1
New
timesNEW
OPPORTUNITIES
TO GROW
I N T E G R A T E D
A N N U A L R E P O R T
2 0 1 7
Financial Report
Sustainability Report
NEW TIMES, NEW OPPORTUNITIES TO GROW / xxGRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content 2
STATEMENT OF
RESPONSIBILITY
This document contains true and sufficient information on the operations of Graña y Montero S.A.A.
during the year 2017. Notwithstanding the responsibility of the issuer, the undersigned assume
responsibility for the contents here of in accordance with applicable laws”.
- Luis Díaz Olivero -
Chief Executive Officer
Lima, June 2018
- Julia Cabrera Calle -
Corporate General Accountant
NEW TIMES, NEW OPPORTUNITIES TO GROW / xxGRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content 3
CONTENT
I
A NEW
PHASE
SUMMARY OF A
NEW BEGINNING
- Letter to shareholders
- Our progress for a new future
- Financial performance
- Environmental, social, and
governance performance
5
8
9
13
II
OUR
PROGRESS
WE STRENGTHEN
OURSELVES TO GROW
- Strengthening of our
Corporate Governance
- Strengthening of our risk
17
and compliance management
19
- Business and financial
strengthening
- Strengthening the
communication with
our stakeholders
22
25
III
THE SAME
COMMITMENT
TO CONTINUE BUILDING
A BETTER FUTURE
IV
APPENDIX
- Transcendental projects
for Peru and the region
- Responsible business
for a better future
27
63
- Coporate information
104
- Materiality process Description 116
118
- Sustainability report (SMV)
131
- GRI content index
NEW TIMES, NEW OPPORTUNITIES TO GROW / xxGRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content I
THE RESULTS OF OUR
STRENGTHENING PROCESS AND
OUR FINANCIAL ENVIRONMENTAL,
SOCIAL AND GOVERNANCE
PERFORMANCE
4
A new
phase
SUMMARY
OF A NEW
BEGINNING
NEW TIMES, NEW OPPORTUNITIES TO GROW / xxGRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content NEW TIMES, NEW OPPORTUNITIES TO GROW / LETTER TO SHAREHOLDERS
5
LETTER TO
SHAREHOLDERS
Dear Shareholders,
On behalf of our Board of Directors, we are happy to present to you
the 2017 Annual Report, marking our 84th year of presence in the industry.
On March 31st, 2017, the General Shareholders’ Meeting elected a new
Board of Directors for Graña y Montero, which I am honoured to chair.
Being aware of the difficult circumstances the company was facing, we did
not hesitate in accepting the responsibility of overcoming its worst crisis
ever, because we cannot fathom a Peru with no Graña y Montero.
We highly regard it significance as a company and its impact in the projects
it carries out, fostering the country’s economic and social development.
During the past year, we have worked intensely to revert this situation and
convert this crisis into an opportunity to innovate and learn. We can already
show concrete achievements, and we are sure that we are on the correct
path, both at the operational and strategic level.
Still, what happened? How could such a renowned company be involved
in a scandal that started its worst crisis in 84 years?
Part of the answer lies with the overestimation of our reputation and a
decision making process which favoured profitability without assessing
correctly possible risks.
Graña y Montero entered a partnership with Odebrecht to carry out a few
projects which were of the utmost importance for the country development,
but in doing so it accepted an asymmetrical association with a controlling
partner which later admitted to bribery and corruption. This proved that
there were improvements to be made, both in our management system
as well as our third-party partnership process.
This is how we decided to reinvert ourselves and show our resiliency. We
implemented a new organizational structure, we made internal changes, we
questioned our strategy and processes, we came up with alternative solutions
to better overcome our problems and learn from our mistakes. Overall,
we are moving forward with a clear vision for our future.
The new management started a new chapter, focused on strengthening
our risk management, refining our standards, good corporate practices
and compliance, with a public commitment to the truth, to transparency
and integrity. As a first step, we published a Manifest, with which the new
management committed, amongst other things, to carrying our six key
actions for our future:
- The creation of a Risk, Compliance and Sustainability Committee;
- The implementation of a training programme on anti-corruption
for our employees and executives;
- The reviewing and strengthening of our association policy with
the government;
- Our new association policy with partners and clients;
- Our new association policy with suppliers and subcontractors;
- The creation of an External Advisory Council;
GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content NEW TIMES, NEW OPPORTUNITIES TO GROW / LETTER TO SHAREHOLDERS
6
+200 projects in
15 regions of Peru
and 6 countries
in the region.
As part of all these actions, our corporate culture is transforming and
our processes are becoming more rigorous.
Furthermore, today we seek to be more transparent in our management and
to actively involve our stakeholders. We are empowering our employees to
report any questionable act through the Ethics Channel, and our external
stakeholders have been given a new communications channel called “We’re
listening”, which is part of the “Committed to the future” programme,
launched by the Board of Directors.
With regards to the business activities, our team has shown that under
the hardest conditions we are able to achieve a more efficient operations
management, in order to perform better, which is shown EBITDA, that
increased from USD -28 MM in 2016 to USD 242 in 2017.
Another financial aspect which I wish to point out is the repayment of 53% of
the debt incurred because of the cancellation of the Gaseoducto Sur Peruano,
equivalent to USD 167.3 MM repaid. This was thanks to our divestment
strategy which was promptly carried out, also as part of our organizational
restructuring, and generated a USD 213.2 MM income. This contributed to
the deleveraging of the company, which reduced its total debt from USD 1049
MM as of December 2016, to USD 829 MM at the end of 2017.
Without a doubt, one of the greatest satisfactions of 2017 has been wining
new contracts and extending existing ones, which helped in maintaining our
Backlog plus recurring business in USD 2,973 MM at year end. In the same
way, our sales end the year in US $ 1,874 MM.
With the unwavering support and dedication of our employees, we have
been working on approximately 200 projects in 15 regions, as well as
carrying out important works in Chile, Colombia, Mexico and Panama. This
was also possible thanks to the support of around 10,000 suppliers which
allowed us to carry the projects our, benefitting thousands of people.
There some projects of paramount importance this year which will have a
positive impact on our society:
- The Line 1 capacity expansion, which will allow to increase daily
passengers from 300 thousand to 500 thousand;
- The carrying out of five contracts for Southern Copper Corporation in
the Toquepala and Cuajone mines, which together represents this year’s
largest mining investment;
- The refurbishment and expansion of the Talara Refinery, for which
we hired over 4.500 people;
- The Yellow Line project, a 25km network which will connect 11 Lima
districts, and will improve circulation for 139.000 vehicles.
GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content NEW TIMES, NEW OPPORTUNITIES TO GROW / LETTER TO SHAREHOLDERS
7
The above shows that, our difficulties notwithstanding, the company
preserves its core strengths, such as the talent and experience of our
engineers, our teamwork, our operations management and our commitment
to fulfil our objectives. All of these are qualities which are still at the country
and the region’s service, and which will continue improving the citizens’
quality of life. We also reaffirm our commitment to the principles of the
UN Global Compact, which we uphold and show in all the aspects of our
sustainable conduct.
During 2018 we are resolved to show to the country that Graña y Montero
is committed to the truth, transparency and integrity, and that we will
condemn any act which is not in accordance to the standards of Corporate
Governance and Compliance which we are implementing.
This is why we ask the society to give us a new vote of confidence.
- Augusto Baertl -
Chairman of the Board
- Rafael Venegas -
Independent Director
- Alfonso de Orbegoso -
Independent Director
- Pedro Pablo Errázuriz -
Independent Director
- José Antonio Rosas -
Independent Director
- Manuel Del Río -
Independent Director
- Alfonso García Miró -
External Director
- Roberto Abusada Salah -
External Director
- Carlos Montero -
External Director
GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content FINANCIAL
STRENGHENING
AND NEW GROWTH
STRATEGY
page 22
- New growth strategy
- Asset sale process
- Refinancing and debt reduction
- New financing sources
OUR
PROGRESS
FOR A NEW FUTURE
STRENGTHENING
OF OUR CORPORATE
GOVERNANCE
- New General Management
- New Board
- New Risk, Fulfillment and
Sustainability Committee
page 17
- New communication channels
- New relationship strategy
STRENGTHENING
THE COMMUNICATION
WITH OUR
STAKEHOLDERS
page 25
STRENGTHENING OF
OUR RISK MANAGEMENT
AND COMPLIANCE
page 19
- New External Advisory Council
- New Risk and compliance area
- New policies, procedures and controls
- Training for the Board and collaborators
GRAÑA Y MONTERO
NEW TIMES, NEW OPPORTUNITIES TO GROW /
Content
FINANCIAL
PERFORMANCE
KEY FIGURES
DISTRIBUTION OF VALUE
Sales
Gross Profit
Profit before Taxes
Net Profit
EBITDA
Backlog
Recurring business
Backlog and recurring business
Professionals
6,080,142
672,786
328,713
148,738
785,101
7,750,341
1,898,521
9,648,863
KEY FIGURES
1,873,695
207,330
101,298
45,836
297,592
2,388,395
585,060
2,973,455
4,529
Through our companies, we seek to generate value for society in
the economic, as well sale as social and environmental areas. Therefore,
we not only develop the best engineering and infrastructure solutions;
we also seek to go beyond our business, fostering the growth of our
takeholders.
DISTRIBUTED ECONOMIC VALUE
Reinvestment
(Capex)
State
(taxes)
Collaborators
(Salaries, bonds
TOTAL
Suppliers
(*) Ventas más
IGV pagado
GRAÑA Y MONTERO
NEW TIMES, NEW OPPORTUNITIES TO GROW / xx
Content
FINANCIAL
PERFORMANCE
SALES BY BUSINESS LINE
Services
$327
16%
Services
Engineering and
Construction
Engineering and
Construction
Real Estate
Real Estate
$200
10%
Infrastructure
$446
22%
Infrastructure
$93
42%
Infrastructure
$545
22%
Real Estate
$26
1%
Services
$460
18%
Engineering and
Construction
NEW TIMES, NEW OPPORTUNITIES TO GROW / ECONOMICAL PERFORMANCE 2017
11
FINANCIAL
PERFORMANCE
2017
DEBT REDUCTION
DEBT (US$ THOUSAND)
Working capital + Leasing
Working capital
Funding Associated with GSP
Total
Debt Letter guarantee CHUBB
2016
382,677
336,389
277,415
996,481
52,500
1Q2017
383,045
348,576
247,344
978,965
52,500
TOTAL DEBT
1,048,981
1,031,465
2Q2017
344,055
335,414
173,593
853,062
21,679
874,741
3Q2017
349,423
335,036
169,621
854,081
20,249
874,329
2017
328,079
337,763
146,988
812,830
15,640
828,470
TOTAL DEBT (US$ MILLIONS)
DEBT ASSOCIATED WITH GSP (US$ MILLIONS)
9
4
0
,
1
1
3
0
,
1
5
7
8
4
7
8
8
2
8
1,200
1,000
800
600
400
200
0
350
300
250
200
150
100
50
0
2016
1T2017
2T2017
3T2017
2017
2016
1T2017
2T2017
3T2017
2017
Chubb
CreditSuisse
GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content GRAÑA Y MONTERO
NEW TIMES, NEW OPPORTUNITIES TO GROW /
Content
FINANCIAL
PERFORMANCE
KEY FIGURES
Sales
Gross profit
Profit before taxes
Net profit
EBITDA
Backlog
Recurring business
Backlog and recurring business
SALES BY BUSINESS LINES
Engineering and Construction
Infrastructure
Real Estate
Services
7,008,680
2,344,824
1,842,356
6,080,142
1,873,695
318,357
169,765
100,282
305,069
7,815,495
649,974
154,616
7,097
599,737
2,289,919
190,440
45,302
2,079
175,721
6,190,317
557,295
-582,865
-509,699
-93,581
3,765,447
13,781,034
4,037,807
10,541,583
580,003
1,529,834
448,237
2,327,822
951,569
507,429
299,744
911,851
11,254,921
1,733,630
12,988,551
165,862
-173,472
-151,696
-27,851
3,137,376
692,804
672,786
328,713
148,738
785,102
7,750,341
1,898,521
207,330
101,298
45,836
241,942
2,388,395
585,060
2,973,455
4,345,450
15,310,868
4,486,044
12,869,405
3,830,180
9,648,863
5,035,674
1,249,126
224,560
843,808
1,684,735
417,907
75,129
282,304
5,829,441
1,353,062
215,764
816,851
1,708,011
396,443
63,218
239,335
4,159,539
912,094
411,518
1,139,061
1,237,958
271,457
122,476
339,006
3,353,198
1,447,926
647,535
1,060,996
1,033,343
446,202
199,548
326,963
NEW TIMES, NEW OPPORTUNITIES TO GROW / ENVIRONMENTAL, SOCIAL AND GOVERNANCE PERFORMANCE
13
ENVIRONMENTAL,
SOCIAL AND
GOVERNANCE
PERFORMANCE
31,520
DIRECT JOBS
generated
directly
OUR IMPACT ON THE REGION
We generate value for our stakeholders through our environmental, social,
and governance activities in the places in which we operate. We base our
efforts on our Sustainability Policy, whose guidelines allow us to address
seven management priorities* in order to ensure that our operations are
carried out in a sustainable manner. In this regard, we highlight
the most noteworthy figures for the region.
*(See page 66, Appendix)
5 OUT
OF THE 9
DIRECTORS
are independent
+10,000
suppliers and
contractors
+170,000
HOURS OF
TRAINING
for suppliers,
customers and
communities
+ 90
MILLION
DOLLARS
in local
purchases
15% OF
CONSTRUCTION
WASTE
put to use
GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content NEW TIMES, NEW OPPORTUNITIES TO GROW / ENVIRONMENTAL, SOCIAL AND GOVERNANCE PERFORMANCE
14
OUR CONTRIBUTION TO THE ACHIEVEMENT OF THE SUSTAINABLE
DEVELOPMENT GOALS
As signatories of the Global Compact, we are committed to respect for
human rights, labor regulations, preservation of the environment and
the fight against corruption. In addition, through our business strategies
and sustainability priorities, we contribute to the achievement of the
Sustainable Development Goals set by the United Nations in the year
2015 in order to bring about positive change in the world.
Our actions, which focus on four Sustainable Development Goals (SDG),
are related with the education, the generation of decent employment,
the promotion of innovation, and the development of infrastructure and
sustainable cities.
Complementarily, our projects made concrete contributions to the
achievement of the following SDGs: 1 (No Poverty), 3 (Good Health and
Wellbeing), 12 (Responsible Consumption and Production), 13 (Climate
Action) and 16 (Peace, Justice and Strong Institutions). Throughout this
document, reference is made to specific contributions toward these goals.
- More than 170,000 hours of
- 412 face-to-face courses and
training for suppliers, customers
and communities in the vicinity
of our projects.
- 96 students completed a technical
education program in Construction
Management that was designed and
implemented by Graña y Montero.
- 412 face-to-face courses and
1,271 online courses offered through
the Graña y Montero Academy.
1,271 online courses offered through
the Graña y Montero Academy.
- More than 1.1 million hours
of training since the foundation
of the Developing Skills for Job
Placement program in 2005.
- 95% of our employees received
a salary above the country’s legal
minimum wage.
- 28 construction project committees
or unions, with whom we work
respectfully.
- More than 10,000 local suppliers
and US$ 90 million in local
purchases.
- 10 companies in the Group certified
according to ISO 14001 and OHSAS
18001.
- Treatment of 25% of Lima’s
waste water through the La Chira
wastewater treatment plant.
- More than 320,000 passengers
transported daily by Line 1 of
the Lima Metro.
- Operation of more than 1,200
kilometers of highways that
facilitate the transportation
of millions of citizens.
- Foundation of the Digital
Workshop, a space where
we design new technological
solutions for our projects.
- 10 eco-friendly buildings built
according to the standards of
the Bono Mivivienda Sostenible
(Sustainable Housing Bonus).
- Different engineering solutions
designed for our customers that
enable them to reduce their
environmental impact.
- More than 5,400 hours of
training on road safety provided
to the community.
- M15% construction waste (from soil
removal and demolition work) put
to use.
GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content II
2017 HAS GIVEN US AN OPPORTUNITY
FOR TRANSFORMATION IN ORDER
TO STRENGTHEN OUR MANAGEMENT
PRACTICES AND
GROW TOGETHER AS A COMPANY
TO ACHIEVE EXCELLENCE
15
Actions
for the
future
WE STRENGTHEN
OURSELVES TO GROW
NEW TIMES, NEW OPPORTUNITIES TO GROW / xxGRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content ACTIONS
FOR THE
FUTURE
16
2017 WAS A YEAR
OF PROFOUND CHANGES
We decided to start a process of transformation and turn the reputational crisis that we went through in the year, into an opportunity to strengthen ourselves as
an organization and recover the path towards a sustainable future.
This transformation process is complex, has multiple dimensions and some of its results are long-term, but it will allow us to become a benchmark for integrity,
compliance, risk management and corporate governance in Latin America.
Below is a summary of the progress of the main actions with which we started the new stage of Graña y Montero:
1
2
3
4
Strengthening
of our Corporate
Governance
Strengthening
of our risk
management
and complience
Financial
strenghening
and new growth
strategy
Strengthening
the communication
with our stakeholders
NEW TIMES, NEW OPPORTUNITIES TO GROW / xxGRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content 17
STRENGTHENING
OF OUR
Corporate
Governance
- NEW GENERAL MANAGEMENT
- NEW BOARD
- NEW RISK, COMPLIANCE AND
SUSTAINABILITY COMMITTEE
1
NEW TIMES, NEW OPPORTUNITIES TO GROW / xxGRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content NEW TIMES, NEW OPPORTUNITIES TO GROW / STRENGTHENING OF OUR GOVERNMENT`S AREAS
18
STRENGTHENING
OF OUR
CORPORATE GOVERNANCE
NEW CHIEF EXECUTIVE OFFICER
NEW DIRECTION WITH INDEPENDENT MANAGEMENT
NEW RISK, COMPLIANCE AND SUSTAINABILITY COMMITTEE
In February 2017, the Board appointed Mr. Luis Díaz Olivero as the new
CEO. Luis Díaz has more than 20 years’ experience in the organization
and prior to holding the current position he worked as corporate
operations manager (2016), corporate infrastructure manager (2013-
2015), general manager of GMP (2011-2013) , among others. He is an
industrial engineer from the Pontificia Catholic University of Peru and has
a master's degree in Business Administration from the University
of Pittsburgh.
Under his leadership, in 2017 we achieved important progress related to
the financial strengthening of the company, the design of the new growth
strategy and the change in the Group's organizational structure, which
will allow us to maximize efficiency, agility and strengthen our focus
on the client.
To guarantee a greater transparency and complete independence of criteria,
the General Shareholders' Meeting appointed a new Board of Directors
for the period 2017-2020. This new Board of Directors is chaired by
Mr. Augusto Baertl and composed of nine members, all of them external
and with an independent majority. It incorporated professionals with
recognized career and experience, with very specialized profiles, according
to the current needs of the company.
During the year, the Board registered an average of 95% attendance of its
members, working hard to reverse adverse circumstances and restore the
company's reputation. It has been a key player in strengthening the "tone
at the top" in promoting the necessary reforms
to strengthen our standards of risk management, compliance and
good corporate governance practices.
In order to enhance the risk management of the company, the new
Risk, Compliance and Sustainability Committee was created at the
Board level. This Committee is led by the Chairman of the Board
and composed of four directors.
Some of its main functions are: to approve the Group's risk exposure
limits and ensure compliance with internal policies and laws that apply
to us. Additionally, this Committee incorporated sustainability issues
that, until 2016, were being managed by the Human Resources
Management and Sustainability Committee.
In 2017, the Risk, Compliance and Sustainability Committee was the
most active governing body, registering more than 70 work sessions.
2017 BOARD
INDEPENDENT EXTERNAL
DIRECTORS
EXTERNAL NON-INDEPENDENT
DIRECTORS
Pedro Pablo Errázuriz Dominguez
Augusto Baertl Montori
Alfonso de Orbegoso Baraybar
Roberto Abusada Salah
Manuel del Río Jiménez
Alfonso García Miró Peschiera
José Antonio Rosas Dulanto
Carlos Montero Graña
Rafael Venegas Vidaurre
GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content
19
STRENGTHENING
OF OUR
Risk management
and compliance
- NEW EXTERNAL ADVISORY COUNCIL
- NEW RISK AND COMPLIANCE AREA
- NEW POLICIES, PROCEDURES AND CONTROLS
- TRAINING FOR THE BOARD AND COLLABORATORS
2
NEW TIMES, NEW OPPORTUNITIES TO GROW / xxGRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content NEW TIMES, NEW OPPORTUNITIES TO GROW / STRENGTHENING OF OUR RISK MANAGEMENT AND COMPLIANCE
20
STRENGTHENING OF
OUR RISK MANAGEMENT
AND COMPLIANCE
CREATION OF THE PROGRAM COMMITTED WITH THE FUTURE
The new Board of the Group renewed its commitment to truth,
transparency and integrity and created the Committed to the Future
Program, which seeks to raise the risk management and compliance
standards of the company, through the following pillars:
A. NEW EXTERNAL ADVISORY COUNCIL
During 2017, we created an external and independent Council to
support the management of the Board of Directors in matters of
Corporate Governance, strategic business, risk management, internal
control, transparency of information and permanence of the company's
policies and values.
C. NEW POLICIES, PROCEDURES AND CONTROLS
During the year, we reinforced our main corporate policies and processes,
focusing on the evaluation of potential strategic partners and third
parties. In this sense, we designed and implemented a new process due
diligence process, much more rigorous, which during the second semester
was applied to 15 potential businesses or companies.
400 executives trained
in the anticorruption
training program.
The Advisory council is composed of Javier Tovar, an expert attorney
in legal strategies for regulatory and corporate matters, Gemma Aiolfi,
Director of Compliance and Corporate Governance at the Basel Institute
on Governance in Switzerland and Barbara Bruce, renowned professional
in the business world in Peru.
Likewise, we initiated the processes of updating the Code of Conduct,
our policies of interaction with the State, the systems of evaluation and
contracting of suppliers, as well as the operating process of the Ethics
Channel. During 2018, these policies and related training programs
will be deployed.
B. NEW RISK AND COMPLIANCE AREA
To ensure the independence and resources necessary for proper risk
management, in 2017, we created the corporate area of Risks and
Compliance and hired Mr. Fernando Dyer, a professional with recognized
international experience in Compliance matters, to lead it. This area reports
directly to the Board's Risks, Compliance and Sustainability Committee.
D. TRAINING FOR THE BOARD AND COLLABORATORS
During 2017, we reformulated our anti-corruption training program,
segmenting the contents according to the audience. We conducted
more than 10 face-to-face courses aimed at the Board of Directors,
Senior Management, and the most sensitive areas of the Group, where
we trained more than 400 executives.
Among his main achievements were the definition of a new risk
management model for the Group, the incorporation of shared objectives
related to the ethical concept and accountability for managers,
the reorganization of the internal audit structure and the re-launch
of the Ethical Channel.
We also signed an agreement with the International Anti-Corruption
Academy (IACA), an institution created by the United Nations to promote
the training of professionals in the fight against corruption. With them,
we conducted specialized and in-depth training for 40 directors and
senior executives of the Group. In addition, as part of this initiative, the
Group organized a discussion on Corporate Governance and Compliance,
in which nearly 80 representatives from the private sector, trade union
institutions and the Peruvian academic sector participated.
GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content
NEW TIMES, NEW OPPORTUNITIES TO GROW / STRENGTHENING OF OUR RISK MANAGEMENT AND COMPLIANCE
21
INDEPENDENT INVESTIGATION
In January 2017, the Board of Directors commissioned the firm
Simpson Thacher & Bartlett, an independent investigation to fully
understand the company's acting - and and those involved in the projects
in which it partnered with Odebrecht . The investigation was led by a
former senior US government official who supervised
the prosecution of fraud and corruption crimes.
The investigation concluded without finding evidence that could lead to the
conclusion that any of the directors, present or past, executives or employees
of the company, had knowledge of, or knowingly participated in any act of
corruption or bribery of public officials in the aforementioned projects.
From the results of this investigation, it was then evident that in the company
there had never been an agreed criminal structure to carry out illegal business
practices, pay bribes or corrupt officials. However, it also showed that there
were areas for improvement in the company's risk management systems,
which has been strengthening during the course of 2017.
During the independent investigation, which took about ten months,
more than 250,000 documents were analyzed. Emails, cell phones,
text messages, financial statements, press information and commercial
documents were reviewed, as well as other electronic media such as
computer hard disks and corporate network data bases. This information
was complemented with face-to-face interviews with officials and former
employees of the company.
The results of the investigation were reported on November 2,
2017 to the Shareholders' Meeting and are available at
www.comprometidosconelfuturo.pe
GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content 22
FINANCIAL
STRENGTHENING
and new
Growth strategy
- NEW GROWTH STRATEGY
- ASSET SALE PROCESS
- REFINANCING AND DEBT REDUCTION
- NEW FINANCING SOURCES
3
NEW TIMES, NEW OPPORTUNITIES TO GROW / xxGRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content NEW TIMES, NEW OPPORTUNITIES TO GROW / FINANCIAL STRENGTHENING AND NEW GROWTH STRATEGY
23
FINANCIAL STRENGTHENING
AND NEW GROWTH STRATEGY
NEW GROWTH STRATEGY
As part of the transformation process, we have rethought our growth
strategy, seeking to be more agile and efficient company. In this context,
we have defined that in the coming years our growth will be focused on the
three lines of business: Engineering and Construction, Infrastructure and
Real Estate.
At the Engineering and Construction levels, we want to be a regional
company with equal capabilities in Peru, Chile and Colombia. Likewise,
in Infrastructure, we will seek to take advantage of the experience we
already have, concentrating on oil and gas projects, roads, transportation
and sanitation. In the Real Estate sector, we will continue to serve the
traditional and social housing segments.
With this, we look for more robust and powerful business areas with
a structure that favors greater organizational capacities and, in this way,
have companies with more agile and business-focused structures, and
a lighter and more efficient Holding.
ASSET SALE PROCESS
REFINANCING AND DEBT REDUCTION
In order to comply with our commitments during 2017, we sold six assets,
which represented US$ 213.2 million. These sales were made methodically
and without sacrificing value, as part of a disinvestment plan, aligned with
the new growth strategy of the organization.
THE ASSETS SOLD DURING THE YEAR WERE
- Cuartel San Martín (02/03/2017)
- Red Eagle Mining (02/28/2017)
- PRINSUR (02/24/2017)
- COGA (04/24/2017)
- GMD (06/06/2017)
- Corporate building (09/29/2017)
US$ 50 MM
US$ 11.5 MM
US$ 25 MM
US$ 21.5 MM
US$ 84.7 MM
US$ 20.5 MM
The debts generated by the cancellation of the Southern Peru Gas
Pipeline project (GSP) amounted to US$ 330 MM. During the first half of
the year, we closed important refinancing agreements with the creditors of
these debts, Chubb Perú SA, Credit Suisse AG and four other international
banks, obtaining new payment terms until 2020. The achievement of
these financing reflected the confidence of our creditors
and substantially reduced the financial risk of the company.
Also, thanks to the disinvestment plan executed during the year, at
the end of 2017, the GSP debt was reduced by approximately 50%. With
this, we improved our debt levels in relation to EBITDA, going from 6.5
(2016) to 4.1 (2017).
GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content
NEW TIMES, NEW OPPORTUNITIES TO GROW / FINANCIAL STRENGTHENING AND NEW GROWTH STRATEGY
24
NEW FINANCING SOURCES
Despite the complex current reputational situation faced by the Group,
during 2017, we obtained a new syndicated credit line with five major local
banks (Banco de Credito del Peru, Scotiabank, Interbank, Citibank Peru
and BBVA) for US$ 161.1 million and an additional line of bail bonds for up
to US$ 100 million to take care of future company projects.
We also obtained new financing for a total of US$ 416 million for the
execution of our projects, such as the extension of Line 1 of the Lima
Subway, which will increase our transport capacity from 320,000 to
500,000 people; or the expansion of the storage terminals that our oil
company GMP manages, in the north of the country.
With these agreements, we successfully completed a stage of financing
negotiations, which allowed us to reaffirm the confidence of financial
institutions in the future of the Graña and Montero Group.
RELIABLE FINANCIAL STATEMENTS
DURING 2017, THE COMPANY APPROVED A NEW
MEASURE TO GUARANTEE INDEPENDENCE IN
ITS AUDIT PROCESS OF FINANCIAL STATEMENTS.
WITH IT, NO FIRM THAT IS PROVIDING THESE
SERVICES MAY BE HIRED TO PERFORM OTHER
SERVICES, FOR THE DURATION OF THE
DESIGNATION PERIOD.
GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content 25
STRENGTHENING
COMMUNICATION
with our
stakeholders
- NEW COMMUNICATION CHANNELS
- NEW RELATIONSHIP STRATEGY
4
NEW TIMES, NEW OPPORTUNITIES TO GROW / xxGRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content NEW TIMES, NEW OPPORTUNITIES TO GROW / STRENGTHENING COMMUNICATION WITH OUR INTEREST GROUPS
26
STRENGTHENING
COMMUNICATION WITH
OUR STAKEHOLDERS
NEW COMMUNICATION CHANNELS
As part of our commitment to transparency and integrity and with the
aim of keeping our different stakeholders informed, we created new
communication channels , among which the following stand out:
- Web page Committed with the Future: portal that generated more
than 47,000 visits in 2017 and is used to inform about the progress of
our program Committed with the Future and our strengthening process.
- Channel Te Escuchamos: Section of the website of Committed with
the Future that allows users, whether internal or external, to write to us
about any doubt and/ or concern. During the year 134 doubts or queries
were cleared up.
NEW NETWORK MARKETING STRATEGY
In addition to digital channels, we opened faca-to-face instances
to exchange views, collect comments and solve queries from our
stakeholders. Thus, during 2017, we more than 50 meetings 1 to 1 and
through informative breakfast, we achieve to solve the doubts of more 60
companies.
GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content III
WE MAINTAIN OUR
COMMITMENT TO UNDERTAKE
THE REGION’S MOST
CHALLENGING PROJECTS
AND TO GENERATE WELFARE
IN THE COMMUNITIES IN
WHICH WE OPERATE.
27
A
permanent
commitment
TO CONTINUE
BUILDING A BETTER
FUTURE
NEW TIMES, NEW OPPORTUNITIES TO GROW / xxGRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content A PERMANENT
COMMITMENT
28
We are a Peruvian company with 84 years’ experience and we are committed to the future of our workers, investors, customers, users, suppliers
and communities in the countries where we operate.
Throughout our history we have developed more than 1,500 projects, which have allowed us to accompany the growth, especially of Peru, and create value,
through the generation of new jobs, the improvement of industry safety standards, the development of local economies and the reduction of the country's
infrastructure gaps.
We continue to be the Engineering and Construction Group with the greatest technical capacity in Peru and, thanks to the talent and experience
of our more than 31,500 employees , we can design, build and operate the most complex projects, with the best standards quality.
During 2017, we worked on more than 150 projects, located in 17 regions of Peru, as well as in Chile, Colombia, Mexico and Panama. Thanks to them, we
generated more than 100,000 direct and indirect jobs and involved approximately 13,000 suppliers, who trusted us. Undoubtedly, all these projects had a positive
economic impact, but they also improved the life quality of thousands of people. Thus, in Graña y Montero, we not only ensure the technical quality and economic
profitability of our projects, but we also seek to have a positive social and environmental impact. In this way we promote a virtuous circle of development, where
both the company and society win.
To achieve this, since 2016, we have a Corporate Sustainability Policy, which provides guidelines and clear commitments on the seven most important issues for
our sustainable management. These issues have been defined based on the assessment of our environmental, social and governance risks (ESG) and our potential
impacts on stakeholders.
Given its close relationship with comprehensive risk management, since 2017 the sustainability issues have been monitored by the Board's Risks, Compliance
and Sustainability Committee. With this, it is expected to achieve greater alignment with the business and consistency in the long term.
1
2
Transcendental projects
for Peru and the region
Responsible business for a
better future
1 Ver Anexos Pág. 105: Proceso de Materialidad seguido para
determinar las prioridades de Sostenibilidad del Grupo
NEW TIMES, NEW OPPORTUNITIES TO GROW / xxGRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content Major
projects
FOR PERU AND
THE REGION
1
NEW TIMES, NEW OPPORTUNITIES TO GROW / VALUE PROPOSITION
30
VALUE PROPOSITION
What started as a construction company, today has become a group
of companies divided into business lines. Each business line gathers
together companies with similar operations and management
systems. This solution allows us to build the capacities and
strengthen the skills of the different areas and to boost the group’s
internal synergies. (G4-17)
* In february 2018, STRACON GyM left the Group.
GMI
ENGINEERING
GyM
CONSTRUCTION IN PERU
VIAL Y VIVES - DSD
CONSTRUCTION IN CHILE
MORELCO
CONSTRUCTION IN COLOMBIA
STRACON GyM
MINING SERVICES
Infrastructure
NORVIAL
HIGHWAY CONCESSION
SURVIAL
HIGHWAY CONCESSION
CANCHAQUE
HIGHWAY CONCESSION
VESUR
URBAN CONCESSION
GYM FERROVIAS
LINE 1 OF THE LIMA METER
GMP
OIL INFRASTRUCTURE
OPERATION
LA CHIRA
RESIDUAL WATER TREATMENT
PLANT
CONCAR
ROADS AND INFRASTRUCTURE
OPERATION
VIVA GyM
REAL STATE DEVELOPMENT
CAM
ELECTRICAL SERVICES
ALMONTE
INDUSTRIAL LOTS
ADEXUS
INFORMATION TECHNOLOGY
GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content
NEW TIMES, NEW OPPORTUNITIES TO GROW / REGIONALIZATION
31
REGIONALIZATION
STRATEGIC
PARTNER
FOR PROJECT
DEVELOPMENT
in the region.
méxico
costa rica
panamá
colombia
ecuador
perú
dominican
republic
jamaica
venezuela
guyana
bolivia
argentina
chile
WE HAVE
DEVELOPED
PROJECTS IN 13
COUNTRIES OF
LATIN AMERICA
we have offices
installed in Peru,
Chile and Colombia.
engineering & construction
infrastructure
real state
services
GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content 32
NEW TIMES, NEW OPPORTUNITIES TO GROW / xxGRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content To close 2017, we achieved a total of US$ 1,033 MM
on sales and a backlog of US$ 1,457 MM.
It is important to underline that with the projects
done, not only did we show our great ability to carry
out complex projects, which have technical and
geographical challenges and short deadlines, but we
also improved our performance on safety, registering
a frequency rate of 0.25 disabling accidents for every
200,000 hours of work.
Besides, as part of our value proposal, we had a positive
impact on thousands of people’s lives, generating 18,265
direct jobs, buying from more than 5,000 suppliers
and contractors, and giving more than 80,000 training
hours to communities located near our project, so as to
promote their local recruitment.
2017 was a complex year for the Group and the
country, where the political scenario delayed the start
of several public projects and kept the private sector
expectant and prudent. Besides, we have
to add the clients’ concerns about the situation of
the Company in Peru, which affected the performance
of the Engineering and Construction area.
Despite the difficult scenario, many of our clients
kept trusting in our technical strength and because
of this, the area was renewed and awarded important
contracts in Peru, Chile and Colombia, most
importantly for the mining sector. An example of this
is the renewal of the operation contract in La Zanja,
a mine located in Cajamarca. Also a contract for the
realization of the Vertical Work Package N°1 (VWP1)
project in the Spence mine (Chile), which belongs
to BHP Billiton, or the awarding of complementary
contracts for Ecopetrol in Colombia.
Additionally, we strengthened our regional presence
not only with the awarding of new projects, but also
with our permanent establishment in Mexico, where
we are aiming at developing EPC projects specialized
in the sanitation and mining sector.
US$
1,033
MILLIONS
in sales
ADJUDICATION
AND RENEWAL
of important
contracts in Peru,
Chile and Colombia
18,265
DIRECT JOBS
generated
US$
1,457
MILLIONS
in backlog
NEW TIMES, NEW OPPORTUNITIES TO GROW / ENGINEERING & CONSTRUCTION
34
GMI
ENGINEERING
During 2017 we decided to strengthen our regional position, so we opened
a subsidiary in Mexico in order to have a permanent offer of our services
in that country. In chile, partnered with Vial y Vives-DSD, we carried out
the EPC of the storage and delivery of concentrate copper plant located in
Totoralillo’s harbor, Chile for the “Compañia Minera del Pacífico” (CAP).
At the same time, we continued our operations in Peru, where we develop
important projects for the water sector, such as the EPC contract for
the water treatment plant of the Antapaccay Company. This plant
generates large environmental benefits for the region, due to its necessary
technology to treat up to 300 liters of water excess per second, which
allows to retake advantage of this resource in the vegetable watering,
animal consumption or once again, pour it into the river without causing
environmental impacts.
In the hydrocarbon sector, we were awarded two modernization projects
for the hydrocarbon storage terminals located in Mollendo, Cusco, Juliaca,
Pisco, Ilo and Moquegua. These projects seek to adjust the terminal
infrastructure according to the newest safety and environment regulations
in order to reduce accident and spilling risks.
On the other hand, within the mining sector we carried out the detail
engineering, phase 1, for Bear Creek Mining in their Corani polymetallic
mining project. Currently, we are working on the extension of the tailing
dam project for the Cerro Corona mine located in Cajamarca.
Finally, within the infrastructure sector, we received the awarding and
initiated the supervision contract for the repair of several sections of the
north Peruvian oil pipeline. Also we carried out the engineering for the
second road, as well as the Chiclayo-Piura highway improvement studies.
Eventually, we began the supervision works from the EPC contracts of the
iron Mineral Processing Plant for the Shougang mining company.
ANTAPACCAY MINING EFLUENT PLANT
CUSCO - PERU
GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content NEW TIMES, NEW OPPORTUNITIES TO GROW / ENGINEERING & CONSTRUCTION
35
GMI
ENGINEERING
ECOTEC
We carried out the environmental management for the construction
of the new IQ Farma plant, a company dedicated to the research,
manufacturing and commercialization of medicine. Likewise, we made
the Sustainability Reporting studies (Informe Técnico Sustentatorio) for
the Pukaqaqa and Magistral of Minera Milpo. Also we did the detailed
EIA (Environmental Impact Assessment) for the industrial plant ETNA,
and the lime plant of Unacem – Unidad Condorcocha. Additionally, we
started with the environmental monitoring services for the construction
of Yellow Line, Lima Subway Line 1 and the Consorcio Ermitaño projects.
We decided to
strengthen our regional
position by opening
a branch in Mexico.
TOTORALILLO PORT
CHILE
GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content NEW TIMES, NEW OPPORTUNITIES TO GROW / ENGINEERING & CONSTRUCTION
36
GMI
ENGINEERING
URBAN ROADS AND TRANSPORTATION
By the end of 2017 we had achieved a 97% of construction progress
of the Yellow Line project in Lima for our client Vinci Concessions. This
project meant important challenges because of the short deadlines and
the innovative infrastructure used, which included elevated viaducts,
underground viaducts and underpasses. However, the experienced
human team allowed us to accomplish the client’s expectations.
It should be noted that the project was developed within a complex
social context, which demanded innovations on our social management
in order to create trustworthy relationships with the community.
Among the steps taken, for the first time, we successfully promoted the
reinsertion of people with criminal records in the job market, working
for the project.
On the other hand, we finished the year with a progress of 34% in the
extension of the Lima Subway Line 1 project, which includes the stations
remodeling, the improvement of the electrical system and the construction
of a second access to the Yard (Patio Taller), among others.
It is important to mention that these works will result in an increase in the
number of daily commuters being transported by the Lima Subway Line 1,
from 320,000 to 500,000, which will in turn lead to in an improvement
in the life quality for millions of Peruvians.
LINEA AMARILLA PROJECT
LIMA - PERU
GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content
NEW TIMES, NEW OPPORTUNITIES TO GROW / ENGINEERING & CONSTRUCTION
37
GMI
ENGINEERING
MINING
During 2017, a team composed by over 900 people from Tacna and
Moquegua carried out five important contracts for the Toquepala and
Cuajone mines of the Southern Cooper Corporation. Overall, the latter
represented the most important investment mining projects of the year.
In Cuajone we completed two contracts to assemble a conveyor belt as
well as the tailing thickeners, and we signed additional contracts for
the commissioning of these. In spite of the large amount of interferences,
we managed to finish the construction on the stipulated deadlines with
no inconveniences. In Toquepala, where we have 3 contracts, we closed
the year with a 69% progress.
GAS AND OIL
In 2017 we also worked in the realization of the most important project
of this sector; the modernization and extension of the Talara’s Refinery
infrastructure located in the north of Peru. By the end of 2017, the project had
reached a 55% progress and for such purpose, we hired around 4,500 people.
CUAJONE MINING PROJECT
MOQUEGUA- PERU
GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content
NEW TIMES, NEW OPPORTUNITIES TO GROW / ENGINEERING & CONSTRUCTION
38
VIAL Y VIVES - DSD
CONSTRUCTION IN CHILE
In 2017, through the TyV Committee, where we keep a 50% shareholding,
we were awarded an important contract for the realization of the Vertical
Work Package N°1 (VWP1) Project of the Spence S.A Mining Company for
a total of US$ 131.8 MM.
which was a big challenge for the team due to the short execution
deadlines requested by the client. By the end of 2017, we had achieved a
100% progress and this has been accomplished thanks to the integration
of the different company’s strengths, including the design, procurement
and the construction.
This Project will be developed in the copper open pit mine that belongs to
Spence Mining Co., a subsidiary of BHP Billiton, and is located in Sierra
Gorda, in the region of Antofagasta-Chile. It will mainly consist of the
construction and assembly of a material grinding and transporting plant,
as well as the development of all the necessary facilities.
On the other hand, we obtained a new contract with the National
Petroleum Company (ENAP) for the construction and assembly of a Wet
Gas Scrubber system in the Bío-Bío refinery. The project, whose duration
will be 12 months, consists of the construction and assembly of a new heat
recovery machine (Flue Gas Steam Generator), a new gas washer (Wet
Gas Scrubber), a new effluent liquid treatment system (Purge Treatment
Unit), among others.
This new awarding was added to the Static Equipment Maintenance
Service and Implementation of Projects in Plant Shoutdowns contract
which was already being carried out, and finished successfully in 2017
for the same refinery, whose average output is 116,000 barrels per day. It
should be mentioned that during the last quarter of the year we earned an
extra contract: the MHC Plant contract for an amount of US$ 1.8MM.
Finally, a fact to be noted is the continuation of the EPC Project of the
concentrated of copper boarding system for the CAP client in Totoralillo,
We will carry out the
Vertical Work Package
project for Minera
Spence.
BIO BIO REFINERY
CHILE
GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content NEW TIMES, NEW OPPORTUNITIES TO GROW / ENGINEERING & CONSTRUCTION
39
MORELCO
CONSTRUCTION IN COLOMBIA
During 2017, we continued carrying out the construction and maintenance
works of the hydrocarbon transport system in the Western Colombian
Zone for Ecopetrol.
Thanks to our successful performance in the project, we managed to
be awarded five additional projects, which include: the construction of
the diversions in different sections of the oil pipeline and the maintenance
of the Eastern Oil Pipeline (Bases Galán and Ayacucho). Likewise,
the implementation of the new model of maintenance in the pumping
stations of Buenaventura, Dagua, Yumbo, Cartago, Pereira, Manizales,
Fresno, Herveo, Mariquita, Cisneros, Medellín, Sebastopol, Vasconia,
Ayacucho, Galán, Lizama y Chimita; among others.
On the other hand, we were awarded a project to build and assemble
an air cooling system at the Suria and Ocoa Thermoelectric Plants, both
located in Villavicencio. The design phase began in 2017 and will last for
450 days. In addition, we signed a contract to carry out the construction
and reconditioning of dams and facilities at the Cartagena refinery
(REFICAR, S:A).
Finally, in the water sector, we were awarded the ordinary, preventative,
predictive and corrective general maintenance project of the residual
treatment plant of Cañaveralejo, which will go on for 23 months.
POLYDUCT MAINTENANCE
COLOMBIA
GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content NEW TIMES, NEW OPPORTUNITIES TO GROW / ENGINEERING & CONSTRUCTION
40
STRACON GyM
MINING SERVICES
Thanks to the quality of our services, in 2017 we renewed the trust of
important clients, who decided to extend their construction contracts:
Hudbay Perú in their mine Constancia until 2019, and Minera La Zanja
S.R.L, until late 2018.
Likewise, we managed to enter the Mexican market and strengthen our
regional positioning through the awarding of two important contracts for
the Canadian mining company AlioGold. It is an operation contract for 51
months for La Chicharra pit of San Francisco, a mine located in the state of
Sonora. And also the underground development contract for the Ana Paula
mine located in the state of Guerrero. The last one includes the construction
of a 2,400 m ramp, as well as the underground drilling stations.
It should be noted that we also closed the year with excellent outcomes
on safety concerns, reaching a frequency rate of 0.22 incapacitating
accidents each 200,000 work hours. Besides, for third consecutive year,
we received the Excelencia en Seguridad 2017 Award given by MAPFRE
(insurance company) and the Excelencia ARL SURA Award
in recognition to our pre-emptive work on the San Ramón project of
the Red Eagle Mining client in Colombia.
In addition, as part of our social management, our Operators Training
Program stood out. The latter gave more than 8 thousand hours training
to the nearby communities in order to promote the hiring of local heavy
machine operators.
Finally, considering our commitment with social responsibility, for the
second time, we received the Socio Emprendedor 2017-2019 certification by
the ABE (Asociación de Buenos Empleadores) of the Peruvian American
Chamber of Commerce (AmCham Perú).
CONSTANCIA MINING PROJECT
CUZCO - PERU
GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content 41
NEW TIMES, NEW OPPORTUNITIES TO GROW / xxGRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content Infrastructure
The Infrastructure arm of the Company consolidates
the Investment and Operations businesses, and is the
largest Peruvian Concession Operator, with operations
in road infrastructure, urban rail transport, sanitary
infrastructure and oil and gas.
- The treatment of approximately 230 million m3
of wastewater, equivalent to more than 93,000
Olympic swimming pools, through the La Chira
wastewater treatment plant.
Our participation in these sectors allows us to
contribute to the development of the countries
in which we operate, either by channeling private
investment to finance projects of public interest,
assuming the risks of performance and compliance
with service levels or by providing our technical
capabilities to design operate and maintain
infrastructure.
Thanks to the work of our more than 2,500
collaborators, the area generated revenues of US$ 446
million and a backlog of US$ 545 million. Also, during
this year we had important achievements, such as:
- The launching of the operation of two new trains
on Line 1 of the Lima Subway, and the start of the
expansion works as part of the project that will allow
us to progressively increase the transport capacity
from 320,000 to 500,000 daily people until 2018.
- The first year of investments in Lot IV, located in
Talara. In total, 33 oil production wells were drilled,
becoming the company that has drilled the most
wells in Peru.
- Modernization investments in the main
hydrocarbon storage terminals in the country,
through Terminales del Peru.
On the other hand, as part of our process
of organizational transformation, Concar, the
company dedicated to the operation of the Group's
infrastructure, joined the Infrastructure area. With
this, we are seeking to consolidate our infrastructure
operation and public services capabilities to generate
even more efficient service proposals of greater
value for the needs of users and the market.
Another highlight was the sale of COGA, a company
dedicated to the operation and maintenance of gas
transportation systems, as part of the new strategy's
Group, which is the Concentration its commercial
offer in the engineering, construction, concessions and
real estate businesses.
It should be noted that, the safety of our collaborators
and the protection of the environment continued to be
one of our priorities and thanks to our risk management
system, we closed the year with zero fatal accidents and
a frequency index of 0.39 accidents with lost time per
every 200,000 hours worked. Despite this, we believe
that road safety continues to be a huge challenge in the
countries of the region. Therefore, in 2018 we will seek
to strengthen the road safety education programs that
we currently apply, to more actively involve transporters
and high-risk users.
US$
446
MILLION
in sales
2,500
COMMITTED
COLLABORA-
TORS
230
MILLION
of m3 of treated
residual water
US$
545
MILLION
in Backlog
NEW TIMES, NEW OPPORTUNITIES TO GROW / INFRASTRUCTURE
43
Infrastructure
NORVIAL
HIGHWAY CONCESSION
The franchisee of the highway from Ancón to Pativilca, located
in the North of Lima, recorded an increase in traffic of 3.74% compared
to 2016, reaching 21 million collectable axles.
In regards to the Works of the Second Stage of the highway, a cumulative
advance of 93% has been achieved. Likewise, we delivered the Second
Stage Works, corresponding to 52.2 out of 57 km, as well as bridges and
road interchanges already built. Pending work will be carried out during
the course of 2018.
NORVIAL HIGHWAY
LIMA - PERU
GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content NEW TIMES, NEW OPPORTUNITIES TO GROW / INFRASTRUCTURE
44
Infrastructure
SURVIAL
HIGHWAY CONCESSION
SURVIAL is a road concession going from San Juan de Marcona, in
the department of Ica, to Urcos in the department of Cusco. In this road,
the execution of periodic maintenance was completed according to the
Technical Report of Maintenance N° 4 for an amount of US$ 18.6 MM,
which meant a challenge due to the climatic difficulties and the high
altitude at which the interventions were located. Likewise, the signing of
a Minute of Agreement with the Grantor was achieved to execute during
the year 2018 the Work of reconstruction of the Stretches affected by
Catastrophic Events for an amount of US$ 15.6MM.
New reconstruction
project for 2018.
SURVIAL HIGHWAY
ICA - CUZCO
GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content NEW TIMES, NEW OPPORTUNITIES TO GROW / INFRASTRUCTURE
45
Infrastructure
CANCHAQUE
HIGHWAY CONCESSION
CANCHAQUE is a road concession going from the junction of the IIRSA
North road to Buenos Aires, until reaching the town of Canchaque,
located in the highlands of Piura, in northern Peru. In the middle of the
year the authorization of the Grantor was obtained to start the periodic
maintenance activities according to the Technical Report of Maintenance
N° 1 for an amount of US$ 7.8 MM, the same which is being executed,
and to end at the beginning of 2018
VESUR
URBAN CONCESSION
This project will extend the Expressway (Vía Expresa) of Paseo de
la República, located in Lima, until it is connected to the South Pan-
American Highway. It aims to be a direct link between the city center
and the south exit of Lima.
The approved design of the project involves the construction of alternative
roads for free circulation, the 4.9 km toll road, new road integration
interchanges and the possible expansion of the public transport system
in segregated COSAC corridors.
In 2017, the Vía Expresa Sur concessionaire and the Municipality of Lima
reached an agreement to extend the term of the construction beginning
for a period of 12 months.
CANCHAQUE HIGHWAY
PIURA - PERU
GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content NEW TIMES, NEW OPPORTUNITIES TO GROW / INFRASTRUCTURE
46
Infrastructure
GYM FERROVIAS
LINE 1 OF THE LIMA METER
During 2017, we made more than 107 million trips and maintained
excellent performance in service level indicators required by the State.
Thus, for example, we recorded a 97.62% in the punctuality of our trips
and we achieved a 90% level of satisfaction; that is, 2.5% better than
the previous year.
On the other hand, the franchisee achieved the financial closing for
the execution of the expansion works of Line 1, which will serve 500,000
passengers per day and reduce waiting times in rush hour,
from 6 to 3 minutes.
97.62% of trips
made punctually.
LINE 1 OF THE LIMA METER
LIMA - PERU
GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content NEW TIMES, NEW OPPORTUNITIES TO GROW / INFRASTRUCTURE
47
Infrastructure
GYM FERROVIAS
LINE 1 OF THE LIMA METER
As part of this project, we began remodeling works at Bayovar, Grau,
Gamarra, La Cultura and Villa El Salvador stations, without affecting
the operation or the normal movement of passengers.
We also put into operation 2 of the 20 new Alstom trains contemplated
in the investment plan, which arrived in Peru from Barcelona, between
the months of October and November.
It is important to mention that, the services of Line 1 of the Lima
Subway contemplate a proposal of integral value. For this reason, as
part of our social management, we continued executing our Culture
Metro, Neighborhood Art and Graffiti Plan programs, which allowed
us to sensitize more than 15 thousand people and recover 2,659 m2 of
deteriorated public spaces. Likewise, we offered 12 trainings in railway
safety and carried out preventative health campaigns, which benefitted
more than 24,000 people. All this, generated that 91% of our users
continue to believe that Line 1 promotes citizenship.
Finally, in environmental matters, we continued recycling in our
different stations, 70% of the water used in the washing of our trains
and we promoted the recycling of waste, such as electrical and electronic
equipment, paper, plastic and glass.
LINE 1 OF THE LIMA METER
LIMA - PERU
GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content NEW TIMES, NEW OPPORTUNITIES TO GROW / INFRASTRUCTURE
GMP
OIL INFRASTRUCTURE OPERATION
EXPLORATION & PRODUCTION
We have been developing hydrocarbon exploitation operations in Lots
I, III, IV and V in Talara, Paita and Los Órganos, located in the Piura
region of northwest Peru. By the end of 2017, we had achieved an average
production of 3,158 barrels of crude oil per day and 12.88 MMPCD
of natural gas, from 662 wells in operation.
It should be noted that, during 2017, at GMP we developed various
investment projects that allowed us:
- To drill 22 new wells in Block IV. The current production of these wells
is 665 BOPD, which contributed, by the end of 2017, along with the 11
wells drilled between November and December 2016, with approximately
340,000 barrels of oil to the value chain. These wells have a reserve
of 1.6 million barrels.
- To drill the exploratory well No. 13683X of the Chimenea deposit in
Zone B of Block IV. The productive result of this well generated 61,000
barrels of reserves, which will allow to continue drilling 10 additional
wells in such area.
- To install a LACT unit (Automatic Measurement Unit for Custody Transfer
or Lease Automatic Custody Transfer) in lot III that will improve the
infrastructure inspection for oil production with state-of-the-art equipment.
48
Infrastructure
OIL LOTS
PIURA - PERÚ
GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content NEW TIMES, NEW OPPORTUNITIES TO GROW / INFRASTRUCTURE
49
Infrastructure
GMP
OIL INFRASTRUCTURE OPERATION
NATURAL GAS
In April 2017, we began the commercialization of condensate natural
gas as a wholesaler, with which we were able to optimize the profitability
of this product. Also, in June, we began the sale of storage capacity
of condensate natural gas in our gas plant, located in Pariñas.
On the other hand, as part of the technological transformation project
that we have been executing, we launched the real-time information
system for plant operations, both for the Osinergmin auditing entity
and for the GMP Operations Control Center. This allows us to provide
technical support to operations, from Lima, and optimize the sales
schedule, knowing the production and inventory online. An estimated
300 barrels per month more in sales is estimated.
PARIÑAS GAS PLANT
PIURA - PERU
GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content NEW TIMES, NEW OPPORTUNITIES TO GROW / INFRASTRUCTURE
50
Infrastructure
GMP
OIL INFRASTRUCTURE OPERATION
TRANSPORTATION & DISTRIBUTION
Through two consortiums, we take care of the operation of ten
hydrocarbon storage terminals. With Terminales del Perú, we operate
those in the north and center (Chimbote, Salaverry, Eten, Supe and
Callao), and with Consorcio Terminales, we have in charge, those
in the south (Pisco, Mollendo, Ilo, Cusco and Juliaca).
Likewise, this year we improved the fuel reception process in the
operation of the Supe Pisco and Ilo terminals, eliminating water
interfaces to reduce the risk of sea pollution.
During 2017, as part of our investment program for expansion
and modernization of the facilities, Terminales del Perú completed
the construction of four tanks of 90,000 barrels of capacity, each in
the terminal of Callao. With this, it managed to increase its capacity
by 35% for the storage of liquid fuels, such as Turbo Jet and Diesel.
On the other hand, Consorcio Terminales concluded the construction
of 2 tanks of 90,000 barrels, which allowed to expand its capacity
by 23%. Additionally, the installation of a new berth was completed
to receive ships of up to 60,000 tons DWT, which means an increase
of 70% over the previous capacity.
OIL AND GAS TERMINAL
PISCO - PERU
GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content NEW TIMES, NEW OPPORTUNITIES TO GROW / INFRASTRUCTURE
51
Infrastructure
LA CHIRA
RESIDUAL WATER TREATMENT PLANT
By the end of 2017, we had completed a year and a half of operation and
maintenance of the wastewater treatment plant, La Chira. During this
period, about 230 million cubic meters were treated, which is equivalent
to more than 93,000 Olympic wastewater pools. Thus, more than
20 million kilos of solid waste were removed, which otherwise would
have ended at sea.
The PTAR La Chira treats about 14 million m2 of water per month, which
represents more than 25% of Lima's wastewater. It is a successful project,
which has allowed to recover the quality of the sea from the beaches,
located between the Ravine of Armendáriz (Miraflores) and Conchán
(Villa El Salvador); benefiting more than 9 million people in Lima.
230 million cubic
meters of water
treated.
LA CHIRA RESIDUAL WATER
TREATMENT PLANT
LIMA - PERU
GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content
NEW TIMES, NEW OPPORTUNITIES TO GROW / INFRASTRUCTURE
52
Infrastructure
CONCAR
ROADS AND INFRASTRUCTURE
OPERATION
One of the most important milestones of the year was signing the contract
for the "Rehabilitation of the External Railroad Road to the Cajamarquilla
Refinery", because it is the second contract for the railway sector being
carried out in Peru.
Complementing our experience in this sector, we began, in February,
the Maintenance Service for the Electric System of the Santiago Subway
Lines 4, 4A, extension of Line 5, train batteries and systems, whose
contract was signed in 2016, in partnership with CAM.
On the other hand, we closed two complementary contracts with Provías
Nacional to carry out the Cora Cora Conservation Project and the Pasco
Road Conservation Project, both for a period of two years.
Also, two important projects for air transport in Peru. One of them,
with Lima Airport Partners, will allow us to develop the engineering
and construction of the Stabilization of Unpaved Areas North Side
of Jorge Chávez Airport; and another one with Aeropuertos Andinos
del Perú to carry out, together with GyM, the Rehabilitation of the
Asphalt Pavement of the Air Side of Ayacucho Airport.
ROAD MAINTENANCE
LIMA - PERU
GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content NEW TIMES, NEW OPPORTUNITIES TO GROW / INFRASTRUCTURE
53
Infrastructure
CONCAR
ROADS AND INFRASTRUCTURE
OPERATION
Our management system in safety and preventative culture allowed us to
have an excellent performance in safety, closing the year with a frequency
index of 0.28 accidents per 200,000 hours worked, which reflects a great
improvement compared to the 0.83 obtained in 2016. In this same line, we
continue to transfer our culture of prevention to society, by carrying out
more than 60 workshops and educational campaigns on road safety, which
benefited 4,000 people in our areas of influence.
This year, in addition, we achieved the ISO 14001: 2015 and OHSAS
18001: 2007 certifications, as well as the maintenance and updating of
the ISO 9001: 2015 standard for our Management System in Operation,
Conservation and Road Infrastructure Management.
We benefit more than
4,000 people in our
areas of influence.
ROAD REHABILITATION
HUANUCO - PERU
GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content 54
NEW TIMES, NEW OPPORTUNITIES TO GROW / xxGRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content In 2017, the Real Estate sector faced as a challenge
when the State Government decided to eliminate the
subsidy bonus for homes with a value greater than 30
UIT. In spite of this, the company managed to regain
the first position in market share, both in units, as
in amount for sales.
Also, according to the reports of the Mi Vivienda
Fund, VIVA GyM was recognized as the top company
in mortgage disbursements of the Mi Vivienda y Techo
Propio program (low-income social housing)
The Parques de Comas project, with its three products,
managed to stand out again, thanks to the acceptance
of the public, thanks to a varied offer that adapts to
the needs of the customers.
Likewise, there were substantial improvements
in the sales of our projects and products aimed at
other market segments such as El Nuevo Rancho
(traditional homes), Los Parques de Huancayo (plots
of developments), among others. It is important to
highlight the consolidation of the area in the upper
segment through the Klimt housing project located
in the heart of San Isidro, which managed to close
the year with 24 out of 32 homes sold.
Thus, we closed 2017 with 1602 units sold, a sales
volume of US$ 200 MM and a net profit of US$ 36 MM.
US$
200
MILLIONS
in sales
#1
PROJECT
in disbursements
with Mivivienda
1,602
UNITS
sold in 2017
US$
36
MILLIONS
of net profit
NEW TIMES, NEW OPPORTUNITIES TO GROW / REAL ESTATE
56
VIVA GyM
REAL STATE DEVELOPMENT
TRADITIONAL HOUSING
We finished the works and started the delivery of our emblematic Klimt
project, located on Pezet Avenue in San Isidro. We closed the year with
24 units sold, leaving 8 to be placed in 2018. Thanks to the level of service
and the quality of this product, we have managed to consolidate the
experience of VIVA GyM in the luxury housing segment.
For its part, the El Nuevo Rancho condo also had a positive progress
in 2017, by achieving 13 sales and 20 deliveries.
In regards to the new project Los Parques del Mar, located in the district
of San Miguel, during the year we were working to consolidate the supply
of our products. Thus, we managed to sell 14 housing units.
During the year, we improved our efficiency in measuring progress and
control of our sales processes, through the incorporation of technology.
Now we have digital signature systems, a virtual consultation platform
Vivatudepa, among others.
EL NUEVO RANCHO PROJECT
LIMA - PERU
GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content NEW TIMES, NEW OPPORTUNITIES TO GROW / REAL ESTATE
57
VIVA GyM
REAL STATE DEVELOPMENT
HOUSING OF SOCIAL INTEREST
Los Parques de Comas was the star project of VIVA GyM due to its high
rate of sales. 1,097 apartments were sold in their different modalities:
720 apartments Techo Propio of 50 m2, 194 apartments of 60 m2 in
the Villa Los Molles condo and 183 apartments of 72 m2 in the Alborada
Residential Club.
Additionally, this project incorporates, within its proposal, 10 eco-friendly
buildings under the Sustainable Mivivienda Bono modality, which have
technologies to reduce the consumption of water and energy from its
design; ensure proper management of waste during the construction
process; and include training in environmental issues for future owners.
On the other hand, our new product of urbanization of lots, Los Parques
de Huancayo managed to place 150 units in sales. At the end of the year,
the habilitation works and the sale of the second stage began.
In Los Parques de Piura project, we managed to consolidate the sales of
stage II-A and make 96 deliveries. As for the towers of stage II-B, these
were redesigned so that they have an area of 50m2 and be more accessible
to the public, at a value ranging from 20 UIT (S/ 83,000)up to a roof of
25 UIT (S/ 104,000)). On the other hand, we consolidated the sale of our
product of houses in closed condos.
LOS PARQUES DE COMAS PROJECT
LIMA - PERU
GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content NEW TIMES, NEW OPPORTUNITIES TO GROW / REAL ESTATE
58
VIVA GyM
REAL STATE DEVELOPMENT
In regards to the sales of the other projects, Los Parques de Carabayllo
II sold out its apartments stock in 2017; The Parks of Villa El Salvador II
managed to sell 65 units and deliver 68; finally, Los Parques de San Martin
de Porres has almost sold out all its apartments, by achieving 100 units
in sales and 112 deliveries. In short, we managed to sell 1,561 units between
homes (apartments and houses) and plots and deliver 1,353 homes.
Likewise, as part of our proposal of social value, in 2017 we reformulated
our Ayni program, expanding its lines of intervention. As a result, in
addition to training new owners of our real estate projects in legal issues,
conflict resolution and leadership (ConViva), we integrated two other
training axis to promote environmental sustainability (EcoVIVA) and the
caring of infrastructure (AdministraBien). The program was implemented
by 100% of social housing projects and managed to train 2,443 people.
LOS PARQUES DE SAN MARTÍN
DE PORRES PROJECT
LIMA - PERU
GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content NEW TIMES, NEW OPPORTUNITIES TO GROW / REAL ESTATE
59
VIVA GyM
REAL STATE DEVELOPMENT
OFFICES
During 2017, we completed the sales of the Rivera Navarrete building
and the Real 2 building, both located in the main commercial areas
of San Isidro. In regards to the Panorama building, located in La Molina,
we made 80% of sales.
RENTS
This business corresponds to the rental of advertising space in the Plaza
Agustino Shopping Center and in the Lima Subway Line 1 stations, which
are managed by VIVA GyM. In sum, we achieved sales of US$ 2.6 MM and
an EBITDA of US$ 1.6 MM.
ALMONTE
During the year, we worked in the negotiations for the sale of 14.7 ha,
which represents US$ 12.5 MM in the period. On the other hand,
we built 56,243 m2 of roads in the lower area and managed to recover
the possession of 6.8 ha. of land.
PANORAMA BUILDING
LIMA - PERU
GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content 60
NEW TIMES, NEW OPPORTUNITIES TO GROW / xxGRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content We operate in Peru, Chile and Colombia and
offer several electric, Information Technologies and
Telecommunications services to different sectors.
During 2017, this services area experienced significant
changes. Concar moved to the Infrastructure area and
GMD was sold to the Advent International company.
This is due to the Group's new commercial strategy,
through which we seek growth with the engineering,
construction, concessions and real estate businesses.
Thus, the area is now made up by companies like CAM
and Adexus, both of which have achieved important
progress in their own markets.
Thanks to the commitment of our 10,387
collaborators, we generated a US$ 460 MM Backlog
and US$ 327 MM of sales,, meeting the economic
objectives proposed for these businesses.
Additionally, we achieved our clients’ expectations,
by registering better levels of accomplishment in the
operational management. Besides, through our work,
we share our standards of performance with more
than 2,800 suppliers.
US$
460
MILLIONS
of backlog
10,387
COMMITED
COLLABORA-
TORS
+ 2,800
SUPPLIERS
US$
327
MILLIONS
in sales
NEW TIMES, NEW OPPORTUNITIES TO GROW / SERVICES
62
CAM
ELECTRICAL SERVICES
The most relevant achievement in 2017, in Chile, was the contract which
we got to maintain, during 4 years, the power system and low tension
power of the complete Metro network, which includes 109 stations,
as well as the contract that will allow us to build the definitive electric
network for the new Santiago airport, which is one of the most significant
projects in the country.
On the other hand, in Telecommunications, we achieved the awarding
of two important contracts with the Claro and VTR operators for
the network maintenance service of Hybrid Optical-Coaxial Fiber.
Another contract to be mentioned in the Assembly division is the engineering
service, civil and control works, construction and implementation of high
tension substations of Transelect.
Likewise, as part of our social management, in CAM Chile we implemented
an agreement with institutes and schools for the formation of young
technicians who, are eventually trained by ourselves to incorporate them
as collaborators in the Telecommunications division.
GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content NEW TIMES, NEW OPPORTUNITIES TO GROW / SERVICES
63
CAM
ELECTRICAL SERVICES
In Peru we achieved to close several projects, mainly with the electric and
telecommunication sector, being some of the most important contracts:
RLP21 + RLP35 for Repsol, which consists in the assembly of electric
equipment, facilities and instrumentation at the refinery of La Pampilla
in Lima; the heat maintenance of MV networks with Enel Distribution,
as well as the equipment and system modernization project of Claro
Peru for América Móvil.
Finally, in Colombia we initiated the first significant contract with EPM,
the largest power company in the country, which is one of the most
important in public services in Latin America. This contract consists of
the recovery of power losses, and its objective is to control and mitigate
power theft. On the other hand, we signed several contracts of FTTH
supplies (Home Pass) with Huawei, which will allow us get the necessary
experience to continue with the commercial development in this market.
GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content NEW TIMES, NEW OPPORTUNITIES TO GROW / SERVICES
64
ADEXUS
INFORMATION TECHNOLOGY
During 2017, ADEXUS consolidated its operations with important
contracts, among which we can note the ones developed in the hydrocarbon,
telecommunications, mining, retail and government sectors.
ENAP (National Petroleum Company) trusted in ADEXUS services to
manage and optimize all the communication infrastructure of its regional
and international offices for the next 5 years. This project involved the
migration of LAN and WiFi Platform Services, Extended LAN Networking
(MESH), Industrial LAN Platform Supply, Safety Services and Unified
Communication Service, which also involved the migration of all the IP
telephone service, and the granting of new videoconference equipment.
In the mining sector, ADEXUS closed important contracts as well, among
them, we can note the Minera Escondida one. The contract consisted of
the incorporation of the control and display room of all the geotechnical
systems which will allow the company to count on a line to monitor the
stability of the two pits under exploration, and with this, it will be possible
to anticipate contingencies that migh jeopardize the work in the mine.
On the other hand, La Polar, one of the biggest retail stores, with presence
in different Chilean cities, chose ADEXUS for the incorporation of
the services of support and help desk in field for three years; NOC 360
communication services and centralized CCTV, both for 5 years.
Finally, another important contract for ADEXUS was the one signed
with SERVEL (Servicio Electoral de Chile), which consisted of the design
of an electoral data process and publication system.
GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content Responsible
business
FOR A BETTER FUTURE
- SEVEN MANAGEMENT PRIORITIES
2
NEW TIMES, NEW OPPORTUNITIES TO GROW / RESPONSIBLE BUSINESS FOR A BETTER FUTURE
66
RESPONSIBLE
BUSINESS FOR A
BETTER FUTURE
OUR SUSTAINABILITY PRIORITIES
Our management priorities have been defined based on the matters
most relevant to our companies and our stakeholders*. They enable
us to integrate social, environmental and governance activities
in the projects in order to generate greater value in the operations.
*(See page 92, Appendix)
GRAÑA Y MONTERO WAS INCLUDED IN THE PRESTIGIOUS
DOW JONES SUSTAINABILITY INDEX - MILA
During the year, we faced with the Dow Jones Sustainability
Index Mila Pacific Alliance evaluation process, an index that
recognizes the leading companies in sustainability in the
region of the Pacific alliance.
In this first edition of the index, promoted by S & P Dow
Jones Indices (S & P DJI), the International Financial
Corporation (IFC), RobecoSAM and the stock exchanges
of the Latin American Integrated Market (MILA), Graña
y Montero shared the ranking with another 41 companies
leaders in sustainability of Chile, Colombia, Mexico and Peru.
Righteous
conduct
People’s
development
Operational
excellence
Security
and health
Environment
Communication
To share
wellness
GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content RIGHTEOUS
CONDUCT
RIGHTEOUS
CONDUCT
“In Graña y Montero we are firmly committed to the truth,
transparency and integrity and we are working tirelessly to
become a benchmark in the region. In 2017, the new Board of
Directors launched the Committed with the Future program,
which will strengthen our Risk and Compliance Management
System through six specific measures.
Today, more than ever, it is essential for the continuity of our
business to have an effective management system, especially
in the fight against corruption, which will allows us to train,
prevent, detect and punish potential acts of corruption in our
activities and relations with groups of interest”.
500+
MAN HOURS
of training on
the Code of Ethics, Code
of Conduct and use of
the Ethics Channel
+ 70
WORKING
SESSIONS
of the Compliance
and Sustainability
Risks Committee
400+
MAN HOURS
of training on
anticorruption
matters
- Augusto Baertl -
Chairman of the Board
NEW TIMES, NEW OPPORTUNITIES TO GROW / RIGHTEOUS CONDUCT
69
OUR MANAGEMENT SYSTEM
MAIN PROGRESS 2017
APPROACH
- Senior Management’s Commitment
- Risk assessment
- Policies and procedures
- Training and communication
- Monitoring and self-evaluation
ETHICS CULTURE
- Accountability
- Aligned incentives and clear disciplinary measures
EVALUATION AND CONTINUOUS IMPROVEMENT
- External audits
- Internal control
- Ethics Channel
- External channel "We listen to you"
- Visible commitment of the new administration, through the active
participation of the Board in matters of conduct and integrity.
- We created the Risk, Compliance and Sustainability Committee at
the Board level that carried out more than 70 work sessions in the
last seven months.
- We created the Risk and Compliance area, led by a professional
with extensive experience in these matters, who reports directly
to the Crisis Comitte.
- We conducted an exhaustive evaluation of the Group's corruption
risks and developed new methods to deepen our knowledge about
customers and partners.
- We evaluated 15 potential associations or businesses through a new,
more rigorous and risk-based due diligence process.
- We restructured the Ethics Commission and the functioning of the
Ethics Channel, transferring the responsibility of investigation to
the Corporate Risk and Compliance Manager to increase efficiency.
- We created the "We listen to you" channel to address the concerns
and potential complaints from external stakeholders.
- We began the process of updating our Ethics Charter (1995)
and Code of Conduct (2012)
- We began the reformulation of our policies with suppliers, including
ethical variables from the evaluation and selection of them.
- We concluded the review of our donation policy.
- The International Anticorruption Academy (IACA) trained our
board of directors, general and corporate managers in the best
anti-corruption practices.
- We began the reorganization of the internal audit area.
- This year we received 74 complaints through the Ethics Channel.
Of these, 33 cases have been closed and 16 of those were declared
unfounded. Additionally, 41 cases are under investigation, of which
8 are in the process of being closed by the Ethics Committee.
GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content NEW TIMES, NEW OPPORTUNITIES TO GROW / RIGHTEOUS CONDUCT
70
2017
PROGRESS
= Logrado
= Logrado
= Avanzado
= Avanzado
= En proceso
= En proceso
Review and continue strengthening our policies and
procedures, mainly those related to strategic partners.
Update our matrix of existing risks, processes and controls
in the Group.
Strengthen our policies and procedures related
to the election and registration of suppliers.
- Implement a segmented training plan, according to
companies, areas and critical positions.
- Strengthen the compliance area and monitoring systems.
2018
CHALLENGES
- Consolidate the implementation of the new Risk
and Compliance Management System.
- Approve and deploy the new relationship policy with
suppliers and contractors, and the updated Code of Conduct.
- Implement the training plan on the new approved policies,
especially the Code of Conduct.
- Reinforce the importance of an ethical culture in the
organization, by aligning the system of goals and incentives
of our executives.
GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content
71
PEOPLE
DEVELOPMENT
NEW TIMES, NEW OPPORTUNITIES TO GROW / xxGRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content PEOPLE
DEVELOPMENT
"We are proud of our more than 31,500 employees. Thanks to
their talent and commitment, we are the Peruvian company with
the greatest technical capacity in engineering and construction
and we contribute to the welfare of millions of families in the
country.
2017 was a year of organizational changes that demanded great
challenges also at the level of our human teams. Our correct
person strategy in the right place, became more important
than ever and was accompanied by a process of cultural
transformation, which will allow us to promote a new leadership
style and become a more agile and accountable organization."
- Rafael Venegas -
Independent director
35
JUNIOR
ENGINEERS
in our Trainee
Program
+54,000
MAN HOURS
training to surrounding
communities of our
projects
31,520
DIRECT JOB
generated
NEW TIMES, NEW OPPORTUNITIES TO GROW / PEOPLE DEVELOPMENT
73
OUR MANAGEMENT SYSTEM
MAIN PROGRESS 2017
FOCUS
"Right person in the right place" in all our processes:
1.- Attraction
2.- Performance Management
3.- Development and Loyalty
EVALUATION AND CONTINUOUS IMPROVEMENT
- System for following up objectives and more rigurous
performance evaluations
- Cultural diagnosis
- Ethics Channel and external channel "We listen to you"
- Internal control
- The right person strategy in the right place, allowed us to efficiently
accompany the downsizing processes and the rightsizing that the
organization faced during the year, favoring the retention of critical talent,
greater internal mobility and the replacement of key positions.
- We strengthened our internal communication strategy by making it
more open, clear, multidirectional and timely, training leaders and using
new channels.
- We reorganized the corporate area of human management to promote
greater proximity to the projects and strengthen the area of shared
services, centralizing all the processes of selection, payroll, compensation,
work advice and welfare at the Group level.
- We created the Knowledge Centers (CC) of human management in order
to generate high impact solutions according to the needs of the projects.
- We created the culture area and made a diagnosis to identify the aspects
of the Graña y Montero Style that we must modify to accompany the
transformation process required by the Group.
- We defined a new style of leadership necessary to promote a more agile
and accountable organization.
- In 2017, there were 0 complaints of discrimination in the Ethical Channel.
- We created the program of internal ambassadors to promote a more
fluid and close communication throughout the organization.
- We maintained positive relations with 28 unions or Work Committees*,
showing complete respect for freedom of association. we should specify,
that in 2017 we registered a work committee conflict, which was resolved
satisfactorily
* GyM: 5 unions, 10 work committees / Stracon GyM: 3 unions, 1 work committees / GMP: 1
unions / Cam Chile: 8 unions
We set up 7 Knowledge
Centers, which bring professionals
together to find solutions
to problems.
GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content NEW TIMES, NEW OPPORTUNITIES TO GROW / PEOPLE DEVELOPMENT
74
OUR TEAM
DISTRIBUTION OF COLLABORATORS BY COUNTRY
DISTRIBUTION OF COLLABORATORS BY GENDER
Despite the lower activity in the construction industry in Peru and the
reputational and financial crisis faced by the Group, our team closed the
year with 31,520 people (employees, operatives and consortiums), a figure
that represents an increase of 12 % compared to 2016, mainly driven by
the Yellow Line, Toquepala, Cuajone and the Talara refinery projects.
Panama
7%
Women
9%
GRUPO GRAÑA Y MONTERO TEAM
30,000
15,000
10,000
15,000
10,000
5,000
0
6
0
7
,
4
1
6
2
0
,
1
1
7
1
3
,
3
1
9
5
,
7
1
3
9
4
,
8
5
9
9
,
1
TOTAL
31,520
2
8
7
,
6
1
9
2
6
,
3
1
9
0
1
,
1
Chile
15%
TOTAL
31,520
Peru
58%
TOTAL
31,520
Colombia
20%
Men
91%
DIRECTIVE ROLES
TOP DIRECTIVE ROLES*
JUNIOR DIRECTIVE ROLES
Men
Women
89%
11%
81%
19%
DIRECTIVE ROLES
IN THE OPERATION**
87%
13%
2015
2016
2017
Employees
Operatives
Conglomerates
*It includes up to two levels lower than the CEO
**It does not include support areas
GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content NEW TIMES, NEW OPPORTUNITIES TO GROW / PEOPLE DEVELOPMENT
75
TALENT ATTRACTION
PERFORMANCE MANAGEMENT
DEVELOPMENT AND LOYALTY
- In 2017, the process of improving our systems for
monitoring objectives and evaluating performance
began. The results of these processes were an
important input to promote objective promotions
and internal movements, which allowed 899 vacancies
of employees to be covered with Group employees.
- At the operational collaborators level, we managed
to get 293 people to be recategorized within the civil
construction career. Also, thanks to our internal
recruitment program, 65% of the operational staff
hired during the year comes from our own projects.
This has favored the performance of the company
and reduced the costs of training and adaptation
- Through our Trainee program, we recruited 35
outstanding students from the main engineering
faculties in the country. With them, 801 junior
engineers from Lima and provinces have already
been hired since 2010.
- We were considered the fifth most attractive company
to work in Peru and first in the construction and real
estate sector, according to the Marca Emplodora 2017
study prepared by Laborum.
- Through our program Developing Skills for
Employment, we provided more than 70,000 man-
hours of training to the communities surrounding
our projects, which allowed us to ensure that 100%
of the unskilled labor is hired locally.
- We have an accumulated database of more
than 130,000 civil construction curricula (GyM).
- We obtained more than 114,000 applications to
operational positions, through our decentralized
offices in Lima, Arequipa, Cajamarca, Cusco,
Moquegua, Talara and Tacna.
- Through the Graña y Montero Academy, during 2017
we offered curricular subjects of 412 face-to-face
courses and 1,271 virtual courses related to technical,
management or leadership aspects.
- We managed 26 travel courses for our teams in
projects both nationally and internationally.
- Regrettably, due to the situation, the number of man-
hours of face-to-face training provided by the company
was reduced from 419,000 to 35,500. However, this
situation meant an opportunity to enhance our digital
tools, encouraging 8,000 employees to take at least
one virtual course in the year.
- We continued to measure the leadership index of
our Senior Management executives, achieving a better
result (84.4%).
- At the Group level, we carried out the NET evaluation
Promoter Sccore, whose result showed that there is a
high sense of pride and permanence of the employees
towards the company. Also, that the internal
reputation would not be affected negatively by the
conjuncture.
GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content NEW TIMES, NEW OPPORTUNITIES TO GROW / PEOPLE DEVELOPMENT
76
2017
PROGRESS
= Logrado
= Avanzado
= En proceso
Continue working on the “right person in the right place”
concept, focusing on execution.
Strengthen the culture of self-development so that workers
take better advantage of the training tools available.
Respond to Peruvian Ministry of Labor requirements
related to qualifications of operations personnel.
Standardize and expand the performance evaluation process
for operations personnel in all of the projects.
2018
CHALLENGES
- Consolidate the “right person in the right place” strategy.
- Strengthen our performance evaluation system for the
Group’s top executives and resume the evaluation process
for the Group’s workers.
- Design a new salary incentive system.
- Consolidate the new leadership style desired.
- Continue the cultural transformation process, focusing
on the values of collaboration, integrity and accountability.
GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content 77
OPERATIONAL
EXCELLENCE
NEW TIMES, NEW OPPORTUNITIES TO GROW / xxGRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content OPERATIONAL
EXCELLENCE
"The success of our projects depends on our execution capacity
with operational excellence which allows us to meet the needs
of our customers with high standards of quality, efficiency
and compliance with the set agreements. We achieve all this
with good management systems, with the best talent and an
exemplary discipline.
As part of our transformation process, during 2017, we promoted
important changes at the level of structure and people. This will
allow us to be more competitive, ensure the desired results and
become a more agile and resilient organization."
90%
CLIENTS´S
SATISFACTION
on Metro Lima
LINE 1
77%
OF COMPLIANCE
in operative management
of our service companies
- Manuel Del Río -
Independent Director
100%
OF PROJECTS
completed before
the agreed deadline
NEW TIMES, NEW OPPORTUNITIES TO GROW / OPERATIONAL EXCELLENCE
79
OUR MANAGEMENT SYSTEM
MAIN ADVANCES 2017
- We appointed Mr. Antonio Cueto as the new Corporate Operations
Manager. His leadership will ensure the integrated execution of our
business strategy and the fulfilment of planned operational objectives.
- We promote the use of new technologies in our projects for
the automation of online reports and indicators.
- We maintained our compliance levels, both in terms of delivery
times and agreed service levels.
DIGITAL TRANSFORMATION
We founded the Digital Workshop, a space where
agile and collaborative methodologies are used
to develop technology solutions for business.
As a first project, in 2017 we designed and
implemented Cappazo, a platform that promotes
more efficient information management in projects,
facilitating decision making and productivity.
Currently, this solution is already used in most
GyM projects and it has allowed our foremen to
be released in the equivalent of one working day
per month, thanks to the use of technology.
APPROACH
- Process Quality
- Simple reports
- Capable, trained and evaluated people
CULTURE
- Processes must be fulfilled
- Processes are questioned and improved
EVALUATION AND CONTINUOUS IMPROVEMENT
- Diagnoses and evaluations of Operational Excellence
- ISO Audits
- Internal Control
GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content NEW TIMES, NEW OPPORTUNITIES TO GROW / OPERATIONAL EXCELLENCE
80
COMPLIANCE BEFORE THE DEADLINE
INTERNATIONAL STANDARDS
INDICATOR
% of projects delivered before the agreed deadline
GYM
100%
GMI
100%
GMP
100%
VIVA GYM
COMPANY
100%
ISO 9001
(QUALITY)
ISO 14001
(ENVIRONMENTAL)
OHSAS 18001
(SECURITY AND
HEALTH)
ISO 27001
(SECURITY
OF THE
INFORMATION)
ISO 20000
OTHERS
COMPLIANCE OF SERVICE LEVELS
INDICATOR
% compliance of operational management (contracts
and / or services)
CONCAR
CAM
CHILE
CAM
COLOMBIA
81%
90%
81%
CAM
PERÚ
47%
CLIENTS´S SATISFCTION
GyM 1
GMI
Morelco
VV - DSD
GMP 3
ADEXUS
77%
Ferrovías GyM
CONCAR
CAM Chile
CAM Colombia
CAM Perú
Adexus
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X2
X4
X5
X6
X7
X
X
INDICADOR
VIVA GYM
CONCAR
CAM PERÚ
CAM
COLOMBIA
ADEXUS
LÍNEA 1 -
METRO DE
LIMA
% de satisfacción de clientes
86%
85%
69%
80%
84%
90%
1 ISO 9001 for our Project Management Control processes; ISO 14001 and OHSAS 18001 for the engineering, procurement and construction
activities of our Electromechanical, Civil Works and Building projects.
2 ASME ESTAMPES U/S NATIONAL BOARD ESTAMPER
3 Processes of oil and gas production in lots I and V, gas processing in the Pariñas plant and the processes developed in the main office of the Graña
y Montero Petrolera S. A.
4 LC-070 / Calibration Laboratory, LE-629 / Test Laboratory, CP-076 / Product Certification Body
5 Accreditation ONAC 17020, Accreditation ONAC 17025
6 ISO/IEC 17020: 2012
7 SAP Provide of Hosting Partner and SAP in Cloud Provide
GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content NEW TIMES, NEW OPPORTUNITIES TO GROW / OPERATIONAL EXCELLENCE
81
2017
PROGRESS
= Logrado
= Avanzado
= En proceso
Continue with the digitalization processes on site, seeking more
efficiency and better results for our customers (GyM).
Increase the use of technology in services to improve control
and efficiency of the operation.
Implement a segmented training plan, according to companies,
areas and critical positions. Develop specific training programs
for operational excellence, together with the Academy for
service companies.
2018
CHALLENGES
- To implement the new operational structure of the Group and
ensure the necessary equipment and resources to accompany
the transformation process in a successful manner.
- To consolidate the advances in the digitalization of processes,
with special emphasis on the integration of information
and data analysis.
- To promote the development of digital capabilities
at the individual and organizational levels.
GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content
82
SAFETY
AND HEALTH
NEW TIMES, NEW OPPORTUNITIES TO GROW / xxGRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content SAFETY
AND HEALTH
"Our priority is to protect the lives of all the people present
in our operations. In order to achieve our objective of "zero
accidents", we evaluate the risks inherent in our activities,
provide safe working conditions and promote a preventative
culture among our employees and contractors.
During 2017, we continued to drive improvements in our
management systems, with very good results especially at the
engineering and construction level. Our challenge is to take this
preventive culture out of the organization."
- José Antonio Rosas Dulanto -
Independent Director
+ 1.4
MILLION
MAN HOURS
of safety training
for collaborators
and contractors
10
COMPANIES
OF THE GROUP
certified with
OHSAS 18001
ROAD
AUDITS
to 34 projects
NEW TIMES, NEW OPPORTUNITIES TO GROW / SAFETY AND HEALTH
84
MANAGEMENT SYSTEM
MAIN ADVANCES 2017
APPROACH
EVALUATION AND CONTINUOUS IMPROVEMENT
- Identification, evaluation and mitigation of the
risks inherent to our activities in a timely manner.
- OHSAS 18001 Guidelines
- Corporate Sustainability Policy
- Risk Prevention Policy for each business
- Corporate Security Commission to align strategies
and share lessons learned.
- Health and safety committees.
CULTURE
Security based on leadership
1.- Training and technical training
2.- Aligned financial incentives
Safety based on behavior
1.- Risk perception
2.- Good practices at work
- Internal audits
- Leadership supervision visits
- OHSAS 18001 Audits
- Control panels in the Business Directories
135 thousand hours of
training on operational
safety for the chain
of command.
* The reported data correspond to the following companies of the Group: GyM, GMI, Stracon
GyM, Morelco, VyV - DSD, GMP, Concar, LINE 1 Metro de Lima, Viva GyM, Cam Peru, Cam
Chile, Cam Colombia, and Adexus
- We maintained our efforts in risk prevention and obtained an
accident frequency index (IF) of 0.46 for every 200,000 hours worked*.
- We improved our severity index with respect to the previous year,
going from 67 to 27 unworked days for every 200,000 hours worked.
Furthermore, we registered 0 occupational diseases *.
- Highlights the performance of the Engineering and Construction and
Real Estate areas, which managed to reduce their accident frequency
index from 0.34 to 0.25, and from 0.38 to zero, correspondingly.
- We strengthened our security training system, generating strategic
alliances with Mapfre, Rimac and Aon. Thus, we managed to provide
more than 1.4 million man-hours of training to our lines of command,
collaborators and subcontractors.
- We have around 5,000 vehicles under our security management, which
traveled more than 92 million kilometers during the year. Therefore,
to face the risk of road accidents we continued training our drivers in
defensive driving, reinforcing preventative attitudes and carrying out
road audits of 34 projects.
- For the third consecutive year STRACON GyM was recognized with
the "Excellence in Security" award from the insurer MAPFRE. It also
received the "Excellence - Category: Care through Innovation" Award
from ARL SURA, for its outstanding work in the San Ramón project
of the Red Eagle Mining client (Colombia).
GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content NEW TIMES, NEW OPPORTUNITIES TO GROW / SAFETY AND HEALTH
85
2017 RESULTS
INJURY FREQUENCY RATE (IF) EVOLUTION
.
4
4
2
1
9
5
.
0
8
.
6
2
1
9
3
.
0
1
.
6
8
0
4
.
0
1
.
4
9
6
4
.
0
140
120
100
80
60
40
20
0
2014
2015
2016
2017
Hours worked (millions)
IF
INJURY SEVERITY RATE (IS) EVOLUTION
140
120
100
80
60
40
20
0
8
.
6
2
1
4
.
4
2
1
.
4
4
2
1
7
8
.
8
8
1
.
6
8
8
.
7
6
2014
2015
2016
Hours worked (millions)
IG
1
.
4
9
4
.
7
2
2017
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
140
120
100
80
60
40
20
0
GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content NEW TIMES, NEW OPPORTUNITIES TO GROW / SAFETY AND HEALTH
86
2017
PROGRESS
= Logrado
= Avanzado
= En proceso
To implement the road safety action plan, incorporating
the recommendations of the road audit.
To train in soft skills, negotiation and leadership of the risk
prevention team, and continue with segmented training
plans for managers and collaborators.
To standardize security processes in the different companies
of the Group, especially in projects outside the country
and consortiums.
To strengthen the dissemination and learning mechanisms
in projects of the lessons learned.
2018
CHALLENGES
- To continue to strengthen the culture of prevention,
involving more actively suppliers, contractors,
surrounding communities and users of our concessions.
- To standardize the Group's security processes
in projects outside the country and consortiums.
- To consolidate the action plan on road safety.
- To reduce the number of accidents with wasted
time in the service area.
GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content 87
THE
ENVIRONMENT
NEW TIMES, NEW OPPORTUNITIES TO GROW / xxGRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content THE
ENVIRONMENT
"The environmental management of Graña y Montero works
under three lines of action: (i) reducing the environmental
impact of our operations, (ii) promoting a responsible
environmental culture, inside and outside the organization,
and (iii) designing engineering solutions that improve the
environmental performance of our customers and society.
As part of our improvement process, in the coming years we
must have a more active strategy to contribute to the fight
against climate change, identifying the risks and opportunities
associated with this phenomenon."
10
GROUP
COMPANIES
certified with
ISO 14001
standards
229,722
TON CO2 EQ
was our level of
emissions in 2017
- Alfonso García Miró -
External Director
230
MILLION M3
of wastewater
treated by the PTAR
La Chira
NEW TIMES, NEW OPPORTUNITIES TO GROW / THE ENVIRONMENT
89
OUR MANAGEMENT SYSTEM
MAIN ADVANCES 2017
APPROACH
- Identification, evaluation and control of the environmental
risks derived from our activities in a timely manner.
- ISO 14001 guidelines.
- Corporate Sustainability Policy
- Environmental Policy of each business.
- Applicable environmental regulations.
CULTURE
- Awareness campaigns inside and outside the organization.
- The Graña y Montero Code of Conduct.
EVALUATION AND PERMANENT IMPROVEMENT
- ISO 14001 audits.
- Control panels and GRI reports
- Environmental monitoring stations
(natural bodies and emission sources)
- Our electricity consumption decreased slightly from 115 to 110 million
kWh in 2017. 65% of consumption continued to be concentrated in
the infrastructure area due to the operation of the L1 Lima Subway.
- At the fuel level, we recorded a considerable increase in our
consumption, mainly at the level of the service line. Faced with this fact,
we have been implementing different initiatives, including the use of
specialized software to monitor the consumption of our equipment.
- In 2017 we generated approximately 7.2 million tons of waste*, of
which 99% was construction waste (from soil removal and demolition
work). Of this percentage, 15% was put to use and the rest was placed in
authorized Excavation Material Deposits.
- We reduced our water consumption from 1.6 to 1.1 million m3
in relation to 2016.
- We carry out different initiatives to prevent spills in our operations.
At the level of STRACON GyM, we managed to reduce he number
of fuel spills in 10% in projects. However, in the case of GMP,
unfortunately we recorded five spills in the year, two in the Pariñas
pipeline (7 thousand liters) and three in the Eten, Salaverry and Callao
terminals (44 thousand liters). For these cases, sanctioning processes
have been opened, which currently are in legal disclaimer. Faced with
these facts, we carried out the necessary remediation measures, reported
the incidents to the authority and implemented new operational
controls as corrective measures.
- We designed, built and operated different projects that generated
significant environmental benefits for our customers and society.
Some of the most important were the Chira WWTP, the Water Surplus
Treatment Plant of the Antapaccay mine (GMI) or the 10 eco-friendly
buildings developed by Viva GyM under the Sustainable Mivivienda
Bond modality.
4,000+ m3 of water
saved on Line 1 of
the Lima Metro.
*The amount of waste generated corresponds to the companies: GyM, GMI, STRACON GYM,
Morelco, GMP, Concar, LINE 1 Metro de Lima, La Chira, CAM Peru, CAM Chile, CAM Colombia,
and Adexus
GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content NEW TIMES, NEW OPPORTUNITIES TO GROW / THE ENVIRONMENT
90
MAIN RESULTS 2017
ENERGY CONSUMPTION
OPERATIONS AND SERVICES
ENERGY
ENGINEERING
AND CONS-
TRUCTION /1
INFRASTRUC-
TURE /2
REAL ESTATE/3
SERVICES/4
ADMINISTRA-
TIVE OFFICES/5
TOTAL
Electricity (kWh)
22,385,847
72,264,632
Fuel(Gl)
19,264,391
962,118
NA
NA
9,546,217
6,676,283
6,293,860
110,490,555
63,375
26,966,166
WATER CONSUMPTION
WATER
Volumen total
de agua (m3)
OPERATIONS AND SERVICES
ENGINEERING
AND CONS-
TRUCTION /1
INFRASTRUC-
TURE /2
REAL ESTATE/3
SERVICES/4
ADMINISTRA-
TIVE OFFICES/5
TOTAL
744,507
320,931
NA
64,805
14,264
1,144,508
1/ Engineering and Construction: Includes information from GMI, GyM, STRACON GyM and Morelco.
2/ Infrastructure: Includes information on LINE 1 of the Lima Metro GMP and Concar.
3/ Real Estate: It mainly develops commercial and administrative activities, included in the "offices" category.
4/ Services: Includes information from CAM Peru, CAM Chile, CAM Colombia and Adexus.
5/ Administrative offices: Includes the offices of Surquillo, Petit Thouars.
CARBON FOOTPRINT OF GRAÑA Y MONTERO´S GROUP
(GREENHOUSE GASES = 229,722 Tn CO2 eq)
GREENHOUSE GASES (GHG) EMISSIONS
2017
For the fifth consecutive year we continued
measuring our GHG emissions, registering
229,722 tons of CO2 eq.
Infra-
structure
12%
Adm Of.
1%
Services
14%
This measurement accounts for the direct
and indirect emissions generated by the
activities of our 10 main subsidiaries, as
well as those of all our administrative offices
Our GHG emissions increased slightly (11%)
compared to 2016. Based on this, we will
work on action plans that will allow us to
reduce our emissions and contribute more
actively to the fight against climate change.
The GHG measurement includes scopes
1 and 2. The measurement process was
carried out by an independent third party.
Engineering
and Construction
73%
GyM 75,964
GMI 6,421
Cam Perú 2,868
Cam Chile 15,812
Stracon GyM 82,689
Cam Colombia 5,881
Morelco 3,207
Concar 7,867
GMP 7,538
LÍNEA1 12,055
LA CHIRA 214
Adexus 6,786
Surquillo 1,859
Petit Thouars 561
GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content NEW TIMES, NEW OPPORTUNITIES TO GROW / THE ENVIRONMENT
91
2017
PROGRESS
= Logrado
= Avanzado
= En proceso
To generate a research project to increase the reuse
of construction waste.
To automate the processes of environmental information
reporting, enhancing the use of technology.
To carry out measurements to quantify the environmental
benefits of Eco Viva.
To consolidate an environmental culture in our collaborators.
2018
CHALLENGES
- To automate the environmental information
reporting processes, enhancing the use of technology.
- To promote the reuse of waste, especially
at the engineering and construction level.
- To increase the number of man hours training
in Environmental Management issues.
- To update the legal-environmental compliance matrix
and prepare a database of the loss events
GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content 92
COMMUNICATION
AND DIALOGUE
NEW TIMES, NEW OPPORTUNITIES TO GROW / xxGRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content COMMUNICATION
AND DIALOGUE
"In line with our commitment with the future, during 2017 we
sought to make our work transparent, by providing clear and
timely information about the company's situation and promoting
a more active and bidirectional participation of our stakeholders.
Thus, we created new communication channels, such as the
website Committed with the Future or the Te Escuchamos
channel, which allowed us to keep the public informed about
our progress in terms of risks and compliance. In this same line,
we generated new spaces for dialogue with employees, customers,
investors, partners and media.
We know that there are still many challenges to overcome, but
we see the future with optimism. We will continue working hard
to recover the trust of all Peruvians.."
- Alfonso de Orbegoso -
Director Independiente
+ 47,000
MONTHLY
VISITS
to the website
110,000
FOLLOWERS
on Facebook
NEW
COMMUNICATION
CHANNEL
with the external
front
NEW TIMES, NEW OPPORTUNITIES TO GROW / COMMUNICATION AND DIALOGUE
94
OUR STAKEHOLDERS
COLLABORATORS
SUPPLIERS
INVESTORS
STRATEGIC
PARTNERS
ENVIRONMENT
CLIENTS
STATE
COMMUNITIES
MEDIA
MAIN ADVANCESS 2017
- We created the portal "Committed with the Future", which generated
more than 47,000 visits and allowed us to communicate to society our
progress in terms of risks and compliance.
- We kept our investors and the general market carefully informed
through quarterly calls and the publication of important facts and
press releases.
- We created the channel Te Escuchamos, which allowed us to answer
- We generated personalized meetings and work breakfasts with opinion
134 doubts or concerns from external audiences.
leaders and journalists.
- We sent written communications to the different unions to which we
- We held the panel of experts "Corporate Governance and Compliance:
belong to explain our situation and progress towards the strengthening
of the company.
A new challenge for companies in Peru?" Open for the academy and the
business sector.
- We increased the spaces for dialogue with our suppliers, who patiently
- We continued to implement specific procedures for the proper
continued to support us during the year.
management of complaints and claims from users and communities
surrounding our projects, which allowed us to timely address their needs.
- We strengthened our relationship with customers and strategic partners,
providing them with updated information about the company and
clarifying their concerns.
100% of Metro Lima
LINE 1 claims attended
satisfactorily.
GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content NEW TIMES, NEW OPPORTUNITIES TO GROW / COMMUNICATION AND DIALOGUE
95
HOW DO WE DIALOGATE WITH OUR STAKEHOLDERS?
STAKEHOLDERS
RELATIONSHIP MECHANISMS
Collaborators
Investors
Suppliers
Strategic partners
Clients
State
Community
Media
All
- Activation of the internal bulletin, Committed with the Future.
- Group meetings with executives, middle managers and commercial areas
to keep them informed about the company's situation.
- Open doors policy, which brings collaborators and teams closer to their directives.
- General Shareholders' Meeting
- Permanent communication with the Investor Assistance Office
- Open quarterly calls and meetings with investors and analysts
- Annual Integrated Report
- Mass media: newsletters, intranet and web pages.
- Interactive media: Facebook, LinkedIn
- Leadership and feedback surveys
- Quarterly management reports
- Publication of important facts and press releases
- Corporate website
- Provider Portal (SISPROV System)
- Direct and permanent networking.
- Work meetings
- Corporate website
- Annual Integrated Report
CORPORATE CLIENT (B2B)
- Permanent meetings
- Interviews and satisfaction surveys
- Annual Integrated Report
- Website of each company
- Written communications
- Annual Integrated Report
- Community relations representative
- Query and complaint systems
- Social diagnoses
- Academic spaces: conferences, fairs, forums, guilds
- Social networks: Facebook and Twitter of LINE 1 Lima Subway
- Personalized meetings and work breakfasts with opinion leaders and journalists
- Interviews on strategic issues
- Press releases
- Portal "Committed with the future"
- Channel "We listen to you"
CUSTOMER USER (B2C)
- Customer service office (Viva GyM and LINE 1 Lima Subway)
- Complaint book and suggestion box
- Call center and free call
- Social networks: Facebook (Grupo Graña y Montero, Viva GyM, LINE 1 Lima Subway)
and the LINE 1 Lima Subway Twitter
- Website of each company
- Institutional Relations Management
- Participation in fairs and events
- Ethic Channel
- Social Media
RELATIONSHIP
FREQUENCY
Diverse
Diverse
Diverse
Daily
Diverse
Diverse
Daily
Diverse
Diverse
GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content NEW TIMES, NEW OPPORTUNITIES TO GROW / COMMUNICATION AND DIALOGUE
96
2017
PROGRESS
= Logrado
= Avanzado
= En proceso
To implement a communication strategy to recover
our reputation against public opinion.
To consolidate the registration and monitoring
of customer complaints from the Group´s companies.
2018
CHALLENGES
- To consolidate the communication strategy to strengthen
the Group´s position and its reputation in the face of public
opinion.
- To implement the new commercial strategy and strengthen
the relationship with customers.
- To conduct a brand reputation study.
GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content 97
TO SHARE
WELLNESS
NEW TIMES, NEW OPPORTUNITIES TO GROW / xxGRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content TO SHARE
WELLNESS
"In Graña y Montero we are committed to the sustainable
development of the countries where we operate and, through our
businesses, we seek to generate long-term value for our different
interest groups.
Our priorities for social investment are education and the
development of skills that favor the creation of new jobs, as well
as the promotion of responsible citizen behavior, especially in
our users, suppliers and surrounding communities.
During 2017, we evaluated a large part of our programs, seeking
greater efficiency in the use of resources. As a consequence, some
of them were suspended and others re-empowered to continue
generating value to society."
- Pedro Pablo Errázuriz -
Independent director
+ 170,000
HOURS OF
TRAINING
with suppliers,
Customers and
communities
570
SPACES
for dialogue with
suppliers
+ 90
MILLION
dollars in
local purchases
NEW TIMES, NEW OPPORTUNITIES TO GROW / TO SHARE WELLNESS
99
MAIN PROGRAMS
PROVEEDORES
SUPPLIERS
- Development of local suppliers.
CLIENTS
- Metro Culture (L1 Lima Subway) /1
- Road Education (CONCAR) /2
- Ayni (Viva GyM) /3
Gracias al soporte de nuestros más de 13,000 mil proveedores y contratistas, durante el 2017 logramos alcanzar las metas y los compromisos asumidos
con nuestros clientes. Ellos representan el 48% de nuestros ingresos y son nuestros aliados estratégicos para garantizar la ejecución responsable de
nuestras operaciones y proyectos.
Compras descentralizadas y locales
N° Proveedores
% Compras Descentralizadas
% Compras Locales
Principales avances
INGENIERÍA Y CONSTRUCCIÓN
INFRAESTRUCTURA
SERVICIOS
8,179
25%
15%
2,783
30%
23%
1991
13%
NA
COMMUNITIES
- Developing skills for labor insertion (GyM) /4
- Educational Management in Construction Program (Corporate)
1/ Page: 44. Infrastructure Section - Metro Lima LINE 1
2/ Page: 53. Infrastructure Section - Concar
3/ Page: 58. Real Estate Section - Viva GyM
4/ Page: 101. Engineering and construction section - GyM
- La coyuntura del 2017 afectó en algunos momentos nuestra capacidad
de pago a diferentes proveedores y contratistas. Ante esta situación,
realizamos con ellos más de 570 espacios de diálogo para mantenerlos
informados, priorizamos el pago de los proveedores más pequeños y
reestructuramos los cronogramas de pago para poder cumplir con todos.
- Los avances en el Plan de desinversiones y la generación de fideicomisos
individuales por proyecto, nos permitieron superar este desafío.
- Reformulamos nuestro proceso de homologación de proveedores,
con cuestionarios más exigentes que incluyen la evaluación de aspectos
anticorrupción, así como potenciales riesgos ambientales, sociales,
de seguridad, gobernanza, entre otros temas.
- Homologamos, a través de terceros o mediante procesos de
autoevaluación, a más de 200 proveedores del Grupo.
- Realizamos jornadas de capacitación con más de 150 proveedores y
contratistas para promover el traslado de nuestros estándares en temas
técnicos, legales, ambientales y de seguridad.
- Continuamos promoviendo las compras locales y descentralizadas, que
favorezcan el crecimiento de las zonas aledañas a nuestras operaciones.
En el 2017, las principales empresas del Grupo realizaron compras
locales por más de US$ 90 millones.
- Debido al contexto, redujimos temporalmente el alcance de nuestros
programas de desarrollo de proveedores locales.
GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content NEW TIMES, NEW OPPORTUNITIES TO GROW / TO SHARE WELLNESS
100
SUPPLIERS
Main advances
Thanks to the support of our more than 13,000 thousand suppliers
and contractors, during 2017 we achieved the goals and commitments
assumed with our customers. They represent 48% of our revenues
and are our strategic partners to ensure the responsible execution
of our operations and projects.
- The circumstances in 2017 affected our ability to pay different suppliers
and contractors at certain times. In front of this situation, we jointly
created more than 570 spaces for dialogue to keep them informed, we
prioritized the payment of the smallest suppliers, and restructured the
payment schedules to be able to comply with all of them.
- We standardized, through third parties or through self-assessment
processes, more than 200 suppliers of the Group.
- We conducted training sessions with more than 150 suppliers and
contractors to promote the transfer of our standards in technical, legal,
environmental and safety issues.
- The progress in the disinvestment plan and the generation of individual
trusts by project allowed us to overcome this challenge.
- We continue promoting local and decentralized purchases, which favor
- We reformed our supplier approval process, with more demanding
questionnaires that included the evaluation of anti-corruption aspects,
as well as potential environmental, social, security, and governance risks,
among other issues.
the growth of the areas surrounding our operations. In 2017, the Group's
main companies made local purchases for more than US $ 90 million.
- Due to the context, we temporarily reduced the scope of our local
provider development programs
1 It includes the information of GyM, GMI, STRACON GyM and Morelco.
2 It includes information on GMP and CONCAR
3 It includes information from CAM Peru, CAM Chile and CAM Colombia.
4 They correspond to purchases made from suppliers with a Unique Taxpayer
Registry (RUC) in the province.
5. Correspond to purchases made from suppliers whose tax address matches
the location of the project (region level)
6 It only includes the information of CAM Peru.).
Decentralized and local purchases
N° Suppliers
% Decentralized purchases4
% Local purchases6
ENGINEERING AND CONSTRUCTION 1
INFRASTRUCTURE2
5,17%
28%
52%
2,484
31%
22%
SERVICES3
2,802
13%5
NA
GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content NEW TIMES, NEW OPPORTUNITIES TO GROW / TO SHARE WELLNESS
101
COMMUNITIES
Main advances
We seek to share our knowledge to generate employment and
development opportunities in society. During 2017, our different social
programs allowed us to provide more than 170 thousand man-hours
of training and to build positive relationships with the community and
to have a better management of the risks of our businesses.
- Developing job skills (GyM): In the 12 years of the program, we have
trained more than 24,000 people in the community in construction
techniques, safety and leadership, providing more than 1.1 million man-
hours of training. In 2017, we trained 1,429 participants, out of which
53% joined GyM.
- Corporate Volunteering: In 2017, we had more than 200 active
volunteers. The collaborators of the project of Expansion of the National
Institute of Neoplastic Diseases - INEN, who complemented their
engineering work with the delivery of play workshops for hospitalized
children, stood out.
- Educational Management in Construction Program (Corporate):
We trained 96 students within the framework of the technical career
Management of Construction, designed and implemented by Graña y
Montero to promote the employability of more young people with scarce
resources in construction projects. By 2017, 44 students have graduated,
with a 100% employability rate.
- Support in the face of the emergency of the landslides: We lead the
actions in the Ancón-Pativilca area, we provided 7 machineries (tractors
and excavators) for the emergency zones of Pucusana, Coayllo, Huaycoloro,
Supe and Trujillo. We delivered 19 tons of food, water and clothes, donated
2 10x6 tents for the Pampapacta shelter and more than 1,700 pairs
of rubber boots for those affected in Piura.
Social Investment
TYPE OF INITIATIVE*
NUMBER OF BENEFICIARIES
MAN TRAINING HOURS
INVESTMENT U S$
Related training
Unrelated training
1. TRAINING
Social investment
Environmental investment
Economic investment
Corporate philanthropy
2. OTHER ACT. COMPANIES
TOTAL ACTIVITIES (1+2)
10,379
9,783
20,162
66,892
7,708
764
15,027
90,391
110,553
158,889
3,693
162,582
2,739
2,211
6793
790
12,533
175,115
264,576
59,384
323,960
81,535
32,806
51,187
87,853
253,381
577,341
%
46%
10%
56%
14%
6%
9%
15%
44%
100%
* It includes information on social programs: Developing capacities (GyM), Metro
Culture (LINE 1 Metro of Lima), Road Education (Concar), Ayni (Viva GyM)
and Construction Management (Corporate). Training and dialogue spaces, aimed
at suppliers and the community. Furthermore, the Corporate Volunteering and
philanthropic donations of the Group.
GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content NEW TIMES, NEW OPPORTUNITIES TO GROW / TO SHARE WELLNESS
102
2017
PROGRESS
= Logrado
= Avanzado
= En proceso
Clients
Maintained the levels of satisfaction and safety of users in the
context of the metro expansion works (LINE 1 Lima Subway)
Promoted greater dissemination of the benefits of the Ayni
Program (Viva GyM)
Reformulated the Road Education Program to involve transport
companies (CONCAR)
Suppliers
Aligned the different approval systems, seeking to generate
synergies among the companies of the Group (Corporate).
Implemented the reformulated supplier approval program
(GyM, GMI and STRACON GyM).
Applied centralized monitoring, incorporating the different
performance evaluations (GyM, GMI and STRACON GyM).
Incorporated random audits to suppliers and third-party
intermediaries (Corporate).
Communities
Developed the programs under the Works for Taxes modality.
Continued with the evaluation of the emblematic program
for the development of technical capabilities.
GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content NEW TIMES, NEW OPPORTUNITIES TO GROW / TO SHARE WELLNESS
103
2018
CHALLENGES
Clients
- To maintain levels of satisfaction, security and perception
of citizenship in the context of works to expand the metro
(L1 Lima Subway)
- To start the certification of Eco Homes VIVA in at least
one social housing project. (Viva GyM)
- To reformulate the Road Education Program to involve
transport companies (CONCAR)
Providers
- To consolidate the new homologation of suppliers
(GyM, GMI and STRACON GyM).
- To strengthen the centralized monitoring process and
evaluation of suppliers, thus generating an integrated
data base (GyM, GMI and STRACOM GyM).
Communities
- To transfer the management of the Construction Management
Program to the Fe y Alegría Association.
GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content 104
Appendix
IV
A NEW STAGE, THAT HELP US
TO WORK IN TEAM, FOCUSED
ON THE SAME GOAL, GROW
TOGETHER AS A COMPANY
NEW TIMES, NEW OPPORTUNITIES TO GROW / xxGRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content 105
ANNEX 1:
CORPORATE INFORMATION
1. CORPORATE GOVERNANCE
2. RELATIONS WITH INVESTORS
NEW TIMES, NEW OPPORTUNITIES TO GROW / CORPORATE GOVERNANCEGRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content CORPORATE
GOVERNANCE
NEW TIMES, NEW OPPORTUNITIES TO GROW / CORPORATE GOVERNANCE
106
BOARD OF DIRECTORS
FROM JANUARY TO MARCH 2017
JOSÉ GRAÑA MIRÓ QUESADA*
Chairman of the Board
MARIO ALVARADO PFLUCKER*
Internal Director – Corporate General Manager
CARLOS MONTERO GRAÑA
External Vice-president Director
PEDRO PABLO ERRÁZURIZ DOMÍNGUEZ
External Independent Director
MARK HOFFMAN ROSAS
External Independent Director
FEDERICO CÚNEO DE LA PIEDRA
External Independent Director
HERNANDO GRAÑA ACUÑA*
Internal Director
HUGO SANTA MARÍA GUZMÁN
External Independent Director
*José Graña Miró Quesada, Mario Alvarado Pflucker and
Hernando Graña submitted their resignation to the Board
of Directors on February 27, 2017.
FROM APRIL TO DECEMBER 2017
On March 31st. 2017, the Group Graña y Montero renewed
the members of its board, thereafter it consists of:
AUGUSTO BAERTL
Chairman, Board of Directors
ALFONSO DE ORBEGOSO BARAYBAR
External Independent Director
MANUEL DEL RÍO JIMÉNEZ
External Independent Director
JOSÉ ANTONIO ROSAS DULANTO
External Independent Director
RAFAEL VENEGAS VIDAURRE
External Independent Director
ROBERTO ABUSADA SALAH
Non-Independent External Director
ALFONSO GARCÍA MIRÓ PESCHIERA
Non-Independent External Director
CARLOS MONTERO GRAÑA
Non-Independent External Director
PEDRO PABLO ERRÁZURIZ DOMÍNGUEZ
Non-Independent External Director
GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content NEW TIMES, NEW OPPORTUNITIES TO GROW / CORPORATE GOVERNANCE
107
BOARD COMMITTEES, AND
BOARD OPERATIONAL COMMITTEES
INFRASTRUCTURE COMMITTEE
- Mario Alvarado Pflucker, Chairman *
- José Graña Miró Quesada *
- Hugo Santa María Guzmán
- Hernando Graña Acuña *
- Pedro Pablo Errázuriz Domínguez
REAL ESTATE COMMITTEE
- Mario Alvarado Pflucker, Chairman*
- José Graña Miró Quesada *
- Mark Hoffmann Rosas
SERVICES COMMITTEE
- Mario Alvarado Pflucker, Chairman*
- José Graña Miró Quesada*
- Carlos Montero Graña
- Federico Cúneo de la Piedra
FROM JANUARY TO MARCH 2017
AUDIT AND PROCESSES COMMITTEE
- Federico Cúneo de la Piedra, Chairman
- Hugo Santa María Guzmán
- Mark Hoffmann Rosas
HUMAN RESOURCES AND SUSTAINABILITY
MANAGEMENT COMMITEE
- Pedro Pablo Errázuriz Domínguez, Chairman
- Federico Cúneo de la Piedra
- Mark Hoffmann Rosas
INVESTMENTS AND RISKS COMMITTEE
- José Graña Miró Quesada, Chairman*
- Hugo Santa María Guzmán
- Pedro Pablo Errázuriz Domínguez
ENGINEERING AND CONSTRUCTION COMMITTEE
- Mario Alvarado Pflucker, Chairman*
- José Graña Miró Quesada,*
- Hugo Santa María Guzmán
- Hernando Graña Acuña *
- Carlos Montero Graña
*José Graña Miró Quesada, Mario Alvarado Pflucker
y Hernando Graña submitted their resignation to the
Board of Directors on February 27, 2017.
FROM APRIL TO DECEMBER 2017
AUDIT AND PROCESSES COMMITTEE
- Rafael Venegas Vidaurre
- Manuel Del Río Jiménez
- José Antonio Rosas Dulanto
- Alfonso De Orbegoso Baraybar
HUMAN RESOURCES MANAGEMENT COMMITTEE
- Rafael Venegas Vidaurre
- Pedro Pablo Errázuriz Domínguez
- Alfonso De Orbegoso Baraybar
INVESTMENTS COMMITTEE
- José Antonio Rosas Dulanto
- Manuel Del Río Jiménez
- Alfonso García Miró Peschiera
- Augusto Baertl Montori
- Pedro Pablo Errázuriz
RISKS, COMPLIANCE AND SUSTAINABILITY
COMMITTEE
- Rafael Venegas Vidaurre
- Pedro Pablo Errázuriz Domínguez
- Alfonso De Orbegoso Baraybar
- Augusto Baertl Montori
- Manuel Del Río Jiménez
ENGINEERING AND CONSTRUCTION COMMITTEE
- Augusto Baertl Montori
- Rafael Venegas Vidaurre
- Roberto Abusada Salah
- Alfonso de Orbegoso Baraybar
- Alfonso García Miró Peschiera
INFRASTRUCTURE COMMITTEE
- Augusto Baertl Montori
- Rafael Venegas Vidaurre
- Juan Antonio Rosas Dulanto
- Alfonso García Miró Peschiera
- Manuel del Río Jiménez
REAL ESTATE COMMITTEE
- Augusto Baertl Montori
- Roberto Abusada Salah
- Alfonso García Miró Peschiera
- Carlos Montero Graña
- José Antonio Rosas Dulanto
SERVICES COMMITTEE
- Augusto Baertl Montori
- Alfonso de Orbegoso Baraybar
- Manuel del Río Jiménez
GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content 108
PROFILE OF THE NEW
BOARD OF DIRECTORS
AUGUSTO BAERTL
Chairman, Board of Directors.
MANUEL DEL RÍO JIMÉNEZ
External Independent Director
RAFAEL VENEGAS VIDAURRE
External Independent Director
Mr. Baertl is the Chairman of the Group’s Board since March 31st,
2017. He has a degree in Mine Engineering by the Universidad Nacional
de Ingeniería, with postgraduate degrees by the Harvard Business
School and the Northwestern University. He has more than 30 years
of experience and leadership in mining companies such as Milpo and
Antamina, where he was Chairman and General Manager between 1997
and 2003. Former Chairman of the Boards of The National Society
of Mining, Oil and Energy (SNMPE) and of the Institute of Mining
Engineers of Peru among other positions. He is also an active member
of the SNMPE and COMEX Boards of Directors.
ALFONSO DE ORBEGOSO BARAYBAR
External Independent Director
He joined the Group in March 2017, as a Director. Attorney by
profession with a degree by the Universidad Católica del Perú, he
has a Masters’ Degree by the Duke University School of Law, and has
attended specialized courses at the London School of Economics and the
Georgetown University. He has been a partner in the Ludowieg, Andrade
& Associates Attorneys Firm, and Vice-President of Legal and Regulatory
Affairs for Nextel, Peru.
He joined the Group as a Director in March 2017. Mechanical Engineer
by the Pontificia Universidad Católica del Perú, he has a Master’s
Degree in Industrial Management by the Krannert Graduate School of
Management. Former partner in Tax & Legal, KPMG, Peru, responsible
for transactions, transfer prices, corporate finances and business
development, with more than 9 years as a leader in the area of Financial
Control and CFO at Citibank, Peru. He has also been a lecturer
at the Graduate School of Business Administration, ESAN.
He joined the Group, as a Director, in March 2017. Industrial and
Systems Engineer by the Universidad Nacional de Ingeniería, he has a
specialization in administrative and finance processes by the A .Andersen
School of Chicago, and Management in CEO Programs by the Kellogg
Graduate School, as well as Program of Strategic Planning, Human
Resources Management and Marketing by the Harvard University.
Former General Manager of the Banco Internacional de Colombia,
of Citibank Peru, BankBoston Peru and Banco Sudamericano.
JOSÉ ANTONIO ROSAS DULANTO
External Independent Director
ROBERTO ABUSADA SALAH
External Non-Independent Director
He joined the Group, as a Director in March 2017. Business
Administrator and Accountant by the Universidad del Pacífico, with a
MBA in Finances by the Wharton School University of Pennsylvania. He
implemented the Program of High Potential for Leaders as well as the
Advanced Management Program, both at the Harvard Business School.
Former Corporate Financial Manager of Supermercados Peruanos S.A.,
and Intercorp Peru Ltd. Presently, Director at MLW Institute for the
Development of Dreamfutures and Managing Partner in Nexus Group.
He joined the Group as a Director, on March 2017. With a degree in
Economics by the PUCP, and further studies in Harvard and a PhD in
Economics by the Cornell University. Co-founder of the Instituto Peruano
de Economía (Peruvian Institute of Economics), which he presides to this
date. He has taught economics at the Universidad Católica del Perú, the
Universidad del Pacífico, UPC, ESAN, and the Boston University. Former
consultant for the United Nations, the World Bank, the Inter-American
Development Bank and several Governments. He is presently an Ad-
Honorem Consultant for the Peruvian Government in matters concerning
the Pacific Alliance, and a Representative of the Office of the President
of the Council of Ministers, at the Board of the Fiscal Stabilization Fund.
NEW TIMES, NEW OPPORTUNITIES TO GROW / CORPORATE GOVERNANCEGRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content
109
ALFONSO GARCÍA MIRÓ PESCHIERA
External Non-Independent Director
PEDRO PABLO ERRÁZURIZ DOMÍNGUEZ
External Non-Independent Director.
He joined the Group as a Director since March 2014. Civil Engineer
by the Universidad Católica de Chile, with a Master’s Degree in
Engineering Sciences by the same University, and a Master’s Degree in
Financial Operations Research by the London School of Economics.
Presently a partner in Veta Tres. Former Secretary of Transport and
Telecommunications of Chile, Chairman of the Board of Biodiversa, of
Esval, of Aguas del Valle and the SAESA Group. He held the position
of General Manager and Chairman of the Board of ESSBIO, a company
dealing with sanitary services. Also former General Manager of LAN
Express, and Vice-Chairman of Corporate Planning of LAN, Chile.
He joined the Group, as a Director, in March 2017. Economics Degree
by the Universidad de Piura. Chairman and CEO of IPN Investments, he
also chairs Swissport GBH Honduras, a business that caters for airport
cargo handling. Former Chairman of the National Confederation of
Private Business Associations, former Chairman of COMEX (Peruvian
Foreign Trade Association), he is a member of the MALI, the Lima Art
Museum, as well as member of the board of Proeducación, an NGO
dedicated to education issues.
CARLOS MONTERO GRAÑA
External Non-Independent Director
He has been a Director in the Group since 1966. With a degree in Civil
Engineering by the Universidad Nacional de Ingeniería, and postgraduate
studies in the Senior Management Program of the Universidad de Piura.
He has been a Director in Graña y Montero S.A.A. from August 1996
up to this date. He is also Chairman of the Board of CONCAR S.A. and
Director of GMP S.A.
NEW TIMES, NEW OPPORTUNITIES TO GROW / CORPORATE GOVERNANCEGRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content EXECUTIVE
COMMITTEE
MARIO ALVARADO PFLUCKER
Chief Executive Officer, Chairman of the Executive Committee.
He left this position in February 2017
FERNANDO DYER ESTRELLA
Chief Risk and Compliance Officer.
He took up this position in June 2017
LUIS DÍAZ OLIVERO
Chief Executive Officer, Chairman of the Executive Committee.
He took over this position in March 2017
ANTONIO CUETO SACO
Chief Operating Officer
Infrastructure Business Line Manager
ANTONIO RODRÍGUEZ CANALES
Chief Commercial Officer
CLAUDIA DRAGO MORANTE
Legal and Corporate Affairs Officer
JORGE LUIS IZQUIERDO RAMÍREZ
Chief Human Resources Officer
MÓNICA MILOSLAVICH HART
Chief Financial Officer
ROLANDO PONCE VERGARA
Real Estate Business Line Manager
110
JAIME DASSO BOTTO
Services Business Line Manager.
He left his position in June 2017
MANUEL FERNÁNDEZ POLLÁN
Services Business Line Manager.
He took this position in June 2017.
JUAN MANUEL LAMBARRI
Engineering and Construction Line Manager.
He left this position in December 2017
NEW TIMES, NEW OPPORTUNITIES TO GROW / CORPORATE GOVERNANCEGRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content RELATIONS
WITH INVESTORS
During 2017, we participated in four international meetings in Santiago
de Chile, New York, London and Lima. We also contacted 108 investors
in several occasions through personal visits, calls and conferences.
Further information at: adriana.caballero@gym.com.pe
111
FAMILY CONNECTIONS
EQUITY
Mr. José Graña Miró Quesada held the position of Chairman of the Board
until February 2017. He is related in first degree of kinship with Ms.
María Teresa Graña Cánepa, stockholder of the company and former
director of our subsidiaries, GyM, Viva GyM, GMD, GyM Railways
Ferrovías and GMI; cousin twice removed with Miss Yamile Brahim
Graña, stockholder of the company, as well as with the former Director
and stockholder Mr. Hernando Graña Acuña, cousin three times removed,
who also held the position of Chairman of the Boards of Directors of our
subsidiaries GyM and Stracon GyM, as well as Director of our subsidiaries
Vial and Vives-DSD SA, and MORELCO.
SOCIAL CORPORATE NAME
Graña y Montero S.A.A. is a company established by public notary deed
on August 12th., 1996, following the process of demerging investments
Graña y Montero S.A, registered in record n° 1316|7 and digital record N°
11028652 of the Registry of Legal Entities of Lima.
On December 31st. 2017, the equity capital was of S/,660,053,790.00,
Peruvian Soles represented in 660,053,790 shares at a par value of
S/,1.00 each.
MAIN SHAREHOLDERS
As of December 31st., 2017, the company had 2076 shareholders, among
which approximately 99.33% own less than 1% of the equity capital,
and about 0.66% own between 1 and 5%. Our main shareholders are
JP Morgan Chase Bank NA, as depository and representative of all the
holders of ADS (American Depository Shares), GH Holding Group Corp,
represented by Mr., José Graña Miró Quesada, who held the position of
Chairman of the Board until February 2017, and Bethel Enterprises Inc.,
represented by Mr. Carlos Montero Graña, Vice-Chairman of the Board
until February 2017.
NEW TIMES, NEW OPPORTUNITIES TO GROW / RELATIONS WITH INVESTORSGRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content 112
The Main Shareholders until December 31st. 2017
EVOLUTION OF THE SHARES.
NAME
N° OF SHARES
PARTICIPATION
COUNTRY
JP Morgan Chase Bank NA as
depository and representative of
ADS holders
GH Holding Group Corp.
Bethel Enterprises Inc.
Integra AFP
Profuturo AFP
SUBTOTAL
OTHER SHAREHOLDERS
TOTAL
259,302,745
39.29%
Estados Unidos
117,538,203
33,785,285
31,303,316
23,136,533
465,066,082
194,987,708
660,053,790
17.81%
5.12%
4.74%
3.51%
70.47%
29.53%
100.00%
Panamá
Panamá
Perú
Perú
Share prices, at the closing of the year, was of S/.1.87 each. The traded volume during the year reached
S/.329’013,918.15. Finally, the S&P General Index at the Peruvian Stock Exchange showed an increase of 28.3%
in comparison with 2016, and likewise the S&P Select PEN Index at the Peruvian Stock Exchange showed an
increase of 23.5% compared with the previous year. It should be noted that the variation in GRAMON C1 showed
a decrease of 60.2% compared to the closing prices of 2016.
GRAÑA Y MONTERO S.A.A.
VARIABLE ANNUITY
ISIN CODE MNEMONIC CODE
YEAR –
MONTH
MARKET QUOTES 2017
AVERAGE
PRICE S/.
OPENING S/
CLOSING S/ MAXIMUM S/ MINIMUM S/
PEP736581005 GRAMONC1
PEP736581005 GRAMONC1
PEP736581005 GRAMONC1
PEP736581005 GRAMONC1
PEP736581005 GRAMONC1
PEP736581005 GRAMONC1
PEP736581005 GRAMONC1
PEP736581005 GRAMONC1
PEP736581005 GRAMONC1
PEP736581005 GRAMONC1
PEP736581005 GRAMONC1
PEP736581005 GRAMONC1
2017-01
2017-02
2017-03
2017-04
2017-05
2017-06
2017-07
2017-08
2017-09
2017-10
2017-11
2017-12
4.70
3.00
1.99
2.10
2.25
2.07
2.18
2.15
2.35
3.15
3.00
1.95
3.01
1.90
2.19
2.19
2.67
2.16
2.12
2.28
3.08
2.94
1.05
1.87
4.70
3.49
2.12
3.05
2.43
2.32
2.20
2.30
3.15
3.42
3.30
2.07
2.00
1.47
3.45
2.08
1.83
1.88
2.05
1.98
2.35
2.74
1.93
1.55
3.41
2.13
1.66
2.08
2.07
2.20
2.09
2.14
2.82
3.05
2.30
1.88
NEW TIMES, NEW OPPORTUNITIES TO GROW / RELATIONS WITH INVESTORSGRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content 113
DIVIDEND POLICY
COMPANY PURPOSES
The Company’s Dividend Policy, in place during 2016, consists in
distributing between 30 and 40% of the profits generated during each
fiscal year. This, based on Consolidated Financial Statements, subject
to the financial results reported in the Financial Statements of Graña
y Montero S.A.A., individually, that must cover those amounts. If the
amounts reported in the above mentioned Financial Statements are not
sufficient, the distribution will be done only up to the limit therein stated.
No dividends will be paid in advance.
The main purpose of the Company is to make investments and trade
operations in general: acquisitions, transfers and negotiation of shares,
participations or quotas, representative titles or bonds, credit entitlements
and derivatives, issued by Peruvian or foreign companies whichever their
financial activities may be, directly or through the Stock Exchange, as well
as providing managerial and administrative services to related companies
and/or third parties.
The Company can also participate in the construction business in all its
categories, forms and modalities: construction of buildings and other
urban works; development of real estate projects in general, as well
as heavy construction and electro-mechanic works, and assemblies of
every kind and, in general, all engineering and construction activities in
every field of interest, participating in all kinds of selection processes,
either public or private, providing services to exploration activities,
development and exploitation in mining activities as well as related and
ancillary undertakings: providing services to the hydrocarbons industry
in connection with drilling, exploitation and services at oil and gas wells,
as well as the construction works of oil and gas pipelines, processing
plants for gas, oil and by-products, refineries and infrastructure for the
petrochemical industries and their maintenance in general: investing
in the construction, servicing, maintenance and exploitation of public
infrastructure and services through the concession system, as well as the
acquisition and rental of assets and real estate properties either in urban
or in rural areas and, in general, to carry out all activities related directly
or indirectly to its purpose, aiming at fulfilling its objectives.
ISIC – 6619
NEW TIMES, NEW OPPORTUNITIES TO GROW / RELATIONS WITH INVESTORSGRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content 114
DURATION OF
THE COMPANY
Graña y Montero S.A.A. was established with no time limits.
COMPANY NAME
ADDRESS:
TELEPHONE:
RELATION WITH INVESTORS:
PERSON RESPONSIBLE:
E-MAIL:
ESTABLISHMENT OF THE COMPANY
PUBLIC REGISTRY
EQUITY CAPITAL
SHARES
SHARES IN PORTFOLIO
ISIC
PERIOD
EVENTS
AREAS OF COMPETENCE
NET SALES
RENTALS
MANAGEMENT
ALL SERVICES HAVE BEEN PROVIDED WITHIN THE COUNTRY
INVESTMENT PLANS
* The head of Relations with Investors was taken over by Adriana Caballero in April 2018. Contact: adriana.caballero@gym.com.pe
Graña y Montero S.A.A.
Av. Paseo de la República 4667, Surquillo
51-1-213 6565
51-1-2136573
Samantha Ratcliffe *
Samantha.ratcliffe@gym.com.pe *
Public Registry dated August 12th., 1996
Registry 131617, Digital Registry 11028652
S/ 660,053,790.00
660’053,790, all of them fully subscribed and paid
None
6619
Indefinite
Transcendental Projects Chapter
Graña y Montero S.A.A. is an investment Company, with main subsidiaries in the fields of construction, engineering, oil, informatics,
concessions, shopping malls and entertainment. It also provides managerial services exclusively to its subsidiaries.
Year 2016
8,459,395.00
53,610,605
US$ 235 MM
Year 2017
NEW TIMES, NEW OPPORTUNITIES TO GROW / RELATIONS WITH INVESTORSGRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content
115
SHARES
GYM S.A.
GMP S.A.
CONCAR S.A.
GMI S.A INGENIEROS CONSULTORES
CONCECIÓN CHANCAQUE S.A.C.
SURVIAL S.A.
VIVA GYM S.A.
NORVIAL S.A.
PROMOTORA LARCO MAR S.A.
GYM FERROVÍAS S.A
PERCENTAGE
SHARES
PERCENTAGE
98.24%
GENERADORA ARABESCO S.A.
95%
CONCESIONARIA VÍA EXPRESA SUR S.A.
99.99%
CONCESIONARIA CHAVIMOCHIC S.A.
89.41%
RECAUDO LIMA S.A.
99.96%
AGENERA S.A.C
99.99%
ADEXUS S.A.
63.44%
CONCESIONARIA LA CHIRA S.A.
67%
CAM SERVICIOS DEL PERÚ S.A.
46.58%
CAM HOLDING S.P.A CHILE
75%
PROMOTORES ASOCIADOS DE INMOBILIARIAS S.A.
99%
99.98%
26.50%
99.76%
99%
91.03%
50%
73.16%
100%
100%
ADMINISTRATIVE OR ARBITRATION PROCESSES
See notes to the Audited Financial Sheets
PERSONS IN CHARGE OF PREPARING AND REVIEWING FINANCIAL INFORMATION
Julia Cabrera Calle - Corporate General Accountant
EXTERNAL AUDITORS
Luis Díaz Olivero – Chief Executive Officer
Moore Stephens
NEW TIMES, NEW OPPORTUNITIES TO GROW / RELATIONS WITH INVESTORSGRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content NEW TIMES, NEW OPPORTUNITIES TO GROW / MATERIALITY PROCESS DESCRIPTION
116
MATERIALITY
PROCESS
DESCRIPTION
HOW WE DETERMINE OUR PRIORITIES OF SUSTAINABILITY
Every other year, the 10 most important companies of the Group carry out
internal workshops to review and prioritize their environmental, social
and governance risks (ASG). The perceptions of the main stakeholders
are also collected, and international trends and best practices of leading
companies are reviewed to complement this.
RISK AND
IMPACT
ANALYSIS
10 internal
Workshops
PERCEPTIONS OF
STAKEHOLDERS
INTERNATIONAL
TRENDS AND
BENCHMARKING
MANAGEMENT
PRIORITIES
Surveys, interviews
and external sources
22 leading
companies analyzed
GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content NEW TIMES, NEW OPPORTUNITIES TO GROW / MATERIALITY PROCESS DESCRIPTION
117
TOPICS
SPECIFIC ASPECTS
ENGINEERING AND
CONSTRUCTION
INFRASTRUCTURE
REAL ESTATE
SERVICES
ETHICAL BEHAVIOUR
Compliance and fight against corruption
PROFESSIONAL DEVELOPMENT
Professional development
Good corporate governance
OPERATIONAL EXCELLENCE
Quality
Knowledge management
Turnover and retention
Compliance with deadlines
Compliance with service levels
Innovation and technology
SAFETY AND HEALTH
Safety and occupational health
ENVIRONMENT
Road safety
Waste management
Spill prevention
Energy and emissions
COMMUNICATION AND DIALOGUE
Relationship with the government
Environmentally efficient products and services
Relationship with strategic partners
Relationship with client companies (B2B)
Relationship with customers (B2C)
Relationship with the community
SHARING WELFARE
Skill development – Community
Transfer of standards – Suppliers
Citizenship promotion – Clients
GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content GRAÑA Y MONTERO
INTEGRATED ANNUAL REPORT 2017
NEW TIMES, NEW OPPORTUNITIES TO GROW / xx
Content
SUSTAINABILITY
CORPORATE REPORT
SUPERINTENDENCIA DEL
MERCADO DE VALORES
(SMV/SUPERINTENDENCE
OF THE SECURITIES MARKET)
REGISTERED COMPANY NAME:
Graña y Montero S.A.A.
YEAR
2017
WEBSITE:
www.granaymontero.com.pe
SECTION A:
IMPLEMENTATION OF CORPORATE SUSTAINABILITY ACTIONS
QUESTION A.1
HAS THE COMPANY VOLUNTARILY ADHERED
TO STANDARDS OF GOOD PRACTICES IN CORPORATE
SUSTAINABILITY?
YES
X
119
NO
EXPLANATION
We are an Engineering and Infrastructure Group committed to
the sustainable development of the countries in which we operate.
Through our business, we seek to generate value for our different
stakeholders in the long term. We are convinced that this will only
be possible if we guarantee economically viable, socially beneficial,
environmentally safe results.
In January 2016, the Group’s Board of Directors approved our
Corporate Sustainability Policy, which is an update and consolidation
of the previous Environmental Policy (1998), Risk Prevention Policy
(1999) and Corporate Social Responsibility Policy (2005). This
important document establishes clear guidelines and commitments
on the seven most important aspects of our sustainable management,
which were determined based on an assessment of our risks and
impacts on stakeholders.
If the answer is yes, indicate the standard and compliance date:
STANDARD
UNITED NATIONS GLOBAL COMPACT
COMPLIANCE DATE
29/04/2004
NEW TIMES, NEW OPPORTUNITIES TO GROW / SUSTAINABILITY REPORT (SMV)GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content
If sustainability reports other than this report are prepared, indicate the following information:
THESE REPORTS ARE PREPARED:
VOLUNTARILY
DUE TO INVESTOR REQUIREMENTS
DUE TO REQUIREMENTS BY PUBLIC INSTITUTIONS
OTHER (LIST):
These reports are available through:
SUPERINTENDENCE OF THE SECURITIES MARKET (SMV) PORTAL
CORPORATE WEBSITE
SOCIAL NETWORKS
OTHER:
YES
X
X
X
X
X
No
120
NO
X
NEW TIMES, NEW OPPORTUNITIES TO GROW / SUSTAINABILITY REPORT (SMV)GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content
QUESTION A.2
DOES THE COMPANY HAVE A CORPORATE POLICY
THAT COVERS THE IMPACT OF ITS ACTIVITIES ON
THE ENVIRONMENT?
YES
X
121
NO
EXPLANATION
We have a Corporate Sustainability Policy that includes
the environmental dimension.
It explicitly states, “We respect and protect our environment
with a preventative approach. Therefore, we implement the best
management practices to reduce the environmental impact of our
operations and services, we foster an environmentally-responsible
culture, and we provide engineering solutions that improve
the environmental performance of our clients and society.”
In addition, on an annual basis, we publicly disclose our
environmental performance and investment in designs, projects
and technologies that produce environmental benefits for society.
a. If your answer to question A.2 is yes, indicate the company document which regulates the policy and the body that approves it.
DOCUMENT
CORPORATE SUSTAINABILITY POLICY
CODE OF ETHICS
CODE OF CONDUCT
Board of Directors of the Graña y Montero Group and subsidiaries
BODY
Board of Directors of the Graña y Montero Group
Board of Directors of the Graña y Montero Group
b. Does the company quantify greenhouse gas emissions produced by its activities (carbon footprint)?
YES
X
NO
IF YOUR ANSWER IS YES, INDICATE THE RESULTS OBTAINED:
During 2017, the Graña y Montero Group produced 229,722 tons of CO2 eq, calculated under scopes 1 and 2. For further details, see page 90
of the 2017 Integrated Annual Report.
NEW TIMES, NEW OPPORTUNITIES TO GROW / SUSTAINABILITY REPORT (SMV)GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content
122
c. Does the company quantify and document the total amount of energy used in its activities?
YES
X
NO
IF YOUR ANSWER IS YES, INDICATE THE RESULTS OBTAINED:
During 2017, the Graña y Montero Group consumed 110.5 million kWh of electrical energy and 26.9 million gallons of fuel. For further
details, see page 90 of the 2017 Integrated Annual Report.
d. Does the company quantify and document the total amount of water used (water footprint) in its activities?
YES
X
NO
IF YOUR ANSWER IS YES, INDICATE THE RESULTS OBTAINED:
During 2017, the Graña y Montero Group consumed 1.1 million cubic meters of water. For further details, see page 90 of the 2017 Integrated
Annual Report
e. Does the company quantify and document waste produced as a result of its activities?
YES
X
NO
IF YOUR ANSWER IS YES, INDICATE THE RESULTS OBTAINED:
During 2017, the Graña y Montero Group produced 7.2 million tons of solid waste. For further details, see page 89 of the 2017 Integrated
Annual Report
NEW TIMES, NEW OPPORTUNITIES TO GROW / SUSTAINABILITY REPORT (SMV)GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content
QUESTION A.3
DOES THE COMPANY HAVE A POLICY TO PROMOTE AND
ENSURE ITS WORKERS’ FUNDAMENTAL PRINCIPLES AND
RIGHTS AT WORK? 1
YES
X
123
NO
EXPLANATION
We have a Corporate Sustainability Policy that includes our position
and commitment with regard to our employees.
It states, “Our employees are the foundation of our success and
our most important stakeholder group. Therefore, we seek their
professional and personal growth, developing the competencies
necessary for achieving their potential, within the framework of our
corporate values, with respect for human rights and rejecting any
form of discrimination.”
1 According to the International Labor Organization (ILO) Declaration on Fundamental Principles and Rights at Work, the principles and rights fall into the following four categories: (i) freedom of association and the effective right to collective bargaining, (ii) the elimination of forced or compulsory
labor, (iii) the abolition of child labor and, (iv) the elimination of discrimination in respect of employment and occupation.
a. If your answer to question A.3 is yes, indicate the company document which regulates this policy and the body that approves this document.
DOCUMENT
CORPORATE SUSTAINABILITY POLICY
CODE OF ETHICS
CODE OF CONDUCT
b. Does the company keep a record of work-related accidents?
YES
X
BODY
Board of Directors of the Graña y Montero Group
Board of Directors of the Graña y Montero Group
Board of Directors of the Graña y Montero Group
NO
IF YOUR ANSWER IS YES, INDICATE THE AREA RESPONSIBLE FOR KEEPING THE RECORD AND TO WHOM THE AREA REPORTS.
AREA RESPONSIBLE
Corporate Operations
REPORTS TO
Corporate General Manager
Risk Prevention area of each subsidiary
General Manager of each subsidiary
NEW TIMES, NEW OPPORTUNITIES TO GROW / SUSTAINABILITY REPORT (SMV)GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content
124
c. Does the company have a training plan for its workers?
YES
X
NO
IF YOUR ANSWER IS YES, INDICATE THE AREA RESPONSIBLE FOR KEEPING THE RECORD AND TO WHOM THE AREA REPORTS.
BODY
Graña y Montero Academy
Corporate Human Resources
REPORTS TO
Corporate General Manager
General Manager of each subsidiary
d. Does the company take surveys or make evaluations regarding the work environment?
YES
NO
X
IF YOUR ANSWER IS YES, INDICATE THE RESULTS OBTAINED:
NEW TIMES, NEW OPPORTUNITIES TO GROW / SUSTAINABILITY REPORT (SMV)GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content
125
QUESTION A.4
DOES THE COMPANY HAVE A POLICY THAT ESTABLISHES
BASIC GUIDELINES FOR ITS RELATIONS WITH THE
COMMUNITIES WITH WHICH IT INTERACTS?
YES
X
NO
EXPLANATION
The Corporate Sustainability Policy covers relations with the
communities with which the company interacts. We are committed
to contributing to their welfare, especially through capacity building
and the promotion of civic virtues.
a. If your answer to question A.4 is yes, indicate the company document which regulates this policy and the body that approves this document.
DOCUMENT
CORPORATE SUSTAINABILITY POLICY
CODE OF ETHICS
CODE OF CONDUCT
BODY
Board of Directors of the Graña y Montero Group
Board of Directors of the Graña y Montero Group
Board of Directors of the Graña y Montero Group
b. Has the company encountered social conflicts (strikes, marches, etc.) in the community where it conducts its main activities as a consequence of its activities?
YES
X
NO
IF YOUR ANSWER IS YES, EXPLAIN THE IMPACT OF THESE SOCIAL CONFLICTS ON THE COMPANY’S OPERATIONS.
Despite not having recorded any conflicts that affected the scheduling of our activities and projects, during the year we had some complaints
and situations related to the community’s dissatisfaction with our projects: 1. Yellow Line, 2. El Ermitaño and 3. Santa Rosa Tunnel. These
were handled through dialogue and transparent communication.
NEW TIMES, NEW OPPORTUNITIES TO GROW / SUSTAINABILITY REPORT (SMV)GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content c. Does the company work in collaboration with the community in the joint creation of value, including the identification and solution of the main problems they have in common?
YES
X
NO
d. Does the company invest in social programs in the community where it conducts its main activities?
YES
X
NO
IF YOUR ANSWER IS YES, INDICATE THE PERCENTAGE THE INVESTMENT IN SUCH PROGRAMS REPRESENTS WITH REGARD TO
GROSS REVENUE ACCORDING TO THE COMPANY’S FINANCIAL STATEMENTS:
(%) GROSS REVENUE
0.03
126
NEW TIMES, NEW OPPORTUNITIES TO GROW / SUSTAINABILITY REPORT (SMV)GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content 127
QUESTION A.5
DOES THE COMPANY HAVE A POLICY THAT ESTABLISHES
BASIC GUIDELINES FOR MANAGING SUPPLIER RELATIONS?
YES
X
NO
EXPLANATION
The Corporate Sustainability Policy and the Third Party Due
Diligence Policy
a. If your answer to question A.5 is yes, indicate the company document which regulates this policy and the body that approves this document.
DOCUMENT
CORPORATE SUSTAINABILITY POLICY
THIRD PARTY DUE DILIGENCE POLICY
ANTICORRUPTION POLICY
CODE OF CONDUCT
b. Does the company keep an up-to-date list of its suppliers?
BODY
Board of Directors of the Graña y Montero Group
Board of Directors of the Graña y Montero Group
Board of Directors of the Graña y Montero Group
Board of Directors of the Graña y Montero Group
YES
X
NO
IF YOUR ANSWER IS YES, INDICATE THE AREA RESPONSIBLE FOR KEEPING IT AND THE BODY TO WHICH THE AREA REPORTS.
AREA RESPONSIBLE
REPORTS TO
Logistics Area of each subsidiary
General Manager of each company
c. Does the company have a criterion for supplier selection that covers ethical matters and compliance with labor legislation?
YES
X
NO
d. Does the company have a procurement or hiring policy on selecting suppliers that adhere to sustainable or environmental management standards?
YES
X
NO
NEW TIMES, NEW OPPORTUNITIES TO GROW / SUSTAINABILITY REPORT (SMV)GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content
QUESTION A.6
DOES THE COMPANY HAVE A POLICY THAT ESTABLISHES
BASIC GUIDELINES FOR MANAGING CUSTOMER RELATIONS?
YES
X
a. If your answer is yes, indicate the company document which regulates this policy and the body that approves this document.
DOCUMENT
CORPORATE SUSTAINABILITY POLICY
CODE OF CONDUCT
CODE OF ETHICS
b. Does the company keep an up-to-date log of customer complaints?
YES
X
NO
128
NO
EXPLANATION:
Our Code of Conduct and Corporate Sustainability Policy establish
guidelines on our customer relations. Some of the main topics
covered are adherence to ethical standards, the confidentiality of
information, compliance with safety and quality standards, delivery
before the due date, and reliability in business relations, among
others.
BODY
Board of Directors of the Graña y Montero Group
Board of Directors of the Graña y Montero Group
Board of Directors of the Graña y Montero Group
AREA RESPONSIBLE
REPORTS TO
Customer Service (Line 1 of the Lima Metro)
Institutional Relations Manager (Line 1)
Customer Service (Viva GyM)
Social Management Manager (Viva GyM)
NEW TIMES, NEW OPPORTUNITIES TO GROW / SUSTAINABILITY REPORT (SMV)GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content
c. Does the company have regular channels for dealing with the public and for receiving suggestions and complaints related to the products and services it provides?
YES
X
d. Has the company received any recognition for the quality of its customer service?
YES
NO
NO
X
129
NEW TIMES, NEW OPPORTUNITIES TO GROW / SUSTAINABILITY REPORT (SMV)GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content 130
SECTION B:
DETAILS OF ACTIONS IMPLEMENTED BY THE COMPANY
This section details the Company’s stakeholders and the actions implemented during the year in relation to the impact of its operations on social development (labor practices, community and customer relations, and product
liability) and the environment (materials, energy, water, emissions, effluents and waste), complementing the information provided in Section A.
See chapter III - 2 Responsible Businesses for a Better Future, from page 65 of the Integrated Annual Report 2017
NEW TIMES, NEW OPPORTUNITIES TO GROW / SUSTAINABILITY REPORT (SMV)GRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content GRI TABLE OF CONTENTS
GRI STANDARD
GRI 101: Foundation 2017
GENERAL CONTENT
CONTENT
GLOBAL COMPACT
RELATED SDG
DETAIL
131
GRI 102: GENERAL DISCLOSURES 2017
ORGANIZATIONAL PROFILE
102-1 Name of the organization
102-2 Activities, brands, products, and services
102-3 Location of headquarters
102-4 Location of operations
102-5 Ownership and legal form
102-6 Markets served
102-7 Scale of the organization
102-8 Information on employees and other workers
102-9 Supply chain
102-10 Significant changes to the organization and its
supply chain
Principle 1
Principle 2
Principle 4
Principle 5
Principle 6
Principle 2
102-11 Precautionary Principle or approach
Principle 7
102-12 External initiatives
SDG 8
Graña y Montero S.A.A
Pages 32-64
Graña y Montero’s headquarters are located at: Av.
Paseo de la República 4667- 4675, Surquillo, Lima.
We have permanent offices in Peru, Colombia and
Chile. Furthermore, we have operations in Mexico and
Panama.
Graña y Montero S.A.A., the parent company, was
incorporated by means of a public document on
August 12, 1996 as part of a growth process which
began in Gramonvel in 1933.
The company is mainly dedicated to investments
and mercantile operations in general, especially
engineering services, management consulting,
real estate investments and concessions. All of the
companies in the Group are private corporations, with
the exception of the holding company itself, Graña y
Montero S.A.A.
The capital stock as of December 31, 2017 was S/
660,053,790.00 represented by 660,053,790 shares
with a nominal value of S/ 1.00 each.
We have permanent offices in Peru, Colombia and
Chile. Our operations are in Mexico and Panama.
Page 74
Page 74
Page 100
Pages 23,78
Pages 88, 89
We have been adherents to the United Nations Global
Compact since 2004.
NEW TIMES, NEW OPPORTUNITIES TO GROW / GRI CONTENT INDEXGRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content
GENERAL CONTENT
GRI 102: GENERAL DISCLOSURES 2017
ORGANIZATIONAL PROFILE
102-13 Membership in associations
Principle 3
132
- Asociación para el Fomento de la Infraestructura
Nacional (AFIN), an industry association that brings
together the major private companies in the public
service infrastructure sector.
- Perú 2021, which recognizes Socially Responsible
Companies.
- Procapitales, association of companies that promotes
private investment.
- Through GyM we belong to the Peruvian Chamber
of Construction (Capeco).
- Through Vial and Vives we belong to the Chilean
Chamber of Construction.
- Through Viva GyM we belong to the Peru Green
Building Council, a socially committed organization
seeking sustainable construction in Peru.
- Through GMI we belong to the Federación
Panamericana de Consultores (FEPAC/ Pan-
American Federation of Consultants), which is
affiliated with the International Federation of
Consulting Engineers.
- Through GMP, we belong to the American
Association of Petroleum Geologists (AAPG),
the Society of Petroleum Engineers (SPE) and the
Sociedad Nacional de Minería y Petróleo (SNMP/
National Society of Mining and Petroleum), whose
code of conduct we follow.
- ADEXUS: Asociación Chilena de Empresas de
Tecnología de Información A.G. (ACTI/Chilean
Association of Information Technology Companies),
AMCHAM CHILE, American Chamber of
Commerce, Santiago Chamber of Commerce.
STRATEGY
102-14 Statement from senior decision-makers
ETHICS AND INTEGRITY
102-16 Values, principles, standards, and norms
of behavior
Principle 1
Principle 2
Principle 3
Principle 4
Principle 5
Principle 6
Principle 10
SDG16
Page 6-13
Pages 68-70
NEW TIMES, NEW OPPORTUNITIES TO GROW / GRI CONTENT INDEXGRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content
CONTENIDOS GENERALES
GRI 102: ASPECTOS GENERALES 2017
PERFIL DE LA ORGANIZACIÓN
102-17 Mechanisms for advice and concerns
about ethics
Principle 1
Principle 2
Principle 3
Principle 4
Principle 5
Principle 6
Principle 10
133
SDG16
Pages 68-70
GOVERNANCE
102-18 Governance structure
STAKEHOLDER ENGAGEMENT
102-40 List of stakeholders
102-41 Collective bargaining agreements
Principle 3
SDG 8
102-42 Identifying and selecting stakeholders
102-43 Approach to stakeholder engagement
102-44 Key topics and concerns raised
REPORTING PRACTICE
102-45 Entities included in the consolidated financial
statement
102-46 Defining report content and topic boundaries
102-47 List of material topics
102-48 Restatements of information
Page 18
Pages 94-95
At GyM, there are two types of collective agreements:
one with the Federation of Civil Construction Workers
(union) and another with the representative of the
union of each construction project. In both cases, they
are applicable to 100% of the workers pertaining to the
ordinary system.
In order to determine the stakeholders and topics
to report and address, every two years we carry out
a materiality process in line with that suggested by
the Global Reporting Initiative (GRI) in each of the
companies in the Group included in this report.
Page 95
Stakeholder relations are covered in the
“Communication and Dialogue” section. During 2017,
the primary concern was related to the company’s
image and legal and financial situation, following acts
of corruption which Odebrecht, our partner in six
projects, admitted to committing.
The entities included in the financial statements
audited are: GMI, GyM, STRACON GyM, Vial y
Vives - DSD, Morelco, CAM, Ferrovías GyM, La Chira,
Norvial, Survial, Canchaque, Vesur, GMP, Concar, Viva
GyM, and Adexus. The contents of the aforementioned
entities are found on the pages 10-12
Page 117
Page 117
No significant restatements of information from
previous reports have been made.
NEW TIMES, NEW OPPORTUNITIES TO GROW / GRI CONTENT INDEXGRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content
CONTENIDOS GENERALES
GRI 102: ASPECTOS GENERALES 2017
PERFIL DE LA ORGANIZACIÓN
102-49 Changes in reporting
102-50 Reporting period
102-51 Date of most recent report
102-52 Reporting cycle
102-53 Contact point for questions regarding the
report
102-54 Claims of reporting in accordance to the GRI
Standards GRI
102-55 GRI content index
102-56 External assurance
134
GMD, a subsidiary of the Group that was sold to
Advent in early 2017, has not been considered in this
report. In addition, our subsidiary Concar went from
the services area to the infrastructure area.
2017
2016
Annual
Department of Legal and Corporate Affairs
sostenibilidad@gym.com.pe
Compliance - Essential
Page 130
Currently, the company does not have an external
assurance policy.
NEW TIMES, NEW OPPORTUNITIES TO GROW / GRI CONTENT INDEXGRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content
135
GRI STANDARD
MATERIAL TOPICS
CONTENT
GLOBAL COMPACT
RELATED SDG
DETALLE
GRI 201: ECONOMIC PERFORMANCE
201-1 Direct economic value generated and distributed
ETHICAL CONDUCT
GRI 103: MANAGEMENT APPROACH
103-1 Explanation of the material topic and its boundary
103-2 The management approach and its components
103-3 Evaluation of the management approach
Internal indicator - Number of workers trained on anticorruption guidelines
Principle 2
Principle 10
PERSONNEL DEVELOPMENT
GRI 103: MANAGEMENT APPROACH
103-1 Explanation of the material topic and its boundary
SDG 4
103-2 The management approach and its components
103-3 Evaluation of the management approach
GRI 404: TRAINING AND EDUCATION 404-1 Average hours of training per year per employee
Principio 1
Internal indicator - Number of man hours of training for employees and laborers
404-2 Programs for upgrading employee skills and transition assistance programs
404-3 Percentage of employees receiving regular performance and career development
reviews
GRI 414: SUPPLIER SOCIAL
ASSESSMENT
414-1 New suppliers that were screened using social criteria
Internal indicator – Knowledge management initiatives
Internal indicator - Percentage of workers from the local community in places where
there are significant operations
Internal indicator - Number of operations personnel reclassified
Principle 1
Principle 2
Principle 4
Principle 5
Principle 1
Principle 1
Principle 1
SDG 8
SDG 4
SDG 4, SDG1
SDG 4
Page 10-12
Pages 68-69
Pages 68-69
Page 68
Page 20
Pages 72,73.
The reported coverage of the social indicators are
77.87% of the Group's total revenues.
Pages 72,73
Page 73
Due to the situation the Group faced during 2017,
the average number of hours of training per person
decreased from 22 (2016) to 3 hours (2017).
Page 75
Pages 73,75
During 2017, 1,402 employees had performance
evaluations. They represent 8% of our employees.
During the year, 233 suppliers of different companies
in the Group were analyzed through self-assessment
processes or third-party due diligence. Our
questionnaires were standardized and covered
ethical, social and environmental matters.
We provided 26 traveling courses, 180,000 online
class sessions, more than 22 thousand searches and
2 thousand documents of value in our virtual library,
21 knowledge communities, etc.
Page 75
Page 75
NEW TIMES, NEW OPPORTUNITIES TO GROW / GRI CONTENT INDEXGRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content
GRI STANDARD
CONTENT
GLOBAL COMPACT
RELATED SDG
DETALLE
136
Internal indicator – Mechanisms for providing variable compensation
SAFETY
GRI 103: MANAGEMENT APPROACH
103-1 Explanation of the material topic and its boundary
SDG 8
103-2 The management approach and its components
103-3 Evaluation of the management approach
GRI 403: SALUD Y SEGURIDAD
EN EL TRABAJO
403-1 Representación de los trabajadores en comités formales trabajador-empresa
de salud y seguridad
Principle 1
Principle 3
Internal indicator – Accident frequency rate and number of hours worked with risk
exposure
Principle 1
Internal indicator – Road safety management with workers, users and society
Principle 1
SDG 3
ENVIRONMENT
GRI 103: MANAGEMENT APPROACH
103-1 Explanation of the material topic and its boundary
103-2 The management approach and its components
103-3 Evaluation of the management approach
GRI 302: ENERGY
302-1 Energy consumption within the organization
GRI 305: EMISSIONS
305-1 Direct (scope 1) GHG emissions
GRI 306:EFLUENT AND WASTE
306-2 Residuos por tipo y método de eliminación
305-2 Energy indirect (scope 2) GHG emissions
306-3 Significant spills
Principle 7
Principle 8
Principle 9
Principle 7
Principle 8
Principle 7
Principle 8
Principle 9
SDG 7
SDG 13
SDG 12
We have a compensation policy and procedure that
establish the variable concepts of our employees’
compensation in a transparent manner. Among the
mechanisms are the annual bonus for executives, the
project award (given to workers who supervised a
project and made an outstanding contribution to its
execution), the loyalty-building bonus, etc.
Pages 82,85
Pages 82,85
Page 85
In the companies in the Group, 100% of the
workers are represented in the Health and Safety
Committees.
Page 85
Page 84
Pages 88,89
The reported coverage of the environmental
indicators are 96.71% of the Group's total revenues.
Pages 88,89
Page 89
Page 90
Page 90
Page 90
During the year, we produced approximately 80
thousand tons of solid waste, of which 34% was put
to use, recycled or commercialized.
Page 89
NEW TIMES, NEW OPPORTUNITIES TO GROW / GRI CONTENT INDEXGRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content
STANDARD GRI
CONTENIDO
PACTO GLOBAL
ODS ASOCIADO
DETALLE
GRI 308: SUPPLIER ENVIRONMENTAL
ASSESSMENT
308-1 New suppliers that were screened using environmental criteria
Internal indicator – Water consumption and reuse
COMMUNICATION
GRI 103: MANAGEMENT APPROACH
103-1 Explanation of the material topic and its boundary
103-2 The management approach and its components
103-3 Evaluation of the management approach
Principle 1
Principle 2
Principle 7
Principle 8
Principle 9
Principle 7
Principle 8
Principle 9
Principle 1
During the year, 233 suppliers of different companies
in the Group were analyzed through self-assessment
processes or third-party due diligence. Our
questionnaires were standardized and covered
ethical, social and environmental matters.
SDG 6
Pages 34,90
Pages 93, 94
Pages 93, 94
Pages 93, 94
137
NEW TIMES, NEW OPPORTUNITIES TO GROW / GRI CONTENT INDEXGRAÑA Y MONTEROINTEGRATED ANNUAL REPORT 2017Content