CONSORCIO TRANSMANTARO S.A. FINANCIAL STATEMENTS

Transcription

1 Statement of Financial Position CONSORCIO TRANSMANTARO S.A. FINANCIAL STATEMENTS [Individual] III QUARTER as of September 3, 213 (dollars in thousands) ACCOUNT NOTE September 3, 213 December 31, 212 Assets Current Assets Cash and Cash equivalent 7 23,819 7,362 Other financial assets Trade accounts receivable and other accounts receivable 31,842 23,759 Trade accounts receivable (net) 8 1,243 6,15 Other accounts receivable (net) 9 17,64 15,182 Accounts receivable from related parties 23 1,23 1,221 Advance payments 3,35 1,251 Inventory 2,376 1,358 Biological assets Income tax assets Other non financial assets Total Current Assets Different from Assets or Group of Assets for Provision Classified as Held for 58,37 32,479 Sale or Distribute to Owners Non current assets or Group of assets for Provision Classified as Held for Sale 297 Non currente assets or Group of Assets for Provision Classified as Held to Distribute to Owners Non current Assets or Group of Assets for Provision Classified as Held for Sale or Held to Distribute 297 to Owners Total Current Assets 58,37 32,776 Non current Assets Other Financial Assets Investment in subsidiaries, joint and associated businesses Trade accounts receivable and other accounts receivable 12, ,71 Trade accounts receivable 8 5,51 5,747 Other accounts receivables Cuentas por Cobrar 9 114, ,963 Accounts receivable from related parties Advance payments Biological assets Investment properties Properties, Plant and equipment 2,95 2,942 Intangible assets different from the capital gain intangibles distintos de la plusvalia 1 645,94 615,133 Deferred taxes assets Capital gain Other non financial assets Total Non current Assets No Corrientes 769,113 74,785 TOTAL ASSETS 827,15 773,561 Liability and Equity Current Liabilities Other Financial liabilities 13 2,82 16,293 Trade payable accounts and another payable accounts 16,43 15,613 Payable Trade accounts 11 2, Other Payable accounts 12 8,475 1,567 Payable accounts to other related parties 23 5,19 13,77 Deferred Income Provision for employee's benefits Other provisions 12 1,153 1,153 Profit tax liabilities Other non financial liabilities Total Current Liabilities Different from Liabilities included in Group of Assets for Provision 2,43 33,59 Classified as Held for Sales Liabilities included in Group of Assets for Provision Classified as Held for Sale Current Liabilities 2,43 33,59 Total non currente Liabilities Other Financial Liabilities ,377 38,11 Trade accounts payable and other accounts payable 12, Trade accounts payable Other accounts payable Accounts payable to related parties 23 12, Deferred income Provision for employee's benefits Other provisions 12 5,72 3,945 Liabilities for deferred taxes 14 38,812 37,78 Other non financial liabilities Total non current liabilities 53,99 469,124 Total Liabilities 551,312 52,183 Equity Issued capital ,49 194,49 Premium issuance Investment shares Own shares in portfolio Other equity reserves 11,375 9,826 Earnings accrued 7,54 67,143 Other equity reserves Total Equity 275, ,378 TOTAL LIABILITY AND EQUITY 827,15 773,561

2 Profit and loss statement CONSORCIO TRANSMANTARO S.A. FINANCIAL STATEMENTS Individual III QUARTER as of September 3, 213 (Dollars in thousands) ACCOUNT NOTE As of January 1 to September As of January 1 to Accrued from January 1 to Accumulated from January 1 3, 213 September 3, 212 September 3, 213 to September 3, 212 Revenues from ordinary activities Cost of sales Gross Gain (loss) Sales and Distribution Expenses Administrative Expenses Gain (loss) on derecognized financial assets measured at amortized cost Other Operating Income Otros Gastos Operativos Other gains (losses) Income (loss) from operating activities Financial Income Financial expenses Net exchange differences Other income (loss) of subsidiaries, joint ventures and associates Gains (losses) arising from the difference between Previous Book Value and Fair Value of Reclassified Financial Assets Measured at Fair Value f ,748 (33,47) 1,71 (481) 1,22 2,69 (5,254) (271) 52,483-44,924 7,559 (718) 6,841 1,418 (3,627) 1,892 15,58 (72,862) 32,196 (1,54) 3,656 5,254 (23,7) (6,79) 151,12 (127,14) 24,88 (1,598) 22,49 4,185 (11,386) 2,94 Difference between the carrying amount of the assets distributed and the carrying amount of the dividend payable Income before profit tax Expenses for profit tax Gain (Loss) from Continuing Operations Income (loss) from discontinued operations, net of income tax 14 6,764 (1,885) 4,879 6,524 (1,915) 4,69 6,194 (1,734) 4,46 18,229 (5,439) 12,79 Profit (Loss) of the Fiscal year Profit (loss) per share: Basic profit (loss) per share Basic per common share from continuing operations Basic per common share from discontinuing operations Basic profit (loss) per common share Basic per Share Investment in Continuing Operations Basic per Share Investment in discontinuing Operations Basic Profit (loss) per share investment Diluted profit (loss) per share Diluted per common share from continuing operations Diluted per common share from discontinuing operations Diluted profit (loss) per common share Diluted per share investment in Continuing Operations Diluted per share investment in Discontinuing Operations Diluted profit (loss) per share Investment 4,879 4,69 4,46 12,79

3 Cash Flow Statement- CONSORCIO TRANSMANTARO S.A. FINANCIAL STATEMENTS [All] III QUARTER As of September 3, 213 (Dollars in thousands) ACCOUNT NOTE As of January 1 to September 3, 213 As of January 1 to September 3, 213 Cash flow from operating activities Operating activities cash collection types Sale of goods and provision of services 56,235 46,752 Royalties, fees, commissions and other revenue Contracts held for purposes of brokerage or trading Leasing and later sale of these assets Other cash collections related to operating activities Cash payment types for operating activities Goods and services providers (29,41) (18,196) Contracts held for purposes of brokerage or trading Payments to and on behalf of employees (81) (71) Preparation and acquisition of assets for leasing and others held for sale Other cash payments related to operating activities 1,918 11,925 Cash flow and equivalent to cash provided by ( used in) operations 38,31 4,41 Interest received (not included in the Investment Activity) 5, Interest paid (not included in the financing activity) (6,763) (16,873) Dividends received (not included in the Investment Activity) Dividends received (not included in the Financial Activity) Income taxes (paid) refunded (2,83) (3,98) Other cash collections (payments) (1,63) (1,355) Cash Flows and Cash Equivalent From (Used in) Operating Activities 32,856 18,934 Cash flow from investment activities Cash collection types for investment activity Repayment of Loans Advances and Loans Granted to Third Parties Loss control of subsidiaries or other businesses Loan repayments received from related parties Sale of Equity Financial Instruments or Other Entities Debt Derivatives Contracts (futures, forwards, options) Sale of shares in Joint Ventures, Net of expropriated Cash Sale of Property, Plant and Equipment Sale of intangible assets Sale of Other Long-term Assets Government Grants Interest received Dividends Received Cash collection types for investment activities Advances and loans granted to third parties Get control of subsidiaries or other businesses Loans granted to related parties Purchase of Equity Financial Instruments or Other Entities Debt Derivatives Contracts (futures, forwards, options) Purchase of Subsidiaries, Net of Acquired Cash Compra de Participaciones en Negocios Conjuntos, Neto del Efectivo Adquirido Purchase of Property, Plant and Equipment (8) (192) Purchase of Intangible Assets (47,85) (111,41) Purchase of Other Long-term Assets Income taxes (paid for) refunded Other cash collections (payments) related to investment activity (8,954) (9,781) Cash Flows and Cash Equivalent From (Used in) Investment Activities (56,812) (121,14) Cash flows from financing activities Cash collection types for financing activities Obtaining loans 53, , Loans from related parties 4, 34, Changes in shares on subsidiaries ownership that do not result in loss of control Issuance of shares Issuance of other equity instruments Government grants Cash payment types for financial activities Loan amortization or loan payment (343,226) (55,496) Financial leasing liabilities Loans from related parties (124,) (29,) Changes in shares on subsidiaries ownership that do not result in loss of control Repurchase or redemption of shares from the company (Shares in portfolio) Acquisition of other shares in Equity Interest paid Dividends paid Income taxes (paid) refunded Other cash collections (payments) related to financing activity Cash Flows and Cash Equivalent From (Used in) Financing Activities 4,413 11,54 Net Cash Increase (Decrease) and Cash Equivalent before variations in Foreign Exchange Rates 16,457 (576) Effects of variations in Foreign Exchange Rates on Cash and Cash Equivalents Increase (Decrease) in Net Cash and Cash Equivalent 16,457 (576) Cash and Cash Equivalent at the beginning of fiscal year 7,362 7,696 Cash and Cash Equivalent at the End of the fiscal year 23,819 7,12

4 Consorcio Transmantaro S.A. Notes to the Financial Statements As of September 3, 213 and December 31, Identification and business activity of the company ( a ) I d e n t i f i c a t i o n. - Consorcio Transmantaro S.A. (hereinafter the Company ) was incorporated in January The Company is a subsidiary of Interconexión Eléctrica S.A. E.S.P. (company with legal address in Colombia). The Company legal address is Av. Juan de Arona 722, piso 6, San Isidro, Lima, Peru. ( b ) B u s i n e s s a c t i v i t y. - The Company principal business activity is the electric power transmission produced by generating companies. The Company also provides operational and maintenance services to private entities that run transmission lines and sub-stations. The Company electric power transmission operations are developed in accordance with the Electrical Concession Law and its regulation, and are regulated and supervised by the Supervising Organism of Investment in Energy and Mining (OSINERGMIN for its Spanish acronym). ( c ) Approval of financing statements.- The financial statements as of December 31, 212 were approved by the Board and the General Meeting of Shareholders in the period stated by law. 2. Concession contract of electrical transmission systems Mantaro-Socabaya concession On January 1998, the Peruvian government (through the Special Committee authorized by Supreme Resolution No PCM dated December 3, 1996) awarded to the Company the Mantaro-Socabaya electrical transmission system concession. As a result of the award, the Company obtained the right to design, build and commercially exploit the above-mentioned electrical transmission system, together with the responsibility for its maintenance and repairing. The concession term is for thirty three years, starting on February By virtue of the aforementioned award, the Company signed with the Peruvian government the Build, Own, Operate and Transfer contract (named BOOT contract) which establishes the rights and obligations of both parties, as well as the rules and procedures that are in force for the design, supply of goods and services, construction and commercial exploitation of the Mantaro-Socabaya electrical transmission line, as well as the provision of services and the transfer of all the corresponding assets to the Peruvian government at the termination of the concession. The Mantaro-Socabaya transmission line became commercially operative on October 8, 2. From that date, it has rendered a public service of electric power transmission and it is part of the national interconnected grid

5 (known by its Peruvian acronym as SINAC). In reward of the service, the Company receives an income corresponding to the established tariff regime set forth in the concession contract. The contract is regulated by the Energy and Mining Superintendence Organism (OSINERGMIN). In reward for its electric power transmission service, the Company receives a fee corresponding to the total transmission cost, which corresponds to the annuity of the carried out investment, including operating and maintenance overheads as well as other outgoings. The investments of 157, 456,634, have been made, see note 11(b). During the concession s lifetime, the remuneration is adjusted annually in accordance with the Unites States of America Finished Goods Less Food and Energy index. The Peruvian Government, via the Ministry of Energy and Mines, guarantees that the Energy and Mining Superintendence Organism (OSINERGMIN) will put in place the necessary tariff mechanisms to insure that the remuneration received by the Company in return for their transmission services will be entirely recovered from their customers. Extension N 1 On June 29, the Company and the Ministry of Energy and Mines signed an addendum to the concession contract detailing an extension to the Mantaro-Socabaya electric transmission line capacity amounting to 55 MVAR. The service became operational in July 211 and required an investment of 72,73,449, see note 11(b). Chilca- La Planicie- Zapallal concession The Company entered into a concession contract with the Peruvian government on September 8, 28. The contract has been made under BOOT modality, expires after 3 years from the date the service became operational. The service became operational on June 211 and required an investment of 139,265,447, see note 11(b). Ica-Independencia concession On October 21, 29, the Company entered into a concession contract with the Peruvian government in order to carry out the construction of the structural upgrade project designated Reinforcement Sur Medio Transmission System: Independencia Ica Transmission Line 22Kw. The service became operational on June of 211 and required an investment of 1,37,281, see note 11(b). Zapallal-Trujillo concession The Company entered into a concession contract with the Peruvian government on February 18, 21. The contract has been made under BOOT modality, expires after 3 years from the date the service becomes operational, which will occur within 3 months dating from the subscription of the contract. To finance the construction of this project the Company set forth a trust for the Zapallal-Trujillo project, see note 3. The project became operational on December 212 and required an investment of 212,179,564, see note 11(b). Talara-Piura Concession The Company entered into a concession contract with the Peruvian government on August 26, 21. This contract expires after 3 years from the date the service becomes operational, which will occur on May 4, 213.

6 As of September 3, 213. The Company has made investments of $ 21,187,923. See note 11 (b). Pomacocha-Carhuamayo Concession The Company entered into a concession contract with the Peruvian government on September 27, 21. The contract expires after 3 years from the date the service becomes operational which was due on September 2, 213. By September 3, 213, the Company had invested a total of 24,73,757. See note 11(b). Trujillo- Chiclayo Concession The Company entered into a concession contract with the Peruvian government on May 26, 211. This contract expires after 3 years from the date the service becomes operational which will occur in 3 months after the date of subscription of the contract. By September 3, 213 the Company had invested a total of 87,65,411 in this project. See note 11(e). Machupicchu-Cotaruse Concession The Company entered into a concession contract with the Peruvian government on December 22, 21. This contract expires after 3 years from the date the service becomes operational which is planned to be completed by January 215. By September 3, 213, the Company had invested a total of 13,311,14. See note 11(e). Mantaro-Montalvo Concession The Company entered into a concession contract with the Peruvian government on September 26, 213. This contract expires after 3 years from the date the service becomes operational which is planned to be completed in 38 months after the process of the concession is completed. Private Contract - Compañía Eléctrica El Platanal S.A On September 28, Red de Energía del Perú S.A. transferred to the Company the contract that had previously entered into with Compañía Eléctrica El Platanal S.A. (hereinafter CELEPSA). As a result, the Company was committed to construct the El Platanal Chilca transmission line as well as to provide an electric energy transmission service to this client. This contract is in force for a period of 2 years. The total investment in the transmission line was 16, 66,85. The service became operational on August 29. Private Contract Minera Miski Mayo S.A. On March 29 the Company subscribed a contract with the Miski Mayo mining company. Under the terms of the contract, the Company would construct a transmission line and a Kv sub-station. In addition, an electric energy transmission service would be provided. This contract is in force for a period of 3 years. An amount of 16,248,134 was invested. The transmission line entered into service on March 21.

7 Private Contract - Duke Energy S.A. and Kallpa Generación S.A. On July 29 the Company signed two contracts one with Duke Energy S.A. and the other with Kallpa Generación S.A. Under the terms of the contracts, the Company was committed to construct the 22 Kv cell at the Chilca Nueva sub-station and the Kallpa III 22 Kv cell at the Chilca sub-station, respectively. The Company was also contracted to supply an electrical transmission service. The total value of each construction contract amounts to 1, 331,184 and 1,284,217, respectively. Both contracts are in force for 2 years and became operational on May 21. Private Contract - Fenix Power Perú S.A. On August 21 the Company entered into a contract with Fenix Power Perú S.A. Under the terms of the contract, the Company was committed to construct a transmission line, a 22 Kv sub-station, and to provide an electrical energy transmission service. It became operational on March 28, 213. As of September 3, 213, the company had invested a total of 12,44,. Private Contract Cotaruse Extension On November 212, the Company entered into a contract for electrical energy transmission services with ATN2 SA. Under the terms of the contract, the Company was committed to the construction, operation and maintenance of facilities to provide electric transmission services. The total construction cost is 8,593,89 and the term of the contract is 18 years. Private Contract - Minera Suyamarca S.A.C. On November 212, the Company entered into a contract for electrical energy transmission services with Minera Suyamarca. Under the terms of the contracts, the Company was committed to the construction, operation and maintenance of facilities to provide electric transmission service. The total construction cost is 4,296,544 and the term of the contract is 18 years. Private Contract - Termochilca S.A.C. On December 21, the Company entered into a contract for electrical energy transmission services with Termochilca SAC. Under the terms of the contract, the Company was committed to the construction and operation of facilities to provide electric transmission service. It became operational on August 1, 213. As o September 3,213 the investments made amount to 12,681,158 and the contract term is 2 years.

8 Trusts Zapallal- Trujillo Project Trust Under the terms of the Trust Concession Agreement subscribed on January 1, 211 represented by the La Fiduciaria S.A. managed the trust goods of the of the Transmission System Reinforcement of the Centro Norte Medio Transmission System of 5 Kv - Electric Transmission Line Zapallal Trujilllo. It started its operation stage on February 17, 211 by mens of a syndicated contract entered into by the loaners (Banco de Credito del Peru S.A. and BANCOLOMBIA Puerto Rico Internacional INC.) and the Trust Patrimony (represented by La Fiduciaria S.A.) granted the Company a medium-term financing up to the amount of 16,,, for a maturity period of 1 calendar years. The commercial commissioning date for the Zapallal-Trujillo project was set for December 27, 212 (POC for its Spanish acronym). The prepayment of the Trust Patrimony was done with funds from the issuance of international bond that as of May 7 amounted to 151,452,483 thus rendering the trust contract of Zapallal-Trujillo project completely void. Trujillo Chiclayo Project Trust Background Under the Concession Agreement of the Guaranteed Transmission System Project "Transmission Line Trujillo - Chiclayo in 5kV" (Concession Agreement), the Ministry of Energy and Mines, on behalf of the Peruvian government and in its capacity as Grantor awards the Company, as Concessionaire Company the right to design, finance, supply the goods and services required, construct, operate and maintain the line as well as provide the Service, all in accordance with the Agreement and Applicable Law. In accordance with the provisions of the Concession Agreement, the Company as the Concessionaire, in order to meet the goal set forth herein, is entitled to obtain their own financing or from third parties that better estimate the Company interests, as well as conformed the guarantees on goods of the Concessionaire, the Concessionaire of the Guaranteed transmission System, transmission flows or any other asset or right that corresponds to the Concessionaire, in order to secure such financing. By official document Oficio N /MEM-VME dated August 31, 211, the Deputy Minister of Energy of the Ministry of Energy and Mines, in representation of the Grantor, expressed his consent that the financing should involve the transfer under the trust domain of the Concession to a trust so as the Company could transfer or assign its rights or obligations, assign its contractual position or renew all or any of its obligations under the Concession Agreement, without prejudice to the obligation of the Concessionaire to comply itself with each and every one of the provisions of the Contract and applicable laws.

9 Trust Management Contract (a) Description of operations - On December 1, 212, pursuant to the Trust Management Contract (hereinafter the Contract ) subscribed by the Company (hereinafter the Trustee ) and La Fiduciaria S.A. (hereinafter the Fiduciary ), the Trust Fund was established. The Trust Patrimony is established with a view to subscribe the syndicated loan contract and manage the credited funds or to be credited in the collector bank, and also to execute and manage the rights and obligations pertaining to the concession contract in accordance with the terms established in the Trust Management Contract. The Trust Fund became operative on December 7, 212, upon subscription of the syndicated loan contract entered into between the lenders and the Trust Patrimony, specifying therein a mediumterm loan of up to 1,, with a maturity term of 8 calendar years from the date of closing the contract subscription. As of September 3, 213, a total amount of 47,, has been disbursed. The payment of the Principal and interest is made by incrementing and consecutive quarterly installments, plus a balloon payment to be credited in the last installment in the amounts and in the terms that are detailed in the respective payment schedule see note 14(e). As of September 3, 213 no payments to the Principal have been made. (b) Securitized assets - The Trust Patrimony includes: (a) the rights and obligations of the concession contract of Trujillo- Chiclayo, (b) the disbursements from the loan contract, (c) goods relating to the concession, (d) collection rights, which together include current and future collection rights, determined or determinable contributions, extraordinary contributions, insurance policies and considerations for transmission services rendered, and finally: (e) cash flows which together include the total sum of money from collection rights. Administrative and Guarantee Trust Contract (a) Description of operations - - On February 7, 212, pursuant to the Administrative and Guarantee Trust Contract (hereinafter the Contract ), subscribed by the Company and La Fiduciaria S.A. (hereinafter the Trustors ), La

10 Fiduciaria S.A. (Hereinafter the Trustee ), Banco de Crédito del Perú S.A.A. (hereinafter the Fideicommissary ), and Banco de Credito del Peru S.A.A., (hereinafter the Operative Agent when appropriate), the Trust Fund was constituted. The purpose of the Trust Patrimony is to administrate and, if required, take control of the Trust assets, insofar they guarantee the faithful and opportune compliance of the guaranteed obligations and also constitute a payment instrument. (b) S e c u r i t i z e d a s s e t s - The Trust Goods include: (a) the concessions, which together include the Concession Contract and the Final Transmission concession, (b) collection rights, which together include the right to bill and collect transmission services, collect insurance and to charge connection fees, (c) cash flows which, together, include transmission, insurance and connection-related flows, (d) goods pertaining to the concession, and (e) insurance policies which, together, include the global insurance policy, the CAR/ER policy, the transport policy and any additional policy that the Company may consider fit to contract in the future. Furthermore, the Trust Contract shall remain in force until all the warranted obligations have been fulfilled. However, under no circumstances shall the total term exceed the maximum term of thirty years. Detailed below is a summary of the principal assets and liabilities pertaining to the Company financial statements related to the Trust Fund operation as of September 3, Asset accounts relating to Trust Fund operations Cash and cash equivalent 4, ,729 Other accounts receivable 973,79 2,141,946 Prepaid expenses 2,345,84 338,61 Intangible assets, net 85,691,547 56,477,923 89,14,912 59,322,199 Liability accounts relating to Trust Fund Operations Trade accounts payable 357,96 12,745 Account payable to related parties 52,33 8,4,533 Interests payable 46,525 - Current portion of long-term financial obligations 2,35, Long-term financial obligations 43,382,396 8,834,51 Total liability accounts 47,71,211 17,337,788

11 Net assets pertaining to Trust Fund operations 41,943,71 41,984,411 As of September3, 213 disbursements pertaining to administrative expenses were 4,79 and as of December 31, 212 were 15,589. Detailed below is a summary of the Company principal cash flow components related to Trust Patrimony operations as of September 3, 213: 213 Operating activities Payment to supplier (7,919,663) Net cash and cash equivalents used in operating activities (7,919,663) Investment assests Intangible assets additions (29,213,624) Net cash and cash equivalents used in investing activities (29,213,624) Financing activities Trust contributions - Assumed financial obligations 36,774,49 Net cash and cash equivalents provided by financing activities 36,774,49 Net increase in cash and cash equivalent in the year (359,238) Cash and cash equivalent at beginning of year 363,729 Cash and cash equivalent at the end of the year 4,491 Reconciliation of net income to net cash flow and cash equivalent from operating activities Pre-operational and administrative expenses (4,79) Provisions 123,836 Net decrease in operation assets Other accounts receivable 1,168,156 Prepaid expenses (2,6,483) Operation liabilities net increase Trade payable accounts (7,88,23) Accounts payable to related parties 255,215

12 Trade accounts payable 46,525 Net cash and cash equivalents used for operational activities (7,919,663) 4. Main accounting policies 4.1 Preparation basis Compliance statement - The financial statements of the company are prepared in accordance with International Financial Reporting Standards (hereinafter IFRS) as issued by the International Accounting Standards Board (hereinafter IASB), in force as of September 3, 213. Responsibility for the information - The information contained in these financial statements is the responsibility of the Company Management, which expressly state that they have fully implemented the principles and criteria contained in the International Financial Reporting Standards (IFRS) issued by the IASB. Measurement basis - These financial statements have been prepared on a historical cost basis, from the accounting records kept by the Company. The financial statements are presented in United States dollars, the functional currency and the presentation currency of the Company. 4.2 Significant judgments, estimates and accounting assumptions The preparation of the Company financial statements in compliance with the Financial Information International Standards requires that the management make use of the judgments, estimates and assumptions to determine the assets and liabilities reported figures, disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of revenues and expenses for the years ended on September 3, 213 and December 31, 212. In this sense, uncertainty about these assumptions and estimates could result in outcomes in future periods that would require a significant adjustment to the carrying amount of the asset or liability affected. (a) Significant judgments - The judgments which have the most significant effect on the financial statements are described below: (i) Recognition of the concession according to the intangible asset model (see note 11) Based on the IFRIC 12 Service Concession Agreements analysis, the Company has evaluated that the intangible asset model is the one that is applicable to register transmission lines concessions granted by the Peruvian Government. According to Company Management opinion to prepare the financial statements even though the retribution is determined by the Peruvian government

13 yearly, the concession contracts do not establish obligations of the Peruvian government to take responsibility for the payment of the duties assigned to each service user as a result of the annual provision of transmission services, since the obligation is on the users of the provided service. That is, once the compensation is allocated to service users, there is no mechanism established in the Concession Agreement that unconditionally guarantees that the collection of the rights generated by the transmission service is assumed by the Peruvian government in case there is a breach from service users. Given the above, the Company management has concluded that the Peruvian government does not guarantee the payment of the remuneration; however, it ensures the allocation of each one of the users. Consequently, the intangible model is to be used in accordance with IFRIC 12 Service Concession Agreements. (ii) Trust Management Obligations (see note 3) - The Company has subscribed a trust management contract in order to finance the construction of the Zapallal-Trujillo and Trujillo Chiclayo transmission lines. On the basis of an evaluation of the agreed terms, the Company Management determined that the risks and benefits of the concession Contract had not been transferred in their entirety, nor had ceded the control of the concession Contract. Given the circumstances, the Company also recognizes and records liabilities that relate to subsequent assumed obligations. The transferred asset and the related liability are measured so they reflect those rights and obligations retained by the Company. See note 3. (b) Estimates and significant accounting assumptions - The most significant estimates and assumptions in relation with the financial statements are described below: (i) Impairment of long term assets (see note 11(g)) - The Company assesses each year whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the asset recoverable amount. At the date of the financial statements, the available projections of those variables show favorable trends in a view of the Company objectives which support the recoverability of its long - term assets. (ii) Provision for significant maintenance and replacement costs The provision for maintenance and replacements represents the present value of the

14 costs of significant maintenance and replacement outlays expected during the remaining lifetime of the concession. This provision corresponds mainly to those expenses necessary in order to maintain the transmission line infrastructure in the operative conditions demanded by the Peruvian Government and set out in the corresponding concession contract. The provision is calculated by the Transmission Management staff and is based on an assessment of factors relating to the condition and age of the transmission lines and sub-stations. The evaluation includes both a qualitative analysis that incorporates climate factors, the number of technical faults and technical inspections and a quantitative analysis (samples, physical-chemical analysis, and laboratory). Budgets are reviewed annually to take into consideration any material changes to previous projections. However, it should be pointed out that significant upkeep and replacement outlays are dependent upon market prices, maintenance activity and the price of required equipment as affected by future economic conditions. Based on the capital expenses budget previously approved by the Board, the financial area indexes cash outflows by inflation and updates budget flows by applying an annual risk-free rate that takes into consideration market conditions and the specific risk of the related liability. The principal criteria and assumptions used for calculating the provision for significant maintenance and replacement are set out in note 13 (b). (iii) Taxes (see note 17) - Uncertainties exist with respect to the interpretation of complex tax regulations, changes in tax laws, and the amount and timing of future taxable income. Given the nature of the long-term concession contract and the complexity of existing contractual agreements, differences arising between the actual results and the assumptions made, or future changes to such assumptions, could necessitate future adjustments to tax income and expense already recorded. The Company establishes provisions, based on reasonable estimates, for possible consequences of audits by the tax authorities. The amount of such provisions is based on various factors, such as experience of previous tax audits and differing interpretations of tax regulations undertaken by the Company and its consultants. Such differences of interpretation may arise on a wide variety of issues depending on the conditions prevailing in the respective Company domicile. Because the Company believes possible or remote possibility the likelihood of tax litigation and subsequent tax disbursements as a result, has not recognized any tax-related contingent liabilities.

15 (iv)recoverability of the deferred tax assets (see note 15) - Significant management judgment is required to determine if the amount of deferred tax assets should be recognized in the statement of financial position. Deferred tax assets require management to assess the likelihood that the Company generates taxable income in future periods to utilize the deferred tax assets. Estimates of future taxable income are based on projected cash flows from operations and the application of existing tax laws in each jurisdiction. To the extent that future cash flows and taxable income differ significantly of the estimates, this could have an impact on the ability of the Company to perform the net deferred tax assets recorded at the reporting date. In addition, future changes in tax laws could limit the Company capacity to obtaining tax deductions in future periods. Any difference between the estimates and subsequent real outflows is recorded in the period in which it occurs. In Management opinion, the estimates included in the financial statements were made based on the best knowledge of the relevant facts and circumstances at the reporting date. However, the final results could be different from the estimates included in the financial statements. 4.3 Summary of significant accounting principles and policies - (a) Financial instruments: initial recognition and subsequent measurement (i) Financial assets - Recognition and initial measurement - Financial assets within the scope of IAS 39 are classified as financial assets at fair value through profit or loss, loans and receivables, investments held-to-maturity financial investments available for sale or derivatives designated as hedging instruments. Upon initial recognition, financial assets are measured at fair value. The Company determines the classification of its financial assets after initial recognition and, when appropriate, re-evaluates this determination at the end of each year. All financial assets are initially recognized at fair value plus direct costs attributed to the transaction, except for financial assets at fair value with transaction costs are recognized in the income. Purchases or sales of financial assets that require delivery of assets within a time period established by regulation or market convention (conventional transactions) are recognized on the date of negotiation, ie the date on which the Company commits to purchase or sell the asset.

16 The Company financial assets include cash and cash equivalents, trade accounts receivable, accounts receivable from related parties and other receivables. Subsequent measurement The subsequent measurement of financial assets depends on their classification, as detailed below: Financial assets at fair value through profit or loss - Financial assets at fair value through profit or loss include assets held for trading and financial assets designated upon initial recognition as at fair value through profit or loss. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near future. This category includes derivative financial instruments taken by the Company that are not designated as hedging instruments in hedge relationships as defined by IAS 39. Derivatives, including separated embedded derivatives, are also classified as held for trading unless they are designated as effective hedging instruments. Financial assets at fair value through profit or loss are recognized in the statement of financial position at fair value and changes in fair value are recognized as income or finance costs in the statement of comprehensive income. The Company has no financial assets at fair value through profit or loss at September 3, 213. Loans and receivables - The Company has in this category the following accounts: Cash and cash equivalents, trade accounts receivable, accounts receivable from related parties and other receivables, which are expressed to the value of the transaction, net of a provision for accounts receivable dubious when applicable. Loans and receivables are non-derivative financial assets with fixed or determinable fees, which are not traded in an active market, for which the entity intends to sell immediately or in the near future and have no risk of different recovery because of credit impairment. After initial recognition, these financial assets are measured at amortized cost using the method of the effective interest rate, less any impairment. Amortized cost is calculated taking into account any discount or premium on acquisition and fees or costs that are an integral part of the effective interest rate. The amortization of the effective interest rate is recognized as interest income in the statement of comprehensive income. Losses resulting from impairment are recognized in the statement of comprehensive income as finance costs. Investments held-to-maturity - Non-derivative financial assets with fixed or determinable payments are classified as held to maturity when the Company has the intent and ability to hold them to maturity. After initial recognition, the Company measures the investments held to maturity at amortized cost using the effective interest method, less any impairment. Amortized cost is calculated taking into account any discount or premium on acquisition and fees or costs that are an integral part of the effective interest rate. The amortization of the effective interest rate is recognized as interest income in the

17 statement of comprehensive income. Losses resulting from impairment are recognized in the statement of comprehensive income as finance costs. The Company has no investments to be held to maturity as of September 3, 213. Financial assets available for sale - Financial assets available for sale include equity and debt securities. Equity investments classified as available for sale are those which are neither classified as held for trading or as at fair value through profit or loss. Debt securities in this category are those that are expected to remain indefinitely, but that can be sold to a need for liquidity or to changes in market conditions After initial recognition, financial assets available for sale are measured at fair value, and profit or losses are recognized as other comprehensive income in reserve for financial assets available for sale, until the investment is derecognized. At that time, the cumulative gain or loss is recognized as an operating profit or considered as an impairment of the investment, in which case, the cumulative loss is reclassified in the statement of comprehensive income in the line of financial costs and eliminated of the allowance. In the case it is not possible to determine a reasonable value for lack of an active market and / or information relevant for this determination, these financial assets are stated at cost. The Company did not have any available-for-sale financial assets as of September 3, 213. Derecognition of financial assets - A financial asset (or, where applicable, part of a financial asset or part of a group of similar financial assets) is derecognized when accounts: - The contractual rights to the asset cash flows have expired; - The contractual rights are transferred to the cash flows of the asset or an obligation to pay to a third party all cash flows without a significant delay, through a transfer agreement (pass-through arrangement) is assumed, and (a) all risks and rewards of ownership asset has been transferred substantially, (b) have not been transferred nor retained substantially all the risks and rewards of ownership of the asset, but the control of the asset has transferred. When the Company has transferred its contractual rights to receive cash flows from an asset or has entered into a transfer agreement but has neither transferred nor retained substantially all the risks and rewards of ownership of the asset, or has transferred the control of the asset, the asset continues to be recognized to the extent of the Company continuing involvement on the asset. In that case, the Company also recognizes the related liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained. A continuing involvement that takes the form of a guarantee over the transferred asset is measured as the lower original carrying amount of the asset and the maximum amount of the consideration that the Company would be required to repay.

18 Financial liabilities - Recognition and initial measurement - Financial liabilities within the scope of IAS 39 are classified as financial liabilities at fair value through profit or loss or loans and accounts payable, as appropriate. The Company determines the classification of its financial liabilities at initial recognition. All financial liabilities are recognized initially at fair value plus, in the case of loans and payables carried at amortized cost, transaction costs directly attributable. The Company financial liabilities include trade payables, payables to related parties, accounts payable and financial obligations. Financial liabilities are recognized when the Company is part of the contractual agreements of the instrument. Financial liabilities are classified as current liabilities unless the Company has an irrevocable right to defer the settlement of obligations for more than twelve months after the date of the statement of financial position. Financing costs are recognized on the accrual method, including fees related to the financing acquisition. Subsequent measurement - The subsequent measurement of financial liabilities depends on their classification as follows: Financial liabilities at fair value through profit or loss changes - Financial liabilities at fair value through profit or loss changes include financial liabilities held for trading and financial liabilities designated upon initial recognition at fair value through profit or loss changes. Financial liabilities are classified as held for trading if they are acquired for the purpose of selling in the near future. This category includes derivative financial instruments taken by the Compa ny that are not designated as hedging instruments in hedge relationships as defined by IAS 39. Separated embedded derivatives are also classified as held for trading unless they are designated as effective hedging instruments. Profit or losses on liabilities held for trading are recognized in the statement of comprehensive income The Company does not have any financial liabilities at fair value through profit or loss changes as of September 3, 213. Interest-bearing loans - After initial recognition, interest-bearing loans are measured at amortized cost using the method of the effective interest rate. Profit and losses are recognized in the statement of comprehensive income when the liabilities are derecognized as well as through the amortization process of the effective interest rate. Amortized cost is calculated taking into account any discount or premium on acquisition and fees or costs that are an integral part of the effective interest rate. The amortization of the effective interest rate is included in finance cost in the statement of comprehensive income.

19 Derecognition of financial liabilities - A financial liability is derecognized when the obligation specified in the relevant contract is paid or canceled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognized in the statement of comprehensive income (b) Offsetting of financial instruments - Financial assets and liabilities are offset and the net amount presented in the statement of financial position, when there are legal right to offset and the Management intends to settle on a net basis or to process the asset and settle the liability simultaneously. (c) Fair value of financial instruments - The fair value of financial instruments traded in active markets at each reporting date is determined by reference to quoted market prices or price quotations brokers (purchase price for long positions and sales price for short positions), without any deduction for transaction costs. For financial instruments that are not traded in an active market, fair value is determined using appropriate valuation techniques. Such techniques may include comparison with recent market transactions, reference to the current fair value of another instrument that is substantially the same, the analysis of adjusted cash flow or other valuation models. There have been no changes in valuation techniques as of September 3, 213. ( d) Foreign currency transactions - Functional and presentation currency - Items included in the financial statements of the Company are expressed in U.S. dollars which is the functional and presentation currency of the Company. Transactions and balances in foreign currency - Are considered foreign currency transactions to those made in a currency other than the functional currency. Foreign currency transactions are initially recorded in the functional currency using the exchange rates prevailing at the dates of the transactions. Assets and liabilities denominated in foreign currencies are subsequently adjusted to the functional currency using the exchange rates prevailing at the date of statement of financial position. Gains or losses from exchange differences resulting from the settlement of such transactions and from the translation of monetary assets and liabilities in foreign currency at the exchange rate at the end of the year are recognized in the statement of comprehensive income. The non-monetary assets and liabilities in foreign currencies are transferred to the functional currency at the exchange rate prevailing at the date of the transaction.

20 (e) Cash and cash equivalents - The item cash and cash equivalents presented in the statement of financial position of the Company includes all cash balances held in banks. For purposes of preparing the cash flow statement, the balance of cash and cash equivalents also includes highly liquid deposits with original maturities of three months or less. Such accounts are not subject to significant risk of changes in value. ( f ) Machinery and Equipment - The item machinery and equipment are stated at cost, net of accumulated depreciation and impairment estimation of long-lived assets, if applicable. The initial cost of an asset comprises its purchase price or cost of manufacture, including import duties and non-refundable purchase taxes and any costs necessary to bring the asset into operation and, in the case of a qualifying asset, the cost of financing. The purchase price or construction cost is the total amount paid and the fair value of any other against provision given to acquire the asset. This cost also includes the expenditure associated with a substantial improvement and the cost incurred in replacing parts of machinery and equipment, as long as they meet the criteria for recognition, punishing the carrying amount of the component being replaced. The costs of repair and routine maintenance are recognized as expenses as incurred. Depreciation - The depreciation is calculated using the straight -line method using the following estimated useful lives: Improvements in leased facilities 1 Vehicles 5 Furniture and fixtures 1 Other equipment De 4 a 1 The residual values, useful lives and depreciation methods are reviewed and adjusted if appropriate, at the end of each year. Years An item of plant and equipment is removed at the time of disposal or when no economic benefits are expected from its use and subsequent disposal. Any gain or loss arising on removing of fixed assets (calculated as the difference between the proceeds from the sale and the book value of the asset) is included in the statement of comprehensive income in the year the asset is removed. (g) Financial Leasing - The determination of whether an arrangement is or contains a lease is based on the substance of the agreement to the date of its signing, whether fulfillment of the arrangement is dependent on the use of one or more specific assets, or if the agreement grants the right to use the active, even if that right is not explicitly specified in the agreement. The Company as lessor - Finance leases where the Company transfers substantially all the risks and benefits incidental to ownership of the leased asset a finance lease receivables is recognized, either by leasing an asset at fair