any appellate court from any thereof and to the courts of its own corporate domicile in respect of any actions brought against it as a defendant, in any action or proceeding arising out of or relating to this Agreement or any other Loan Document to which it is a party, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in any such New York State court or, to the extent permitted by law, in such federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.

(b) The Borrower hereby irrevocably appoints CT Corporation System (the “ Process Agent ”), with an office on the date hereof at 111 Eighth Avenue, 13 ^th Floor, New York, New York 10011, United States, as its agent to receive on behalf of the Borrower and its property service of copies of the summons and complaint and any other process which may be served in any such action or proceeding. Such service may be made by mailing or delivering a copy of such process to the Borrower in care of the Process Agent at the Process Agent’s above address, and the Borrower hereby irrevocably authorizes and directs the Process Agent to accept such service on its behalf. As an alternative method of service, the Borrower also irrevocably consents to the service of any and all process in any such action or proceeding by the mailing of copies of such process to the Borrower at its address specified in Section 8.02.

(c) Each of the parties hereto irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement or the Loan Documents to which it is a party in any New York State or federal court. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

(d) To the extent that the Borrower has or hereafter may acquire any immunity from jurisdiction of any court or from any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with respect to itself or its property, the Borrower hereby irrevocably and unconditionally waives such immunity in respect of its obligations under this Agreement and the other Loan Documents and, without limiting the generality of the foregoing, agrees that the waivers set forth in this subsection (d) shall have the fullest scope permitted under the Foreign Sovereign Immunities Act of 1976 of the United States and are intended to be irrevocable for purposes of such Act.

(e) Nothing in this Section shall affect the right of a Secured Party to serve legal process in any other manner permitted by law or affect the right of the Lender to bring any action or proceeding against the Borrower or its property in the courts of Perú.


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Section 8.13 Judgment Currency . (a) If, for the purposes of obtaining judgment in any court, it is necessary to convert a sum due hereunder or under the Notes in U.S. Dollars into another currency, the parties hereto agree, to the fullest extent that they may effectively do so, that the rate of exchange used shall be that at which, in accordance with normal banking procedures, the Administrative Agent could purchase U.S. Dollars with such other currency in New York City on the Business Day preceding that on which final, non-appealable judgment is given.

(b) The obligations of the Loan Parties in respect of any sum due to the Secured Parties hereunder or under the other Loan Documents shall, notwithstanding any judgment in a currency other than U.S. Dollars, be discharged only to the extent that on the Business Day following receipt by the Administrative Agent of any sum adjudged to be so due in such other currency, the Administrative Agent may, in accordance with normal, reasonable banking procedures, purchase U.S. Dollars with such other currency. If the amount of U.S. Dollars so purchased is less than the sum originally due to the Secured Parties, in U.S. Dollars, the Borrower agrees, to the fullest extent that it may effectively do so, as a separate obligation and notwithstanding any such judgment, to indemnify the Secured Parties against such loss.

Section 8.14 Patriot Act Notice . Each Lender and Agent (for itself and not on behalf of any Lender) hereby notifies the Loan Parties that pursuant to the requirements of the Patriot Act, it is required to obtain, verify and record information that identifies each Loan Party, which information includes the name and address of such Loan Party and other information that will allow such Lender or the Administrative Agent, as applicable, to identify such Loan Party in accordance with the Patriot Act. The Borrower shall, and shall cause each of its Subsidiaries to, provide, to the extent commercially reasonable, such information and take such actions as are reasonably requested by the Administrative Agent or any Lender in order to assist the Administrative Agent and the Lenders in maintaining compliance with the Patriot Act. The Borrower will provide each Lender and the Administrative Agent with all assistance as may be necessary (including, where relevant, the provision of identification documents) to enable such Lender and the Administrative Agent to comply with its obligations to identify their clients for anti-money laundering purposes.

Section 8.15 Waiver of Jury Trial . Each of the Borrower, the Agents and the Lenders hereby irrevocably waives all right to trial by jury in any action, proceeding or counterclaim (whether based on contract, tort or otherwise) arising out of or relating to the Loan Documents, the Advances or the actions of any Agent or any Lender in the negotiation, administration, performance or enforcement thereof.

Section 8.16 Affiliate Activities . The Borrower acknowledges that the Agents (and each of their respective Affiliates) is a full service securities firm engaged, either directly or through affiliates, in various activities, including securities trading, investment banking and financial advisory, investment management, principal investment, hedging, financing and brokerage activities and financial planning and benefits counseling for both companies and individuals. In the ordinary course of these activities, it may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and/or financial instruments (including bank loans) for its own account and for the accounts of its customers and may at any time hold long and short positions in such securities and/or


		62		GyM Credit Agreement

instruments. Such investment and other activities may involve securities and instruments of the Borrower and its Affiliates, as well as of other entities and persons and their Affiliates which may (i) be involved in transactions arising from or relating to the engagement contemplated hereby and by the other Loan Documents (ii) be customers or competitors of the Borrower and its Affiliates or (iii) have other relationships with the Borrower and its Affiliates. In addition, it may provide investment banking, underwriting and financial advisory services to such other entities and persons. It may also co-invest with, make direct investments in, and invest or co-invest client monies in or with funds or other investment vehicles managed by other parties, and such funds or other investment vehicles may trade or make investments in securities of the Borrower and its Affiliates or such other entities. The transactions contemplated hereby and by the other Loan Documents may have a direct or indirect impact on the investments, securities or instruments referred to in this paragraph.

Section 8.17 No Advisory or Fiduciary Responsibility . In connection with all aspects of the transactions contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document), the Borrower acknowledges and agrees, and acknowledges and agrees that it has informed its other Affiliates, that: (i)(A) no fiduciary, advisory or agency relationship between the Borrower and its Subsidiaries and any Agent is intended to be or has been created in respect of any of the transactions contemplated hereby and by the other Loan Documents, irrespective of whether any such Agent has advised or is advising the Borrower or its Subsidiaries on other matters, (B) the arranging and other services regarding this Agreement provided by the Agents are arm’s-length commercial transactions between the Borrower and its Subsidiaries, on the one hand, and the Agents, on the other hand, (C) the Borrower has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate and (D) the Borrower is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents, (ii)(A) the Agents each are and have been acting solely as principal and, except as may otherwise be expressly agreed in writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary for the Borrower or any of its Affiliates, or any other Person and (B) no Agent has any obligation to the Borrower or any of its Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Loan Documents and (iii) the Agents and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Borrower and its Affiliates, and no Agent has any obligation to disclose any of such interests and transactions to the Borrower or any of its Affiliates. To the fullest extent permitted by law, the Borrower, on behalf of itself and the other Loan Parties, hereby waives and releases any claims that it may have against any Agent with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby.

[ Signature Pages Follow. ]


		63		GyM Credit Agreement

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written.


GRAÑA Y MONTERO S.A.A. , as Borrower

By	/s/ Mario Alvarado Pflucker
	Name:	MARIO ALVARADO PFLUCKER
	Title:	Representative

By	/s/ Jose Graña Miro Quesada
	Name:	JOSE GRAÑA MIRO QUESADA
	Title:	Representative


		[ Signature Page ]		GyM Credit Agreement


BBVA BANCOMER S.A., INSTITUCIÓN DE BANCA MULTIPLE, GRUPO FINANCIERO BBVA BANCOMER , as Administrative Agent

By	/s/ Aida Arana
	Name:	AIDA ARANA
	Title:	Legal Representative

By	/s/ Angel Espinosa
	Name:	ANGEL ESPINOSA
	Title:	Legal Representative

BBVA CONTINENTAL , as Collateral Agent

By	/s/ Guillermo Monjaraz
	Name:	GUILLERMO MONJARAZ
	Title:	Representative

By	/s/ Jorge Yataco
	Name:	JORGE YATACO
	Title:	Representative


		[ Signature Page ]		GyM Credit Agreement

Initial Lenders


Commitment

U.S.$ 15,000,000.00	BBVA BANCO CONTINENTAL

	By	/s/ Gustavo Delgado-Aparicio Labarthe
		Name:	Gustavo Delgado-Aparicio Labarthe
		Title:	Gerente General Adjunto

	By	/s/ Eduardo Torres Llosa V.
		Name:	Eduardo Torres Llosa V.
		Title:	Director Gerente General


		[ Signature Page ]		GyM Credit Agreement


U.S.$ 15,000,000.00	BANCOLOMBIA PUERTO RICO INTERNACIONAL INC.

	By	/s/ Pablo Emilio Diaz Moncayo
		Name:	Pablo Emilio Diaz Moncayo
		Title:	General Manager


		[ Signature Page ]		GyM Credit Agreement


U.S.$ 15,000,000.00	BANCO LATINOAMERICANO DE COMERCIO EXTERIOR, S.A.

	By	/s/ Fernando M. pompeu
		Name:	Fernando M. pompeu
		Title:	Vice President

	By	/s/ Hugo Fernández
		Name:	Hugo Fernández
		Title:	Vice President


		[ Signature Page ]		GyM Credit Agreement


U.S.$ 15,000,000.00	BANCO ITAU CHILE

	By	/s/ Christian Tauber D.
		Name:	Christian Tauber D.
		Title:	Gerente Division Itau BBA

	By	/s/ Claudio Greve E.
		Name:	Claudio Greve E.
		Title:	Gerente Middle Office, Global Corporate Banking, Banco Itau


		[ Signature Page ]		GyM Credit Agreement


U.S.$ 11,250,000.00	BANCO DE CREDITO E INVERSIONES, S.A., MIAMI BRANCH

	By	/s/ M. Grisel Vega
		Name:	M. Grisel Vega
		Title:	General Manager

	By	/s/ Ivan M. Vera
		Name:	Ivan M. Vera
		Title:	Vice President
			Bci Miami Branch


		[ Signature Page ]		GyM Credit Agreement


U.S.$ 11,250,000.00	BANCO BTG PACTUAL S.A. - CAYMAN BRANCH

	By	/s/ Bruno Duque Horta Noriega
		Name:	Bruno Duque Horta Noriega
		Title:	Attorney-in-fact

	By	/s/ Carolina Cury Maia Costa
		Name:	Carolina Cury Maia Costa
		Title:	Attorney-in-fact


		[ Signature Page ]		GyM Credit Agreement


U.S.$ 11,250,000.00	CORPBANCA, NEW YORK BRANCH

	By	/s/ Fernando Burgos
		Name:	Fernando Burgos
		Title:	General Manager
			CorpBanca New York Branch

	By	/s/ Michael P. Nyberg
		Name:	Michael P. Nyberg
		Title:	VP Controller


		[ Signature Page ]		GyM Credit Agreement


U.S.$ 11,250,000.00	HSBC BANK USA, NATIONAL ASSOCIATION

	By	/s/ Scott Regan
		Name:	Scott Regan
		Title:	Vice President


		[ Signature Page ]		GyM Credit Agreement


U.S.$ 11,250,000.00	BANCO INTERNATIONAL DEL PERÚ S.A. - INTERBANK

	By	/s/ Carlos Tori Grande
		Name:	Carlos Tori Grande
		Title:	Gerente de Division Corporativa

	By	/s/ Jorge Miranda Benavides
		Name:	Jorge Miranda Benavides
		Title:	Abogado


		[ Signature Page ]		GyM Credit Agreement


U.S.$ 11,250,000.00	BANCO SANTANDER, S.A.

	By	/s/ Nicolas Herrera
		Name:	Nicolas Herrera
		Title:	Director

	By	/s/ Gaston Plagiaro
		Name:	Gaston Plagiaro
		Title:	Gerente, Banca Corporativa


		[ Signature Page ]		GyM Credit Agreement


U.S.$ 11,250,000.00	THE BANK OF NOVA SCOTIA

	By	/s/ James A. Neate
		Name:	James A. Neate
		Title:	Senior Vice President


		[ Signature Page ]		GyM Credit Agreement


U.S.$ 11,250,000.00	JPMORGAN CHASE BANK, N.A.

	By	/s/ Christophe Vohmann
		Name:	Christopher Vohmann
		Title:	Executive Director

U.S.$ 150,000,000	Total Commitments


		[ Signature Page ]		GyM Credit Agreement

Schedule I

to Credit Agreement

APPLICABLE LENDING OFFICES


Name of Initial Lender		Lending Office

BBVA Banco Continental		Av. República de Panamá 3055, San Isidro, Lima 27, Lima, Perú

Bancolombia Puerto Rico Internacional Inc.		270 Muñoz Rivera Avenue, suite 502, 00918 San Juan, Puerto Rico

Banco Latinoamericano de Comercio Exterior, S.A.		Torre V Business Park, Ave. La Rotonda, Urb. Costa del Este, Panama, Republic de Panama

Banco Itau Chile		Av. Apoquindo 3457 Las Condes, Santiago, Chile

Banco de Credito e Inversiones, S.A., Miami Branch		701 Brickell Avenue, Suite 2250, Miami, FL 33131

Banco BTG Pactual S.A. - Cayman Branch		Butterfield House, 68 Fort Street, Grand Cayman, Cayman Islands

Corpbanca, New York Branch		845 3rd Avenue, 5th floor, New York, NY 10022

HSBC Bank USA, National Association		452 5th Avenue, New York, NY 10018

Banco International del Perú S.A. - Interbank		Avenida Carlos Villarán 140 Urbanización Santa Catalina La Victoria, Lima, Perú

Banco Santander, S.A.		Julio Herrera y Obes 1365, Montevideo, Uruguay

The Bank of Nova Scotia		720 King Street West, Toronto, Canada

JPMorgan Chase Bank, N.A.		270 Park Avenue, New York, NY 10017


		Sch. I-1		GyM Credit Agreement

Schedule 3.01(b)

to Credit Agreement

DISCLOSED LITIGATION

Tax proceedings involving the Borrower

Income tax appeals and fines for the years 2007 and 2008

The Borrower has filed separate appeals with the Tax Court against resolutions issued by the Administrative Division of the SUNAT that dismissed claims filed by the Borrower against certain Determination and Fine Resolutions. These resolutions were issued in relation to income tax deductions for the years 2007 and 2008 that were based on losses due to capital reductions in Graña y Montero Edificaciones S.A.C.

In both of the appealed cases, the Administrative Division confirmed the Determination and Fine resolutions mainly based on its interpretation that the capital reduction was not mandatory and the share losses were not proven to be irrevocable and irreversible, as argued by the Borrower. The Borrower has also argued that, should the Tax Court confirm the Administrative Division’s resolutions, interest and penalties were not applicable.

The opinion of third-party Peruvian legal counsel for the Borrower is that the contingencies resulting from these cases are remote.

According to the SUNAT debt statement dated December 12, 2012, the total debt of the contested Determination and Fine resolutions for the 2007 income tax amounts to S/. 12,300,618 (including interest) and for the 2008 income tax amounts to S/. 14,067,713 (including interest).

Tax proceedings involving GyM S.A.

Income tax appeal and fines for the year 1999

GyM S.A. has filed a claim against a Determination Resolution and a Fine Resolution issued by SUNAT in relation to income tax for 1999. The resolutions refer, among other matters, to annulled revenues, unsubstantiated costs, differences in deferred costs and exchange rates and leaseback deductions. GyM S.A. argues that the resolutions are null because the review made by the tax administration did not comply with due process rules.

Given the tax administration’s delay in issuing a decision on the proceeding, which is interpreted as an implied dismissal, GyM S.A. has filed an appeal. To date, this appeal is pending.

The opinion of third-party Peruvian legal counsel for GyM S.A. is that the outcome of the proceeding is likely to be favorable to GyM S.A.

The claim amounts to S/. 40,950,770, and would eventually reduce GyM S.A.’s carry-forward loss. As of the date hereof, any applicable fines have been suspended.


		Sch. 3.01(b)-1		GyM Credit Agreement

IGV appeal and fines for the year 1999

GyM S.A. has filed a tax claim against a Determination Resolution and various Fine Resolutions issued by SUNAT, with regard to the 1999 IGV. The resolutions refer, among other matters, to unsubstantiated credit notes, untaxed revenues and invoices not qualifying as expenses for income tax purposes. GyM S.A. has accepted a portion of the Determination Resolution, which amounts to S/. 244,380. Applicable fines have been suspended.

Given the tax administration’s delay in issuing a decision on the proceeding, which is interpreted as an implied dismissal, GyM S.A. has filed an appeal. To date, this appeal is pending.

The opinion of third-party Peruvian legal counsel for GyM S.A. is that the outcome of the proceeding is likely to be favorable to GyM S.A.

According to the SUNAT debt statement dated November 12, 2012, the total debt of the contested Determination Resolution amounts to S/. 13,157,700 (including interest).

Income tax appeal and fine for the year 2001

GyM S.A. has filed a tax claim against a Determination Resolution and a Fine Resolution served by SUNAT, with regard to income tax for 2001. The resolutions refer, among other matters, to deferred revenues, deferred costs of work and deferred financial expenses. GyM S.A. argues that the resolutions are null because certain information requirements were issued by unauthorized officers and certain observations are based on a Determination Resolution regarding income tax for 1999, which is also being challenged.

Given the tax administration’s delay in issuing a decision on the proceeding, which is interpreted as an implied dismissal, GyM S.A. has filed an appeal. To date, this appeal is pending.

The opinion of third-party Peruvian legal counsel for GyM S.A. is that the outcome of the proceeding is likely to be favorable to GyM S.A.

According to the SUNAT debt statement dated November 12, 2012, the total debt of each of the contested Determination Resolution and Fine Resolution amount to S/. 33,502,971 and S/. 22,237,365, respectively (in both cases, including interest).

IGV appeal and fines for the year 2001

GyM S.A. has filed a tax claim against various Determination and Fine Resolutions served by SUNAT in relation to the General Sales Tax for 2001. These resolutions refer to the determination of the taxable base, unduly issued payment receipts, non-interest accruing revenues and fiscal credits for challenged payment receipts. GyM S.A. argues that the resolutions are null because certain information requirements were issued by unauthorized officers.

Given the tax administration’s delay in issuing a decision on the proceeding, which is interpreted as an implied dismissal, GyM S.A. has filed an appeal. To date, this appeal is pending.


		Sch. 3.01(b)-2		GyM Credit Agreement

The opinion of third-party Peruvian legal counsel for GyM S.A. is that the outcome of the proceeding is likely to be favorable to GyM S.A.

According to the SUNAT debt statement dated November 12, 2012, the total debt of the contested Determination and Fine Resolutions amounts to S/. 10,073,004 (including interest).

Tax proceedings involving VIVA GyM S.A.

Income tax claim and fine for the year 2010

Viva GyM S.A. has filed a claim against a Determination Resolution and a Fine Resolution served by SUNAT in relation to income tax for 2010. These resolutions refer to deferred expenses and unsubstantiated administrative expenses. As of the date hereof, the appeal filed by Viva GyM S.A. is pending.

The opinion of third-party Peruvian legal counsel for Viva GyM S.A. is that the outcome of the proceeding is likely to be favorable to Viva GyM S.A. and the contingency resulting from this case is remote.

According to the SUNAT debt statement dated January 10, 2013, the total debt of each of the contested Fine Resolution amounts to S/. 217,011 (including interest). The Determination Resolution reduced Viva GyM S.A.’s credit balance by S/. 1,908,343.

Ongoing tax review of the Borrower

SUNAT initiated a tax review of the Borrower in connection with income tax for 2009. On November 30, 2012, SUNAT served the Borrower with the Requirement Results set forth in Article 75 of the Tax Code. Consequently, Determination and Fine Resolutions should be issued shortly. The omitted tax amounts to S./ 1,625,986.80, the applicable fine would amount to S./ 812,993.40 and an additional outstanding tax would amount to S/. 38,594.94.

Ongoing tax reviews of GyM S.A.

SUNAT has served GyM S.A. with general information requirements for 2010 and 2011. As of the date hereof, SUNAT has not submitted its conclusions.


		Sch. 3.01(b)-3		GyM Credit Agreement

Schedule 4.01(a)

to Credit Agreement

EQUITY INTERESTS IN LOAN PARTIES


Graña y Montero S.A.A.
Shareholder	Shares		Percentage of capital stock
GH Holding Group		117,538,203		21.05	%
RI-CARTADM		65,889,092		11.80	%
IN-CARTADM		64,017,772		11.47	%
HO-CARTADM		51,470,882		9.22	%
Bethel Enterprises Inc.		33,785,285		6.05	%
PR-CARTADM		29,965,919		5.37	%
Bryon Development		22,432,223		4.02	%
Hernando Graña Acuña		15,150,061		2.71	%
Float		158,034,753		28.31	%


Viva GyM S.A.
Shareholder	Shares		Percentage of capital stock
Graña y Montero S.A.A.		133,293,085		59.12055	%
GyM S.A.		87,854,874		38.96697	%
Juan Manuel Lambarri Hierro		3,093,857		1.37224	%
Rolando Ponce Vergara		1,218,017		0.54024	%


Concar S.A.
Shareholder	Shares		Percentage of capital stock
Graña y Montero S.A.A.		11,043,2675		99.56	%
Jaime Targarona Arata		47,692		0.43	%
GyM S.A.		255		0.0023	%


Graña y Montero Petrolera S.A.
Shareholder	Shares owned		Percentage of capital stock
Graña y Montero S.A.A.		96,141,984		95	%
Francisco Dulanto Swayne		5,060,105		5	%


		Sch. 4.01(a)-1		GyM Credit Agreement


GyM S.A.
Shareholder	Shares owned		Percentage of capital stock
Graña y Montero S.A.A.		211,970,734		93.66	%
Juan Manuel Lambarri Hierro		5,091,699		2.25	%
Luis Diaz Imiela-Gentimur		4,424,091		1.95	%
Alfonso Gálvez Rubio		2,212,159		0.98	%
Hugo Rangel Zavala		1,691,650		0.75	%
Luis Vinatea Villacorta		298,726		0.13	%
Octavio Cabrera García		264,101		0.12	%
Julio de la Piedra del Río		136,916		0.06	%
Renato Rojas Balta		108,854		0.05	%
Eduardo Villa Corta Lucchesi		108,854		0.05	%


		Sch. 4.01(a)-2		GyM Credit Agreement

Schedule 4.01(c)

to Credit Agreement

EQUITY INTERESTS IN SUBSIDIARIES

Subsidiaries of Graña y Montero S.A.A.


Viva GyM S.A.
Jurisdiction of incorporation	Perú
Authorized shares	225,459,833
Outstanding shares	225,459,833
Percentage of Equity Interest directly owned by the Borrower	59.12	%
Percentage of Equity Interest indirectly owned by the Borrower (through GyM S.A.)	36.50	%

GyM S.A.
Jurisdiction of incorporation	Perú
Authorized shares	226,307,784
Outstanding shares	226,307,784
Percentage of Equity Interest directly owned by the Borrower	93.66	%
Percentage of Equity Interest indirectly owned by the Borrower	N/A

Concesionaria Via Expresa Sur S.A.
Jurisdiction of incorporation	Perú
Authorized shares	5,000
Outstanding shares	5,000
Percentage of Equity Interest directly owned by the Borrower	99.98	%
Percentage of Equity Interest indirectly owned by the Borrower (through GyM S.A.)`	0.0187	%

Concesión Canchaque S.A.
Jurisdiction of incorporation	Perú
Authorized shares	10,792,474
Outstanding shares	10,792,474
Percentage of Equity Interest directly owned by the Borrower	99.96	%
Percentage of Equity Interest indirectly owned by the Borrower	N/A

Concar S.A.
Jurisdiction of incorporation	Perú
Authorized shares	11,091,222
Outstanding shares	11,091,222
Percentage of Equity Interest directly owned by the Borrower	99.56	%
Percentage of Equity Interest indirectly owned by the Borrower (through GyM S.A.)	0.0021	%


		Sch. 4.01(c)-1		GyM Credit Agreement


Graña y Montero Petrolera S.A.
Jurisdiction of incorporation	Perú
Authorized shares	101,202,089
Outstanding shares	101,202,089
Percentage of Equity Interest directly owned by the Borrower	95	%
Percentage of Equity Interest indirectly owned by the Borrower	N/A

GMD S.A.
Jurisdiction of incorporation	Perú
Authorized shares	12,814,062
Outstanding shares	12,814,062
Percentage of Equity Interest directly owned by the Borrower	88.68	%
Percentage of Equity Interest indirectly owned by the Borrower	N/A

GyM Ferrovías S.A.
Jurisdiction of incorporation	Perú
Authorized shares	100,105,000
Outstanding shares	100,105,000
Percentage of Equity Interest directly owned by the Borrower	75	%
Percentage of Equity Interest indirectly owned by the Borrower	N/A

Generadora Arabesco S.A.
Jurisdiction of incorporation	Perú
Authorized shares	1,695,447
Outstanding shares	1,695,447
Percentage of Equity Interest directly owned by the Borrower	99	%
Percentage of Equity Interest indirectly owned by the Borrower	N/A

Norvial S.A.
Jurisdiction of incorporation	Perú
Authorized shares	55,136,335
Outstanding shares	55,136,335
Percentage of Equity Interest directly owned by the Borrower	50.10	%
Percentage of Equity Interest indirectly owned by the Borrower	N/A

CAM Holding SpA (Chile)
Jurisdiction of incorporation	Chile
Authorized shares	5,220,000
Outstanding shares	5,220,000
Percentage of Equity Interest directly owned by the Borrower	99.99	%
Percentage of Equity Interest indirectly owned by the Borrower	N/A


		Sch. 4.01(c)-2		GyM Credit Agreement


Survial S.A.
Jurisdiction of incorporation	Perú
Authorized shares	9,241,320
Outstanding shares	9,241,320
Percentage of Equity Interest directly owned by the Borrower	99.095	%
Percentage of Equity Interest indirectly owned by the Borrower	N/A

GMI S.A.
Jurisdiction of incorporation	Perú
Authorized shares	8,511,533
Outstanding shares	8,511,533
Percentage of Equity Interest directly owned by the Borrower	89.41	%
Percentage of Equity Interest indirectly owned by the Borrower	N/A

Ecotec S.A.
Jurisdiction of incorporation	Perú
Authorized shares	2,064,236
Outstanding shares	2,064,236
Percentage of Equity Interest directly owned by the Borrower	N/A
Percentage of Equity Interest indirectly owned by the Borrower (through GMI S.A.)	89.39	%

GSD S.A.
Jurisdiction of incorporation	Perú
Authorized shares	4,002,570
Outstanding shares	4,002,570
Percentage of Equity Interest directly owned by the Borrower	N/A
Percentage of Equity Interest indirectly owned by the Borrower (through GMD S.A.)	88.67	%

*	Borrower’s indirect share ownership in Subsidiaries of the Guarantors is detailed for each such Subsidiary below

Subsidiaries of Viva GyM S.A.


Las Lomas S.A.C.
Jurisdiction of incorporation	Perú
Authorized shares	1,917,791
Outstanding shares	1,917,791
Percentage of Equity Interest directly owned by Viva GyM S.A.	99.99	%
Percentage of Equity Interest directly owned by the Borrower	N/A
Percentage of Equity Interest indirectly owned by the Borrower (through Viva GyM S.A.)	95.60	%


		Sch. 4.01(c)-3		GyM Credit Agreement


Inmobiliaria Almonte S.A.C.
Jurisdiction of incorporation	Perú
Authorized shares	45,363,685
Outstanding shares	45,363,685
Percentage of Equity Interest directly owned by Viva GyM S.A.	50.44	%
Percentage of Equity Interest directly owned by the Borrower	N/A
Percentage of Equity Interest indirectly owned by the Borrower (through Viva GyM S.A.)	48.23	%

Inmobiliaria Los Juncos S.A.C.
Jurisdiction of incorporation	Perú
Authorized shares	1,000
Outstanding shares	1,000
Percentage of Equity Interest directly owned by Viva GyM S.A.	99.99	%
Percentage of Equity Interest directly owned by the Borrower	N/A
Percentage of Equity Interest indirectly owned by the Borrower (through Viva GyM S.A.)	95.60	%

Promotores Asociados de Inmobiliarias S.A.
Jurisdiction of incorporation	Perú
Authorized shares	2,824,510
Outstanding shares	2,824,510
Percentage of Equity Interest directly owned by Viva GyM S.A.	85.41	%
Percentage of Equity Interest directly owned by the Borrower	N/A
Percentage of Equity Interest indirectly owned by the Borrower (through Viva GyM S.A.)	81.67	%

Subsidiaries of Graña y Montero Petrolera S.A.


Poliductos del Perú S.A.
Jurisdiction of incorporation	Perú
Authorized shares	6,322,000
Outstanding shares	6,322,000
Percentage of Equity Interest directly owned by Graña y Montero Petrolera S.A.	0.016	%
Percentage of Equity Interest indirectly owned by Graña y Montero Petrolera S.A. (through Oiltanking Andina Services S.A.C.)	49.99	%
Percentage of Equity Interest directly owned by the Borrower	N/A
Percentage of Equity Interest indirectly owned by the Borrower (through Graña y Montero Petrolera S.A.)	47.51	%


		Sch. 4.01(c)-4		GyM Credit Agreement

Subsidiaries of GyM S.A.


GyM Servicios Mineros S.A.
Jurisdiction of incorporation	Perú
Authorized shares	370,000
Outstanding shares	370,000
Percentage of Equity Interest directly owned by GyM S.A.	98	%
Percentage of Equity Interest directly owned by the Borrower	N/A
Percentage of Equity Interest indirectly owned by the Borrower (through GyM S.A.)	91.79	%

GyM Chile SpA
Jurisdiction of incorporation	Chile
Authorized shares	812,834
Outstanding shares	812,834
Percentage of Equity Interest directly owned by GyM S.A.	100	%
Percentage of Equity Interest directly owned by the Borrower	N/A
Percentage of Equity Interest indirectly owned by the Borrower (through GyM S.A.)	93.66	%

Stracon GyM S.A.
Jurisdiction of incorporation	Perú
Authorized shares	11,678,301
Outstanding shares	11,678,301
Percentage of Equity Interest directly owned by GyM S.A.	74.15	%
Percentage of Equity Interest directly owned by the Borrower	N/A
Percentage of Equity Interest indirectly owned by the Borrower (through GyM S.A.)	69.45	%

GyM Construcciones y Montajes S.A.S.
Jurisdiction of incorporation	Colombia
Authorized shares	50,000
Outstanding shares	50,000
Percentage of Equity Interest directly owned by GyM S.A.	100	%
Percentage of Equity Interest directly owned by the Borrower	N/A
Percentage of Equity Interest indirectly owned by the Borrower (through GyM S.A.)	93.66	%

Inversiones y Construcciones GyM Ltda
Jurisdiction of incorporation	Chile
Authorized shares	120,144,213
Outstanding shares	120,144,213
Percentage of Equity Interest directly owned by GyM S.A.	99.95	%
Percentage of Equity Interest directly owned by the Borrower	N/A
Percentage of Equity Interest indirectly owned by the Borrower (through GyM S.A.)	93.61	%


		Sch. 4.01(c)-5		GyM Credit Agreement


Servisel S.A.
Jurisdiction of incorporation	Perú
Authorized shares	149,936
Outstanding shares	149,936
Percentage of Equity Interest directly owned by GyM S.A.	99.99	%
Percentage of Equity Interest directly owned by the Borrower	N/A
Percentage of Equity Interest indirectly owned by the Borrower (through GyM S.A.)	93.65	%

Stracon GyM Internacional S.A.C.
Jurisdiction of incorporation	Perú
Authorized shares	1,000
Outstanding shares	1,000
Percentage of Equity Interest directly owned by GyM S.A.	N/A
Percentage of Equity Interest indirectly owned by GyM S.A. (through Stracon GyM S.A.)	74	%
Percentage of Equity Interest directly owned by the Borrower	N/A
Percentage of Equity Interest indirectly owned by the Borrower (through GyM S.A.)	69.30	%

GyM Minería S.A.
Jurisdiction of incorporation	Chile
Authorized shares	62,061,912
Outstanding shares	62,061,912
Percentage of Equity Interest directly owned by GyM S.A.	N/A
Percentage of Equity Interest indirectly owned by GyM S.A. (through GyM Chile SpA and GyM Construcciones y Montajes Ltda)	97.15	%
Percentage of Equity Interest directly owned by the Borrower	N/A
Percentage of Equity Interest indirectly owned by the Borrower (through GyM S.A.)	90.99	%

GyM Construcciones y Montajes Ltda
Jurisdiction of incorporation	Chile
Authorized shares	821,102,761
Outstanding shares	821,102,761
Percentage of Equity Interest directly owned by GyM S.A.	N/A
Percentage of Equity Interest indirectly owned by GyM S.A. (through GyM Chile SpA)	97.16	%
Percentage of Equity Interest directly owned by the Borrower	N/A
Percentage of Equity Interest indirectly owned by the Borrower (through GyM S.A.)	91	%


		Sch. 4.01(c)-6		GyM Credit Agreement


Ingeniería y Construcción Vial y Vives S.A.
Jurisdiction of incorporation	Chile
Authorized shares	133,608,131
Outstanding shares	133,608,131
Percentage of Equity Interest directly owned by GyM S.A.	N/A
Percentage of Equity Interest indirectly owned by GyM S.A. (through GyM Chile SpA, GyM Construcciones y Montajes Ltda and GyM Minería S.A.)	71.89	%
Percentage of Equity Interest directly owned by the Borrower	N/A
Percentage of Equity Interest indirectly owned by the Borrower (through GyM S.A.)	67.33	%

Montajes Vial y Vives S.A.
Jurisdiction of incorporation	Chile
Authorized shares	1,352,800
Outstanding shares	1,352,800
Percentage of Equity Interest directly owned by GyM S.A.	N/A
Percentage of Equity Interest indirectly owned by GyM S.A. (through GyM Chile SpA, GyM Construcciones y Montajes Ltda, GyM Minería S.A. and Ingería y Construcciones Vial y Vives S.A.)	69.73	%
Percentage of Equity Interest directly owned by the Borrower	N/A
Percentage of Equity Interest indirectly owned by the Borrower (through GyM S.A.)	65.31	%


		Sch. 4.01(c)-7		GyM Credit Agreement

Schedule 4.01(m)

to Credit Agreement

EXISTING INDEBTEDNESS


Obligor	Credit Agreement	Principal outstanding (in U.S.$)
Graña y Montero S.A.A.	Credit agreement with Banco Continental dated September 14, 2007		1,556,210
Graña y Montero S.A.A.	Credit agreement with Banco Continental dated October 5, 2012		60,000,000
Viva GyM S.A.	Credit agreement with Banco Internacional del Perú S.A.A. dated March 22, 2012		6,649,320.60
Viva GyM S.A.	Credit agreement with Banco de Crédito del Perú dated November 28, 2012		8,058,359.32
Viva GyM S.A.	Credit agreement with BBVA Banco Continental dated September 27, 2010		6,440,881.27
Viva GyM S.A.	Credit agreement with Banco de Crédito del Perú dated September 17, 2010		5,004,786.98
Graña y Montero Petrolera S.A.	Credit agreement with Citibank, N.A. dated September 19, 2008		27,125
Graña y Montero Petrolera S.A.	Credit agreement with BBVA Banco Continental dated July 26, 2010		750,000


		Sch. 4.01(m)-1		GyM Credit Agreement

Schedule 4.01(o)

to Credit Agreement

EXISTING LIENS


Grantor	Lienholder	Secured principal amount (in U.S.$)		Asset

Viva GyM S.A.	Banco Internacional del Perú S.A.A. - Interbank		6,300,000	Plot of land for project located on Av. 10 de junio, Mz. 20-21 Sublots 2B and 2C of Sublot 2, Urb. San José or Coronel - San Martín de Porres - Partida 12817837

Viva GyM S.A.	Banco de Crédito del Perú - BCP		8,000,000	• Plot of land for mall located in lot 1 of Mz. H, Urb. Los Parques de El Agustino - Partida 12219229; • Plot of land and building for mall - Partida 12219229; and • Collection Rights, cash flow and account balance

Viva GyM S.A.	Banco Continental - BBVA		6,261,250.47	Plot of land located in Fundo Chacra Cerro Comas area - Partida 12546693

Viva GyM S.A.	Banco de Crédito del Perú - BCP		5,003,878.98	• Real property located on Calle Uno, Mz. I Lots 1 and 2, Urb. Los Parques El Agustino - Partida 12836849; • Cash flows from disbursements under mortgage loans with BCP and other banks and from the sale of real estate units

Graña y Montero Petrolera S.A.	Citibank N.A.		28,000,000	• Cash flows from the sale of gas to eligible off-takers; • Equipment and machinery from the gas fractioning plant located at Km 45 of the Pariñas highway, district of La Brea y Pariñas, Talara, Piura, Perú, Partida 11006191, Predial Registry of the I Registral Zone, Sede Piura, Sullana Registral Office; • Land where the gas fractioning plant is located, located at Km 45 of the Pariñas highway, district of La Brea y Pariñas, Talara, Piura, Perú, Partida 11006191, Predial Registry of the I Registral Zone, Sede Piura, Sullana Registral Office; and • Collection rights under the sale of gas agreements with eligible off-takers*


		Sch. 4.01(o)-1		GyM Credit Agreement


Grantor	Lienholder	Secured principal amount (in U.S.$)		Asset

Graña y Montero Petrolera S.A.	BBVA Banco Continental		5,000,000	• Collection rights under oil services agreements of U.S.$181,652 per month

Graña y Montero Petrolera S.A. (through its participation in the Consorcio Terminales consortium with equal partner Oiltanking Perú S.A.C.)	Banco de Crédito del Perú		6,243,528	Collection rights of Consorcio Terminales from Petróleos del Perú - Petroperú S.A. resulting from the investments made by it in the north and south terminals of Petróleos del Perú - Petroperú S.A.

After the Effective Date, any such Liens on an asset of Graña y Montero Petrolera S.A. granted in favor of Citibank N.A. may be amended to either assign in trust the same asset currently subject to the Lien as additional security for the same obligation, or to change the form of security arrangement currently being used to an assignment in trust of the same asset currently subject to the Lien, in both cases without increasing the principal amount secured by the Lien or changing any direct or contingent obligor.


		Sch. 4.01(o)-2		GyM Credit Agreement

Schedule 4.01(aa)

to Credit Agreement

LABOR MATTERS

None.


		Sch. 4.01(aa)-1		GyM Credit Agreement

Schedule 4.01(dd)

to Credit Agreement

CALCULATION OF CONSOLIDATED EBITDA


2012 Consolidated Financial Statements
	2012 EBITDA		EBITDA %
Graña y Montero S.A.A.	U.S.$	772,665.89

GyM S.A.	S/.	339,839.38		44	%
Graña y Montero Petrolera S.A.	S/.	138,466.00		18	%
Viva GyM S.A.	S/.	70,781.78		9	%
Concar S.A.	S/.	23,394.00		3	%

Total EBITDA Guarantors	S/.	572,481.16		74.1	%


Guarantor’s Main Subsidiaries	2012 EBITDA		% of each Guarantor’s EBITDA			% of Guarantors’ total EBITDA
Stracon GyM S.A.	S/.	27,530.46		8.10	%		4.81	%
Inmobiliaria Almonte S.A.C.	S/.	21,217.00		29.98	%		3.71	%

Total	S/.	48,747.46					8.52	%


		Sch. 4.01(dd)-1		GyM Credit Agreement

Schedule 5.02(f)

to Credit Agreement

INVESTMENTS

GyM Ferrovías S.A. (Metro de Lima Project)

The estimated investment in GyM Ferrovías S.A. amounts to S/. 835 million (approximately U.S.$323.6 million) and comprises mainly: (i) the acquisition of rolling stock (€126.38 million, or approximately S/. 420 million), (ii) the construction of the maintenance workshop (S/. 60 million) and (iii) start-up and working capital expenses, operation and debt service reserve accounts, and expenses related to the financing of the project.

As of December 2012, S/. 389 million have already been invested in this project.


		Sch. 5.02(f)-1		GyM Credit Agreement

Exhibit A-1

to Credit Agreement

FORM OF PROMISSORY NOTE

Amount: US$

Place and Date Issued: Lima, , 2013

Date of Maturity:

We, GRAÑA Y MONTERO S.A.A. , (the “ Debtor ”) a publicly held corporation duly organized and existing under the laws of the Republic of Peru, holder of Tax ID Number (RUC) 20332600592, registered under Card 11028652 of Registry of Companies in and for Lima, with principal place of business at Av. Paseo de la República No. 4675, District of Surquillo, Province and Department of Lima, acting by and through José GRAÑA MIRÓ QUESADA, holder of National Identity Card (DNI) 08266298, and Mario ALVARADO PFLUCKER, holder of National Identity Card (DNI) 08216132, as per Powers of Attorney registered under Entry C00041, Card 11028652 of the Registry of Companies in and for Lima, commit ourselves to unconditionally pay, in accordance with the provisions established in this promissory note (the “Promissory Note”) on the date of maturity indicated herein, by means of immediately available funds which are of the same foreign currency indicated in the amount of this Promissory Note, to the order of [ Name of Bank ] (the “Creditor”) or to whom this Promissory Note is endorsed or transferred via any legal means, through a deposit to the account of BBVA BANCOMER S.A., Multiple Banking Institution, BBVA Bancomer Financial Group in its capacity as administrative agent (“Administrative Agent”) opened at JPMorgan Chase New York, 270 Park Avenue, New York 10017, USA, Account Number 400001942, ABA # 021 000 021, name of the account: BBVA Bancomer, S.A., México D.F., Reference: GRAÑA Y MONTERO , Attention: Concepción ZÚÑIGA, or another account designated by the Creditor, or at the place where this Promissory Note is cashed, before 11 o’clock (New York City time, United States of America) the amount of US$

( and 00/100 United States Dollars) of which US$ ( and 0/100 United States Dollars) correspond to the principal amount due and payable by the Debtor to the Creditor and US$ ( and 00/100 United States Dollars) corresponding to compensatory and default interests accrued up to the date of maturity hereof and any other amount due and payable according to this Promissory Note and the Credit Agreement (as defined herein).

These amounts are due and payable by the Debtor in favor of the Creditor in accordance with obligations agreed on by virtue of the Credit Agreement entered into by and between the Debtor, the Administrative Agent, and the Creditor, among others, including the creditors which are party to the Credit Agreement from time to time, on [ ] [ ], 2013, to the extent said document is amended from time to time (the “Credit Agreement”) and the Promissory Note will be filled in, pursuant to the provisions of Law 27287, Section 10 - Securities Act (“Securities Act”) in accordance with the document named “ Instructions for Completing the Promissory Note ” signed by the Debtor and the Creditor on [ ] [ ] 2013, with the amount the Debtor owes to the Creditor at the time of completion of the Promissory Note.


		A-1-1		GyM Credit Agreement

The Debtor unconditionally undertakes to pay the Creditor from the date of maturity hereof and until the date that the payment is completed, the corresponding compensatory interests at an annual nominal rate equivalent to LIBOR rate plus an annual nominal margin of 4.25% (the “Applicable Margin”).

Moreover, the Debtor undertakes to pay default interests in addition to the compensatory interests. The payment of the default interests begins from the day after the date of maturity of this Promissory Note and until the date that the total payment is carried out, at a rate equivalent to the compensatory interests plus two annual nominal percentage points (2%). The default interest shall be automatically applied the day after the date of maturity of this Promissory Note, with no need for previous requirements or notifices on the part of the Creditor.

Interests accrued in accordance with this Promissory Note shall be calculated with a three hundred and sixty-day (360) year as its base.

LIBOR shall mean the annual rate determined on the basis of the deposit rate for Dollars for a period equal to the corresponding period of annual interest counted from the first day of said period of interest which appears on the LIBOR01 page published by Reuters at 11:00 am (London time), two (2) Business Days before the interest period. If the indicated rate does not appear on the LIBOR01 page which Reuters publishes (or in some other way on the page) the “LIBOR Rate” shall be determined according to any other comparable service available to the public for checking Eurodollar rates, to be selected by the Administrative Agent; or, if said services are not available, according to the rates offered to BBVA BANCOMER for Dollar deposits at, or close to, 11 am (New York time), two (2) Business Days before the beginning of the relevant interest period, in the Eurodollar interbank market, where Eurodollars, foreign currencies, and exchange operations are carried out for the first day of the relevant interest period for the number of days included. Notwithstanding prior discussion, if, at any moment, the relevant rate according to this definition is below zero, the “LIBOR Rate” shall be equivalent to zero.

As regards this Promissory Note, “Business Day” means any day on which commercial banks are not authorized or obliged by law to close in New York - State of New York - United States of America; Federal District of Mexico, Mexico; or Lima, Peru, or when said term refers to LIBOR, the term “Business Day” shall also exclude any day on which commercial banks are not open for operations with United States of America Dollar deposits in the interbank market of London, England.

All payments to be made in accordance with this Promissory Note shall have to be made free of and without deduction of present or future taxes, including deductions or withholding from outside parties. If we are legally obliged to carry out any withholding or deduction, we shall pay the necessary additional amounts so that the net amount received by the Creditor is equivalent to what it would have received if said withholding or deductions had not been carried out, or we shall take responsibility for the payment of said taxes and shall pay the applicable amounts directly to the Peruvian tax authority when they are taxable, so that the net amount received by


		A-1-2		GyM Credit Agreement

the Creditor is equal to what it would have received if the law had not obligated us to carry out the withholding or deductions. We are also obliged to pay all the commissions and expenses which the Creditor incurs or notifies the Debtor of in accordance with what the Credit Agreement stipulates.

Likewise, it is established that the obligations established in this Promissory Note shall not be void even when this Promissory Note is not adhered to by the Creditor, thus making this agreement a contract which does not adhere to what is stipulated in Section 1233 of the Civil Code.

Applied to what is provided for in Section 49 of Securities Act, the Debtor expressly authorizes the Creditor to extend the date of maturity of this Promissory Note, without requiring the express assent of the Debtor. It will be sufficient to note the extension in this document without the necessity of the Debtor assenting to it in order to make it valid. Without prejudice to the foregoing, the Creditor shall have to inform the Debtor regarding the new date of maturity in due time and in writing, and not meeting this requirement shall not harm the validity, effectiveness, or executability of the Promissory Note or of its extension.

The principal of this Promissory Note and/or the compensatory and/or default interests, as well as any other amount due and payable by virtue of this Promissory Note, shall be paid by the Debtor in the same foreign currency which the funds transfer which is established by the Promissory Note is made in, in accordance with Section 50 of the Securities Act, thus making this contractual agreement not adhere to Section 1237 of the Civil Code.

On the supposition that, in the future, some regulation or ruling comes into existence which establishes that obligations contractually agreed upon to be paid in a foreign currency can no longer be paid in said currency, the Debtor shall not be exempt from the payment of debts contained in this Promissory Note under any circumstance, and it shall have to pay said debts in the domestic currency, in such a way that the funds received by the Creditor shall be enough to acquire the same amount of foreign currency which the debt obligation due in the contract stipulated in the foreign currency, thus avoiding that the Creditor suffer exchange losses.

The Debtor unconditionally undertakes to pay collection expenses and notarial fees to the Creditor, as well as any other cost, commissions, in and out of court costs and any other relevant expenses (including attorney’s and advisory fees) and/or any other amount due and payable to the Creditor in relation to the Promissory Note, being the Debtor obliged to pay the same compensatory and default interests agreed upon in this Promissory Note on said expenses, from the day after its maturity until the full payment of the amount spent by the Creditor.

In accordance with Section 52 of the Securities Act, this Promissory Note does not require to be protested. Nevertheless, the holder is empowered to protest it if it deems it necessary; in which case, we shall bear the expenses incur in such notarial proceeding or in the corresponding formal proceeding to be performed in substitution thereof. Protest maybe carried out through notice addressed to the domicile of the Debtor which is specified in this Promissory Note.

This Promissory Note is subject to the rules of the Securities Act and other regulations and laws applicable in the Republic of Peru.


		A-1-3		GyM Credit Agreement

Any reference to the Creditor in the Promissory Note shall be understood to apply to any holder of the security, whether the title is acquired through endorsement or any other legal means. Through this agreement, the Debtor declares that it has received a copy of this Promissory Note and that it is completely and entirely satisfied with it. This Promissory Note shall be canceled and given back after it has been paid in full.

We are entirely subject to the jurisdiction and competence of the judges and tribunals of the Judicial District of Lima Centro, waiving the jurisdiction of our domicile, and we point out that our domicile for the purposes of this agreement is the one specified in this Promissory Note, and it is the place where all communications and notices must be directed which are diverted from said domicile.

This Promissory Note consists of ( ) pages, which make up a single legal instrument.

Place and date of issue: Lima, [ ] [ ] 2013

GRAÑA Y MONTERO S.A.A.

Tax ID Number (RUC) N° 20332600592

Address: Av. Paseo de la República N° 4675, District of Surquillo, Province and Department of Lima

Name of representative: José GRAÑA MIRÓ QUESADA

National Identity Card (DNI): 08266298

Position: Attorney-in-Fact

Power of Attorney registered under Entry C00041, Card 11028652 of the Registry of Companies in and for Lima

GRAÑA Y MONTERO S.A.A.

Tax ID Number (RUC) N° 20332600592

Address: Av. Paseo de la República N° 4675, District of Surquillo, Province and Department of Lima

Name of representative: Mario ALVARADO PFLUCKER

National Identity Card (DNI): 08216132

Position: Attorney-in-Fact

Power of Attorney registered under Entry C00041, Card 11028652 of the Registry of Companies in and for Lima


		A-1-4		GyM Credit Agreement

GUARANTEE

We, GYM S.A. , holder of Tax ID Number (RUC) N° 20100154057, with principal place of business at Av. Paseo de la República N° 4675, District of Surquillo, Province and Department of Lima, acting by and through Mario ALVARADO PFLUCKER, holder of National Identity Card (DNI) 08216132, and Juan Manuel LÁMBARRI HIERRO, holder of National Identity Card (DNI) 08249293, as per Power of Attorney registered under Entry C00655, Card 11006796 of the Registry of Companies in and for Lima, pursuant to the provisions set forth in the Securities Act, Law 27287, hereby undertake to act as unconditional and irrevocable guarantors of this Promissory Note for all the obligations therein specified and arising therefrom, provided said obligations have not been fully extinguished, it being understood that this guarantor will be subject to all the terms and conditions of the Promissory Note, without any reserve or limitation whatsoever. Consequently, the guarantor shall likewise assume the same obligations as GRAÑA Y MONTERO S.A.A .

It is expressly established that our domicile is that indicated herein. All communications and/or notices arising from this Promissory Note shall be addressed to the domicile set forth hereunder. If the original holder of the note or its potential endorsees file any legal action in order to cash the amount of this Promissory Note, we shall expressly submit ourselves to the jurisdiction and venue of the judges and courts of the Judicial District of Lima Centro, waiving the jurisdiction of our domicile and resorting for the purposes hereof to the domicile mentioned hereunder.

We hereby declare that we are fully empowered to sign this Promissory Note as guarantors.

Lima, [ ] [ ] 2013

GYM S.A.

Tax ID Number (RUC) N° 20100154057

Address: Av. Paseo de la República N° 4675, District of Surquillo, Province and Department of Lima

Name of representative: Mario ALVARADO PFLUCKER

National Identity Card (DNI): 08216132

Position: Attorney-in-Fact

Power of Attorney registered under Entry C00655, Card 11006796 of the Registry of Companies in and for Lima.

GYM S.A.

Tax ID Number (RUC) N° 20100154057

Address: Av. Paseo de la República N° 4675, District of Surquillo, Province and Department of Lima.

Name of representative: Juan Manuel LÁMBARRI HIERRO

National Identity Card (DNI): 08249293

Position: Attorney-in-Fact

Power of Attorney registered under Entry C00655, Card 11006796 of the Registry of Companies in and for Lima.


		A-1-5		GyM Credit Agreement

GUARANTEE

We, GRAÑA Y MONTERO PETROLERA S.A. , holder of Tax ID Number (RUC) N° 20100153832, with principal place of business at Av. Paseo de la República N° 4675, District of Surquillo, Province and Department of Lima, acting by and through Mario ALVARADO PFLUCKER, holder of National Identity Card (DNI) 08216132, and Luis Díaz Olivero, holder of National Identity Card (DNI) 07872756, as per Powers of Attorney registered under Entries C00025 and C00042, respectively of Card 00636592 of the Registry of Companies in and for Lima, pursuant to the provisions set forth in the Securities Act, Law 27287, hereby undertake to act as unconditional and irrevocable guarantors of this Promissory Note for all the obligations therein specified and arising therefrom, provided said obligations have not been fully extinguished, it being understood that this guarantor will be subject to all the terms and conditions of the Promissory Note, without any reserve or limitation whatsoever. Consequently, the guarantor shall likewise assume the same obligations as GRAÑA Y MONTERO S.A.A .

It is expressly established that our domicile is the one set forth herein. All communications and/or notices arising from this Promissory Note shall be addressed to the domicile set forth hereunder. If the original holder of the note or its potential endorsees file any legal action in order to cash the amount of this Promissory Note, we shall expressly submit ourselves to the jurisdiction and venue of the judges and courts of the Judicial District of Lima Centro, waiving the jurisdiction of our domicile and resorting for the purposes hereof to the domicile mentioned hereunder.

We hereby declare that we are fully empowered to sign this Promissory Note as guarantors.

Lima, [ ] [ ] 2013

GRAÑA Y MONTERO PETROLERA S.A.

Tax ID Number (RUC) N° 20100153832

Address: Av. Paseo de la República N° 4675, District of Surquillo, Province and Department of Lima.

Name of representative: Mario ALVARADO PFLUCKER

National Identity Card (DNI): 08216132

Position: Attorney-in-Fact

Power of Attorney registered under Entry C00025, Card 00636592 of the Registry of Companies in and for Lima.

GRAÑA Y MONTERO PETROLERA S.A.

Tax ID Number (RUC) N° 20100153832

Address: Av. Paseo de la República N° 4675, District of Surquillo, Province and Department of Lima.

Name of representative: Luis DÍAZ OLIVERO

National Identity Card (DNI): 07872756

Position: Attorney-in-Fact

Power of Attorney registered under Entry C00042, Card 00636592 of the Registry of Companies in and for Lima.


		A-1-6		GyM Credit Agreement

GUARANTEE

We, CONCAR S.A. , holder of Tax ID Number (RUC) N° 20343443961, with principal place of business at Calle Schell N° 459, District of Miraflores, Province and Department of Lima, acting by and through Mario ALVARADO PFLUCKER, holder of National Identity Card (DNI) 08216132, and Jaime TARGARONA ARATA, holder of National Identity Card (DNI) 10492436, as per Power of Attorney registered under Entry C00019, Card 03021446 of the Registry of Companies in and for Lima, pursuant to the provisions set forth in the Securities Act, Law 27287, hereby undertake to act as unconditional and irrevocable guarantors of this Promissory Note for all the obligations therein specified and arising therefrom, provided said obligations have not been fully extinguished, it being understood that this guarantor will be subject to all the terms and conditions of the Promissory Note, without any reserve or limitation whatsoever. Consequently, the guarantor shall likewise assume the same obligations as GRAÑA Y MONTERO S.A.A .

We hereby declare that we are fully empowered to subscribe this Promissory Note as guarantors.

Lima, [ ] [ ] 2013

CONCAR S.A.

Tax ID Number (RUC) N° 20343443961

Address: Calle Schell N° 459, District of Miraflores, Province and Department of Lima.

Name of representative: Mario ALVARADO PFLUCKER

National Identity Card (DNI): 08216132

Position: Attorney-in-Fact

Power of Attorney registered under Entry C00019, Card 03021446 of the Registry of Companies in and for Lima.

CONCAR S.A.

Tax ID Number (RUC) N° 20343443961

Address: Calle Schell N° 459, District of Miraflores, Province and Department of Lima.

Name of representative: Jaime TARGARON AARATA

National Identity Card (DNI): 10492436

Position: Attorney-in-Fact

Power of Attorney registered under Entry C00019, Card 03021446 of the Registry of Companies in and for Lima.


		A-1-7		GyM Credit Agreement

GUARANTEE

We, VIVA GYM S.A ., holder of Tax ID Number (RUC) N° 20493040643, with principal place of business at Av. Paseo de la República N° 4675, District of Surquillo, Province and Department of Lima, acting by and through Mario ALVARADO PFLUCKER, holder of National Identity Card (DNI) 08216132, and Rolando PONCE VERGARA, holder of National Identity Card (DNI) 08187579, as per Power of Attorney registered under Entry C00023, Card 12169100 of the Registry of Companies in and for Lima, pursuant to the provisions set forth in the Securities Act, Law 27287, hereby undertake to act as unconditional and irrevocable guarantors of this Promissory Note for all the obligations therein specified and arising therefrom, provided said obligations have not been fully extinguished, it being understood that this guarantor will be subject to all the terms and conditions of the Promissory Note, without any reserve or limitation whatsoever. Consequently, the guarantor shall likewise assume the same obligations as GRAÑA Y MONTERO S.A.A .

We hereby declare that we are fully empowered to subscribe this Promissory Note as guarantors.

Lima, [ ] [ ] 2013

VIVA GYM S.A.

Tax ID Number (RUC) N° 20493040643

Address: Av. Paseo de la República N° 4675, District of Surquillo, Province and Department of Lima.

Name of representative: Mario ALVARADO PFLUCKER

National Identity Card (DNI): 08216132

Position: Attorney-in-Fact

Power of Attorney registered under Entry C00023, Card 12169100 of the Registry of Companies in and for Lima.

VIVA GYM S.A.

Tax ID Number (RUC) N° 20493040643

Address: Av. Paseo de la República N° 4675, District of Surquillo, Province and Department of Lima.

Name of representative: Rolando PONCE VERGARA

National Identity Card (DNI): 08187579

Position: Attorney-in-Fact

Power of Attorney registered under Entry C00023, Card 12169100 of the Registry of Companies in and for Lima.


		A-1-8		GyM Credit Agreement

Exhibit A-2

to Credit Agreement

FORM OF NOTE FILLING AGREEMENT

INSTRUCTIONS FOR COMPLETING THE PROMISSORY NOTE

By means hereof, pursuant to provisions of Section 10 of Law 27287 - Securities Act, GRAÑA Y MONTERO S.A.A. (the “Debtor”) a publicly held corporation duly organized and existing under the laws of the Republic of Peru, holder of Tax ID Number (RUC) 20332600592, registered under Card 11028652 of the Registry of Companies in and for Lima, with principal place of business at Av. Paseo de la República 4675, District of Surquillo, Province and Department of Lima, acting by and through José GRAÑA MIRÓ QUESADA, holder of National Identity Card (DNI) 08266298, and Mario ALVARADO PFLUCKER, holder of National Identity Card (DNI) 08216132, as per powers of attorney registered under Entry C00041, Card 11028652 of the Registry of Companies in and for Lima, and [ Name of Bank ] (the “ Creditor ”) agree that the Creditor may complete the amount and date of maturity of the incomplete promissory note issued by the Debtor in favor of the Creditor on[ ] [ ] 2013 (the “ Promissory Note ”) in accordance with the terms and conditions of the Credit Agreement entered into by and between the Debtor, the Administrative Agent and the Creditor, among other parties, including the creditors that occasionally be part of it and other creditors on [ ] [ ] 2013, as amended from time to time (the “ Credit Agreement ”) pursuant to the instructions detailed herein below:

1.	The promissory note shall be completed by the Creditor when it fills the date of maturity after the acceleration or noncompliance with the Credit Agreement (the “Date of Maturity”) and the amount of the applicable obligations as to the Date of Maturity.

The amount to be incorporated in the Promissory Note shall be that resulting from the settlement made by the Creditor of the total sum of the debtor’s debt before the Creditor for the Principal, the default and compensatory interests, commissions, expenses and any other amount the debtor has payable to the Creditor for any the concept, pursuant to the Credit Agreement, as to the Date of Maturity (the “ Amount ”).

Upon performance of the settlement referred to in the preceding paragraph by the Creditor and upon determination of the Amount as to the Date of Maturity, it shall complete the Promissory Note with the referred amounts.

3.	In order to complete the Promissory Note, the Creditor shall neither require the approval or consent of the Debtor or any third party, nor resolution or judgment issued by a judge, court of administrative authority.

If the Promissory Note is transferred by the Creditor to a third party before being completed, said third party shall become subject to the instructions applicable to the Creditor herein established. The Debtor expressly acknowledges the mechanisms of protection granted by the law for the issue and acceptance of an incomplete promissory note. Without prejudice to the foregoing, the Promissory Note and the rights derived therefrom shall only be assigned with the rights derived from Credit Agreement.

5.	GyM S.A., Graña y Montero Petrolera S.A., Concar S.A. and Viva GyM S.A. participates in this action as guarantors expressing their conformity with the instructions for completing the promissory note contained in this agreement.


		A-2-1		GyM Credit Agreement

This document is governed by the laws of the Republic of Peru and the Parties submit themselves to the jurisdiction and competence of the judges and courts of the judicial District of Lima Centro.

This document is signed by the Debtor on [ ] [ ] 2013.

GRAÑA Y MONTERO S.A.A.

Tax ID Number (RUC) N° 20332600592

Address: Av. Paseo de la República N° 4675, District of Surquillo, Province and Department of Lima.

Name of representative: José GRAÑA MIRÓ QUESADA

National Identity Card (DNI): 08266298

Position: Attorney-in-Fact

Power of Attorney registered under Entry C00041, Card 11028652 of the Registry of Companies in and for Lima.

GRAÑA Y MONTERO S.A.A.

Tax ID Number (RUC) N° 20332600592

Address: Av. Paseo de la República N° 4675, District of Surquillo, Province and Department of Lima

Name of representative: Mario ALVARADO PFLUCKER

National Identity Card (DNI): 08216132

Position: Attorney-in-Fact

Power of Attorney registered under Entry C00041, Card 11028652 of the Registry of Companies in and for Lima

Signed by the Creditors

[ ]


		A-2-2		GyM Credit Agreement

Signed by the Guarantors

GYM S.A.

Tax ID Number (RUC) N° 20100154057

Address: Av. Paseo de la República N° 4675, District of Surquillo, Province and Department of Lima.

Name of representative: Mario ALVARADO PFLUCKER

National Identity Card (DNI): 08216132

Position: Attorney-in-Fact

Power of Attorney registered under Entry C00655, Card 11006796 of the Registry of Companies in and for Lima

GYM S.A.

Tax ID Number (RUC) N° 20100154057

Address: Av. Paseo de la República N° 4675, District of Surquillo, Province and Department of Lima.

Name of representative: Juan Manuel LÁMBARRI HIERRO

National Identity Card (DNI): 08249293

Position: Attorney-in-Fact

Power of Attorney registered under Entry C00655, Card 11006796 of the Registry of Companies in and for Lima.

GRAÑA Y MONTERO PETROLERA S.A.

Tax ID Number (RUC) N° 20100153832

Address: Av. Paseo de la República N° 4675, District of Surquillo, Province and Department of Lima.

Name of representative: Mario Alvarado Pflucker

National Identity Card (DNI): 08216132

Position: Attorney-in-Fact

Power of Attorney registered under Entry C00025, Card 00636592 of the Registry of Companies in and for Lima.


		A-2-3		GyM Credit Agreement

GRAÑA Y MONTERO PETROLERA S.A.

Tax ID Number (RUC) N° 20100153832

Address: Av. Paseo de la República N° 4675, District of Surquillo, Province and Department of Lima.

Name of representative: Luis DÍAZ OLIVERO

National Identity Card (DNI): 07872756

Position: Attorney-in-Fact

Power of Attorney registered under Entry C00042, Card 00636592 of the Registry of Companies in and for Lima.

CONCAR S.A.

Tax ID Number (RUC) N° 20343443961

Address: Calle Schell N° 459, District of Miraflores, Province and Department of Lima.

Name of representative: Mario ALVARADO PFLUCKER

National Identity Card (DNI): 08216132

Position: Attorney-in-Fact

Power of Attorney registered under Entry C00019, Card 03021446 of the Registry of Companies in and for Lima.

CONCAR S.A.

Tax ID Number (RUC) N° 20343443961

Address: Calle Schell N° 459, District of Miraflores, Province and Department of Lima.

Name of representative: Jaime TARGARONA ARATA

National Identity Card (DNI): 10492436

Position: Attorney-in-Fact

Power of Attorney registered under Entry C00019, Card 03021446 of the Registry of Companies in and for Lima.

VIVA GYM S.A.

Tax ID Number (RUC) N° 20493040643

Address: Av. Paseo de la República N° 4675, District of Surquillo, Province and Department of Lima.

Name of representative: Mario ALVARADO PFLUCKER

National Identity Card (DNI): 08216132

Position: Attorney-in-Fact

Power of Attorney registered under Entry C00023, Card 12169100 of the Registry of Companies in and for Lima.


		A-2-4		GyM Credit Agreement

VIVA GYM S.A.

Tax ID Number (RUC) N° 20493040643

Address: Av. Paseo de la República N° 4675, District of Surquillo, Province and Department of Lima.

Name of representative: Rolando PONCE VERGARA

National Identity Card (DNI): 08187579

Position: Attorney-in-Fact

Power of Attorney registered under Entry C00023, Card 12169100 of the Registry of Companies in and for Lima.

GVDS- GV/MCP-jcj

10749K13


		A-2-5		GyM Credit Agreement

Exhibit B

to Credit Agreement

FORM OF NOTICE OF BORROWING

BBVA Bancomer S.A., Institución de

Banca Multiple, Grupo Financiero BBVA Bancomer,

as Administrative Agent for the Lenders party

to the Credit Agreement

referred to below


[ — ]		[ Date ]

Attention: [ — ]

Ladies and Gentlemen:

The undersigned, Graña y Montero S.A.A., refers to the Credit Agreement, dated as of February 27, 2013 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”; terms defined therein being used herein as therein defined), among the undersigned, certain Lenders parties thereto, BBVA Continental, as Collateral Agent for the Secured Parties, and BBVA Bancomer S.A., Institución de Banca Multiple, Grupo Financiero BBVA Bancomer, as Administrative Agent for the Lenders, and hereby gives you notice, irrevocably, pursuant to Section 2.02 of the Credit Agreement that the undersigned hereby requests a Borrowing under the Credit Agreement, and in that connection sets forth below the information relating to such Borrowing (the “ Proposed Borrowing ”) as required by 1)a)i) of the Credit Agreement:

(a) The Business Day of the Proposed Borrowing is [ — ] , 20 [ — ] .

(b) The aggregate amount of the Proposed Borrowing is U.S.$ [ — ] .

The undersigned hereby certifies that the following statements are true on the date hereof, and will be true on the date of the Proposed Borrowing:

(i) the representations and warranties contained in Section 4.01 of the Credit Agreement are correct in all material respects (unless any such representation or warranty is qualified by or subject to a materiality qualification (including “Material Adverse Effect” or similar term of qualification), such representation or warranty shall be correct) on and as of the date of such Proposed Borrowing, before and after giving effect to such Proposed Borrowing and to the application of the proceeds therefrom, as though made on and as of such date (or, if stated to have been made as of an earlier date, were true and correct (in all material respects, as the case may be) as of such earlier date); and

(ii) no event has occurred and is continuing, or would result from such Proposed Borrowing or from the application of the proceeds therefrom, that constitutes a Default.


		B-1		GyM Credit Agreement


Very truly yours,

GRAÑA Y MONTERO S.A.A.

By
		Name:
		Title:


		B-2		GyM Credit Agreement

Exhibit C

to Credit Agreement

FORM OF ASSIGNMENT AND ACCEPTANCE

Reference is made to the Credit Agreement, dated as of February 27, 2013 (as amended or modified from time to time, the “ Credit Agreement ” ; terms defined therein being used herein as therein defined), among Graña y Montero S.A.A., a sociedad anónima abierta organized under the laws of Perú (the “ Borrower ”), the Lenders, BBVA Continental, as Collateral Agent for the Secured Parties, and BBVA Bancomer S.A., Institución de Banca Multiple, Grupo Financiero BBVA Bancomer, as Administrative Agent for the Lenders.

The “Assignor” and the “Assignee” referred to on Schedule 1 agree as follows:

1. The Assignor hereby sells and assigns to the Assignee, and the Assignee hereby purchases and assumes from the Assignor, an interest in and to the Assignor’s rights and obligations under the Credit Agreement as of the date hereof equal to the percentage interest specified on Schedule 1 of all outstanding rights and obligations under the Credit Agreement. After giving effect to such sale and assignment, the Assignee’s Commitment and the amount of the Advances owing to the Assignee will be as set forth on Schedule 1.

2. The Assignor (i) represents and warrants that it is the legal and beneficial owner of the interest being assigned by it hereunder and that such interest is free and clear of any adverse claim, (ii) makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with the Credit Agreement or the execution, legality, validity, enforceability, genuineness, sufficiency or value of [ , or the perfection or priority of any lien or security interest created or purported to be created under or in connection with, ] the Credit Agreement or any other instrument or document furnished pursuant thereto, (iii) makes no representation or warranty and assumes no responsibility with respect to the financial condition of the Borrower or any other Loan Party or the performance or observance by any Loan Party of any of its obligations under any Loan Document or any other instrument or document furnished pursuant thereto and (iv) attaches the Note held by the Assignor and requests that the Administrative Agent exchange such Note for a new Note payable to the order of the Assignee or new Notes payable to the order of the Assignee and the Assignor, respectively, as specified on Schedule 1.

3. The Assignee (i) confirms that it has received a copy of the Credit Agreement, together with copies of the financial statements referred to in Section 4.01 thereof and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Acceptance, (ii) agrees that it will, independently and without reliance upon the Administrative Agent, the Assignor or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement, (iii) confirms that it is a sophisticated investor which has the ability to evaluate the merits and risks of an investment in the Credit Agreement,


		C-1		GyM Credit Agreement

including the financial and political conditions in Perú as of the date hereof, and the ability to assume the economic risks involved in such an investment and (iv) agrees that it will perform in accordance with their terms all of the obligations that by the terms of the Credit Agreement are required to be performed by it as a Lender.

4. Following the execution of this Assignment and Acceptance, it will be delivered to the Administrative Agent for acceptance and recording by the Administrative Agent. The effective date for this Assignment and Acceptance (the “ Effective Date ”) shall be the date of acceptance hereof by the Administrative Agent, unless otherwise specified on Schedule 1.

5. Upon such acceptance and recording by the Administrative Agent, as of the Effective Date, (i) the Assignee shall be a party to the Credit Agreement and, to the extent provided in this Assignment and Acceptance, have the rights and obligations of a Lender thereunder and (ii) the Assignor shall, to the extent provided in this Assignment and Acceptance, relinquish its rights and be released from its obligations under the Credit Agreement.

6. Upon such acceptance and recording by the Administrative Agent, from and after the Effective Date, the Administrative Agent shall make all payments under the Credit Agreement and the other Loan Documents in respect of the interest assigned hereby (including all payments of principal, interest and facility fees with respect thereto) to the Assignee. The Assignor and Assignee shall make all appropriate adjustments in payments under the Credit Agreement and the other Loan Documents for periods prior to the Effective Date directly between themselves.

7. This Assignment and Acceptance shall be governed by, and construed in accordance with, the laws of the State of New York.

8. This Assignment and Acceptance may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of Schedule 1 to this Assignment and Acceptance by telecopier or other electronic communication shall be effective as delivery of a manually executed counterpart of this Assignment and Acceptance.

[ Signature Pages Follow. ]


		C-2		GyM Credit Agreement

IN WITNESS WHEREOF, the Assignor and the Assignee have caused Schedule 1 to be executed by their officers thereunto duly authorized as of the date specified thereon.

Schedule 1

Assignment and Acceptance


Percentage interest assigned:				[ — ] %

Assignee’s Commitment:				U.S.$ [ — ]

Aggregate outstanding principal amount of Advances assigned:				U.S.$ [ — ]

Effective Date ¹ : [ — ] , 20 [ — ]


[ NAME OF ASSIGNOR ] , as Assignor

By
		Name:
		Title:

Dated: [ — ] , 20 [ — ]

[ NAME OF ASSIGNEE ] , as Assignee

By
		Name:
		Title:

Domestic Lending Office:
		[ Address ]

LIBO Rate Lending Office:
		[ Address ]

Accepted this [ — ] day of [ — ] , 20 [ — ] :

BBVA BANCOMER S.A., INSTITUCIÓN

DE BANCA MULTIPLE,

GRUPO FINANCIERO BBVA BANCOMER,

as Administrative Agent


By
		Name:
		Title:

¹	NTD: This date should be no earlier than five Business Days after the delivery of this Assignment and Acceptance to the Agent.


		C-3		GyM Credit Agreement

Exhibit D

to Credit Agreement

You are hereby requested in your capacity as Notary Public to enter into your Registry of Notarially Recorded Instruments one evidencing a Security Interest Agreement Over Account Balance (hereinafter, the “ Collateral Agreement ”) entered into by and between:

In the capacity of Pledgor:

•

GRAÑA Y MONTERO S.A.A. , holder of Tax ID Number (RUC) 20332600592, with principal place of business at Av. Paseo de la República 4675, District of Surquillo, Province and Department of Lima, acting by and through José GRAÑA MIRÓ QUESADA, holder of National Identity Card (DNI) 08266298, and Mario ALVARADO PFLUCKER, holder of National Identity Card (DNI) 08216132, as per powers of attorney registered in Card 11028652 of Registry of Companies in and for Lima (hereinafter, the “ Pledgor ”); and

•

BBVA BANCO CONTINENTAL , holder of Tax ID Number (RUC) 20100130204, with principal place of business at Av. República de Panamá 3055, District of San Isidro ,Province and Department of Lima, acting by and through Guillermo José MONJARAZ PERALTA, holder of National Identity Card (DNI) 09397811, and Jorge Moisés YATACO HUAMÁN, holder of National Identity Card (DNI) 40972909, as per powers of attorney registered in Entries C00332 and C00368, respectively, of Card 11014915 of Registry of Companies in and for Lima, in its capacity as Security Agent under Credit Agreement for the benefit and in interest of the Secured Parties (hereinafter, the “ Collateral Agent ”).

The Pledgor and the Collateral Agent shall be jointly referred to as the “ Parties ” and individually as the “ Party ”.

With the further participation of:

•

BBVA BANCO CONTINENTAL , holder of Tax ID Number (RUC) 20100130204, with principal place of business at Av. República de Panamá 3055, District of San Isidro, Province and Department of Lima, acting by and through Guillermo José MONJARAZ PERALTA, holder of National Identity Card (DNI) 09397811, and Jorge Moisés YATACO HUAMÁN, holder of National Identity Card (DNI) 40972909, as per powers of attorney registered in Entries C00332 and C00368, respectively, of Card 11014915 of Registry of Companies in and for Lima (hereinafter, the “ Bank ”).

•

Servicios Conexos Notreg E.I.R.L. , holder of Tax ID Number (RUC) 20511037426, with principal place of business at Calle Yapeyu 120, District of San Isidro, Province and Department of Lima, acting by and through Mónica Gabriela BRENNEISEN KIMURA, holder of National Identity Card (DNI) No. 09676175 (hereinafter, the “ Common Representative ”).

D-1

under the following terms and conditions:

ONE: DEFINITIONS AND INTERPRETATION

1.1.	Capitalized words shall have the meaning ascribed hereinbelow, unless defined otherwise or cleary required by the context:

1.1.1

Administrative Agent : BBVA Bancomer S.A., a Multiple Banking Institution, BBVA Bancomer Financial Group, in its capacity of Administrative Agent under the Credit Agreement, or its future successor.

1.1.2

Collateral Agent : has the meaning set forth in the introduction to the Agreement.

1.1.3

Authority : a national, regional or local authority of the Republic of Peru exercising executive, legislative, judicial or arbitration, regulatory or administrative functions over any person or subject matter, as per corresponding jurisdiction under the Applicable Law.

1.1.4

Bank : has the meaning set forth in the introductory part of this Agreement.

1.1.5

Pledgor : has the meaning set forth in the introduction to the Agreement.

1.1.6

Credit Agreement : the Credit Agreement dated February 27, 2013, entered into by and between the Pledgor, in its capacity as borrower, the initial lenders listed in such agreement, BBVA Bancomer S.A., Multiple Banking Institution, BBVA Bancomer Financial Group, in its capacity as administrative agent, the Collateral Agent, in its capacity as collateral agent, and BBVA Securities Inc., in its capacity as sole lead arranger and book runner, up to the amount of US$ 150,000,000 (One Hundred and Fifty Million US Dollars) as amended from time to time.

1.1.7

Collateral Agreement : The Security Interest Agreement over Account Balance.

1.1.8

Payment Account : The current account in US Dollars No. 0011-0586-0100026551, opened by the Pledgor at the Bank.

1.1.9

Debt Service Reserve Account : The current account in US Dollars No. 0011-0586-0100026578, opened by the Pledgor at the Bank.

1.1.10

Collateral Accounts : jointly means the Payment Account and Debt Service Reserve Account.

1.1.11

Business Day : Any day other than Saturday, Sunday, holiday or nonworking day in the City of Lima, as established by the Authority or Applicable Law. The days in which the banks in the City of Lima are authorized or obliged not to serve the public are not considered Business Days.

D-2

1.1.12

Credit Documents : has the meaning ascribed thereto in the term Credit Documents in the Credit Agreement.

1.1.13

US Dollar or US$ : means the legal tender in the United States of America.

1.1.14

Enforcement Event : has the meaning ascribed to the term Event of Default in the Credit Agreement and includes any act defined as Enforcement Event in the Security Agreement.

1.1.15

Closing Date : Execution date of the Collateral Agreement.

1.1.16

Effective Date : has the meaning ascribed to the term Effective Date on the Credit Agreement.

1.1.17

Security Interest : the Security Interest over Account Balance created by the Collateral Agreement. As indicated hereinafter, the Security Interest shall be considered as created in relation to the existing Account Balances as of the Closing Date, while it has the pre-created character regarding all the Account Balances arising after the date Closing Date.

1.1.18

Irrevocable Instruction : The instruction that the Pledgor shall issue to the Bank in accordance with Article Fourteen.

1.1.19

Security Interest Act : Law 28677, as amended, regulated and supplemented.

1.1.20

Applicable Law : All the laws, decrees, legal rules of any category, hierarchy and nature, applicable in the Republic of Peru, as may be in force at the time of entering into the Security Agreement and as may be interpreted, amended or substituted in the future.

1.1.21

Encumbrance Amount : has the meaning ascribed in Article Five hereof.

1.1.22

Enforcement Notice : has the meaning assigned in Article Eleven hereof.

1.1.23

Nuevo Sol or S/. : The legal tender in the Republic of Peru.

1.1.24

Secured Obligations : Any and all obligations assumed and owed by the Pledgor arising from or related to the Credit Agreement and the other Credit Documents, including to the fullest extent possible, but not limited to, any amount of principal, compensation and late interest, penalties, fees, taxes, expenses, court costs and attorney’s fees and expenses owed by the Pledgor under the entering into or execution of the Credit Agreement, Security Agreement and other Credit Documents, or the fulfillment of any and all obligations of the Pledgor under the Credit Agreement, Security Agreement and other Credit Documents. In order to avoid any doubts, Secured Obligations also include any amounts owed by the Pledgor as a result of the performance of its obligations under the Security Agreement, as well as any obligation that may be generated under any refinancing or extension that may be granted to the Pledgor, or any total or partial eventual novation of the Pledgor’s obligations, which may originate from the Credit Agreement and other Credit Documents, as applicable.

D-3

1.1.25

Parties : jointly means the Pledgor and the Collateral Agent.

1.1.26

Secured Parties : has the meaning ascribed to the term Secured Parties in the Credit Agreement.

1.1.27

Irrevocable Special Power of Attorney : has the meaning granted to such term in Article Eight of the Security Agreement.

1.1.28

Registry of Security Interests : has the meaning granted to such term in the Security Interest Act.

1.1.29

Registration Regulations : Registration Regulations of the Registry of Security Interests and its relations with the Legal Registries of Personal Properties, approved by Resolution No. 142-2006-SUNARP/SN, as amended, regulated and supplemented.

1.1.30

Common Representative : has the meaning set forth in the introduction to the Security Agreement.

1.1.31

Account Balance : Credit balances existing at any time in the Collateral Accounts.

1.1.32

Debt Service : has the meaning ascribed to the term Debt Service in the Credit Agreement

1.2.	Unless stated otherwise or clearly required by the context, the following rules shall be noted in order to interpret the Security Agreement:

(i)

The singular includes the plural and vice versa.

(ii)

All references to one gender include the other.

(iii)

A reference to any agreement (including this Security Agreement), document or instrument, specifically refers to such agreement, document or instrument, as may be amended or regulated from time to time in accordance with the terms contained in each of them.

(iv)

The Security Agreement includes its exhibits.

(v)

Unless the context requires an interpretation to the contrary, a reference to any provision or exhibit shall mean any provision or exhibit of this Security Agreement.

(vi)

“Including (and thus, “include”) means that it includes includes but is not limited to the generality of the description preceding the use of said term.

D-4

(vii)

The headings used in each provision of the Security Agreement are only for reference purposes and shall not be considered for purposes of interpretating its content and scopes.

(viii)

Any reference to a “Party” or “Parties” hereof shall be understood as to the party or parties of this Security Agreement, as applicable.

(ix)

Any enumeration or listing of concepts in which the disjunctive conjunction “or” is used comprises some or all the elements of such enumeration or listing.

(x)

Any enumeration or listing of concepts in which the copulative conjunction “and” is used comprises each one of the elements in such enumeration.

(xi)

This Security Agreement shall be interpreted in accordance with the rules and principles of interpretation contained in the Applicable Law, considering that it is the will of the Parties that, under no circumstances, the application of such rules of interpretation shall limit in any manner the rights of the Collateral Agent.

(xii)

The Parties agree that the Collateral Agent’s rights deriving from the Security Agreement shall be interpreted to the fullest extent possible, in accordance with the Applicable Law.

(xiii)

Any reference to the Collateral Agent applies to its successors and assignees.

(xiv)

For the purposes hereof, the term “reasonable” or “reasonably” shall be interpreted considering the characteristics of each of the Parties in the situation or context in which the term is applicable.

TWO : RECITALS

2.1	By means of the Credit Agreement, certain lenders have agreed to provide to the Pledgor a loan of up to US$ 150,000,000 (One Hundred and Fifty Million US Dollars).

2.2

In compliance with the provisions of Sub-point 3.01 (f) of the Credit Agreement, the Pledgor is interested in creating a Security Interest in favor of the Collateral Agent, acting for the benefit and interest of the Secured Parties, in order to ensure full and timely compliance of the Secured Obligations.

THREE : PURPOSE

3.1

Pursuant to Security Agreement, and in accordance with the provisions set forth in Section 17 of the Security Interest Act, the Pledgor, in its capacity as sole and exclusive holder of the Account Balances, create and pre-create, as hereinafter defined, a first and preferential Security Interest over Account Balances in favor of the Collateral Agent, in order to ensure full and timely compliance with of any and all of the Secured Obligations

3.2	The Security Interest is deemed to be established in connection with the Account Balances existing in the Closing Date.

D-5

In relation to such Account Balances to be generated in the future, the Parties expressly agree that the Security Interest is deemed to be a pre-created floating collateral, which shall remained established, immediately and without further action as soon as such Account Balances exist. In this regard, and in accordance with the provisions set forth in Point 2) of Section 21 of the Security Interest Act, all Account Balances to be generated in the future shall be included within the scope of the Security Interest as from the time they exist, being understood, for all legal purposes, that the Security Interest has been established over such Account Balances.

3.3

The Parties agree that the Security Interest irrevocably affects any sum of money credited or to be credited in the future in the Collateral Accounts for any person and under any title, as well as the interests and/or readjustments arising therefrom, and/or any increase they earned or which may be applicable.

3.4	The Pledgor waives its right to request - in or out of court - the variation or replacement of the Security Interest established under the Security Agreement.

FOUR : TERM

The Security Interest is established and pre-established, as appropriate, for an indefinite period and shall remain in force until the date in which the Secured Obligations have been fully complied to the satisfaction of the Collateral Agent.

Once the Collateral Agent has certified that all the Secured Obligations have been fully paid and fulfilled to its satisfaction, it shall, upon Pledgor’s request, execute and deliver all public and private documents which may be needed for the release and cancellation of the Security Interest. The Pledgor shall be responsible for carrying out the release’s proceeding of the Security Interest in the Registry of Security Interests and for fully assuming any costs or expenses generated by such release.

FIVE ENCUMBRANCE AMOUNT

5.1

Pursuant to Point 4) Section 19 of the Security Interest Act, the Parties agree that the Security Interest is created and pre-created, as applicable, up to the determined amount equivalent to the total sum of the Secured Obligations pending payment or fullfilment (hereinafter the “ Encumbrance Amount ”).

Notwithstanding the foregoing, the Parties agree to establish, as reference and only for the purposes of determining the registry rates applicable to the registration of the Security Interest as the Encumbrance Amount, both for the created and pre-created Security Interest, the sum of US$ 150,000,000 (One Hundred and Fifty Million US Dollars).

However, it shall not be interpreted, construed or considered in any manner that the establishment of this referential amount limits the total amount secured by the Security Interest, indicated in the first item of this serial number. Neither shall it limit or restrict in any manner the ability of the Collateral Agent to exercise the rights or actions corresponding thereto in accordance with the terms and conditions of the Security Agreement, other Credit Documents or Applicable Law.

5.2	The Pledgor expressly waives its right to request in or out-of-court any reduction in the Encumbrance Amount, either because a partial payment or compliance of the Secured Obligations has been performed, or due to any other reason.

D-6

SIX : INDIVISIBILITLY OF THE SECURITY INTEREST

The Security Interest is indivisible and ensures the full performance of any and all Secured Obligations. In this regard, the Security Interest shall continue until all the Secured Obligations have been fully paid and complied to the satisfaction of the Collateral Agent.

Consequently, the Pledgor expressly waives its right to request a partial release of the property subject to the Security Interest or the partial payment of the Security Interest.

SEVEN : REGISTRATION OF THE SECURITY INTEREST

7.1

The Security Interest shall be registered in the Registry of Security Interests, being the Pledgor obliged to make such registration within sixty (60) calendar days following to the Effective Date. This period may only be extended at the sole discretion of the Administrative Agent, to the extent that the Pledgor is performing commercially reasonable efforts to achieve such registration, according to the following:

7.1.1

On the Closing Date, the Parties shall execute the Notarially Recorded Instrument, previously memorandum in writing (minuta), and the Pledgor shall ensure that a certified copy of such Notarially Recorded Instrument is delivered to the Collateral Agent.

7.1.2

Within three (3) Business Days following to the execution of the Notarially Recorded Instrument, the notarial reports related to the Notarially Recorded Instrument shall be submitted before the Registry of Security Interests for registration in accordance with the Security Interest Act and Registration Regulations.

7.1.3

Having obtained the registration certificate of the Security Interest from the Registry of Security Interests, the Pledgor shall deliver to the Collateral Agent, within the three (3) Business Days following to such registration, a verbatim copy of the corresponding registration entries.

7.2

The Parties agree to execute all public and private documents, and to take all actions that may be reasonably necessary to formalize and register the Security Interest in the Registry of Security Interests, including the acts necessary for the purpose of rectifying any observation performed by the Registrar concerning the title submitted to the Registry of Security Interests.

7.2

It is hereby agreed that The Pledgor shall be the sole responsible for making the submission and registration proceeding of the Security Interest, and all the costs and expenses that such submission and registration may require shall be entirely borne by The Pledgor.

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EIGHT : IRREVOCABLE POWER OF ATTORNEY

8.1

Without prejudice to the obligations assumed by the Pledgor under the Security Agreement, the Pledgor hereby grants, an Irrevocable Special Power of Attorney in favor of the Collateral Agent, so that - acting through the individual or individuals designated by the Collateral Agent- on behalf of the Pledgor, it may perform all acts, measures and proceedings that the Collateral Agent may deem appropriate, for the formalization and registration of the Security Interest in the Registry of Security Interests (hereinafter the “Irrevocable Special Power of Attorney”).

8.2	The Irrevocable Special Power of Attorney also empowers the Collateral Agent to perform all acts, public or private, necessary to maintain at all times the full force and effect of the Security Interest, including the submission of any communication or notice at the Registry of Security Interests.

8.3	The Irrevocable Special Power of Attorney granted by the Pledgor in favor of the Collateral Agent pursuant to the provisions set forth in Sections 153, 156 and 166 of the Civil Code, is irrevocably conferred.

The Irrevocable Special Power of Attorney shall be in effect indefinitely. The Pledgor agrees to register the Irrevocable Special Power of Attorney in Card corresponding to the Pledgor in the Registry of Companies in and for Lima. This registration must be performed no later than sixty (60) days from the Effective Date.

8.4

The Pledgor shall maintain the Irrevocable Special Power of Attorney in force throughout the term of the Security Agreement. The Pledgor shall deliver to the Collateral Agent a valid power of attorney certifying that the Irrevocable Special Power of Attorney is in effect within thirty (30) days following to each anniversary of the Closing Date. The revocation of the Irrevocable Special Power of Attorney or loss of validity of such Irrevocable Special Power of Attorney shall constitute an Enforcement Event of the Security Interest.

8.5

All acts and measures necessary for the full force and effect of the Irrevocable Special Power of Attorney are the sole responsibility of the Pledgor. All the costs and expenses related to the perfection and registration of the Irrevocable Special Power of Attorney shall be entirely borne by the Pledgor.

NINE : REPRESENTATIONS AND WARRANTIES OF THE PLEDGOR

The Pledgor represents and warrants to the Collateral Agent that: (i) at the Closing Date; and (ii) on the date on which the Security Interest is established with respect to the future Account Balances acquiring existence:

9.1	The Pledgor is the sole and exclusive owner of the Collateral Accounts and Account Balances, vested with full right, capacity, power and authority to enter into the Security

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Agreement and to affect the Account Balances with the Security Interest in the terms set forth herein without violating any contractual or legal obligation, or of any other type, that the Pledgor may have before any third party.

9.2

Except for the Security Interest, which is established and pre-pledged, as applicable, pursuant to the Security Agreement, Account balances are and shall be free from any charge, encumbrance and, in general, any and all lien, judicial, arbitration, administrative or court measure aimed to limit or restrict the free and full availability or which may grant to any third a higher priority with respect to rights, than those granted to the Collateral Agent pursuant to the Security Agreement, or which may limit or restrict in any manner whatsoever the property rights that the Pledgor has or may have.

9.3	The Pledgor has not assigned and it shall not assign to any third party under any title, its ownership over the Collateral Accounts or Account Balances.

9.4

There are no claims, legal actions or pending trials, and the Pledgor is not aware of the existence of any threat of claims, actions or trials against, or involving the Pledgor, which may affect the ownership of the Pledgor over the Collateral Accounts or Account Balances, or which may limit, restrict, forbid, opposite or prevent the creation or pre-creation of the Security Interest.

9.5	There is no contractual or legal impediment to formalize and register the Security Interest as first and preferential.

9.6	The execution and execution of the Security Agreement by the Pledgor: (i) have been duly authorized by the competent corporate bodies of the Pledgor; (ii) is not contrary to any Applicable Law; and (iii) is not contrary to any legal or contractual restriction that may oblige or affect the Pledgor.

9.7

The powers of attorney of the Pledgor’s representatives, who execute the Security Agreement have been duly granted by the competent corporate bodies of the Pledgor; they are fully in force and are registered in the Card that corresponds to the Pledgor in the Registry of Companies in and for Lima; and therefore, these representatives are authorized to bind the Pledgor under the terms and conditions set forth in the Security Agreement.

9.8

The Pledgor guarantees the Collateral Agent the existence and enforceability of the Collateral Accounts and the existing Account Balances, and also the existence and enforceability of the Account Balances arising in the future. In case of execution of the Security Interest, the award of the Account Balances shall imply the transfer to the Collateral Agent, as applicable, of any and all rights and privileges corresponding to the Account Balances.

9.9	There is any prohibition, nor is any consent, authorization, approval or any prior registration or other action required, with regard to:

9.9.1

Entering into the Security Agreement and for the creation and pre-creation of the Security Interest;

9.9.2

The exercise by the Collateral Agent of any right, action or remedy that may correspond under the Security Agreement.

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TEN : OBLIGATIONS OF THE PLEDGOR

Without prejudice to the other obligations assumed pursuant to the Security Agreement and other Credit Documents, during the time the Security Interest remains in force, the Pledgor agrees to:

10.1.

Refrain from taxing, encumbering, transferring, or entering into any kind of act on the Collateral Accounts or Account Balances, or in general, entering into any action to dispose over the Collateral Accounts or Account Balances.

10.2.

Notify the Collateral Agent of any facts or circumstances which may adversely and substantially affect the Collateral Accounts or the Account Balances, within the Business Day following the date on which the Pledgor becomes aware of such event or circumstance.

10.3.

Perform all acts, whether public or private, which may be reasonably required by the Collateral Agent from time to time, so the efficiency and effectiveness of the Security Interest over the Account Balances are maintained at all times.

10.4.

Issue, execute and grant all private and public documents, and perform all acts to its responsibility, as may be required to formalize, maintain in force, permit opposition and/or execute the Security Interest on the Account Balances under the terms set forth in the Security Agreement, as well as to execute all public and private documents and perform all acts required to carry out and formalize the award of the Account Balances, in the event of execution of the Security Interest.

10.5.

Oppose the creation of liens, encumbrances or in and out of court measures on the Collateral Accounts and Account Balances, by any Authority or others, being requested to notify such authorities or third parties about the existence of the Security Agreement and the Security Interest. The Pledgor shall notify the Collateral Agent, as soon as it becomes aware of the alleged creation of liens, encumbrances or in and out of court measures over the Collateral Accounts and the Account Balances.

10.6.

Maintain the Collateral Accounts open and operational at all times.

10.7.

Pay all costs and assume all taxes deriving from or arising as a result of the entering into and execution of the Security Agreement, including, without limitation, all notary and registration expenses related to the conversion of the Security Agreement into a Notarially Recorded Instrument and registration of the Security Interest in the Registry of Security Interests and of the Irrevocable Special Power of Attorney in the Register of Companies, as well as those arising from any amendments to the Security Agreement, the Irrevocable Special Power of Attorney renewal and Irrevocable Instruction notice.

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ELEVEN : ENFORCEMENT OF THE SECURITY INTEREST

11.1.

The Security Interest shall be enforced in accordance with the terms set out in this provision; and in all matters not regulated in this provision, the provisions of the Security Interest Act and the Applicable Laws shall additionally apply.

11.2.

If an Enforcement Event occurs, the Collateral Agent is authorized to seek enforcement of the Security Interest over the award of the Account Balances.

For this purpose, the Collateral Agent shall, in accordance with Point 2) Section 53 of the Security Interest Act, notify the occurrence of the Enforcement Event to the Pledgor (notarially, using the form included as Exhibit I (a)) and to the Common Representative (via notary, using the form included as Exhibit I (b)), must indicate in such communications the amount of the Secured Obligations owed, as well as the decision to enforce the Security Interest through the award of the Account Balance (both notices, hereinafter collectively referred to as the “Enforcement Notice”). The submission of the Enforcement Notice shall be the only requirement to be met by the Collateral Agent to proceed with the implementation of the Security Interest.

11.3.

Award of Account Balances

11.3.1.

Upon receipt of the Enforcement Notice, the Common Representative shall award the Account Balances in favor of the Collateral Agent, for which the Common Representative shall, immediately and without requiring additional action, submit to the Bank a written notice (with a copy to the Pledgor), on terms substantially similar to the form included as Exhibit II, stating that the Collateral Agent has assumed, being the winning bidder, full ownership of the Account Balances, and instruct the Bank to transfer the Account Balances to the account specified for that purpose by the Common Representative.

11.3.2.

The award of the Account Balances shall be conducted by the Common Representative, for which it has an Irrevocable Power of Attorney conferred by the Parties as provided in Article Thirteen of the Security Agreement.

11.3.3.

The Parties agree that the award by the Collateral Agent of the Account Balances, as provided in this provision, has no full payment effects in respect to the Secured Obligations, unless otherwise specified by the Collateral Agent in writing.

11.3.4.

For the purposes of award, the Parties agree that the value of the Account Balances, is the nominal value thereof on the date of execution.

11.4.

From the occurrence of an Enforcement Event, until all of the Secured Obligations have been paid and complied with to the satisfaction of the Collateral Agent, any amount to be received directly by the Pledgor in the Collateral Accounts shall be transferred by the Bank within one Business Day of having receipt it, to the account stated for such purpose by the Common Representative.

11.5.

The Pledgor waives its right to make any claim against the Common Representative and/or the Collateral Agent in connection with the award of the Account Balances or, in general, with respect to any matter relating to the execution of this Security Interest unless it is established that they acted with bad intention or gross negligence, according to a final and conclusive court ruling.

11.6.

The Pledgor agrees to provide to the Collateral Agent and the Common Representative all the documents and information necessary to formalize the award of the Account Balances in the course of the execution of the Security Interest.

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TWELVE : PROCEEDS FROM THE SECURITY INTEREST ENFORCEMENT

12.1.

The proceeds from the Security Interest enforcement shall be applied by the Collateral Agent pursuant to the Credit Agreement and the other Credit Documents.

12.2.

Any balance or surplus generated after applying the proceeds from enforcement under the Credit Agreement and the other Credit Documents shall be returned to the Pledgor.

THIRTEEN : COMMON REPRESENTATIVE

13.1.

The Collateral Agent and the Pledgor, by mutual agreement, appoint Servicios Conexos Notreg E.I.R.L., holder of Tax ID Number (RUC) 20511037426, with principal place of business at Jr. Santo Domingo No. 291, District of Jesús María, Province and Department of Lima, as its Common Representative for the purposes of execution of the Security Interest (hereinafter the “ Common Representative ”). For the purposes hereof, the Collateral Agent and the Pledgor agree to grant the Common Representative an Irrevocable and Indefinite Power of Attorney, so it could carry out the following:

Execute the Security Interest upon reception of an Enforcement Notice; and in that context, perform all acts necessary to carry out the award of the Account Balances in favor of the Collateral Agent, in accordance with the terms of the Security Agreement.

Formalize the transfer of the Account Balances in accordance with the procedure provided in the Security Agreement, being able to such effect - to execute any public or private document.

Instruct the Bank to perform the transfer of Account Balances in the account specified by the Collateral Agent to that effect.

Issue the award certificate for the corresponding tax purposes.

13.2.

The irrevocable power of attorney granted under the preceding paragraph shall remain in force during the term of the Security Interest.

13.3.

The Parties agree to empower the Collateral Agent, so that, acting on behalf of the Parties, it may substitute the Common Representative if: (i) the Common Representative waives its right; (ii) the Common Representative is dissolved or liquidated; (iii) bankruptcy proceedings are filed by or against the Common Representative; or (iv) there is any other event that prevents the Common Representative from fulfilling the functions entrusted herein.

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In such cases, the Collateral Agent shall be authorized to designate another person to replace the Common Representative in order to exercise that position under this Security Agreement with the powers granted in this provision. In order to substitute the Common Representative, the Collateral Agent shall notify the Pledgor in writing, proposing the name of at least three (3) possible substitutes of the Common Representative, attaching the respective quotations. The Pledgor shall have a term of three (3) business days to choose one of the proposed substitutes, by written notice delivered to the Collateral Agent. Once this communication is received, the Collateral Agent shall appoint the new Common Representative. Likewise, if the Pledgor does not notify his decision to the Collateral Agent within the period specified above, the Collateral Agent may proceed to unilaterally designate any of the candidates proposed to the Pledgor as the Common Representative.

Consequently, the Parties hereby grant the same powers and authority granted to the Common Representative in the Security Agreement, to the person appointed as the new Common Representative. These powers and authority shall become effective on the date on which the Collateral Agent advises the Pledgor and the substitute Common Representative of the appointment; and from then on, all references to the Common Representative in the Security Agreement shall refer to this substitute Common Representative.

13.4.

It is hereby stated that the obligations assumed by the Common Representative under the provisions set forth in this Security Agreement are from means and not from proceeds; and that according to the aforesaid, they shall be provided by the Common Representative in compliance with the applicable provisions established for such effect in the Security Agreement; and, additionally, by the provisions set forth in the Security Interest Act and Applicable Law.

FOURTEEN : IRREVOCABLE INSTRUCTIONS

14.1.

The Pledgor hereby irrevocably instructs the Bank to:

14.1.1.

Never make or authorize any withdrawals, charge or transfer of funds from the Collateral Accounts, except for (i) the Debt Service charge under the Credit Agreement, and (ii) as provided in Article Eleven and Sub-point 14.1.2 below.

14.1.2.

If the Common Representative advises that there has been an Enforcement Event of the Security Interest, proceed to: (i) apply the Account Balances in the payment of the Secured Obligations, by adjudicating them in favor of the Collateral Agent, pursuant to the instructions of the Common Representative; and (ii) perform the transfers of the remaining funds to the bank account specified by the Common Representative.

14.2.

It is hereby agreed that the Irrevocable instructions contained in this provision are given in the interest of the Collateral Agent; thus, it may not be revoked or modified without the express consent of the Collateral Agent.

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FIFTEEN : STATEMENT OF ACCOUNTS

15.1	The Pledgor undertakes to ensure that the Bank, in the form and manner provided in the Credit Agreement, will forward the statement of accounts of the Collateral Accounts to the Collateral Agent.

15.2	The Pledgor undertakes to ensure that the Bank will allow the Collateral Agent to have access to the Collateral Accounts for inquiry purposes, through remote access systems.

SIXTEEN : GENERAL PROVISIONS

16.1.

Expenses and Taxes

All expenses and taxes resulting from the execution and performance of the Security Agreement, including those arising from the registration of the Security Interest and its subsequent execution, and the registration and renewals of the Irrevocable Special Power of Attorney shall be borne by the Pledgor.

16.2.

Amendments

The Security Agreement may only be amended, either in whole or in part, by written agreement of the Parties.

Any modification or amendment to the Security Agreement shall be submitted for registration with the Registry of Security Interest, within a maximum period of five (5) Business Days from the signing of the private documents and/or notarially recorded instruments necessary for registration. Within this same period, the Pledgor shall forward to the Collateral Agent evidence of registration of the respective instruments with the Registry of Security Interest.

16.3.

Waiver :

The failure or delay of the Collateral Agent in exercising any faculty, power, right or privilege granted in the Security Agreement, shall not be deemed a waiver of the Collateral Agent of such faculty, power, right or privilege, or of other faculties, powers, rights or privileges which the Collateral Agent may have inder the Security Agreement. In addition, the individual or partial exercise of any of the powers, faculties, rights or privileges conferred on either Party shall not limit any subsequent exercise extension of the specified right, faculty, power or privilege or the exercise of any other right, faculty, power or privilege, which may be additional to that which was exercised.

Any waiver of any faculty, power, right or privilege granted to the Parties under the Security Agreement shall be expressly issued, in writing; otherwise it shall have no effect.

The actions prescribed in the Security Agreement are cumulative and not exclusive of the exercise of any other remedy provided therein, in the other Credit Documents or in the Applicable Laws.

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16.4.

Assignment

16.4.1.

The Parties agree that the Collateral Agent may assign, in whole or in part, its rights corresponding thereto by virtue of this Security Agreement, together with the assignment to be made under the Credit Documents. The Pledgor hereby expressly issues its consent and irrevocable authorization to such transfer in whole or in part.

16.4.2.

In addition, the Parties hereto agree that the Collateral Agent may assign the contract corresponding thereto, by virtue of this Security Agreement, together with the assignment to be made under the Credit Documents. The Pledgor hereby expressly issues its consent and irrevocable authorization for such assignment.

16.4.3.

All assignments by the Collateral Agent shall be in full force and effect when notices to the Pledgor are issued.

16.4.4.

The Parties agree that the Pledgor may not transfer or assign - for any reason and under any title - any rights or obligations corresponding thereto by virtue of this Security Agreement, without the prior written authorization of the Collateral Agent.

16.5.

Effectiveness :

The invalidity or non-enforceability of any provision of the Security Agreement shall not affect in any manner whatsoever the validity or non-non-enforceability of any other provision of the Security Agreement. In the event that any provision is held invalid or non-enforceable, the Parties shall endeavor to agree on a valid, enforceable provision that has effects substantially equivalent to those of the invalid or unenforceable provision and shall incorporate it into the Security Agreement.

16.6.

Notices :

Any notice or communication required hereunder shall be forwarded in writing and should be notified by either of the following methods: (i) uncertified letter with acknowledgement of receipt requested, or (ii) notarized letter.

Notices shall be addressed as follows:


The Pledgor	:

Address	:	Av. Paseo de la República No. 4675, Surquillo
		Lima - Peru
Attention	:	Ms. Mónica María Miloslavich Hart and
		Mrs. Claudia Inés Drago Morante

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Collateral Agent	:

Address	:	Av. República de Panamá No. 3055, San Isidro Lima - Peru
Attention	:	Ms. Marcela de Romaña

Bank	:
Address	:	Av. República de Panamá No. 3055, San Isidro Lima - Peru
Attention	:	Mr. Bruno Viacava Hooker

Common Representative	:

Address	:	Calle Yapeyu No. 120, San Isidro Lima - Peru
Attention	:	Ms. Mónica Brenneisen Kimura

Any changes to the information referred to above shall only be effective to the extent that they have been notified in writing with no less than fifteen (15) calendar days in advance, it being understood that, in any event, the address of the Pledgor shall be within the area of Metropolitan Lima.

In the event any of the requirements established in the preceding paragraph are not fulfilled, the change shall not take any effect, and all notices forwarded pursuant to the terms indicated above shall be considered effectively delivered

16.7.

Automatic Arrears :

If the Pledgor defaulted on its obligations under the Security Agreement, it shall automatically be classified to be in arrears, without the need for the Collateral Agent to demand compliance therewith in or out of court, in accordance with the provisions of Section 1333, Point 1) of the Civil Code.

SEVENTEEN : APPLICABLE LAW AND DISPUTE RESOLUTION

17.1	This Security Agreement shall be governed by the applicable laws.

17.2	In the event that any dispute arises as a result of the execution, performance, termination and/or interpretation of this Security Agreement, the Parties hereto establish that the dispute shall be settled amicably - preferably directly between the Parties.

17.3

However, in the event that the dispute between the Parties cannot be settled thereby in a friendly and direct manner, within ten (10) days of the service of the respective notice by the affected party, it shall be settled by a de jure arbitration, in accordance with the Arbitration Rules of the AmCham Peru Arbitration Center (hereinafter, the “Center”) which rules, administration and decision the Parties unconditionally subject themselves to, declaring to fully know them and accept them. Accordingly, the arising controversy, uncertainty, claim or dispute shall be subject to the jurisdiction and expertise of an arbitration court consisting of three (3) arbitrators.

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17.4

Each Party shall appoint one arbitrator and the third arbitrator shall be appointed jointly by the already appointed arbitrators. The third arbitrator shall preside over the Arbitration Court. The Party who has forwarded the petition in which the dispute is submitted to arbitration, shall include the designation of an arbitrator. The other Party shall, within fifteen (15) days after receipt of such notice, appear at the arbitration proceedings and appoint an arbitrator. If a Party fails to appoint its arbitrator within the period of fifteen (15) days or if the arbitrators cannot agree on the appointment of the third arbitrator within fifteen (15) days, the appointment shall be made by the Center.

17.5	All members of the Arbitration Court shall be attorneys-at-law and necessarily resolve the dispute in accordance with a de jure arbitration.

17.6	The arbitration proceedings shall be held in the City of Lima, in Spanish language.

17.7

The award issued by the Arbitration Court shall be final and conclusive. Consequently, the parties expressly waive their right to filing any appeal. The award issued by the Arbitration Court may only be voided for having incurred in any of the grounds provided in Executive Order (Decreto Legisltivo ) 1071, Section 63, in which case, the judges and courts of the Judicial District of Lima Centro shall be competent.

17.8	Any expenses and costs incurred in the arbitration shall be paid according to the arbitration award issued by the Arbitration Court.

17.9	Anything related to the arbitration proceedings, which is not regulated by this provision shall be governed by the provisions of Executive Order (Decreto Legislativo) 1071, as amended now or in the future.

17.10

Submission to the arbitration jurisdiction does not limit the right of the Collateral Agent to request out of court execution of the Security Interest, in the form and manner provided in the Security Agreement and the Applicable Law.

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17.11

Without prejudice to submission to the arbitration jurisdiction, the parties shall resort to the judges and courts of the Judicial District of Lima Centro is judicial intervention is necessary.

Lima, February 27, 2013


GRAÑA Y MONTERO S.A.A. Pledgor				BBVA BANCO CONTINENTAL Collateral Agent


José Graña Miró Quesada				Guillermo José Monjaraz Peralta
National Identity Card (DNI) No. 08266298				National Identity Card (DNI) No. 09397811


Mario Alvarado Pflucker				Jorge Moisés Yataco Huamán
National Identity Card (DNI) No. 08216132				National Identity Card (DNI) No. 40972909

BBVA BANCO CONTINENTAL The Bank				Servicios Conexos Notreg E.I.R.L. Common Representative


Guillermo José Monjaraz Peralta				Mónica Gabriela Brenneisen Kimura
National Identity Card (DNI) No. 09397811				National Identity Card (DNI) No. 09676175


Jorge Moisés Yataco Huamán
National Identity Card (DNI) No. 40972909

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Exhibit I (a)

Form of Enforcement Notice to Pledgor


Lima, [ — ] [ — ], [ — ]

GRAÑA Y MONTERO S.A.A.
[Address]
[City]

Attention:		[ Full Name]
		[Position]

Subject:		Notice of Enforcement of Security Interest

Dear sirs,

Reference is made to the Agreement for Pledging of Security Interest on Account Balances, dated February 27, 2013 (hereinafter, the “ Security Agreement ”) entered into by and between Graña y Montero S.A.A. (hereinafter, the “Pledgor”) and BBVA Banco Continental (hereinafter, the “ Collateral Agent ”).

Capitalized terms not otherwise defined shall have the meaning attributed thereto in the Security Agreement.

We hereby advice that an Enforcement Event has taken place under such Security Agreement; and, therefore, we made the decision to enforce the Security Interest.

In this regard, we inform that we are simultaneously forwarding the Enforcement Notice to the Common Representative, pursuant to the provisions of the Security Agreement, in order to proceed with the implementation of the Security Interest. In addition, please note that the outstanding amount of the Secured Obligations to the date of this notice, amounts to US$ [ — ] without prejudice to any interest accrued up to the date when full payment of the Secured Obligations is made.

Pursuant to the provisions of the Security Agreement, the Common Representative shall award any and all Account Balances until full payment of the Secured Obligations is to the satisfaction of the Collateral Agent.

As from the date of receipt of this document: (i) the Collateral Agent shall be the full and exclusive owner of all Account Balances; and (ii) the Account Balances shall be transferred to the bank account, which is notified to the Bank by the Common Representative.

Yours truly,

BBVA Banco Continental

Collateral Agent

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Exhibit I (b)

Form of Enforcement Notice to the Common Representative


Lima, [ — ] [ — ], [ — ]

[ name of Common Representative ]
[Address]
[City]

Attention:		[ Full Name]
		[Position]

Subject:		Enforcement Notice of Security Interest

Dear sirs,

Reference is made to the Security Interest Agreement Over Account Balances, dated February 27, 2013 (hereinafter, the “ Security Agreement ”) entered into by and between Graña y Montero S.A.A. (hereinafter, the “Pledgor”) and BBVA Banco Continental (hereinafter, the “ Collateral Agent ”).

Capitalized terms not otherwise defined shall have the meaning attributed thereto in the Security Agreement.

We hereby advice that an Enforcement Event has taken place under such Security Agreement; and, therefore, we made the decision to enforce the Security Interest.

In this regard, we request that in accordance with the provisions of the Security Agreement, you will proceed with the execution of the Security Interest, by immediately awarding to us all the Account Balances, until we report that the Pledgor has paid and complied with the Secured Obligations, which, as of the date of this notice, amount to US$ [ — ], without prejudice to any interest accrued up to the date when full payment of the Secured Obligations is made.

In addition, we hereby request you to proceed and notify the Bank executing the Security Interest, indicating that as from the date of receipt of this document: (i) the Collateral Agent is the full and exclusive owner of all Account Balances; and (ii) the Account Balances must be transferred to Account [ — ].

Yours truly,

BBVA Banco Continental

Collateral Agent

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Exhibit II

Form of Notice to the Bank


Lima, [ — ] [ — ], [ — ]

[Bank]
[Address]
[City]

Attention:		[ Full Name]
		[Position]

Subject:		Enforcement of Security Interest

Dear sirs,

Capitalized terms not otherwise defined shall have the meaning attributed thereto in the Security Agreement.

Pursuant to the provisions of the Security Agreement, we hereby advise that the Collateral Agent has notified the Common Representative of its intention to enforce the Security Interest, whereby the Collateral Agent has been awarded full ownership of the Account Balances.

Consequently, we instruct that as from the date of receipt of this document, up to the date when you receive a new notice expressly revoking these instructions, you should transfer the Account Balances, up to the amount of US$ [ — ] into Account [ — ].

Yours truly,

[Common Representative]

GFC/LR-MCP-mch

010750K13

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EXECUTION VERSION

Exhibit E

to Credit Agreement

GUARANTY

This GUARANTY , dated as of February 27, 2013, is made by GyM S.A., Graña y Montero Petrolera S.A., Concar S.A. and Viva GyM S.A., and each other Subsidiary of the Borrower (the “ Additional Guarantors ”) that executes a guaranty supplement in the form of Exhibit A (collectively the “ Guarantors ” and, individually, each a “ Guarantor ”), in favor of the Secured Parties (as defined under the Credit Agreement referred to below),

W I T N E S S E T H :

WHEREAS , Graña y Montero S.A.A., a sociedad anónima abierta organized under the laws of Perú (the “ Borrower ”), is party to that certain Credit Agreement, dated as of February 27, 2013 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”; capitalized terms used but not otherwise defined herein are used herein as defined therein), with the banks, financial institutions and other institutional lenders party thereto from time to time (the “ Lenders ”), BBVA Continental, as collateral agent for the Lenders (the “ Collateral Agent ”), and BBVA Bancomer S.A., Institución de Banca Multiple, Grupo Financiero BBVA Bancomer, as administrative agent for the Lenders (the “ Administrative Agent ”);

NOW , THEREFORE , for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and to comply with the condition precedent to effectiveness under Section 3.01(f)(iv) of the Credit Agreement and the affirmative covenant of the Borrower under Section 5.01(j) of the Credit Agreement, each Guarantor jointly and severally ( solidariamente ) with each other Guarantor, hereby agrees as follows:

1. Guaranty . (a) Each Guarantor unconditionally guarantees the punctual payment when due, whether upon maturity, by acceleration or otherwise, of all obligations (now or hereafter existing, including any extensions, modifications, substitutions, amendments or renewals of any or all of the foregoing obligations) of each other Loan Party under any Loan Document, whether direct or indirect, absolute or contingent, and whether for principal, interest, premium, fees, indemnities, expenses or otherwise, in each case, in accordance with the terms thereof (all such obligations being the “ Guaranteed Obligations ”). If any Loan Party fails to pay any Guaranteed Obligation in full when due (whether at stated maturity, by acceleration or otherwise), the Guarantors will promptly pay the same to the Administrative Agent, for the benefit of the Secured Parties. The Guarantors will also pay to the Administrative Agent, for the benefit of the Secured Parties, any and all expenses (including reasonable legal fees and expenses) incurred by any Secured Party in enforcing such Secured Party’s rights under this Guaranty. This Guaranty is a guaranty of payment and not merely of collection.

(b) Each of the Guarantors, and by its acceptance of this Guaranty, the Administrative Agent and each other Secured Party, hereby confirms that it is the intention of all such Persons that this Guaranty and the obligations of each Guarantor hereunder not constitute a

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fraudulent transfer or conveyance for purposes of Bankruptcy Law (as hereinafter defined), the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar foreign, federal or state law, including Law No. 27809 - Ley General del Sistema Concursal of Perú, to the extent applicable to this Guaranty and the obligations of each Guarantor hereunder. To effectuate the foregoing intention, (i) the Administrative Agent, the Secured Parties and the Guarantors hereby irrevocably agree that the obligations of each Guarantor hereunder at any time shall be limited to the maximum amount as will result in such obligations not constituting a fraudulent transfer or conveyance and (ii) each Guarantor hereby unconditionally and irrevocably agrees that in the event any payment shall be required to be made to any Secured Party as requested by the Administrative Agent on behalf of such Secured Party under this Guaranty, such Guarantor will contribute, to the maximum extent permitted by law, such amounts to each other Guarantor so as to maximize the aggregate amount paid to the Secured Parties under or in respect of the Loan Documents. For purposes hereof, “ Bankruptcy Law ” means any proceeding of the type referred to in Section 6.01(e) of the Credit Agreement or Title 11, U.S. Code or any similar foreign, federal or state law for the relief of debtors.

2. Guaranty Absolute . (a) Each Guarantor’s liability under this Guaranty is joint and several ( solidaria ), irrevocable, absolute and unconditional irrespective of (i) any illegality, lack of validity or enforceability of any Guaranteed Obligation, (ii) any amendment, modification, waiver or consent to departure from the terms of any Guaranteed Obligation, including any renewal or extension of the time or change of the manner or place of payment, (iii) any exchange, substitution, release, non-perfection or impairment of any collateral securing payment of any Guaranteed Obligation, (iv) any change in the corporate existence, structure or ownership of any Loan Party, or any insolvency, bankruptcy, reorganization or other similar proceeding affecting any Loan Party or its assets or any resulting release or discharge of any Guaranteed Obligation, (v) the existence of any claim, set-off or other rights that any Guarantor may have at any time against any other Loan Party, the Secured Parties or any other corporation or Person, whether in connection herewith or any unrelated transactions; provided that nothing herein will prevent the assertion of any such claim by separate suit or compulsory counterclaim, (vi) any law, regulation, decree or order of any jurisdiction, or any other event, affecting any term of any Guaranteed Obligation or the Secured Parties’ rights with respect thereto, including: (A) the application of any such law, regulation, decree or order, including any prior approval, which would prevent the exchange of a Non-USD Currency (as hereinafter defined) for U.S. Dollars or the remittance of funds outside of such jurisdiction or the unavailability of U.S. Dollars in any legal exchange market in such jurisdiction in accordance with normal commercial practice, (B) a declaration of banking moratorium or any suspension of payments by banks in such jurisdiction or the imposition by such jurisdiction or any Governmental Authority thereof of any moratorium on, the required rescheduling or restructuring of, or required approval of payments on, any indebtedness in such jurisdiction, (C) any expropriation, confiscation, nationalization or requisition by such country or any Governmental Authority that directly or indirectly deprives any Loan Party of any assets or its use or of the ability to operate its business or a material part thereof or (D) any war (whether or not declared), insurrection, revolution, hostile act, civil strife or similar events occurring in such jurisdiction which has the same effect as the events described in clause (A) , (B) or (C) above (in each of the cases contemplated in clauses (A) through (D) above, to the extent occurring or existing on or at any time after the date hereof) and (vii) any other circumstance (including any statute of limitations) or any existence of or reliance on any representation by any Secured Party that might otherwise constitute a defense available to, or a legal or equitable discharge of, any Loan Party or surety.

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(b) Without limiting the generality of the foregoing, each Guarantor guarantees that it shall pay the Secured Parties in accordance with the express terms of any document or agreement evidencing any Guaranteed Obligation, including in the amounts and in the currency expressly agreed to thereunder, irrespective of and without giving effect to any laws of the jurisdiction where any of the Loan Parties is principally located in effect from time to time, or any order, decree or regulation in the jurisdiction where any of the Loan Parties is principally located (except as enforceability thereof may be limited by the effect of any applicable bankruptcy, insolvency, reorganization, moratorium, or similar law affecting creditors’ rights generally and general principles of equity). The obligations of each Guarantor under or in respect of this Guaranty are independent of the Guaranteed Obligations of any other Loan Party under or in respect of the Loan Documents, and a separate action or actions may be brought and prosecuted against each Guarantor to enforce this Guaranty, irrespective of whether any action is brought against the Borrower or any other Loan Party or whether the Borrower or any other Loan Party is joined in any such action or actions.

(c) It is the intent of this Section 2 that each Guarantor’s obligations hereunder are and shall be absolute and unconditional under any and all circumstances.

3. Waiver . To the extent permitted under applicable law, each Guarantor hereby waives promptness, diligence, notice of acceptance, notice of dishonor and any other notice with respect to any Guaranteed Obligation and this Guaranty and any requirement that the Secured Parties exercise any right or take any action against any Loan Party or credit support.

4. Reinstatement . This Guaranty will continue to be effective or be reinstated, as the case may be, if at any time any payment of any Guaranteed Obligation is rescinded or must otherwise be returned by the Secured Parties upon the insolvency, bankruptcy or reorganization of any of the Loan Parties or otherwise, all as though such payment had not been made; provided, however, that any such reinstatement shall be limited to the amount of the payment so rescinded or returned by such party.

5. Subrogation . Until the Guaranteed Obligations and all other amounts payable under this Guaranty have been paid in full in cash and the Commitments shall have expired or been terminated, each Guarantor hereby unconditionally and irrevocably agrees not to exercise any rights that it may now have or hereafter acquire against the Borrower or any other Loan Party that arise from the existence, payment, performance or enforcement of such Guarantor’s obligations under or in respect of this Guaranty or any other Loan Document, including any right of subrogation, reimbursement, exoneration, contribution or indemnification and any right to participate in any claim or remedy of any Secured Party against the Borrower or any other Loan Party or any collateral, whether or not such claim, remedy or right arises in equity or under contract, statute or common law, including the right to take or receive from the Borrower or any other Loan Party, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security on account of such claim, remedy or right. If any amount shall be paid to any Guarantor in violation of the immediately preceding sentence at any time prior to the latest of (a) the payment in full in cash of the Guaranteed Obligations and all

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other amounts payable under this Guaranty and (b) the date of termination in whole of the Commitments, such amount shall be received and held in trust for the benefit of the Secured Parties, shall be segregated from other property and funds of such Guarantor and shall forthwith be paid or delivered to the Administrative Agent in the same form as so received (with any necessary endorsement or assignment) to be credited and applied to the Guaranteed Obligations and all other amounts payable under this Guaranty, whether matured or unmatured, in accordance with the terms of the Loan Documents, or to be held as collateral for any Guaranteed Obligations or other amounts payable under this Guaranty thereafter arising. If (i) any Guarantor shall make payment to any Secured Party of all or any part of the Guaranteed Obligations, (ii) all of the Guaranteed Obligations and all other amounts payable under this Guaranty shall have been paid in full in cash and (iii) the Commitments shall have been terminated in full, the Secured Parties will, at such Guarantor’s request and expense, execute and deliver to such Guarantor appropriate documents, without recourse and without representation or warranty, necessary to evidence the transfer by subrogation to such Guarantor of an interest in the Guaranteed Obligations resulting from such payment made by such Guarantor pursuant to this Guaranty.

6. Taxes . Any and all payments by or on account of any obligation of any Guarantor hereunder or under any other Loan Document shall be made free and clear of and without reduction or withholding for any Taxes or Other Taxes, on the same terms provided in Section 2.12 of the Credit Agreement, which Section 2.12 is incorporated herein by reference as if set forth in full, with references to the “Borrower” being deemed references to the Guarantors.

7. Place and Currency of Payment . If any Guaranteed Obligation is payable in U.S. Dollars, each Guarantor will make payment hereunder to the Administrative Agent in U.S. Dollars at the Administrative Agent’s Account. If any Guaranteed Obligation is payable in a currency other than U.S. Dollars (a “ Non-USD Currency ”) and/or at a place other than the United States, and such payment is not made as and when agreed, the Guarantors will, at the Administrative Agent’s option, either (a) make payment in such Non-USD Currency and at the place where such Guaranteed Obligation is payable or (b) pay the Administrative Agent in U.S. Dollars at the Administrative Agent’s Account. In the event of a payment pursuant to clause (b) above, the Guarantors will pay the Administrative Agent the equivalent of the amount of such Guaranteed Obligation in U.S. Dollars calculated at the rate of exchange at which, in accordance with normal banking procedures, the Administrative Agent may buy such Non-USD Currency in New York, New York on the date the Guarantors make such payment; provided , however , that the foregoing provisions of this sentence shall not apply to any payments hereunder in respect of Guaranteed Obligations that have been re-denominated into a Non-USD Currency as a result of the application of any law, order, decree or regulation in any jurisdiction other than the United States, which Guaranteed Obligations shall, for purposes of this Guaranty, be deemed to remain denominated in U.S. Dollars and payable to the Administrative Agent in accordance with the first sentence of this Section 7 .

8. Set-Off . If any Guarantor fails to pay any of its obligations hereunder when due and payable, each Secured Party and each of their respective Affiliates is authorized at any time and from time to time, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other Indebtedness at any time owing by such Secured Party or such Affiliate to or for such Guarantor’s credit or account against any and all of the Guaranteed Obligations, whether or not the Administrative Agent or any other Secured

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Party has made any demand under this Guaranty. Such Secured Party will promptly notify the Guarantors after any such set-off and application; provided that the failure to give such notice will not affect the validity of such set-off and application. The Administrative Agent’s and each other Secured Party’s rights under this Section 8 are in addition to other rights and remedies (including other rights of set-off) that the Administrative Agent and such other Secured Party may have.

9. Representations and Warranties . Each Guarantor represents and warrants that: (a) it is a sociedad anónima duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation, (b) the execution, delivery and performance by such Guarantor of this Guaranty are within its corporate powers, have been duly authorized by all necessary corporate action and do not contravene (i) its charter or by-laws or (ii) any law or any contractual restriction binding on or affecting such Guarantor, and will not result in the imposition of any Lien on any assets of such Guarantor, (c) no authorization or approval or other action by, and no notice to or filing with, any Governmental Authority or regulatory body or any other third party is required for the due execution, delivery and performance by such Guarantor of this Guaranty and (d) this Guaranty has been duly executed and delivered by such Guarantor and is its legal, valid and binding obligation, enforceable against such Guarantor in accordance with its terms (except as enforceability thereof may be limited by the effect of any applicable bankruptcy, insolvency, reorganization, liquidation, moratorium or similar law affecting creditors’ rights generally and general principles of equity).

10. Continuing Guaranty . (a) This Guaranty is continuing in nature and applies to all Guaranteed Obligations whenever arising. This Guaranty is irrevocable and will remain in full force and effect until the payment in full of the Guaranteed Obligations and all amounts payable hereunder and the termination of all of the agreements relating to the Guaranteed Obligations.

(b) Without limiting the generality of clause (a) above, any Secured Party may assign or otherwise transfer all or any portion of its rights and obligations under the Credit Agreement (including all or any portion of its Commitments, the Advances owing to it and the Note or Notes held by it) to any other Person, and such other Person shall thereupon become vested with all the benefits in respect thereof granted to such Secured Party herein or otherwise, in each case, as and to the extent provided in Section 8.07 of the Credit Agreement. No Guarantor shall have the right to assign its rights hereunder or any interest herein without the prior written consent of the Secured Parties.

11. Amendments, Etc . (a) No amendment or waiver of any provision of this Guaranty, and no consent to departure by any Guarantor herefrom, will in any event be effective unless the same is in writing and signed by the Administrative Agent, and then such waiver or consent will be effective only in the specific instance and for the specific purpose for which given. The effectiveness of any amendment to this Guaranty is subject to the terms of Section 8.01 of the Credit Agreement.

(b) Upon the execution and delivery by any Person of a guaranty supplement in substantially the form of Exhibit A (each, a “ Guaranty Supplement ”), (i) such Person shall be referred to as an “Additional Guarantor” and shall become and be a Guarantor hereunder, and

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each reference in this Guaranty to a “Guarantor” shall also mean and be a reference to such Additional Guarantor, and each reference in any other Loan Document to a “Guarantor” shall also mean and be a reference to such Additional Guarantor and (ii) each reference herein to “this Guaranty”, “hereunder”, “hereof” or words of like import referring to this Guaranty, and each reference in any other Loan Document to the “Guaranty”, “thereunder”, “thereof” or words of like import referring to this Guaranty, shall mean and be a reference to this Guaranty as supplemented by such Guaranty Supplement.

12. Notices, Etc . All notices and other communications provided for hereunder to any Guarantor shall be addressed to it in care of the Borrower at the Borrower’s address specified in Section 8.02 of the Credit Agreement and shall be made in the manner and with the effect provided in such Section. All other notices and other communications provided for hereunder to any Secured Party shall be made at its address specified, in the manner and with the effect provided in Section 8.02 of the Credit Agreement.

13. Indemnification . (a)Each Guarantor, jointly and severally, agrees to indemnify, defend and save and hold harmless each Secured Party and each of their Affiliates and their officers, directors, employees, agents and advisors (each, an “ Indemnified Party ”) from and against, and shall pay on demand any and all claims, damages, losses, liabilities and expenses (including reasonable fees and expenses of counsel) incurred by or asserted or awarded against any Indemnified Party, in each case, arising out of or in connection with or by reason of (including in connection with any investigation, litigation or proceeding or preparation of a defense in connection therewith) this Guaranty or any other Loan Document, except to the extent such claim, damage, loss, liability or expense is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Party’s gross negligence or willful misconduct.

(b) In the case of an investigation, litigation or other proceeding to which the indemnity in this Section 13 applies, such indemnity shall be effective whether or not such investigation, litigation or proceeding is brought by any Guarantor, its directors, equityholders or creditors or an Indemnified Party or any other Person, whether or not any Indemnified Party is otherwise a party thereto. Each Guarantor also agrees not to assert any claim for special, indirect, consequential or punitive damages against any Indemnified Party on any theory of liability arising out of or otherwise relating to this Guaranty or any other Loan Document.

(c) Without prejudice to the survival of any of the other agreements of any Guarantor under this Guaranty or any of the other Loan Documents to which it is a party, the agreements and obligations of each Guarantor contained in Sections 1 (with respect to enforcement expenses), 2 , 6 and this Section 13 shall survive the payment in full of the Guaranteed Obligations and all of the other amounts payable under this Guaranty.

14. Subordination . Each Guarantor hereby subordinates any and all Indebtedness permitted under the Loan Documents and other Guaranteed Obligations owed to such Guarantor by each other Loan Party (the “ Subordinated Obligations ”) to the Guaranteed Obligations to the extent and in the manner hereinafter set forth in this Section 14 :

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(a) Prohibited Payments, Etc . Except during the continuance of an Event of Default (including the commencement and continuation of any proceeding under any Bankruptcy Law relating to any other Loan Party), each Guarantor may receive regularly scheduled payments from any other Loan Party on account of the Subordinated Obligations. After the occurrence and during the continuance of any Event of Default (including the commencement and continuation of any proceeding under any Bankruptcy Law relating to any other Loan Party), however, unless the Administrative Agent otherwise agrees, no Guarantor shall demand, accept or take any action to collect any payment on account of the Subordinated Obligations.

(b) Prior Payment of Guaranteed Obligations . In any proceeding under any Bankruptcy Law relating to any other Loan Party, each Guarantor agrees that the Secured Parties shall be entitled to receive payment in full in cash of all Guaranteed Obligations (including all interest and expenses accruing after the commencement of a proceeding under any Bankruptcy Law, whether or not constituting an allowed claim in such proceeding (the “ Post Petition Interest ”) before such Guarantor receives payment of any Subordinated Obligations.

(c) Administrative Agent Authorization . After the occurrence and during the continuance of any Event of Default (including the commencement and continuation of any proceeding under any Bankruptcy Law relating to any other Loan Party), the Administrative Agent is authorized and empowered (but without any obligation to so do), in its discretion, (i) in the name of each Guarantor, to collect and enforce, and to submit claims in respect of, the Subordinated Obligations and to apply any amounts received thereon to the Guaranteed Obligations (including any and all Post Petition Interest) and (ii) to require each Guarantor (A) to collect and enforce, and to submit claims in respect of, the Subordinated Obligations and (B) to pay any amounts received on such obligations to the Administrative Agent for application to the Guaranteed Obligations (including any and all Post Petition Interest).

15. Guarantor’s Credit Decision, Etc . Each Guarantor has, independently and without reliance on the Secured Parties and based on such documents and information as such Guarantor has deemed appropriate, made its own credit analysis and decision to enter into this Guaranty. Each Guarantor has adequate means to obtain from any other Loan Party on a continuing basis information concerning the financial condition, operations and business of such Loan Party, and such Guarantor is not relying on the Secured Parties to provide such information now or in the future. Each Guarantor acknowledges that it will receive substantial direct and indirect benefit from the extensions of credit contemplated by the Credit Agreement to which this Guaranty relates.

16. Judgment Currency . If for the purposes of obtaining judgment in any court it is necessary to convert a sum due hereunder in U.S. Dollars into a Non-USD Currency, each Guarantor agrees that the rate of exchange used will be that at which, in accordance with normal banking procedures, the Administrative Agent could purchase U.S. Dollars with such Non-USD Currency on the Business Day preceding that on which final, non-appealable judgment is given. The obligation of each Guarantor in respect of any sum due hereunder will, notwithstanding any judgment in a Non-USD Currency, be discharged only to the extent that on the date each Guarantor makes payment to the Secured Parties of any sum adjudged to be so due in such Non-USD Currency, the Administrative Agent may, in accordance with normal banking procedures, purchase U.S. Dollars with such Non-USD Currency; if the U.S. Dollars so

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purchased are less than the sum originally due to the Secured Parties in U.S. Dollars, each Guarantor agrees, as a separate obligation and notwithstanding any such judgment, to indemnify the Secured Parties against such loss, and if the U.S. Dollars so purchased exceed the sum originally due to the Secured Parties in U.S. Dollars, the Administrative Agent agrees to remit to the Guarantors such excess.

17. Execution in Counterparts . This Guaranty and each amendment, waiver and consent with respect hereto may be executed in any number of counterparts and by different parties thereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of a signature page to this Guaranty by telecopier or other electronic communication shall be effective as delivery of an original executed counterpart of this Guaranty.

18. Governing Law . This Guaranty shall be governed by, and construed in accordance with, the laws of the State of New York.

19. Jurisdiction, Waiver of Jury Trial, Etc . (a) Each Guarantor, and by its acceptance of this Guaranty, the Administrative Agent and each other Secured Party, hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of any New York State court or federal court of the United States sitting in New York City, and any appellate court from any thereof and to the courts of its own corporate domicile in respect of any actions brought against it as a defendant, in any action or proceeding arising out of or relating to this Guaranty, or for recognition or enforcement of any judgment, and each Guarantor, and by its acceptance of this Guaranty, the Administrative Agent and each other Secured Party, hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in any such New York State court or, to the extent permitted by law, in such federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.

(b) Each Guarantor hereby irrevocably appoints CT Corporation System (the “ Process Agent ”), with an office on the date hereof at 111 Eighth Avenue, 13 ^th Floor, New York, New York 10011, United States, as its agent to receive on behalf of such Guarantor and its property service of copies of the summons and complaint and any other process which may be served in any such action or proceeding. Such service may be made by mailing or delivering a copy of such process to such Guarantor in care of the Process Agent at the Process Agent’s above address, and each Guarantor hereby irrevocably authorizes and directs the Process Agent to accept such service on its behalf. As an alternative method of service, each Guarantor also irrevocably consents to the service of any and all process in any such action or proceeding by the mailing of copies of such process to the Borrower at its address specified in Section 8.02 of the Credit Agreement.

(c) Each Guarantor, and by its acceptance of this Guaranty, the Administrative Agent and each other Secured Party, irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this

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Guaranty or the other Loan Documents to which it is a party in any New York State or federal court. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

(d) To the extent that any Guarantor has or hereafter may acquire any immunity from jurisdiction of any court or from any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with respect to itself or its property, to the extent permitted by United States federal law, such Guarantor hereby irrevocably and unconditionally waives such immunity in respect of its obligations under this Guaranty and the Loan Documents to which it is a party and, without limiting the generality of the foregoing, agrees that the waivers set forth in this clause (d) shall have the fullest scope permitted under the Foreign Sovereign Immunities Act of 1976 of the United States and are intended to be irrevocable for purposes of such Act.

(e) Nothing in this Section 19 shall affect the right of any Secured Party to serve legal process in any other manner permitted by law or affect the right of the Secured Parties to bring any action or proceeding against any Guarantor or its property in the courts of Perú.

(a) EACH GUARANTOR, AND BY ITS ACCEPTANCE OF THIS GUARANTY, THE ADMINISTRATIVE AGENT AND EACH OTHER SECURED PARTY, IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS GUARANTY OR ANY SECURED PARTY’S ACTIONS IN THE NEGOTIATION, ADMINISTRATION OR ENFORCEMENT HEREOF.

[ Signature Pages Follow. ]

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IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be executed by its officer thereunto duly authorized, as of the date first above written.


GYM S.A.

By	/s/ Juan Manuel Lambarri
	Name:	Juan Manuel Lambarri
	Title:	Representative

By	/s/ Mario Alvarado Pflucker
	Name:	Mario Alvarado Pflucker
	Title:	Representative

GRAÑA Y MONTERO PETROLERA S.A.

By	/s/ Luis Diaz Olivero
	Name:	Luis Diaz Olivero
	Title:	Representative

By	/s/ Mario Alvarado Pflucker
	Name:	Mario Alvarado Pflucker
	Title:	Representative

CONCAR S.A.

By	/s/ Jaime Targarona A.
	Name:	Jaime Targarona A.
	Title:	Representative

By	/s/ Mario Alvarado Pflucker
	Name:	Mario Alvarado Pflucker
	Title:	Representative

VIVA GYM S.A.

By	/s/ Rolando Ponce Vergara
	Name:	Rolando Ponce Vergara
	Title:	Representative


		[ Signature Page ]		GyM Guaranty


By	/s/ Mario Alvarado Pflucker
	Name:	Mario Alvarado Pflucker
	Title:	Representative


		Signature Page ]		Gym Guaranty Supplement

Exhibit A

to Guaranty

FORM OF GUARANTY SUPPLEMENT

[ — ] , 20 [ — ]

BBVA Continental

[ Address ]

Attention: [ — ]

Re:

Credit Agreement, dated as of February 27, 2013 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), among Graña y Montero S.A.A., a sociedad anónima abierta organized and existing under the laws of Perú (the “ Borrower ”), the banks, financial institutions and other institutional lenders party thereto from time to time (the “ Lenders ”), BBVA Continental, as collateral agent for the Lenders (the “ Collateral Agent ”), and BBVA Bancomer S.A., Institución de Banca Multiple, Grupo Financiero BBVA Bancomer, as administrative agent for the Lenders (the “ Administrative Agent ”).

Ladies and Gentlemen:

Reference is made to the above-captioned Credit Agreement and to the Guaranty, dated as of February 27, 2013 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “ Guaranty ”; capitalized terms used but not otherwise defined herein are used herein as defined therein).

1. Guaranty; Limitation of Liability . (a)The undersigned hereby unconditionally guarantees the punctual payment when due, whether at scheduled maturity or by acceleration, demand or otherwise, of all obligations of each other Loan Party (now or hereafter existing, including any extensions, modifications, substitutions, amendments or renewals of any or all of the foregoing obligations) under or in respect of the Loan Documents (including any extensions, modifications, substitutions, amendments or renewals of any or all of the foregoing obligations), whether direct or indirect, absolute or contingent, and whether for principal, interest, premium, fees, indemnities, expenses or otherwise (such obligations being the “ Guaranteed Obligations ”), and agrees to pay to the Administrative Agent, for the benefit of the Secured Parties, any and all expenses (including reasonable legal fees and expenses) incurred by any Secured Party in enforcing any rights under this guaranty supplement (this “ Guaranty Supplement ”) or the Guaranty. If any Loan Party fails to pay any Guaranteed Obligation in full when due (whether at stated maturity, by acceleration or otherwise), the undersigned will promptly pay the same to the Administrative Agent, for the benefit of the Secured Parties. This Guaranty Supplement is a guaranty of payment and not merely of collection.

(b) The undersigned, and by its acceptance of this Guaranty Supplement, the Administrative Agent and each other Secured Party, hereby confirms that it is the intention of all such Persons that this Guaranty Supplement, the Guaranty and the Guaranteed Obligations of the undersigned hereunder and thereunder not constitute a fraudulent transfer or conveyance for


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purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar foreign, federal or state law, including, but not limited to, Law No. 27809 - Ley General del Sistema Concursal of Perú, to the extent applicable to this Guaranty Supplement, the Guaranty and the obligations of the undersigned hereunder and thereunder. To effectuate the foregoing intention, the Administrative Agent, the other Secured Parties and the undersigned hereby irrevocably agree that the obligations of the undersigned under this Guaranty Supplement and the Guaranty at any time shall be limited to the maximum amount as will result in the obligations of the undersigned under this Guaranty Supplement and the Guaranty not constituting a fraudulent transfer or conveyance.

(c) The undersigned hereby unconditionally and irrevocably agrees that in the event any payment shall be required to be made to any Secured Party under this Guaranty Supplement or the Guaranty, the undersigned will contribute, to the maximum extent permitted by applicable law, such amounts to each other Guarantor so as to maximize the aggregate amount paid to the Secured Parties under or in respect of the Loan Documents.

2. Obligations Under the Guaranty . The undersigned hereby agrees, as of the date first above written, to be bound as a Guarantor by all of the terms and conditions of the Guaranty to the same extent as each of the other Guarantors thereunder. The undersigned further agrees, as of the date first above written, that each reference in the Guaranty to an “Additional Guarantor” or a “Guarantor” shall also mean and be a reference to the undersigned, and each reference in any other Loan Document to a “Guarantor” or a “Loan Party” shall also mean and be a reference to the undersigned.

3. Representations and Warranties . The undersigned hereby makes each representation and warranty set forth in Sections 9 and 15 of the Guaranty to the same extent as each other Guarantor.

4. Delivery by Telecopier . Delivery of an executed counterpart of a signature page to this Guaranty Supplement by telecopier or other electronic communication shall be effective as delivery of an original executed counterpart of this Guaranty Supplement.

5. Governing Law; Jurisdiction; Waiver of Jury Trial, Etc.

(a) This Guaranty Supplement shall be governed by, and construed in accordance with, the laws of the State of New York.

(b) The undersigned hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of any New York State court or federal court of the United States sitting in New York City, and any appellate court from any thereof and to the courts of its own corporate domicile in respect of any actions brought against it as a defendant, in any action or proceeding arising out of or relating to this Guaranty Supplement or the Guaranty, or for recognition or enforcement of any judgment, and the undersigned hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in any such New York State court or, to the extent permitted by law, in such federal court. The undersigned agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. The undersigned hereby irrevocably appoints CT Corporation System (the “ Process Agent ”), with an office on the date hereof at 111 Eighth Avenue, 13 ^th


		E-A-2		GyM Guaranty

Floor, New York, New York 10011, United States, as its agent to receive on behalf of itself and its property service of copies of the summons and complaint and any other process which may be served in any such action or proceeding. Such service may be made by mailing or delivering a copy of such process to the undersigned in care of the Process Agent at the Process Agent’s above address, and the undersigned hereby irrevocably authorizes and directs the Process Agent to accept such service on its behalf. As an alternative method of service, the undersigned also irrevocably consents to the service of any and all process in any such action or proceeding by the mailing of copies of such process to the Borrower at its address specified in Section 8.02 of the Credit Agreement.

(c) The undersigned irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Guaranty Supplement, the Guaranty or the other Loan Documents to which it is a party in any New York State or federal court. The undersigned hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

(d) To the extent that the undersigned has or hereafter may acquire any immunity from jurisdiction of any court or from any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with respect to itself or its property, to the extent permitted by United States federal law, the undersigned hereby irrevocably and unconditionally waives such immunity in respect of its obligations under this Guaranty Supplement, the Guaranty and the Loan Documents to which it is a party and, without limiting the generality of the foregoing, agrees that the waivers set forth in this clause (d) shall have the fullest scope permitted under the Foreign Sovereign Immunities Act of 1976 of the United States and are intended to be irrevocable for purposes of such Act.

(e) Nothing in this Section 5 shall affect the right of any Secured Party to serve legal process in any other manner permitted by law or affect the right of the Secured Parties to bring any action or proceeding against the undersigned or its property in the courts of Perú.

(f) THE UNDERSIGNED IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS GUARANTY SUPPLEMENT, THE GUARANTY OR ANY SECURED PARTY’S ACTIONS IN THE NEGOTIATION, ADMINISTRATION OR ENFORCEMENT HEREOF OR THEREOF.

[ Signature Page Follows. ]


		E-A-3		GyM Guaranty

IN WITNESS WHEREOF, the undersigned has caused this Guaranty Supplement to be executed by its officer thereunto duly authorized, as of the date first above written.


[ NAME OF ADDITIONAL GUARANTOR ]

By
		Name:
		Title:


		E-A-4		GyM Guaranty

Exhibit F

to Credit Agreement

February 27, 2013

BBVA BANCOMER S.A., INSTITUCIÓN DE BANCA MÚLTIPLE,

GRUPO FINANCIERO BBVA BANCOMER

Montes Urales 620, 2nd Floor

Col. Lomas de Chapultepec 11000

Mexico D.F.

Ladies and Gentlemen:

I am the General Counsel of Graña y Montero S.A.A. (the “Borrower”) and GyM S.A., Graña y Montero Petrolera S.A. Concar S.A. and Viva GyM S.A. (the “Guarantors”) in connection with the US$ 150’000,000.00 Credit Agreement (the “Credit Agreement”) dated February 27, 2013 entered into and among by the Initial Lenders named therein (the “Lenders”), the Borrower, BBVA Bancomer S.A., Institución Financiera de Banca Múltiple, Grupo Financiero Bancomer BBVA Bancomer (the “Administrative Agent”), BBVA Continental (the “Collateral Agent”), and BBVA Securities Inc. (the “Sole Lead Arranger and Bookrunner”).

This opinion letter is provided pursuant to Section 3.01(f)(viii) of the Credit Agreement. Capitalized terms used but not otherwise defined herein have the meanings assigned thereto in (including by reference in) the Credit Agreement.

1.	In connection with the opinions expressed below, I have examined the following agreements, instruments and other documents:

(a)

an executed copy of the Credit Agreement;

(b)

an executed copy of the promissory notes issued by the Borrower under the Credit Agreement (the “ Notes ” or “ Pagarés ”), the guaranty ( aval ) issued by GyM S.A., Graña y Montero Petrolera S.A. Concar S.A. and Viva GyM S.A. (collectively, the “Guarantors”) and the corresponding Note Filling Agreements (“ Instrucciones para el llenado del Pagaré ”), all dated February 27, 2013;

(c)

an executed copy of the Guaranty Agreement dated February 27, 2013;

(d)

an executed copy of the Peruvian Account Pledge ( Contrato de Constitución de Garantía Mobiliaria sobre Saldos en Cuenta ) dated Februrary 27, 2013;

(e)

copy of certificate of validity and effectiveness of the powers of attorney granted by the Borrower ( Certificado de Vigencia ) and recorded in File 11028652 of the Registry for Companies of Lima, dated February 22, 2013, authorizing Mr. José Graña Miró Quesada, identified with Peruvian ID 08266298, and Mr. Mario Alvarado Pflucker, identified with Peruvian ID 08216132, to execute the Credit Agreement, the Peruvian Account Pledge and the Pagaré;

(f)

copy of certificate of validity and effectiveness of the powers of attorney granted by GyM S.A. ( Certificado de Vigencia ) and recorded in File 11006796 of the Registry for Companies of Lima, dated February 22, 2013, authorizing Mr. Mario


		F-1		GyM Guaranty

Alvarado Pflucker, identified with Peruvian ID 08216132, and Mr. Juan Manuel Lámbarri Hierro, identified with Peruvian ID 08249293, to execute the Pagaré as guarantor and the Guaranty Agreement;

(g)

copy of certificate of validity and effectiveness of the powers of attorney granted by Graña y Montero Petrolera S.A. ( Certificado de Vigencia ) and recorded in File 00636592 of the Registry for Companies of Lima, dated February 22, 2013, authorizing Mr. Mario Alvarado Pflucker, identified with Peruvian ID 08216132, and Mr. Luis Díaz Olivero, identified with Peruvian ID 07872756, to execute the Pagaré as guarantor and the Guaranty Agreement;

(h)

copy of certificate of validity and effectiveness of the powers of attorney granted by Concar S.A. ( Certificado de Vigencia ) and recorded in File 03021446 of the Registry for Companies of Lima, dated February 22, 2013, authorizing Mr. Mario Alvarado Pflucker, identified with Peruvian ID 08216132, and Mr. Jaime Targarona Arata, identified with Peruvian ID 10492436, to execute the Pagaré as guarantor and the Guaranty Agreement;

(i)

copy of certificate of validity and effectiveness of the powers of attorney granted by Viva GyM S.A. ( Certificado de Vigencia ) and recorded in File 12169100 of the Registry for Companies of Lima, dated February 22, 2013, authorizing Mr. Mario Alvarado Pflucker, identified with Peruvian ID 08216132, and Mr. Rolando Ponce Vergara, identified with Peruvian ID 08187579, to execute the Pagare as guarantor and the Guaranty Agreement;

The documents listed in (a), (b), (c) and (d) above are herein referred to as the “Documents”.

2.	The opinions set out in this letter relate only to the laws of the Republic of Peru as in force at the date hereof and I do not express any opinion as to the laws of any other jurisdiction.

3.	Upon the basis of the foregoing, I am of the opinion that:

(a)

The Borrower is a sociedad anónima abiert a duly organized, validly existing and in good standing under the laws of Peru.

(b)

Each of the Guarantors is a sociedad anónima duly organized, validly existing and in good standing under the laws of the Republic of Peru.

(c)

Each of the Loan Parties has all necessary corporate power and authority to execute and deliver, and to perform all of its obligations under, each of the Documents to which it is a party and to consummate the transactions contemplated therein.

(d)

Each of the Loan Parties has duly authorized each of the Documents to which it is a party, and each of such Documents has been executed and delivered by duly authorized representatives of the respective Borrower or Guarantor with the authority and capacity to execute such documents on such Loan Party’s behalf.

(e)

The execution and delivery of the Documents under which the Loan Parties are a party (i) constitute a legal, valid and binding obligation of the Loan Parties, enforceable against it in accordance with the terms therein, except as may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization, liquidation,


		F-2		GyM Guaranty

moratorium or other similar laws relating to or affecting the rights and remedies of creditors generally, and (ii) are in proper legal form for purposes of any legal proceeding in Peru, for the enforcement thereof against the Loan Parties. It is not necessary that any of the Documents be filed or recorded with any court or other authority in the Republic of Peru. Neither the execution and delivery of the Documents by the Borrower or the Guarantors nor compliance by them with the terms thereof, will violate or conflict with any law, statute, regulation, rule, decree or their by- laws ( Estatuto ).

(f)

The execution, delivery and performance by each of the Loan Parties of the Documents to which it is a party do not contravene the laws of Peru applicable to such Loan Party.

(g)

Each of the Notes governed by Peruvian law (i) was duly executed by the Borrower and the Guarantors ( as avalista ) (ii) is in proper legal form under the laws of the Republic of Peru for its enforcement against the Loan Parties through appropriate legal proceedings filed before the competent judges in the Republic of Peru, and (iii) represents a legal, valid and binding obligation of Borrower and the Guarantors ( as avalista ), enforceable against them in accordance with the terms therein.

Since each of the Notes is a pagaré incompleto under Peruvian law, you must follow the corresponding Note Filling Agreement ( Instrucciones para el llenado del Pagaré ) before any enforcement against the Borrower or the Guarantors.

(h)

The Peruvian Account Pledge constitutes a valid and perfected first priority Lien in favor of the Collateral Agent, for the benefit of the Secured Parties, as purported to be granted thereby, that will be effective erga omnes upon the recording of the Peruvian Account Pledge with the Contracts Registry ( Registro Mobiliario de Contratos ).

(i)

A judgment of a court of Peru may be expressed in a currency other than Peruvian currency if the parties to the relevant agreement convened in paying the obligations arising thereunder in such foreign currency.

(j)

No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Peruvian governmental authority is necessary or required (i) in connection with the execution, delivery or performance of the Documents by, or enforcement against, the Borrower or the Guarantors, or (ii) for the granting by the Borrower of first priority perfected Lien in favor of the Collateral Agent, for the benefit of the Secured Parties, purported to be granted by or pursuant to the Peruvian Account Pledge, other than the recording of the Peruvian Account Pledge with the Contracts Registry ( Registro Mobiliario de Contratos ) for purposes of its effectiveness erga omnes .

(k)

There is no foreign exchange or other restrictions in effect in Peru adversely affecting the ability or right of the Borrower or the Guarantors to acquire and to remit to you Dollars to pay and satisfy its obligations under the Documents.

(l)

No fees or taxes, including without limitation, stamp, transaction, registration or similar fees and taxes, are required to be paid for the legality, validity, enforceability of the Documents; provided that (i) the admissibility in evidence and the enforceability before a Peruvian court of the Documents executed in a language other than Spanish requires such documents to be officially translated


		F-3		GyM Guaranty

into Spanish by a duly authorized public translator in the Republic of Peru, and (ii) the fees ( tasas judiciales ) to be paid for the admissibility before a Peruvian court of any Document.

(m)

Except for those parties that are domiciled in Peru, no party to the Documents will be deemed to be domiciled in Peru, nor will any party be considered to be performing or transacting business in Peru by reason only of the execution, delivery, performance and enforcement of the Documents.

(n)

No withholding or other tax under the laws of Peru is required to be paid or withheld on or by virtue of the execution, delivery or performance by the Borrower of the Documents, except for obligations with respect to (a) the withholding of income tax (Impuesto a la Renta) at a rate of 30% or 4.99%, if applicable, on interest, fees, commissions, premiums and any other amount of money paid by the Borrower under the Credit Agreement, (b) payment of the Peruvian Value Added Tax ( Impuesto General a las Ventas ) at a rate of 18% in connection with fees and interest payments made by the Borrower under the Credit Agreement (which obligation is currently exempted to the extent that the applicable lender is a local or foreign bank, or financial institution), and (c) payment by the Borrower of the Peruvian Financial Transactions Tax (Impuesto a las Transacciones Financieras) at a rate of 0.005%.

(o)

Not being a financing granted directly to them, the Guarantors will have no obligation to withhold income tax ( Impuesto a la Renta ) or pay Value Added Tax ( Impuesto General a las Ventas ) on interest, commissions, premiums and other financial expenses paid under the Documents. Other than payment of the Peruvian Financial Transactions Tax ( Impuesto a las Transacciones Financieras ) created by Law No. 28194 and regulated by its Single Unified Text ( Texto Único Ordenado ) approved by Supreme Decree No. 150-2007-EF, which would apply if funds are wired to or from a Peruvian bank account, no tax is required to be paid in Peru in respect of, or deducted from, any payment required to be made pursuant to the Documents.

(p)

The choice of New York law under the Credit Agreement and the Guaranty Agreement is a valid choice of law, and will be recognized by the courts of the Republic of Peru, except for the limitations of (i) Article 2049° of the Peruvian Civil Code, under which provisions of foreign law shall be excluded if they are incompatible with international public policy or good morals; (ii) Article 2088° of the Peruvian Civil Code, by virtue of which the creation, content and extinction of security interests on tangible assets located in Peru is governed by Peruvian law; and (iii) Article 2.1 of the Peruvian Insolvency System General Act, Law No. 27809, according to which any insolvency, bankruptcy, moratorium, fraudulent conveyance or transfer involving entities domiciled in Peru shall be governed by Peruvian law. In any such scenario, the laws of Peru will apply.

The submission by the Borrower to the jurisdiction expressly set forth in the Credit Agreement and the Guaranty Agreement is a legal and valid submission to jurisdiction in accordance with its terms. The appointment of the process agent contemplated in the Credit Agreement and the Guaranty Agreement is valid and effective under Peruvian law.

A final, non-appealable judgment against the Borrower and the Guarantors obtained from the United States District Court of the Southern District of New York or any New York State court or state court sitting in the State of New York


		F-4		GyM Guaranty

will be recognizable and enforceable against the Borrower and the Guarantors in the competent courts of the Republic of Peru without re-examination, review of the merits of the cause of action in respect of which such judgment was given, or relitigation of the merits adjudicated upon, provided that the following conditions are met:

(i)

such judgment does not resolve matters under the exclusive jurisdiction of Peruvian courts;

(ii)

the court rendering such judgment had jurisdiction under its own conflicts of law rules and under international rules on jurisdiction;

(iii)

the defendant was served with process in accordance with the laws of the place where such court sits, was granted a reasonable opportunity to appear before such foreign courts and was guaranteed due process rights;

(iv)

the judgment has the status of res judicata in the jurisdiction of the court rendering such judgment;

(v)

there is no pending litigation in Peru between the same parties for the same dispute, which shall have been initiated before the commencement of the proceeding that concluded with the foreign judgment;

(vi)

such judgment is not incompatible with another enforceable judgment in Peru unless such foreign judgment was rendered first;

(vii)

such judgment is not contrary to the public order or good morals of Peru; and

(viii)

there is a treaty between Peru and the country in which such judgment has been rendered, and the provisions of such treaty shall apply. In the absence of a treaty, the reciprocity rule is applicable (such reciprocity being presumed), under which a judgment given by a foreign competent court will be admissible in the Peruvian courts and will be enforceable thereby, except if according to such foreign law (a) judgments issued by Peruvian courts are not admissible in such foreign country, or (b) judgment issued by Peruvian courts are subject to re-examination by such competent court of the issues dealt with therein.

As of this date, there is no treaty between Peru and the United States of America on the enforcement of foreign judicial resolutions. However, we have no reason to believe that any obligation under the Credit Agreement and the Guaranty Agreement would be contrary to Peruvian public policy and international treaties to which Peru is subject or generally accepted principles of international law.

Assuming that the foreign final judgment complies with the standards set forth in this opinion, and in the absence of any condition referred to above which would render a foreign judgment unenforceable, the respective parties would be entitled to enforce such judgment in Peru by proceedings for the enforcement of a foreign final judgment under the laws of Peru.

(q)

Neither the Borrower, nor the Guarantors nor their properties enjoy any right of immunity from set-off, suit or execution with respect to their assets or their


		F-5		GyM Guaranty

obligations under any of the Documents. The Loan Parties are subject to civil and commercial law with respect to their obligations under the Documents, and the execution, delivery and performance of their obligations thereunder constitute private and commercial acts rather than public or governmental acts.

Sincerely,

/s/ Claudia Drago

Claudia Drago

General Counsel


		F-6		GyM Guaranty

Exhibit G

to Credit Agreement

MILBANK, TWEED, HADLEY & M ^c CLOY LLP

1 CHASE MANHATTAN PLAZA


LOS ANGELES	NEW YORK, NY 10005-1413	BEIJING
213-892-4000		8610-5969-2700
FAX: 213-629-5063		FAX: 8610-5969-2707

WASHINGTON, D.C. 202-835-7500 FAX: 202-835-7586	212-530-5000	HONG KONG 852-2971-4888 FAX: 852-2840-0792
	FAX: 212-530-5219

LONDON		SINGAPORE
44-20-7615-3000		65-6428-2400
FAX: 44-20-7615-3100		FAX: 65-6428-2500

FRANKFURT		TOKYO
49-(0)69-71914-3400		813-5410-2801
FAX: 49-(0)69-71914-3500		FAX: 813-5410-2891

MUNICH		SÃO PAULO
49-89-25559-3600		55-11-3927-7700
FAX: 49-89-25559-3700		FAX: 55-11-3927-7777

February 27, 2013

To the Lenders that are parties to the

Credit Agreement referred to below,

BBVA Bancomer S.A., Institución de Banca Múltiple

Grupo Financiero BBVA Bancomer, as Administrative Agent

for such Lenders (the “ Administrative Agent ”)

and BBVA Continental, as Collateral Agent

for such Lenders (the “ Collateral Agent ”)

Ladies and Gentlemen:

We have acted as special New York counsel to Graña y Montero S.A.A. (the “ Borrower ”) in connection with the Credit Agreement dated as of February 27, 2013 (the “ Credit Agreement ”), among the Borrower, the financial institutions referred to as “Lenders” in the Credit Agreement (the “ Lenders ”), the Administrative Agent and the Collateral Agent. Terms defined in the Credit Agreement have the same respective defined meanings when used herein.

In rendering the opinions expressed below, we have examined

(a)

an executed counterpart of the Credit Agreement;


		G-1		GyM Guaranty

(b)

an executed counterpart of the Guaranty dated as of February [ ], 2013 (the “ Guaranty ”), among the Guarantors party thereto (the “ Guarantors ” and, together with the Borrower, the “ Obligors ”); and

(c)

such other records of the Obligors and such other agreements, instruments, certificates and other documents as we have deemed necessary as a basis for the opinions expressed below.

For the purposes of this opinion letter, (i) “ Opinion Documents ” means the documents described in clauses (a) and (b) above and (ii) “ Applicable Law ” means, collectively, any Federal law of the United States, any law of the State of New York and any rule or regulation thereunder that, in each case, in our experience, is customarily recognized to apply to transactions of the kind contemplated by the Opinion Documents.

In our examination, we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals and the conformity with authentic original documents of all documents submitted to us as copies. When relevant facts were not independently established, we have relied upon representations made in or pursuant to the Opinion Documents or in certificates delivered by or on behalf of the Obligors pursuant thereto. We have also assumed (i) that each of the Opinion Documents has been duly authorized, executed and delivered by all of the parties thereto, that all signatories thereto have been duly authorized and that all such parties are duly organized and validly existing and have the power and authority (corporate or limited liability company or other) to execute, deliver and perform the same, (ii) (except, to the extent set forth below, as to the Obligors) that each of the Opinion Documents constitutes a legal, valid, binding and enforceable obligation of all of the parties thereto, and (iii) that all authorizations, approvals or consents of (including without limitation all foreign exchange controls), and all filings or registrations with, any governmental or regulatory authority or agency of Perú (including the central bank of Perú) required for the making and performance by each Obligor of the Opinion Documents to which it is a party have been obtained or made and are in effect.

Based upon and subject to the foregoing and subject also to the comments and qualifications set forth below, and having considered such questions of law as we have deemed necessary as a basis for the opinions expressed below, we are of the opinion that:

(1) Each of the Opinion Documents constitutes a legal, valid and binding obligation of each Obligor party thereto, enforceable against such Obligor in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance or transfer, moratorium or other similar laws relating to or affecting the rights of creditors generally, and subject to the possible judicial application of foreign laws or governmental action affecting the rights of creditors generally, and except as the enforceability of each of the Opinion Documents is subject to the application of general principles of equity (regardless of whether considered in a proceeding in equity or at law), including without limitation (i) the possible unavailability of specific performance, injunctive relief or any other equitable remedy and (ii) concepts of materiality, reasonableness, good faith and fair dealing.


		G-2		GyM Guaranty

(2) The execution and delivery by each Obligor of the Opinion Documents to which it is a party do not, and the performance by such Obligor of its obligations under the Opinion Documents to which it is a party will not, violate any Applicable Law.

(3) No authorization, approval or other action by, and no notice to or filing with, any governmental or regulatory body or instrumentality under Applicable Law is required for the due execution, delivery or performance by any Obligor of any Opinion Document to which it is a party.

The foregoing opinions are also subject to the following comments and qualifications:

(A) The enforceability of provisions in the Opinion Documents to the effect that terms may not be waived or modified except in writing may be limited under certain circumstances.

(B) The enforceability of provisions in the Opinion Documents providing for indemnification, contribution or exculpation may be limited by (i) laws rendering unenforceable indemnification contrary to law or the public policy underlying such law, and (ii) laws limiting the enforceability of provisions exculpating or exempting a party from, or requiring indemnification of a party for, liability for its own action or inaction, to the extent the action or inaction involves gross negligence, recklessness, willful misconduct or unlawful conduct.

(C) We express no opinion as to (i) the effect of the laws of any jurisdiction in which any Lender is located (other than New York) that limits the interest, fees or other charges it may impose for the loan or use of money or other credit, (ii) Section 8.05 of the Credit Agreement or Section 8 of the Guaranty, (iii) the last sentence of Section 2.13 of the Credit Agreement (or any similar provision in any Opinion Document) insofar as such sentence relates to the right of set-off of any Lender purchasing a participation from another Lender, (iv) the first sentence of Section 8.12(a) of the Credit Agreement or Section 19(a) of the Guaranty insofar as such sentence relates to the subject-matter jurisdiction of the federal courts of the United States sitting in New York City to adjudicate any controversy related to the Credit Agreement or any other Loan Document, (v) the waiver of inconvenient forum set forth in Section 8.12(c) of the Credit Agreement or Section 19(c) (or any similar provision in any Opinion Document) with respect to proceedings in any federal court of the United States sitting in New York City, (vi) Section 8.13 of the Credit Agreement or Section 16 of the Guaranty (or any similar provision of any Opinion Document) or (vii) Section 8.12(d) of the Credit Agreement or Section 19(d) of the Guaranty to the extent it relates to immunity acquired after the date of execution and delivery of the Credit Agreement or Guaranty, as applicable.

(D) Paragraph (a)(ii) of Section 2 of the Guaranty may not be enforceable to the extent that the Guaranteed Obligations as defined therein are materially modified.


		G-3		GyM Guaranty

(E) We express no opinion as to the applicability to the obligations of the respective Guarantors under Section 1 of the Guaranty of (or the enforceability of such obligations under) Section 548 of the Bankruptcy Code, Article 10 of the New York Debtor and Creditor Law or any other provision of law relating to fraudulent conveyances, transfers or obligations, or the provisions of the law of the jurisdiction of incorporation of the Guarantors restricting dividends, loans or other distributions by a corporation for the benefit of its stockholders.

(F) We express no opinion as to any Federal or state securities laws.

The foregoing opinions are limited to matters involving the Federal laws of the United States and the law of the State of New York, and we do not express any opinion as to the law of any other jurisdiction. Without limiting the foregoing, we do not hold ourselves out as experts on, or purport to advise on, the laws of Perú and have rendered no opinion with respect to the foregoing.

This opinion letter is provided to you by us as special New York counsel to the Borrower pursuant to the Credit Agreement and may not be relied upon by any other person or for any purpose other than in connection with the transactions contemplated by the Credit Agreement without our prior written consent in each instance.

Very truly yours,

/s/ Milbank, Tweed, Hadley & M ^c Cloy LLP


		G-4		GyM Guaranty

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the use in this Amendment No. 1 to the Registration Statement on Form F 1 of Graña y Montero S.A.A and Subsidiaries of our report dated June 3, 2013 relating to the consolidated financial statements of Graña y Montero S.A.A and Subsidiaries, which appears in such Registration Statement. We also consent to the references to us under the heading “Experts” and “Selected Financial Data” in such Registration Statement.

/s/ Felix U. Horna

Felix U. Horna

Partner

Dongo –Soria Gaveglio y Asociados Sociedad Civil de Responsabilidad Limitada

Lima, Peru

June 18, 2013