Anda di halaman 1dari 68

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.

This is a story of work, entrepreneurship, persistence and dedication. We are a


group that reinvents itself every day, growing sustainably in our untiring search
for excellence in everything that we do, and transforming the diversity of our
businesses into something unique, like DNA.

Votorantim Ombudsman:
0800 70 10 451
Post Office Box: 19.134
www.votorantim.com.br

Annual Report 2007

As we present the redesigned Votorantim logotype in homage to the Companys


90 years of existence, we are prepared to continue moving forward. With courage,
responsibility, daring and determination, we are going to continue believing that,
yes, the future can overcome the impossible.

Participation

Annual Report 2007

The Votorantim Group participates in companies that are standouts in their


sectors of operation, representing 11% of the operating cash generated by the
Group. The portfolio includes Usiminas (metallurgy), CPFL (electricity), Aracruz
(bleached eucalyptus pulp), Itamb (cement) and Aceras Paz del Rio (metallurgy in
Colombia). Other relevant participations include Milpo (mining company in Peru),
AcerBrag (metallurgy in Argentina), Minerao Rio do Norte (bauxite),
and electricity generation companies, cement and concrete producers.

ANnUAL report 2007 / VOTORANTIM group

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

Pulp and Paper

19%
Cement

26%
Finance

Cash generation EBITDA

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

207% growth in five years

03

04

05

US$ 14.6 billion accumulated


in cash generation
Ebitda = Earnings before interest, taxes and
depreciation/amortization.

Investments in Capex

Net Income

(U$ billion)

(U$ billion)
2.0

2.5

1.4
1.1

03

1.1

04

05

06

07

Since 2003, evolution of 126%

2.0
1.0

1.0

03

04

05

2.7
1.6

06

US$ 8.3 billion invested


over five years

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

Pulp and Paper

44

Energy

50

Agribusiness

56

Chemicals

62 Finance
68 New Business
74 Social Performance
78 Environmental Performance
86 2007 Financial Statements

AnNUAL REPORT 2007 / VOTORANTIM group

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 Pulp and Paper


begins construction of a new
pulp factory in Trs Lagoas (MS),
which will have annual capacity
of 1.3 million tons.

Votorantim Metals announces


three acquisitions: 27% of the
Argentine company AcerBrag,
the second-largest producer of
long steel in Argentina, 52% of
the shares of Aceras Paz del Ro,
the second-largest steel company
in Colombia, and U.S.Zinc,
with operations in the United
States and China.

Votorantim Cement acquires two


companies in the United States:
Prestige, a concrete producer
headquartered in Florida, and
Prairie, one of the largest concrete
and aggregate companies in the
North American Midwest.

The second hydroelectric plant


in the Amador Aguiar Energy
Complex in Rio Araguari, in
Minas Gerais comes on line
with 450 MW of capacity.
The Group reaches 2020 MW
of installed capacity.

Banco Votorantim announces


the launch of credit cards.

New Business announces the


merger of TIVIT and Telefutura.

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.

The Votorantim Group


announces investments of
R$ 25.7 billion in its industrial
operations, one of the largest
investments made in the
private sector in Brazil.

AnNUAL REPORT 2007 / VOTORANTIM group

Business Areas:
unity in diversity

Diversified portfolio combines capital-intensive


businesses and state-of-the-art technology

Cement

Metals

Pulp and Paper

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

Pulp and Paper


Upon completion of its 20th year, Votorantim Pulp and Paper (VCP) is directing its strategic focus toward increasing cellulose production
for the market, and on strategic repositioning of its business of paper for printing and writing, and special types of paper. Its operation
is comprised of and includes from wood production to product distribution to the end consumer Products | Bleached pulp and film
paper, off-set, reprographics, thermal and self-copy Brands | Copimax and Maxcote (cut-size), Lumimax and Image (film), Printmax
(off-set), Easycopy, Extracopy and Slipcopy (self-copy), Termocopy, Termolabel and Termoscript (thermal) Market | Paper, publishing
and graphics industries Production units | Forests: 3; industrial: 2 Production capacity | Cellulose: 1.4 million t/year; paper:
380,000 t/year; 318,000 hectares planted with eucalyptus Own employees | 2,111

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 Pulp and Paper


(commercial office)

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 (mill)


Votorantim Metals
(mineral exploration)

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

AnNUAL REPORT 2007 / VOTORANTIM group

Message from Management

Entrepreneurship
Antnio Ermrio de Moraes
Chairman of the Board of Directors

The commemoration theme of the Votorantim Groups 90


years of existence, The impossible has no place in this story,
is a good definition of our companies tendencies to constantly
evolve and exceed expectations. When we opened our textile
factory in 1918, it would have been difficult to imagine that
after 90 years of operation we would be one of the largest
industrial groups in Latin America, with increasingly
global operations.
The entrepreneurship, work, dedication and persistence of
our teams were always the main ingredients in our recipe for
success, and the common denominator for all our businesses.
In 2007, we broke all production records. We attained
US$ 15.6 billion in consolidated net revenues,
and US$ 4.3 billion in cash generation. We accelerated the
pace of international expansion, and we announced the largest
investment ever in the Group: R$ 32.8 billion (including the
finance area) by 2012. We reinforced our entrepreneurial
vocation that is committed to identifying organic projects and
acquisition opportunities that will allow us to maintain the
path of growth and internationalization of our businesses.
Considering this direction, we revised our strategic objective
10

to face a bigger challenge:


to double value by 2012.
Between 2001 and 2007,
we grew 130%, performance
that is 95% above our
previously established goal.
Operating improvements,
the diversified business
portfolio and use of the
best company management
instruments were determining
factors in obtaining good
results in a year marked
by growth in the internal
market and record
commodities prices,
partially reducing the adverse
impact of the appreciation
of the real on the results
from exports and
international operations.

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.

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, creating a virtuous
circle that begins with youth
in the communities where
we are present the focus
of our social operations
and that goes all the way
to our clients who inspire
our search for excellence in
everything that we do.
We believe that execution
of our growth plan has
only been possible because
of the support of our
shareholders, our clients in
Brazil and throughout the
world who identify value

differentials in our products,


suppliers who operate in
conjunction with us to
develop solutions
and technologies,
and especially our team,
which is challenged every
day to reach new standards
of global efficiency and
excellence. Everyone plays
a part in our ongoing
evolution, and they are
prepared to continue forging
ahead. With courage,
responsibility, daring and
determination, we are going
to continue believing that,
yes, the future can overcome
the impossible.

11

AnNUAL REPORT 2007 / VOTORANTIM group

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

VOTORANTIM NEW BUSINESS

CORPORATE DEPARTMENTS

VOTORANTIM CEMENT
VOTORANTIM METALS

VOTORANTIM PULP AND PAPER


VOTORANTIM ENERGY
VOTORANTIM AGRIBUSINESS

VOTORANTIM CHEMICALS

13

AnNUAL REPORT 2007 / VOTORANTIM group

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.

Cimesa, Votorantim Cement, Laranjeiras, SE

represented a value capture


equal to R$ 214 million
during the year, surpassing
the goal of R$ 180 million
that had been established for
the period. Additional savings
of R$ 238 million
are projected for 2008.
15

AnNUAL REPORT 2007 / VOTORANTIM group

Citrovita, Itapetininga, So Paulo, SP

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.

Internal Social Investment


9.6

(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

(Safe Behavior and


Responsible Actions), with
safety rules; and Equale
(Equal), for the inclusion of
people with handicaps.
Training
In the New Business area,
TIVIT formed a partnership
with universities to train
and prepare employees
who work in the company
so that in the future they
can occupy positions that
require greater specialization
and training. On average,
1,800 people are trained per
month in programs that allow
operators in the Contact
Center to be trained as
systems technicians.
Satisfaction
In the Votorantim Group, the
Organizational Climate Survey

periodically measures the


satisfaction of professionals.
Survey participation in 2007
in Votorantim Finance, for
example, was 90%, and
the average satisfaction
level was 94%. The strong
points chosen by the
employees were the work
environment, the Companys
positive image, and growth
opportunities. For reasons
such as these, for the
fifth consecutive year BV
Financeira was recognized
among the best companies
to work for in Brazil,
according to the Brazilian
guide Exame Voc S/A.
Golden Rules
The number of accidents has
fallen year after year with
the Health and Environment
System (SSMA), which has

been used since 2004 in the


industrial units. The rate of
21.2 accidents recorded in
that year, with or without
time lost from work per
million hours worked,
dropped to 7.0 in 2007. The
Group works continuously to
zero this rate, and to do this
it intends to focus its next
actions more strongly in the
behavioral area. The Golden
Rules of Safety, introduced in
2007, are procedures defined
to ensure that each and
every job is performed within
very rigid safety standards,
seeking to preserve
employees health and
quality of life. The intent is to
spread a culture of maximum
safety to all employees,
respecting all procedures and
always placing life above
other objectives.
17

AnNUAL REPORT 2007 / VOTORANTIM group

Citrovita, Araras, So Paulo, SP

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

Success of the companies depends on the


engagement, qualification, commitment and
ethical sense of the team of professionals.
18

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

AnNUAL REPORT 2007 / VOTORANTIM group

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

AnNUAL REPORT 2007 / VOTORANTIM group

Industry

CBA Factory, Alumnio, SP

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

Cash generation EBITDA

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

Earnings before interest, taxes and


depreciation/amortization.

07

03

04

05

06

07

23

AnNUAL REPORT 2007 / VOTORANTIM group

Industry

The portfolio includes


Usiminas (metallurgy),
CPFL (electricity), Aracruz
(bleached eucalyptus pulp),
Itamb (cement) and Aceras
Paz del Rio (metallurgy in
Colombia). Other relevant
participations include

Milpo (mining company in


Peru), Minerao Rio do
Norte (bauxite), AcerBrag
(metallurgy in Argentina),
electricity generation
companies, and cement and
concrete producers. In 2007,
this group of businesses

reported net income of


R$ 22.4 billion, growth of
9.3% over the prior year.
EBITDA was R$ 6.6 billion
(R$ 6.8 billion in 2006),
and net income totaled
R$ 3.6 billion, a variation
of 2.1%. The focus on

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%

appreciation of the real on


the results of exports and
international operations,
which represented 60% of
consolidated net revenues.

CBA Factory, Alumnio, SP

Integrated
management
and the search
for synergies
result in
increased
efficiency
gains and
profitability.

24

25

AnNUAL REPORT 2007 / VOTORANTIM group

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

AnNUAL REPORT 2007 / VOTORANTIM group

Cement

Prairie, Votorantim Cement, Chicago - USA

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

the United States, where


the Company maintains
the majority of its foreign
operations. The mortgage
crisis caused demand to
retract, a scenario that VC
faced with a realignment of
its operating and logistics
costs, which allowed it to
attain its best results to date
in North America,
even during a year of
lower consumption.

Net Revenues

Cash generation EBITDA

(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

AnNUAL REPORT 2007 / VOTORANTIM group

Cement

Cimesa, Votorantim Cement, Laranjeiras, SE

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

program directed toward


transporters of cement and
complementary products.
In the concrete business
the largest investment was
in fleet expansion, with the
acquisition of 150 concretemixing trucks, 15 mobile
centers and 22 pump
trucks. In aggregates the
focus was on acquiring new
stone assets, consolidating
production units in the
interior of the state of So
Paulo (Taubat and Ja).
In North America, the
Company increased its
operations with the purchase
of Prestige, a concrete
producer in Florida and
North Carolina (USA). At the
start of 2008, it announced
the acquisition of Prairie,
the leader in concrete and
aggregates in the midwestern
region of the United States.
Based in Chicago, Prairie

has a presence in the


states of Illinois, Indiana,
Michigan and Wisconsin,
where it has 81 concrete
plants, 17 aggregates
mines, deposits and more
than 1,100 cement-mixing
trucks. In 2007, it sold 5
million cubic meters of
concrete and 6.5 million tons
of aggregates. Votorantim
Cement holds nearly 30%
of the Great Lakes market,
and approximately 15% of
the market in the state of
Florida. In total, it has eight
production units outside of
Brazil: two in Canada (St.
Marys and Bowmanville,
both in Ontario); five in the
United States (Charlevoix and
Detroit, Michigan; Dixon,
Illinois; Badger, Wisconsin;
and Suwannee American
Cement in Brandford,
Florida), and one unit in
Puerto Suarez (Bolivia).

Acquisition of the concrete and aggregates


production companies, Prestige and Prairie,
strengthens the operations in North America.
30

31

AnNUAL REPORT 2007 / VOTORANTIM group

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

AnNUAL REPORT 2007 / VOTORANTIM group

Metals

CBA factory, Alumnio, SP

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

Cash generation EBITDA

(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

capacity in 2007 by 70,000


tons, for a total of 475,000
tons/year. Net revenues
were R$ 3,010 million
(which amount includes
participation in Metalrgica
Atlas), maintaining the pace
of development of 9.6% per
year over the last ten years.
Sales volume rose 11% in
2007 to 445.6 thousand
tons, above the average of
9% of the national market
during the period, with
high expectations for 2008
due to growth in the civil
construction industry.
Zinc, nickel and steel
Net revenues at Votorantim
Metals (VM) were R$ 7,274
million, with R$ 2,133 million
in nickel, R$ 3,014 million in
zinc (includes Cajamarquilla)
and R$ 2,127 million in steel
(with revenues from the shares
in Usiminas and Aceras Paz
del Ro). Performance was
influenced by jumps in the
prices of nickel (56%), zinc
(6%) and steel (3%), a factor
that neutralized the impact
of the dollars devaluation.
Thus the internationalization
of VM, which surged in
2007, integrates the strategy
of decreasing the effects

of volatile currencies and


fluctuating markets on
financial performance. During
the year investments were
made in organic growth
projects and acquisitions. One
highlight was the expansion
of Cajamarquilla in Peru,
from 160,000 to 320,000
tons of zinc per year, and
of the ferronickel factory in
Niquelndia (GO), with 10.6
thousand tons of contained
nickel. The unit maintains
reserves of 16.9 million tons
of mineral, which is sufficient
for at least 20 years of
operation. Two new plants
were also begun in Juiz de
Fora (MG), part of Projeto
Polimetlicos, which combines
operating gains and respect
for the environment. Through
cutting-edge technologies
to recycle electric steelworks
dust and vehicle batteries,
production of zinc and other
projects will be increased,
such as indium, copper
concentrate, metallic lead,
silver and gold compounds,
polypropylene, and sulfuric
acid. The company went from
two countries, Peru and Brazil,
to six in the period of just
one year. The first step
was acquisition of 52% of
35

AnNUAL REPORT 2007 / VOTORANTIM group

U.S.Zinc, Votorantim Metals, Changshu, China

Aceras Paz Del Ro,


in Colombia, the secondlargest metallurgical company
in the country. At the end of
the year it announced the final
agreement for the purchase of
U.S.Zinc, with five factories
in the United States and one
in China. The company is the
domestic market leader in

recycling industrial waste from


galvanization, production of
metallic zinc and higher valueadded products, such as oxide
and zinc dust, in addition to
having a commercial branch.
The purchase fits with the
Groups strategy to grow
in the industrial sectors in
which it has standards of

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

CBA Factory, Alumnio, SP


36

opening new bauxite mines.


In the first half of 2008,
a third mining unit will begin
operations in Mira (MG),
with the capacity to produce
5 million tons of bauxite
per year. The mine in Barro
Alto, Gois, will add another

Metals

900,000 tons. The second


essential input, energy,
is assured for a minimum of
60% of the demand by 18
of the companys operating
hydroelectric units, with
capacity of 1,174.27 MW.
In 2008, the investment
in two more presses in
the extrusion area will be
concluded, expanding the
capacity to offer profiles
of different conformations
and colors. In addition, the
laminator will be expanded
and new casting equipment
and a new yard for casing
will be acquired. All areas will
receive investments on the
order of R$ 1.5 billion.

The purchase of U.S.Zinc fits with the


Groups strategy to grow in the industrial
sectors in which it has standards of
international excellence, seeking assets that
make it globally competitive.
Zinc, nickel and steel
Of the R$ 25.7 billion announced by the Votorantim Group for the Investment Program in the
industrial sector in the coming years, R$ 9.1 billion will be directed to businesses with these
metals, which shows a strategy focused on sustainability and a long pipeline of growth projects.
Among the investments projected for 2008 are several expansions of the already-existing
factories and investments in the area of mineral research, which in 2007 alone received
R$ 149.4 million, as a sector that is strategic and essential for sustaining growth. In the zinc
area, nearly R$ 763 million will be invested to expand the mining unit in Vazante and the
metallurgy unit in Trs Marias (MG), whose production will increase from 180,000 to 260,000
tons/year, with conclusion projected for 2010. The largest-scale project will be the new
metallurgy plant in Resende (RJ); the unit is scheduled to come on line in 2009 and will have
production capacity of 1 million tons of steel per year.
37

AnNUAL REPORT 2007 / VOTORANTIM group

Pulp and Paper

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

AnNUAL REPORT 2007 / VOTORANTIM group

Pulp and Paper

Eucalyptus tree plantation, VCP, Jacare, SP

Business performance

Pulp and Paper


Net Revenues

Cash generation EBITDA

(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

Ebitda = Earnings before interest, taxes and


depreciation/amortization

40

(R$ million)

1,493

1,487

04

Investments in Capex

725

781

03

04

1,155
818

05

06

07

In line with the objective to


be one of the major players
in the global pulp market,
in 2007 Votorantim Pulp and
Paper executed a far-reaching
transformation plan with
the objective of expanding
its pulp business and
concentrating on operations
in high value-added paper.
Eight strategic operations
were conducted during the
year: exchange of assets with
International Paper, in which
the forest area and a pulp
and paper factory in Luz
Antonio (SP) were exchanged
for forest area and a pulp
factory under construction in
Mato Grosso do Sul, which
will be finished in 2009, with
capacity for 1.3 million tons/
year; a joint venture with
Ahlstrom in paper assets in
Jacare; three de-investments
from small units in Ripasa;
demobilization of Rilisa,
a paper distributor in Ripasa;
a strategic agreement with

Oji Paper for thermal paper


technology; and sale of the
paper factory in Mogi das
Cruzes. Organized on two
fronts Current Operations
and Future Construction
the company maintained a
very solid pace of production
1.6 million tons sold,
with 1.1 million tons of that
being pulp and 499,000
tons of that being paper. To
sustain future growth, with
the projection of tripling its
current cellulose production
capacity of 1.4 million tons/
year by 2012, the huge
challenge was expanding
the forest area, which
today has 318,000 hectares
planted with eucalyptus
and approximately 200,000
hectares preserved in the
states of So Paulo, Mato
Grosso do Sul and Rio Grande
do Sul. The pace of planting
was equal to 186 saplings
per minute. Net revenues,
including shares in Aracruz

and Ripasa (controlled


jointly with Suzano Papel e
Celulose) totaled R$ 3,211
million, 15.4% lower than in
2006, reflecting the strategic
repositioning and reduction
in paper volume. Exports
were equal to 35% of gross
revenues, compared to
34% in 2006. Consolidated
EBITDA with Aracruz and
Ripasa was R$ 1,101 million,
with a margin of 34%
(39% in 2006).

VCP expands
pulp business
and concentrates
on operations
with higher
value-added
papers.
41

AnNUAL REPORT 2007 / VOTORANTIM group

Pulp and Paper

The projection is to triple current production


capacity of 1.4 million tons by 2012, and to become
one of the main global pulp players.
Eucalyptus tree plantation, VCP, Jacare, SP

Projeto Horizonte, VCP, Trs Lagoas, MS

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

(close to R$ 1.1 billion),


with US$ 247 million of
that in expansion, US$ 101
million in modernization
and industrial maintenance,
and US$ 281 million
in land acquisition and
forest formation. With the
installation of a new coater,
the Piracicaba (SP) unit
will double thermal paper
production capacity
(to 40,000 tons/year),
reinforcing the sales mix of
high value-added paper in
the domestic market.

43

AnNUAL REPORT 2007 / VOTORANTIM group

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

AnNUAL REPORT 2007 / VOTORANTIM group

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.

This challenge to grow at an accelerated pace to keep the


percent of our own supply stable was surpassed in 2007,
the year in which, for the first time, the company attained
production of 63% of the Groups total demand.

Net Revenues
(R$ billion)

1,101

1,183 1,223

1,326

1,388

Campos Novos Plant, Votorantim Energy, Campos Novos, SC

03

04

05

06

07

Cash generation EBITDA


(R$ billion)

216

03

505

328

340

05

06

264

04

07

Earnings before interest, taxes and


depreciation/amortization.

Investments in Capex
(R$ billion)
424

03

46

93

101

81

04

05

06

161

07

47

AnNUAL REPORT 2007 / VOTORANTIM group

With the start-up of the


second hydroelectric plant in
the Amador Aguiar Energy
Complex in Minas Gerais,
in which Votorantim Metals is
part of a consortium formed
by three other companies,
and the start-up of the
Campos Novos hydroelectric
plant in Santa Catarina,

Energy

the Group gained another


466 MW of capacity, closing
the year with installed
capacity of 2,020 MW.
This growth in 2007 alone is
capable of supplying a city of
3.5 million inhabitants. This
gives an idea of the level of
the Groups requirements;
Votorantim consumes the

equivalent of 3.2% of all the


energy produced in Brazil.
With 31 plants, during
the period VE had its best
performance ever. The result
is due to the Votorantim
Groups strategy to always
plan energy sources before
starting industrial expansion
plans. Thus, the year was

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

Campos Novos Plant, Votorantim Energy, Campos Novos, SC

48

the plant in Machadinho


between the municipalities of
Maximiliano de Almeida (RS)
and Piratuba (RS). The former
has installed capacity of 93
MW, and the participation
of CBA and VC in the latter
is 378 MW. The Group also
has a 50% share in VBC
Energia, the main controller
of CPFL Energia, a company
whose EBITDA grew 19.9%
in 2007 over 2006. CPFL has
6.3 million clients in 568
municipalities in the states
of So Paulo, Rio Grande
do Sul, Paran and Minas
Gerais. In 2008, the Groups
investments in energy are
budgeted at R$ 339 million,
with projects that will add
275 MW in the future.
Growth is carefully planned
in order to attain the capacity
to supply 70% of the
energy necessary to the
metals area, which is
expected to grow in 2008.

49

AnNUAL REPORT 2007 / VOTORANTIM group

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

AnNUAL REPORT 2007 / VOTORANTIM group

Agribusiness

Production of saplings, Citrovita, Itapetininga, SP

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

It ran all of its factory units at


maximum capacity in a highly
competitive environment with
a restricted supply of raw
materials. The processing
volume, which reached 330,000
tons of concentrated juice,
surpassed the years projections
to produce 311,000.
This performance was due to
record orange production in
our own orchards of 10 million

boxes of the total during


the period. This is a result of
Citrovitas strategy to grow
continuously, with one of the
main directives to continually
increase planting. In 2007, the
company had net revenues of
R$ 1,463 million, 12.7% higher
than in 2006. EBITDA was
R$ 305 million (R$ 341 million
in 2006), and investments
totaled R$ 167 million.

Cash generation EBITDA

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

Earnings before interest, taxes and


depreciation/amortization.

07

05

06

07

53

AnNUAL REPORT 2007 / VOTORANTIM group

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

The first will be to change


100% of the energy matrix
from oil and gas to biomass,
which will allow significant
gains in reducing the
cost of this input and in
environmental improvement.
The second project is to
expand the factories, which,
at the end of the cycle, will
be capable of producing
450,000 tons of concentrated
orange juice instead of
the current 330,000 tons.
Industrial growth will be
sustained by an increase in
the citrus base; 4.3 million
orange trees will be planted,
for a total of 15 million by
2010. In 2008 alone 1.5
million new saplings will be

planted. Since the increased


production will demand a
logistical base with
greater capacity,
the transportation system will
be expanded with new ships
and loading terminals.

Industrial
growth will be
sustained by
an increased
citrus base.
Orange truck, Citrovita

54

55

AnNUAL REPORT 2007 / VOTORANTIM group

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

AnNUAL REPORT 2007 / VOTORANTIM group

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

it also produces sulfuric


acid, hydrofluoric acid and
aluminum fluoride.
It produces raw materials
for the paint and varnish,

cosmetics and pesticides


industries, among others.
With average growth rates
in nitrocellulose production
between 14% and 17% per
year, while the international
average is between 2% to 3%
per year, the Company has
ongoing improvement and
cost reduction programs that
focus on business excellence.
In 2007, it operated all of
its factories at maximum
capacity, which performance
was reflected in its financial
results. Net revenues were
R$ 333 million, 2.1% lower
than in 2006. EBITDA was
R$ 81 million, with a margin
of 24.3%; and investments
were R$ 31 million.

Chemicals
Net Revenues
(R$ million)
347

351

03

04

378

05

340

333

06

07

Cash generation EBITDA


(R$ million)
105

94

93
68

03

04

05

06

81

07

Earnings before interest, taxes and


depreciation/amortization.

Investments in Capex
(R$ million)
68

67
54

03

58

04

45

05

06

31

07

59

AnNUAL REPORT 2007 / VOTORANTIM group

Investments

Chemicals

Nitro Qumica, So Miguel Paulista, SP

In 2008, organic investments


in production expansion
of the factory units will
allow growth of 2,000
tons in installed capacity
of nitrocellulose, totaling
35,000 tons/year, which
will allow for an increased
percentage of global market
share and 6% growth in
sales. This jump in production
is the first stage of the project
to expand to 40,000 tons/
year, with start-up projected
for 2010.

60

61

AnNUAL REPORT 2007 / VOTORANTIM group

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

AnNUAL REPORT 2007 / VOTORANTIM group

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

Focus on credit quality and


in personalized attention

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

AnNUAL REPORT 2007 / VOTORANTIM group

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

At the end of the year BV


Financeira had 91 branches,
as well as 54 personal credit
stores maintained by CP

Promotora. The highlight


during the year was the
59.1% evolution in the
consolidated portfolio of
credit operations, which
totaled R$ 26.7 billion,
excluding securities and
bonds. The variation
exceeded growth of 27.7%
in the credit volume recorded
by the Central Bank in 2007.
Funding increased 20.4% to
R$ 36.7 billion, and managed
assets totaled R$ 20.9 billion,
17.1% above the prior year.

In 2008, Banco
Votorantim
expects to
continue its
growth in the
credit markets.

Banco Votorantim, Votorantim Finanas, So Paulo, SP


66

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.

Banco Votorantim credit cards, Votorantim Finance


67

AnNUAL REPORT 2007 / VOTORANTIM group

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

AnNUAL REPORT 2007 / VOTORANTIM group

TIVIT, Site Barra, Rio de Janeiro, RJ

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

The merger of TIVIT and Telefutura allows synergy gains,


a broader scope, and the sale of various joint services.
71

AnNUAL REPORT 2007 / VOTORANTIM group

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

be able to offer the sugar


alcohol sector new varieties
of sugar cane that will allow
increased productivity of
sugar cane plantations,
and, consequently, lower
production costs. In the
mining area, Base Metals
and Sul-Americana de Metais
(SAM) are continuously
prospecting in new areas
of operation. AnFreixo,
which works in distribution
of industrial supplies,
experienced 20% growth
in its revenues.

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

AnNUAL REPORT 2007 / VOTORANTIM group

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

AnNUAL REPORT 2007 / VOTORANTIM group

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

its new factories, hearing


suggestions and expectations
regarding the Company from
community representatives,
opinion formers, authorities
and members of nongovernmental organizations.
Nearly one thousand people
from the communities were
involved in discussing five
investment projects in Resende
(RJ), Vazante, Juiz de
Fora and Trs Marias (MG),

and Cajamarquilla (Peru).


At Votorantim Pulp and Paper,
the producers neighboring the
areas of Company operations
are invited to participate
in Programa Poupana
Florestal (Save the Forest
Program), which allows the
forest to thrive alongside the
production of food, animal
husbandry and preservation
of nature, promoting
sustainability in the country.

Programs

The Votorantim Institute


The Votorantim Institute
believes that young people
are an important agent of
social transformation because
they have the will and the
ability to promote changes
in their own lives and in
their communities. Because
of this, in 2007 it reaffirmed
its focus on working with
Brazilian youth. The actions
developed seek to give
incentive to this ability to act
in the direction of change,
of taking responsibility for
their own paths, autonomy,
critical sense and ethics.
The Votorantim Institute is
responsible for aligning social
action and streamlining
76

directives in order to expand


the connection with business,
in addition to qualifying and
increasing public benefits.
In 2007, R$ 44.8 million
was earmarked for these
initiatives. The Institute acts
on two fronts, stimulating
debate and the practice
of Corporate Social
Responsibility among the
employees, and qualifying
the external social investment
of the Business Units in the
communities where it is
present. In 2007, the internal
public underwent training
to develop its perception of
corporate social responsibility
based on indicators from

the Ethos Institute. For the


external public, the Group
supported 103 projects that
benefited more than 315,000
youths in 233 municipalities
in all regions of the country.
In 2007, the Votorantim
Institute redesigned the
External Social Investment
Policy, establishing areas of
priority operation for youth
development: education,
work, culture and sports.
The policys new architecture
also projects creation of a
program that identifies youth
with potential, stimulating
them and helping them to
develop, becoming true
agents of transformation.

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

External Social Investment


(R$ million)

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

AnNUAL REPORT 2007 / VOTORANTIM group

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.

In 2007, 103 projects in the


areas of education, work,
culture and protection of
children and adolescents were
supported, benefiting more
than 325,000 young people.
Sports
The Sports Program was developed in 2007, and seeks to promote
sports initiatives of all types for youth between the ages of 15 and
24. The focus will be on social and educational training of young
people through sporting activities.
VIA
VIA Programa Votorantim de Apoio ao Estatuto da Criana e
do Adolescente [Votorantim Program in Support of the By-Laws
of Children and Adolescents] guides and supports the Groups
Business Units in earmarking funds to the Funds for the Rights of
Children and Adolescents (FIA). The program seeks to contribute
to improving the quality of life of children and adolescents in
vulnerable situations, in addition to strengthening management
structures in the area through CMDCAs (Councils for the Rights
of Children and Adolescents) and Funds for the Rights of Children
and Adolescents. In 2007, 22 projects were supported in 22
municipalities in various regions of the country.

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

environmental area were


R$ 192.4 million,
with R$ 178.8 million in
initiatives related to company
operations, and R$ 13.5
million in external projects,
emphasizing preservation
and clean-up activities
(57% of the total). Of the
internal resources, R$ 78.4
million was used to reduce
emissions, effluents and
waste, and R$ 65.0 million
went to clean up pollution.
Since 2006, the energy
matrix and the inventory of
greenhouse gas emissions

of all the companies have


been consolidated, with the
objective of improving the
energy matrix and seeking
out new ways to reduce
energy consumption and
the emission of carbon
dioxide (CO2) and other
gases that are harmful to the
environment. The energy and
pulp and paper areas assess
purchasing carbon credits,
both within the scope of
the Kyoto Protocol, and in
accordance with the criteria
of the Chicago Climate
Exchange CCX).

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

AnNUAL REPORT 2007 / VOTORANTIM group

Sapling nursery, VCP, Jacare, SP

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

the concept of eco-efficient,


sustainable production by
using fewer natural resources.
And since 1999, Votorantim
Cement has been a member
of the World Business Council
for Sustainable Development
(WBCSD), which gathers the
ten largest cement companies
in the world in projects that
seek to reduce greenhouse
gas emissions. Votorantim
Metals uses a system of
dam management, rigid

control of all waste deposits


generated in factories
production processes, and a
critical risk program focused
on continuous improvement
of production processes.
VM also developed an
environmental investment
policy that demands extensive
environmental analysis of
projects before their approval
and implementation that
focuses on prevention and
continuous improvement.

the energy is generated


with renewable resources
(black liquor and biomass).
In 2007, the company
received the National
Award for Conservation and
Rational Use of Energy from
Confederao Nacional das
Indstrias (CNI National
Industry Confederation), for
the installation of a natural
gas co-generation plant
at the Jacare unit, which

allowed the company to


become self sufficient in
electricity with the use
of the combined-cycle plant.
In agribusiness, 100% of
the orange bagasse is
used by being transformed
into animal feed or biomass
for energy production, and
the water extracted
in the juice concentration
process is used to irrigate
sugar cane fields.

Commitment to sustainability aligns companies


in eco-efficient production processes.
Areas of preservation
The Business Units maintain areas of environmental preservation and natural reserves in the
locations in which they operate. Votorantim Pulp and Paper has 200,000 hectares of native forests,
which is equivalent to 38% of the land areas owned by the company. Companhia Brasileira de
Alumnio conserves 28,000 hectares of Mata Atlntica (Atlantic Rain Forest) in the areas surrounding
the hydroelectric plants on the Juqui and Ipiranga rivers in So Paulo, and two reserves
Cachoeira do Tombador (MT) and Angico (MG) were created by Votorantim Cement, which
also preserves a mangrove in the region of Laranjeiras (SE). Votorantim Metals has recovery and
revegetation programs in mining areas, in addition to its policy of decommissioning mines for
planning operation closures.
81

AnNUAL REPORT 2007 / VOTORANTIM group

Cimesa, Votorantim Cement, Laranjeiras, SE

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

the recycling of materials


such as steel mill dust and
car batteries, in an innovative
and environmentally sound
solution. And it will also
generate higher value-added
products such as indium, lead,
silver and gold concentrate,
sulfuric acid, and copper
concentrate. In the steel
area, Projeto + Ao (+ Steel
Project) in Resende is a
mini-mill that will use steel
recycling as its main source

of raw materials, contributing


to the preservation of
natural resources. In 2007,
Votorantim Cement achieved
a record volume of 400,000
tons of co-processed waste,
particularly used tires,
chemical solvents, oils and
unusable materials.
Co-processing is the reuse
of industrial waste as a
source of thermal energy
and raw materials in the
cement industry.

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

AnNUAL REPORT 2007 / VOTORANTIM group

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

AnNUAL REPORT 2007 / VOTORANTIM group

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.

So Paulo, March 10, 2008

Independent Auditors
CRC 2SP000160/O-5

Opinion of Independent Auditors


To the Managers and Shareholders of
Votorantim Participaes S.A.
1

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.

Carlos Eduardo Guaran Mendona


Accountant CRC 1SP196994/O-2
87

AnNUAL REPORT 2007 / VOTORANTIM group

Balance Sheets at December 31 (in thousands of reais)

Liabilities and Net Equity

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

Result from future years........................................................................................................................ 9(c)

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..................................................................................................................................

Total liabilities and net equity..............................................................................................................

88

Managements explanatory notes are an integral part of the financial statements.

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

Managements explanatory notes are an integral part of the financial statements.

89

AnNUAL REPORT 2007 / VOTORANTIM group

Income Statement Years ended December 31

Net Equity Statements

(in thousands of reais)

(in thousands of reais, unless otherwise indicated)

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

Taxes and sales and services and other deductions................................................................................

(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.........................................................................................................................

Operating income (loss) before company participations


and financial result......................................................................................................
Result from company participations
Net equity............................................................................................................................................
Exchange rate variation on investments abroad.....................................................................................
Amortization of goodwill......................................................................................................................
Net financial result . ......................................................................................................................
Operating income...........................................................................................................................
Non-operating result, net ................................................................................................................
Earnings before income tax, social contribution and minority share..............................
Income tax and social contribution
Current.................................................................................................................................................
Deferred...............................................................................................................................................
Earnings before minority share..................................................................................................
Profit-sharing.......................................................................................................................................
Minority share......................................................................................................................................
Net Income for the year................................................................................................................
Net income by lot of one thousand shares of company capital at the end of the year R$........

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

Managements explanatory notes are an integral part of the financial statements.

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

Managements explanatory notes are an integral part of the financial statements.

1,017,808

91

AnNUAL REPORT 2007 / VOTORANTIM group

Statement of Sources and Uses of Funds


Year ended on December 31 (in thousands of reais, unless otherwise indicated)
2007
Origin of Funds
Regarding social operations
Net income during the year..............................................................................................................................
Amounts that do not affect working capital
Equity income..................................................................................................................................................
Realization of negative goodwill in the sale of investments................................................................................
Exchange rate variation of long-term liquid assets abroad.................................................................................
Amortization of goodwill in the acquisition of controlled companies..................................................................
Depreciation, amortization and depletion..........................................................................................................
Residual value of written-off permanent asset...................................................................................................
Gains in variation of company participation......................................................................................................
Deferred income tax and social contribution.....................................................................................................
Interest and exchange rate variation of long-term items....................................................................................
Provision for contingencies...............................................................................................................................
Provision for losses (gains) in long-term hedge operations.................................................................................
Minority share..................................................................................................................................................
Adjustments to prior years................................................................................................................................
Funds originating from (investments in) operations...........................................................................................
Funds applied in operations..............................................................................................................................
Regarding shareholders
Paid-in capital..................................................................................................................................................
Regarding third parties
Decrease of long-term realizable.......................................................................................................................
Dividends and interest on own capital to receive and received . ........................................................................
Disposal of investments....................................................................................................................................
Increase of long-term demandable ..................................................................................................................
Write-off of permanent asset by capital reduction.............................................................................................
Net working capital of acquired companies.......................................................................................................
Total sources......................................................................................................................................................
Application of funds
In social operations .........................................................................................................................................
In long-term realizable......................................................................................................................................
In permanent assets
Investments......................................................................................................................................................
Fixed................................................................................................................................................................
Deferred...........................................................................................................................................................
Goodwill in the acquisition of investments........................................................................................................
Long-term net assets of acquired controlled companies.....................................................................................
Decrease of long-term demandable....................................................................................................................
Variation in minority shares................................................................................................................................
Tax and other incentives.....................................................................................................................................
Dividends and interest on own capital paid and proposed...................................................................................
Decrease in the results of future years.................................................................................................................

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

Increase (decrease) of working capital........................................................................................................

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

Increase (decrease) in working capital........................................................................................................

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......................................................................................................................................

(in thousands of reais, unless otherwise indicated)

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

Variations in working capital


Current assets
At the end of the year.......................................................................................................................................
At the start of the year......................................................................................................................................

92

Controller
2006

Managements Explanatory Notes to the Financial Statements


at December 31, 2007 and 2006

315

1,017,546

2,620,640
163,265

Managements explanatory notes are an integral part of the financial statements.

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.

Managements explanatory notes are an integral part of the financial statements.

93

AnNUAL REPORT 2007 / VOTORANTIM group

(iv) Votorantim Energy


Votorantim Energy manages the production of 31 hydroelectric plants, some under shared
management and others belonging to the Votorantim Group, and four thermoelectric plants. Another
six hydroelectric plants are in the project phase or under construction.
In 2006, Votorantim Energy increased its participation in VBC Energy to 50%, the main controller of
CPFL and one of the most important companies in the Brazilian electricity sector.

(v) Votorantim Agribusiness


Votorantim Agribusiness is mainly involved in concentrated orange juice, with commercial offices
in Europe, North America and Asia, in addition to port terminals in Santos, Antwerp (Belgium) and
Newcastle (Australia).

(vi) Votorantim Chemicals


Votorantim Chemicals furnishes raw materials such as nitrocellulose, hydrofluoric acid and aluminum
fluoride to various industrial segments.

(b) Votorantim Finance


Operates in the wholesale, retail, treasury and resource management segments. There is one subsidiary
abroad and one agency in Nassau, in addition to an office in London and a brokerage firm in New York.
The operations are conducted in the context of a group of institutions that act in an integrated manner
in the financial market. The areas of operation are concentrated in: (i) consumer financing (mainly
car financing); (ii) investment bank products and treasury products for corporate clients; (iii) resource
administration; (iv) brokerage; and (v) commercial leasing operations both for the corporate market and
for individuals.

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).

(c) Votorantim New Business


Votorantim New Business (VNN) is an area specialized in the Groups new investments, and it operates
in two segments - diversification of business and management of risk capital.

Managements explanatory notes are an integral part of the financial statements.

2 Presentation of financial statements and main accounting practices



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.

Managements explanatory notes are an integral part of the financial statements.

95

AnNUAL REPORT 2007 / VOTORANTIM group

96

(ii) Industrial and energy segment


Short-term investments in shares of investment funds are classified as Securities for negotiation
since they were acquired with the intent of being active and frequently traded. The other short-term
investments are recorded at their actualized acquisition cost since Votorantim Participaes S.A. and
its controlled companies intend to keep the investment until maturity. Derivative financial instruments
(note 19) that are used as protection are evaluated and recorded at their contracted conditions, and
they are not recorded at market value.
Short-term investments as well as operations involving derivative financial instruments contracted
with Votorantim Finanas S.A. and controlled companies are completely eliminated in the
consolidation process.
(c) Provision for credits for doubtful payments
The provision for credits for doubtful payment is formed based on a value that is considered to be
sufficient by management to cover estimated losses in the collection of accounts receivable from
clients, as well as BACEN standards for the financial segment, and in conformance with the Electricity
Sector Accounting manual for the energy segment.
(d) Inventory
Inventory is shown at the average purchase or production price, less than the replacement cost or
realization values. Provisions are made for obsolescence and deteriorated inventory,
when applicable. Advances to supplies and imports under way are presented at the accumulated
cost at the close of the year.
(e) Other current assets and long-term assets
These are shown at their acquisition cost plus, when applicable, two yields calculated on a daily pro
rata basis and monetary variations and exchange rate variations until the date of the balance sheet,
and adjusted by a provision in conformance with the realization values. Assets realizable after 12
months following the date of the financial statements are considered to be non-current.
(f) Investments
Investments in controlled and associated companies are evaluated using the net equity method, plus
goodwill and negative goodwill arising from investments (Note 9). Other investments are shown
at their acquisition cost, monetarily corrected to December 31, 1995, including, when applicable,
a provision for probable losses in realization. The goodwill or negative goodwill determined in
the acquisition of a company is calculated as the difference between the purchase value and the
accounting value of the acquired investment. Based on expectations of future results, goodwill is
amortized during the recovery period of no more than ten years. Negative goodwill is amortized only
when the investment is sold.
(g) Fixed assets
Property is shown at the acquisition or construction cost, monetarily corrected to 1995. Depreciation is
calculated using the straight-line method at the rates mentioned in Note 10. Forest development costs,
mainly those for project implementation, are capitalized when incurred. The cost of interest on loans

Managements explanatory notes are an integral part of the financial statements.

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.

(i) Income tax, social contribution and tax incentives


The provision for income tax and deferred income tax on tax losses and temporary differences are
determined at the rate of 25%, and the provision for social contribution, as well as deferred social
contribution on negative bases of social contribution and temporary differences are determined
at the rate of 9%. Some subsidiaries are also subject to income tax arising from their operations in
foreign jurisdictions.
Income tax and social contribution are provisioned on taxable results.
The deferred tax benefit on tax losses and credits to be compensated, is recognized as realization
becomes probable. Taking advantage of the deferred income tax asset depends on generation of
sufficient taxable profit in future years. The value of the deferred income tax that is considered
realizable may, however, be reduced if there is a reduction in the estimates of future taxable profits.
Taxes on income are recorded in the income statement, without tax incentives. The benefit of tax
incentives is credited directly to net equity at the time that the option for the incentive is made, with
the corresponding reduction of obligations in the liabilities.

(j) Current and long-term liabilities


These are shown by known or calculated values that can be calculated, plus, when applicable, those
values that correspond to charges and monetary variations incurred. The provisions for profit-sharing
are recorded when companies give this right to the employees, according to performance-based plans.
As with assets, the liabilities that are realizable after 12 months following the date of the financial
statements are considered to be non-current.

(l) Contingent assets, liability contingencies and legal obligations


The recognition, measurement and divulging of contingent assets, contingent liabilities and legal
obligations are done according to the criteria defined in Pronouncement NPC 22 of IBRACON - Instituto
dos Auditores Independentes do Brasil (Brazilian Institute of Independent Auditors).

Managements explanatory notes are an integral part of the financial statements.

97

AnNUAL REPORT 2007 / VOTORANTIM group

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.

(m) Environmental expenses


Expenses related to environmental repairs are recorded in the results when they are incurred. Other
environmental costs are also incurred as expenses, unless they increase the value of assets and/or
provide future economic benefits, and in these cases they are capitalized.
Additionally, liabilities are recognized when the expenses are considered to be probable, and may be
reasonably estimated. Measurement of liabilities is based on current laws and regulations, as well as
existing technology. In general, such recognition coincides with companies commitment to the formal
action plan.

(n) Interest on own capital


Brazilian companies are allowed to deduct interested attributed to net equity as a financial expense
for tax purposes. For the purpose of preparation and presentation of the financial statements,
interest attributed to net equity is recorded as a deduction from accumulated profits not earmarked,
similar to a dividend.

98

Managements explanatory notes are an integral part of the financial statements.

(o) Retirement and other post-retirement benefits


The contributions made by Votorantim Participaes S.A. and its controlled companies to defined
contribution retirement plans and social security for employees (Note 17) were determined by
independent actuaries and are recognized as operating expenses.
The indirect subsidiary of Votorantim Participaes S.A. abroad, Votorantim Cement North America
Inc., and the companies controlled in conjunction with VBC Energia S.A., Usinas Siderrgicas de Minas
Gerais S.A. Usiminas, Ripasa S.A. Celulose e Papel and Aracruz Celulose S.A., have defined benefit
retirement plans that also offer medical assistance and life insurance, among other benefits.
The cost of retirement benefits and the other benefits of these plans provided to qualified employees
is determined using the projected pro rata benefit method on the service, and the best expectations of
management on investment margins, salary adjustments, cost trends and mortality, and the retirement
age of the employees.
(p) Consolidated financial statements
In order to provide greater transparency reagrding its net equity position and the results of its
operations, and as required by accounting practices used in Brazil, the management of Votorantim
Participaes S.A. chose to present consolidated financial statements.
Investments between companies, accounts receivable and accounts payable, revenues and expenses
and unrealized gains between the companies were eliminated. The minority share in net equity and in
the results was listed separately.
The companies controlled in conjunction with VBC Energia S.A., Aracruz Celulose S.A., Ripasa S.A.
Celulose e Papel, Usinas Siderrgicas de Minas Gerais S.A. Usiminas and Suwannee American
Cement, LLC were consolidated in proportion to their capital participation.
The results of the controlled and jointly controlled companies acquired during the period are
consolidated as of their acquisition date.
In the consolidation, the goodwill arising from transactions with third parties remain classified in the
group of investments and the negative goodwill is transferred to the line Results from future years.
Derivative financial instruments contracted with the intent of protecting the consolidated exchange rate
exposure of the Votorantim Group, as well as short-term investments, had their amounts and results
completely eliminated in the preparation of the consolidated financial statements.
Votorantim Participaes S.A. and its controlled companies use uniform accounting practices to
record their operations and evaluate the equity elements, and the financial statements of associated
companies and subsidiaries abroad were prepared in accordance with the accounting principles in the
countries of origin, in their respective currencies. For the purpose of equity income and consolidation,
these statements were adjusted to accounting practices used in Brazil and converted to reais at the
exchange rates in effect on the balance sheet date. The results were converted using the average
monthly exchange rate. The result from gains and losses from exchange rate variations at the controller
is recorded directly in the results for the year.
The consolidated financial statements include the amounts of the following main controlled companies,
whether directly or indirectly:

Managements explanatory notes are an integral part of the financial statements.

99

AnNUAL REPORT 2007 / VOTORANTIM group

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

Holding and other segments


Hailstone Limited.......................................................................................................................................................................................
TIVIT Tecnologia da Informao S.A. .......................................................................................................................................................
Santa Cruz Gerao de Energia S.A. . .........................................................................................................................................................
Votorantim Comercial Exportadora e Importadora Ltda. . ............................................................................................................................
Votorantim Comrcio e Indstria Ltda. .......................................................................................................................................................
Votorantim Investimentos Industriais S.A. ..................................................................................................................................................
Votorantim Investimentos Latino-Americanos S.A. ......................................................................................................................................
Votorantim Cimentos Amrica S.A. . ...........................................................................................................................................................
Votocel Investimentos Ltda. .......................................................................................................................................................................
Votorantim Energia Ltda. ...........................................................................................................................................................................
Voto Votorantim Overseas Trading Operations III Ltd. ..............................................................................................................................
Voto Votorantim Overseas Trading Operations IV Ltd. ..............................................................................................................................
Votorantim Novos Negcios Ltda. ..............................................................................................................................................................

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

Result for the year


2007
2006
4,784,193
4,337,983
25,083
61,628
(4,097)
4,805,179
4,399,611

(*) 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

Managements explanatory notes are an integral part of the financial statements.

Managements explanatory notes are an integral part of the financial statements.

101

AnNUAL REPORT 2007 / VOTORANTIM group

Short-term investments and derivative financial instruments


2007
Securities for negotiation (*)
Treasury Financial Letters - LFTs........................................................................................................
National Treasury Letters - LTNs.......................................................................................................
National Treasury Notes - NTNs.......................................................................................................
Bank Certificates of Deposit - CDBs..................................................................................................
Eurobonds.......................................................................................................................................
Brazilian external debt securities......................................................................................................
External debt securities of other countries........................................................................................
Debentures.....................................................................................................................................
Investment fund shares....................................................................................................................
Direct Credit Investment Funds - FIDC..............................................................................................
Variable income securities................................................................................................................
Others.............................................................................................................................................
Securities kept until maturity
Eurobonds.......................................................................................................................................
Investments denominated in foreign currency...................................................................................
Bank Certificates of Deposit CDBs.................................................................................................
Interbank Certificates of Deposit CDIs...........................................................................................
Committed operations.....................................................................................................................
Debentures.....................................................................................................................................
Others.............................................................................................................................................

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

Managements explanatory notes are an integral part of the financial statements.

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.

Short-term liquid interbank investments - consolidated


The portfolio of liquid interbank short-term applications is comprised, by type, as follows:
2007

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

Short-term investments in the open market


Own resources..............................................................................................................................................................................................
Financing.....................................................................................................................................................................................................
Position sold.................................................................................................................................................................................................
Short-term investments in interbank deposits.......................................................................................................................................
Short-term investments in foreign currency...........................................................................................................................................
Others..........................................................................................................................................................................................................

52,029

Derivative financial instruments (Note 19)..........................................................................................


Short-term parcel............................................................................................................................
Long-term parcel.............................................................................................................................

2007

Accounts receivable from clients consolidated


The credit risk is minimized by the large client base and by control procedures, as well as by monitoring
the credit limits of these clients. Votorantim Participaes S.A. and its controlled companies also
operate with a credit insurance policy for the majority of their accounts receivable from exports.
The companies in the industrial segment have irrevocable assignment operations for receivables for
the Fundo de Investimentos de Direitos Creditrios - FIDC (Direct Credit Investment Fund). The fund is
managed by Banco Bradesco S.A., and at December 31, 2007, has net equity of R$ 3,123
(2006 R$ 251,707), with R$ 285 (2006 R$ 191,721) in senior shares belonging to exclusive funds
of controlled companies and R$ 2,838 (2006 R$ 59,987) in subordinated shares, all belonging
to controlled companies. In December 2007, Votorantim management requested that this fund be
dissolved in the first quarter of 2008.
On December 31, 2007, the open amount in accounts receivable transferred to the FIDC is
R$ 516 (2006 R$ 257,896). The result recorded in the transfers during the year ended in 2007 was
R$ 20,000 (2006 R$ 30,231), recorded as financial expenses in the consolidated income statements
for the year.
On December 31, 2007, the controlled company VCP had seller operations open in the amount of
R$ 224,207 (2006 R$ 257,708), deducted for accounting purposes from the amounts receivable from
clients in the country. VCP is a guarantor of these operations and the potential losses are considered in
the loss provision in credit receipts.

Managements explanatory notes are an integral part of the financial statements.

103

AnNUAL REPORT 2007 / VOTORANTIM group

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.

(b) Portfolio composition by type of client


Industry.......................................................................................................................................................................................................
Commercial.................................................................................................................................................................................................
Rural...........................................................................................................................................................................................................
Other services..............................................................................................................................................................................................
State
Financial institutions....................................................................................................................................................................................
Individuals..................................................................................................................................................................................................

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

Managements explanatory notes are an integral part of the financial statements.

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

(c) Composition of credit operations portfolio at the corresponding risk levels


Portfolio composition by risk level of the financial segment, including, in 2006, the amount of
commercial leasing and the exchange portfolio, is shown below:
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 . .....................................................................................................

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.

Managements explanatory notes are an integral part of the financial statements.

105

AnNUAL REPORT 2007 / VOTORANTIM group

Amounts and transactions with related parties


Controller
Dividends and
interest on own
capital receivable
Segment/company

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

Managements explanatory notes are an integral part of the financial statements.

Managements explanatory notes are an integral part of the financial statements.

107

AnNUAL REPORT 2007 / VOTORANTIM group

Investments

(a) Information from companies receiving investment at December 31


(i) Controller

(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

Result of equity income


2007
2006
2,215
(98)
190,575
(6,504)
40,157
2,510

(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.

Managements explanatory notes are an integral part of the financial statements.

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

Result of equity income


2007
12,437
58,070
1,755
41,582
(625)
43,727
7,079
34,804
(20,747)
(3,161)

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.

(b) Movement of investments


Amount at the start of the year...................................................................................................
Net equity.......................................................................................................................................
Acquisitions from investments and capital increase in companies invested in....................................
Transfer of investments and capital reduction in companies invested in............................................
Gains, (losses) and exchange rate variation of investments...............................................................
Adjustment from the prior fiscal year in controlled company (Note 16 (e)).........................................
Incorporation of controlled companies (*)........................................................................................
Dividends received and receivable....................................................................................................
Amount at the end of the year....................................................................................................

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.

Managements explanatory notes are an integral part of the financial statements.

109

AnNUAL REPORT 2007 / VOTORANTIM group

(c) Goodwill (negative goodwill) arising from acquisitions


Controller
Description
Goodwill
Aceras Paz del Ro S.A. (i)...............................................................................................................
Angra dos Reis Ltda. (v)...................................................................................................................
Aracruz Celulose S.A. (ii)..................................................................................................................
BAESA Energtica Barra Grande S.A. (iii).......................................................................................
Campos Novos Energia S.A. (iii).......................................................................................................
Companhia de Cimento Ribeiro Grande (iv)....................................................................................
Companhia Paulista de Fora e Luz (viii)...........................................................................................
Compaia Minera Milpo S.A.A. (v)...................................................................................................
Machadinho Energtica S.A. (v).......................................................................................................
Minerao Zona da Mata Ltda. (v)...................................................................................................
Prestige Gunite Inc. (v)....................................................................................................................
Rio Grande Energia S.A. (viii)...........................................................................................................
Rio Verdinho Energia S.A. (v)...........................................................................................................
RioCell S.A.(vii)................................................................................................................................
Ripasa S.A. Celulose e Papel (v).......................................................................................................
S&W Materials Inc. (ii).....................................................................................................................
Softway Center Servios de Teleatendimentos a Clientes S.A. (v).......................................................
St. Marys Cement Inc. (v).................................................................................................................
Sucorrico S.A...................................................................................................................................
Suwannee American Cement, LLC (ii)...............................................................................................
The Bulk Service (v)..........................................................................................................................
TIVIT Terceirizao de Tecnologia e Servio S.A. (v)...........................................................................
VBC Energia S.A. (v)........................................................................................................................
Votorantim Metais Cajamarquilla S.A. (v)......................................................................................
Others (v)........................................................................................................................................
Negative goodwill (result from future years)
Empresa de Transporte CPT Ltda. ....................................................................................................
Hailstone Limited (vi).......................................................................................................................
VCP-MS Celulose Sul Mato-Grossense Ltda. ....................................................................................
Votorantim Celulose e Papel............................................................................................................
Others.............................................................................................................................................

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

Land and buildings.........................................................................................


Equipment and installations...........................................................................
Vehicles..........................................................................................................
Furniture and fixtures......................................................................................
Others............................................................................................................

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.

Managements explanatory notes are an integral part of the financial statements.

Managements explanatory notes are an integral part of the financial statements.

111

AnNUAL REPORT 2007 / VOTORANTIM group

11

Loans and financing


Controller
Type/purpose
In foreign currency
Pre-payment for export.................
Advances on exchange contracts..
Asset acquisition..........................
Eurobonds....................................
Financing for imports...................
Compror.......................................
Working capital (includes
Resolution Nos. 63 and 2770)......
Loans for pass-through.................
Others..........................................

Annual financial charges levied


on December 31, de 2007
Exchange rate variation + Libor + 0.25% to 4.12%
Exchange rate variation + 5.40% to 5.70%
Exchange rate variation + Libor + 2.14% to 3.56%
Exchange rate variation + 7.75% and 7.875%
Variao cambial + Libor + 1,20% a 1,80%
Exchange rate variation + Libor + 2.60%

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

Exchange rate variation + 5.15% to 6.70%


Exchange rate variation + 5.59% up to 6.79%
Exchange rate variation + 3.00% to 4.00%

Parcel maturing in the


short-term...................................
Long-term....................................
Maturity of long-term parcels
2008............................................
2009............................................
2010............................................
2011............................................
2012............................................
2013 and beyond.........................

1,030,516

5,207

857,046
In domestic currency
Asset acquisition
BNDES.........................................
Loans for pass-through.................
Working capital............................
Others..........................................

2006

Consolidated

TJLP + 3.80% to 7.36%


Exchange rate variation + 1.30% up to 11.00%
Exchange rate variation + 102.30% to 102.50% of CDI
TJLP + 2.75% to 3.30%

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

Resources from acceptances and issue of securities

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

Debenture issues and subordinated debt

(a) Funds from debentures


Annual financial charges
Votorantim Finanas S.A.
With exchange rate variation..................................... 12.04% +
exchange rate variation
Post-fixed.................................................................. DI + 0.35%
VBC Energia S.A.
Post-fixed.................................................................. TJLP + 2.5 a 6%
Post-fixed.................................................................. CDI + up to 5%
Post-fixed.................................................................. IGP-M + 9.5%

112

Managements explanatory notes are an integral part of the financial statements.

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.

Managements explanatory notes are an integral part of the financial statements.

113

AnNUAL REPORT 2007 / VOTORANTIM group

(b) Subordinated debt


Consolidated
Annual financial charges

2007

DI

1,118,215

DI + 0.5% a.a.

1,460,627
2,578,842

Votorantim Finanas S.A.


Bank certificate of deposit.................................................................................................................................................
Post-fixed..........................................................................................................................................................................
Debentures
Post-fixed..........................................................................................................................................................................

14


Deferred income tax and social contribution

15 Contingencies, tax obligations under discussion, and commitments




(a) Contingencies and tax obligations under discussion

Votorantim Participaes S.A. and its controlled companies are parties involved in labor, civil, tax and
other proceedings under way, and they are discussing these questions both in the administrative and legal
spheres, which, when applicable, are protected by legal deposits. The provisions for possible losses that
are considered to be probable arising from these proceedings are estimated and updated by management,
and their opinion is backed by their legal advisers. The position of these provisions for legal proceedings
and other litigation is presented below:
Controller

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).

Managements explanatory notes are an integral part of the financial statements.

Tax...............................................
Labor and social security..............
Civil.............................................
Others..........................................

Consolidated
2006

33,055
10,512
10,512

Legal deposits

Short-term parcel.........................
Long-term parcel..........................

Consolidated

Provision for contingencies

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

Provision for contingencies


2007
2,085,616
299,987
242,652
21,804
2,650,059
(660,149)
1,989,910

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

Movement of the provision during the year is shown below:


Amount at December 31, 2006........................................................................................................................................................
Additions............................................................................................................................................................................................
Write-offs............................................................................................................................................................................................
Monetary actualization........................................................................................................................................................................
Amount at December 31, 2007........................................................................................................................................................

96,187

The main liability proceedings at December 31, 2007 are the following:

(i) Tax proceedings


PIS/COFINS the Votorantim Group has been legally questioning the increase in the COFINS rate from
2% to 3%, as well as the basis of calculation of the PIS and the COFINS, which includes financial revenues
and other non-operating revenues.
PIS/COFINS on JCP questioning the taxation of distribution of interest on own capital JCP, under the
argument that the JCP is like a dividend, and not like a revenue.
Plano Vero (Summer Plan) - questioning the deductibility of monetary actualization corresponding to
variation in the IPC in the month of January 1989, of 70.28%.
CPMF questioning by the indirectly controlled company BV Leasing - Arrendamento Mercantil S.A.,
of the right to receive the same tax treatment projected for the other financial institutions.
ICMS questioning the legitimacy of including the ICMS in the calculation base of COFINS, as well as
maintaining the ICMS credit on acquisitions of raw materials for paper production exempt from taxation
and on assets for use and consumption.

Managements explanatory notes are an integral part of the financial statements.

115

AnNUAL REPORT 2007 / VOTORANTIM group

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.

(iii) Proceedings with probability of loss considered to be possible


The Votorantim Group is involved in other tax, civil and labor proceedings that arise during the normal
course of its business involving possible risk of loss, which total R$ 2,153,299 (2006 R$ 1,442,128).

(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:

Campos Novos Energia S.A.


Intervention in financing contract with the BNDES........................................................................................................................................
BAESA Energtica Barra Grande S.A.
Intervention in financing contract with the BNDES........................................................................................................................................
Votorantim Metais Zinco S.A.
Intervention in financing contract with the BNDES........................................................................................................................................
Machadinho Energtica S.A.
Intervention in financing contract with the BNDES........................................................................................................................................
Guarantee letter to the BNDES.................................................................................................................................................................

Managements explanatory notes are an integral part of the financial statements.

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

Managements explanatory notes are an integral part of the financial statements.

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

AnNUAL REPORT 2007 / VOTORANTIM group

(d) Accumulated profits


The destination of the amount remaining in the line Accumulated profits will be defined during the
General Ordinary Shareholders Meeting.

(e) Adjustment from prior years


Prior to January 1, 2006, due to company restructurings and company acquisitions, inter-temporary tax
effects were reported, which resulted in the recognition of tax credits in the amount of R$ 904,605.
During the period of recognition of the mentioned tax credit, it was recorded for accounting purposes,
both in Votorantim Participaes S.A. and in its controlled companies. It did not impact the result
of the year since the increase of the assets realizable in the long-term had a counterpart in the line
accumulated income.
The Votorantim Group periodically uses the practice of analyzing the capacity to recover its assets,
among them tax credits. Thus, the Votorantim Group decided to reverse the abovementioned tax credits,
impacting the accounting lines and periods of origin of launches.
Additionally, on December 31, 2006, the adjustment to market value of the financing portfolio was recorded in counterpart to the line accumulated income for the controller Votorantim Participaes S.A. and
the indirectly controlled company BV Financeira S.A. - CFI, as indicated in Article 186 of Law No. 6404/76,
in the amount of R$ 379,343, net of tax effects, as a function of the change in criteria in the method
of calculation.

(b) Defined benefit


Defined benefit retirement plans and medical plans and other post-retirement benefits are shown below:

Retirement plans
Obligations for
projected benefits..............
Plan assets........................
Plan deficit........................
Unamortized actuarial
adjustments......................
Net liabilities.....................
Short-term parcel..............
Long-term parcel ..............

(a) Defined contribution


Votorantim Participaes and its controlled companies are sponsors of private retirement plans
managed by Fundao Senador Jos Ermrio de Moraes - FUNSEJEM, a closed, non-profit private
retirement plan available to all the employees of the Votorantim Group. According to the terms of fund
regulation, employee contributions to FUNSEJEM are matched by the sponsors according to the level
of remuneration of the employee. For those whose remuneration is less than the limits determined by
regulation, contributions of up to 1.5% of their monthly remuneration is matched. For the employees with
remuneration higher than the limits, employee contributions of up to 6% of their monthly remuneration
are matched. Voluntary contributions may also be made to FUNSEJEM. The contributions made
by Votorantim Participaes S.A. and controlled companies to FUNSEJEM during the year totaled
R$ 20,537 (2006 R$ 19,636).

22,762

69,695

22,762

69,695

14,601
138,042

15,490
38,252

(13,318)
56,377

118

Managements explanatory notes are an integral part of the financial statements.

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

The net obligation is recorded in the line Other obligations.


The main assumptions used by the actuaries are presented below:

Discount rate...................................................................
Expected rate of return on assets.....................................
Future salary growth........................................................
Capacity factor medical care.........................................

18

Insurance

19

Derivative financial instruments

Complementary
retirement plans

873,243
749,802
123,441

17 Private retirement plan



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).

Managements explanatory notes are an integral part of the financial statements.

119

AnNUAL REPORT 2007 / VOTORANTIM group

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

(b) Change to Brazilian Corporate Law for 2008


On December 28, 2007, Law No 11.638/07 was promulgated, altering Brazilian Corporate Law regarding
certain accounting practices, bookkeeping and preparation of financial statements, effective as of the
calendar year ending December 31, 2008. Considering the extent and complexity of the alterations
brought by the mentioned Law, management is evaluating its impacts on the Company and its controlled
companies, while it is following the discussions and debates in the market, particularly in the accounting
entities and associations, and together with the regulators, which may be manifested in aspects for
application of the Law.
At this time, until there is better clarification regarding the Law, especially regarding its practical
application and its regulation, management understands that it is not possible to evaluate and reasonably
quantify possible effects on the Companys financial statements.
(c) Alterations in tax legislation
Provisory Measure (MP) No 413, of January 3, 2008, is on tax measures and raised the Social Contribution
rate on Net Income CSLL of financial institutions, insurance and capitalization companies from 9% to
15% of taxable income, as of May 2008.

3,087,630
1,723,788
74,860
934,938

20 Non-operating result, net




In 2007, this is mainly represented by the (i) gain generated in the transfer of shares from the Bolsa de
Mercadorias e Futuros (BM&F) and the Bolsa de Valores de So Paulo (BOVESPA) in the amount of
R$ 319,124 and (ii) gain in the joint venture operation with the Finnish company Ahlstrom Corporation,
in the amount of R$ 136,264.

In 2006, it is mainly represented by the (i) gain in the sale of the controlled company Companhia Luz e
Fora Santa Cruz, in the amount of R$ 124,765, (ii) gains from tax proceedings in the amount of
R$ 61,479 and (iii) other capital gains from investments in the amount of R$ 134,024.
21




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.

Managements explanatory notes are an integral part of the financial statements.

121

AnNUAL REPORT 2007 / VOTORANTIM group

IBASE 2007 (Brazilian operations)


5 Employee Indicators

1 Basis of Calculation

2007 Amount (thousands of reais)

Net Revenues (RL)..................................................................................

2006 Amount (thousands of reais)

30,416,231

29,997,896

Operating Result (RO) ...........................................................................

6,702,971

6,184,781

Gross payroll (FPB).................................................................................

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%

Compulsory social charges......................................................................

526,479

25.66%

1.73%

486,110

26.72%

1.68%

Private pension plan...............................................................................

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%

Occupational health and safety..............................................................

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%

Professional training and development...................................................

19,778

0.96%

0.07%

16,827

0.92%

0.06%

Day care or day care aid.........................................................................

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%

Total - Internal Social Indicators.......................................................

1,028,674

50.14%

3.38%

914,592

50.27%

3.16%

Amount
(thousands)

% over FPB

2 Internal Social Indicators

3 External Social Indicators

% 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%

Health and hygiene................................................................................

4,935

0.07%

0.02%

5,032

0.08%

0.02%

Sports....................................................................................................

180

0.00%

0.00%

145

0.00%

0.00%

Fight against hunger and food safety......................................................

0.00%

0.00%

79

0.00%

0.00%

Others....................................................................................................

10,296

0.15%

0.03%

4,617

0.07%

0.02%

Total contributions to society...........................................................

44,840

0.67%

0.15%

37,366

0.60%

0.13%

Taxes (excluding social charges)..............................................................

6,727,169

100.36%

22.12%

6,064,626

98.06%

20.93%

Total - External Social Indicators......................................................

6,772,009

101.03%

22.26%

6,101,992

98.66%

21.06%

Amount
(thousands)

% over FPB

Investments related to company


production/operation..............................................................................

178,841

2.67%

0.59%

217,912

3.52%

0.75%

Investments in programs and/or external projects....................................

13,518

0.20%

0.04%

6,879

0.11%

0.02%

Total investments in the environment.............................................

192,359

2.87%

0.63%

224,791

3.63%

0.78%

4 Environmental Indicators

Regarding establishing annual goals to minimize waste,


overall consumption in production / operation and increasing
efficiency in using natural resources, the company:

(X) does not have goals


( ) complies from 0 to 50%
( ) complies from 51 to 75%
( ) complies from 76 to 100%

% over RL

Amount
(thousands)

% over FPB

(X) does not have goals


( ) complies from 0 to 50%
( ) complies from 51 to 75%
( ) complies from 76 to 100%

% over RL

2007

2006

No. of employees at the end of the period..............................................

55,046

31,514

No. of hires during the period.................................................................

27,471

6,121

No. of outsourced employees ................................................................

13,704

13,562

No. of interns.........................................................................................

1,487

711

No. of employees above 45 years old......................................................

6,300

4,757

No. of women working in the company..................................................

21,718

4,824

% of management positions occupied by women....................................

29.00%

13.00%

No. of black people working in the company..........................................

12,282

5,565

% of management positions occupied by blacks.....................................

12.00%

5.00%

No. of handicapped people or with special needs...................................

861

534

6 Relevant information regarding corporate citizenship

2007

Goals 2008

Relationship between the highest and lowest


remuneration in the Company................................................................

NA*

NA*

Total number of work accidents..............................................................

1.198

NA*

( ) directors
The social and environmental projects developed by
the Company were defined by: .........................................................

( ) all
employees

( ) directors

(X) directors ( ) all


The health and safety standards in the work environment
were defined by: ................................................................................ and managers employees

( ) all + Cipa

(X) directors ( ) all


and managers employees

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

(X) will not


get involved

( ) 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

(X) are required

( ) will not be (X) will be


considered
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

Private social security includes: ........................................................

Profit-sharing includes: . ....................................................................

Total number of consumer complaints and criticisms:

(X) directors
and managers

Total added value to distribute (in thousands R$) ..........................

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

(X) will get


organized and
will encourage

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

AnNUAL REPORT 2007 / VOTORANTIM group

Corporate Information
Hejoassu Administrao S.A.

Votorantim Participaes 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

Board Members: Carlos Ermrio de Moraes



Clovis Ermrio de Moraes Scripilliti

Fabio Ermrio de Moraes

Jos Ermrio de Moraes Neto

Jos Roberto Ermrio de Moraes

Maria Helena Moraes Scripilliti

Board Members: Carlos Eduardo Moraes Scripilliti



Cludio Ermrio de Moraes

Clovis Ermrio de Moraes Scripilliti

Fabio Ermrio de Moraes

Jos Roberto Ermrio de Moraes

Luis Ermrio de Moraes

Family Board
President:

Clovis Ermrio de Moraes Scripilliti

Board Members: Ana Helena de Moraes Vicintin



Ana Paula de Moraes Rizkallah

Antonio Ermrio de Moraes Filho

Carlos Eduardo Moraes Scripilliti

Jos Ermrio de Moraes Neto

Marcos Ermrio de Moraes

Maria Regina Ermrio de Moraes Waib
Neide Helena de Moraes

Regina Helena Scripilliti Velloso

Rubens Ermrio de Moraes

Institute Board
President:
Jos Ermrio de Moraes Neto
Vice President: Ana Helena de Moraes Vicintin
Institute
Director:

Clia Maria Christofolini Picon

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:





Albano Chagas Vieira


Alexandre DAmbrosio
lvaro Luis Veloso
Fabio Faria
Gilberto Lara Nogueira
Luis Felipe Schiriak
Samuel de Almeida Lima

Votorantim Finanas S.A.


(Votorantim Finance)
President:

124

Jos Ermrio de Moraes Neto

Responsible Executives by Business Unit


Banco Votorantim:

Marcus Olyntho de Camargo Arruda


Milton Roberto Pereira
Wilson Masao Kuzuhara

Votorantim Novos Negcios Ltda. (Votorantim New Business)




Luis Ermrio de Moraes
Responsible Executive by Business Unit
Votorantim Novos Negcios:

Paulo Henrique de Oliveira Santos

Responsible Executives by Industrial Business Units


Companhia Brasileira de Alumnio: Antnio Ermrio de Moraes
Votorantim Cement:
Walter Schalka
Votorantim Metals:
Joo Bosco Silva
Votorantim Pulp and Paper:
Jos Luciano Duarte Penido
Votorantim Energy:
Otvio Carneiro de Rezende
Votorantim Chemicals and Agribusiness: Mrio Bavaresco Jnior
Business Unit Directors
Antonio Joaquim Ferreira Custdio
Antonio Sergio Monteiro da Fonseca
Arnaldo Dias Andrade
Candido Shigueyuqui Hotta
Carlos Augusto Parisi
Carlos Roberto Paiva Monteiro
Celso Martini
Chester Allen Rook
Daniel Fritz
Eduardo Cavalcanti Maciel
Edvaldo Arajo Rabelo
Erik Madsen
Fabio Filippos
Felipe Lima
Fernando Antonio Barros Capra
Fernando de Castro Reinach
Flavio Marassi Donatelli
Francisco Fernandes Campos Valrio
Fred Fernandes
Haroldo Fleischfresser

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

Milton Flvio de Moura


Naldilei Zumpano
Nelson Teixeira
Olair Adalberto Martins
Paulo Oliveira Motta Junior
Paulo Prignolato
Paulo Roberto Pisauro
Paulo Musetti
Renato C. Brito de Moura
Renato Jos Giusti
Richard Olsen
Roberto Bento Vidal
Rmulo Fabri Miranda
Selma Paschini
Sergio Almeida
Valdecir Aparecido Botassini
Valdir Roque
Will Glusac

125

AnNUAL REPORT 2007 / VOTORANTIM group

Addresses of companies in the Votorantim Group in Brazil


Votorantim Participaes S.A.
Rua Amauri, 255
01448-000 So Paulo SP
Tel.: 55 11 3704-3300
Fax: 55 11 3167-1550
Votorantim Cimentos Ltda.
(Votorantim Cement)
Edifcio Berrini 500
Praa Professor Jos Lannes, 40 9o andar
04571-100 So Paulo SP
Tel.: 55 11 2162-0600
Fax: 55 11 2162-0630
Votorantim Metais (Votorantim Metals)
Praa Ramos de Azevedo, 254 6o andar
01037-912 So Paulo SP
Tel.: 55 11 2159-3100
Fax: 55 11 2159-3628
Companhia Brasileira de Alumnio
Praa Ramos de Azevedo, 254
01037-912 So Paulo SP
Tel.: 55 11 3224-7000
Fax: 55 11 3224-7143
Votorantim Celulose e Papel S.A.
(Votorantim Pulp and Paper)
Alameda Santos, 1.357
01419-908 So Paulo SP
Tel.: 55 11 2138-4000
Fax: 55 11 2138-4065
Citrovita Agroindustrial Ltda.
Edifcio Berrini 500
Praa Professor Jos Lannes, 40 16o andar
04571-100 So Paulo SP
Tel.: 55 11 3927-5150
Fax: 55 11 3927-5160

126

Votorantim Qumica (Votorantim Chemicals)


Av. Dr. Jos Arthur Nova, 951
08090-000 So Paulo SP
Tel.: 55 11 2246-3100
Fax: 55 11 2246-3376
Votorantim Energia Ltda. (Votorantim Energy)
Praa Ramos de Azevedo, 254 5o andar
01037-912 So Paulo SP
Tel.: 55 11 2159-3200
Fax: 55 11 3361-3624
Banco Votorantim S.A.
Av. Roque Petroni Jr., 999 16o andar
04707-910 So Paulo SP
Tel.: 55 11 5185-1700
Fax: 55 11 5185-1900
Votorantim Novos Negcios
(Votorantim New Business)
Rua Jernimo da Veiga, 384 12o andar
04536-001 So Paulo SP
Tel.: 55 11 3077-5050
Fax: 55 11 3077-5051
Votorantim Internacional Brasil Ltda.
(Votorantim International)
Edifcio Berrini 500
Praa Professor Jos Lannes, 40 7o andar
04571-100 So Paulo SP
Tel.: 55 11 3927-5066
Fax: 55 11 3927-5077
Instituto Votorantim (Votorantim Institute)
Rua Amauri, 286 1o andar
01448-000 So Paulo SP
Tel.: 55 11 3704-3334
Fax: 55 11 3167-6677

Addresses of companies in the Votorantim Group outside of Brazil


St. Marys Cement Incorporated
55 Industrial Street
Toronto ON M4G 3W9
Canada
Tel.: 1 416 423-1300
Fax: 1 416 423-0889
Trinity Materials, LLC
100 West Bay Street
Suite 700
Jacksonville, FL 32202
USA
Votorantim International Europe
GMBH
Ballindamm 37
20095 Hamburg
Germany
Tel.: 49 40 899-7800
Fax: 49 40 899-7808
Suwannee American Cement
5117 US Highway 27
Brandford, Florida 32008
USA
Tel.: 1 386 935-0966
Fax: 1 386 935-1155
Prestige Gunite Inc
Postal address 7228-C Westport
Place, West Palm Beach, FL 33413
Tel.: 1 561 478-9980
Fax: 1 561 478-2911
Prairie Material National
Headquarters
7601 W. 79 th Street
PO BOX 1123
Bridgeview, IL 60455
Tel.: 1 708 458-0400
Votorantrade N.V.
Singapore Branch
360 Orchard Road
Shaw House # 19-06
Singapore 238868
Tel.: 0065 6733 5441
Fax: 0065 6733 5443

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

Votorantim Metais Colmbia


Aceras Paz del Ro
Carrera 8a n 13 31 P8
Bogot, Colombia
Tel: 57 1 382-1730
Fax: 57 1 382-1776
Votorantim Metals United States
U.S.Zinc
6020 Navigation Blvd. 770111132
P.O. Box 611
Houston, TX 77001-0611
Votorantim Metals China
U.S.Zinc Office China
1515 Nanjing West Road 610B
Room Shanghai 200040
Shanghai, China
Tel: 86 21 62798115
U.S.Zinc Changshu
Yehui Road, Changshu Economic
Development Zone,
Changshu, Jiangsu 215536, China
Tel: 86 21 6138-1999
Banco Votorantim Securities Inc.
909 Third Avenue
Fifth Floor, Suite 520
New York, NY 10022
USA
Tel: 1 646 495-3205
Fax: 1 646 495-3207
Banco Votorantim
Representative Office
1 Cornhill
London EC3V3ND
England
Tel: 44 0 20 7743-6545
Fax: 44 0 20 7743-6546

127

AnNUAL REPORT 2007 / VOTORANTIM group

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.

This is a story of work, entrepreneurship, persistence and dedication. We are a


group that reinvents itself every day, growing sustainably in our untiring search
for excellence in everything that we do, and transforming the diversity of our
businesses into something unique, like DNA.

Votorantim Ombudsman:
0800 70 10 451
Post Office Box: 19.134
www.votorantim.com.br

Annual Report 2007

As we present the redesigned Votorantim logotype in homage to the Companys


90 years of existence, we are prepared to continue moving forward. With courage,
responsibility, daring and determination, we are going to continue believing that,
yes, the future can overcome the impossible.

Participation

Annual Report 2007

The Votorantim Group participates in companies that are standouts in their


sectors of operation, representing 11% of the operating cash generated by the
Group. The portfolio includes Usiminas (metallurgy), CPFL (electricity), Aracruz
(bleached eucalyptus pulp), Itamb (cement) and Aceras Paz del Rio (metallurgy in
Colombia). Other relevant participations include Milpo (mining company in Peru),
AcerBrag (metallurgy in Argentina), Minerao Rio do Norte (bauxite),
and electricity generation companies, cement and concrete producers.

Anda mungkin juga menyukai