Constant Evolution
The future is always challenging the impossible. It has been this way since creation
of the Votorantim Group in 1918.
What started as a textile factory in the interior of So Paulo is today one
of the largest private corporate groups in Latin America, with an increasing
global presence.
The Votorantim Group is one of the largest industrial groups in Latin America,
with increasingly global operations. It controls a diversified portfolio of capitalintensive businesses and state-of-the-art technology that are grouped into three
large segments: industrial, financial and new business. The industrial area has
operations in the cement, concrete, metals (aluminum, zinc, nickel and steel),
pulp and paper, concentrated orange juice, specialty chemicals, self-generation and
electricity distribution markets. In the financial sector it operates through Votorantim
Finance, and in new business, it prefers to invest in biotechnology projects and
companies, mineral exploration, and information technology.
In addition to its presence in 20 states and nearly 100 Brazilian municipalities,
it operates in 14 other countries, in an internationalization process initiated in
2001 and that received a boost in 2007 when it acquired companies in the United
States, China, Argentina and Colombia. At the end of the year, the Company directly
employed 60,000 people.
The unified management model, which seeks excellence in four structural areas
personnel, operations, information and risk has allowed constant evolution in the
results, year after year. In 2007, the group of businesses reported net revenues of
US$ 15.6 billion, cash generation (EBITDA) of US$ 4.3 billion, and net income of
US$ 2.5 billion. Capex investments were US$ 2.7 billion.
The pace of growth in revenues, an average of 18% per year since 2003, led the
Group to revise the aspirations it had devised in 2001: to triple company value in
ten years. Now its new goal is to double its businesses by 2012. To attain this goal,
in 2007 it announced the largest investment in its history: US$ 16.5 billion in five
years, with US$ 12.9 billion in industrial operations. This is a challenge that will be
undertaken starting in 2008, when the Group commemorates 90 years of existence,
inspired by the theme The impossible has no place in this story.
Votorantim Ombudsman:
0800 70 10 451
Post Office Box: 19.134
www.votorantim.com.br
Participation
Revenue Composition
Votorantim Identity
Values
The five Votorantim values
express the way the Group
operates and permeate
all of its actions, decisions
and relationships with
its various audiences.
They are:
Solidness
The capacity to maintain
stability even in
environments of constant
and accelerated change.
Ethics
The non-negotiable
requirement to act
responsibly and
transparently.
Respect
Respect for people and
constant willingness
to learn.
Entrepreneurship
The capacity to see farther,
to anticipate tomorrow, and
to have the courage to do,
innovate and invest.
Unity
To maintain the unity of
the proposal and stimulate
and inspire the diversity
of talents, cultures and
businesses, using the very
best of each one.
Vision
To ensure continuous growth and presence as a major
family-owned company that is respected and recognized
in the communities where it operates, with a focus
on creating economic, environmental and social
value through:
Ethical values that guide responsible corporate conduct
Highly competitive businesses
The search for creative and innovative solutions
for its portfolio
People motivated to perform at high levels.
Code of Conduct
The Code of Conduct gathers the principles that guide
the behavior of the entire Votorantim team. It serves as
a daily reference in relationships with employees, the
community, shareholders, suppliers, the government,
the media and other audiences, as well as matters such
as intellectual property, contracts, gifts and presents,
health, safety and the environment.
An Ombudsman was created to ensure the Groups
transparency and to spread the Code of Conduct even
farther. This is a direct line of communication with the
Group that both the internal and the external public
may use to ask for clarifications or to make complaints.
The Code must be used among the employees of
Votorantim, and it must serve as a reference for the
Companys partners. The complete version may be
accessed at www.votorantim.com.br
1%
Agribusiness
New Business
Chemicals
5%
Energy
Main
Indicators
31%
11%
Metals
19%
Cement
26%
Finance
Net Revenues
(U$ billion)
(U$ billion)
13.3
15.6
9.7
Aspiration
To double the value of the Groups businesses
by 2012 through consolidation of the main
businesses and the search for opportunities in new
or traditional segments.
To attain global standards in operation and
management that are comparable with those of the
best companies worldwide.
2%
5%
1.9
6.4
2.2
3.7
4.3
06
07
2.5
5.1
03
04
05
06
07
03
04
05
Investments in Capex
Net Income
(U$ billion)
(U$ billion)
2.0
2.5
1.4
1.1
03
1.1
04
05
06
07
2.0
1.0
1.0
03
04
05
2.7
1.6
06
07
Table of
Contents
04 Highlights
06 Business Units
08 International Presence
10 Message from Management
12 Corporate Governance
14 Management Model
19 Strategy
20 Industry
26
Cement
32
Metals
38
44
Energy
50
Agribusiness
56
Chemicals
62 Finance
68 New Business
74 Social Performance
78 Environmental Performance
86 2007 Financial Statements
2007 Highlights
CBA inaugurates its
expansion and becomes the
largest primary aluminum
factory in Latin America,
with capacity for 475,000
tons per year.
Votorantim Agribusiness
announces an expansion
plan of R$ 800 million in
investments, which will take
place over the next five years.
Votorantim Chemicals
completes its project to expand
nitrocellulose production to
33,000 tons per year, attaining
the global leadership position in
the sector with 16% of
market share.
Business Areas:
unity in diversity
Cement
Metals
Finance
Agribusiness
Chemicals
Energy
New Business
Cement
For more than 70 years, Votorantim Cement has had operations in Brazil, the United States, Canada, Bolivia and Paraguay. One of the
ten-largest companies worldwide in the sector, it is the Brazilian market leader with more than 40% market share Products | Cement,
dry mortar, lime, concrete, aggregates and agricultural limestone Brands | Votoran, Ita, Poty, Tocantins, Aratu, Irajazinho, Votomassa,
Engemix, Calfrtil, St. Marys, Suwannee, CBM, Trinity, Prairie and Prestige Market | Basic construction materials Production units |
Brazil: 142; North America: 174; Bolivia: 1 Production capacity | Cement: 31 million t/year; concrete: 11 million m3/year;
aggregates: 22.5 million t/year Employees | 10,500
Metals
The Votorantim Group has the largest integrated aluminum industry in the world, and it is the third-largest global producer of zinc,
with expansions under way. Votorantim is the largest nickel producer in Latin America, the third-largest Brazilian producer of long steel,
and the second-largest producer of long steel in Colombia Products | Aluminum, nickel, zinc and steel Brands | Votoral and Votorao
Market | Civil construction, mechanical construction, stainless steel, automobile industry, household appliances, energy towers, cellular
telephones, tires and elastomers, glazing and ceramics, chemicals and electrochemicals, agriculture, paints, pharmaceuticals, food and
electronic components Production units | Aluminum: Brazil (1 factory and 3 mines); nickel: Brazil (2 mines and 1 metallurgy plant);
zinc: Brazil (2 mines and 2 metallurgy plants); Peru (1 metallurgy plant and shareholder participation in 1 mining company); United States
(5 metallurgy plants); and China (1 metallurgy plant); Steel: Brazil (1 metallurgy plant), Colombia (1 metallurgy plant) and Argentina
(shareholder participation in 1 metallurgy plant) Production capacity | Aluminum: 475,000 t/year; nickel: 30,000 t/year;
zinc: 525,000 t/year; steel: 1 million t/year Employees | 20,129
Finance
Created in 1991, Banco Votorantim has established itself as Brazils fourth-largest private domestic bank. It is also the fastest-growing
financial institution in Brazil, and it currently finances one out of every six used cars sold throughout the entire country Companies |
Banco Votorantim, BV Financeira, Votorantim Asset Management, BV Leasing and Votorantim Corretora Services | Financial
intermediation Market | Large and medium-size companies, institutional clients and individuals Units | Headquarters and branches
in Brazil, representative office in London, and a brokerage firm in New York Employees | 5,000
Agribusiness
One of the largest producers of concentrated orange juice in the world, Votorantim has 20% of the global market and exports to Europe,
the Americas, Asia and Oceania. It has an orchard with 10 million trees, which satisfies more than one-third of its raw material needs
Products | Concentrated orange juice and sub-products Brand | Citrovita Market | International orange juice market, essential
oils and animal feed (more than 60 countries) Production units | 3 factories, 10 million orange trees and 3 distribution terminals
Production capacity | 90 million boxes of oranges/year; 330,000 t/year of concentrated orange juice Employees | 1,866
Chemicals
The largest Brazilian manufacturer of nitrocellulose and ranked as one of the international leaders, Votorantim Chemicals has the most
modern facilities, and the best productivity and quality in its sector. It is a benchmark in terms of safety, health and the environment
Products | Nitrocellulose, hydrofluoric acid, aluminum fluoride and sulfuric acid Market | Painting, varnish, leather and cosmetics,
chemical and petrochemical industries Production units | Factories: 3; mining: 2 Production capacity | Nitrocellulose:
33,000 t/year; hydrofluoric acid: 17.8 t/year; aluminum fluoride: 18.5 t/year; sulfuric acid: 270,000 t/year Employees | 650
Energy
The Votorantim Group owns electricity generation assets for its own consumption and it also owns shares in generation and distribution
companies, such as CPFL Energia. The Energy Business Unit manages optimization of energy production of these assets for use in the
Groups industrial units Products and services | This area is responsible for managing electricity, contracting natural gas for the
industrial units, and also for managing the investment portfolio in the Groups energy businesses Market | Self-generation of electricity
for the Votorantim Group; Industrial units of the Votorantim Group that are final consumers of electricity and natural gas Production
units | Hydroelectric plants: 31; thermoelectric plants: 4 Production capacity | 2,020 megawatts Employees | 44
New Business
Area for risk capital and diversification of businesses of the Votorantim Group, Votorantim New Business (VNN) focuses on investing
in innovative companies and projects whose potential to create value is high Function | Area of the Group focused on investment
venture capital and portfolio diversification Area of Operation | Investments in innovative companies and projects whose potential to
create value is high Availability of resources | US$ 300 million for venture capital Companies in the portfolio | TIVIT, Quadrem,
Alellyx, CanaVialis, AnFreixo, Base Metals and SAM Employees in the companies in the portfolio | 25,000
Belgium
Votorantim Pulp and Paper
(port terminal)
Votorantim Agribusiness
(commercial office and
port terminal)
Germany
Votorantim Agribusiness
(commercial office)
Switzerland
England
Canada
Votorantim Finance
(representative office)
Votorantim Cement
(cement factories and
terminals, concrete centers
and aggregates units)
China
United States
Votorantim Cements
(cement factories and
terminals, mills, concrete
centers and aggregate units)
Votorantim Metals
(zinc metallurgy plant and
commercial offices)
Votorantim Pulp and Paper
(commercial office)
Votorantim Agribusiness
(commercial office)
Votorantim Chemicals
(commercial office)
Votorantim Finance
(broker)
Votorantim Metals
(zinc metallurgy and
commercial office)
Votorantim Pulp and Paper
(representative office)
Bahamas
Votorantim Finance
(agency)
Colombia
Votorantim Metals
(metallurgy and
mineral exploration)
Singapore
Peru
Votorantim Metals
(zinc metallurgy, mineral
exploration, shareholder and
mining participation)
Brazil
Bolivia
Votorantim Cement
Votorantim Metals
Votorantim Pulp and Paper
Votorantim Energy
Votorantim Agribusiness
Votorantim Chemicals
Votorantim Finance
Votorantim New Business
Votorantim Agribusiness
(commercial office)
Votorantim Chemicals
(commercial office)
Australia
Votorantim Agribusiness
(port terminal)
Argentina
Votorantim Metals
(shareholder participation
in metallurgy)
International Presence
ionalization began
The Votorantim Groups process of internat
company in North
in 2001 with the acquisition of a cement
ad have been growing
America. From that time, investments abro
there were industrial
at an increasing pace. At the end of 2007
United States,
operations in seven countries (Canada, the
a), in addition to
Colombia, Peru, Bolivia, Argentina and Chin
th America, Europe,
commercial and logistics operations in Nor
present in 15 countries.
Asia and Oceania. In total, Votorantim is
Entrepreneurship
Antnio Ermrio de Moraes
Chairman of the Board of Directors
We believe in
the future of
Brazil, and this
gives us the
incentive and
energy to seek
growth in an
increasingly
sustainable
and ethical
manner.
11
Corporate
Governance
The Votorantim Groups corporate governance is conducted
according to a group of principles, initiatives and management
structures. The objective is to ensure the growth and continuity
of the companies, reconciling family shareholder control with
strengthening the base of executives to head the businesses.
With actions focused on values that are common to all the
companies, it seeks to continuously improve management
standards and performance.
The Board of directors represents the controlling
families and delegates monitoring of the business to the
Board of VPAR.
The Board of Votorantim Participaes (VPAR) is
responsible for strategic direction and for the operating
performance of the three main areas: Votorantim Industrial,
Votorantim Finance and Votorantim New Business.
The Family Board represents the shareholding family,
spreading and preserving its beliefs and values. It is the
interface responsible for reporting the objectives and the
results of business among the family members, for developing
future generations of shareholders, harmonizing the efficacy
of the succession process, and for contributing so that they
develop a sense of belonging and pride.
The Votorantim Institute acts on two fronts: stimulating
debate and practicing corporate social responsibility among
the employees, and qualifying external social investment of the
Business Units in the communities where they are present.
This model of corporate governance provides an integrated
vision and agile decision-making, and resulted in Votorantim
being recognized by the IMD Business School and Lombard
Odier Darier Hentsch Bank as the best family-run company in
the world in 2005.
12
BOARD OF
DIRECTORS
The objective is
to ensure the
growth and
continuity of
the companies,
reconciling
family
shareholder
control with
strengthening
the base of
executives
to head the
businesses.
FAMILY BOARD
VOTORANTIM INDUSTRIAL
(General Directorate)
VOTORANTIM PARTICIPAES
VOTORANTIM INSTITUTE
VOTORANTIM FINANCE
CORPORATE DEPARTMENTS
VOTORANTIM CEMENT
VOTORANTIM METALS
VOTORANTIM CHEMICALS
13
Management
Model
Management of the Votorantim Group is based on four structural factors: operations, risks,
information and people. The management model is built into into the four aspects, which allows
efficiency gains and standards of excellence in business development.
Managing operations
Unified management is
a huge differential in the
operations of the industrial
area, which in 2002 created
the Votorantim Management
System (Sistema de Gesto
Votorantim - SGV), a tool
to identify and spread
best practices among the
companies, driving value
creation. It is based on
five principles clients
and suppliers, personnel,
quality and excellence,
innovation, safety and
the environment which
ensure the sustainability
of the businesses over the
long term. The operating
methodology follows
four stages processes,
evaluation systems,
14
competitive benchmarking,
and continuous improvement
that are structured to
provide growing productivity
gains. The integration is
further stimulated by shared
structures, such as the Service
Center and Supplies and
Logistics services. The first is
a common area that performs
support tasks, freeing up
companies to concentrate
their attention on business.
The second structure
represents gains of scale and
negotiating power in freight
and acquisition contracts
for non-strategic materials.
Operating efficiency gains
and gains from synergies
in purchase negotiations,
logistics, inputs and energy
Solidity in
financial
indices, risk
management,
growth,
governance and
transparency.
Information
management
In 2007, implantation of the
SAP integrated management
system was concluded in
all the Groups industrial
companies in Brazil and
abroad, standardizing and
optimizing processes and
information in the Business
Units. The management
model will be streamlined in
2008, maximizing the use
of SAP functionalities and
the basis of management
information, allowing the
businesses to perform better
and improvements in the
decision-making process.
Risk management
Financial management and the ability to manage risk with
structured analytical processes and resource allocation allow
us to mitigate adverse factors and drive results. During the year
the Group became the only privately held Brazilian company
rated as investment grade by the three main rating agencies,
receiving a Baa3 rating from Moodys. In addition, Standard
& Poors raised the BBB- rating it had given in 2005 to BBB.
The Company has been rated BBB by Fitch ratings since 2006.
Solidity in the financial indicators, risk management, growth,
governance and transparency are factors considered in these
risk assessments, which provide the Group with competitive
conditions for accessing international capital to sustain
its growth plans.
Personnel management
For the Votorantim Group, the success of the companies is
directly related to the involvement, qualification, commitment
and ethical behavior of the 60,000 people that comprise
its team. On this premise, the Company creates programs
and processes to attract, maintain and develop talent in a
continuous, structured manner.
Academy of
Excellence
One of the main achievements
was the entry into full
operation of the Votorantim
Industrial Academy of
Excellence launched in
October 2006 with
pilot groups. The project
operates on two fronts:
the development of personal
and management skills,
and technical improvement.
In 2007, 4000 participants
were trained over a total
of 70,000 class-hours,
with a focus on developing
leadership. Besides training
professionals in the critical
skills needed to face business
challenges, the initiative
allows alignment of concepts
and an enriching exchange
of best practices among
people from various areas of
the business. There are four
training centers: Leadership,
Industrial Excellence and
16
Technology, Commercial
Excellence and Corporate
Processes. In 2008,
the Mining-Metallurgy School
will be launched, with the
projection of training
800 people.
Movimenta
During the year, the
Movimenta (Movement)
Program was also created,
which organizes and
encourages mobility in order
to allow promising talent
and executives to work in the
various areas of Votorantim,
within and outside of Brazil.
Trainee
Program
Launched in 2005, this is
the main entryway for new
leaders. It attracts recent
university graduates, who
complete an extensive training
program at the Groups
different units.
(R$ million)
9.9
8.0
03
04
05
7.7
8.0
06
07
Sistema de
Desenvolvimento
Votorantim (SDV)
(Votorantim
Development System)
The integrated personnel
management model,
whose main objective is to
develop internal talent in
the organization to meet the
Groups growth needs, is an
environment of operating
excellence. Several other
initiatives help to improve
and qualify personnel
management, among which
are included the Programa
+ Vida (Program + Life),
for quality of life; Crescer
e Despertar (Awaken and
Grow), and Meu Primeiro
Emprego (My First Job),
for starting to study again;
Comportamento Seguro e
Atuao Responsvel
Strategy
The Votorantim Group is an organization focused on growth. It stimulates systemic operation
of the Business Units to identify organic projects and acquisition projects that allow us to
sustainably expand our operations, combining creation of value, environmental preservation and
social inclusion. The world no longer has borders in this process, and all geographical areas are
assessed in the search for the best expansion opportunities. The aspiration is to double the value
of business by 2012, supported by our main competitive differences: the portfolio of businesses
and use of the best company management instruments, combined with a planning cycle that
brings discipline to the strategy and its execution. Operating in different segments of the
economy from traditional sectors of industry, to technology businesses and essential service
companies, or services that are complementry to the productive sector (energy, information
technology and finance) allows cost management, synergy gains, and profitability.
This strategy, along with geographic diversification, enables the company to face market
volatility and increase gains of scale. To execute its expansion plan, in 2007 the Company
announced an investment of US$ 16,5 billion over the next five years as a way of attaining the
following strategic objectives at the Business Units:
Cement
Seek international expansion and growth
in the Brazilian market
Metals
Aluminum: become a leader in integrated
aluminum in Latin America.
Zinc: consolidate leadership in metallic zinc
in the Americas and as one of the three
largest producers in the world.
Nickel: focus on organic growth with quality
mineral reserves to be among the five largest
global producers.
Steel: position the company as one of the
major players in the Americas.
Pulp and Paper
Triple market pulp production by 2012.
Energy
Seek 70% self-sufficiency in energy for the
metals area
Agribusiness
Invest in the expansion of orchards to meet
growing demand, expand production capacity
and change the energy matrix
Chemicals
Consolidate the export market, seeking global
leadership in nitrocellulose
Finance
Invest in strong organic expansion in all areas
of Banco Votorantim
New Business
Invest in new projects and acquisition of assets
related to the current portfolio
19
Industry
Diversity
Many people dont know how much Votorantim does. The Group
started as a textile producer 90 years ago. Today, it operates in cement,
concrete and mining markets. It is a giant in aluminum, zinc, nickel,
steel, and pulp and paper. It has a strong presence in the concentrated
orange juice and specialty chemicals markets. It produces its own
energy and has its own bank: one of the largest domestic private banks
in the country. In addition, it invests in biotechnology and information
technology. There are various branches of operation, and different
types of people in the most different places in the world combined by
principles, values and a common challenge: to overcome the impossible
in every way possible.
20
21
Industry
Management
focused on
creating value
Votorantim Industrial
Votorantim Industrial manages the Groups
most diversified business portfolio, with
companies that operate in segments
characterized by intensive use of capital
and by production that is concentrated on
basic products. Integrated management and
the search for synergies result in increasing
efficiency gains and profitability.
Votorantim Indusitral is also responsible for
the Groups participation in companies that
are standouts in their sectors of operation,
which represented 11% of the operating cash
generated by the Group in 2007.
22
Industry
Investments in Capex
20.5
3.5
2.8
2.7
13.5
15.8
Net Income
(R$ billion)
(R$ billion)
4.7
4.5
Net Revenues
(R$ billion)
22.4
15.7
(R$ billion)
6.8
4.7
5.0
3.5
6.6
3.5
3.6
2.8
4.5
1.8
03
04
05
06
07
03
04
05
06
07
03
04
05
06
07
03
04
05
06
07
23
Industry
management and on
efficiency gains allowed the
Group to take advantage
of the positive effect from
higher commodities prices,
especially in the first half
of the year, and to partially
reduce the impact of the 17%
Integrated
management
and the search
for synergies
result in
increased
efficiency
gains and
profitability.
24
25
Daring
Cement
Alone, one small rock doesnt do much. But when it dares to multiply and transform into
cement, it becomes the main element in construction. In addition to being the Brazilian market
leader, the Votorantim Group is among the ten largest producers of cement in the world, with
factories also in Bolivia, the United States and Canada. It is a member of the WBSCD,
the global council that gathers together companies that are committed to sustainable
production. This daring has resulted in more work and more conquests. Dreams have solidified,
and the construction of a history of success has become increasingly possible.
26
27
Cement
Operating
Performance
With operations in Brazil,
the United States, Canada
and Bolivia, Votorantim
Cement (VC) obtained record
results in 2007. Total sales
volume in Brazil was 17.2
million tons of cement,
3.2 million cubic meters of
concrete, and 5.9 million
tons of aggregates. In North
America the total cement
sales volume was 4.7 million
tons. The concrete business
reached two million cubic
meters, and aggregates
rose to 7.6 million tons.
Net revenues grew 6.7%
over 2006, reaching R$
5,545 million; EBITDA was
R$ 1,590 million, with a
margin of 28.7%, four
percentage points above
what was obtained in the
prior period; and Capex
investments were R$ 688
million. The Company, which
is among the ten largest
in the world in the cement
sector, and which holds
40% of Brazilian market,
experienced two distinct
28
Cement
scenarios during the year. In
Brazil, the civil construction
industry heated up, causing
accentuated demand in
cement in the second half
of the year. To meet market
demand, VC increased the
degree of use of its plants
and optimized its distribution
logistics, attaining records
in production and sales.
The international scenario
was diverse, especially in
Net Revenues
(R$ million)
(R$ million)
5,545
5,199
4,694
03
05
1,807
1,362 1,291
06
07
(R$ million)
2,238
4,825 4,696
04
Investments in Capex
03
04
05
06
1,590
07
428
428
03
04
517
05
606
688
06
07
29
Cement
Investments
In August, record
investments of R$ 1.7 billion
were announced for the
installation of ten cement
factories and five dry mortar
factories, reactivation and
increased production at units
throughout the entire country.
By 2010, production capacity
will increase by 30%, from
25 million to 33 million tons
per year. Several regions in
Brazil will benefit from the
investments, particularly
the Midwest, North
and the Northeast.
In September 2007, the cycle
of inaugurations began with
the new mill in Barcarena,
Par, which began operations
with production capacity
of 460,000 tons per year.
Other highlights in Brazil
included the installation of
ten new distribution centers
and improvement of logistics,
with the fleet renewal
31
Metals
Determination
A simple spark can transform itself into a large flame. It does this
with determination. It insists, perseveres, supports the highest
temperatures and, finally, manages to mold different forms
and make them even better. Without determination, today the
Votorantim Group would not have the largest integrated aluminum
factory in the world, nor would it be the first Latin American
company capable of producing rolls with dimensions of up to 14
tons and two meters in length.
Just like fire, the Votorantim Group expanded its work with nickel,
zinc and steel, and it also invested in new markets. Without
determination, none of this would have been possible.
32
33
Metals
Operating
Performance
The dynamism and capacity
to select new businesses that
are in synch with the strategy
of the Votorantim Group
characterized the operations
in the metals area in 2007.
Companhia Brasileira de
Alumnio (CBA), which is
the Brazilian sector leader,
maintained its continuous
growth trajectory, raising
its production capacity
from 405,000 to 475,000
tons. With the acquisitions
undertaken during the year,
Votorantim Metals, which
produces nickel, zinc and
steel, began operations in
another four countries.
Metals
Net Revenues
(R$ million)
(R$ million)
10,284
3,516
8,830
34
3,825
835
1,051
05
06
1,972
1,679
1,962 1,920
3,560
04
(R$ million)
1,477
5,205 5,817
03
Investments in Capex
07
03
04
05
06
07
03
972
04
05
06
07
Aluminum
CBA has the largest
integrated aluminum factory
in the world located in the
municipality of Alumnio
(SP). It processes gross ore
all the way to semi-finished
products, which amounts
to six industries in the same
location. With the start-up
of a new production area
for primary aluminum,
it increased its installed
international excellence,
seeking assets that make it
globally competitive. With the
purchase of 27% of AcerBrag,
the second-largest producer
of long steel in Argentina, the
Group took yet another step
in the direction of diversifying
its portfolio and searching for
new geographical horizons.
Investments
Aluminum
CBA plans to expand to
570,000 tons starting in
2009. Its constant challenge
is to have ore available,
and the energy to process it.
Therefore it invests in its own
electricity generation and in
Metals
Dedication
Transforming a tree into a piece of
paper is work. Replanting that tree and
turning it into a renewable source of raw
materials is dedication. Votorantim was
the first company in the sector to adhere
to the International Declaration on Cleaner
Production of the United Nations for the
Environment (PNUMA). It signed up due
to its dedication, not because it was an
obligation. Because fulfilling obligations is
nothing. It is common. And you dont get to
be the size of the Votorantim Group by doing
what is common, by fulfilling ones duties.
It is necessary to do more.
With commitment. With sacrifice.
With dedication. Only in this way does the
impossible come closer to being possible.
38
39
Business performance
(R$ million)
(R$ million)
3,403 3,418
3,795
3,211
2,926
03
04
05
06
07
1,306
03
1,471
1,222
05
1,101
06
07
40
(R$ million)
1,493
1,487
04
Investments in Capex
725
781
03
04
1,155
818
05
06
07
VCP expands
pulp business
and concentrates
on operations
with higher
value-added
papers.
41
Investments
During the year, investments
totaled R$ 1,155 million and
were concentrated on future
construction: expansion of
the forest area (acquisition
of land, planting and
maintaining forests) mainly
in the states of Mato Grosso
do Sul and Rio Grande do
Sul, and construction of the
factory for Projeto Horizonte,
in Trs Lagoas (MS). The unit,
with capacity for 1.3 million
tons of pulp, will begin
operations in 2009.
For 2008 the projection is to
invest US$ 629 million
42
43
Energy
Courage
It is courage that gives a drop of water its strength. Votorantim knows the force of
courage. It also knows the force of water. With courage, one drop of water ceases
to be one drop. It battles, confronts, grows. It summons other drops and becomes a
river. With courage, Votorantim transforms this heroism of water into 1,
into 2, into 31 hydroelectric plants. And with this courage the Votorantim Group will
continue to do what it has been doing these last 90 years: removing the im from
impossible. Like transforming one drop of water into an abundance of energy.
44
45
Business
performance
Energy
Energy
Self-generation of energy is the indispensable ingredient
in the Votorantim Groups recipe for sustainability. The role
of Votorantim Energy is to support the growth strategy of
the Groups companies, which in 2007 obtained record
results and production.
Net Revenues
(R$ billion)
1,101
1,183 1,223
1,326
1,388
03
04
05
06
07
216
03
505
328
340
05
06
264
04
07
Investments in Capex
(R$ billion)
424
03
46
93
101
81
04
05
06
161
07
47
Energy
particularly successful,
as the market was marked
by turbulence caused by
scarce supply and high
prices. During the year, the
businesses provided net
income of R$ 1,388 million,
and cash generation
was R$ 505 million,
an evolution of 48.5%.
Investments
Even within this highly
competitive scenario,
Votorantim acquired
and began building the
hydroelectric plant Salto
do Rio Verdinho in the
municipality of Itarum (GO),
and it increased its share in
48
49
Agribusiness
Success
Every great story, just like the best dreams, begins with a small seed. It is
because of this that over the last 90 years the Votorantim Group has gone to
the field to sow a history of success and to reap more and more conquests.
The Votorantim Group supplies 20% of all concentrated orange juice
consumed in the international market. The seed of success has grown,
and today the company is expanding its own orchards, irrigation systems
and investing in operations in North America, Europe and Oceania.
These are the successes that make our story possible.
50
51
Agribusiness
Growth with
attainment
of high value
Agribusiness
Operating Performance
Votorantim Agribusiness (VA)
is one of the largest producers
of concentrated orange juice in
Brazil. It exports to more than
60 countries on five continents,
and is among the three largest
companies worldwide in the
sector. In 2007, Citrovita, which
is controlled by VA, continued
its growth trend, expanding
14% in processing and 12%
in sales in relation to 2006.
52
Net Revenues
(R$ million)
1,026
459
401
04
(R$ million)
341
1,463
365
305
167
603
100
03
Investments in Capex
(R$ million)
05
06
07
03
57
04
65
75
03
04
124
33
05
06
07
05
06
07
53
Agribusiness
Investments
The year was also marked by the Board of Directors approval of a daring expansion plan totaling
R$ 800 million in investments that will be conducted over the next five years. The amount will be
allocated to four main fronts.
Sapling Production, Citrovita, Itapetininga, SP
Industrial
growth will be
sustained by
an increased
citrus base.
Orange truck, Citrovita
54
55
Chemicals
Persistence
Challenging the impossible is an unending battle.
It was by persistently transforming difficulties into
competitive advantages that the Votorantim Group
doubled the number of countries to which it exports
and conquered 16% of the global nitrocellulose
market. It differentiated products, adopted special
care in handling and transport, and it fully assumed
the logistics chain to precisely and safely deliver
nitrocellulose directly to the client in any part of the
world. The Votorantim Group owes a great
deal to persistence. It has been 90 years without
desisting. Without giving up. Without believing that
the impossible is impossible.
56
57
Chemicals
Operating Performance
In 2007, Votorantim Chemicals completed its project to expand nitrocellulose production to
33,000 tons per year, gaining the global leadership position in the sector with 16% market
share. Nitro Qumica Brasileira, controlled by the Company, is considered to be the most modern
nitrocellulose factory in the world, with the best productivity and quality indices.
With one factory in So Miguel Paulista (SP) and mines in the region of Cricima (SC),
Laboratory, Nitro Qumica, So Miguel Paulista, SP
Chemicals
Net Revenues
(R$ million)
347
351
03
04
378
05
340
333
06
07
94
93
68
03
04
05
06
81
07
Investments in Capex
(R$ million)
68
67
54
03
58
04
45
05
06
31
07
59
Investments
Chemicals
60
61
Finance
Realization
Realization is what differentiates big dreams from
big illusions. Without realization, nothing would be
possible. In the end, the best thing about having a
dream is making it real. The Votorantim Group helps
thousands of people purchase cars or construction
materials, and makes personal credit feasible and
available for those who want to turn dreams into
reality. Today the Group has its own credit card,
it is the fastest-growing financial entity in the
country, and it has become the fourth-largest private
domestic institution. This is living proof
that realization honors dreams, making them
become real.
62
63
Finance
Finance
Net Equity
Total Assets
(R$ billion)
56.7
36.6
(R$ billion)
66.4
46.0
2.2
3.1
4.0
6.0
5.0
24.9
BV Financeira, Votorantim Finance, So Paulo, SP
03
04
05
06
07
03
Net Income
(R$ million)
1,011
Operating
Performance
In 2007, Banco Votorantim
consolidated its position as
the fourth-largest private
domestic bank in Brazil, with
assets of R$ 66.4 billion,
17.1% above the prior year.
Its business is concentrated
on consumer financing,
investment banking products
and treasury products for
corporate clients, resource
administration, and securities
brokerage. The operations
of Votorantim Finance are
conducted by a group of
institutions that act in an
integrated manner in the
financial market: Banco
Votorantim (commercial and
64
629
741
806
07
26.7
16.8
12.2
04
05
06
(R$ billion)
31.3
07
03
7.1
04
05
06
06
07
(R$ billion)
36.7
17.9
13.1
04
05
Funds Managed
20.4
03
06
(R$ billion)
1,164
Funds Raised
8.8
05
Credit Options
4.3
03
04
07
8.5
9.4
03
04
20.9
12.6
05
06
07
65
investment bank), BV Financeira (financing and consumer credit), Votorantim Asset Management
(resource management) and Votorantim CTVM (securities brokerage firm). The Bank ended 2007
with 15 branches in Brazil. There is one subsidiary abroad and one agency in the Bahamas in
Nassau, in addition to an office in London and a brokerage firm in New York.
Finance
In 2008, Banco
Votorantim
expects to
continue its
growth in the
credit markets.
Investments
A new organizational and
operating structure allowed
better efficiency to be
attained in 2007, further
expanding performance and
business results. In addition,
the Bank has invested in
its technological platform,
with new systems, expanded
equipment capacity, and
process improvement. In
August 2007 it entered
into a new market segment
with the launch of its credit
card with the Visa and
MasterCard logos. In 2008,
Banco Votorantim expects to
continue its growth in both
the individual and
retail credit markets.
The expectation is that
the company will attain
growth of around 40%
during the period.
New Business
Innovation
It began as a textile factory. Today it
operates in the IT market, and is the first
Brazilian company capable of providing
integrated information technology services,
a Contact Center and BPO. This is a good
example of what a large part innovation
plays in the story of the Votorantim Group.
Innovation is a way of thinking. It is finding
opportunities where others see threats.
It is seeing the new where everyone
sees the same old thing, and knowing
that what is impossible one way, may be
possible another way. Not to be different.
To be better. To not stand still. To evolve.
Over the next 90 years, to give way to new
impossible things, as the impossible things
of today become possible.
68
69
New Business
Operating
Performance
Votorantim New Business
(VNN), a corporate
investment fund that invests
in innovative companies
with high potential for
value creation, continued
its growth trajectory and
discovery of potential
investments in 2007.
The companies that currently
comprise its portfolio operate
in information technology,
mineral exploration, services
and biotechnology.
The merger of TIVIT and
Telefutura is among the
years highlights. In addition,
TIVITs purchase of Software
Contact Center, and the
technology partnership
of Alellyx and Canavialis with
Monsanto, are among the
main events of 2007.
The merger of TIVIT,
which specializes in
outsourcing information
technology infrastructure
and systems development
services, with Telefutura,
a contact center company
70
New Business
TIVIT, Data Center, So Paulo, SP
and an outsourcer of
business processes, allowed
synergy gains, a broader
scope, and the sale of
various joint services. This is
the first Brazilian company
capable of offering integrated
Information Technology,
Contact Center and Business
Process Outsourcing (BPO)
services, a model that offers
clients tailored solutions
for certain stages of their
business. With the purchase
of Softway, TIVIT gained
expertise in credit and
collections, which are the
companys specialties.
At the end of 2007, there
were 25,000 employees,
a portfolio of clients with 300
large and 1,400 small and
medium-sized companies,
and 16 units.
In biotechnology,
the highlight was the
exclusivity contract for
technology development
of cultivating sugar cane
between Alellyx and
CanaVialis, with Monsanto.
With this, Votorantim will
72
Investments
In 2008, Votorantim New
Business and the companies in
its portfolio intend to continue
their expansion process
through new investments
in companies in Brazil and
abroad. In the specific case of
TIVIT, internationalization is a
goal to be reached in 2008,
with the provision of services
from Brazil for American and
European companies.
In 2008,
Votorantim New
Business and
the companies
in its portfolio
intend to
continue their
expansion
process
through new
investments
in companies
in Brazil and
abroad.
73
Responsibility
The Votorantim Group invests in social projects because it believes in the future.
In 2007 alone, it supported 103 projects, and more than 315,000 young people
benefited. The program Escola em Ao (School in Action) improved students
reading and writing by 55%, and it also trained 420 teachers. The project Onda
Jovem (Youth Wave) was chosen by the UN as one of the 50 Brazilian ways to
change the world. In the work area, the projects Futuro em Nossas Mos
(Future in our Hands) and Evoluir (Evolve) trained more than 900 young people
for the labor market. In culture, the Group sponsored 35 projects that provide
access to culture, and through Via Votorantim the Group benefited 7,500 children
and adolescents in socially vulnerable situations. For those who need it, these are
opportunities. For the Votorantim Group, this is only the beginning.
74
75
Projeto Msica nas Escolas (Music in the Schools Project), Barra Mansa, RJ
Social Performance
The Votorantim Group believes
that the work of today must
guarantee tomorrow.
This sustainable vision
permeates all its actions, but it
is best stated in the social area
with the Groups operations
in the communities around
the factories. In 2007 they
gained yet another channel
of expression in Votorantim
Metals, which started holding
public meetings before building
Programs
Distribution of
Added Value (DVA)
2.3%
11.1%
Shareholders
Employees
22.2%
31.1%
Government
33.3%
Retained
Education
The Education Program encourages raising the level of
schooling of young people with actions to combat failing
grades and skipping class, and that encourage their continued
development through quality education. The project Onda
Jovem, comprised of a magazine and an Internt portal,
was recognized by the UN as one of the 50 Brazilian ways
to change the world. The project is a place of reference for
content regarding actions connected to youth.
Third Parties
30.4
31.0
03
04
34.0
05
37.4
06
44.8
07
Work
The Programa de Trabalho (Work Program) allows access to,
the search for and the insertion of qualified youth into the labor
market, respecting their vocations and their interest in bulding
a professional career. The project Futuro em Nossas Mos,
which is carried out at Companhia Brasileira de Alumnio,
Votorantim Cement and Votorantim Metals, operates in three
areas: professional training, insertion into the market,
and formation of support networks. Professional training is also
a focus of the Evoluir project. The two initiatives obtained an
employability index of 50% in 19 municipalities in Brazil.
77
Culture
Programa de Democratizao
Cultural (Cultural
Democratization Program)
seeks to contribute to
balancing the equation
between production and
access to culture, supporting
actions that make the
population particularly
young people cultural
participants, whether by
means of exhibition projects,
tours, practice, and even
artistic training. The Program
supported 35 projects in 78
municipalities, with a public
of 700,000 people, of whom
almost 270,000 are young
people. In 2007, the main
events were: production
of the Support Manual for
Cultural Democratization
Projects, the second public
selection of cultural projects,
and the International Cultural
Democratization Seminar.
Environmental performance
Continuous improvement
of processes and adoption
of programs to reduce and
rationally use materials and
natural resources align the
Groups companies in the
search for balance between
the five elements that
are fundamental for life:
water, air, energy, land and
people. This commitment to
sustainability has provided
relevant progress in
environmental performance,
minimizing the impact of
activities on the environment.
In 2007, investments in the
Projeto Memria
Launched in 2003, Projeto Memria Votorantim [Votorantim Memory Project] seeks to
strengthen the link of each company employee, value their role as agents in building
Votorantims path, and their participation in economic, political and social development of
the country. The content recorded in the last five years will be presented in 2008 in Espao
Votorantim Aprendizagem e Conhecimento [Votorantim Space Learning and Knowledge]
during the commemoration of the Groups 90 years, in a pioneering initiative that marks
Votorantims historical and social role of responsibility. The project has a collection of
70,000 documents kept in a climate-controlled room, and 900 interviews, 70 videos and 8
commemorative books, available at www.memoriavotorantim.com.br (site in Portuguese only).
Mata Atlntica Reserve on the banks of the Juqui River, SP
78
79
Energy efficiency
Energy efficiency projects
make the industrial
operations competitive,
especially those that use
energy intensively, such as
metals, cement and pulp.
In 2007, even with volume
growth in all the Business
Units, the Group managed
to save 2% in energy
consumption, with selfproduction being 63% of the
supply. At VCP, nearly 80% of
Sustainable production
Votorantim Pulp and Paper
was the first Brazilian
company in the sector to
become a signatory to the
International Declaration on
Cleaner Production of the
United Nations Program for
the Environment (PNUMA)
in 2005. In recognition of its
sustainable management,
VCPs forests in the state of
So Paulo are certified by the
Forest Stewardship Council
(FSC), and its production uses
80
Recycling
With the acquisition of
U.S.Zinc, Votorantim
Metals became the fourthlargest recycler of zinc
worldwide, and it also now
integrates all the links in
the production chain with
mining, metallurgy and metal
recycling. On another front,
the Polimetlicos project in
Juiz de Fora (MG) will allow
reduction of 80% of the waste
generated from the current
zinc production process, and
Environmental education
Internal and external programs seek to develop knowledge, attitudes and the skills necessary
to preserve and sustainably use natural resources. CBA created the program Cultivando Boas
Aes [Cultivating Good Actions], which consolidates all the social and environmental actions
developed by the Companys units. In 2007, nearly 25,000 people in 17 municipalities located
around the factories were served. Notable among the activities are the Centros de Vivncia
Ambiental (CVAs Environmental Living Centers), which are spaces to develop activities of
awareness and information for the population. The fifth center, inaugurated in the municipality
of Alumnio in 2007, includes a green area of 48,000 square hectares, in which 14,000 people
were attended during the year.
The Environmental Education Program of Votorantim Metals incorporates environmental
education as one of the Companys cultural values. In 2006 and 2007, it involved more than
20,000 people. Three hundred and sixty-six teachers from public schools received environmental
education training, and 415 children of employees and full-time contractors were trained as
environmental monitors. In addition, 21,107 employees and full-time contractors participated in
five types of environmental training. At VCP, these activities are developed in eight Ncleos de
Educao Ambiental NEAs (Environmental Education Centers), which are centers that multiply
environmental knowledge, constituting one of the main axes of VCP with the communities
surrounding its operating areas.
82
83
Unity
Some people think that unity only produces force. The Votorantim Group is proof
that it is a determining factor in much more. It encourages entrepreneurship, daring,
determination, persistence, innovation, diversity and responsibility. It inspires talent,
culture and businesses, using the best of each. With unity, that which is good
becomes not only better, but bigger. Only unity is capable of multiplying dreams and
possibilities, and adding the realizations of a single Group, which builds a portfolio of
businesses. Only in this way is it possible to build something that is truly lasting, such
as one of the largest business conglomerates in Latin America, such as a 90-year story,
and, most importantly, dreams that never end.
84
85
Financial
Statements 2007
We conducted our audits in accordance with auditing standards applicable in Brazil, which require
that the audits be done with the objective of proving proper presentation of the financial statements
in relevant aspects. Therefore, our examinations included, among other procedures: (a) work planning,
considering the relevance of the amounts, the volume of transactions and the accounting systems
and internal controls of the companies; (b) verification, based on tests, of evidence and the records
that support the amounts and the accounting information released; and (c) evaluation of the most
representative accounting practices and estimates adopted by management of the companies, as well
as presentation of the financial statements taken together.
Based on our audits and on the opinions provided by other independent auditors, we are of the
opinion that the financial statements audited by us and mentioned in the first paragraph adequately
represent, in all relevant aspects, the net equity and financial position of Votorantim Participaes S.A.
and Votorantim Participaes S.A. and controlled companies on December 31, 2007 and 2006, and
the results of operations, the net equity statements and the statements of sources and uses of funds
of Votorantim Participaes S.A., for the fiscal years ended on those dates, as well as the consolidated
result of the operations and the statements of sources and uses of consolidated funds in those fiscal
years, in accordance with accounting practices used in Brazil.
Independent Auditors
CRC 2SP000160/O-5
86
We audited the balance sheets of Votorantim Participaes S.A. and the consolidated balance sheets
of Votorantim Participaes S.A. and controlled companies on December 31, 2007 and 2006, and
the corresponding income statements, statements of net equity and sources and uses of funds
of Votorantim Participaes S.A. and the corresponding consolidated income statements and the
sources and uses of funds for the fiscal years ended on those dates, prepared under the responsibility
of its management. Our responsibility is to issue an opinion regarding these financial statements.
Examination of the financial statements of the indirectly associated companies at December 31,
2007 and 2006, Minerao Rio do Norte S.A., Petrocoque S.A. Indstria e Comrcio, Machadinho
Energtica S.A., Sirama Participaes Administrao e Transportes Ltda., Compaia Minera Milpo
S.A.A. and Campos Novos Energia S.A., whose investments, evaluated using the net equity method
total R$ 639,590 thousand (2006 - R$ 464,053 thousand), as well as the companies controlled in
conjunction with VBC Energia S.A., Aracruz Celulose S.A. and Usinas Siderrgicas de Minas Gerais S.A.
- Usiminas and the controlled companies Votorantim Finanas S.A. and TIVIT Tecnologia
da Informao S.A., with investments and consolidated assets of R$ 8,229,956 thousand
(2006 R$ 6,198,537 thousand) and R$ 67,458,651 thousand (2006 - R$ 55,708,906 thousand),
respectively, were performed under the responsibility of other independent auditors, and our opinion
in relation to the value of these investments and total assets and liabilities, as well as participation of
Votorantim Participaes S.A. in the profits produced by it in the amount of R$ 1,890,637 thousand
(2006 R$ 1,376,448 thousand), is based exclusively on the opinions of the other auditors.
Assets
Note
Current
Cash and Cash Equivalents.......................................................................................................................
Short-term liquid interbank loans..............................................................................................................
Short-term investments and derivative financial instruments......................................................................
Interbank relationships.............................................................................................................................
Accounts receivable from clients...............................................................................................................
Credit operations......................................................................................................................................
Provision for credits for doubtful payments................................................................................................
Inventory..................................................................................................................................................
Taxes recoverable.....................................................................................................................................
Dividends and interest on own capital receivable......................................................................................
Exchange portfolio...................................................................................................................................
Other credits ...........................................................................................................................................
Non-current
Long-term
Short-term liquid interbank loans..............................................................................................................
Short-term investments and derivative financial instruments......................................................................
Accounts receivable from clients...............................................................................................................
Credit operations......................................................................................................................................
Provision for credits for doubtful payments.................................................................................................
Mutual assets...........................................................................................................................................
Titles receivable........................................................................................................................................
Legal deposits .........................................................................................................................................
Tax Incentives...........................................................................................................................................
Deferred income tax and social contribution.............................................................................................
Taxes recoverable.....................................................................................................................................
Other credits............................................................................................................................................
Permanent
Investments in controlled and associated companies.................................................................................
Goodwill/(negative goodwill)....................................................................................................................
Property...................................................................................................................................................
Deferred...................................................................................................................................................
Total assets...........................................................................................................................................
2007
Controller
2006
300,949
133
3,208,065
1,489,327
4
5
6
7
8
3
3
330,094
252,651
454,615
412,123
11,555
4,103,314
1,267
2,357,465
143,664
601,456
5
8
1,153,116
1,081,651
15
21,505
4,039
33,762
5,330
30,578
1,391,994
24,352
4,039
64,245
14
8
9
9
10
36,522
1,812,265
25,549,856
(200,422)
14,262
24,121,838
(200,422)
14,793
25,363,696
30,859,004
23,936,209
28,105,939
2007
Consolidated
2006
878,735
15,977,491
27,925,993
1,006,101
2,532,712
12,976,669
(568,470)
3,377,364
2,034,135
78,158
856,958
1,612,063
68,687,909
377,592
17,951,404
23,959,773
1,438,828
2,436,270
9,136,992
(308,703)
2,914,337
2,089,612
34,502
752,238
1,944,066
62,726,911
984,311
820,357
90,222
13,804,461
(121,533)
513,744
178,400
721,109
7,636
1,497,677
894,414
809,954
20,200,752
1,428,764
3,192,270
21,874,496
582,308
27,077,838
115,966,499
1,499,112
755,262
24,435
7,300,087
(119,846)
456,588
374,035
569,458
23,058
1,309,035
986,747
575,159
13,753,130
1,014,002
3,011,245
17,718,540
720,353
22,464,140
98,944,181
2007
Consolidated
2006
7,878,788
8,944,093
17,347,430
509,563
269,153
1,816,999
638,288
440,261
890,851
991,611
2,859,638
913,496
145,799
660,149
2,270,447
46,576,566
5,437,204
8,351,556
13,784,733
446,739
171,579
1,661,682
398,206
1,202,247
1,314,198
511,046
2,069,332
439,269
218,379
486,001
770,383
37,262,554
16,743,054
3,966,187
6,044,402
1,591,059
4,005,394
15,449,309
8,561,766
2,633,798
2,269,588
4,190,241
940,009
1,989,910
904,276
2,578,842
1,013,112
39,776,245
973,996
1,800,506
1,018,298
800,099
37,697,601
2,445,014
660,374
Minority share........................................................................................................................................
2,913,130
2,657,956
Current
Loans and financing.................................................................................................................................
Deposits...................................................................................................................................................
Funding on the open market.....................................................................................................................
Funds from acceptances and issue of titles . .............................................................................................
Funds from debentures.............................................................................................................................
Suppliers..................................................................................................................................................
Salaries and social benefits.......................................................................................................................
Taxes and contributions to collect.............................................................................................................
Income tax and social contribution...........................................................................................................
Dividends and interest on own capital payable . .......................................................................................
Derivative financial instruments................................................................................................................
Exchange portfolio...................................................................................................................................
Advances from clients...............................................................................................................................
Provision for contingencies and tax obligations.........................................................................................
Other obligations.....................................................................................................................................
Non-current
Long-term
Loans and financing.................................................................................................................................
Deposits...................................................................................................................................................
Funding on the open market.....................................................................................................................
Funds from acceptances and issue of titles................................................................................................
Funds from debentures.............................................................................................................................
Mutual liabilities.......................................................................................................................................
Deferred income tax and social contribution.............................................................................................
Provision for contingencies and tax obligations.........................................................................................
Derivative financial instruments................................................................................................................
Subordinated debt....................................................................................................................................
Other obligations.....................................................................................................................................
Net equity................................................................................................................................................
Capital.....................................................................................................................................................
Capital reserve.........................................................................................................................................
Re-evaluation reserve...............................................................................................................................
Profit reserve............................................................................................................................................
Accumulated profits..................................................................................................................................
88
Note
2007
Controller
2006
11
24,535
5,207
1,533
1,635
1,004
7,870
171,900
12
13
11,179
743,540
367,234
39,190
821,612
7,506
560,721
11
832,511
1,030,516
12
13
8
14
15
19
4,716,253
10,512
96,187
1,574
5,669,803
43,567
94,753
104,154
129,982
5,787,019
6,942,793
19
15
16
12,380,538
836
17,047
1,017,808
10,834,144
24,250,373
12,380,538
836
17,047
778,598
7,425,406
20,602,425
12,380,538
836
17,047
1,017,808
10,839,314
24,255,543
12,380,538
836
17,047
778,598
7,488,677
20,665,696
30,859,004
28,105,939
115,966,499
98,944,181
89
2007
Consolidated
2006
16,640,270
7,573,930
7,427,103
2,018,899
1,696,700
35,356,902
14,454,124
7,639,052
8,017,160
1,456,361
1,729,406
33,296,103
(4,940,671)
(4,318,207)
Net Revenues....................................................................................................................................
Cost of products sold and services provided..........................................................................................
Expenses from financial intermediation.................................................................................................
Gross income....................................................................................................................................
Operating revenues (expenses)
Expenses with sales and credits............................................................................................................
General and administrative expenses....................................................................................................
Other operating revenues (expenses), net..............................................................................................
30,416,231
(14,776,964)
(4,585,772)
11,053,495
28,977,896
(14,458,497)
(5,683,868)
8,835,531
Note
2007
Controller
2006
Gross revenues
Sales to the internal market..................................................................................................................
Sales to the external market..................................................................................................................
Revenues from financial intermediation.................................................................................................
Supply of electricity..............................................................................................................................
Revenues from services.........................................................................................................................
90
20
(84,532)
1,491
(83,041)
(72,283)
(2,857)
(75,140)
(2,109,614)
(2,804,467)
563,557
(4,350,524)
(1,648,924)
(1,373,987)
563,593
(2,459,318)
(83,041)
(75,140)
6,702,971
6,376,213
4,954,827
(139,451)
(142,484)
4,672,892
160,695
4,750,546
38,717
4,789,263
4,124,508
174,921
(732,587)
(933,382)
(1,491,048)
1,963,079
7,175,002
539,387
7,714,389
152,261
(420,958)
(466,204)
(734,901)
739,501
6,380,813
280,830
6,661,643
(7,378)
2,308
(5,070)
4,784,193
(8,642)
11,010
2,368
4,337,983
4,784,193
872.38
4,337,983
806.18
(2,029,366)
(179,164)
(2,208,530)
5,505,859
(282,241)
(418,439)
4,805,179
(1,571,526)
(174,893)
(1,746,419)
4,915,224
(196,032)
(319,581)
4,399,611
4,124,508
31,463
4,080,831
254,784
4,335,615
Capital
reserve
Note
At December 31, 2005..............................................................
Adjustment from prior years.........................................................
Adjusted opening amount........................................................
Capital Increase...........................................................................
Adjustment from prior years.........................................................
Net Income for the year...............................................................
Destination of the results
Legal reserve...............................................................................
Proposed interest on own capital (R$ 90.70 per thousand shares)
Dividends paid and proposed (R$ 100.77 per thousand shares)....
At December 31, 2006..............................................................
Net Income for the year...............................................................
Destination of result....................................................................
Legal reserve...............................................................................
Dividends paid and proposed (R$ 211.16 per thousand shares)....
At December 31, 2007..............................................................
Capital
12,112,210
Capital
reserve
Tax
Incentives
836
Re-evaluation
reserve in
controlled
companies
17,047
Legal reserve
561,699
836
17,047
561,699
16(e)
16(a)
16(e)
12,112,210
268,328
216,899
16(d)
16(c)
12,380,538
836
17,047
778,598
Accumulated
profits
5,618,540
(904,605)
4,713,935
(379,343)
4,337,983
Total
18,310,332
(904,605)
17,405,727
268,328
(379,343)
4,337,983
(216,899)
(488,028)
(542,242)
7,425,406
4,784,193
(488,028)
(542,242)
20,602,425
4,784,193
(239,210)
(1,136,245)
(1,136,245)
10,834,144
24,250,373
16(c)
239,210
12,380,538
836
17,047
1,017,808
91
2007
Consolidated
2006
4,784,193
4,337,983
4,805,179
4,399,611
(4,954,827)
(4,124,508)
(349,996)
(174,921)
(152,261)
242,519
933,382
1,745,881
933,942
420,958
466,204
1,942,407
73,168
(136,000)
174,893
147,165
437,229
139,451
142,484
847
(2,308)
(16,425)
1,434
102,581
638
(235,751)
(11,010)
179,164
(174,965)
363,552
46,541
418,439
197,430
(379,343)
(715,446)
715,446
9,272,172
471,199
1,730,858
4,168,527
1,117,844
5,365,095
5,416,504
1,213,188
1,476,391
3,875,878
16,336,298
10,583,378
16,414,337
236,814
715,446
1,695,265
6,280,162
1,938,128
337,858
4,684,951
51,485
1,114,407
171,659
11,344,121
98,018
602,165
34,502
9,261
7,895,018
159,779
1,030,270
1,136,245
( 3,640)
Total applications...........................................................................................................................................
2,390,920
17,405,742
13,936,392
8,169,285
1,484,958
(1,069,444)
(3,353,014)
8,245,052
4,103,314
(2,357,465)
1,745,849
2,357,465
(3,140,710)
(783,245)
68,687,909
(62,726,911)
5,960,998
62,726,911
(50,401,338)
12,325,573
821,612
(560,721)
260,891
1,484,958
560,721
(274,522)
286,199
(1,069,444)
46,576,566
(37,262,554)
9,314,012
(3,353,014)
37,262,554
(33,182,033)
4,080,521
8,245,052
Operating context
The purpose of Votorantim Participaes S.A. and its controlled companies (the Votorantim Group)
is to manage goods and companies, and it may participate in other civil and commercial companies of
any type, in the interest of its purposes.
The Votorantim Group is a private conglomerate with investments in a business portfolio:
268,328
1,136,245
Current liabilities
At the end of the year.......................................................................................................................................
At the start of the year......................................................................................................................................
319,581
(379,343)
7,713,612
58,299
3,511,480
108,137
875,398
768,394
174,166
(319,855)
14,104
1,030,270
10,764
92
Controller
2006
315
1,017,546
2,620,640
163,265
a) Votorantim Industrial
(i) Votorantim Cement
Votorantim Cement has cement, aggregates, hydrated lime, dry mortar, agricultural limestone,
gypsum and concrete companies. By means of its investments, in addition to operations in Brazil,
VC has operations in the United States, Canada and Bolivia. In December 2006, Companhia de Cimento
Ribeiro Grande (CCRG) was acquired, and in October 2007, the companies in the Prestige Group,
headquartered in Florida (United States) and leaders in the supply of milled concrete and designed
concrete in the states of Florida, North Carolina, California and Texas, were acquired.
(ii) Votorantim Metals
In the metals segment, Votorantim operates in the aluminum, zinc, nickel and steel markets. In addition
to its operations in Brazil, it has investments in Peru through Votorantim Metais Cajamarquilla S.A.,
where it produces and sells zinc, and in Colombia, in the long steel market, with a 52% share in
Aceras Paz del Ro, which was acquired at the beginning of 2007.
(iii) Votorantim Pulp and Paper
With an integrated operation in Brazil that includes the production of wood up to product distribution
to the final consumer, VCPs shares are traded on the So Paulo Stock Exchange, and its Level III ADRs
are traded on the New York Stock Exchange. Approximately 80% of the pulp that is sold goes to the
external market, and paper mainly goes to the internal market.
On May 24, 2006, the company restructuring related to the acquisition of the company share in Ripasa
S.A. Celulose e Papel was concluded. Due to this transaction, the following contractual conditions are
in effect for the option to purchase and sell shares with the group of ex-shareholders that controlled
Ripasa, which received preferential shares of VCP: (i) in the first five years, the ex-shareholders have
the option to sell the shares, as long as they are free from any burden or encumbrance; in the last year,
VCP has the option to purchase the shares. The contractually determined amount of the option is
R$ 318,488, subject to update by the SELIC from March 31, 2005 until the effective transaction date,
if there is one.
93
94
On February 1, 2007, an agreement was signed with International Paper to exchange industrial and
forest assets between the two companies. As a consequence of the agreement, VCP transferred the
pulp and paper production unit located in the municipality of Luiz Antonio (SP), as well as the specific
forest base for that unit, to International Paper. In turn, International Paper transferred to VCP assets
of a pulp plant under construction, with all related rights, in addition to the land and planted forest
located around Trs Lagoas (MS). This operation generated negative goodwill of R$ 1,780,000 in
relation to the difference between the net equity of the companies exchange basis.
In September 2007, VCP and the Finnish company Ahlstrom Corporation formalized the formation of a
joint venture involving the paper businesses produced by the VCP unit located in Jacare (SP),
as described in note 9(a).
The individual and consolidated financial statements were prepared and are presented in conformance
with accounting practices used in Brazil.
In preparation of the mentioned financial statements, it is necessary to use estimates and projections
that affect the reported values of assets, liabilities and results, including estimates that refer to
selection of the useful life of a fixed asset, provisions necessary for contingent liabilities,
and determination of provisions for income tax and similar items. The real results may vary in relation
to the estimates.
(a) Examination of the result
The result of the operations is reported using the accrual basis. Revenues from the sale of products and
services and their corresponding costs are recognized at the time the product is delivered or when the
service is provided. Provisions are formed for discounts and rebates to clients, estimates of returns and
other adjustments in the same period that sales are recorded.
The results of financial intermediation are substantially shown by the results reported in credit
operations, exchange operations, securities and derivative financial instruments.
Revenues from electricity distribution are recognized based on the tariffs regulated by Agncia
Nacional de Energia Eltrica ANEEL (the National Electricity Agency), at the time the energy is billed.
Unbilled revenues relative to the monthly billing cycle are provisioned considering the real energy load
made available during the month and the annualized loss index. The difference between the estimate
and the real unbilled revenues, which has not historically been relevant, is recognized in the following
month. Revenues from sales of electricity generation are registered based on the delivery and capacity
generated, and at rates specified according to contract terms or in the current market price.
(b) Short-term investments and derivative financial instruments
(i) Financial segment
Securities are classified according to how management intends to invest it, in the following categories:
Securities for negotiation - acquired with the intent of being active and frequently negotiated,
adjusted by the market value in counterpart to the result in the period.
Securities available for sale - do not fall into securities for negotiation nor are they kept until
maturity, adjusted by the market value offsetting the net equity line, deducted from tax effects.
Securities kept until maturity - acquired with the intent and financial capacity to keep them
in the portfolio until maturity, recorded at the actualized acquisition cost, and not adjusted by
the market value.
Derivative financial instruments are evaluated and classified as hedge (protection) or non-hedge
instruments. In the financial segment, the operations that use financial instruments effected at the
request of clients, on the Companys own account, or that do not meet the protection criteria defined
in Circular N0 3082 of the BACEN, are recorded at market value with realized and unrealized gains and
losses recognized directly in the income statement.
95
96
contracted during construction directly linked to these companies is capitalized. Capitalized interest is
added to the cost of the corresponding assets, and amortized over the useful life of these assets.
The Votorantim Group is a partner in consortiums that operate hydroelectric plants, and it has its own
hydroelectric plants that are recorded in fixed assets. The revenues generated by the consortiums
arising from the sale of excess production are negotiated on the Wholesale Energy Market, and they
are presented in the results net of expenses.
Expenses related to studies and mineral research are considered to be operating expenses until there
is effective proof of the economic viability of commercial exploration of a determined bed. From this
proof, the expenses incurred are capitalized as a cost of mine development. During the development
phase of a mine, the expenses for removal of waste are capitalized as part of the development costs.
After the start of the mines production phase, these expenses are treated as a production cost.
(h) Deferred
The deferred amount, formed mainly by pre-operating expenses in relation to expansion projects, is
amortized over a ten-year period.
97
Contingent assets - are recognized in the financial statements only in the event of existence of
evidence that indicates the guarantee of their realization over which no other resources apply,
characterizing the gain as practically certain.
Contingent liabilities - are recognized in the financial statements when, based on the opinion of legal
advisors and management, the risk of loss of a legal or administrative proceeding is considered to be
probable, with the probable outflow of resources for payment of obligations, and when the amounts
involved can be measured with sufficient certainty. The contingent liabilities that are classified as
possible losses are not recognized for accounting purposes, and are explained in the explanatory notes,
and those that are classified as remote are not provisioned or divulged.
Legal obligations - these are legal proceedings related to tax obligations whose contestation
regarding their legality or constitutionality that, independent of the probability of success of the legal
proceedings under way, have their amounts fully recognized in the financial statements.
98
99
2007
Industrial segment
Cement
Call Ita Participaes Minas Gerais S.A. ..................................................................................................................................................
Calmit Industrial Ltda. ..............................................................................................................................................................................
Calsete Industrial S.A. ..............................................................................................................................................................................
Votorantim Cimentos Brasil Ltda. ..............................................................................................................................................................
Votorantim Cimentos NNE.........................................................................................................................................................................
Empresa de Transporte CPT Ltda. ..............................................................................................................................................................
Engemix S.A. . ..........................................................................................................................................................................................
St. Barbara Cement Inc. (Canad)..............................................................................................................................................................
St. Marys Cement Inc. (Canad e Estados Unidos)......................................................................................................................................
Suwannee American Cement, LLC (Estados Unidos)....................................................................................................................................
Votorantim Cement North America, Inc. (Canad)......................................................................................................................................
Votorantim Cimentos Ltda. .......................................................................................................................................................................
Votorantim Investimentos Internacionais S.A. . ..........................................................................................................................................
Metalurgy
Companhia Brasileira de Alumnio.............................................................................................................................................................
Indstria e Comrcio Metalrgica Atlas S.A. . ............................................................................................................................................
Votorantim Metais Nquel S.A. (i)...............................................................................................................................................................
Votorantim Metais Cajamarquilla S.A. (Peru)...........................................................................................................................................
Siderrgica Barra Mansa S.A. ...................................................................................................................................................................
Votorantim Metais Zinco S.A......................................................................................................................................................................
Votorantim Metais Ltda. ...........................................................................................................................................................................
Usinas Siderrgicas de Minas Gerais S.A. Usiminas.................................................................................................................................
Aceras Paz del Ro S.A. (Colmbia)............................................................................................................................................................
Pulp and Paper
Aracruz Celulose S.A. ...............................................................................................................................................................................
Nova HPI Participaes e Comrcio Ltda. (ii)..............................................................................................................................................
Ripasa S.A. Celulose e Papel......................................................................................................................................................................
Votorantim Celulose e Papel S.A. ..............................................................................................................................................................
Agribusiness
Citrovita Comercial Exportadora S.A. (iii) ...................................................................................................................................................
Citrovita Industrial e Comercial Ltda. (iii) ...................................................................................................................................................
Citrovita Agroindustrial Ltda. ....................................................................................................................................................................
Citrovita Agropecuria Ltda. .....................................................................................................................................................................
Sucorrico S.A. (ii) . ....................................................................................................................................................................................
Chemicals
Companhia Agroindustrial Igarassu (iv)......................................................................................................................................................
Companhia Nitro Qumica Brasileira...........................................................................................................................................................
Trading
Votorantim International Holding...............................................................................................................................................................
The Bulk Service Corporation.....................................................................................................................................................................
100.00
100.00
100.00
100.00
98.80
100.00
100.00
100.00
100.00
50.00
100.00
98.47
100.00
100.00
100.00
100.00
100.00
98.80
100.00
100.00
100.00
100.00
50.00
100.00
98.47
100.00
99.77
99.86
100.00
99.06
100.00
99.92
100.00
5.76
52.00
99.74
99.86
100.00
99.06
100.00
99.92
100.00
5.76
12.35
12.35
100.00
50.00
52.15
50.00
52.15
99.99
99.99
99.98
100.00
75.00
2007
Percent
2006
100.00
99.99
100.00
99.98
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
99.99
100.00
99.99
100.00
99.98
100.00
100.00
94.56
94.56
100.00
100.00
100.00
100.00
99.99
Financial segment
Banco Votorantim S.A. ..............................................................................................................................................................................
BV Financeira S.A. .....................................................................................................................................................................................
BV Leasing e Arrendamento Mercantil S.A. ................................................................................................................................................
BV Sistemas Ltda. . ....................................................................................................................................................................................
BV Trading S.A. .........................................................................................................................................................................................
CP Promotora de Vendas Ltda. . .................................................................................................................................................................
Votorantim Bank Limited............................................................................................................................................................................
Votorantim Finanas S.A. . .........................................................................................................................................................................
Votorantim International Business Limited...................................................................................................................................................
Votorantim CTVM Ltda. . ............................................................................................................................................................................
Votorantim Asset Management DTVM Ltda. ...............................................................................................................................................
Votorantim Seguros e Previdncia S.A. .......................................................................................................................................................
Banco Votorantim Securities, Inc. . .............................................................................................................................................................
99.92
99.99
99.99
99.94
99.99
99.40
95.94
100.00
100.00
99.98
99.99
99.99
100.00
99.92
99.99
99.99
99.94
99.99
99.40
95.84
100.00
100.00
99.98
99.99
99.99
100.00
Energy segment
VBC Energia S.A. .......................................................................................................................................................................................
50.00
50.00
Percent
2006
99.99
100.00
99.99
99.99
100.00
99.98
99.98
100.00
75.00
(i) The mineral company Serra da Fortaleza S.A. incorporated Companhia Nquel Tocantins during 2006 and changed its company name to Votorantim Metais Nquel S.A.
(ii) Transferred to Votorantim Investimentos Industriais S.A. and incorporated in December 2007.
(iii) Incorporated by Votorantim Participaes S.A. in December 2007.
(iv) Company sold in July 2007.
(q) Reconciliation of net equity and net income during the year between the controlled and
the consolidated
Controller....................................................................................................................................
Complement of equity income (*)...............................................................................................
Adjustment for unrealized profits, net of tax effects....................................................................
Consolidated...............................................................................................................................
2007
24,250,373
86,711
(81,541)
24,255,543
Net equity
2006
20,602,425
63,271
20,665,696
(*) Refers to the complement of net equity of companies consolidated into Votorantim Participaes S.A., with dispersed residual company participation evaluated at historical
cost, whose amounts were adjusted during the consolidation process.
100
101
Controller
2006
Consolidated
2006
169,337
218,668
7,866,028
332,983
2,129,024
4,724,047
1,505,742
211,271
2,098,682
1,194,440
5,264,698
829,479
1,093,238
224,796
20,676,379
958,304
289,498
2,220,603
1,087,669
5,009,917
77,519
465,223
832,453
18,127,240
968,031
884,107
968,031
936,136
609,035
1,637,913
1,154,647
202,370
2,172,435
1,055,734
286,757
462,228
509,979
248,843
4,938,346
3,131,625
28,746,350
(27,925,993)
820,357
680,910
1,652,865
1,792,611
209,658
136,750
2,383,698
1,154,647
3,351,729
(3,208,065)
143,664
2,090,783
(1,489,327)
601,456
343,042
102
4,679,086
1,908,709
24,715,035
(23,959,773)
755,262
(*) Securities for negotiation - the criteria for pricing securities are defined by the Risk Management area of Votorantim Participaes S.A. and Votorantim Finanas S.A., which
consider prices and rates officially divulged by entities such as Associao Nacional das Instituies de Mercado Aberto ANDIMA (National Association of Open Market
Institutions) and Bolsa de Mercadorias & Futuros - BM&F (Commodities & Futures Exchange), in addition to possible price adjustments in low-liquidity securities, which consider
offers, most recent prices, possible dispersion and other factors that may, most adequately and fairly, determine both the internal and the external market value.
For the securities negotiated on the Brazilian market, the average rates for commercial papers released by ANDIMA for the closing date are considered, as are the closing prices
revealed for positions on the BM&F, the prices of the most recent debenture negotiations released by ANDIMA, considering the adoption of criteria judged to be adequate to
price checking for low-liquidity papers. For assets invested abroad, the closing prices for public debt securities in the international market that are released by Bloomberg and
other information services are considered, as are adoption criteria judged to be adequate for correctly pricing low-liquidity securities.
The vast majority of public securities, Eurobonds and C-Bonds issued by the Brazilian government have maturity dates until January 2018. They are recorded in current assets
independent of their maturity periods due to their characteristics of high liquidity, and to better take advantage of market opportunities.
The investment fund shares are recorded at their realization value, obtained by taking the amount available on the closing date of the accounting statements.
Votorantim Finanas S.A., by means of its controlled company Votorantim Asset Management DTVM Ltda., administers various fixed and variable income funds, whose net equity
amounts to R$ 28,921,606 (2006 - R$ 23,649,758). Of the total short-term investments in investment funds maintained by the industrial segment, the amount of
R$ 3,800,654 (2006 - R$ 3,814,713) was made in funds managed by Votorantim Asset Management DTVM Ltda.
Consolidated
2006
4,600,203
5,835,783
2,473,654
2,436,187
1,338,823
277,152
16,961,802
Short-term parcel....................................................................................................................................................................................... (15,977,491)
Long-term parcel........................................................................................................................................................................................
984,311
6,264,005
9,127,721
1,523,791
2,494,632
19,240
21,127
19,450,516
(17,951,404)
1,499,112
52,029
2007
103
Credit operations
(a) Composition of credit operations
Loans public sector...................................................................................................................................................................................
Loans private sector.................................................................................................................................................................................
Financing private sector ..........................................................................................................................................................................
Financing rural, securities and others........................................................................................................................................................
Commercial leasing and exchange portfolio (*)............................................................................................................................................
Short-term parcel........................................................................................................................................................................................
Long-term parcel.........................................................................................................................................................................................
(*) In 2006, classified as Other credits and the exchange portfolio as a reducer of Other obligations.
Consolidated
2006
200,725
4,532,312
11,561,819
142,223
Credits to mature
6,431,916
15,375,964
2,820,479
275,077
94,290
8,451
1,358
4,401
10,543
25,022,479
2007
5,938,605
1,769,176
256,346
2,375,674
Consolidated
2006
2,739,690
1,259,171
182,034
1,882,152
25,560
16,415,769
26,781,130
33,857
10,741,946
16,838,850
Matured credits
669,475
410,059
152,636
99,339
79,486
59,727
287,929
1,758,651
Risk level
AA...................................................................................................................................................
A.....................................................................................................................................................
B delay between 15 and 30 days...................................................................................................
C delay between 31 and 60 days...................................................................................................
D delay between 61 and 90 days...................................................................................................
E delay between 91 and 120 days.................................................................................................
F delay between 121 and 150 days...............................................................................................
G delay between 151 and 180 days...............................................................................................
H - delay greater than 180 days........................................................................................................
16,838,850
(9,136,992)
7,300,087
104
2007
182,856
8,977,910
16,860,252
159,561
600,551
26,781,130
(12,976,669)
13,804,461
2007
Total
6,431,916
15,375,964
3,489,954
685,136
246,926
107,790
80,844
64,128
298,472
26,781,130
Credits to mature
2,614,249
10,266,181
1,209,110
1,175,702
104,208
6,004
630
675
4,360
15,381,119
Matured credits
Inventory
Finished products ......................................................................................................................................................................................
Products in process.....................................................................................................................................................................................
Raw materials and auxiliary........................................................................................................................................................................
Warehousing of goods for consumption......................................................................................................................................................
Imports under way.....................................................................................................................................................................................
Others........................................................................................................................................................................................................
556,442
411,318
112,503
82,395
57,656
46,585
190,832
1,457,731
2006
Total
2,614,249
10,266,181
1,765,552
1,587,020
216,711
88,399
58,286
47,260
195,192
16,838,850
2007
932,005
1,091,118
513,116
454,448
150,280
236,397
3,377,364
Consolidated
2006
878,976
873,490
413,405
445,764
202,518
100,184
2,914,337
Taxes recoverable
Mainly represented by income tax on yield from financial investments and credits from the Tax on Sale
of Goods and Services - ICMS, resulting from the purchase of fixed assets and acquisition of consumable products, recorded for the realization periods evaluated by management.
105
2007
Cement
Empresa de Transportes CPT Ltda. . ......... 18,823
Fazenda So Miguel Ltda. ......................
St. Marys Cement Inc...............................
Votorantim Cimentos Ltda. .....................
Votorantim Cimentos Brasil Ltda. ............
Votorantim Investimentos
Industriais S.A. ....................................... 37,550
Votorantim Investimentos
Internacionais S.A. .................................
1,038
Votorantim Cimentos NNE S.A. ...............
Metals
Votorantim Metais Zinco S.A. . ................
Votorantim Metais Ltda. .........................
Votorantim Investimentos
Latino-Americanos Ltda. . .......................
Chemicals
Companhia Nitro Qumica Brasileira......... 28,740
Energy
Votorantim Energia Ltda. ........................
Agribusiness
Citrovita Agroindustrial Ltda. ..................
Citrovita Industrial e Comercial Ltda. . .....
Citrovita Agropecuria Ltda. ...................
Fazenda Bodoquena Ltda. ......................
Finance
Votorantim Finanas S.A. . ...................... 147,203
Pulp and Paper
Nova HPI Participaes
e Comrcio Ltda. ....................................
Indstria de Papel Pedras Brancas Ltda.
Votorantim Celulose e Papel S.A. ............
Others
Hailstone Limited ...................................
Hejoassu Administrao S.A. ..................
Intervia Txi Areo Ltda. .......................
Mquinas Piratininga do Nordeste S.A. . .
TIVIT Tecnologia da Informao S.A. .......
6,129
106
2006
Dividends and
Interest on own
capital payable
2007
2006
18,823
Mutual assets
and advances
for future
capital increase
Mutual liabilities
Financial charges
net of mutual
2007
2007
2007
2006
2006
Controller
Dividends and
interest on own
capital receivable
2006
Segment/company
Santa Maria Comrcio e Servios Ltda. . ..
Silcar Empreendimentos, Comrcio e
Participaes Ltda. .................................
St. Helen Holding II B.V. . ........................
Votocel Investimentos Ltda. ....................
Votorantim Comercial Exportadora
e Importadora Ltda. ...............................
Voto-Votorantim Overseas
Trading Operations N.V. III.......................
Votorantim Novos Negcios Ltda. ...........
Votorantrade N.V. ...................................
Votorantim Investimentos Ltda. . .............
Usinas Siderrgicas de
Minas Gerais S.A. Usiminas..................
Others.....................................................
31,245
4,323
10,203
123,155
10,203
82,669
288,907
2,415,028
12,904
1,100,338
4,323
578
2,290,787
1,713,687
277,004
(123,673)
(119,253)
11,902
10,783
7
152,568
152,575
1,845
14,862
14,540
110
142,144
8,180
2,170
4,798
42,429
2006
2007
2006
13,168
10,834
8,497
412,123
2007
2006
2007
2006
2007
2006
16,373
23,929
21,641
(2,288)
(2,562)
49,628
60,763
253,833
(450)
306,383
3,589
52,267
367,417
370,922
73,716
82,849
(5,940)
(11,351)
143,335
50,872
(47,799)
19,883
(2)
1,153,116 1,081,651
73
4,716,253
31,819
743,540
367,234
5,669,803
(97,504)
151,633
55,182
(6,120)
(4,182)
Company
Suppliers
BAESA Energtica Barra Grande S.A. ..................................
Machadinho Energtica S.A. . ................................................
Minerao Rio do Norte S.A. .................................................
Petrocoque S.A. Indstria e Comrcio......................................
92,489
290,150
2,170
489
10
216
1,149
11,536
(43,876)
36,851
406,262
3,633
2007
Assets
2006
2007
99
28,421
5,677
34,197
124,950
Financial charges
net of mutual
Mutual liabilities
3,937
12,400
352,835
3,642
252,651
61,302
128,819
1,845
309,288
2007
Mutual assets
and advances
for future
capital increase
Dividends and
Interest on own
capital payable
Mtuos
Hejoassu Administrao S.A...................................................
12,982
513,744
Liabilities
2006
8,404
30,651
5,546
44,601
2007
(34,354)
(52,188)
(121,492)
(208,034)
(161,341)
Consolidated
Expenses
2006
(48,337)
(48,639)
(108,789)
(205,765)
456,588
Transactions are conducted in conditions adjusted between the parties, incurring, or not, financial charges without a period determined for paymenet.
119,589
7,635
743,540
3,301
6,275
45,320
367,234
1
1,707
(7,491)
1,708
225
(12,061)
2,525
5,500
107
Investments
(ii) Consolidated
2007
2007
Segment/company
Cement
Calsete Industrial S.A.....................................................
Empresa de Transportes CPT Ltda...................................
Votorantim Cimentos Ltda..............................................
Votorantim Investimentos Internacionais S.A. . ..............
Votorantim Cimentos Amrica S.A..................................
Votorantim Cimentos Brasil Ltda....................................
Votorantim Cimentos NNE S.A. .....................................
Metals
Votorantim Metais Ltda.................................................
Chemicals
Companhia Nitro Qumica Brasileira...............................
Agribusiness
Citrovita Agroindustrial Ltda..........................................
Citrovita Comercial Exportadora S.A. (i)...........................
Citrovita Industrial Comercial Ltda. (i).............................
Companhia Agroindustrial Igarassu (iii)..........................
Sucorrico S.A. (ii)...........................................................
Fazenda Bodoquena Ltda..............................................
Finance
Votorantim Finanas S.A. . ............................................
Pulp and Paper
Nova HPI Participaes e Comrcio Ltda. (ii)..................
Votorantim Celulose e Papel S.A. (ii)...............................
Indstria de Papel Pedras Brancas Ltda. . ......................
Others
Azben Holding G.M.B.H. ..............................................
Empresa de Minerao Acariuba Ltda. ..........................
Hailstone Limited..........................................................
TIVIT Tecnologia da Informao S.A. .............................
St. Helen Holding II B.V. . ..............................................
Santa Maria Comrcio e Servios Ltda. . ........................
Silcar Empreendimentos, Comrcio e Participaes Ltda.
Votocel Investimentos Ltda. ..........................................
Votorantim Comercial Exportadora e Importadora Ltda.
Votorantim Investimentos Industriais S.A. .....................
Votorantim Investimentos Latino-Americanos S.A............
Voto Votorantim Overseas Trade Operations IV Ltd. ....
Votorantim Novos Negcios Ltda. ..................................
Votorantim Empreendimentos Ltda. ..............................
Intervia Txi Areo Ltda. .............................................
Inecap Investimentos S.A. . ...........................................
Ibar Administrao e Participao Ltda. .....................
Mquinas Piratininga S.A. ............................................
Igara Participaes S.A. ................................................
Other investments (iv) . .................................................
Total investments in controlled and associated companies .
Other investments evaluated at cost................................
108
Adjusted net
equity
(unsecured
liability)
10,722
1,293,620
3,048,895
1,037,370
599,662
2,426,457
2,563,470
Result for
the year
2,215
(98)
550,512
(9,460)
633,033
152,878
Company
participation
(%)
100,00
100,00
34,62
68,75
45,45
6,34
1,64
(1,108)
(31,517)
72,843
(65,234)
(16,484)
38,171
184
Companies
BAESA Energtica Barra Grande S.A. .........................
Campos Novos Energia S.A. . ........................................
Ahlstrom VCP Indstria de Papis Especiais S.A. (*) .......
Compaia Minera Milpo S.A.A. ....................................
Machadinho Energtica S.A. . .......................................
Minerao Rio do Norte S.A. ........................................
Petrocoque S.A. Indstria e Comrcio ...........................
Rio Verdinho Energia S.A. .............................................
Sirama Participaes Administrao e Transportes Ltda..
Exchange rate variation in associated company ..............
Other investments...........................................................
Advances made for acquisition of
controlled companies......................................................
Total investments evaluated by the
net equity method...........................................................
Investments evaluated at cost
Alunorte Alumina do Norte S.A. ................................
Tijuca Sociedade de Minerao......................................
Other investments
Industrial segment.........................................................
Financial segment.........................................................
Shared energy segment.................................................
Investment /
(provision for
unsecured liability)
2007
2006
10,722
1,293,620
1,055,459
713,192
272,573
153,926
42,087
8,507
1,294,012
924,695
719,696
272,573
113,768
10,920
655,176
279,575
86,995
99,98
86,977
58,080
279,518
275,467
469,991
65,967
100,00
65,967
59,822
70,529
469,991
12,497
542,022
668,562
878,995
98
124,179
12,992
6,432,731
5,519,386
12,497
(555)
100,00
8,081
(555)
275,888
89,134
318
42
5,215
(394)
6,432,731
1,230,592
100,00
1,230,592
959,693
27,050
293,027
(1,903)
776,490
541,172
100,00
541,172
279,839
682,452
(70,385)
23,499
82,513
5,684
20,182
27,027
(11,348)
(2,113)
45,402
(3,862)
100,00
84,34
100,00
100,00
99,98
29,99
20,182
22,794
(11,348)
(2,113)
45,393
(1,158)
11,938,521
557,116
32,980
51,810
(13,714)
2,476
297,095
49,231
3,678
2,436,092
(15,833)
4,534
(24,877)
(928)
516
95,245
(1,035)
(1,096)
100,00
45,45
50,00
100,00
100,00
94,76
10,44
100,00
99,22
2,436,092
(7,197)
2,114
(24,877)
(928)
489
45,124
(1,035)
(1,088)
140,943
4,954,827
203,820
776,490
326,059
(430)
(5,649)
279,839
319,172
26,421
651,662
552,477
(14,950)
(70,385)
(72,918)
(1,778)
23,499
8,999
28,682
82,497
37,104
1,238
1,705
2,867
84,290
1,320,365 11,938,521 10,633,117
12,978
253,234
260,573
801
16,490
17,419
(31,685)
51,810
6,836
(1,283)
(13,714)
(12,444)
(435)
2,346
2,730
31,014
49,231
3,649
25,474
118,468
713,144
658,045
4,124,508 25,527,348 24,105,908
22,508
15,930
4,124,508 25,549,856 24,121,838
4,954,827
(i) Company incorporated in 2007.
(ii) Company sold for net equity value in 2007 to Votorantim Investimentos Industriais S.A.
(iii) Company transferred in 2007.
(iv) Includes investment in Usinas Siderrgicas de Minas Gerais S.A. Usiminas, based on the financial statements prepared for October 31, 2007.
Adjusted
net equity
(unsecured
liability)
525,199
487,688
166,377
539,465
355,598
591,012
59,103
34,580
252,967
Net income
adjustment
period
82,914
129,706
4,386
167,129
(1,797)
432,143
27,475
90,990
Company
participation
(%)
15,00
44,77
40,00
24,88
33,14
10,00
22,50
100,00
38,25
2006
7,662
Amount of investment
2006
66,461
174,032
34,097
2007
78,780
218,338
66,551
134,263
117,828
59,101
13,298
34,580
96,762
24,608
228,908
232,069
51,215
935
34,567
(823)
123,055
104,038
58,489
9,944
89,984
140,400
174,921
Total investments........................................................
174,921
152,261
152,261
1,188,809
858,072
95,858
29,910
85,208
82,120
15,651
16,416
239,955
1,428,764
39,406
30,864
452
155,930
1,014,002
(*) As mentioned in Note 1(a), VCP and the Finnish company Ahlstrom Corporation formalized a joint venture involving the paper business generated by
the VCP factory located in Jacare (SP). The Brazilian subsidiary of Ahlstrom Corporation now holds 60% of the capital of Ahlstrom VCP Indstria de Papis
Especiais S.A., and the remaining 40% is held by VCP. The value of the operation was R$ 233,458, generating a non-operating gain of R$ 136,264. In
addition, a Purchase and Sale Option Contract was signed by VCP and Ahlstrom in relation to the 40% held by VCP. This contract is valid for two years from
September 2007. The financial statements of the controlled and associated companies on December 31, 2007 and 2006 were examined and/or reviewed
by independent auditors. The opinion of the independent auditors regarding the financial statements on December 31, 2007 and 2006, of the company
controlled jointly by VBC Energia S.A. contains emphasis on the tariff repositioning conceded provisorily by ANEEL for some of its controlled companies.
Considering the provisory nature of the tariff revision, the company is subject to possible alterations upon its final approval.
2007
24,121,838
4,954,827
171,393
(159,204)
(139,451)
(1,668,689)
(1,730,858)
25,549,856
Controller
2006
14,900,397
4,124,508
11,344,121
(4,985,752)
235,751
(379,343)
(1,117,844)
24,121,838
(20,747)
Consolidated
2006
885,535
152,264
58,299
(9,261)
(38,333)
(98,018)
1,428,764
(34,502)
1,014,002
2007
1,014,002
195,668
337,858
(*) In December 2007, the controlled companies Citrovita Industrial and Comercial Ltda. were incorporated at net equity value Citrovita Comercial
Exportadora S.A.
109
2007
110
Fixed assets
(a) Controller
Consolidated
2007
2006
2007
584,577
50,655
185,499
7,545
64,297
231,607
136,356
103,922
16,652
25,993
220,006
42,527
28,990
23,120
545,344
11,872
43,038
336,303
23,735
50,935
36,766
126,945
138,640
156,946
3,192,270
(1,409)
(199,013)
(200,422)
2006
10
(1,409)
(199,013)
(200,422)
(1,409)
(199,013)
(1,781,000)
(349,996)
(113,596)
(2,445,014)
Cost
329,411
9,334
68,891
224,693
149,971
155,191
15,199
248
2,595
2,272
3,170
23,484
Accumulated
depreciation
(5,432)
(221)
(1,557)
(2,012)
(9,222)
2006
Net
Net
9,767
27
1,038
260
3,170
14,262
9,996
64
1,210
353
3,170
14,793
Annual
depreciation
rates (%)
0 to 10
4 to 25
10 to 25
10 to 20
26,986
42,602
(b) Consolidated
2007
27,806
734,999
17,735
Cost
Land and buildings.........................................................................................
Equipment and installations...........................................................................
Vehicles..........................................................................................................
Furniture and fixtures......................................................................................
Prospecting rights...........................................................................................
Plantations and forests...................................................................................
Work in progress (ii).......................................................................................
Others............................................................................................................
432,191
148,071
37,616
63,906
120,000
196,813
225,029
3,011,245
(1,409)
(199,013)
(349,996)
(109,956)
(660,374)
6,008,415
18,987,349
673,324
216,406
874,597
1,725,583
5,899,991
527,613
34,913,278
Accumulated
depreciation
(1,788,109)
(10,047,134)
(498,961)
(144,292)
(87,548)
(262,120)
(210,619)
(13,038,783)
2006
Net
Net
4,220,306
8,940,215
174,364
72,114
787,049
1,463,463
5,899,991
316,994
21,874,496
3,684,332
8,735,418
201,842
88,872
790,152
1,135,007
2,449,636
633,281
17,718,540
Annual
depreciation
and depletion
rates (%)
0 to 10
4 to 25
10 to 25
10 to 20
(i)
(i)
4 to 33
(i) Depletion is calculated based on the extraction of mineral and forest resources, considering the estimated useful lives of the reserves or close-cut forests.
(ii) This mainly refers to expansion, modernization and operational improvement projects in the plants in the Metals and Cement divisions, and in CBA,
as well as assets of VCPs pulp plant under construction, arising from the exchange described in Note 1. They additionally include CBAs investments for
construction of hydroelectric plants in the amount of R$ 63,922. Management hopes to obtain environmental permits so that these plants can begin to
generate energy in the medium-term. Based on the opinion of its legal advisers, management expects that its defense against the environmental proceeds
will prevail, and that the permits will be approved.
(i) As mentioned in Note 1, on March 16, 2007, the Votorantim Group acquired 8,206,215,228 common shares of the Colombian steel company Aceras
Paz del Ro S.A. in an auction held on the Colombian Stock Exchange, representing 52% of the capital, for the amount of US$ 502,100 thousand, equal
to R$ 1,034,268 on that date, including goodwill in the amount of R$ 925,094, with the fundamental expectation of future profitability, which is being
amortized in up to ten years, and R$ 634,823 referring to the appreciation of assets in the amount of R$ 290,271, which is being amortized according to
the useful life of the assets.
(ii) Goodwill based on expectations of future profitability, amortized for the period of up to eight years.
(iii) Goodwill based on the expectation of future profitability, and that will be amortized in ten years, from the moment at which the plant begins operating.
(iv) In November 2006, the Votorantim Group acquired control of Companhia de Cimento Ribeiro Grande, for R$ 425,376, including goodwill in the
amount of R$ 319,963, based on expectations of future profitability of R$ 224,912, which will be amortized in up to 10 years, and appreciation of assets
in the amount of R$ 94,781, net of tax effects, which will be amortized according to the useful life of the assets.
(v) Goodwill based on expectations of future profitability, amortized for the maximum period of ten years.
(vi) In August 2002, Votorantim Participaes S.A. acquired control of Optiglobe Tecnologia da Informao S.A. Net negative goodwill of R$ 199,013
was generated.
(vii) Goodwill recorded in acquisition of control of Riocell S.A., using the following bases: (i) the market value of the assets, which will be amortized
according to its realization, and (ii) future profitability, amortized in ten years starting in January 2004.
(viii) Goodwill based on expectations of future profitability amortized over the remaining concession period.
111
11
2007
2007
2006
4,813,028
683,835
1,472,351
1,092,243
989,223
289,506
5,975,237
47,157
2,142,924
1,317,325
354,455
251,601
1,035,723
2,768,654
2,610,463
1,293,876
16,013,179
2,826,881
1,829,551
336,104
15,081,235
3,062,855
2,223,646
857,046
1,035,723
3,006,808
3,125,197
1,468,597
1,008,061
8,608,663
24,621,842
518,777
5,805,278
20,886,513
(24,535)
832,511
(5,207)
1,030,516
(7,878,788)
16,743,054
(5,437,204)
15,449,309
857,046
1,030,516
5,207
857,046
In domestic currency
Asset acquisition
BNDES.........................................
Loans for pass-through.................
Working capital............................
Others..........................................
2006
Consolidated
51,226
65,396
191,761
392,697
131,431
832,511
25,656
61,831
78,935
231,460
632,634
1,030,516
3,422,374
2,750,767
2,585,387
4,390,796
3,593,730
16,743,054
2,527,900
2,148,569
1,529,413
3,852,228
5,391,199
15,449,309
(a) Agreements
Votorantim Participaes S.A., the controlled companies Votorantim Celulose e Papel S.A. and
Votorantim International Holding N.V., and the jointly controlled company VBC Energia S.A. have loan
and financing contracts subject to the following main obligations:
(a) certain restrictions in new financing issued, (b) restrictions on certain transactions with related
parties and participation in mergers with other companies, (c) commitment to meet the volume of
contracts to be in conformance with a coverage rate, (d) conformance with financial indices, such as
capitalization, interest coverage, minimum accumulated profits and rates on financial loans. If the
conditions of such obligations are not met and through notification by the financial institutions, the
open amount becomes immediately redeemable. The subsidiary Votorantim Cement North America, Inc.
has loans with commitments that restrict the payment of dividends and new financing. Additionally,
calculation of the covenants was done considering the consolidated financial statements in the
industrial segment, maintaining uniformity with prior periods. The companies are meeting all the
conditions established in the contractual clauses.
(b) Guarantees
The loans and financing are guaranteed by fiduciary transfer of the equipment financed, promissory
notes and shareholder guarantees.
12
The obligations for acceptance resources and issue of securities represent funds in foreign and
domestic currency raised through the issuance of securities in the international market and levying
financial charges of up to 14.28% per year, plus exchange rate variation.
13
112
Current
82,635
119,795
202,430
56,211
8,764
1,748
66,723
269,153
2007
Long-term
1,583,343
2,295,344
3,878,687
99,088
27,619
126,707
4,005,394
Current
Consolidated
2006
Long-term
27,775
79,336
107,111
51,972
10,963
1,533
64,468
171,579
977,662
2,792,558
3,770,220
195,606
198,300
26,115
420,021
4,190,241
The debentures are subject to certain restrictive conditions, contemplating clauses that require keeping certain financial indices at pre-established parameters. In managements
understanding, these restrictive conditions and clauses are being adequately met.
113
2007
DI
1,118,215
DI + 0.5% a.a.
1,460,627
2,578,842
14
Deferred income tax and social contribution
Deferred assets and liabilities represent tax losses and temporary differences in income tax and social
contribution and are classified as long-term assets and liabilities, reflecting their realization estimate,
which is based on projections for realization and future profitability of the respective companies,
in addition to the prescriptive periods, in the case of tax losses, the limit of 30% for annual use, as per
certain current legislation.
2007
Assets
Tax loss and negative basis of social contribution...............................................................................
Temporary differences
Provision for contingencies................................................................................................................
Provision for credits for doubtful payments.........................................................................................
Provision for losses on investments....................................................................................................
Deferral of loss in swap contracts.......................................................................................................
Tax benefit on goodwill.....................................................................................................................
Other provisions................................................................................................................................
Current (other credits)....................................................................................................................
Long term.........................................................................................................................................
Liabilities
Deferral of gain in swap contracts......................................................................................................
Adjustments to market value of fixed assets.......................................................................................
Adjustments to market value.............................................................................................................
Accelerated depreciation...................................................................................................................
Reforestation costs............................................................................................................................
Deferral of revenues from transfer of investments...............................................................................
Deferral of exchange rate variation....................................................................................................
Others...............................................................................................................................................
Short-term parcel (other obligations)...........................................................................................
Long-term parcel.............................................................................................................................
114
32,089
Controller
2006
10,149
1,138
535
1,138
35,413
33,762
17,545
64,245
33,762
64,245
2007
10,512
43,567
10,512
43,567
281,705
416,509
439,161
277,744
117,564
235,654
187,814
149,703
1,689,345
(191,668)
1,497,677
313,056
215,541
3,425
418,074
132,912
248,947
1,748,464
(439,429)
1,309,035
192,986
160,827
128,362
78,307
114,086
503,287
198,848
185,028
44,677
23,419
473,771
19,362
1,167,701
(227,692)
940,009
139,928
140,595
1,235,782
(261,786)
973,996
The controlled company Votorantim Metais - Cajamarquilla S.A. has a tax benefit for a deduction of up to 80% of its net income based on the income tax
calculation. That benefit is linked to the reinvestment of net income generated in its activities. On December 31, 2007, the amount of R$ 211,175 (equal
to US$ 119,220 thousand) was approved by the Ministry of Mines and Energy of Peru, to be applied as a reinvestment. That Ministry also authorized
execution of the reinvestment program for the next two years in the budgeted amount of R$ 885,000 (equal to US$ 500,000 thousand).
Tax...............................................
Labor and social security..............
Civil.............................................
Others..........................................
Consolidated
2006
33,055
10,512
10,512
Legal deposits
Short-term parcel.........................
Long-term parcel..........................
Consolidated
2007
18,623
520
236
2,126
21,505
2006
22,556
176
2007
95,411
776
2006
94,753
1,620
24,352
96,187
21,505
24,352
96,187
Legal deposits
94,753
2007
624,041
59,189
31,986
5,893
721,109
2006
490,230
53,753
14,068
11,407
569,458
94,753
721,109
569,458
2006
1,817,698
289,095
178,969
745
2,286,507
(486,001)
1,800,506
Controller
94,753
1,434
Consolidated
2,286,507
295,312
(121,843)
190,083
2,650,059
96,187
The main liability proceedings at December 31, 2007 are the following:
115
IPI questioning the right to reimbursement of IPI credits arising from acquisition of inputs,
raw materials, intermediate products and packaging materials used in the production process for
manufacture of products that are exempt from taxes, that are not taxed and/or subject to a zero rate.
Income tax and social contribution the financial segment is contesting the difference in the
income tax rate used for application in tax incentives, as well as exclusion of the difference of the
IPC/BTNF that occurred in January 1989 from the accounting result, in the calculations for income tax
and social contribution.
(ii) Labor and civil proceedings
These mainly consist of complaints brought by ex-employees and third parties, whose demands consist
of payment of annulled money, additional payment for illness and hazardous pay, overtime, in itinere
hours, as well as civil proceedings referring to requests for indemnity of ex-employees or third parties for
supposed occupational illnesses, work accidents, and material and moral damages.
(b) Commitments
(i) The controlled companies Votorantim Cimentos Brasil Ltda. and St. Marys Cement Inc. have supply
contracts with steel plants to purchase slag, which mature in 2011 and 2023, respectively.
(ii) The controlled company VCP signed long-term Take or Pay contracts with EKA Chemicals, Air Liquide
Brasil and Air Products Gases Industriais for them to supply chemical products for the period of one to
ten years. The contracts foresee rescission clauses for reasons of breach of the essential obligations and
suspension of supply. The contractual obligations did not exceed R$ 102,037 on December 31, 2007
(December 31, 2006 - R$ 81,215). In addition, a long-term Take or Pay contract related to the supply of
pulp for the period of 30 years was signed. The obligation defined by this contract is approximately
R$ 75,785 per year.
(iii) The controlled company CBA has electricity purchase contracts with CESP Companhia Energtica de
So Paulo for 400 MW, with minimum consumption established in the contract of 137 MW until 2015.
(iv) The Votorantim Group has commitments referring to the construction and acquisition of equipment
for its own electricity generation plants and those owned in consortiums, whose future expected
disbursement by Votorantim is close to R$ 2,000 thousand.
(v) The main guarantees provided by Votorantim Participaes and by controlled companies to associated
companies are summarized below:
2006
1,080,496
1,080,496
300,000
300,000
112,000
112,000
76,200
402,000
1,970,696
76,200
402,000
1,970,696
(vi) The controlled company Aceras Paz del Ro S.A., by virtue of the agreements signed in 2003 and
2006 for restructuring its debt with creditors, cannot distribute dividends until 2010.
16
Net equity
(a) Capital
Fully subscribed and paid-in capital on December 31, 2007 and 2006 is represented by 5,380,878,973
common nominal shares in the amount of R$ 12,380,538. In February of 2006, there was a capital
increase in the amount of R$ 268,328 by the shareholder Hejoassu Administrao S.A., paid in with
conferral of the following assets: (i) 50 common shares issued by Votorantim Investimentos LatinoAmericanos S.A., at net equity value of R$ 123,799, and (ii) 50 common shares issued by Votorantim
Cimentos Amricas S.A. with net equity value of R$ 144,529.
(b) Interest on own capital
No. 9249/95, the Companys management approved the distribution to its shareholders of interest on
own capital, including the amount of the minimum obligatory dividend. In adherence with tax legislation,
the amount of interest on own capital at December 31, 2006 was recorded as a financial expense. However, for the purpose of these accounting statements, interest on own capital is presented as a distribution
of net income during the year.
(c) Dividends
Shareholders are assured the right to receive obligatory dividends of 10% of adjusted net income,
as set forth in Article 202 of Brazilian Corporate Law.
The dividends proposal indicated in the Companys financial statements, subject to shareholder approval
at the General Shareholders Meeting, is shown below:
Net Income for the year...............................................................................................................................................................................
Appropriation of the legal reserve (5%)........................................................................................................................................................
Basis of calculation of minimum obligatory dividends...................................................................................................................................
Proposed dividends.....................................................................................................................................................................................
Interest on own capital................................................................................................................................................................................
Percent over adjusted income......................................................................................................................................................................
116
2007
2007
4,784,193
(239,210)
4,544,983
1,136,245
1,136,245
25
2006
4,337,983
(216,899)
4,121,084
542,242
488,028
1,030,270
25
117
Retirement plans
Obligations for
projected benefits..............
Plan assets........................
Plan deficit........................
Unamortized actuarial
adjustments......................
Net liabilities.....................
Short-term parcel..............
Long-term parcel ..............
22,762
69,695
22,762
69,695
14,601
138,042
15,490
38,252
(13,318)
56,377
118
Consolidated
2006
Total
Total
965,700
749,802
215,898
867,929
675,725
192,204
16,773
232,671
(27,323)
205,348
(34,669)
157,535
(15,124)
142,411
Discount rate...................................................................
Expected rate of return on assets.....................................
Future salary growth........................................................
Capacity factor medical care.........................................
18
Insurance
19
Complementary
retirement plans
873,243
749,802
123,441
Planos de
aposentadoria
complementares
2007
Retirement plans
5.0 and 11.3
7.0 and 17.1
3.0 and 7.1
2007
Other postretirement plans
6.25 and 11.3
0 and 11.3
0 and 7.1
7.5 and 0
Retirement plans
5.2 and 11.3
7.0 and 17.1
3.5 and 7.1
Percent
2006
Other postretirement plans
6.25 and 11.3
11.3
7.1
6.5
Due to the physical dispersion of its assets, combined with the result of work done by specialists who
consider the probability of the occurrence of major accidents to be low, Votorantim Participaes S.A.
and its controlled companies use a policy of monitoring, control and periodic evaluation of risk for each
business for a substantial part of its assets.
Votorantim Participaes S.A. and its controlled companies perform operations that involve derivative
financial instruments, acting in organized markets and over-the-counter markets, with the objective of
managing market risk that is adequate for the policy of each business unit.
In the financial segment, market risk management is done centrally, by administrative area, adopting the
following as basic procedures: (a) monitoring appropriateness of risk positions and the limits established
by the Risk Committee and legal limits, (b) pricing integrity of assets and derivatives, (c) evaluation of
market risk using the Value at Risk methodology and by scenario simulations, and (d) tracking daily
results with tests regarding methodology adherence tests (back-test).
119
The market risk management policy further considers use of derivative financial instruments to hedge
positions, to meet the demand of other parties, and as a means of reversing positions during periods of
large oscillations. The areas of Operating Risk, Risk Management, Information Safety and Internal Audit
manage operating risk, and it is tracked by the Risk Committee.
The derivative financial instruments may be summarized as follows:
2007
Controller
2006
Assets (Note 3)
Differential receivable from swap contracts .......................................................................................
Term operations.................................................................................................................................
Premiums paid for option contracts....................................................................................................
Liabilities
Differential payable from swap contracts............................................................................................
Term operations.................................................................................................................................
Premiums received for option contracts..............................................................................................
Amounts payable for BOX of options.................................................................................................
Others...............................................................................................................................................
Main value of the contracts (Notional)
Swap.................................................................................................................................................
Cross currency...................................................................................................................................
Future...............................................................................................................................................
Option..............................................................................................................................................
1,574
104,154
1,574
104,154
76,553
2007
Consolidated
2006
1,882,635
970,370
278,620
3,131,625
1,694,192
149,815
64,702
1,908,709
1,316,396
973,799
257,247
1,095,255
160,978
65,177
1,766,220
1,216,472
3,763,914
3,479,737
241,058
37,965,903
908,241
3,087,630
1,723,788
74,860
934,938
120
Subsequent events
(a) Company acquisitions
Prairie Material Sales Inc. was purchased at the beginning of 2008. It is one of the largest concrete and
aggregates companies in the United States Midwest, and is headquartered in Chicago.
In January 2008, a 27% share was purchased in AcerBrag S.A., a long steel producer in Argentina.
Also in January 2008, control was purchased of the North American company U.S.Zinc Corporation,
which operates in the North American domestic market in recycling industrial waste from galvanization,
metallic zinc production, and lower value-added products, such as zinc oxide and zinc powder. It has five
factories in the United States and one plant in the final phases of construction in China, which will start
operations at the beginning of 2008.
Managements explanatory notes are an integral part of the financial statements.
121
1 Basis of Calculation
30,416,231
29,997,896
6,702,971
6,184,781
2,051,789
1,819,472
2007
2006
Amount
(thousands)
% over FPB
Meals....................................................................................................
116,716
5.69%
0.38%
91,013
5.00%
0.31%
526,479
25.66%
1.73%
486,110
26.72%
1.68%
28,734
1.40%
0.09%
23,136
1.27%
0.08%
Health....................................................................................................
95,511
4.65%
0.31%
89,505
4.92%
0.31%
24,553
1.20%
0.08%
24,085
1.32%
0.08%
Education..............................................................................................
13,487
0.66%
0.04%
3,361
0.18%
0.01%
Culture...................................................................................................
20
0.00%
0.00%
278
0.02%
0.00%
19,778
0.96%
0.07%
16,827
0.92%
0.06%
2,130
0.10%
0.01%
1,306
0.07%
0.00%
Profit-sharing.........................................................................................
125,774
6.13%
0.41%
114,815
6.31%
0.40%
Others....................................................................................................
75,493
3.68%
0.25%
64,156
3.53%
0.22%
1,028,674
50.14%
3.38%
914,592
50.27%
3.16%
Amount
(thousands)
% over FPB
% over RL
% over RL
Amount
(thousands)
Amount
(thousands)
% over FPB
% over FPB
% over RL
% over RL
Education..............................................................................................
9,496
0.14%
0.03%
14,991
0.24%
0.05%
Culture...................................................................................................
19,929
0.30%
0.07%
12,502
0.20%
0.04%
4,935
0.07%
0.02%
5,032
0.08%
0.02%
Sports....................................................................................................
180
0.00%
0.00%
145
0.00%
0.00%
0.00%
0.00%
79
0.00%
0.00%
Others....................................................................................................
10,296
0.15%
0.03%
4,617
0.07%
0.02%
44,840
0.67%
0.15%
37,366
0.60%
0.13%
6,727,169
100.36%
22.12%
6,064,626
98.06%
20.93%
6,772,009
101.03%
22.26%
6,101,992
98.66%
21.06%
Amount
(thousands)
% over FPB
178,841
2.67%
0.59%
217,912
3.52%
0.75%
13,518
0.20%
0.04%
6,879
0.11%
0.02%
192,359
2.87%
0.63%
224,791
3.63%
0.78%
4 Environmental Indicators
% over RL
Amount
(thousands)
% over FPB
% over RL
2007
2006
55,046
31,514
27,471
6,121
13,704
13,562
No. of interns.........................................................................................
1,487
711
6,300
4,757
21,718
4,824
29.00%
13.00%
12,282
5,565
12.00%
5.00%
861
534
2007
Goals 2008
NA*
NA*
1.198
NA*
( ) directors
The social and environmental projects developed by
the Company were defined by: .........................................................
( ) all
employees
( ) directors
( ) all + Cipa
Regarding freedom to unionize, the right to collective bargaining (X) does not
and internal representation of workers, the Company: .................. get involved
( ) follows
OIT norms
( ) encourages
and follows OIT
( ) will follow
OIT norms
( ) will
encourage and
follow OIT
( ) directors
( ) directors
and managers
(X) all
employees
( ) directors
( ) directors
and managers
(X) all
employees
( ) directors
( ) directors
and managers
(X) all
employees
( ) directors
( ) directors
and managers
(X) all
employees
When selecting suppliers, the same ethical standards and standards ( ) are not
of social and environmental responsibility adopted by the Company: considered
( ) are
suggested
( ) does not
Regarding participation of employees in voluntary
work programs, the Company: ......................................................... get involved
(X) supports
( ) organizes
( ) will not
and encourages get involved
at the
Company
7.368
at Procon
0
in Court
28
at the
% of complaints and criticisms attended or resolved: .................... Company
78
at Procon
0
in Court
0
(X) directors
and managers
In 2007: 21,637,130
Distribution of Added Value (DVA): ........................................................
31.09% government
11.09% employees
2.35% shareholders
33.26% third parties
22.21% retained
(X) directors
and managers
( ) all
employees
( ) all + Cipa
( ) will be
required
( ) will support
in the
Company
NA*
at Procon
NA*
in Court
NA*
in the
Company
NA*
at Procon
NA*
in Court
NA*
In 2006: 16,291,243
37.23% government
11.17% employees
8.29% shareholders
22.64% third parties
20.68% retained
*NA Not available
122
123
Corporate Information
Hejoassu Administrao S.A.
Board of Directors
Board of Directors
President:
Antnio Ermrio de Moraes
Vice President: Ermrio Pereira de Moraes
President:
Carlos Ermrio de Moraes
Vice President: Jos Ermrio de Moraes Neto
Family Board
President:
Institute Board
President:
Jos Ermrio de Moraes Neto
Vice President: Ana Helena de Moraes Vicintin
Institute
Director:
Director of Legal
Department: Marcus Olyntho de Camargo Arruda
Director
of Audit: Nelson Shimada
Votorantim Investimentos Industriais S.A.
(Votorantim Industrial Investments)
President:
Jos Roberto Ermrio de Moraes
Vice Presidents: Cludio Ermrio de Moraes
Fabio Ermrio de Moraes
Chief Executive
Officer:
Raul Calfat
Corporate
Director:
124
Jan Ihden
Jones Belther
Jorge Alejandro Wagner
Jorge Luiz Valezin
Jos Eduardo Felgueiras Nicolau
Jos Geraldo dos Santos
Jos Maria de Arruda Mendes Filho
Jos Rodrigues dos Reis
Jos Roberto Giro Junior
Luis Carlos Loureiro Filho
Luiz Alberto Chaves
Luiz Alberto Castro Santos
Luiz Osrio Gomes Lima
Marcelo Chamma
Marcelo Strufaldi Castelli
Marco Antonio Palmieri
Marco Fabio Coghi
Mario Luiz Franceschi Fontoura
Mauro Davi Bolletta
Miguel Caldas
125
126
Votorantim International
North America
111 Continental Drive Suite 309
Newark, Delaware 19713
USA
Tel.: 1 302 454-8300
Fax: 1 302 454-8309
VCP USA
Inner Harbor Center
400 E. Pratt St. Suite 410
Baltimore, Maryland 21202
USA
VCP Belgium
Koningin Astridplein 5
B 2018 Antwerpen
Belgium
VCP China
1515, Nanjing West Road,
Room 1606
200040 Shanghai
China
VCP Switzerland
Baarerstrasse 8, 4th floor
6300 Zug
Switzerland
Votorantim International
Europe N.V.
Kaai 1223
Hazopweg 6
Kallo, 9130 Beveren
Belgium
Tel: 32 3 570 9867
Fax: 32 3 570 9860
Votorantim Metais Peru
Carretera Central - Km 9,5
Desvio a Huachipa
Cajamarquilla - Lima 15
PO Box 430015 - Lima 43
Peru
Tel: 51 1 317-2200
127
Credits
General Coordination:
Malu Weber Brand and Corporate Communications General Manager Votorantim Group
Financial Information:
Luis Felipe Schiriak
Alfredo Ferreira Villares
Carlos Cavalcante Guimares
Ricardo Franzon Campana
Social Balance Sheet Information:
Reporting Committee of the SIS Sustainability Indicator System
Contributed to the preparation and approval of the Annual Report in the Business Units:
Communication Committee of the Votorantim Group
Editorial Project:
centoeseis www.centoeseis.com.br
Drafting and editing of text:
Editora Contadino
Photography:
Rafael Costa, Adriano Gambarini and Image Bank Votorantim
Translation:
Eliza Gibbons
Hispania Lnguas Latinas
Printed on off-set paper Lumimax Matte 150 g/m2 and Print Max 120 g/m2 (Financial Statements)
of Votorantim Pulp and Paper (VCP).
Paper manufactured from wood collected in planted eucalyptus forests.
Preserving the environment in harmony with society.
128
Votorantim Group:
Constant Evolution
The future is always challenging the impossible. It has been this way since creation
of the Votorantim Group in 1918.
What started as a textile factory in the interior of So Paulo is today one
of the largest private corporate groups in Latin America, with an increasing
global presence.
The Votorantim Group is one of the largest industrial groups in Latin America,
with increasingly global operations. It controls a diversified portfolio of capitalintensive businesses and state-of-the-art technology that are grouped into three
large segments: industrial, financial and new business. The industrial area has
operations in the cement, concrete, metals (aluminum, zinc, nickel and steel),
pulp and paper, concentrated orange juice, specialty chemicals, self-generation and
electricity distribution markets. In the financial sector it operates through Votorantim
Finance, and in new business, it prefers to invest in biotechnology projects and
companies, mineral exploration, and information technology.
In addition to its presence in 20 states and nearly 100 Brazilian municipalities,
it operates in 14 other countries, in an internationalization process initiated in
2001 and that received a boost in 2007 when it acquired companies in the United
States, China, Argentina and Colombia. At the end of the year, the Company directly
employed 60,000 people.
The unified management model, which seeks excellence in four structural areas
personnel, operations, information and risk has allowed constant evolution in the
results, year after year. In 2007, the group of businesses reported net revenues of
US$ 15.6 billion, cash generation (EBITDA) of US$ 4.3 billion, and net income of
US$ 2.5 billion. Capex investments were US$ 2.7 billion.
The pace of growth in revenues, an average of 18% per year since 2003, led the
Group to revise the aspirations it had devised in 2001: to triple company value in
ten years. Now its new goal is to double its businesses by 2012. To attain this goal,
in 2007 it announced the largest investment in its history: US$ 16.5 billion in five
years, with US$ 12.9 billion in industrial operations. This is a challenge that will be
undertaken starting in 2008, when the Group commemorates 90 years of existence,
inspired by the theme The impossible has no place in this story.
Votorantim Ombudsman:
0800 70 10 451
Post Office Box: 19.134
www.votorantim.com.br
Participation