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AENZA S.A.A. AND SUBSIDIARIES

NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AT DECEMBER 31, 2020 AND DECEMBER 31, 2021 (UNAUDITED)

AENZA S.A.A., (hereinafter the “Company”) is the parent Company of the AENZA S.A.A. Corporation that includes the Company and its subsidiaries (hereinafter, the “Corporation”) and is mainly engaged in holding investments in Corporation companies. Additionally, the Company provides services of strategic and functional advice and office leases space to the Corporation companies.

The General Shareholder’s Meeting on November 2, 2020 approved the modification of the Company’s corporate name from Graña y Montero S.A.A. to AENZA S.A.A. which is effective as of February 4, 2021.

The Corporation is a conglomerate of companies with operations including different business activities, the most significant are engineering and construction, infrastructure (public concession ownership and operation) and real estate businesses. See details of operating segments in Note 7.

The condensed interim consolidated financial statements for the period ended December 31, 2021 were authorized by Management and Board of Directors on January 31, 2022.

The consolidated financial statements for the year ended December 31, 2020, were prepared and issued with authorization of Management and the Board of Directors on March 5, 2021, and were approved on the General Shareholders’ Meeting held on March 31, 2021.

Since the date the financial statements were submitted to our shareholders for their approval, until the date of presentation to the Securities and Exchange Commission of the financial information attached to the annual report 20F, subsequent events with material impact on our results occurred and as a result, and in compliance with International Financial Reporting Standards (IFRS), we have recorded such impacts herein, this was revealed through a relevant information communication on May 17, 2021. The events referred to previously, are related mainly to the considerable progress in the negotiations of the Company’s plea bargain agreement, which allowed us to reassess our estimate of our exposure to the contingencies including within its scope. As a result, the amounts included in our financial statements were restructured.

After the filing of the Form 20-F, the Company signed an “Acta de Acuerdo Preparatorio de Colaboracion y Beneficios” (the “Agreement”), with the “Procuraduria Publica ad Hoc”. who dedicate themselves exclusively to the knowledge of investigations related to Crimes of Corruption of Officials and related incurred by the company Odebrecht and others (the “Prosecutor's Office” and with the ad hoc Public Prosecutor's Office for investigations and processes related to crimes of corruption of officials, money laundering and related assets incurred by the company Odebrecht and others (the "Office of the Attorney General"). Pursuant to the Agreement, the Company assumed an obligation to pay a civil penalty, which is within the estimates included in such financial information. The effects of the Effective Collaboration Agreement will enter into force as of their judicial approval.

The consolidated restructured financial statements for the year ended December 31, 2020 have been prepared and issued with authorization of Management and the Board of Directors on June 9, 2021 to ensure consistency between the information presented to the markets in which the Company’s securities are traded, and were approved on the General Mandatory Shareholder’s Meeting held on July 6, 2021.

Pursuant to the Agreement executed on May 21, 2021, AENZA S.A.A. accepts it was utilized by certain former executives to commit illicit acts until 2016, and commits to pay a civil penalty to the Peruvian State of S/321.9 million and US$41.1 million.  The civil penalty is subject to (i) a repayment tenor of 12 years, (ii) the legal interest rate in domestic and foreign currency, (iii) a total collateral of S/197 million through a trust that includes shares issued by a subsidiary of AENZA, a mortgage on a real estate asset and debt service guaranty account. Among other conditions, the Agreement includes a restriction to participate in public construction and road maintenance contracts for 2 years.  As of December 31, 2021, we registered the present value of the amounts described before, which amount to S/164.6 million and US$18.9 million (totaling S/240.1 million).

The civil penalty covers the total contingency to which the Company was exposed because of the investigations revealed in the notes to the financial statements since 2017.  Nevertheless, the Agreement enforceability is subject to court approval and its terms and conditions are subject to confidentiality provisions in such agreement.

On December 23, 2021, the Peruvian Government extended the State of National Emergency for a period of 30 days as a result of COVID-19. Likewise, certain economic activities are restricted, according to the alert level in each department of Peru, until January 31, 2021. Management considers that the measures taken by the national authorities have no impact on the continuity and development of the operations of the Company because the activities carried out by the Company are within the group of permitted activities and have not been significantly impacted by the pandemic.

The Company’s Management continues to monitor the evolution of the situation and the guidance of the national and international authorities, since events beyond the control of Management may arise that require modifying the established business plan. Covid-19 and the consequent measures taken to limit the spread of the disease could affect the ability to conduct business in the normal way and, therefore, affect the financial position and results of operations, however, until the date of approval of the financial statements, it is not expected that operations and going concern will be affected.

The condensed interim consolidated financial statements for the period ended December 31, 2021 have been prepared in accordance with IAS 34 "Interim Financial Reporting". The condensed interim consolidated financial statements provide comparative information regarding prior periods; however, they do not include all the information and disclosures required in the annual consolidated financial statements, so they must be read together with the audited consolidated financial statements for the year ended December 31, 2020, which have been prepared in accordance with International Standards. of Financial Information (hereinafter "IFRS").

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

The accounting policies used in the preparation of these condensed interim consolidated financial statements are consistent with those applied in the preparation of the consolidated financial statements at December 31, 2020.

3.1. Standards, amendments, and interpretation adopted by the Group

Standards, amendments and interpretation that have entered in force as of January 1, 2021, have not had impact on the condensed interim consolidated financial statements as of December 31, 2021, and fo this reason thay have not been disclosed.  The Group has not adopted in advance any amendment and modification that are not yet effective

Financial risk management is carried out by the Corporation’s Management. Management oversees the general management of risks in specific areas, such as foreign exchange rate risk, price risk, cash flow and fair value interest rate risk, credit risk, the use of derivative and non-derivative financial instruments and the investment of excess liquidity, which are supervised and monitored periodically.

The Corporation’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, price risk, fair value interest rate risk and cash flow interest rate risk), credit risk and liquidity risk. The Corporation’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Corporation’s financial performance.

The Corporation is exposed to exchange rate risk as a result of the transactions carried out locally in foreign currency and due to its operations abroad. As of December 31, 2020 and 2021, this exposure is mainly concentrated in fluctuations of U.S. dollar, the Chilean and Colombian Pesos.

The balances of financial assets and liabilities denominated in foreign currencies correspond to balances in U.S. dollars, which are expressed at the published bid and ask exchange rate in effect at that date, according to the currency exchange rate:

		At				At
		December 31,				December 31,
		2020				2021
Soles (a)			3.624				3.998
Chilean Pesos (b)			711.24				844.69
Colombian Pesos (c)			3,432.50				3,981.16

		2020				2021
		USD(000)				USD(000)
Assets			586,479				360,834
Liabilities			321,599				431,556

For the periods ended December 31, 2020 and 2021, the Corporation’s exchange gains and losses for the Peruvian Sol, the Chilean and Colombian Pesos exposure against the U.S. dollar was:

		2020				2021
Gain			426,164				383,199
Loss			(429,930	)			(430,410	)

ii) Price risk

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

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

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

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

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

c) Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and cash equivalents, the availability of funding through an adequate number of sources of committed credit facilities and the capacity to close out positions in the market. Historically, the Corporation cash flows enabled it to meet its obligations. Under COVID-19 pandemic (Note 1-e), the Corporation has implemented various actions to reduce its exposure to liquidity risk, and has developed a Financial Plan based on several steps, which were designed assuming attaining a plea bargain agreement within a reasonable time frame. The Financial Plan aims to enable compliance with the various obligations at the corporate and group companies’ levels.

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

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

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

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

		Less than					1-2				2-5			More than
As of December 31, 2020		1 year				years				years				5 years				Total
Other financial liabilities (except
for finance leases and lease
liability for right-of-use asset)			433,318				183,796				197,785				23,953				838,852
Finance leases			16,287				14,919				20,851				8,515				60,572
Lease liability for right-of-use asset			24,714				32,006				19,847				11,131				87,698
Bonds			137,090				168,673				385,919				971,543				1,663,225
Trade accounts payables (except
non-financial liabilities)			1,001,470				40,502				-				-				1,041,972
Accounts payables to related parties			43,818				35,461				-				836				80,115
Other accounts payables (except
non-financial liabilities)			356,101				62,943				230,352				322,123				971,519
			2,012,798				538,300				854,754				1,338,101				4,743,953
		Less than					1-2				2-5			More than
As of December 31, 2021		1 year				years				years				5 years				Total
Other financial liabilities (except
for finance leases and lease
liability for right-of-use asset)			224,503				52,751				173,392				124,320				574,966
Finance leases			5,624				4,613				296				-				10,533
Lease liability for right-of-use asset			18,817				24,295				21,993				8,086				73,191
Bonds			137,852				206,476				837,931				792,037				1,974,296
Trade accounts payables (except
non-financial liabilities)			912,826				-				-				-				912,826
Accounts payables to related parties			51,004				50,712				-				-				101,716
Other accounts payables (except
non-financial liabilities)			349,459				22,941				109,383				422,666				904,449
			1,700,085				361,788				1,142,995				1,347,109				4,551,977

The Corporation’s objectives when managing capital are to safeguard the Corporation’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 minimize the cost of capital.  In 2017 the situation of the Corporation had lead Management to monitor deviations that might cause the non-compliance of covenants and may hinder the renegotiation of liabilities (Note 15). In extraordinary events as explained in Note 1, the Corporation identifies the possible deviations and requirements and establishes a plan.

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

The Corporation monitors capital based on 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, 2020 and 2021, the gearing ratio is presented below indicating the Corporation’s strategy to keep it in a range from 0.08 to 0.70.

		2020				2021
Total financial liabilities and bonds (Note 15 and Note 16)			1,831,079				1,840,822
Less: Cash and cash equivalents (Note 8)			(900,168	)			(957,178	)
Net debt			930,911				883,644
Total equity			1,595,296				1,474,934
Total capital			2,526,207				2,358,578
Gearing ratio			0.37				0.37

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

The table below shows the Corporation’s liabilities measured at fair value:

		Level 3
As of December 31, 2020
Financial liabilities
Other financial entities (Note 15-b)			152,523
As of December 31, 2021
Financial liabilities
Other financial entities (Note 15-b)			165,878

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

In preparing these condensed interim consolidated financial statements, the significant judgements made by management in applying the Corporation’s accounting policies and the key sources of uncertainty were the same as those that applied to the consolidated financial statements for the year ended  December 31, 2020.

The Corporation does not present seasonality in the operations of any of its subsidiaries; however, economic activities temporarily restricted due to COVID-19 pandemic and government measures implemented to contain the spread of the virus. As a result,  this situation affected negatively Corporation's revenues and financial position (Note 1.e).

Operating segments are reported consistently with the internal reports that are reviewed by the Corporation’ chief decision-maker; that is, the Executive Committee, which is led by the Chief Executive Officer. This Committee acts as the highest authority in making operational decisions, responsible for allocating resources and evaluating the performance of each operating segment.

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

Inter-segmental sales transactions are entered into at prices that are similar to those that would have been agreed to with unrelated third parties. Revenues from external customers reported are measured in a manner consistent with the basis of preparation of the financial statements. Sales of goods are related to Real Estate segment. Revenues from services are related to other segments.

Corporation sales and receivables are not concentrated on a few customers. There is no external customer that represents 10% or more of the Goup’s revenue.

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

Operating segments financial position
Segment reporting
						Infrastructure
As of December 31, 2020		Engineering and construction				Energy				Toll roads				Transportation				Water treatment				Real estate				Parent Company operations				Eliminations				Consolidated
Assets.-
Cash and cash equivalent			382,850				60,165				117,893				207,975				7,408				73,531				50,346				-				900,168
Trade accounts receivables, net			425,939				37,614				25,014				111,602				565				38,043				64,390				-				703,167
Work in progress, net			186,433				-				-				-				-				-				-				-				186,433
Accounts receivable from related parties			107,495				35				31,868				2,624				30				1,342				102,103				(218,159	)			27,338
Other accounts receivable			323,084				27,900				23,631				13,220				197				10,446				35,051				2				433,531
Inventories, net			58,653				36,016				8,496				31,861				-				418,341				360				(1,727	)			552,000
Prepaid expenses			7,798				1,964				6,485				328				116				-				6,281				-				22,972
Total current assets			1,492,252				163,694				213,387				367,610				8,316				541,703				258,531				(219,884	)			2,825,609
Long-term trade accounts receivable, net			53,036				-				15,740				632,214				-				2,181				27,495				-				730,666
Long-term accounts receivable from related parties			315,393				-				14,508				-				11,103				-				611,498				(332,431	)			620,071
Prepaid expenses			-				981				19,009				2,048				736				-				-				(510	)			22,264
Other long-term accounts receivable			134,719				70,694				531				-				7,346				54,237				60,696				-				328,223
Investments in associates and joint ventures			109,870				8,080				-				-				-				6,095				1,322,865				(1,411,394	)			35,516
Investment property			1,467				-				-				-				-				24,606				44,521				(44,521	)			26,073
Property, plant and equipment, net			169,091				166,382				9,186				794				146				9,592				16,718				33,560				405,469
Intangible assets, net			143,575				250,327				371,437				681				-				872				19,017				6,081				791,990
Right-of-use assets, net			8,179				9,872				4,626				99				-				3,936				51,401				(13,595	)			64,518
Deferred income tax asset			174,269				4,717				5,037				-				779				18,704				53,536				5,123				262,165
Total non-current assets			1,109,599				511,053				440,074				635,836				20,110				120,223				2,207,747				(1,757,687	)			3,286,955
Total assets			2,601,851				674,747				653,461				1,003,446				28,426				661,926				2,466,278				(1,977,571	)			6,112,564
Liabilities.-
Borrowings			230,682				32,550				2,405				42				-				95,709				102,469				(10,973	)			452,884
Bonds			4,546				-				32,819				21,081				-				-				-				-				58,446
Trade accounts payable			861,833				51,225				51,221				32,637				61				42,565				57,625				-				1,097,167
Accounts payable to related parties			185,104				1,083				17,738				21,531				-				19,074				15,708				(216,420	)			43,818
Current income tax			26,922				1,351				1,638				3,606				166				-				811				-				34,494
Other accounts payable			525,195				12,905				35,997				6,719				766				91,976				40,252				4,596				718,406
Provisions			8,876				18,943				1,659				-				-				492				62,787				-				92,757
Total current liabilities			1,843,158				118,057				143,477				85,616				993				249,816				279,652				(222,797	)			2,497,972
Borrowings			25,273				103,154				2,291				59				-				11,021				328,753				(25,115	)			445,436
Long-term bonds			22,911				-				248,029				603,373				-				-				-				-				874,313
Long-term trade accounts payable			-				-				-				-				-				-				40,502				-				40,502
Other long-term accounts payable			140,605				-				11,623				231				2,762				23,357				4,654				-				183,232
Long-term accounts payable to related parties			104,432				-				836				36,297				24,207				-				186,886				(316,361	)			36,297
Provisions			122,503				37,599				26,034				1,925				-				-				148,548				-				336,609
Deferred income tax liability			25,576				36,793				1,518				39,020				-				-				-				-				102,907
Total non-current liabilities			441,300				177,546				290,331				680,905				26,969				34,378				709,343				(341,476	)			2,019,296
Total liabilities			2,284,458				295,603				433,808				766,521				27,962				284,194				988,995				(564,273	)			4,517,268
Equity attributable to controlling interest in the Company			261,501				354,982				161,710				177,694				464				138,933				1,474,398				(1,302,076	)			1,267,606
Non-controlling interest			55,892				24,162				57,943				59,231				-				238,799				2,885				(111,222	)			327,690
Total liabilities and equity			2,601,851				674,747				653,461				1,003,446				28,426				661,926				2,466,278				(1,977,571	)			6,112,564