2 Annual Report was a year of vigorous growth for all Promon Group businesses.

Transcrição

1 2008

2 2 Promon Group 2008 was a year of vigorous growth for all Promon Group businesses. Promon was well positioned and able to capture the opportunities brought about by Brazil s economic growth, especially until the third quarter of the year. Promon has a well structured portfolio of solutions and is recognized for its technical, professional and management competencies. In 2008 it was able to strengthen its client and contract portfolio as demand for infrastructure and services increased and a wide range of industries increased their production capacity, all of which favored the growth and development of Promon s business.

3 3 Agregate group gross revenue reached R$852.8 million in Net profits amounted to R$137.8 million, net of the R$19.8 million distributed to Promon officers and employees as profit sharing. A number of factors contributed to this high volume of net profits: all group companies delivered positive operating earnings in 2008, and group financial earnings were excellent, as were non-operating profits resulting from the Logicalis Group transaction that created PromonLogicalis Latin America Limited. As a result, shareholder returns for the period were 117%. At the end of fiscal year 2008, the consolidated net worth of holding company Promon S.A. was R$ million, and the financial position of the Group was very strong, having maintained its strategy of high liquidity and low debt, which has given it the resiliency it needs to face the global crisis. In 2008 Promon invested some R$63 million, primarily in training, technology and new business development. Since it was created in 1960, Promon has evolved and kept up with changing demands; 2008 was no exception. The year was marked by yet another Group transformation: to enable it to capture opportunities in the various industries in which it is active, Promon embarked on a process to implement an organizational and governance structure that will make the entities that make up the Group more independent. From now on Promon S.A. will operate as a pure holding company, transferring to the management teams and structures of each Group operating entity the responsibility for developing its own strategies and running its own business. Promon Engenharia is a wholly-owned subsidiary of Promon S.A. and a leading provider of engineering services, focusing on strategic industries such as oil and gas, mining and metals, electric power, chemicals and petrochemicals and environmental services. Revenue (R$ million) Net income (R$ million) Investments 21% Technological development Education & training Infrastructure New business % 41% Source: Financial statements Source: Financial statements 19% Total: R$63 million Source: Financial reports Promon Group Fundação Promon de Previdência Social Employee Shareholders Instituto de Tecnologia Promon Promon S.A. Instituto Razão Social PromonLogicalis Promon Engenharia Trópico Promon Novos Negócios

4 4 PromonLogicalis Latin America Limited was created in April 2008, providing Promon with a strong presence in the Latin American information and communication technology (ICT) industry, a fact that will accelerate its regional growth. It is a joint venture between Promon Tecnologia, the former ICT arm of Promon S.A., and U.K.-based Logicalis Group, a division of Datatec Limited. Promon S.A. owns 30% of the equity but has full management responsibility for this new company. Trópico, which is controlled by Promon S.A., is a 3-way joint venture between Promon S.A. (60%), Fundação CPqD (30%) and Cisco Systems (10%). Trópico specializes in developing hardware and software for telecom operators. Other Group entities are the Fundação Promon de Previdência Social, Instituto de Tecnologia Promon and Instituto Razão Social, the latter maintained in association with two other large Brazilian groups Gerdau and Instituto Camargo Corrêa, with IBM Brazil as the technology partner. In 2008, Promon S.A. created Promon Novos Negócios, dedicated to new business development, providing the Group with a channel for its entrepreneurial tradition and vocation. Promon Novos Negócios fosters innovation and new ventures in infrastructure related industries, an area where the Group has broad knowledge and important competencies. This new area has already partnered with important players in the investment market and has identified interesting investment opportunities. As business grew in 2008, Promon Group companies had to significantly increase their headcount and, by year end, employed a total of 1,600 professionals, including some 300 in Latin American countries outside Brazil. Recruiting a large number of professionals and retaining talent during this period of market growth was a significant challenge for the human resources area. Promon was successful in both tasks, integrating the new employees into a community of professionals who share the responsibility for leading the company and for fostering the principles, values and practices that are the basis of its culture. Promon is recognized by its employees and the marketplace as an excellent place to work and has become a reference in people management in Brazil. For the 12th consecutive year Promon was considered one of the best places to work in Brazil by surveys conducted by the Great Place to Work Institute / Época Negócios and by Guia Exame-Você S.A. / FIA-USP, the University of São Paulo Business School. Promon s HR was ranked among the 50 most admired by Brazilian HR journal Gestão RH. Promon continuously advances in its determination to make its socio-environmental commitment an integral element of its strategic planning and business activities, rather than a mere set of principles, values and rules to be followed. In 2008, activities carried out by Promon Engenharia and PromonLogicalis moved Promon further along this direction. In the area of social activities and investments, Promon prioritized projects and initiatives in education, as it has in other years. The Group believes that education is an essential nutrient to the development of Brazil and its citizens. These priorities are reflected in the activities of Instituto Razão Social and the financial support provided to NGOs such as Ação Comunitária and Casa do Zezinho, as well as the encouragement given to employees to volunteer their services to projects such as the Junior Achievement, an NGO that focuses on preparing young people to succeed in the labor market.

5 5 Promon is also involved in supporting Brazil s National Quality Foundation s main mission, which is to disseminate management best practices to Brazilian organizations large and small, both private and government owned. Promon believes that these practices require adopting a set of principles that will not only make the organizations more competitive, but will also help them integrate their activities with the development of society and the environment. Promon is a signatory to the United Nations Global Compact and Brazil s educational program known as Compromisso Todos pela Educação, 1 and is aligned with movements such as Nossa São Paulo: Outra Cidade. 2 Promon s sustainability efforts have evolved continuously and have reached benchmark levels in several of the indicators published by Instituto Ethos de Empresas e Responsabilidade Social. In 2008, Promon was selected as a reference company for the third consecutive year by the Sustainability Guide published by Exame magazine. Although Promon made numerous changes during the course of the past year, those elements that form the essence of Promon remain unchanged: the principles and values that mold its culture, its professional competence based on a highly qualified team of professionals who are motivated and committed to its future, the ownership model that places 100% of the company s stock in the hands of its professionals, sustainability as a defining element of its business strategy and an open, inquisitive spirit, which is a characteristic of those who strive for constant renewal. The search for excellence, a strategic concept that has been a constant in the history of Promon and which led to it being awarded the 2007 National Quality Prize, is the result of its mature commitment to the quality of the solutions it develops and the services it delivers, of the selection and development of its professionals, and of its concern with their quality of life, as well as its permanent search for the highest technical standards and the type of relationships it develops with clients, partners and society at large. Brazil should feel the effects of the global financial crisis more strongly in 2009, severely slowing its economic growth and affecting several of the industries the Group serves. Promon is aware of the scenario but feels it has solid grounds to face the future with equanimity. It has a healthy portfolio of contracts that should ensure that its 2009 revenue is equivalent to what it recorded in This, added to its vitality, management capability and financial health, will allow it to strengthen its business, an open project built around the concept that it is possible to conduct business and deliver consistent earnings while maintaining a standard of ethics, participating in the development of the nation, respecting the environment and respecting human dimension, all of which are the very essence of Promon. 1 Everyone Committed to Education 2 Our São Paulo: a Different City

6 6 Promon Engenharia 2008 was a historical year for Promon Engenharia, with vigorous increases in revenue and staff. Large contracts and good performance in almost all of its target industries boosted revenue to R$388 million, a 78% increase over the R$217 million recorded in The combination of rising demand and an offer of highly differentiated services had a direct impact on Promon Engenharia s contract portfolio, which closed the year at R$1.6 billion, over 20% above the initial forecast for the period.

7 7 P romon Engenharia adopted a new organizational model in 2008, a result of Promon S.A. s organizational and governance changes that call for each operating entity to have its own executive and management structure. The number of employees increased significantly to some 1,000 by year end, as the company had to increase its professional staff to meet market demand. The company also added a unit dedicated to environmental projects to its traditional business areas. Some of the more important challenges faced in 2008 involved recruiting, training and retaining qualified personnel in an extremely competitive scenario. To keep up with accelerated demand and ensure the quality of its services, Promon Engenharia invested heavily in process improvements and people management in Promon Engenharia reiterated its belief in the importance of Knowledge Management by appointing an executive director to be in charge of this theme and by formally introducing Environmental Affairs to its portfolio of technical competencies. The success of these initiatives was evidenced in client satisfaction surveys where Promon Engenharia surpassed its already high scores in previous years. Revenue (VAC)* (R$ million) Source: Financial reports * Value Added for Clients, comprising Promon s operating revenue plus the value of goods and services procured under its responsibility Oil & gas As a result of a truly bubbling market, EPC (engineering, procurement and construction) contracts have made a strong come-back. Petrobras continues to lead the industry and is responsible for over 80% of the contracts and accounted for about 50% of the 2008 revenue. The first major event of the year was the signing of an agreement to build the Delayed Coking Plant (DCP) at the Petrobras Presidente Getúlio Vargas refinery in Araucária (Paraná). This is a R$2.5 billion contract and one of the largest ever for Promon Engenharia, which in this particular case is part of a consortium with Construtora Camargo Corrêa. Other O&G highlights for the period include the continued work on the Hydrotreatment Unit (HDT) at the Henrique Lage (Revap) refinery in São José dos Campos (São Paulo), the Hydrodesulfurization Unit (HDS) at Revap and the Alberto Pasqualini (Refap) refinery in Canoas (Rio Grande do Sul) and the Sulfur Removal Unit (SRU) at the Capuava refinery (Recap) in Mauá (São Paulo). Chemicals & petrochemicals In chemicals & petrochemicals important projects were delivered to traditional clients such as Carbocloro, Polietilenos União and Petroquímica União the latter two now part of Quattor, created in mid 2008 by Unipar and Petrobras. Promon Engenharia is part of a consortium that provided engineering and project estimates to expand the existing Fosfertil complex in Uberaba and build a new fertilizer facility in Patrocínio (Minas Gerais). Fosfertil is controlled by Fertifós, a consortium of fertilizer companies. This is a new and innovative contract, in the form of an alliance, which enables stronger and more long lasting relationship with clients, as well as shared decision making, risks and savings from lower investment costs.

8 8 In biofuels, work continued on two large contracts with Cosan, Brazil s largest sugar and ethanol group. One of these is to build the new ethanol plant in Jataí (Goiás), and the other is to replace a cogeneration plant at its Usina da Barra facility in Barra Bonita (São Paulo). Both of these units will allow selling surplus power to the regional utilities. Power Promon Engenharia conducted technical feasibility studies for Vale, one of its oldest and largest clients, interested in building coal fired thermal power plants in the Brazilian states of Espírito Santo and Ceará. Work also continued on engineering and management for a thermal power plant at Barcarena, Pará, where Promon Engenharia is responsible for adapting equipment acquired in China to local conditions. As part of this effort Promon plays an important role in adapting the engineering and construction cultures of both countries. To perform this task Promon Engenharia had teams working in China, which provided a very relevant procurement experience in that country. Mining and metals Vale is also an important partner in mining and metals. Promon Engenharia finished the third expansion of Alunorte s alumina plant. Alunorte is the world s largest alumina refiner and the controlling share is owned by Vale. Promon has been its leading engineering partner from the very start, some twenty years ago. In December 2008, Promon Engenharia signed a process engineering and infrastructure contract with Companhia de Alumina do Pará (CAP), whose production capacity is expected to exceed Alunorte s. Vale is also the majority shareholder of CAP. Other important projects for Vale include basic engineering, planning and budgeting for the expansion

9 9 of the Carajás Railroad and the Rail and Maritime Terminals in Ponta da Madeira (Maranhão), which will provide Vale with the capacity to ship 230 million tons per year (Mtpa) through its North System. In steel, Promon Engenharia finished the pre-feasibility study for Companhia Siderúrgica de Pecém in Ceará, a joint venture between Vale and Korean DongKuk Steel. This facility will be built in two steps, each with capacity to produce 2.5 million tons of slabs per year, for an aggregate capacity of 5 Mtpa. Promon Engenharia also conducted a preliminary feasibility and logistics study for Aços Laminados do Pará (ALPA), a 2.5 Mtpa rolling facility to be built in Marabá (Pará). Working with Vale in its expansion overseas, Promon Engenharia conducted feasibility studies for an ore pelletizing plant in Oman, in the Middle East.

10 10 PromonLogicalis Latin America One of the highlights for 2008 was the creation of PromonLogicalis Latin America, a decisive step in the organization s international expansion in the information and communication technology (ICT) industry. PromonLogicalis is the result of the merger between Promon Tecnologia and the Latin American operations of U.K.-based Logicalis and was born as the largest independent integrator of ICT solutions in Latin America.

11 11 T he merger switched the focus of operations from the domestic to the regional market. PromonLogicalis is present in Brazil and has offices in Argentina, Chile, Paraguay, Peru and Uruguay. This strategic and geographic realignment allowed it to keep up with the global needs of its clients, who now demand vendors that can serve them regionally, not just locally earnings reflect the success of this initiative. Consolidated revenue in Latin America was R$712 million and in Brazil revenue grew 120% year over year, a period when the total ICT market grew only 40%. This was the fifth consecutive year in which the organization s ICT operations grew more than the market. This performance reflects the success of a business model grounded in solid professional competencies and technological partnerships, combined with a consultative approach that starts with a thorough understanding of the client s business to design and deliver innovative, value-added solutions. The client base grew significantly in all the verticals in which PromonLogicalis has a presence: telecom operators, corporations and public sector and government institutions. Fixed and mobile telephony and cable television are the traditional markets, and these clients continue to account for the largest share of the contracts. In 2008, for the first time ever, all of Brazil s large telecom operators were PromonLogicalis clients, an important milestone for the company. This was primarily the result of factors such as the rapidly expanding offer of 3G services (highspeed voice, data, images and video) and, more recently, portability. Contracts with telecom operators include IP network infrastructure, high speed data transmission Revenue (R$ million) ** 588* Source: Financial reports * Brazil ** Other Latin American countries

12 12 solutions and services, multiple service offerings, network management and security solutions, among others. The corporate sector has increased its share of the PromonLogicalis portfolio, doubling for the fourth consecutive year. This growth reflects the alignment of the company s offerings and competencies with corporate demand for collaborative solutions and tools, data center optimization, network virtualization and eco-efficient technologies that comply with the concept of green IT, consuming less energy and generally making more efficient use of IT infrastructures. Clients in this segment include banks and other financial institutions, service industries, infrastructure providers, manufacturing industry and civil construction companies. PromonLogicalis tries to understand the specific needs of each industry. This approach enables not only the development of solutions tailored to the needs of each segment, but also their replication in order to optimize client service and reduce time to market projects included remodeling the data center structure for Redecard, a credit and debit card processing company that is part of the Itaú group, developing a set of solutions for Pinheiro Neto Advogados, a leading law firm in Latin America, and IT engineering consulting services for Vale. In the civil construction industry, the highlight for the year was the agreement to supply ICT solutions to the CCPR consortium (Camargo Corrêa and Promon Engenharia), which is building the Delayed Coking Plant at Petrobras Presidente Getúlio Vargas (Repar) refinery in Araucária (Paraná). PromonLogicalis provides network infrastructure, data processing, security, electronic document management, voice, data and wireless communication solutions for this facility. For the banking industry, PromonLogicalis offers WAAS (wide area application service) solutions that enable its clients to optimize their communication resources by assigning levels of priority, and also has a number of contracts to provide Advanced Service Centers, in which PromonLogicalis takes over the management of the client network. In late 2008, important contracts were signed with public sector institutions, a market that PromonLogicalis is maturing and where the outlook for growth is good. PromonLogicalis will provide solutions to upgrade data centers, network security and collaborative tools for clients such as the São Paulo State Department of Finance, the Federal Data Processing Service (Serpro) and the Integrated Air Defense & Air Traffic Control Center (Cindacta). Another front along which PromonLogicalis is advancing is the formalization of new technology partnerships. Tandberg, a provider of highdefinition videoconferencing and telepresence solutions, and AlterPoint, which provides network automation, management and security solutions, joined the existing partner base, which already includes Cisco, IBM, Arbor, McAfee and VMware, among others.

13 PromonLogicalis obtained important new certifications in 2008, including Cisco Master Security Specialized and Advanced DCNI (Data Center Networking Infrastructure), which recognize the expertise of Cisco s partners in network security solutions and data center infrastructure design and implementation respectively. In fact, Cisco elected PromonLogicalis its 2008 Partner of the Year. Other achievements worth mentioning are Leader in Security Implementation, Leader in Telecom Implementation and Largest Telecom Implementation awarded by the 2008 edition of IDG s (a subsidiary of the International Data Group) 100 Largest Telecom Companies guide. One of the main challenges in 2009, PromonLogicalis believes, will be meeting client demand for solutions that provide faster returns on investments and make technology a means to reduce costs. Part of the focus in 2009 will be the further development of the company s presence in Latin America. The idea is to strengthen its position as a regional supplier and reinforce an organizational model that enables it to combine the competencies of its various units to offer its clients the best solution, regardless of the country or countries in Latin America in which they operate. 13

14 14 Trópico After another year of strong growth, Trópico reported R$209 million in revenue for the year. Sales in 2008 were 115% higher than 2007, which in turn were 37% higher than Trópico provides access and control solutions and applications as well as professional services for telecom operators. Its Vectura family of equipment was chosen as one of the 25 most innovative projects of the last ten years by a Monitor Group survey conducted in partnership with Exame magazine and entitled O Brasil que Inova. 3 3 Innovative Brazil

15 15 Revenue (R$ million) Source: Financial reports As in previous years, in 2008 Trópico continued to stand out in a market characterized by very rapidly increasing investments in voice and data network convergence and NGNs (next generation networks). However, it was portability for fixed and mobile telephony that truly drove the company s increased revenue for the period. Trópico was ready and positioned to efficiently me et op erator nee d s when the regulator y body ( A natel) determined portability, which allows subscribers to switch operators and keep their same phone number. Trópico s solution is based on the Vectura Signaling Server (VSI), which enables portability without requiring that operators change platforms. This innovative and competitive solution allowed Trópico to sell 40% more than had been budgeted for the year. Trópico s VSI has been applied to the legacy and NGN networks of Telefonica, Oi and GVT. Other highlights for the year include the supply of VIA (Vectura IP Access) solutions for converging corporate voice and data networks, and expanding the installed base of VSSs (Vectura Software Switches) that control IP voice calls. VSSs were supplied to clients such as Telefonica, Easytone, Voitel, Rede Networks and Hoje Telecom. Telefonica s implementation of VAS (Vectura Access Server) solution has helped improve customer service, thanks to its voice recognition system. Oi is using Trópico s VES (Vectura Edge Switch) to expand its traditional telephony network. British Telecom, which supplies corporate networks in Brazil, signed a managed services agreement with Trópico to supply equipment, operation and maintenance services this past December. Trópico has also expanded its international presence. It is conducting market surveys in countries similar to Brazil and is testing its VSI solution with Telefonica in Argentina. It also set up Trópico Colômbia S.A. to consolidate the company s business in Colombia. Larger teams focused on local markets will enable the company to better serve its clients and prospect for new business opportunities. In line with Promon Group s entrepreneurial strategy and tradition, Trópico is one of the four controlling entities of WxBR, a company created in the first quarter of 2008 to offer WiMax (wireless broadband) solutions. Trópico s management successfully faced the challenge to expand the Manaus plant, almost doubling its manufacturing area. To ensure continued product and service excellence, as well as the levels of client satisfaction demonstrated in numerous surveys, in 2008 Trópico invested some R$24 million in technology development and expects to invest another R$29 million in 2009.

16 16 Promon Novos Negócios Promon s longstanding entrepreneurial vocation was reinforced in 2008 with the creation of Promon Novos Negócios. The objective is to provide the Group with a framework to systematically support its investment decisions in areas where it has recognized knowledge, competence and credibility.

17 17 Promon Novos Negócios activities will be based on two main axes. One is to assess opportunities and scenarios to invest in midsized ventures in electric power generation, information and communication technology and other areas. When investing in these industries Promon will necessarily take the lead and will be responsible for concept, implementation and management of the resulting venture, even if it reaches out to investors to leverage the initiative. The second axis is based on the activities of P2Brasil, a joint venture established in 2008 by Promon Group and Pátria Investimentos to create and manage investment funds. Pátria is one of Brazil s outstanding corporate advisory and capital management firms. As an asset manager, P2Brasil has independent governance so as to avoid conflicts of interest with other Promon Group businesses. The first initiative of this new company is the P2Brasil Infrastructure fund that focuses on business opportunities in the sub-sectors of logistics and transportation, oil and gas, water, sanitation and waste treatment and electric power transmission and distribution. P2Brasil will draw on the solid knowledge and competencies of the two partners, Pátria in investment management and Promon in infrastructure project management. To enable continued economic growth, Brazil must invest and revitalize its infrastructure. Promon wants to use its entrepreneurial nature to be an active participant of this process, using its competencies and the credibility it has developed in the marketplace. One of Promon s new business initiatives in 2008 was an equity investment in DeepFlex, a US company that manufactures flexible pipes used to produce and distribute oil and gas. These pipes are made of lightweight and corrosionresistant material, making them specially suited to challenging offshore environments such as subsea facilities. This is a market with significant growth potential because of oil exploration and production in Brazilian waters.

18 18 Fundação Promon de Previdência Social Fundação Promon de Previdência Social (FPPS), the Group s pension fund, was not immune to the effects of the global economic crisis in 2008, but its results remain better than those of most open plans available in Brazil was one of the worst years ever for pension funds worldwide because of the global slump in equity markets. In Brazil, where pension funds had accumulated a large surplus during the stock market boom years, average nominal 2008 returns were negative by an estimated average of 1.6%, according to ABRAPP, the national association of closed pension fund entities.

19 19 Both plans administered by FPPS the MultiFlex defined-contribution plan and the BásicoPlus defined-benefit plan were affected, albeit less so than their peer group of pension funds. Fund management is conservative in both cases, with less than 18% exposure to variable yield securities at the start of As a result, the plans did not suffer the full impact of falling stock prices as did the rest of the market. Quotas in the MultiFlex plan increased in value by 3.72% during the year; even though this performance is far above the negative 1.6% yield mentioned above, if we include the 6.48% increase in the consumer price index (INPC), real fund yield was negative 2.6%. However, if the accumulated yield since the fund was created in 2005 is taken into account, its performance is still better than most open pension funds available in the market. MultiFlex has a total of 1,304 members, of which 1,142 are employees, 142 are self-funded and 20 are beneficiaries. At the end of 2008 total assets were R$106 million. BásicoPlus, which was set up more than 30 years ago, ended the year with net assets of R$602 million and 728 participants (85 active employees, 82 self-funded and 561 beneficiaries). At year end its accrued actuarial liability amounted to R$549 million based on the discounted present value of future liabilities and the life expectancy of the members. Here too results were affected by the negative yield of variable yield investments was also marked by new and restrictive government regulations governing supplemental pension fund funding models and the destination of surpluses in defined-benefit plans. As a result, the level of contributions to BásicoPlus is expected to increase considerably in 2009, affecting both active pension plan members and Promon Group companies as the sponsors. This situation should lead to a reopening of the option to migrate to the MultiFlex plan, where member contributions are entirely voluntary. In 2008, FPPS introduced real segregation of the assets held by the two plans, but decided not to introduce more strongly differentiated investment policies for each one until the turbulence caused by the ongoing global financial crisis is over. At the institutional level, FPPS continued to represent the sponsoring companies on Brazil s Conselho de Gestão de Previdência Complementar (Supplemental Pension Fund Management Board). This Council, which performs normative and appealing functions, is chaired by the Minister of Social Security and is made up of government, member and pension fund representatives.