Grana y Montero S.A.A.
Annual Report 2008

Plain-text annual report

PERUVIANS BUILDING PERU 2008 Annual Report: 75th Anniversary 2 3 INTRODUCCION Resultado del Ejercicio 6 Carta del Presidente 8 PERUVIANS BUILDING PERU 1933 –1948 1949 –1967 1968 –1982 1983 –1990 1991–1997 1998– 2006 16 20 24 28 32 36 STRATEGIC DEVELOPMENT Diversification 44 Concessions 46 Strategic Investments 48 ORGANIZATION GMD 54 GMI 58 GMP 64 GyM 68 Concar 74 Larcomar 78 4 4 SOCIAL RESPONSIBILITY Social Human Resource Risk prevention and Knowledge Community Relations Responsibility Management Environment Management 86 88 94 96 98 CORPORATE GOVERNANCE Corporate Governament 110 ANALYSIS OF RESULTS Informe del Análisis de la Administración 126 ANEXOS Estados Financieros Estados Financieros Informe Antes del Plazo Informe Buen Gobierno Consolidados 141 187 219 Corporativo 231 2 2 Resultados del Ejercicio Principales Cifras Principales Cifras (Miles de Nuevos Soles Valores Constantes a Diciembre 2008) Actividad Facturación Utilidad Bruta Utilidad antes de impuestos Utilidad Neta UAIPIDA Profesionales 2005 2006 2007 2008 Crecimiento 2008 / 2007 % Equivalente Miles USD 915,217 1,320,849 1,529,818 1,887,723 894,005 1,188,813 1,439,974 1,827,710 174,599 71,465 32,724 272,755 174,373 104,918 299,027 399,490 207,199 232,985 129,900 147,189 173,611 275,451 286,607 372,696 1,286 1,380 1,705 1,947 600,803 581,703 127,145 74,152 46,846 118,617 23.40 26.93 33.60 12.45 13.31 30.04 14.19 Actividad por Sector UAIPIDA Energia y Petróleo Edificaciones e Industria Infraestructura Minería Tecnología Otros GyM GMP Larcomar GMD GMI Concar 14% 13% 46% 17% 6% 3% 29.52% 52.45% 3.88% 4.32% 4.96% 4.87% 66 UAIPIDA (Miles de Nuevos Soles) Utilidad Neta (Miles de Nuevos Soles) 372,696 275,451 286,607 147,189 129,900 104,918 173,611 32,724 2005 2006 2007 2008 2005 2006 2007 2008 Profesionales (Número) Backlog (Cartera de contratos por ejecutar) Millones de US$ Dólares 1,947 1,705 1,286 1,380 830 720 592 539 2005 2006 2007 2008 2005 2006 2007 2008 77 Letter to the Shareholders Dear Shareholders: It is our pleasure to present the 2008 Annual Report, in which we celebrate the 75th anniversary of the founding of our company, which finds us in a clear position of leadership in engineering in the country and with the best results in our history. On June 22, 1933, the construction company, GRAMON- book on the main projects carried out. At the suggestion VEL, was founded. It began constructing flagship build- of our editors, we decided upon the title “Peruvians ings such as Miraflores City Hall and would soon be in Building Peru”. charge of large-scale projects, among which the New City of Talara stood out. In 1949, a merger with Morris y Additionally, in relation with the anniversary, the ex- Montero was agreed upon and Graña y Montero was pansion of our offices was initiated with the latest tech- formed in order to have the capacity to undertake large nology in order to provide the best working conditions, infrastructure works, such as the Pan-American High- including a new auditorium and gymnasium for our way or the Cuajone mining project. Following the cele- employees’ professional development and personal bration marking 50 years of operations, a diversifica- well-being. tion process was initiated in order to include other engineering activities that today have led us to com- Earnings for the year 2008 surpassed those of all pre- prise a group of 7 companies with 13,012 employees, of ceding years. The group’s activity exceeded US$600 which 1,407 are engineers, which gives us the capacity million, which means that annual growth was 23%, to participate in the country’s major projects, such as cash generation amounted to US$119 million, increas- Camisea, to undertake the operation of 2,400 km of ing 30% in comparison to the preceding year, and highways under concession and to run our own gas net income was US$47 million (13% more than that fractionation plant. of the preceding year, absorbing the currency exchange difference). We are proud of the works executed over these 75 years, which have benefited millions of Peruvians. For this rea- These results have enabled us to make considerable son, on the occasion of our anniversary, we presented a progress on our investment plan, with over US$100 8 José Graña Miró Quesada million invested during the year, mainly in the three Canchaque Highway and the Parques del Agustino sectors established in our Strategic Plan. The largest project, respectively. investments made in the hydrocarbon, infrastructure concession and social housing sectors were in the Talara Gas Fractionation Plant, the Buenos Aires- 9 Mario Alvarado Pflucker Nuestros resultados nos han permitido avanzar notablemente en nuestro plan de inversiones, habiendo invertido más de US$100 millones en el año, principalmente en los tres sectores que hemos definido en nuestro Plan Estratégico. 1010 However, the most important achievements attained in based on a 15% increase of our portfolio of contracts 2008, in consolidation of our long-range plan, were pending execution, which amount to US$830 million as three major contracts in the same three districts. In the of December 31. hydrocarbon sector, we signed a concession contract for the Pisco-Lima Gas Pipeline. In infrastructure, work We are aware of the fact that we have completed 75 was begun on the 750 km Nazca-Cuzco highway con- years of operations primarily due to commitment to our cession and, in the area of social housing we were values, to our employees and to the communities where awarded a contract for the construction of 22,656 homes we work. During the year, 182,776 man-hours of train- in relation with the Nuevo Habitat Comas project. ing for the development of professional capacities and 738,143 man-hours of training on risk prevention and Considering the great potential demand existing in the environmental management have been completed. In social housing segment in Peru and the leadership at- the localities where we operate, 71,960 hours of training tained by the group in this activity, it was agreed that a for the development of job-related skills were provided new company called GMV would be founded for the for the local populations. This program was recognized purpose of focusing on the development of social hous- by IPAE in the year 2008 with the Luis Hochschild award ing. The new company’s operations are to begin in for its contribution to education in the country. January 2009 with US$30 million in equity, following a spin-off from GyM. During the year, we agreed to form a not-for-profit civil association called Espacio Azul, which shall be in These activities are those that will probably experience charge of carrying out social responsibility work out- the most growth in the coming year. The international side the group and shall reinforce our commitment to crisis that unfolded in recent months found Peru in an the communities where we work and to the country. exceptionally good position to weather the storm. With growth of over 9%, a fiscal surplus and reserves greater In closing, we would like to thank our customers and than the debt, once again Peru will likely be the country employees who have enabled us to achieve success with the highest growth rate in the Americas in 2009. In over these 75 years. order to ensure this growth, the government recently launched an anti-cyclical policy primarily based on construction, housing and infrastructure. Our organiza- tion is well prepared for this with properly structured debt and we forecast sound growth for the coming year, José Graña Miró Quesada President Mario Alvarado Pflucker General Manager 1111 12 PERUVIANS BUILDING PERU 1933–1948 1949–1969 1968 –1982 1983–1990 1991–1997 1998–2006 The early years: Gramonvel 14 The Beginings of El Reto de la Diversification The Stable Cash The Efficiency Graña y Montero Segunda Flows Strategy Boost 18 Generación 22 26 30 3 13 (1933–1948) The early years: Gramonvel On June 22, 1933, with youthful enthusiasm, Carlos Graña Elizalde, Alejandro Graña Garland and Carlos Montero Bernales, who were three young Peruvian engineers, agreed to form, in their own words, “a technical company with the objective of bringing together our knowledge in order to undertake any construction project”. During the early years, Héctor Velarde Bergman, an architect, joined them and the company took the name Gramonvel; that is, Graña, Montero and Velarde. Years later, Héctor Velarde left Gramonvel to dedicate niques. It is because of this that he is recognized as one his efforts exclusively to architecture. of the creators of the construction business in Peru. Car- Lima was a city whose population had grown to half area of finance, while Alejandro Graña stood out due to a million inhabitants. Its main hub was downtown, his technical and management capabilities, especially where the recently founded company, Gramonvel, start- in difficult times and critical situations. los Montero contributed his talent and culture in the ed its operations with 3,000 soles in capital. Its first office was on the sixth floor of the Wiese building on Gramonvel’s first construction project was the residence Jirón Carabaya. of Dr. Manuel Irigoyen y Puente. Carlos Graña was the first president of the company This initial phase continued with other construction and the creator of the long-term business concept that projects as they developed new capacities and took on distinguished it. He was forward-thinking and had a new challenges, such as the docks for the guano com- great capacity for establishing new business tech- pany. By 1937 the company was carrying out more am- 14 bitious projects, such as the Miraflores beach facilities, which had space for up to 500 people. The company continued expanding its offering, under- taking construction projects with increasing size and technical difficulty, as occurred with the Nestlé factory (1937) Baños de Miraflores 15 (1933–1948) in Venezuela, where the latest technical solutions, such as rigid tiling were implemented due to the type of soil, and the Nestlé plant in Chiclayo, where a flexible tiling solution was designed for the same reason. In the case of the Copsa factory in Callao, 50-meter high stacks were built according to procedures designed entirely by the company. In 1941, the eminent planning engineer, Teodoro E. Harmsen, joined the company. He excelled as the tech- nical and administrative manager and eventually be- came the managing director and president of the GyM board of directors. In 1942, Luis Graña, who had worked on the construc- tion of the Panama Canal, joined Gramonvel. For many years, he held the position of Works Manager and Di- rector at GyM. Due to his technical skill and personal characteristics, he became a role model for other engi- neers who had the opportunity to work with him. Fábrica Copsa Vista de la fábrica Copsa, Callao (1948) In 1942, Gramonvel built the Nestlé factory in Venezue- la, its first project abroad, with Enrique Olazábal as the resident engineer. That same year, the company was awarded the contract for the El Pato Base in Talara for the United States government. In order to carry out this project, the contribution of Morris y Montero, a company owned by a cousin, Jorge Montero Muelle, was required in addition to that of the entire Gramonvel staff. As a result of this project, a successful association began. Because of its good performance, the company was able to continue working in the area where, together with Roque Vargas Prada y Cía., we obtained the con- tract for the construction of the entire city of Talara in Fábrica Nestlé 1945. There we built over 2,000 houses, offices, schools, Chiclayo (1943) markets, churches and commercial properties for the IPC, as well as the refinery and another airport. Luis Noriega was the resident engineer for this major con- struction project. By 1949, Gramonvel’s partners had decided to merge with Morris y Montero, giving rise to Graña y Montero S.A. 16 Personal de Gramonvel En sus oficinas del edificio Wiese (1942) 17 (1949 –1967) The Beginnings of Graña y Montero On October 31, 1949, Gramonvel and Morris y Montero agreed to merge and create Graña y Montero S.A., under the presidency of Carlos Graña Elizalde, with Alejandro Graña Garland, Carlos Montero Bernales, Jorge Montero Muelle and Dr. Roy Morris, who was later replaced by Dr. Manuel Echecopar, as directors. The engineer Jorge Montero joined the firm, contributing Meanwhile, GyM relocated to offices in the Ostolaza his knowledge in construction equipment management building located at the corner of Avenida Tacna and and creating GyM’s Equipment Leasing Table System. Jirón Huancavelica. The company’s development con- Following the creation of GyM, individual contributions construction projects that served to increase its techni- tinued from 1949 onward as it undertook important were important, such as Jorge Montero’s equipment cal capacities. management, the “school” created by Luis Graña, who was a master of construction, and Teodoro E. Harms- One of these projects was the expansion of the Oeschle en’s ability in the technical office. A culture was devel- store in 1950, which constituted a special technical oping with the principal value of “reliability”, including challenge, as a basement was built without interrupt- quality, performance and ethics. It would continue to ing the store’s regular operations. The work of securing develop, as the current culture contains the past, as the the building — sustaining it in order to lay the founda- future culture will contain the present. tion — and building a basement required special tech- nical underpinning procedures designed by Teodoro E. 18 Aeropuerto Jorge Chávez (1960) Luis y Alejandro Graña Luego de un vuelo en el avión de la empresa (1953) Harmsen, under the supervision of Carlos Graña, with airplane that was used to visit its distant construction Carlos Cava Crovetto as the resident engineer. projects, such as the Southern Pan American Highway In 1952, for the construction of the Hospital del Em- or the city of Talara. pleado (now Hospital Edgardo Rebagliati Martins), Upon Carlos Graña’s death, Fernando Graña assumed GyM worked with Flores y Costa S.A. and Andes Con- the presidency and held the position until 1957, when structora to form an engineering consortium called Alejandro Graña was elected president, with Carlos Consorcio de Ingenieros Contratistas. Subsequently, Montero Bernales, Jorge Montero Muelle, Luis Graña the consortium participated in major construction proj- Garland and Teodoro E. Harmsen as directors. ects in Peru and expanded its operations to Argentina, Bolivia and Chile. Alejandro Graña held the position until 1983, when he retired upon GyM’s 50th anniversary and was named In 1953, Carlos Graña died in a tragic accident when honorary president. traveling in the company’s twin-engine Boeing 247 D 19 (1949 –1967) Sears Roebuck del Perú Vista de la obra terminada y en funcionamiento (1954) In relation with the construction of the social security system’s Hospital del Empleado, our firm joined forces with two other Peruvian companies to form an engineer- ing consortium called Ingenieros Contratistas Gener- ales in 1952. As a member of the consortium, we participated in the country’s major construction projects, such as the steel plant in Chimbote, the Cañón del Pato Hydroelectric Plant and the Jorge Chávez International Airport. As a result of this experience and the reputation we acquired with these complex construction projects, we were able to undertake important works abroad, such as the El Alto Airport in La Paz, Bolivia, and the Nihuil Dam in GyM continues undertaking major construction projects for both the public and private sector, while developing knowledge about buildings and infrastructure works. As an anecdote, and moreover as a challenge, we Mendoza, Argentina. should remember engineer Luis Graña’s statement that GyM was capable of completing a kilometer of high- way per day. Following completion of the Talara works, in 1957 the engineer Juan Madalengoitia was placed in charge of opening an office in Piura, from where work on the con- struction of the Santa Teresita (Copsa) cotton gin plant was initiated. Upon its completion, it was the largest plant of its kind in the world. In 1965, the engineer Carlos Montero Graña joined the firm, starting in the position of resident engineer, subse- quently becoming the Equipment Division manager and eventually assuming the position of general man- ager, which he held from 1986 to 1990. Currently, he is the vice president of the group. 20 Hospital del Empleado Presidente Manuel A. Odría visita las obras 21 (1968 –1982) El Reto de la Segunda Generación En 1968 eran momentos difíciles para la empresa, pues se estaba liquidando el Consorcio de Ingenieros Contratistas debido a la mala experiencia de las obras en Argentina y Bolivia. En el país también eran épocas difíciles. Se produjo el ción presupuestos de día y en las noches tomar un curso golpe militar del general Juan Velasco contra el arqui- de administración para graduados. tecto Fernando Belaunde luego de una devaluación traumática y, poco después, se expropió la International Había descubierto que las empresas no se heredan, Petroleum y las haciendas azucareras, que se encontra- sino se trabajan y había aceptado el reto de la segun- ban entre nuestros clientes. da generación. José Graña se encontraba en Londres después de haber Así empezó lo que podríamos llamar la etapa de tran- terminado la carrera de arquitectura, cuando recibió la sición o de cambio generacional. Porque no estaba noticia de que debía regresar a Lima y empezar a traba- solo. Éran cinco socios o familias de socios y más de jar en GyM. cien empleados e ingenieros. Aprendió su primera lección empresarial tuvo que tomar Este proceso de trabajo simultáneo, que en nuestro su primera decisión. Olvidar sus sueños juveniles de caso duró diez años, es probablemente la época más emular a Le Corbousier y comenzar a trabajar en la sec- interesante y delicada cuando hablamos del tema del 22 cambio de generaciones en una empresa. Creo en esa etapa la palabra clave: respeto. Respeto por las personas, respeto por los socios, respeto por las tradiciones, respeto por la historia, respeto por los va- lores de la empresa. Alejandro y José Graña El cambio generacional fue un proceso de trabajo simultaneo que llevó 10 años 23 (1968 –1982) The strategy of keeping the GyM operation independent Subsequently, in 1975, in line with this new philosophy, and parallel to the consortium’s work enabled us to pull the Campoverde Consultores organizational develop- through the crisis. In the two following years, contracts ment firm was hired with the initial participation of José on important projects such as the Banco Central Hipote- Campoverde and, starting in 1983, that of Ricardo Ruzo cario bank, the Cementos Lima cement plant, the works to develop the GyM management cadres and to work on in Quiruvilca for Northern Peru and the Sheraton Hotel in two central themes: management by objectives and the Lima were obtained. search for excellence. Inspired by José Graña, in 1969 a brochure was prepared As part of this work, a survey was conducted among our in relation with the major works completed by GyM from customers and suppliers, which confirmed that we were 1933 to 1969, which increased recognition of the elder, by known not only for performance and quality, but also for keeping the company’s values alive. This attitude served reliability as a distinctive value of GyM. In 1977 Graña y that generation well as it spontaneously began to dele- Montero opened its new offices on block 46 of Avenida gate functions to the next generation. Paseo de la República in the Surquillo district. Graña y Montero obtained the contract for earth moving In 1975, Jorge Montero had died and in 1979, Carlos works, civil construction and plants at the Cuajone mine, Montero and Luis Graña passed away. as well as the contract for the construction of the central bank, Banco Central de Reserva. These works reaffirmed During this phase, new professionals arrived at GyM, its leadership in the construction industry. such as Rodolfo Sotelo, who is now the manager of the Fábrica de Cementos Lima (1969 –1970) Budget area; Octavio Cabrera, the current manager of the Civil Works division; Hernando Graña, who was the manager of the Commercial and Development areas and is now the executive vice president of GyM, and Juan Manuel Lambarri, the current general manager. 24 Hotel Sheraton Detalle de su construcción (1972–1974) Banco Continental Construcción del Banco Continental y Centro Comercial San Isidro (1978–1980) Other professionals who joined the firm include Francis- co Dulanto, who began working in the Technical Section and is now the general manager of GMP; Walter Silva Santisteban, the current general manager of GMI, and Mario Alvarado Pflucker, who was the general manager of GME and later became the general manager of Gra- ña y Montero S.A.A. In 1983, Graña y Montero celebrated its 50th anniversary and, as a result of the successful process of incorporat- ing the second generation, was prepared to begin a new phase of development and change. Mina Cuajone Tajo abierto (1976) 25 (1983 –1990) Diversification In 1983, Graña y Montero celebrated its 50th anniversary with President Fernando Belaunde in attendance at the ceremony at its offices. Due to the effects of national or worldwide matters, construction cycles limited our growth, so as a response, the need to diversify within the field of “engineering services” was recognized. It was decided that a diversification process that would sequently, in 1988, it was hired by the Chimú consor- change the company had to be initiated. Growing and tium to undertake the detail engineering for the diversifying became the new challenge. Chavimochic irrigation project. GMP began its operations providing services to Petrope- In August of 1984, the first company within the diversifi- ru for the operation of oil wells and for the drilling of the cation process was formed: GMI-Graña y Montero Ing- same wells by companies established in the area, such eniería, which was dedicated to consulting and super- as Sapet, Unipetro and Monterrico. vision, with the engineer Luis Noriega as the general manager. GMP-Graña y Montero Petrolera, which was In June of 1985, GMD-Graña y Montero Digital was dedicated to petroleum production services, followed in founded to provide information engineering services, November of the same year, with the engineer Francisco as the result of a partnership with the Chilean company Dulanto as its general manager. Sonda and with the Digital Equipment Corporation GMI began its operations with the design of the expan- dealership. The engineer Enrique Zevallos was its first sion of the Pacocha industrial plant in Huacho and sub- general manager. Subsequently, GMD acquired Son- 26 Unidad de Bombeo GMP Piura 27 (1983 –1990) da’s share, thus developing independently. headed by engineer Juan Manuel Lambarri, was found- Since May of 2000, Jaime Dasso, an engineer who ed to execute construction projects related to buildings joined GMD, has been its general manager. in the capital. In the decade of the eighties, GMD’s business was From 1984 to 1987, GyM continued working actively based on the sale of hardware and software products throughout Peruvian territory, affirming its leadership in and services. Its first clients were companies with DEC construction projects related to buildings and infra- (Digital Equipment Corporation) installed base, and structure. During those years, new engineers who are IBM installed base later on. Its main customers were now project managers, such as César Vera, Javier Soto Minero Peru, the Ministry of Agriculture, the Ministry of and Mario Rangel, joined the company. Transportation and Communication, the Peruvian navy, the Lima Stock Exchange, Inti Corredores de Seguros In 1988, GyM, together with the Norberto Odebrecht insurance brokers, Empresa Nacional de Comercial- construction company, began work on the Chavimochic ización de Insumos (ENCI/National Company for the project in Trujillo. Commercialization of Agricultural Inputs), Drokasa and the International Potato Center. In 1985, as President Belaunde’s term was drawing to a close, management decided to expand our financial In January of 1987, GME-Graña y Montero Edifica- forecast from 5 to 10 years, in order to avoid the effect of ciones, which was dedicated to real estate promotion, thinking of a single presidential term. When defining management and investment, was founded together our objectives at that time, among others, international- with Mario Alvarado Ballón and a short time afterward, ization and the attainment of what we called a large in September of 1988, GML-Graña y Montero Lima, project were established. Fiesta de los 50 años de GyM In this forecast, Chavimochic was considered to have potential as that large project and we had to dedicate Alejandro Graña, José Graña y Fernando Belaunde our efforts to obtaining it, establishing competitive ad- vantages, which was achieved with the contract award for the construction of the provisional bridge for that irrigation project, as well as a proper decision on the firm with which we would partner. Years later, we joined forces with Odebrecht on this large project that 28 Muelle Conchán para Cementos Lima Baterías de petroleo para Occidental Peruana (1987–1989) GMP (1983–1989) enabled us to weather critical times for the country with- of electromechanical assembly for our company, which out major problems. had been known traditionally as a general contractor In 1990, together with France’s Cegelec (Alsthom), for civil works. SOPEN, a company dedicated to electromechanical In October of 1990, Holding Graña y Montero was cre- assembly, was created under Cegelec’s leadership and ated, initially as GMH and subsequently the construc- management initially. Subsequently, in 1992 the part- tion company gave its name to the holding company, nership was redefined, GMA was created and Graña y which then became known as Graña y Montero S.A. Montero assumed an increasing share percentage until The construction company changed its name to GyM. it reached 100%. The architect José Graña was named manager of the holding company and the engineer Luis Díaz Imiela The engineer Luis Vinatea, who had been the opera- Gentimur was the general manager of GyM. tions manager at SOPEN, became the general manag- er of GMA. This company opened the doors to the world The basic phase of diversification had been completed. 29 (1991–1997) The Stable Cash Flows Strategy During these years, Graña y Montero defined the strategy of directing its commercial attention toward contracts that generate stable cash flows for the company, as these triggered the company’s economic stability. In virtue of this, the companies’ commercial strategy Concesiones de Carreteras S.A. was formed for this pur- was redesigned and subsequently, the company par- pose, giving rise to a specialty that would result in the ticipated in the privatization process, becoming the existence of our current company, Concar S.A. Peruvian partner of companies such as Telefónica, Edegel and Repsol. The relations established in the In October of that year, GyM joined forces with Sintel of privatization process would later result in important Spain and Telefónica Internacional to form Sintel Peru, projects for GyM, such as laying the Lima-Arequipa fi- in order to provide internal and external plant services ber optics or the Yanango Hydroelectric Station. Addi- during the development phase of telephone service in tionally, GMD consolidated contracts with Telefónica, Peru. Fernando Almenara was subsequently named such as the Omega contract in 1991, which was an im- manager of Sintel. portant milestone. In 1994, the first road concession contract was signed for lished a complementary internationalization strategy. the operation of the Arequipa-Matarani highway and Following analysis of different regional possibilities, it The diversification process progressed and GyM estab- 30 Concesión de Carretera IIRSA Concar Concesión de Termi- nal de combustible de Mollendo GMP was decided that an office would be opened and con- Plásticos Omnium, with its Puebla and Ramos Arispe struction work would be carried out in Mexico. plants, as well as the buildings built for GME, which also started up operations in Mexico. Back in the early nineties, the company made its en- trance in the Mexican market with the contract for build- In those years, the GyM projects increased in impor- ing the Four Seasons Hotel, which was followed by the tance, such as the contract for the construction of the Plaza and Pasaje Santa Fé real estate projects. Initially, United States Embassy in Lima, in a joint venture with the projects were carried out with EPN and Constructora J.A. Jones; the Hotel Oro Verde, which is now the Swis- ROCA. Subsequently, Graña y Montero S.A. de CV was sotel in San Isidro or the expansion of the Sheraton Ho- founded and became well known to the competition. tel in Santiago, Chile. A specialization in transmission Among its customers are the Church of Jesus Christ of ra line and continued successfully. The company’s min- the Latter Day Saints, for whom we built two churches ing work received a boost with the work performed on and twenty-five cultural centers in different cities, and the Pierina mine in Huaraz and Yanacocha Stage 5 in lines was developed, beginning with the Chiclayo-Piu- 31 (1991–1997) Embajada de los Estados Unidos Lima (1992–1995) Hotel Four Seasons México (1992–1994) Cajamarca. The first maintenance services for the net- GMD focused its business on software development and works of Sedapal, the state water company, were pro- obtained contracts with Sunat, Telefónica, Copresa, vided as well. IPSS, BellSouth, AFP Unión Vida and the Lima Stock Ex- change, for which it designed an electronic negotiation Early in the decade, GMI began its operations abroad system (ELEX), which is still in use. when a contract was signed for the supervision of the Hotel Meliá Bávaro in the Dominican Republic, In 1994, a set of company policies, such as “Before the with which a long relationship with the Meliá group Deadline”, “Quality of Service” and “Customer-Partner”, was established. were devised in order to guarantee follow-up on our es- sential values: Performance, Quality and Reliability. Meanwhile, GMP was awarded exploration and drilling contracts for Lots 1 and 5 in Talara in calls for tenders In order to specify the value of Performance, the “Before related to petroleum exploration areas promoted by the Deadline” policy was established. However, it was the government. noted that any company could say that it met its dead- 32 lines; therefore it was of utmost importance not only to say it, but to demonstrate it. Consequently, it was decid- ed that Price Waterhouse would be hired to measure compliance with our contracts and establish an annual compliance percentage. Since that time, we have been able to demonstrate a compliance level of over 99%, reaffirming our commit- ment to the policy. The implementation of the Customer-Partner policy, which sets out a high-level meeting with the owners and supervision in order to establish direct, timely lines of communication and to align the companies’ objectives to benefit the project, has yielded good results from the start. In the Lima-Arequipa fiber optics, Hotel Oro Verde Túnel Kovire and many other projects, it was demonstrated that the Tacna (1990–1995) benefits of this policy of aligning expectations were very significant. In 1994, Graña y Montero was recognized as In 1996, Holding Graña y Montero S.A. was reorganized a national leader in organizational change processes. and the engineer Mario Alvarado was named general The year 1995 was marked by two occurrences. At the manager. beginning of the year, on January 6, Alejandro Graña, In mid 1997 Graña y Montero was the first company the last surviving member of the founders of Graña in the sector to have its shares quoted on the Lima y Montero, passed away and toward the end of that Stock Exchange. year, the group’s “Letter of ethics” was published to for- malize our commitment to our customers, partners, em- ployees and the community regarding our fundamental value, Reliability. 33 (1998– 2006) The Efficiency Boost The Graña y Montero group is an open company quoted on the Lima Stock Exchange and recognized as one of the country’s leading companies. The group’s prestige has been reinforced by specific policies to ensure respect for its traditional values of Quality, Performance, Reliability and Efficiency. The second generation’s strategies have been: provided, the decision was made to publish the risk pre- 1) Professionalism, team work and respect for knowl- vention policy designed to communicate our firm posi- edge within a new work philosophy, 2) diversification tion in this regard to the managers, employees, subcon- and internationalization to absorb the impact of the tractors and customers and, at the same time, to assist country’s construction cycles, and 3) the generation of the managers in the fulfillment of their responsibility to stable cash flows, participating in privatizations and provide safe working conditions for their employees. concessions and expanding our activity within the field of engineering services in search of economic stability. In 1998, GMP began operations related to the conces- In 1998, it was decided that the company’s environmen- called GMT-Consorcio Terminales with Oil Tanking of tal policy should be made known with a document to Germany. At a later date, in 2000, this consortium ac- formalize its commitment. Subsequently, in order to quired the CLHB company to run the fuel storage and show that risk prevention had priority within the plan for transportation business in Bolivia. sion contract on fuel terminals, forming a consortium technological progress and excellence in the services 34 That same year, within its quality assurance strategy, GMD obtained ISO 9001 certification in maintenance and post-sale service. In 1999, the Corporate Learning Center (known by its Spanish acronym, CCA) was created as an entity for the development, acquisition, updating and sharing of knowledge. That year, together with the Spanish company, Necso, GyM obtained the contract for the bypass tunnel and the cavern for the Ralco hydroelectric plant in Chile for Endesa, as well as the initial works for the development of the Antamina mine in Huaraz. Túnel de Derivación Central Hidroeléctrica de Ralco en Chile (2002–2004) 35 (1998– 2006) Carretera Interoceánica IIRSA Norte (2006–2031) Economic stabilization and the opening of the market In December of 2000, GML merged with GyM and be- in the nineties obligated us to meet international effi- came the Building Division headed by the engineer Julio ciency standards so as to be competitive. In 1999, GyM de la Piedra. The engineer Juan Manuel Lambarri be- decided to initiate the “MP21” Efficiency Improvement came the general manager of GyM, replacing Luis Díaz Project with advisory services from two important con- Imiela Gentimur, who took on the role of executive direc- sulting firms. The processes defined for this project tor and took charge of the Corporate Learning Center. were implemented in the year 2000. Simultaneously, with assistance from external consul- and stable cash flows, GMI redesigned its manner of tants, GMD worked on a process revision program for serving companies and obtained a framework engi- the purpose of improving its efficiency. neering contract with BHP Billiton Tintaya, which would In 2000, within the plan to generate long-term contracts be replicated with Antamina, Cerro Verde, Río Tinto, Repsol and Pluspetrol 36 Fundición Ilo Nave de Convertidores (2005-2006) 37 The decade beginning in the year 2000 has been a pe- ing out its operations as the target group on the exter- riod of continuous development for GMD, which began nal front. Early in 2006, the Graña y Montero Group performing technology outsourcing work for companies formed part of the consortiums awarded the conces- such as Alicorp, Ebel and San Fernando, subsequently sions for 950 kilometers of the Northern IIRSA highways developing outsourcing of the business itself for the and two sections of the Southern IIRSA extending 700 ONP, OYR and municipal and regional elections. kilometers, where we shall participate in the construc- GME merged with GyM, hence the GyM production or- tained the contract for the operation and maintenance tion of those highways. Additionally, Concar S.A. ob- ganization has four divisions now: Real Estate, Build- of the Northern IIRSA. ings, Civil Works and Electromechanics. In April of that year, GMP acquired the Talara gas pro- GMI initiated an engineering project in relation with a cessing plant from the electric company in Piura. To- gold industrial plant for Minera San José in Argentina. ward the end of the year, Graña y Montero obtained the Within this process of development and consolidation concession for the Buenos Aires-Canchaque highway of its corporate identity, supported by its adherence to in the department of Piura, where once the construction standards of good corporate governance and comple- has been completed, Concar S.A. shall be in charge of menting its letter of ethics and its policies on risk pre- the operation of this road. In 2007, the concession for vention and the environment, a social responsibility the 750-kilometer section 1 of the Interoceanic Highway policy is formalized, having its personnel and share- was obtained. holders as the primary target group on the internal front, and the community with which it is linked in carry- In 2006 the highlights for GyM were the contracts on lot Central Térmica de Malacas Talara (1997) 1 AB in Andoas and lot 8 for Plus Petrol, where we have been operating 23 years. In 2007, the GyM real estate division was awarded the contract for the first megaproject of the Mivivienda pro- gram called Los Parques de El Agustino, which shall be the model for future social housing programs in Peru. 38 During 2008, work was completed on the installation of the Talara gas plant, work began on the construction of the Westin Libertador Hotel in San Isidro and, lastly, a contract was signed in relation with the construction of the Nuevo Habitat complex in Comas, where 22,656 housing units are to be built. The 2007–2011 Strategic Plan can be summed up into three objectives: 1) to generate value within the Group through investment in new projects, reinvesting a large percentage of the profits, 2) to attain structural stability of the Group using the new investments to consolidate our position in the sectors corresponding to the pillars of the corporation, which are hydrocarbons, infrastruc- ture and construction and 3) to increase our prestige and capacities, taking adherence to our values to the highest international standards and making great ef- fort in the area of knowledge management, building capacities among the group’s professionals and pro- viding them with the infrastructure and resources they need to ensure their development. To date, the new strategy has shown results reflected in the value attained by the company on the Lima Stock Exchange. 39 40 STRATEGIC DEVELOPMENT Diversification Concessions Strategic Investments 44 46 48 41 42 43 Diversification Over 20 years ago, we adopted a diversification strategy in order to increase the stability of our business without distancing ourselves from our basic knowledge; so we focused our efforts on turning the company into an Engineering and Infrastructure Services Group. Today, what was once a construction company has become a group of 19 companies grouped in 6 companies, thereby achieving the objective of having the new companies generate over half of the Group’s operating profits. GMD, the Information Technology Services company that GMI, the Engineering Consulting company that has a has a Technological Operations Center for outsourcing sys- subsidiary specializing in Environmental Engineering called tems services ECOTEC 44 GMP, the Petroleum Services company that drills oil wells GyM, the original construction company, which has four for third parties, operates two petroleum fields in northern divisions: Electromechanics, Civil Works, Buildings and Peru, operates a Natural Gas Fractionation Plant in Talara Real Estate and has formed Consorcio Terminales, a consortium with Oiltanking of Germany for the operation of fuel terminals in Peru CONCAR, the company specializing in the operation and LARCOMAR, (Fashion Center S.A.) the company that oper- maintenance of highways under concession ates Larcomar Entertainment Center and Fashion Mall in the district of Miraflores 45 Concessions In recent years we have been successful in attaining our objective of ensuring the stability of the Group by developing knowledge and skills in design, construction, finance and the operation of Infrastructure Concessions, which is clearly the way that large projects will be carried out in the future. The Builder-Concessionaire model generates extensive synergies among the Group’s different lines of business. In the economic aspect, concession cycles are long-term, sometimes 60 years, in comparison with 1 or 2 years for construction contracts. Concessions produce very stable margins, although they are capital intensive, while construction companies require less capital and generate cash flow. In operations, the two areas strengthen and complement each other in execution and maintenance work. Currently, we own shares in the concession companies listed below. 46 Norvial Red vial 5 – Ancón, Huacho, Pativilca Consorcio Terminales Terminal de combustible en Mollendo Survial Carretera Interoceánica Cuzco – Nazca Fashion Center de Larcomar CONCAR Consorcio Terminales Fashion Center S.A. Operator of the Norvial Concession for the Joint Venture with Oiltanking of Germany Concessionaire of the Larcomar North Lima Highway to Pativilca, CONCIN to operate fuel storage terminals in Peru, Entertainment Center and Fashion for the Northern IIRSA Highway from Paita the Camisea Loading Dock in Pisco, and Center in Miraflores to Yurimaguas, and Survial for the Nazca- NaSH Storage and Dispatch facilities at Cuzco Highway (Section 1 of the Peru- the Matarani Port Brazil Southern Interoceanic Highway) TGP Norvial Concesionaria IIRSA Norte S.A. (Transportadora de Gas del Peru), Concessionaire for Road Network No. 5, A company that has the concession the company that was awarded the the Northern Lima highway from Ancón contract for the 980 Km Paita -Yurimaguas contract for the construction of a to Pativilca Highway transportation and distribution system for gas from Camisea CONIRSA Concesión Canchaque Survial A company that is currently building the The concessionaire for the Buenos The company that toward the end of 2007 2nd and 3rd sections of the Interoceanic Aires-Canchaque Highway, construction won the concession contract for the 750 Highway to Brazil of which began in May of 2008 km first phase of the Interoceanic Highway between Cuzco and Nazca. The reha- bilitation work on this highway began in October of 2008. 47 Strategic Investments In the year 2007, we prepared a Strategic Plan to concentrate our long-term investments on 3 pillars of development: Infrastructure Concessions, the Hydrocarbon Sector and Social Housing. We have been very successful in this program and in the last two years we have invested nearly 200 million dollars. In terms of Infrastructure Concessions, in 2007 we obtained the concession for the Buenos Aires-Canchaque highway and in 2008 section 1 of the Interoceanic Highway from Nazca to Cuzco. In addition, we recently agreed to increase our share in NORVIAL, the company that has the concession for the highway that runs from the north of Lima to Pativilca. In the Hydrocarbon sector, we have completed the construction of the Gas Fractionation Plant in Talara and during the year we have obtained the contract for the construction of the Pisco-Lurín multi- purpose pipeline to be built starting in 2009. 48 Planta de Fraccionamiento Conjunto Residencial Concesión carretera de Gas de GMP Pariñas – Talara Los Parques del Agustino Interoceánica tramo 1 Nazca – Cuzco In the Social Housing Sector, we are executing the Los Parques del Agustino housing project and in 2008 we obtained the contract for the Nuevo Hábitat Comas housing project. In order to carry out these and other housing projects, we decided to form GMV, a company starting out with clear leadership in the Social Housing Sector in Peru. 49 50 ORGANIZATION GMD 54 GMI 58 GMP 64 GyM 68 Concar 74 Larcomar 78 51 52 53 Tecnology Services Centro de Operaciones Tecnológicas de GMD 54 Gerente General Jaime Dasso Botto 24 Años de GMD 1983 Plataforma de la Bolsa de Valores de Lima In the year 2008 GMD, which will soon be celebrating its 25th anniversary, consoli- dated its leading position as a provider of information technology solutions for the corporate market by increasing its share of the Software Factory business and Busi- ness Process Outsourcing (BPO). The company’s total activity for the year amounted to US$ 36.6 million, which repre- sents growth of 19.81% over the year 2007. Operating earnings for the year were US$ 2.3 million and EBITDA amounted to US$ 5.1 million, which indicates 110% and 44% growth respectively over the previous year. The strategy of focusing on business with stable cash flows has enabled us to con- solidate our leading position in the Peruvian market and lay the foundation for solid, sure growth. The income from Outsourcing and Software Factory business amounted to US$ 21 million, which accounts for 56.3% of the total activity. GMD’s financial results for the year 2008 were quite favorable. The company’s debt was reduced by US$ 0.8 million dollars, cash in banks increased by US$ 1.2 million dollars and US$ 2.6 million were invested in new outsourcing projects and the expan- sion and technological renovation of our Data Centers. Today our Data Centers have twice the capacity they used to have, with world-class tools and security systems. The investment we made in the year 2006 in CMMI level 3 certification for Software Factory, aimed at guaranteeing the quality of the development and maintenance of GMD Software, has enabled us to be the first information technology company in Peru to meet this international standard. By the same token, the strategy of creating the Project Management Office in order to standardize processes and methodology in all of the company’s projects enabled us to raise the management level and trans- fer methodologies among them. 1998 Diseño e implementación para los sistemas de cómputo de Cavali 55 Principales Cifras In addition, our strategic partners once again recognized us with their highest distinctions. Cisco recognized us at the regional level with the “Cisco Excellence in Customer Satisfaction” award, which is one of the most pres- tigious awards that a strategic partner can receive. HP granted GMD Platinum Business Partner certification, the highest level of certification that the transnational company grants to its business partners. Undoubtedly, the main reason we have attained these achievements has been team work among our employ- ees. The human resource management of our leaders was aimed at building trust and cooperation among the support and project areas in commercial and pre-sale processes, as well as in the execution and support. Part of this plan was to launch the educational program in project management with courses such as Finance for Non-Financial Personnel, Contract Administration, PMBOK and workshops to prepare for PMP certification, which six new employees obtained. Listed below, the main projects which GMD has worked on during 2008. Industry and Sector Industria y Commerce Sector Comercio Graña y Montero Group Grupo Graña y Montero Production start-up of the Puesta en producción del Sis- Corporate Human Resources tema Corporativo de Recursos nacional, Outsourcing del Pro- Repsol ceso de atención y control de Outsourcing of the billing and despacho de combustible. collection process nationwide, Governmental Sector Sector Gobierno Backus Backus System (META 4) Humanos (META 4). as well as outsourcing of the ONP ONP Outsourcing of Network Equi- Outsourcing de Tecnología pment and Telemarketing Call de equipos de Red y del Avícola San Fernando Avícola San Fernando Center Technology, Technical Call Center de Televentas, Renewal and extension of Renovación y Ampliación del and Functional Evaluation of Evaluación Técnica y Funcional the Systems Maintenance Servicio de Mantenimiento the HR META 4 System and del Sistema de RRHH META 4 and Development Service, IT y Desarrollo de sistemas, Outsourcing of Regional Soft- y Outsourcing de Software Fac- Outsourcing and Oracle Suite Outsourcing de TI y Soporte ware Factory for the maintenan- tory Regional para el manteni- Support del Oracle Suite. ce of the ERP SAP in 6 Latin miento del ERP SAP; 6 países American countries de Latinoamérica. Repsol fuel dispatch process Sector de (Oficina de Normalización (Oficina Normalización Telecomunicaciones Provisional / National Previsional): Outsourcing de Telecommunications Telefonica Sector Software Factory de los Siste- mas: ATIS, Legacies, Módulo Telefonica de Atención de Clientes y de Software Factory Systems: ATIS, Integración. Legacies, Customer Service Pension Fund Administrator): Software Factory nivel CMMI-3, Outsourcing of CMMI level 3 y de Tecnología de todos los Software Factory, of technology sistemas y Outsourcing del for all systems and outsourcing Proceso de Gestión documen- of the document and file taria y de archivo. management process Outsourcing del Proceso de and Integration Modules facturación y cobranzas a nivel 56 1 2 4 Osinergmin CONSUCODE Outsourcing of Process for Infrastructure and Base Handling Complaints, Field Software for the Peruvian 3 5 1, 2, 3, 4, 5 Centro de Opera- ciones Tecnológicas de GMD Banking and Finance Cavali Supervision and Supervision of government’s procurement AFP Integra Regulatory Compliance portal ONPE Outsourcing of CMMI level 3 Software Factory Outsourcing of Infrastructure for Registry Zone the Recall of Municipal Authori- Infrastructure for the Contingen- ties Process at the national level cy Site AFP Horizonte Outsourcing of Application Maintenance and Development Lima Stock Exchange Outsourcing of Technological Infrastructure Outsourcing of the maintenance of the Cavali Compensation and Liquidation Systems Banco de la Nación Implementation of the bank’s Communication Systems 57 Consulting Engineering Doe Run Perú Planta de ácido circuito de cobre 58 Gerente General Walter Silva Santisteban GMI will be celebrating its 25th anniversary, we would like to mention some relevant aspects of its history, not without first indicating that in 2008 GMI achieved excellent results, having participated in significant projects at the national level and abroad, which has made it possible to attain leadership in engineering in Peru. On August 17, 1984, GMI was created from the Technical Section of Graña y Monte- ro (today GyM S.A.). After initially dedicating its efforts to designing and supervis- ing large civil works such as irrigation projects, ports and highways, the company became involved in more complex industrial projects. Subsequently, it developed a specialization in hotel project management abroad and formed a subsidiary called Ecotec, specializing in envionmental matters. In recent years, GMI has positioned itself as a leader in the design of mining projects and today it is undergoing sig- nificant growth in the petroleum and gas sectors. The skill acquired over the years has led GMI to perform different services abroad, involving mining projects in Ar- gentina, highways in Bolivia and hotels in the Dominican Republic. Today GMI is an organization oriented toward its customers. To serve the private sector, it has the Mining, Infrastructure and Industry divisions, while the Supervi- sion division serves the public sector. GMI is well on its way to achieving its objec- tive of being a company that grows while learning and managing knowledge, hav- ing inaugurated approximately 2,000 m² of new offices equipped with the latest communication technology, whose design is aimed at ensuring integration, com- munication, socialization, teamwork in the community and the Learn-Be-Share and Grow philosophy. Lastly, with regard to organizational development, its employees have completed 20,170 mh of training. 24 Años de GMI 1996 Hotel Paradisus Punta Cana Rep. Dominicana (1998–1999) Hotel Gran Meliá Caracas 59 In 2008, GMI’s activity was US$ 36 million, which represented growth of 56% and cash generation of US$ 5.9 mil- lion, increasing 68% compared to the preceding year. Net income was US$ 3.2 million, 76% more than that of the preceding year. With regard to our international operations, services for Sol Meliá continued in the expansion of the Paradisus and Paradisus Palma Real hotels in Punta Cana and continued supervision of the Moon Palace hotel in the Dom- incan Republic for the Mexican Palace Resorts chain. The international crisis that has intensified due to the drop in commodity price indexes indicates that 2009 will be a year in which we must pay special attention to our contracts, obtaining competitive margins and placing empha- sis on added value in order to retain our customers and strengthen commercial ties. This slowdown should be seen as a great opportunity to demonstrate the maturity of our processes and management systems, continuing with our Knowledge Management and Organizational Development strategies. 60 2 1 Contrato Marco de Inge- niería para Minera Antamina 2 Restaurante Gabi Club del Hotel “The Reserve” de Paradisus Palma Real – Rep. Dominicana 1 Mining Sector detail Engineering for the Main for Nuevo Ciclone, Hydraulic the Sample Laboratory, Con- Connection Networks for the Study of PAD 4 and miscella- struction Management of the new Camp neous Bottleneck-Concentrator Demonstration Plant and the Compañía Minera Antamina projects S.A. Minera Chinalco Peru S.A. La Granja Complex, Construc- tion Management of mainte- Under the Engineering Frame- work Contract, the following projects were carried out: • Management of the construc- Rio Tinto Minera Peru nance work on the Chiclayo tion of the Kingsmill Tunnel Limitada S.A.C. - La Granja Access Highway Treatment Plant – Toromocho Under the Engineering Frame- • Supervision of the Molino Project Sag Bypass, Supervision of the Microcell Sparger Cu, Zn, work Contract, the following Doe Run Peru projects were carried out: • Materials management for Sociedad Minera Cerro Verde • La Granja Camp Engineer- the new Sulfuric Acid Plant preparation of Conceptual En- S.A.A. ing, Definitive Engineering for for the Lead Circuit and Detail gineering for CAPEX estimation, review of Design Criteria and Detail Engineering Plans for the Edificio Principal Project and Under the Engineering Frame- the construction of the La Engineering on works outside work Contract, the following Granja – Northern Route Ac- the Battery Limit of the Fleck projects were carried out: cess Highway, Engineering and Chemical contract • Supervision of Quality Control Construction Management for 61 Minera Barrick Misquichilca Votorantim Metais – GyM Perenco Peru Limited S.A. Cajamarquilla S.A. • Basic and Detail Engineering Peru Branch • Detail Engineering for the Under the Engineering Frame- for Lot 58 Production Platform • Basic Engineering for the cutting of overland, new Ore silo work Contract, 31 projects and La Peruanita Camp, Review Dorado – Andoas Pipeline and Conveyor Belt No. 03. were carried out according to of Basic Engineering and prep- the FEL (IPA) methodology, up aration of the Detail Engineering Minera Yanacocha S.R.L. to FEL 2 level for the CAPEX for the Topping Plant Under the Engineering Frame- estimation to streamline and work Contract, the following optimize operations in the dif- Infrastructure and Transportation projects were carried out: ferent areas of the refinery Hydrocarbons Provias Nacional • Engineering for different proj- ects for Yanacocha and Conga, Detail Engineering AWTP East, Buildings Detail Engineering for Ring and Industry • Supervision of road improve- PetroPeru S.A. ment work on the Mojón • Supervision of Environmental – Chiquian – Aquia Highway, Remediation work at La Pam- New Conococha – Huallanca Piping & System Project, Fifth pilla refinery and its Sales Plant Highway Junction, Section 1: Retort and Improvements in Cemento Andino S.A. Mojón Chiquian, Supervision of the Yanacocha North Ventila- • Service Contract for Industrial La Pampilla Refinery the Maintenance of the Ciudad tion System, Detail Engineering Cleaning and Waste Manage- • Under the Detail Engineering de Dios Cajamarca Highway for Maqui Maqui Project and ment by our subsidiary, Ecotec Framework Contract on RELA- Section II – Chilete – Cajamarca Chaquicocha Dewatering S.A. PASA investment projects Sector 2-A Chilete 62 2 3 1 Paradisus Palma Real – Rep. Dominicana 2 Planta de tratamiento de aguas ácidas para minera Yanacocha 3 Carretera Tarapoto – Juanjui 1 Ositran • Supervision of section 5 of the Southern Interoceanic Cor- ridor – Peru – Brazil Survial • Definitive Engineering Stud- ies and Environmental Impact Studies for the San Juan de Marcona Nazca Highway Works and Rehabilitaiton – Puquio – Cusco – Urcos; Geotechnical Inspection of the Interoceanic Peru Lng Highway Southern Section 1 • Narrative technical report on and Engineering support current condition of the surface course and buildings near the Shougang Hierro Peru S.A.A. access routes for the Peru LNG • Layout of the route for the San Gas Pipeline between Pampa Juan Highway – Pan American Melchorita and Chiquintirca Highway Minera Yanacocha S.R.L. • Supervision of the 73 Km Chilete Junction Highway Votorantim Metais Cajamarquilla • Supervision of the construction of the Highway to – Chalhuanca – Abancay Cajamarca Cajamarquilla 63 Petroleum Services Planta de Fraccionamiento de Gas, Pariñas – Talara 64 Gerente General Francisco Dulanto Swayne 24 Años de GMP In the year 2009, GMP S.A. will be celebrating its 25th anniversary. It began its op- erations in 1984 with the diversification process of the Graña y Montero Group. Initially, GMP conducted its operations in the province of Talara, providing produc- tion and maintenance services at petroleum camps. Subsequently, it began provid- ing well drilling services. Currently, GMP is in charge of the operation of Lots I and V in the northwest, the operation of 9 fuel terminals in the country and the marine op- erations of the Camisea project in a joint venture with Oiltanking GMBH. It is the owner and operator of the natural gas liquids separation and fractionation plant in Pariñas and has formed LQS (Logística de Químicos del Sur) with Oiltanking and 1983 – a la fecha Unidad de bombeo, Piura Santa Sofía Puertos. The results for this year have been quite satisfactory, with US$ 69 MM billed, which represents growth of 16.7%. Additionally, during the period construction was completed and operations began at the Gas Plant in Pariñas with an investment of US$ 44.6 million. In summary, it was a year in which the company had its highest figures ever for the amount billed, profits and investments. In the month of August, a concession contract was signed for the Pisco-Lurín Multi- Purpose Pipeline stemming from an initiative approved by PROINVERSION, in order to transport LPG between these two cities and to supply the southern section of Lima. 1998 – a la fecha Almacenamiento y despacho de combustible Mention should also be made of the efforts made in the area of social responsibility and the achievements that they represented in the communities related to the com- pany’s activities. 65 Petroleum and Gas Production Drilling In the year 2008, 9 development wells were drilled in lots I and V By the end of the year 2008, 20 oil wells had been drilled and 403 thousand barrels of petroleum and 1,751 MMSCF of natural in the Talara area and 2 water injection wells had been gas were produced. These figures represent increases of 8.52% drilled in the northern Peruvian jungle. The total num- and 20.74% compared to the volumes for the year 2007. The second ber of feet drilled as drilling contractors was 91 thousand. semester of the year was marked by very high crude price volatility. Talara Gas Plant On October 23, the new Pariñas Gas Plant began operations. The amount of natural gas processed at the plants during the year 2008 was 10.01 BSCF, which is an average of 27.43 MMSCFD and the production of liquids totaled 293 thousand barrels. The new Pariñas plant has enabled us to increase efficiency substantially in the recovery of liquids. 66 4 5 1 Terminal Marítimo de Pisco para Camisea 2 Tanque de crudo de Talara 3, 4, 5 Planta de gas de Talara 1 2 3 Consorcio Terminales LQS Matarani (Logística de Químicos del Sur) In the year 2008, Consorcio Terminales (GMP/Oiltanking) dispatched During the year, 29,207 tons of sodium hydrosulfide (NaSH) were re- an average of 63 thousand BPD of products at the country’s ceived at the Port of Matarani for our mining customers in the area terminals, which was a 10.1% increase compared to the preceding (Sociedad Minera Cerro Verde and Southern Peru Copper Corpora- year and storage by our users amounted to 1.82 million barrels on tion). For the coming year, construction of a plant for the reception, average, which was 8.32% higher than in the year 2007. storage and dispatch of sulfuric acid at the same port is planned. At the Camisea (Pisco) marine terminal, 105 vessels were loaded with a total volume of 13.1 million barrels. 67 Construction Services Hotel Westin Libertador San Isidro (2008–2010) 68 Gerente General Juan Manuel Lámbarri Hierro 75 Años de GyM Continuing with the country’s growth, in the year 2008, GyM grew to set a new record of approximately US$ 448 million in sales, which represented growth of 20% over the preceding year and resulted in after-tax profits of US$ 23 million. These results are based on improvement in our efficiency, as we obtained a gross margin of 15% and ended the year with a backlog of over US$ 500 million. Consolidating the strategy of leading in the construction and promotion of afford- able housing, in the month of September, GyM joined forces with another company and won the contract award for the real estate project called Nuevo Hábitat Comas (Collique), which shall include 15 thousand economical housing units. Additionally, we have acquired a 52 mil m² lot in the district of Cercado de Lima, where we shall 1997–1998 Planta concentradora de Cuajone build 2,500 additional housing units. It should be noted that, in line with the strategy of generating a specialization in this market, in the latter part of 2008 the GyM Board of Directors approved the spin-off of the real estate division of GyM, which was assigned to a new company called GMV S.A., which shall be in charge of executing these projects. As part of the participation in gas exploitation in Peru, in a joint venture with a for- eign company, GyM began the construction of the Chiquintirca Compressor Station in the department of Ayacucho, which is a pivotal project to Peru LNG. In the month of March of 2008, GyM was awarded the contract for the construction of two fractionation plants (topping plants) under the Engineering, Procurement and Construction modality for Pluspetrol Norte in Lot 1AB in Andoas and in Lot 8. 1974 Hotel Sheraton, Lima 69 Recently, the contract award was obtained for civil works and assembly of the expansion at the Machu Picchu hydro- electric plant. This key project shall increase the generation capacity of this plant by approximately 100 MW, thus triggering development of the southern part of the country. As a result of the growth and the demanding nature of the market, GyM reinforced its staff of engineers and profes- sionals, increasing the number of employees by 30% to enable us to take on new challenges with the efficiency and quality we are known for. Aware that knowlege is the pillar with which GyM has managed to thrive over time, consolidating its position as the leading construction company in the sector, during the year 2008 it banked on maximizing its knowledge manage- ment by promoting the “Learn to Grow” program as a key factor in future growth. Therefore, it has provided 59 thou- sand man-hours of training, 20% more than in the preceding period. It is noteworthy that in 2008 GyM, Peru’s oldest, most prestigious construction company, celebrated its 75th anniver- sary. What began in 1933 as a technical firm of 3 engineers now has over 1,260 employees and more than 9,000 la- borers and conducts its activities in almost all of the departments of Peru. It would take too many pages to list all of the small and large projects that GyM has executed for development of Peru. This success is due to the participation of its workers throughout these 75 years and special thanks go out to each and every one of them. 70 1 2 3 4 1 Torre Abaco 2 Línea de transmisión Mazuco – Pto. Maldonado 3 Refinería de Cajamarquilla 4 Paseo de los Héroes Navales Mining Sector Minera Goldfield La Cima Minera Río Tinto Energy Sector Civil Works and Mechanical Exploratory Tunnel in the La Minas Buenaventura Assembly in the Cerro Corona Granja Mine 4,219.60 meters of tunnels, Project Pluspetrol Norte • Re-injection of Production 828.90 m of Horizontal Excava- tions and 70.3 mts of Vertical Votorantim Metais – Miscellaneous works • Environmental Improvement Minera Cerro Verde Waters Excavations in Poracota Cajamarquilla S.A. Indium Thickener Compañía Minera Antamina Minera El Brocal Indium Plant Structural and Services and facilities at the 10 years working jointly in the Electromechanical Assembly Yanacancha Camp open pit and moving 7,976,059 Stebbins Tanks m3 of earth and 671,334 m3 of Civil Works and Assembly mineral in 2008 Indium Refinery Cell House Buildings Roaster and Acid Plant Program • Highway Maintenance • Topping Plants LNG Electrical and Instrumentation Works Structural Assembly and Piping at the Terminal 71 Underground Buildings Camps Main Civil Works Tank Foundations Pluspetrol Corporation Expansion of the Malvinas Gas Compression Plant GMP Expansion and Modernization of the Pariñas Gas Plant Ministry of Energy and Mines San Gabán Mazuco – Puerto Maldonado Transmission Line TGP Chinquitirca Compressor Station CELEPSA Northern IIRSA: Inserfinsa Paucarcocha Dam 110 km of highway Tarapoto- Santo Toribio Office Building Lining of the Platanal Shaft Yurimaguas asphalted during PETROBRAS Lot 58 Infrastructure Sector the year Hipermercados Tottus in Los Parques del Agustino Buenos Aires-Canchaque Highway Earth Movement and Reloca- Pro Ecclesia Santa tion of Works of Art, Prime Coat Church in Surco Work Inmobiliari Southern IIRSA – Section 1: City of Lima Capital Office Building Recycling and foamed asphalt Paseo de los Héroes Navales work Interchange Westin Libertador Hotel Southern IIRSA – Section 2: 118 kms asphalted during Building and Real Office Building for the ABACO the year Estate Development Group 303-room hotel in San Isidro Sector Southern IIRSA – Section 3: Distribution Center for 237 kms asphalted during Novotel UNIQUE the year 210-room hotel in San Isidro 72 2 3 1 Edificio Capital 2 Conjunto Residencial Los Parques del Agustino 3 Pampa Melchorita Fundaciones de tanques para Perú LNG 1 Inmobiliaria Viena S.A. Telecommunications Kimberly Clark CBI Golf Millenium Project Sector Design and installation of Implementation of the Fire structured wiring in fiber optics Detection System at the Per- Balta 1070 Residential Buil- Ministry of Education (Backbone) and wireless system manent Camp and YSBL and ding in Miraflores Structured and Electrical Wiring for the production plant in OSBL Buildings in the project for Computers in the Huascarán Santa Clara; structured UTP for for Peru LNG (Melchorita lique- Golf Los Inkas Residential Project nation-wide Camacho offices faction plant in Cañete) Building - Monterrico TELMEX Emsa – Yanacancha Telefónica Housing Complex Infrastructure set up in 11 Implementation of the Fire De- Miscellaneous works Los Parques del Agustino turn-key equipment rooms and tection System at Yanacancha installation of Huawei and Cisco for EMSA Javier Prado 200 Appartment communication equipment Building – Magdalena 73 Highway Maintenance And Operation Carretera IIRSA Norte 74 Gerente General Jaime Targarona Arata 14 Años de Concar 1994 Concesión carretera Arequipa – Matarani The year 2008 has been a year in which Concar continued with its Growth Plan, fur- ther consolidating its position as a leading company specializing in highway opera- tion and maintenance. It participated actively in the Ministry of Transportation and Communications’ Peru Project and obtained the contract for the maintenance of the 380+Km section of the highway connecting Ayacucho with Abancay, passing through Andahuaylas. This section is an unpaved compacted road, due to which we have initiated a new experience in the maintenance of unpaved compacted highways. In addition, because activities related to the Northern IIRSA Highway contract and the specialization in periodic maintenance of asphalted highways have increased, in- vestments in specialized equipment were made. Also in the year 2008, the construc- tion of the first phase of the Ancón – Huacho – Pativilca highway was completed and repair work began on the San Juan de Marcona – Urcos highway, as well as the highway that runs from the detour to the town of Buenos Aires to Canchaque in the department of Piura. With the Buenos Aires – Canchaque contract, CONCAR has reached a total of over 2,700 Km of highways for which it is in charge of road operation and maintenance. A greater volume of periodic maintenance work on the roads for which the concession- aires are responsible is projected for the future, without neglecting to participate in governmental processes related to the Peru Project. The results for the year 2008 are quite satisfactory. Sales increased by more than 30%, totaling over US$ 19 million, with margins above 15%, and there is a backlog 2006 – a la fecha Carretera IIRSA Norte amounting to over 60 million dollars, apart from the ample program announced by the government for the year 2009 in relation with the Peru Project, guaranteeing growth in the upcoming years. 75 The projects under concession and CONCAR’s responsibility are listed below. Operation and maintenance of Ancón – Hua- Operation and maintenance of the Northern cho – Pativilca Highway IIRSA Highway, Paita – Yurimaguas During the year 2008, CONCAR satisfactorily handled the operation Since April of 2006, CONCAR has been in charge of the operation and maintenance work on approximately 285 Km of highway, in and maintenance of the Northern IIRSA Highway, which is approxi- addition to providing support to Norvial by developing procedures mately 955 Km long. for technical solutions to specific problems. Operation and maintenance of Section 1 of the Interoceanic Highway In the month of December 2007, the operation and maintenance work began on the approximately 755 Km long highway that joins the Port of San Juan de Marcona and the city of Urcos in the department of Cuzco. 76 1 2 3 4 1, 4 Proyecto IIRSA Norte 2 IIRSA Sur 3 Mapa de ubicación concesiones CONCAR Service Contract for Routine and Periodic Contrato de Servicios de Mantenimiento Maintenance on the 400 Km Tacna – Camia- Rutinario Puesta a Punto de la Carretera ra Bridge, Tacna – Tarata, Tacna Palca, Tac- Ayacucho – Puente Sahuinto na – La Concordia and Tacna – Ilo highway En asociación con GyM con un contrato por 5 años para servicio este contrato en diciembre del 2008, para ejecutarse en el plazo de mantenimiento. de 4 años. Con una extensión aproximada de 380 Km, se dio inicio a 77 Entertainment and Fashion Center Fashion Center – Larcomar 78 Gerente General Antonio Rodríguez Canales 10 Años de Larcomar 1998 Centro de Entretenimiento Larcomar It is our pleasure to present the 2008 Annual Report, which shows the best results obtained by the company since it was founded 10 years ago, once more exceeding growth expectations in commercial and financial terms, as well as positioning in the industry. Larcomar opened its doors 10 years ago, on November 28, 1998, offering a wide, select range of entertainment, culture, cuisine and merchandise in a modern, novel open-air architectural format on the cliffs overlooking the Pacific Ocean in Miraflores, which has become the image representing the modern aspect of Lima. During the year 2008, the commercial activity, oriented toward offering the best expe- rience in a safe environment with quality, was visited by 6 million people, including 815 thousand tourists, which was 4% more than in 2007, enabling the operators to bill a total of US$ 58 million dollars, 27% more than in the preceding year. This volume of activity has reinforced Larcomar’s positioning as an industry leader in tourist attractions, shopping centers and entertainment centers. The satisfaction level among all segments of visitors is 96%, which we have maintained since the startup of operations. Larcomar is increasingly being promoted in the tourist and cultural circuit of the city of Lima, while different events have been held and well-known personalities visited during the EULAC and APEC summits. The “modern face of the city” concept has been well received by travel agencies, hotels and public organizations and is being 2006–2007 Construcción del Fashion Center de Larcomar disseminated at international fairs and important tourism forums. Larcomar - Fashion Center’s financial position has been consolidated and a 25% reduction in financial expenses has been obtained due to improvements in rates and payment periods related to structural debt that were negotiated last year. 79 Operatively, the team composed of 211 employees has actively participated in the maintenance of the facilities, in safety drills conducted jointly with Indeci (civil defense) and the fire department, gaining significant experience, which has been reinforced with an annual average of 59.15 hours of training per employee. In the field of corporate social responsibility, Larcomar - Fashion Center participated in programs promoted by Miraflores City Hall, such as “Adopt a School”, as well as those organized by Asetumi, the association for the promotion of safe tourism in Miraflores. In 2008, these strategies resulted in 98% occupation of the leasable area, total company activity for the year of US$ 9.9 million and EBITDA of US$ 4.6 million, which represented a 10% increase as compared to the year 2007. Lastly, it should be noted that organizational maturity, together with financial soundness due to the positive finan- cial results obtained over these 10 years, make it possible to look toward the future with optimism despite the re- cent international financial crisis. For this reason, it has been proposed that the original Larcomar project be completed with the construction of a first class hotel with 300 guest rooms, with work starting on it in 2009. This objective confirms the vocation for innovation and growth that result in stable cash flows and generate real estate and construction synergies with the company’s shareholders. 80 1 2 1 Centro comercial y de entretenimiento Larcomar 2 Fashion Center Larcomar 2006–2007 3 3 Interior Fashion Center LM Los principales operadores por área son: Area Inmobiliaria, principales operadores, anunciadores y franquicias. Alpaca 111 Tatoo Bembos Nike HushPuppies Starbucks Air Sport Club by Nike Florsheim Chilis Aura Gótica UVK Liliana Castellanos Swatch Tony Romas La Dama Juana Timberland Laritza Backus Pizza Hut Café Café Phillip Morris GMO NU Íbero Burger King Giuliana Testino KFC Mangos Makoto Telefónica Claro 81 82 SOCIAL RESPONSIBILITY Social Human Resource Risk prevention and Knowledge Community Relations Responsibility Management Environment Management 86 88 94 96 98 83 84 85 Social Responsibility The growth of our operations and the economic results obtained have been accompanied by an on-going commitment to our employees and the communities with which we are connected in the course of our activities, guided by corporate values that call for ethical conduct and institutional outreach. In June of 2008, Espacio Azul, a not-for-profit civil asso- Mariano Melgar District City Hall in Arequipa officially ciation founded by the companies in the Graña y and publicly recognized Espacio Azul for the profes- Montero Group, began its activities with the objective of sional technical assistance it offered in the preparation centralizing efficient execution of its social responsibil- of pre-investment studies for the installation of drinking ity plans to benefit our country’s communities. The work water and sewer systems that will benefit over 23,000 of this new entity and its associates has been well re- inhabitants of the high-altitude areas it serves. ceived and has obtained significant recognition from the community for its contributions. Recognition such as the foregoing strengthens our Within the framework of the 46th Annual Executives’ ny, sharing our knowledge and experience to benefit Conference (known as CADE), Graña y Montero re- the community. commitment to reach beyond the limits of the compa- ceived the Luis Hochschild Plaut award for its contribu- tion to education through the “Developing Job Skills in the Areas of Influence” program. By the same token, 86 Premio Luis Hochschild Plaut por el aporte de Graña y Montero a la educación In accordance with our corporate policy of transparency Our commitment to our own employees is maintained and our role as signatory members of the World Pact pro- as the key element of our daily operations. Therefore, moted by the United Nations, we informed such organi- we continue implementing human resource manage- zation of the set of social responsibility activities carried ment policies aimed at achieving increasing degrees of out and we have been the object of annual IDB audits of personal and professional satisfaction among the em- our projects, the result of which was certification that our ployees, providing them with the best working condi- activities are in compliance with good social practices tions and safety for the performance of their jobs. both within and outside of our organization. 8787 Human Resource Management The Group’s significant economic growth entailed a significant increase in the total number of workers, which reached 13,012; that is, an increase of about 9% compared to the previous year. The number of professional employees has risen 14%, reaching 1,947, 72% of whom are engineers with different areas of specialization. As a result of this growth, with the objective of support- enhanced in coordination with our Corporate Learning ing efficient human resource management aimed at Center. The basic, intermediate and advanced pro- the personal and professional development of its em- grams aimed at developing professional competencies ployees, during the year the company inaugurated the consolidated ordinary program planning. The conclu- new Corporate Learning Center facilities. These in- sion of the first highly specialized internal program for clude a new auditorium, an exhibition room with audio- project managers, in which 33 engineers from different visual equipment and new classrooms. Likewise, on the companies within the Group participated, merits spe- top floor of our headquarters, a modern gymnasium cial mention. was inaugurated in order to offer our employees a set of modern equipment and services for a lifestyle aimed As one of the events held to celebrate Graña y Monte- at their overall wellbeing. ro’s 75th anniversary, the Group’s employees and their As the organization is mainly composed of engineering maraderie and identification with the achievements of professionals and places special emphasis on knowl- the group throughout its history prevailed. Additional- edge management, training activities continued being ly, all of the Group’s employees and workers received spouses were invited to a lovely dinner where joy, ca- 88 Auditorio del Centro Corporativo de Aprendizaje de Graña y Montero a copy of the book titled “Peruvians Building Peru”, In the annual assessment of workplace climate orga- which was published on the occasion of the organiza- nized by the Great Place to Work Institute, 84 % of the tion’s 75th anniversary in honor of everyone who con- participants stated that they were proud to be working tributed toward making our organization what it is for a company pertaining to the Graña y Montero Group, and who, with their daily efforts, urge us forward to- which further reinforces our commitment to the personal ward new achievements. and professional development of our employees. 89 Estadística Formación N° de Personas G&M S.A.A. GyM GMD GMP GMI CONCAR Larcomar Total Empleados Planilla Subsidiarias Ingenieros / Arquitectos con Post Grado Otras Profesiones con Post Grado Profesionales de Ingeniería / Arquitectura Otras Profesiones Total Profesionales Técnicos Total Empleados Planilla Subsidiarias Obreros Obreros Especializados Obreros No Especializados Obreros Subcontratistas Total 14 6 5 18 43 5 48 0 0 0 0 52 5 659 295 1011 249 1260 3334 3775 1907 9,016 18 7 354 39 418 405 823 0 0 0 0 21 0 61 29 111 252 363 0 0 0 0 20 4 156 92 272 159 431 60 0 0 60 5 23 37 5 70 759 829 0 0 0 0 0 4 5 13 22 38 60 0 0 0 0 130 49 1227 491 1947 1867 3814 3394 3775 1907 9076 Total Personal 48 10,276 823 363 491 829 60 12890 Practicantes Profesionales Independientes Total 0 2 2 59 6 65 38 0 38 3 3 6 3 3 6 2 0 2 2 1 3 107 15 122 Total General 50 10,341 861 369 497 831 63 13012 90 Gimnasio de Graña y Montero Distribución por Edades al 31.12.08 N° Empleados Menos de 20 De 20 a 30 De 31 a 40 De 41 a 50 De 51 a 60 De 61 a 65 De 66 a más Total G&M S.A.A GyM GMD GMP GMI CONCAR Larcomar Total 0 10 15 13 8 1 1 1 513 393 207 110 25 11 0 284 405 103 28 3 0 48 1,260 823 0 55 68 112 107 16 5 363 0 135 123 96 58 8 11 6 327 307 141 44 4 0 0 17 21 17 5 0 0 7 1341 1332 689 360 57 28 431 829 60 3814 91 Estadística Poblacional N° de Personas Organización Oficinas Principales Proyectos Total Genero Masculino Femenino Total Jerarquía Alta Dirección Empleados Practicantes Profesionales Independientes Obreros Total G&M S.A.A. GyM GMD GMP GMI CONCAR Larcomar Total 48 0 48 37 11 48 24 24 0 2 0 243 1017 1,260 1010 250 1,260 7 1,253 59 6 9,016 465 358 823 576 247 823 4 819 38 0 0 68 295 363 334 29 363 13 350 3 3 0 50 10,341 861 369 187 244 431 340 91 431 5 426 3 3 60 497 17 812 829 725 104 829 5 824 2 0 0 60 0 60 42 18 60 3 57 2 1 0 1088 2726 3814 3064 750 3814 61 3753 107 15 9076 831 63 13012 92 Estadística Modalidad Contractual 2007–2008 N° de Personas . . . A A S M & G . 7 0 2 .1 1 3 . . . A A S M & G . 8 0 2 .1 1 3 M y G . 7 0 2 .1 1 3 M y G . 8 0 2 .1 1 3 D M G . 7 0 2 .1 1 3 D M G . 8 0 2 .1 1 3 P M G . 7 0 2 .1 1 3 P M G . 8 0 2 .1 1 3 I M G . 7 0 2 .1 1 3 I M G . 8 0 2 .1 1 3 . 7 0 2 .1 1 3 R A C N O C . 8 0 2 .1 1 3 R A C N O C . 7 0 2 .1 1 3 r a m o c r a L r a m o c r a L . 8 0 2 .1 1 3 l a t o T . 7 0 2 .1 1 3 l a t o T . 8 0 2 .1 1 3 Tipo de Contrato Laboral Empleados Con Vinculo Permanente Con Vinculo Temporal Total Empleados 44 0 44 Obreros - Régimen Común 47 199 208 160 198 1 862 1052 634 625 190 168 206 157 29 38 27 53 431 393 710 776 48 1061 1260 794 823 358 363 460 431 737 829 Con Vínculo Permanente Con Vinculo Temporal Rég. Esp. Cons. Civ (Vinculo Temporal) Total Obreros 0 0 0 0 0 0 0 0 891 706 0 7125 6403 0 8016 7109 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 64 0 0 60 0 0 64 60 0 0 0 0 0 0 0 0 47 3 50 0 0 0 0 58 696 808 2 2808 3006 60 3504 3814 0 0 0 0 0 955 766 7125 6403 0 8080 7169 Total Empleados y Obreros 44 48 9077 8369 794 823 358 363 524 491 737 829 50 60 11584 10983 93 Risk prevention and Environment In line with our risk prevention and environmental policies, responsible conduct regarding the environment and employees’ health while they are performing their work is a distinctive practice of all employees of Corporación Graña y Montero. This good practice generates value and an unavoid- the efforts of approximately 13 thousand workers who able commitment to our customers and society. have done their best to perform their activities, adher- Our organization has developed an integrated risk pre- spect for the environment. Our personnel’s commitment vention and environmental management system, tak- to the corporation’s policies has enabled us to end the ing the OHSAS 18001 and ISO 14001 guidelines as a year 2008 with no environmental incidents and a fre- ing to the fundamental principles of job safety and re- reference for the purpose of guaranteeing fulfillment of quency index of 0.88. the commitments established in our policies. This sys- tem is audited annually by the IDB, which certifies its The investment that our organization makes in guar- effective, efficient implementation for the benefit of our anteeing the health and safety of its workers is evident customers and everyone working on the projects for in the increasing preventive culture and the on-going which we are responsible, as well as the immediately protection of its employees against work-related risks. surrounding environment. During the year 2008, no less than 738 thousand hours During the year 2008, Corporación Graña y Montero nel and raising awareness among them regarding the has generated no fewer than 35 million man hours, with inherent risks of their jobs. In addition, US$ 6.0 million were invested and recorded in instructing our person- 94 Conducta responsable con el medio ambiente in personal and collective protection equipment have been acquired. These results have earned us recognition from our cus- tomers over the last five years and resulted in their con- tinuing to have confidence in us and awarding us con- tracts for new projects that enhance and prolong our status as a business group. 95 Knowledge Management The year 2008 has marked an important phase of development and consolidation of our “Learn to Grow” strategy. The incorporation of a special work group composed of the Human Resources managers from all of the companies has made an important exchange of experiences possible, which together with coordination and alignment has generated synergy among the companies in order to achieve the objectives established. This year, the ratio of training hours per employee in- The publication of bulletins by the companies, as well creased 6.15% over the ratio for 2007, with the notewor- as the presentation of talks and reports on different thy participation of the Internal Educators and instruc- projects has contributed toward increasing communi- tors from the companies that have made 68% Internal cation and promoting the exchange of experiences in Training possible. The total number of training hours different projects. amounted to 182,751 man-hours, which represented a 70% increase as compared to 2007. Lastly, agents of change are being generated in the Significant progress has been made in the develop- knowledge that shall enable us to continue being an ment of portals or Internet-based communication sys- “organization that learns”. companies, thus fostering a culture of prioritization of tems that facilitate our professionals’ access to the companies’ structured knowledge and permit interac- tion among them through forums, etc. that have enjo- yed a very good level of participation. 96 Desarrollo de habilidades directivas Capacitación año 2008 Horas – hombre Descripción GyM GMD GMI GMP Concar Larcomar Total Programa Básico- Ingenieros Jóvenes 16,918 8,062 746 8,246 1,029 73 35,074 Desarrollo Profesional Memoria Colectiva Capacitación Externa Total General 20,926 15,022 11,894 1,102 46 35 288 104 38,405 1,308 87,843 50 25 1,362 19,892 13,827 7,496 13,946 1,168 2,143 58,472 58,838 36,957 20,171 22,584 40,652 3,549 182,751 Promedio anual empleados Ratio: HHs de capacitación/ Empleado 1,222 48.15 788 613 358 854 60 46.90 32.91 63.08 47.60 59.15 3,895 46.92 PDR - GA - Obreros 667,758 NA 16,795 27,252 26,338 NA 738,143 9797 Community Relations Throughout the year 2008, we continued developing social responsibility plans during the execution of our projects, aware of the importance of developing good relations with the surrounding communities and sharing knowledge about our engineering activity with them, in favor of their sustainable development. In line with our Social Responsibility Policy, priority has During the year 2008, through the execution of different been given to activities whose line of action is educa- social responsibility plans, approximately 13,643 peo- tion and Job Training Workshops were held to benefit ple have benefited from actions related to education the local populations where we carry out our projects, and 24,015 people have benefited from other activities whether in rural, urban or marginal-urban settings in related to the environment or other issues in the com- different parts of the country. For this reason, we re- munity’s interest. ceived the annual “Luis Hochschild Plaut” award for Graña y Montero’s contribution to education through In addition, as part of the corporate social responsibil- the “Developing Job Skills in the Areas of Influence” ity projects carried out to benefit the community, our program, as well as recognition from Peru 2021 for our civil association, Espacio Azul, provided technical as- contribution to corporate social responsibility in the sistance and specialized advisory services for the ex- community category in relation with the “Developing ecution of social investment projects, among which the Skills for Insertion in the Job Market” program. service provided to the municipalities of Miraflores and Mariano Melgar in the city of Arequipa stand out. Due to this assistance, having complied with SNIP/Na- 98 Responsabilidad Social Capacitación indirecta clases practicas taller de construcción de viviendas en adobe mejorado comunidad Contagallo – Cañete. Donación Biblioteca Colegio Jabonillal de Talara – 2008. Mujeres andinas emprendedoras tional Public Investment System requirements, both The following is a summary of the different actions municipalities were able to gain access to financing carried out in the different areas of influence of our that enabled them to expand their drinking water and operations. sewer networks. Proyectos de Responsabilidad Social INICIATIVA GRUPO OBJETIVO - LUGAR BENEFICIARIO DIRECTO Apoyo continúo al colegio Jabonillal: Donación de biblioteca, Alumnos de la Institución Talara – Piura vivero, mejora en infraestructura, útiles, uniformes y medicinas; Educativa Jabonillal Pariñas Apoyo económico para actividades de esparcimiento y Talleres Talara para los padres. Charlas de Educación Vial denominadas “Educación en Seguridad Niños y Niñas de Instituciones Paita – Piura; Ancón / Huacho Vial” 8,829 horas de capacitación Educativas cercanas a: Carretera / Pativilca – Lima; San Juan de Paita – Yurimaguas Proyecto Marco – Cusco; y Pachia / Toma- IIRSA Norte; Carretera Ancón siri / Sama Las Yaras – Tacna – Huacho – Pativilca; Carretera San Juan de Marcona (Nazca) / Urcos (Cusco) IIRSA Sur Tramo – 1 y Proyecto Conservación Vial Tacna. Coordinación para Capacitación Laboral “Construcción de Vivienda Comunidades de Cañete Cañete – Lima con Adobe Mejorado” en alianza con CB&I y la ONG CARITAS Diálogos y coordinaciones con dirigentes para implementación de Dirigentes: CLAS del Distrito de Lurín/Cañete – Lima y Chincha Talleres de Capacitación para la Inserción Laboral en construcción Lurín – zona A; Sindicato de CC – Ica Civil de Lurín; comunidades de Ca- ñete y Yauyos; comunidades de Chincha – Cañete y Coordinado- res de Municipios. Talleres de Capacitación para la Inserción Laboral en construcción Pobladores de las comunidades Buenos Aires – Piura; El Agustino civil (54). 49,976 horas de capacitación. y desocupados de la zonas de / Cañete – Lima; Puquio – Ayacu- influencia. cho y Chincha – Ica 99 Talleres de Capacitación Laboral “ Enchapados de cerámicos” 912 Jóvenes de la comunidad Tinyahuarco – Pasco horas de capacitación campesina de Santa Rosa de Colquijirca y del Centro Poblado de Colquijirca. Talleres de Capacitación Laboral “ Reparaciones básicas de Jóvenes de las Comunidades Tinyahuarco – Pasco Instalaciones Sanitarias” 1,104 horas de capacitación Campesinas de Santa Rosa de Colquijirca, Smelter, Villa Pasco y Centro Poblado de Colquijirca. Talleres de capacitación Laboral “Construcción de Cocinas Comunidades: La Granja, La Ira- Chota – Cajamarca Mejoradas”. 13,120 horas de capacitación ca, Paraguay, La Pampa – CHOTA CAJAMARCA Talleres de Capacitación Laboral “Curso Básico de Instalaciones Alumnos del 5to año de Secun- Lurín – Lima Eléctricas Domiciliarias”. 1,200 horas de capacitación daria de la Institución “Educativa Nacional Miguel Grau Semina- rio”– Asociación de Vivienda Los claveles,Distrito de Lurín Talleres de Capacitación Laboral “Curso Básico de Instalaciones Alumnos del 5to año de Secun- Lurín – Lima Eléctricas Domiciliarias”. 1,200 horas de capacitación daria de la Institución “Educativa Nacional Miguel Grau Semina- rio”– Asociación de Vivienda Los claveles,Distrito de Lurín Talleres de Capacitación Laboral “Instalaciones de agua y Comunidades: La Granja, La Chota – Cajamarca alcantarillado”. 4,480 horas de capacitación Iraca, El Sauce, Paraguay, La Pampa – CHOTA CAJAMARCA Talleres de Capacitación Laboral “Mantenimiento Básico de Jóvenes de las comunidades Tinyahuarco – Pasco Instalaciones Eléctricas” 960 horas de capacitación. Campesinas de Santa Rosa de Colquijirca, Smelter y CP de Colqujirca. Talleres de Capacitación Laboral en alianza con la ONG Servicios Jóvenes de El Agustino, de 18 a El Agustino – Lima Educativos de El Agustino. 4,680 horas de capacitación. 29 años 100 Talleres de Comunicación e integración para los docentes y perso- Colegio Juana Alarco de Dan- Miraflores – Lima nal del Colegio Juana Alarco de Danmert. mert Asistencia social a pobladores de Talara a través de la gestión de la Pobladores en extrema pobreza Talara – Piura Gobernación Campañas de salud: Vacunación gratuita contra la Hepatitis B; Centros Educativos de San Cañete – Lima y Chincha – Ica Obstetricia, higiene bucal y medicina general Vicente de Cañete y Comunidad en general Chalas a dirigentes vecinales sobre características de los proyec- Dirigentes de la Mesa de Con- Lurín – Lima y Puquio – Ayacucho tos: NASA UNIQUE; Corredor Vial Interoceánico certación, Dirigentes Territoria- les del Distrito de Lurín-Zona A,Dirigentas de las OSB y Coor- dinadores de los Municipios Charlas sobre cuidado del Medio Ambiente; organización de Escolares de secundaria del Tinyahuarco – Pasco; San Juan grupos de trabajo para limpiar el cauce de una torrenta cercana y Colegio Jose Carlos Mariátegui de Marcona – Nasca y Urcos – segregación de residuos sólidos de Colquijirca y Instituciones Cusco. educativas cercanas a la carrete- ra San Juan de Marcona (Nasca) / Urcos (Cusco) Programa de capacitación: Mujeres Andinas Emprendedoras: Esposas de Colaboradores Tarma – Junín Tejido. que viven en las localidades de Condorcocha Proyecto Integral en conjunto con COLP, CB&I, COSAPI y APC para Comedores Populares de Cañete – Lima y Chincha – Ica capacitar a los comedores populares. Chincha Talleres de actitud para el cambio, autoestima y desarrollo personal Miembros de la comunidad de Tarma – Junín y familiar, herramienta: metodología de la dramatización e intercam- Condorcocha y Carpapata bio de roles. Apoyo a profesores (03) de colegios en Los Organos para su capa- Profesores de colegios naciona- Los Órganos – Piura citación en la UDEP. les en Los Órganos Apoyo a viaje de promoción de Colegio de Comunidad Willoq Promoción 2007 Institución Miraflores – Lima (Visita Museo de Oro y almuerzo en Larcomar) Educativa #501617 101 Apoyo con material para infraestructura educativa y programas de Centro Educativo Ciro Guevara Chota – Cajamarca; El Agustino alfabetización Perez – La Granja – Chota – – Lima Cajamarca; Comedor Popular A.H. Ancieta Alta Apoyo con útiles escolares a comunidades Centros Educativos de Tinyahuarco – Pasco; Tanta – Comunidades Campesinas de: Lima y Chota – Cajamarca Colquijirca, Smelter, Villa Pasco, Huaraucaca, Racracancha; CP de Colquijirca; Tanta y La Granja Campaña: “Dona un juguete y harás sonreír a un niño” (Donantes: Niños Hospitalizados del Hospital Breña – Lima Trabajadores GMI), del Niño Concurso escolar de afiches y slogans, teniendo como tema Centros Educativos Nacionales Cañete – Lima central “El Reciclaje”. de San Vicente – Cañete Construcción de un muro de contención de concreto; loza Pobladores de Independencia; Independencia/San Juan de deportiva; plataforma para áreas verdes; parque infantil y escalera Ganímedes; A.H. La Planicie y Lurigancho – Lima para A.H. A.H. Juan Pablo II Coordinación de compras con proveedores locales en Chincha y Comunidades de Chincha y Cañete – Lima y Chincha – Ica Cañete Cañete Donación de Departamento en Proyecto Parques del Agustino para Clínica San Juan de Dios A nivel Nacional ser sorteado en Teletón 2008. El monto recaudado en alianza con Claro y el Fondo de Vivienda fue de: S/.220,000 aproximadamente. Mejoras en la infraestructura de: Escuela de Chota; Local Pronei y Escolares de Chota; Chota/Paraguay – Cajamarca Parroquia de la comunidad La Granja. Comunidades de La Palma – Paraguay – Cajamarca y Comunidad La Granja Realización de (02) dos funciones de cine para implementar sala de Colegio Juana Alarco de Miraflores – Lima computo – Programa Adopta una Escuela. Danmert 102 Sembrado de 143 arbolitos en Proyecto Parques del Agustino Pobladores que residirán en el El Agustino – Lima realizado por los trabajadores de GyM S.A. Conjunto Habitacional Parques del Agustino Apoyo económico y con materiales diversos a entidades u Centros Educativos de Tinyahuarco – Pasco; El Agustino organizaciones comunitarias. Colquijirca; Pequeñas / Tanta – Lima y Querocoto – empresas de A.H. 2 de Mayo; Cajamarca Centro Victoria; Mypes de metalmecánica El Agustino, Pobladores del distrito de Tanta, del Pueblo de Mancora, del A.H. Los Alamos y Querocoto. Apoyo con maquinaria pesada para la nivelación de terrenos de Colegios de las comunidades Tinyahuarco – Pasco centros educativos campesinas Santa Rosa de Colquijirca, Smelter y Villa Pasco Apoyo con utensilios e implementos para el programas Vaso de Niños y madres del Pueblo Los Órganos – Piura; Negrito – Leche Nuevo Los Órganos y Distrito de Piura Negritos Shows infantil navideños, chocolatadas y entrega de juguetes en Niños de 0 a 12 años de edad del Cañete; Talara; Salaverry; comunidades Pueblos de Huacapuquio; Talara; Chimbote; Supe; Pisco, Mollendo, zonas de influencia de Consorcio Cusco, Ilo; Eten, Lima y Cerro de Terminales y Colquijirca – Cerro Pasco de Pasco 103 Iniciativa Estado Grupo Objetivo Lugar Beneficiario directo Proyectos especiales Asistencia técnica en un estudio preliminar y Información levantada para Un total de 1881 Región La Libertad, elaboración del informe respectivo para la evaluación 03 centros educativos e alumnos de un proyecto de apoyo social en infraestructura informe presentado sobre educativa. Trabajo realizado en coordinación con “Cia. necesidades de inversión. Provincia y distrito de Santiago de Chuco. Minera Barrick Misquichilca S. A.” en el distrito de Santiago de Chuco. Asistencia técnica en la revisión del expediente Informe presentado Beneficiarios 13,273 Región Arequipa, técnico “Mejoramiento y Ampliación de las Redes de Agua Potable y Alcantarillado “ elaborado por la Municipalidad del distrito de Orcopampa – Arequipa. Trabajo realizado en coordinación con Cía. Minera Buenaventura: habitantes distrito de Orcopampa. Asistencia técnica en un estudio preliminar y Informe presentado elaboración del informe respectivo para la evaluación de un proyecto de apoyo social en rehabilitación de infraestructura de riego comunal en Cañete y Chincha. Trabajo realizado en coordinación con Perú LNG. Beneficiarios 500 familias Región Lima – Cañete y Región Ica – Chincha. Asistencia técnica en el análisis de una base de Informe presentado Un estimado de 350 Región Ayacucho y datos sobre Instituciones Educativas factibles de recibir apoyo para la mejora del servicio educativo en las Regiones de Ayacucho y Huancavelica. Trabajo realizado en coordinación con Perú LNG. Asesoría a SURVIAL en la coordinación con autoridades locales del distrito de Puquio a efectos de evaluar las posibilidades de ofrecer asistencia técnica en la realización de estudios de pre-inversión a nivel de perfil para un hospital local. alumnos Huancavelica Población adscrita Región Ayacucho, según MINSA Provincia de Lucanas, distrito de Puquio. 104 Asistencia técnica en la etapa de pre-inversión: Se aprobó la viabilidad Área a beneficiar: Distrito de Miraflores 1.PASO I: Se apoyo en la gestión del pase de nivel perfil del estudio de factibilidad 95 ha., de 1,923 lotes en la provincia de a nivel Factibilidad del estudio del distrito de Miraflores donde culmina la etapa existentes. Arequipa en Arequipa, coordinándose con el Ministerio de de pre-inversión. La 7,692 habitantes para Economía y Finanzas, Gobierno Regional y Gobierno Municipalidad emprenderá el 2009 y 11,497 para el Local. la etapa de inversión, año 2029 (horizonte del 2.PASO II: Se brindó Asistencia Técnica permanente en desarrollando el expediente proyecto) el desarrollo del estudio de Factibilidad “Instalación de técnico. Redes Primarias y Secundarias del Sistema de Agua Potable y Alcantarillado de los Pueblos Jóvenes de las Partes Altas del distrito de Miraflores – Provincia de Arequipa. 3.PASO III: Se apoyó en la gestión de viabilidad del estudio de factibilidad de Miraflores ante el Gobierno Regional de Arequipa. Asistencia técnica en la etapa de pre-inversión: Estudio de factibilidad Área a beneficiar: 306 Distrito de Miraflores 1.PASO I: Se apoyo en la gestión de nivel de perfil a concluido. La Municipalidad ha., de 4,638 lotes en la provincia de nivel Factibilidad del estudio del distrito de Mariano gestiona el otorgamiento existentes. Arequipa Melgar en Arequipa, coordinándose con el Ministerio de de la viabilidad y con ello 23,190 habitantes para Miraflores – Arequipa Economía y Finanzas, Gobierno Regional y Gobierno iniciar el desarrollo del el 2009 y 28,184 para el Local. expediente técnico de la año 2029 2.PASO II: Se brindó Asistencia Técnica permanente en etapa de inversión. el desarrollo del estudio de Factibilidad “Instalación de Redes Primarias y Secundarias del Sistema de Agua Potable y Alcantarillado de las Partes Altas del distrito de Mariano Melgar – Provincia de Arequipa. 105 106 CORPORATE GOVERNANCE Corporate Governance 110 107 108 109 Corporate Governance Continuing with our effort to consolidate the best corporate governance practices, in the year 2008 Graña y Montero participated in the Good Corporate Governance Index which the Lima Stock Exchange published for the first time, with the participation of only 7 companies. Our inclusion was the result of the evaluation of our good governance practices by an external auditor previously approved by the Lima Stock Exchange. Continuing with our effort to consolidate the best corporate governance practices, in the year 2008 Graña y Montero participated in the Good Corporate Governance Index which the Lima Stock Exchange published for the first time, with the participation of only 7 companies. Our inclusion was the result of the evaluation of our good governance practices by an external auditor previously approved by the Lima Stock Exchange. The Board of Directors’ committees were strengthened this year, encouraging the participation of the Independent External Directors and reducing the participation of the Internal Directors. The Audit and Process Committee held 3 meetings this year, the Investment and Risk Committee had 5 meetings, and the Human Resource Management and Social Responsibility Committee met twice in 2008. The Shareholder Service Office handled 42 inquiries from shareholders and potential investors in 2008 and the company, in line with the launch of our new image, redesigned the website, incorporating more useful information for the shareholders and investors. For the third time, Graña y Montero S.A.A., as well as our subsidiaries, underwent a Self Assessment of the Board of Directors. As part of the process of becoming familiar with the business in the field, our directors visited the Parques del Agustino construction project and the new Gas Plant in Talara. As of December 31, 2008, we had 865 shareholders, of which approximately 13.25% own less than 1% of the capital stock. Nearly 30.29% own between 1 and 5% of the capital stock. 110 1 4 7 2 5 8 3 6 9 1 José Graña Miró Quesada President 2 Carlos Montero Graña Vice President 3 Mario Alvarado Pflucker Internal Director – General manager 4 Teodoro Harmsen Gómez de la Torre External Director 5 Roberto Abusada Salah Independent External Director 6 Jean Louis Dupoirieux External Director 7 José Chlimper Ackerman Independent External Director 8 Augusto Baertl Montori Independent External Director 9 Hernando Graña Acuña Internal Director In March of 2008, the General Assembly of Shareholders elected the Board of Directors for the 2008–2010 period, maintaining five external directors among its members. Of these five, 3 are independent external directors; that is, they do not have a significant number of shares in the company. 111 Directorio José Graña Miró Quesada President of the Board of Directors and an architect by profession. Additionally he is the President of the Board of Directors of the subsidiaries GyM, GMP, GMD, CONCAR, and LARCOMAR, as well as Vice President of the Board of Directors of GMI. He is also a director of Empresa Editora El Comercio S.A. and Relapasa. Carlos Montero Graña Vice President of the Board of Directors and a civil engineer by profession. Additionally, he is the Vice President of the Board of Directors of GyM, Vice President of the Board of Directors of GMP and a director of GMD, GMI and CONCAR. Mario Alvarado Pflucker Director and General Manager. Civil Engineer with a master’s degree in Business Administration from George Washington University, U.S.A. Currently, he is also a director of GMD, GMI, GyM, GMP, CONCAR, Larcomar, Norvial and América Leasing. Teodoro E. Harmsen Gómez de la Torre Director and a civil engineer by profession. President of GMI S.A. and a director of Wagonlits and MDI. Professor emeritus at the PUCP School of Science and Engineering. He is also an honorary member of the American Concrete Institute, among other distinctions. Roberto Abusada Salah Director, with a PhD in Economics (Cornell, U.S.A.). He is a director of GMD, CONCAR, Mauricio Hothschild y Cía. Ltda. S.A.C. and the Peruvian Institute of Economics (IPE). 112 Jean-Louis Dupoirieux Director and a civil engineer by profession. He is a Project Director at Vinci-Construction Grands Projets (France) and also a director of GyM and Sociedad Concesionaria Puente de Chiloe (Chile). José Chlimper Ackerman Director. He has a degree in Economics and Business Administration from North Carolina State University and holds the position of President of the Board of Directors of Corporación Drokasa and Sociedad Agrícola Drokasa, where he is also the CEO. Director of Maestro Home Center, Banco Central de Reserva del Peru and Aeropuertos del Peru. Additionally he is a director of GMD. Augusto Baertl Montori He is a mining engineer by profession and the Executive President of Gestora de Negocios e Investments S.A. and IMA Latin America Inc. Additionally, he is the President of the Board of Directors of Agrícola Chapi S.A. and a director of Alturas Minerals, Norsemont, Interbank, GMP and FIMA. Hernando Graña Acuña Director, industrial engineer with a post graduate degree in Mining Engineering from the University of Minnesota, U.S.A.. He is a director of GyM, GMI, GMP, Ecotec S.A. and CONCAR. President of Norvial S.A. He is also a director of CAPECO and TGP. 113 Board of Directors’ Committees Auditing and Processes Human Resources Management and Investment and Risk Committee Committee Social responsibility Committee Composed of Augusto Baertl Montori José Graña Miró Quesada Roberto Abusada Salah Chairman Chairman Composed of Composed of Chairman Jean Louis Dupoirieux José Chlimper Ackerman Steering committee José Chlimper Ackerman Augusto Baertl Montori Roberto Abusada Salah Teodoro Harmsen Gómez de la Torre The Steering committee responsible for the Group’s coordination is composed of the 4 Executive Directors and 7 General Managers of companies in the Group. José Graña Miró Quesada Carlos Montero Graña Hernando Graña Acuña Mario Alvarado Pflucker Juan Manuel Lámbarri Francisco Dulanto Swayne Jaime Dasso Botto President Vice President Director Managing Director General Manager GyM General Manager GMP General Manager GMD Walter Silva Santisteban Requejo General Manager GMI Jaime Targarona Arata Rolando Ponce Vergara General Manager CONCAR General Manager GMV Antonio Rodríguez Canales General Manager LARCOMAR 114 Senior Executives Mario Alvarado Pflucker Corporate General Manager from 1997 to the present. Obtained a bachelor’s degree in Civil Engineering from Universidad Ricardo Palma and a master’s degree in Engineering Administration, specializing in Construction Management, from George Washington University, U.S.A. Currently, he is also a director of GMD, GMI, GyM, GMP, CONCAR, Larcomar, Norvial and América Leasing. Juan Manuel Lámbarri Hierro General Manager of GyM from 2001 to the present. Civil Engineer graduated from Pontificia Universidad Católica del Perú and Senior Man- agement Program (Spanish acronym: PAD) at Universidad de Piura. He began working for Graña y Montero in 1982 and currently, he is also a director of GyM. Hernando Graña Acuña GyM director and executive. Industrial Engineer with a post graduate degree in Mining Engineering from the University of Minnesota, U.S.A. He is a director of GyM, GMI, GMP, Ecotec S.A. and CONCAR. President of Norvial S.A. He is also a director of CAPECO and TGP. Francisco Dulanto Swayne General Manager of GMP S.A. since it was founded in 1984 and a director since 1988. Studies at Universidad Nacional de Ingeniería (Na- tional Engineering University), ESAN, PAD Universidad de Piura. He has been working for the Graña y Montero Group since 1974. He is also a director of Consorcio Terminales and CLHB (Bolivia). He was the President of SPE (Society of Petroleum Engineers), Lima Section, in 1991 and Director of the Sociedad Nacional de Minería, Petróleo y Energía (the National Society of Mining, Petroleum and Energy) from 1993-1994 and 2005-2006. Jaime Dasso Botto General Manager of GMD from 2000 to the present. He obtained a bachelor’s degree in Electronic Engineering and a master’s degree in Software Development from Stevens Institute of Technology, U.S.A. He was the Commercial Manager of GMD from 1994 to1999. Currently, he is also a director of GMD. 115 Walter Silva Santisteban Requejo General Manager of GMI from 1998 to 2005 and Managing Director from 2006 to the present. He obtained a bachelor’s degree in Civil Engi- neering from Universidad Nacional de Ingeniería (National Engineering University). Currently, he is also a director of ECOTEC. Jaime Targarona Arata General Manager of CONCAR since August of 2005. Civil Engineer graduated from Universidad Autónoma de Guadalajara, with an MBA from Universidad San Ignacio de Loyola. He has also held the position of Civil Engineer on different projects, Commercial Manager of the GyM Special Projects Division and General Manager of Graña y Montero Mexico. Rolando Ponce Vergara General Manager of GMV since October of 2008. Previously, he held the position of Manager of the Real Estate Division. He has worked for the Group since the year 1993. He is a Civil Engineer by profession, with a degree from Universidad Ricardo Palma and a master’s degree in Construction and Real Estate Business Management from Pontificia Universidad Católica de Chile-Politécnica de Madrid. Luis Díaz Olivero Corporate Finance Manager since December 15, 2004. Industrial Engineer graduated from Pontificia Universidad Católica, with an MBA from the University of Pittsburgh. Since joining the Group in 1993, he has also been the Finance Manager of GMP S.A from 1998 to 2000 and the Finance Manager of GyM from 2001 to 2004. Miguel Valentín Ghezzi Business development Manager since October of 2006. He has a degree in Business Administration from Universidad del Pacífico and an MBA from Harvard Business School. He has been with the Group since November of 2004. He is a director of CONCAR, Survial and Larcomar. Previously, he worked for Citibank in the Corporate Finance Area and was a consultant with McKinsey & Company in Madrid. César Neyra Rodriguez Manager of Internal Auditing and Management Processes. He has a bachelor’s degree in Accounting from Universidad Nacional Federico Villarreal and a master’s degree in Business Administration and Finance from Universidad del Pacífico. He has also studied Quality Improve- ment Systems and graduated from the Six Sigma Methodology program at Caterpillar University in Mexico and the U.S.A. 116 Claudia Drago Morante Corporate Legal Manager from 2000 to the present. Attorney graduated from the University of Lima. PADE in Finance and Corporate Law from ESAN. She was the Legal Advisor to GMD from 1997 to 2000. Juan José Arrieta Ocampo Manager of Human Resources Management and Social Responsibility since November of 2007. Bachelor’s degree in Sociology from Pontificia Universidad Católica. PADE in Business Administration from ESAN. He was the Human Resources Manager at GyM from 1999 through October 2007. Kinship Mr. José Graña Miró Quesada, President of the Board of Directors, has first degree kinship with Mr. Miguel Valentín Ghezzi, a director of Con- car and Larcomar and Business Development Manager at Graña y Montero, third degree kinship with Ms. Yamile Brahim Graña, shareholder of the company, and fourth degree kinship with the director, Mr. Hernando Graña Acuña. Lastly, Mr. Teodoro Hans Harmsen Andress, a director of GMP, has first degree kinship with Mr. Teodoro Harmsen Gomez De La Torre, a director of the company. Company Name In a corporate split-off from Investments Graña y Montero S.A., Graña y Montero S.A.A. was incorporated by public deed on August 12, 1996 and registered on card 131617 and electronic record 11028652 in the Registry of Legal Entities of Lima. Capital The capital of the company as of December 31, 2008 amounted to S/.390,798,933.00, represented by 558,284,190 shares with a nominal value of S/. 0.70 each as a result of an increase in capital stock agreed upon by the General Assembly of Shareholders on March 31, 2008. 117 Principales Accionistas El principal accionista es GH Holding Group, representada por José Graña Miro Quesada, Presidente del Directorio. Relación de Principales Accionistas al 31.12 . 2008 Nombres y apellidos Numero De Acciones Participacion (%) Nacionalidad GH Holding Group AFP Integra (ING GROUP)* Prima AFP (Grupo Crédito) * 117,538,227 66,312,888 66,130,519 AFP Horizonte (Grupo BBVA)* 51,154,671 Profuturo AFP (Grupo Citibank)* 38,771,698 Bethel Enterprises S.A. 33,986,024 Vinci Construction (Grupo Vinci) 32,825,259 Byron Development 24,040,669 Genesis Smaller Companies SICAV 22,090,451 Subtotal Otros Accionistas Total 206,439,961 351,844,229 558,284,190 * Sumatoria de los Fondos 1,2 y 3 21.05% 11.88% 11.85% 9.16% 6.94% 6.09% 5.88% 4.31% 3.96% 81.12% 18.88% 100.00% Panamá Perú Perú Perú Perú Panamá Francia Panamá Luxemburgo 118 Tenencia Menor a 1% Entre 1% - 5% Entre 5% - 10% Mayor al 10% Total Social purpose Número de Accionistas Porcentaje de participación al 31.12.08 848 10 6 1 865 13.25% 30.29% 35.41% 21.05% 100.00% The company’s main objective is to dedicate its efforts toward investments and mercantile operations in general, as well as engineering services, management consultancy, real estate investments, and the acquisition, transfer and negotiation of shares of companies and other securities. CIIU – 6719 Duration of the Company Graña y Montero S.A.A. was incorporated for an indefinite period of time. Changes in Shares The stock market quotation was S/.5.61 per share in January and S/. 2.00 per share on December 31, partially due to the issuance of 130,060,057 paid-up shares. The average liquidity during the period was 83.47 % and the volume traded during the year totaled S/.83,567,324. In the month of April, dividends in the amount of S/. 25.9 MM were distributed. 119 Cotizacion mensual de acciones Codigo ISIN Nemonico Año - Mes Apert. S/. Cierre S/. Max. S/. Min. S/. Prom. S/. Cotizaciones 2008 Precio PEP736581005 GRAMONC1 PEP736581006 GRAMONC1 PEP736581007 GRAMONC1 PEP736581008 GRAMONC1 PEP736581009 GRAMONC1 PEP736581010 GRAMONC1 PEP736581011 GRAMONC1 PEP736581012 GRAMONC1 PEP736581013 GRAMONC1 PEP736581014 GRAMONC1 PEP736581015 GRAMONC1 PEP736581016 GRAMONC1 2008-01 2008-02 2008-03 2008-04 2008-05 2008-06 2008-07 2008-08 2008-09 2008-10 2008-11 2008-12 6.00 5.63 5.92 6.15 6.25 7.06 5.00 4.67 4.30 3.60 2.99 2.10 5.61 5.92 6.15 6.25 7.05 5.40 4.67 4.30 3.63 2.99 2.10 2.00 6.10 5.95 6.20 6.40 7.05 7.13 5.00 4.67 4.35 3.60 2.99 2.15 5.40 5.60 5.92 6.06 6.25 5.40 4.67 4.29 3.50 2.96 2.01 2.00 5.75 5.90 6.08 6.21 6.73 5.64 4.93 4.43 3.86 3.10 2.02 2.07 Volumen de negociado GRAMONC 1 Vol. Neg. US$ Precio cierre Emisiones de acciones liberadas 03 junio 8.00 7.00 6.00 5.00 4.00 3.00 2.00 1.00 0.00 ene feb mar abr may jun jul ago sep oct nov dic 18,000,000 16,000,000 14,000,000 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 - 120 Bonos de Titulización En octubre 2003 la empresa y sus principales subsidiarias colocaron Bonos Titulizados con garantía parcial del BID y el FMO por un monto de US$ 50 millones, con amortizaciones semianuales con vencimiento en Setiembre 2011. Al cierre de Diciembre 2008 dichos bonos tienen un saldo de S/. 73,390,836 (US$ 23,4 MM). En el año 2006, la empresa obtuvo la aprobación de la Junta de Bonistas y los Garantes para reducir los niveles de garantía del BID y el FMO, liberar la cuenta de reserva y flexibilizar ciertas condiciones en la estructura de los Bonos que generaban ineficiencias operativas y tributarias. Estas modificaciones no afectan la clasificación de los mismos manteniéndose el rating en AAA. Codigo Isin Nemonico Corto Plazo Apert % Cierre % Max % Min % Prom % PEP80070F083 INTE0BTG1U Bonos de Titulización 102.20% 100.00% 102.20% 97.02% 101.03% Instrumentos Corto Plazo Cotizaciones 2008 Precio Instrumentos de Corto Plazo En Noviembre 2008 se renovó la línea de instrumentos de corto plazo en el mercado de capitales por US$ 20 millones durante un período de dos años adicionales. Al 31 de diciembre 2008, la empresa tiene vigente dos emisiones, cada una por US$ 7MM con vencimiento en Julio y Noviembre 2009. 121 122 ANALYSIS OF RESULTS Informe del Análisis de la Administración 126 123 124 Analysis of Results Summary Results as of December 31, 2008 (audited figures) • By the year-end closing, activity had increased 23.4% compared to the preceding year, amounting to S/. 1,887.7 MM (US$ 600.8 MM). • EBITDA in 2008 reached S/.372.7 MM (US$ 118.6 MM), which represents growth of 30.3% compared to the preceding year and is equivalent to 19.7% of the activity. • Available Earnings at the 2008 closing amounted to S/.147.2 MM (US$ 46.8 MM), which represents growth of 13.3% compared to the preceding year. • Debt / EBITDA (1) closed the period at 1.2x (14.2 months) compared to a debt duration of 27 months. • The consolidated backlog at the 2008 year-end closing amounted to S/. 2,607.2 MM (US$ 829.7 MM), which represents growth of 20.8% compared to the 2007 year-end closing. • Gross Capital Investment during the 2008 period was S/. 315.1 MM (US$ 100.3 MM). Principales Cifras Consolidadas Acumuladas (En miles de nuevos soles) Actividad Facturación Utilidad Bruta 2007 / 4 1,529,818 1,439,974 299,027 Utilidad Operativa 220,013 Utilidad Realizada 194,773 Utilidad Disponible 129,900 UAIPIDA (1) 286,608 100.0% 94.1% 19.5% 14.4% 13.0% 8.6% 18.7% (1) Utilidad Operativa + Depreciación + Amortización 2008/4 1,887,723 1,827,710 399,490 294,936 277,128 147,189 372,696 100.0% 96.8% 21.2% 15.6% 14.7% 7.8% 19.7% 4t’08 / 4t’07 23.4% 26.9% 33.6% 34.1% 39.4% 13.3% 30.0% 126 Profits and Losses The consolidated activity of the Graña y Montero Group at year-end closing had grown 23.4% compared to the preceding year, amounting to S/. 1,887.7 MM. Growth in the activity during 2008 is accounted for by growth in the Infrastructure and Construction Business, which grew S/. 292.5 MM (+26.2%), the Engineering Business S/. 45.2 MM (+64.6%), the Petroleum Business S/.39.6 MM (+22.4%), the Concession and Concession Operation Business S/. 34.9 MM (+77.0%), the Information Technology Business S/. 19.0 MM (+19.8%) and the Larcomar Business which grew S/ 2.7 MM (+10.2%) respectively. The activity of the Infrastructure and Construction Business reached S/. 1,408.5 MM (US$ 448.3 MM). The major contracts executed during the year 2008 were the Expansion of the Malvinas Plant, the construction of the Cerro Corona mining project, the modernization of the Pariñas plant, the construction of Sections 2 and 3 of the Southern Interoceanic Highway, the highway maintenance work in Lot IAB, the Paucarcocha Dam, the contract on hauling material for the El Brocal mine and the work on camps, underground work, tank foundations and civil works at the new NGL plant in Chilca. The Golf Milenium, Balta 1070, Parques del Agustino and Golf Los Incas real estate projects are those with the most activity in the Real Estate Division, while the construction of the Héroes Navales Station, the office building on Santo Toribio for Inserfinsa, the construction of the Westin Hotel and Novotel in San Isidro are the main projects of the Building Division. The Petroleum Business activity in 2008 closed at S/. 216.6 MM (US$ 68.9). The activity of the Exploration – Production line showed the most growth given that it benefited from the higher crude price, as well as increased production due to the drilling of ten new wells in Lots I and V. The activity of this line represented 45.1% of the total activity of the Petroleum Business. The activity of the Gas Plant intensified due to greater demand for gas from EEPSA, as well as higher prices for derivatives obtained as a result of the fractionation process. This plant’s activity accounts for 27.9% of the activity of this business. Lastly, the Fuel Storage and Dispatch line showed increased activity due to greater consumption generated by the growth in the country’s economy, which resulted in greater demand for energy and hydrocarbons. This line accounted for 27.0% of the activity of this business. 127 The activity of the Engineering Business amounted to S/.113.2 MM (US$ 36.0 MM). The growth of this business in 2008 occurred due to ro- bustness in the first three quarters in relation with the framework contracts with Río Tinto, Antamina, Minera Yanacocha, Repsol and Pluspet- rol. Mention should also be made of the Construction Management at the La Granja Camp for Rio Tinto and the Engineering for the Dorado Pipeline in Lot 67 for Perenco. In the Dominican Republic, the Hotel Moon Palace Supervision Project was rolled out and the supervision of the Hotel Club Melia Paradisus project, as well as other projects for the Sol Melia chain, were concluded. In the Information Technology Business, the activity for 2008 amounted to S/. 115.0 MM (US$ 36.6 MM). The Technology and Technology Services line accounts for the growth of this business, with the start up of operations at the CONSUCODE computer centers. Its activity rep- resented 42.9% of the total activity of this business. The Technology Outsourcing and Software Factory lines represented 24.6% and 25.1% of the activity respectively, while the Business Process Outsourcing line accounts for the balance of the activity for the period. The combined activity of the Highway Concession Business and the Highway Operation and Maintenance Business conducted in 2008 reached S/. 80.2 MM (US$ 25.5 MM). In concessions, the activity of the concession for Section 1 of the Southern Interoceanic Highway ac- counts for the growth of the business and represents 24.7% of the total activity, while Highway Operation and Maintenance with its Conces- sion Contract on the Operation of the Paita – Yurimaguas Highway, the Operation and Maintenance of Road Network No. 5 for Norvial and the Tacna Road Maintenance Contract represented 75.3% of the activity. During the year 2008, greater sales among Larcomar operators resulted in an improvement in the variable annual income from the Shopping and Entertainment Center. The activity reported at the end of the period was S/. 29.3 MM (US$ 9.3 MM). There was record activity in the fourth quarter for the second consecutive time, amounting to S/.543.7MM (US$ 173.1MM). Intercompany ser- vices also set a record of S/. 105.9 MM (US$ 33.7 MM) due to the construction contract on the new gas plant in Pariñas. Lastly, at the closing of the quarter, 62.5% of the activity was the result of contracts related to the mining, petroleum and energy sectors. • Gross Profit rose 33.6% (27.4% in US$) compared to the preceding year, amounting to S/. 399.5 MM (US$ 127.1 MM), which accounts for 21.1% of the activity. Gross Profit for the year 2008 is composed of Gross Profit from the Infrastructure and Construction Business that amounted to S/. 209.4 MM (US$ 66.7 MM), Gross Profit from the Petroleum Business totaling S/. 105.4 MM (US$ 33.6 MM) and Gross Profit 128 Actividad Anual Consolidada (S/.000’s) 1,888 1,321 1,530 932 1,800 1,550 1,300 1,050 800 550 300 50 2,005 2,006 2,007 2,008 from the Engineering Business, which amounted to S/. 30.7 MM (US$ 9.8 MM). The other three types of business account for the balance of the Gross Profits (33.6 MM) y por la Utilidad Bruta del Negocio de Ingeniería que alcanzó los S/. 30.7 MM (US$ 9.8 MM). Los otros tres negocios completan el saldo de la Utilidad Bruta. Actividad por negocio Utilidad bruta Infraestructura y construción Tecnología de Informac. Infraest. y Const. Otros Ingeniería de Consulta Servicios Petroleros Operac. de Conseciones Larcomar 71.8% 5.8% 4.1% 5.9% 11.0% 1.5% 47.66% 52.34% 129 Gross Profits from the Infrastructure and Construction Business in 2008 rose 36.3% compared to the previous year. The increase in Gross Profit is mainly due to a larger Gross Margin for the projects and appreciation of the United States dollar that has a favorable impact on the relation between income and costs in this business. At the 2008 closing, the Gross Margin for this business was 14.8%. Gross Profit from the Petroleum Business rose 30.6% due to the increase in Gross Profit from Lots I and V that benefited from a higher crude price during the first three quarters of the year, which supported the production increase explained above. Additionally, the increase in Gross Profit from the Gas Plant as a consequence of the greater activity and higher price of derivatives accounts for the increase in the Gross Mar- gin of this business, which reached 48.7%. Gross Profit from the Fuel Storage and Dispatch line was similar to that of the preceding year. The higher Gross Profit from the Engineering Business is closely related to the growth in its activity. Gross Profit from this business rose 59.3% in comparison with the preceding year and the Gross Margin reached 27.1%. Gross Profit from the Information Technology Business amounted to S/. 19.8 MM (US$ 6.3 MM), while Gross Profit for the Concession and Concession-Operation Business was S/. 19.0 MM (US$ 6.6 MM) and Gross Profit from Larcomar amounted to S/.17.1 MM (US$ 5.4 MM). • Operating Earnings increased 34.1% (27.9% in US$), totaling S/. 294.9 MM (US$ 93.9 MM), which results in an Operating Margin of 15.6%. The increase in Gross Profit supports this improvement in Operating Earnings. General expenses increased due to the higher level of activity, amounting to 5.5% of the same. • Net financial expenses totaled S/. 32.3 MM (US$ 10.3MM), which accounts for an increase of 42.1% (34.0% in US$) com- pared to 2007. The increase in Capital Investments and Working Capital needs as a result of greater activity explain the increase in Financial Debt. EBITDA also increased due to higher Operating Earnings and greater depreciation of Capital Investments, which has made it possible to absorb the higher financial expenses with no impact on their coverage that amounted to 11.6x, which is similar to the coverage at the 2007 year-end closing. 130 • The cumulative effect of devaluation as of December 2008 was S/.44.1 MM. The devaluation is explained by a greater exposure to the United States dollar in the amount of S/. 24.8 MM as a result of an increase in Financial Debt and the expiration of forward contracts in the amount of S/ 19.3 MM. The impact of the forward contracts was mainly on the fourth quarter due to the increase in the exchange rate caused by the international financial crisis. However, as explained before, this increase also had a favorable impact on the group’s Gross Profit. The effects offset each other in terms of the period’s outcomes. • Available Earnings grew 13.3% (8.1% in US$), amounting to S/. 147.2 MM (US$ 46.9 MM). The devaluation mentioned in the preceding paragraph is the factor that accounts for the fact that Available Earnings grew less than Operating Earnings. In 2007, this effect was positive, while in this period it is negative, increasing its impact on Final Net Income. • Cumulative EBITDA1 in 2008 increased 30.0% (24.1% in US$), totaling S/. 372.7 MM (US$ 118.6 MM). The higher Operating Earnings combined with increased depreciation on the Group’s Capital Investments account for the increase in EBITDA, the consolidated total of which represents 19.7% of the group’s activity. Long-term stable cash flows, such as those from highway concessions, petroleum services and the outsourcing business account for 43.2% of EBITDA1, resulting in coverage of 1.52x of the group’s total Financial Expenses plus General Expenses that are not related to these types of business. Additionally, it is assumed that the latter would not be cut back in the event of a total loss of its activity. 131 UAIPIDA por negocio Infraestructura y construción Tecnología de Informac. Operac. de Conseciones Servicios Petroleros Ingeniería Larcomar 29.16% 3.50% 4.27% 4.96% 3.77% 54.33% Balance Sheet • Compañía Logística de Hidrocarburos Boliviana (CLHB): As explained in previous reports, the state-owned company, Yacimientos Petroleros Fiscales Bolivianos, has taken control of CLHB’s operations without a transfer of its shares or payment of compensation for its nationalization. The negotiations to finalize this process continue, due to which there has been no need to record any expense in addition to that recorded in 2006. • Current liquidity at the end of the period was 1.25x. The pressure from Working Capital had an impact on this indicator. Although the figure was at a healthy level at the 2008 year-end closing, it has dropped 0.14x. The cash reserve to cover strategic investments under evaluation amounted to S/. 21.0 MM (US$ 6.7 MM) in December 2008. • Financial Leverage was 0.74x while Total Leverage was 1.52x. Combined Capital Investments with a greater need for working 132 capital have put pressure on Liabilities to Banks and Long-Term Debt. Taking into account that S/. 315.1 MM (US$ 100.3 MM) was invested during 2008, it should be mentioned that the Financial Debt related to these investments increased only US$ 29.0 MM. The balance of the increase in Financial Debt is US$ 21.0 MM, which is due to the working capital required by the revenue recognition method associated with the obtainment of CRPAO progress certificates at the beginning of the work on Section 1 of the Southern Interoceanic Highway and the Coast – Highlands Project: Buenos Aires Canchaque. As a consequence of the foregoing, the Financial Debt / Equity ratio increased 0.17x and the Total Leveraging ratio increased 0.13x compared to the 2007 year-end closing. • Financial Debt / EBITDA (1) amounted to 1.2x at the 2008 closing. The increase in Financial Debt during the period surpassed the growth of EBITDA, with an indicator 0.24x higher at year-end. However, considering that the average debt expiration closed at 27 months, there is still a gap between this indicator and the debt payment period that allows adequate cash generation levels for the group. • Average Return on Equity at year-end closing for 2008 was 25.2%, while the Return on Assets was 10.0%. Earnings for the period have enabled us to maintain profitability levels of the group, absorbing the capitalization of 80% of the earnings for the year 2007. The absence of earnings on investments that have not yet entered into production had a slight effect on the Return on Total Assets. Backlog and Perspectives • The group’s backlog rose 20.8% at the 2008 closing, amounting to S/. 2,607.2 (US$ 829.8 MM), which represents 1.38x the activity for the last 12 months. Of this total, S/. 1,555.6 MM (US$ 495.1 MM) shall be executed in 2009, S/. 702.9 MM (US$ 223.8 MM) in 2010 and the balance from 2011 onward. It should be noted that the backlog to be executed in 2009 is 28.8% higher than the backlog reported at the 2007 year-end closing. Due to this Backlog, as well as the expected return on Capital Investments, despite the international financial crisis, the group projects growth, although at a more moderate level than that reported for prior years. 133 • The group’s Capital Investments during the year 2008 totaled S/ 315.1 MM (US$ 100.3 MM), increasing substantially. Of the total investments, S/.126.6 MM (US$ 40.3 MM) correspond to investments in the hydrocarbons sector, S/. 59.1 MM (US$ 18.8 MM) to land acquisitions for the development of the real estate business and S/. 39.0 MM (US$ 12.4 MM) correspond to Infrastructure Concessions. The balance invested mainly corresponds to investments in machinery and equipment in the construction business and in the expansion and modernization of the group’s corporate offices. These investments are consistent with the three sectors on which the group focuses its strategic development. Backlog Consolidado US$ MM 830 720 539 592 2005 2006 2007 2008 900 800 700 600 500 400 300 200 100 0 134 Subsidiaries of Graña y Montero S.A.A. The Graña y Montero Group operates in diverse economic sectors, primarily through the following subsidiaries: GyM, the original construction company, which has four divisions: Civil Works, Electromechanics, Buildings and Real Estate GMD, the leading company providing information technology solutions for the corporate market GMP, the petroleum services company dedicated to the extraction of petroleum and the drilling of wells in the northern part of the country. It is the operating partner of Consorcio Terminales, a consortium with Oiltanking of Germany for the operation of 9 fuel storage terminals in Peru and and 10 terminals plus 1,600 Km of pipelines in Bolivia (CLHB). GMI, the company dedicated to design engineering, construction project supervision and project management that is also the majority shareholder of ECOTEC, a company specializing in environmental engineering Concession Operations, for several years, Graña y Montero has participated in the concession business. Currently, it holds the concessions for the operation of Road Network No. 5 (Norvial S.A.), the Northern IIRSA Highway, Survial and the Tacna Road Concession. Larcomar, which is located on the cliffs at the bottom of the Salazar park in the district of Miraflores, has a total area of 44,675 m². Its main business is real estate, through leases on commercial properties in the entertainment area and the recently opened area called Fashion Center. In addition, it generates income from business ventures such as the parking lot and advertising in the center. 135 

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