PROMON/ annual RePORt 2010

PROMON/ annual report 2010

PROMON in 2010 / 2 PROfile / 8 GoveRNance / 10 Strategy / 12 PROMON 50 years / 16 core beliefs and ReaSON to exist / 17 businesses PROMON Engenharia / 20 PROMONlOGicalis Latin America / 26 trópico / 30 PROMON NovOS NegóciOS / 34 associated entities Fundação PROMON de Previdência Social / 38 instituto de TecNOlogia PROMON / 40 instituto Razão Social / 42 PROMON PROFESSIONalS april 2011 / 44 MANAGEMENT TEAM / 46

/ PROMON IN 2010 2

3

The Promon Group closed the year of 2010 with excellent results. The net operating revenue totaled R$ 1.09 billion, an increase of 46% over 2009, and net profits reached R$ 87.2 million, net of the R$ 21.3 million destined for distribution to the officers and employees as profit sharing. Profits in 2010 remained on the same level as that of the preceding year, and were primarily the result of the good operational performance of all the Group s businesses. In the business year, the Group also recorded the positive effect of nonoperational results in connection with the transaction carried out with the Logicalis Group in 2008 for the creation of PromonLogicalis Latin America. This effect, however, was smaller in 2010 than in 2009. When the overall set of businesses under the management of the Promon Group is considered, regardless of the share interest held in each one of them, the gross revenue reached R$ 1.8 billion in 2010. During the year, the investments amounted to R$ 65.4 million, a sum 13% higher than that of the preceding year, concentrated in technological development, training and the development of new businesses. Promon S.A. closed the business year with an enviable balance sheet and financial position, showing high liquidity and low indebtedness. The shareholders equity at the end of 2010 reached R$ 323.7 million, of which R$ 10.7 million, corresponding to the obligatory minimum dividends, have already been deducted. The Group s workforce at the end of 2010 totaled more than 1,430 professionals in Brazil and 270 in other Latin American countries, besides roughly 90 participants in the trainee program. In relation to 2009, it represents a 6% growth in the total number of professionals. The revenues of Promon Engenharia and PromonLogicalis recorded an expressive growth in relation to the preceding year, at 48% and 67% respectively. Trópico s revenues grew roughly 9%, a good performance in a period in which the telecommunications industry showed a reduction on the order of 9% in its investments. The favorable Brazilian economic environment, expressed in the evolution of 7.5% of the GNP recorded in 2010, was important for the achievement of these results. The consistency of the performance, however, derives from the differentiated capacity of the Promon Group s companies in the application of engineering and technology solutions, in conjunction with their competence in project management. Promon Engenharia took advantage of its favorable positioning in the oil and gas industry, which continues to present a remarkable strength, due to the investments ongoing and planned for the coming years. Other markets in which the company is active, such as steel and fertilizers have been resuming their investment plans since the second half of 2010, following their slowdown owing to the global crisis that arose in 2008. The effects of this resumption began to appear in the business year, with the contracting of Promon Engenharia for the development of initial studies and basic projects for various clients. 5

PromonLogicalis, an independent integrator of information and communication technology solutions in Latin America, has been continuously expanding its offering and markets in which it is active. The new demands generated by the broadband expansion and by the utilization of new forms of communication by society have given rise to growth opportunities in the company s traditional areas of operation, as well as in specific fields, such as security solutions and advanced network management services. Its geographical base of activity was expanded in 2010 to Colombia, Ecuador and Bolivia, so that the company went on to operate in nearly all of South America. Trópico, in turn, went on to incorporate technological differentials in its solutions and add new functionalities to its equipment line, in this manner gaining new contracts among the country s principal telecommunications operators, which updated their networks and invested in the offering of new services. The company also initiated the consolidation of a new offering: custom-based software development to address specific needs of corporate clients. Also very positive were the achievements of Promon Novos Negócios, a unit created in 2008 to better foster the organization s entrepreneurial drive. The P2Brasil Infraestrutura, the first fund of P2Brasil, an investment management company formed together with Pátria Investimentos, had raised funds by the end of the business year on the order of US$ 850 million. With the funding process still ongoing, the prospects are that the figure of US$ 1 billion will be exceeded. The fund, which in 2010 consolidated its own management team, made its first investments in the same year in the fields of transportation and logistics. The funding success is an expression of the receptivity of the investors, the great majority of which are foreigners. The investors look with enthusiasm on the potential of Brazil s economy and, particularly, the opportunities derived from the needs of investments in infrastructure in order to sustain the country s development. But the principal attraction of P2Brasil is its proposal to gather within a managerial company the complementary experience, credibility and competencies of the Promon Group and of Pátria Investimentos. Another highlight of the performance of Promon Novos Negócios during the year was the creation of Genes, a company focused on investing in power generation projects, a traditional area in which Promon Engenharia is active. 6

Revenue R$ million 2008 713.3 2009 744.9 2010 1,088.7 Source: Financial statements Net Income R$ million 2008 137.8 2009 86.0 2010 87.2 Source: Financial statements Investments in 2010 total R$ 65.4 million Added Value Distribution R$ million TechnolOGical DevelOPMent Infrastructure New Businesses Training 35% 23% 20% 22% Government employees Shareholders Third Parties Withheld 2008 518.6 2009 482.2 2010 565.1 Source: Financial RePORts Source: Financial statements 7

PROfile The Promon Group is controlled by Promon S.A., its holding company, in which is situated the organization s executive and strategic coordination. Its only stockholders are professionals formally connected with the organization. Democratic, transparent and participative, more than a legal structure, Promon s ownership model is the economic expression of the organization s ideals and values. Through the voluntary adherence to the model, the professional strengthens the degree of his or her sharing in the wealth created and participation in the life of the company. Promon Engenharia Ltda., PromonLogicalis Latin America Limited, Trópico Sistemas e Telecomunicações S.A. and Promon Novos Negócios comprise the set of companies through which the organization s principal businesses are developed, acting with managerial independence, but always aligned with the general strategy, policies and guidelines established by the Group. A wholly-owned subsidiary of Promon S.A., Promon Engenharia is active in the engineering market, focusing on the strategic industries of Oil and Gas, Mining and Metals, Power, Chemicals and Petrochemicals, and the Environment. PromonLogicalis Latin America Limited, a joint venture between the British company Logicalis Group Limited and Promon S.A., is dedicated to systems integration for the information and communication technology market, operating in Latin America. Promon, which owns 30% of the company s equity, is fully responsible for its management. Trópico, a joint venture between Promon S.A., which holds 60% of its equity, the Fundação CPqD (30%) and Cisco Systems (10%), operates in the development of software and hardware for the telecommunications market. The mission of Promon Novos Negócios is to develop in a structured and consistent manner the Group s entrepreneurial drive, based on the organization s competencies and relationship networks, in order to stimulate the development of new businesses in sectors connected with infrastructure. P2 Gestão de Recursos Ltda. (P2Brasil) is a joint venture between Promon and Pátria Investimentos, oriented toward the management of investment funds in these sectors. Genes Geração de Energia Sustentável S.A. is a company dedicated to the development of enterprises focused on the generation of sustainable energy. The organization s structure includes the Fundação Promon de Previdência Social, the Instituto de Tecnologia Promon and the Instituto Razão Social, the latter maintained jointly with Gerdau and relying on the technological partnership of IBM Brasil. 8

THE PROMON GROUP EmployEE Shareholders promon s.a. fundação promon de previdência social instituto de tecnologia promon instituto razão social associated entities promonlogicalis latin america ltd. promon engenharia ltda. trópico sistemas e telecomunicações s.a. promon novos negócios 30% 100% 60% 100% p2 brasil 40% genes s.a. 100% 9

GoveRNance Adhering to an already sanctioned renewal process, which covers all the organization s fundamental aspects, in April 2010 the new composition of the Board of Directors and of the Executive Committee of Promon S.A., the Group s holding company, was established for the term of 2010 to 2013. The Board of Directors, the company s highest administrative instance, was defined according to a voting process among the roughly 1,100 shareholder professionals, who manifested in an expressive manner their confidence in the six names proposed to form the Board. Luiz Ernesto Gemignani was reelected Chairman of the Board of Directors, after having served three terms as the Group s principal executive officer. The other members of the Board are Gilson G. Krause, Luiz Fernando T. Rudge, Luiz Gonzaga Marinho Brandão, Raul Antonio Del Fiol and José Guimarães Monforte. The first four professionals are thoroughly conversant with the organization. Monforte, a professional with recognized experience, is an independent member of the Board, in yet an additional evolution of the governance model. The Executive Committee is now formed by Luiz Fernando T. Rudge, who has worked for the organization over the past nearly thirty years, in the position of Chief Executive Officer; by Gilson G. Krause and Ivo Godoi Junior, in the positions of Executive Directors, all of them professionals who were already members of the Committee in the previous term of office; and by Felipe Alceu Amoroso Lima, in the position of Executive Director and Chief Financial Officer. Three committees providing support to the Board were formed: that of Strategy, oriented towards the analysis and monitoring of the organization s strategic planning; that of Risks and Auditing, focusing on the evaluation and tracking of the major business risks in their various categories; and that of Organizational Development, dedicated to the subjects connected with people, culture, the management system and the organizational model. Tamas Makray, Carlos M. Siffert and Paulo A. Fragelli, members of Promon s founding group and professionals to whom the organization expresses its heartfelt gratitude, although no longer taking part in the operations, continue to cooperate with the company, through their membership in the boards of associated entities and in advisory committees supporting the Board of Directors. 10

The vision of the near future, very stimulating owing to the more immediate business and development prospects for the company, does not, however, satisfy Promon s restless spirit, which gains nourishment from the dynamics of permanent renewal and from a look that seeks to see further ahead. It was this search that in 2010 inspired the launching of the Promon 2020 project. In attunement with a principle that has always permeated its existence that of being a community of shareholder professionals, responsible for the company s destiny and actively taking part in the definition of its future Promon exposed more than a hundred professionals to the large issues facing the world and the sectors in which the company is active, with the objective of jointly defining possible scenarios for the next decade. Which will be the most important transformations in this period? Which technologies will prevail? What will be the consequences of these changes in the Group s businesses? How may Promon help to build this future? The process aimed at the search for these answers included the participation of renowned international experts in several knowledge areas and required months of intense work by the company s professionals, who dealt with a comprehensive selection of issues ranging from aspects of a broader context, such as climate, social, demographic and geopolitical changes, to more specific issues, such as energy, information and communication, transportation infrastructure, biotechnology and nanotechnology. From the result of this effort there emerged a vision of what the world may look like as of 2020 and of the respective implications for Brazil and Promon. Based on this vision, the professionals sought to define the principal strategic choices for the company. The perception that the social and environmental sustainability will be acclaimed by society as the principal determiner of its avenues towards development implies deep impacts on companies, particularly those that are active in the infrastructure field. Promon is aware of the social environmental responsibility deeply embedded in its culture, but in regard to this issue proposes to go beyond the high standards already consolidated in its traditional line of business. The organization is determined to make sustainability the principal guiding element in its businesses, going on to orient its investments in the light of this objective. The efficiency in the use of the existing resources and the replacement of old technologies by cleaner ones will become demands made by society, suggesting a time of great changes, challenges and opportunities. To speed up the steps in this direction a number of activities will be initiated in 2011 that will mobilize the company s best talents in the quest for what is new. Technological observatories are being established to function as groups of permanent monitoring of themes identified as being essential for the Group s positioning in this future, such as the generation of clean energies, the development of new materials, cloud computing and its impact on people and organizations, and the confluence of biology and technology. 11

Strategy PROMON S STRateGIC PERSPectiveS The systemic vision of the Promon Group comprises eight strategic perspectives that permeate the entire organization and represent the principal stakeholders and the main elements of its dynamics of value creation. In 2010, within the sphere of the Promon 2020 project, the Group s aspirations were discussed anew by the organization, resulting in a more ambitious and detailed formulation of the macro-objectives relative to each one of those perspectives. Those macro-objectives clarify the importance given by Promon to the quality of the relationship with its clients, partners and suppliers. They emphasize the proactive stance in the proposal of solutions of value, in the innovative application of technology and in the continuous updating of its knowledge base. Worthy of emphasis is the commitment to managerial excellence, to innovation and to entrepreneurship, as well as the vision of social and environmental sustainability as a determinant element of the development of the organization and its businesses. There is a strengthening of the importance of the open and collaborative environment in order to allow the professionals who make up the Promon community to realize their potential and to seek a superior performance and the permanent exercise of innovation. The organization s culture, the true expression of its values, is an element to be enriched by sharing, by communication and by the participation of the community s members. It is the basis on which the other elements sustain themselves. Clients Knowledge and ProcESSES Partners and Suppliers Economic performance Society and the Environment Organizational Culture BusinESS Portfolio People 12

The vision of organizations held by the Promon Group is that they are live systems, permanently interacting with other systems, which exert an influence on and are influenced by them. In a manner consistent with this view, the Group defines its strategies and evaluates its performance taking into account not only the economic and financial results of its businesses, but eight strategic perspectives: Economic Performance, Business Portfolio, Clients, Partners and Suppliers, Knowledge and Processes, Society and the Environment, People and Organizational Culture. For a company that ascribes a strategic dimension to its people, views knowledge as its major raw material and the organizational culture as its most intangible asset, it is essential to dedicate managerial energy to ensure excellence in the management of its people, its competencies and the organizational environment. To this end, more than adopting the best policies and practices, Promon seeks to evolve constantly, remaining attentive to and renewing itself with the changes. A special effort has been made by the Group to the forming of new leaders, whether to meet the growth requirements of its companies, or for the succession of professionals that hold key positions. In this context, in addition to the traditional training and development actions, the Group has sought to engage its future leaders in challenging activities, such as the proactive participation in its strategic projects. Furthermore, the organization invests in an extensive selection of actions aimed at sharing knowledge, encouraging communities of practices, technical engineering and technology meetings, and the Mastigando Ideias (Chewing on Ideas), in voluntary attendance meetings that are already traditional, in which a professional who is an expert in a given subject shares his knowledge with the other interested parties. From this positioning significant recognitions resulted in the people management sphere. Promon continued as one of only three companies in the country present, always in positions of prominence, in all the editions of the 150 Best Companies to Work For guide published by Você S.A./Exame, and the The 100 Best Companies to Work For in Brazil guide published by Great Place To Work/Época. Carried out every year, the internal organization climate survey revealed that the satisfaction rates of the professionals remain at levels that surpass those of the benchmark organizations on a global basis. The survey s results were discussed internally with the professionals and actions were defined to deal, in 2011, with such topics as communication, coexistence with other cultures and positive aspects of diversity for new learning. Staff Evolution as of December 31st Corporate/Holding PROMON ENGENHARia PROMONLOGicaliS [BRAzil] PROMONLOGicaliS [abroad] TRÓPicO 2008 1,528 2009 1,611 2010 1,707 13

Organizational Culture Percentage of favorable answers from the Promon Group s employees to a set of questions related to the topics set forth below: Conduct How the organization handles its external and internal relationships. ReSPect and Equity How the professionals are treated, regardless of their job positions. Engagement Percentage of professionals participating in the ownership model. 94% 93% 92% 86% conduct ReSPect and Equity 92% 91% 87% 79% 2008 2009 2010 BENChmark* * RESULTS ObtaiNED AMONG HIGH PERFORMANce COMPANieS, according TO AN INteRNatiONal ANalySIS FROM TOWERS WatSON SOurce: ORGANizatiONal CLIMate SURvey (TOWERS WatSON) 81% 80% 78% Engagement 14

Convinced that education is a key factor for the progress and development of people and of countries, it is in this field that over the past years Promon has concentrated it social actions. It is the focus of the activities of the Instituto Razão Social, of the Programa de Voluntariado (Volunteer Program) and of the company s private investments which, during the year, benefited more than twenty organizations in the regions in which the company operates. One of the projects supported by Promon, the Artes na Periferia (Arts in the Environs), developed in São Paulo by the Casa do Zezinho organization, was mentioned as one of the thirty best social projects by the 2010 Global Compact for Development report, published by the UN Global Compact, an organization of which the Promon Group is a signatory since 2006. The Volunteer Program is planned and monitored so that the voluntary labor of the Promon professionals meet the requirements of the projects of the partner NGOs, having been recognized by the 2010 Top Social Award, granted by the Associação dos Dirigentes de Vendas e Marketing do Brasil (Association of Sales and Marketing Managers). In the course of the year, roughly one half of the Group s workforce engaged itself in voluntary projects and campaigns, benefiting ten thousand children and teenagers. The continuous commitment to the incorporation of social and environmental issues into its business activities and the evolution of actions in this field caused Promon to be recognized by Exame magazine, for the fifth consecutive year, as one of the country s twenty model companies in enterprise citizenship. The organization, furthermore, is associated with the movement entitled Todos pela Educação (All for Education), the Rede Nossa São Paulo (Our São Paulo Network), the Gife Grupo de Institutos Fundações e Empresas (Group of Institutes, Foundations and Companies), the Instituto Ethos de Empresas e Responsabilidade Social (Ethos Institute of Business and Social Responsibility), and the Instituto Akatu pelo Consumo Consciente (Akatu Institute for Conscious Consumption). It is a signatory of the Pacto Nacional pela Erradicação do Trabalho Escravo (National Pact for the Eradication of Slave Labor) and sustaining member of the Fundação Nacional da Qualidade (National Quality Foundation), of whose Trustee Council the Chairman of Promon s Board of Directors is a member. degree of corporate social responsibility The seven Corporate Social Responsibility (CSR) topics considered by Instituto Ethos are: Values, Transparency & Governance; Employees; Environment; Suppliers; Consumers & Clients; Community; Government & Society. scope 7 csr topics depth csr stages 2008 PROMON GROuP consolidated 2009 PROMONLOGicaliS 2010 PROMONLOGicaliS 2009 PROMON ENGENHARia 2010 PROMON ENGENHARia Benchmark area source: Instituto EthOS de Empresas e ReSPONSabilidade Social 15

The Promon Group views the future with great enthusiasm. In the closer horizon, the prospects are that its traditional businesses in the infrastructure sectors continue to be favored by the continuation of the country s current development cycle. Meanwhile, the look taken by Promon towards the future enables it to perceive the wealth of possibilities that this era sharply marked by technological, cultural and geopolitical possibilities offers. Although some of the roads that Promon intends to explore are new there is nothing novel in the fact of its doing so. It was by renewing and reinventing itself that Promon arrived at the age of fifty, completed in 2010, as a live organization, vibrant, with an enviable history of achievements. These five decades of activity have given it experience, knowledge and maturity. But it is the youthful spirit that makes it lasting, because it is from this very spirit that the organization extracts the enthusiasm and energy that drive it in the unceasing search for new frontiers. PROMON 50 years Promon celebrated its fifty years in 2010. Established in December 1960, in 1970 it became a company whollyowned by its employees, due to the visionary initiative of a small group of professionals. Promon underwent great moments, faced great turbulence, and wrote a history of great achievements. It proved capable, as did few organizations, of understanding the changes that occurred in Brazil and in the world, defining and exploring new roads. To celebrate these five decades, the company sponsored the Promon Chamber Concerts 50 Years Schumann, Chopin and Brazil series. The program presented works celebrating the bicentennial of the birth of Robert Schumann and Frédéric Chopin and provided counterpoint performances of the works of Brazilian composers, such as Heitor Villa-Lobos, interpreted by new and talented artists. The seven presentations took place from August to November 2010, at the Teatro Cultura Artística Itaim, in São Paulo. Promon published the commemorative book entitled Para Chegares ao Que Não Sabes ( In Order to Arrive at What You do not Know ), written by the famous writer Ignácio de Loyola Brandão, describing the ideas and achievements, values and beliefs shared by the professionals of Promon during these fifty years. On taking up the company s history, it sought to pay tribute to the thousands of professionals that experienced and built the company during these decades, revealing, in addition, various curious and picturesque facts that occurred with its employees. These are stories that illuminated the backstage and the life of its protagonists, composing a mosaic that melted into a harmonious assembly, as cells forming a live and complex organism. promon 16

THE BOARD OF DIRectORS AND THE EXECUTIVE COMMittee: LUIZ GONzaGA M. BRANdãO, Raul A. DEL FIOL, GilSON G. KRauSE, luiz FERNANDO T. RudGE, LUIZ ERNESTO GEMIGNANI, FELIPE A. AMOROSO LIMA, IVO GODOI JUNIOR and JOSÉ GuiMARãeS MONFORte Core beliefs and ReaSON to exist Core beliefs A company is a living system, an integral part of a social, economic and natural ecosystem with which it interacts, on which it depends and for which it is co-responsible. Knowledge shall be an instrument for the accomplishments of individuals and of society if used in a shared and conscious manner. ReaSON to exist Promon is a knowledge-based community of professionals identified by its capacity to innovate, which, having as its guiding concept the pursuit of excellence, wants to undertake and provide infrastructure solutions that create value for its clients and other stakeholders; provide conditions for the professional and human achievement of its professionals; be an active agent of society s development process and of the environment s conservation. Community means having things in common, shared understandings that transcend the parts into which the company is divided. Community implies the inclination to observe principles and rules, but also implies voluntary collaboration, much wealthier and less programmed. Collaboration is not altruism. It arises when people share a cause, when they feel that they are part of a common destiny. A community may be described, it may be mapped according to formal terms, but it also has an emotional significance, a sense of connection, of union. Communities have a body, but they also have a soul. 17

businesses / PROMON ENGENHARia / PROMONLOGicaliS latin AMERICA / TRÓPICO / PROMON NOVOS NEGóciOS 18

19

20

Revenue R$ million 2008 388 2009 680 2010 1,009 Source: Financial RePORts / PROMON ENGENHARia The resumption of the investments that had been postponed at the height of the global economic crisis had positive impacts on the performance of Promon Engenharia in 2010. Revenues reached R$ 1,009 million, a growth of 48% relative to the preceding year, with an expressive participation of the Oil and Gas sector. BUSINESS PORtfOliO, CLIENTS, PARTNERS AND SUPPlieRS The relationship with Petrobras, its oldest and most traditional client, was reinforced with important contracts based on the EPC system (Engineering, Procurement and Construction). Among these, is the construction of the Atmospheric and Vacuum Distillation Unit (UDAV) at the Rio de Janeiro Petrochemical Complex (Comperj), in the town of Itaboraí, under a partnership with Skanska and Engevix. Begun in 2010, this construction job is to be carried out in 36 months. The unit, the first of its kind to be built in Brazil in the past thirty years, will have a nominal processing capacity of 150 thousand barrels/day of crude oil, to be separated into products such as fuel gas, naphtha, diesel oil and kerosene. Under a consortium with MCE, Promon Engenharia also obtained a contract for the construction and assembling of the offshore platform PIGs Operation Module (MOP-1), the first platform of its kind in Brazil. Its construction term is two years and, after its conclusion, it will be towed by maritime means from Bahia, where it is being assembled, to Campos Basin. The unit will be utilized in the moving of the PIGs (Pipeline Inspection Gauges), equipment that carries out the cleaning of gas transportation pipes. Besides these new projects contracted by Petrobras, the execution of another five EPC contracts was continued in 2010: the Delayed Coking Unit (UCR) of the Presidente Getúlio Vargas Refinery (Repar) at Araucária (State of Paraná), the Hydrotreatment Unit (HDT) of the Henrique Lage Refinery (Revap) at São José dos Campos (State of São Paulo), the Hydrodesulfurization Units (HDS) at Revap and at the Alberto Pasqualini Refinery (Refap) at Canoas (State of Rio Grande do Sul) and the Sulfur Removal Unit (URE) at the Capuava Refinery, in Mauá (State of São Paulo). Developed in a consortium with Camargo Corrêa, the UCR at Repar remains the largest project in which Promon Engenharia is currently involved, and has been the object of important recognitions. An unprecedented feat in works contracted by Petrobras, the CCPR-Repar consortium obtained the sector s five main certifications: ABNT ISO/TS 29001, relative to the Quality Management System for Gas and Oil; NBR 16001, relative to the Social Responsibility Management; NBR ISO 14001, of the Environmental Management System; NBR ISO 9001, of the Quality Management System; and OHSAS 18001, of the Occupational Health and Safety Management System. In addition, the quality of the project s management was recognized through the 2010 Banas Management National Award, granted by the Banas Qualidade magazine in the Quality and Sustainable Development categories. It was 21