GRAÑA Y MONTERO WORK STYLE
INSPIRES US
DISTINGUISHES US
ALLOWS US TO TRANSCEND
ANNUAL
REPORT
2014
GRAÑA Y MONTERO WORK STYLE
INSPIRES US
DISTINGUISHES US
ALLOWS US TO TRANSCEND
ANNUAL
REPORT
2014
CON
TENT
TO THE SHARE-
HOLDERS:
PG._5
01_
WHAT DO
WE DO?
PG._13
ORGANIZATION
PAG._8
MAIN FIGURES
PG._9
HISTORICAL
SUMMARY
ENGINEERING &
CONSTRUCTION
INFRASTRUCTURE
REAL ESTATE
TECHNICAL
SERVICES
PG._14
PG._18
PG._24
PG._31
PG._37
02_
HOW DO
WE DO IT?
TRANSPARENCY
CORPORATE
GOVERNANCE
PG._42
PG._43
03_
WHY DO
WE DO IT?
PG._82
REPORTS
PG._83
4 >>
STATEMENT OF
RESPONSIBILITY
“This document contains true and sufficient information on the operations of Graña y Montero S.A.A. during the year 2014. Notwithstanding the
responsibility of the issuer, the issuer, the undersigned assume responsibility for the contents hereof in accordance with applicable laws”
Mario Alvarado Pflucker
Chief Executive Officer
Gonzalo Rosado Solis
Corporate General Accountant
Lima, January 30, 2015
<< menu GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDANNUALREPORT2014
5 >>
TO THE SHAREHOLDERS:
We are pleased to submit to you the Annual
Report 2014, the year when we celebrate 81 years
of the founding of our company.
Also this year, we celebrate 30 years of the
forming of our subsidiaries GMI, GMD and
GMP, which responded to a strategic decision to
diversify towards other engineering activities and
laid the groundwork for today’s Graña y Montero
Group, made up of 26 companies providing
engineering and infrastructure services.
Within this development strategy, the highlight
of the year has certainly been the purchase of
the companies COGA and Morelco. COGA
is a company in charge of operation and
maintenance of the Camisea Trans-Andean
Pipeline, in which we have acquired a 51%
stake with Enagas from Spain and CPPIB from
Canada as partners. Morelco is a Colombian
construction company with 35 years of
experience, mainly in the hydrocarbon sector,
GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCEND<< menu ANNUALREPORT2014 TO THE
SHAREHOLDERS:
We firmly believe that these successes are mainly the result of having formed an
outstanding team of more than 46,762 collaborators, including 6,819 professionals,
which has consolidated around our four corporate values of Quality, Compliance,
Seriousness and Efficiency. Values which are committed not only to the projects that we
execute but also to the style and way in which we perform our work.
6 >>
>>
in which we have acquired a 70% stake and the
founding members have kept 30%.
referent in the construction and infrastructure
area, especially in Peru, Chile and Colombia.
In addition to these acquisitions, major
contracts were awarded during the year, which
strengthen our growth strategy in the region
and in the long-term concessions business.
This year, we were awarded the concession
for the development and operation, for 30
years, of two oil blocks in northwestern Peru
that currently produce 1,700 barrels of oil per
day, and which are adjacent to the other two
blocks that we currently have. We were also
awarded the construction contract for the Ñuble
Hydroelectric Plant in Chile, which brings new
prospects to our subsidiary Vial y Vives DSD,
acquired two years ago, and whose specialty was
mainly in the mining sector.
These major strides in our strategy are consistent
with our decision to make a capital increase
and list on the New York Stock Exchange in
2013 with the objective of becoming a regional
In 2014 we billed over US$ 487 MM abroad and
47.6% of the Group’s EBITDA came from stable
contracts or from concessions, progressing in
the geographic diversification strategies and
generation of stable flows established over 10
years ago.
Thanks to these strategic accomplishments, by
the end of 2014, our backlog portfolio for the
next three years reached US$ 3,765 MM and the
recurrent businesses reached an amount of
US$ 580 MM.
The revenues for the year increased by 9.9%
compared to the previous year, reaching
US$ 2,345 MM and generating a net profit of
US$ 100MM.
These figures of revenues and results don’t
include COGA or Morelco yet, which were
acquired at the end of December, but, that in
2013 billed US$ 105 MM and US$ 144 MM
respectively.
We firmly believe that these successes are mainly
the result of having formed an outstanding team
of more than 46,762 collaborators, including
6,819 professionals, which has consolidated
around our four corporate values of Quality,
Compliance, Seriousness and Efficiency. Values
which are committed not only to the projects
that we execute but also to the style and way in
which we perform our work. We believe that
one of the reasons why we have been successful
throughout these eight decades is this work style.
This is why this year we published a book titled
precisely “Graña y Montero Work Style” and will
serve as a guide for the new generations to develop
successfully for many more years to come.
To strengthen this style, this year we imparted
465,523 man hours of training on all levels of the
organization and we have been awarded several
external recognitions such us "Great Place to
GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCEND<< menu ANNUALREPORT2014 7 >>
DOMINICAN
REPUBLIC
COLOMBIA
GUYANA
BRASIL
Work", as well as the Lima Stock Exchange Key
for Best Corporate Governance, the award given
by the American magazine “Latin Finance” in
the category of “Corporate with the best equity
market strategy” and “Andean Corporate with
the Best Capital Markets Strategy” and the “Best
Managed Company in Latin America” distinction
awarded by the English magazine “Euromoney”.
These strategic accomplishments and
recognitions lead us to think that we are coming
closer to accomplishing our vision of being the
most reliable Engineering and Infrastructure
Group in Latin America.
Lastly, we would like to express our very special
thanks to our clients and collaborators, who have
made this success possible.
José Graña Miró Quesada
Chairman
Mario Alvarado Pflucker
CEO
MEXICO
>>
We are a Group of
complementary
companies which
cross frontiers
PANAMA
PERU
CHILE
GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDCAPÍTULO<< menu ANNUALREPORT2014 8 >>
ORGANIZATION
>>
What used to be a construction company, today has become a group of 26 complementary companies grouped
into 4 areas and operating in 8 countries of Latin America.
GMI
GyM
VIAL Y VIVES - DSD
STRACON GyM
MORELCO
NORVIAL
SURVIAL
CANCHAQUE
VESUR
FERROVIAS GyM
LA CHIRA
GMP
COGA
VIVA GyM
ALMONTE
GMD
CONCAR
CAM GyM
GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCEND<< menu ANNUALREPORT2014 9 >>
MAIN FIGURES
2010
2011
2012
2013
2014
2014
Crecimiento
2013-2014
Thousands S/.
Thousands S/.
Thousands S/.
Thousands S/.
Thousands S/.
Thousands US$
Thousands S/.
Revenues
Gross Income
Income before Taxes
NET
EBITDA
Backlog
2,502,675
444,829
401,028
252,802
553,959
4,241,266
5,231,885
631,749
477,645
289,076
662,042
712,066
520,826
289,954
775,660
3,688,909
6,726,148
10,627,338
5,967,316
1,004,660
595,005
320,363
1,030,680
11,002,142
7,008,680
2,344,824
951,569
507,430
299,745
911,852
318,357
169,766
100,283
305,069
11,254,921
3,765,447
17.5%
-5.3%
- 14.7%
- 6.4%
- 11.5%
2.3%
Professionals
2,816
4,810
5,575
6,077
6,819
6,819
12.2%
<< menu GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDANNUALREPORT2014 MAIN FIGURES
REVENUES BY AREAS
2013
2014
Crecimiento 2013-2014
Thousands S/.
Thousands US$
Thousands S/.
Thousands US$
Engineering and
Construction
Infrastructure
Real Estate
Technical Services
GMH and Eliminations
TOTAL
4,075,070
1,457,464
5,035,674
1,684,735
680,988
313,731
1,169,115
-271,588
5,967,315
243,558
112,207
418,138
-97,135
884,766
224,560
1,208,168
-344,488
296,007
75,129
404,205
-115,252
2,134,233
7,008,680
2,344,824
S/.
23.6%
29.9%
-28.4%
3.3%
26.8%
17.5%
10 >>
US$
15.6%
21.5%
-33.0%
-3.3%
18.7%
9.9%
<< menu GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDANNUALREPORT2014 MAIN FIGURES
REVENUES (US$ IN MILLIONS)
2014
2013
2012
2011
2010
11 >>
5
4
3
,
2
>>
4
3
1
,
2
1
5
0
,
2
3
7
5
,
1
CAGR
27.4%
1
9
8
GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCEND<< menu ANNUALREPORT2014 MAIN FIGURES
BACKLOG (US$ IN MILLIONS)
2014
2013
2012
2011
2010
12 >>
5
6
7
,
3
5
3
9
,
3
>>
6
6
1
,
4
4
9
4
,
2
CAGR
30.1%
3
1
3
,
1
GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCEND<< menu ANNUALREPORT2014 WHAT DO
WE DO?
AFTER 81 YEARS, IT IS CLEAR THAT OUR OBJECTIVE
IS TO EXECUTE ENGINEERING PROJECTS OF
THE HIGHEST QUALITY AND WITH THE BEST
INTERNATIONAL STANDARDS. SINCE ITS
BEGINNING IN 1933, GRAÑA Y MONTERO HAD A
CLEAR VISION OF WHAT IT WANTED TO DO. OUR
STYLE OF DOING THINGS HAS LED US TO LOOK
AFTER THE LEGACY OF THE FOUNDING ACT OF
"BRINGING TOGETHER KNOWLEDGE IN ORDER TO
EXECUTE ANY WORK".
5 Antapaccay mining project, Cusco, Peru
GRAÑA Y MONTERO WORK STYLE
INSPIRES US
DISTINGUISHES US
ALLOWS US TO TRANSCEND
ANNUAL
REPORT
2014
<< menu
14 >>
HISTORICAL SUMMARY
1933
4
Graña y Montero is founded on
June 22, 1933 under the name
GRAMONVEL. The company was
founded by engineers Carlos Graña
Elizalde, Alejandro Graña Garland
and Carlos Montero Bernales.
1944
3
Las Palmas Air Force Base is built based
upon four hangars.
1949
4
The company merges with Morris y
Montero to acquire the capacity for the
execution of paving and earth moving
works. By then, it has the new name of
Graña y Montero.
5
1952
Consorcio de Ingenieros
Contratistas Generales S.A. was
formed in order to execute more
complex projects.
GRAÑA Y MONTERO WORK STYLE
INSPIRES US
DISTINGUISHES US
ALLOWS US TO TRANSCEND
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REPORT
2014
<< menu
15 >>
1953
Construction of the South Pan-
American Highway. The Ministry of
Economy is built the following year.
1957
The Cañón del Pato Hydroelectric
Plant and the Ministry of Labor are
built. The Chimbote Steel Mill was
built the following year.
6
6
1983
Upon the celebration of the company’s
50th anniversary in 1983, the Strategic
Diversification Plan towards other
Engineering services was launched,
leading to the formation of GMP,
petroleum services company; GMD,
information technology service
company; and GMI, engineering
consulting company. These companies
were the origin of what is now the
Graña y Montero Group.
5
1961
Jorge Chávez Airport is concluded.
1976
4
The company focuses its growth on
major private projects such as the
Cuajone and Cerro Verde mines,
in Shell, Mobil and Occidental oil
projects.
GRAÑA Y MONTERO WORK STYLE
INSPIRES US
DISTINGUISHES US
ALLOWS US TO TRANSCEND
ANNUAL
REPORT
2014
<< menu
16 >>
3
1988
The Chavimochic irrigation project is
completed.
2005
4
An important international
development begins, by participating
in the construction of mining projects
in Chile, Bolivia, the Dominican
Republic and Panama.
3
1997
The Graña y Montero Holding is created.
Graña y Montero participated actively
in the Peruvian privatization process
as Telefónica’s local partner in Peru,
as ENDESA’s partner in Empresa de
Generación Eléctrica de Lima, and
as REPSOL’s partner in La Pampilla
Refinery. The Company is listed in the
Lima Stock Exchange.
2010
4
The Company acquires the electricity
services company CAM, which
operates in Chile, Peru, Colombia and
Brazil. The following year STRACON
GyM is formed for mining services
with New Zealand partners.
GRAÑA Y MONTERO WORK STYLE
INSPIRES US
DISTINGUISHES US
ALLOWS US TO TRANSCEND
ANNUAL
REPORT
2014
<< menu
17 >>
2011
4
In recent years, the Company has
been the first to participate in the
concessions program, becoming the
largest infrastructure concession
holder in Peru, with three highways,
Line One of the Lima Metro, and La
Chira Waste Water Treatment Plant.
2013
4
Our company was listed on the New York
Stock Exchange, with a capital increase
of US$ 430 million. We acquired DSD
Construcciones y Montajes company
which then merges with Vial y Vives
becoming the company Vial y Vives -
DSD, Graña y Montero´s builder arm
in Chile and from which we hold a
participation of 80.4%
3
2012
We acquired 74% of the Chilean company
Vial y Vives, a construction company
specialized in the mining sector which,
added to the experience of GyM, makes
us the group with the most extensive
experience in the construction of mining
projects in Latin America
2014
4
According to our strategy growth, we
integrated two leading companies in their
respective fields to the Group: Morelco
S.A.S a Colombian company, specialized in
civil works, electromechanical assemblies
and services to the oil, gas and energy
industry; and Compañia Operadora de Gas
del Amazonas (COGA), a Peruvian company
dedicated to the operation and maintenance
of the transporting systems of natural gas and
natural gas liquids.
WITH MORE THAN 81 YEARS OF EXPERIENCE,
THE ENGINEERING AND CONSTRUCTION
AREA OF THE GRAÑA Y MONTERO GROUP
IS THE STRATEGIC PARTNER FOR EXECUTING
PROJECTS IN THE REGION. IT HAS OPERATED
IN NINE COUNTRIES IN LATIN AMERICA, AND
HAS A PERMANENT PRESENCE IN PERU AND
CHILE.
19 >>
One of the highlights of the year in the Engineering
and Construction Area was the incorporation
of Morelco in December 2014, a Colombian
construction company specializing in the oil and
gas sector. . Morelco together with the companies
Vial y Vives-DSD in Chile, Stracon GyM for
mining operations, GMI for engineering and
consulting and the construction company GyM
with its civil works, electromechanical assembly
and buildings divisions form the area.
In 2014, revenues of the Engineering and
Construction Area were US$1,685 MM, which
represents a 15.6% growth compared to the
previous year, with a net profit of US$ 65 MM. As
of 2014, backlog for this area was US$ 2,835MM,
which guarantees stability in upcoming years.
ENGINEERING AND
CONSTRUCTION
5 Los Pelambres Mine, Chile.
<< menu GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDANNUALREPORT2014
20 >>
GyM
In the mining sector, the mining company Guyana
Goldfields awarded us the EPC Aurora contract
for the construction of a processing plant and a
power plant for the Aurora Gold Project in Guyana
Republic (former British Guyana). The contract
was obtained in a partnership with the Australian
Company Sedgman.
In a joint undertaking of our subsidiary Vial
y Vives-DSD with GyM we were awarded the
construction contract for the Ñuble Hydroelectric
Plant (138 MW) for an amount of US$ 202MM,
which started in December.
During the year we continued with the execution
of major projects of expansion of the Cerro Verde
mine, in Arequipa, owned by Freeport-McMoRan,
as well as works in the Inmaculada mine for the
Hochschild Group and in Las Bambas for MMG.
In the Energy sector, we continued executing the
Machu Picchu Hydroelectric Plant, which we
expect to deliver in the first quarter of 2015. In
addition to this, we continued with the execution
of the Cerro del Aguila project jointly with Astaldi.
>>
In a joint undertaking
of our subsidiary Vial
y Vives-DSD with GyM
we were awarded the
construction contract for
the Ñuble Hydroelectric
Plant (138 MW) for
an amount of US$
202MM, which started in
December.
5Tunnel of Machu Picchu Hydroelectric Plant, Cusco, Peru
<< menu GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDANNUALREPORT2014 21 >>
STRACON GyM
Growth of this company continued in 2014,
billing US$439.7MM and with a net profit of
US$ 24.9MM.
In addition to the projects already under
execution in Constancia Mine, La Arena and
Minera Panamá, in December 2014 we were
awarded the contract for mining development of
the Shahuindo mine, for US$ 240 MM and for
an execution period of 5 years, for the client Rio
Alto Mining Limited.
>>
Growth of this company continued in
2014, billing US$439.7MM and with a
net profit of US$ 24.9MM.
5El Brocal mining project, Pasco, Peru
<< menu GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDANNUALREPORT2014 22 >>
VIAL Y VIVES-DSD
On July 1, 2014, in accordance with our
integration plan, Vial y Vives merged with DSD,
forming a new company named Vial y Vives-
DSD, consolidating our mining, gas and oil
experience in Chile.
It is important to mention that in 2014 revenues
grew by 82% in Chile, reaching an amount of
US$ 227.4 MM and net profit of US$ 29.8 MM,
which represents a 35% increase compared to
the previous year.
During 2014 we were awarded the contract for
the construction of the Kelar Combined Cycle
Thermoelectric Central for our client Samsung
Engineering Co., Ltd in Antofagasta for
US$ 91.5 MM and, as indicated before,
commited with the strategy of acquiring
different capabilities, we obtained the Ñuble
Hydroelectric Plant contract in partnership with
GyM.
5Ministro Hales Mine, Antofagasta, Chile
<< menu GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDANNUALREPORT2014 23 >>
GMI
During 2014, GMI obtained the engineering
framework contracts for Antapaccay Mine,
Goldfields Mine, Repsol Exploraciones
(REPEXSA) and RELAPASA.
It also obtained the basic engineering contract
as well as the detail capacity increase to
15,000 TPD contract for Milpo Mine, Unidad
El Porvenir. With Southern Peru Copper
Corporation, GMI obtained the “Medium
Equipment Shops” engineering and procurement
management contracts for Unidad Toquepala.
With PetroPerú, GMI was awarded the contract
for the supervision of the engineering and
construction of several fuel storage projects.
Furthermore, the conceptual engineering
work for the resettlement of destination places
for our client. Río Tinto Minera Peru was
completed. The supervision of the Engineering,
Procurement and Construction of the Shougang
Hierro Peru expansion continued. Supervision of
the Expansion of Hotel Paradisus in Punta Cana,
Dominican Republic also was continued.
5REPEXSA Project, Urubamba, Cusco, Peru
<< menu GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDANNUALREPORT2014
THE INFRASTRUCTURE AREA OF THE GRAÑA Y
MONTERO GROUP IS THE LEADING PERUVIAN
CONCESSIONAIRE IN THE COUNTRY. IT
MANAGES PROJECTS THAT REQUIRE A HIGH
LEVEL OF INVESTMENT AND LONG-TERM
CONTRACTS.
INFRASTRUCTURE
5 Line 1 of Lima’s Metro, Peru
25 >>
By the end of 2014 the Infrastructure Area
reached revenues for US$ 296 MM, which
represents a 21.5% increase compared to the
previous year considering within the business the
construction investment in accordance with the
new accounting standards. Also, we obtained an
EBITDA of US$ 103 MM and a net profit of
US$ 40 MM.
During the year the new contracts for North
and Center Terminals were signed for 20 years
and the South Terminal contract was extended
for one year. Additionally, the license contracts
for oil blocks III and IV were awarded for 30
years. On the other hand, we submitted fourteen
co-financed Private Initiatives (IPC’s) for an
estimated investment amount of
US$ 5,125 MM, four of which have been declared
of relevance and priority for an estimated
investment amount of US$ US$ 1,043 MM.
<< menuGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDANNUALREPORT2014 26 >>
In April we started construction of the second
stage of Norvial, which is the company in
charge of the concession of the Ancon- Huacho-
Pativilca tranche of the North Panamerican
Highway for an investment amount of
US$ 97 MM. Moreover, in July we started
operation of the tranche 2 of Line One,
completing the startup of operation of all the
investment in this concession. To fund both
investments, we structured two bond issues for
a total amount of S/ 1,000 MM, which will be
issued during the first quarter of 2015.
Lastly, in December 2014 we acquired a 51%
stake of COGA, in a partnership with Enagas
(30%) and CPPIB (19%).
>>
By the end of 2014 the Infrastructure Area reached
revenues for US$ 296 MM, which represents a 21.5%
increase compared to the previous year considering
within the business the construction investment in
accordance with the new accounting standards.
5 Natural gas operating plant
<< menuGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDANNUALREPORT2014 ROAD CONCESSIONS:
NORVIAL, SURVIAL Y CANCHAQUE
In Norvial, which operates the Ancon to
Pativilca highway, in northern Peru, the number
of collectible axes reached US$ 18 MM in 2014,
representing for a 2.4% traffic increase compared
to 2013. Construction of the second stage, which
we expect to complete in 24 months, started in
April 2014.
27 >>
In Survial, which goes from San Juan de
Marcona to Urcos, the works of the improved
traffic flow road Evitamiento Urcos and
Catastrophic Events Reconstruction of
Limatambo for US$ 38 MM were executed. Also,
the authorization of the concession grantor to
execute the Technical Maintenance Intervention
3 for US$ 29 MM in 2015 was obtained.
In Canchaque, which runs from the junction
with the IIRSA Norte road to Buenos Aires,
up to the town of Canchaque, located in the
highlands of Piura in Perú, Ositran approved
the execution of the Technical Maintenance
Intervention 1 at the end of 2014, leaving the
approval of the budget still pending.
Lastly, in VESUR Project, which consists of
the expressway expansion, the approval of the
draft Project, the the Environmental Impact
Assessment (EIA) and the Expropriation Plan
(PATCA) were obtained.
Also, work on the final engineering assessment,
the new demand studies and the documentation
to start the expropriation process is under way.
5 Stretch 1 – IIRSA Sur Highway, Peru
<< menuGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDANNUALREPORT2014 OIL AND GAS
GMP
In August, the highest average monthly production
of crude oil in the history of GMP was obtained,
reaching 2,136 barrels per day.
28 >>
Exploration and Production: 24 development
wells were drilled, 23 in Block I and 1 in Block V
with an investment of US$ 23.4 MM. 642,000
barrels of crude oil and 3,395 MMSCF of natural
gas were produced, breaking once again the annual
production record of crude and gas of GMP.
Pariñas Gas Plant: 10 BSCF of natural gas, which
equivalent to an average of 27.36 MMSCFD were
produced.
The production of liquids was of 387,000 barrels
and liquid recovery efficiency reached 96%.
Consorcio Terminales: (12 months South and
10 months North). An average of 63.8 thousand
barrels per day of products were dispatched and
storage contracted by our users was of 2.120 MM
barrels per month.
Terminales del Perú: (4 months Center and 2
months North). An average of 38 thousand barrels
per day of products were dispatched and storage
contracted by our users 1.430 MM was barrels per
month.
5 Pariñas Natural Gas processing plant, Piura, Peru
<< menuGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDANNUALREPORT2014 FERROVÍAS GYM
In July 2014, Tranche 2 of Line One started
operating, allowing operation of the entire fleet of
trains purchased to provide the service. As a result
of this higher supply in the service, demand grew
29 >>
steadily, rapidly exceeding the capacities in the
service.
Passengers transported during the year reached
70 million, with a daily record of 372,000
passengers. The line operated with 99%
compliance and 98% punctuality of the service.
In the average of the two surveys of the year
conducted by Arellano Marketing we obtained
85% in customer satisfaction and a
recommendation level of 97% in our service.
In March 2014, IADB and Harvard University
awarded us the “Infrastructure 360°” prize,
a recognition awarded for the first time to an
organization in Latin America for good social
and environmental sustainability practices in
infrastructure.
5 Line 1 of Lima’s Metro, Peru
>>
In July 2014, Tranche 2 of Line One started operating,
allowing operation of the entire fleet of trains purchased
to provide the service.
<< menuGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDANNUALREPORT2014 30 >>
PTAR LA CHIRA
The work construction continued, having been
executed US$ 55 MM of works to date, which
is equivalent to 78% of the total investment
commitment.
5 Construction of La Chira Plant, Lima, Peru
<< menuGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDANNUALREPORT2014 IT DEVELOPS REAL ESTATE PRODUCTS SUCH
AS HOUSING, OFFICES, COMMERCIAL
ESTABLISHMENTS, AND INDUSTRIAL LOTS IN
ALL MARKET SEGMENTS, OFFERING A WORLD
CLASS ARCHITECTURE WHICH PROVIDES
WELFARE TO ITS CUSTOMERS.
32 >>
Within this context, we have ended the year 2014
with a 33% contraction compared to the previous
year, with revenues of US$ 75.1MM and EBITDA
US$ 24.4 MM.
The Real Estate Area includes Viva GyM, the
largest real estate company in Peru, Almonte S.A.,
owner of a land for major urban development in
the south of Lima, and we are also partners of
Inversiones Maje in the Panorama Offices Project
and with Urbi in "Espacio Project" on the land site
where the former military base Cuartel San Martín
was located.
We closed the year with a backlog of US$81MM
and we have developed twenty projects in its
various stages of execution, which means delivering
close to 8,100 real estate units in the next five years.
Among the different companies of our Real Estate
Area we have a land bank of approximately 1093.49
hectares. Additionally, we have a low level of debt,
which will allow us to face the opportunities that
arise in the Real Estate market.
REAL ESTATE
The real estate sector experienced deceleration in
2014 as a result of the slowdown of the economy,
the caution of banks in financing real estate
projects, and the hardening of their requirements
to qualify clients for mortgage credit. In addition to
this, there has been a gap between the increase in
the property prices and household income in recent
years.
5 View from “El Sol de Barranco” building, Lima, Peru
<< menu GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDANNUALREPORT2014 33 >>
VIVA GYM
In 2014, only 51% of our business came from
affordable housing projects, compared to 70%
in 2013, consistent with the market conditions.
During 2014 we sold 642 apartments and
delivered 831 apartments. Also, in order to
diversify the market, we have acquired an area
of 91,992 m2 of land in Huancayo and we have
acquired an interest of 35% in the Panorama
Offices Project.
During 2014, we were granted the court
decision that extends the term of the urban
development license of Los Parques de Comas
Project with a total of 10,624 apartments. The
approval of the building project is still pending,
which has allowed us to start the pre-sale of
>>
During the fiscal year we sold 642
apartments and delivered 831
apartments.
5 Los Parques de Carabayllo II condo, Lima, Peru
<< menu GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDANNUALREPORT2014 34 >>
the Club Residential apartment building while
concurrently following the corresponding
process required to start selling the Techo Propio
product during 2015.
During the year we continued with our
campaigns intended to position the Viva GyM
brand in the market, achieving the second place
in top of mind brand recall and the highest
market share regarding units sold.
For the fourth consecutive year, Viva GyM
was elected as one of the Great Place to Work
(GPTW) companies in Peru. This 2014 we
ranked sixth among the companies with 50 to
250 employees.
Another important recognition that we received
was the first place in the real estate ranking of
most attractive employers in Peru (Employer
Brand – Laborum / Arellano Marketing).
5 Bolognesi private apartment building,
Lima, Peru
>>
For the fourth consecutive
year, Viva GyM was
elected as one of the Great
Place to Work (GPTW)
companies in Peru. This
2014 we ranked sixth
among the companies with
50 to 250 employees.
5 Los Parques del Naranjal real estate project, Lima, Peru
<< menu GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDANNUALREPORT2014
35 >>
ALMONTE S.A.
In 2014 we obtained approval of the industrial
zoning of the land and we are currently
evaluating the development of storage, logistic
services and sales of industrial land business.
>>
In 2014 we obtained approval of the industrial zoning
of the land and we are currently evaluating the
development of storage, logistic services and sales of
industrial land business.
5 Industrial zoning plane
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ESPACIO PROJECT
This partnership with the firm Urbi is developing
the “Espacio” project at the site of the former
military base Cuartel San Martin, which includes
four residential buildings, two office buildings,
a shopping center, a hotel and a convention
center. This year we obtained approval by the
Municipality of Lima of the ordinance for
approval of the Traffic Impact Study (EIV)
which will allow us to continue with the building
permit process.
5 Espacio Project, Lima, Peru
<< menu GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDANNUALREPORT2014 THE TECHNICAL SERVICES AREA, GROUPS
THE COMPANIES DEDICATED TO THE
OPERATION AND MAINTENANCE OF
INFORMATION TECHNOLOGY, BUSINESS
PROCESSES, ELECTRICAL NETWORKS AND
INFRASTRUCTURE.
38 >>
The Technical Services Area comprises the
companies providing infrastructure operation
and conservation services to the energy,
telecommunications, public transportation,
health, water, road, banking and insurance, and
industry and commerce business sectors. The
value proposal of the Technical Services Area
is based on three key concepts: specialization
and knowledge of business processes, the use of
technology as a means to increase efficiency, and
a highly specialized human group.
The Technical Services Area includes the
following companies of the Group: Concar,
specializing in road and public infrastructure
operation and conservation services; GMD,
specializing in business process and Information
Technology infrastructure operation services;
and CAM, specializing in electricity and
telecommunication infrastructure operation and
conservation services in Chile, Colombia, Peru
and Brazil.
Revenues for the Technical Services Area in
2014 reached US$ 404.2 MM and EBITDA
was of US$ 21.2 MM which represent 16% and
7%, respectively, of participation in the Group.
Even though growth of the Technical Services
Area was sustained in the last five years, this
was not the case in 2014, primarily due to the
termination of the road network contracts of
CONCAR with Cusco Region. However, the
backlog increased from US$ 619 million to US$
646 million, which represents a 4.3% growth.
On the area level, we have been working on
a first joint strategic plan of the companies
that comprise this area, aimed at building a
consistent and comprehensive vision of the
services supply, as well as of its organization
identifying synergies and possible value
contributions to the businesses and investments
of the Group, based on adding value through
the operational excellence strategy and using
innovative technologies as a differentiating
mechanism.
Furthermore, we started to work comprehensively
in opportunities of infrastructure operation and
conservation using the various capabilities of
each of the companies of this area, and pursuing
opportunities in the Infrastructure Area.
TECHNICAL
SERVICES
5 GMD’s technological operations center
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CONCAR
In 2014, CONCAR started operation of the
second tranche of Line One of the Lima Metro,
as well as the operation of the Cerro de Pasco -
Tingo María Highway, while the maintenance
contract of Red Vial 1 was terminated.
The budget deviation of the road network
contracts with the Cusco Government evidenced
the need to reformulate and strengthen
processes, reason why Concar focused on
implementing the project “Concar Avanza”
(“Concar Advances”) with the purpose of
returning to its previous margins and
results, and defining a business vision with a
clear strategy and objectives, which can be
measurable in the short and medium term. This
project is vital to accomplish the business plan.
In terms of Human Resources Management,
Concar was recognized as the company with
the highest working climate increase in 2014,
according to Great Place to Work (GPTW).
5 Icapal highway concession, Peru
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GMD
GMD has continued its organic growth in 2014,
increasing its operating margins and, to a lesser
extent, its EBITDA, which was affected mainly
by delays in the extension of contracts with the
public sector. However, GMD was awarded the
concession of the Trujillo public transportation
collection system.
This year, GMD completed construction
of the new operations center which has a
category TIER III Data Center for design and
construction, the only one in Peru, a vault for
documents with legal values, and expansion of
the software factory an the Call Center, laying the
ground for its future growth.
During 2014, GMD ratified its commitment
to Human Resources Management, being
recognized as one of the 12 best companies to
work in Peru, according to GPTW (Great Place
to Work), as well as to Quality Management,
by certifying the software factory with CMMI
Level 5, being the only company in Peru with
such certification. GMD also renewed its ISO
9001 certification for all processes, including
Electronic Intermediation, and obtained
OSHAS 18001 and ISO 20000 certifications,
thus ensuring the reliability, availability and
quality of its operations.
>>
This year, GMD completed construction of the new operations center which
has a category TIER III Data Center for design and construction, the only one
in Peru, a vault for documents with legal values, and expansion of the software
factory an the Call Center, laying the ground for its future growth.
5 GMD´s data center
<< menuGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDANNUALREPORT2014 CAM
In the year 2014, CAM focused its efforts
on implementing the CAM Cumple (CAM
Accomplishes) project, which seeks operational
excellence, prioritizing the use of productivity
indicators and process tracking, with the objective
of improving the efficiency and reliability of its
forecasts. As a result, margins have
improved and projects that affected profitability
41 >>
stabilized, which will in turn allow to undertake
new services.
Backlog increased notably this year, by obtaining
the contracts for the operation and conservation of
networks from Telefónica in Chile and Codensa in
Colombia. Additionally, CAM continued with the
process of integration to the Group with the taking
over of Coasin Instalaciones, a firm engaged in
operation and conservation of telecommunication
networks, which was purchased in 2013 to expand
the portfolio of services provided to such sector.
The revenues of CAM grew by 8.5% in dollars
(15.9% in soles) from 2013, and such growth was
not higher due to the strategic decision to focus
on the service business, reducing works and sales
projects, and expanding its business pipeline to
non-electrical sectors, where it accomplished
increased efficiency, improved prrofitability,
became more competitive with prices and provided
better service quality.
Furthermore, the results of subsidiaries show
major progress in Chile, Colombia and Peru; and,
in Brazil, CAM started a deep restructuring that
rendered positive results in the second quarter of
the year.
5 Connection of the power cable to the AC network
<< menuGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDANNUALREPORT2014 HOW DO
WE DO IT?
WE HAVE A HUMAN GROUP ENGAGED WITH
PROFESSIONALISM, TEAM WORK, SERIOUSNESS,
TRUST, TRANSPARENCY AND MANY OTHER
QUALITIES THAT SUM UP TO THE PRIDE OF DOING
THINGS RIGHT, IN OUR WAY OF "BEING" AND
"ACTING". THE PILLARS OF OUR WORK STYLE ARE
OUR VALUES OF "PROFESSIONALISM", "QUALITY",
"RELIABILITY" AND "EFFICIENCY".
TRANSPARENCY:
WE CREATE AN ENVIRONMENT OF
TRUST, WE PROMOTE THE FREE
ACCESS TO INFORMATION AND OPEN
COMMUNICATION.
CORPORATE GOVERNANCE
_ BOARD OF DIRECTORS
_ PROFILE OF THE BOARD OF DIRECTORS
_ AWARDS AND RECOGNITIONS 2014
_ RESULTS ANALYSIS TO DECEMBER 31ST, 2014
44 >>
CORPORATE GOVERNANCE
In March 2014, Graña y Montero S.A.A. elected a
new Board of Directors for the 2014-2017 period
and, considering the new equity structure of the
Group after its listing in the New York Stock
Exchange, it was decided to have a majority of
Independent Directors in the Board. At present,
5 of the 9 Directors elected are Independent
Directors and the Audit and Process Committee
and the Human Resources Management and
Social Responsibility Committee consist entirely
of Independent Directors, who also make up the
majority of the Investment and Risk Committee.
In accordance with the Regulations of the
Board of Directors, upon the addition of 3 new
Directors to the Board, induction meetings were
held with such new Directors prior to the first
meeting of the Board, which provided them with
an overview of the Graña y Montero Group and
its main companies. Also, two visits to businesses
were scheduled and made, which allowed the
Directors to approach such businesses and
acquire a first-hand view of safety, commercial
and other matters.
On the other hand, the Ethics Channel
established in 2013 continued operating and
the management of the Ethics Commission
elected for such purpose was strengthened.
Furthermore, consulting was hired to aid in
the implementation of specific control-related
improvements to prevent corrupt practices
in the Group, from which we have received
recommendations that we are in the process
of implementing. We continued training in
the Ethics Letter of the Code of Conduct in the
induction week for new collaborators of the
Group, and of the trainees, strengthening also
the communication on the “Graña y Montero
Work Style” by publishing a book of the same
name prepared by the Chairman of the Board
José Graña and distributed to 28 thousand
collaborators of the Group.
On the external front, the company not only
continued in the Good Corporate Governance
Index of the Lima Stock Exchange, but also
received the Key of the Lima Stock Exchange,
an award that speaks of trust and recognition of
the best corporate governance practices that we
have in place, and of the liquidity of our shares.
Additionally, as part of the Companies Circle,
Graña y Montero participated in writing of a paper
on Corporate Governance of Company Groups and
was elected Chairman of the Steering Committee,
showing its commitment and ongoing activity to
promote good corporate governance practices both
internally and externally.
In 2014 we worked extensively on the application
of internal control systems for the Group, in
compliance with SOX standards, and 2,432
collaborators of GyM and 130 of Viva GyM were
trained in the Asset Laundering and Financing of
Terrorism Prevention System.
<< menu GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDANNUALREPORT2014 45 >>
CORPORATE GOVERNANCE
BOARD OF DIRECTORS.
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CORPORATE GOVERNANCE
BOARD OF DIRECTORS. The members of the Board of Directors are the following:
JOSÉ
Chlimper
Ackerman
HERNANDO
Graña
Acuña
MARK
Hoffmann
Rosas
CARLOS
Montero
Graña
JOSÉ
Graña
Miro Quesada
MARIO
Alvarado
Pflucker
PEDRO PABLO
Errazuriz
Domínguez
FEDERICO
Cúneo
de la Piedra
HUGO
Santa María
Guzmán
Independent
External Director
Internal
Director
Independent
External Director
Vice Chairman
External Director
Chairman
External Director
Internal Director
Chief Executive
Officer
Independent
External Director
Independent
External Director
Independent
External Director
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47 >>
CORPORATE GOVERNANCE
PROFILE OF THE BOARD OF DIRECTORS
JOSÉ
Graña
Mr. Graña joined the group in 1968 and has
been a director and Chairman of our board of
directors since August 1996. He is an architect
and graduated from Universidad Nacional de
Ingeniería. For graduate studies, he attended
ESAN and the Universidad de Piura Senior
Management Program. In addition, Mr. Graña
serves as a director of Mexichem Amanco
Holding and Banco de Crédito del Perú. He has
previously served as a member of the board of
directors of our subsidiaries CONCAR, GMP,
GMI, GMD, as well as Refinería La Pampilla
S.A.A, Edegel S.A.A. and Telefónica S.A.A.,
Chairman of Viva GyM and Director of Empresa
Editora El Comercio S.A., Prensa Popular S.A.,
Servicios Especiales de Edicion S.A.
He served as Chairman and First Executive
of Graña y Montero S.A.A. until March 2011,
when he decided to retire from his executive
responsibilities and the position of President was
eliminated.
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CORPORATE GOVERNANCE
PROFILE OF THE BOARD OF DIRECTORS
CARLOS
Montero
Mr. Montero has been a director since August 1996 and is currently the Vice Chairman of our board
of directors. He graduated from Universidad Nacional de Ingeniería as a civil engineer. For graduate
studies, he attended the Universidad de Piura Senior Management Program. Mr. Montero is also the
Chairman of the board of directors of our subsidiary Concar and a director of our subsidiary GMP
S.A. He has previously served as Vice Executive Chairman of our subsidiary GyM until 2007.
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CORPORATE GOVERNANCE
PROFILE OF THE BOARD OF DIRECTORS
FEDERICO
Cúneo
Mr. Cúneo has been a director of Graña y
Montero S.A.A. since march 2014. Since 2006 he
has been a Partner and Director of Amrop Peru,
Panama, Costa Rica and Ecuador, from 2003 to
2005 he served as a Business Director in Ernst &
Young and between 1996 and 2002 he served as
CFO in the Boston Bank. He has a BBA degree in
Accounting at the Eastern Michigan University,
USA and postgrade work at Escuela Superior
de Administración de Negocios (ESAN),
Universidad de Piura y Harvard Business School,
and the IMD. Mr. Cúneo has been Chairman of
Peru 2021 and Forum Empresa and a Member
of the Board of Mesa de Concertacion de Lucha
contra la Pobreza (Executive Board of Agreement
for the fight against poverty), Programa Juntos,
Spirit in Business, IPAE, Ethos Brazil and
Repsol’s La Pampilla Refinery where he headed
the Audit Committee (RELAPASA-REPSOL).
He is currently the Vice Chairman of Amcham
Peru, member of the Investment Committee of
Apoyo Capitales and Member of the Board of
Peru 2021, Graña y Montero, Tununga Forestry
Investments, Osaka Holding, and Chairman of
Sporting Cristal Football Club.
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CORPORATE GOVERNANCE
PROFILE OF THE BOARD OF DIRECTORS
JOSE
Chlimper
Mr. Chlimper has been a director since March
2006. He received a degree in Economics and
Business Administration from North Carolina
State University. In addition, Mr. Chlimper
is the Chairman of the board of directors and
CEO of Agrokasa S.A. and a member of the
board of directors of Corporación Drokasa S.A.,
ComexPerú and the Instituto de Formación
Bancaria (IFB). He is Chairman of the board of
directors of Compec. He has previously served
as councilman for the municipality of Lima,
President of the Fondo de Las Américas, Peru’s
Minister of Agriculture and member of the board
of directors of the Peruvian Central Bank.
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CORPORATE GOVERNANCE
PROFILE OF THE BOARD OF DIRECTORS
PEDRO PABLO
Errazuriz
Mr. Errazuriz is currently a director of Graña y
Montero SAA. He is a Civil Engineer from the
Universidad Catolica de Chile, he have a Master’s
Degree in Science Engineering from the same
university and a Master’s Degree in Science
Operations Research (Finance) from the London
School of Economics. He is currently partner
of Veta Tres. Until March 2014 he served as
Minister of Transport and Telecommunications
in Chile, a position he assumed in 2011. He has
been director of several companies on behalf
of Holding Ontario Teachers' Pension Plan,
Fund of which he was general manager between
2009 and 2011. In the same period he served
as Chairman of Biodiversa, Esval, Aguas del
Valle and SAESA- Group. He was the CEO and
Chairman of water utility ESSBIO. He was CEO
of LanExpress between 2000 and 2006 and Vice
President of Corporate Planning of Lan Chile
between 1999 and 2000.
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CORPORATE GOVERNANCE
PROFILE OF THE BOARD OF DIRECTORS
HUGO
Santa Maria
Mr. Santa María has been a director since March 2011. He is an Economist from Universidad del
Pacífico and has a doctorate in Economics from Washington University in St. Louis, Missouri. Mr.
Santa María previously served as director of Fondo Consolidado de Reserva (FCR) , Compañía
Minera Atacocha and between 2007 and 2012 he served as an independent director at Mibanco and
it’s Chairman of the Board of Directors until 2014. He is also a director of APOYO Comunicación
Corporativa, as well as a partner and chief economist at APOYO Consultoría and director of Banco
Santander.
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CORPORATE GOVERNANCE
PROFILE OF THE BOARD OF DIRECTORS
MARK
Hoffmann
Mr. Hoffmann is currently director of Graña
y Montero S.A.A. and President of Amazonas
Infraestructura. He has been CEO of Duke
Energy from 2008 to 2013, CEO of Electroandes
from 2003 to 2007, among others. He is
Industrial Engineering from Georgia Institute of
Technology in Atlanta, Georgia, USA and holds
an MBA in Finance from Cornell University,
Ithaca, NY. He is currently a board member since
2012 in Financial Qapaq, since 2014 IPAE, from
2010 Radio Philharmonic and since 2007 from
Markham College. Mr. Hoffmann has previously
served as a member of the boards of Luz del
Sur, Electroandes, AmCham and served as Vice
President of Caminando Juntos and the National
Society of Mining, Petroleum and Energy.
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CORPORATE GOVERNANCE
PROFILE OF THE BOARD OF DIRECTORS
HERNANDO
Graña
Mr. Graña joined the Group in 1977 and has
been director since august 1996. He is an
Industrial Engineer graduated from Texas A&M
University. Mr. Graña also completed post-
gradute studies in Mine Engineering at the
University of Minnesota, EEUU. In addition,
he is the Chairman of the Board of Directors of
our subsidiaries GyM and Stracon GyM as well
as director of our subsidiaries Vial y Vives-DSD,
GMI, CAM and Transportadora de Gas del Perú.
Mr. Graña has participated as Director-Manager
of GyM since 1996.
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CORPORATE GOVERNANCE
PROFILE OF THE BOARD OF DIRECTORS
MARIO
Alvarado
Mr. Alvarado joined the Group in 1980 and
has been Chief Executive Officer of Graña y
Montero since 1996 and a director since April
2003. He is a Civil Engineer with a master’s
degree in Administration Engineering from
George Washington University and graduate
studies in the CEO Management program at
Kellogg School of Management, Northwestern
University. In addition, he is a member of the
board of directors of our subsidiaries Viva GyM
S.A. He is also a member of the Consultive
Council of the Tecnológico de Monterrey (Peru
Site). Mr. Alvarado has previously served as
member of the board of directors of Amerika
Financiera S.A.
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CORPORATE GOVERNANCE
COMMITTEES OF
THE BOARD OF DIRECTORS
AUDIT AND PROCESSES COMMITTEE:
• José Chlimper, Chairman
• Federico Cúneo
• Hugo Santa María
This committee held 5 meetings during the
year
HUMAN RESOURCES MANAGEMENT AND
SOCIAL RESPONSIBILITY COMMITTEE:
• José Chlimper, Chairman
• Federico Cúneo
• Mark Hoffmann
This committee held 6 meetings during the
year
INVESTMENT AND RISK COMMITTEE:
• José Graña, Chairman
• Hugo Santa María
• Pedro Pablo Errazuriz
This committee held 3 meetings during the
year
OPERATING COMMITTEES OF THE BOARD OF DIRECTORS
ENGINEERING AND
CONSTRUCTION COMMITTEE:
• José Graña, Chairman
• Mario Alvarado
• José Chlimper
• Hernando Graña
• Carlos Montero
This committee held 12 meetings during the
year
INFRASTRUCTURE COMMITTEE:
• José Graña, Chairman
• Mario Alvarado
• Hugo Santa María
• Hernando Graña
• Pedro Pablo Errazuriz Domínguez
This committee held 12 meetings during the
year
REAL ESTATE COMMITTEE:
• José Graña, Chairman
• Mario Alvarado
• Mark Hoffmann
This committee held 12 meetings during the
year
TECHNICAL SERVICES COMMITTEE:
• José Graña, Chairman
• Mario Alvarado
• Carlos Montero
• Federico Cúneo
This committee held 12 meetings during the
year
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CORPORATE GOVERNANCE
EXECUTIVE COMMISSION
The Executive Commission is in charge of the Groups coordination and it is made up by the Area Managers Group:
Mario Alvarado
Gonzalo Ferraro
Juan Manuel
Luis Díaz
Jaime Dasso
Rolando Ponce
This committee held 10 meetings during the year 2014.
Chief Executive Officer
Chairman of the Executive Commission
President of the Infrastructure Area
Engineering and Construction Area Officer
Infrastructure Area Officer
Service Area Officer
Real Estate Area Officer
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58 >>
SHAREHOLDER
SERVICES OFFICE
Mr. Dennis Gray is the Investor Relations
Officer and Stock Exchange representative
of the company before the Securities Market
Superintendence, the Lima Stock Exchange and
the New York Stock Exchange.
During 2014 we had the opportunity to
participate in 10 international conferences in
Santiago, New York, Toronto, Miami, Sao Paulo,
London and Lima, where we had meetings with
158 investors. In addition, we conducted a "non-
deal roadshow" in Europe to visit institutional
investors specifically in London, Stockholm,
Frankfurt and Madrid.
SELF-EVALUATION OF THE
BOARD OF DIRECTORS
During 2014, the Self-Evaluation of the Board
of Directors process was conducted at the Board
of Directors Meeting of Graña y Montero S.A.A.
prior to the change in the Board. As a result
of the self-evaluation, we received suggestions
from the outgoing Directors and from those
that would remain in the Group, improving
the structure of the information submitted
to the Board of Directors, incorporating the
commercial component of Group and the
relevant developments in the business areas, so
that the Directors are fully informed. Visits to
works also continued, having visited Line One
of the Lima Metro and works at Cerro Verde, in
Arequipa.
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CORPORATE GOVERNANCE
SENIOR EXECUTIVES
MARIO
Alvarado
MONICA
Miloslavich
ANTONIO
Rodríguez
Mr. Alvarado joined the group in 1980 and
has been Chief Executive Officer of Graña y
Montero since 1996 and a director since April
2003. He is a Civil Engineer with a master’s
degree in Administration Engineering from
George Washington University and graduate
studies in the CEO Management program at
Kellogg School of Management, Northwestern
University. In addition, he is a member of the
board of directors of our subsidiaries Viva GyM
S.A. He is also a member of the Consultive
Council of the Tecnológico de Monterrey (Peru
Site). Mr. Alvarado has previously served as
member of the board of directors of Amerika
Financiera S.A.
Mrs. Miloslavich joined the group in 1993
and she has been our Chief Financial Officer
since 2009. She is an Economist graduated
from the Universidad de Lima and received
a postgraduate diploma from Tecnológico
de Monterrey. She previously served as
Chief Financial Officer of Graña y Montero
Edificaciones S.A.C. from 1998 to 2004 and
Chief Financial Officer of our subsidiary GyM
from 2004 to 2009 and as Chief Financial
Officer of our subsidiary GyM from 2004 to
2009.
Mr. Rodriguez joined the group in 1999 and
he has been our Chief Investment Officer since
2010. He is an Accountant graduated from the
Universidad de Lima, with a master’s degree
in Business Administration from ESAN and
a master’s degree in Business Administration
from The Birmingham Business School in
the United Kingdom. He previously served
as Chief Executive Officer of Larcomar from
1999 to 2010. Currently, he is a director of our
subsidiaries Concar, CAM and GMD.
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CORPORATE GOVERNANCE
SENIOR EXECUTIVES
CLAUDIA
Drago
JUAN JOSE
Arrieta
JOSÉ CARLOS
Ascarza
Mrs. Drago joined the Group in 1997 and she
has been our Chief Legal Officer since 2007. She
is a Lawyer from the Universidad de Lima and
pursued postgraduate studies in Finance and
Corporate Law at ESAN, received a postgraduate
diploma from Tecnológico de Monterrey and
completed the Management Program for
Lawyers at Yale School of Management. She has
previously served as Legal Counsel of Graña
y Montero from 2000 to 2007 and of our
subsidiary GMD from 1997 to 2000. Ms. Drago
is Graña y Montero’s representative to the Lima
Stock Exchange and the Secretary of the board of
directors.
Mr. Arrieta joined the Group in 1999 and is
our Corporate Social Responsibility Manager
since 2011. He received a Bachelor’s degree in
Sociology from Pontificia Universidad Católica
del Peru, a postgraduate diploma in Business
Administration from ESAN. He previously
served as our Human Resources and Social
Responsibility Manager from 2007 to 2011 and
as Human Resources Manager of our subsidiary
GyM from 1999 to 2007.
Mr. Ascarza joined the Group in 2004 and has
been our Chief Human Resources Officer since
2012. He is an Industrial Engineer graduated
from the Universidad de Lima and received
a postgraduate diploma from Tecnológico de
Monterrey. He previously served as Human
Resources Manager at our subsidiary GyM from
2007 to 2012.
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CORPORATE GOVERNANCE
SENIOR EXECUTIVES
DENNIS
Gray Febres
JORGE LUIS
Izquierdo
GONZALO
Ferraro
Mr. Gray joined the Group in 2011 and has been
our Corporate Finance and Investor Relations
Officer. He is an Economist with a degree from
the Universidad del Pacífico specializing in
Finance and received a postgraduate diploma
from Tecnológico de Monterrey. He previously
served as Corporate Vice President of Finance at
Citibank del Perú, General Manager of Citicorp
Perú S.A.B. and Product Development Manager
at Banco de Crédito del Perú. Mr. Gray is Graña
y Montero’s representative to the Lima Stock
Exchange and in the Ney York Stock Exchange.
Mr. Izquierdo joined the Group in 1999 and is
our Manager Operational Excellence and has
been since 2011 our Corporate Learning Center
Manager, having previously served as manager
of the Project Management Officer. He is a
Civil Engineer with a degree from the Pontificia
Universidad Católica del Perú and a master’s
degree in Construction Management from the
University of California, Berkeley.
Mr. Ferraro joined the Group in 1996 and
has been President of the Infrastructure Area
since April 2013. He has also held a number
of managerial positions, including Corporate
Infrastructure Manager from 2010 to 2013. He
is an Industrial Industrial Engineer graduated
from Universidad de Lima, with studies at
Universidad Nacional de Ingeniería and he
completed additional graduate studies at the
Universidad de Piura Senior Management
Program and received a postgraduate diploma
from Tecnológico de Monterrey. Mr. Ferraro is
currently the Chairman of the board of directors
of subsidiaries Survial, Norvial, La Chira, GyM
Ferrovías, as well as Concesionaria Vía Expresa
Sur, and a member of the board of directors of
our subsidiary GMP.
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CORPORATE GOVERNANCE
SENIOR EXECUTIVES
HERNANDO
Graña
FRANCISCO
Dulanto
JUAN MANUEL
Lambarri
Mr. Graña joined the Group in 1977 and has
been director since august 1996. He is an
Industrial Engineer graduated from Texas A&M
University. Mr. Graña also completed post-
gradute studies in Mine Engineering at the
University of Minnesota, EEUU. In addition, he
is the President of the Board of Directors of our
subsidiaries GyM and STRACON GyM as well
as director of our subsidiaries Vial y Vives-DSD,
GMI, CAM and Transportadora de Gas del Perú.
Mr. Graña has participated as Director-Manager
of GyM since 1996.
Mr. Dulanto joined the Group in 1974 and is
the Executive President and Chairman of the
board of directors of GMP. He graduated from
Universidad Nacional de Ingeniería and pursued
graduate studies at ESAN and the Universidad
de Piura Senior Management Program. He
also received a postgraduate diploma from
Tecnológico de Monterrey. He served as Chief
Executive Officer of our subsidiary GMP between
1984 and 2011; as well as President of the Society
of Petroleum Engineers (SPE), Lima Section, in
1991; and director of the Sociedad Nacional de
Minería y Petróleo y Energía.
Mr. Lambarri joined the Group in 1982 and is
our Corporate Engineering and Construction
Area Officer, having previously served as Chief
Executive Officer of our subsidiary GyM since
2001. He is a Civil Engineer graduated from
Pontificia Universidad Católica del Perú. He also
pursued graduate studies from Universidad de
Piura Senior Management Program and received
a postgraduate diploma from Tecnológico de
Monterrey. He is currently a member of the
board of directors of our subsidiaries GyM,
Stracon GyM, Vial y Vives-DSD and GMI.
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CORPORATE GOVERNANCE
SENIOR EXECUTIVES
LUIS FRANCISCO
Diaz
JAIME
Dasso
WALTER
Silva Santisteban.
Mr. Díaz joined the Group in 1993 and is our
Corporate Infrastructure Area Officer since
april 2013, having previously served as Chief
Executive Officer of our subsidiary GMP since
March 2011. He is an Industrial Engineer with
a master’s degree in Business Administration
from the University of Pittsburgh and received
a postgraduate diploma from Tecnológico de
Monterrey. Mr. Diaz previously served as Deputy
Chief Executive Officer of GMP from 2009 to
2011, Chief Financial Officer of Graña y Montero
from 2004 to 2009, and Financial Manager of
our subsidiary GyM from 2001 to 2004. He is
also a member of the board of directors of GMP,
GyM Ferrovias, Norvial, La Chira, Survial and
Via Expresa Sur.
Mr. Dasso joined the Group in 1991 and is our
Corporate Service Area Officer, having previously
served as Chief Executive Officer of our
subsidiary GMD since 2000. He is an electronic
engineer and received a master’s degree in
Software Development from Stevens Institute
of Technology in the United States of America
and a postgraduate diploma from Tecnológico de
Monterrey. He previously served as Commercial
Manager of GMD from 1994 to 1999. Currently,
he is a member of the board of directors of GMD,
Concar and CAM and the President of the board
of directors of our subsidiary GSD.
Mr. Silva Santisteban joined the Group in 1981
and has been the Chief Executive Officer of
our subsidiary GMI since 1998. He is a Civil
Engineer graduated from Universidad Nacional
de Ingeniería and received a postgraduate
diploma from Tecnológico de Monterrey.
Currently, he is a member of the board of
directors of GMI.
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CORPORATE GOVERNANCE
SENIOR EXECUTIVES
JAIME
Targarona
ROLANDO
Ponce
RENATO
Rojas
Mr. Targarona joined the Group in 1996 and
has been the Chief Executive Officer of Concar
since 2005. He is a Civil Engineer graduated
from Universidad Autónoma de Guadalajara
(Mexico), with a master’s degree in Business
Administration from Universidad San Ignacio
de Loyola. He also completed the Universidad de
Piura Senior Management Program and received
a postgraduate diploma from Tecnológico de
Monterrey. He previously held positions as Civil
Engineer on different projects, Commercial
Manager of our subsidiary GyM’s Special
Projects Divisions and as Chief Executive Officer
of Graña y Montero Mexico. Additionally, Mr.
Targarona is a member of the board of directors
of our subsidiaries Concar.
Mr. Ponce joined the Group in 1993 and
has been the Chief Executive Officer of our
subsidiary Viva GyM since 2008 and Corporate
Real Estate Area Officer since march 2014. He
is a Civil Engineer graduated from Universidad
Ricardo Palma and received a master’s degree
in Construction and Real Estate Business
Management from Pontificia Universidad
Católica de Chile – Politécnica de Madrid (Spain)
and a postgraduate diploma from Tecnológico de
Monterrey. He has previously served as manager
of GyM’s Real Estate Division. Currently, he
is a member of the board of directors of our
subsidiaries Viva GyM and Almonte.
Mr. Rojas joined the Group in 1995 and is the
Chief Executive Officer of GyM since February
2014. He previously served as Manager of the
Civil Works Division of GyM from 2010 to
2014, Sub Manager of the same Division from
2002 to 2010. Mr. Rojas holds a degree in civil
engineering from Pontificia Universidad Catolica
del Peru. He also completed a Master’s degree
in Company Management at the Universidad de
Piura. He is currently a member of the board of
directors of GMI and GyM.
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CORPORATE GOVERNANCE
SENIOR EXECUTIVES
HUGO
González
MARITZA
Zavala
REYNALDO
Llosa
Mrs. Zavala, joined us in 1997 and is the
Corporative Technology Manager since
September 2013. She holds a degree in industrial
engineering from University of Lima, with
a Master’s degree in International Business
Administration from Nova Southeastern
University.
Mr. González joined the Group in 1997 and is the
Chief Executive Officer of GMD since February
2014. He previously served as Manager of the
Technology Solutions Division of GMD from
2008 to 2014, Manager of the Outsourcing
Technology Division from 2005 to 2008. He
holds a degree in system engineering from
Lima University. He also completed a Master’s
degree in General and Strategic Management,
with double degree at Maastricht School of
Management (MSM) and Pontificia Universidad
Católica del Perú (Centrum Catolica). He is
currently a member of the board of directors of
our subsidiary GMD.
Mr. Llosa joined the Group in 2014 and is
the Chief Executive Officer of GMP since
February 2014. He holds a degree in mechanical
engineering and graduated from the University
of Houston, he holds a Senior Executive MBA
from Universidad de Piura. He has completed
extensive technical and management executive
education programs including Certificate
Programs at Rice University and Northwestern
Kellogg School of Management. He previously
served as deputy general manager at BPZ
Energy from 2010 to 2013, and was employed by
Schlumberger for 25 years where he held several
managerment positions over the most recent 15
years.
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CORPORATE GOVERNANCE
SENIOR EXECUTIVES
EDUARDO
Villa Corta
KLAUS
Winkler
CÉSAR
Neyra
Mr. Villa Corta joined the Group in 1995 and
is the Chief Executive Officer of GMI since
February 2014. He previously served as Technical
Manager of GyM from 2010 to 2014, Manager of
the Industry Division from 2003 to 2010. In the
year 2000 he joined GyM Mexico as the General
Director. He holds a degree in civil engineering
from Catholic University of Peru. He also
completed a MBA from University of Piura. He
is currently a board member of our subsidiaries
GMI and Vial y Vives-DSD.
Mr. Winkler joined the Group in 2011 and has
been the Executive Vice President of CAM Chile
S.A. since 2007 as well as Country Manager—
Chile since April 2013. He is a Commercial
Engineer graduated from Universidad Gabriela
Mistral in Chile. He also has a master’s degree
in Business Administration from Stanford
University and a postgraduate diploma from
Tecnológico de Monterrey. He previously
served as Chief Executive Officer of Compañía
Americana de Multiservicios Ltda. (currently,
CAM Chile) from 2007 to 2011; and held several
managerial positions over 15 years in Endesa
group in Chile, Spain and the United States. He
is currently a board member of our subsidiaries
Vial y Vives-DSD and CAM.
Mr. Neyra joined the Group in 2003 and has
been our Manager of Internal Auditing and
Management Processes since 2003. He received
an Accounting degree from Universidad
Nacional Federico Villareal and a master’s degree
in Business Administration and Finance from
Universidad del Pacífico. He has also studied
Quality Improvement Systems and graduated
from the Six Sigma Methodology program at
Caterpillar University in Mexico and the United
States of America.
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CORPORATE GOVERNANCE
SENIOR EXECUTIVES
OCTAVIO
Cabrera
NURIA
Esparch
Mr. Cabrera joined the Group in March 1974
and has been the Chief Executive Officer of
Stracon GyM S.A. since January 2012. Previously
he served as Division Manager of Civil Works
from January de1994. Mr. Cabrera has a
degree in Civil Engineering from the National
University of Engineering, he also has a Masters
in Executive Management Program from the
University of Piura. He is currently a board
member of Stracon Gym S.A.
Mrs. Esparch joined the Group in September
2014 and is our Chief Officer of Institutional
Relations. She is a lawyer of the Pontificia
Universidad Catolica del Perú with a master's
degree in Public Administration from Maxwell
School of Citizenship and Public Affairs at
Syracuse University in New York. Ms. Esparch
was Senior Manager of Communications and
External Relations Rio Tinto Project Farm and
previously spent two years doing research and
consulting for public and Research Affiliate at
GRADE well as in Apoyo.
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CORPORATE GOVERNANCE
KINSHIP:
Mr. José Graña Miró Quesada, Chairman of the Board of Directors, has first-degree kinship by blood with Maria Teresa Graña Canepa, a shareholder of the company and director of
our subsidiaries Viva GyM, GMD, GyM Ferrovías and GMI, third-degree kinship by blood with Ms. Yamile Brahim Graña, a share¬holder of the company, and fourth-degree kinship
by blood with the director and shareholder Hernando Graña Acuña, who also holds the position of Chairman of the Board of our subsidiaries GyM and Stracon GyM and of director
of our subsidiaries Vial y Vives-DSD S.A., GMI, CAM and Transportadora de Gas del Perú.
CORPORATE NAME:
Graña y Montero S.A.A. was incorporated by public instrument dated August 12, 1996, as a result of the corporate spin-off of Inversiones Graña y Montero S.A. The incorporation
was entered in Record 131617 and Electronic Registry File 11028652 of the Lima Registry of Legal Entities.
CAPITAL
The capital of the company as of December 31, 2014 is S/.660,053,790 represented by 660,053,790 shares, S/.1.00 par value each.
PRINCIPAL SHAREHOLDERS
As of December 31, 2014 we have 1,854 shareholders, of which about 99.19% are holders of less than 1% of the capital stock and about 0.32% hold 1% to 5%.
Our principal shareholders are GH Holding Group, represented by José Graña Miro Quesada, Chairman of the Board, Bethel Enterprises Inc, represented by Carlos Montero Graña
Vice-President of the Board, and JP Morgan Chase Bank NA as depositary and on behalf of all ADS holders.
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CORPORATE GOVERNANCE
LIST OF PRINCIPAL SHAREHOLDERS AS OF 12.31.2014
FULL NAME
NUMBER OF SHARES
INTEREST
NATIONALITY
JP Morgan Chase Bank Na en calidad de depositario y en representación de todos los
253,865,985
titulares de ADS’s
GH Holding Group
Bethel Enterprises inc.
AFP Integra (ING Group)
Profuturo AFP (Grupo Scotiabank)
Subtotal
Other Shareholders
Total
117,538,203
33,785,285
40,304,651
37,488,166
482,982,290
177,071,500
660,053,790
United States
Panamá
Panamá
Peru
Peru
38.46%
17.81%
5.12%
6.11%
5.68%
73.17%
26.83%
100%
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CORPORATE GOVERNANCE
EVOLUTION OF THE SHARES
The price quoted at the year-end was S/. 7.26 per share. The volume traded during the year was S/. 667.827,357.59.
Lastly, the IGBVL (general index) decreased by 6.09% from 2013, and the ISBVL (selective index) also decreased by 11.42% from 2013. It should be noted that variation in the
GRAMONC1 share decreased by 38.99% vis-à-vis the 2013 year-end price (including the effect of the issue of stock dividends).
ISIN CODE
MNEMONIC
YEAR-MONTH
OPENING S/.
CLOSING S/.
MAXIMUM S/.
MINIMUM S/.
AVERAGE PRICE S/.
PRICING 2014
PEP736581005
PEP736581005
PEP736581005
PEP736581005
PEP736581005
PEP736581005
PEP736581005
PEP736581005
PEP736581005
PEP736581005
PEP736581005
PEP736581005
GRAMONC1
GRAMONC1
GRAMONC1
GRAMONC1
GRAMONC1
GRAMONC1
GRAMONC1
GRAMONC1
GRAMONC1
GRAMONC1
GRAMONC1
GRAMONC1
2014-01
2014-02
2014-03
2014-04
2014-05
2014-06
2014-07
2014-12
2014-09
2014-10
2014-11
2014-12
11.90
10.85
10.75
9.75
9.85
9.26
10.00
7.62
9.33
8.72
7.95
7.62
11.90
10.75
9.80
9.92
9.35
10.00
9.35
7.26
8.75
7.95
7.70
7.26
12.35
11.85
11.40
10.19
9.85
10.00
10.20
7.62
9.40
8.72
7.95
7.62
11.20
10.51
9.65
9.27
9.18
8.99
9.30
6.90
8.75
7.67
7.15
6.90
12.05
10.86
10.58
9.61
9.47
9.25
9.89
7.25
9.15
8.04
7.39
7.25
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CORPORATE GOVERNANCE
DIVIDEND POLICY
The Dividend Policy of the company in force in 2014 was to distribute 30%-40% of the profits generated in each fiscal period.
CORPORATE PURPOSE
The company’s main purpose is to engage in investments and commercial operations in general, and in engineering services, management consultancy, real estate investments,
concessions 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 term.
EVOLUTION OF THE SHARES
The price quoted at the year-end was S/. 7.26 per share. The volume traded during the year was S/. 667.827,357.59.
Lastly, the IGBVL (general index) decreased by 6.09% from 2013, and the ISBVL (selective index) also decreased by 11.42% from 2013. It should be noted that variation in the
GRAMONC1 share decreased by 38.99% vis-à-vis the 2013 year-end price (including the effect of the issue of stock dividends).
GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCEND<< menu ANNUALREPORT2014 CORPORATE GOVERNANCE
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
)
$
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JAN.
2014
FEB.
2014
MAR.
2014
APR.
2014
MAY.
2014
JUN.
2014
JUL.
2014
AUG.
2014
SEP.
2014
OCT.
2014
NOV.
2014
DEC.
2014
72 >>
12.00
11.00
10.00
9.00
8.00
7.00
6.00
5.00
4.00
3.00
2.00
1.00
0
GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCEND<< menu ANNUALREPORT2014
73 >>
CORPORATE GOVERNANCE
Corporate Name
Address
Telephone
Fax
Investor Relations Manager
Officers
Electronic Mail
Incorporation
Public Registry
Capital Stock
Shares
Treasury Stock
Graña y Montero S.A.A.
Av. Paseo de la República 4667, Surquillo
51-1-213 6565
51-1- 213 6590
51-1-2136566
Dennis Gray Febres / Mónica Miloslavich Hart
dgray@gym.com.pe / mmiloslavich@gym.com.pe
Public Instrument dated August 12, 1996
Record 131617- Electronic Registry File 110286522
S/. 660,053,790
660,053,790 fully subscribed and paid in
None
Principal Shareholders and Economic Group
See Corporate Governance section
Corporate Purpose
See Corporate Governance section
CIIU
Term
Events
6719
Indefinite
See Historical Summary
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CORPORATE GOVERNANCE
Sector and Competence
Net Sales
Investment Plans
Main Assets
Graña y Montero S.A.A. is an investment company whose principal subsidiaries belong to the Construction, Engineering, Petroleum, Information
Technology, Concessions and Shopping and Entertainment Center Sectors.
In addition, it provides management services exclusively to its subsidiaries, for which reason it does not compete in the market.
Year 2014
3,581,480.47
49,630,821.74
Leases
Management
All services have been rendered in-country.
US$ 385 million
GyM S.A. Shares
GMI S.A. Shares
GMP S.A. Shares
Norvial S.A. Shares
Canchaque S.A. Shares
Survial S.A. Shares
GyM La Chira Shares
GyM Ferrovías Shares
Concesionaria Via Expresa Sur Shares
Agenera Shares S.A.C.
Viva GyM Shares S.A.
GMD S.A. Shares
Concar S.A. Shares
CAM Chile S.A. Shares
TGP S.A. Shares
COGA Shares
Year 2013
3,124,220
47,423,660
97.86%
89.41%
95%
67.00%
99.96%
99.00%
50%
75%
99.99%
99%
60.62%
89.15%
99.74%
75%
1.64%
51%
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75 >>
CORPORATE GOVERNANCE
Administrative or Arbitration Proceedings
See Notes to the Audited Financial Statements
Persons Responsible for Preparing and Reviewing
Gonzalo Rosado Solís
Financial Information
Mario Alvarado Pflucker
External Auditors
Price Waterhouse Coopers
Corporate Controller
Chief Executive Officer
GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCEND<< menu ANNUALREPORT2014 HISTORICAL REVIEW
Graña y Montero was founded almost 81
years ago on June 22, 1933, under the name
GRAMONVEL by engineers Carlos Graña
Elizalde, Alejandro Graña Garland and Carlos
Montero Bernales.
It started as a construction company and
continued as such until the year 1949, when
it merged with Morris y Montero to acquire
capacity for the execution of paving and earth
moving works under the new name Graña y
Montero.
In those times, Graña y Montero participated in
the country’s major infrastructure works, such
as the Southern Pan-American Highway, El Pato
Air Base for the United States government or
the city of Talara, and built some of Lima’s most
emblematic buildings, such as the Ministry of
Economy and the Ministry of Labor.
In the 1950’s, Graña y Montero formed
Consorcio de Ingenieros Contratistas Generales
S.A. to execute more complex projects, such as
the Cañón del Pato Hydroelectric Plant, the Steel
Mill in Chimbote and the runway for Callao’s
Jorge Chávez Airport.
Subsequently, the company focused its growth
on large-scale private projects such as the
Cuajone and Cerro Verde mines, the Shell, Mobil
and Occidental petroleum projects, and the
Chavimochic and Chinecas irrigation projects.
Upon the celebration of its 50th anniversary in
1983, the Strategic Diversification Plan aimed at
other engineering services was launched, leading
to the formation of GMP, the petroleum services
company; GMD, the information technology
service company; and GMI, the engineering
consulting company. These companies were
the origin of what is now the Graña y Montero
Group.
76 >>
>>
It started as a construction company
and continued as such until the year
1949, when it merged with Morris y
Montero to acquire capacity for the
execution of paving and earth moving
works under the new name Graña y
Montero.
In the 1990’s, Graña y Montero participated
actively in the Peruvian privatization process as
Telefónica’s local partner in Telefónica del Perú,
as ENDESA’s partner in Empresa de Generación
Eléctrica de Lima, and as REPSOL’s partner in
La Pampilla Refinery.
In recent years, Graña y Montero was the
first company to participate in the concession
program and it is currently the largest
infrastructure concession holder in Peru, with
GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCEND<< menu ANNUALREPORT2014 77 >>
>>
At present, the Group has 6,819 professionals, it is the only
company in its industry listed on the Lima Stock Exchange and
on the New York Stock Exchange, it is clearly the leader in the
country’s engineering and infrastructure sector, has activities
in eight other Latin American countries including Peru and is
a leader in mining construction in the region.
HISTORICAL REVIEW
three highways, Line One of the Lima Metro,
and La Chira Waste Water Treatment Plant.
The Group has undertaken a major international
development in recent years, participating in
the construction of mining projects in Chile,
Bolivia, the Dominican Republic and Panama.
Additionally, in 2010 we acquired the electricity
services company CAM, which operates in Chile,
Peru, Colombia and Brazil, in 2011 we formed
Stracon GyM for mining services with Australian
partners and in 2012 we acquired 74% of the
Chilean company Vial y Vives, a construction
company specialized in the mining sector which,
added to the experience of GyM, makes us the
group with the most extensive experience in
the construction of mining projects in Latin
America. Today, we have 80.4% of that company,
after it merged with DSD, company which we
acquired in 2013.
In 2013, the company made a successful initial
public offering of stock for approximately 413
million dollars in the New York Stock Exchange.
Also, the company granted the placing banks an
option for up to an additional 62 million dollars,
which was exercised in 30 days.
The aforementioned issue was for 19,534,884
American Depositary Shares (ADSs); each of which
ADS represents five shares of the company.
In 2014, the company acquired 70% of the
Colombian construction company Morelco,
specialized in the oil and gas sector, 50% of the
company COGA,(Compañía Operadora del Gas del
Amazonas).
At present, the Group has 6,819 professionals, it
is the only company in its industry listed on the
Lima Stock Exchange and on the New York Stock
Exchange, it is clearly the leader in the country’s
engineering and infrastructure sector, has activities
in eight other Latin American countries including
Peru and is a leader in mining construction in the
region.
GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCEND<< menu ANNUALREPORT2014 CORPORATE GOVERNANCE
78 >>
14 AWARDS AND
RECOGNITIONS
IN 2014
• Best managed company in Latin America,
given by the British Magazine Euromoney.
• Key of the Lima Stock Exchange, for having
the best corporate governance practices.
• Company with the best strategy for Latin
America equity market, granted by the
LatinFinance magazine.
• Corporate with the best equity market
strategy, and Andean corporate with the
best capital markets strategy awarded by the
American magazine LatinFinance.
>>
26 recognitions
awarded in the last two years
CAPÍTULO<< menu GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDANNUALREPORT2014 79 >>
CORPORATE GOVERNANCE
• One of the 10 most admired companies of
Peru, awarded by the magazine G of Gestion
and PwC.
In addition, our companies obtained the
following awards:
• The Infrastructure 360° Award, given by
• Rank 7 in the ranking of the 100 Peruvian
companies with the best reputation, according
with the study conducted by the international
consulting company, MERCO, with the
support of KPMG.
the Inter-American Development Bank with
the support of the Harvard University, for
work in the Lima Metro Line 1, as the project
demonstrated the most comprehensive
implementation of a sustainability strategy
• Rank 11 in the ranking of the 100 more
responsible companies in Peru and with
the best governance in 2014, according to
the study conducted by the international
consulting company, MERCO, with the
support of KPMG.
• Award Peru 2021, first place in the
Multistakeholder category for the program
IMPULSO to the shared innovation.
• GyM, 4th in the overall ranking and 1st in the
construction companies ranking of the study
"Where do I want to work" developed by
Arellano Marketing and Laborum.
• Viva GyM, 1st in the real estate companies
ranking of the study “Where do I want to
work” developed by Arellano Marketing and
Laborum.
• Viva GyM, 6th -in the category of companies
>>
Rank 7 in the ranking of the 100 Peruian companies with
the best reputation, according with the study conducted by
the international consulting company, MERCO, with the
support of KPMG.
between 30 and 250 workers- in the ranking
“The best companies where to work 2014" of
Great Place to Work ® Peru.
• GMP, 11th -in the category of companies
between 251 and 1,000 workers- in the
ranking “The best companies where to work
2014” of Great Place to Work ® Peru.
• GMD, 12th - in the category of companies
with more than 1,000 workers- in the ranking
“The best companies where to work 2014" of
Great Place to Work ® Peru.
<< menu GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDANNUALREPORT2014 80 >>
ANALYSIS OF RESULTS TO DECEMBER 31, 2014
• Revenues for 2014 increased 17.5% in Nuevos Soles, compared to 2013, reaching S/. 7,008.7 MM (US$ 2,344.8MM, 9.9%
growth in dollars)
• Net profit for 2014 was S/.299.7 MM (US$ 100.3 MM), which represents 4.3% of the revenues.
• EBITDA for 2014 amounted to S/.911.9 MM (US$ 305.1 MM) which represents 13% of the revenues.
• Consolidated Backlog for 2014 amounted to S/.11,254.9 (US$ 3,765.4 MM) which represents an increase of 2.3% compared
to 2013. From the consolidated backlog, S/. 5,506.0 (US$1,842.1 MM) will be executed during 2015, S/.3,437.4 MM
(US$1,150.0 MM) in 2016 and the remaining in 2017 and the following years.
<< menu GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDANNUALREPORT2014 GRAÑA Y MONTERO WORK STYLE
INSPIRES US
DISTINGUISHES US
ALLOWS US TO TRANSCEND
ANNUAL
REPORT
2014
<< menu
81 >>
REVENUES BY AREA (US$ MM)
EBITDA BY AREA (US$ MM)
NET PROFIT BY AREA (US$ MM)
3%
12%
7%
8%
-1%
8%
16%
69%
34%
51%
35%
56%
ENGINEERING AND CONSTRUCTION US$ 1,685 69%
16%
TECHNICAL SERVICES
12%
3%
INFRASTRUCTURE
REAL ESTATE
US$ 404
US$ 296
US$ 75
ENGINEERING AND CONSTRUCTION US$ 154
INFRASTRUCTURE
REAL ESTATE
TECHNICAL SERVICES
US$ 103
US$ 24
US$ 21
51%
34%
8%
7%
ENGINEERING AND CONSTRUCTION US$ 65
INFRASTRUCTURE
REAL ESTATE
TECHNICAL SERVICES
US$ 40
US$ 9
US$ -2
56%
35%
8%
-1%
WHY DO
WE DO IT?
OUR VISION OF BEING "THE MOST RELIABLE
ENGINEERING AND INFRASTRUCTURE GROUP IN
LATIN AMERICA” DOESN'T COMMIT TO AN AMOUNT,
BUT TO AN ATTRIBUTE, AND HAS IMPLIED THE
COMMITMENT OF TRANSCENDING, FORMING A
GROUP OF ENGINEERS CAPABLE OF DEVELOPING
EVERY STAGE OF THE MAJOR ENGINEERING
PROJECTS OUR REGION NEEDS.
5 Larco Mar shopping center
REPORTS
_ AUDITED FINANCIAL STATEMENTS
_ INDIVIDUAL FINANCIAL STATEMENTS
_ COMPLIANCE WITH THE GOOD CORPORATE
GOVERNANCE CODE FOR PERUVIAN
COMPANIES
_ SPECIAL REPORT OF PROCEEDINGS
_ PREVIOUSLY AGREED DOCUMENTS ON
CONSTRUCTION PROJECTS AND SERVICES
PERFORMED, CULMINATING AND DELIVERED
GRAÑA Y MONTERO STYLE
INSPIRES US
DISTINGUISHES US
ALLOWS US TO TRANSCEND
ANNUAL
REPORT
2014
<< menu
84 >>
CONSOLIDATED FINANCIAL STATEMENTS
GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES
DECEMBER 31, 2012, 2013 AND 2014
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
CONSOLIDATED INCOME STATEMENT
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
CONSOLIDATED STATEMENT OF CASH FLOWS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
S/.
=
US$ =
NEW PERUVIAN SOL
UNITED STATES DOLLAR
INDEPENDENT AUDITORS REPORT
86 >>
Note
2013
2014
As of December 31
8
10
11
12
13
14
16
959,415
-
521,872
971,743
87,328
553,218
762,797
25,687
21,473
818,402
7,105
1,109,209
1,152,790
99,061
579,654
833,570
26,444
9,513
3,903,533
4,635,748
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
ASSETS
Current assets
Cash and cash equivalents
Financial asset at fair value through profit or loss
Trade accounts receivables
Unbilled work in progress
Accounts receivable from related parties
Other accounts receivable
Inventories
Prepaid expenses
Non-current assets classified as held for sale
Total current assets
The accompanying notes on pages 8 to 110 are an integral part of the consolidated financial statements.
GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Continuation
ASSETS
Non-current assets
Long-term trade accounts receivable
Long-term unbilled work in progress
Prepaid expenses
Other long-term accounts receivable
Available-for-sale financial assets
Investments in associates and joint ventures
Investment property
Property, plant and equipment
Intangible assets
Deferred income tax asset
Total non-current assets
Total assets
The accompanying notes on pages 8 to 110 are an integral part of the consolidated financial statements.
87 >>
Note
2013
2014
As of December 31
10
11
13
9
15
16
17
23
591,917
-
-
38,151
88,333
87,967
36,945
952,906
480,885
135,521
2,412,625
6,316,158
579,956
35,971
9,478
44,553
93,144
229,563
36,244
1,148,651
780,784
135,807
3,094,151
7,729,899
GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
88 >>
Note
2013
2014
As of December 31
18
19
12
20
21
486,119
991,397
25,585
66,645
837,683
8,895
2,416,324
1,425,455
1,178,849
83,027
89,615
1,007,743
11,441
3,796,130
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Continuation
LIABILITIES AND EQUITY
Current liabilities
Borrowings
Trade accounts payable
Accounts payable to related parties
Current income tax
Other accounts payable
Provisions
Total current liabilities
The accompanying notes on pages 8 to 110 are an integral part of the consolidated financial statements.
GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
89 >>
Note
2013
2014
As of December 31
18
19
20
21
7
23
309,703
2,157
205,396
43,418
3,911
138,554
703,139
3,119,463
326,124
3,779
294,886
46,904
2,999
79,155
753,847
4,549,977
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Continuation
LIABILITIES AND EQUITY
Non-current liabilities
Borrowings
Long-term trade accounts payable
Other long-term accounts payable
Provisions
Derivative financial instruments
Deferred income tax liability
Total non-current liabilities
Total liabilities
The accompanying notes on pages 8 to 110 are an integral part of the consolidated financial statements.
GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
90 >>
Note
2013
2014
As of December 31
22
660,054
111,657
1,027,533
18,423
947,766
2,765,433
431,262
3,196,695
6,316,158
660,054
132,011
899,311
(113,895)
1,113,697
2,691,178
488,744
3,179,922
7,729,899
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Continuation
LIABILITIES AND EQUITY
Equity
Capital
Legal reserve
Share Premium
Other reserves
Retained earnings
Equity attributable to controlling interest in the Company
Non-controlling interest
Total equity
Total liabilities and equity
The accompanying notes on pages 8 to 110 are an integral part of the consolidated financial statements.
GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
91 >>
Note
25
25
27
15
For the year ended December 31,
2012
3,341,539
1,536,275
354,071
5,231,885
(2,969,687)
(1,335,092)
(215,040)
(4,519,819)
712,066
(257,180)
75,619
-
530,505
2013
3,820,393
1,748,127
398,980
5,967,500
(3,354,420)
(1,349,850)
(259,108)
(4,963,378)
1,004,122
(361,792)
25,302
5,722
673,354
2014
4,749,159
1,912,646
346,875
7,008,680
(4,336,388)
(1,489,573)
(231,150)
(6,057,111)
951,569
(421,367)
15,136
-
545,338
CONSOLIDATED INCOME STATEMENT
Revenues from construction activities
Revenues from services provided
Revenue from real estate and sale of goods
Cost of construction activities
Cost of services provided
Cost of real estate and goods sold
Gross profit
Administrative expenses
Other income and expenses
Profit from the sale of investments
Operating profit
The accompanying notes on pages 8 to 110 are an integral part of the consolidated financial statements.
GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu CONSOLIDATED INCOME STATEMENT
Continuation
Financial expenses
Financial income
Share of the profit or loss in associates and joint
ventures under the equity method of accounting
Profit before income tax
Income tax
Profit for the year
Profit attributable to
Owners of the Company
Non-controlling interest
92 >>
Note
26
26
15
28
For the year ended December 31,
2012
(68,129)
57,846
604
520,826
(154,575)
366,251
289,954
76,297
366,251
2013
(152,802)
40,353
33,562
594,467
(182,323)
412,144
320,016
92,128
412,144
2014
(102,816)
11,462
53,445
507,429
(146,196)
361,233
299,744
61,489
361,233
Earnings per share from continuing operations attributable to owners of the Company
during the year
33
0.519
0.533
0.454
The accompanying notes on pages 8 to 110 are an integral part of the consolidated financial statements.
GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu 93 >>
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Profit for the year
Other comprehensive income:
Items that will not be reclassified to profit or loss
Remeasurement of actuarial gains and losses, net of tax
Items that may be subsequently reclassified to profit or loss
Cash flow hedge, net of tax
Foreign currency translation adjustment, net of tax
Change in value of available-for-sale financial assets, net of tax
Exchange difference from net investment in a foreign operation, net of tax
Other comprenhensive income for the year, net of tax
Total comprehensive income for the year
Comprehensive income attributable to:
Owners of the Company
Non-controlling interest
The accompanying notes on pages 8 to 110 are an integral part of the consolidated financial statements.
For the year ended December 31,
Note
2012
366,251
2013
412,144
2014
361,233
29
29
9
29
(3,678)
(6,121)
(1,777)
(2,369)
(2,019)
-
-
(4,388)
(8,066)
358,185
282,870
75,315
358,185
3,733
(1,071)
19,060
-
21,722
15,601
427,745
337,564
90,181
427,745
568
(21,040)
4,649
(12,794)
(28,617)
(30,394)
330,839
277,913
52,926
330,839
GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu 94 >>
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2012, 2013 AND 2014
ATTRIBUTABLE TO THE CONTROLLING INTERESTS OF THE COMPANY
Number
of shares
In
thousands
Capital
Legal
reserve
Premium
for
issuance
of shares
Other
reserves
Retained
earnings
Non-
controlling
interest
Total
Total
In thousands
Balances as of January 1, 2012
558,284
390,488
78,104
4,880
(310)
715,860
1,189,022
264,064
1,453,086
Profit for the year
Cash flow hedge
Adjustment for actuarial gains and losses
Foreign currency translation adjustment
Comprehensive income of the year
Transactions with shareholders:
- Transfer to legal reserve
- Dividend distribution (Note 32 and 34 g)
- Capitalization
- Subsidiaries constitution
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
167,485
-
-
-
-
-
-
28,907
-
-
-
-
-
-
-
-
-
-
-
-
-
289,954
289,954
76,297
366,251
(2,251)
-
-
(3,678)
(1,155)
-
(2,251)
(3,678)
(1,155)
(118)
-
(864)
(2,369)
(3,678)
(2,019)
(3,406)
286,276
282,870
75,315
358,185
-
-
-
-
(28,907)
-
-
-
(86,723)
(86,723)
(37,512)
(124,235)
(167,485)
-
-
-
-
-
5,750
5,750
The accompanying notes on pages 8 to 110 are an integral part of the consolidated financial statements.
GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu 95 >>
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2012, 2013 AND 2014
Continuation
ATTRIBUTABLE TO THE CONTROLLING INTERESTS OF THE COMPANY
- Purchase of subsidiaries (Note 31 d-e)
- Debt capitalization (Note 34 f)
- Contributions of non-controlling shareholders (Note 34 d)
- Acquisition of non-controlling interest in Survial S.A. (Note 34 a)
- Sale to non-controlling interest in GyM S.A. and Concar S.A. (Note 34 b)
- Sale and purchase of treasury shares
- Others
Total transactions with shareholders
Balances as of December 31, 2012
Balances as of January 1, 2013
Profit for the year
Number
of shares
In
thousands
Capital
Legal
reserve
Premium
for
issuance
of shares
Other
reserves
Retained
earnings
Non-
controlling
interest
Total
Total
In thousands
-
-
-
-
-
-
-
-
-
-
-
-
-
140
171
-
-
-
-
-
-
-
167,796
28,907
-
-
-
364
291
1,292
(171)
1,776
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,951
-
-
-
364
291
1,432
4,951
48,055
48,055
12,232
12,232
26,096
26,096
(4,757)
(4,393)
902
-
889
1,193
1,432
5,840
(278,164)
(79,685)
51,655
(28,030)
558,284
558,284
107,011
6,656
(3,716)
723,972
1,392,207
391,034
1,783,241
558,284
558,284
107,011
6,656
(3,716)
723,972
1,392,207
391,034
1,783,241
-
-
-
-
-
320,016
320,016
92,128
412,144
The accompanying notes on pages 8 to 110 are an integral part of the consolidated financial statements.
GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu 96 >>
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2012, 2013 AND 2014
Continuation
ATTRIBUTABLE TO THE CONTROLLING INTERESTS OF THE COMPANY
Number
of shares
In
thousands
Capital
Legal
reserve
Premium
for
issuance
of shares
Other
reserves
Retained
earnings
Non-
controlling
interest
Total
Total
In thousands
Cash flow hedge
Adjustment for actuarial gains and losses
Foreign currency translation adjustment
Change in value of available-for-sale financial assets
Comprehensive income of the year
Transactions with shareholders:
- Transfer to legal reserve
- Dividend distribution (Note 32 and 34 g)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
- Issuance of shares (Note 22 c)
101,770
101,770
- Contributions of non-controlling shareholders (Note 34 d)
- Additional acquisition of non-controlling (Note 34 a)
- Deconsolidation of former subsidiaries (Note 34 e)
-
-
-
-
-
-
The accompanying notes on pages 8 to 110 are an integral part of the consolidated financial statements.
-
-
-
-
-
4,646
-
-
-
-
-
-
-
-
-
-
-
-
1,055,488
-
(34,611)
-
3,546
-
3,546
187
3,733
-
(4,591)
(467)
19,060
-
-
(4,591)
(467)
19,060
(1,530)
(604)
(6,121)
(1,071)
-
19,060
22,139
315,425
337,564
90,181
427,745
-
-
-
-
-
-
(4,646)
-
-
-
(86,985)
(86,985)
(51,794)
(138,779)
-
-
-
-
1,157,258
-
1,157,258
-
34,774
34,774
(34,611)
(29,257)
(63,868)
-
(19,377)
(19,377)
GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu 97 >>
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2012, 2013 AND 2014
Continuation
ATTRIBUTABLE TO THE CONTROLLING INTERESTS OF THE COMPANY
Number
of shares
In
thousands
Capital
Legal
reserve
Premium
for
issuance
of shares
Other
reserves
Retained
earnings
Non-
controlling
interest
Total
Total
In thousands
- Purchase of subsidiaries (Note 31 c)
-
-
-
-
Total transactions with shareholders
101,770
101,770
4,646
1,020,877
-
-
-
-
15,701
15,701
(91,631)
1,035,662
(49,953)
985,709
Balances as of December 31, 2013
660,054
660,054
111,657
1,027,533
18,423
947,766
2,765,433
431,262
3,196,695
Balances as of January 1, 2014
660,054
660,054
111,657
1,027,533
18,423
947,766
2,765,433
431,262
3,196,695
Profit for the year
Cash flow hedge
Adjustment for actuarial gains and losses
Foreign currency translation adjustment
Change in value of available-for-sale financial assets
Exchange difference from net investment in a foreign operation
Comprehensive income of the year
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
299,744
299,744
61,489
361,233
540
-
(13,086)
4,649
(12,602)
-
540
28
568
(1,332)
(1,332)
(445)
(1,777)
-
-
-
(13,086)
(7,954)
(21,040)
4,649
-
4,649
(12,602)
(192)
(12,794)
(20,499)
298,412
277,913
52,926
330,839
The accompanying notes on pages 8 to 110 are an integral part of the consolidated financial statements.
GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu 98 >>
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2012, 2013 AND 2014
Continuation
ATTRIBUTABLE TO THE CONTROLLING INTERESTS OF THE COMPANY
Number
of shares
In
thousands
Capital
Legal
reserve
Transactions with shareholders:
- Transfer to legal reserve
- Dividend distribution (Note 32 and 34 g)
- Contributions of non-controlling shareholders (Note 34 d)
- Additional acquisition of non-controlling (Note 34 a)
- Sale to non-controlling interest in GyM Chile Spa (Note 34 b)
- Deconsolidation of subsidiaries (Note 34 e)
- Put option liability from acquisition of non-controlling (Note 20)
- Purchase of subsidiaries (Note 31 a-b)
Total transactions with shareholders
Balances as of December 31, 2014
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
20,354
-
-
-
-
-
-
-
The accompanying notes on pages 8 to 110 are an integral part of the consolidated financial statements.
Premium
for
issuance
of shares
-
-
-
(128,222)
-
-
-
-
Other
reserves
Retained
earnings
Non-
controlling
interest
Total
Total
In thousands
-
-
-
-
-
-
(111,819)
-
(20,354)
-
-
-
(112,127)
(112,127)
(68,062)
(180,189)
-
-
-
-
-
-
47,376
47,376
(128,222)
(50,109)
(178,331)
-
-
1,627
2,284
1,627
2,284
(111,819)
(2,010)
(113,829)
-
73,450
73,450
660,054
660,054
132,011
899,311
(113,895)
1,113,697
2,691,178
488,744
3,179,922
20,354
(128,222)
(111,819)
(132,481)
(352,168)
4,556
(347,612)
GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu 99 >>
Note
2012
2013
2014
For the year ended December 31
520,826
594,467
507,429
16
17
14
10
21
173,018
71,485
10,981
2,707
-
-
-
-
181,479
78,387
2,239
110
-
774
-
15,084
185,309
74,730
62
71
2,415
14,170
(1,169)
6,559
CONSOLIDATED STATEMENT OF CASH FLOWS
OPERATING ACTIVITIES
Profit before income tax
Adjustments to profit not affecting cash flows from
operating activities:
Depreciation
Amortization of other assets
Impairment of inventory
Impairment of accounts receivable
Impairment of property, machinery and equipment
Impairment of other assets
Recovery of impairment of inventory
Provisions
Share of the profit and loss in associates
The accompanying notes on pages 8 to 110 are an integral part of the consolidated financial statements.
GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu CONSOLIDATED STATEMENT OF CASH FLOWS
Continuation
under the equity method of accounting
Reversal of provisions
Profit on sale of property, plant and equipment
Profit on sale of investments in associates
Net variations in assets and liabilities:
Decrease in trade accounts receivable
Increase (decrease) in other accounts receivable
Decrease in other accounts receivable from related parties
Decrease in inventories
Increase (decrease) in pre-paid expenses and other assets
Increase in trade accounts payable
Increase (decrease) in other accounts payable
Increase (decrease) in other accounts payable to related parties
Decrease in other provisions
The accompanying notes on pages 8 to 110 are an integral part of the consolidated financial statements.
100 >>
Note
15 a-b
27
16
15 a
For the year ended December 31
2012
2013
2014
(604)
(67,556)
(1,261)
-
(49,897)
(346,429)
(24,451)
(197,802)
21,644
224,935
373,637
23,069
(3,759)
(33,562)
(14,556)
(734)
(5,722)
(783,965)
(33,606)
(34,089)
(21,071)
(539)
56,836
(145,379)
(14,677)
(16,269)
(53,445)
(9,394)
(4,845)
-
(594,993)
32,159
(15,291)
(51,489)
(8,634)
82,051
(19,731)
58,342
(7,208)
GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu CONSOLIDATED STATEMENT OF CASH FLOWS
Continuation
Payments related to Norvial Concession
Payment of income tax
Net cash provided by (applied to) operating activities
INVESTING ACTIVITIES
Sale of investment in associates
Sale of available-for-sale investment
Sale of property, plant and equipment
Dividends received
Payment for purchase of available-for-sale investment
Payment for purchase of investments properties
Payments for intangible purchase
Payments for purchase and contributions on investment in associate and joint ventures
Direct cash outflow from acquisition of subsidiaries
The accompanying notes on pages 8 to 110 are an integral part of the consolidated financial statements.
101 >>
Note
2012
2013
2014
For the year ended December 31
(28,406)
(159,408)
542,729
(2,329)
(190,556)
(367,678)
-
342
23,471
2,057
-
(956)
(10,851)
-
6,800
-
15,861
4,688
(56,100)
(2,974)
(22,375)
-
(133,648)
(88,342)
(82,698)
(154,878)
(40,478)
-
-
42,968
36,718
-
(1,450)
(60,846)
(129,859)
(167,921)
15 -a,b
15 -a,b
31
GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu CONSOLIDATED STATEMENT OF CASH FLOWS
Continuation
Payments for property, plant and equipment purchase
Net cash applied to investing activities
FINANCING ACTIVITIES
Loans received
Amortization of loans received
Interest payment
Dividends paid to owners of the parent
Dividends paid to non-controlling interest
Cash received from non-controlling shareholders
Acquisition or sale of interest in a subsidiary of non-controlling shareholders
Capital contribution
Issuance of shares, net of related expenses
Repurchase of shares
102 >>
Note
2012
2013
2014
For the year ended December 31
(280,402)
(399,987)
(197,553)
(339,995)
(265,567)
(545,957)
610,399
1,351,964
2,852,271
(490,398)
(1,378,359)
(2,053,422)
(46,659)
(86,723)
(37,512)
26,096
(3,200)
5,750
-
1,432
(61,013)
(86,986)
(51,794)
34,774
(63,868)
-
1,147,418
-
(46,411)
(112,127)
(63,990)
47,376
(175,824)
-
-
-
34-d
Net cash (applied to) provided by financing activities
(20,815)
892,136
447,873
The accompanying notes on pages 8 to 110 are an integral part of the consolidated financial statements.
GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu CONSOLIDATED STATEMENT OF CASH FLOWS
Continuation
Net increase (net decrease) in cash
Cash decrease in deconsolidation
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
NON-CASH TRANSACTIONS:
Capitalization of retained earnings
Debt capitalization
Acquisition of assets through finance leases
Net assets transferred for acquisition to Stracon GyM
Adjustment for deconsolidation of former subsidiaries
Change in fair vaue of available-for-sale financial asset
Account payable - acquisition of Morelco
Put option liability from acquisition of non-controlling
The accompanying notes on pages 8 to 110 are an integral part of the consolidated financial statements.
103 >>
Note
2012
2013
2014
For the year ended December 31
121,927
-
658,187
780,114
167,485
12,232
123,815
24,994
-
-
-
184,463
(5,162)
780,114
959,415
-
7,989
43,812
-
(19,943)
19,060
-
-
(138,562)
(2,451)
959,415
818,402
-
-
163,399
-
2,284
4,649
45,684
113,829
GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu 104 >>
1. GENERAL INFORMATION
a.
Incorporation and operations -
Graña y Montero S.A.A. (hereinafter indistinctly the Company or the Parent) was established in Peru on August 12, 1996 as a result of the equity spin-off of Inversiones GyM S.A. (formerly
Graña y Montero S.A.). The Company’s legal address is Av. Paseo de la República 4675, Surquillo Lima, Peru and it is listed on the Lima Stock Exchange and the New York Stock Exchange
(NYSE).
The Company is the parent company of the Graña y Montero Group (hereinafter the Group) and its principal activity is the holding of the investments in the different companies of the
Group. Additionally, the Company provides services of general management, financial management, commercial management, legal advisory and human resources management to the
Group´s companies; it is also engaged in the leasing of offices to the Group’s companies.
The Group is a conglomerate of companies with operations including different business activities, of which the most significant are engineering and construction, infrastructure (public
concession ownership and operation), real estate businesses and technical services. See details of operating segments in Note 6.
b.
Issuance of new common shares -
At the Board of Shareholders’ General Meeting held on March 26, 2013, and the subsequent Board of Directors’ meetings held on May 30, July 23 and August 22, 2013, shareholders agreed
to the issuance of common shares through a public offering of American Depositary Shares (ADS) registered with the Securities and Exchange Commission (SEC) and the New York Stock
Exchange (NYSE).
As a consequence in July and August 2013, the Company issued 101,769,600 new common shares, equivalent to 20,353,920 ADS in two tranches, with a unit price of US$21.13, resulting total
proceeds of US$430,078, equivalent to S/.1,195,793 before issuance related costs.
The total outstanding common shares as of the date of the financial statements are 660,053,790 shares listed in the Lima Stock Exchange, from that 253,635,480 shares are represented in
ADS in the NYSE.
The excess of the total proceeds obtained by this transaction in comparison with the nominal value of the shares amounted to S/.1,055,488 (net of commissions, other related costs and tax
effects for that amounted to S/.38,535) recorded as share premium in the consolidated statement of financial position (Note 22).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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c. Authorization for issue of the financial statements -
The consolidated financial statements for the year ended December 31, 2014 have been prepared and authorized by Management on January 29, 2015, which will submit them for the
consideration of the Board and Annual Shareholders’ Meeting to be held within the term established by Peruvian law. Management expects that the financial statements as of December
31, 2014 will be approved by the Board of Directors’ and the General Shareholders’ Meetings with no changes.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years
presented, unless otherwise stated.
2.1 Basis of preparation
The consolidated financial statements of the Company have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting
Standards Board.
The consolidated financial statements have been prepared under the historical cost convention, except for derivative financial instruments, financial assets at fair value through profit and
loss and available-for-sale financial assets which are measured at fair value. The financial statements are presented in thousands of New Peruvian Soles, unless otherwise stated.
The preparation of the consolidated financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its
judgment in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are
significant to the consolidated financial statements are disclosed in Note 4.
2.2 Consolidation of financial statements
a. Subsidiaries -
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the group is exposed to, or has rights to, variable returns
from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is
transferred to the Group. They are deconsolidated from the date that control ceases.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred,
the liabilities incurred to the former owners of the acquiree and the equity instruments issued by the Group. The consideration transferred includes the fair value of any asset or liability
resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at
their fair values at the acquisition date.
The Group recognizes any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest’s proportionate share of the
recognized amounts of acquirer’s identifiable net assets.
Acquisition-related costs are expensed as incurred.
If the business combination is achieved in stages, the carrying value of the acquirer’s previously held equity interest in the acquiree is re-measured to fair value at the acquisition date; any
gains or losses arising from such re-measurement are recognised in profit or loss.
Any contingent consideration to be transferred by the group is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is
deemed to be an asset or liability is recognised in accordance with IAS 39 either in profit or loss or as a change to other comprehensive income. Contingent consideration that is classified
as equity is not re-measured, and its subsequent settlement is accounted for within equity.
Goodwill is initially measured as the excess of the aggregate of the consideration transferred and the fair value of non-controlling interest over the net identifiable assets acquired and
liabilities assumed. If this consideration is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized in profit or loss as a bargain purchase at the time
of acquisition.
Balances, income and expenses from transactions between Group companies are eliminated. Profits and losses resulting from inter-company transactions that are recognized as assets are
also eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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b. Changes in ownership interests in subsidiaries without change of control -
Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions - that is, as transactions with the owners in their capacity as
owners. The difference between fair value of any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or
losses on disposals to non-controlling interest, are also recorded in equity at the time of disposal.
c. Disposal of subsidiaries -
When the Group ceases to have control over a subsidiary any retained interest in the entity is re-measured to its fair value at the date when control is lost, with the change in carrying
amount recognized in profit or loss at such date. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint
venture or financial asset. In addition, any amounts previously recognized in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed
of the related assets or liabilities. This may mean that amount previously recognized in other comprehensive income is reclassified to profit or loss.
d.
Joint arrangements -
Investments in joint arrangements are classified as either joint operations or joint ventures depending on the contractual rights and obligations of each investor. The Group has assessed
the nature of its joint arrangements and determined them to have both joint ventures as well as joint operations.
Joint ventures are accounted for using the equity method (par.e below). Under the equity method of accounting, interests in joint ventures are initially recognized at cost and adjusted
thereafter to recognize the Group’s share of the post-acquisition profits or losses and movements in other comprehensive income. When the Group’s share of losses in a joint venture
equals or exceeds its interests in the joint ventures (which includes any long-term interests that, in substance, form part of the group’s net investment in the joint ventures), the Group
does not recognize further losses, unless it has incurred obligations or made payments on behalf of the joint ventures.
Unrealized gains on transactions between the Group and its joint ventures are eliminated to the extent of the Group’s interest in the joint ventures. Unrealized losses are also eliminated
unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of the joint ventures have been changed where necessary to ensure consistency
with the policies adopted by the Group.
Joint operation is a joint arrangement whereby the parties that have joint control of the arrangement, have rights to the assets, and obligations for the liabilities, relating to the
arrangement. Each party recognizes its assets, liabilities, revenue and expenses and its share of any asset and liability jointly held and of any revenue or expense arisen from the joint
operation.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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e. Associates -
Associates are all entities over which the Group has significant influence but not control, generally accompanying a holding of between 20% and 50% of the voting rights. Investments
in associates are accounted for using the equity method of accounting. Under the equity method, the investment is initially recognized at cost, and the carrying amount is increased or
decreased to recognize the Group’s share of the post-acquisition profits or losses. The Group’s investment in associates includes goodwill identified on acquisition.
If ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously recognized in other comprehensive income is
reclassified to profit or loss where appropriate. The Group’s share of post-acquisition profit or loss is recognized in the income statement, and its share of post-acquisition movements
in other comprehensive income is recognized in other comprehensive income with a corresponding adjustment to the cost of the investment. When the Group’s share of losses in an
associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognize further losses, unless it has incurred legal or constructive
obligations or made payments on behalf of the associate.
The Group determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the Group calculates the amount
of impairment as the difference between the recoverable amount of the associate and its carrying value and recognizes the amount adjacent to ‘share of profit or loss in associates and
joint ventures under the equity method of accounting’ in the income statement.
Profits and losses resulting from upstream and downstream transactions between the Group and its associates are recognized in the Group’s financial statements only to the extent of
unrelated investor’s interests in the associates. Unrealized losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of
associates have been changed where necessary to ensure consistency with the policies adopted by the Group.
Dilution gains and losses arising in investments in associates are recognized in the income statement.
2.3 Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker of the Group. The chief operating decision-maker, who
is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Executive Committee, led by the Corporate General Manager.
If an entity changes the structure of its internal organization in a manner that causes the composition of its reportable segments to change, the Group restates the information for earlier
periods unless the information is not available.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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2.4 Foreign currency translation
a.
Functional and presentation currency -
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which each entity operates (the
functional currency). The consolidated financial statements are presented in New Peruvian Soles, which is the Company’s functional currency and the Group’s presentation currency. All
subsidiaries, joint arrangements and associates use the New Peruvian Sol as their functional currency, except for foreign entities, for which the functional currency is the currency of the
country in which they operate.
b.
Transactions and balances -
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the date of the transactions or valuation when items are re-measured.
Foreign exchange gains and losses resulting from the settlement of such transactions and from the changes at year-end exchange rates of monetary assets and liabilities denominated in
foreign currencies are recognized in the income statement, except when deferred in equity as qualifying cash flow hedges.
Foreign exchange gains and losses of all monetary items are presented in the income statement within financial expenses and financial income.
c. Group companies -
The results and financial position of all the Group entities (none of which has the currency of a hyper-inflationary economy) that have a functional currency different from the presentation
currency of the Group are translated into the presentation currency as follows:
i)
assets and liabilities for each statement of the financial position presented are translated using the closing rate at the date of the statement of financial position;
ii)
income and expenses for each income statement are translated at the average exchange rate (unless this average is not a reasonable approximation of the cumulative effect of the
rates prevailing on the transaction dates, in which case income and expenses are translated using the rate on the date of the transaction);
iii)
capital is translated by using the historical exchange rate for each capital contribution made; and
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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iv)
all resulting exchange differences are recognized as separate components in other comprehensive income.
Goodwill and fair value adjustments arising because of the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and are translated at the closing exchange
rate. Exchange differences arising are recognized in other comprehensive income.
Exchange differences arising on loans from the Parent to its subsidiaries in foreign currencies are recognized in the separate financial statements of the Parent and individual financial
statements of the subsidiaries. In the consolidated financial statements, such exchange differences are recognized in other comprehensive income and are subsequently re-classified in the
income statement on the disposal of the subsidiary; to the extent such loans qualifying as part of the “net investment of the foreign operation”.
2.5 Public services concession agreements
Concession agreements signed between the Group and the Peruvian Government entitles the Group, as a Concessionaire, to assume obligations for the construction or improvement of
infrastructure and which qualify as public service concessions as defined by IFRIC 12, “Service Concession Arrangements”. The consideration to be received from the Government for the
services of constructing or improving public infrastructure is recognized as a financial asset or as an intangible asset, as set forth below.
Under these agreements, the government controls and regulates services provided by the Group with the infrastructure and dictates to whom it must provide them and at what price.
The concession agreement establishes the obligation for the Group to return the infrastructure to the grantor at the end of the concession period or when there is an expiration event.
This feature gives the grantor control of the risks and rewards of the residual value of the assets at the end of the concession period. For this reason, the Group will not recognize the
infrastructure as part of its property, plant and equipment.
The Group manages three types of concessions which accounting recognition is as follows:
a)
Recognizes a financial asset to the extent that it has a contractual right to receive cash or another financial assets either because the Government secures the payment of specified
or determinable amounts or because the Government will cover any difference arising from the amounts actually received from public service users in relation with the specified or
determinable amounts. These financial assets are recognized initially at fair value and subsequently at amortized cost (the financial model).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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b)
Recognizes an intangible asset to the extent that the service agreement grants the Group a contractual right to charge users of the public service. The resulting intangible asset is
measured at cost and is amortized as described in Note 2.16 (the intangible asset model).
c)
Recognizes a financial asset and an intangible asset when the Group recovers its investment partially by a financial asset and partially by an intangible asset (the bifurcated model).
2.6 Cash and cash equivalents
In the consolidated statement of cash flows, cash and cash equivalents include cash on hand, on-demand bank deposits, other highly liquid investments with original maturities of three
months or less and bank overdrafts. In the consolidated financial statements, bank overdrafts are included in the balance of financial obligations as current liabilities in the statement of
financial position.
2.7 Financial assets
2.7.1 Classification
The Group classifies its financial assets in the following categories: financial assets at fair value through profit or loss, financial assets held-to-maturity, loans and account receivables and
financial assets available for sale. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets
at initial recognition. As of the date of the financial statements, the Group has classified its financial assets in the following three categories:
a.
b.
Financial assets at fair value through profit or loss -
Financial assets at fair value through profit or loss are non-derivatives that are designated by the Group as at fair value upon initial recognition and are held-for-trading. They are included
in current assets. The changes in their fair value are recognized in “Other income and expenses” in the income statement.
Loans and accounts receivable –
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for those
which maturity is greater than 12 months after the statement of financial position. These are classified as non-current assets. The Group’s loans and receivables comprise ‘trade accounts
receivables’, ‘accounts receivable from related parties’, ‘other accounts receivable’, ‘unbilled work in progress’ and ‘cash and cash equivalents’.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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c. Available-for-sale financial assets -
Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets
unless Management intends to dispose of them within 12 months of the date of the statement of financial position.
2.7.2 Recognition and measurement
Regular purchases and sales of financial assets are recognized on the trade-date, the date on which the Group commits to purchase or sell the asset. Investments are initially recognized
at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets are derecognized when the rights to receive cash flows from the
investments have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. Available-for-sale financial assets are subsequently
carried at fair value. Loans and receivables are subsequently carried at amortized cost using the effective interest method.
Gains or losses arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’ category are presented in the income statement within ‘Other income and
expenses’ in the period in which they arise. Dividend income from financial assets at fair value through profit or loss is recognised in the income statement as part of other income when
the group’s right to receive payments is established.
Changes in the fair value of monetary securities classified as available for sale are recognised in other comprehensive income, When a financial asset classified as available for sale is sold
or impaired, the accumulated fair value adjustments recognised in equity are recycled to the income statement.
Dividends on available-for-sale equity instruments are recognized in the income statement as part of “other income” when the Group’s right to receive payments is established.
2.8 Offsetting financial instruments
Financial assets and liabilities are offset and its net amount is reported in the statement of financial position when there is a legally enforceable right to offset the recognized amounts and
there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be
enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the company or the counterparty.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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2.9
Impairment of financial assets
a) Assets carried at amortized cost -
The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or a group of financial assets is impaired. If a financial asset or a group of
financial assets is impaired, the impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition
of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.
Evidence of impairment may include indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal
payments, the probability that they will enter bankruptcy or other financial reorganization, and where observable data indicate that there is a measurable decrease in the estimated future
cash flows, such as changes in arrears or economic conditions that correlate with defaults.
For the loans and receivables category, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows
(excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced and the amount
of the loss is recognized in the statement of comprehensive income. If a loan or an account receivable has a variable interest rate, the
discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. As a practical expedient, the Group may measure impairment on the
basis of an instrument’s fair value using an observable market price.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized (such as an
improvement in the debtor’s credit rating), the reversal of the previously recognized impairment loss is recognized in the income statement.
b) Assets classified as available-for-sale -
The Group assesses at the end of each reporting period whether there is objective evidence that a financial asset or a group of financial assets available for sale is impaired.
For debt securities, if any such evidence exist the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that
financial asset previously recognised in profit or loss – is removed from equity and recognized in profit or loss. If, in a subsequent period, the fair value of a debt instrument classified as
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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available for sale increases and the increase can be objectively related to an event occurring after the impairment loss was recognized in profit or loss, the impairment loss is reversed
through the consolidated income statement.
For equity investments, a significant or prolonged decline in the fair value of the security below its cost is also evidence that the assets are impaired. If any such evidence exists for
available-for-sale financial assets, the cumulative loss - measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset
previously recognized in profit or loss - is removed from equity and recognized in profit or loss. Impairment losses recognized in the income statement on equity instruments are not
reversed through the income statement.
2.10 Derivative financial instruments and hedging activities
Derivatives are initially recognized at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. The method of recognizing the
resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The Group designates certain derivatives as
hedges of a particular risk associated with a recognized asset or liability (fair value hedge) or a highly probable forecast transaction (cash flow hedge).
The Group documents, at the inception of the transaction, the relationship between hedging instruments and hedged items, as well as its risk management objectives and strategy for
undertaking various hedging transactions. The Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging
transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.
The fair values of various derivative instruments used for hedging purposes and changes in the account reserves for hedging in equity are disclosed in Note 7. The full fair value of a
hedging derivative is classified as a non-current asset or liability when the remaining maturity period of the hedged item is more than 12 months and as a current asset or liability when the
remaining maturity period of the hedged item is less than 12 months. Trading derivatives are classified as a current asset or liability.
Cash flow hedge -
The effective portion of changes in the fair value of derivatives that are designated and qualify as fair value hedges is recognized as other comprehensive income. The gain or loss relating
to the ineffective portion is recognized immediately in the income statement.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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Amounts accumulated in equity are reclassified to profit or loss in the periods when the hedged item affects profit or loss (for example, when the forecasted sale that is hedged takes
place). The gain or loss relating to the effective portion of interest rate swaps hedging variable rate borrowings is recognized in the income statement as ‘Financial income or expenses’.
However, when the forecasted transaction that is hedged results in the recognition of a non-financial asset (for example, inventory or fixed assets), the gains or losses previously deferred
in equity are transferred from equity and are included in the initial measurement of the cost of the non-financial asset. The deferred amounts are ultimately recognized in cost of goods
sold in the case of inventory or in depreciation in the case of fixed assets. When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting,
any cumulative gain or loss existing in equity at that time remains in equity and is recognized when the forecasted transaction is ultimately recognized in the income statement. When
a forecasted transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the income statement within ‘other (losses)
gains- net’.
2.11 Trade receivables
Trade receivables are amounts due from customers for goods or services sold by the Company’s subsidiaries. If collection is expected in one year or less, they are classified as current
assets. If not, they are presented as non-current assets.
Trade receivables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method, less any provision for impairment.
2.12 Unbilled work in progress
Unbilled work in progress comprises the estimation made by the Management of the Engineering and Construction segment related to the unbilled rights receivable for services rendered
and not yet approved by the client (valuation based on the percentage of completion).
It also includes the balance of work in progress costs incurred that relates to future activities of the construction contracts (see Note 2.26 for detail on Revenue from construction
activities)
2.13 Inventories
Inventory mainly includes land, work in progress and finished property which is assigned to the real- estate activity. It also includes material used in the construction activity. Goods and
supplies correspond to goods that the Group trades as part of its IT segment. Materials and supplies used in construction activities and IT equipment are determined under the weighted
average cost method.
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Land intended to carry out real estate projects is recognized at acquisition cost. Work in progress and finished property comprise design costs, material, labor costs, other indirect costs
and general expenses related to the construction and do not include exchange differences.
Net realizable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses. For the reductions in the carrying amount of inventories to
their net realizable value, a provision is made for inventory impairment with a charge to the results of the period in which such reductions are made.
Materials and other supplies are not written down below cost if the finished products in which they will be incorporated are expected to generate margin. When a decline in the price of
materials indicates that the cost of the finished products exceeds net their realizable value, the materials are written down to their replacement cost.
2.14 Investment properties
Investment properties are shown at cost less accumulated depreciation and impairment losses, if any. Subsequent costs attributable to investment properties are capitalized only if it is
probable that future economic benefits will flow to the Company and the cost of these assets can be measured reliably; if not, they are recognized as expenses when incurred.
Repair and maintenance expenses are recognized in profit and loss when they are incurred. A property’s carrying amount is written down immediately to its recoverable amount if the
property’s carrying amount is greater than its estimated recoverable amount. The cost and accumulated depreciation on disposals are eliminated from the respective accounts and the
resulting gain or loss is recognized in profit or loss for the period. The depreciation of this asset is calculated under the straight-line method at a rate that is considered sufficient to absorb
the property’s cost over its estimated useful life and considering its significant components with substantially different useful lives (each component is treated separately for depreciation
purposes and depreciated over its individual useful life). The estimated useful life of investments properties fluctuate between 5 and 20 years.
The Group maintains only one investment property, a Shopping Mall owned by the subsidiary Viva GyM S.A. Its fair value amounted to US$19 million at December 31, 2014. The stores in
this mall are leased to third parties under operating leases.
2.15 Property, plant and equipment
Property, plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of these items.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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Subsequent costs are included in the asset’s carrying amount or are recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated
with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced asset is derecognized. All other repairs and maintenance are
charged to the income statement during the financial period in which they are incurred.
Assets in the construction stage are capitalized as a separate component. At their completion, the cost of such assets is transferred to their definitive category.
Replacement units are major spare parts which depreciation starts when are installed for use within the related asset.
Land is not depreciated. Depreciation of machinery and equipment and vehicles recognized as “Major equipment” are depreciated based on their hours of use. Under this method, the
total number of work hours that machinery and equipment is capable to produce is estimated and a charge per hour is determined. The depreciation of other assets that do not qualify as
“Major equipment” is calculated under the straight-line method to allocate their cost less their residual values over their estimated useful lives, as follows:
Years
Own occupied buildings
Machinery and equipment
Vehicles
Furniture and fixtures
Other equipment
Replacement units
Between 33 and 50
Between 4 and 10
Between 4 and 10
Between 2 and 10
Between 2 and 10
5
The assets’ residual values and useful lives are reviewed, and adjusted as appropriate, at each date of the statement of financial position. An asset’s carrying amount is written-down
immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. Gains and losses on disposals are determined by comparing the
proceeds with the carrying amount and are recognized in “Other income and expenses” in the income statement.
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Non - current assets (or disposal groups) are classified as non- current assets held for sale when its carrying amount is recovered mainly through a sale operation and this sale is considered
highly probable. These are estimated through the lowest carrying amount and the fail value amount less sale costs.
2.16 Intangible assets
a. Goodwill -
Goodwill arises on the acquisition of subsidiaries and represents the excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the
acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired. If the total of consideration transferred, non-controlling
interest recognised and previously held interest measured at fair value is less than the fair value of the net assets of the subsidiary acquired, in the case of a bargain purchase, the
difference is recognised directly in the income statement.
Goodwill acquired in a business combination is allocated to each of the cash-generating units (CGU), or group of CGUs, that is expected to benefit from the synergies of the combination.
Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill
is monitored at the operating segment level.
Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential impairment. The carrying value of goodwill is
compared to its recoverable amount, which is the higher of its value in use and its fair value less costs of disposal. Any impairment is recognized immediately as an expense and is not
subsequently reversed.
b. Trademarks -
Separately acquired trademarks and licences are shown at historical cost. Trademarks and licences acquired in a business combination are recognised at fair value at the acquisition date.
Trademarks and licences have an indefinite useful life.
c. Concessions rights -
The intangible asset related to the right to charge users for the services related to service concessions agreements (Note 2.5 and.5.b) is amortized under the straight-line method, from the
date when toll collection started using the lower of its estimated expected useful life or effective period of the concession agreement.
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d. Contractual relationships with customers -
Contractual relationships with customers are assets resulting from business combinations that were initially recognized at fair value, as determined based on the future cash flows
expected from those relationships over an estimated period of time based on the time period those customers will remain as customers of the Group (the estimation of useful life is based
on the contract terms which fluctuate between 2 and 5 years). The useful life and the impairment of these assets are individually assessed.
e. Cost of development of Wells -
Costs incurred to prepare the wells to extract the hydrocarbons associated with Block I and Block V, are capitalized as intangible assets. The Company capitalizes the development stage
costs associated with preparing the wells for extraction. These costs are amortized based on the useful life of the wells (9 and 10 years for Blocks I and V, respectively), which is less than
the overall period of the service contract with Perupetro.
f.
Internally generated software and development costs -
Costs associated with maintaining computer software programs are recognized as an expense as incurred. Development costs that are directly attributable to the design and testing of
identifiable and unique software products controlled by the Group are recognized as intangible assets when the following criteria are met:
it is technically feasible to complete the software product so that it will be available for use;
•
• management intends to complete the software product and use or sell it;
•
•
•
•
there is an ability to use or sell the software product;
it can be demonstrated how the software product will generate probable future economic benefits;
adequate technical, financial and other resources to complete the development and to use or sell the software product are available; and
the expenditure attributable to the software product during its development can be reliably measured.
Directly attributable costs, such as development employee costs and an appropriate portion of relevant overhead, are capitalized as part of the software.
Other development expenditures that do not meet these recognition criteria are expensed as incurred. Development costs previously recognized as an expense are not recognized as an
asset in a subsequent period. Computer software development costs recognized as assets are amortized over their estimated useful lives not exceeding three years.
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g. Rights of use of land -
Right of use of land are stated at historical cost less amortization and any accumulated impairment losses. The useful life of this asset is based on the agreement signed (60 years) and
their effective period may be extended if agreed by the parties. Amortization will begin when it becomes ready for its intended use by Management.
2.17 Impairment of non-financial assets
Assets that have an indefinite useful life are not subject to amortization and are tested annually for impairment. Assets that are subject to amortization are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset’s carrying
amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets
are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that were adjusted for impairment
are reviewed for possible reversal of such impairment at each reporting date.
2.18 Trade payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business. Accounts payable are classified as current liabilities if payment is
due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities.
Trade payables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method.
2.19 Borrowings
Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortized cost; any difference between the proceeds (net of
transaction costs) and the redemption value is recognized in the income statement over the period of the borrowings using the effective interest method.
Fees paid for entering into loan facilities are recognized as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the
fee is deferred until the draw-down occurs.
2.20 Borrowing costs
General and specific borrowing costs directly attributable to acquisitions, construction or development of qualifying assets, which are assets that necessarily take a substantial period of
time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for
capitalization. All other borrowing costs are recognized in profit or loss in the period in which they are incurred.
2.21 Current and deferred income tax
The tax expense for the period comprises current and deferred tax. Tax is recognized in the income statement, except to the extent that it relates to items recognized in other
comprehensive income or directly in equity. In this case, the tax is also recognized in statement of comprehensive income or directly in equity, respectively.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the date of the statement of financial position in the countries where the
Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax
regulation is subject to interpretation. Management, where appropriate, establishes provisions on the basis of amounts expected to be paid to the tax authorities.
Deferred income tax is recognized, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the
consolidated financial statements. However, deferred tax liabilities are not recognized if they arise from the initial recognition of goodwill; deferred income tax is not accounted for if it
arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or
loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related
deferred income tax asset is realized or the deferred income tax liability is settled.
Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized.
Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except for deferred income tax liability where the timing of the reversal of
the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax
assets and liabilities relate to income taxes levied by the same taxation authority.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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The deferred income tax arising from the temporary differences in investments in subsidiaries, associates and interest in joint-controlled businesses is not recognized due the tax
legislation in Chile, Colombia, Panama, Brasil, Dominican Republic and Peru does not consider the income from dividends as a taxable item and the Group expects to recover the
investment through the dividends rather than their sale.
2.22 Employee benefits
Profit sharing -
a.
The Peruvian entities of the Group recognize a liability and an expense for statutory workers’ profit sharing. Workers’ profit sharing is equivalent to 5% of the taxable income determined
separately by each of the Group’s Peruvian entities, according to the income tax law currently in force. The branch based in the Dominican Republic has a similar profit sharing scheme,
which rate is 10% of the taxable income. In Brazil, Colombia and Chile these benefits are not provided to employees.
b. Bonuses -
The Peruvian entities of the Group recognize an expense and the related liability for statutory bonuses based on applicable laws and regulations effective in Peru. Statutory bonuses
comprise two additional one-month salaries paid every year in July and December, respectively. According to Chilean legislation, employees receive a fixed amount of sixty five thousand
of Chilean pesos (equivalent to three hundred and eighteen new Peruvian soles) in September and December. In Brazil, Colombia and Dominican Republic these benefits are not provided
to employees.
c.
Severance indemnities -
The employees’ severance payments for time of service of the Group’s Peruvian staff comprise their indemnification rights, calculated in accordance with the regulations in force, which
have to be credited to the bank accounts designated by workers in May and November each year. The compensation for time of service amounts to an additional one-month’s salary
effective at the date of bank deposits. The Group has no obligations to make any additional payments once the annual deposits to which workers are entitled have been made.
d. Vacation leave -
Annual vacation leave is recognized on an accrual and cumulative basis. Provision for the estimated obligations of annual vacations is recognized at the date of the statement of financial
position and it corresponds to one month for Peruvian and Brazilian employees and fifteen days for Chilean, Dominican and Colombian employees, per year.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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e.
Pension plans -
The subsidiary CAM Chile has in place a pension plan scheme with its workers. These commitments comprise both defined benefit and defined contribution plans. A defined benefit plan
defines an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation.
The liability recognized in the balance sheet in respect of defined benefit pension plan is the present value of the defined benefit obligation at the end of the reporting period less the
fair value of plan assets. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit
obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits
will be paid, and that have terms to maturity approximating to the terms of the related pension obligation. In countries where there is no deep market in such bonds, the market rates on
government bonds are used.
Remeasurements arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in other comprehensive income in the period in which they
arise.
2.23 Provisions
a. General -
Provisions are recognized when the Group has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the
obligation; and the amount has been reliably estimated. If the time value of money is significant, provisions are discounted using a pre-tax rate that reflects, when applicable, the specific
risks related to the liability. Reversal of the discount due to the passage of time results in the obligation being recognized with a charge to the income statement as a financial expense.
Provisions are not recognized for future operating losses.
Contingent obligations are disclosed for possible obligations that are not yet determined to be probable. Contingent assets are not recognized and only disclosed if it is probable that
future economic benefits will flow to the Company.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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b. Provision for the closure of production wells -
Group entities recognize a provision for the closure of operating units that correspond to the legal obligation to close oil production wells once the production phase has been completed.
At the initial date of recognition, the liability that arises from said obligation is measured at cash flow discounted to present value, the same amount is simultaneously charged to the
intangible account in the statement of financial position.
Subsequently, the liability will increase in each period to reflect the financial cost considered in the initial measurement of the discount, and the capitalized cost is depreciated based on
the useful life of the related asset. When a liability is settled, the Group’s entities will recognize any gain or loss that may arise. The fair value changes estimated for the initial obligation
and interest rates are recognized as an increase or decrease of the carrying amount of the obligation and related asset, according to IFRIC 1 ‘Changes in Existing Decommissioning,
Restoration and Similar Liabilities’; any decrease in the provision, and any decrease of the asset that may exceed the carrying amount of said asset is immediately recognized in the income
statement.
If the review of the estimated obligation results in the need to increase the provision and, accordingly, increase the carrying amount of the asset, the Group’s entities will also take into
consideration if said increase corresponds to an indicator that asset has been impaired and, if so, impairment tests are carried out, according to the guidelines of IAS 36, “Impairment of
assets” (Note 2.17).
c. Provision for periodic maintenance –
The service concession arrangement of Norvial have maintenance obligations that it must fulfill during the operation phase to maintain the infrastructure to a specific level of service at all
times and to restore the infrastructure to a specified level condition before it is handed back to the grantor. The Group recognizes and measures such obligations, except for an upgrade
element, in accordance with IAS 37, 'Provisions, contingent assets and liabilities. The Company apply a criteria of maintenance provision based on the use of the infrastructure, so the level
of use of the road is the fact that determines the amount of the obligation over the time.
2.24 Put option arrangement
The potential cash payments related to put options issued by the group on shares of an existing subsidiary that are held by non-controlling interests are accounted for as financial
liabilities.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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The financial liability is recognised at the present value of the redemption amount and accreted through finance charges in the income statement over the contract period up to the final
redemption amount. Any adjustments to the redemption amount are recognised as finance charges in the income statement. In the event that the option expires unexercised, the liability
is derecognised with a corresponding adjustment to equity.
2.25 Capital
Common shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity, as a deduction, net of taxes, of the proceeds.
Where any Group company purchases the company’s equity shares (treasury shares), the consideration paid, including any directly attributable incremental costs (net of income taxes) is
deducted from equity attributable to the company’s equity holders until the shares are cancelled or reissued. Where such shares are subsequently reissued, any consideration received,
net of any directly attributable incremental transaction costs and the related income tax effects is included in equity attributable to the Group’s equity holders.
2.26 Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable. Revenue is stated net of sales rebates, discounts and after eliminating sales between Group companies.
The Group recognizes revenue when the amount of revenue can be reliably measured; when it is probable that future economic benefits will flow to the entity; and when specific criteria
have been met for each of the Group’s activities.
The Group’s revenue recognition policy is described as follows:
i) Revenue from construction activities -
Revenues from construction contracts are recognized using the percentage-of-completion of the contract based on the completion of a physical proportion of the contract work
considering total costs and revenues estimated at the end of the project, in accordance with IAS 11, Construction Contracts. Under the physical proportion method revenues are
determined based on the proportion of actual physical completion compared to the total contract physical construction commitment.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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Revenue is billed once approval is received by the owners of the work in progress.
With respect to services that have been provided but not billed, due to the outstanding approval by the owners, the Company recognizes revenue with an increase in accounts receivable -
“Unbilled work in progress”.
Accounts receivable derived from work services are shown net of the advances received from customers to the extent the related contracts include settlement provisions.
A variation is an instruction by the customer for a change in the scope of the work to be performed under the contract. A variation may lead to an increase or a decrease in contract
revenue. A variation is included in contract revenue when it is probable that the customer will approve the variation and the amount of revenue arising from the variation; and the amount
of revenue can be reliably measured.
A claim is an amount that the Group seeks to collect from the customer or third party as reimbursement for costs not included in the contract price. Claims are included in contract
revenue only when negotiations have reached an advanced stage such that it is probable that the customer will accept the claim; and the amount that it is probable will be accepted by the
customer can be measured reliably.
ii) Revenue from engineering, advisory, consulting services and other services -
For sales of services, revenue is recognised in the accounting period in which the services are rendered.
iii) Sales of real-estate properties -
Revenue from sales of real estate properties is recognized in the results of the period when sales occur, that is, when the properties are delivered and the risks and rewards inherent to
ownership are transferred to the buyer and the collection of the corresponding receivables is reasonably assured.
iv) Revenue from IT services -
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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The sale of computer equipment includes some services to be provided in a subsequent date to the asset sale as installation and maintenance. When sales agreements include multiple
elements, the amount of the revenue is attributed to each element based on their related fair values. The fair value of each element is determined based on the market price prevailing
for each element when sold separately. Revenue derived from computer equipment is recognized when the related risks and rewards are transferred to the customer, which occurs upon
delivery. Revenue relating to each service element is recognized as a percentage of the total services to be performed during the period of service.
v)
Interest income -
Revenue from interest is recognized on a time-proportion basis, using the effective interest method.
vi) Dividend income -
Dividend income is recognized when the right to receive payment is established.
vii) Revenue for concession services -
Revenue for concession services is recognized according to its nature. Construction and restoration activities are accounted for applying the percentage-of-completion method as
described above and operation and maintenance services in the accounting period when they are provided (see Note 2.5).
2.27 Construction contract costs
Construction contract costs are recognized as an expense in the period in which they are incurred.
Contract costs include all direct costs such as materials, labor, subcontracting costs, manufacturing and supply costs of equipment, start-up costs and indirect costs. Periodically, the
Company evaluates the reasonableness of the estimates used in the determination of the percentage-of-completion. If, as a result of this evaluation, there are modifications to the revenue
or cost previously estimated, or if the total estimated cost of the project exceeds expected revenues, an adjustment is made in order to reflect the effect in results of the period in which
the adjustment or loss is incurred.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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When the outcome of a construction work cannot be estimated reliably, the revenue of the contract is recognized only up to the amount of the contractual costs incurred and that are
likely to be recovered.
Changes in contract relating to the work to be performed, lawsuits and payment of incentives are included in the revenue from the contract to the extent that they have been agreed with
the client and can be measured reliably.
2.28 Leases
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any
incentives received from the lessor) are charged to the profit or loss of the period on a straight-line basis over the period of the lease.
The Group leases certain property, plant and equipment. Leases of property, plant and equipment where the Group has substantially assumed all the risks and rewards of ownership are
classified as finance leases. Finance leases are capitalized at the lease’s commencement at the lower of the fair value of the leased property and the present value of the minimum lease
payments.
Each lease payment is allocated between the liability and finance charges in order to obtain a constant rate on the balance pending payment. The corresponding rental obligations, net of
finance charges, are included in other long-term payables. The interest element of the finance cost is charged to the income statement over the lease period so as to produce a constant
periodic rate of interest on the remaining balance of the liability for each period. The property, plant and equipment acquired under finance leases are depreciated over the shorter of the
useful life of the asset and the lease term.
2.29 Dividend distribution
Dividend distribution to the Company’s shareholders is recognized as a liability in the financial statements in the period in which the dividends are approved by the Company’s
shareholders.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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2.30 Contingent liabilities and assets
Contingent liabilities are not recognized in the financial statements, but are disclosed in the Notes to the financial statements.. Contingent assets are not recognized in the financial
statements and are only disclosed when it is probable that an inflow of resources will flow to the Company.
2.31 Significant non-operating items
Significant non-operating items are separately shown in the financial statements when they are necessary to provide a better understanding of the Group’s financial performance. These
material items are income or expenses shown separately due to the significance of their nature or amount.
2.32 New standards, amendments and interpretations
a) New standards, amendments and interpretations adopted by the Group in 2014
The following standards have been adopted by the group for the first time for the 2014 financial statements. Principal impacts of the adoption of these standards are related to the
presentation and disclosure of the financial statements:
- Amendment to IAS 32, “Financial Instruments: Presentation”. This amendment clarifies that the right of set-off must not be contingent on a future event. It must also be legally
enforceable for all counterparties in the normal course of business, as well as in the event of default, insolvency or bankruptcy. The amendment also considers settlement mechanisms.
The amendment did not have a significant effect on the group financial statements.
- Amendments to IAS 36, “Impairment of assets”. This amendment removed some disclosure requirements regarding: a) eliminating the requirement about disclosing the recoverable
value when a cash generating unit (CGU) contains a goodwill or indefinite life intangible assets, but that has not been impaired; b) disclosing the recoverable value of an asset CGU
when an impairment loss has been recognized or reversed and c) detailed disclosures about how the recoverable value less costs of sales has been measured when an impairment loss
has been recognized or reversed. The Group has applied the amendment and consequently there has been no significant impact on the Group financial statements.
- Amendments to IAS 39 “Financial instruments: Recognition and measurement”. This amendment requires to discontinue the hedging accounting when a hedging instrument expires or
is sold, finished or exercised, unless the replacement or incorporation of a hedging instrument in another hedging instrument is part of the hedging strategy documented by the entity.
The Group has applied the amendment and consequently there has been no significant impact on the Group financial statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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- Amendment to IAS 19 “Employee benefits”. The amendment applies to contributions from employees or third parties to defined benefit plans and clarifies the treatment of such
contributions. The amendment distinguishes between contributions that are linked to service only in the period in which they arise and those linked to service in more than one period.
The objective of the amendment is to simplify the accounting for contributions that are independent of the number of years of employee service, for example employee contributions
that are calculated according to a fixed percentage of salary. Entities with plans that require contributions that vary with service will be required to recognize the benefit of those
contributions over employee’s working lives. The Group has applied the amendment and consequently there has been no significant impact on the Group financial statements.
- IFRIC 21, “Levies”, sets out the accounting for an obligation to pay a levy if that liability is not income tax. The interpretation addresses what the obligating event is that gives rise to pay
a levy and when a liability should be recognized. The Group is not currently subjected to significant levies so the impact on the Group is not material.
Other standards, amendments and interpretations which are effective for the financial year beginning on January 1, 2014 are not material to the Group.
b) New standards, amendments and interpretations not yet adopted
A number of new standards and amendments to standards and interpretations are effective for annual periods beginning after 1 January 2014, and have not been applied in preparing these
consolidated financial statements. None of these is expected to have a significant effect on the consolidated financial statements of the Group, except the following set out below:
- IFRS 9, ‘Financial instruments,’ addresses the classification, measurement and recognition of financial assets and financial liabilities. The complete version of IFRS 9 was issued in July
2014. It replaces the guidance in IAS 39 that relates to the classification and measurement of financial instruments. IFRS 9 retains but simplifies the mixed measurement model and
establishes three primary measurement categories for financial assets: amortized cost, fair value through Other Comprehensive Income and fair value through Profit and Loss. The
basis of classification depends on the entity’s business model and the contractual cash flow characteristics of the financial asset. Investments in equity instruments are required to be
measured at fair value through profit or loss with the irrevocable option at inception to present changes in fair value in Other Comprehensive Income not recycling. There is now a new
expected credit losses model that replaces the incurred loss impairment model used in IAS 39. For financial liabilities there were no changes to classification and measurement except
for the recognition of changes in own credit risk in other comprehensive income, for liabilities designated at fair value through profit or loss. IFRS 9 relaxes the requirements for hedge
effectiveness by replacing the bright line hedge effectiveness tests. It requires an economic relationship between the hedged item and hedging instrument and for the ‘hedged ratio’ to
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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be the same as the one management actually use for risk management purposes. Contemporaneous documentation is still required but is different to that currently prepared under IAS
39. The standard is effective for accounting periods beginning on or after January 1, 2018. Early adoption is permitted. The Group is yet to assess IFRS 9’s full impact.
- IFRS 15, ‘Revenue from contracts with customers’ deals with revenue recognition and establishes principles for reporting useful information to users of financial statements about the
nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. Revenue is recognised when a customer obtains control of a good or
service and thus has the ability to direct the use and obtain the benefits from the good or service. The standard replaces IAS 18 ‘Revenue’ and IAS 11 ‘Construction contracts’ and related
interpretations. The standard is effective for annual periods beginning on or after 1 January 2017 and earlier application is permitted. The group is in the process of assessing the impact
of IFRS 15, whose application is expected to impact several operating segments of the Group. As part of this assessment the Group is evaluating the transition options established by
IFRS 15 and the effect on the current contracts entered into by the different subsidiaries.
- Amendments to IFRS 10 ‘Consolidated Financial Statements’ and IAS 28 ‘Investments in associates’, prospectively applicable from January 1, 2016. Amendments will only be applicable
to transactions in which the investor sells or transfers of assets to its associates or joint ventures. Amendments are not intended to take into account the accounting that an investor
will apply in selling or transfer of assets transactions to joint ventures. The resulting impact is that the investor will recognize all the profit or loss in cases in which non-monetary assets
constitute a business. If assets do not meet the business definition, the investor will recognize the profit or loss up to the limit of the interest of the other investors in the associate or
joint venture. The Group is evaluating the impact of these amendments.
There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Group.
3 FINANCIAL RISK MANAGEMENT
Financial risk management is carried out by the Group’s Management. Management oversees the general management of risks in specific areas, such as foreign exchange rate risk, price
risk, cash flow and fair value interest rate risk, credit risk, the use of derivative and non-derivative financial instruments and the investment of excess liquidity as well as financial risks, and
carries out periodic supervision and monitoring.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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3.1 Financial risk factors
The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, price risk, fair value interest rate risk and cash flow interest rate risk), credit
risk and liquidity risk. The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Group’s
financial performance. The Group uses derivative financial instruments to hedge certain risk exposures in some of its subsidiaries and considers the use of other derivatives, in the event
that it identifies risks that may generate an adverse effect for the Group in the short and medium-term.
Foreign exchange risk -
a. Market risks -
i)
The Group is exposed to exchange rate risk as a result of the transactions carried out locally in foreign currency and due to its operations abroad. As of December 31, 2014 and 2013, this
exposure is mainly concentrated in fluctuations of the U.S. dollar and Chilean and Colombian pesos. The foreign exchange risk of the investments in Brazil, and Dominican Republic are not
significant due their low level of operations.
Management has set up a policy to require Group companies to manage their foreign exchange risk against their functional currency. The Group companies are required to hedge
their entire foreign exchange risk exposure in coordination with the Group treasury. To manage their foreign exchange risk arising from future commercial transactions and recognized
assets and liabilities, Group companies sometimes use forward contracts, previously approved by Group treasury. Foreign exchange risk arises when future commercial transactions or
recognized assets or liabilities are denominated in a currency other than the entity’s functional currency.
As of December 31, 2014, the consolidated statement of financial position includes assets and liabilities in foreign currency (U.S.dollar) equivalent to S/.2,096 million and S/.2,176 million,
respectively (S/.1,886 million and S/.2,746 million, respectively, as of December 31, 2013) equivalent to US$455.5 million and US$580 million respectively (US$470 million and US$811 million
respectively as of December, 2013).
During 2014 the Nuevo Sol has been exposed against the U.S. dollar and Chilean Pesos. The Group’s exchange gains and losses for 2014 amounted to S/.357.3 million and S/.401.6 million,
respectively (S/.431 million and S/.501 million respectively in 2013, and S/.264 million and 243 million, respectively in 2012).
If, at December 31, 2014, the new Peruvian sol and the Chilean pesos had strengthened/weakened by 2% against the U.S. dollar and Chilean and Colombian Pesos, with all variables held
constant, the pre-tax profit for the year would have increased/decreased by S/.0.9 million (S/.1.4 million in 2013 and S/.0.4 million in 2012).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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As of December 31, 2014, the consolidated statement of changes in shareholder´s equity comprises a foreign currency translation adjustment originated by its subsidiaries. Their financial
position include assets and liabilities in functional currency equivalent to Ch$109,187 million and Ch$62,163 million respectively (Ch$90,904 million and Ch$77,415 million, respectively as of
December, 2013), Col$189,649 million and Col$149,150 million respectively (Col$38,545 million and Col$27,595 million, respectively as of December, 2013), R$20.1 million and R$7.05 million
respectively (R$29 million and R$22 million, respectively as of December, 2013). The Group´s foreign currency translation adjustment for 2014 amounted to S/.18.27 million (S/. 1.1 million in
2013 and S/.2.02 million in 2012).
ii) Price risk -
Management considers that the exposure of the Group to the price risk of its investments in mutual funds, bonds and equity securities is low, since the invested amounts are not
significant. Any fluctuation in their fair value will not have any significant impact on the balances reported in the consolidated financial statements.
iii) Cash flow and fair value interest rate risk -
The Group’s interest rate risk mainly arises from its long-term borrowings. Borrowings issued at variable rates expose the Group to cash flow interest rate risk. Borrowings issued at fixed
rates expose the Group to fair value interest rate risk. Group policy is to maintain most of its borrowings in fixed rate instruments; 97% of total debt in 2014 (86% in 2013) was contracted
at fixed rates.
Management has established mechanisms with the banks to negotiate in time intervals the interest rates of loans.
During 2014 and 2013 the Group’s borrowings at variable rates are denominated in U.S. dollars and the Group’s policy is to manage their cash flow risk by using interest-rate swaps, which
are recognized under hedge accounting.
The variable portion of the hedging derivative only comprises 3% of the total debt for 2014 and (14% in 2013) and an increase or decrease of 5% in interest rate would not have a material
effect on the Group’s results. There was no material ineffectiveness on cash flow hedges occurred in fiscal years 2014 and 2013.
b) Credit risk -
Credit risk arises from cash and cash equivalents and deposits with banks and financial institutions, as well as customer credit counterparties, including the outstanding balance of
accounts receivable and committed transactions. For banks and financial institutions, only independently rated parties with a minimum rating of ‘A’ are accepted.
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For accounts receivable, Management of each of the Group’s companies evaluates the credit quality of the client taking into consideration its financial position, past experience and other
factors. Individual risk limits are set based on internal or external ratings in accordance with limits set by the board. The utilization of credit limits is regularly monitored.
With respect to loans to related parties, the Group has measures in place to ensure the recovery of these loans through the controls maintained by the Corporate Finance Management
and the performance evaluation conducted by the Board.
No credit limits were exceeded during the reporting period, and Management does not expect the Group to incur any losses from non-performance by these counterparties.
c) Riesgo de liquidez -
Prudent liquidity risk management implies maintaining sufficient cash and cash equivalents, the availability of funding through an adequate number of sources of committed credit
facilities and the capacity to close out positions in the market. In this sense, the Group has no significant liquidity risks given the fact that historically its cash flows have enabled it to
maintain sufficient cash to meet its obligations.
Group Corporate Finance monitors rolling forecasts of the Group’s liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom
on its undrawn committed borrowing facilities (Note 18), so that the Group does not breach borrowing limits or covenants, where applicable, on any of its borrowing facilities. Less
significant financing transactions are controlled by the Finance Management of each subsidiary.
Such forecasting takes into consideration the Group’s debt financing plans, covenant compliance, compliance with internal statement of financial position ratio targets and, if applicable,
external regulatory or legal requirements; for example, currency restrictions.
Surplus cash held by the operating entities over the balance required for working capital management are invested in interest-bearing checking accounts or time deposits, selecting
instruments with appropriate maturities and sufficient liquidity.
The following table analyzes the Group’s financial liabilities into relevant maturity groupings based on the remaining period from the date of the statement of financial position to the
contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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Less than 1 year
From 1 to 2 years
From 2 to 5 years
Over 5 years
Total
371,302
118,347
64,698
-
22,912
-
-
2,354
-
25,266
-
11,224
-
-
-
-
554,347
308,931
993,554
25,585
251,709
3,911
2,138,037
1,447,719
364,832
1,182,628
83,027
383,376
2,999
178,584
11,224
3,464,581
-
1,719,395
1,318,817
138,988
1,178,849
83,027
337,692
3,057,373
3,911
235,652
72,696
92,242
3,779
45,684
2,999
217,400
-
-
157,724
56,206
122,378
-
-
-
-
At December 31, 2013
Other financial liabilities (except
finance leases)
Finance leases
Trade payable
Payables to related parties
Other payables
Other non-financial liabilities
At December 31, 2014
Other financial liabilities (except
finance leases)
Finance leases
Trade payables
Payables to related parties
Other payables
Other non-financial liabilities
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu 136 >>
3.2 Capital management -
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders, benefits for other
stakeholders and to maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to
reduce debt.
The Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt is calculated as total borrowings (including current and
non-current borrowings), less cash and cash equivalents. Total capital is calculated as ‘equity’ as shown in the consolidated statement of financial position plus net debt.
As of December 31, 2013, there is no gearing ratio due to the Company having a cash surplus higher than borrowings and equity was not used to guarantee the fulfilment of those
borrowings. As of December 31, 2014, the gearing ratio is presented below indicating the Company’s strategy to keep it in a range from 0.10 to 1.00.
As of December 31, 2013 and 2014 the gearing ratio was as follows:
Total borrowing
Less: Cash and cash equivalents
Net debt
Total equity
Total capital
Gearing ratio
2013
795,822
(959,415)
(163,593)
3,196,695
3,033,102
0.00
2014
1,751,579
(818,402)
933,177
3,179,922
4,113,099
0.23
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3.3 Fair value estimation -
For the classification of the type of valuation used by the Group for its financial instruments at fair value, the following levels of measurement have been established.
-
-
-
Level 1: Measurement based on quoted prices in active markets for identical assets or liabilities.
Level 2: Measurement based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is,
derived from prices).
Level 3: Measurement based on inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs, generally based on internal estimates and
assumptions of the Group).
The fair value of the investment held in Transportadora de Gas del Perú S.A. (TGP) classified as available-for-sale financial asset was based on unobservable inputs in the market; the
Group calculated its fair value based on its discounted cash flows as of the financial statement date. The information used to determine the fair value of this investment corresponds to
Level 3 (Note 9).
Financial assets classified as at fair value through profit or loss corresponds to investments in mutual funds and bonds. Their fair value has been determined with observable information of
Level 2.
Other financial instruments measured at fair value correspond to the interest rate swaps signed by subsidiary GMP S.A., by which a variable-interest instrument is changed to a fixed
interest rate (cash flow hedge) and the forward foreign exchange contracts signed by the subsidiaries GyM Ferrovías S.A. and Viva GyM S.A. (the later up-to 2013) to hedge the Group’s
exposure to changes in the exchange rate of the Euro and US Dollars. The information used for determining the fair value of these instruments are Level 2 and has been determined based
on the present value of discounted future cash flows applied to the interest-rate change projections of Citibank N.A.
The carrying amounts of cash and cash equivalents correspond to their fair values. The Company considers that the carrying amount of trade accounts receivable and payable is similar to
their fair values. The fair value of financial liabilities, disclosed in Note 18-c), has been estimated by discounting the future contractual cash flows at the interest rate currently prevailing in
the market and which is available to the Company for similar financial instruments (Level 2).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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4 CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS
Estimates and judgments used are continuously evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be
reasonable under the circumstances.
4.1 Critical accounting estimates and assumptions
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and
assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below.
a. Estimated impairment of goodwill and other intangible assets with indefinite useful life
Impairment reviews are undertaken annually to determine if goodwill arising from business acquisitions and other intangible assets with indefinite useful life have suffered any
impairment, in accordance with the policy described in Note 2.16). For this purpose, goodwill is attributed to the different CGUs to which it relates while other intangible assets with
indefinite useful life are assessed individually. The recoverable amounts of the CGUs and of other intangible assets with indefinite useful life have been determined based on their value-
in-use. This evaluation requires the exercise of Management’s professional judgment to analyze any potential indicators of impairment as well as the use of estimates in determining the
value in use, including the preparation of future cash flows, macro-economic forecasts as well as defining the interest rate at which said cash flows will be discounted.
Value in use is usually determined on the basis of discounted estimated future net cash flows. Determination as to whether and how much an asset is impaired involves management
estimates on highly uncertain matters such as future commodity prices, the effects of inflation on operating expenses, discount rates, production profiles and the outlook for global or
regional market supply-and-demand conditions for crude oil, natural gas and refined products.
If the Group experiences a significant drop in revenues or a drastic increase in costs or changes in other factors the fair value of business units might decrease. If management determines
the factors that reduce the fair value of the business are permanent, those economic factors will be taken into consideration to determine the recoverable amount of the business units
and, therefore, goodwill as well as other intangible assets with indefinite useful life may be deemed to be impaired, which may cause their write-down to be necessary.
Based on the impairment tests performed by Group Management, no goodwill nor intangible (trademarks) impairment losses were required to be recognized because the recoverable
amount of the CGUs subject to testing was substantially higher than their related carrying amounts.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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The most significant assumptions are gross margin, growth rate and discount rate which are included in Note 17. The Group has performed a sensitivity analysis on the gross margin and
discount rate which is included below.
i. Gross margin
The Group’s fair value is above its carrying amount and if the gross margin was adjusted down by 10% the fair value would be 26.04% higher than the carrying amount and if the gross margin was
adjusted up by 10% the fair value would be 88.26% higher than carrying amount. Therefore the Group’s businesses would still be greater than the carrying amount even under a significant decline in
the Group’s gross margin and the Group would not need to impair its goodwill.
ii. Discount rate
The Group’s fair value is significantly above its carrying amount and if the discount rate was adjusted down by 10% the fair value would be 76.64% higher than the carrying amount and if
the discount rate was adjusted up by 10% the fair value would be 39.42% higher than carrying amount. Therefore the Group’s businesses would still be greater than the carrying amount
even under a significant upward adjustment to the discount rate in value and the Group would not need to impair its goodwill.
b)
Income taxes -
Determination of the tax obligations and expenses requires interpretations of the applicable tax laws and regulations. The Company seeks legal tax counsel’s advice before making any
decision on tax matters. Although Management considers its estimates to be prudent and appropriate, differences of interpretation may arise with Tax Authorities (mainly Peruvian,
Chilean and Colombian Authorities) which may require future tax adjustments.
Deferred tax assets and liabilities are calculated by taking the temporary differences of the tax basis of assets and liabilities and the financial statement basis using the tax rates in effect
for each of the years in which the difference is expected to reverse. Any change in tax rates will affect the deferred tax assets and liabilities. This change will be recognized in income in the
period the change takes effect.
Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences and tax loss
carryforwards can be utilized. For this purpose, the Group takes into consideration all available positive and negative evidence, including factors such as historical data, projected income,
current operations and tax planning strategies.. A tax benefit related to a tax position is only recognized if it is more likely than not that the benefit will ultimately be realized.
The maximum exposure of the Group related to tax contingencies amounts to S/.37.5 million.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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c) Percentage of completion revenue recognition -
Revenue from construction contracts is recognized under the percentage-of-completion method which requires the final margin from construction contracts to be estimated. Projections
of these margins are performed by Management based on work execution budgets and adjusted periodically based on updated information reflecting the actual performance of work. The
estimated contract revenue and total cost estimates are reviewed often as work progresses and is approved. In this regard, Management considers that the estimates made at the year-end
closing are reasonable. When unapproved change orders occur, revenue is recognized equal to costs incurred (no profit component recognized) until the additional work is approved.
Contract revenue is recognized as revenue in the income statement in the accounting periods in which the work is performed. Contract costs are recognized as cost of sales in the income
statement in the accounting period in which the work to which they relate is performed. However, any expected and probable excess of total contract costs over total contract revenue
for the contract is expensed immediately. Furthermore, any changes in contract estimates are recognized as a change in accounting estimates and recognized in the period the change
is made and in future periods as applicable. In certain construction contracts, the terms of these agreements allow for an amount to be withheld by the customers until construction has
been completed. Under these contracts the full amount may not be recognized until the next operating cycle. As of December 31, 2014, 2013 and 2012, a sensitivity analysis was performed
considering a 10% increase/decrease in the Group’s gross margins, as follows:
Sales
Gross profit
%
Increase 10%
Increase in profit before taxes
2012
2013
2014
3,341,539
371,852
11.13
12.24
37,185
409,037
3,820,393
465,973
12.20
13.42
46,597
512,570
4,749,159
412,771
8.69
9.56
41,249
454,020
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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Decrease 10%
Decrease in profit before taxes
d) Provision for well closure costs -
10.02
(37,185)
334,667
10.98
(46,597)
419,376
7.82
(41,387)
371,384
The Group estimates the present value of its future obligation for well closure costs, or well closure liability, and increases the carrying amount of the asset that will be withdrawn in the
future and that is shown under the heading of intangibles in the statement of financial position. The discount pre-tax rate used for the present value calculation was 2.17% based on the
10 year bond rate as of December, 2014 (2.74% as of December, 2013). At December 31, 2014 the present value of the estimated provision for closure activities for 78 wells amounted to S/.
7.21 million (S/.4.85 million as of December 31, 2013 for closure activities for 83 wells). The well closure liability is adjusted to reflect the changes that resulted from the passage of time and
from revisions of either the date of occurrence or the amount of the present value of the obligations originally estimated.
If, at December 31, 2014, the estimated rate would have increased or decreased by 10%, with all variables held constant, the pre-tax profit for the year would have been as follows:
+10%
-10%
Impact in pretax
profit 2013
(59)
59
Impact in pretax
profit 2014
(59)
60
During 2014, the Company recorded a provision amounting to S/.2.7 million with charge to intangibles to reflect the estimated obligation to close productive wells included in the service
agreements for Blocks I and V.
4.2 Critical judgments in applying the entity’s accounting policies -
Consolidation of entities in which the Group holds less than 50% -
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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The Company owns some direct and indirect subsidiaries of which the Group has control even though it has less than 50% of the voting rights. These subsidiaries mainly comprise indirect
subsidiaries in the real-estate business owned through Viva GyM S.A., where even though the Group holds interest between 30% and 50%, has the power to affect the relevant activities
that impact the subsidiaries’ returns. Additionally, the Group owns de facto control of Promotora Larcomar S.A. on which owns 42.80% of equity interest considering the fact that the
ownership of the 57.2% is disperse.
5
INTERESTS IN OTHER ENTITIES
The consolidated financial statements of the Group include the accounts of the Company and of its subsidiaries. Additionally, the consolidated financial statements of the Group include
its interest in joint operations in which the Company or certain subsidiaries have joint control with their joint operations partners (Note 2.2-d).
a) Principal subsidiaries -
The following chart shows the principal direct and indirect subsidiaries allocated by operating segment (Note 6):
Name
Country
Economic activity
ENGINEERING AND CONSTRUCTION:
GyM S.A.
Stracon GyM S.A.
Peru and
Dominican
Republic
Peru and
Panama
Civil construction, electro-mechanic assembly, buildings, management and implementing housing development projects
and other related services.
Mining contracting activities, providing mining services and carrying out drilling, demolition and any other activity related to
construction and mining operations.
GyM Chile S.p.A.
Chile
Electromechanical assemblies and services to energy, oil, gas and mining sector.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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V y V - DSD S.A. (*)
Chile
Electromechanical assemblies and services. Develop activities related to the construction of engineering projects, civil construction
projects and electromechanical assemblies, as well as architectural design and installations in general. Construction and
electromechanical assemblies and services in the areas of energy, oil and gas and mining.
GMI S.A.
Morelco S.A.S.
INFRASTRUCTURE:
GMP S.A.
Oiltanking Andina
Services S.A.
Transportadora de Gas Natural Comprimido Andino
S.A.C.
GyM Ferrovías S.A.
Survial S.A.
Norvial S.A.
Concesión Canchaque S.A.C.
Concesionaria Vía Expresa Sur S.A.
REAL ESTATE:
VIVA GyM S.A.
TECHNICAL SERVICES:
GMD S.A.
Gestión de Servicios Digitales S.A.
Peru
Advisory and consultancy services in engineering, carrying out studies and projects, managing projects and supervision of works.
Colombia and
Ecuador
Providing construction and assembly services, supplying equipment and material to design, build, assemble, operate and maintain all
types mechanical engineering, instrumentation and civil work.
Peru
Peru
Peru
Peru
Peru
Peru
Peru
Peru
Peru
Peru
Peru
Concession of services for treating and selling oil, natural gas and by-products as well as for storing and dispatching fuel extracted
from demonstrated feasible fields.
Operation of the gas processing plant of Pisco – Camisea.
Concession for constructing, operating and maintaining the supply system of compressed natural gas in certain provinces of Peru.
Concession for operating the Lima Metro transportation system.
Concession for constructing, operating and maintaining the Section 1 of the “Southern Inter-oceanic” road.
Concession for restoring, operating and maintaining the “Ancón - Huacho - Pativilca” section of the Panamericana Norte road.
Concession for operating and maintaining the Buenos Aires - Canchaque road.
Concession for designing, constructing, operating and maintaining the Via Expresa - Paseo de la República in Lima.
Developing and managing real estate projects directly or together with other partners.
Information technology services.
Information technology services.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu 144 >>
CAM Holding S.p.A.
Concar S.A.
Coasin Instalaciones Ltda.
PARENT COMPANY OPERATION:
Generadora Arabesco S.A.
Larcomar S.A.
Promotora Larcomar S.A.
Promotores Asociados de Inmobiliarias S.A.
Chile, Peru,
Brazil and
Colombia
Peru
Chile
Peru
Peru
Peru
Peru
Electric and technological services for the power industry.
Operating and maintaining roads under concession.
Installing and maintaining network and equipment for telecommunications.
Implementing projects related to electric power-generating activities.
Exploiting land right to use the Larcomar Shopping Center.
Building a hotel complex on a plot of land located in the district of Miraflores.
Operating in the real-estate industry and engaged in the development and selling office facilities in Peru.
(*) The subsidiaries Ingeniería y Construcción, Vial y Vives S.A., DSD Construcciones y Montajes S.A. and GyM Minería S.A. (all from Chile) merged and combined in July 2014, The merged
entity’s name is V y V – DSD S.A.
The following are the Group’s subsidiaries and related interests on December 31, 2014:
Percentage of
ordinary shares
directly held by
Parent (%)
Percentage of
ordinary shares
held by
Subsidiaries (%)
Percentage of
ordinary shares
held by
the Group (%)
Percentage of
ordinary shares
held by non-controlling
interests (%)
ENGINEERING AND CONSTRUCTION:
GyM S.A.
98.23%
-
98.23%
1.77%
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
- GyM S.A. subsidiarias
Stracon GyM S.A.
GyM Chile SpA
V y V – DSD S.A.
GMI S.A.
Morelco S.A.S.
INFRASTRUCTURE:
GMP S.A.
Oiltanking Andina Services S.A.
Transportadora de Gas Natural Comprimido
Andino S.A.C
GyM Ferrovias S.A.
Survial S.A.
Norvial S.A.
Concesión Canchaque S.A.
Concesionaria Vía Expresa Sur S.A.
REAL ESTATE:
Viva GyM S.A.
- Viva GyM S.A. subsidiarias
-
-
-
-
89.41%
-
95.00%
-
-
75.00%
99.99%
67.00%
99.97%
99.98%
60.62%
-
-
87.64%
99.99%
82.04%
-
70.00%
-
50.00%
99.93%
-
-
-
-
-
38.97%
-
-
87.64%
99.99%
82.04%
89.41%
70.00%
95.00%
50.00%
99.93%
75.00%
99.99%
67.00%
99.97%
99.98%
99.59%
-
145 >>
14.20%
12.36%
0.01%
17.96%
10.59%
30.00%
5.00%
50.00%
0.07%
25.00%
0.01%
33.00%
0.03%
0.02%
0.41%
40.58%
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu 146 >>
10.85%
-
0.26%
-
-
1.00%
20.34%
57.20%
0.01%
TECHNICAL SERVICES:
GMD S.A.
Cam Holding S.p.A.
Concar S.A.
Gestión de Servicios Digitales S.A.
Coasin Instalaciones Ltda.
PARENT COMPANY OPERATIONS:
Generadora Arabesco S.A.
Larcomar S.A.
Promotora Larcomar S.A.
Promotores Asociados de Inmobiliarias S.A.
89.15%
100.00%
99.74%
-
-
99.00%
79.66%
42.80%
99.99%
-
-
-
100.00%
100.00%
-
-
-
89.15%
100.00%
99.74%
100.00%
100.00%
99.00%
79.66%
42.80%
99.99%
In December 2014, the Group through its subsidiary GyM S.A. acquired control over Morelco S.A.S. for a consideration amounting to US$93.7 million (equivalent to S/.277.1 million).
In March 2014, the Group through its subsidiary CAM Chile S.A. acquired control of Coasin Instalaciones Ltda. (hereinafter Coasin) for a consideration amounting to US$2.1 million
(equivalent to S/.6.4 million).
The details of these transactions and their resulting accounting impact are disclosed in Note 31.
The following are the Group’s subsidiaries and related interests on December 31, 2013:
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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Percentage of
ordinary shares
directly held by
Parent (%)
Percentage of
ordinary shares
held by
Subsidiaries (%)
Percentage of
ordinary shares
held by
the Group (%)
Percentage of
ordinary shares
held by non-controlling
interests (%)
93.67%
-
-
-
-
-
-
89.41%
95.00%
-
-
75.00%
99.99%
67.00%
99.97%
-
-
74.15%
99.99%
85.95%
80.40%
99.90%
-
-
50.00%
99.93%
-
-
-
-
93.67%
-
74.15%
99.99%
85.95%
80.40%
99.90%
89.41%
95.00%
50.00%
99.93%
75.00%
99.99%
67.00%
99.97%
6.33%
13.68%
25.85%
0.01%
14.05%
19.60%
0.10%
10.59%
5.00%
50.00%
0.07%
25.00%
0.01%
33.00%
0.03%
ENGINEERING AND CONSTRUCTION:
GyM S.A.
- GyM S.A. subsidiaries
Stracon GyM S.A.
GyM Chile SpA
DSD Construcciones y Montajes S.A.
Ingeniería y Construcción Vial y Vives S.A.
GyM Minería S.A.
GMI S.A.
INFRASTRUCTURE:
GMP S.A.
Oiltanking Andina Services S.A.
Transportadora de Gas Natural
Comprimido Andino S.A.C.
GyM Ferrovias S.A.
Survial S.A.
Norvial S.A.
Concesión Canchaque S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu 148 >>
Concesionaria Vía Expresa Sur S.A.
99.99%
-
99.99%
0.01%
REAL ESTATE:
Viva GyM S.A.
- Viva GyM S.A. subsidiaries
TECHNICAL SERVICES:
GMD S.A.
Cam Holding S.p.A.
Concar S.A.
Gestión de Servicios Digitales S.A.
PARENT COMPANY OPERATIONS:
Generadora Arabesco S.A.
Larcomar S.A.
Promotora Larcomar S.A.
Promotores Asociados de
Inmobiliarias S.A.
59.25%
-
89.15%
100.00%
99.74%
-
99.00%
79.66%
42.80%
99.99%
38.97%
-
-
-
-
100.00%
-
-
-
-
98.22%
-
89.15%
100.00%
99.74%
100.00%
99.00%
79.66%
42.80%
99.99%
1.78%
40.58%
10.85%
-
0.26%
-
1.00%
20.34%
57.20%
0.01%
In August 2013, the Group through some of its subsidiaries, GyM Minería S.A., Ingeniería y Construcción Vial y Vives S.A. and GyM Chile S.p A., acquired control of DSD Construcciones y
Montajes S.A. for a consideration amounting to US$37.2 million (equivalent to S/.103.9 million).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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In 2012, the Group, through some of its subsidiaries acquired control of certain entities as follows:
i) A Chilean entity, Ingeniería y Construcción Vial y Vives S.A. (hereinafter Vial y Vives) for a consideration amounting to US$55.6 million (equivalent to S/.142 million), and
ii) Stracon GyM, for a consideration amounting to US$16.4 million (equivalent to S/.41.9 million).
The details of these transactions and their resulting accounting impact are disclosed in Note 31.
All subsidiaries undertakings are included in the consolidation. The proportion of the voting rights in the subsidiaries’ undertakings are held directly by the parent company and do not
differ from the proportion of common shares held. There is no restriction to access or use of the assets or to the settlement of the liabilities of the Group.
At December 31, the total non-controlling interest is attributable to the following subsidiaries:
Viva GyM S.A. subsidiarias
Viva GyM S.A.
GyM S.A. subsidiarias
GyM S.A.
Norvial S.A.
CAM Holding S.p.A.
GMP S.A.
GyM Ferrovias S.A.
Promotora Larcomar S.A.
Others
2013
176,210
5,411
101,601
40,616
39,811
19,585
18,853
14,042
9,960
5,173
431,262
2014
191,826
8,414
147,660
18,953
41,820
24,137
18,204
19,878
9,697
8,155
488,744
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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Summarized financial information of subsidiaries with material non-controlling interests
Set out below is the summarized financial information for each subsidiary that has non-controlling interests that are material to the Group.
Summarized statement of financial position
Current:
Assets
Current liabilities, net
Non-current:
Assets
Liabilities
Total non-current net assets (liabilities), net
Net assets
Viva GYM S.A.
December 31,
GyM S.A.
December 31,
Norvial S.A.
December 31,
2013
2014
2013
2014
2013
2014
672,627
(217,609)
455,018
76,506
(97,762)
(21,256)
433,762
760,815
(266,576)
494,239
117,352
(138,880)
(21,528)
472,711
1,794,604
(1,578,685)
215,919)
915,000
(385,495)
529,505
745,424
2,622,112
(2,490,013)
132,099
1,221,016
(391,293)
829,723
961,822
19,977
(50,362)
(30,385)
152,228
(1,207)
151,021
120,636
6,092
(109,134)
(103,042)
230,401
(633)
229,768
126,726
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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Summarized income statement
Revenue
Profit before Income tax
Income tax
Post-tax profit
Other comprehensive Income
Total comprehensive Income
2012
240,110
65,282
(19,967)
45,315
-
45,315
Viva GYM S.A.
December 31,
2014
224,560
37,967
(11,452)
26,515
(25)
26,490
2013
313,731
80,467
(21,427)
59,040
-
59,040
GyM S.A.
December 31,
2014
4,861,362
239,597
(54,657)
184,940
(26,199)
158,741
2013
3,903,916
350,687
(105,674)
245,013
(1,240)
243,773
2012
3,341,539
250,132
(79,690)
170,442
(962)
169,480
Norvial S.A.
December 31,
2014
178,170
41,998
(10,908)
31,090
-
31,090
2013
92,252
40,341
(10,245)
30,096
-
30,096
2012
85,700
38,734
(11,578)
27,156
-
27,156
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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Summarized cash flows
Cash flows from operating
activities (used), net
Cash flows from investing
activities (used), net
Cash flows from financing
activities (used), net
Increase (decrease) in cash
And cash equivalents, net
Cash received for
acquisition
Cash decrease due to
deconsolidation
Cash and cash equivalents
and overdrafts at the
beginning of the year
Cash and cash equivalents
at the end of the year
Viva GYM S.A.
December 31,
GyM S.A.
December 31,
Norvial S.A.
December 31,
2012
2013
2014
2012
2013
2014
2012
2013
2014
5,104
(46,450)
18,656
467,606
69,768
143,917
48,052
37,746
30,645
(4,158)
(5,609)
(39,444)
(263,724)
(139,563)
(207,645)
(16,729)
(412)
(71,469)
22,804
22,081
32,030
(179,416)
(87,296)
84,710
(32,757)
(24,791)
20,832
23,750
(29,978)
11,242
24,466
(157,091)
20,982
(1,434)
12,543
(19,992)
-
-
-
-
-
-
-
-
-
(2,614)
(1,458)
-
-
-
-
-
-
-
49,254
73,004
43,026
398,435
422,901
264,352
14,383
12,949
25,492
73,004
43,026
54,268
422,901
264,352
282,720
12,949
25,492
5,500
The information above is the amount before inter-company eliminations.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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b) Public services concessions -
The Group acts as concessionaire in various public services concessions. When applicable, revenue attributable to the construction or restoration of infrastructure has been accounted for
by applying the models set forth in Note 2.5 (financial, intangible and bifurcated model). The concessions of the Group are described as follows:
Financial model:
i) Survial S.A. concession
Under the Survial concession, the Company operates and maintains a 750 km road from the San Juan de Marcona port to Urcos, Peru, which is connected to an interoceanic road that runs
up to the Peruvian-Brazilian border. The road has five toll stations and three weigh stations. The concession was awarded to Survial in 2007 for a 25-year term. The Company owns 99.9% of
Survial.
The obligations under the concession include the construction of the road, which was completed in 2010 with an investment of US$98.9 million. The concession maintains payback
mechanisms through the annual payment for maintenance and operation of the road, hereinafter PAMO, which is paid to Survial by the Peruvian Ministry of Transport and
Communications (“MTC”), according to the terms established in the contract.
PAMO revenues are generated by periodic and routine maintenance. The 46.88% of the total PAMO is periodic maintenance, and the difference is for routine maintenance. The revenue in
this concession does not depend on traffic volume.
This concession is recognized as a financial asset because Survial has the unconditional contractual right to receive cash or other financial asset and such operation is secured contractually
by the Peruvian Government. Survial receives specific and determinable amounts of cash and measures the financial asset at amortized cost, taking into consideration the effective
interest rate method as prescribed in IAS 39, ‘Financial Instruments: Recognition and Measurement’ .
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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ii) Canchaque S.A. concession
Under the Canchaque concession, the Company operates and periodically maintains a 78 km road from the towns of Buenos Aires to Canchaque, in Peru. The road has one toll station. The
concession was awarded to Canchaque in 2006 for a 15-year term. The Company owns 99.97% of Canchaque S.A. The obligations under the concession include the construction of the road
1B from Buenos Aires to Canchaque in Piura, which was completed in 2009; the total investment amounted to US$26.1 million. Revenue from this concession consists of an annual fee paid
by the MTC in consideration for the operation and maintenance of the road (PAMO), which can vary depending on the amount of road maintenance required due to road wear and tear.
The revenue received by the Company in this concession does not depend on traffic volume. These revenues are guaranteed by a minimum amount of US$310,648 per year. The 20.30% of
the total PAMO is periodic maintenance, and the difference is for routine maintenance.
This concession granted to the Company comprises public services and investments qualifying as a financial asset as the Company has the unconditional right to receive cash or other
financial assets from the collection of annual payments for maintenance and operation. Canchaque S.A. recognizes such financial asset at amortized cost, taking into consideration
effective interest rate method, as prescribed in IAS 39, ‘Financial instruments: recognition and measurement’.
iii) La Chira S.A. concession
In 2011, the Company was awarded a 25-year concession for the construction, operation and maintenance of La Chira waste water treatment plant in the south of Lima. The project is aimed
at addressing Lima’s environmental problems caused by sewage discharged directly into the sea. The Company holds a 50% interest in this project and the Company´s partner Acciona
Agua holds the remaining 50%. La Chira’s annual revenues under the concession are in the form of a fee paid by Sedapal S.A., the public utility company responsible for the supervision of
the water service in Lima. The total investment amounted to S/.450.5 million.
The concession maintains payback mechanisms through certificates of progress of the works, hereinafter CAO´s, because the concession is under construction.
At December 31, 2013, the concession has issued two CAO´s by advancing work executed, corresponding to 38.54 % of the total of the project. It is estimated that a total of seven CAOS
will be issued. During 2014, no CAO was issued.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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This concession granted to the Company comprises public services and investments qualifying as a financial asset as the Company has the unconditional right to receive cash or other
financial assets through collections of revenue charged for maintaining the plant.
The concession is recognized as a financial asset at its amortized cost, taking into consideration the effective interest rate method calculation set forth in IAS 39, ‘Financial Instruments:
Recognition and Measurement’.
iV) GyM Ferrovías S.A. concession
In 2011, the Company was awarded a 30-year concession for the operation of Line 1 of the Lima Metro, Peru’s only urban railway system. The concession was awarded to the subsidiary
GyM Ferrovías, in which the Company holds a 75% ownership interest, with the other 25% being held by Ferrovías S.A.C. The obligations under the contract include (i) the operation
and maintenance of the five existing trains provided by the government; (ii) the acquisition of 19 new trains on behalf of the Peruvian government, which will be the legal owner of such
trains; (iii) the operation and maintenance of the 19 additional trains; and (iv) the design and construction of the railway maintenance and repair yard. The total investment amounted
to US$549.8 million. Revenue from this concession consists of a quarterly fee that is received from the MTC based on the kilometers travelled per train. The revenue does not depend on
passenger traffic volume.
The concession given to the Company comprises public services and investments qualifying as a financial asset as the Company has the unconditional right to receive cash or other
financial asset for the collection of the secured kilometers.
The concession is recognized as a financial asset at its amortized cost, taking into consideration the effective interest rate calculation set forth in IAS 39, ‘Financial Instruments:
Recognition and Measurement’.
V) Transportadora de Gas Natural Comprimido Andino S.A.C. concession
In July 2013 the Group, through its subsidiary GMP S.A., obtained from the Local Government the concession to design, finance, build, maintain and operate the system supply of
compressed natural gas in Jauja, Huancayo, Huancavelica, Huamanga, Huanta, Andahuaulas, Abancay, Cusco, Juliaca and Puno. The concession term is 10 years with an option to extend
for 20 more years. According to the contract the infrastructure will reverse to the grantor at the end of the concession term. The estimated initial investment during the first nine months
will result in US$14.1 million. In the sixth year the amount will be about US$1.76 million.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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This concession granted to the Company comprises public services and investments qualifying as financial assets, the Company has the unconditional right to receive cash or other
financial assets due as the granted income which is higher than the investment costs.
The concession is recognized as a financial asset at its amortized cost, taking into consideration the effective interest rate method set forth in IAS 39, ‘Financial Instruments: Recognition
and Measurement’.
Intangible model:
i) Norvial S.A. concession
Under the Norvial concession, the Company operates and maintains part of the only highway that connects Lima to the northwest of Peru. This 183-km road known as Red Vial 5, runs from
the cities of Ancón to Pativilca and has three toll stations. The concession was awarded to Norvial in 2003 for a 25-year term. The Company owns 67% of Norvial. Norvial’s revenue derives
from the collection of tolls. The toll fee is determined by the MTC and adjusted on a yearly basis in accordance with a contractual formula that takes into account the new Peruvian sol/U.S.
dollar exchange rate and Peruvian and U.S. inflation. The Company is required to transfer 5.5% of monthly toll revenue to the MTC and pay a 1% regulatory fee to the Peruvian Supervisory
Agency for Investment in Public Transportation Infrastructure. The obligations under the concession include expanding the already existing road by, among other things, adding two
additional lanes. The first stage of construction was completed in 2008 and the second stage has begun in 2014. The total investment of the concession amounted to US$50 million in
the first stage while the second stage will amount to US$102 million. As part of the construction of the second stage, the Company is also required to pay a one-time estimated fee of
approximately US$1.8 million to the Peruvian Supervisory Agency for Investment in Public Transportation Infrastructure.
The concession contract given to the Company comprises public services and investments and qualifies as an intangible asset because the concession agreement grants the right to charge
a predefined and adjustable rate to the users. The cost of the intangible asset comprises the investment or executed to the extent their amount and borrowing costs can be estimated
reliably.
Bifurcated model:
i) Vía Expresa Sur S.A. concession
On August 8, 2013, the Company obtained the concession for a 40-year term for designing, financing, building, operating and maintaining the infrastructure associated with the Vía
Expresa Sur Project. This project involves the second stage expansion of the Via Expresa - Paseo de la República, between Av. República de Panamá and Panamericana highway.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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The estimated investment in this concession is expected to be US$196.8 million. The contract gives the Company the right to charge users of the public service according to a pre-defined
price list; however, the grantor (Government) has agreed to pay the difference if the revenues generated during the operation stage are lower than US$18 million in the first two years and
US$19.7 million from the third year until the fifteenth year. Revenue for the construction activities and other initial activities are accounted for as a financial asset for the portion that the
government guarantees to the Company, and as an intangible, for the unguaranteed investment.
c) Principal Joint Operations -
As of December 31, 2014, the Group participated in 65 Joint Operations in association with third parties (64 as of December 31, 2013). The following table contains the principal Joint
Operations in which the Group participated:
JOINT OPERATIONS
GRAÑA Y MONTERO S.A.A.
- Concesionaria la Chira S.A.
GyM S.A.
- Consorcio Constructor Alto Cayma
- Consorcio Rio Pallca – Huanza
- Consorcio Tren electrico
- Consorcio Alto Cayma
- Consorcio Vial Ayacucho
- Consorcio Lima Actividades Comerciales
- Consorcio GyM – COSAPI
- Consorcio Atocongo
2013
2014
Percentage of interest
50.00%
50.00%
40.00%
33.00%
49.00%
50.00%
50.00%
50.00%
40.00%
50.00%
50.00%
40.00%
29.64%
49.00%
50.00%
50.00%
50.00%
40.00%
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
- Consorcio Norte Pachacutec
- Consorcio La Chira
- Consorcio Río Urubamba
- Consorcio Vial Quinua
- Consorcio Rio Mantaro
- Consorcio GyM – CONCIVILES
- Consorcio Toromocho
- Consorcio Construcciones y Montajes CCN
- Consorcio CGB
- Consorcio HV GyM
- Consorcio Stracon Motta Engil JV
GMP S.A.
- Consorcio Terminales
- Terminales del Perú
CONCAR S.A.
- Consorcio Ancón-Pativilca
- Consorcio Peruano de Conservación
GMD S.A.
- Consorcio Cosapi-Data – GMD S.A.
- Consorcio TLBG
- Consorcio Procesos digitales
- Consorcio Indra
158 >>
49.00%
50.00%
60.00%
46.00%
50.00%
66.70%
55.00%
25.00%
50.00%
50.00%
50.00%
50.00%
50.00%
50.10%
50.00%
70.00%
66.45%
43.65%
50.00%
49.00%
50.00%
60.00%
46.00%
50.00%
66.70%
55.00%
50.00%
50.00%
50.00%
50.00%
50.00%
50.10%
50.00%
70.00%
66.45%
43.65%
50.00%
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu 159 >>
50.00%
50.00%
59.00%
50.00%
- Consorcio Fábrica de Software
- Consorcio Gestión de Procesos Electorales (ONPE)
VIVA GYM S.A.
- Consorcio Cuartel San Martín
CAM HOLDING S.P.A.
- Consorcio Mecam
- Consorcio Seringel
All of the joint arrangements listed above operate in Peru.
The description of the main activities of the joint arrangements is as follows:
JOINT ARRANGEMENTS IN
ECONOMIC ACTIVITY
50.00%
50.00%
50.00%
50.00%
50.00%
Graña y Montero S.A.A.
Construction, operation and maintenance of La Chira waste water treatment plant in the south of Lima. The project is aimed to solve Lima’s environmental
problems caused by sewage discharged directly into the sea.
GyM S.A.
The activities of the joint operations of this subsidiary are:
Civil works division: construction in general in the energy, mining, infrastructure, industry.
Electromechanical Division: assembly, installation and supply of materials and / or electromechanical equipment and laying of transmission lines.
Building division: building houses, offices and commercial premises Services division: mining services.
GMP S.A.
Consorcio Terminales and Terminales del Peru provide services for reception, storing, shipping and transportation for liquid hydrocarbons, such as gasoline, jet fuel,
diesel fuel and residual among others.
CONCAR S.A.
Joint operations Concar provides rehabilitation service, routine and periodic maintenance of the road, further provides conservation services and supervision.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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GMD S.A.
Viva GyM S.A.
GMD joint arrangements are specially engaged in supply services derived from contracts of business online BPO (Business Process Outsourcing).
Construction of a five star hotel with a convention center, a business center and entertainment center.
CAM Holding S.A.
Outsourcing services to the electric power sector.
The Group’s consolidated financial statements do not include any other type of entities in addition to those mentioned above, such as trust funds or special purpose entities.
6 SEGMENT REPORTING
Operating segments are reported consistently with the internal reports that are reviewed by the Executive Committee led by the Corporate General Manager; this Committee is the chief
operating decision maker, responsible for allocating resources and evaluating the performance of each operating segment.
The Group's operating segments are assessed by the activity of the following business units: (i) engineering and construction, (ii) infrastructure, (iii) real estate and (iv) technical services.
As set forth under IFRS 8, reportable segments by significance of income are: ‘engineering and construction’ and ‘technical services’. However, the Group has voluntarily decided to report
on all its operating segments as detailed in this Note.
The revenues derived from foreign operations (Chile, Brazil, Panama, Dominican Republic, Colombia and Bolivia) comprise 17.23% of the Group’s total revenue in 2014 (13.72% in 2013 and
17.21% in 2012).
Inter-segmental sales transactions are carried out at arm’s length. Revenues from external customers reported to the Corporate General Management are measured in a manner consistent
with the preparation basis of the financial statements.
Group sales and receivables are not concentrated in a few customers.
The following segments set forth the principal activities of the Group:
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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a) Engineering and construction: This segment includes: (i) engineering, from traditional engineering services such as structural, civil and design engineering, and architectural planning
to advanced specialties including process design, simulation, and environmental services; (ii) civil works, such as the construction of hydroelectric power stations and other large
infrastructure facilities; (iii) electro mechanic construction, such as concentrator plants, oil and natural gas pipelines, and transmission lines; (iv) building construction, such as office
buildings, residential buildings, hotels, affordable housing projects, shopping centers and industrial facilities; (v) contract mining, such as earthworks, blasting, loading and hauling ore.
b) Infrastructure: The Group has long-term concessions or similar contractual arrangements in Peru for three toll roads, the Lima Metro, a waste water treatment plant in Lima, multiple
fuel storage facilities, two producing oil fields, and a gas processing plant.
c) Real Estate: The Group develops and sells homes targeted to low and middle-income population sectors which are experiencing a significant increase in disposable income, as well as,
to a lesser extent, office and commercial space.
d) Technical Services: The Group provides: (i) operation and maintenance services for infrastructure assets; (ii) information technology (IT) services, including IT outsourcing, systems
integration, application outsourcing and business process outsourcing services; and (iii) electricity networks services (maintenance) in telecommunications.
e) Parent Company Operation corresponds to the services which the Holding company provides, managing, logistics and accounting services, among others, to the different related
entities of the Group.
Below are shown the financial statements of the Group according to its operating segments:
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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Operating segments financial position
Segment reporting
As of December 31, 2013
Assets.-
Cash and cash equivalents
Trade Accounts receivable
Unbilled work in progress
Accounts receivable from related parties
Other accounts receivable
Inventories
Prepaid expenses
Non-current assets classified as held for sale
Engineering and
construction
Energy
Toll roads
Mass transit
Infrastructure
Water
treatment
Real estate
Technical
services
Parent
Company
Operations
Eliminations
Consolidated
265,788
265,544
734,976
111,210
360,936
90,671
7,440
21,473
17,764
29,527
6,966
4,083
26,840
7,741
1,318
-
80,785
12,347
2,433
18,660
11,180
-
5,442
-
23,318
4,090
31,187
163
34,263
11,927
4,394
-
445
-
37,489
-
4,557
-
3
-
43,026
17,938
-
561
17,939
590,567
2,596
-
46,469
192,382
158,692
53,845
65,794
63,912
4,131
-
481,820
44
-
733,645
33,469
486
363
-
-
-
-
(834,839)
(1,760)
(2,507)
-
-
959,415
521,872
971,743
87,328
553,218
762,797
25,687
21,473
Total Current assets
1,858,038
94,239
130,847
109,342
42,494
672,627
585,225
1,249,827
(839,106)
3,903,533
Long-term trade accounts receivable
Long-term trade accounts receivable from related parties
Other long-term accounts receivable
Available-for-sale financial asset
Investments in associates and joint ventures
Investment property
Property, plant and equipment
Intangible assets
-
-
-
-
153,555
-
534,067
174,771
-
-
-
1,058
7,287
-
190,844
101,978
-
-
10,081
-
-
-
3,919
145,711
591,917
-
-
-
-
-
6,724
6,450
-
-
1,858
-
-
-
-
1,151
-
-
11,811
-
16,297
36,945
5,636
957
-
-
12,301
2
-
69,001
2,100
88,333
(69,001)
-
(1,060)
10,454
1,309,293
(1,408,919)
-
114,081
18,883
-
103,840
15,282
-
(6,205)
15,702
-
38,151
88,333
87,967
36,945
952,906
480,885
-
591,917
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu 163 >>
Deferred income tax asset
Total non-current assets
Total assets
Liabilities.-
Borrowings
Trade accounts payable
Accounts payable to related parties
Current taxes
Other accounts payable
Provisions
Total current liabilities
Borrowings
Long-term trade accounts payable
Accounts payables to related parties
Other long-term accounts payable
Provisions
Derivative financial instruments
Deferred income tax liability
Total non-current liabilities
Total liabilities
Equity attributable to controlling interest in the Company
Non-controlling interest
Total liabilities and equity
68,700
931,093
2,789,131
644
301,811
396,050
195,083
751,097
43,373
54,670
589,412
-
1,633,635
33,847
19,950
877
519
13,840
4,207
73,240
4,258
163,969
294,816
46,007
3,353
25,572
1,627
43,779
3,846
8,765
613,856
723,198
-
9,912
642,510
-
960
-
-
3,009
45,503
5,869
280
35,558
366
-
-
4,860
76,506
749,133
77,854
42,484
21,493
1,841
73,937
-
42,119
197,840
783,065
1,264
4,911
1,589,113
(1,464,572)
2,838,940
(2,303,678)
135,521
2,412,625
6,316,158
126,872
160,104
77,613
7,622
101,925
842
587
4,217
-
-
24,928
(846,339)
-
13,830
-
-
-
-
486,119
991,397
25,585
66,645
837,683
8,895
124,184
653,382
42,073
217,609
474,978
43,562
(846,339)
2,416,324
127,067
86,334
9,780
-
-
124,344
14,832
-
119,367
385,610
2,019,245
622,899
146,987
-
-
-
4,668
3,563
453
95,018
168,258
211,431
16,361
2,789,131
396,050
-
-
462
-
-
166
10,408
134,592
120,407
39,817
294,816
-
2,157
-
-
-
201
-
2,358
655,740
50,594
16,864
723,198
-
-
-
-
-
-
340
340
42,413
3,090
-
45,503
52,318
-
28,500
9,723
-
147
7,074
97,762
315,371
152,713
281,049
749,133
31,367
-
29,001
69,957
23,918
-
5,864
160,107
635,085
125,738
22,242
2,837
-
-
910
-
-
3,599
7,346
-
-
(57,501)
-
-
-
1,691
(55,810)
50,908
(902,149)
2,778,148
(1,299,587)
9,884
(101,942)
309,703
2,157
-
205,396
43,418
3,911
138,554
703,139
3,119,463
2,765,433
431,262
783,065
2,838,940
(2,303,678)
6,316,158
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
164 >>
Operating segments financial position
Segment reporting
As of December 31, 2014
Assets.-
Cash and cash equivalents
Financial asset at fair value through profit or loss
Trade Accounts receivable
Unbilled work in progress
Accounts receivable from related parties
Other accounts receivable
Inventories
Prepaid expenses
Non-current assets classified as held for sale
Engineering
and construction
Energy
Toll roads
Mass transit
Infrastructure
Water
treatment
Real estate
Technical
services
Parent
Company
Operations
Eliminations
Consolidated
285,367
54,085
53,312
7,105
604,951
1,136,404
121,989
384,484
126,293
11,489
9,513
-
35,201
1,414
6,723
10,781
7,921
891
-
-
46,598
-
-
9,042
-
822
-
51,522
-
71,817
-
216
29,515
13,909
6,056
-
8,407
54,268
134,679
176,762
-
-
14,972
-
3,154
-
407
-
-
-
57,584
293,024
-
6,561
11,409
630,758
235
-
-
65,242
63,797
55,601
5,119
-
-
34
-
371,765
66,414
486
1,425
-
-
-
-
-
(473,435)
1,058
(1,398)
-
-
818,402
7,105
1,109,209
1,152,790
99,061
579,654
833,570
26,444
9,513
Total Current assets
2,687,595
117,016
109,774
173,035
26,940
760,815
617,462
616,886
(473,775)
4,635,748
Long-term trade accounts receivable
Long-term unbilled work in progress
Long-term trade accounts receivable from related parties
Prepaid expenses
Other long-term accounts receivable
Available-for-sale financial assets
Investments in associates and joint ventures
-
-
-
-
6,192
-
161,938
-
25,387
-
-
4,449
1,058
7,316
-
579,956
10,584
408
2,416
11,776
-
-
-
-
7,062
4,131
-
-
-
-
-
-
1,587
-
-
-
-
-
-
9,705
-
62,863
-
-
433
-
4,496
2
-
-
-
-
182,548
(183,389)
-
2,217
93,144
-
-
(1,060)
579,956
35,971
-
9,478
44,553
93,144
10,059
1,729,640
(1,742,253)
229,563
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
165 >>
-
-
1,100
-
2,687
29,627
-
159
24,552
138
-
-
36,244
7,344
1,187
9
117,352
878,167
144,314
31,690
24,106
1,150
65,316
-
-
-
166,323
119,483
32,838
37,363
17,417
926
-
(6,785)
14,652
586
36,244
1,148,651
780,784
135,807
251,514
2,145,375
(1,918,249)
3,094,151
868,976
2,762,261
(2,392,024)
7,729,899
80,531
155,714
82,203
11,259
101,973
3,027
632
8,461
12,421
6
22,425
-
-
-
(485,259)
-
-
-
1,425,455
1,178,849
83,027
89,615
1,007,743
11,441
Investment property
Property, plant and equipment
Intangible assets
Deferred income tax asset
Total non-current assets
Total assets
Liabilities.-
Borrowings
Trade accounts payable
Accounts payable to related parties
Current taxes
Other accounts payable
Provisions
Total current liabilities
Borrowings
Long-term trade accounts payable
Accounts payables to related parties
Other long-term accounts payable
Provisions
Derivative financial instruments
Deferred income tax liability
Total non-current liabilities
Total liabilities
Equity attributable to controlling interest in the Company
Non-controlling interest
Total liabilities and equity
-
652,797
325,943
91,361
-
193,183
-
2,036
146,477
234,923
714
4,604
-
14,270
6,247
244
1,238,231
378,584
266,747
611,910
3,925,826
495,600
376,521
784,945
95,902
3,250
55,679
249
26,076
-
404,915
12,385
278,819
32
2,308
-
629,584
940,042
89,445
71,288
771,127
-
2,501,486
144,081
-
-
214,462
26,878
-
51,556
436,977
2,938,463
817,356
170,007
69,577
27,148
1,061
5,493
18,518
8,414
130,211
99,767
-
-
349
5,774
2,999
1,331
110,220
240,431
236,925
18,244
181,156
698,459
24,849
266,576
434,707
43,945
(485,259)
3,796,130
16,368
63,070
2,205
633
1,622
-
495
-
-
-
-
2,157
-
4,820
-
-
-
2,750
6,977
183,906
705,436
150,788
41,827
59,633
19,876
-
-
-
-
-
-
325
325
25,174
4,453
-
-
109,126
4,679
-
-
8,707
138,880
405,456
157,276
315,435
-
62,522
69,201
14,252
-
7,021
216,066
650,773
-
-
880
-
-
10,215
13,300
57,245
-
-
(171,648)
-
-
-
-
326,124
3,779
-
294,886
46,904
2,999
79,155
(171,648)
753,847
(656,907)
4,549,977
128,429
2,695,401
(1,559,083)
2,691,178
89,774
9,615
(176,034)
488,744
3,925,826
495,600
376,521
784,945
29,627
878,167
868,976
2,762,261
(2,392,024)
7,729,899
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu 166 >>
Engineering
and construction
Energy
Toll roads
Mass
transit
Water
treatment
Real
estate
Technical
services
Parent
Company
operations
Eliminations
Consolidated
Infrastructure
3,524,585
287,040
123,345
73,067
41,007
240,110
1,083,323
44,654
(185,246)
5,231,885
86,706
103,935
(17,409)
(105,363)
408,021
(159,845)
(602)
247,574
(17,727)
37,393
9,178
276,418
(87,918)
188,500
165,116
23,384
188,500
110,847
(14,739)
(2,530)
93,578
(5,529)
3,765
-
91,814
(28,457)
63,357
58,029
5,328
63,357
53,341
(6,361)
61
47,041
(8,382)
3,219
-
(2,712)
(7,926)
(27)
(10,665)
(3,958)
15
-
41,878
(14,608)
(12,526)
29,352
3,584
(11,024)
15,800
13,552
29,352
(8,268)
(2,756)
(11,024)
11,155
(1,485)
-
9,670
(6,557)
126
-
3,239
(972)
2,267
1,134
1,133
2,267
(1,711)
67,586
(4,366)
2,062
-
65,282
(19,967)
45,315
12,375
32,940
45,315
(26)
(3,971)
8,426
4,429
(8,538)
7,438
(59,201)
712,066
59,919
(257,180)
(1,583)
(865)
75,619
530,505
543
(68,129)
(4,722)
57,846
604
-
294,607
(303,181)
73,585
72,157
(13,615)
8,550
67,092
(5,638)
61,454
50,623
10,831
61,454
297,936
(308,225)
520,826
(4,235)
1,554
(154,575)
293,701
(306,671)
366,251
293,242
(298,097)
289,954
459
(8,574)
293,701
(306,671)
76,297
366,251
Operating segments performance
Segment Reporting
Year 2012 -
Revenues
Gross profit
Administrative expenses
Other income and expenses
Profit before interests and taxes
Financial expenses
Financial income
Share of the profit or loss in
associates and joint ventures under the equity method
Profit before income tax
Income tax
Profit for the year
Profit attributable to:
Owners of the Company
Non-controlling interest
Profit for the year
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu 167 >>
Operating segment performance
Segment Reporting
Year 2013
Revenue
Gross profit
Administrative expenses
Other income and expenses
Gains from the sale of investments
Profit before interests and taxes
Financial expenses
Financial income
Share of the profit or loss
in associates and joint ventures under the equity
method of accounting
Profit before income tax
Income tax
Net profit for the period
Profit attributable to:
Owners of the Company
Non-controlling interest
Net profit for the period
Engineering
and construction
Energy
Toll roads
Mass
transit
Water
treatment
Real
estate
Technical
services
Parent
Company
operations
Eliminations
Consolidated
Infrastructure
4,075,255
559,544
(217,927)
10,762
-
321,097
97,495
(16,170)
(3,561)
-
352,379
77,764
(49,349)
(14,264)
22,714
41,971
33
1,587
367,715
65,120
(111,240)
(20,066)
256,475
45,054
195,861
66,455
(6,600)
(35)
-
59,820
(7,416)
3,006
-
55,410
(14,971)
40,439
118,541
19,670
(8,025)
758
-
12,403
(40,012)
14,035
-
(13,574)
477
(13,097)
211,594
44,881
41,635
3,419
26,077
14,362
(9,823)
(3,274)
256,475
45,054
40,439
(13,097)
45,489
3,179
(212)
(2)
-
2,965
(44)
14
-
2,935
(881)
2,054
2,054
-
2,054
313,731
113,732
1,169,115
179,175
(20,993)
(132,486)
(1,749)
3,197
94,187
(14,639)
855
64
80,467
(21,427)
59,040
19,154
39,886
59,040
24,669
-
71,358
(17,881)
2,028
1,070
56,575
(16,655)
39,920
34,296
5,624
39,920
51,525
(323,114)
5,967,500
(4,031)
(8,616)
(2,689)
2,525
(12,811)
(21,615)
35,680
318,705
(31,097)
1,004,122
49,237
(2,851)
-
15,289
12,418
(38,012)
(329,835)
(361,792)
25,302
5,722
673,354
(152,802)
40,353
33,562
319,959
(340,140)
594,467
(781)
3,221
(182,323)
319,178
(336,919)
412,144
319,275
(324,246)
(97)
(12,673)
320,016
92,128
319,178
(336,919)
412,144
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu 168 >>
Engineering
and construction
Energy
Toll roads
Mass
transit
Water
treatment
Real
estate
Technical
services
Parent
Company
operations
Eliminations
Consolidated
Infrastructure
5,035,674
535,360
(258,554)
(9,796)
-
267,010
(69,046)
6,623
48,242
252,829
(59,252)
193,577
350,339
124,455
(17,256)
(3,359)
-
103,840
(11,564)
120
29
92,425
(29,768)
62,657
164,095
29,482
193,577
59,010
3,647
62,657
338,153
76,697
(8,035)
33
-
68,695
(10,822)
1,320
-
59,193
(16,158)
43,035
32,774
10,261
43,035
166,951
42,109
(14,714)
18
-
27,413
(5,245)
727
-
22,895
(10,842)
12,053
9,040
3,013
12,053
2,307
(317)
-
-
1,990
(55)
16
-
1,951
(588)
1,363
1,363
-
1,363
29,323
224,560
1,208,168
62,413
142,343
53,241
(7,574)
(397,729)
7,008,680
(26,541)
951,569
(21,058)
(122,506)
(35,444)
(852)
-
40,503
(14,807)
93
12,178
37,967
(11,452)
26,515
7,995
(2,139)
25,693
(27,393)
1,821
591
22,063
-
(20,955)
(1,566)
59,734
56,517
(966)
2,139
31,149
37,682
(58,992)
270,045
(277,640)
(421,367)
15,136
-
545,338
(102,816)
11,462
53,445
712
307,258
(267,801)
507,429
(5,788)
(5,076)
(12,582)
234
(146,196)
294,676
(267,567)
361,233
9,527
16,988
26,515
(5,339)
294,948
(265,674)
263
(272)
(1,893)
(5,076)
294,676
(267,567)
299,744
61,489
361,233
Operating segment performance
Segment Reporting
Year 2014
Revenue
Gross profit
Administrative expenses
Other income and expenses
Loss from the sale of investments
and taxes
Financial expenses
Financial income
in associates and joint ventures under the equity
method of accounting
Profit before income tax
Income tax
Net profit for the period
Utilidad atribuible a:
Owners of the Company
Non-controlling interest
Net profit for the period
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu 169 >>
Engineering
and construction
Energy
Toll roads
Mass
transit
Water
treatment
Real
estate
Technical
services
Parent
Company
operations
Eliminations
Consolidated
Infrastructure
276,418
91,814
41,878
(14,608)
3,239
65,282
67,092
297,936
(308,225)
520,826
131,133
(62,061)
(61,468)
159,597
126,885
570,504
(60,205)
4,119
(393,856)
-
(449,942)
17,465
(100,820)
-
-
-
42,821
(6,356)
(908)
(26,566)
5,047
105,852
392
-
(63,113)
-
(62,721)
38,991
(87,429)
-
-
-
24,494
1,941
-
(667)
51,143
118,789
(17)
-
101
-
84
(23,108)
(20,750)
-
-
-
454
(5,464)
(6,251)
9,866
47,270
31,267
(458)
-
(3,940)
-
(4,398)
-
-
-
-
-
(14,354)
(97,709)
(3,128)
(51,566)
(7,849)
(51,707)
(262)
(262)
104
(37,419)
-
(14)
31,836
(2,254)
-
-
-
-
-
8,271
-
-
-
-
(6,557)
1,714
2,922
(18,902)
(154,804)
58,190
52,416
5,104
(1,032)
-
39,447
5,868
14,197
(5,976)
(33,573)
87,055
(961)
-
(3,126)
(30,582)
2,075
(22)
851
782
(475,969)
(174,347)
9,637
252,288
(22,229)
-
(144,160)
-
(4,158)
34,728
(10,571)
-
-
-
(31,543)
(2,934)
(29,956)
-
-
-
(1,353)
22,804
(10,736)
(43,626)
95,536
153,845
(124,235)
26,096
(4,393)
1,193
4,619
57,125
1,053
72,518
10,581
29,723
(4,891)
(199,241)
76,115
(254,350)
91,230
144,160
57,155
(107,257)
249,526
5,750
-
-
(5,607)
142,412
244,503
(49,897)
(197,802)
224,935
(199,836)
542,729
23,471
2,057
(425,515)
-
(399,987)
120,001
(124,235)
31,846
(4,393)
1,193
(45,227)
(20,815)
Operating segments cash flows
Segment Reporting
Year 2012
Profit before income tax
Adjustments to profit
Depreciation and amortization
Accounts receivable
Inventories
Accounts payable
Other variations
Cash flows from operating activities
Sale of assets
Dividends received
Purchase of assets
Loans to subsidiaries, net
Cash flows from investing activities
Debt repayment
Dividend distribution
Cash received from non-controlling shareholders
Acquisiton of interest in non-controlling subsidiary
Sale of interest in non-controlling subsidiary
Other payments
Cash flows from financing activities
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu 170 >>
Cash increase (decrease)
Cash at the beginning of the year
Cash at the end of the year
Operating segments cash flows
Segment Reporting
Year 2013
Profit before income tax
Adjustments to profit
Depreciation and amortization
Accounts receivable
Inventories
Accounts payable
Other variations
Cash flows from operating activities
Sale of assets
Dividends received
Purchase of assets
Loans to subsidiaries, net
Cash flows from investing activities
Debt repayment
22,853
400,479
423,332
(8,435)
39,085
30,650
67,166
23,478
90,644
26,607
1,705
28,312
(540)
608
68
23,750
49,254
73,004
11,886
73,401
85,287
(21,686)
70,177
48,491
326
-
326
121,927
658,187
780,114
Engineering
and construction
Energy
Toll roads
Mass
transit
Water
treatment
Real
estate
Technical
services
Parent
Company
operations
Eliminations
Consolidated
Infrastructure
367,715
65,120
55,410
(13,574)
2,935
80,467
56,575
319,959
(340,140)
594,467
151,885
(388,772)
64,957
34,397
(149,752)
80,430
15,134
12,064
53,432
(10,343)
546
753
(24,371)
85,137
86
1,708
(171,126)
(70,835)
-
-
(143,928)
(371,997)
(69,041)
(29,430)
10,047
(4,316)
-
(7,250)
(26,279)
27,612
-
-
(555)
-
(555)
632
52
(322,993)
(20,131)
(5,508)
337,027
4,735
319
-
-
(5,313)
-
(5,313)
-
16,444
(622)
(1,322)
-
-
-
-
-
3,610
1,949
(58,500)
(50,784)
(23,192)
37,219
1,986
1,003
259,866
(137,016)
(41,017)
70,979
(851,660)
(4,667)
32,424
-
(17,899)
(21,071)
5,184
(471,415)
(103,220)
(29,371)
(322,254)
325,046
(246,060)
(46,450)
(44,836)
(36,142)
(432,426)
(367,678)
317
-
316
-
6,799
119,791
9
(128,875)
22,661
4,688
(5,926)
(30,880)
(134,946)
52,237
(367,344)
-
-
(446,387)
446,387
-
(5,609)
(30,564)
(454,743)
369,758
(339,995)
(10,662)
(34,400)
(43,567)
(135,472)
(285,472)
(537,484)
9,112
(1,439,372)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu 171 >>
(4,728)
(86,986)
113,854
(138,780)
-
-
-
-
-
(54,764)
-
1,147,418
437,332
19,107
-
-
-
-
(41,926)
(19,107)
34,774
(63,868)
-
1,147,418
1,351,964
-
Dividend distribution
(73,936)
(29,163)
(25,240)
Contribution of non-controlling shareholders
Acquisiton of interest in non-controlling subsidiary
Issue of common shares,
proceeds from shares issuance, net of related expenses
-
(9,104)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(32,581)
34,774
-
-
-
Other payments
Loans received from subsidiaries, net
Cash flows from financing activities
Cash increase (decrease)
Cash decrease in deconsolidation
Cash at the beginning of the year
Cash at the end of the year
Operating segments cash flows
Segment Reporting
Year 2014
Profit before income tax
Adjustments to profit
Depreciation and amortization
Accounts receivable
Inventories
362,449
32,881
(1,014)
34,400
45,300
155,360
327,182
-
-
-
(92,588)
(25,712)
(36,916)
-
-
(156,086)
(1,458)
423,332
265,788
(9,616)
(3,270)
30,650
17,764
(9,859)
(4,994)
-
90,644
80,785
-
28,312
23,318
-
1,733
411
(34)
68
445
-
-
22,081
36,982
924,623
61,933
892,136
(29,978)
(38,418)
433,738
(735)
184,463
-
73,004
43,026
(400)
85,287
-
48,082
46,469
481,820
-
735
-
(5,162)
780,114
959,415
Engineering
and construction
Energy
Toll roads
Mass
transit
Water
treatment
Real
estate
Technical
services
Parent
Company
operations
Eliminations
Consolidated
Infrastructure
252,829
92,425
59,193
22,895
1,951
37,967
712
307,258
(267,801)
507,429
144,235
(484,177)
(12,127)
58,144
(16,538)
(180)
11,419
(6,651)
-
907
(26,838)
(1,982)
52
24,192
-
3,821
(37,035)
(30,861)
37,185
8,962
3,972
3,222
(73,546)
-
1,054
33,506
(10,311)
260,039
(578,125)
(51,489)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
172 >>
95,353
14,036
(472,016)
120,662
(34,997)
(270,528)
278,353
(298,994)
111,187
18,618
(19,558)
(437,215)
(40,478)
-
(16,998)
-
164,929
(153,340)
42,968
36,718
54,846
(15,762)
12,976
-
3,375
(42,819)
(71,816)
-
-
(297,701)
(19,080)
202,150
(625,643)
19,080
-
(39,444)
(53,198)
(151,852)
50,892
(545,957)
32,175
(6,261)
20,896
-
-
(8,265)
-
(8,265)
(11,129)
(1,004)
14,062
-
-
-
-
-
(604,894)
(18,400)
-
-
-
-
-
-
-
-
(39,046)
(28,022)
48,793
-
-
(253,978)
(585)
(842)
(112,351)
-
-
-
-
-
-
(1,438)
(19,017)
386,329
(2,099,833)
154,871
(1,417)
(176,117)
47,376
(103,003)
(175,824)
(1,627)
-
(69,425)
2,852,271
19,017
-
1,749,831
83,776
114,576
620,467
12,300
55,985
286,199
-
-
-
-
-
-
-
74,820
14,049
29,088
15,573
(6,100)
37,710
31,636
(133,648)
384,745
447,873
-
22,193
(2,614)
265,788
285,367
-
-
-
36,321
(27,473)
28,204
-
17,764
54,085
-
80,785
53,312
-
23,318
51,522
-
7,962
-
445
8,407
-
11,242
-
43,026
54,268
-
89,625
(1,415)
46,469
134,679
-
(305,058)
-
481,820
176,762
-
(1,578)
1,578
-
-
(138,562)
(2,451)
959,415
818,402
385,388
(128,619)
157,529
40,058
38,810
10,656
(21,640)
122,867
1,259
-
(289,024)
(101,854)
11,353
(98,536)
(23,222)
31
(17,056)
(16,314)
-
-
-
(210,156)
(100,595)
(1,480,390)
(123,427)
(33,879)
(35,848)
(33,339)
(54,733)
(30,755)
-
(72,821)
1,627
-
-
-
-
-
-
Accounts payable
Other variations
Cash flows from operating activities
Sale of assets
Dividends received
Purchase of assets
Loans to subsidiaries, net
Cash flows from investing activities
Debt repayment
Dividend distribution
Contribution of non-controlling shareholders
Acquisiton of interest in non-controlling subsidiary
Sale of interest in non-controlling subsidiary
Other payments
Loans reveiced from subsidiaries, net
Cash flows from financing activities
Cash increase (decrease)
Cash decrease in deconsolidation
Cash at the beginning of the year
Cash at the end of the year
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
Segments by geographical area
Revenue:
- Peru
- Chile
- Colombia
- Guyana
- Brazil
- Bolivia
- Dominican Republic
- Panama
Non-current assets:
- Peru
- Chile
- Colombia
- Guyana
- Brazil
- Bolivia
- Panama
173 >>
2012
2013
2014
4,326,471
660,152
114,757
92,899
37,606
5,231,885
5,072,251
631,883
112,573
74,399
-
-
76,394
5,967,500
1,895,217
499,580
8,987
-
8,717
-
124
5,611,844
1,011,822
125,929
49,525
68,045
1,849
-
139,666
7,008,680
2,461,288
359,686
259,915
2,974
8,398
1,890
-
2,412,625
3,094,151
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu Liabilities:
- Peru
- Chile
- Colombia
- Guyana
- Brazil
- Bolivia
- Dominican Republic
- Panama
Total allocated
Unallocated
- Borrowings (excluding finance leases)
- Derivative financial instruments
- Deferred income tax liability
Total liabilities
174 >>
1,999,143
2,220,982
431,119
23,039
-
9,435
-
34
521,299
227,511
11,697
8,073
9,741
31
49,061
2,462,770
3,048,395
514,228
3,911
138,554
3,119,463
1,419,428
2,999
79,155
4,549,977
Comprises the Group’s financial debt, excluding finance leases and derivative finance liabilities; liabilities from the segment that should be reported to the Executive Committee were not
taken into consideration because they are managed by the Group’s Corporate Finance department.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
7 FINANCIAL INSTRUMENTS
7.1 Financial instruments by category -
The classification of financial assets and liabilities per category is as follows:
ASSETS ACCORDING TO THE STATEMENT OF FINANCIAL POSITION
Loans and accounts receivable:
- Cash and cash equivalents
- Trade and other accounts receivable
not including advances to suppliers
- Unbilled work in progress
- Financial assets related to concession agreements (1)
- Accounts receivable from related parties
Available-for-sale financial assets (Note 9)
Financial asset at fair value thorough profit and loss
175 >>
December 31
2014
818,402
1,225,690
1,188,761
702,531
99,061
4,034,445
93,144
7,105
2013
959,415
669,134
971,743
620,943
87,328
3,308,563
88,333
(1) Financial assets related to concession agreements are recorded in the statement of financial position within the line items of other short-term accounts receivable and other long-term
accounts receivable.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
176 >>
December 31,
2014
1,419,428
332,151
1,566,004
83,027
3,400,610
2,999
2013
514,228
281,594
1,242,235
25,585
348
2,063,990
3,911
LIABILITIES ACCORDING TO THE STATEMENT OF FINANCIAL POSITION
Other financial liabilities at amortized cost
- Borrowings
- Finance leases
- Trade and other accounts payable (excluding non-financial liabilities)
- Accounts payable to related parties
- Derivative financial instruments (a)
Hedging derivatives:
- Derivative financial instruments (b)
(a)
In seeking to mitigate the exposure resulting from the expenditures incurred in Euros to a foreign supplier for the purchase of the infrastructure required under the concession agreement
signed between a subsidiary, GyM Ferrovías S.A., and the Peruvian Government, this subsidiary entered into a cross currency swap contract by which the purchase of Euros at a future date
is secured at a fixed exchange rate up-to January 2014. This contract was accounted for as a fair value hedge by the Group and it recognized the fair value of the financial instrument (cross
currency swap) in profit or loss and, as a counterpart, it recognized the fair value of the firm commitment associated with the contract with the foreign supplier. At December 31, 2013, the
change in fair value amounted to S/.14 million which is presented in “Financial income and expenses" (Note 26). The cross currency swap matured in January 2014.
(b)
(b) In seeking to mitigate the exposure resulting from the borrowings obtained from Citibank in variable rate (see Note 18), GMP S.A. entered into a cross interest rate swap contract
by which it established a fixed rate. This contract is accounted for as a cash flow hedge by the Group and it recognizes the changes in fair value of the financial instrument in other
comprehensive income. At December 31, 2014, the changes in fair value amounted to S/.568, net of deferred income tax of S/.221 (S/.2,433 plus tax effect of S/.731 at December 31, 2013).
The fluctuation observed in deferred income tax in 2013 includes the effect of the revision of the tax effect that was not calculated for 2012 which amounts to S/.569.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu 177 >>
7.2 Credit quality of financial assets -
The credit quality of financial assets that are neither past due nor impaired can be assessed by reference to external risk ratings (if available) or to historical information about
counterparty default rates.
The credit quality of financial assets is presented as follows:
CASH AND CASH EQUIVALENTS (*)
Cash and cash equivalents (*)
Banco de Crédito del Perú (A+)
Banco Continental (A+)
Banco Bogotá (A)
Banco Interbank (A)
Banco de la Nación (A)
Banco Santander - Chile (A)
Banco Scotiabank (A+)
Banco Continental Chile (A)
ITAU - Chile (A)
Banco de Crédito e Inversiones - Chile (A)
Banco de Chile (A)
Banco Interamericano de Finanzas (A)
Citibank (A)
Banco Santander - Perú (A)
Banco GNB Perú (A)
Other lesser amounts
2013
558,540
254,439
-
9,360
45,782
7,544
2,401
-
-
25,568
-
652
850
42,102
10,771
958,009
December 31,
2014
453,942
76,408
67,959
64,962
56,028
40,577
11,611
7,396
7,391
10,597
5,328
1,855
677
183
115
4,962
809,991
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
178 >>
The ratings in the above table “A and A+” represent high quality credit ratings. For banks located in Peru, the ratings were derived from risk rating agencies authorized by the Peruvian
banking and insurance regulator (“Superintendencia de Banca, Seguros y AFP – SBS”). For banks located in Chile, the ratings were derived from risk rating agencies authorized by the
Chilean stock and insurance regulator (“Superintendencia de Valores y Seguros – SVS”).
(*) The difference between the balances shown above with the balances shown in the statement of financial position corresponds to cash on hand (Note 8).
The credit quality of customers is assessed in three categories (internal classification):
A: new customers/related parties (less than 6 months),
B: existing customers/related parties (with more than 6 months of trade relationship) with no previous default history; and
C: existing customers/related parties (with more than 6 months of trade relationship) with previous default history.
Trade accounts receivable (Note 10 and Note 11)
Counterparties with no external risk rating
A
B
C
Receivable to related parties (Note 12)
B
2013
2014
44,474
2,040,541
517
87,328
51,844
2,700,295
125,787
99,061
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
The total number of accounts in compliance with contract terms and conditions, none of them have been re-negotiated.
With respect to available-for-sale financial assets, the counterparty held an external credit rating of AAA at December 31, 2013 and 2014.
8 CASH AND CASH EQUIVALENTS
This account comprises:
Cash on hand
Checking accounts
Time deposits (a)
In-transit remittances
Mutual funds (b)
179 >>
2013
1,406
548,630
407,763
1,616
-
959,415
Al 31 de diciembre de
2014
8,411
530,246
259,035
1,986
18,724
818,402
(a) At December 31, 2014, this balance mostly comprises the Company’s short-term deposits for S/.168 million; GyM S.A. for S/.29 million, GyM Ferrovías S.A. for S/. 29 million and ViVa GyM
S.A. for S/.18 million. Interest rates range between 0.10% and 3.97% (mainly comprises GyM’s short-term bank deposits for S/.127 maintained in Banco de Credito del Peru - Chile for S/.58
million, local banks for S/.69 million and the Company’s short-term deposits for S/.269 million maintained in Banco de Credito at December 31, 2013).
(b) This balance comprises mutual funds for S/.7.4 million, S/.7.4 million and S/.3.9 million which are maintained by the subsidiary VyV – DSD S.A. in Itaú, BBVA Banco Continental and
Santander banks, respectively, at rates ranging from 0.29% to 0.32%.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
180 >>
9 AVAILABLE-FOR-SALE FINANCIAL ASSETS
This account comprises the investment held by the Company, directly and indirectly, in Transportadora de Gas del Perú S.A. (TGP), a Peruvian entity engaged in providing gas
transportation services.
In December 2013, the Group acquired from one of the TGP’s shareholders, Pluspetrol Resources Corporation (hereinafter Pluspetrol), an additional 1.04% interest in TGP paying a
consideration of US$20 million (equivalent to S/.56.1 million) obtaining a total interest of 1.64% at December 31, 2013. At December 31, 2013, the fair value of the Group´s interest in TGP
equals S/.88.3 million, based on the price paid in one recent arm's length transaction which occurred in December 2013 among knowledgeable willing parties. The fluctuation in the fair
value of this investment in 2013 amounts to S/.19.1 million, net of its income tax effect amounting to for S/.8.2 million. The net amount has been recognized in the statement of other
comprehensive income.
Together with the acquisition of the 1.04% interest, the Company acquired from Pluspetrol on behalf of the Canada Pension Plan Investment Board (CPPIB) an additional indirect interest
of 11.34% in TGP. The investment for US$217 million was funded entirely by CPPIB. The risk and rewards of the entire investment are assumed by CPPIB.
Given the features of the transaction, it has been treated as an off-balance-sheet transaction because, in substance, the Company is acting as an agent to CPPIB. Therefore, the Company
did not recognized either the investment in TGP nor any obligation to CPPIB.
This acquisition is part of an investment agreement entered into with CPPIB, whereby both parties commit themselves to initiate and develop projects in the oil and gas industry.
On December 27, 2013 the Company announced its intention to transfer the previously acquired interest of 11.34% in TGP to CPPIB (10.43%) and to Corporación Financiera de Inversiones –
CFI (0.91%), if none of the existing TGP shareholders exercise their first option of share acquisition rights.
On February 27, 2014, the Company transferred the shares to the above indicated entities, retaining in TGP an interest equivalent to 1.64%, for this transaction the Group obtained a
commission fee of S/.7.5 million which is included in ‘other income and expenses’.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
181 >>
At December 31, 2014, the fair value of the Group´s interest in TGP equals S/.93.14 million the base on the discounted cash flow method. The information used in the calculation is as
follows:
- Discounted cash flows from operating activities of TGP net of cash flows from investment activities (CAPEX).
-
-
-
Cash flows were estimated for a 30 year term.
The discount rate used is 8% corresponding to the Company’s WACC.
The interest of the Company in TGP is 1.64% as of December 31, 2014
The fluctuation in the fair value of this investment in 2014 amounts to S/.3.56 million, net of its income tax effect amounting to S/.1.25 million, plus the adjustment for changes in rate of
income tax amounting to S/.1.09 million (see note 28-b), which has been recognized in the statement of other comprehensive income.
10 TRADE ACCOUNTS RECEIVABLE
This account comprises:
Invoices receivable
Collection rights from concession agreements
Impaired accounts
2013
1,058,078
58,528
1,116,606
(2,817)
1,113,789
December 31,
2014
1,414,185
277,547
1,691,732
(2,567)
1,689,165
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
Less: non-current portion
Invoices receivable
Collection rights from concession agreements
Total non-current
Total current
(545,736)
(46,181)
(591,917)
521,872
182 >>
(529,201)
(50,755)
(579,956)
1,109,209
The fair value of current receivables is similar to their carrying amount since their average collection turnover is less than 60 days. These current receivables do not bear interest and have
no specific guarantees.
The non-current portion of the trade accounts receivable is related to GyM Ferrovías S.A.; the balance at December 31, 2013 and 2014 is the account receivable from the expenses incurred
in the electric train Project (acquistion of the Alstrom trains) and the construction of the Patio – Taller.
Collection rights as of December 31, 2014 comprises GyM Ferrovías S.A., CAM Holding S.p.A,GMD S.A., GMI S.A., Concar S.A., Viva GyM S.A. and Concesion Canchaque S.A.C. for S/.116
million, S/.51 million, S/.31 million, S/.37 million, S/.35 million, S/.6 million and S/.2 million respectively (GyM Ferrovías S.A., Survial S.A. and Canchaque for S/.46,181, S/.7,617 and S/.4,730
respectively in 2013).
The collection rights that arise from GyM Ferrovías S.A., a concession signed with the Peruvian Government comprising Line 1 of the Lima Metro (train line), by which this entity has to
acquire, on the Government’s behalf, certain infrastructure needed for the implementation of the transport system that will be operated by the GyM Ferrovías S.A once completed (Note
5-b-iv). This account will be collected through the cash flows determined at the inception of the concession under the "price per kilometer traveled" method (PKT). For this purpose, the
subsidiary has applied certain criteria to determine the amount of the interest to be accrued on the outstanding balances and the beginning of the collection of the amounts pending.
These balances bear interest at a 7.7% rate and their collection began in 2014 jointly with the beginning of operation.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
Aging of trade accounts receivable is as follows:
Current
Past due up to 30 days
Past due over 30 days
183 >>
2013
937,932
117,985
60,689
1,116,606
December 31,
2014
1,402,635
174,633
114,464
1,691,732
As of December 31, 2014, trade accounts receivables totaling S/.289.1 million (S/.178.7 million in 2013) are past due but not impaired. The related customers do not have a historical record
of default.
The maximum exposure to credit risk at the reporting date is the carrying amount of the accounts receivable and of unbilled work in progress (note 11).
The movement of the account receivables reserve is as follows:
Initial balance
Additions
Write-offs
Final balance
2013
2,707
110
-
2,817
Al 31 de diciembre de
2014
2,817
71
(321)
2,567
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
11 UNBILLED WORK IN PROGRESS
This account comprises:
Unbilled rights receivable
Deferred costs of work in progress
Less: Non – current portion
Deferred costs of work in progress
Total current
184 >>
December 31,
2014
957,916
230,845
1,188,761
35,971
1,152,790
2013
748,376
223,367
971,743
-
971,743
Rights receivable correspond to the unbilled rights for services rendered by the Engineering and Construction Segment. Each month, under the percentage of completion method, the
Company estimates the work completed to date. Based on its monthly estimates, the Company recognizes the corresponding revenue. Until such revenue is billed, it is recorded in the
account, rights receivable.
At December 31, 2014 and 2013, rights receivable are presented net of advances received for S/.334 million and S/.273 million, respectively the terms of which vary based on each contract.
These advances substantially correspond to those received by subsidiary GyM S.A.
At December 31, 2014, advances amounting to S/.305 million, correspond to a scheme by mean of which certain customers agree to grant revolving monthly advances which are settled
with the amount billed the month following the reception of the advance. Other advances received from customers are recognized netting the corresponding receivables and are offset
following the pattern of actual services provided. In these cases, if the contract is terminated, the amount received in advance is offset against any receivable balance determined by the
work progress at termination date.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
185 >>
Deferred costs of work in progress include all those expenditures incurred by the Group that relate to future activities to be performed under current construction contracts. At December
31, 2014, the balance mainly comprises costs incurred in the following projects: i) Concentrating Plant Cerro Verde, ii) Las Bambas, iii) Machu Picchu, iv) Servicios Cerro del Águila and v)
Chile Spa for S/.53.8 million, S/.32.9 million, S/.31.4 million, S/.22.3 million and S/.12.7 million, respectively.
Other smaller projects for which certain cost amounting to S/.52 million have been deferred are: Red Gas Contugas, Preliminary work Aurora Gold, Pad I FASE III Cerro Verde..
The non-current portion mainly comprises the expenditures incurred by Concesionaria Vía Expresa Sur S.A. for S/.10 million that related to future activities to be performed under the
construction contract(implementation of the 4km extension of Vía Expresa Sur connecting the district of “San Juan de Miraflores”). This Project is expected to be completed in August
2018.
Additionally the non-current portion comprises the expenditures incurred by the subsidiary GMP S.A. for for S/.25.39 million (work in progress related to Transportadora de Gas Natural
Comprimido Andino Concession). This Concession is in a pre-operative stage.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
12 TRANSACTIONS WITH RELATED PARTIES
a) Transactions with related parties -
Major transactions between the Company and its related parties are summarized as follows:
Revenue from sale of goods and services:
- Associates
- Joint operations
Expenses from purchase of goods and services:
- Associates
- Joint operations
Inter-company transactions are based on the price lists in force and terms that would be available to third parties.
2012
49,252
51,385
100,637
5,818
8,030
13,848
2013
4,915
67,601
72,516
5
6,068
6,073
186 >>
2014
6,040
43,897
49,937
42
715
757
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
187 >>
b) Key management compensation -
Key management includes directors (executives and non-executives), members of the Executive Committee and Internal Audit Management. The compensation paid or payable to key
management in 2014 amounted to S/.100.4 million (S/.93.5 million as of December 31, 2013).
c) Balances at the end of the year resulting from the sale/purchase of goods/services -
Joint operations:
Consorcio GyM Conciviles
Consorcio Peruano de Conservación
Consorcio Tren Electrico
Consorcio Terminales
Consorcio Rio Urubamba
Consorcio Sistemas SEC
Consorcio La Gloria
Consorcio Constructor Alto Cayma
Consorcio JV Panamá
Consorcio Lima
Consorcio Norte Pachacutec
Consorcio Huacho Pativilca
Receivable
33,405
15,080
2,499
4,294
2,798
-
3,696
566
1,323
312
556
-
2013
Payable
-
-
-
-
-
-
3,398
4,881
-
-
952
-
Receivable
December 31,
2014
Payable
48,581
15,365
7,380
6,837
5,107
4,349
3,805
1,424
1,043
877
531
369
-
-
-
-
3,796
-
3,423
-
-
-
1,068
4,555
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
Consorcio Rios Pallca
Consorcio Constructor Chavimochic
Consorcio Alto Cayma
Consorcio Construcciones y Montajes
Consorcio Vial Quinua
Bechtel Vial y Vives Servicios Complementarios Ltda. -
Consorcio Atocongo
Consorcio Brocal Pasco
Consorcio Ingenieria y Construcción Bechtel
Consorcio Rio Mantaro
Consorcio Vial Ipacal
Consorcio Vial Sullana
Consorcio Vial Sur
Consorcio EIM ISA
Ingeniería y Construcción Sigdo Koppers-Vial
Consorcio DSD Echevarría Izquierdo
Other
Other related parties:
Ferrovias Argentina
Besco
3,903
-
5,557
-
37
-
712
1,913
-
3,822
283
470
737
-
-
3,478
1,887
87,328
-
-
-
87,328
-
-
666
-
1,315
-
41
3,924
-
-
-
-
1,050
16,227
8,771
587
9,358
25,585
187
141
121
115
116
96
-
-
-
-
-
-
-
-
-
-
2,617
99,061
-
-
-
99,061
188 >>
282
2,896
700
1,198
4,648
915
-
5,140
-
-
-
-
2,955
35,302
-
2,056
68,934
14,093
-
14,093
83,027
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu 189 >>
Receivables and payables are of current maturity and do not have specific guarantees.
Accounts receivable from related parties mainly have maturity periods of 60 days and arise from sale of goods and services. These balances are non-interest-bearing due to their short-
term maturities and are not impaired.
Accounts payable to related parties mainly have maturity periods of 60 days and arise from engineering, construction, maintenance and other services received. These balances are not
interest bearing due to their short-term maturities.
Transactions with non-controlling interest are disclosed in Note 34.
13 OTHER ACCOUNTS RECEIVABLE
This account comprises:
Advances to suppliers (a)
Guarantees deposits (b)
Income tax on-account payment (c)
Fiscal credit (d)
Accounts receivable from sale of investments
Temporary taxes on net assets
Claims to the tax administration (tax paid in advance)
Claims to third-parties
Account receivable from personnel
2013
183,464
56,851
95,488
109,050
33,601
10,901
7,913
15,799
14,633
December 31,
2014
162,544
103,086
96,026
91,442
23,822
19,223
14,572
13,155
11,235
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
VyV Collahuasi – Guarantee deposit
Account receivable from Morelco´s non -controllng shareholders
Association agreement – Obrainsa (Red vial 1)
7,416)Overseas Bechtel Incorp. Suc.del Peru
Legal credits CAM Brasil
Loans provided to third parties
Consorcio Fábrica de Software
Petróleos del Perú S.A.- Petroperú S.A. (e)
Municipalidad de la Brea - Talara
Indemnification asset (note 31-d)
Compensation fund (f)
Loans receivable from employees
Right to recover taxes (Brasil and Colombia)
Others (g)
Less non-current portion:
Fiscal credit
Legal credits CAM Brasil
Transportadora de Gas Natural Comprimido Andino
Others
Current portion
190 >>
9,938
7,768
7,416
4,287
4,170
4,136
3,925
2,518
2,298
1,344
1,154
651
-
39,497
624,207
(35,608)
(4,170)
(4,449)
(326)
(44,553)
579,654
10,745
-
2,284
5,107
3,430
-
-
18,087
-
6,006
812
584
2,259
14,355
591,369
(34,071)
(3,430)
-
(650)
(38,151)
553,218
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu 191 >>
Other non-current accounts receivable have maturities between 2 and 5 years. Company’s Management estimates that the fiscal credit will be applied against the credit balance of the
corresponding tax over the medium term.
The following contains a description of major accounts receivable:
(a) Advances to suppliers -
Mainly corresponds to advances amounting approximately to S/.146.5 million (S/.163.1 million in 2013) granted by the subsidiary GyM S.A. to import the equipment of the projects, detailed
as follows:
Consorcio Río Mantaro
Panorama Plaza Negocios
EPC Planta Minera Inmaculada
Morelco
GyM Chile SPA
ABB Inc.
Stracon GyM
Harvin Electric
Centro Empresarial Leuro
Consorcio constructor Chavimochic
ABB AB Importaciones
Consorcio Peruano de Conservación
2013
54,311
1,312
7,207
-
1,888
-
1,655
-
-
-
-
4,708
December 31,
2014
81,153
17,270
9,387
5,681
4,042
3,487
2,771
2,007
1,651
1,368
1,353
1,350
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
Edificio Real 8
Nuevo Campus Universitario UTEC
GyM Operaciones Internacionales
Central Hidroeléctrica Machu Picchu
Consorcio GyM Conciviles
Consorcio Rio Urubamba
Consorcio Tren Eléctrico
Consorcios – Cam
Mantenimiento Periodico/Red Vial 1
Proyectos inmobiliarios
Other smaller projects
192 >>
1,219
1,104
1,064
717
345
312
-
-
-
-
26,263
162,544
3,025
-
-
20,998
2,144
704
64,567
2,800
2,439
2,379
13,327
183,464
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu 193 >>
(b) Guarantee deposits -
Guarantee deposits are the funds retained by customers for work contracts assumed basically by subsidiary GyM S.A. These deposits are retained by the customers in order to have a
guarantee that the subsidiary will perform is obligations under the contracts. The amounts retained will be recoup once the work has been completed. Such deposits mainly correspond to
the following projects:
Project:
Empresa Colombiana de Petróleos S.A.
Minera Antucoya
Proyecto Machupicchu
Construcción Planta de Cal Pachachaca
Minera los Pelambres
Nuevo Campus Universitario UTEC
Centro Empresarial Leuro
Panorama Plaza Negocios
Metapetroleum Corp
Garantías - arriendos CAM Chile
La Zanja
Maersk Container Industry San Antonio SPA
Colombiana S.A.
Planta Minera Inmaculada
December 31,
2013
-
3,814
8,624
-
-
-
554
-
-
573
1,348
-
-
881
2014
38,100
12,279
11,495
6,299
5,168
3,735
3,684
3,104
2,966
2,222
1,818
1,562
1,072
1,069
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
Trabajos Electromecánicos llenado de agua Quellaveco
CC Interbank Valle Hermoso
Edificio Real 8
Consorcio HV
Conga Reticulation Camp
Proyecto Chancadora Caserones
Refineria Cartagena S.A.
Mansarovar Energy Colombia Ltda.
Agrocascadas SA
Stracon GyM
Pozas almacenamiento de agua
Pampa Verde
Garantías - Arriendos CAM Perú
Campamentos Congas
Others
194 >>
523
488
392
331
307
151
200
192
131
-
-
-
-
-
5,798
103,086
-
-
1,417
287
5,473
-
-
-
18,834
7,143
3,601
605
415
3,282
56,851
(c)
Income tax on-account payment –
Mainly comprises income tax payments in advance from the subsidiaries GyM S.A., the Holding, CAM Holding S.p.A., Concar S.A. and Viva GyM S.A. for S/ 41 million, S/. 30 million, S/.11
million, S/.5 million and S/.4 million respectively (S/.60 million, S/.3 million, S/.11 million, S/.6 million and S/.6 million respectively in 2013).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
195 >>
(d) Fiscal credit -
Mainly corresponds to the subsidiaries Survial S.A., GyM S.A. and GyM Ferrovias S.A. for S/.10 million, S/.28 million, S/.25 million respectively, (Survial S.A., GyM S.A., GyM Ferrovías S.A.,
Viva GyM S.A. and Concar S.A. for S/.17 million, S/.25 million and S/.27 million, S/.12 million and S/.9 million, respectively in 2013). Management estimates that this fiscal credit related to
value added tax payments will be recovered during the ordinary course of the future operations of these subsidiaries.
(e) Petróleos del Perú S.A. - Petroperú S.A. -
These balances are comprised of additional investments established in the operating agreement and completed by Consorcio Terminales (a joint venture of the subsidiary GMP S.A.)
for the modernization and extension of 9 terminals subject to the agreement. These investments which are presently works in progress will be transferred to Petróleos del Perú S.A. -
Petroperú S.A., once a technical audit has been completed and after obtaining the written approval and accreditation of said institution; the value thus determined will be considered for
billing. During the fiscal year 2013, the consortium incurred additional investments of US$6.1 million.
This agreement consists in the operation of the oil terminals of Petroleos del Peru to store and distribute the oil to the different customers of this State entity.
The effective period of the agreements with Consorcio Terminales ended on August 1, 2014; in this context, receivables from Petroperú S.A. were fully settled. The outstanding balance of
S/.2.5 million is related to current operations in the Southern terminals which contract was renewed to July 2015.
(f) Compensation fund -
The balance receivable from the compensation fund corresponds to subsidiary GMP S.A. and relates to the Fund created by the Government to prevent the high volatility of the price
of crude oil and its by-products from affecting the end users. In 2014 GMP S.A. received payments of S/.0.3 million (S/.1.7 million in 2013 and S/.9.3 million in 2012) and applications of
contributions amounting to S/.1.6 million in 2013 (3.7 million in 2012).
(g) Others -
Other receivables do not present past due amounts or impairment and the non-current balances are supported by contractual agreements with third-parties.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
196 >>
The fair value of other short - term accounts receivable is similar to their carrying amount due to the fact of short term maturity. The non – current portion is not significant to the financial
statements for any period presented.
The maximum exposure to credit risk as of the date of the report is the carrying amount of each class of other accounts receivable mentioned. The Group does not request collaterals as
guarantee.
14 INVENTORIES
This account comprises:
Land
Work in progress - real estate
Construction materials
Materials and supplies
Finished properties
Impairment of inventories
2013
411,822
104,908
92,299
92,909
71,304
773,242
(10,445)
762,797
December 31,
2014
494,024
84,683
125,665
84,869
51,767
841,008
(7,438)
833,570
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
At December 31, 2013 and 2014, land comprises properties for the development of the followings projects:
Lurín (a)
Comas (b)
Miraflores (c)
San Isidro (d)
Callao (e)
San Miguel (f)
Huancayo (g)
Others
197 >>
2013
90,000
57,000
78,000
48,000
52,400
86,422
411,822
December 31,
2014
91,000
61,000
78,700
52,000
52,800
67,300
11,000
80,224
494,024
(a) Plot of land of 812.8 hectares located in the district of Lurin, province Lima, for industrial development and public housing.
(b) Plot of land located in the district of Comas, which will be used to develop the project of approximately 8,000 social housing projects called Los Parques de Comas.
(c) Plot of land located in Av. El Ejército, Urbanizacion. Santa Cruz, Miraflores, development complex consisting of a 5-star hotel, convention, business, cultural, commercial and
residential building center.
(d) Plot of land located at Av. Pezet 583, San Isidro, development consisting of building with 32 apartments each of more than 300 m2 each.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
198 >>
(e) Plot of land located at Av. Argentina 2430-Callao, for the project of approximately 984 housing in 3 phases called Los Parques del Callao.
(f) Plot of land located in the district San Miguel of 1.4 hectares to develop a traditional mulit-family building of 1,004 apartments in 4 stages.
(g) Plot of land located in the province Huancayo of 8.5 hectares, to develop a social housing Project of 900 housing units in 4 stages.
Work in progress - real estate -
As of December 31, 2014, this item mainly includes the 2nd stage of the green area project “Los Parques de San Martin” for S/.35 million that, such as in the 1st stage, comprises 20 multi-
family buildings of 5, 10 and 12 stories located in the district San Martin de Porres; the project Rivera Navarrete for S/.22 million comprising 17 offices from 350 mts2 to 680 meters located
in the district of San Isidro, the project Villa El Salvador 2 for S/.17 million comprising 280 apartments in 20 buildings, located in the district Villa El Salvador and the green area project
“Parques de Piura” for S/.10 million.
As of December 31, 2013, this item mainly consists of project “Parque Central Club Residencial” (S/.17.6 million), comprising 22 multi-family buildings of 12 floors each, located in Cercado
de Lima, and the housing project “Los Parques de Carabayllo” (S/.16.6 million) comprising 24 buildings of 4 floors each, located in Carabayllo. The housing project “Los Parques de San
Martin” (S/.53.2 million) comprising 20 multi-family buildings of 5, 10 and 12 floors, located in San Martin de Porres; the housing project “Barranco” (S/.9.9 million) comprising a 16-storey
building with 40 apartments; and the “Real 8-9” project (S/.21.4 million) where a 16-storey building will be built with 32 offices of 500m2 each.
During the year, the Company has capitalized financing costs for these construction projects amounting to S/.5.9 million (S/.6 million in 2013 and S/.4.3 million in 2012).
Construction materials -
In 2014, the Group opened new projects and acquired construction materials by S/.10.1 million, which mainly relate to the projects: Km 117 Montaje Electrico Concentradora by S/.2.9
million, the Chancadora Primavera project for S/.2.3 million, PAD project Phase 111 – Cero Verde for S/.1.5 million and other minor projects for S/.3.3 million. The balance at December 31,
2014 shows an increase compared to 2013 which mainly corresponds to the EPC projects “Immaculate Mining Plant” which increased S/.23 million and Consorcio Vial Quinua project which
increase for S/.10.05 million. However, the Consorcio Rio Mantaro project decreased from 2013 for S/.10 million.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
199 >>
At December 31, 2014, projects in the closing process include Consorcio Tren Eléctrico Lima, Estación de Gas y Acometida Fénix – Calidda, Edificio Real 8 & 9, Oficina Rivera Navarrete,
Consorcio Tormocho and other smaller projects.
The movement of the provision for impairment of inventories is as follows:
Initial balance
Additions
Write off
Final balance
2013
10,981
2,239
(2,775)
10,445
2014
10,445
62
(3,069)
7,438
At December 31, 2014 borrowings are guaranteed with land and real state work in progress of the followings projects: “Parque Central”, “Barranco”, “Parque de San Martín”, “Pezet” and
“Parque del Agustino II”. The amount guaranteed amounts to S/.203.47 million (S/.509.57 million in 2013).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
15 INVESTMENTS IN ASSOCIATES AND JOINT VENTURES
This account comprises:
Associates
Joint ventures
Los montos reconocidos en el estado de ganancias y pérdidas comprenden:
Associates
Joint ventures
200 >>
2013
28,209
59,758
87,967
2013
11,104
22,458
33,562
December 31,
2014
82,494
147,069
229,563
December 31,
2014
29,132
24,313
53,445
2012
114
490
604
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
201 >>
Investment in associates
a)
Set out below are the associates of the Group as at December 31, 2013 and 2014. The associates listed below have share capital solely consisting of common shares, which are held directly
by the Group. None of the associates are listed companies; therefore there is no quoted market price available for their shares.
Entity
Asociación en Participación
Panorama Plaza de Negocios
Promoción Inmobiliaria del Sur S.A.
Concesionaria Chavimochic S.A.C.
JV Panama
Betchel Vial y Vives Servicios
Complementarios Ltda.
Ingenieria y Construccion
Vial y Vives OGP-1 Ltda.
Sierra Morena S.A.
Others
Class
of share
Common
Common
Common
Common
Common
Common
Common
Interest in capital
2014
%
35.00
23.86
26.50
15.00
40.00
40.00
33.33
2013
%
-
23.86
15.00
40.00
33.33
Carrying amount
At December 31,
2013
2014
-
16,298
-
2,755
-
8,450
305
401
28,209
38,932
23,930
13,336
2,755
2,345
286
272
638
82,494
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
202 >>
The most significant investments are described as follows:
i) Asociación en Participación Panorama Plaza de Negocios -
An entity which owns a land property in the District of Santiago de Surco, on which a real estate Project is being developing which comprises a commercial area and two buildings.
ii) Promoción Inmobiliaria del Sur S.A -
An entity with major asset in the form of land of 24,957,300 m2 located in Lurin, which will be used for real estate developments. Based on recent appraisals of the property, Management
believes that the commercial value of this property is higher that its carrying amount.
iii) Concesionaria Chavimochic S.A.C. -
An entity that was awarded with the implementation of the Chavimochic irrigation Project, including: a) design and construction of the work required for the third-phase of the
Chavimochic irrigation project in the province of La Libertad; b) operation and maintenance of works; and c) water supply to the Project users. Construction activities will start in 2015; the
concession effective period is 25 years and the total entire investment amounts US$647 million.
iv) JV Panama -
A limited company incorporated under the laws of Barbados, which provides engineering services to mining companies in Panama.
v) Betchel Vial y Vives Servicios Complementarios Limitada -
An entity mainly engaged in providing engineering services, acquisitions, construction services and other related services, including sales and leases of machinery, tools and equipment.
vi) Ingeniería y Construccion Vial y Vives OGP-1 Ltda -
This entity is mainly engaged in the execution of civil construction work, industrial assembly and engineering works at Escondida Mine in Chile; its business purpose is to expand the
processing capacity of its client.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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The following table shows financial information of the principal associates:
Summarized financial information for associates -
Promoción Inmobiliaria del Sur S.A
Ingeniería y Construcción
Vial y Vives OGP-1 Ltda.
Chavimochic S.A.C.
Asociación en
participación
Panorama Plaza de
Negocios(*)
At December 31,
At December 31,
At December 31,
At December 31,
2013
937
146
1,083
187
102
289
156,749
89,237
68,306
2014
48,545
25,806
74,351
-
34,351
34,351
49,365
-
-
89,365
2013
572
156,328
156,900
-
135,761
135,761
-
-
-
21,139
2014
3,238
43,380
46,618
27,229
18,674
45,903
-
-
-
715
2014
5,200
81,324
86,524
30,288
14,834
45,122
8,980
57
50,325
2014
52,748
216,296
269,044
2,385
200,590
202,975
61,945
16,418
247
111,349
Current
Cash and cash equivalents
Other current assets (excluding cash)
Total current assets
Financial liabilities
(excluding trade payables)
Other current liabilities
(including trade payables)
Total current liabilities
Non-current
Assets
Financial liabilities
Other liabilities
Net assets
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
Promoción Inmobiliaria del Sur S.A
Ingeniería y Construcción
Vial y Vives OGP-1 Ltda
Chavimochic
S.A.C
204 >>
Asociación en
participación
Panorama
Plaza de
Negocios(*)
Revenue
Depreciation and amortization
Interest income
Interest expenses
Profit or loss from continuing operations
Income tax expense
Post-tax profit from continuing
operations
Other comprehensive income
Total comprehensive income
At December 31,
At December 31, At December 31, At December 31,
2012
20,560
(79)
63
(2)
11,183
(2,601)
7,009
-
7,009
2013
44,552
(69)
52
(2)
43,234
(13,365)
29,971
-
29,971
2014
88,870
(73)
29
(3)
82,080
(24,521)
61,402
-
61,402
2012
6,437
(5,562)
-
-
875
(175)
700
-
700
2013
127,528
(101,320)
-
-
26,208
(5,398)
20,810
-
20,810
2014
220,701
-
-
-
27,828
(5,694)
22,134
-
22,134
2014
67,473
(216)
61
(126)
175
57
118
-
118
2014
9
(489)
10,918
(7,420)
955
654
301
-
301
(*) Asociación en Participación Panorama Plaza de Negocios financial statements are presented to November 30, 2014.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
The movement of the investments in associates is as follows:
Opening balance
Acquisition through business combinations (Note 31)
Contributions
Equity interest in results
Dividends received
Return of capital
Sale of investments
Conversion adjustment
Final balance
205 >>
2014
28,209
-
51,244
29,132
(25,191)
-
-
(900)
82,494
2012
25,953
2,891
-
114
-
(2,057)
-
(2,182)
24,719
2013
24,719
346
-
11,104
(2,980)
-
6,684
1,704
28,209
In 2012, 2013 and 2014 the following significant movements were carried out:
- In March 2014, Constructora Norberto Odebrecht S.A. and Odebrecht Partipacoes e Investimentos S.A. formed Concesionaria Chavimochic S.A.C., in which the Company has a 26.5%
interest by means of a capital contribution of S/.13.3 million in March 2014.
- In June 2014, the Company acquired 35% interest in the share capital of Asociacion Panorama Plaza de Negocios, through its subsidiary Viva GyM for S/.37.8 million.
- During the course of 2014, the Group received dividends mainly from its associates Promoción Inmobiliaria del Sur S.A., Ingeniería y Construcción Vial y Vives OGP -1 Limitada and from
Betchel Vial y Vives Servicios Complementarios Ltda. totaling S/.3.4 million, S/.16.6 million and S/.4.9 million, respectively.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
206 >>
- In December 2013, the Group sold its interest in Inmobiliaria San Silvestre S.A. The principal underlying asset of this associate is a plot of land located in San Isidro. The price was
determined in function of the fair value of the land which amounted to S/.5.6 million, giving rise a gain of S/.3.2 million which has been recognized in the income statement.
- In December 2013, the Group sold 4,123,783 shares of Inversiones Real Once S.A. The sale price was S/.6.8 million and profit generated from the transaction was S/.2.5 million which has
been recognized in the income statement.
- In October 2012, as a result of the acquisition of 74% of shares capital in Ingeniería y Construcción Vial y Vives (Vial y Vives) (Note 31-b), the Group recognized its investments in the
associate maintained by Vial y Vives. Such investments mainly consist of investments in Ingeniería y Construccion Bechtel, Vial y Vives Limitada for S/.2.6 million. Additionally, these
investments also include Ingeniería y Construcción Bechtel Vial y Vives OGP-1 Ltda.
b)
Investment in Joint Ventures
Set out below are the joint ventures of the Group as of December 31, 2013 and 2014.
Entity
Class
Interest in capital
Tecgas N.V.
Constructora SK-VyV Ltda.
Sistemas SEC
G.S.J.V. SCC
Logistica Químicos del Sur S.A.C.
Consorcio DSD Echeverria Izquierdo
Consorcio Vial y Vives Mena y Ovalle Ltda.
Common
Common
Common
Common
Common
Common
Common
2013
%
-
50.00
49.00
-
50.00
50.00
50.00
2014
%
51.00
50.00
49.00
50.00
50.00
50.00
50.00
Carrying amount
At December 31,
2014
75,836
42,175
10,057
8,121
7,316
3,388
176
147,069
2013
37,542
10,452
-
7,287
4,284
193
59,758
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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i) Tecgas N.V.
This entity provides services of operations and maintenance of oil pipelines and related activities. Currently its activities are focused in the service agreement of operations and
maintenance of oil pipelines of the concession of Transportadora de Gas del Perú S.A.A. - TGP (its largest customer). The acquisition of an additional interest in the latter company will
enable the Company to extend its services in to order to bring operating and maintaining services to the Southern gas pipeline (“gasoducto del sur”).
ii) Constructora SK - VyV Ltda -
This entity is mainly engaged in the execution of civil construction work and industrial assembly, construction, buildings and carrying out engineering projects, in general, and any other
business agreed upon by the partners for the project “Caserones” of the client Minera Lumina Cooper.
iii) Sistemas SEC -
The company’s activities include the renovation and automation of the electrical system and signaling of railways and communications within Santiago - Chillán - Bulnes - Caravans and
Conception areas. The contract was awarded to SEC in 2005 for a period of 16 years.
iv) G.S.J.V. SCC -
An entity engaged in designing, acquiring and building the gold-processing plant for Sedgman S.A. its partner in the implementation the Aurora Project of Guyana Goldfields.
v) Logistica de Quimicos del Sur S.A.C. -
The business purpose of Logistica de Quimicos del Sur S.A.C. (LQS) is to provide services of receiving, storing, shipping, and transport of sodium hydrosulfide to Sociedad Minera Cerro
Verde S.A.A.
vi) Consorcio DSD Echeverria Izquierdo Limited -
The purpose of this company is exclusively the execution of civil works and electromechanical assemblies for mining project Ministro Hales, which is owned by Codelco. It was made part
of the Group through the acquisition of DSD Construcciones y Montajes S.A. (see Note 31-c).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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The following table shows financial information of the principal joint ventures:
Summarized financial information for joint ventures -
Constructora SK-VyV Ltda.
At December 31,
Sistemas SEC
At December 31,
Tecgas N.V.
At December 31,
2013
2014
2013
2014
2013
2014
Current
Cash and cash equivalents
Other current assets (excluding cash)
Total current assets
871
153,019
153,890
692
91,606
92,298
181
22,248
22,429
68
18,329
18,397
Financial liabilities (excluding trade payables)
-
68
1,935
42
Other current liabilities
(including trade payables)
Total current liabilities
Non-current
Assets
Financial liabilities
7,921
7,989
17,487
19,422
8,867
8,909
103
24,618
16,239
78,782
78,782
-
-
-
-
-
-
-
-
35,009
53,370
88,379
81,917
81,917
201,362
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
Other liabilities
Total non-current liabilities
Net assets
Revenue
Depreciation and amortization
Interest income
Interest expenses
Profit or loss from continuing operations
Income tax expense
Post-tax profit from continuing operations
Other comprehensive income
Total comprehensive income
-
-
75,108
593,258
(68)
-
-
63,266
(12,164)
51,102
-
51,102
91
91
84,321
298,156
(426)
83
46,916
(8,964)
37,952
-
37,952
6,296
6,296
21,329
37,912
(236)
-
(582)
2,835
(684)
2,151
-
2,151
5,198
5,198
20,529
362
(2,069)
1,409
(1,065)
2,474
(1,305)
(1,169)
-
(1,169)
-
-
-
-
-
-
-
-
-
-
-
-
209 >>
59,126
59,126
148,698
-
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu The movement of the investments in joint ventures is as follows:
Opening balance
Acquisition through business
combination (v) (Note 31)
Contributions
Debt capitalization
Equity interests in results
Dividends received
Adjustment SEC (iv)
Adjustment LQS (iv)
Conversion adjustment
Final balance
210 >>
2014
59,758
78,615
-
24,313
(11,527)
-
-
(4,090)
147,069
2012
-
12,237
-
-
490
-
-
-
-
12,727
2013
12,727)
2,262
-
7,989
22,458
(1,708)
9,379
7,408
(757)
59,758
In 2014, 2013 and 2012 the following significant movements were carried out:
i)
In December 2014, the Company acquired 51% of the share capital of Tecgas N.C. (current strategic partner of Transportadora de Gas del Perú), which holds 100% the share capital
of Compañía Operadora de Gas del Amazonas (hereinafter COGA) for a total of S/.75.8 million. This investment includes goodwill resulting from the purchase amounting to S/.61.4
million.
ii)
In July 2014, the Company acquired 50% interest in the share capital of G.S.J.V. SCC, through a subsidiary of GyM S.A. for S/.2.78 million.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
211 >>
iii)
The Group received dividends in 2014 from Constructora SK – VyV Ltda., for S/.11.5 million.
iv)
v)
In 2013, the Company reassessed the nature of the rights attributed to its partners based on the provisions of IFRS 10 and concluded that the parties have joint control instead of
being subsidiaries; therefore, Logística de Químicos del Sur S.A.C. (LQS) and Sistemas SEC SA (hereinafter SEC) were de-consolidated from the Group and recorded under the equity
method of accounting. The effect of this reassessment on total assets and total shareholders’ equity is not significant to the financial statements for any of the periods presented.
In October 2012, as a result of the acquisition of 74% of shares capital in Ingeniería y Construcción Vial y Vives (Vial y Vives), the Group recognized its investments in joint ventures
maintained by Vial y Vives which corresponds to mainly Constructora SK-VyV Ltda. for S/.12.2 million. Additionally, these investments also include Consorcios Vial y Vives and Mena
y Ovalle Ltda.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
212 >>
16 PROPERTY, PLANT AND EQUIPMENT
The movement in property, plant and equipment accounts and its corresponding accumulated depreciation for the year ended December 31, 2014, 2013 and 2012 is as follows:
At January 1, 2012
Cost
Accumulated depreciation
Net cost
Net initial cost
Additions
Acquisition of subsidiary - Vial y Vives
Acquisition of subsidiary - Stracon GyM
Reclassifications
Transfers to intangibles (Note 17)
Deduction for sale of assets
Adjustments and/or reclassifications for
cost – asset disposal
Depreciation charge
Depreciation for sales deductions
Adjustments and/or reclassifications for
asset depreciation
Depreciation for transfers
Foreign currency translation effect
Net final cost
At December 31, 2012
Cost
Accumulated depreciation
Net cost
Land Own occupied
buildings
Machinery
Vehicles
Furniture and
fixtures
Other
equipment
Replacement
units
In-transit
units
Assets under
construction
Total
17,674
-
17,674
17,674
3,713
5,128
-
-
-
-
-
-
-
-
-
-
86,265
(15,624)
70,641
70,641
17,955
-
-
(608)
-
(5,790)
1,791
(6,664)
1,198
362
-
629,163
(288,659)
340,504
340,504
136,853
32,055
24,504
(21,555)
-
(45,868)
(3,216)
(81,798)
34,234
1,821
22,427
-
222,227
(89,600)
132,627
132,627
82,363
75
47,233
20,459
-
(16,284)
1,994
(53,306)
10,987
1,185
(2,565)
-
28,501
(16,530)
11,971
11,971
7,161
1,547
31
(216)
-
(633)
1,675
(8,738)
537
5,248
91,542
(59,751)
31,791
31,791
29,962
379
-
22,045
-
(6,281)
(1,729)
(21,642)
5,704
644
236
(20,449)
-
9,071
-
9,071
9,071
784
-
-
1,218
-
(63)
(806)
(47)
-
5
(11)
-
6,922
-
6,922
6,922
28,033
-
-
(15,609)
-
-
(23)
-
-
-
-
-
26,515
78,885
439,961
222,398
18,819
40,424
10,151
19,323
26,515
-
26,515
99,613
(20,728)
78,885
751,936
(311,975)
439,961
358,067
(135,669)
222,398
38,066
(19,247)
18,819
135,918
(95,494)
40,424
10,204
(53)
10,151
19,323
-
19,323
65,712
-
65,712
65,712
97,393
-
-
(5,734)
(59,755)
-
683
-
-
-
-
(1,244)
97,055
97,055
-
97,055
1,157,077
(470,164)
686,913
686,913
404,217
39,184
71,768
-
(59,755)
(74,919)
369
(172,195)
52,660
6,533
-
(1,244)
953,531
1,536,697
(583,166)
953,531
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
213 >>
Land Own occupied
buildings
Machinery
Vehicles
Furniture and
fixtures
Other
equipment
Replacement
units
In-transit
units
Assets under
construction
Total
26,515
-
26,515
99,613
(20,728)
78,885
751,936
(311,975)
439,961
26,515
78,885
439,961
6,713
624
(1,555)
10,184
-
63,155
44,493
(5,187)
35,627
(948)
(2,467)
(20,432)
-
(2,641)
(5,706)
(5,752)
358,067
(135,669)
222,398
222,398
31,445
2,973
(119)
6,193
-
(19,213)
(15,767)
(1,592)
38,066
(19,247)
18,819
18,819
3,419
94
(382)
1,108
-
135,918
(95,494)
40,424
40,424
22,061
1,773
(158)
10,204
(53)
10,151
10,151
3,537
-
-
19,323
-
19,323
19,323
19,585
-
-
(4,417)
(2,494)
(15,823)
-
(2,579)
(2,676)
-
-
-
-
(2,074)
(3,004)
(601)
( 1,256)
97,055
-
97,055
97,055
91,450
-
(19,108)
(30,525)
(38,656)
-
(2,173)
1,536,697
(583,166)
953,531
953,531
241,365
52,922
(26,509)
-
(39,604)
(47,367)
(21,473)
(19,093)
(7,387)
(84,454)
(59,126)
(9,247)
(19,235)
(144)
1,587
542
(15)
84,326
110,456
(26,130)
84,326
(2,623)
14,984
3,787
(2,102)
474,803
855,084
(380,281)
474,803
1,746
11,961
295
(111)
181,083
361,876
(180,793)
181,083
(12)
2,432
2,168
23
13,769
37,675
(23,906)
13,769
1,010
1,276
2,138
( 59)
39,133
149,438
(110,305)
39,133
-
-
(179,487)
(38)
23
-
-
-
-
-
-
-
-
-
-
-
10,578
21,829
98,043
10,646
(68)
10,578
21,829
-
21,829
98,043
-
98,043
-
32,240
8,930
(2,549)
952,906
1,674,389
(721,483)
952,906
2,965
-
147
-
-
-
-
-
-
-
-
(285)
29,342
29,342
-
29,342
At January 1, 2013
Cost
Accumulated depreciation
Net cost
Net initial cost
Additions
Acquisition of subsidiary – DSD (Note 31)
Desconsolidation SEC y LQS
Reclassifications
Transfers to intangibles (Note 17)
Deduction for sale of assets
Transfer to held for sale assets
Adjustments and/or reclassifications for
cost – assets disposal
Depreciation charge
Depreciation for transfers
Depreciation for sales deductions
Adjustments and/or reclassification for
cost – asset depreciation
Foreign currency translations effect
Net final cost
At December 31, 2013
Cost
Accumulated depreciation
Net cost
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu 214 >>
Land Own occupied
buildings
Machinery
Vehicles
Furniture and
fixtures
Other
equipment
Replacement
units
In-transit
units
Assets under
construction
Total
At January 1, 2014
Cost
Accumulated depreciation
Net cost
Net initial cost
Additions
Acquisition of subsidiary - Morelco (Note 31 a)
Acquisition of subsidiary - Coasin (Note 31 b)
Reclassifications
Transfers to intangibles (Note 17)
Deduction for sale of assets
Adjustments and/or reclassification for
cost – assets disposal
Depreciation charge
Depreciation for transfers
Depreciation for sale deductions
Adjustments and/or reclassification for cost – asset
depreciation
Foreign currency translations effect
Net final cost
At December 31, 2014
Cost
Accumulated depreciation
Net cost
29,342
-
29,342
29,342
17
794
-
-
-
-
-
-
-
-
-
(677)
29,476
29,476
-
29,476
110,456
(26,130)
84,326
84,326
19,349
1,370
855,084
(380,281)
474,803
474,803
133,230
61,212
-
-
67,454
24,523
361,876
(180,793)
181,083
181,083
87,958
1,844
-
(3,048)
-
-
-
(61,508)
(10,404)
(52,364)
(1,402)
37,675
(23,906)
13,769
13,769
8,434
332
-
468
(2,514)
(585)
(3,316)
-
(3,087)
(8,319)
149,438
(110,305)
39,133
39,133
40,125
1,829
10,646
(68)
10,578
10,578
98
-
21,829
-
21,829
21,829
19,982
-
98,043
-
98,043
98,043
119,773
3,375
711
-
-
-
( 3,066)
(2,327)
(11,996)
(2,222)
2,959
1,910
(285)
157,472
192,951
(35,479)
157,472
(89,462)
(52,697)
(6,896)
(22,100)
375
45,001
8,339
(8,449)
577,685
993,713
(416,028)
577,685
(3,036)
33,458
1,253
(787)
192,262
394,077
(201.815)
192,262
958
2,214
351
(585)
15,946
43,225
(27,279)
15,946
3,925
2,394
5,753
(335)
56,173
177,046
(120,333)
56,713
(2,043)
(31,415)
(851)
(605)
(7)
71
-
-
7,241
7,245
(4)
7,241
(830)
-
-
-
-
-
(389)
9,177
9,177
-
9,177
1,674,389
(721,483)
952,906
952,906
428,966
70,756
711
-
(66,604)
(124,220)
(22,841)
(183,158)
-
86,097
17,606
(52,623)
(66,604)
-
801
-
-
-
-
(86)
(11,568)
102,679
1,148,651
102,679
102,679
1,949,589
(800,938)
1,148,651
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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In 2014 and 2013, additions to cost correspond to the acquisition of fixed assets under finance leases and by direct acquisition.
The balance of assets under construction at December 31, 2014, relate mainly to investments made by the subsidiary GMP SA for S/.47.4 million (S/.37.6 million at December 31, 2013) for
the activities of oil drilling in order to increase exploitation of oil and gas (25 wells in 2014 and 16 wells in the 2013).
Additionally, the balance includes the construction work of the offices in the new administrative headquarters of the Company in Petit Thouars avenue, amounting to S/.28.9 million
(S/.26.8 million in 2013 and S/.25.3 million by remodeling the administrative headquarters in Surquillo in 2013) and the subsidiary GyM S.A. maintains a balance of S/.12 million relating to
the construction of a corrective preventive maintenance at the Constancia mine.
In 2014 the sale of fixed assets amounted to S/.43.1 million (S/.20.4 million and S/.22.2 million in 2013 and 2012, respectively), resulting in a profit of S/.4.9 million (a profit of S/.0.7 million
and S/.1.2 million in 2013 and 2012, respectively), which is shown in the income statement under “other income and expenses”.
The amount of S/.21.5 million transferred to held-for-sale assets in 2013 consisted of certain machinery and furniture owned by the Chilean subsidiary of GyM S.A., for the execution of a
project in Chile. Management approved their sale. Most of these assets could not be sold in 2014 due to unfavorable market conditions. As a consequence, Management performed an
assessment of their fair value which resulted in the recognition of an impairment loss of S/.11.96 million (S/.10.34 million which is included in “other income and expenses” and S/.1.6 million
of translation adjustment included in other comprehensive income. Management expects to recoup this amount through the sale of the assets in 2015.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
Depreciation of fixed assets and investment properties for the year is broken down in the income statement as follows:
Cost of services and goods
Administrative expenses
Capitalization to inventories
Total depreciation related to property, plant and equipment
(+) Depreciation related to investment property
(-) Capitalization to inventories
Total depreciation charged to expenses
2012
159,526
11,980
689
172,195
1,512
689
173,018
2013
166,098
13,389
-
179,487
1,992
-
181,479
216 >>
2014
168,633
14,525
-
183,158
2,151
-
185,309
The net carrying amount of machinery and equipment, vehicles and furniture and fixtures acquired under finance lease agreements is broken down as follows:
Cost
Accumulated depreciation
Net cost
Property, plant and equipment amounting to S/.95.6 million (S/.240.5 million in 2013) have been pledged granted as guarantee of certain borrowings.
2013
480,099
(201,999)
278,100
December 31,
2014
643,498
(264,343)
379,155
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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17 INTANGIBLE ASSETS
The movement of intangible assets and that of their corresponding accumulated amortization, as of December 31, 2014, 2013 and 2012, is as follows:
At January 1, 2012
Cost
Accumulated amortization and impairment
Net cost
Net initial cost
Additions
Acquisition of subsidiary - Vial y Vives (Note 31)
Acquisition of subsidiary - Stracon GyM (Note 31)
Deductions
Transfers from assets under construction (Note 16)
Disposals - cost
Amortization charge
Disposals - amortization
Net final cost
At December 31, 2012
Cost
Accumulated amortization and impairment
Net cost
Goodwill
Trade-
marks
Concession
rights
Contractual
relations
with clients
Internally
generated
software and
development
costs
Costs of
development
of wells
Development
costs
Land use
right
Other
assets
Total
(21,995)
24,909
24,909)
-
28,944
13,366
-
-
-
-
-
67,219
89,214
(21,995)
67,219
-
-
-
-
-
75,845
-
-
-
-
(410)
-
75,435
75,845
(410)
75,435
390,039
(207,649)
182,390
182,390
28,406
-
-
(263)
-
(537)
(31,413)
-
178,612
417,645
(239,033)
178,612
17,518
( 4,907)
12,611
12,611
-
23,024
9,976
-
-
-
(7,147)
29
38,464
50,518
(12,054)
38,464
26,771
(12,240)
14,531
14,531
3,998
-
-
(20)
-
(7,654)
(10,427)
6,307
6,735
23,095
(16,360)
6,735
114,327
(65,548)
48,779
48,779
4,897
-
-
-
59,686
-
(21,828)
-
91,534
178,910
(87,376)
91,534
3,623
(3,623)
-
-
-
-
-
-
-
-
-
-
-
3,623
(3,623)
-
13,288
-
13,288
13,288
-
-
-
-
-
-
-
-
13,288
13,288
-
13,288
21,376
(87)
21,289
21,289
1,956
-
-
(13,962)
69
(38)
(260)
57
9,111
9,401
(290)
9,111
633,846
(316,049)
317,797
317,797
39,257
127,813
23,342
(14,245)
59,755
(8,229)
(71,485)
6,393
480,398
861,539
(381,141)
480,398
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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At January 1, 2013
Cost
Accumulated amortization and impairment
Net cost
Net initial cost
Additions
Acquisition of subsidiary - DSD (Note 31)
Desconsolidation SEC y LQS
Transfers from assets under construction (Note 16)
Disposals - cost
Amortization charge
Disposals - amortization
Foreign currency translations effect
Net final cost
At December 31, 2013
Cost
Accumulated amortization and impairment
Net cost
Goodwill
Trade-
marks
Concession
rights
Contractual
relations
with clients
Internally
generated
software and
development
costs
Costs of
development
of wells
Development
costs
Land use
right
Other
assets
Total
89,214
(21,995)
67,219
67,219
-
6,128
-
-
-
-
-
-
73,347
95,342
(21,995)
73,347
75,845
(410)
75,435
75,435
-
-
-
-
(33)
(2,458)
-
-
417,645
(239,033)
178,612
178,612
14,622
218
(1,203)
2,122
(1,965)
50,518
(12,054)
38,464
38,464
-
7,373
-
-
(100)
23,095
(16,360)
6,735
6,735
5,106
-
(902)
290
(42)
(18,816)
(16,202)
(7,084)
(323)
6,728
-
-
(6)
-
178,910
(87,376)
91,534
91,534
-
-
-
38,621
(317)
(31,236)
-
-
72,944
179,995
29,535
4,097
98,602
3,623
(3,623)
-
-
-
-
-
-
-
-
-
-
-
13,288
-
13,288
13,288
-
-
-
-
-
-
-
-
9,401
(290)
9,111
9,111
4,976
-
(5)
(1,429)
(1,307)
(2,591)
322
-
861,539
(381,141)
480,398
480,398
24,704
13,719
(2,110)
39,604
(3,764)
(78,387)
(7)
6,728
13,288
9,077
480,885
75,812
(2,868)
72,944
438,167
(258,172)
179,995
57,791
(28,256)
29,535
27,547
(23,450)
4,097
217,214
(118,612)
98,602
3,623
(3,623)
-
13,288
-
13,288
11,636
(2,559)
9,077
940,420
(459,535)
480,885
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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At January 1, 2014
Cost
Accumulated amortization and impairment
Net cost
Net initial cost
Additions
Acquisition of subsidiary – Morelco (Note 31 a)
Acquisition of subsidiary – Coasin (Note 31 b)
Transfers from assets under construction (Note 16)
Reclassifications
Disposals - cost
Amortization charge
Disposals - amortization
Amortization reversal (Vial y Vives)
Foreign currency translations effect
Net final cost
At December 31, 2014
Cost
Accumulated amortization and impairment
Net cost
Goodwill
Trade-
marks
Concession
rights
Contractual
relations
with clients
Internally
generated
software and
development
costs
Costs of
development
of wells
Development
costs
Land use
right
Other
assets
Total
95,342
(21,995)
73,347
73,347
-
105,764
5,743
-
-
-
-
-
-
(2,597)
182,257
204,252
(21,995)
182,257
75,812
(2,868)
72,944
72,944
-
33,326
-
-
-
-
-
-
2,651
(6,370)
102,551
102,768
(217)
102,551
438,167
(258,172)
179,995
179,995
135,502
847
6
1,845
920
(16,016)
(26,823)
15,491
-
(88)
291,679
561,183
(269,504)
291,679
57,791
(28,256)
29,535
29,535
-
30,318
-
-
-
-
27,547
(23,450)
4,097
4,097
2,804
-
1,371
1,677
180
(29)
217,214
(118,612)
98,602
98,602
-
-
-
64,759
(251)
(14,987)
(3,013)
(31,780)
-
-
(1,876)
42,990
86,233
(43,243)
42,990
1
-
(1,319)
5,769
32,231
(26,462)
5,769
-
-
-
131,330
281,722
(150,392)
131,330
3,623
(3,623)
-
-
-
-
-
-
-
-
-
-
-
-
-
13,288
-
13,288
13,288
-
-
-
-
-
-
-
-
-
11,636
(2,559)
9,077
9,077
5,238
-
-
(1,677)
(849)
(91)
(778)
-
-
-
13,288
10,920
3,623
(3,623)
-
13,288
-
13,288
14,257
(3,337)
10,920
940,420
(459,535)
480,885
480,885
143,544
170,255
7,120
66,604
-
(16,136)
(77,381)
15,492
2,651
(12,250)
780,784
1,299,557
(518,773)
780,784
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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a) Goodwill -
Management reviews the results of its businesses based on the type of economic activity carried out. Economic activities which have given rise to goodwill in the Group are construction,
electro-mechanical, engineering services and the sale of IT equipment and services and Telecommunications services.
Goodwill from cash-generating units is allocated to the following segments:
Construction - Engineering (Note 31 a, c y d)
Construction - Mining services (Note 31-e)
Construction - Electromechanical
Information technology services
Telecommunications services (Note 31-b)
2013
35,072
13,366
20,737
4,172
73,347
December 31,
2014
138,239
13,366
20,737
4,172
5,743
182,257
Goodwill from information technology services arose from the previous acquisition in prior years of subsidiary Gestión de Servicios Digitales S.A.
Goodwill from the electromechanical engineering business corresponds to the previous acquisition in prior years of subsidiary GMA S.A., which was later merged with subsidiary GyM S.A.
As a result of the impairment testing on goodwill performed by Management on an annual basis the recoverable amount of the related cash-generating unit (CGU) is determined based on
its value in use. Value in use is determined based on the future cash flows expected to be generated by the assessed CGU. As a result of these assessments no provisions for impairment
were required.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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The main criteria used by the Group to determine the value in use are as follows:
2013 -
Gross margin
Growth rate
Discount rate
2014 -
Gross margin
Growth rate
Discount rate
Mining
construction
services
17.00%
3.00%
12.00%
12.60%
2.00%
13.00%
Engineering
construction
Electro-
mechanical
IT equipment
and services
Telecommunication
services
12.99%
3.00%
9.80%
10.70%
3.00%
8.36%
10.80%
3.00%
9.80%
8.73%
2.00%
13.00%
31.89%
3.00%
22.40%
41.16%
0.00%
13.00%
-
-
-
11.10%
5.00%
10.76%
These assumptions have been used for the analysis of each cash-generating unit (CGU) included in the operating segments for a period of 5 years and considering a recoverable residual
value with no growth.
Management determines the budgeted gross margins based on past results and market development expectations. Average growth rates are consistent with those prevailing in the
industry. Discount rates used are pre-tax and reflect the specific risk related to the assessed CGUs.
b) Trademarks -
The Group acquired trademarks in business combination processes of Vial y Vives S.A.C. (S/.75.4 million) in October 2012 and of Morelco (S/.33.32 million) in December 2014. The
total carrying amount of these assets amount to S/.102.5 million at December 31, 2014 (S/.72.9 million in 2013). In 2014, the Group determined that trademarks arising from business
combinations have an indefinite life; accordingly these assets are tested for impairment annually as explained in a) above. In this regard, the amortization previously recorded in 2013 and
2012 amounted to S/.2.5 million has been reverse against profit and loss in 2014.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
As a result of these assessments, no provision for impairment was considered necessary to be made.
Major assumptions used by the Group to determine the value in use are as follows:
2014 -
Gross margin
Growth rate
Discount rate
222 >>
Construcción de ingeniería
10.70%
3.00%
8.36%
c)
Concessions -
This intangible asset includes the value attributable to the concession for the Ancón-Huacho-Pativilca road section of the Panamericana Norte highway. Intangibles arising from this
concession as of December 31, 2014 mainly comprise the EPC contract for S/.101.39 million; highway improvement for S/.21.5 million; and initial capitalized expenses for S/. 12.2 million
(S/.109.2 million, S/.20.2 million and S/.12.2 million respectively in 2013. Under those contracts the Concessionaire has to construct, improve and rehabilitate the road infrastructure over
the effective period of the concession.
During 2014, the following transactions took place: i) subsidiary GMP S.A. acquired the right of subscription in Terminales del Perú for the operation of the northern freight platforms for
a period of 20 years for an amount of S/.12.2 million and the acquisition of the rights to subscription in the renewal of the operational agreement of the Consorcio Terminales del Sur (1
year) for S/.1.2 million; ii) Subsidiary Norvial S.A. invested S/.82.70 million in the construction of the second tranche of the highway “Ancón - Huacho - Pativilca”; iii) Subsidiary GMD S.A.
invested an amount of S/.15.2 million that comprises projects of technology for the Oficina de Normalización Previsional for S/. 9.5 million, in the project of Superintendencia Nacional de
Registros Públicos (SUNARP) for S/.1.2 million, in the project of ISO Infraestructura for S/.1.1 million en el proyecto de ISO Infraestructura and S/.3.4 million in licenses and other tools;
investments of the concession Vía expresa Sur for S/.15.85 related to the extension of vía expresa Sur in conection with San Juan de Miraflores district, which accounts for 53% of the non-
guaranteed revenue by the concessionaire (bifurcated model) and othe minor projects for an amount of S/.7.6 million (That correspond to the subsidiaries GyM S.A., Concar S.A. y Viva
GyM S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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d) Costs of development of wells -
Through one of its subsidiaries, the Group operates and extracts oil from two fields (Block I and Block V) located in the province of Talara in northern Peru. Both oil fields are operated
under long-term service agreements by which the Group provides hydrocarbon extraction services to Perupetro, the government-run oil company. Hydrocarbons extracted from each field
belong to Perupetro, which in turn pays the Group a variable fee per barrel of lifted hydrocarbons, which is based on a basket of international crude prices and the level of production. The
fee is paid on a monthly basis. The Group’s activities are focused on development and production of proved reserves and are conducted in mature oil fields, which have been producing oil
for over 100 years (in the case of Block I) and over 50 years (in the case of Block V). Such service contracts do not qualify as public service concessions, as
defined by IFRIC 12. The extraction services that the Group provides and the infrastructure that it maintains are not a service that is provided to the public. Such infrastructure is not
designed for public use and the services provided are exclusively for Perupetro.
As part of the Group’s obligations under the service contracts, it is required to invest in certain costs to prepare the wells located in Block I and Block V for providing oil and hydrocarbon
exploitations services, which are capitalized as part of the intangible asset with a carrying amount on December 31, 2014 of S/.128.2 million and S/.5 million, respectively (S/.91.8 million and
S/.6.9 million at December 31, 2013, respectively). These blocks are amortized along the concession terms, which set maturity in 2021 for Block I and in 2023 for Block V.
Amortization of intangible assets -
The amortization of intangibles is distributed in the income statement as follows:
Cost of sales (Note 25)
Administrative expenses (Note 25)
2012
60,517
10,968
71,485
2013
67,254
11,133
78,387
2014
68,089
6,641
74,730
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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On December 10, 2014, the subsidiary GMP S.A. was awarded by the Peruvian Government the right to exploit for 30 years Oil Blocks III and IV (owned by the estate company Perupetro)
located within the Talara basin, in the city of Piura, in the northern region of Peru.
GMP’s winning technical-economic bid engages it to drill 230 development wells in Block III and 330 development wells in Block IV for 10 years. The total expected investments in both
wells amount to US$560 million. Operations are expected to start in April 2015 in both Blocks, with a production of 1,700bpd while the drilling obligation is engaged to become effective
one year after the beginning of operations.
18 BORROWINGS
This item comprises:
Bank loans
Finance leases
Total debt
a) Bank loans -
Total
As of December 31,
2014
1,419,428
332,151
1,751,579
2013
514,228
281,594
795,822
Current
As of December 31,
2014
1,300,636
124,819
1,425,455
2013
381,005
105,114
486,119
Non- current
As of December 31,
2014
118,792
207,332
326,124
2013
133,223
176,480
309,703
At December 31, 2014 and 2013 this item comprises bank borrowings contracted in local and foreign currency intended for working capital. These obligations are subject to fixed interest
rates ranging between 1% and 9% in 2014 and between 2% and 9% in 2013.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
225 >>
At December 2014, subsidiary GyM S.A. received loans for a total amount of S/.434 million from BBVA Continental, Scotiabank and Banco Santander; those borrowings mature between
January and March 2015 and bear interest at an annual rate that range between 1% and 5.90%.
In June 2014, the subsidiary GyM Ferrovías signed a short term loan with BBVA Continental of S/.200 million at an interest rate of 5.75%, due on December 2014. In December 2014, the
short term loan with BBVA Continental was refinanced through a short term loan provided by BCP, due in February 2015. In August 2014, another short term loan with Banco de Crédito
del Perú-BCP of S/.200 million at an interest rate of 5.90%, due on January 2015. Both loans will be cancelled with an international bond issuance under the Regulation S, to be placed in
February 2015. This issuance will consist of 25-year corporate bonds, at inflation adjusted (VAC) interest rate, to be place mainly to insurance companies and pension funds.
In January 2014, subsidiary Norvial S.A. signed a short-term loan agreement with Banco de Crédito del Perú (BCP) for a total S/.120 million and US$12 million. On the same date, under
such credit facility, S/.50 million was disbursed at an annual effective rate of 6.32% and during 2014 a total of S/.85 million have been disbursed. This loan will be settled with the issuance
of bonds to be placed in the Peruvian capital market to finance the construction of the second phase of “Ancón - Huacho Pativilca” highway.
During 2014, Viva GyM S.A. maintained bank borrowings and promissory notes equivalent to S/.140.4 million (S/.109.3 million in December 2013) with local financial institutions at interest
rates ranging between 3% and 8%. Proceeds were used to purchase land properties (Note 14) and working capital.
During 2014, CAM Chile S.A., a subsidiary of CAM Holding Sp.A., maintained bank borrowings and promissory notes equivalent to S/.45.6 million, with local financial institutions at
interest rates ranging between 4.02% and 7.92%, with maturity between January and October 2015, and in May 2018. The proceeds were used for working capital.
During 2014, GMD S.A. maintained promissory notes equivalent to S/.13.6 million with local financial institutions at interest rates ranging between 4.9% and 5.76%, with maturity in March
2015; the proceeds were used for working capital.
In April 2005, subsidiary Norvial S.A. signed two “Loan Agreements”; one with IFC and one with IDB; these multilateral financing organizations granted funding for the engineering,
construction and acceptance of works relating to the first phase of the Concession Agreement totaling US$36 million (S/.123.5 million) with maturity in January 2014.
Between November and December 2013, subsidiary Concar S.A. contracted local currency bank borrowings for S/.51.2 million at December 31, 2013 to be used as working capital. These
loans earn fixed interest rates ranging between 5.6% and 6%. These borrowings expired and were cancelled in June 2014 and have no specific guarantees.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
226 >>
In December 2013, the subsidiary GMI S.A. signed bank borrowings with local financial institutions, totaling S/.3.2 million and US$4.7 million (equivalent to S/.13.2 million), bearing fixed
interest rates ranging between 5.45% and 7.5%. Acquired loans were used for working capital and they do not have collaterals. These loans borrowings expired and were cancelled in March
2014.
In September 2013, subsidiary GMP S.A. obtained a loan from Banco Continental of $8 million (equivalent to S/.21 million); the proceeds were used for working capital. This loan bears an
annual interest of 4.34% and is secured by future cash flows of Block I Project (Note 17-d).
Additionally, the subsidiary GMP maintains a loan with Citibank N.A. as per the loan agreement signed on September 19, 2008 (amended on August 29, 2012), which was applied to the
financing of the construction, equipment and operating the new Gas Pariñas Plant of the subsidiary. The major amendments to the original agreement include: an increase in the financed
amount to US$28 million (S/.72 million), an extension of the repayment period and a reduction of accrued interest. The guarantees given to secure this obligation are: a mortgage on the
land on which the Gas Pariñas Plant has been constructed; a pledge on the equipment and assignment of the cash flows to be obtained from sales to customers (Repsol, Llama Gas, Zeta
Gas and Herco). Said loan reaches maturity in August 2020, as per the new conditions agreed upon. This debt bears interest at Libor (3m) + 1.75%, if the exchange rate, at the installment
payment date, remains within the range from S/.2.60 to S/.2.75 per US$1 or (ii) 1.95%, if the stated range is not maintained. In order to reduce the exposure to Libor
variation, the Company signed an interest rate swap with Citibank N.A., which establishes a fixed rate of 4.80% or 5.05%, based on each of the above cases. At December 31, 2014 the
balance of this borrowing is S/.60.4 million (S/.66.4 million at December 31, 2013).
At December 31, 2014, the Company has renewable lines of credit totaling S/.2,459 million (S/.2,626 million 2013).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
b)
Finance lease obligations -
The minimum payments to be made by maturity and present value of the finance lease obligations are as follows:
Up to 1 year
From 1 to 5 years
Future financial charges on finance leases
Present value of the obligations for finance lease contracts
The present value of finance lease obligations is as follows:
Up to 1 year
From 1 to 5 years
227 >>
December 31,
2014
138,988
225,844
364,832
(32,681)
332,151
December 31,
2014
124,819
207,332
332,151
2013
115,698
193,233
308,931
(27,337)
281,594
2013
115,114
166,480
281,594
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
228 >>
c)
Fair value of borrowings -
The carrying amount and fair value of borrowings are broken down as follows:
Loans from multilateral organizations
Other loans
Carrying amount current and
non-current portion
Fair value
As of December 31,
As of December 31,
2013
42,599
753,223
795,822
2014
-
1,751,579
1,751,579
2013
44,384
642,842
687,226
2014
-
1,705,843
1,705,843
Fair values are determined based on discounted cash flows using borrowing rates of 4.4% and 8.0% (4.1% and 8.1% in 2013) information that corresponds to level 2 of the fair value
hierarchy.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
19 TRADE ACCOUNTS PAYABLE
This item comprises:
Invoices payable
Notes payable
Total
Non-current
Invoices payable
Total current
229 >>
December 31,
2014
1,182,607
21
1,182,628
(3,779)
1,178,849
2013
993,050
504
993,554
(2,157)
991,397
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
20 OTHER ACCOUNTS PAYABLE
This item comprises:
Advances received from customers
Salaries and profit sharing payable
Put option liability - acquisition of Morelco (*)
Account payable - acquisition of Morelco (Note 31-a)
Other taxes payable
Loans from third-parties
IVA payable
Deposits in guarantee
Post-retirement benefits
Unbilled services
Account payable for the purchase of fixed assets
Deferred income
Other accounts payables
Less non-current portion:
Put option liability – acquisition of Morelco
Account payable - acquisition of Morelco
Advances received from customers - GyM S.A.
230 >>
December 31,
2014
684,256
220,212
113,829
45,684
71,876
56,025
45,043
14,599
9,850
6,743
6,546
4,249
23,717
1,302,629
(113,829)
(45,684)
(54,949)
2013
701,813
156,455
-
-
63,802
29,771
28,787
17,342
8,995
3,807
5,159
4,356
22,792
1,043,079
-
(124,344)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
Advances received from customers - Concar S.A.
Advances received from customers - GMD S.A.
Advances received from customers – GyM Ferrovías S.A.
Advances received from customers – Viva GyM S.A.
Post-retirement benefits - CAM Holding S.p.A.
Others
Current portion
(51,938)
-
-
(9,723)
(18,000)
(1,371)
(205,396)
837,683
(*) The balance of put option liability correspond to the agreement signed by the subsidiary GyM S.A. associated with the purchase of Morelco (Note 31 a).
The amortized cost of the other short – term accounts payable is similar to their carrying amounts due the fact to the short maturity.
231 >>
(30,869)
(19,603)
(4,820)
(4,679)
(16,272)
(4,181)
(294,886)
1,007,743
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
Advances received from customers are discounted from billing, in accordance with the terms of the agreements. These advances mainly comprise:
Projects:
Consorcio Rio Mantaro
Proyecto HidroÑuble - Chile
Central Hidroeléctrica Machu Picchu
Stracon GyM
EPC Planta Minera Inmaculada
Consorcio Vial La Quinua
Proyecto Kelar - Chile
Proyecto Navarrete
Planta Concentradora Cerro Verde 2 Fase 1
Chilectra S.A.
Consorcio Construcciones y Montajes – CCM
Pad I Fase III - Sociedad Minera Cerro Verde
Panorama Plaza Negocios 2
Proyecto Antucoya
Túnel Santa Rosa II
Cora Cora
CER- Consorcio Menegua
2013
162,926
-
46,678
45,670
60,331
21,078
-
4,678
9,800
3,819
8,005
-
19,552
-
12,016
32,168
-
232 >>
December 31,
2014
102,780
84,488
46,274
34,871
32,330
27,013
24,940
24,447
22,675
22,167
21,844
21,318
16,143
16,009
15,967
13,104
11,974
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
Construcción Planta de Cal.
G&M Construcciones y Montajes - Bolivia
6-SK Refineria Esmeraldas-Ecuador
Chancadora Primaria CV2
K117 Montaje Eléctrico - Sociedad Minera Cerro Verde
Nuevo Campus Universitario UTEC
Oficinas Navarrete 2
Neo 10 y Real 8-9
Saga Centro Cívico
Shougan Hierro Perú SAA
Los Parques San Martín y Piura
Parque Central Club Residencial
Proyecto Barranco
Centro Empresarial Leuro 2do Etapa
Consorcio Peruano de Conservación
Consorcio Vial Ipacal
Los Parques de Comas
Los Parques del Agustino
GyM Chile SPA
Consorcio Rio Urubamba
Pezet 961
Consorcio GyM Conciviles
233 >>
11,710
11,474
11,376
9,806
7,989
7,614
7,381
7,259
6,685
5,172
4,397
2,897
2,892
1,954
1,756
558
146
173
-
-
-
7,228
-
-
-
-
-
-
6,535
-
7,545
9,671
8,468
10,108
13,531
4,494
4,012
-
-
51,387
8,166
16,323
6,882
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu Proyecto Especial de Transporte Nacional
Consorcio Tren Eléctrico Lima
Contrato Red Vial 1
Consorcio HV
Edelnor
Other projects
234 >>
-
-
-
-
-
44,673
684,256
39,125
28,441
14,368
4,452
3,389
30,967
701,813
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu 21 PROVISIONS
This item comprises:
Legal claims
Contingent liabilities from the acquisition of DSD (Note 31-c)
Contingent liabilities from the acquisition of Vial y Vives (Note 31-d)
Contingent liabilities from the acquisition of Morelco (Note 31-a)
Contingent liabilities from the acquisition of Coasin (Note 31-b)
Contingent liabilities from CAM acquisition
Provision for well closure
235 >>
December 31,
2014
13,056
3,846
1,890
17,533
2,658
12,152
7,210
2013
12,217
3,846
6,006
21,546
4,852
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
Provision for maintenance obligations in concession contracts
Less:
Non-current portion
Current portion
Legal claims
3,846
52,313
(43,418)
8,895
236 >>
58,345
(46,904)
11,441
Legal claims maintained at December 31, 2014 mainly comprise provisions for labor liabilities and tax claims recorded by subsidiaries GyM S.A., GMP S.A. and CAM Chile for S/.5 million,
S/.6.8 million and S/.1.7 million, respectively (S/.5 million, S/.4 million and S/.3 million at December 31, 2013, respectively).
Provisions related to GyM S.A. comprise claims from the tax authority which have been accounted for based on management estimates of the amounts the Company would most likely be
required to pay for these cases. Regarding tax claims, due to the fact those amounts depend on the tax authority, the Group does not have an estimated timing of when these outflows will
take place.
With respect to GMP, legal claims consists of court actions brought against the Company by the Peruvian energy regulator (OSINERGMIN) resulting from the storage of hydrocarbons and
the applicable environmental laws and regulations.
With respect to CAM Chile, provisions comprises claims from the tax authority which have been accounted for based on management estimates of the amounts the Company would most
likely be required to pay for these cases.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
237 >>
Contingent liabilities DSD
Comprising the fair value of contingent fiscal obligations of S/.3,813 and employees’ contingent obligation of S/.33 of the DSD (Note 31-c).
Contingent liabilities Vial y Vives
As a result of the due diligence process, certain labor contingent liabilities were recorded for the acquisition of 74% of the outstanding shares of Vial y Vives. Each of these contingencies
was assigned a probability of occurrence based on management and attorney assessments. Management had provisioned S/.6 million in 2013, as it expected such outflows to take place in
2014. However, during 2014, a total of S/.4.1 million expired, and were therefore offset against the balance of other accounts receivable (assets subject to indemnities, Note 31-d)
Contingent liabilities CAM
In 2014 the Company recognized a reversal of approximately S/.9.4 million (S/.13.6 million in 2013 and S/.68 million in 2012) in provisions that were accounted for in the acquisition of CAM
Chile and affiliates in 2011 that related to labor and tax contingencies which related liabilities expired during the year.
Contingent liabilities COASIN
In 2014, the Group’s subsidiary CAM Chile S.A. acquired control of Coasin Instalaciones Ltda. by purchasing 100% of its capital shares. As a result of the acquisition, labor contingencies
were recorded for S/.2.5 million and legal contingencies for S/.0.2 million.
Contingent liabilities MORELCO
At the end of December 2014, the Group’s subsidiary, GyM S.A. acquired control of Morelco S.A.S. by purchasing 70.00% of its equity shares. As a result of the acquisition, tax
contingencies were recorded for S/.10.24 million, labor contingencies for S/.5.7 million and legal contingencies for S/.1.59 million.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
238 >>
Provision for maintenance obligations in concession contracts
These provisions relate to Norvial S.A., a subsidiary which has agreed to perform conservation and maintenance activities on the infrastructure during the effective period of the Contract.
This contractual obligation to maintain the infrastructure up to a specified service capacity have been recognized and measured in accordance with IAS 37, 'Provisions, contingent assets
and liabilities.
These periodic maintenance obligations depend on the use of the infrastructure, so the level of use of the road is the factor that determines the amount of the obligation and this
provision is accounted for over the contract length (a 25 year term). At December 31, 2014, the Group used 100% of its provisions made for 2013 (S/.3.8 million at December 31, 2013).
Provision for well closure
In 1994 and 1995 GMP S.A. (“GMP”) contracted with Perupetro to provide hydrocarbon extraction services in Block I and Block V located in northwestern Peru. The contract states that
GMP is responsible for the abandonment of the following wells:
(i) wells drilled by GMP that have not been productive; and
(ii) old wells that have been productive during the term of the contracts but that have mechanical problems or that no longer have oil reserves.
As per a preliminary estimate, 70 wells of Block I and 15 wells of Block V should be closed. The closure process for both blocks started in 2013 and is expected to be completed in 2021 and
2023, respectively. In 2013, one well of each block has been fully closed. During the course of 2014, 4 wells in Block I and 1 well in Block V have been closed.
At December 31, 2014 the amount discounted from the provision for plug-back costs relating to the remaining 78 wells (83 wells in 2013) amounts to S/.7.2 million (S/.4.85 million in 2013) at
a discount rate of 2.17% (2.74% in 2013).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
The gross movement of other provisions is broken down as follows:
Other provisions
At January 1, 2013
Additions
Transfer from intangibles
Additions from business combinations
Reversals
Payments
At December 31, 2013
At January 1, 2014
Additions
Additions from business combinations
Morelco (Note 31-a)
Additions from business combinations
Coasin (Note 31-b)
Reversals
Payments
At December 31, 2014
Legal
claims
11,380
2,039
-
(882)
(320)
12,217
12,217
1,376
-
-
-
(537)
13,056
Contingent
liabilities from
acquisitions
Provisions for the
for the acquisition
of CAM
6,006
-
3,846
-
-
9,852
9,852
-
17,533
2,658
(4,116)
-
25,927
35,220
-
-
(13,674)
-
21,546
21,546
(9,394)
12,152
Provision
for well
closure
4,897
154
-
(199)
4,852
4,852
2,696
(338)
7,210
Provisions
for periodic
maintenance
-
12,868
6,728
-
-
(15,750)
3,846
3,846
2,487
-
-
-
(6,333)
-
239 >>
Total
57,503
15,061
6,728
3,846
(14,556)
(16,269)
52,313
52,313
6,559
17,533
2,658
(13,510)
(7,208)
58,345
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
240 >>
22 EQUITY
a) Capital -
As of December 30, 2014 and 2013, the authorized, subscribed and paid-in capital, according to the Company’s bylaws, as amended, comprises 660,053,790 common shares at S/.1.00 par
value each.
At the General Shareholders’ Meeting held on March 30, 2012, the decision was made to capitalize retained earnings, which increased capital from S/.390,799 to S/.558,284. As a
consequence of this transaction the nominal value of shares increased from S/.0.7 to S/.1.00 per share.
Subsequently, a decision made at the General Shareholders’ Meeting on March 26, 2013, as well as agreements adopted at meetings of the Board on May 30, July 23 and August 22 of
2013, mandated the issuance of common stock through a public offering of "American Depositary Shares" (ADS´s) registered in the Securities and Exchange Commission (SEC) and NYSE,
increasing the capital sum from S/.558,284 to S/.660,054.
This capital increase was carried out in two tranches as follows:
(i) The first tranche for the amount of S/.97,674 (representing the issuance of 97,674,420 common shares issued and 19,534,884 ADS’s, therefore, at 5 shares per ADS), and,
(ii) A second tranche for the amount of S/.4,095 representing the issuance of 4,095,180 common shares and ADS’s 819,036 (issued at 5 shares per ADS rate).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
As of December 31, 2014 the Company’s capital structure is as follows:
Percentage of individual interest in capital
Up to 1.00
From 1.01 to 5.00
From 5.01 to 10.00
Over 10
Number
of shareholders
1,841
10
1
2
1,854
241 >>
Total
percentage of
interest
15.23
23.38
5.12
56.27
100.00
As of December 31, 2014 the year-end quoted price of the Company’s shares was S/.7.26 per share, with a trading frequency of 90.48% (quoted price of S/.11.90 per share and a trading
frequency of 95.24% at December 31, 2013).
b)
Legal reserve -
In accordance with Peruvian Company Law, the Company’s legal reserve is formed by the transfer of 10% of the annual net profit, up to a maximum of 20% of the paid-in capital. In the
absence of profits or freely available reserves, this legal reserve can be applied to offset losses but it has to be replenished with the profits to be obtained in subsequent years. This reserve
can also be capitalized but its subsequent replenishment is equally mandatory.
c)
Share premium -
At the General Shareholders’ Meeting held on March 26, 2013, and the subsequent Board of Directors’ meetings held on May 30, July 23 and August 22, 2013, the Board decided to issue common
shares through a public offering of American Depositary Shares (ADS) registered with the Securities and Exchange Commission (SEC) and listed on the New York Stock Exchange (NYSE).
In July and August 2013, the Company issued 101,769,600 new common shares, equivalent to 20,353,920 ADS in two tranches (note 22-a).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
242 >>
The excess of the total proceeds obtained by this transaction in comparison with the nominal value of these shares was S/.1,055,488 (net of commissions and other related costs for
S/.48,375 and net of tax effects for S/.9,840). This amount was recorded in the premium for issuance of shares in the consolidated statement of changes in shareholders’ equity.
At December 31, 2013 a total of 265,877,310 shares were represented by ADS (equivalent to 53,175,462 ADS).
At December 31, 2014, a total of 253,635,480 shares were represented by ADSs (equivalent to 50,727,096 ADSs at 5 shares per one ADS).
In addition, in this account is recognized the difference between nominal and transaction value on additional acquisitions of shares from non-controlling interest. Detail of these
transactions in 2012, 2013 and 2014 are disclosed in note 34.
23 DEFERRED INCOME TAX
Deferred income tax is broken down by its estimated reversal period as follows:
Deferred income tax asset:
Reversal expected in the following 12 months
Reversal expected after 12 months
Total deferred tax asset
Deferred income tax liability:
Reversal expected in the following 12 months
Reversal expected after 12 months
Total deferred tax liability
Deferred income tax (liability) asset, net
December 31,
2013
87,635
47,886
135,521
(98,401)
(40,152)
(138,554)
(3,033)
2014
116,699
19,107
135,807
(50,733)
(28,422)
(79,155)
56,652
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
The gross movement of the deferred income tax item is as follows:
Deferred income tax asset (liability), net as of January 1
Credit (charge) to income statement (Note 28)
Tax charged to other comprehensive income
Tax charged to equity
Acquisition of subsidiary (Morelco)
Acquisition of subsidiary (Coasin)
Acquisition of subsidiary (DSD)
Acquisition of subsidiary (Stracon GyM)
Acquisition of subsidiary (Vial y Vives)
Recovery PPUA charged to account receivable
Deconsolidation of SEC and LQS
Other (decreases) increases
Total as of December 31
243 >>
2014
(3,033)
66,373
(1,328)
-
4,230
(178)
-
-
-
(5,938)
835
(3,452)
56,652
2012
19,908
(8,666)
(1,158)
-
-
-
-
(6,653)
(20,458)
-
-
(337)
(17,364)
2013
(17,364)
5,704
(8,159)
9,840
-
-
(2,499)
-
-
-
8,610
(3,033)
The provisional payment on absorbed profits (hereinafter PPUA) comprises the recovery of the first-category income tax (Chilean corporate tax) on own profits and profits obtained from
other entities in which the entity has an interest (third party attributable profits) and which have been partially or fully absorbed against tax losses. As a result of the reorganization of the
Chilean entities, VyV-DSD S.A. has recognized PPUA on the tax losses absorbed from Ingeniería y Construcción Vial y Vives S.A.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
244 >>
VyV – DSD S.A. has a tax goodwill credit balance ( higher acquisition valued paid over the acquiree’s own tax capital) which arose from the reorganization of entities that took place in
2014, which, under Chilean applicable tax laws and regulations is not considered a loss in the period in which it is generated but has to be proportionally allocated to the non-monetary
assets received from the acquiree up to the market price of those assets, increasing the tax cost of those assets; any reversals will affect profit or loss. The unallocated portion will be
considered as deferred expenses and will be deducted as a tax expenses over a period of 10 years. The allocation performed was as follows: S/.8,560 investments, S/.2,114 fixed assets and
S/.9,768 deferred expenses (non-attributable portion).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
245 >>
The movement of deferred tax assets and liabilities in the year, without taking into account the offsetting of balances, is as follows:
Deferred income tax
liability
At January 1, 2012
Charge (credit) to results
Charge (credit) to OCI
Acquisition of Stracon GyM (Note 30-c)
Acquisition of Vial y Vives (Note 30-b)
Other increases
At December 31, 2012
Charge (credit) to results
Charge (credit) to OCI
Acquisition of DSD (Note 30-a)
Other increases
At December 31, 2013
Charge (credit) to results
Charge (credit) to OCI
Reclassification of prior years
Other increases
At December 31, 2014
Non-taxable
income
Difference
in depreciation
rates
-
4,236
-
-
-
4,236
9,954
-
-
-
14,190
-
-
-
-
14,190
13,056
(2,054)
-
2,181
236
-
13,419
(270)
-
1,148
(1,176)
13,121
9,936
-
13,458
-
36,515
Fair
value
gains
(357)
-
-
-
17,152
-
16,795
34
8,169
4,269
(1,410)
27,857
(8,585)
-
(5,540)
-
13,732
Outstanding
work in
progress
2,774
22,346
-
4,472
-
-
Difference
in depreciation
rates of assets
leased
10,266
(1,221)
-
-
-
-
29,592
9,045
38,448
-
-
18,734
86,774
(50)
-
-
1,505
10,500
(72,488)
219
-
82
-
14,368
(274)
-
10,445
Others
Total
3,397
7,120
(612)
-
3,605
1,568
15,078
4,461
1,520
(834)
(16,596)
3,629
5,754
1,328
7,777
3,049
21,537
29,136
30,427
(612)
6,653
20,993
1,568
88,165
52,577
9,689
4,583
1,057
156,071
(65,164)
1,328
15,503
3,049
110,787
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
246 >>
Outstanding
work in
progress
Provision for
vacations
unpaid
Investments
in
subsidiaries
Others
Total
Deferred income tax
asset
At January 1, 2012
Credit (charge) to results
Credit (charge) to OCI
Acquisition of Vial y Vives (Note 30-b)
Other increases
At December 31, 2012
Credit (charge) to results
Charge (credit) to OCI
Credit (charge) to equity (Note 21-c)
Acquisition of DSD (Note 30-a)
Other increases
At December 31, 2013
Credit (charge) to results
Acquisition of Coasin (Note 31-a)
Acquisition of Morelco (Note 31-b)
PPUA,charged to accounts receivable
Other increases
Reclassification of prior years
At December 31, 2014
Provisions
Accelerated
tax
depreciation
6,178
6,529
-
-
299
13,006
(6,499)
-
-
-
1,836
8,343
9,054
-
-
-
-
22,714
(6,656)
-
535
134
16,727
3,788
1,530
-
-
1,842
23,887
1,579
(178)
-
-
-
324
25,612
Tax
losses
4,000
13,936
-
-
-
737
13,456
-
-
-
1,375
1,506
-
-
55
17,936
14,193
2,936
23,544
-
9,840
-
1,560
52,880
33,242
1,984
-
-
966
3,244
51,645
-
-
684
1,690
7,294
2,492
(24,886)
4,083
-
-
-
-
-
-
-
-
-
-
-
-
5,953
23,350
3,664
59,036
(2,818)
23,941
5,596
16,973
-
-
-
-
-
-
-
-
-
-
-
-
5,613
-
4,230
-
-
-
9,843
14,040
(7,010)
(1,768)
-
741
6,003
2,115
-
-
542
330
8,990
3,274
-
-
(5,938)
(425)
2,783
8,684
49,044
21,761
(1,768)
535
1,229
70,801
58,174
1,530
9,840
2,192
10,502
153,039
1,209
(178)
4,230
(5,938)
(425)
15,502
167,439
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu 247 >>
As of December 31, 2014, total tax losses amounted to S/.231 million which S/.36 million are expected to be applied in 2015, S/.92 million in 2016 and the remaining balance in the following
periods (S/.213 million in 2013, of which S/.57.4 million are expected to be applied in 2014, S/.65.4 million in 2015 and the remaining balance in the following periods.
24 WORKERS’ PROFIT SHARING
As established under current legislation, profit sharing plans of Graña y Montero S.A.A., consortiums and local subsidiaries is 5% of the net income. This profit sharing is deductible for the
purposes of income tax calculation.
With respect to the Dominican Republic, the profit sharing plan rate is 10%. In the specific case of Chile, profit sharing plans are a component of remuneration and not a determined
percentage of profit. In Brazil and Colombia profit sharing plans are not required by law.
In 2014, profit sharing plans amounted to S/.37 million (S/.16 million and S/.22.7 million in 2013 and 2012, respectively).
The distribution of profit sharing plans in the income statement as of December 31 is as follows:
Cost of sales
Administrative expenses
Total at December 31
2012
18,633
4,088
22,721
2013
12,990
3,060
16,050
2014
27,396
9,541
36,937
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
25 EXPENSES BY NATURE
For the years ending December 31, this item is made up of the following:
2012:
Purchase of goods
Personnel charges
Services provided by third-parties
Taxes
Other management charges
Depreciation
Amortization
Impairment (inventories and accounts receivable)
Variation of inventories
2013:
Purchase of goods
Personnel charges
Services provided by third-parties
Taxes
Other management charges
248 >>
Cost of
services and goods
Adminis-
trative expenses
252,186
1,458,715
1,389,371
7,238
292,740
159,526
60,517
11,192
888,334
4,519,819
212,819
1,527,146
1,520,254
8,930
533,544
-
125,558
51,378
863
52,425
13,492
10,968
2,496
-
257,180
169,469
93,666
614
72,413
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
Depreciation
Amortization
Impairment (inventories and accounts receivable)
Variation of inventories
2014:
Purchase of goods
Personnel charges
Services provided by third-parties
Taxes
Other management charges
Depreciation
Amortization
Impairment (inventories and accounts receivable)
variation of inventories
249 >>
13,389
11,133
764
344
361,792
836
210,028
120,714
6,212
63,124
14,525
6,641
71
(784)
421,367
168,090
67,254
2,349
922,992
4,963,378
1,218,522
1,864,053
2,105,226
11,356
686,593
170,784
68,089
2,477
(69,989)
6,057,111
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu 26 FINANCIAL INCOME AND EXPENSES
For the years ending December 31 these items included the following:
Financial income:
Interest on loans granted to related parties
Interest on short-term bank deposits
Interest on loans
Income from reimbursement of performance bond
Commissions and guarantees
Interest on third-party loans
Exchange difference gains, net
Derivative financial instruments
Other
250 >>
2014
8,010
62
377
969
837
-
-
1,207
11,462
2012
3,005
2,007
14,644
968
290
350
21,126
12,745
2,711
57,846
2013
113
5,230
15,497
783
2,053
874
-
13,972
1,831
40,353
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
Financial expenses:
Interest expense:
- Interests to related parties
- Bank loans
- Finance lease
- Multilateral loans
- Commissions and guarantees
- Third party loans
Derivative financial instruments
Exchange difference losses, net
Other financial expenses
Less capitalized interest
251 >>
3,026
21,307
12,872
5,022
4,927
2,432
1,819
44,282
9,992)
( 2,863)
102,816
-
25,897
19,119
6,422
-
1,333
14,763
-
5,375
(4,780)
68,129
500
40,000
14,164
4,975
5,155
895
15,903
70,418
6,84
( 6,048)
152,802
27 OTHER INCOME AND EXPENSES
At the acquisition date of CAM in 2011, as part of the purchase price allocation process and based on external lawyers reports, the Company accounted for a provision amounting to
S/.102.7 million for contingent liabilities mainly related to labor and tax issues considered as possible and probable as stated by IAS 37, which have expiration dates according to legal
requirements between 2012 and 2016. Most of the amount shown in this account corresponds to the reversal of this provision.
The amount recognized as other income and expenses mainly corresponds to the reversal of such original registry amounted to S/.9.4 million in 2014(S/.13.6 million and S/.68 million in
2013 and 2012, respectively); and primarily reflects the liabilities that expired under the laws of each country during year 2012, 2013 and 2014.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
252 >>
During 2014, this item amounted to S/.9.4 million relating to tax and labor-related contingencies of Brazil, Colombia and Peru for S/.8.6 million, S/.0.6 million and S/.0.2 million,
respectively. In 2013 this item amounted to S/.13.6 million relating to tax and labor-related contingencies of Brazil, Chile and Peru for S/.9 million S/.4 million and S/.0.6 million,
respectively.
In 2012 it amounted to S/.68 million, related to labor-related and tax contingencies for S/.40 million (from Brazil and Colombia for S/.32 million and S/.8 million, respectively) and trade
liabilities amounting to S/.28 million. The probability of payment became remote throughout the course of the years 2012 and 2013, as the statute of limitations for such issues expired.
During 2014 the Group received dividends from its investment in Transportadora de Gas del Perú S.A. (TGP) classified as available for sale financial assets for S/.9.35 million and recognised
a commission fee for S/.7.5 million (Note 9). In addition, an impairment loss related to fixed asset was recorded for S/.10.34 million (Note 16).
28 INCOME TAX EXPENSES
a)
In accordance with current legislation in Perú, Chile, Brasil, Colombia, Panamá and Dominican Republic, each Company in the Group is individually subject to the applicable taxes.
Management considers that it has determined the taxable income under general income tax laws in accordance with the current tax legislation of each country.
b) Changes in the Peruvian Income Tax Law -
By means of Law No.30296 enacted on December 31, 2014 amendments to Income Tax Law have been made, which are effective starting in fiscal year 2015 onwards.
Among these amendments, it should be noted the progressive reduction in the corporate income tax rate (on the Peruvian third-category income earners) from 30% to 28% for fiscal years
2015 and 2016; then a reduction to 27% for fiscal years 2017 and 2018; and a final reduction to 26% from fiscal year 2019 onwards. Tax on dividends and other forms of profit distribution,
agreed on by any legal entities to non-domiciled individuals and legal persons is to be progressively increased from 4.1% to 6.8% for distributions that are agreed on or made available in
cash or in kind during fiscal years 2015 and 2016; then an increase to 8.8% for fiscal years 2017 and 2018 will be effective; and a final increase to 9.3% will be effective from fiscal year 2019
onwards. The distribution of retained earnings until December 31, 2014 will continue to be subject to a 4.1% tax even when the distribution is to be made in the subsequent years.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
253 >>
c) On September 29, 2014, Law No 20780 was enacted by which certain changes are made to the Chilean tax system, such as: changes in the Income Tax Law, VAT Law and Tax Code. With
respect to income tax, two systems have been established:
i)
ii)
Attributable income system: the tax rate applicable on entities will be progressively increased, 21% in 2014, 22.5% in 2015, 24% in 2016, up to 25% in 2017. This system levies the
shareholders of Chilean entities with taxes on an annual basis regardless of any effective distribution of profits from the local entity; and entitles them to use the total taxes paid as
income tax fiscal credit.
Partially integrated system. the tax rate applicable on entities will be progressively increased, 21% in 2014, 22.5% in 2015, 24% in 2016, 25.5% in 2017, up to 27% in 2018. This system
levies the shareholders of Chilean entities that distribute dividends and entitle them to use such distribution as a fiscal credit at a 65% of the total taxes paid. This limit does not
apply to investors with whom Chile had signed double taxation agreements, such as Peru.
Companies will be able to choose the system they will apply in 2017 until June and December 2016.
Based on the above, the Group has assessed the future realization of its temporary items underlying its deferred income tax based on the application of the new tax rates and is
determining the required adjustments that will result from the expected changes in tax rates.
d)
The income tax expense shown in the consolidated income statement comprises:
Current tax:
- Current tax on profit of the year
Deferred tax:
- Generation and reversal of temporary differences (Note 23)
Income tax expense
2012
145,909
8,666
154,575
2013
188,027
(5,704)
182,323
2014
212,570
(66,373)
146,196
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
254 >>
e)
The Group’s income tax on profit before taxes differs from the theoretical amount that would have resulted from applying the weighted-average income tax rate applicable to the profit of
the consolidated companies, as follows:
Profit before income tax
Income tax by applying local applicable tax rates
on profit generated in the respective countries
Tax effect on:
- Non-taxable income
- Associates net profit
- Non-deductible expenses
- Unrecognized deferred tax
asset income
- Adjustment for changes in rates of income tax
- Tax goodwill
- PPUA
- Prior year adjustment
- Others
Income tax charge
2012
520,826
156,248
( 11,550)
-
19,756
-
-
-
-
( 7,432)
(2,447)
154,575
2013
594,467
211,234
( 39,494)
( 9,348)
24,160
104
( 4,333)
182,323
2014
507,429
236,114
(104,421)
(1,790)
25,967
13,922
(2,746)
(20,542)
( 5,938)
3,891
( 1,841)
146,196
f)
Peruvian tax authorities have the right to examine, and, if necessary, amend the income tax determined by the Company in the last four years - from January 1 of the year after the date
when the tax returns are filed (years subject to examination). Therefore, years 2010 through 2014 are subject to examination by the tax authorities. Since differences may arise over
the interpretation by the tax authorities of the regulations applicable to the Company, it is not possible at present to estimate if any additional tax liabilities will arise as a result of any
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu 255 >>
eventual examinations. Any additional tax, fines and interest, if they occur, will be recognized in the results of the period when such differences with the tax authorities are resolved.
Management considers that no significant liabilities will arise as a result of these possible tax examinations. Additionally, income tax returns for fiscal years 2011 to 2013 and those to be
filed for fiscal year 2014 remain open for examination by the Chilean tax authorities who have the right to carry out said examination within the three years following the date the income
tax returns have been filed.
g) As established under regulations in force in Peru, for purposes of determining income tax and the general sales tax, transfer pricing must be taken into account for operations with related
parties and/or tax havens, which must have documentation and information supporting the methods and valuation criteria applied in their determination. Peruvian tax authorities are
entitled to request such information from the taxpayer.
h)
Temporary tax on net assets -
The temporary tax on net assets is applied by the companies which operate in Peru, to third category income generators subject to the Peruvian Income Tax General Regime. Effective in
the year 2012, the tax rate is 0.4%, applicable to the amount of the net assets exceeding S/.1 million.
The amount effectively paid may be used as a credit against payments on account of income tax under the General Regime or against the provisional tax payment of the income tax of the
related period.
i)
The weighted-average tax rate was 29.30% (30.70% in 2013). The decrease in the effective tax rate in relation with the prior year’s rate primarily resulted from the addition of tax credits
arising from the reorganization of the Chilean entities.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
256 >>
29 ACCUMULATED OTHER COMPRENHENSIVE INCOME
Accumulated other comprehensive income consisted of the fair value of the variable-fixed interest rate hedge signed by GMP S.A., a foreign currency translation adjustment related to
foreign subsidiaries fair value of available for sale assets and the exchange difference resulting from permanent investment overseas. These movements are shown net of income tax,
except for the translation adjustment.
The analysis of the movement is as follows:
At January 1, 2012
Additions (*)
Tax effects (*)
Other comprenhensive income of the year
At December 31, 2012
Additions (*)
Tax effects (*)
Other comprenhensive income of the year
At December 31, 2013
Cash
flow
hedge
(3,448)
(3,216)
965
(2,251)
(5,699)
5,066
(1,520)
3,546
(2,153)
Translation
adjustment
Increase in
fair value of
available-for
sale assets
Exchange
difference from
net investment in a
foreign operation (a)
(4,322)
(1,155)
-
(1,155)
(5,477)
(467)
-
(467)
(5,944)
7,460
-
-
-
7,460
27,229
(8,169)
19,060
26,520
-
-
-
-
-
-
-
-
-
Total
(310)
(4,371)
965
(3,406)
(3,716)
31,828
(9,689)
22,139
18,423
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
257 >>
Additions (*)
Tax effects (*)
Adjustment for changes In rates of income tax
Other comprenhensive income of the year
At December 31, 2014
750
(210)
-
540
(1,613)
(13,086)
-
-
(13,086)
(19,030)
4,811
(1,251)
1,089
4,649
31,169
(17,030)
4,428
-
(12,602)
(12,602)
(24,555)
2,967
1,089
(20,499)
(2,076)
(*) Amounts in the table above represent only amounts attributable to the Company’s controlling interest net of taxes. Below is the movement in Other Comprehensive Income for each year:
Controlling interest
Non-controlling interest
Adjustment for actuarial gains and losses, net of tax
Total value in OCI
2012
( 3,406)
( 982)
( 3,678)
(8,066)
2013
22,139
( 1,947)
(4,591)
15,601
2014
( 20,499)
( 8,563)
(1,332)
(30,394)
At December 31, 2014 the balance comprises the effect of exchange difference of S/.10.6 million resulting from a loan denominated in foreign currency granted by GyM S.A. to its subsidiary
GyM Chile S.p.A for the acquisition of VyV – DSD S.A and an exchange difference of S/.1.9 million resulting from a loan granted by the Company to CAM Holding S.p.A. for a total effect of
S/.10.9 million.
The effect of the exchange difference is recognized initially in Other comprehensive income as required under International Financial Reporting Standards since this exchange difference
meets the qualifying criteria to be considered a net investment in a foreign operation. GyM S.A. does not plan repay such borrowing in the foreseeable future since no payment schedule
has been agreed at the date of the statement of financial position.
The exchange difference recognized in Other comprehensive income will be reclassified to the statement of income upon sale of the foreign operation.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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30 CONTINGENCIES, COMMITTMENTS AND GUARANTEES
a) Tax contingencies -
During the course of 2013 and 2014, Graña y Montero S.A.A. was audited by the Peruvian Tax Authorities (SUNAT) for fiscal years 2010, 2011 and 2012. Before the date of issue of the
financial statements, SUNAT issued tax determination and tax penalties against the Company as a result of the 2010 tax audit; the Company filed a challenge against those resolutions.
Also, decisions remain to be issued on claims filed against tax resolutions issued in 2012 and 2013 for fiscal 2007, 2008 and 2009. Management and its legal advisors considers that the
outcome of these tax legal actions will be favorable to the Company.
As a result of the tax audits of fiscal 1999, 2001 and 2010 on subsidiary GyM S.A., SUNAT issued tax determination and tax penalties resolutions amounting to approximately S/.16 million
(S/.29 million as of December 31,2013).
During the year 2014, Joint Operations where GyM SA participates as an investor and GMD S.A., were audited by the Peruvian Tax Authorities (SUNAT) for fiscal year 2012 and 2011
respectively and issued tax determination and tax penalties against these entities, the maximum amount of exposure is S/.2.2 million and S/.2.3 million respectively.
Management expects the outcome of the other court actions will be favorable to the Company considering their nature and characteristics as well as the opinion of its legal advisor.
b) Other contingencies -
Year 2014 -
i)
Civil court actions mainly involving damages and contract terminations as well as work accidents amounting to S/.5.8 million (S/. 3.0 million for GyM S.A., S/.2.5 million for GMI SA.
and S/.0.27 million for Viva GyM).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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ii)
iii)
iv)
Arbitration processes amounting to S/.110.59 million related to an action brought by Contugas S.A.C. against the court action brought by GyM S.A. involving recognition of expenses
and indemnification for costs and damages.
Challenge administrative actions amounting to S/.1.1 million (S/. 0.8 million comprising an action brought by the Peruvian mining and energy regulator (OSINERMIN) for the alleged
noncompliance of GMP S.A. and Consorcio Terminales and S/.0.2 million comprising an action brought by the Peruvian Labor Ministry.against GyM S.A.
Administrative actions amounting to S/.1.8 million (S/.0.9 comprising an action brought by the Peruvian agency for the protection of the consumer ("Instituto Nacional de Defensa
de la Competencia y de la Protección de la Propiedad Intelectual- INDECOPI) against Viva GyM S.A. for the alleged lack of adequate construction techniques and finishings
implemented in housing developments).
v)
Labor-related processes amounting to S/.2.8 million (S/.2.5 million were actions against GMP S.A., S/. 0.12 million against Cam Peru S.A. and S/. 0.14 million against GyM S.A.).
Management considers that the above-described actions brought against Group companies will be found baseless given their nature
Year 2013 -
i)
ii)
As of December 31, 2013, civil court actions have been brought against the Company mainly relating to claims of Municipalities in respect of work execution with no municipal
authorization and failure to pay municipal rights for S/.2.7 million (S/.4.7 million in 2012).
Also, similar actions have been brought against jointly-controlled businesses in which the Company has an interest, mainly relating to work executed without the respective
municipal authorization; these actions total approximately S/.0.7 million (S/.0.8 million in 2012).
iii)
In February 2003 the Company was served notice of General Management Resolution No.004-2003-GG-OSITRAN issued by the Peruvian regulator of infrastructure and public
transport investment - (OSITRAN) by which payment of S/.250 plus interest was ordered on the grounds of alleged withholdings of the Transport Fund (Fondo Vial) by the Company.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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To date, the Company has challenged the decision and the hearing date remains to be set by the Administrative Court. Management considers that the outcome of this claim will be
favorable to the Company and will not affect future financial results.
Management believes that the court actions mentioned above will be declared will be declared without merit, and therefore, no liabilities will arise in addition to those already paid as of
December 31, 2013.
c) Commitments and Guarantees
As of December 31, 2014, the Group had guarantee commitments with different financial institutions securing transactions for a total US$21.6 million and S/.535.5 million (US$83 million and
S/.3.8 million as of December 31, 2013).
31 BUSINESS COMBINATIONS
a) Acquisition of Morelco S.A.S.
In December 23, 2014, through subsidiary GyM S.A. the Company obtained control of Morelco S.A.S. (Morelco) by acquiring 70.00% of its capital shares. Morelco is an entity domiciled in
Colombia that is mainly engaged in providing construction and assembly services. This acquisition is part of the Group’s plan to increase its presence in markets that present high growth
potential as in Colombia, and in attractive industries, such as mining and energy.
The acquisition value of the investment in Morelco amounted to US$93.7 million (equivalent to S/.277.1 million) which is comprised of cash payments of US$78.5 million (equivalent to
S/.231.5 million), a balance payable of US$15.3 (equivalent to S/.45.7 million), and resulted in the recognition of goodwill for US$36.1 million (equivalent to S/.105.8 million) at the acquisition
date.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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The following tables summarize the consideration paid for Morelco and the provisional determination of fair value of assets acquired, liabilities assumed and the non-controlling interest at
the acquisition date:
Cash and cash equivalents
Trade receivables
Outstanding work accounts in progress – receivables from clients
Other receivables
Inventories
Prepaid expenses
Investments held for sale
Property, plant and equipment
Intangibles
Deferred income tax assets
Short-term borrowings
Long-term borrowings
Trade accounts payables
Other accounts payables
Contingent liabilities
Deferred income tax liability
Fair value of net assets (provisional)
Non-controlling interest (30.00%)
Goodwill (Note 17)
Initial purchase consideration
Cash payment for acquisition
Cash and cash equivalents of the acquired subsidiary
Direct cash outflow during the year for the acquisition
S/.000
69,930
92,138
101,533
63,949
18,037
2,133
7,291
70,756
64,491
8,031
( 31,204)
( 9,315)
( 103,739)
( 87,863)
( 17,533)
( 3,801)
244,834
73,450
105,76
277,148
231,464
(69,930)
161,534
US$000
23,514
30,981
34,140
21,503
6,065
717
2,452
23,792
21,685
2,700
( 10,492)
( 3,132)
( 34,882)
( 29,544)
( 5,895)
( 1,278)
82,326
24,697
36,118
93,747
78,462
(23,514)
54,948
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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At December 31, 2014, GyM S.A. has an estimated balance payable related to this purchase amounting to US$15.3 million (equivalent to S/.45.7 million), to be discussed and confirmed after
the revision is completed by the buyer and the seller. This amount is presented in the item “Other accounts payables” and comprises the portion of consolidation that will be subject to a
balance adjustment at the acquisition date, following the procedure below:
a) On April 30, 2015, GyM S.A. will provide to the selling party with a certificate (“Closing Certificate”) that will include: i) audited balance sheet at December 31, 2014 and ii) determination of
calculation of balance adjustment and adjustment for work contracted remaining to be completed (backlog) under the purchase-sale share agreement.
b) On April 30, 2016, GyM S.A. will provide to the selling party with a certificate (“EBITDA 2015 Certificate”) which will include: i) audited balance sheet at December 31, 2015 and ii) EBITDA
adjustment calculation determination.
The amount referred above as balance adjustment, although has been considered in the financial statements, has not yet been accepted by the buyer and the seller as the final adjustment.
Acquisition related costs of S/.4.5 million have been charged to administrative expenses in the income statement of 2014.
If Morelco had been consolidated from January 1, 2014, the revenue and profit generated would have been S/.722.57 million and S/.80.75 million, respectively.
Provided that the distribution of the consideration is divided between the fair values on a provisional basis for the 2014 financial statements, the Group will complete the distribution
process in a period that should not exceed one year as of the acquisition date of Morelco. During such review period, additional assets and liabilities will be recognized that may arise from
updated data that may be obtained regarding existing information at the acquisition date and that does not comprise to new incidents occurred after the acquisition date; that is, if the
Group were to adjust initial amounts recognized at the business combination dates.
Pursuant to the Shareholder Agreement associated with the purchase of Morelco, GyM S.A. also entered into a put and call option agreement in relation to the ordinary shares retained
by the non-controlling interest, which provided sellers with the right to sell its retained interest to GyM S.A (put option). As per this agreement, GyM S.A. has the obligation to purchase
shares owned by the sellers since the second anniversary of the initial purchase whenever the non-controlling shareholder requests it, for an amount based on a factor applied on an
average measure of EBITDA of the last 12 months, limited to a floor equivalent to the price applied for the initial shares purchase. According to the contract the put option expires between
month 51 and 63 as from the date of the agreement.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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On the other hand, GyM S.A. has the right to buy all the shares (call option) of the non-controlling interest at everytime during the validity period of the Shareholder Agreement (from the
date of the contract until month 63) for an amount determined in the same way as applied for the put option.
Under IFRS the put option represents an obligation (Note 20) to purchase shares from the non-controlling interest, and accordingly, the Group recognised a put option liability at its fair
value with a corresponding reduction in equity decreasing other reserves.
The option liability was estimated as the present value of the expected redemption amounts based on the Company's risk weighted estimates of Morelco's expected financial results and
option execution dates. The Company expects the put options to be exercised on the day following the option's vesting date. The expected redemption of the non-controlling interest
shares is as follows: 41.66% on the second anniversary, 41.66% on the fourth anniversary and the remaining shares will be sold on the fifth anniversary of the option's grant date. The
discount rate used to calculate the present value of the expected redemption amounts reflects the risk free rate for market participants comparable to the Company. This reflects the
Company's assumption that all risks have been incorporated into its risk-weighted estimates of future cash flows. As of December 31, 2014, the assumed discount rate is of 1.65%.
b) Acquisition of Coasin Instalaciones Ltda.
In March 2014, through the subsidiary CAM Chile S.A., the Group acquired control of Coasin Instalaciones Limited with the purchase of 100.00% of its capital shares. Coasin is an entity
incorporated in Chile and is mainly engaged in providing installation and maintenance services for networks and equipment related to the telecommunications industry.
This acquisition is part of the Group’s plan to increase its presence in markets that present high growth potential as in Chile, and in other attractive industries, such as utilities.
The acquisition value of the investment in CAM Chile S.A. amounted to US$2.1 million (equivalent to S/.6.4 million) and resulted in the recognition of goodwill for US$ 1.9 million
(equivalent to S/.5.7 million) at the acquisition date.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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The following tables summarize the consideration paid for Coasin and the provisional determination of fair value of assets acquired, liabilities assumed and the non-controlling interest at
the acquisition date:
Cash and cash equivalents
Trade accounts receivables
Inventories
Prepaid expenses
Property, plant and equipment
Intangibles
Deferred income tax liability
Trade accounts payables
Contingent liabilities
Fair value of net assets (provisional)
Goodwill (Note 17)
Consideration provided for the acquisition
Payment for the acquisition settled in cash
Cash and cash equivalents of the subsidiary acquired
Direct outflow of cash for the acquisition
S/.000
3
4,675
276
33
711
1,377
(178)
(3,592)
(2,658)
647
5,743
6,390
6,390
(3)
6,387
US$000
1
1,564
92
11
238
461
(60)
(1,202)
(889)
216
1,921
2,137
2,137
(1)
2,136
Revenue and profit resulting for the period between the date of acquisition and December 31, 2014 amounted to S/.66.3 million and S/.0.7 million, respectively.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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Provided that the distribution of the consideration is divided between the fair values on a provisional basis for the 2014 financial statements, the Group will complete the distribution
process in a period that should not exceed one year as of the acquisition date of Coasin. During such review period, additional assets and liabilities would be recognized that may arise
from updated data that may be obtained regarding existing information at the acquisition date and that does not comprise to new incidents occurred after the acquisition date; that is, if
the Group were to adjust initial amounts recognized at the business combination dates.
c) Acquisition of DSD Construcciones y Montajes S.A. (DSD)
In August 2013, through the subsidiaries GyM Minería S.A., Ingeniería y Construcción Vial y Vives S.A. and GyM Chile S.p.A., the Group acquired control of DSD with the purchase of
85.95% of its equity shares. DSD is an entity domiciled in Chile whose main economic activity is the execution of electromechanical works and assemblies in construction projects of oil
refineries, pulp and paper, power plants and mining plants.
This acquisition is part of the Group’s plan to increase its presence in markets that present high growth potential as in Chile, and in attractive industries, such as mining and energy.
During the twelve-month period after the acquisition date, the Group reviewed the allocation of the purchase price for the acquisition of DSD Construcciones y Montajes S.A. carried
out in August 2013 and modified goodwill for a net decrease of S/.1.7 million (net of tax impact of S/.0.5 million and non-controlling interest of S/.0.3 million) adjusting the values of fixed
assets, intangibles, trade receivables, other receivables and contingent liabilities for S/.0.4 million, S/.1.9 million, S/.0.2 million, S/.3.5 million and S/.3 million, respectively.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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The consideration provided by GyM to purchase DSD Construcciones y Montajes S.A. amounted to US$37.2 million (equivalent to S/.103.9 million). The final attribution of the price paid
between fair values after the review period resulted in the recognition of goodwill for S/.6.1 million which is illustrated below:
Cash and cash equivalents
Trade accounts receivables
Receivables from related parties
Prepaid expenses
Investments
Property, plant and equipment
Intangibles
Deferred income tax assets
Trade accounts payables
Other accounts payables
Contingent liabilities
Deferred income tax liability
Fair value of net assets
Non-controlling interest (14.05%)
Goodwill (Note 17)
Total paid for the purchase
Cash payment for acquisition
Cash and cash equivalents of the acquired subsidiary
Direct outflow of cash flows for the acquisition
Previously stated
S/.000
US$000
15,530
74,502
6,605
1,032
2,608
52,504
5,741
2,192
( 5,328)
( 38,679)
( 815)
( 4,187)
111,705
( 15,701)
7,868
103,872
103,872
( 15,530)
88,342)
5,562
26,684
2,366
369
935
18,805
2,056
785
( 1,908)
( 13,854)
( 292)
( 1,500)
40,008)
( 5,624)
2,802
37,186
37,186
( 5,562)
31,624
S/.000
15,530
74,317
10,083
1,032
2,608
52,922
7,591
2,192
( 5,328)
( 38,679)
( 3,846)
( 4,692)
113,730)
( 15,986)
6,128
103,872
103,872
( 15,530)
88,342
Revised
US$000
5,562
26,618
3,611
369
935
18,955
2,719
785
( 1,908)
( 13,854)
( 1,378)
( 1,681)
40,733
( 5,725)
2,178
37,186)
37,186
( 5,562)
31,624
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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Acquisition related costs of S/.0.65 million have been charged to administrative expenses in the consolidated income statement for the year ended 31 December 2013.
Revenue and profit generated for the period between the date of acquisition to December 31, 2013 were S/.82.97 million and S/.8.3 million, respectively.
If DSD Construcciones y Montajes S.A. would have been consolidated since January 1, 2013, the revenue and profit generated would have been S/.182.68 million and S/.10.15 million,
respectively.
d) Acquisition of Vial y Vives
In October 2012, the Group’s subsidiary GyM S.A. acquired 74% of equity shares in Vial y Vives S.A.C., an entity based in Chile, which is mainly engaged in carrying out activities related
to construction, engineering works, civil work projects and electromechanical assemblies, architecture, installations. This acquisition is part of the Group’s plan to increase its presence in
markets that present high growth potential as in Chile, and in attractive industries, such as mining and energy.
During the period of twelve months after the acquisition date the Group reassessed the purchase price allocation from the acquisition of Vial y Vives S.A.C. which was made in October,
2012 and reallocated the amount of S/.24.7 million from goodwill (net of tax impact of S/.6.3 million and non-controlling interest of S/.6.4 million) to fixed assets, other accounts receivable
and contingent liabilities in the amounts of S/.15.4 million, S/.16.8 million and S/.5.1 million respectively. This effect corresponds to the measurement period adjustment of the preliminary
fair value assigned to the assets and liabilities acquired.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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The price paid by GyM for the acquisition of Vial y Vives amounted to US$55.6 million (equivalent to S/.142 million) and resulted in the recognition of goodwill for S/.28.9 million, at the
acquisition date, which is detailed as follows:
Cash and cash equivalents
Marketable securities
Trade accounts receivable, net
Other accounts receivable
Inventories
Prepaid expenses
Property, plant and equipment
Intangibles (“Order Backlog” and Brand)
Investments
Deferred income tax
Accounts payable from related parties
Trade accounts payable
Other accounts payable
Provisions
Advances from clients
Contingent liabilities
Deferred income tax liability
S/.000
10,445
61,664
10,862
4,002
2,182
1,020
23,746
98,869
15,128
535
(9,550)
(3,806)
(17,115)
(4,965)
(47,085)
(11,130)
(14,730)
Reported in 2012
US$000
4,094
24,172
4,258
1,569
855
400
9,309
38,757
5,930
210
(3,744)
(1,492)
(6,709)
(1,946)
(18,457)
(4,363)
(5,774)
S/.000
10,445
61,664
10,862
20,765
2,182
1,020
39,184
98,869
15,128
535
(9,550)
(3,806)
(17,115)
(4,965)
(47,086)
(6,006)
(20,993)
Revised
US$000
4,094
24,173
4,258
8,140
855
400
15,360
38,757
5,930
210
(3,744)
(1,492)
(6,709)
(1,946)
(18,457)
(2,355)
(8,229)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
Fair value of net assets
Non-controlling interest (26.42%)
Goodwill (Note 17)
Total paid for acquisition
Cash payment for the acquisition
Cash and cash equivalent of the acquired subsidiary
Direct cash outflow from acquisition
120,072
(31,757)
53,654
141,969
141,969
(10,445)
131,524
47,069
(12,449)
21,033
55,653
55,653
(4,094)
51,559
151,133
(38,108)
28,944
141,969
141,969
10,445)
131,524
269 >>
59,245
(14,792)
11,200
55,653
55,653
(4,094)
51,559
The cash payment for the acquisition comprises an indemnification asset of S/.6,006 which was deposited in an escrow account to compensate any future disbursements related to
contingent liabilities acquired with the business combination.
The income and the profit generated for the period from the acquisition date to December 31, 2012 amounted to S/.23.9 million and S/.1.7 million, respectively.
If Vial y Vives had been consolidated from January 1, 2012, the income generated would have been S/.59.6 million and S/.7.9 million, respectively.
e)
Acquisition of Stracon GyM -
On March 1, 2012 GyM obtained control over certain business which it had jointly with an entity called Stracon S.A.C. (hereinafter Stracon), as well as the control over certain interests
owned by Stracon both individually and with other partners.
This acquisition was made effective through an entity that GyM and Stracon formed for this purpose. In fact, both entities established Stracon GyM S.A. (hereinafter Stracon-GyM), over
which GyM exercises control and to which both the above-mentioned companies contributed with equity packages comprising various assets and liabilities associated with the mining
industry.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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This acquisition is part of the Group's strategy to group in one single entity all businesses related to the mining industry, including existing businesses that were conducted jointly with
Stracon, own business, and businesses owned by Stracon conducted with third parties. This strategy is intended to generate synergies, economies of scale and tax efficiencies from the
integration of the mining-related businesses and taking advantage of the individual experience of both entities now conducting this restructured business.
The structure of this transaction consisted of transactions made by both entities to obtain a certain percentage of interest in Stracon-GyM, and an additional contribution of GyM. As a
result of the several contributions that each party engages to make, the share capital structure of Stracon-GyM was attributed to shareholders as follows: 74.15% to GyM and 25.85% to
Stracon. GyM has control over the overall operation and it applies IFRS 3 to account for this transaction.
The consideration paid by GyM for the purchase of Stracon - GyM is comprised of the book value of net assets transferred for a total S/.24.9 million plus a cash amount for a total of
US$16.4 million (in aggregate equivalent to S/.42 million; see Note 5) and resulting in the recognition of goodwill for S/.13.4 million at the acquisition date, is as follows:
Cash and cash equivalents
Trade accounts receivable, net
Other accounts receivable
Inventories
Prepaid expenses
Property, plant and equipment
Intangibles (“Order Backlog” and customer relationships)
Deferred income tax assets
Other assets
Financial obligations
Trade accounts payable
S/.000
885
120,184
3,862
16,674
24
206,153
9,976
674
36
(64,058)
(39,267)
US$000
347
47,131
1,515
6,539
9
80,844
3,912
264
14
(25,121)
(15,399)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
Accounts payable to related parties
Other accounts payable
long-term liabilities
Deferred income tax liability
Fair value of net assets
Non-controlling interest (25.85%)
Goodwill (Note 17)
Consideration given for the acquisition)
Net assets transferred
Cash paid in 2011
Cash paid in 2012
Cash and cash equivalent of the acquired subsidiary
Direct cash outflow from acquisition
271 >>
(32,086)
(516)
(49,491)
(2,873)
15,089
(3,901)
5,242
16,430
(9,802)
6,628
5,448
1,180
(347)
833
(81,820)
(1,316)
(126,202)
(7,327)
38,478
(9,947)
13,366
41,897
(24,994)
16,903
13,894
3,009
(885)
2,124
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
The following table provides a breakdown of the book value of assets and liabilities transferred in connection with the acquisition of Stracon-GyM:
Trade accounts receivable
Accounts receivable from related parties
Inventories
Machinery and equipment
Other accounts receivable
Total assets
Trade accounts payable
Accounts payable to related parties
Borrowings
Other accounts payable
Total liabilities
Book value of net assets transferred
272 >>
S/.000
55,545
27,880
12,318
139,248
19,155
254,146
28,564
56,063
141,430
3,095
229,152
24,994
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
273 >>
32 DIVIDENDS
At the General Shareholders’ meeting held on March 28, 2014 the decision was made to distribute dividends for S/.112,127 (S/.0.169 per share), which correspond to 2013 earnings.
At the General Shareholders’ meeting held on March 26, 2013, the decision was made to distribute dividends amounting to S/.86,986.2 (S/.0.156 per share), corresponding to 2012 earnings.
At the General Shareholders’ meeting held on March 30, 2012, the decision was made to distribute dividends amounting to S/.86,722.4 (S/.0.156 per share), corresponding to 2011 earnings.
A dividend of S/.0.159 per share, amounting to S/.104,910 will be proposed at the Annual General Shareholders’ meeting which will be held on March 28, 2015. The financial statements do
not reflect these dividends payable.
33 EARNINGS PER SHARE
Basic earnings per share are calculated by dividing the net profit of the period attributable to common shareholders of the Group by the weighted average number of common shares
outstanding during the year. No diluted earnings per common share were calculated because there are no common or investment shares with potential dilutive effects (i.e., financial
instruments or agreements that give the right to obtain common or investment shares); therefore, it is equal to basic earnings per share. The basic earnings per share are broken down as
follows:
Profit attributable to the controlling interest in the Company
Weighted average number of shares in issue at S/.1.00 each, at December 31, 2012, 2013 and 2014)
Basic and diluted earnings per share (in S/.)
2012
289,954
558,284,190
0.519
2013
320,016
600,346,925
0.533
2014
299,744
660,053,790
0.454
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
274 >>
34 TRANSACTIONS WITH NON-CONTROLLING INTERESTS
a) Additional acquisition of non-controlling interest
i)
ii)
iii)
iv)
v)
vi)
In July 2014, GyM S.A. acquired 13.49% of additional shares in Stracon GyM at a price of US$24.96 million (equivalent to S/.72.82 million). The carrying amount of non-controlling
interest at the acquisition date was S/.22.15 million. The Group eliminated the non-controlling interest and recognized a decrease in equity attributable to the parent owners of
S/.50.67 million.
In August, November and December 2014, the Company acquired 4.567% (2.25%, 1.95% and 0.367% respectively) additional shares in GyM S.A. at a total purchase price of S/.93.16
million. The carrying amount of the non-controlling interest at the acquisition date was S/.24.61. The Group eliminated non-controlling interest and recognized a decrease in equity
attributable to the owners of the parent for S/.71.52 million.
In August 2014, the Company acquired 1.37% additional shares in Viva GyM S.A. at a price of S/.9.38 million. The carrying amount of the non-controlling interest at the acquisition
date was S/.3.35 million. The Group eliminated non-controlling interest and recorded a decrease in equity attributable to the parent owners of S/.6.03 million.
In 2013, the Company acquired additional shares of Ingeniería y Contrucción Vial y Vives S.A., GMD S.A., Viva GyM S.A., and Concar S.A. representing the 6.4%;0.47%;0.13% and
0.18% of their corresponding issued shares. The carrying amount of the non-controlling interests in such subsidiaries was S/.9,528 and the purchase consideration was S/.12,433. The
Group derecognized non-controlling interest and accounted a decrease in equity attributable to owners of the Parent of S/.2,905.
In 2013, the Company acquired an additional 16.9% of the outstanding shares of Norvial S.A from the former shareholder Besco S.A. at the purchase consideration of S/.51,435.
The carrying amount of the no-controlling interests at the acquisition date was S/.19,729. The Group derecognized its non-controlling interest and recorded a decrease in equity
attributable to owners of the Parent of S/.31,706.
In May 2012, the Company acquired the remaining 26.99% of the shares issued of Survial S.A. at a sales price of S/.4,393. The Group now holds 99.99% of the total share capital of
Survial S.A. The carrying amount of the Group’s non-controlling interests at the acquisition date was S/.4,757. The Group derecognized these non-controlling interests for S/.4,757
and recorded a decrease in capital attributable to parent owners of S/.364.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
275 >>
The effect of these changes is broken down as follows:
Carrying amount of non-controlling interest acquired
Consideration provided for non-controlling interest
Lower (higher) payment attributable to the Company’s controlling interest
b) Disposal of interests in subsidiary without loss of control
2012
4,757
(4,393)
364
2013
29,257
(63,868)
(34,611)
2014
50,109
(178,331)
( 128,222)
i)
ii)
In November 2014, GyM Chile S.p.A sold 1.01% (S/.1.6 million) of its total interest of 82.04% in Vial y Vives – DSD for US$0.582 million (equivalent to S/.1.6 million). The carrying
amount of the non-controlling interest in Vial y Vives – DSD at the disposal date was S/.1.6 million.
In January 2012, the Company sold 0.17% (S/.708) of its total interest of 93.84% held in GyM S.A. for S/.555. The carrying amount of the non-controlling interest in GyM S.A. at the
disposal date was S/.25.6 million (that is, 6.16% interest).
iii)
In January 2012, the Company sold 0.40% (S/.194) of its total interest of 99.97% held in Concar S.A. for S/.638. The carrying amount of the non-controlling interest in Concar S.A. at
the disposal date was S/.14.5 (that is, 0.03% interest).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
The effect of these changes at December 31 is summarized as follows:
Carrying amount of non-controlling interest sold
Consideration received for non-controlling interest
Increase in equity of the Company’s controlling interest
There were no transactions with non-controlling interest in 2013.
c)
Effects of transactions with non-controlling interests on equity attributable to Parent owners for the year ended December 31:
Changes in equity attributable to the Company’s controlling interest arising from:
Acquisition of additional interest in subsidiary
Disposal of interest in subsidiary without losing control
Decrease in equity of the Company’s controlling interest
2012
364
291
655
276 >>
2014
(1,627)
1,627
-
2014
128,222
-
128,222
2012
(902)
1,193
291
2013
(34,611)
-
(34,611)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
277 >>
d) Contributions of non-controlling shareholders
Mainly correspond to the contributions made by the partners of subsidiary Viva GyM S.A. for their real estate projects. At December 31 the amounts contributed were the following:
Contributions from Viva GyM S.A.
Contributions from GyM Ferrrovías S.A.
Returns of contributions
Increase in equity of non-controlling interest
2012
30,224
-
(4,128)
26,096
2013
59,387
(24,613)
34,774
2014
48,793
2,823
(4,240)
47,376
Contribution returns mainly correspond to profit attributable to the party for the housing project El Agustino I, which has been completed and most of the apartments have been delivered
to the customers.
e) Deconsolidation of subsidiaries
In 2014 the Group assessed its interest in the joint venture “Red Vial 1 – Cusco”, which was considered and reported as a subsidiary at December 31, 2013. As a result of this assessment,
the Group concluded that the rights entitled in such business do not grant control, joint control or significant influence. In addition Management´s conclusion is that Company´s interest
in this business is that of a financial asset (receivable). Assets and liabilities of “Red Víal 1 – Cusco” previously consolidated and the non-controlling interest amounted to S/.2,284 which
was eliminated in 2014.
In 2013 the Group assessed its interests in Concessión La Chira S.A. and Logistica Quimica del Sur S.A.C (LQS). The interests in these concessions were accounted for as if they were under
control of the Group (subsidiaries). Subsequent that assessment it was determined that the interests correspond to a joint operation and joint venture, respectively under the provisions of
IFRS 11. The amounts, consolidated as of December 31, 2013 of assets and liabilities non-controlling interest amounted to S/.12,535 for La Chira and S/.6,842 for LQS.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
278 >>
f) Debt capitalization -
Corresponds to the capitalization of debt arising from obligations contracted by Stracon GyM with its investors, GyM and Stracon S.A.C., and amounted to S/.12.2 million in 2012.
g) Dividends
At December 31, 2014, 2013 and 2012 dividends were distributed for S/.68.1 million, S/.51.8 million and S/.37.5 million, respectively.
35 EVENTS AFTER THE DATE OF THE STATEMENT OF FINANCIAL POSITION
a) On October 3, 2014 we reported that the joint operation formed by our Company and our subsidiary GMD were awarded with the concession for the operation of road tolls called:
“Operación de la Unidad de Recaudo del Sistema Integrado de Transporte de Lima – SIT”. We were waiting for the respective notice specifying the starting date of the agreement when
a communication was served to us “Oficio 007-2015-MML/IMPL/GG” from the Metropolitan Lima Municipality dated January 20, 2015 stating the annulment of the concession that
was previously awarded to us; as a result, the Public Bid process went back to the stage before the publication of the proforma agreement indicated in the original Bid time schedule;
the reason for this was primarily the report issued by the Peruvian Ministry of Economy and Finance indicating that, as established by law, that Ministry has to issue an opinion on the
concession agreement prior the award date; and the Lima Municipality failed to reach the respective agreement to the Ministry before the bid award date.
It should be noted that the Group Backlog does not contain any amount related to the above-mentioned concession agreement.
The Company is presently evaluating its legal situation as to the decision made by the Municipality and will decide what measures to take.
b) On February 03, 2015 the Company placed S/.629 million in “Series A Senior Secured VAC – Indexed Notes due 2039”, corresponding to notes issued by GyM Ferrovías S.A.
The Notes sale took place on February 3, 2015 and the issuance date was set at February 10, 2015. Notes will be redeemed on November 25, 2039. Interest rate is 4.75% annually plus
inflation adjustment for a period of 24.8 years. Interest payments dates are February 25, May 25, August 25, and November 25, each year, starting May 25, 2015.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSGRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTCONSOLIDATED FINANCIAL STATEMENTS | GRAÑA Y MONTERO S.A.A. AND SUBSIDIARIES DECEMBER 31, 2012, 2013 AND 2014ANNUALREPORT 2014<< menu
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REPORT ON COMPLIANCE WITH THE
GOOD CORPORATE GOVERNANCE CODE
FOR PERUVIAN COMPANIES
(For the fiscal year 2014)
NAME:
GRAÑA Y MONTERO S.A.A.
FISCAL YEAR:
2014
WEB PAGE:
WWW.GRANAYMONTERO.COM.PE
NAME OR
CORPORATE NAME
OF THE REVIEWING
FIRM 1
1
Applicable only if the information contained in this Report has been reviewed by a specialized firm (for instance, an auditing firm or a consulting firm).
<< menu GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDANNUALREPORT2014 280 >>
METHODOLOGY:
Companies with securities listed on the Public Register of the Securities Market (Registro Público del Mercado de Valores) are required to disclose to the public their good corporate
governance practices. In this connection, such companies report their adhesion contained in the Good Corporate Governance Code for Peruvian Companies2.
The information to be submitted refers to the fiscal year ended on December 31 of the calendar year previous to the year of submission, whereby any reference to “the fiscal year”
must be understood as made to the aforementioned period, and is submitted as an annex to the Annual Report of the Company in the electronic forms provided by the Securities
Market Superintendence to facilitate submission of the information in this report through Yesstema MVnet.
Section A includes the letter of introduction of the Company, setting out the major corporate governance advancements made in the period.
Section B presents the level of compliance of the principles that make up the Code. For such purpose, the Report is structured in accordance with the five pillars of the Code:
I. Rights of Shareholders;
II. Regular Shareholders Meeting;
III. Board of Directors and Senior Management3;
IV. Risk and Compliance; and,
V. Information Transparency.
2
3
The Good Corporate Governance Code for Peruvian Companies (2014) is available for reference at Orientación – Gobierno Corporativo del Portal del Mercado de Valores www.smv.gob.pe. (Guidance Section – Corporate
Governance of the Securities Market Portal www.smv.gob.pe).
The term “Senior Management” includes the general manager and other managers.
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Each principle is evaluated based on the following parameters:
a) “Comply or Explain” Evaluation: compliance by the Company is marked with an “x”, based on the following criteria:
Yes: Total compliance with the principle.
No: Non-compliance with the principle.
Explanation: In this field, if the Company checked option “No”, it should explain the reasons why it did not adopt the principle or the actions conducted that allow
it to consider that progress is made towards compliance or partial adoption thereof, as applicable. Also, if deemed necessary, if the option “Yes” was checked, the
Company may provide information on compliance with this principle.
b) Supporting Information: provides information allowing further knowledge on how the Company has implemented the principle.
Section C provides a list of documents of the Company that regulate the policies, procedures and other relevant matters that bear a relationship with the principles under evaluation.
Section D includes additional information not developed in the previous sections or other relevant information that the Company freely decides to mention so the investors and the
various stakeholders may gain further knowledge of the good corporate governance practices that it has implemented.
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SECTION A:
LETTER OF INTRODUCTION4
In the year 2014, Graña y Montero S.A.A. participated in the Good Corporate Governance Index of the Lima Stock Exchange and was awarded the Key of the Stock Exchange for its
good practices combined with the opinion of investors and analysts through la Voz del Mercado.
Also, it continues to participate as an active member of the Companies Circle, a group of Latin American companies that stand out for their good corporate governance practices,
having been elected Chairman of its steering committee. This group is endorsed by the IFC.
Graña y Montero S.A.A. firmly believes that the process of implementing good corporate governance standards is an ongoing process and, as such, during 2014 it elected a new board
of directors for the 2014-2017 period, which consists of nine members, five of which are independent directors. Also, it continued with the practice that both the Human Resources
and Social Responsibility Committee and the Audit and Process Committee is consist of independent directors in their entirety; in addition that, in the latter, one of its members
qualifies as financial expert under SOX standards, as it has previously served as an auditor.
Additionally, during 2014 use of the Ethical Channel as a tool to channel concerns in connection with compliance with the Ethics Charter and the Code of Conduct continued
to strengthen.
4 Describes the main actions implemented during the fiscal year in terms of good corporate governance practices that the Company deems relevant to highlight in line with the five pillars of the Good Corporate
Governance Code for Peruvian Companies (2014): Rights of the Shareholders, Shareholders Regular Meeting, Board of Directors and Senior Management, Risk and Compliance and Information Transparency.
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In connection with the Regular Shareholders Meeting, the Company issued the agenda and the business to be transacted thereat in a timely manner, generating for the first time the
proxy vote, allowing shareholders to deliver voting instructions and cast their vote individually for each director. Also, we made public the resumes of the nominees to the Board of
Directors to enable a better informed election.
Through the Investor Relations Office, the Company sought to become closer to its shareholders and potential investors, for which it held 10 meetings in New York, Europe, Chile
and Lima during the year.
Likewise, the Company held, after releasing the quarterly results, a telephone conference with investors and analysts, to explain the results of the quarter and answer their questions.
Especially, during 2014, we undertook to raise our disclosure standards in accordance with applicable laws and provisions and the SOX regulations applicable to foreign investors,
not only by disclosing relevant facts but also disclosing in document 20-F more detailed information, such as the explanation of the business areas, the disclosure of the main risk
factors, transactions among related entities, the resumes of the directors and chief executives of the Group, among others.
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SECTION B:
EVALUATION OF COMPLIANCE WITH THE PRINCIPLES OF THE GOOD CORPORATE GOVERNANCE CODE FOR PERUVIAN COMPANIES
PILLAR I: RIGHTS OF SHAREHOLDERS
PRINCIPLE 1: EQUITABLE TREATMENT
QUESTION I.1
YES
NO
EXPLANATION:
Does the Company recognize in its conduct of business an equitable treatment of
shareholders of the same class and that they are afforded the same conditions?(*)
X
Article 6 of the Regulations of the Regular Shareholders Meeting provides that
the relationship of the Company with its shareholders is to be consistent with
the principles of equitable treatment between shareholders, transparency and
the provision of broad and continued information.
(*) The same conditions is to be understood as the particularities that distinguish the shareholders, or make them have a common characteristic, in their relationship with the
Company (institutional investors, non-controlling investors, etc.). It should be noted that this shall not imply in any case that the use of privileged information is favored.
QUESTION I.2
YES
NO
EXPLANATION:
Does the Company promote the existence of classes of shares with voting
rights only?
X
Article 8 of the by-laws provides that the Company shall have a single class of
shares and all of them shall carry the same rights and obligations.
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a. In connection with the equity of the Company, specify:
Subscribed capital as of closing of
the fiscal year
Paid-in capital as of closing of
the fiscal year
Total number of shares representing
the capital stock
Number of shares of voting stock
s/. 660,053,790.00
S/. 660,053,790.00
660,053,790
660,053,790
b. If the Company has more than one class of shares, specify:
Class
Number of shares
Par value
Rights(*)
Not Applicable
(*) The specific rights of the class that distinguish it from the others shall be indicated in this field.
QUESTION I.3
If the Company has investment shares, does the Company promote a policy of
redemption or voluntary swap of investment shares for common shares?
YES
NO
EXPLANATION:
Not Applicable
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PRINCIPLE 2: INTEREST OF SHAREHOLDERS
QUESTION I.4
a. Does the Company provide in its corporate documents the form of
representation of the shares and who is in charge of entry thereof in
the share ledger?
YES
NO
EXPLANATION:
X
Both the Company by-laws and the Regulations of the Regular Shareholders
Meeting provide that representation by proxy is allowed provided it is
communicated to the Company at least 24 hours prior to the Meeting and by a
non-certified letter. The Company provides this free of charge The only restriction
is that if the proxy letter is to a Director, it shall state the voting intent, as provided
in Article 28 of the Regulations of the Regular Shareholders Meeting.
On the other hand, CAVALI is in charge of entry in the share ledger.
b. Is the share ledger kept permanently up to date?
X
CAVALI is in charge of keeping and updating the share ledger.
Provide the timing of updates to the share ledger upon becoming apprised of any change.
TIMING:
Within 48 hours
Weekly
Others / Detail (in days)
1 day
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PRINCIPLE 3: NO DILUTION OF INTEREST IN THE CAPITAL STOCK
QUESTION I.5
YES
NO
EXPLANATION:
a. Is it a policy of the Company that the proposals of the Board of Directors
in connection with corporate operations that may affect the right to non-
dilution of shareholders (i.e., mergers, spinoffs, capital increases, among
others) be previously explained by the Board of Directors in a detailed report
with the independent opinion of an external advisor of professional repute
appointed by the Board of Directors?
b. Is it a policy of the Company to make such reports available to the
shareholders?
X
The Board of Directors is informed of and explains to the market the
operations through the motions that it makes public with the notice of the
Regular Shareholders Meeting. An external advisor is not hired to provide an
independent opinion; the general manager hires an external advisor to be in
charge of the operation.
X However, Article 10 of our Regulations of the Board of Directors provides that
any question or request for information is to be handled directly through the
Investor Relations Office.
If any corporate operations under the scope of item a) of question 1.5 have occurred during the fiscal year, and if he Company has Independent Directors(*),
state if in all cases:
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Was the appointment of the external advisor made with the affirmative vote of all Independent Directors?
Not Applicable
YES
NO
All of the Independent Directors clearly expressed their acceptance of the aforementioned report and, if applicable, state the reasons for
non-acceptance?
Not Applicable
(*) Independent Directors are those selected based on their professional experience, honorability, financial sufficiency and independence and non-relationship with the Company, its
shareholders or directors.
PRINCIPLE 4: INFORMATION AND COMMUNICATION TO SHAREHOLDERS
QUESTION I.6
YES
NO
EXPLANATION:
Does the Company set who is in charge of or the means for shareholders to
receive and require timely, reliable and truthful information?
X
Article 10 of the Regulations of the Board of Directors and Article 15 of the
Regulations of the Regular Shareholders Meeting provide that the Investor
Relations Office is responsible for the shareholders receiving and requiring
timely, reliable and truthful information, and the means for such purpose.
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a. Indicate the means through which shareholders receive and/or request information from the Company.
COMMUNICATION MEANS
Electronic mail
Telephone
Corporate web page
Postal mail
Information meetings
Others / Detail
RECEIVE INFORMATION
REQUEST INFORMATION
X
X
X
X
X
X
X
Quarterly telephone conferences
b. Does the Company have a time limit to respond to information requests of shareholders? If answered in the affirmative, provide the time limit:
Time limit (days)
7 business days
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QUESTION I.7
YES
NO
EXPLANATION:
Does the Company have mechanisms in place for the shareholders to express
their opinion on the development thereof?
X
Section 1 of Article 7 del Regulations of the Regular Shareholders Meeting
provide that shareholders may submit, through the information channels
implemented by the Company, such matters, suggestions and comments of
interest to the Company as they may deem appropriate at any time.
If answered in the affirmative, detailed the mechanisms in place in the Company for shareholders to express their opinion on the conduct thereof.
Article 7 of the Regulations of the Regular Shareholders Meeting provides that shareholders may express their opinion through the information channels in place in
the Company at any time. It also provides that the response of the Company deemed of general interest shall be placed in the corporate web page.
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PRINCIPLE 5: SHARING IN DIVIDENDS OF THE COMPANY
QUESTION I.7
YES
NO
EXPLANATION:
a. Is compliance with the dividend policy subject to evaluations to be
X
conducted within a specific time frame?
The Board of Directors is under the obligation to review and approve the Financial
Statements and, as such, proposes the distribution of profits in accordance with the
dividend policy approved at the Regular Shareholders Meeting. The Shareholders
Meeting approves the dividends and verifies conformity thereof with its policy.
b. Is the dividend policy made known to the shareholders by its corporate web
X
page, among other means?
Our dividend policy is placed in our corporate web page, specifically in the
‘Corporate Governance’ section.
a. Indicate the dividend policy of the Company applicable to the fiscal year
Approval date
Approved by the Regular Shareholders Meeting of March 26, 2013
Dividend policy (profit sharing criteria)
Distribute, as dividends, between 30% and 40% of the profits generated in
each fiscal year.
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292 >>
b. Indicate the dividends in cash and in shares distributed by the Company in the fiscal year ended and in the previous fiscal year.
PER SHARE
FISCAL YEAR REPORTED
FISCAL YEAR PREVIOUS TO THE REPORTED FISCAL YEAR
IN CASH
IN SHARES
IN CASH
IN SHARES
Class
Class
Investment share
S/. 112’126,907.68
0
0
0
0
0
S/. 86,986,243.79
0
0
0
0
0
DIVIDENDS PER SHARE
PRINCIPLE 6: CHANGE OF CONTROL OR TAKEOVER
QUESTION I.9
YES
NO
EXPLANATION:
Does the Company have policies or agreements of non-adoption of anti-takeover
mechanisms?
X
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YES
NO
X
X
X
Indicate if any of the following measures has been established in your company:
Requirement of a minimum number of shares to be a Director
Minimum number of years as a Director to be appointed Chairman of the Board
Agreements for indemnification of executives / officers as a result of changes after a PAO.
Others of a similar nature / Detail
PRINCIPLE 7: ARBITRATION FOR SETTLEMENT OF DISPUTES
QUESTION I.10
YES
NO
EXPLANATION:
a. Do the by-laws of the Company contain an arbitration agreement providing
X
Article 76 of the by-laws contains the arbitration agreement.
that any dispute between shareholders, or between shareholders and
the Board of Directors; and any objection to resolutions of the Regular
Shareholders Meeting or of the Board Directors by the shareholders of the
Company be submitted to arbitration according law?
b. Does such clause enable an independent third party to settle the disputes,
except in case of an express legal reserve to be filed in the ordinary courts?
X
Article 76 of the by-laws contains the arbitration agreement
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In the event of any objections to resolutions of the Regular Shareholders Meeting or of the Board Directors by the shareholders and others involving the company during the fiscal
period, provide their number.
Number of objections to resolutions of the Regular Shareholders Meeting
Number of objections to resolutions of the Board of Directors
0
0
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PILLAR II: REGULAR SHAREHOLDERS MEETING
PRINCIPLE 8: FUNCTION AND COMPETENCE
QUESTION II.1
YES
NO
EXPLANATION:
Is approval of the Board of Directors remuneration policy an exclusive and non-
delegable function of the Regular Shareholders Meeting?
X
Article 23 of the by-laws state that it is a function of the Regular Shareholder
Meeting to elect the members of the Board of Directors and set their
remuneration. Also, Article 34 of the Directors remuneration policy is
determined by the Regular Shareholder Meeting as provided in the by-laws.
Indicate whether the following functions are exclusive of the Regular Shareholders Meeting. If answered in the negative, indicate the body that exercises them.
Provide special investigations and audits
Resolve the amendment of the by-laws
Resolve a capital stock increase
Resolve the distribution of dividends on account
Appoint external auditors
YES
NO
BODY
X
X
X
X
X
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PRINCIPLE 9: REGULATIONS OF THE REGULAR SHAREHOLDERS MEETING
QUESTION II.2
YES
NO
EXPLANATION:
Does the Company have binding Regulations of the Regular Shareholders
Meeting, the non-compliance of which entails liability?
X
The Regulations of the Regular Shareholders Meeting were approved by the
Regular Shareholders Meeting held on March 31, 2005.
If the company has Regulations of the Regular Shareholders Meeting, state whether they set the procedures to:
Give notice of Meetings
Incorporate items in the agenda by the shareholders
Provide additional information to the shareholders for the meetings
Conduct of the meetings
The appointment of members of the Board of Directors
Relevant others / Details
Publicize the resolutions passed at the Regular Shareholders Meeting
YES
NO
X
X
X
X
X
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PRINCIPLE 10: PROCEDURES FOR GIVING NOTICE OF MEETINGS
QUESTION II.3
YES
NO
EXPLANATION:
In addition to the procedures to give notice of meetings established by law,
does the Company have notice procedures that allow establishing contact with
shareholders, particularly those who have no participation in the control or
management of the Company?
X
In addition to the notice procedures established by law, the Regulations of the
Regular Shareholders Meeting provide that the meeting is to be announced
through our web page.
a. Complete the following information for each of the Meetings held during the fiscal year:
Date of Notice
Date of Meeting
Place of Meeting
February 28, 2014
March 28, 2014
Graña y Montero Office
(*) Direct exercise includes voting by any means or procedure other than by proxy.
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b. What other means, in addition to the one provided in Article 43 of the General Corporations Law and the provisions in the Relevant Facts and Reserved Information Regulations
did the company use to give notice of the meetings during the fiscal year?
Electronic mail
Telephone
Corporate web page
X
Postal mail
Social media
Others / Detail
QUESTION II.4
YES
NO
EXPLANATION:
Does the Company make available to the shareholders all information relative to
the items in the agenda of the Regular Shareholders Meeting and the proposed
resolutions intended to be passed (motions)?
X
Section 2 of Article 12 of the Regulations of the Regular Shareholders Meeting sets
forth the proposed resolutions and the comprehensive documentation of the various
reports and documents that should be previously made available to the shareholders.
In the notices of meeting given by the company during the fiscal year:
QUESTION II.4
Was the place where the information pertaining to the items in the agenda to be transacted at the meetings specified?
Were “other business”, “various items” or similar included as items in the agenda?
YES
X
NO
X
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PRINCIPLE 11: PROPOSED AGENDA ITEMS
QUESTION II.5
YES
NO
EXPLANATION:
Do the Regulations of the Regular Shareholders Meeting include procedures
allowing the shareholders to exercise the right to submit proposed agenda items to
be discussed at the meeting and the procedures to accept or reject such proposals?
X
Article 13 of the Regulations of the Regular Shareholders Meeting provides that
shareholders may submit suggestions on the matters included in the agenda
through the Investor Relations Office.
a. Indicate the number of proposals submitted by the shareholders during the fiscal year to include items in the agenda to be discussed at the Regular Shareholders Meeting and the
outcome thereof:
Received
None
NUMBER OF REQUESTS
Accepted
Not Applicable
Rejected
Not Applicable
b. If any requests to include items in the agenda to be discussed at the Regular Shareholders Meeting were rejected in the fiscal year, state whether the company communicated the
reasons for such rejection to the requesting shareholders.
Not Applicable
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300 >>
PRINCIPLE 12: PROCEDURES TO EXERCISE VOTING
QUESTION II.6
YES
NO
EXPLANATION:
Does the Company have mechanisms in place that allow the shareholder to
exercise remote voting by secure means, whether electronic or postal, that
ensure that the person casting the vote is actually the shareholder?
X
The Company does not limit the right to proxy and therefore has not set
mechanisms to allow remote exercise of voting.
a. If applicable, indicate the mechanisms or means in place by which the Company may exercise remote voting.
Vote by electronic means
Not Applicable
Vote by postal means
Not Applicable
b. If remote voting was exercised during the fiscal year, provide the following information:
% REMOTE VOTING
% REMOTE VOTING / TOTAL
Date of Meeting
Not Applicable
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301 >>
QUESTION II.7
YES
NO
EXPLANATION:
Does the Company have corporate documents that clearly provide that
shareholders may vote separately on substantially independent matters, so they
may exercise their voting preferences separately?
X However, in practice the Company provides, through its motions, the authority
of every shareholder to exercise separately the voting preferences of its shares on
substantially independent matters.
Indicate whether the Company has corporate documents that clearly provide that shareholders may vote separately on:
The appointment or ratification of Directors by an individual vote for each of them.
The amendment of the by-laws, for each article or group of articles that are substantially independent.
Others/ Detail
In practice, shareholders may vote separately on substantially independent matters.
YES
X
NO
X
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QUESTION II.8
YES
NO
EXPLANATION:
Does the Company allow those acting on behalf of several shareholders to cast
differentiated votes for each shareholder, so they comply with the instructions of
each shareholder that they represent?
X
In practice, the Company allows to cast differentiated votes for each shareholder,
for purposes of complying with the instructions of each shareholder represented.
Article 17 of the Regulations of the Regular Shareholders Meeting contain very
broad provisions that do not restrict the possibility to represent more than one
shareholder with different voting intent but, rather, promote the giving of voting
instructions by proxy letters.
PRINCIPLE 13: DELEGATION OF VOTES
QUESTION II. 9
YES
NO
EXPLANATION:
Do the by-laws of the company allow its shareholders to delegate their vote to
any person?
X
Article 29 of the company by-laws states that any shareholder entitled to
participate in regular meetings may be represented by another person.
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YES
NO
Not Applicable
Not Applicable
Not Applicable
If answered in the negative, state whether your by-laws restrict the right to be represented by any of the following persons:
Another shareholder
A Director
A Manager
PREGUNTA II.10
a. Does the Company have procedures detailing the conditions, the means and
the formalities to be performed in situations of voting delegation?
b. Does the Company make available to shareholders a proxy form setting forth
details of the proxies, the business for which the shareholder delegates its
vote and, if applicable, its voting intent for each of the proposals?
SI
X
X
NO
EXPLICACIÓN:
Article 29 of the by-laws and Article 17 of the Regulations of the Regular
Shareholders Meeting require representation by proxy to be set in writing and
especially for each meeting, unless powers of attorney have been granted by a
public instrument. Proxies must be filed with the Company at least 24 hours
prior to the time set for the Regular Meeting and the Company shall not make
any charge for such proxy.
Under Section 5 of Article 17 of the Regulations of the Regular Shareholders
Meeting, the Company makes available to shareholders a proxy form duly
posted in advance in the web page. However, this is not the only form accepted
by the Company.
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Set forth the requirements and formalities to be met for a shareholder to be represented by proxy at a meeting:
Formality (indicate whether the Company requires a simple letter, a notarized letter,
a public instrument or other).
Notice period (number of days prior to the meeting that the proxy form must be submitted)
Cost (indicate whether the Company requires any payment for this purpose and the amount thereof ).
Simple letter
24 hours
Free of charge
QUESTION II.11
YES
NO
EXPLANATION:
a. Is it a policy of the Company to set limitations to the percentage of
delegation of votes to members of the Board of Directors or of the
X
Senior Management?
b. In cases of delegation of votes to members of the Board of Directors or of the
Senior Management, is it the policy of the Company that shareholders who
delegate their votes clearly state the intent thereof?
X
Article 28 of the Regulations of the Regular Shareholders Meeting provides
that the delegation of votes to a Director must necessarily state its voting intent.
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PRINCIPLE 14: FOLLOW-UP ON RESOLUTIONS OF THE REGULAR SHAREHOLDERS MEETING
QUESTION II.12
YES
NO
EXPLANATION:
a. Does the Company follow up on the resolutions passed at the Regular
Shareholders Meeting?
b. Does the Company issue periodic reports to the Board of Directors and are
these made available to the shareholders?
X
X
Article 9 of the Regulations of the Board of Directors sets forth the general
supervisory function of the Board of Directors.
Quarterly reports, which are made public through the SMV and the corporate
web page, are issued.
If applicable, indicate the area and/or person in charge of following up on the resolutions passed by the Regular Shareholders Meeting. If a person is in charge, include also the
position and area where he/she works.
Area in Charge
Corporate Legal Management
Full Name
PERSON IN CHARGE
Title
Area
Claudia Drago Morante
Corporate Legal Manager
Corporate Legal Management
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PILLAR III: BOARD OF DIRECTORS AND SENIOR MANAGEMENT
PRINCIPLE 15: MAKE-UP OF THE BOARD OF DIRECTORS
QUESTION III.1
YES
NO
EXPLANATION:
Is the Board of Directors made up of persons specializing in various areas
and with different competences, with good reputation, ethical, financial
independence and other qualities relevant to the Company, so that there is a
plurality of approaches and opinions?
X
The Board of Directors is made up of nine persons of various professions, all of
them reputed, ethical and with sufficient availability. Additionally, five of them
are financially independent (Independent Directors).
a. Provide the following information pertaining to the members of the Board of Directors of the Company during the fiscal year.
FULL NAME
PROFESSIONAL BACKGROUND (*)
DATE
EQUITY INTEREST (****)
START (**)
END (***)
N° OF SHARES
INTEREST (%)
DIRECTORS (NOT INCLUDING INDEPENDENT DIRECTORS)
José Graña Miró Quesada
Carlos Montero Graña
Mario Alvarado Pflucker
-Architect
-Director in two companies
-Engineer
- Director in two companies (both
belonging to our economic group)
- Engineer
-Director in one company
1996
1996
2003
117,538,203 shares through GH
Holding Group Corp.
33,785,285 shares through Bethel
Enterprises Inc.
17.81%
5.12%
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Hernando Graña Acuña
- Engineer
- Director in six companies (five belonging
to our economic group)
1996
INDEPENDENT DIRECTORS
José Chlimper Ackerman
- Economist and Business Administrator
- Director in six companies, in three of
which he is a shareholder.
Pedro Pablo Errázuriz Domínguez
- Engineer.
- Director of one company
Federico Cúneo de la Piedra
Mark Hoffmann Rosas
Hugo Santa María Guzmán
- Accountant
- Director in nine companies, in five of
which he is a shareholder.
- Engineer
- Director in four companies
- Engineer
- Director in four companies.
2006
2014
2014
2014
2011
In addition, detail whether the Director is concurrently a member of other boards of directors, their number and whether these are part of the economic group of the
(*)
reporting company. In this connection, the definition of economic group contained in the Regulations on Indirect Ownership, Related Companies and Economic Groups
shall be considered.
(**)
(***)
(****) Mandatory only for Directors holding an interest of 5% or more in the capital stock of the reporting company.
Pertains to the first appointment in the reporting company.
Complete only if ceased in the position of Director during the fiscal year.
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% of the total shares held by the Directors
28.62%
Provide the number of Directors of the Company within the following age range.
Less than 35
Between 35 and 55
Between 55 and 65
Older than 65
0
3
4
2
b. Indicate whether there are specific requirments to be appointed Chairman of the Board in addition to the requirements to be appointed a Director.
Yes
X
No
If answered in the affirmative, set forth such requirements.
Section 35.2 of the Regulations of the Board of Directors provides that the Chairman of the Board may not be a chief executive of the Group.
c. Does the Chairman of the Board have a casting vote?
Yes
X
No
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QUESTION III.2
YES
NO
EXPLANATION:
Does the Company prevent the appointment of substitute or alternate
Directors, especially for quorum reasons?
X
Yes, even though the Regulations allow it, the Company prevents –as it has been
doing for years- the appointment of substitute or alternate Directors because
these would not be focused on and connected with the dynamic of the Company
if required to attend on an occasional basis.
If the Company has alternate or substitute Directors, provide the following:
Full Name of Substitute or Alternate Director
Start (*)
End (**)
(*)
(**)
Pertains to the first appointment as alternate or substitute Director of the reporting Company.
Complete only if ceased in the position of alternate or substitute Director during the fiscal year.
Not Applicable
Not Applicable
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QUESTION III.3
YES
NO
EXPLANATION:
Does the Company disclose the names of Directors, their independent
status and their resumes?
X
The name, capacity and resumes of our Directors are provided in our corporate
web page and the Annual Report and were made available to the shareholders
prior to the election of the Board of Directors.
Set forth the means by which the Company discloses the following information on the Directors:
Name of Directors
Independent Status or not
Resumes
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Also provided in the Annual Report
Also provided in the Annual Report
Also provided in the Annual Report
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PRINCIPLE 16: FUNCTIONS OF THE BOARD OF DIRECTORS
QUESTION III.4
YES
NO
EXPLANATION:
The Board of Directors performs the function of:
a. Approving and directing the corporate strategy of the Company
b. Setting objectives, goals and action plans include in the annual budgets and
the business plans.
c. Controlling and supervising the management and in charge of governance
and administration of the Company.
X
X
X
Article 9 of the Regulations of the Board of Directors states its functions.
Article 9 of the Regulations of the Board of Directors states its functions.
Article 9 of the Regulations of the Board of Directors states its functions.
d. Supervising the good corporate governance practices and setting the policies
X
Article 9 of the Regulations of the Board of Directors states its functions.
and measures required for better application thereof.
a. Detail any other relevant powers of the Board of Directors of the Company
- Supervise strategically important commercial, industrial or financial agreements.
- Approve acquisitions and disposals of substantial assets and equity interests in companies, and the financial operations of the Company that have a material impact on the
equity situation or that, due to any circumstance, may be especially significant.
- Approve investments that due to their amount or their nature significantly affect the equity situation or the strategy of the Company.
- Propose and approve within the limits authorized by the Regular Shareholders Meeting, the issue of bonds, obligations or similar securities.
- Approve the rules and procedures for appointments, control of the management activity, the identification of the main risks of the Company, the evaluation, removal and
remunerations applicable to the Senior Management, especially of the Corporate General Manager and the efficiency of the good corporate governance practices.
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b. Does the Board of Directors delegate any of its functions?
Yes X
No
Set forth, if applicable, the main functions of the Board of Directors that have been delegated, and the body that performs such delegated functions.
FUNCTIONS
BODY / AREA TO WHICH FUNCTIONS HAVE BEEN DELEGATED
Hiring and substituting the General Manager
Human Resources Management and Social Responsibility Committee
Hiring and substituting the Management Staff
Human Resources Management and Social Responsibility Committee in coordination with
the General Manager
Set the remuneration of chief executives
Human Resources Management and Social Responsibility Committee
Evaluate the remuneration of chief executives
Human Resources Management and Social Responsibility Committee in coordination with
the General Manager
Follow up on the social responsibility policy
Human Resources Management and Social Responsibility Committee
Ongoing relationing with external auditors
Audit and Process Committee
Follow-up and supervision of the internal and external audit services
Audit and Process Committee
Review of the internal processes of the Group
Procedures and investigations of claims filed with the Ethical Channel in
connection with accounting and financial matters.
Audit and Process Committee
Audit and Process Committee
Follow-up and approval of the annual investment plan
Audit and Process Committee
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PRINCIPLE 17: DUTIES AND RIGHTS OF THE MEMBERS OF THE BOARD OF DIRECTORS
QUESTION III.5
YES
NO
EXPLANATION:
Are the members of the Board of Directors entitled to?:
a. Request the Board of Directors support or the contribution of experts.
b. Participate in induction programs on their authority and duties and to be
timely informed of the organizational structure of the Company.
X
X
Article 32 of the Regulations of the Board of Directors states that Directors may
gather the information and receive the advisory that they may require on any
aspect of the Company.
Section 19.3 of the Regulations of the Board of Directors provides that the
Chairman of the Board and the General Manager shall provide induction to
the new Director explaining the structure of the Graña y Montero Group.
Also, as a practice, Directors are taken to visit major projects of the Group.
c. Receive a remuneration for the work perfumed, which combines recognition
X
of the professional experience and dedication to the Company with a
rationality criterion.
Chapter IX of the Regulations of the Board of Directors regulating remuneration
of the Director. Remuneration consists of a fixed amount per meeting and a
variable amount per meeting.
a. If specialized advisors were hired during the fiscal year, indicate whether the list of specialized advisors of the Board of Directors who provided services during the fiscal year for
the decision making of the Company was provided to the shareholders.
No
If applicable, state whether any of the specialized advisors was related to any member of the Board of Directors and/or the Senior Management(*).
Not Applicable
(*) In connection with relatedness, the relationship criteria contained in the Regulations on Indirect Ownership, Related Companies and Economic Groups shall be applied.
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b. If applicable, indicate whether the Company conducted induction programs with the new members who joined the Company.
Yes
X
No
c. Indicate the ratio of the aggregate amount of remunerations and annual bonuses of Directors to gross income, according to the financial statements of the Company (*).
REMUNERATION
(%) GROSS INCOME
BONUSES
(%) GROSS INCOME
Directors (not including Independent Directors)
Independent Directors
0.0154%
0.0143%
Delivery of Shares
Delivery of Options
Delivery of Cash
Others (detail)
Not Applicable
Not Applicable
0.297
(*) Remuneration ratio set in relation to consolidated gross sales of the Graña y Montero Group.
PRINCIPLE 18: REGULATIONS OF THE BOARD OF DIRECTORS
QUESTION III.6
YES
NO
EXPLANATION:
Does the Company have binding Regulations of the Board of Directors the non-
compliance of which entails liability?
X
We have Regulations of the Board of Directors approved at the Board of
Directors Meeting held on March 31, 2005.
Indicate whether the Regulations of the Board of Director contain:
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315 >>
NO
Operating policies and procedures
Organizational structure of the Board of Directors
Functions and responsibilities of the Chairman of the Board
Procedures for identification, evaluation and nomination of candidates to members of the Board,
who are proposed to the Regular Shareholders Meeting
Procedures for cases of vacancy, termination and succession of Directors
YES
X
X
X
X
X
Others / Detail
PRINCIPLE 19: INDEPENDENT DIRECTORS
Regulates cases of conflict of interest, the functions of the vice chairman
and secretary of the Board of Directors, and of the General Manager
QUESTION III.7
YES
NO
EXPLANATION:
Is at least one-third of the Board of Directors made up of
Independent Directors?
X
At present, five of the nine Directors of Graña y Montero are
Independent Directors
Indicate which of the following conditions is taken into account by the Company to qualify its Directors as Independent Directors.
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relationship have elapsed.
Not being an employee of a shareholder with an interest of five percent (5%) or more in the company.
Not having more than eight (8) continued years as an Independent Director of the Company.
Not having, or having had in the last three (3) years a business, commercial or contractual relationship, whether direct or indirect, and significant, (*),
with the Company or any other company of its group.
Not being the spouse of, or have any first or second degree kinship relationship by blood, or in the first degree of affinity, with shareholders, members
of the Board of Directors or of the Senior Management of the Company.
Not being a director or a member of the Senior Management of another company in which any Director or member of the Senior Management of the
Company is part of the Board of Directors.
Not having been in the last eight (8) years a member of the Senior Management or an employee, whether in the Company, in companies of its group
or in companies who are shareholders of the Company.
Not having been in the last three (3) years, a partner or employee of the external auditor or of the auditor of any company of its group.
YES
X
X
X
X
X*
Others / Detail
-*Our regulations consider a period of five (5) years.
-Additionally, to qualify as an Independent Director a professional and personal profile that inspires a presumption of trust in
connection with its independence is required.
• The business relationship shall be presumed significant when any of the parties has issued invoices or payments in an amount higher than 1% of its annual income.
316 >>
NO
X
X
X
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QUESTION III.8
YES
NO
EXPLANATION:
a. The Board of Directors declares that the proposed candidate is independent
based on the enquiries conducted and the statement of the candidate?
b. The candidates to Independent Director state their independent status to the
Company, its shareholders and managers?
X
X
The Board of Directors proposes to the Shareholders Meeting the appointment
of the Directors stating whether they are Independent, External Non-
Independent or Internal Directors.
Candidates submit to the Company a Sworn Affidavit where they state their
Independent status, among others.
PRINCIPLE 20: OPERATIONAL EFFICIENCY OF THE BOARD OF DIRECTORS
QUESTION III.9
YES
NO
EXPLANATION:
Does the Board of Directors have a work plan that contributes to the efficiency
of its functions?
X
The Board of Directors has a pre-established agenda.
QUESTION III.10
YES
NO
EXPLANATION:
Does the Company provide its Directors the channels and procedures necessary
to participate efficiently in Board of Directors meetings, even if non-presential?
X
Section 12.4 of the Regulations of the Board of Directors and Article 59 of the
by-laws provide that non-presential meetings may be held.
a. Indicate the following in connection with the Board of Directors meetings held during the fiscal year:
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Number of meetings held without the giving of notice (*)
Number of meetings which the Chairman of the Board did not attend
Number of meetings at which one or more Directors were represented by substitute or alternate Directors
Number of regular Directors who were represented at least once
(*) The number of meetings held under the provisions in the last paragraph of Article 167 of the General Corporations Law shall be set in this field.
318 >>
9
0
0
0
0
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NAME
José Graña Miró Quesada
Carlos Montero Graña
Mario Alvarado Pflucker
Mark Hoffmann Rosas
Federico Cúneo de la Piedra
José Chlimper Ackerman
Hernando Graña Acuña
Pedro Pablo Errázuriz Domínguez
Hugo Santa María Guzmán
319 >>
% ATTENDANCE
100%
100%
100%
85.71%
85.71%
100%
100%
100%
100%
c. Indicate the time prior to the Board of Directors meeting that all information of the business to be transacted at a meeting is made available to the Directors
LESS THAN 3 DAYS
3 - 5 DAYS
MORE THAN 5 DAYS
Non-Confidential Information
Confidential Information
X
X
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QUESTION III.11
YES
NO
EXPLANATION:
a. Does the Board of Directors evaluate at least once a year, objectively, its
X
Directors conduct a self-evaluation within the first quarter of the year.
performance as governing body and that of its members?
b. Is the self-evaluation methodology alternated with the evaluation conducted
X
The evaluation of the Board of Directors has been internal.
by external advisors?
a. Indicate if performance evaluations of the Board of Directors have been conducted during the fiscal year.
As governing body
Of its members
(*) Members were not evaluated this year due to the change in the Board of Directors and many Directors were departing.
If any of the fields in the previous question is answered in the affirmative, provide the following information for each evaluation:
YES
X
NO
X*
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EVALUACIÓN
SELF-EVALUATION
EXTERNAL EVALUATION
Date
Communicated (*)
Date
Entity in Charge
Communicated (*)
BOARD OF DIRECTORS MEETING
March 28, 2014
No
Not Applicable
(*) Indicate Yes or No, if the evaluation was communicated to the shareholders.
PRINCIPLE 21: SPECIAL COMMITTEES
QUESTION III.12
YES
NO
EXPLANATION:
a. Does the Board of Directors of the Company form special
committees focused on the analysis of the most relevant
matters for performance of the Company?
b. Does the Board of Directors approve the regulations
governing each of the special committees formed?
c. Are special committees chaired by Independent Directors?
d. Are Special committees assigned a budget?
X
X
X
X
The Regulations of the Board of Directors govern development of the three Committees formed
in the Company: (i) Investment and Risk Committee (ii) Human Resources Management and
Social Responsibility Committee; and; (iii) Audit and Process Committee.
The Regulations of the Board of Directors, which govern the conduct of special committees,
was approved by a Board of Directors meeting.
The only one of the three committees not chaired by an Independent Director is the Investment
and Risk Committee; however, it consists of a majority of Independent Directors. The other
two special committees are made up of and chaired by Independent Directors only.
The Investment and Risk Committee and the Human Resources Management and Social
Responsibility Committee have an assigned budget. This is not provided to the Audit and
Process Committee, which in accordance with item o) of Article 40.6 of the Regulations
of the Board of Directors may determine its own budget to ensure independence in
performance of its duties.
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QUESTION III.13
YES
NO
EXPLANATION:
Does the Company have an Appointments and Remuneration Committee
in charge of nominating the candidates to member of the Board, who are
proposed to the Regular Shareholders Meeting by the Board of Directors, and of
approving the remuneration and incentives system of the Senior Management?
X
The Human Resources Management and Social Responsibility Committee
approves the remuneration and incentives system of the Senior Management,
while the Senior Management is in charge of nominating the candidates to
member of the Board.
QUESTION III.14
YES
NO
EXPLANATION:
Does the Company have an Audit Committee that oversees the efficiency and
suitability of the internal and external control system of the Company, the work
of the auditing firm or the independent auditor, and compliance with the legal
and professional independence regulations?
X
The Audit and Process Committee.
a. Indicate whether the Company has the following additional Special Committees:
Risk Committee
Corporate Governance Committee
*The functions of the Corporate Governance Committee are performed by our Audit and Process Committee.
YES
X
NO
X*
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b. If the Company has Special Committees, provide the following information for each committee:
NAME OF THE COMMITTEE:
Audit and Process Committee
DATE OF CREATION:
October 28, 2004
MAIN FUNCTIONS:
Ensure good corporate governance, appropriate internal procedures and the transparency of all acts of the Company in the economic-
financial, external audit and compliance and internal audit areas. Specifically:
• Report at the Shareholders Meeting on matters within the competence of shareholders to be submitted at such meeting;
• Propose at the Regular Shareholders Meeting the appointment of external auditors for submission thereof to the Regular Shareholders Meeting.
• Oversee the internal auditing services.
• Have knowledge of the financial reporting process and the information and internal control systems of the company.
• Review the accounts of the company, monitor compliance with legal requirements and the proper application of generally accepted
accounting principles, and report on the proposals for amendment of accounting principles and criteria proposed by the management.
• Oversee compliance with the auditing contract, ensuring that the opinion of the annual accounts and the main contents of the audit
report are clearly and accurately written.
• Relate with the external auditors to receive information on such matters that may jeopardize the independence thereof and any others
associated with the account audit process.
• Monitor compliance with the Regulations of the Board of Directors and, in general, of the corporate governance rules, and make such
proposals as may be required for improvement and to prepare the information that the Board of Directors is to approve and include
within its annual public documents.
• Oversee functioning of the Web page of the Group.
• Ensure proper compliance with the internal operating processes of the Group associated with the cycles of origination,
structuring, proposal preparation, acceptance of awarded contracts and performance of contracts and propose any corrective
measures deemed appropriate.
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• Be directly responsible for the appointment, compensation, retention and oversight of the external auditors retained by the Company.
• Settle any disputes as may arise between the management and the external auditors.
• Have the sufficient authority and financial resources to hire its own external advisors, whether legal, accounting or other advisors, as may
be necessary for the proper performance of its duties.
• Set its own budget to ensure independence in performance of its duties.
• Set the prior approval policies and procedures for audit and other permitted services.
• Set the procedures for: (i) receipt, retention, and the procedure for complaints received by the Company in connection with accounting,
accounting internal control or auditing matters; and,(iii allow the anonymous and confidential submission of concerns by Company
employees in connection with debatable accounting or auditing issues.
MEMBERS OF THE COMMITTEE (*): FULL NAME
DATE
POSITION IN THE COMMITTEE
José Chlimper Ackerman
Hugo Santa María Guzmán
Federico Cúneo de la Piedra
% of Independent Directors in the Committee
Number of meetings held during the fiscal year:
End (***)
Start (**)
31.03.08
29.04.14
29.04.14
Has been granted powers in accordance with Article 174 of the General Corporations Law.
The committee or its chairman participates in the Regular Shareholders Meeting.
Yes X
Yes
Chairman
Member
Member
100%
5 meetings
No
No X
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NAME OF THE COMMITTEE:
Human Resources Management and Social Responsibility Committee
DATE OF CREATION:
MAIN FUNCTIONS:
October 28, 2004
• Report to the Board of Directors the appointments and terminations of the Senior Management of the company, and of the general
managers of the subsidiaries.
• Resolve on the adoption of remuneration plans for the Senior Management, especially for the Corporate General Manager, taking into
account the performance of the company.
• Propose measures for transparency of the compensation of directors and the Senior Management, and ensure performance thereof.
• Know and assess the human resources policy.
•
Inform the Board of Directors of transactions with related parties of directors, senior executives or persons related therewith, which
involve or may involve conflicts of interest.
• Ensure compliance with the Social Responsibility Policy, and issue Social Responsibility policies, guidelines and/or instructions.
• Oversee the social responsibility management and report in connection therewith to the Board of Directors.
• Review and approve corporate goals and objectives associated with the compensation of the General Manager; evaluate the performance of
the General Manager in accordance with such goals and objectives, and set and approve the compensation of the General Manager.
• Retain and keep an independent external advisory in compensation matters.
• Responsible for the appointment, compensation and oversight of independent external advisors in compensation matters.
• Retain independent external advisors for remuneration or other matters as necessary for performance of its duties.
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MEMBERS OF THE COMMITTEE (*): FULL NAME
DATE
POSITION IN THE COMMITTEE
José Chlimper Ackerman
Federico Cúneo de la Piedra
Mark Hoffmann Rosas
% of Independent Directors in the total del Committee.
Number of meetings held during the fiscal year:
End (***)
Start (**)
23.03.06
29.04.14
29.04.14
Has been granted powers in accordance with Article 174 of the General Corporations Law.
The committee or its chairman participates in the Regular Shareholders Meeting.
Yes X
Yes
Chairman
Member
Member
100%
6 meetings
No
No X
NAME OF THE COMMITTEE:
Investment and Risk Committee
DATE OF CREATION:
MAIN FUNCTIONS:
October 28, 2004
• Set the investment policy
• Approve the Annual Investment Plan
• Analyze projects requiring an investment of over US$5,000,000.00 assessing the available funding sources and the impact on the
balance structure of the company and its subsidiaries.
• Assess and control the main risks of the projects in which the companies of the Financial Group participate.
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MEMBERS OF THE COMMITTEE (*): FULL NAME
DATE
POSITION IN THE COMMITTEE
José Graña Miró Quesada
Hugo Santa María Guzmán
Pedro Pablo Errázuriz Dominguez
% of Independent Directors in the Committee
Number of meetings held during the fiscal year:
End (***)
Start (**)
28.10.04
29.04.14
29.04.14
Has been granted powers in accordance with Article 174 of the General Corporations Law.
The committee or its chairman participates in the Regular Shareholders Meeting.
Yes X
Yes
(*)
(**)
(***)
Information on persons who are or were members of the Committee during the reporting fiscal year.
Pertains to the first appointment as a member of the Committee in the reporting company.
Complete only if ceased to be part of the Committee during the fiscal year.
Chairman
Member
Member
67%
3 meetings
No
No X
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PRINCIPLE 22: CODE OF ETHICS AND CONFLICTS OF INTEREST
QUESTION III.15
YES
NO
EXPLANATION:
Does the Company take measures to prevent, detect, handle and disclose
conflicts of interests that may arise?
X
The Company has an Ethics Charter and a Code of Conduct available from our
web page.
If applicable, indicate the area and/or person in charge of follow-up and control of possible conflicts of interest. If a person is in charge, include also the position and area where he/
she works.
Area in Charge
Human Resources Management
Full Name
PERSON IN CHARGE
Position
Area
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QUESTION III.16 / COMPLIANCE
YES
NO
EXPLANATION:
a. Does the Company have a Code of Ethics(*) enforceable on its Directors,
X
The Code of Conduct was approved in 2012 and the Ethics Charter in 1995.
managers, officers and other collaborators (**) of the Company, which sets
forth ethical and social responsibility criteria, including management of
potential conflicts of interest?
b. Does the Board of Directors or the General Manager approve training
X
programs for compliance with the Ethics Code?
Every company of the group incorporates to the annual training plan courses on
the Code of Conduct. Also, to conduct such training, we have on-line courses,
incorporating them as induction for new directors and new collaborators.
(*) The Code of Conduct may be a part of the Internal Conduct Regulations.
(**) The term collaborates covers all persons who have any employment relationship with the Company, regardless of the labor system or procedure.
If the Company has a Code of Ethics, indicate the following:
a. Available to:
Shareholders
Other persons to whom it may apply
The general public
YES
NO
X
X
X
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b. Indicate the area and/or person in charge of following up on and compliance with the Code of Ethics. If a person is in charge, include also the position and area where he/she
works and who he/she reports to.
Area in Charge
Ethics Commission
Full Name
Position
Area
Reports to
Claudia Drago Morante
Gerente Legal Corporativa
Corporate Legal Management
Mario Alvarado Pflucker
PERSON IN CHARGE
c. Is a record of cases of non-compliance with such Code in place?
Yes X
No
d. Indicate the number of events of non-compliance with the provisions in such Code, detected or reported during the fiscal year.
TOTAL CASES FILED 2014
Pending
Inadmissible
Under investigation
Closed
57
10
6
19
22
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331 >>
• The Ethical Channel record includes reports received, classified as above; however, we cannot say whether the reports classified as ‘closed’ have been an event of non-compliance
or were ruled inadmissible, information that the Ethics Commission handles as reserved.
QUESTION III.17
YES
NO
EXPLANATION:
a. Does the Company have mechanisms in place to report any illegal or
unethical behavior, safeguarding the confidentiality of the reporting party?
b. Reports are filed directly to the Audit Committee when related to accounting
matters or when the General Management or the Financial Management are
involved?
X
X
We have an Ethical Channel that allows reporting illegal or unethical behaviors
safeguarding the confidentiality of the reporting party.
Item Q) of Section 40.6 of the Regulations of the Board of Directors requires
that the Audit and Process Committee sets procedures for reception, retention
and processing of the reports received by the Company in connection with
accounting, internal control of accounts or audit matters.
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QUESTION III.18
YES
NO
EXPLANATION:
a. Is the Board of Directors in charge of follow-up and control of any conflicts
X
of interest arising in the Board of Directors?
b. If the Company is not a financial entity, has it established the policy that
X
members of the Board of Directors are prohibited from borrowing from the
Company or from any company of their economic group, unless previously
consented by the Board of Directors?
c. If the Company is not a financial entity, has it established the policy that
X
members of the Senior Management are prohibited from borrowing from the
Company or from any company of their economic group, unless previously
consented by the Board of Directors?
Article 29 of the Regulations of the Board of Directors provides that Directors
communicate to the Board of Directors any conflict situation, whether direct or
indirect, that they may have with the interest of the Company.
This policy is in place since we listed in the New York Stock Exchange. It should
be noted that no loans whatsoever are granted to members of the Board of
Directors (not even with the approval thereof ).
This policy is in place since we listed in the New York Stock Exchange. It should
be noted that no loans whatsoever are granted to members of the Board of
Directors (not even with the approval thereof ).
a. Provide the following information on members of the Senior Management who are shareholders with an interest of 5% or more in the Company.
FULL NAME
POSITION
NUMBER OF SHARES
% OF TOTAL SHARES
Not Applicable
% of the total shares held by the Senior Management
9.19%
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b. Indicate whether any of the members of the Board of Directors or the Senior Management of the Company is the spouse, is a first or second degree relative by blood, or first
degree relative by affinity of:
Full Name
Vinculación con:
)
*
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Full Name of Shareholder /
Director / Manager
Relation Type (**)
Additional Information (***)
Not Applicable
(*) Shareholders with an interest of 5% or more in the capital stock.
(**) In connection with relatedness, the relationship criteria contained in the Regulations on Indirect Ownership, Related Companies and Economic Groups shall be applied.
(***) If any relationship with a shareholder exists, include the equity interest thereof. If the relation is with any member of the management staff, include its position.
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334 >>
c. If a member of the Board of Directors holds or has held a management position in the Company during the fiscal year reported herein, provide the following information:
Full Name
Management Position that he holds or has held
Management Position Date
Mario Alvarado Pflucker
Corporate General Manager
Hernando Graña Acuña
Executive President of GyM S.A.
(*) Pertains to the first appointment to a management position in the reporting company
(**) Complete only if ceased in the management position during the fiscal year.
Start (*)
12.08.1996
31.03.2011
End (**)
d. If any member of the Board of Directors or the Senior Management of the Company has held during the fiscal year any significant business, commercial or contractual
relationship with the Company due to the amount or subject thereof, provide the following information:
FULL NAME
José Graña Miró Quesada
RELATIONSHIP TYPE
Chairman of the Board
BRIEF DESCRIPTION
Purchased two (2) apartments at Proyecto Real 2 from our subsidiary
Viva GyM S.A., in the total amount of USD 2,699,085.39
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PRINCIPLE 23: TRANSACTIONS WITH RELATED PARTIES
QUESTION III.19
YES
NO
EXPLANATION:
a. Does the Board of Directors have policies and procedures in place to assess,
approve and disclose certain transactions between the Company and related
parties, and to know the business or personal relationships, whether direct
or indirect, that the Directors maintain with each other, with the Company,
its suppliers or clients, and other stakeholders?
X
b. For operations of special relevance or complexity, is the participation of
X
independent external advisors for assessment thereof considered?
The Human Resources Management Committee has policies and procedures
in place to assess, approve and disclose certain transactions between the
Company and related parties, disclosing them in form 20F submitted as
Relevant Fact to the SMV.
a. If item a) of question III.19 is the case, indicate the area(s) of the Company in charge of dealing with transactions with related parties in the following aspects:
Aspects
Assessment
Approval
Disclosure
Area in Charge
HR Management
General Management or Board of Directors of each company
General Management
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b. Indicate the procedures to approve transactions between related parties:
Article 30 of the Regulations of the Board of Directors provides that Human Resources Management and Social Responsibility Committee reserves the knowledge and authority
over material transactions between related parties, a material transaction being any operation of the Company with material shareholders, Directors, Senior Mangers and Chief
Executives or persons related to them, and with other companies of the Graña y Montero Group.
Furthermore, for ordinary transactions, provided they are conducted at fair value, the generic authorization of the operations line shall suffice.
c. Detail the transactions material due to their amount or subject performed between the Company and its related parties during the fiscal year .
Name or Corporate Name of Related Party
Nature of the Relationship(*)
Type of Transaction
Amount (S/.)
GyM S.A.
Concar S.A.
GyM S.A.
Viva GyM S.A.
TGNCA S.A.
GMD S.A.
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
General Management and Various Managements Contract
S/. 20,556,930
Loan contract
Loan contract
Loan contract
Loan contract
Loan contract
S/. 33,900,000.00
S/.295,800,000.00
S/. 66,631,516.72
S/. 16,530,000.00
S/. 30,450,000.00
(*) In connection with relatedness, the relationship criteria contained in the Regulations on Indirect Ownership, Related Companies and Economic Groups shall be applied.
d. Indicate whether the Company sets limits to transitions performed with related companies.
Yes
No X
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337 >>
PRINCIPLE 24: FUNCTIONS OF THE SENIOR MANAGEMENT
QUESTION III.20 / COMPLIANCE
YES
NO
EXPLANATION:
a. Does the Company have a clear policy for the delimitation of administrative
X
or governance functions implemented by the Board of Directors, the
ordinary conduct of business by the Senior Management and the leadership
of the General Manager?
b. The appointments of General Manager and Chairman of the Board of the
Company are made by various persons?
c. Does the Senior Management have sufficient autonomy to perform the duties
assigned, within the framework of policies and guidelines defined by the
Board of Directors and under the control thereof?
d. Is the General Manager in charge of complying with and enforcing
compliance with the policy of information delivery to the Board of Directors
and its members?
X
X
X
Article 9 of the Regulations of the Board of Directors defines the overall
management strategy and guidelines of the Company, the furtherance and
oversight of the conduct of the Senior Management setting the foundations of
the corporate organization with a view to ensuring the highest efficiency thereof,
oversight in connection with transparency and truthfulness of the information
of the Company in its relationships with shareholders. Additionally, Article 38
of such Regulations provide that the General Manager is responsible for the
operations and administration of the Company in accordance with the criteria
and guidelines set by the Board of Directors, who implements such resolutions
and ensures that the Senior Management performs the resolutions of the Board
of Directors, implements the strategy of the Board and keeps an appropriate
planning, control and information system for the Board of Directors.
Section 35.2 of the Regulations of the Board of Directors provides that the
Chairman of the Board may not be a chief executive of the Group.
Art. 9.5 provides that the Board of Directors respects the decision making
authority of its governing and management bodies in consistency with the
interests of the Company. Furthermore, the principle of responsible autonomy
set in the Code of Ethics prevails in the Company.
Article 38 of the Regulations of the Board of Directors provides that the General
Manager shall be in charge of maintaining and appropriate planning, control
and information system for the Board of Directors.
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e. Does the Board of Directors evaluate on an annual basis the performance of
the General Management under well defined standards?
f. Does remuneration of the Senior Management have a fixed and a variable
component that take into account the results of the Company based on a
sound and responsible assumption of risk, and accomplishment of the goals
set in the respective plans?
X
X
Yes, it is a part of the self-evaluation process of the Board of Directors.
At present, the remuneration of Directors of the Company, regulated in Article
34 of the Regulations of the Board of Directors, consists of the following: Board
of Directors meeting attendance fees, Committee meeting attendance fees, and
profit sharing.
a. Provide the following information on the remuneration of the General Manager and the management staff (including bonuses).
POSITION
General Manager
Management Staff
FIXED
0.015%
0.220%
REMUNERATION (*)(**)
VARIABLE
0.003%
0.057%
(*) Indicate the ratio of the aggregate amount of remunerations and annual bonuses of members of the Senior Management to gross income, according to the financial statements
of the Company.
(**) The ratio is set in relation to consolidated gross sales of the Graña y Montero Group.
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b. If the Company pays the Senior Management bonuses or any compensation other that those required by law, indicate how these are paid.
Delivery of Shares
Delivery of Options
Delivery of Cash
Others / Detail
GENERAL MANAGEMENT
MANAGERS
No
No
Shares delivered based on loyalty program
X
No
No
c. In case of existence of a variable component in the remuneration, specify the main aspects taken into account for determination thereof.
- Compliance with Company budget taken into account
- Rate of compliance with executive objectives
- Pre-established financial index
d. Indicate if the Board of Directors evaluated performance of the General Management during the fiscal year.
Yes
No X
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340 >>
PILLAR IV: RISK AND COMPLIANCE
PRINCIPLE 25: ENVIRONMENT OF RISK MANAGEMENT SYSTEM
QUESTION IV.1
YES
NO
EXPLANATION:
a. Does the Board of Directors approve a comprehensive risk management
policy in consistency with its size and complexity, promoting a risk
management culture within the Company, from the Board of Directors to the
Senior Management and its own collaborators?
X
Under item J) of Article 9.3 of the Regulations of the Board of Directors, this is
a function of the Board of Directors. However, as of this date the risk matrix of
the Group it is under review to enhance it.
b. The comprehensive risk management policy covers all companies that make
X
Will cover the entire Group.
up the Group and allows a comprehensive view of critical risks?
Does the Company have a risk management delegation policy setting the risk limits that can be managed for each company level?
Yes
No X
QUESTION IV.2
YES
NO
EXPLANATION:
a. The General Management manages the risks to which the Company is
exposed and communicates them to the Board of Directors?
b. Is the General Management responsible for the risk management system, if
there is no Risk Committee or Risk Management?
X
X
Through the management report of the business report and the Relevant Facts
submitted at every meeting.
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Does the Company have a Risk Manager?
Yes
No X
If answered in the affirmative, provide the following information:
FULL NAME
DATE OF POSITION HELD
Start (*)
End (**)
Not Applicable
AREA / BODY TO WHICH IT REPORTS
(*) Pertains to the first appointment in the reporting Company.
(**) Complete only if ceased in the position during the fiscal year.
QUESTION IV.3
YES
NO
EXPLANATION:
Does the Company have an internal and external control system the efficiency
and suitability of which is overseen by the Board of Directors of the Company?
X
Through the Audit and Process Committee
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PRINCIPLE 26: INTERNAL AUDIT
QUESTION IV.4
YES
NO
EXPLANATION:
a. The internal auditor performs auditing duties on an exclusive basis, is
autonomous and has the experience and expertise in the subjects under his
evaluation, and the independence to follow up on and evaluate efficiency of
the risk management system?
b. Are the ongoing evaluation of the validity and reliability of all the financial
information generated or entered by the Company, and verifying the
efficiency of regulatory compliance the functions of the internal auditor?
c. Does the internal auditor report directly to the Audit Committee its plans,
budget, activities, progress, results obtained and actions taken?
X
X
X
The internal auditor is autonomous to objectively evaluate and regulate the
risks of the business, the internal control system and the operating and financial
performance so that the information of the Company is accurate and consistent
with the transparency principle.
For the information of the Company to be accurate and consistent with the
transparency principle.
Likewise, under item c) of Article 40.6 of the Regulations of the Board of
Directors, supervising the internal audit services is a function of the Audit and
Process Committee.
a. Indicate whether the Company has an independent area in charge of internal audit.
Yes X
No
If answered in the affirmative, indicate, by rank, who the audit depends on within the organic structure of the Company.
Depends on:
THE AUDIT AND PROCESS COMMITTEE
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b. Indicate if the Company has an Internal Corporate Auditor.
Yes X
No
Indicate the main responsibilities of the internal auditor and if it performs functions other than the internal audit.
The internal auditor does not perform functions other that the internal audit and its main functions are:
- Assist the Board of Directors and the Management in performance of its Corporate Governance-related functions.
- Objectively evaluate and regulate the risks of the business, the internal control system and operating and financial performance.
- Provide assurance and consulting in the potential capacity of this activity to improve risk management, add value to the group and improve the operational level.
QUESTION IV.5
YES
NO
EXPLANATION:
Is the Board of Directors in charge of the appointment and termination of the
Internal Auditor at the proposal of the Audit Committee?
X
The Regulations of the Board of Directors provide that the Audit and Process
Committee shall ensure that selection of the Internal Auditor is made under
objective criteria; and in general, that that the information of the Company be
accurate and consistent with the transparency principle.
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PRINCIPLE 27: EXTERNAL AUDITORS
QUESTION IV.6
YES
NO
EXPLANATION:
Does the Regular Shareholders Meeting, at the proposal of the Board of
Directors, appoint the auditing firm or the independent auditor, who maintain a
clear independence from the Company?
X
The auditor appointed by the Regular Shareholders Meeting maintains a clear
independence whereby it is a function of the Audit and Process Committee to
relate with the external auditors to receive information on matters that may
jeopardize their independence.
a. Does the Company have a policy for appointment of the External Auditor?
Yes X
No
If answered in the affirmative, describe the procedure to hire the auditing form in charge of reviewing the annual financial statements (including the identification of the corporate
body in share of electing the auditing firm).
The Corporate Financial Management proposes three candidates, then the Audit and Process Committee approves the appointment of one of them, who is presented by the
Chairman of the Committee to the Board of Directors for approval and submission to the Regular Shareholders Meeting who ultimately approves such appointment.
b. If the auditing firm has provided services other than accounts reviewing, indicate if such hiring was communicated to the Regular Shareholders Meeting, including the
percentage of the total invoiced by the auditing firm to the Company that such services account for
Yes X
No
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c. The persons or entities related to the auditing firm provide to the Company services other than the reviewing of accounts?
Yes X
No
If answered in the affirmative, provide the following information on the additional services provided by persons or entities related to the auditing
firm in the reported fiscal year.
Name or Corporate Name
PwC
Additional Services
Other services
% of Remuneration (*)
22%
(*) Invoicing of additional services to invoicing of auditing services.
d. Indicate whether the auditing firm has used different equipment, if it has provided services additional to reviewing of accounts.
Yes X
No
QUESTION IV.7
YES
NO
EXPLANATION:
a. Does the Company maintain a policy of renewal of its independent auditor
or auditing firm?
b. If such policy requires longer periods for renewal of the auditing firm, the
work team of the auditing firm rotates every five (5) years maximum?
X
X
The Regulations of the Board of Directors set forth the independent auditor
renewal policy.
The Company keeps the firm, but the equipment must be changed at least every
three (3) years.
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Provide the following information on the auditing firms that have provided services to the Company in the last five (5) years.
CORPORATE NAME OF THE AUDITING FIRM
SERVICE (*)
PERIOD
REMUNERATION (**)
% OF THE INCOME OF THE AUDITING FIRM
PwC
PwC
PwC
PwC
PwC
PwC
Audit before the deadline
2010- 2014
Transfer prices study
Oversight advisory
Sworn affidavit assistance
Other service
Other services
2013
2010-2013
2012-2013
2010-2013
2014
12%
14%
67%
16%
82%
22%
(*) Include all service types, such as financial information reviews, accounting appraisals, operational audits,
systems audits, tax audits and other services.
(**) Of the aggregate amount paid to the auditing firm on all accounts, indicate the percentage pertaining to remuneration for financial auditing services.
QUESTION IV.8
YES
NO
EXPLANATION:
In economic groups, the external auditor is the same for the entire group,
including off-shore affiliates?
X
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Indicate whether the auditing firm hired to review the financial statements of the Company for the reported fiscal year also reviewed the financial statements for the same fiscal year
of other companies of its economic group.
Yes X
No
If answered in the affirmative, provide the following:
NAME OR CORPORATE NAME OF COMPANY (COMPANIES) OF THE ECONOMIC GROUP
GyM S.A.
GMI S.A.
GMP S.A.
GMD S.A.
CONCAR S.A.
NORVIAL S.A.
SURVIAL S.A.
Concesión Canchaque S.A.C
GyM Ferrovías S.A.
CAM Chile S.A.
Compañía Americana de Multiservicios del Perú S.A. (Cam Perú S.A.)
CAM Colombia Multiservicios S.A.S.
Viva GyM S.A
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348 >>
Concesionaria La Chira S.A.
Stracon GyM S.A.
CAM Holding SpA
GyM Chile SPA
GyM Construcciones y Montajes Limitada
GyM Minería S.A.
Vial y Vives-DSD S.A.
Inmobiliaria Almonte S.A.C.
Ecotec S.A.C.
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PILLAR V: INFORMATION TRANSPARENCY
PRINCIPLE 28: INFORMATION POLICY
QUESTION V.1
YES
NO
EXPLANATION:
Does the Company have an information policy for shareholders, investors,
other stakeholders and the market in general, with which it defines in a formal,
orderly and comprehensive manner the guidelines, standards and criteria to
be applied in handling, gathering, preparing, classifying, organizing and/or
distributing the information generated or received by the Company?
X
The information policy for shareholders, investors and other stakeholders is
covered by both our Investor Relations Office and by the communications made
by our Stock Exchange Representative though the Relevant Facts.
a. If applicable, indicate if, according to its information policy, the Company issues the following:
Objectives of the Company
List of members of the Board of Directors and the Senior Management
Equity structure
Description of the economic group to which it belongs
Financial statements and annual report
Others / Detail
NO
X
YES
X
X
X
X
Transactions between related parties
Remuneration of the Board of Directors and the Senior Management
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Yes X
No
The corporate web page includes:
A special section on corporate governance or relationships with shareholders and investors, which includes the Corporate Governance Report
Relevant facts
Financial information
By-laws
Regulations of the Shareholders Meeting and information on meetings (attendance, minutes, others)
Make-up of the Board of Directors and its Regulations
Code of Ethics
Risk policy
Corporate Social Responsibility (community, environment, others)
Others / Detail
350 >>
YES
NO
X
X
X
X
X
X
X
X
X
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QUESTION V.2
YES
NO
EXPLANATION:
Does the Company have an investor relations office?
X
It is our Investor Relations Office.
If it has an investor relations office, who is the person in charge?
Investor Relations Office Manager
Dennis Gray Febres
If no investor relations office is in place, indicate the unit (department/area) or person in charge of receiving and handling the information requests of shareholder of the Company
and the general public. If a person is in charge, include also his/her position and the area where he/she works.
Area in Charge
Not Applicable
Full Name
PERSON IN CHARGE
Position
Not Applicable
Area
PRINCIPLE 29: FINANCIAL STATEMENTS AND ANNUAL REPORT
If the external auditor’s report has been issued with qualifications, these have been explained and/or substantiated to the shareholders?
Not Applicable
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PRINCIPLE 30: INFORMATION ON EQUITY STRUCTURE AND SHAREHOLDER RESOLUTIONS
QUESTION V.3
YES
NO
EXPLANATION:
Does the Company disclose the ownership structure, considering the
various classes of shares and, if applicable, the joint interest of a specific
economic group?
X
The Company discloses such information through the SMV, where we report
direct and indirect ownership.
Indicate the make-up of the equity structure of the Company as of the year-end.
SHARES OF VOTING STOCK HELD
NUMBER OF HOLDERS (AS OF THE YEAR-END)
% INTEREST
Less than 1%
1% - 5%
5% - 10%
More than 10%
Total
1841
10
1
2
1854
15.23%
23.38%
5.12
56.27%
100%
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SHARES OF NON-VOTING STOCK HELD (IF APPLICABLE)
NUMBER OF HOLDERS (AS OF THE YEAR-END)
% INTEREST
Less than 1%
1% - 5%
5% - 10%
More than 10%
Total
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Not Applicable
INVESTMENT SHARES HELD (IF APPLICABLE)
NUMBER OF HOLDERS (AS OF THE YEAR-END)
% INTEREST
Less than 1%
1% - 5%
5% - 10%
More than 10%
Total
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Not Applicable
Treasury stock to capital stock ratio: Not Applicable
QUESTION V.4
YES
NO
EXPLANATION:
Does the Company report shareholder agreements?
X
However, we do not have a shareholders agreement.
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Yes
No X
b. If any shareholders agreement has been reported to the Company during the fiscal year, indicate the subject matter thereof.
Election of members of the Board of Directors
Exercise of voting rights at meetings
Restriction to the free transfer of the shares
Changes in internal or statutory regulations of the Company
Others / Detail
PRINCIPLE 31: CORPORATE GOVERNANCE REPORT
354 >>
Not Applicable
Not Applicable
Not Applicable
Not Applicable
QUESTION V.5
YES
NO
EXPLANATION:
Does the Company disclose the corporate governance standards adopted in an
annual report, for the contents of which the Board of Directors is responsible,
upon the report of the Audit Committee, the Corporate Governance Committee,
or of an external consultant, if applicable?
X
These are communicated in the Annual Report and released to the SMV.
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a. The Company has mechanisms in place for internal and external disclosure of corporate governance practices.
Yes X
No
If answered in the affirmative, specify the mechanisms used
The Legal Management is in charge of internal and external disclosure of corporate governance practices and of proposing improvements to the General Management and the
Board of Directors.
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SECTION C:
CONTENT OF DOCUMENTS OF THE COMPANYD
Indicate in which of the following document(s) of the Company these matters are regulated.
1.
2.
3.
4.
Policy for redemption or swap of shares of non-voting stock
Share ownership entry method and person in charge
Procedures for selection of external advisor to issue an independent
opinion on the corporate operations that may affect the right to non-
dilution of shareholders
Procedure to receive and handle request for information and opinion of the
shareholders
5.
Dividend policy
T
N
E
M
U
C
O
D
F
O
E
M
A
N
)
*
*
(
CAVALI
)
*
(
S
N
O
I
T
A
L
U
G
E
R
L
A
N
R
E
T
N
I
L
A
U
N
A
M
S
W
A
L
-
Y
B
X
X
E
L
P
I
C
N
I
R
P
1
2
3
4
5
E
L
B
A
C
I
L
P
P
A
T
O
N
X
D
E
T
A
L
U
G
E
R
T
O
N
X
S
R
E
H
T
O
X
X
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6.
7.
8.
9.
Policies or agreement for non-adoption of anti-takeover mechanisms
Arbitration agreement
Policy for selection of Directors of the Company
Policy to evaluate remuneration of the Directors of the Company
10. Mechanisms to make information relative to items contained in the agenda
of the Regular Shareholders Meeting and resolution proposals available to
shareholders.
11.
12.
13.
Means additional to those provided by Law, used by the Company to give
notice of meetings.
Additional mechanisms for shareholders to submit proposals of items in
the agenda to be discussed at a Regular Shareholder Meeting.
Procedures to accept or reject shareholder proposals to include agenda
items to be discussed at the Regular Shareholders Meeting
14. Mechanisms allowing non-presential participation of shareholders
15.
Procedures to cast differentiated votes by the shareholders
16.
17.
Procedures to perform in voting delegation situations
Requirements and formalities for a shareholder to be represented by proxy
at the meeting.
6
7
8
8
10
10
11
11
12
12
13
13
X
X
X
X
X
X
X
X
X
X
X
X
X
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18.
Procedures for the delegation of votes to members of the Board of
Directors or the Senior Management.
19.
Procedure to follow up on Regular Shareholders Meeting resolutions
20. Minimum and maximum number of members to make up the Board of
Directors of the Company
21.
22.
23.
24.
25.
26.
27.
28.
Duties, rights and functions of the Directors of the Company
Bonus types received by the Board of Directors for accomplishment of
goals of the Company
Policy for hiring advisory services for Directors
Induction policy for new Directors
Special requirements to be an Independent Director of the Company
Criteria for performance evaluation of the Board of Directors and its
members
Policy for determining, follow-up and control of possible conflicts of
interest
Policy defining the procedure for assessment, approval and disclosure of
transactions with related parties
13
14
15
17
17
17
17
19
20
22
23
X
X
X
X
X
X
X
X
X
X
X
X
X
X
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29.
Responsibilities and functions of the Chairman of the Board, Executive
President, General Manager, and other Senior Management officers.
30.
Criteria for performance evaluation of the Senior Management
31.
32.
33.
34.
Policy to set and evaluate remuneration of the Senior Management
Comprehensive risk management policy
Responsibilities of person in charge of Internal Audit.
Policy to appoint the External Auditor, term of the contract and renewal
criteria.
24
24
24
25
26
27
35.
Policy of disclosure and communication of information to shareholders
28
X
X
X
X
X
X
X
X
(*) Includes the Regulations of the Regular Shareholders Meeting, Regulations of the Board of Director and others issued by the company
(**) Indicate name of the document, unless it is the by-laws
<< menu GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTSREPORT ON COMPLIANCE WITH THE GOOD CORPORATE GOVERNANCE CODE FOR PERUVIAN COMPANIES(For the fiscal year 2014)ANNUALREPORT2014 360 >>
SECTION D:
OTHER INFORMATION OF INTEREST5
On July 23, 2013, the Company made an initial public offering (IPO) of shares for approximately USD 413 million dollars in the New York Stock Exchange. It also gave the placing
banks an option for up to an additional USD&& 62 million, which was exercised over a period of 30 days. In this connection, we have submitted Form 6K concurrently with the
Relevant Facts submitted to the Securities Market Superintendence (SMV), Form 20F that is submitted annually and which we also submitted as a Relevant Fact to the SMV.
Additionally, we have a financial expert in the Audit and Process Committee, as required by the , Sarbanes-Oxley Act of 2002 (SOX), applicable to foreign companies.
In addition to the aforementioned Special Committees, we have the following governing bodies, the conduct of which is regulated in our Regulations of the Board of Directors:
5 We include other information of interest not discussed in the previous sections, to provide investors and the various stakeholders with a broader scope of other good corporate governance practices
implemented by the Company, practices pertaining to corporate social reasonability, and relations with institutional investors, among others.
Furthermore, the Company may indicate if it has voluntarily adhered to other codes of ethical principles or good practices, whether international, sectorial, or other, indicating the code and date of adhesion.
<< menu GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTSREPORT ON COMPLIANCE WITH THE GOOD CORPORATE GOVERNANCE CODE FOR PERUVIAN COMPANIES(For the fiscal year 2014)ANNUALREPORT2014 361 >>
- Executive Commission.- The governing body made up of the Executive Presidents, General Managers of the Subsidiaries and the Corporate Managers of the Company, the
purpose of which is to discuss matters of strategic importance that affect the Company and Subsidiaries as a part of the Graña y Montero Group and be a coordination body. The
main functions of the Executive Commission include:
a) Discuss the Strategic Plan of the Company and Subsidiaries
b) Discuss the Annual Budget of the Company and Subsidiaries
c) Discuss the Annual Investment Plan of the Company and Subsidiaries
d) Discuss Policies and Strategies applicable to the Company and Subsidiaries
e) Other matters of interest and relevance to the Company and Subsidiaries
- Ethics Commission.- A board in charge of promoting ethical behavior in the Group, and of evaluating and making decisions on any breach of the Ethics Charter and the Code of
Conduct. The Ethics Commission provides a Manual setting the Ethical Channel Use Protocol.
Lastly, we are part of the Companies Circle, an initiative launched in 2005, that brings together a group of Latin American companies who stand out for their good corporate
governance practices and since last year we chair its Steering Committee.
<< menu GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDREPORTSREPORT ON COMPLIANCE WITH THE GOOD CORPORATE GOVERNANCE CODE FOR PERUVIAN COMPANIES(For the fiscal year 2014)ANNUALREPORT2014 362 >>
SPECIAL REPORT ON PREVIOUSLY AGREED UPON PROCEDURES
APPLIED TO THE SCHEDULE OF WORKS, PROJECTS AND SERVICES
PERFORMED, COMPLETED AND DELIVERED DURING THE YEAR ENDED
DECEMBER 31, 2014
I
II
III
Exhibit A -
Exhibit B -
Exhibit C -
Exhibit D -
Exhibit E -
Exhibit F -
Scope
Previously agreed-upon procedures
Report
GyM S.A.: Schedule of works performed, completed and delivered during the year ended December 31, 2014.
GMD S.A.: Schedule of services performed, completed and delivered during the year ended December 31, 2014.
GMI S.A. Ingenieros Consultores: Schedule of projects performed, completed and delivered during the year ended December 31, 2014.
Graña y Montero Petrolera S.A.: Schedule of services performed, completed and delivered during the year ended December 31, 2014.
Viva GyM S.A.: Schedule of projects performed, completed and delivered during the year ended December 31, 2014.
Summary by company of works, projects and services performed, completed and delivered during the year ended December 31, 2014.
S/.
US$
Nuevo sol
United States Dollar
<< menu GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDANNUALREPORT2014 363 >>
INFORMESSPECIAL REPORT ON PREVIOUSLY AGREED UPON PROCEDURES APPLIED TO THE SCHEDULE OF WORKS, PROJECTS AND SERVICES PERFORMED, COMPLETED AND DELIVERED DURING THE YEAR ENDED DECEMBER 31, 2014<< menu GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDANNUALREPORT2014 364 >>
INFORMESSPECIAL REPORT ON PREVIOUSLY AGREED UPON PROCEDURES APPLIED TO THE SCHEDULE OF WORKS, PROJECTS AND SERVICES PERFORMED, COMPLETED AND DELIVERED DURING THE YEAR ENDED DECEMBER 31, 2014<< menu GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDANNUALREPORT2014 365 >>
Performance Bonds
US$
S/.
-
EXHIBIT A
GyM S.A.
SCHEDULE OF WORKS PERFORMED, COMPLETED AND DELIVERED FOR THE YEAR ENDED DECEMBER 31, 2014
No.
Project
Customer
Project Description
Contractual
Delivery Date
Date of
Delivery to
Customer
1
2
3
4
5
Yanbal Chiclayo
MAFER REAL ESTATE
Development and compatibility of engineering in various specialties: Structures,
August 30,
August 30,
-
S.
Electrical Installations, Sanitary Installations, Communications, Air Conditioning,
2014
2014
Compressed Air, LPG, Pavements.
Real 8
VIVA GYM SA
Construction of the structural shell, common areas finishings, electrical, sanitary
November 14,
November 14,
-
4,937,874
Crosland offices
CROSLAND
REPUESTOS
and equipment installations compounding common areas of sixteen (16) top floors
2014
2014
and five (5) basements of parking lots and stores and SUM (Multipurpose Room)
Provisional and preliminary works, including demolition of perimeter fence and
June 6, 2014
June 3, 2014
concrete structure on a building with 08 floors and 03 basements.
Crusher of Caserones
SCM MINERA
Construction Contract B2CA-K-102A "Montaje Eléctromecánico Chancador primario
March 31, 2014 March 31, 2014
Project - Chile
LUMINA CO
y Correa alimentadora Acopio Mineral Grueso" of the Caserones project.
-
-
Electric train - Lima
PROVIAS NACIONAL
Preparation of technical dossier and execution of civil and electromechanical
September 4,
July 17, 2014
42,381,660
Tranch 2
works of the special project of local transportation infrastructure of the Ministry of
2014
-
-
-
Transport and Communications - MTC
To be read together with the report issued by Gaveglio, Aparicio y Asociados on March 26, 2015.
INFORMESSPECIAL REPORT ON PREVIOUSLY AGREED UPON PROCEDURES APPLIED TO THE SCHEDULE OF WORKS, PROJECTS AND SERVICES PERFORMED, COMPLETED AND DELIVERED DURING THE YEAR ENDED DECEMBER 31, 2014<< menu GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDANNUALREPORT2014
EXHIBIT B
GMD S.A.
SCHEDULE OF SERVICES PERFORMED, COMPLETED AND DELIVERED FOR THE YEAR ENDED DECEMBER 31, 2014
No.
Project
Customer
Project Description
Contractual
Delivery Date
Date of
Delivery to
Customer
March 21,
March 21,
2014
2014
1
2
3
4
5
6
101211
STE-CONTRALORIA-
Acquisition of storage storewize discs
DISCOS
N° 058-2013 SUNARP/
STE-SUNARP-
Acquisition of servers for Sunarp - Headquarters- Main provision
June 30, 2014
May 7, 2014
GAF-LOG
SERVIDORES
101367
(Adend)
STE-ZRIX-
Main service provision intended to update the Support and License of Hardware and
November 21,
October 20,
RENOVACION
Software Inventory Solution
2014
2014
SOPORTE Y
LICENCIAS
101231
STE - MEF - BIENES E
Delivery, setting up, starting-up of net switch equipment and training.
April 30, 2014
April 22, 2014
IMPLEMENTACION
100000
TDP - Accenture
Equipment rental, maintenance service and development of phone line app
February 28,
February 28,
2014
2014
Software maintenance
AO-INNOVACCION-
Provision of IT services comprising regulatory adequacy of the systems being
March 31, 2014
March 14,
and development
SWF
operated.
2014
366 >>
Performance Bonds
US$
-
-
-
-
-
-
S/.
37,500
38,456
-
233,481
-
-
INFORMESSPECIAL REPORT ON PREVIOUSLY AGREED UPON PROCEDURES APPLIED TO THE SCHEDULE OF WORKS, PROJECTS AND SERVICES PERFORMED, COMPLETED AND DELIVERED DURING THE YEAR ENDED DECEMBER 31, 2014<< menu GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDANNUALREPORT2014
367 >>
EXHIBIT B
GMD S.A.
SCHEDULE OF SERVICES PERFORMED, COMPLETED AND DELIVERED FOR THE YEAR ENDED DECEMBER 31, 2014
7
101231
ISO - ONP - CENTRO
Delivery, seting up, testing, starting-up of net switch equipment and training, as per
April 22, 2014
April 22, 2014
-
-
DE COMPUTO
technicalspecifications.
(EL CONTRATO
COMPLEMENTARIO
SE DIO EN EL MISMO
CÓDIGO)
8
Service presentation of
HD – RIMAC
Leverl-based service (SLA), comprising implementing a single contact point to
May 1, 2014
May 1, 2014
-
-
Help Desk
receive, process and direct assistance requests from users.
To be read together with the report issued by Gaveglio, Aparicio y Asociados on March 26, 2015.
INFORMESSPECIAL REPORT ON PREVIOUSLY AGREED UPON PROCEDURES APPLIED TO THE SCHEDULE OF WORKS, PROJECTS AND SERVICES PERFORMED, COMPLETED AND DELIVERED DURING THE YEAR ENDED DECEMBER 31, 2014<< menu GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDANNUALREPORT2014
EXHIBIT C
GMI Ingenieros y consultores S.A.
SCHEDULE OF PROJECTS PERFORMED, COMPLETED AND DELIVERED DURING THE YEAR ENDED DECEMBER 31, 2014
No.
Project
Customer
Project Description
GMI N° 121294 project
ALICORP
Supervision of extension of the "Fideeria" plant
Contractual
Delivery Date
Date of
Delivery to
Customer
December 31,
December 31,
2014
2014
Airside pavement in
AEROPUERTOS DEL
Functional and structural assessment of the airside pavement at the Cajamarca
January 31,
January 31,
10,000
Cajamarca Airport
PERU S.A.
Airport
2014
2014
Airside pavement in
AEROPUERTOS DEL
Preparation of the Periodic Maintenance report on the airside pavement at the
April 23, 2014
April 23, 2014
12,484
Pucallpa Airport
PERU S.A.
Pucallpa Airport
Airside pavement in
AEROPUERTOS DEL
Functional and structural assessment of the airside pavement at the Chiclayo
January 31,
January 31,
10,000
Chiclayo Airport
PERU S.A.
Airport
2014
2014
Airside pavement in
AEROPUERTOS DEL
Functional and structural assessment of the airside pavement at the Trujillo Airport
January 31,
January 31,
10,000
Trujillo Airport
PERU S.A.
2014
2014
Consultancy service
MELIA HOTELES
Supervision of work comprising civil works, instalation and finishings for Nuevo
December 20,
December 20,
-
Restaurante Naos, Gabi and Family Concierge Hotel Pardisus Palma Real and Nuevo
2014
2014
Restaurante Playa and remodeling for Restaurante Agora at the Hotel Melia Caribe
Tropical in Bavaro, Punta Cana, Domenican Republic
1
2
3
4
5
6
368 >>
Performance Bonds
US$
-
S/.
-
-
-
-
-
-
INFORMESSPECIAL REPORT ON PREVIOUSLY AGREED UPON PROCEDURES APPLIED TO THE SCHEDULE OF WORKS, PROJECTS AND SERVICES PERFORMED, COMPLETED AND DELIVERED DURING THE YEAR ENDED DECEMBER 31, 2014<< menu GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDANNUALREPORT2014
369 >>
EXHIBIT C
GMI Ingenieros y consultores S.A.
SCHEDULE OF PROJECTS PERFORMED, COMPLETED AND DELIVERED DURING THE YEAR ENDED DECEMBER 31, 2014
PETROPERU
FEED basic extended ingeenering to measure two condensers del "EDP
Sistema de Tope"
March 13,
2014
January 8,
2014
-
-
7
8
9
FEED basic extended
ingeenering to
measure two
condensers del
Sistema de Tope de
la UDP
Engeeniering
professional services
Construction of five
parts of the Truck
Shop
PETROPERU
LAS BAMBAS
Basic engineering for the acquisition and instalation project related to a
60/70 PEN electric pump for asphalt at the Conchán Refinery.
April 28,
2014
4/28/14
Supervision of the EPC agreement to build 5 parts of the Truck Shop and
validating engineering
November 4,
2014
November 4,
2014
-
-
10
MTE 3913
ANTAMINA
Supervision of the Debottlenecking 130 ktpd project
August 30,
2014
August 15,
2014
100,000
ANTAMINA
Supervision of work construction for Engineering Management projects
and other
April 31,
2014
April 31,
2014
-
11
Supervision of
work construction
for Engineering
Management
projects and other
-
-
-
-
INFORMESSPECIAL REPORT ON PREVIOUSLY AGREED UPON PROCEDURES APPLIED TO THE SCHEDULE OF WORKS, PROJECTS AND SERVICES PERFORMED, COMPLETED AND DELIVERED DURING THE YEAR ENDED DECEMBER 31, 2014<< menu GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDANNUALREPORT2014
EXHIBIT C
GMI Ingenieros y consultores S.A.
SCHEDULE OF PROJECTS PERFORMED, COMPLETED AND DELIVERED DURING THE YEAR ENDED DECEMBER 31, 2014
12
13
14
15
16
17
18
2012 - 2013
investment projects
CONSORCIO
TERMINALES
Consultancy, Management, Supervision and Engineering service agreement
for "Proyectos de Inversión 2012-2013" project
April 11, 2014 April 11, 2014
EPCM service of
segregation of Diesel
in Mollendo and
Eten terminals.
Acquisition and
instalation of an
electric pump for
asphalt
CONSORCIO
TERMINALES
EPCM service of segregation of Diesel at the Mollendo and Eten terminals.
February 7,
2014
February 7,
2014
PETROPERU
Aerial process consultancy to start-up thedistillation column for Conchan
Refinery
February 12,
2014
February 12,
2014
-
-
-
Engeeniering
professional services
PETROPERU
Technical specifications, terms of reference and engineering required to
acquire a fire truck for the Conchán Refinery
April 28,
2014
April 28,
2014
4,250
Oquendo fuel
terminal
PRIMAX
Conceptual engineering for Oquendo fuel terminal
May 31, 2014 May 31, 2014
GMI N°111323 project
TEVA PERU
Reinforcement of the production building and offices located at the Ate
Plant.
July 21, 2014
July 21, 2014
GMI N°121294
project
ALICORP
Assessment and detail engineering and "mechanical tie line"/Piping
Project 1294
August 29,
2014
August 29,
2014
-
-
-
370 >>
-
-
-
-
-
-
-
INFORMESSPECIAL REPORT ON PREVIOUSLY AGREED UPON PROCEDURES APPLIED TO THE SCHEDULE OF WORKS, PROJECTS AND SERVICES PERFORMED, COMPLETED AND DELIVERED DURING THE YEAR ENDED DECEMBER 31, 2014<< menu GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDANNUALREPORT2014
EXHIBIT C
GMI Ingenieros y consultores S.A.
SCHEDULE OF PROJECTS PERFORMED, COMPLETED AND DELIVERED DURING THE YEAR ENDED DECEMBER 31, 2014
19
20
21
22
GMI N°121230
project
GMI N°121243
project
GMI N°121294
project
GMI N°111324-002
project
23
GMI N°111324-004
project
ALICORP
Detail engineering for pasta long line L-23 Phase 1 Stage 3 of Manufacturing
network design project 1230
January 31,
2014
January 31,
2014
ALICORP
Detail engineering of building for "Pasta line feeding system" - Project 1243
June 31, 2014 June 31, 2014
ALICORP
Assessment and detail engineering of facilities and "mechanical tie line"/
Piping Project 1294
May 30,
2014
May 30,
2014
UNION
CERVECERIAS
PERUANAS
BACKUS Y
JOHNSTON S.A.A.
UNION
CERVECERIAS
PERUANAS
BACKUS Y
JOHNSTON S.A.A.
Professional services of Detail engineering to extend APT-AQP at the plant
located in the district of Schaca - Arequipa (GMI N° 111324-002 project)
August 31,
2014
August 31,
2014
Professional services of Detail engineering to remodel CD-Chincha at the
Distribution Center located in the province of Chincha - ICA (GMI N°
111324-004 project)
September
12, 2014
September
12, 2014
371 >>
-
-
-
-
-
-
-
-
-
-
INFORMESSPECIAL REPORT ON PREVIOUSLY AGREED UPON PROCEDURES APPLIED TO THE SCHEDULE OF WORKS, PROJECTS AND SERVICES PERFORMED, COMPLETED AND DELIVERED DURING THE YEAR ENDED DECEMBER 31, 2014<< menu GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDANNUALREPORT2014
EXHIBIT C
GMI Ingenieros y consultores S.A.
SCHEDULE OF PROJECTS PERFORMED, COMPLETED AND DELIVERED DURING THE YEAR ENDED DECEMBER 31, 2014
24
GMI N°111324-003
project
25
GMI N°111324-001
project
26
27
2013 - 2015 Coga
agreement
GMI N°121220
project
Professional services of Detail engineering to elevate the roof of the
existing warehouse of PAT-Tacna to be performed in the Distribution center
of Pocollay industrial park - Tacna (GMI N° 111324-003 project)
December 6,
2014
December 6,
2014
Professional services of Detail engineering to re-build the cement floor in
APT at the plant located in Ate Vitarte - Lima (GMI N° 111324-001 project)
June 19, 2014 June 19, 2014
UNION
CERVECERIAS
PERUANAS
BACKUS Y
JOHNSTON S.A.A.
UNION
CERVECERIAS
PERUANAS
BACKUS Y
JOHNSTON S.A.A.
COGA
Consulting services - Coga agreement 2013 - 2015
TRUPAL
Professional services of Detail engineering of the MP1 and OCC plant to be
performed at the Trupal Evitamiento Plant, located in El Agustino - Lima
(GMI N° 121220 project)
December
31, 2014
August 31,
2014
December
31, 2014
August 31,
2014
372 >>
-
-
-
-
-
-
-
-
INFORMESSPECIAL REPORT ON PREVIOUSLY AGREED UPON PROCEDURES APPLIED TO THE SCHEDULE OF WORKS, PROJECTS AND SERVICES PERFORMED, COMPLETED AND DELIVERED DURING THE YEAR ENDED DECEMBER 31, 2014<< menu GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDANNUALREPORT2014
373 >>
EXHIBIT C
GMI Ingenieros y consultores S.A.
SCHEDULE OF PROJECTS PERFORMED, COMPLETED AND DELIVERED DURING THE YEAR ENDED DECEMBER 31, 2014
28
Ayacucho gas
pipeline
COGA
29
LOM 23 KV" Project
ANTAMINA
Consulting service to perform the Basic Engineering of "Ayacucho gas
pipeline" project , together with specialized professionals which reviewed
the information delivered by COGA.
Professional services to "Supervise the building of two Sub-transmission
lines in 23kv mixed (aerial and subterraneal) from 1405 project "Power
system for LOM 23 KV project"
December
16, 2013
December
16, 2013
December
31, 2014
December
31, 2014
-
-
-
-
To be read together with the report issued by Gaveglio, Aparicio y Asociados on March 26, 2015.
INFORMESSPECIAL REPORT ON PREVIOUSLY AGREED UPON PROCEDURES APPLIED TO THE SCHEDULE OF WORKS, PROJECTS AND SERVICES PERFORMED, COMPLETED AND DELIVERED DURING THE YEAR ENDED DECEMBER 31, 2014<< menu GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDANNUALREPORT2014
374 >>
EXHIBIT D
Graña y Montero Petrolera S.A.
SCHEDULE OF SERVICES PERFORMED, COMPLETED AND DELIVERED FOR THE YEAR ENDED DECEMBER 31, 2014
No.
Project
Customer
Project Description
Contractual
Delivery Date
Date of
Delivery to
Customer
1
Drilling service
Vetra Perú S.A.C.
GMP will provide drilling services to two (2) oil and/or gas wells in Block XXV and
Valeria(1X)
Valeria(1X)
Performance Bonds
US$
-
S/.
-
performed in Block
XXV, VALERIA 1X well
other additional services
To be read together with the report issued by Gaveglio, Aparicio y Asociados on March 26, 2015.
well - January
well - January
22, 2014
Valeria(1X)
well -
January 22,
2014
22, 2014
Vicente
(1X) well -
February 27,
2014
INFORMESSPECIAL REPORT ON PREVIOUSLY AGREED UPON PROCEDURES APPLIED TO THE SCHEDULE OF WORKS, PROJECTS AND SERVICES PERFORMED, COMPLETED AND DELIVERED DURING THE YEAR ENDED DECEMBER 31, 2014<< menu GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDANNUALREPORT2014
375 >>
EXHIBIT E
Viva GyM S.A.
DULE OF PROJECTS PERFORMED, COMPLETED AND DELIVERED FOR THE YEAR ENDED DECEMBER 31, 2014
No.
Project
Customer
Project Description
Contractual
Delivery Date
Ref
Date of
Delivery to
Customer
Performance Bonds
US$
S/.
1
2
3
Los Parques de San
HUAMANYAURI
Two residential multi-familiar building complexes comprising a total of
October 31,
[B]
November 7,
Martín Project
DE LA CRUZ SMITH
1,056 Appts. They offer 02 and 03 rooms and areas of 41m2,48m2 and 59m2.
2014
2014
ALIPIO
Buildings range from 5,10 to 12 floors
Los Parques de San
ANDRES VICTOR
Two residential multi-familiar building complex comprising a total of 1,056
February 19,
[B]
February 14,
Martín Project
GUTIERREZ
MORENO
Apts. They offer 02 and 03 rooms and areas of 41m2,48m2 and 59m2.
2014
2014
Buildings range from 5,10 to 12 floors
Los Parques de San
SALAZAR TRILLO
Two residential multi-familiar building complex comprising a total of 1,056
January 8,
[B]
December 18,
Martín Project
JENNY MARLENI
Apts. They offer 02 and 03 rooms and areas of 41m2,48m2 and 59m2.
2015
2014
Buildings range from 5,10 to 12 floors
4
Los Parques de San
POMA OLIVARES
Two residential multi-familiar building complex comprising a total of 1,056
January 30,
[A] November 28,
Martín Project
JENNIFER ELENA
Apts. They offer 02 and 03 rooms and areas of 41m2,48m2 and 59m2.
2015
2014
Buildings range from 5,10 to 12 floors
5
Los Parques de San
SIHUI CALLA YANET
Two residential multi-familiar building complex comprising a total of 1,056
December 15,
[B] November 28,
Martín Project
Apts. They offer 02 and 03 rooms and areas of 41m2,48m2 and 59m2.
2014
2014
Buildings range from 5,10 to 12 floors
-
-
-
-
-
-
-
-
-
-
INFORMESSPECIAL REPORT ON PREVIOUSLY AGREED UPON PROCEDURES APPLIED TO THE SCHEDULE OF WORKS, PROJECTS AND SERVICES PERFORMED, COMPLETED AND DELIVERED DURING THE YEAR ENDED DECEMBER 31, 2014<< menu GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDANNUALREPORT2014
EXHIBIT E
Viva GyM S.A.
DULE OF PROJECTS PERFORMED, COMPLETED AND DELIVERED FOR THE YEAR ENDED DECEMBER 31, 2014
6
7
8
9
Los Parques de San
Martín Project
Los Parques de San
Martín Project
ROJAS DE LA
CRUZ MOISES
JHONATHAN
RUBEN
AVENDAÑO
PAREDES
Two residential multi-familiar building complex comprising a total
of 1,056 Apts. They offer 02 and 03 rooms and areas of 41m2,48m2
and 59m2. Buildings range from 5,10 to 12 floors
Two residential multi-familiar building complex comprising a total
of 1,056 Apts. They offer 02 and 03 rooms and areas of 41m2,48m2
and 59m2. Buildings range from 5,10 to 12 floors
May 26,
2014
April 30,
2014
Los Parques de San
Martín Project
FERNANDEZ INGA
GLEDY PAMELA
Two residential multi-familiar building complex comprising a total
of 1,056 Apts. They offer 02 and 03 rooms and areas of 41m2,48m2
and 59m2. Buildings range from 5,10 to 12 floors
August 29,
2014
[B]
[A]
[D]
May 22,
2014
April 28,
2014
August 29,
2014
-
-
-
Los Parques de
Carabayllo II Project
CHUQUIHUANGA
VERA PATRICIA
1,200 apartments in 100 three-floor buildings, 4 apartments per
floor. First-floor apartments with backyards. 4 stages comprising
300 apartments each one, 760 parking lots. Trade areas, green
areas, SUM and sports areas.
May 10, 2014
[A] May 10, 2014
-
10
Pezet 961 Project
SESKUS SALCEDO
DE GALARRETA
DORA MARIA
Fifteen-floor multi-familiar building, 21 apartments. It has 71 parking
lost and stores. Flats of 173.8 m2,235 m2 . Duplex from 310m2.
March 15,
2014
[A]
February 28,
2014
-
376 >>
-
-
-
-
-
INFORMESSPECIAL REPORT ON PREVIOUSLY AGREED UPON PROCEDURES APPLIED TO THE SCHEDULE OF WORKS, PROJECTS AND SERVICES PERFORMED, COMPLETED AND DELIVERED DURING THE YEAR ENDED DECEMBER 31, 2014<< menu GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDANNUALREPORT2014
EXHIBIT E
Viva GyM S.A.
DULE OF PROJECTS PERFORMED, COMPLETED AND DELIVERED FOR THE YEAR ENDED DECEMBER 31, 2014
11
Pezet 961 Project
12
13
Pezet 961 Project
Pezet 961 Project
DAVILA QUIROZ
JOSE VALENTIN
Fifteen-floor multi-familiar building, 21 apartments. It has 71
parking lost and stores. Flats of 173.8 m2,235 m2 . Duplex from
310m2.
June 30,
2014
DIAZ IMIELA-
GENTIMUR LUIS
Fifteen-floor multi-familiar building, 21 apartments. It has 71 parking
lost and stores. Flats of 173.8 m2,235 m2 . Duplex from 310m2.
March 15,
2014
JEAN PIERRE
DEWERPE
DULONG
Fifteen-floor multi-familiar building, 21 apartments. It has 71 parking
lost and stores. Flats of 173.8 m2,235 m2 . Duplex from 310m2.
February 24,
2014
14
Pezet 961 Project
MARIATEGUI
BOSSE RENZO
Fifteen-floor multi-familiar building, 21 apartments. It has 71 parking
lost and stores. Flats of 173.8 m2,235 m2 . Duplex from 310m2.
January 30,
2014
[A]
[A]
[A]
[A]
Fifteen-floor multi-familiar building, 21 apartments. It has 71 parking
lost and stores. Flats of 173.8 m2,235 m2 . Duplex from 310m2.
May 15, 2014
[A]
April 28,
2014
February 3,
2014
February 24,
2014
January 16,
2014
January 31,
2014
15
Pezet 961 Project
16
Pezet 961 Project
17
Piura Project
PENDAVIS
PFLUCKER JUAN
ENRIQUE M.
RODRIGUES
DE CARVALHO
RODNEY
WONG NORIEGA
WALTER
Fifteen-floor multi-familiar building, 21 apartments. It has 71 parking
lost and stores. Flats of 173.8 m2,235 m2 . Duplex from 310m2.
March 15,
2014
[A]
January 31,
2014
Eitght residential multi-familiar building complexes comprising
a total of 2,274 apartments of 03 rooms of approximately 60m2.
Buildings range from 4 to 5 floors.
April 7, 2014
[C] April 7, 2014
-
377 >>
-
-
-
-
-
-
-
-
-
-
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INFORMESSPECIAL REPORT ON PREVIOUSLY AGREED UPON PROCEDURES APPLIED TO THE SCHEDULE OF WORKS, PROJECTS AND SERVICES PERFORMED, COMPLETED AND DELIVERED DURING THE YEAR ENDED DECEMBER 31, 2014<< menu GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDANNUALREPORT2014
EXHIBIT E
Viva GyM S.A.
DULE OF PROJECTS PERFORMED, COMPLETED AND DELIVERED FOR THE YEAR ENDED DECEMBER 31, 2014
18
Piura Project
19
Piura Project
20
Piura Project
21
Piura Project
NUREÑA
NORIEGA
ELIZABETH MARIA
Eitght residential multi-familiar building complexes comprising
a total of 2,274 apartments of 03 rooms of approximately 60m2.
Buildings range from 4 to 5 floors.
SEMINARIO
INFANTE LILIANA
JULITZA DEL PILAR
Eitght residential multi-familiar building complexes comprising
a total of 2,274 apartments of 03 rooms of approximately 60m2.
Buildings range from 4 to 5 floors.
ADRIANO PEÑA
ROYER GENARO
Eitght residential multi-familiar building complexes comprising
a total of 2,274 apartments of 03 rooms of approximately 60m2.
Buildings range from 4 to 5 floors.
AGUILAR ATOCHE
LAURA
Eitght residential multi-familiar building complexes comprising
a total of 2,274 apartments of 03 rooms of approximately 60m2.
Buildings range from 4 to 5 floors.
22
Real 8 Project
23
Real 8 Project
SEGUROS SURA
- 401
SEGUROS SURA
- 402
Office building
Office building
July 10, 2014
[A]
July 7, 2014
-
August 25,
2014
June 30,
2014
[B]
[A]
August 5,
2014
May 28,
2014
-
-
July 30, 2014
[A]
June 23, 2014
-
September
15, 2014
September
15, 2014
[A]
[A]
June 13, 2014
-
June 13, 2014
-
378 >>
-
-
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INFORMESSPECIAL REPORT ON PREVIOUSLY AGREED UPON PROCEDURES APPLIED TO THE SCHEDULE OF WORKS, PROJECTS AND SERVICES PERFORMED, COMPLETED AND DELIVERED DURING THE YEAR ENDED DECEMBER 31, 2014<< menu GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDANNUALREPORT2014
EXHIBIT E
Viva GyM S.A.
DULE OF PROJECTS PERFORMED, COMPLETED AND DELIVERED FOR THE YEAR ENDED DECEMBER 31, 2014
24
Real 8 Project
25
Real 8 Project
26
Real 8 Project
27
Real 8 Project
28
Real 8 Project
29
Real 8 Project
30
Real 8 Project
31
Real 8 Project
SEGUROS SURA
- 403
SEGUROS SURA
- 501
SEGUROS SURA
- 502
SEGUROS SURA
- 503
SEGUROS SURA
- 601
SEGUROS SURA
- 602
SEGUROS SURA
- 603
SEGUROS SURA
- 701
Office building
Office building
Office building
Office building
Office building
Office building
Office building
Office building
September
15, 2014
[A]
June 13, 2014
-
October 10,
2014
[D] October 10,
2014
October 10,
2014
[D] October 10,
2014
October 10,
2014
[D] October 10,
2014
-
-
-
September
15, 2014
September
15, 2014
September
15, 2014
September
15, 2014
[A]
[A]
[A]
[A]
July 22, 2014
-
July 22, 2014
-
July 22, 2014
-
June 13, 2014
-
379 >>
-
-
-
-
-
-
-
-
INFORMESSPECIAL REPORT ON PREVIOUSLY AGREED UPON PROCEDURES APPLIED TO THE SCHEDULE OF WORKS, PROJECTS AND SERVICES PERFORMED, COMPLETED AND DELIVERED DURING THE YEAR ENDED DECEMBER 31, 2014<< menu GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDANNUALREPORT2014
EXHIBIT E
Viva GyM S.A.
DULE OF PROJECTS PERFORMED, COMPLETED AND DELIVERED FOR THE YEAR ENDED DECEMBER 31, 2014
32
Barranco Project
33
Barranco Project
34
Barranco Project
35
Barranco Project
36
Barranco Project
37
Barranco Project
CLAUDIA
MARIANA
CASAPIA CHARUN
NORA RAQUEL
PORTAL LA
MADRID
RICARDO
ENRIQUE
FERNANDEZ
RIBBECK
HANNY GLADYS
CUEVA BETETA
JUAN PABLO
NOZIGLIA
MONTJOY
LUCIA ASTRID
DUHALDE ZELADA
Eighteen-floor multi-familiar building flats type
June 30, 2015
[A]
Eighteen-floor multi-familiar building flats type
June 30, 2015
[A]
December
23, 2014
December
10, 2014
Eighteen-floor multi-familiar building flats type
January 30,
2015
[A]
December
22, 2014
Eighteen-floor multi-familiar building flats type
Eighteen-floor multi-familiar building flats type
January 30,
2015
[A]
June 20, 2015
[A]
Eighteen-floor multi-familiar building flats type
June 20, 2015
[A]
December
19, 2014
December
22, 2014
December
20, 2014
-
-
-
-
-
-
380 >>
-
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-
INFORMESSPECIAL REPORT ON PREVIOUSLY AGREED UPON PROCEDURES APPLIED TO THE SCHEDULE OF WORKS, PROJECTS AND SERVICES PERFORMED, COMPLETED AND DELIVERED DURING THE YEAR ENDED DECEMBER 31, 2014<< menu GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDANNUALREPORT2014
EXHIBIT E
Viva GyM S.A.
DULE OF PROJECTS PERFORMED, COMPLETED AND DELIVERED FOR THE YEAR ENDED DECEMBER 31, 2014
38
Barranco Project
39
Barranco Project
40
Barranco Project
41
42
GMBVS(Parque
Central) Project
GMBVS(Parque
Central) Project
JUAN MANUEL
LAMBARRI
HIERRO
GUISSELLE KAREN
MERCEDES
MONTOYA
HERRERA
EDUARDO DANIEL
CARREÑO CARPIO
Eighteen-floor multi-familiar building flats type
June 20, 2015
[A]
Eighteen-floor multi-familiar building flats type
June 20, 2015
[A]
Eighteen-floor multi-familiar building flats type
June 20, 2015
[A]
PAZCE ZUÑIGA
DANITZA KAROLY
A project comprising 22 twelve-floor multi-familiar buildings
located at "Cercado de Lima"
DUEÑAS CALERO
DE BERROSPI
LIBERATA
A project comprising 22 twelve-floor multi-familiar buildings
located at "Cercado de Lima"
December
24, 2013
February 15,
2014
[B]
[A]
December
22, 2014
December
22, 2014
December
23, 2014
January 10,
2014
February 10,
2014
-
-
-
-
-
381 >>
-
-
-
-
-
INFORMESSPECIAL REPORT ON PREVIOUSLY AGREED UPON PROCEDURES APPLIED TO THE SCHEDULE OF WORKS, PROJECTS AND SERVICES PERFORMED, COMPLETED AND DELIVERED DURING THE YEAR ENDED DECEMBER 31, 2014<< menu GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDANNUALREPORT2014
EXHIBIT E
Viva GyM S.A.
DULE OF PROJECTS PERFORMED, COMPLETED AND DELIVERED FOR THE YEAR ENDED DECEMBER 31, 2014
43
GMBVS(Parque
Central) Project
44
45
46
47
GMBVS(Parque
Central) Project
GMBVS(Parque
Central) Project
GMBVS(Parque
Central) Project
GMBVS(Parque
Central) Project
MONDRAGON
PALOMINO
VIVIANA
VERONICA
PINTO
CONTRERAS ELVA
LUISA
HONG . XIAOLI
A project comprising 22 twelve-floor multi-familiar buildings
located at "Cercado de Lima"
March 5,
2014
[A]
March 3,
2014
-
A project comprising 22 twelve-floor multi-familiar buildings
located at "Cercado de Lima"
August 15,
2014
[A] May 13, 2014
-
A project comprising 22 twelve-floor multi-familiar buildings
located at "Cercado de Lima"
May 29,
2014
[A]
May 29,
2014
-
GIL CHANG KARIN
EDITH
A project comprising 22 twelve-floor multi-familiar buildings
located at "Cercado de Lima"
VENTURO
ALVARADO
LINDER ESTEBAN
A project comprising 22 twelve-floor multi-familiar buildings
located at "Cercado de Lima"
June 14, 2014
[A]
July 25, 2014
[A]
June 14, 2014
-
July 22, 2014
-
382 >>
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INFORMESSPECIAL REPORT ON PREVIOUSLY AGREED UPON PROCEDURES APPLIED TO THE SCHEDULE OF WORKS, PROJECTS AND SERVICES PERFORMED, COMPLETED AND DELIVERED DURING THE YEAR ENDED DECEMBER 31, 2014<< menu GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDANNUALREPORT2014
EXHIBIT E
Viva GyM S.A.
DULE OF PROJECTS PERFORMED, COMPLETED AND DELIVERED FOR THE YEAR ENDED DECEMBER 31, 2014
48
49
50
51
52
53
54
GMBVS(Parque
Central) Project
GMBVS(Parque
Central) Project
GMBVS(Parque
Central) Project
GMBVS(Parque
Central) Project
GMBVS(Parque
Central) Project
GMBVS(Parque
Central) Project
GMBVS(Parque
Central) Project
MOLINA
HUAMANI VDA DE
SOTO RENEE
VASQUEZ
ATALAYA ROGGER
IVAN
A project comprising 22 twelve-floor multi-familiar buildings
located at "Cercado de Lima"
July 25, 2014
[A]
July 22, 2014
-
A project comprising 22 twelve-floor multi-familiar buildings
located at "Cercado de Lima"
August 27,
2014
October 9,
2014
[A]
[A]
August 15,
2014
september
30, 2014
GRANDEZ
VASQUEZ KELLY
A project comprising 22 twelve-floor multi-familiar buildings
located at "Cercado de Lima"
GAVINO ALVES
JUNIOR GAMELIN
A project comprising 22 twelve-floor multi-familiar buildings
located at "Cercado de Lima"
November 3,
2014
[A] October 24,
2014
MO WEN CARLOS
A project comprising 22 twelve-floor multi-familiar buildings
located at "Cercado de Lima"
October 21,
2014
[A] October 20,
2014
VILLARREAL ORE
IVONNE
A project comprising 22 twelve-floor multi-familiar buildings
located at "Cercado de Lima"
MARCIAL RAMOS
ROXANA KARINA
A project comprising 22 twelve-floor multi-familiar buildings
located at "Cercado de Lima"
November
28, 2014
January 1,
2015
[A]
[A]
November
15, 2014
December
26, 2014
-
-
-
-
-
-
383 >>
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-
INFORMESSPECIAL REPORT ON PREVIOUSLY AGREED UPON PROCEDURES APPLIED TO THE SCHEDULE OF WORKS, PROJECTS AND SERVICES PERFORMED, COMPLETED AND DELIVERED DURING THE YEAR ENDED DECEMBER 31, 2014<< menu GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDANNUALREPORT2014
384 >>
EXHIBIT E
Viva GyM S.A.
DULE OF PROJECTS PERFORMED, COMPLETED AND DELIVERED FOR THE YEAR ENDED DECEMBER 31, 2014
55
Almonte Project
ARIS INDUSTRIAL
S.A.
Comprising land property of 819 hectares located in the Lurin
district, province of Lima, intended to industrial lands and social
housing projects.
December
18, 2014
[A]
December
18, 2014
-
-
Key:
[A] Delivery date under contract.
[B] Fifteen (15) business days from the last date of payment made by customer.
[C] Client's request to change delivery date from contractual date.
[D] Delivery document supporting delivery date other than contractual date (“Delivery before due date” ) stating that Viva GyM “… has completed construction of property before the due date set
under contract and that delivery on such date due to causes beyond its responsibility…”.
To be read together with the report issued by Gaveglio, Aparicio y Asociados on March 26, 2015.
INFORMESSPECIAL REPORT ON PREVIOUSLY AGREED UPON PROCEDURES APPLIED TO THE SCHEDULE OF WORKS, PROJECTS AND SERVICES PERFORMED, COMPLETED AND DELIVERED DURING THE YEAR ENDED DECEMBER 31, 2014<< menu GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDANNUALREPORT2014
385 >>
EXHIBIT F
Viva GyM S.A.
SUMMARY OF WORKS, PROJECTS AND SERVICES PERFORMED, COMPLETED AND DELIVERED, BY COMPANY FOR THE YEAR ENDED DECEMBER 31, 2014
GyM S.A.
GMD S.A.
GMI S.A.
GMP S.A.
Viva GyM S.A.
TOTAL
On the contractual
date or before
After contractual
date
TOTAL
5
0
5
8
0
8
29
0
29
1
0
1
53
2
55
96
2
98
%
98%
2%
100%
To be read together with the report issued by Gaveglio, Aparicio y Asociados on March 26, 2015.
INFORMESSPECIAL REPORT ON PREVIOUSLY AGREED UPON PROCEDURES APPLIED TO THE SCHEDULE OF WORKS, PROJECTS AND SERVICES PERFORMED, COMPLETED AND DELIVERED DURING THE YEAR ENDED DECEMBER 31, 2014<< menu GRAÑA Y MONTERO WORK STYLEINSPIRES USDISTINGUISHES US ALLOWS US TO TRANSCENDANNUALREPORT2014
386 >>
1 GyM S.A.
Av. Paseo de la República 4675,
Surquillo, Lima 34, Perú
T. 213-0444 F. 213-0400
Legal representative: Renato Rojas Balta
2 STRACON GyM S.A.
Av. República de Panamá 3531, of. 1101
Lima 27, Perú.
6 Survial S.A.
Av. Paseo de la República 4667, Surquillo,
Lima 34, Perú
11 Viva GyM S.A.
Av. Petit Thouars 4957, Miraflores,
Lima 18, Perú
T. 203-5180
Legal representative: Carlos Pimentel Barrio de Mendoza
T. 206-7206 F.206-7205
Legal representative: Rolando Ponce Vergara
7 Concesión Canchaque S.A.C
Av. Paseo de la República 4667, Surquillo,
Lima 34, Perú
12
Inmobiliaria Almonte S.A.C.
Av. Petit Thouars 4957, Miraflores,
Lima 18, Perú
T. 208-0230 F. 421-6045 anexo 103
Legal representative: Octavio Cabrera García
T. 203-5175
Legal representative: Carlos Pimentel Barrio de Mendoza
T. 206-7206 F. 206-7205
Legal representative: Aurelio Rospigliosi González-Vigil
3 Vial y Vives-DSD S.A.
Av. Santamaría 2810, Santiago de Chile, Chile
T. (52-2) 23688000
Legal representative: Eduardo Guzmán
4 GMI S.A.
Ingenieros Consultores
Av. Paseo de la República 4667, Surquillo,
Lima 34, Perú
Ferrovias GyM S.A.
8
Jr. Solidaridad cdra. 8 s/n, Parque Industrial, Villa El Salvador,
13 Concar S.A.
Av. Petit Thouars 4957, Miraflores,
Lima 42, Perú
T. 207-2900
Legal representative: Manuel Wu Rocha
9 Concesionaria La Chira S.A.
Av. Paseo de la República 4667, Surquillo,
Lima 34, Perú
Lima 18, Perú
T. 213-6535 F. 213-6538
Legal representative: Jaime Targarona Arata
14 GMD S.A.
Av. Petit Thouars 4957, Miraflores,
Lima 18, Perú
T. 213-5600 F. 444-0373
Legal representative: Eduardo Villa Corta Lucchesi
T. 203-6830
Legal representative: Daniel Lezama Diago
T. 213-6300 F. 446-9667
Legal representative: Hugo Gonzales Castañeda
5 Norvial S.A.
Av. Paseo de la República 4667, Surquillo,
Lima 34, Perú
10 GMP S.A.
Av. Petit Thouars 4957, Miraflores,
Lima 18, Perú
T. 203-5160
Legal representative: Jorge Bustamante Rodríguez
T. 215-1500 F. 241-3030
Legal representative: Reynaldo Llosa Martinto
15 Cam GYM
Tarapacá 934, P.3, Santiago de Chile, Chile
T. 56-2-23897437 F. 56-2-23897342
Legal representative: Klaus Winkler Speringer
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