Argos ONE

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At the Ordinary Shareholders’ Meeting, Argos shared with its shareholders the best results in its history

  • The dividend declared is $281.2 per share, 37 % higher than in 2021, and will be paid in cash in four quarterly installments starting in April of this year.
  • On a consolidated basis, Argos achieved in 2021 the best results in its history taking into consideration all business’ dimensions.
  • At the end of 2021, revenues from products and services with sustainable characteristics exceeded US $1.5 million, representing 47 % of the cement company’s revenues.
  • In 2021, the company acquired three credits linked to environmental, social and corporate governance indicators. 

 

In the framework of the Ordinary Assembly, Argos, the cement company of Grupo Argos, proposed to its shareholders a dividend of $281.2 per share, 37 % higher than in 2021, reflecting the company’s historical results in all its dimensions, the outstanding cash flow generation, the low financial leverage and the good prospects of the territories where the company conducts its operations.


This dividend will be paid in cash in four quarterly installments at a rate of $70.3 as follows:

 

  • April 2022: between the 18th and 28th.
  • July 2022: between the 18th and 28th.
  • October 2022: between the 18th and 28th.
  • January 2023: between the 17th and 27th.

 

Likewise, as part of its efforts and initiatives directed to create value for society, the General Shareholders’ Meeting approved the allocation of 7,605 million Colombian pesos in social investment.

 

During the assembly, the company also announced that, as part of the execution of its strategy to make the business profitable and optimize its asset base and in the framework of its divestment plan of assets located in suburban markets or not integrated to its own logistics and production chain, Argos USA signed an agreement with Smyrna Ready Mix Concrete, LLC., to sell 23 concrete plants (18 in eastern North Carolina and five in southwest Florida), with a right to supply cement for a period of five years. The total value of the sale is approximately US $ 93 million.

With this sale, the organization reinforces its strategy of value creation and investment targeting, seeking to maximize the return of its investors’ capital.
 

The transaction, which is subject to customary closing conditions, is expected to close in the first quarter of 2022.

 

«We are extremely happy to share with our shareholders some results of paramount importance that undoubtedly reflect the discipline, the determination and the commitment of our more than 7,000 employees to strengthen our value proposition and the execution of a strategy focused on a long-term vision. Our intent is to continue generating profitability for our investors, while contributing to the creation of value for society and making possible the construction of housing and infrastructure dreams.»
Juan Esteban Calle, Argos CEO.

 

HISTORIC RESULTS 2021:


The cement company presented a solid volume performance in most countries. It shipped 17.1 million tons of cement and 7.8 million cubic meters of ready-mix on a consolidated basis, representing increases of 18.3 % and 2.7 % compared to 2020, respectively.


Consolidated revenues were 9.8 billion Colombian pesos, a year-over-year increase of 9.1 %. Consolidated ebitda for 2021, including the gain from the Dallas divestiture, closed at 2.16 billion Colombian pesos and is the highest in the history of Argos, up 34 % compared to 2020. The annual ebitda margin was 22 % and is the highest since 2005, when the internationalization of the company began.
 


OUTSTANDING ACHIEVEMENTS:


Financial flexibility, leverage for growth and sustainability:

Solid financial results allowed to significantly decrease the company’s leverage indicator from 4.5 times net debt over ebitda plus dividends at the beginning of 2021 and place it slightly below 3 times at the end of the year.


Thanks to this and the implementation of operational efficiency strategies that have leveraged debt reduction and the expectation that operating cash flow generation will continue a growth trajectory in the coming years, Fitch Ratings recently announced its decision to upgrade Argos’ credit rating outlook from stable to positive.


In 2021, in search of financing options that support the promotion of best practices in environmental, social and corporate governance (ESG) matters, Argos acquired the disbursement of three loans linked to sustainability indicators.

 

Strength in the management of environmental, social and governance aspects – ESG:

Based on the monetization of externalities associated with the management and valuation of all its economic, social and environmental impacts, through the measurement they call Statement of Value Added to Society, VAS, the company highlights that in 2021 they returned to society 2.55 times the profit they retained.


For the ninth consecutive year, along with Grupo Argos, the company was recognized as a world reference in sustainability in the construction materials sector, according to the Dow Jones Global Index. In addition, it was positioned as one of the leading companies in the world with the best environmental, social and governance practices, according to the FTSE4Good responsible and sustainable investment index, and received the Gold Class medal in the S&P Sustainability Yearbook.


At the end of 2021, revenues from products and services with sustainability features exceeded US $1.5 million, representing 47 % of its revenues and far exceeding its target of US $ 800 million by 2030.


More than 368,000 people were direct beneficiaries of the cement company’s social projects, with a consolidated investment of more than US $4.5 million, in the areas of housing improvement, cement donation for road and community infrastructure, quality education, inclusive businesses, health, food security, and support to communities and construction workers in the face of the pandemic crisis.

 

«2021 will remain a memorable milestone in the history of Argos.»
Juan Esteban Calle.

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PIEDAD MONSALVE

Gerente de Comunicaciones
pmonsalve@argos.com.co
(57 4) 3198700

DANIELA VALLE

Directora de Comunicaciones
dvalle@argos.com.co

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Atmospheric emissions

We are committed to reducing our emissions through actions that achieve more efficient processes and the implementation of abatement measures, contributing to good air quality in the places where we operate.  Our cement-, concrete- and aggregate-production processes generate punctual and scattered particulate matter (PM) emissions, as well as emissions of sulfur oxides (SO2) and nitrogen oxides (NOx) in the clinkering furnaces of the cement plants.

  • For society:  To contribute to mitigating the impact on air quality in the areas where we operate, acting responsibly and promoting relationships of trust with our Stakeholders.

 

  • For the company:  To develop more efficient processes that allow us to reduce our atmospheric emissions and contribute to responsible production, complying with local regulations in the countries where we operate and – in some cases – going beyond compliance with said regulations, contributing to the profitability of the business and preparing to face future challenges.

The “Emissions” pillar of our Environmental Strategy focuses on: Working on the adequate measurement, control and reduction of SO2, NOx and particulate-material (PM) emissions generated by our production processes in the cement business and on the prevention and mitigation of our dispersed emissions of particulate material (dust), originated mainly by the activities of transportation, transfer, unloading and storage of materials in the cement, concrete and aggregate processes. The foregoing, through operational control, optimization and renewal of emission-control systems to achieve continuous improvement.

Industry positioning

We position ourselves as strategic allies for the development of the territories where we are present, directly and through the empowerment of our value chain.  We do it through the construction of housing and sustainable infrastructure that enables the closing of socioeconomic gaps, the generation of employment, the improvement of the quality of life and the reduction of the impacts generated.

  • For society:  To sustainably respond to the growing demand for housing and infrastructure of the world population with the aim of improving people's quality of life, interconnecting regions and developing innovative solutions. 

 

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    For the company:  To be strategic allies of the actors in our value chain in order to maintain the Company's leadership in the market, ensure its competitiveness over time and increase the generation of sustainable value.

We are committed to the role we have as a Company in the achievement of the 2030 Agenda goals, the consolidation of territorial development plans where we operate, and the economic reactivation of the countries affected by the pandemic. Therefore, we focus our efforts in the development of sustainable housing and infrastructure projects that contribute to closing socioeconomic gaps, generating employment under safe conditions, environmental protection, and investment in improving people’s health systems and quality of life. 

Our work unfolds in three large lines:

 

Cities for everyone:

 

With nearly 54% of the world  population living in urban areas, the pandemic made inequality of those who live in the cities of the world

manifest. Nearly 90% of the COVID-19 cases are concentrated in the urban

centers that have, among others, challenges associated with access to basic services and decent housing conditions. For this reason, we work together with our value chain to develop projects that benefit the lessfavored population, facilitate access to housing, and promote development in

the areas of influence.

 

Interconnected cities

 

The need to connect urban areas with rural areas to expand the coverage

of basic services, such as health, has been a priority of developing countries

since before the pandemic. Therefore, during 2020, we continued working on creating innovative solutions that allow us to be present in the large projects of the countries and territories where we are present.

 

Intelligent cities

 

In recent years, the acuteness of the effects of climate change became the

risk of greatest impact to the world. Therefore, in the global stage, a need

has grown to transition to a low-carbon economy, an opportunity that becomes more relevant amid post-pandemic recovery scenarios and the effort we are making as a Company to generate new business models that respond to environmental and social challenges. For this reason, our Climate-Change Strategy includes actions aimed at mitigating the impacts associated with our productive processes, adapting our operating model and innovating from the identification of optimization opportunities.

Supplier management

Supplier management is a fundamental pillar of our Supply Chain Strategy; it seeks to build and strengthen relationships with strategic allies who have the ability to contribute to the Company in terms of efficiency, productivity, customer service and innovation.  For this reason, we carefully select our suppliers, transfer knowledge to promote their development, promote good practices and recognize those who are an example of sustainable, innovative, safe and responsible management.

  • For society:  To develop our suppliers, promote transparent practices and responsible conduct, to improve the productivity and competitiveness of our society and support the construction of a better future.

 

  • For the company:  To seek to add value throughout the Company's supply chain, from the purchase of goods and services to the delivery of products to clients.  Through the mitigation of risks and potentiation of opportunities, the implementation of good contracting practices and service excellence, we create relationships of trust and turn suppliers into business allies.

Our management is divided into five stages:

  1. Identification: We determine the goods and services required for our operation and the category to which they belong, according to our Category Tree. This groups our suppliers into macro-categories which – in turn – are subdivided into two more specific levels.
  2. Pre-Selection: We validate the suitability of suppliers through due diligence and review aspects of sustainability and financial health to ensure long-term relationships.
  3. Negotiation: We select suppliers with high standards, considering technical, economic, sustainability and service aspects.
  4. Retention and evaluation: We carry out knowledge-transfer processes with those suppliers with growth potential.
    • We characterize our suppliers as critical suppliers or with potential risk in sustainability.
    • We measure the management of critical suppliers through performance evaluations in terms of quality, service, occupational health and safety, having constant feedback and identifying key factors for their development.
    • We apply the Sustainability Index to suppliers with potential sustainability risks, to identify challenges, opportunities, and to develop joint action plans in environmental, economic, social and Human-Rights matters.
    • We implement additional controls and development plans to suppliers belonging to categories where the greatest potential risks have been identified. This is how, for example, we develop road-safety strategies for our logistics suppliers; with mining suppliers, we carry out a more rigorous pre-selection process, and with contractors, we have special controls on occupational health and safety.
    • We have a Transparency Line for Stakeholders to report possible improper actions and to implement the pertinent corrective actions. 
  5. Recognition:  Every two years, through Growing Together (Creciendo Juntos), we recognize the suppliers that have shown outstanding performance in innovation, sustainability, health and safety and development and comprehensiveness.

 

Additionally, we have:

 

Contracting manual: transparent action framework that guides the negotiation and contracting of our suppliers to allow the process to be agile, make use of best practices and carry out adequate risk management.

 

Code of conduct for suppliers: in which we define the principles and behaviors that we expect from our allies in terms of respect for human rights, protection of workers, environmental management, business ethics and responsible business practices.

Ethics and compliance

We are convinced that ethics and integrity are fundamental and non-negotiable; that is why we live by these principles, integrating them into our operations, processes, and strategy, thus generating value responsibly for our business, our Stakeholders, and for society.  Through the Global Governance and Compliance Program, our ethics and business conduct system, we seek to promote that our actions are consistent with the pillars of corporate culture and integrity as the guiding principle of our business activity.

  • For society:  To promote transparent, competitive, and sustainable business environments that strengthen trust and ethics in business, generating positive impacts for the market and society.

 

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    For the company:  To promote that our actions are consistent with the pillars of culture and that integrity is the inspiring principle of all members of the Organization.  This is how we consolidate ourselves as a competitive, reliable company in the eyes of investors and other Stakeholders.

We have voluntarily adopted a self-regulatory framework that confirms our commitment to business ethics as a way to promote transparent practices that contribute to the development of competitive environments. This framework* incorporates mandatory principles of ethics and conduct:

 

 

For the proper implementation and application of these guidelines, the strengthening of the ethical culture, the prevention and control of incorrect actions, our Board of Directors approved the Global Governance and Compliance Program (GGCP, in Spanish). The program structure incorporates international best practices to evaluate compliance programs, such as ISO 37001, ISO 19600 and the United States Department of Justice (DOJ) guidelines. The program has the following scope:

 

 

Likewise, it systematically groups together the activities carried out to promote integrity in the Company's actions, its employees, and members

of the value chain, which allow the updating and permanent strengthening

of the program. Operating Scheme:

 

Efficiency and productivity

We materialize our Corporate Strategy through actions aimed at the efficient use of resources, the improvement of our financial flexibility and the maximization of income generation and business profitability.  We focus on the application of efficient, safe production processes and circular economy models, on the diversification of energy management models and on the efficient management of the supply chain.

  • For society:  To provide solutions and products that meet the needs of our clients through the responsible, appropriate use of resources and the incorporation of raw materials and alternative energy sources.

 

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    For the company:  To guarantee business sustainability, optimize working capital and capital investments, reduce costs and the level of indebtedness, and mitigate risks regarding the availability of resources necessary for our operation and the emergence of new business realities, environmental requirements and new regulations.

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