INTEGRATED ALL- ANNUAL REPORT 2015 ENCOMPASSING _ FINANCIAL REPORT VISION SUSTAINABILITY REPORT STATEMENT OF RESPONSIBILITY “This document contains true and sufficient information on the operations of Graña y Montero S.A.A. during the year 2015. Not with standing the responsibility of the issuer, the undersigned assume responsibility for the contents here of in accordance with applicable laws”. Mario Alvarado Pflucker Gonzalo Rosado Solís Chief Executive Officer Corporate General Accountant Lima, January 2016 CONTENT WHAT HOW WHY WE DO IT WE DO IT WE DO IT OUR FIELD OF OUR COMMITMENT OUR PURPOSE AS ACTIVITY TO DO THINGS AN ORGANIZATION WELL 35 72 137 MESSAGE OUR GRAÑA Y MONTERO SUSTAINABILITY APPENDIX FROM SENIOR VALUE GROUP STRATEGY 73 MANAGEMENT PROPOSAL 8 82-YEAR HISTORY 37 4FINANCIAL 4 OUR RESPONSIBLE STATEMENTS 138 4 DIVERSIFICATION 9 BUSINESS AREAS 42 MANAGEMENT 76 4 COMPLIANCE OF 4 REGIONALIZATION 10 WE SHARE WELFARE 117 CORPORATE GOVERNANCE 4 GRAÑA Y MONTERO PRINCIPLES 312 KEY FIGURES 11 AWARD AND RECOGNITIONS 136 4 REPORT OF PROJECTS 4 CORPORATE DELIVERED BEFORE GOVERNANCE 15 THE DEADLINE 369 GRI G4 CONTENT INDEX 387 REPORT REVIEW 399 INTEGRATED ANNUAL REPORT MESSAGE FROM 2015 SENIOR MANAGEMENT _ FINANCIAL REPORT SUSTAINABILITY REPORT _ MESSAGE FROM SENIOR MANAGEMENT Dear Shareholders We are pleased to present the Annual Report for 2015, the year in which we celebrated the 82nd anniversary of our founding. For the first time, this report presents our financial and sustainability activities in an integrated manner. This report highlights four important events that occurred during the year: a drop in earnings, our investment in ADEXUS - Chile, our acquisition of an interest in the Red Eagle mining project in Colombia, and our inclusion in the Peruvian Southern Gas Pipeline project. Earnings for the year are significantly lower than the preceding year, mainly due to a drop in the price of oil, the impact of a stronger dollar in the 3 countries where we work, and 4 >> poor results of some construction projects, All-encompassing vision especially the Inmaculada Mine contract. In this regard, measures were taken quickly to avoid a repetition of these problems, such as a revision of proposal processes and the creation of the Contract Risk Management area. In the fourth quarter CONTENT of the year, we had better results than in the _ INTEGRATED ANNUAL REPORT MESSAGE FROM 2015 SENIOR MANAGEMENT _ FINANCIAL REPORT SUSTAINABILITY REPORT 2,295 million DOLLARS TOTAL REVENUE _ MESSAGE FROM SENIOR MANAGEMENT 228 million IN EBITDA preceding quarters, which had been affected by the Then, in the month of November, we joined construction contract our company has obtained in previously mentioned projects, so we are optimistic the concessionaire company in charge of the its long history. This contract enabled us to end the about our future earnings. construction, operation and maintenance of the year with a backlog and recurring business of 4,486 In the month of July, we launched a capital increase 1,200 km Peruvian Southern Gas Pipeline overthe million dollars. of 15 million dollars invested in ADEXUS S.A. next 30 years. Our Group has a 20% interest - Chile, a well-known information technology in the concessionaire company and 29% of the These contracts propel our strategy of growing in company with operations in Colombia and Construction Consortium. For the Group, this proportion to our long-term contracts and growing Ecuador. As this capital increase represented 44% means a 215 million dollar capital investment in abroad, in order to become a leading player in of the company, we currently have a controlling the company and the equivalent of an over 1 billion engineering in the region. In the year 2015, our interest and the right to merge ADEXUS with dollar construction contract, which is the largest international revenue totaled over 600 million GMD, our information technology company, which would become an important regional player in the field. 5 >> All-encompassing vision In the month of October, we announced our minority interest in the Red Eagle gold mining project in Colombia, which meant that our subsidiary, STRACON GyM, obtained the 150 IN THE MONTH OF NOVEMBER WE OFFICIALLY million dollar Earth Moving Contract for the next BECAME A MEMBER OF THE CONCESSIONAIRE 8 years. IN CHARGE OF THE PERUVIAN SOUTHERN GAS PIPELINE. CONTENT _ INTEGRATED ANNUAL REPORT GRUPOMESSAGE GRAÑA FROM Y 2015 MONTEROSENIOR MANAGEMENT _ FINANCIAL REPORT SUSTAINABILITY REPORT + 29,000 WORKERS COMMITTED TO THE _ GRAÑA Y MONTERO MESSAGE FROM SENIOR MANAGEMENT STYLE INITIATIVE. dollars, and EBITDA from the Infrastructure It should also be noted that in 2015 we were among Efficiency. Therefore, a year ago we published a and Services areas accounted for over 53% of the the 10 most admired companies in Peru, according book titled El Estilo Graña y Montero (The Graña total for the group. During this period, we gained to a report prepared by PwC; we qualified as one of y Montero Style), and last year we provided more Movistar zone 13 and a contract with VTR for the top companies where people would like to work than 380,000 hours of training at every level of last mile services for 47 and 53 million dollars in Peru, according to a study conducted by Arellano the organization, since we know this is our best respectively. Marketing and Laborum; and we were named the guarantee of continuity. leading company in Sustainability and Corporate Projects completed during the year include the Governance in Peru by the Agenda Líderes Lastly, we would especially like to thank our clients Santa Teresa Hydroelectric Plant, the Guyana Sustentables 2020 initiative. This only confirms and employees who have made our achievements Goldfields EPC Aurora Gold project in Guyana, our commitment to the principles of the United possible. the Las Bambas mining project in partnership Nations Global Pact, which are reflected in every with Bechtel, and the expansion of the Cerro Verde aspect of our sustainable management. Copper Beneficiation Plant, the world’s largest 6 >> beneficiation plant. We are convinced that throughout our 82-year All-encompassing vision history, we have been able to overcome the most This made total billing of 2,295 million dollars daunting challenges due to the professional possible during the year, which resulted in EBITDA work of our nearly 29,000 employees, who are José Graña Mario of 228 million and a net profit of 25.8 million committed to the Graña y Montero Style and to Miró Quesada Alvarado Pflucker dollars. our values of Quality,Performance, Reliability and Chairman of the Board Chief Executive Officer CONTENT WHAT WE DO SETS US APART HOW DO WE DO IT DEFINES US WHY WE DO IT DIFFERENTIATES US All-encompassing vision OUR VALUE PROPOSAL INTEGRATED ANNUAL REPORT VALUE 2015 PROPOSAL _ FINANCIAL REPORT SUSTAINABILITY REPORT DIVERSIFICATION _ WHAT WAS A CONSTRUCTION COMPANY IS NOW A GROUP OF 26 COMPLEMENTARY COMPANIES DIVIDED IN 4 BUSINESS AREAS VALUE PROPOSAL ACCORDING TO THE SIMILARITY OF THEIR OPERATIONS AND MANAGEMENT SYSTEMS. THIS ENABLES US TO STRENGTHEN THE _ DIVERSIFICATION _ REGIONALIZATION CAPACITIES OF THE DIFFERENT AREAS AND GENERATE GREATER INTERNAL SYNERGIES IN THE GROUP. (G4 - 17) _ GRAÑA Y MONTERO KEY FIGURES _ CORPORATE GOVERNANCE Técnicos 9 >> All-encompassing vision CONTENT COGA _ INTEGRATED ANNUAL REPORT VALUE 2015 PROPOSITION _ FINANCIAL REPORT SUSTAINABILITY REPORT REGIONALIZATION COLOMBIA _ VALUE PROPOSAL STRATEGIC PARTNER GUYANA _ DIVERSIFICATION _ REGIONALIZATION FOR DEVELOPING _ GRAÑA Y MONTERO KEY FIGURES _ CORPORATE GOVERNANCE PROJECTS IN THE BOLIVIA REGION. WE OPERATE IN 7 PANAMA LATIN AMERICAN ECUADOR PACIFIC COUNTRIES, OCEAN BASED IN OUR OFFICES IN PERU, CHILE AND PERU COLOMBIA. 10 >> All-encompassing vision CHILE WE ARE A GROUP OF COMPANIES THAT TRANSCENDS BORDERS. CONTENT WE ARE A GROUP OF PEOPLE THAT GENERATES WELFARE IN THE SOCIETIES IN WHICH WE OPERATE ENGINEERING AND CONSTRUCTION INFRASTRUCTURE REAL ESTATE SERVICES _ INTEGRATED ANNUAL REPORT VALUE 2015 PROPOSAL _ FINANCIAL REPORT SUSTAINABILITY REPORT KEY FIGURES _ VALUE PROPOSAL _ DIVERSIFICATION 2010 2011 2012 2013 2014 2015 2015 _ REGIONALIZATION _ GRAÑA Y MONTERO KEY FIGURES _ CORPORATE GOVERNANCE S/. Thousands S/. Thousands S/. Thousands S/. Thousands S/. Thousands S/. Thousands US$ Thousands Sales 2,502,675 4,241,266 5,231,885 5,967,316 7,008,680 7,832,432.69 2,294,882 Gross Profit 444,829 631,749 712,066 1,004,660 951,569 702,805 205,920 Profit before Taxes 401,028 477,645 520,826 595,005 507,429 217,330 63,677 Net Profit 252,802 289,076 289,954 320,363 299,744 88,153 25,829 EBITDA 553,959 662,042 775,660 1,030,680 911,851 778,395 228,068 Backlog 3,688,909 6,726,148 10,637,341 11,002,142 11,254,921 13,781,034 4,037,807 Recurring business 933,583 961,367 1,029,965 1,101,282 1,733,630 1,529,834 448,237 Backlog and 4,622,492 7,687,515 11,667,306 12,103,424 12,988,551 15,310,868 4,486,044 recurring business Professionals 2,816 4,810 5,575 6,077 6,819 4,809 4,809 11 >> All-encompassing vision CONTENT _ INTEGRATED ANNUAL REPORT VALUE 2015 PROPOSAL _ FINANCIAL REPORT SUSTAINABILITY REPORT KEY FIGURES _ VALUE PROPOSAL _ DIVERSIFICATION _ REGIONALIZATION _ GRAÑA Y MONTERO KEY FIGURES _ CORPORATE GOVERNANCE SALES BY AREA 2013 2014 2015 S/. Thousands S/. Thousands S/. Thousands US$ Thousands Engineering and construction 4,075,070 5,035,674 5,841,559 1,711,561 Infrastructure 680,988 884,766 1,023,112 299,769 Real Estate 313,731 224,560 215,764 63,218 Services 1,169,115 1,208,168