Executive summary of the sustainability report 2012 by Graña y Montero

NEW HORIZONS, NEW CHALLENGES EXECUTIVE SUMMARY OF THE SUSTAINABILITY REPORT 2012

SUSTAINABILITY REPORT 2012 For the second consecutive year, we present the Sustainability Report of the Gra単a y Montero Group for fiscal year 2012. This document is the result of a process of sustainable management improvement by the Group that started in 1995 with our Ethics Charter and was reaffirmed in 2011, when we took on the challenge to incorporate the methodology of the Global Reporting Initiative, a major referent in the preparation of sustainability reports. This Sustainability Report accounts for the progress made in 2012 and presents the new sustainability challenges that we take on enthusiastically. As a team, we will continue providing highly reliable engineering services, implementing and operating large infrastructure works, all of them in compliance with world-class standards, with a view to generating value for society.

INDEX 6 11 15

Letter from the President and the General Manager Our Organization Sustainable Management at Gra単a y Montero GROUP

Commitment to Our Collaborators

Occupational Safety and Health

Sustainable Communities

Environmental Commitment

Creation of Value

Responsible Chain

Corporate Governance

Relationship with Our Clients

Letter from the President and the General Manager Dear friends:

It is with great satisfaction that we present this new Sustainability Report, for the

in the hands of a corporation that follows good corporate governance and social

year 2012, because it allows us to highlight the most relevant aspects of our corporate

responsibility practices.

responsibility management model, that was awarded this year a number of public recognitions, such as the Latin American Corporate Social Responsibility Award 2012

During 2012, we responded to these challenges with the commitment of all of us

of Federaci贸n Interamericana de la Industria de la Construcci贸n (FIIC); the Business

who make up the great human team of the Gra帽a y Montero Group, and we have

Creativity Award of Universidad Peruana de Ciencias Aplicadas (UPC); and being

been rewarded by recognized prestige, accompanied by excellent economic-financial

considered a Model Peruvian Company by the Lima Chamber of Commerce (CCL).

results. In 2012, our sales increased by over 30% to more than 2,051 million dollars, with record profits of 114 million dollars and capital investments for 352 million

We were born as an engineering company, almost 80 years ago, and we continue to

dollars. This has allowed us to increase our local investments and move forward with

grow and create value for society. We are particularly excited with our performance

our international growth plans, by acquiring a majority interest prestigious Chilean

as suppliers and operators of infrastructure that help improve the quality of life of

construction company Vial y Vives, with over 30 years of experience as a specialized

people, transforming us into suppliers of social well-being and civic growth.

provider for the mining sector.

Our sustainable management model is based on building trust with the various

We take pride in our Talent Development System that has allowed us to form an

stakeholders with whom we establish relationships by understanding their

excellent professional team of more than 3,600 engineers capable of designing and

expectations, whether such expectations are the aspirations of a community,

bringing to fruition the most sophisticated projects in Peru and abroad. With them,

in rural or urban areas, in connection with the generation of local employment,

we have implemented important mining projects in Peru, Chile and Panama, after

or the expectations of clients of having constructions, facilities or housing within

completing the construction of a large mining operation in the Dominican Republic

certain deadlines or of a certain quality, and the demand of the state for a qualified

and a power transmission line in Chile this year.

operator to build, fund and operate the infrastructure it requires, or of the large extractive companies that require a qualified supplier operating in accordance with

The growth of our operations has allowed us to further our ability to generate

international standards, or the expectations of investors who place their capital

knowledge and specialization, providing increasing opportunities for personal and

professional growth to our collaborators, who are now more than 28,000 and make up a major competitive advantage in the industry. Our Grow and Share strategy and the sustainability of the various social responsibility programs that make up such strategy respond not only to the expectations of our stakeholders, but are also based on the responsible involvement and the commitment of the recipients. Examples of this are, as we explained in this Report, the social accompaniment programs in the new housing projects that we develop or build, or the development of the Metro Culture in the operation of Line 1 of the Lima Metro of which we are in charge, and where our clients become new agents of change and examples of good citizens. Our challenges for upcoming years will be much greater but, to face up to them we trust our corporate values of quality, compliance, seriousness and efficiency, the commitment of our great human team, and the significant growth projections for Peru and the countries in the region where we operate. Thus, we confirm our adherence to the Global Compact Principles and report on our progress in the sustainability area, in accordance with the guidelines and indicators of the Global Reporting Initiative (GRI) explained in this document.

JosĂŠ GraĂąa MirĂł Quesada

Mario Alvarado Pflucker

Our Organization The Gra単a y Montero Group consists of 24 complementary firms that operate in six Latin American countries, organized in four segments: engineering and construction, infrastructure, real estate and technical services. Established almost 80 years ago, the Gra単a y Montero Group is a leader in the engineering services sector, with projects throughout Peru and operations in Chile, Colombia, Brazil, Dominican Republic and Panama. In line with its growth and diversification strategy, the Group has taken on new challenges of international projection and generation of steady flows, expanding its business lines. Our entry to the infrastructure concession business, in addition to the financial opportunity it affords to us as an organization, places us in a leading position in the development of Peru, by making us partners of the public sector, channeling private resources to operate public services in accordance with the highest standards. Thus, at present we are suppliers and operators of infrastructure that allows improving the quality of life of people, such as the Line 1 of the Lima Metro or the 5,000 km of roads operated by Concar. The internationalization process of recent years, which includes integration of the Chilean companies Cam in the electricity sector and Vial y Vives in the construction sector, added to our track record inspired by our corporate values of quality, compliance, seriousness and efficiency brings us closer to our vision of being the most reliable engineering services group in Latin America.

Presence in 6 Latin American countries

GRAĂ&#x2018;A Y MONTERO GROUP: OUR DIMENSIONS

28,654 collaborators, 3,657 of which are engineers US$ 4,574 million backlog Capital investments for over US$ 352 million US$ 2,051 million in NET sales US$ 114 million profit +52 million users of our services (L1 Lima Metro and roads) 11 recognitions in 2012 to management of the GraĂąa y Montero Group

Sustainable Management at Gra単a y Montero GROUP The Gra単a y Montero Culture is at the core of our sustainability model, and we project it into society to promote civic growth through our Grow and Share strategy.

The Path to Sustainability Our commitment to social responsibility is expressed in our Ethics Charter (1995) and was formally incorporated to our business model in 2004, by our adherence to the United Nations Global Compact Principles. In 2010 we launched the Grow and Share strategy, laying the foundations for our present model, which includes growth of the various stakeholder groups with whom we relate as the basis of our growth. Thus, we project into and share with society our knowledge of the Gra単a y Montero culture, with education at the core and as a central objective. In 2012 we decided to enhance our commitment to education and knowledge by associating them with the civic development of individuals and institutions to which we target our various social responsibility activities and programs.

Our Sustainability Model PROMOTE CITIZENSHIP

Within our sustainability vision, we make every one of our activities as well as the implementation and operation of infrastructure an opportunity for a positive change in society, by sharing with our various stakeholder groups the knowledge and attitudes which support good citizen behavior. This is our Grow and Share strategy. In developing infrastructure, we go beyond contractual requirements, as we offer our clients, users and the community qualities that allow them to use such infrastructure for their own development and, at the same time, to see themselves as good citizens capable of performing their duties and exercising their rights, taking on a positive leadership, with respect for each other and undertaking constructive actions in our society. As the Gra単a y Montero Culture is the foundation of our sustainability model, the contribution and commitment of our collaborators is key to accomplish this goal. It is our collaborators, as individuals and as teams, who make the Gra単a y Montero Group a good corporate citizen who builds on the development of individuals, safe work, respect for the environment, relationships of trust with stakeholders and a value-based ethical behavior.

Grow and Share: Sustainability

Develop

Promote safe

Manage our

Establish

Promote ethical

collaborators

work

environmental

trusting

behavior and

impacts

relationships

values

with our stakeholders

Gra単a y Montero culture

OUR Stakeholder Groups The proper management of our stakeholder groups involves developing transparent and trusting relationships with each of them, taking into account their expectations in connection with the activity of each of the Group companies. In 2011, as part of the first process of preparation of our Sustainability Report under the Global Reporting Initiative methodology, we identified and prioritized expectations and relevant issues for each stakeholder group, which was later used as input to design the various sustainable development plans in the main companies of the Group.

Stakeholder Groups of Gra単a y Montero Group

Collaborators

Shareholders

Suppliers

Strategic

State

Clients

Communities

partners

Environment

For the 2012-2013 period, we prioritized our management objectives based on the sustainability approach of the Group and the characteristics of each of our companies. Thus, we set two main sustainability challenges for the entire organization: waste management and the development of social investment projects with the community. Additionally, each company set goals in consistency with the characteristics of the sector in which they operate and their strategic business priorities.

The proper management of our stakeholder groups involves developing transparent and trusting relationships.

Latin American Social Responsibility award 2012 , by FIIC and CAF.

Recognitions Awarded to our Sustainable Management

Model Peruvian Company award , by the Lima Chamber of Commerce.

■■ The Ten Most Admired Companies, from magazine G of the daily Gestión

and Price Waterhouse. ■■ Seventh place in the ranking of the 100 Most Reputable Peruvian Companies,

In 2012, the corporate management of the Graña y Montero Group was recognized by various institutions, such us: ■■ GyM: Latin American Social Responsibility Award 2012, conferred by

Federación Interamericana de la Industria de la Construcción (FIIC) and the Andean Development Corporation (CAF). ■■ Graña y Montero-Infrastructure Division: Business Creativity Award 2012 of Universidad Peruana de Ciencias Aplicadas, in the Society Commitment Category. ■■ Ferrovías GyM – Line 1 of the Lima Metro: Business Creativity Award 2012 of Universidad Peruana de Ciencias Aplicadas, in the Customer Service Category. 20

according to the survey conducted by the international consulting firm Merco and KPMG. ■■ Fifteenth place in the ranking of the 100 Peruvian Companies with higher Social Responsibility, according to the survey conducted by the international consulting firm Merco and KPMG. ■■ Model Peruvian Company, awarded by the Lima Chamber of Commerce, according to its 12th Annual Executive Survey.

Creation of Value We provide engineering services, and develop and operate infrastructure, all in accordance with international standards that exceed the expectations of our clients, and also allow us to share value with society. The knowledge and expertise of the professional teams that make up the Gra単a y Montero Group allow us to design, fund, build and operate infrastructure in accordance with international standards and operational excellence criteria, and thus generate value for our clients and users. Our commitment to our country goes beyond the development of projects that improve the quality of life of people. We want users of the new infrastructure to make them their own and recognize their value, using them properly for their own development and that of the community. This is why we instill knowledge and attitudes that allow them to grow as responsible citizens. Likewise, in developing our operations, we share value with the various communities associated with our projects. We impart training on subjects of our expertise to the local population to improve their employability, and provide our suppliers support to formalize and improve their conduct of business. In connection with the state, we become a strategic partner for the sustainable development of the country, by operating concessions with efficiency, quality and world-class standards.

Financial Performance

BACKLOG (MILLION US$)

In 2012, our sales grew 30%, reaching 2,051 million dollars, EBITDA for 303 million dollars, 114 million dollars net profit, capital investments for 352 million dollars, operating costs for 1,771 million dollars and a backlog of 4,574 million dollars.

$ 4,574 $ 3,075

These economic-financial results were possible thanks to the commitment and talent of our more than 28,000 collaborators, 3,657 of whom are engineers.

$ 1,883 $ 1,281

2009

SALES (MILLION US$)

$ 2,051

2010

2011

2012

This year, revenues were allocated among all of the stakeholders of Gra単a y Montero Group: over 1,000 million dollars were paid to suppliers, over 489 million dollars to our collaborators (employees and workers), over 220 million dollars to the state, as taxes; 34 million dollars were paid in dividends and over 352 million dollars in capital investments.

$ 1,573 $ 891 $ 666

2009

2010

2011

2012

DISTRIBUTION of REVENUES (MILLION US$)

2012

Item

Sales plus IGV paid Payment to suppliers (*)

2,153 1,043

Balance

1,110

100.00%

Workers

252

22.72%

employees (wages, bonuses, profit)

238

21.43%

Shareholders (dividends)

3.07%

Financial Expenses

1.17%

Taxes

220

19.87%

Reinvestment (capex)

352

31.74%

internal stakeholders

(*)Excludes working capital variation effects

Distribution to internal stakeholders Workers, employees AND Shareholders

Shareholders 7%

Employees 45%

Workers 48%

Workers and employees account for 44% of total revenues distribution of the Group.

Corporate Governance Our good corporate governance is based on policies and practices that uphold and promote compliance with the principles of ethics and transparency within the Group. The corporate governance of the Gra単a y Montero Group seeks to convey trust and transparency to the market and its investors, setting an ethical and responsible frame of action that strengthens sustainability of the organization. Since 1997, we are the only company in this sector listed in the Lima Stock Exchange and with significant shareholdings in the Private Pension Funds (AFPs). Our good corporate governance practices follow a continuous improvement process that allows us to act within the highest international standards. In this connection, in 2012 we issued our Code of Conduct, based on the Ethics Charter (1995), with a view to providing our collaborators with clear and precise behavior guidelines. Subsequently, training activities were conducted in all companies of the Group for all collaborators to disseminate them and gain insight into such guidelines. We will continue with this effort in 2013 to achieve extensive coverage of our human team. Likewise, we continued within the Good Corporate Governance Index of the Lima Stock Exchange and participated actively in the Companies Circle, a group of 19 Latin American companies with high standards of corporate governance.

As part of the training activities for our directors, a group of them participated in the Fifth Corporate Governance Program for Directors of the Senior Management Program (PAD) of Universidad de Piura, under an agreement with Ernst & Young and Universidad del Pacífico. Sustainability and Corporate Governance ■■ We have the Human Resource and Social Responsibility Committee (2004), the

purpose of which is to ensure compliance with human resource management and social responsibility policies in accordance with the principles of transparency and ethics of the Group. This Committee consists of three external directors, two of them independent. ■■ We have an Asset Laundering Prevention Office, in charge of a Compliance

Officer, which promotes and monitors implementation of this standard in the

Board members of Graña y Montero Group.

Group companies. ■■ Given the sensitivity of our sector, we conduct workshops and presentations on

asset laundering prevention for 100% of the personnel of GyM and Viva GyM. In 2012, we implemented a virtual training classroom at GyM, which, in addition to expanding coverage, allows evaluating knowledge of the subject. ■■ Our Audit and Processes Committee (2004) is intended to ensure the

appropriateness and transparency of internal procedures and of all acts of the Group in the economic, financial, internal and external audit, and compliance areas. Corruption risks and compliance with ethics standards are managed through this Committee. ■■ During 2012, the Board of Directors and the Audit and Processes Committee

approved implementing a confidential reporting system named “Ethical Line” that will have electronic mail, telephone and web channels in place. Such initiative is being prepared by the consulting firm Ernst & Young and will start operating in 2013.

Commitment to Our Collaborators Our collaborators are at the core of our success and make up our main stakeholder group. This is why we focus on their professional and personal development, within the guidelines of the GraĂąa y Montero Culture. Our human resources management system seeks to make up a committed and cohesive team that sees itself as key to the success accomplished and takes pride in belonging to the leading Group in the sector. Our competitive advantage builds on the experience and knowledge or our great team of collaborators. This is why, through our Learning to Grow strategy (2005), we seek to develop capacities, systematize the knowledge generated, and share it within the organization. In 2012 we started deployment of the Talent Development model, which seeks to further the training and growth of the Groupâ&#x20AC;&#x2122;s professional that rapid growth of our business requires. This training effort is complemented by the ongoing dissemination of our corporate values and upholding of the GraĂąa y Montero Culture, characterized by promoting innovation and responsible empowerment of its collaborators.

Our Team The financial growth of the Group entailed a 17% increase in the number of collaborators to 28,654. Within these, the group of professionals increased by 16% to 5,575 in numbers, 3,657 of which are engineers from various areas of specialization. As of December 2012, direct worker collaborators totaled 11,885. This growth process in both the domestic and the international levels has been accompanied by a special effort towards cultural integration and assurance of our ability for attracting, retaining and developing human capital, within a working climate that generates trust, pride and comradeship.

Employees of Gra単a y Montero Group

Engineers/ architects 32%

Other professionals 17%

Technical employees 51%

Total = 11,399 collaborators

Employees during the orientation training Knowing Gra単a y Montero Week.

Talent Development Since 2005, the Learning to Grow strategy and the Corporate Learning Center (CCA) have conducted knowledge management of the Group by creating spaces and mechanisms to generate, systematize and share the knowledge of the organization as a cornerstone for growth. Along these lines, in 2012 the Group started deployment of the Talent Development model, which seeks to further training and growth of our professionals considering three lines of action: i) specialized training for all levels, including the Senior Management; ii) the mentoring program; and iii) feedback from supervisory staff to collaborators. Success of the model is based on the contribution and commitment of three fundamental players: the company, the supervisor and the collaborator, and is based on 21 competencies associated with operational excellence, the relationship with the environment and actions for sustainability.

KNOWLEDGE

+ COMPANY Training

SKILL (PRACTICE) LEADER Opportunities

Training programs and skill

Active involvement of

+ COLLABORATOR Predisposition

Increasingly acquire

development workshops

collaborators on daily

knowledge and deepen

activities and the

it through individual and

level.

environment in which

constant research.

Average Hours of Training per Employee

ATTITUDE

according to development

they operate.

During 2012, we continued to deploy the education and training programs through the CCA. Thus, we developed the fifth internal masters program with Universidad de Piura, the first Senior Management Master Express from TEC Monterrey, conducted 11 editions of the corporate induction program Knowing Gra単a y Montero Week, 42 presentations on specialized topics, and the second internal engineering paper competition.

GyM

GMI

GMP

Viva GyM

GMD

Concar

Thus, our collaborators enhance their contribution as professionals and as work teams who take on the challenges of growth. We seek to promote this collective contribution by developing Reliable Operating Clusters that are recognized as highly motivated teams, which undertake specific missions and guide their actions by our corporate values.

Workers Human Resource Management

Graña y Montero GROUP: A Great Place to Work

Our workers account for 42% of our total workforce, and their input is essential to performance of the Group’s projects. The capabilities, skills and attitudes of our workers, added to those of our engineers and professionals, allow us to deliver our projects within the time limits and quality standards offered to our clients. Our workers human resource management focuses on attracting, retaining and developing this great team:

An essential component of our human resource management is keeping a cohesive and motivated group committed to the objectives of the Graña y Montero Group. This is why we promote a work environment where collaborators perceive that both the company and its staff generate trust, pride and comradeship. Recognition of our Human Resource Management

■■ We have a database that allows us to know and contact more than 32,000

workers specializing in the various areas of civil construction.

Great Place to Work – GPTW For the fifth consecutive year, the Graña y Montero Group participated in the working climate survey of the Great Place to Work Institute, the result of which was 70%

■■ We have developed a map of job profiles that has improved hiring, selection

and training of our worker collaborators. ■■ Four decentralized personal recruitment centers have been set up nationwide

stood out among the 45 best companies to work in the country, ranking 9th and 14th

(in Arequipa, Cusco, Huancayo and Cajamarca), and these are additional to virtual recruitment channels. ■■ Over 120,000 training hours were imparted for the benefit of 4,146 worker collaborators in 2012. ■■ We provide ongoing labor legal advisory to ensure and evidence a transparent management of their duties and rights. This is enhanced by a salary and benefits management that recognizes and promotes specialization, productivity and loyalty.

in their respective categories.

2012

satisfaction among our more than 11,000 employees. This year, Viva GyM and GMP

Asociación de Buenos Empleadores – ABE During 2012, GyM, GMI, GMD, Concar and GMP obtained or renewed their ABE certification awarded by Asociación de Buenos Empleadores (Good Employers Association). This non-profit association is sponsored by the American Chamber of Commerce of Peru (AmCham Peru), an entity that promotes good human resource management practices.

Results of our human resource management of workers in 2012 Capacity building We increased by 8 points the percentage of workers trained vis-Ă -vis the previous year, reaching 36% of worker personnel in 2012. Also, we completed an average 10.6 hours of training per worker, 26% more than in 2011.

Percentage of trained worker collaborators, by category

97%

66%

28%

Official

Operator

2012

2011

2012

2011

Helper / laborer

28% 22%

21%

Supervisor/ Foreman

Great Place to Work Since 2009 we apply internal evaluation surveys and, since 2012, we have conducted the survey of the Great Place to Work Institute, to understand the perceptions and expectations of this group of the working environment and contribute to the ongoing improvement of our human resource management systems. According to this measurement, 70% of the 11,764 workers of GyM, the construction company of the Group, are of the opinion that this is a great place to work. This is a major accomplishment for the organization, given the special characteristics and conditions of work at construction sites and the turnover generated upon completion of each project. Our workers account for 42% of our total workforce.

Occupational Safety and Health Our Risk Prevention Management System is based on a preventive culture aimed at ensuring occupational behaviors and conditions that guarantee the life and health of collaborators. At the Gra単a y Montero Group, the consolidation of an integrated risk prevention and environmental management system is based on the work of over 450 professionals who promote and support a preventive culture in accordance with the guidelines of OHSAS 18001. In consistency with our risk prevention corporate policy (1999), we conduct all of our activities with a view to eliminating or controlling all risks associated with the activities of the operation, through timely identification, continuous monitoring and the preparation of action plans in accordance with worldclass standards. To ensure compliance with these standards in our projects, we have Risk Prevention Committees in all of them. As of December 2012, the Electromechanical Divisions of GyM, GMI, GMP y Cam Chile and are OHSAS 18001 certified. Having obtained and maintaining these certifications reflect the strong commitment of the Group to risk prevention.

Safety and Risk Prevention Management Results In 2012, on a corporate level, the Accident Frequency Rate (FR) was 0.44 for a total of 93,076,536 hours worked, which reflects the appropriate safety management of all of the Group’s companies. This excellent result is especially relevant if we consider the sharp increase in the number of hours worked during the year.

Evolution of the Accident Frequency rate of the Graña y Montero Group vs Number of Hours Worked (Expressed in Millions) 0.60 In 2012 the accident frequency rate was 0.44 for a total of 93,076,536 hours worked.

100

0.58 0.56

0.55

90 80

0.53

0.52

0.50

0.49 0.47

0.45

Main actions taken in 2012: ■■ We continued with the implementation of the Behavior-Based Safety (BBS) methodology. ■■ Special risk prevention training activities were designed, which in 2012 totaled more than 1.2 million hours. ■■ In the specific case of Ferrovías GyM, the concession holder of Line 1 of the Lima Metro, and of Concar as operator of road concessions and provider of road maintenance services, we continued to promote a safety culture among their stakeholders, through training and sensitizing programs.

60 0.44

0.44

0.43

0.44

0.44 50

40 0.40

30 20

0.35

10 0.30

0 Jan

Feb

Mar

Apr

May

Jun

Jul

Hours Worked (aggregate 2012)

Aug

Sep

Oct

Nov

Dec

The performance of the Engineering and Construction segment was also noteworthy, increasing its activity by 22%, reaching 66,741,791 hours worked and an Accident Frequency Rate of 0.29, which results evidence our strong commitment to safety.

Evolution of the Accident Frequency rate of the Engineering and Construction SEGMENT vs Number of Hours Worked (Expressed in Millions) 0.60

By way of reference, according to the US Occupational Safety and Health Administration OSHA and the Bureau of Labor Statistics1, the frequency rate of both the Gra単a y Montero Group (0.44) and the Engineering and Construction segment (0.29) are far below the average rate of the construction sector in the United States, which for the last two years was 6.0 (2012) and 3.9 (2011).

80 0.53

70 0.50 0.40

0.41

0.39

0.38

0.35

0.35 0.32

0.30

50 0.29

0.27

0.29

40 30

0.20

20 0.10

10 0

0.00 Jan

Feb

Mar

Apr

May

Jun

Hours Worked (aggregate 2012)

Jul

Aug

Sep

Oct

Nov

Dec

See Bureau of Labor Statistics web page: http://data.bls.gov/iirc/?data_tool=IIRC

Occupational Health

We also keep a detailed record of occupational health statistics, which provides us relevant information for the design and implementation of specific programs according to company, project and sector. Preventive health At Graña y Montero Group we undertake various actions to detect and prevent possible occupational diseases. Some of those are describe below: ■■ Health campaigns to inform of medical tests and attention in various areas, free of

charge and by specialized physicians. ■■ Occupational health presentations at company facilities, in charge of the Well-

being Area. ■■ Informational presentations on procedures in the event of disease or work

accident. ■■ Annual preventive checkup by the Health Care Provider (EPS). ■■ Preventive medical checkup during implementation of the project (worker

personnel). ■■ Presence of social workers at each of the projects to ensure health promotion.

They are the communication channel between the Well-being Area, collaborators assigned and workers. ■■ Gymnasium at the Headquarters, with an average of more than 200 registered,

equal to 22% of personnel working in this building. GyM’s Dental health campaign.

■■ In line with the promotion of a preventive culture among its collaborators in 2012

GMD, Viva GyM and the Holding established their Occupational Safety and Health Committees.

We implement actions for prevention and timely diagnosis of occupational diseases, both at the start and upon completion of our projects. This allows us to identify any health problems in time and monitor them to ensure a recovery process.

Sustainable Communities Our social responsibility policy promotes a harmonious and positive relationship with the stakeholders with whom we interact, based on respect and trust. At Gra単a y Montero Group we understand that the impact of our activities goes beyond the services we provide and the construction and operation of infrastructure. It also involves the development of citizens who acknowledge its value and take advantage of it and relate positively with their environment and contribute to its sustainability. This commitment with civic development is at the core of our Grow and Share strategy, which seeks to project our leadership, experience and values into society. During 2012, we set up to enhance our commitment to education and knowledge by associating it with civic development as a source and in support of people and institutions who exercise their rights and duties responsibly. This new approach allows us to build relationships of trust in the two main fronts: the communities in the immediate vicinity of the projects, and with other groups, such as the engineering or the business communities.

How we relate to our communities Local communities Through social investment programs such as Building Labor Capacities in Influence Areas, where GyM provides specialized training in civil construction work to facilitate employability. Engineering community Through spaces such as the PI Engineering Portal, that now has over 22,000 members, we promote sharing of knowledge in real time, and knowledge generation in the community to further a solid development of future engineers in Peru. Academic-scientific and university community We promote innovation and research through the the Graña y Montero Peruvian Engineering Research Award. The third edition took place in 2012, in the Professional and University Dissertation categories. This edition had 73 competitors from 11 cities of Peru. Professional community We promote the Lean Construction philosophy by sponsoring our first national conference on this field that sought to bring together the various industry players to

3rd edition of the Graña y Montero Peruvian Engineering Research Award.

share experiences, success cases and other aspects. Business community Through the Practical Guide for Management of Projects with Social Responsibility (Guía práctica para la gestión de proyectos con responsabilidad social) published with Universidad del Pacífico, we promote the integration of sustainability to the various operational processes of organizations. In 2012, 500 copies were reprinted, and a second issue is planned for next year.

Social Responsibility The various social responsibility programs implemented over the year involved the generation of competencies based on knowledge and skills, as well as the promotion of an attitude change in the participants, so beneficiaries become positive leaders and agents of their own growth, within a frame of recognition and respect for others, and based on the generation of spaces and relationships of trust. An example of the above is the Social Accompaniment program (Ayni) of Viva GyM that has trained over 6,000 resident families of its new economical housing projects located in the peripheral areas of Lima. The goal is to build leadership, coexistence, integration and mutual respect. Espacio azul This is the non-profit civil association of the GraĂąa y Montero Group (2007) that promotes and channels the efficient implementation of social responsability plans and initiatives of the companies of the Group, mainly for the external front.

Ayni Social Accompaniment program of Viva GyM.

Some corporate initiatives promoted by Espacio Azul are the GraĂąa y Montero Corporate Volunteering Program which benefited more than 5,000 individuals, and also the University Thesis Program for Students which promotes dissertation development in engineering through a partnership with the Universidad Nacional de IngenierĂa.

In 2012, investment in social responsibility initiatives developed in the external front was over 2.1 million dollars and impacted on the lives of more than 132,000 direct beneficiaries, who received 284,996 man-hours in training. These initiatives were divided into training programs related to operations in our various companies or to social, financial or environmental investment programs.

Within the above programs, GMP stood out for the Works for Taxes Program, which allowed building the Youth House in Talara, Piura, and giving the Talara Provincial Municipality a modern and duly equipped building on an area of 1,780 m2. It should also be noted that during this year GyM implemented social responsibility programs for its influence areas in 79% of its projects nation wide and coverage by Concar was 92%.

Environmental Commitment At Gra単a y Montero Group, respect for the environment and its conservation, and compliance with environmental standards, are key commitments during development of all of our activities. The various companies of the Group operate within the frame of our Environmental Policy (1998), promoting respect for the environment and its conservation by implementing good practices in their operations, in strict compliance with applicable laws and the commitments willingly taken on in furtherance of sustainability. Implementation of environmental management plans responds to the specificities of each company and the risks identified within the context and in the analysis of the value chain. As a result, and within the frame of a preventive environmental culture aimed at complying with international standards in our operations, the companies GyM1, GMI, Stracon GyM2, GMP3 and Cam Chile have been certified under the ISO 14001 standard.

1 2 3

Electromechanical Division. Poracota and Orcopampa Projects. Consorcio Terminales, Gas Plant and OFP

How we implement environmental management at Graña y Montero Group ■■ GMI has the Guide to good environmental practices that sets behavior

guidelines aimed at reducing environmental impact at the offices. ■■ GMP implemented the Revegetation Program in Talara that seeks to

■■

minimize and offset environmental impacts in the Talara Dry Forest by rehabilitation with vulnerable species, and, thus, provide a habitat for the Peruvian bird Cortarrama. In 2012, 2,200 trees were planted close to the facilities of GMP. Viva GyM developed domestic wastewater recycling solutions for irrigation of the green areas of its real estate projects or of houses with environmental added value. This is the result of the professional commitment to innovation for the direct benefit of clients and the environment. Ecotec, a subsidiary of GMI, provides specialized environmental services such as, environmental management consulting, development of environmental remediation engineering projects, waste management, industrial maintenance, among others. Cam GyM offers metering and energy efficiency solutions to generation, distribution and industrial sector companies with high energy requirements. It focuses on solutions such as metering, telemetering, loss management, and building automation, among others, with support from their Certification Laboratory and their Technological Innovation Center. Our company Concesionaria La Chira is in charge of design, funding, construction and operation for 30 years of the La Chira Wastewater Treatment Plant and Underwater Marine Outfall, south of Lima. This solution will allow ensuring treatment of 25%, approximately, of the wastewater of the city of Lima. Concar, as operator of road concessions, and Ferrovías GyM, as operator of Line 1 of the Lima Metro promote excercise of environmental responsibility among its clients and users.

Revegetation Program in Talara planted 2,200 trees in 2012.

Operational Environmental Management We seek to eliminate or minimize the negative impacts and maximize the opportunities identified as positive within the processes of our chain. Accordingly, our actions are focused on key matters such as water and energy consumption, waste management and biodiversity management. Water and Energy Consumption Management of these resources is performed in accordance with the characteristics of the business and is intended to save and improve the technology to make an efficient use of such resources. Water: ■■ GyM has treatment plants in place to return domestic wastewater to the sources upon being treated and systematically monitored. Also, GyM has a pilot program for camp infrastructure upgrading for efficient water use that is 40% implemented at the Antapaccay project of the Xstrata Copper mining company. ■■ During this year GyM conducted base measurements on water extraction at its main projects4 , resulting in 39.5 million m3 of water used at present, 2% of which is reused. ■■ At our head office in Surquillo we have conducted water saving campaigns and perform inspections to detect leaks. In 2012, water consumption at the Surquillo head office was 14,200 m3. Energy:

■■ In connection with direct energy consumption (gasoline, LPG and other

fuel), in 2012, GyM made a baseline of its main projects, according to which 23.1 million gallons were used every year. ■■ In 2012, head office of Graña y Montero Group in Surquillo (Lima) used 2.8 million Kw/h. Waste Management Waste management is aimed at developing initiatives to promote waste reduction and proper disposal. In 2012 we conducted a baseline measurement of our generation of solid waste at the Surquillo head office, where 1,131 collaborators work. Likewise, Concar and Cam Peru prepared a similar study of solid waste managed in their administrative offices.

Measurement 2012: Solid Waste at the Surquillo Head Office Waste Type

Organic waste

Non- hazardous, non-recyclable waste

Paper and cardboard

Tons

63.16

5.34

25.66

Glass

1.98

Plastic

6.08

Hazardous, non-recyclable waste

0.05

■■ Concar, Cam Peru and Cam Brasil prepared a baseline of direct energy

consumption per capita for its head office and, based on these results, they will prepare a work plan to reduce energy consumption.

Total

102.28

Includes information on Antapacay, La Quinua San Francisco, Consorcio Pasco, Cerro el Águila, Contugas, PAD La Quinua, Central Hidroeléctrica Santa Teresa, Toromocho, Central Hidroeléctrica de Machu Picchu, Nueva Fuerabamba, La Zanja, Orcopampa and Constancia.

Responsible Chain We promote an ethical conduct in our chain of suppliers, in accordance with our corporate culture, values and standards of conduct. We work hand-in-hand with a large number of suppliers who become important allies in the accomplishment of our business objectives and plans, in accordance with the excellence standards required by the projects we undertake. We share operating spaces and processes and, therefore, seek to share our knowledge, experience and culture as well. Furthermore, we establish relationships with small suppliers in the areas of influence of our projects nationwide. In this connection, we have local supplier development programs intend to provide our suppliers the tools and training required to improve their competitiveness and a conduct aligned with our values.

Pilot Program for Approval of Suppliers In 2012, GyM started a pilot project to improve the quality and technical efficiency of its supplier chain and promote a responsible conduct in accordance with company standards. For such purpose, GyM is working on the preparation of an approved supplier database in accordance with technical and social responsibility management criteria.

Local Supplier Management Growth of our infrastructure projects nationwide contributes to dynamize the economy of various localities as, in addition to the benefits of such projects themselves, we demand resources, products and services for their development. In 2012, the volume of local purchasing, understood as purchases from suppliers in the provinces, of the five largest companies of the Group was in the amount of 85 million dollars, which account for 12.3% of the procurement volume of these companies, which evidences the importance of local suppliers in the areas of influence of our projects.

Local Supplier Management GyM started a pilot project to improve the quality and technical efficiency of its supplier chain.

The information evaluated includes aspects associated with processes and the quality of products, but also topics relative to occupational safety and health, the environment, as well as respect for human rights and the community. In this pilot project, GyM has already approved 8 suppliers and GMP, who has also joined the initiative, has already certified 4 suppliers and 25 are awaiting the results.

Item

GyM

GMI

GMP

GMD

Concar

Nยบ of suppliers of the company

4304

351

595

1938

% of domestic suppliers

96%

95%

100%

97%

100%

% of local suppliers

26%

60%

% of purchases from domestic suppliers

87%

53%

72%

97%

% of purchases from local suppliers

11%

47%

21%

Relationship with Our Clients Activities at GraĂąa y Montero Group are pursued keeping in mind the excellence of the services we offer our clients, beyond any contractual terms and as partners in our relationship. We have gained experience and leadership in responsible management of client relationships, whether delivering large infrastructure projects or providing international-standard engineering services, and established ourselves as socially responsible suppliers. This furthers the development of relationships of trust sustainable over time, based on the GraĂąa y Montero Culture, and our corporate values of quality, compliance, seriousness and efficiency. As part of our diversification strategy, we have developed new services, such as infrastructure concessions, which presents us with the major challenge of a new relationship: we have passed from client-company relationships to client-user relationships, where continuous interaction with millions of users is foremost. We have thereby taken on a new role as shapers of more connected and competitive cities that embrace new living standards based on the services offered and the unique value we provide. Our management approach and system of the client â&#x20AC;&#x201C; user relationship, based on the Grow and Share strategy, gives users an active role, involving them as citizens acting responsibly as they exercise their duties and rights in connection with our services.

Lima Metro: Business Creativity Award 2012 for Customer Service The Metro Culture, the core of the organization, deploys a series of initiatives focused on having users take part in a new standard of public service and include them in the development of a citizen culture driven by values, conduct and attitudes that may be later projected to society.

Civic Education System use Training on service use

Coexistence Training on behavior and values

Social Commitment Actions that transcend the system (User–responsible citizens)

Results as of 2012: ■■ 90% of users are satisfied with our service. ■■ 92% of users recognize that the service makes for better citizens. ■■ 96% identify that Line 1 of the Lima Metro educates the public on civic values.

On the other hand, operational excellence was evidenced by the following results:

Civic education at the Line 1 of the Lima Metro.

■■ Compliance with scheduled Line 1 trips: 98.9% ■■ Train punctuality: 99.5% ■■ Cleanliness: 81%

Lastly, we should note that in 2012, Line 1 received the Business Creativity Award in the Customer Service category as a result of its citizenship education strategy.

Dialogue with Our Clients The relationship with our clients, whether they are a company or a user, is based on the establishment of strong trust relationships through ongoing and transparent interactions. We create and manage communication channels to gather their expectations, comments, complaints or suggestions about our

performance, as well as their level of satisfaction with our services. We study these results and include them in our operations management plans and improvement processes.

Confidentiality of Client Information Under the Group’s Ethics Charter, we undertake to accurately and truthfully convey both internal and external information of public knowledge and to exercise

Social networks are a new space for communication in our growth process as an organization. The companies that currently have a presence in social networks such as Facebook and Twitter are Ferrovías GyM through Line 1 of the Lima Metro, and Viva GyM on account of its business and of its relationship with service users.

the utmost discretion with respect to confidential information about our company and our clients. In the case of GMD, an information technology service company, this commitment is made tangible through the ISO 9001 – Quality Management System certificate (1998) for Data Center processes and ISO 27000 – Information Security

We have established ongoing social network management for both companies, focusing on continuous and transparent interaction with users through the dissemination of relevant information, the creation of entertaining spaces, and timely attention to questions and complaints.

Management System (2009), which ensures that information security risks are identified and handled promptly and effectively by the organization.

■■ Viva GyM: 8,210 fans in Facebook.

Average of 30 responses to questions per month. Response Time: 24 hours ■■ Ferrovías GyM – Line 1: 164,392 fans in Facebook and 825 followers

in Twitter.

Head Office Av. Paseo de la RepĂşblica 4667-4675, Surquillo, Lima. For any questions about the Sustainibility Report, please contact: Juan JosĂŠ Arrieta O. Corporate Social Responsibility Manager jarrieta@gym.com.pe

This executive summary is given with a CD that contains the full information of the 2012 Sustainability Report.

Creation, design and strategic concept by Studioa

Printed by Biblos

Graña y Montero S.A.A. Av. Paseo de la República 4667 Oficina C-401, Surquillo, Lima 34, Perú T 213-6565 F 213-6590 www.granaymontero.com.pe 78