4Q14 Financial Statements

Transcription

(A free translation of the original in Portuguese)
Votorantim Cimentos S.A.
Parent company and consolidated
financial statements at
December 31, 2014
and independent auditor's report
G:\DEC\VOTORANTIMCIM14.DEC
(A free translation of the original in Portuguese)
Independent auditor's report on
Parent company and consolidated
financial statements
To the Board of Directors and Shareholders
We have audited the accompanying financial statements of Votorantim Cimentos S.A. ("Company" or
"Parent company"), which comprise the balance sheet as at December 31, 2014 and the statements of
income, comprehensive income, changes in equity and cash flows for the year then ended, as well as the
accompanying consolidated financial statements of Votorantim Cimentos S.A. and its subsidiaries
("Consolidated"), which comprise the consolidated balance sheet as at December 31, 2014 and the
consolidated statements of income, comprehensive income, changes in equity and cash flows for the year
then ended, and a summary of significant accounting policies and other explanatory information.
Management's responsibility
for the financial statements
Management is responsible for the preparation and fair presentation of the financial statements in
accordance with accounting practices adopted in Brazil and in accordance with the International Financial
Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB), and for such
internal control as management determines is necessary to enable the preparation of financial statements
that are free from material misstatement, whether due to fraud or error.
Auditor's responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted
our audit in accordance with Brazilian and International Standards on Auditing. Those standards require
that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on the auditor's judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or
error.
In making those risk assessments, the auditor considers internal control relevant to the entity's
preparation and fair presentation of the financial statements in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of
2
PricewaterhouseCoopers, Al. Dr. Carlos de Carvalho 417, 10o, Curitiba, PR, Brasil 80410-180, Caixa Postal 699
T: (41) 3883-1600, F: (41) 3222-6514, www.pwc.com/br
the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies
used and the reasonableness of accounting estimates made by management, as well as evaluating the
overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
Opinion
In our opinion, the financial statements present fairly, in all material respects, the financial position of
Votorantim Cimentos S.A. and Votorantim Cimentos S.A. and its subsidiaries as at December 31, 2014,
and their financial performance and cash flows, and their consolidated financial performance and
consolidated cash flows for the year then ended in accordance with accounting practices adopted in Brazil
and the International Financial Reporting Standards (IFRS) issued by the International Accounting
Standards Board (IASB).
Other matters
Supplementary information statement of value added
We have also audited the Parent company and consolidated statements of value added for the year ended
December 31, 2014, which are the responsibility of the Company's management and are presented as
supplementary information. These statements were subject to the same audit procedures described above
and, in our opinion, are fairly presented, in all material respects, in relation to the financial statements
taken as a whole.
Curitiba, February 25, 2015
PricewaterhouseCoopers
Auditores Independentes
CRC 2SP000160/O-5
Carlos Eduardo Guaraná Mendonça
Contador CRC 1SP196994/O-2
3
Contents
Parent company and consolidated financial statements
Balance sheet............................................................................................................................................................5
Statement of income................................................................................................................................................6
Statement of comprehensive income.......................................................................................................................7
Statement of changes in equity................................................................................................................................8
Statement of cash flows..........................................................................................................................................10
Statement of value added.......................................................................................................................................12
1
General considerations ................................................................................................................................ 13
2
Presentation of the parent company and consolidated financial statements............................................... 15
2.1 Basis of preparation ..................................................................................................................................... 15
2.2 Consolidation ............................................................................................................................................... 16
2.3 Foreign currency translation .......................................................................................................................18
2.4 Cash and cash equivalents ........................................................................................................................... 19
2.5 Financial assets ........................................................................................................................................... 20
2.6 Derivative financial instruments and hedging activities .............................................................................. 21
2.7 Trade accounts receivable ........................................................................................................................... 22
2.8 Inventories .................................................................................................................................................. 22
2.9 Current and deferred income tax and social contribution .......................................................................... 22
2.10 Property, plant and equipment ................................................................................................................... 23
2.11 Leases ......................................................................................................................................................... 23
2.12 Intangible assets ......................................................................................................................................... 24
2.13 Impairment of non-financial assets ............................................................................................................ 25
2.14 Non-current assets held for sale ................................................................................................................. 25
2.15 Trade payables ............................................................................................................................................ 25
2.16 Loans and financing.................................................................................................................................... 25
2.17 Provisions ................................................................................................................................................... 26
2.18 Asset retirement obligation......................................................................................................................... 26
2.19 Employee benefits....................................................................................................................................... 26
2.20 Capital ..........................................................................................................................................................27
2.21 Revenue recognition ................................................................................................................................... 28
2.22 Distribution of dividends and interest on capital ....................................................................................... 28
2.23 Earnings per share ...................................................................................................................................... 28
2.24 Government grants ..................................................................................................................................... 28
2.25 Segment reporting ...................................................................................................................................... 29
2.26 Statement of cash flows .............................................................................................................................. 29
2.27 Statement of value added............................................................................................................................ 29
3
Changes in accounting policies and disclosure ........................................................................................... 29
4
Critical accounting estimates and judgments ............................................................................................. 30
5
Financial risk management......................................................................................................................... 32
5.1 Financial risk factors................................................................................................................................... 32
5.2 Capital management ................................................................................................................................... 35
5.3 Fair value estimates .................................................................................................................................... 36
5.4 Derivatives contracted ................................................................................................................................ 39
5.5 Hedge of net investment ............................................................................................................................. 40
5.6 Sensitivity analysis ...................................................................................................................................... 40
6
Financial instruments by category .............................................................................................................. 42
7
Credit quality of financial assets ................................................................................................................. 44
8
Cash and cash equivalents .......................................................................................................................... 45
9
Financial investments ................................................................................................................................. 45
10 Trade accounts receivable ........................................................................................................................... 46
11 Inventory .................................................................................................................................................... 48
12 Other taxes recoverable .............................................................................................................................. 49
13 Related parties ............................................................................................................................................ 50
14 Other assets ................................................................................................................................................ 53
15 Investments in associates and joint ventures ............................................................................................. 54
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
Property, plant and equipment .................................................................................................................... 61
Intangible assets ......................................................................................................................................... 65
Loans and financing.................................................................................................................................... 69
Current and deferred income tax and social contribuition .......................................................................... 77
Provision ..................................................................................................................................................... 80
Payables - trading ....................................................................................................................................... 88
Use of public assets ..................................................................................................................................... 89
Other liabilities ........................................................................................................................................... 89
Stockholders' equity .................................................................................................................................... 89
Revenues ..................................................................................................................................................... 92
Other operating income, net ....................................................................................................................... 93
Expenses by nature ..................................................................................................................................... 93
Employee benefit expenses ......................................................................................................................... 94
Financial income (expenses), net................................................................................................................ 94
Pension plan and post-employment health care benefits ........................................................................... 95
Tax benefits ................................................................................................................................................. 99
Insurance coverage .................................................................................................................................... 101
Non-current assets (or disposal groups) held for sale ............................................................................... 101
Financial information by operating segment .............................................................................................103
Balance sheet
Years ended December 31
All amounts in thousands of reais
As sets
Current ass ets
Cash and cash equivalents
Financial investments
Derivative financial instruments
Trade accounts receivable
Inventory
Other taxes recoverable
Current income tax and social contribution receivable
Advances to s uppliers
Dividends receivable
Other assets
As sets of dispos al group classified as held for sale
Note
2014
8
9
5.4
10
11
12
12
188,676
1,456,432
13
14
33
Parent company
2013
2014
305,571
432,225
107,497
28,694
29,314
42,741
33,427
14,218
1,027,785
15,010
302,390
484,343
86,900
95,826
31,239
143,974
61,122
1,148,809
1,302,235
196,346
75,212
82,826
31,224
149,678
665,588
1,274,323
17,526
1,096,596
1,305,655
179,448
161,686
74,401
24,555
154,578
2,624,577
2,262,807
5,512,370
4,954,356
36,509
955,327
1,570,713
Consolidated
2013
1,285,785
787,981
6,798,155
5,742,337
Liabilities and stockholders' equity
Current liabilities
Loans and financing
Trade payables
Payables - Trading
Salaries and payroll charges
Income tax and social contribution payable
Taxes payable
Dividends payable
Advances from custom ers
Us e of public assets
Other liabilities
Liabilities of disposal group classified as held for sale
2,661,086
Non-current ass ets
Long-term receivables
Derivative financial instrum ents
Related parties
Judicial deposits
Deferred taxes
Other assets
Investments in associates and joint ventures
Property, plant and equipment
Intangible assets
5.4
13
20 (c)
19 (b)
12
14
15
16
17
2,262,807
91,156
23,983
126,603
17,833
132,369
155,904
53,075
172,802
61,243
91,156
135,687
196,153
421,662
247,500
144,405
103,767
206,779
320,080
269,802
172,885
450,721
384,247
1,236,563
1,073,313
12,204,889
4,982,531
828,571
13,283,863
4,945,756
765,548
1,677,115
10,647,488
5,267,054
1,553,893
10,384,454
5,156,829
18,015,991
18,995,167
17,591,657
17,095,176
Non-current liabilities
Loans and financing
Related parties
Provisions
Deferred taxes
Payables to investees
Us e of public assets
Pension liabilities
Other liabilities
Note
2014
Parent company
2013
18
5.4
617,046
76,386
373,041
116,240
166,997
552,526
182
351,961
112,445
159,981
137,044
116,722
5,013
99,489
1,880
6,990
21
13
22
23
Total liabilities
Stockholders' equity
Capital
Revenue reserves
Cumulative other comprehensive income
Total equity attributable to owners of the parent
131,944
119,859
263,405
1,740,433
1,405,313
3,159,514
2,686,751
895,235
390,305
1,740,433
1,405,313
4,054,749
3,077,056
12,623,807
11,326,447
3,826
2,860,017
582,960
107,518
26,407
13,652,822
71,445
776,102
510,947
12,779,596
3,826
151,623
913,990
498,318
398,525
140,897
334,163
459,311
424,874
43,154
31,563
84,114
169,379
154,314
242,287
13,666,823
15,076,554
15,407,917
15,220,938
15,407,256
16,481,867
19,462,666
18,297,994
2,730,875
2,254,332
735,335
2,731,375
1,761,803
667,176
2,730,875
2,254,332
735,335
2,731,375
1,761,803
667,176
5,720,542
5,160,354
5,720,542
5,160,354
443,167
452,478
24
Non-controlling interests
Total stockholders' equity
Total assets
21,127,798
21,642,221
25,626,375
23,910,826
The accompanying notes are an integral part of these financial statements.
5 of 105
Total liabilities and stockholders' equity
772,368
76,386
1,232,301
116,240
316,668
14,138
220,417
122,100
25,491
Consolidated
2013
721,745
2,450
910,705
112,445
292,606
68,618
205,783
45,664
69,957
24,859
231,919
33
18
5.4
13
20
19 (b)
15
22
30
23
2014
5,720,542
5,160,354
6,163,709
5,612,832
21,127,798
21,642,221
25,626,375
23,910,826
Statement of income
D
Parent company
2014
2013
Note
Continuing operations
Revenue
Cost of sales and services
25
27
Gross profit
Operating income (expenses)
Selling
General and administrative
Other operating income, net
27
27
26
Operating profit before equity results
and net financial results
Results of investees
Equity in the results of associates and joint ventures
Realization of other comprehensive income on disposal of investments
15
1(vi)
6,330,908
(3,664,506)
12,883,566
(8,568,924)
12,142,288
(8,102,841)
2,874,501
2,666,402
4,314,642
4,039,447
(721,169)
(563,168)
62,814
(1,221,523)
(592,665)
(506,255)
59,784
(1,039,136)
(1,061,881)
(885,999)
234,093
(1,713,787)
(893,711)
(790,373)
326,125
(1,357,959)
1,652,978
1,627,266
2,600,855
2,681,488
743,025
774,123
31,045
805,168
187,687
96,863
31,045
127,908
254,263
(1,423,027)
(60,604)
186,330
(925,452)
(42,241)
319,888
(1,679,281)
(82,282)
376,101
(1,072,152)
(89,745)
(1,229,368)
(781,363)
(1,441,675)
(785,796)
1,166,635
1,651,071
1,346,867
2,023,600
19 (a)
8,502
(91,906)
Profit for the year from continuing
operations
Discontinued operations
Profit (loss) for the year from discontinued operations
187,687
29
Profit before taxation
Income tax and social contribution
Current
Deferred
Consolidated
2013
6,642,445
(3,767,944)
743,025
Net financial results
Financial income
Financial expenses
Exchange variations, net
2014
1,083,231
(304,079)
(19,168)
1,327,824
33 (d)
(231,789)
9,493
1,124,571
16,221
(551,810)
(34,098)
1,437,692
(48,857)
1,083,231
1,327,824
1,140,792
1,388,835
1,083,231
1,327,824
1,083,231
57,561
1,327,824
61,011
1,083,231
1,327,824
1,140,792
1,388,835
5,421,511
5,422,032
5,421,511
5,422,032
Basic and diluted earnings per share - R$ (*)
0.1998
0.2449
0.1998
0.2449
From continuing operations
Basic and diluted earnings per share - R$ (*)
0.1998
0.2449
0.1968
0.2539
0.0030
(0.0090)
Net income for the year
Net incom e attributable to the owners of the parent
Net incom e attributable to non-controlling interests
Total number of shares - thousand (*)
From discontinued operations
Basic and diluted earnings (loss) per share - R$ (*)
6 of 105
Statement of comprehensive income
Note
Other comprehensive income (loss) net of taxes, all of which cannot be reclassified
to statement of income
Remeasurements of retirement benefits
1,140,792
1,388,835
24 (e)
5.5
1 (vi)
(1,396)
(336,912)
(21,926)
(336,912)
24 (e)
425,028
86,720
(7,361)
(563,681)
(31,045)
(15,720)
665,051
47,244
444,351
85,513
17,216
(563,681)
(31,045)
(15,720)
660,475
67,245
30
(18,561)
42,207
(18,561)
42,207
68,159
1,151,390
89,451
1,417,275
66,952
1,207,744
109,452
1,498,287
1,151,390
1,417,275
1,191,523
16,221
1,547,144
(48,857)
1,151,390
1,417,275
1,207,744
1,498,287
1,151,390
56,354
1,417,275
81,012
1,207,744
1,498,287
33 (d)
Comprehensive income (loss) attributable to:
Comprehensive income (loss) attributable to the owners of the parent
Comprehensive income (loss) attributable to non-controlling interests
7 of 105
Consolidated
2013
1,327,824
Other comprehensive income (loss) for the year, net of taxes
Total comprehensive income for the year
Comprehensive income (loss) attributable to the owners of the parent:
Continuing operations
Discontined operations
2014
1,083,231
Other comprehensive income (loss) net of taxes, all of which can be reclassified to
statement of income
Interest in other comprehensive income of investees
Hedge accounting of net investments abroad
Realization of other comprehensive income on disposal of investments in VILA
Currency translation of investees located abroad
Parent company
2014
2013
Statement of changes in equity
Revenue reserves
Note
2,746,024
At January 1, 2013
Other comprehensive income for the year
Total contributions by and distributions to stockholders
Decrease in non-controlling interest Macau
Increase in non-controlling interest Artigas
Increase in non-controlling interest Antequera
Capital reduction - partial spin-off of assets
Acquisition of non-controlling interest VCNNE
Capital increase
Reversal of lapsed unclaimed dividends
Allocation of net income
Tax incentive reserve
Legal reserve
Dividends approved (R$ 0.17 per share)
Profit retention
At December 31, 2013
Capital
Tax incentive
reserve
Profit retention
353,070
436,711
1,327,824
1 (v)
1 (ix)
1 (iv)
1 (vii)
24 (a)
252,279
4,910,250
89,451
89,451
1,327,824
89,451
1,417,275
61,011
20,001
81,012
1,388,835
109,452
1,498,287
(9,600)
(46,881)
(46,881)
(52,670)
32,232
62,027
(52,670)
32,232
62,027
207,982
153,451
(207,982)
(66,391)
(900,000)
(153,451)
(1,327,824)
66,391
24 (b)
(14,649)
2,731,375
207,982
66,391
153,208
752,423
419,461
589,919
Total
stockholders
equity
4,657,971
(9,600)
24 (d)
Non-controlling
interests
577,725
1,327,824
24 (e)
8 of 105
544,441
Legal
Retained
earnings
Attributable to owners of the parent
Cumulative other
comprehensive
income
Total
(27,900)
224,795
6,120
(83,828)
(900,000)
(914,892)
667,176
5,160,354
(37,500)
224,795
6,120
(46,881)
(136,498)
32,232
62,027
(900,000)
119,187
452,478
(795,705)
5,612,832
Statement of changes in equity
Revenue reserves
Note
2,731,375
At January 1, 2014
Other comprehensive income for the year
Acquisition of non-controlling interest VCNNE
Increase in non-controlling interest Yacuces
Increase in non-controlling interest Itacam ba
Capital reduction - partial spin-off of assets
Reclassification from non-controlling interests to revenue reserve
Allocation of net income
Legal reserve
Dividends approved (R$ 0.08 per share)
Interest on stockholders' equity (R$ 0.03 per share)
Profit retention
(i)
Capital
Tax incentive
reserve
752,423
Legal
Profit retention
419,461
589,919
Retained
earnings
Attributable to owners of the parent
Cumulative other
comprehensive
income
Total
667,176
5,160,354
68,159
68,159
1,083,231
68,159
1,151,390
1,083,231
24 (e)
1,083,231
1 (i)
2.2 (iii)
1 (iv)
24 (c)
(38,206)
(38,206)
(42,774)
(500)
(42,774)
(500)
24 (d)
200,614
562,733
(200,614)
(54,162)
(116,722)
(149,000)
(562,733)
200,614
54,162
237,753
(1,083,231)
953,037
473,623
827,672
54,162
24 (b)
24 (b)
(244,000)
(500)
2,730,875
735,335
The interest on stockholder’s equity is gross of tax withheld at source of 15%, being the net balance R$ 126.650 (Note 24(b)).
9 of 105
Non-controlling
interests
452,478
57,561
(1,207)
56,354
(100,102)
47,745
13,385
Total
stockholders
equity
5,612,832
1,140,792
66,952
1,207,744
(138,308)
47,745
13,385
(500)
42,774
(360,722)
(149,000)
(69,467)
(430,189)
(149,000)
(591,202)
(65,665)
(656,867)
5,720,542
443,167
6,163,709
Statement of cash flows
Note
Parent company
2014
2013
2014
Consolidated
2013
Cash flow from operating activities
Profit before income tax and social contribution
Income (loss) from discontinued operations
Adjustments to reconcile net income to cash
from operations
Depreciation, amortization and depletion
Impairment of advances to suppliers, property, plant and equipment and intangible assets
Loss (gain) on sale of property, plant and equipament and intangible assets
Loss (gain) on disposal of other investments
Gain on disposal of investments C+PA
Equity in the results of associates and joint ventures
Allowance for doubtful accounts
Provision for (reversal of) inventory losses
Contingent consideration Reversal unrealized
Interest, indexation and exchange variations
Fair value adjustment of derivative instruments
Provision
1,166,635
33 (d)
16 e 17
26
26
1 (ii)
26
1 (v)
15
10 (b)
11
17 (c)
Net cash provided by operating activities
27
2,023,600
(48,857)
269,319
28,943
(6,897)
(31,045)
(596)
805,499
96,191
(31,258)
(743,025)
12,549
15,338
(774,123)
15,167
(3,501)
1,086,171
(3,768)
(75,857)
857,132
(6,336)
93,061
(187,687)
35,489
30,701
(35,700)
1,376,458
(2,325)
(125,938)
773,093
37,168
(20,478)
(31,045)
(1,853)
(34,904)
(96,863)
41,351
(16,257)
1,101,344
(9,823)
188,108
3,323,072
3,904,584
291,668
17,287
30,824
609
2,092,195
(1,446)
(286,925)
(22,579)
36,780
75,936
10,878
39,905
306,914
(51,675)
(88,481)
(48,287)
(56,500)
(16,077)
(147,034)
(88,699)
(30,149)
85,141
(27,436)
(50,241)
758,116
(139,480)
(82,685)
(24,472)
18,264
(210,428)
21,080
114,249
7,016
(1,977)
(188,596)
(31,606)
183,707
25,696
(4,338)
(274,861)
311,596
(49,428)
24,062
(44,466)
(69,887)
46,929
60,796
59,590
45,796
(434,211)
1,604,198
(980,990)
(147,301)
(1,060)
2,036,687
(792,532)
3,236,531
(1,055,672)
(175,436)
(135,733)
4,002,799
(872,761)
474,847
1,215,529
1,869,690
2,895,489
10 of 105
1,346,867
16,221
1,798,431
Decrease (increase) in assets
Inventory
Related parties
Other assets
Increase (decrease) in liabilities
Trade payables
Taxes payable
Salaries and payroll charges
Advances from customers
Accounts payable and other liabilities
Cash provided by operations
Interest paid
Premium paid on partial repurchase of bond
Income tax and social contribution paid
1,651,071
(28,626)
(234,549)
Statement of cash flow
Note
Cash flow from investing activities
Cash obtained from the acquisition of the subsidiary Artigas
Increase in interest in Bio Bio
Capital increase in investees
Acquisition of equity investment in C+PA
Acquisition of equity investment in Cementos Artigas
Acquisition of equity investment in Cementos Avellaneda
Acquisition of equity investment in VCEAA
Acquisition of equity investment (net of cash obtained) in Antequera
Acquisitions of property, plant and equipment
Acquisitions of intangible assets
Proceeds from disposals of property, plant and equipment and intangible assets
Proceeds from sales of non-current assets C+PA
Proceeds from investment disposal
Dividends received
15 (c)
1 (v)
1 (ix)
(11,064)
(69,320)
2014
(10,191)
(155,946)
17
Net cash used in investing activities
Cash flow from financing activities
Acquisition of non-controlling interest in Macau
New loans and financing
Payments of loans and financing
Related parties, net
Proceeds from capital reduction VCEAA
Portion of capital contribution Voto IV
Acquisition of non-controlling interest in VCNNE
Increase in non-controlling interest in Yacuces
Increase in non-controlling interest in Itacamba
Capital increase in investees Voto IV
Interest on capital
Dividends paid
Parent Company
2014
2013
15 (c)
15 (c)
Net cash (used in) provided by financing activities
(780,962)
(2,116)
8,427
48,150
51,313
(497,478)
(948,604)
(1,180,749)
(1,334,786)
3,472,003
(2,840)
(2,671,371)
(63,178)
15,887
754,253
(346)
(681,836)
655,749
4,280,971
(3,074)
(4,038,008)
(84,662)
(37,500)
1,435,420
(3,095)
(2,206,930)
(65,882)
Cash and cash equivalents at the end of the year
52,294
(136,498)
(158,532)
(150,880)
(244,000)
(986,092)
(150,880)
(351,826)
(986,563)
197,089
(258,272)
(424,657)
(1,948,754)
25,455
117,385
8,653
264,284
(388,051)
14,218
5,565
665,588
936,254
188,676
14,218
955,327
665,588
174,458
Cash and cash equivalents at the beginning of the year
50,628
(138,308)
47,745
13,385
Effects of exchange rate changes on cash and cash equivalents of foreign subsidiaries
Increase (decrease) in cash and cash equivalents
91,034
(14,699)
(14,102)
(27,900)
(50,795)
(121,909)
(155,946)
(12,728)
(1,282,118)
(20,848)
40,721
60,200
112,600
61,704
(545,861)
(1,152)
12,449
1 (i)
(1,275,915)
(64,475)
119,204
Consolidated
2013
Principal non-cash transactions
Offsetting of dividends receivable from related parties (liabilities)
Capital reduction in investee VCNNE offsetting related parties (liabilities)
Payment in kind of investments offsetting related parties (liabilities)
Payment of REFIS Art 33 da MP 651/14 with deferred tax on tax losses
Loans from FINAME for acquisition of property, plant and equipment
Disposal of investment in VILA
Acquisition of investee Voto IV
1 (iii)
655,491
1,421,333
268,236
17,290
49,133
1 (vi)
1 (viii)
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53,701
682,155
32,232
35,247
61,093
53,785
682,155
32,232
Statement of value added
Note
Revenue
Sales of products and services
Other operating income
26
Inputs acquired from third parties
Raw materials and other production inputs
Materials, energy, oustourced services and other
Gross value added
16 e 17
Net value added generated by the Company
Value added received through transfer
Equity in the results of investees
Financial income and exchange gains
Total value added to distribute
Distribution of value added
Personnel and payroll charges
Direct remuneration
Pension plan
Social charges
Benefits
Third-party capital remuneration
Financial expenses and exchange losses
Rentals
Value added distributed
Consolidated
2013
8,851,542
62,814
(12,549)
8,366,561
59,784
(15,167)
15,822,201
234,093
(35,489)
14,875,281
326,125
(41,351)
8,901,807
8,411,178
16,020,805
15,160,055
(2,362,083)
(1,343,121)
(2,294,864)
(1,248,190)
(5,213,503)
(2,529,969)
(5,014,286)
(2,294,909)
(3,705,204)
(3,543,054)
(7,743,472)
(7,309,195)
5,196,603
4,868,124
8,277,333
7,850,860
(291,668)
(269,319)
(805,499)
(773,093)
4,904,935
4,598,805
7,471,834
7,077,767
743,025
442,455
805,168
1,077,844
187,687
605,300
127,908
1,343,705
1,185,480
1,883,012
792,987
1,471,613
6,090,415
6,481,817
8,264,821
8,549,380
486,724
434,365
266,201
144,892
897,817
237,974
124,650
796,989
1,029,316
14,914
385,651
224,330
1,654,211
910,791
18,198
350,102
200,504
1,479,595
726,172
1,515,504
27,579
91,906
2,361,161
977,648
1,410,183
31,586
19,168
2,438,585
1,166,253
2,103,078
30,488
(9,493)
3,290,326
1,434,708
1,940,548
35,307
34,098
3,444,661
1,671,823
76,383
1,748,206
1,859,207
59,212
1,918,419
2,046,975
132,517
2,179,492
2,129,501
106,788
2,236,289
116,722
149,000
817,509
900,000
61,011
900,000
427,824
1,083,231
1,327,824
57,561
186,189
149,000
731,821
16,221
1,140,792
476,681
(48,857)
1,388,835
6,090,415
6,481,817
8,264,821
8,549,380
33 (d)
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2014
28
Taxes and contributions
Federal
State
Municipal
Deferred taxes
Own capital remuneration
Non-controlling interests
Dividends
Interest on capital
Reinvested profits
Income (loss) from discontinued operations
Parent company
2014
2013
Notes to the parent company and consolidated financial statements
at December 31, 2014
All amounts in thousands of reais unless otherwise stated
1
General considerations
Votorantim Cimentos S.A. (the "Company" or "VCSA") and its subsidiaries are principally engaged in the
production and sale of a wide portfolio of building materials, which includes cement, aggregates, ready-mix
concrete, mortar, as well as well as raw materials and byproducts, similar and related products; rendering
of concrete pouring services; research, mining and processing of mineral reserves in connection with its
cement producing activities; transportation, distribution and importing; and holding investments in other
companies. The Company is a corporation headquartered in the city and State of São Paulo. The Company
and its subsidiaries operate in all regions of Brazil, in North and South America, Europe, Africa and Asia.
The Company is directly controlled by Votorantim Industrial S.A. ("VID"), and its ultimate parent
company is Votorantim Participações S.A. ("VPAR"). VPAR is a privately held company controlled by the
Ermírio de Moraes family and is the holding company of Votorantim (“Votorantim”), headquartered in São
Paulo, Brazil.
Main changes in interests in 2014 and 2013
(i)
Purchase of non-controlling interest - Votorantim Cimentos N/NE S.A. (“VCNNE”)
On January 20, 2014, the Company's subsidiary VCNNE repurchased shares of its own share capital held
by Banco Votorantim S.A. and its finance entities, to be held in treasury. The number of shares acquired
was 806,620, 663,591 of which were common shares and 143,029 were preferred shares. The unit value of
the share, obtained based on an economic valuation report prepared by an independent outsourced
company, was R$ 214.01, representing a total disbursement of R$ 172,626. Of the amount paid, R$ 34,318
was deducted as dividends recorded in payables to non-controlling interests. As the unit carrying value of
the share was R$ 124.10, a goodwill on the repurchase amounting to R$ 38,206 was generated.
Accordingly, the Company currently holds 100% of the capital of VCNEE.
(ii)
Hydroelectric power plants
In 2014, Management approved the transfer sale of its share of 5.62% on the Consortium of the
Machadinho hydroelectric power plant to its associate Companhia Brasileira de Alumínio. In the same
period, Management approved the transfer of the Pedra do Cavalo’s concession to its associate Votorantim
Metais Zinco S.A., through a “purchase and sale” agreement (Note 33 (c)).
(iii) Capital reduction
In October 2014, the subsidiary VCNEE approved at an extraordinary general meeting of stockholders a
capital reduction of R$ 1,421,333 without cancelation of shares, with refund to stockholders in proportion
to their interest in its capital. The payment was made with the assignment of part of the balance of "related
parties" of its non-current assets amounting to R$ 1,689,648. The residual balance of "related parties" was
settled through payment in kind of the investments in Acariuba Mineração e Participação Ltda. and
Pedreira Pedra Nega Ltda. (“PPN”), Company's direct subsidiaries.
(iv)
Spin -off of assets
At the Extraordinary General Meeting of Stockholders held on December 31, 2014, Management approved
the partial spin-off of assets to Votorantim Industrial S.A. (“VID”). As a consequence, the Company's assets
and equity decreased by R$ 500 (canceling the equivalent to 520,617 common shares). At the same date,
Management also approved the partial spin-off of assets of subsidiary VCNNE to the Company. As a
consequence, the Company's assets and equity decreased by R$ 500 (canceling the equivalent to 7,091
common shares).
13 of 105
At the Extraordinary General Meeting of Stockholders held on December 31, 2013, Management approved
the partial spin-off of assets to VID. As a consequence, the Company’s assets and equity decreased by 3,621
(canceling the equivalent to 3,709,042 common shares). On September 30, 2013, Management also
approved the partial spin-off of assets to VID. As a consequence, the subsidiary’s assets and equity
decreased by R$ 43,260 (canceling the equivalent to 45,316,929 common shares).
(v)
Acquisition of interest in C+PA and Macau
On January 10, 2013, the Company acquired a non-controlling 48% interest in Cimento e Produtos
Associados S.A. (“C+PA”), an entity domiciled in Portugal. The purchase price amounted to EUR 10.4
million (R$ 27.9 million), of which EUR 4.0 million (R$ 10.8 million) was paid during the second quarter
of 2013. C+PA held a 25% non-controlling interest in our subsidiary Cimpor Macau – Investment Company
S.A. (“Macau”), which operates in China. The company acquired our interest in C+PA because of its
holdings in Macau and with the view to resell it together with C+PA's interest and, for this reason the
interest in C+PA was classified as an asset held for sale.
On April 16, 2013 the Company sold its 48% interest in C+PA to a third-party for EUR 23.3 million (R$
60.2 million), originating a gain of EUR 12.8 million (R$ 34.9 million) and on the same date the Company
acquired 20% of the interest held by C+PA in Macau and a 10% additional direct interest in Macau from
another shareholder for the combined amount of EUR 14.5 million (R$37.5 million). Both payments were
made during the second quarter of 2013. Following these transactions the Company now holds an 80%
interest in Macau, which is booked in accordance with IFRS 5 “Non-current assets held for sale and
discontinued operations” at its acquisition cost which does not exceed its fair value less its cost to sell. This
acquisition is part of the Company’s strategy to sell the operations in China. The gain on the disposal of
C+PA was classified under “other operating income” in the statement of income.
Since the Company already had control of the Macau operations, the remaining interests acquired were
accounted for as a transaction between shareholders. Accordingly the Company has accounted for the
difference between the consideration paid of R$ 37.5 million and the carrying value of the non-controlling
interests related to Macau within stockholders’ equity in the amount of R$ 9.6 million.
(vi)
Disposal of interest in Votorantim Investimentos Latino Americanos S.A “VILA”
On May 14, 2013, the Company entered into a share purchase agreement with VID pursuant to which VID
purchased the Company’s equity interest of 12.36% in VILA for a total purchase price of R$682.5 million.
On May 28, 2013, the Company partially offset this receivable with dividends payable to VID in the amount
of R$280.2 million. The remaining balance of this transaction will be settled against an obligation that one
of our subsidiaries has with a subsidiary of VID resulting from the Company´s acquisition of the additional
equity interests in Avellaneda and Artigas. The total amount of this obligation is R$ 402.3 million.
The Company's equity investment was already classified as held for sale and did not affect the statement of
income as the purchase price was equal to its carrying amount, with the exception of cumulative other
comprehensive income related to this equity investment in the amount of R$ 31,045, which related to
currency translations adjustments.
(vii) Purchase of non-controlling interest - Votorantim Cimentos N/NE S.A.(“VCNNE”)
During the third quarter of 2013, the Company’s subsidiary VCNNE repurchased and settled a 2.00%
interest of its own share capital. The purchase price was R$ 136,498, recorded in the company's line item
"treasury shares".
Since the Company already had control of the VCNNE's operations, the goodwill of R$ 52,670 paid on the
acquisition of the non-controlling interest was recorded as a transaction between shareholders within
stockholders’ equity.
14 of 105
(viii) Voto - Votorantim Overseas Trading Operations IV Ltda. (“Voto IV”)
On September 30, 2013, VID contributed a 50% interest in Voto IV to the Company. Voto IV is a vehicle
through which the Company has issued Eurobonds and currently the Company holds 50% of its capital.
Since then, Voto IV is a joint operation with Fibria Celulose S.A., which holds the remaining 50%.
The equity interest in Voto IV was classified as a joint operation since the Company shares control over
decisions concerning significant activities and has rights and obligations over specific assets and liabilities
Consequently the Company recognized the assets and liabilities, including its share of assets and liabilities
held jointly related to this operation. The net assets recognized amount to R$ 32,232 and include cash
obtained of R$ 52,294.
On June 11, 2014, the Company subscribed capital in its investee Voto IV and paid in USD 70.9 million (R$
158,532) without any change in its ownership interest.
(ix)
Other acquisitions and disposals
On April 18, 2013, through its subsidiary Inversiones Chile, the Company acquired an additional interest of
1.549% in Cementos BioBio S.A., through the Santiago stock market and, following this purchase, the
Company now holds a 16.70% interest in BioBio. The transaction was settled in April 2013.
On May 31, 2013, the Company, through its subsidiary VCEAA, acquired an interest of 61.59% in Cementos
Antequera S.A. (located in Spain) from third parties for EUR 8.0 million (R$ 22.2 million). Following this
purchase, the Company holds an interest of 84.67% in Cementos Antequera. This operation was recorded
under IFRS 3 ("Business combination achieved in stages - step acquisitions"), and generated goodwill of
EUR 685 million (R$ 1,770).
2
Presentation of the parent company and consolidated financial statements
The Board of Directors' meeting of February 24, 2015 authorized the issue of these parent company and
consolidated financial statements.
2.1
Basis of preparation
The financial statements of the Company have been prepared in accordance with International Financial
Reporting Standards (IFRS) as issued by the International
Accounting Standards Board (IASB). The financial statements have been prepared under the historical
cost convention, as modified for financial assets and financial liabilities (including derivative instruments)
measured at fair value through profit or loss (where applicable).
The preparation of financial statements requires the use of certain critical accounting estimates. It also
requires management to exercise its judgment in the process of applying the Company’s accounting.
Policies involving a higher degree of judgment or complexity, or areas where assumptions and estimates
are significant to the financial statements are disclosed in
Note 4.
Consolidated financial statements
The consolidated financial statements have been prepared and are being presented in accordance with
accounting practices adopted in Brazil, including the pronouncements issued by the Brazilian Accounting
Pronouncements Committee (CPC), as well as according to the International Financial Reporting
Standards (IFRS) issued by the International Accounting Standards Board (IASB).
15 of 105
Parent company financial statements
The parent company financial statements have been prepared in accordance with accounting practices
adopted in Brazil issued by the CPC. As the accounting practices adopted in Brazil applied to the parent
company financial statements as from 2014 do not differ from the IFRS applicable to separate financial
statements since it permitted the application of the equity method in separate financial statements, they
are also in conformity with the IFRS issued by the IASB. These parent company financial statements are
disclosed together with the consolidated financial statements.
2.2
Consolidation
The following accounting policies are applied in the preparation of the consolidated financial statements.
(a)
Subsidiaries
Subsidiaries are all entities (including structured entities) over which the Company has control.
Subsidiaries are fully consolidated from the date on which control is transferred to the Company. They are
deconsolidated from the date that control ceases.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are
measured initially at their fair values at the acquisition date. The Company recognizes any non-controlling
interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling
interest's proportionate share of the fair value of the acquiree's identifiable net assets. Non-controlling
interests are determined on each acquisition.
Acquisition-related costs are expensed as incurred.
Transactions, balances and unrealized gains on transactions between group companies are eliminated.
Unrealized losses are also eliminated, unless the transaction demonstrates evidence of
impairment of the asset transferred. Accounting policies of subsidiaries have been changed where
necessary to ensure consistency with the policies adopted by the Company.
16 of 105
The main consolidated entities and joint operations are as follows:
% of ownership interest
2014
2013
Votorantim Cimentos S.A. and subsidiaries
Itacam ba Cem ento S.A. (i)
Votorantim Cim entos N/NE S.A.
Interavia Trans portes Ltda.
Silcar - Em preendim entos Com ércio e Participações Ltda.
Pedreira Pedra Negra Ltda.
Acariuba Mineração e Participação Ltda.
Seacrown do Brazil, Com . Im port. e Part. S.A.
Votorantim Cim entos Chile Ltda.
Votorantim Cem ents Internacional Spain SE
Lux Cem International S.A.
Mondello S.A. (iv)
Erom ar S.A. (iv)
Votorantim Cement North America Inc. and subsidiaries
St. Marys Cem ent Inc. (Canada)
Votorantim Cem ent North Am erica Inc. - "VCNA"
Ros edale Securities Ltd.
VCNA Nova Scotia ULC
Hutton Trans port Ltd.
Ontario Ltd.
Votorantim Cim entos North Am erica Inc.
St Marys VCNA LLC
VCNA US Inc.
St. Barbara Cem ent Inc.
St. Marys Cem ent Inc. (US)
Suwannee Holdings LLC
VCNA Pres tige Gunite Inc.
Am erican Gunite Managem ent Co. Inc
Sacram ento Pres tige Gunite Inc.
VCNA Pres tige Concrete Products Inc.
VCNA US Materials Inc.
VCNA Prairie Inc.
Central Ready Mix Concrete Inc.
VCNA Prairie Aggregate Holdings Illinois Inc.
Votorantim Cimentos EAA Inversiones S.L and subsidiaries
Itacam ba Cem ento S.A. (i)
Cim por Macau – Inves tm ent Com pany, S.A.
Votorantim Cim entos EAA Invers iones S.L - "VCEAA"
Yacuces , S.L. (iii)
Votorantim Europe S.L.U. (ii)
Cem entos Cos m os S.A.
Com ercial Cos m os Sur, S.A.
Votorantim Cem ent Trading, S.L.
Sociedad de Cem entos y Materiales de Cons trucción de Andalucia, S.A.
Cem entos Antequera S.A.
Shree Digvijay Cem ent Com pany Lim ited
As m ent De Tem ara, S.A.
Societe Les Cim ents de Jbel Ous t - CJO
Votorantim Çim ento Sanayi ve Ticaret A.Ş.
Yibitas Yozgat Is ci Birligi Ins aat Malzem eleri Ticaret ve Sanayi A.S.
Cem entos Artigas S.A.
Erom ar S.A. (iv)
Mondello S.A. (iv)
Joint operations
Great Lakes Slag Inc.
Bot-Duff Res ources Inc.
Voto - Votorantim Overs eas Trading Operations IV Ltda.
Exclusive investment funds
Odes s a Multim ercado Crédito Privado (v)
Place of business
50.01
97.38
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
Bolivia
Brazil
Brazil
Brazil
Brazil
Brazil
Brazil
Chile
Spain
Luxem bourg
Uruguay
Uruguay
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
Canada
Canada
Canada
Canada
Canada
Canada
USA
USA
USA
USA
USA
USA
USA
USA
USA
USA
USA
USA
USA
USA
66.67
80.00
100.00
51.00
16.66
80.00
100.00
Bolivia
China
Spain
Spain
Spain
Spain
Spain
Spain
Spain
Spain
India
Morocco
Tunis ia
Turkey
Turkey
Uruguay
Uruguay
Uruguay
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
99.77
100.00
100.00
100.00
84.00
73.36
62.62
99.99
99.76
82.96
51.00
100.00
100.00
50.00
50.00
50.00
100.00
100.00
99.77
100.00
100.00
84.00
73.36
62.62
99.99
99.76
82.96
51.00
50.00
50.00
50.00
Canada
Canada
Caym an Is land
Brazil
(i)
In April 2014, the Company subscribed capital in VCEAA capital by contributing its 50.01% interest in the
investee Itacamba amounting to R$17,206. Itacamba became a subsidiary of VCEAA.
(ii)
Company merged into VCEAA.
(iii)
Yacuces S.L. was established by the subsidiary VCEAA as a holding company, holder of investments in
Itacamba Cementos S.A. and GB Minerales y Agregados, S.A..
(iv)
In December 2014, the Company increased VCEAA capital by contributing its 100% interest in the
investees Eromar and Mondello amounting to R$5,523. Also in December, VCEAA transferred these
interests to its investee Cementos Artigas S.A.. The investees became subsidiaries of Artigas.
(v)
In October 2014 the Company made its first investment in an exclusive fund.
17 of 105
(b)
Transactions with non-controlling interests
The Company accounts for transactions with non-controlling interests as transactions with equity owners
of the Company. For purchases from non-controlling interests, the difference between any consideration
paid and the proportion acquired of the carrying value of net assets of the subsidiary entity is recorded in
stockholders’ equity. Gains or losses on disposals to non-controlling interests are also recorded directly in
stockholders' equity, in “profit retention reserve”.
(c)
Loss of control of subsidiaries
When the Company ceases to have control, any retained interest in the entity is remeasured to its fair value,
with the change in carrying amount recognized in profit or loss. This may mean that amounts previously
recognized in other comprehensive income are reclassified to profit or loss.
(d)
Associates and joint arrangements
Associates are all entities over which the Company has significant influence but not control, generally
accompanying a shareholding of between 20% and 50% of the voting rights.
Joint arrangements are all entities over which the Company shares control with one or more parties.
Investments in joint arrangements are classified as either joint operations or joint ventures depending on
the contractual rights and obligations of each investor.
Joint ventures are accounted for in the financial statements in order to represent the Company's
contractual rights and obligations. Therefore, the assets, liabilities, revenues and expenses related to its
interests in joint operations are individually accounted for in its financial statements.
Investments in associates and joint ventures are accounted for using the equity method and are initially
recognized at cost. The Company’s investment in associates and joint ventures includes goodwill identified
on acquisition, net of any accumulated impairment loss.
The Company's share of the profit or loss of its associates and joint ventures is recognized in the statement
of income and its share of reserve movements is recognized in the Company reserves.
When the Company’s share of losses in an associate or joint venture equals or exceeds the carrying amount
of the investment, including any other unsecured receivables, the Company does not recognize further
losses, unless it has incurred obligations or made payments on behalf of the associate or jointly-controlled
investee.
Unrealized gains on transactions between the Company and its associates and joint ventures are eliminated
to the extent of the Company’s interest. Unrealized losses are also eliminated unless the transaction
demonstrates evidence of an impairment of the asset transferred. Accounting policies of associates and
jointly-controlled investees have been changed where necessary to ensure consistency with the policies
adopted by the Company. If the ownership interest in an associate is reduced but significant influence is
retained, only a proportionate share of the amounts previously recognized in other comprehensive income
is reclassified to profit or loss where appropriate.
Dilution gains and losses arising in investments in associates are recognized in the statement of income.
2.3
Foreign currency translation
(a)
Functional and presentation currency
The Company’s functional and presentation currency is the Brazilian Real (“R$”). This conclusion is based
on an analysis of the following indicators:
18 of 105
• Currency that more significantly affects the prices of products and services;
• Currency of the country whose competitive forces and regulations have a significant effect in the
determination of the sales price of its products and services;
• Currency that affects more significantly labor, materials and other costs related to the supply of
products and services;
• Currency in which financial resources are mainly obtained; and
• Currency in which amounts granted by the operating activities are normally held.
(b)
Transactions and balances
Foreign currency transactions are translated into Reais using the exchange rates prevailing at the dates of
the transactions or the dates of valuation when items are remeasured. Foreign exchange gains and losses
resulting from the settlement of such transactions and from the translation at year-end exchange rates of
monetary assets and liabilities denominated in foreign currencies are recognized in the statement of
income, except when deferred in equity as qualifying net investment hedges.
(c)
Subsidiaries with a different functional currency
The results and financial position of all the Company's entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are
translated into the presentation currency as follows:
(i)
assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that
balance sheet;
(ii)
income and expenses for each statement of income are translated at average exchange rates (unless this
average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction
dates, in which case income and expenses are translated at the rate on the dates of the transactions); and
(iii)
all resulting exchange differences are recognized as a separate component of stockholders' equity, in the
account "Other comprehensive income".
The amounts presented in the cash flow are extracted from the translated changes in the assets, liabilities
and profit or loss, as detailed above.
On consolidation, exchange differences arising from the translation of the net investment in foreign
operations, and of borrowings and other foreign currency instruments designated as hedges of such
investments, are recorded in stockholders’ equity. When a foreign operation is partially disposed of or
sold, exchange differences that were recorded in stockholders’ equity are recognized in the statement of
income as part of the gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and
liabilities of the foreign entity and translated at the closing rate.
2.4
Cash and cash equivalents includes cash, bank deposits, and highly liquid short-term investments
(investments with an original maturity date below 90 days), which are readily convertible into a known
amount of cash and subject to immaterial risk of change in value. Overdraft accounts are presented as
"Loans and financing", in current liabilities, when applicable.
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2.5
Financial assets
2.5.1
Classification
The Company and its subsidiaries classify their financial assets according to the following categories: at fair
value through profit or loss (held for trading), and loans and receivables. The classification depends on the
purpose for which the financial assets were acquired. Management determines the classification of its
financial assets at initial recognition.
(a)
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is
classified in this category if acquired principally for the purpose of selling in the short-term. All financial
assets in this category are classified as current assets.
Derivatives are also categorized as held for trading unless they are designated as hedges.
(b)
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market. They are included in current assets, except for maturities greater than 12
months after the end of the reporting period, which as classified as non-current assets. Loans and
receivables are recorded on the effective interest method, which represents the rate established in contract
and adjusted by the respective costs of each transaction. The Company's loans and receivables comprise
mainly "cash and cash equivalents and trade accounts receivable".
2.5.2
Recognition and measurement
Normal purchases and sales of financial assets are recognized on the trade date – the date on which the
Company commits to purchase or sell the asset. Investments are initially recognized at fair value plus
transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets
carried at fair value through profit or loss, when any, are initially recognized at fair value, and transaction
costs are expensed in the statement of income.
Financial assets are derecognized when the rights to receive cash flows from the investments have expired
or have been transferred and the Company has transferred substantially all the risks and rewards of
ownership. Financial assets at fair value through profit or loss are subsequently carried at fair value. Loans
and receivables are carried at amortized cost using the effective interest rate method.
Gains or losses arising from changes in the fair value of the financial assets held for trading are presented
in the statement of income under "Net financial results" in the year in which they arise.
The fair values of quoted investments are based on current bid prices. If the market for a financial asset is
not active, the Company establishes fair value by using valuation techniques. These include the use of
recent arm's length transactions, reference to other instruments that are substantially the same, discounted
cash flow analysis, and option pricing models.
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2.5.3
Offsetting of financial instruments
Financial assets and liabilities are offset and the net amount presented in the balance sheet when there is a
legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis
or realize the asset and settle the liability simultaneously. The legally enforceable right must not be
contingent on future events and must be enforceable in the normal course of business and in the event of
default, insolvency or bankruptcy of the company or the counterparty.
2.5.4
Impairment of financial assets carried at amortized cost
The Company assesses at each balance sheet date whether there is objective evidence that a financial asset
or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and
impairment losses are incurred only if there is objective evidence of impairment as a result of one or more
events that occurred after the initial recognition of the asset (a "loss event") and if that loss event (or
events) has an impact on the estimated future cash flows of the financial asset or group of financial assets
that can be reliably estimated.
The amount of any impairment loss is measured as the difference between the asset's carrying amount and
the present value of estimated future cash flows (excluding future credit losses that have not been incurred)
discounted at the financial asset's original effective interest rate. The carrying amount of the asset is
reduced and the amount of the loss is recognized in the statement of income.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related
objectively to an event occurring after the impairment was recognized (such as an improvement in the
debtor's credit rating), the reversal of the previously recorded loss is recognized in the statement of income.
2.6
Derivative financial instruments and hedging activities
Derivatives are initially recognized at fair value on the date a derivative contract is entered into and are
subsequently remeasured at their fair value. The method of recognizing the resulting gain or loss depends
on whether the derivative is designated as a hedging instrument, in the case of adoption of hedge
accounting.
The Company designates certain derivatives as either: (i) hedges of a particular risk associated with a
recognized asset or liability or a highly probable forecast transaction (cash flow hedge); or; (ii) hedges of a
net investment in a foreign operation (net investment hedge).
The fair values of various derivative instruments used for hedging purposes are disclosed in Note 5.4. The
full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining
hedged item is more than 12 months, and as a current asset or liability when the remaining maturity of the
hedged item is less than 12 months.
(a)
Cash flow hedge
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow
hedges is recognized in other comprehensive income. The gain or loss relating to the ineffective portion is
recognized immediately in the statement of income within “Other operating income, net”.
Amounts accumulated in equity are reclassified to profit or loss in the periods when the hedged item affects
profit or loss (for example, when the forecast sale that is hedged takes place). The gain or loss relating to
the effective portion of interest rate swaps hedging variable rate borrowings is recognized in the statement
of income within “Net financial results”.
When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge
accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognized
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when the forecast transaction is ultimately recognized in the statement of income. When a forecast
transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is
immediately transferred to the statement of income within “Other operating income, net”.
(b)
Net investment hedge
Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges.
Any gain or loss on the hedging instrument relating to the effective portion of the hedge is recognized in
equity within "Other comprehensive income". The gain or loss relating to the ineffective portion is
recognized immediately in the statement of income. Gains and losses accumulated in equity are included
in the statement of income when the foreign operation is partially disposed of or sold (Note 5.5).
2.7
Trade accounts receivable are amounts due from customers for merchandise sold or services performed in
the ordinary course of the Company’s business. If collection is expected in one year or less, they are
classified as current assets. If not, they are presented as non-current assets.
Trade accounts receivable are recognized initially at fair value and subsequently measured at amortized
cost using the effective interest rate method, less an allowance for doubtful accounts. Trade accounts
receivable from export sales are presented at the foreign exchange rates prevailing on the reporting date.
2.8
Inventories
Inventories are stated at the lower of cost and net realizable value. Cost is determined using the weighted
average cost method. The cost of finished goods and work in progress comprises raw materials, direct
labor, other direct costs and related production overheads (based on normal operating capacity). Net
realizable value is the estimated selling price in the ordinary course of business, less conclusion costs and
selling expenses. Imports in transit are stated at the accumulated cost of each import.
The company, at least once in a year, counts its physical inventory of goods to guarantee that the physical
balances and the recorded balances are the same. Any adjustment to be performed is booked under the row
“Cost of sales and services”.
2.9
Current and deferred income tax and social contribution
The income tax and social contribution benefit or expense for the period comprises current and deferred
taxes. Taxes on profit are recognized in the statement of income, except to the extent that they relate to
items recognized in comprehensive income or directly in stockholders’ equity. In such cases, the taxes are
also recognized in comprehensive income or directly in stockholders’ equity.
The current and deferred income tax and social contribution is calculated on the basis of the tax laws
enacted or substantively enacted at the balance sheet date in the countries where the entities operate and
generate taxable income. Management periodically evaluates positions taken by the Company in income
tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It
establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
The current income tax and social contribution are presented net, separated by taxpaying entity, in
liabilities when there are amounts payable, or in assets when the amounts prepaid exceed the total amount
due on the reporting date.
Deferred tax assets are recognized only to the extent it is probable that future taxable profit will be
available against which the temporary differences and/or tax losses can be utilized.
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2.10
Property, plant and equipment are stated at historical cost of acquisition or construction less accumulated
depreciation. Historical cost includes expenditure that is directly attributable to the acquisition and
construction of the qualifying assets.
Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will flow to the
Company and they can be measured reliably. The carrying amount of the replaced items or parts is
derecognized.
All other repairs and maintenance are charged to the statement of income during the financial period in
which they are incurred. The cost of major renovations is included in the carrying amount of the asset
when it is probable that the Company will realize future economic benefits in excess of the original
benchmark performance specifications of the existing asset. Renovations are depreciated over the
remaining useful life of the related asset.
Land is not depreciated. Depreciation of other assets property is calculated using the straight-line method
to reduce their cost to their residual values over their estimated useful lives, as follows:
- Buildings
- Machinery
- Vehicles
- Furniture, fixtures and equipment
32-52 years
21 years
5-10 years
5-10 years
The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each
reporting period.
An asset's carrying amount is written down immediately to the recoverable amount when it is greater than
its estimated recoverable amount.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are
recognized within "Other operating income, net" in the statement of income.
2.11
Leases
The Company leases certain property, plant and equipment. Leases of property, plant and equipment
where the Company has substantially all the risks and rewards of ownership are classified as finance leases.
Finance leases are capitalized at the inception of the lease at the lower of the fair value of the leased item
and the present value of the minimum lease payments.
Each lease payment is allocated between the liability and finance charges. The corresponding rental
obligations, net of finance charges, are included in other liabilities.
The interest element of the finance cost is charged to the statement of income over the lease period so as to
produce a constant periodic rate of interest on the remaining balance of the liability for each period. The
property, plant and equipment acquired under finance leases are depreciated over the shorter of the useful
life of the asset and the lease term.
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2.12
Intangible assets
(a)
Goodwill
Goodwill on acquisition of subsidiaries represents the excess of (i) the consideration transferred; (ii) the
amount of any non-controlling interest in the acquiree; and (iii) the acquisition-date fair value of any
previous equity interest in the acquiree over the fair value of the Company's interest in the identifiable net
assets acquired. If the total of consideration transferred, non-controlling interest recognized and previously
held interest measured is less than the fair value of the net assets of the subsidiary acquired, in the event of
a bargain purchase, the difference is recognized directly in the statement of income for the year.
Goodwill is allocated to Cash-generating units ("CGUs") for the purpose of impairment testing. The
allocation is made to those cash-generating units or groups of CGUs that are expected to benefit from the
business combination in which the goodwill arose. The Company’s CGU (groups of CGUs) are disclosed in
Note 17.
(b)
Exploration rights over mineral resources
When the economic feasibility of the mineral reserves is proven, the consideration paid to acquire the
mining exploration rights are capitalized under "Property plant and equipment - assets under
construction", together with the costs capitalized in relation to the construction of the plant that is going to
be operated at the mine´s location. When the mine becomes operational the cumulative costs capitalized
in relation to exploration rights are reclassified from property plants and equipment to intangible assets
and subsequently amortized or included in cost of production. The capitalized construction costs relating
to the plant are reclassified to "Equipment and facilities".
The costs of mining rights are capitalized and amortized using the straight-line method over their useful
lives or, when applicable, based on the depletion of mines.
Once the mine is operational, these expenses are amortized and included in cost of production.
Depletion of mineral resources is calculated based on extraction, taking into consideration the estimated
productive lives of the reserves.
In the mining operations related to our cement business, it is necessary to remove overburden and other
waste materials to access ore from which minerals can be extracted economically. The process of mining
overburden and waste materials is referred to as stripping. During the development of a mine, before
production commences, when the stripping activity asset improves access to the ore body, the component
of the ore body for which access has been improved can be identified and the costs can be measured
reliably, the stripping activity asset is capitalized as part of the investment in construction of the mine,
accounted for as part of the intangible assets, and subsequently amortized over the life of the mine on a
units of production basis and tested for impairment.
(c)
Use of public assets
Use of public assets refer to the rights granted by the government to use hydraulic energy potential in a
specific area of the Paraguaçu river in exchange for the payment in cash of an annual charge by the
Company (onerous authorization under the legal form of an agreement for the Use of Public Asset (“UBP”).
The amount is recognized once the operating license is obtained, irrespective of the payment schedule
established in the contract. The amount is originally recognized as a financial liability (obligation) and as
an intangible asset (right to use a public asset) which corresponds to the amount of the total annual charges
over the period of the agreement discounted to present value (present value of the future payment cash
flows).
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The amortization of the intangible asset is calculated on a straight-line basis over the period of the
authorization to use the public asset. The financial liability is updated by the effective interest method and
reduced by the payments contracted.
(d)
Contractual customer relationships and non-competition agreements
Contractual customer relationships and non-competition agreements acquired as a result of a business
combination are recognized at fair value at the acquisition date. Contractual customer relationships and
non-competition agreements with a finite useful life are carried at cost less accumulated amortization.
Amortization is calculated using the straight-line method over their estimated useful lives as follows:
Customer relationships
Non-competition agreements
(e)
15 years
5 years
Computer software
Costs associated with maintaining computer software programs are recognized as an expense as incurred.
2.13
Impairment of non-financial assets
Assets that have an indefinite useful life, for example goodwill, are not subject to amortization and are
tested annually for impairment. Goodwill is reviewed for impairment annually or more frequently
whenever events or changes in circumstances indicate evidence of impairment. Assets that are subject to
depreciation and amortization are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable. An impairment loss is recognized when the
asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's
fair value less costs to sell and its value in use. For the purposes of assessing impairment, assets are
grouped at the lowest levels for which there are separately identifiable cash flows (Cash-generating units
(CGU’s)). Non-financial assets other than goodwill that were adjusted due to impairment are subsequently
reviewed for possible reversal of the impairment at the balance sheet date.
2.14
Non-current assets held for sale
Non-current assets are classified as assets held for sale when their carrying amount is to be recovered
principally through a sale transaction and the sale is considered highly probable. They are stated at the
lower of carrying amount and fair value less costs to sell.
2.15
Trade payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course
of business from suppliers. Trade accounts payable are classified as current liabilities if payment is due in
one year or less. If not, they are presented as non-current liabilities.
2.16
Loans and financing
Loans and financing are recognized initially at fair value, net of transaction costs incurred, and are
subsequently carried at amortized cost. Any difference between the proceeds (net of transaction costs) and
the total amount payable is recognized in the statement of income over the period of the loans using the
effective interest rate method.
Loans and financing are classified as current liabilities unless the Company has an unconditional right to
defer repayment of the liability for at least 12 months after the reporting period.
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Borrowing costs directly related to the acquisition, construction or production of a qualifying asset that
requires a substantial period of time to get ready for its intended use or sale are capitalized as part of the
cost of that asset when it is probable that future economic benefits associated with the item will flow to the
Company and costs can be measured reliably. The other borrowing costs are recognized as financial
expenses in the period in which they are incurred.
2.17
Provisions
Provisions for restructuring costs and legal claims (labor, civil, tax and environmental) are recognized
when: (i) the Company has a present legal or constructive obligation as a result of past events; (ii) it is
probable that an outflow of resources will be required to settle the obligation; and (iii) the amount can be
reliably estimated. Provisions do not include future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in
settlement is determined by considering the class of obligations as a whole. A provision is recognized even
if the likelihood of an outflow with respect to any one item included in the same class of obligations may be
small.
Provisions are measured at the present value of the expenditures expected to be required to settle the
obligation using a pre-tax rate that reflects current market assessments of the time value of money and the
risks specific to the obligation. The increase in the provision due to the time elapses is recognized as
interest expense.
2.18
Asset retirement obligation
Expenditures relating to mine retirement are recorded as asset retirement obligations. Obligations consist
mainly of costs associated with termination of activities. The asset retirement cost, equivalent to the
present value of the obligation (liability), is capitalized as part of the carrying amount of the asset, which is
depreciated over its useful life. These liabilities are recorded as provisions.
2.19
Employee benefits
The Company operates some types of post-employment benefits, including both defined benefit and
defined contribution pension plans and post-retirement health care plans.
(a)
Pension obligations
The Company, through its subsidiaries abroad (VCNA, VCEAA and Artigas) and in Brazil (VCNNE),
participates in pension plans, managed by a private pension entity, which provide post-employment
benefits to employees.
In Brazil, the Company sponsors a defined contribution plan. A defined contribution plan is a pension plan
under which the Company pays fixed contributions to a separate entity. The Company has no legal or
constructive obligations to make additional contributions should the fund not have sufficient assets to
honor the benefits related to employee service in the current or prior periods.
For VCNNE and its subsidiaries abroad (VCNA, VCEAA and Artigas), the Company sponsors a defined
benefit plan, which is different from a defined contribution plan. This plan defines an amount of pension
benefit that an employee will receive upon their retirement, usually dependent on one or more factors such
as age, years of service and salary.
The liability recognized in the balance sheet in respect of defined benefit pension plans is the present value
of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The
defined benefit obligation is calculated annually by independent actuaries using the projected unit credit
method.
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The present value of the defined benefit obligation is determined by discounting the estimated future cash
outflows using market interest rates that are denominated in the currency in which the benefits will be
paid, and that have terms to maturity approximating the terms of the related pension obligation. In
countries where there is not an active market related to such obligations, market rates for government
securities are used.
Actuarial gains and losses, also called "remeasurements" arising from changes in actuarial assumptions
and amendments to pension plans are recognized in "Other comprehensive income".
Past-service costs are recognized immediately in profit or loss, unless the changes to the pension plan are
conditional on the employees remaining in service for a specified period of time (the vesting period). In
this case, the past-service costs are amortized on a straight line basis over the vesting period.
For defined contribution plans, the Company pays contributions to the pension plan administrators on a
compulsory, contractual or voluntary basis. The Company has no further payment obligations once the
contributions have been paid. The contributions are recognized as employee benefit expense when they are
due. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in the
future payments is available.
(b)
Health care (post-retirement)
The Company, through its subsidiaries abroad, offer post-retirement health care benefits to its employees.
The health care benefit for retired employees was offered by the Company under a policy which has been
discontinued. This policy established a lifetime benefits concession to a specified group of employees. This
benefit is closed to new participants and there are no active employees who can opt in.
The liability related to the health care plan for retired employees is stated at the present value of the
obligation, less the market value of the plan assets, adjusted by actuarial gains and losses and past-services
costs, similar to the accounting methodology used for defined benefit pension plans. The benefit obligation
of health care is calculated annually by independent actuaries. The present value of the defined benefit
obligation is determined through an estimate of the future cash outflow. Actuarial gains and losses arising
from changes in actuarial assumptions and amendments to pension plans are fully recognized in "Other
comprehensive income ".
(c)
Profit sharing
Provisions are recorded to recognize the expenses related to employee profit sharing. These provisions are
calculated based on qualitative and quantitative targets established by management and are recorded as
"Employee benefits", in the statement of income.
2.20
Capital
Common and preferred share shares are classified in stockholders' equity.
Incremental costs directly attributable to the issue of new shares or options are shown in stockholders’
equity as a deduction, net of tax, from the proceeds.
Where the Company purchases its equity share capital (treasury shares), the consideration paid, including
any directly attributable incremental costs (net of taxes) is deducted from stockholders' equity attributable
to the Company's stockholders until the shares are canceled or reissued. Where such shares are
subsequently reissued, any consideration received, net of any directly attributable incremental transaction
costs and the related income tax and social contribution effects, is included in equity attributable to the
Company's stockholders.
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2.21
Revenue recognition
Revenue comprises the fair value of the consideration received or receivable for the sale of goods and
services in the ordinary course of the Company’s activities. Revenue is shown net of value-added tax,
returns, rebates and discounts, after eliminating sales within the consolidated companies.
The Company recognizes revenue when: (i) the amount of revenue can be reliably measured; (ii) it is
probable that future economic benefits will flow to the entity; and (iii) specific criteria have been met for
each of the Company’s activities as described below. Revenue will not be deemed as reliably measured if all
sale conditions are not resolved. The Company bases its estimates on historical results, taking into
consideration the type of customer, the type of transaction and the specifics of each arrangement.
Revenue recognition is based on the following principles:
(i)
Sales of goods: Sales are mainly made for payment in up to 30 days. These sales are normally recognized
when the goods are delivered to the carrier and the ownership and risks with respect thereto are
transferred to the customer.
(ii)
Sale of services: the Company renders concrete pouring, co-processing and cargo transportation services.
These services are based on time and materials or as a fixed-price contract, and the terms generally vary up
to three years.
If circumstances arise that may change the original estimates of revenues, costs or percentage of
completion, estimates are revised. These revisions may result in increases or decreases in estimated
revenues or costs and are reflected in the statement of income in the period in which the circumstances
that give rise to the revision become known to management.
2.22
Distribution of dividends and interest on capital
The distribution of dividends and interest on capital to the Company’s stockholders is recognized as a
liability in the Company’s financial statements at year-end based on the Company’s bylaws. Any amount
that exceeds the minimum required is only provided on the date it is approved by the stockholders at the
General Meeting.
The minimum dividends, established by the Company’s bylaws, are 25% of net income, less the legal
reserve.
The tax benefit of interest on capital is recognized in the statement of income.
2.23
Earnings per share
Earnings per share are computed by dividing net income attributable to the owners of the Company by the
weighted average number of common shares outstanding for each reporting year. Weighted average shares
are computed based on the periods for which the shares were outstanding.
The Company does not have instruments or arrangements that could have a dilutive effect on the basic
earnings per share calculation.
2.24
Government grants
Grants from the government are recognized at their fair value where there is a reasonable assurance that
the grant will be received and the Company will comply with all related conditions.
Government grants relating to costs are deferred and recognized in the statement of income over the period
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necessary to match them with the costs that they are intended to compensate.
2.25
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief
operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources
and assessing performance of the operating segments, has been identified as the Chief Executive Officer of
the Company.
2.26
Statement of cash flows
The statement of cash flows presents the changes in cash and cash equivalents during the year for the
operating, investing and financing activities. Cash and cash equivalents include highly liquid financial
investments.
Cash flows from operating activities are presented using the indirect method. The consolidated profit is
adjusted by the effects of non-cash transactions, any deferrals or appropriations of operating past or future
cash receipts or payments, and the effects of revenue or expenses related to cash flows from investing or
financing activities.
All revenues and expenses arising from non-monetary operations attributable to investment or financing
are eliminated. Interest received or paid is classified as cash flows from operations.
2.27
Statement of value added
The purpose of this statement is to evidence the wealth created by the Company and its distribution during
a certain period and is presented by the Company, as required by Brazilian corporate law, as part of its
Parent Company Financial Statements and as supplemental information to the Consolidated Financial
Statements since it is not a statement provided for or required by the IFRSs.
The statement of value added was prepared based on information obtained from the accounting records
used as basis for the preparation of the statements. The first part of the statement presented the wealth
created by the Company, represented by revenues (gross sales revenue, including taxes levied on the sale,
other revenues and the effects of the allowance for doubtful accounts), inputs acquired from third parties
(cost of sales and purchases of materials, energy and outsourced services, including taxes levied on the
purchase, the effects of impairment and recovery of assets, and depreciation and amortization) and the
value added received from third parties (equity in the results of investees, financial income and other
income). The second part of the statement of value added presents the distribution of wealth among
personnel, taxes and contributions, third-party capital remuneration and own capital remuneration.
3
Changes in accounting policies and disclosure
(a)
Adoption of new standards, amendments and interpretations issued by the CPC
The main changes in accounting policies applied to the preparation of the accounting information and
financial statements, based on the new standards, amendments to and interpretations of standards,
applicable to the Company, effective from January 1, 2014, was as follows:
ICPC 19 / IFRIC 21 - "Levies”
It is related to the recognition of obligations imposed by government agents, related to the recognition of a
tax liability derived from the requirement of IAS 37 – Provisions, contingent liabilities and contingent
assets. The Company analyzed possible impacts related to this update on its financial statements and
concluded that there are no material impacts on its financial statements.
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CPC 01 / IAS 36 - "Impairment of assets"
This instruction removes certain disclosures regarding the recoverable amount of Cash Generator Units
(CGUs) that were included in IAS 36 by the emission of IFRS 13.
CPC 38 / IAS 39 - Financial Instruments: Recognition and Measurement
Clarifies that the substitution of original counterparts by compensation counterparts that may be required
due to introduction or changes in law and regulations does not cause the expiration or end of a hedge
instrument. Furthermore, the effects of the original counterpart substitution should be reflected in the
measurement of the hedge instrument and, therefore, on the evaluation and measurement of the hedge
effectiveness.
CPC 39 / IAS 32 – Financial Instruments: Presentation
This standard addresses the compensation of financial assets and liabilities. This change clarifies that the
right of compensation should not be contingent in a future event. It should also be legally applied to all
counterparts during the normal course of the business as well as in case of insolvency or bankruptcy. The
change also considers the settlement mechanisms.
(b)
New standards and interpretations not yet adopted
IFRS 9 - "Financial instruments: Recognition and measurement"
This new standard addresses the classification, measurement and recognition of financial assets and
financial liabilities. IFRS 9 has the ultimate objective of superseding IAS 39 – “Financial Instruments:
Recognition and Measurement”. This standard is effective from 2015, but has been revised since its
issuance. Management has not yet concluded its assessment of the impacts of adoption.
IFRS 15 – “Revenue from contracts with customers”
This new standard sets out the principles that an entity should apply to determine the revenue
measurement and when it is recognized. The standard will be effective in 2017 and supersedes IAS 11 (CPC
17) – “Construction Contracts”, and IAS 18 – (CPC 30) – “Revenue” and the related interpretations.
Management is assessing the impact of adoption.
The CPC has not yet issued the equivalent new or revised standards in accordance with accounting
practices adopted in Brazil, and these new or revised standards are still subject to approval by the relevant
regulatory authorities. In general, the early adoption of new or revised standards and interpretations,
although encouraged by the IASB, is not available in the accounting practices adopted in Brazil. Therefore,
these new or revised standards are not included in these financial statements of the Company.
4
Critical accounting estimates and judgments
Based on assumptions, the Company makes estimates concerning the future. The resulting accounting
estimates and judgments are continually reviewed and are based on historical experience and other factors,
including expectations of future events that are believed to be reasonable under the circumstances.
The accounting estimates will seldom match the related actual results. The estimates and assumptions that
have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities
within the next financial year are addressed below:
30 of 105
(a)
Impairment of goodwill and investments
The Company and its subsidiaries have a total of R$ 3,129,137 recognized as goodwill on its consolidated
balance sheet as of December 31, 2014 (2013 – R$ 3,051,700) (Note 17 (b)).
The Company tests annually whether goodwill has suffered any impairment, in accordance with the
accounting policy stated in Note 2.13. The recoverable amounts of cash-generating units (CGUs) have been
determined based on value-in-use calculations. These calculations require the use of estimates.
For the recoverable amount of its investments, the Company applies a similar procedure to impairment
testing of goodwill.
In 2014, the Company recorded an impairment loss on the goodwill of the investments in Mineração
Potilíder Ltda. (R$ 35,700), Petrolina Zeta Mineração Ltda. (R$ 13,548) and Lidermarc Indústria e
Comércio Ltda. (R$ 450), and in hydroelectric consortium Pai Querê and Santa Isabel (R$ 868).
(b)
Fair value of derivatives and other financial instruments
The fair value of financial instruments that are not traded in an active market is determined by using
valuation techniques. The Company uses judgment to select among a variety of methods and makes
assumptions that are mainly based on market conditions existing at the end of each reporting period (Note
5.3).
(c)
Provisions
The Company is party to labor, civil, tax and environmental ongoing lawsuits, which are pending at
different court levels. The provisions and contingencies against potentially unfavorable outcomes of
litigation in progress are established and updated based on management evaluation, as supported by the
positions of external legal counsel, and require a high level of judgment (Note 20).
(d)
Business combinations
In a business combination, the identifiable assets acquired and liabilities assumed are measured at fair
value on the acquisition date. The non-controlling interest in the company acquired is valued at the fair
value of the business or at the relevant portion of fair value of the company's net identifiable assets. The
measurement of these assets and liabilities, on the acquisition date, is subject to recoverability analysis,
including estimates of future cash flows, fair value, credit risk and others, and could be significantly
different from actual results.
(e)
Income tax, social contribution and other taxes
The Company is subject to income taxes in all countries in which it operates. Significant judgment is
required in determining the worldwide provision for income taxes. There are many transactions and
calculations for which the ultimate tax determination is uncertain. The Company also recognizes liabilities
for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final
tax outcome of these matters is different from the amounts that were initially recorded, such differences
will impact the current and deferred tax assets and liabilities in the period in which such determination is
made (Note 19).
31 of 105
(f)
Employee benefits
The present value of the health care plan obligations depends on a number of factors that are determined
on an actuarial basis using various assumptions. The assumptions used in determining the net cost
(income) for actuarial obligations include the discount rate.
The Company determines the appropriate discount rate at the end of each year. This is the interest rate
that should be used to determine the present value of estimated future cash outflows expected to be
required to settle the pension obligations.
Any changes in the assumptions used to calculate these obligations will impact the carrying amount at the
balance sheet date (Note 30).
(g)
Revenue recognition and accounts receivable
The allowance for doubtful accounts is recorded in an amount considered sufficient to cover any probable
losses on realization of trade accounts receivable. The Company's accounting policy for establishing the
allowance for doubtful accounts requires that invoices be reviewed by the legal, collection and credit
departments, in order to determine the amount of the probable expected losses.
(h)
Review of the useful lives and recoverability of long-lived assets
The Company reviews its long-lived assets to be held and used in its activities, for possible impairment
whenever events or changes in circumstances indicate that the carrying amount of an asset or group of
assets may not be recoverable on the basis of undiscounted future cash flows. If the carrying amount of
these assets exceeds their recoverable amount, the net value and useful life are adjusted to reflect the new
thresholds.
(i)
The amount related to the use of a public asset is originally recognized as a financial liability (obligation)
and as an intangible asset (right to use a public asset) which corresponds to the amount of the total annual
charges over the period of the agreement discounted to present value (present value of the future cash
flows).
5
Financial risk management
5.1
Financial risk factors
The Company’s activities expose it to a variety of financial risks: a) market risk (including currency risk,
interest rate risk and commodities risk); (b) credit risk; and (c) liquidity risk.
A significant portion of the products sold by the Company are denominated in Reais. The Company’s costs
and investments in assets, however, are denominated in foreign currency.
The Company has loans linked to indices and denominated in foreign currencies, which may have an
impact on its cash flow.
In order to mitigate the adverse effects of each market risk factor, the Company adopted a Market Risk
Management Policy, for the purpose of establishing governance and guidelines for the market risk
management process, as well as metrics for measurement and monitoring. This policy is complemented by
other policies that establish guidelines and rules for: (i) Foreign Exchange Exposure Management, (ii)
Interest Rate Exposure Management, (iii) Issuers and Counterparties Risk Management, and (v) Financial
Indebtedness and Liquidity Management.
32 of 105
(a)
Market risk
(i)
Foreign exchange risk
Foreign exchange risk is managed using the Parent Company's Foreign Exchange Exposure Management
Policy, which states that the objectives of derivative transactions are to reduce cash flow volatility, hedge
against foreign exchange exposure and avoid currency mismatches.
The Company has certain investments in foreign operations, the net assets of which expose the Company to
foreign exchange risk. The foreign exchange exposure arising from investments in foreign operations is
hedged mainly by loans in the same currency as the functional currency of the investees which are
classified as hedge accounting of net investment. Presented below are the assets and liabilities in foreign
currencies (Euro, US dollar, Canadian dollar, Moroccan dirham, Tunisian dinar, India rupee, Turkish lira
and Chinese renminbi) at the end of the reporting period:
Note
Assets denominated in foreign currency
Liabilities denominated in foreign currency
Loans and financing (i)
Trade payables
Net exposure
(ii)
8
9
10 (c)
18 (c)
Parent company
2014
2013
2,249
2,248
91,156
1,603
95,008
2014
Consolidated
2013
15,010
2,385
19,643
743,938
77,785
91,156
792,930
1,705,809
642,090
75,657
18,548
755,326
1,491,621
7,681,178
76,386
1,093
5,843,651
4,008
17,672
8,619,634
76,386
771,496
7,181,347
6,276
521,369
7,758,657
5,865,331
9,467,516
7,708,992
7,663,649
5,845,688
7,761,707
6,217,371
Cash flow or fair value risk associated with interest rate
The Company's interest rate risk arises mainly from long-term loans. Loans at variable rates expose the
Company to cash flow interest rate risk. Loans at fixed rates expose the Company to fair value risk
associated with interest rate.
The Interest Rate Exposure Management Policy establishes guidelines and rules to hedge against
fluctuations in interest rates that impact the cash flow of the Company and its subsidiaries. Exposures to
each interest rate (mainly CDI, LIBOR and TJLP) are projected until the maturity of the assets and
liabilities exposed to such indices.
Occasionally the Company enters into floating to fixed interest rate swaps to manage its cash flow interest
rate risk (Note 5.3).
(b)
Credit risk
Derivative financial instruments, time deposits, Bank Deposit Certificates (CDB) and repurchase
transactions backed by debentures and government securities create exposure to credit risk with respect to
the counterparties and issuers. The Company has a policy of making deposits in financial institutions that
have, at least, a rating by international agencies. The minimum rating required for counterparties is AA33 of 105
(or Aa3) (local rating scale) or A (or A2) (global rating scale) (Note 7). For countries where issuers do not
meet the minimum rating previously described, the criteria that management includes are: global
positioning of banks, relationship with the Company and local presence.
In the case of credit risk arising from customer credit exposure, the Company assesses the credit quality of
the customer, mainly taking into account mainly the history of the relationship and financial indicators
defining individual credit limits, which are continuously monitored.
The allowance for doubtful accounts is recorded at an amount sufficient to cover probable losses on the
collection of trade accounts receivable and is charged to "Selling expenses".
(c)
Liquidity risk
This risk is managed by means of the parent company's Liquidity and Financial Indebtedness Management
Policy, which aims to ensure the availability of sufficient net funds to meet the Company’s financial
commitments.
One of the main liquidity monitoring measurement instruments is the cash flow projection, using a
minimum projection period of 12 months from the benchmark date.
The liquidity and indebtedness management policy uses credit evaluation metrics comparable to an
investment rating of A (global rating scale) and AA- (local rating scale) used by risk rating agencies.
Exceptionally, the Company’s Board of Directors may approve counterparties that do not meet these
requirements after a grounded analysis justifying such approval.
The table below analyzes the Company's main financial liabilities by maturity, corresponding to the
remaining period from the balance sheet date up to contractual maturity. The amounts represent
undiscounted contractual cash flow.
Parent company
Less than
1 year
Loans and financing
Trade payables
Payables - Trading
Dividends payable
Related parties
Loans and financing
Trade payables
Payables - Trading
Dividends payable
Related parties
34 of 105
Between 1 and
2 years
Between 2 and
5 years
Between 5 and 10
years
Over 10 years
1,260,936
76,386
373,041
116,240
116,722
282,339
2,225,664
4,266,235
5,444,753
4,975,485
7,292,099
78,029
4,344,264
106,636
5,551,389
448,095
5,423,580
7,292,099
1,228,700
182
351,961
112,445
1,880
766,922
2,462,090
1,227,243
609
8,114,691
3,217
3,840,589
6,643,467
1,791,177
3,019,029
94,132
8,212,040
426,540
4,267,129
6,643,467
Total
23,239,508
76,386
373,041
116,240
116,722
915,099
24,836,996
21,054,690
4,008
351,961
112,445
1,880
3,078,771
24,603,755
Consolidated
Less than
1 year
Loans and financing
Trade payables
Payables - Trading
Dividends payable
Related parties
Pension plan
Loans and financing
Trade payables
Payables - Trading
Dividends payable
Related parties
Pension plan
Between 1 and
2 years
Between 2 and
5 years
Between 5 and 10
years
1,557,278
76,386
1,232,301
116,240
122,100
3,227
40,147
4,771,634
5,755,442
5,085,264
68,218
39,969
115,551
1,416,446
3,147,679
4,879,821
5,870,993
1,467,034
2,450
910,705
112,445
45,664
83,553
24,942
39,526
2,686,319
1,871,679
609
8,730,106
3,217
55,774
26,514
39,611
1,994,187
89,765
124,794
8,947,882
Over 10 years
Total
7,293,554
24,463,172
76,386
1,232,301
116,240
122,100
71,445
1,612,113
6,501,710
7,293,554
27,693,757
4,268,549
6,648,077
22,985,445
6,276
910,705
112,445
45,664
151,623
1,230,686
1,531,612
26,974,456
12,296
190,529
1,327,681
5,799,055
898,936
7,547,013
As the amounts included in the table represent undiscounted contractual future cash flow, these amounts
may not agree directly with the amounts in the balance sheet.
5.2
Capital management
In order to maintain or adjust the capital structure of the Company, management can make, or may
propose to the stockholders when their approval is required, adjustments to the amounts of dividends paid
to stockholders, return capital to stockholders or, also, issue new shares or sell assets to reduce debt, for
example.
The Company monitors its capital on the basis of the gearing ratio, which corresponds to net debt divided
by Adjusted EBITDA. Net debt is calculated as total borrowing (including current and non-current
borrowing as shown in the consolidated balance sheet) less cash and cash equivalents, derivative financial
instruments and financial investments. Adjusted EBITDA is calculated based on the sum of operating
profits, depreciation, amortization, depletion, dividends received, any other non-cash items included in
operating profit, and items assessed by the Company's management as exceptional.
Exceptional items basically represent equity in the results of investees (gains/losses on acquisitions,
disposals and impairment).
The net debt/Adjusted EBITDA ratios at December 31, 2014 and December 31, 2013 are summarized as
follows:
Loans and financing
Note
18
8
2014
14,425,190
(955,327)
Consolidated
2013
13,501,341
(665,588)
5.4
9
(14,770)
(1,570,713)
(11,250)
(1,274,323)
11,884,380
11,550,180
3,492,584
3,512,178
3.40
3.29
Net debt - (A)
Adjusted EBITDA - (B)
Net debt / adjusted EBITDA - (A/B)
35 of 105
34 (a)
The increase in the gearing ratio is mainly due to foreign exchange variation in the period of R$ 621,975
(Note 18 (b)).
5.3
Fair value estimates
The carrying amounts of trade accounts receivable, less allowance for doubtful accounts, and of trade
accounts payable, approximate their fair values. The fair value of financial liabilities for disclosure
purposes is estimated by discounting the future contractual cash flows at the current market interest rate.
The main financial instruments and the assumptions made by the Company for their valuation are
described below:
•
Cash and cash equivalents, financial investments, trade accounts receivable and other current assets considering their nature and terms, the carrying amounts approximate their realizable values.
•
Financial liabilities - these instruments are subject to the usual market interest rates. Market value
was based on the present value of expected future cash disbursement, at interest rates currently
available for issuance of debt with similar maturity and terms.
The difference between the fair value and the carrying amount of these liabilities is R$ 185,598, parent
company (2013 - R$ 152,877) and R$ 184,718, consolidated (2013 – R$ 205,045), and the carrying amount is
higher than the fair value (Note 18 (f)).
The Company discloses fair value measurements by Level based on the following fair value measurement
hierarchy:
. Quoted prices (unadjusted) in active markets for identical assets and liabilities (Level 1).
. Inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly (that is, as prices) or indirectly (that is, derived from prices) (Level 2).
. Inputs for the asset or liability that are not based on observable market data (that is, unobservable
inputs) (Level 3).
At December 31, 2014 and 2013, the financial assets and liabilities carried at fair value were classified as
Level 1 and 2 in the fair value measurement hierarchy, see classification below.
36 of 105
Note
Ass ets
Derivative financial ins truments
Liabilities
Loans and financing
8
9
5.4
18 (f)
5.4
Fair value measured based on
Valuation technique
Price quoted in an
supported by
active market
observable prices
Level 1
Level 2
Ass ets
Liabilities
Loans and financing
8
9
5.4
18 (f)
5.4
186,148
1,445,387
91,156
188,676
1,456,432
91,156
13,573
1,722,691
1,736,264
6,604,351
6,450,904
76,386
6,527,290
13,055,255
76,386
13,131,641
Valuation technique
Price quoted in an
supported by
active market
observable prices
Level 1
Level 2
14,218
348,388
Parent company
2013
Fair value
recognized
679,397
15,010
14,218
1,027,785
15,010
362,606
694,407
1,057,013
5,457,410
6,574,440
4,008
6,578,448
12,031,850
4,008
12,035,858
5,457,410
37 of 105
Fair value
recognized
2,528
11,045
6,604,351
Note
Parent company
2014
Note
Ass ets
Financial inves tments
Liabilities
Loans and financing
8
9
5.4
18 (f)
5.4
Valuation technique
Price quoted in an
supported by
active market
observable prices
Level 1
Level 2
Ass ets
Financial inves tments
Liabilities
Loans and financing
8
9
5.4
18 (f)
5.4
488,443
1,553,130
91,156
955,327
1,570,713
91,156
484,467
2,132,729
2,617,196
6,891,956
7,348,516
76,386
7,424,902
14,240,472
76,386
14,316,858
Valuation technique
Price quoted in an
supported by
active market
observable prices
Level 1
Level 2
Consolidated
2013
Fair value
recognized
402,791
357,083
262,797
917,240
17,526
665,588
1,274,323
17,526
759,874
1,197,563
1,957,437
5,871,991
7,834,395
6,276
7,840,671
13,706,386
6,276
13,712,662
5,871,991
(a)
Fair value
recognized
466,884
17,583
6,891,956
Note
Consolidated
2014
Financial instruments - Level I
The fair value of financial instruments traded in active markets (as trading securities and available-for-sale
securities) is based on quoted market prices at the balance sheet date. A market is regarded as active if
quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing
service, or regulatory agency, and those prices represent actual and regularly occurring market transactions
on an arm's length basis. The quoted market price used for financial assets held by the Company is the
current bid price. These instruments are included as Level I. Instruments included in Level I comprise
primarily investments in federal government securities classified as trading securities or available-for-sale
securities.
(b)
Financial instruments - Level II
The fair value of financial instruments that are not traded in an active market (for example, over-thecounter derivatives) is determined by using valuation techniques. These valuation techniques maximize
the use of observable market data where it is available and rely as little as possible on entity specific
estimates. If all significant inputs required to fair value an instrument are observable, the instrument is
included as Level II.
Specific valuation techniques used to value financial instruments include:
•
Quoted market prices or dealer quotes for similar instruments;
38 of 105
•
•
•
The fair value of interest rate swaps is calculated as the present value of the estimated future cash
flows based on observable yield curves;
The fair value of forward foreign exchange contracts is determined using forward exchange rates at
the balance sheet date, with the resulting value discounted back to present value;
Other techniques, such as discounted cash flow analysis, are used to determine fair value for the
remaining financial instruments.
There were no transfers between Levels 1, 2 and3 during the year.
5.4
Derivatives contracted
All derivative transactions were carried out in the over-the-counter market.
Hedging program for interest rates in US Dollars - derivative financial instruments contracted to adjust the
Company’s exposure to LIBOR (arising from loans in US Dollars indexed to LIBOR floating rates) to ensure
compliance with the parameters established by the policy. Mitigation of risks is carried out by means of
swaps.
Hedging program for exchange rate exposure – hedging instruments contracted for the purpose of
protecting the cash flow in Reais against exchange exposure. Mitigation of risks is carried out through the
purchase of US Dollar and Euro forward contracts.
Hedging program for foreign currency-denominated debts – hedging instruments contracted for the
purpose of protecting the cash flow in local currency. Mitigation of risks is carried out by means of cross
currency swaps.
Instruments to hedge Real-denominated debts - derivative financial instruments contracted to transform
fixed rates of Real-denominated debts into Interbank Deposit Certificate (“CDI”) floating rates. Mitigation
of risks is carried out by means of swaps. Changes in fair value are recognized in the statement of income.
The table below summarizes the derivative financial instruments and the underlying hedged items:
Parent company
Program
Unit
Hedging instruments for foreign exchange exposure
US Dollar forward
Euro forward
USD
EUR
Hedging instruments for debts
Fixed rate in Reais vs. CDI floating rate swaps
LIBOR floating rate vs. CDI floating rate swaps
BRL
USD
2014
Principal
2013
Average
Rate/Price
FWD
Average
term
(days)
2014
85,000
39,000
5,261
9,233
500,000
300,000
Fair value
2013
0.82%
Total (assets and liabilities, net)
1,033
14,770
1,033
14,770
Realized
gain
(loss)
2014
2015
2016
Fair value by maturity
2017
2018
(740)
(3,492)
(2,100)
11,002
(2,840)
Fair value
2013
Realized
gain (loss)
2014
(76,386)
(50,313)
83,376
58,093
(76,386)
(50,313)
83,376
58,093
Consolidated
Program
Unit
2014
Principal
2013
Average
Rate/Price
FWD
Average
term
(days)
2014
Hedging intruments for interest rates in US Dollars
LIBOR floating rate vs. US Dollar fixed rate swap
USD
148,750
(2,216)
(2,144)
Hedging instruments for foreign exchange exposure
US Dollar forward
Euro forward
USD
EUR
85,000
59,000
5,261
8,211
(740)
(1,130)
Hedging instruments for debts
Fixed rate in Reais vs. CDI floating rate swaps
Rupee vs. US Dollar swaps
LIBOR floating rate vs. CDI floating rate swaps
BRL
USD
USD
(3,492)
3,486
(2,100)
3,040
11,250
(3,074)
Total (assets and liabilities, net)
39 of 105
500,000
5,300
300,000
0.82%
1,033
14,770
14,770
Fair value by maturity
2017
2018
2015
2016
(76,386)
(50,313)
83,376
58,093
(76,386)
(50,313)
83,376
58,093
The derivative transactions recognized in net income totaled an income of R$ 928 (2013 - R$ 5,990),
parent company, and R$ 259 (2013 – R$ 2,304), consolidated.
5.5
Hedge of net investment
The Company designated as a hedging instrument its debt denominated in Euros at an aggregate amount
equal to EUR 942 million (R$ 2,917,921) with respect to its investment in the subsidiary VCEAA, which has
the Euro as its functional currency.
From January 1, 2013, the Company also designated a portion of its debt denominated in US Dollars, at an
aggregate amount equal to US$ 1,455 million (R$ 3,204,599) (December 31,2014 – US$ 1,547 million – R$
4,110,072), as a hedge of the investment in its subsidiary VCNA, including its subsidiaries in the United
States. VCNA, a Company domiciled in Canada, has the Canadian dollar as its functional currency, which
is highly correlated to the US Dollar.
The Company documents this correlation by assessing the effectiveness of this net investment hedge both
prospectively as well as retrospectively on a quarterly basis.
The foreign exchange loss on the translation of debt recognized as other comprehensive income was (R$
336,912) for 2014, and (R$ 563,681) for 2013.
5.6
Sensitivity analysis
Presented below is a sensitivity analysis for the main risk factors that have an impact on the pricing of the
outstanding financial instruments of cash and cash equivalents, financial investments, loans and financing,
and derivative financial instruments. The main sensitivities are the exposure to the fluctuations of the
Dollar and Euro, the LIBOR and CDI interest rates. The scenarios for these factors are prepared using
market sources and specialized sources, in compliance with the Company's policies.
The scenarios at December 31, 2014 are described below:
•
Scenario I: considers a change in the market forward yield curves and quotations as at December 31,
2014, according to the base scenario defined by the Company for March31, 2015.
•
Scenario II: considers a change of + or -25% in the market forward yield curves as at December 31,
2014.
Scenario III: considers a change of + or -50% in the market forward yield curves as at December 31,
2014.
40 of 105
Risk factor
Asset
Liability
Currency
Changes from
12/31/2014
Foreign exchange rate
USD
EUR
7
2,249
4,810,869
3,123,825
USD
EUR
2.33%
4.24%
1,642,580
4,400,000
936,201
BRL
USD
Interest rates
BRL - CDI
USD - LIBOR
Risk factor
Foreign exchange rate
USD
EUR
Interest rates
BRL - CDI
USD - LIBOR
23 bps
16 bps
Asset
Liability
Currency
Changes from
12/31/2014
756,269
65,467
5,109,265
3,445,296
USD
EUR
2.33%
4.24%
1,689,906
4,400,000
1,188,540
BRL
USD
23 bps
16 bps
Impacts on P&L
Scenarios II and III
Scenario I
Results of
scenario I
-25%
-50%
+25%
1,799
(3,471)
(15,181)
21,344
(30,363)
42,689
(12,870)
333
84,512
515
169,191
1,030
+50%
Scenario I
Results of
scenario I
-25%
-50%
+25%
+50%
15,181
(21,344)
30,363
(42,689)
(95,936)
(128,833)
1,051,500
792,126
2,103,000
1,584,252
(1,051,500)
(792,126)
(2,103,000)
(1,584,252)
(84,366)
(515)
(168,603)
(1,030)
Impacts on P&L
Scenario I
Results of
scenario I
-25%
-50%
+25%
671
(3,471)
(2,818)
21,344
(5,636)
42,689
(12,647)
423
83,087
654
166,342
1,307
Parent company
Impacts on comprehensive income
Consolidated
Impacts on comprehensive income
+50%
Scenario I
Results of
scenario I
-25%
-50%
+25%
+50%
2,818
(21,344)
5,636
(42,689)
(84,554)
(139,778)
921,999
859,425
1,843,997
1,718,851
(921,999)
(859,425)
(1,843,997)
(1,718,851)
(82,941)
(654)
(165,754)
(1,307)
With respect to changes in the foreign exchange rate, the impacts on comprehensive income are due to the effects of hedge accounting. (Note 5.4)
41 of 105
6
Financial instruments by category
(a)
Parent company
2014
Assets as per balance sheet
Related parties
Note
8
9
5.4
10
13
Loans and
receivables
188,676
Note
18
5.4
21
13
1,456,432
91,156
Total
188,676
1,456,432
91,156
305,571
23,983
1,547,588
2,065,818
305,571
23,983
518,230
Liabilities as per balance sheet
Loans and financing
Trade payables
Payables - Trading
Related parties
Assets held for
trading
2014
Other financial
liabilities
13,240,853
76,386
373,041
116,240
459,311
14,265,831
2013
Related parties
Loans and financing
Trade payables
Payables - Trading
Related parties
42 of 105
Note
8
9
5.4
10
13
Note
18
5.4
21
13
Loans and
receivables
14,218
Assets held for
trading
1,027,785
15,010
302,390
17,833
334,441
2013
Other financial
liabilities
11,878,973
4,008
351,961
112,445
2,860,017
15,207,404
1,042,795
Total
14,218
1,027,785
15,010
302,390
17,833
1,377,236
(b)
Consolidated
2014
Related parties
Note
8
9
10
13
Loans and
receivables
955,327
Note
18
21
13
1,570,713
91,156
Total
955,327
1,570,713
91,156
1,148,809
135,687
1,661,869
3,901,692
1,148,809
135,687
2,239,823
Loans and financing
Trade payables
Payables - Trading
Related parties
Assets held for
trading
2014
Other financial
liabilities
14,425,190
76,386
1,232,301
116,240
71,445
15,921,562
2013
Related parties
Loans and financing
Trade payables
Payables - Trading
Related parties
Note
8
9
10
5.4
13
Note
18
21
13
Loans and
receivables
665,588
1,274,323
17,526
1,096,596
103,767
1,865,951
2013
Other financial
liabilities
13,501,341
6,276
910,705
112,445
151,623
14,682,390
43 of 105
Assets held for
trading
1,291,849
Total
665,588
1,274,323
17,526
1,096,596
103,767
3,157,800
7
Credit quality of financial assets
(a)
Cash and cash equivalents and financial investments
The following table reflects the credit quality of issuers and counterparties for transactions involving cash and cash equivalents, financial investments and derivative
financial instruments:
Parent company
2013
2014
Local
rating
Cas h and cas h equivalents
AAA
AA+
AAA+
A
ABBB+
BBB
BBBBB+
BB
BBB+
Sem rating
Financial inves tm ents
AAA
AA+
AAA+
A
ABB+
BBBSem rating
Derivative financial ins trum ents
AAA
ABBB
Global
rating
186,148
2
2
10
77
Global
rating
9,261
2
201
Total
9,261
2
201
10
77
2,249
188
186,427
Total
186,148
2
2
Local
rating
197,037
5
2
28
2
388
2,249
188
188,676
2,506
11,970
1,016,609
305,851
1,016,609
305,851
542,667
436,778
15,864
14,889
132
14,889
132
2,249
2,248
2,248
2,248
2,506
14,218
13,927
211,389
542,667
436,778
15,864
1,049,781
305,851
779
17,410
140
41
41
Consolidated
2013
2014
Local
rating
Global rating
Total
Local rating
19,175
7
201
363,804
136,239
71,642
33,938
45,092
42,212
41,152
9,624
197,037
5
2
363,832
136,241
72,030
33,938
45,092
42,212
41,152
9,624
235
743,938
14,162
955,327
2,894
23,498
1,049,781
305,851
713,491
436,778
15,864
77,785
1,216
5
779
95,195
140
Global
rating
63,641
2,025
144,057
65,698
25,669
57,067
199,939
57,072
199,939
37,122
2,248
16,388
28,236
642,090
37,122
2,248
16,388
31,130
665,588
713,491
436,778
15,864
72,855
98
118,951
1,456,432
32,435
1,027,785
32,435
1,027,785
118,967
1,492,928
59,362
59,362
15,010
15,010
59,362
59,362
1,702,221
31,794
31,794
34,043
31,794
91,156
1,736,264
15,010
1,054,765
2,248
15,010
1,057,013
59,362
1,763,679
77,785
31,794
31,794
853,517
118,967
1,570,713
32,435
1,198,666
59,362
15,010
31,794
91,156
2,617,196
15,010
1,237,174
72,855
75,657
98
2,802
32,435
1,274,323
2,465
51
2,516
720,263
15,010
2,465
51
17,526
1,957,437
2,802
118,951
1,456,432
Total
19,175
63,648
2,226
144,057
65,698
26,885
The local and global ratings were obtained from the rating agencies Standard & Poor's, Moody's and Fitch.
Local rating: Local ratings are specific purpose ratings that apply only to credits in a certain country or region. They refer to credit quality rating of the “best” credit risk within a country or
region. The “best” risk will generally, although not always, be attributed to all financial commitments issued or guaranteed by the Sovereign State.
Global rating: Global ratings are related to commitments in foreign or local currency and, in both cases, they assess the capacity to honor these commitments, using a scale applicable on a
global basis. Therefore, both ratings in foreign currency and in local currency are internationally comparable ratings.
44 of 105
8
2014
Local currency
Cash and banks
Bank Deposit Certificate ("CDBs")
Repurchase agreements
Foreign currency
Cash and banks
Bank Deposit Certificate ("CDBs")
Parent company
2013
2014
Consolidated
2013
279
77,989
108,159
11,970
5,557
82,527
123,305
23,498
186,427
11,970
211,389
23,498
2,249
2,248
461,327
282,611
379,293
262,797
2,249
2,248
743,938
642,090
188,676
14,218
955,327
665,588
The average yield of the portfolio at December 31, 2014 was 100.79% of the CDI (2013 - 100.78% of the
CDI).
9
2014
Held for trading
Local currency
Financial Treasury Bills ("LFT")
Credit Rights Investment Funds ("FIDC")
Investment fund quotas (i)
CDBs
11,045
132
455,738
972,748
16,769
1,456,432
Parent company
2013
393
1,011,483
15,909
1,027,785
Foreign currency
Investment fund quotas
2014
17,583
140
482,256
973,534
19,415
1,492,928
77,785
1,456,432
1,027,785
77,785
1,570,713
Consolidated
2013
2,069
1,180,339
16,258
1,198,666
74,145
1,512
75,657
1,274,323
Financial investments in local currency comprise government securities or securities of first tier financial
institutions indexed to the interbank deposit rate.
The average yield of the portfolio at December 30, 2114 was 100.12% of the CDI (2013 - 100.02% of the
CD). Financial investments in foreign currency comprise fixed income financial instruments in local
currency.
45 of 105
(i)
Below is the composition of the fund’s exclusive portfolio proportional to the Company’s interest:
Consolidated
2014
CDB floating rate
Repurchase agreement
54,517
30,132
84,649
Financial Treasury Bills ("LFT")
National Treasury Bills ("LTN")
Credit Rights Investment Funds ("FIDC")
CDBs
10
(a)
Analysis
Note
Local customers
Foreign customers
Related parties
(b)
2013
13
Parent company
2014
2013
261,303
29
59,664
(15,425)
249,168
204
68,515
(15,497)
305,571
302,390
316,509
158,672
118,951
377,379
2,023
973,534
209,438
145,575
32,535
704,079
4,063
1,095,690
973,534
1,180,339
2014
335,380
823,233
66,318
(76,122)
1,148,809
Consolidated
2013
304,727
774,585
83,921
(66,637)
1,096,596
Changes in the allowance for doubtful accounts are as follows:
Parent company
2014
2013
2014
Consolidated
2013
Balance at the beginning of the year
Additions, net
Trade accounts receivable written off during
the year as uncollectible
Exchange variations
(15,497)
(12,549)
(10,960)
(15,167)
(66,637)
(35,489)
(42,996)
(41,351)
12,621
10,630
27,001
(997)
19,696
(1,986)
Balance at the end of the year
(15,425)
(15,497)
(76,122)
(66,637)
In 2013 the Company transferred customer receivables to a financial institution assuming up to 1% of
losses of the receivables transferred. Since the Company transferred the significant risks and rewards of the
receivables, it has derecognized receivables with a carrying amount of R$ 99,797 and recognized a liability
under "other liabilities" in the amount of R$ 997, representing the fair value of the guarantee granted with
respect to the 1% of losses which is also the amount of the Company's maximum exposure related to
continuing involvement in the receivables transferred. The Company has no obligation, right or option to
repurchase the receivables and there are no other contractual obligations or rights, in addition this
transaction did not result in any significant gain or loss. In 2014 the Company did not enter into this
transaction.
46 of 105
The additions to the allowance for doubtful accounts have been included in "Selling expenses". Amounts
charged to the allowance for doubtful accounts are generally written off when there is no expectation of
recovering additional cash.
(c)
Analysis by currency
Parent company
2014
2013
Reais
US dollars
Canadian dollars
Euro
Turkis h Lira
Moroccan dirham
Uruguayan peso
Tunisian dinars
Indian rupee
Bolivian boliviano
(d)
303,968
1,603
300,005
2,385
305,571
302,390
355,879
259,303
169,165
122,990
110,142
43,445
54,247
27,865
5,651
122
1,148,809
Consolidated
2013
341,270
212,606
181,281
132,587
88,863
75,975
44,986
17,187
1,841
1,096,596
Aging of overdue receivables
Parent company
2014
2013
To fall due
Up to 3 months
From 3 to 6 months
Over 6 months
(e)
2014
226,366
22,417
2,617
9,932
261,332
2014
228,646
3,261
334
17,131
249,372
1,056,313
67,793
8,692
25,815
1,158,613
Parent company
2013
2014
Consolidated
2013
897,485
94,814
12,240
74,773
1,079,312
Credit quality of trade accounts receivable
2014
High risk
Medium risk
Low risk
AAA
78,068
39,824
71,319
37,155
47,842
28,100
113,494
39,210
156,641
120,196
703,632
75,844
114,458
89,271
616,895
76,861
226,366
228,646
1,056,313
897,485
The amounts above refer to trade accounts receivable that are non-overdue and not impaired.
High risk
– New customers without historical financial information.
Medium risk – Customers with a history of some delay in payments.
Low risk
– Customers with solid commercial and payment history.
Customers AAA– Classification only for wholesale customers, based on individual
credit analysis made by the Management.
47 of 105
Consolidated
2013
11
Inventory
(a)
Analysis
Finished products
Semi-finished products
Raw materials
Auxiliary materials and consumables
Imports in transit
Other
Provision for losses (i)
2014
Parent company
2013
2014
Consolidated
2013
29,222
205,035
121,221
121,145
17,132
7,030
(68,560)
29,833
215,229
111,235
144,281
33,558
3,429
(53,222)
137,314
596,919
299,025
293,832
82,036
32,814
(139,705)
123,162
602,739
287,268
294,625
83,703
20,294
(106,136)
432,225
484,343
1,302,235
1,305,655
(i) The provision for losses refers mainly to obsolete and slow-moving materials in inventory. The Company
had no inventory pledged as collateral for any of its liabilities.
(b)
Changes in the provision for inventory losses
Parent company
Addition
Reversal
Finished products
(1,065)
(2)
51
(1,016)
Semi-finished
products
(8,144)
(8,954)
Raw materials
(9,269)
(2,105)
Auxiliary
materials and
consumables
(34,053)
(3,553)
(17,098)
(11,374)
(37,606)
2014
2013
Other
(691)
(775)
Total
(53,222)
(15,389)
51
Total
(56,723)
(2,705)
6,206
(1,466)
(68,560)
(53,222)
Consolidated
Finished products
(5,228)
Addition
(801)
Reversal
1,731
Foreign exchange variations
(253)
48 of 105
(4,551)
Semi-finished
products
(10,602)
(10,564)
201
(178)
Raw materials
(27,092)
(9,496)
936
(1,239)
Auxiliary
materials and
consumables
(61,626)
(12,762)
298
(1,391)
(21,143)
(36,891)
(75,481)
2014
2013
Others
(1,588)
(1,037)
793
193
Total
(106,136)
(34,660)
3,959
(2,868)
Total
(114,090)
(11,668)
27,925
(8,303)
(1,639)
(139,705)
(106,136)
12
Parent company
2014
2013
Current income tax and social contribution receivable
ICMS credits on acquisitions of property, plant and equipment (i)
Value-added Tax on Sales and Services ("ICMS")
Excise Tax ("IPI")
Employees' Profit Participation Program ("PIS") (ii)
Social Contribution on Revenue ("COFINS") (ii)
Other (iii)
Taxes recoverable
Current
Non-current
Consolidated
2014
2013
28,694
49,907
65,849
15,476
23,428
106,363
2,378
263,401
95,826
64,449
22,258
20,403
27,152
123,562
1,878
259,702
75,212
64,153
130,405
23,267
36,901
169,075
20,044
443,845
161,686
77,157
87,191
27,578
42,041
192,776
22,506
449,249
292,095
355,528
519,057
610,935
(136,191)
(182,726)
(271,558)
(341,134)
155,904
172,802
247,500
269,802
(i)
The credits related to ICMS arise from the purchase of property, plant and equipment (recoverable in 48
monthly installments) and consumable products and will be recovered during the ordinary course of the
Company's operations.
(ii)
The credits related to PIS and COFINS arise mainly from the purchases of property, plant and equipment.
These credits will be recovered in accordance with the prevailing tax criteria.
(iii)
Of the total amount presented in the analysis above as other in consolidated, R$ 6,470 (2013 - R$ 19,286)
refers to taxes recoverable (“VAT” - value-added tax) of VCEAA (foreign company).
49 of 105
13
Related parties
(a)
Parent company
Parent
Votorantim Industrial S.A. (i)
2014
2013
1,128
38
2014
2013
Non-current assets
2014
2013
38
38
Votorantim Participações S.A.
Companhia Brasileira de Alumínio
2,426
13,641
449
227
219
219
404
404
CRB Operações Portuárias S.A.
1,432
Fazenda São Miguel Ltda.
1,175
Hailstone Limited
Interávia Transportes Ltda.
13,551
11,952
32
32
334
334
Itacamba Cementos S.A.
Polimix Concreto Ltda.
Seacrown do Brasil Comércio, Importação e Participação S.A.
Somix Concreto Ltda.
Supermix Concreto S.A. (iv)
179
Dividends payable
2014
2013
116,722
1,880
2014
30,520
Purchases
2013
52,640
115
834
722
118
6,163
7,665
7,512
9,676
2,174
7,812
5,718
175
26
11,174
14,678
89
33,738
2,468
2014
Sales
2013
8,792
417
25
10
5
9
33,738
20,652
16,241
68,860
74,850
139,826
166,260
(2,042)
1,146
1,048
4
709
5,532
5,532
849
349
2,468
312
184
4,961
5,909
18,114
16,925
294,943
234,821
289
15,529
13,960
7
Votorantim Metais S.A.
294
Votorantim Siderurgia S.A.
478
Other
206
386
59,664
68,515
Current
(59,664)
(68,515)
50 of 105
Financial result
2013
46
Votener-Votorantim Comercializadora de Energia Ltda. (v)
Non-current
2014
3
1,546
Voto-Votorantim Overseas Trading Operantions IV Limited
Votorantim Cimentos N/NE S.A. (ii)
Votorantim GmbH (iii)
2014
2013
1,295
83,553
351
50
1,567
Mizu S.A.
Trade payables
2013
22,697
30
Associates or joint ventures
Acariúba Minerações e Participações Ltda.
Calmit Industrial Ltda.
Cia de Cimento Itambé
2014
19,246
42,034
2,647
364,701
(31,503)
(35,141)
78
2,345,770
24,962
(5,494)
(66)
(3,111)
(2,253)
216,209
194,552
8,599
112,473
16,898
122,675
169,035
65,847
183
591
697
2,469
2,582
311
955
386,828
407,942
708,001
566,022
2,697
534
982
12,915
111
6,030
24,150
158
440
139
54
1,042
185
132
707
143,269
413,621
705
3,115
954
42,741
143,974
23,983
17,833
(42,741)
(143,974)
23,983
17,833
30,880
64,601
116,722
1,880
(30,880)
(64,601)
(116,722)
(1,880)
5,047
1,761
11
459,311
2,860,017
(37,052)
(459,311)
(2,860,017)
(42,544)
6
(b)
Consolidated
Parent
Votorantim Industrial S.A. (i)
Votorantim Participações S.A.
Associates or joint ventures
Acerbrag S.A.
Cementos Avellaneda S.A.
Cementos Bio Bio S.A.
Cementos Especiales de las Islas, S.A.
Cia de Cimento Itambé
Hailstone Limited
Ibar Administração e Participação Ltda.
Maré Cimento Ltda.
Mizu S.A.
Santa Cruz Geração de Energia S.A.
Santa Maria Comércio e Serviços Ltda.
Sopacim
Sumter Cement Co. LLC
Superior Materials Holdings, LLC
Supermix Concreto S.A. (iv)
Suwannee American Cement LLC
Verona Participações Ltda.
Votener-Votorantim Comercializadora de Energia Ltda. (v)
Voto-Votorantim Overseas Trading Operantions IV Limited
Votorantim Andina S.A.
Votocel Investimentos Ltda.
Votorantim GmbH (iii)
Votorantim Metais S.A.
Votorantim Siderurgia S.A.
Other
2014
2013
1,128
213
569
2014
2013
999
Non-current assets
2014
2013
38
38
7,969
7,028
771
2014
19,553
30
Trade payables
2013
22,697
595
695
413
1,699
Non-current
51 of 105
2014
2013
1,295
83,553
722
722
2,865
393
2014
Financial result
2013
2014
32,096
(124)
1,103
Purchases
2013
56,094
2014
Sales
2013
8,792
417
34,650
69,142
140,844
39,206
75,044
168,780
30,496
390,201
27,045
305,891
695
2,372
645
2,426
2,334
7,845
11,227
9,776
13,641
4,687
5,743
14,687
3,629
1,778
7,947
2,840
1,277
7,149
13,552
5,075
11,952
5,075
1
8
1
8
1,699
32,603
22,275
10
4
50
46
707
27,949
52
534
126
1,421
10,271
24,056
451
1,252
8,540
22,651
8
150
150
11,340
9,218
9,860
2,966
2,616
7
79,654
7
62,091
18,652
13,242
289
1,546
1,669
715
222,417
205,737
848
9,457
435,461
158
3,999
938
695,069
412,971
183
40,797
591
4,024
681,403
7,107
723,468
45,312
697
6
8,618
680,473
(27,274)
1,993
1,757
416
293
487
3,165
66,318
7
111
439
1,167
83,921
1,602
4,008
31,224
3,150
24,555
1
16,556
135,687
1
13,348
103,767
72,515
6,030
2,899
1,794
122,784
43,386
24,150
351
1,059
109,628
Total non-controlling interest
Current
Dividends payable
2014
2013
116,722
1,880
(66,318)
(83,921)
(31,224)
(24,555)
(122,784)
135,687
103,767
(109,628)
116,722
246
3,202
5,378
42,462
(122,100)
(45,664)
37,257
(148)
(2,559)
5,569
3,730
71,445
7
326
151,623
2,500
(29,118)
(71,445)
(151,623)
The main transactions with related parties were carried out under the following conditions:
(i)
Services purchased include those provided by the Shared Solutions Center (“Centro de Soluções
Compartilhadas”), or CSC, of VID related to administrative activities, human resources, back office,
accounting, taxes, technical assistance, training, and those provided by the Corporate IT department
(“Centro de Competência em Tecnologia da Informação” or “CCTI”). These services are provided to all
Votorantim companies, and the Company reimburses the expenses related to these services to VID based
upon the services actually provided by the CSC and the CCTI.
(ii)
In October 2014, the balances were substantially settled as mentioned in Note 1 (iii).
(iii)
Products were sold based on the companies' internal price lists. The products purchased from Votorantim
GmBH (basically petroleum coke) included a margin of between 14% and 15% on the purchase price
charged by the suppliers in the periods presented, as compensation for services rendered, which is in line
with the transfer pricing policy which the Company has in place.
(iv)
Refer to sales of cement and aggregates to Supermix Concreto S.A.
(v)
Refer to purchases of electric power from Votoner - Votorantim Comercializadora de Energia Ltda.
Other prices for the sales and rendering of services between related parties have been negotiated based on
internal costs, with no margins applied.
(c)
Guarantees of the indebtedness of the Company and its consolidated entities granted by
related parties
Instrument
BNDES
1st issue of debentures (i)
2nd issue of debentures (i)
3rd issue of debentures (i)
4th issue of debentures (i)
5th issue of debentures (i)
ECA Framework Agreement
Eurobonds - EUR
Eurobonds - USD (Voto 41)
Guarantor
Hejoassu (parent of VPAR) / VID
VPAR
VID
VID
VID
VID
VID
VPAR (100%), CBA (50%)
VID
VPAR (100%), VCSA (50%) and Fibria (50%)
2014
1,359,170
140,363
1,013,981
3,377,086
257,598
2013
1,523,123
503,978
1,024,402
623,382
1,044,446
1,208,279
140,432
2,509,431
2,978,376
411,164
6,148,198
11,967,013
(i)
In 2014, the Company made amendments to the indentures of the first, second, third, fourth and fifth
issues of debentures in order to release the VID and VPAR guarantee.
(d)
Guarantees of the indebtedness of related parties granted by the Company and its
consolidated entities
2014
Instrument
Debtor
VID
CBA
Guarantor
VPAR, VCSA, CBA
VPAR, VCSA
Percentage
guaranteed by
the Company
50%
50%
Debt
760,652
649,828
1,410,480
52 of 105
Amount
guaranteed
380,326
324,914
705,240
2013
Debt
2,171,931
1,698,141
Amount
guaranteed
1,085,965
849,070
3,870,072
1,935,035
(e)
Key management compensation
Key management includes the members of the Company's Global Executive Team and Board of Directors.
Key management compensation, including all benefits, was as follows:
2014
Short-term benefits to managers
Termination benefits
Post-employment benefits
Other long-term benefits to key management
24,654
Parent company
2013
2014
Consolidated
2013
29,447
422
5,007
32,839
1,103
478
15,090
550
5,819
36,493
1,103
619
15,480
30,083
49,510
35,816
53,695
The short-term benefits above include fixed compensation (salaries and fees, paid vacations and 13th
month salary), social charges (contributions to the National Institute of Social Security - INSS and the
Government Severance Indemnity Fund for Employees - FGTS) and short-term benefits under the
Company’s variable compensation program. The other long-term benefits relate to the variable
compensation program. The post-employment benefits refer to pension plans.
14
Other assets
Prepaid expenses
Fiscal credits
Credits from share sales (i)
Social security credits
Advances to employees
Long-term advances to suppliers
Employee benefit
PP&E sales credits (ii)
Other credits
Current
Non-current
2014
Parent company
2013
9,277
48,591
30,791
62,252
7,573
5,689
11,065
14,431
13,768
1,604
86,502
(33,427)
53,075
2014
Consolidated
2013
3,826
98,059
69,359
48,300
11,651
7,499
5,668
2,244
14,079
37,224
109,480
103,735
28,727
13,022
17,318
7,369
1,055
4,732
42,025
122,365
294,083
327,463
(149,678)
(154,578)
144,405
172,885
(61,122)
61,243
(i)
The balance refers substantially to amount receivable by VC Argentina of R$ 38,469 as a result of the
disposal of the investment in Yguazú Cemento S.A..
(ii)
In September 2014, Jaú and Treze de Maio units were sold and the related amounts will be received over
one and five years, respectively.
53 of 105
15
Investments in associates and joint ventures
(a)
Analysis
Parent company
Net equity
Inves tm ents accounted for us ing the equity m ethod
Subs idiaries and as s ociates
Votorantim Cem ent North Am erica Inc
Votorantim Cim entos EAA Invers iones S.L.
Silcar Em preendim entos Com ércio e Participações Ltda.
Votorantim Cem entos Chile Ltda.
Pedreira Pedra Negra Ltda. (Nota 1 (iii))
Acariuba Mineração e Participação Ltda. (Nota 1 (iii))
Cem entos Portland S.A.
Votorantim Cim entos Argentina S.A.
Itacam ba Cem ento S.A. (Nota 2.2 (a)(i))
Erom ar S.A. (Nota 2.2 (a)(iv))
Seacrown do Bras il, Com .Im port. e Part. S.A.
Other
Joint operation
VOTO-Votorantim Overs eas Trading Operations IV Lim ited Ltda.
Information as at December 31, 2014
Net income
Percentage of
(loss) for the
voting and total
year
capital
4,345,020
2,022,079
2,618,007
665,134
177,496
44,069
318,899
250,122
134,591
12,570
100.00
100.00
100.00
100.00
100.00
243,356
32,889
4,983
6,698
29.50
99.94
1,864
(718)
40.45
363,091
(51,731)
50.00
Equity in the results of
associates and joint
ventures
Balance
2014
2014
44,069
318,899
250,122
134,591
12,570
(1,268)
864
1,469
6,694
721
543
(290)
316
4,345,020
2,022,079
2,618,007
665,134
177,496
71,790
32,869
861
2,033
(25,865)
181,545
743,435
10,116,834
Goodwill
Votorantim Cem ent North Am erica Inc.
1,205,257
882,798
2,088,055
12,204,889
Total inves tm ents and goodwill
Payables to inves tees
Total inves tm ents , goodwill and payables to inves tees
54 of 105
(31,563)
(410)
100.00
(410)
(31,563)
743,025
12,173,326
Parent company
Net equity
Subs idiaries and as s ociates
Votorantim Cem ent North Am erica Inc
Votorantim Inves tim entos Latino Am ericano S.A. (Nota 1 (vi))
Acariuba Mineração e Participação Ltda.
Votorantim Cim entos Argentina S.A.
Itacam ba Cem ento S.A. (Nota 2.2 (a)(i))
Erom ar S.A.
Seacrown do Bras il, Com .Im port. e Part. S.A.
Other
Joint operation
VOTO-Votorantim Overs eas Trading Operations IV Lim ited Ltda.
3,915,924
3,825,354
2,393,703
Net income
Percentage of
(loss) for the
voting and total
year
capital
106,442
488,607
144,758
100.00
97.38
100.00
571,898
170,123
147,264
110,325
224,637
28,726
33,686
2,372
2,585
95,662
(13,938)
1,158
(12,441)
(1,687)
(11)
2,647
(509)
(9,322)
100.00
100.00
100.00
100.00
29.50
99.96
50.01
100.00
40.45
43,126
(22,514)
50.00
ventures
Balance
2013
2013
106,442
470,672
144,758
2,890
95,662
(13,938)
1,158
(12,441)
(498)
(11)
1,324
(509)
(3,770)
183
3,915,924
3,725,253
2,393,703
571,898
170,123
147,264
110,325
66,268
28,715
16,847
2,372
1,046
12,994
(12,203)
21,563
779,719
11,184,295
Goodwill
Votorantim Cem ent North Am erica Inc.
1,205,070
882,798
11,700
2,099,568
13,283,863
Total inves tm ents and goodwill
Payables to inves tees
Total inves tm ents , goodwill and payables to inves tees
55 of 105
(26,407)
(5,596)
100.00
(5,596)
(26,407)
774,123
13,257,456
Consolidated
Net equity
Investments accounted for using the equity method
Associates
Cementos Portland S.A.
Votorantim Cimentos EAA Inversiones S.L.
Cementos Avellaneda S.A. (c)
Silcar Empreendimentos Comércio e Participações Ltda.
Sirama Participações Adm. e Transportes Ltda.
Maré Cimento Ltda. (a)
Polimix Concreto Ltda. (a)
Supermix Concreto S.A.
Mizu S.A. (a)
Verona Participações Ltda. (a)
Polimix Cimento Ltda. (a)
Votorantim Cementos Chile
Cemento Bio Bio S.A. (b)
Joint ventures - VCNA
Suwannee American Cement LLC (c)
Superior Building Materials LL
Sumter Cement Co LLC
Trinity Materials LLC
Other investments
Total investments, joint ventures and others
56 of 105
Net income
Percentage of
(loss) for the
voting and total
year
capital
ventures
Balance
2014
2014
243,356
4,983
29.50
1,469
71,790
411,026
88,033
49.00
43,136
382,926
973,311
260,983
325,030
208,847
98,967
109,268
30,345
210,251
64,923
33,575
12,862
32,976
70,459
38.26
51.00
27.57
25.00
51.00
25.00
51.00
80,437
25,848
5,653
3,216
12,213
9,131
372,363
133,101
89,616
52,212
50,473
27,317
15,476
921,991
77,105
16.69
12,876
153,964
211,633
51,954
36,124
15,072
(21,444)
733
(703)
(223)
50.00
50.00
50.00
50.00
(10,722)
366
(352)
(111)
177,027
25,977
18,062
7,536
4,527
99,275
187,687
1,677,115
Consolidated
Net equity
As s ociates
Votorantim Cim entos S.A.
Cem entos Avellaneda S.A. (c)
Siram a Participações Adm . e Trans portes Ltda.
Maré Cim ento Ltda. (a)
Polim ix Concreto Ltda. (a)
Superm ix Concreto S.A.
Mizu S.A. (a)
Verona Participações Ltda. (a)
Polim ix Cim ento Ltda. (a)
Invers iones Votorantim Chile
Cem ento Bio Bio S.A. (b)
Suwannee Am erican Cem ent LLC (c)
Superior Building Materials LL
Sum ter Cem ent Co LLC
Trinity Materials LLC
Other inves tm ents
Total inves tm ents , joint ventures and others
(a)
(b)
(c)
224,637
ventures
Balance
2013
2013
29.50
(498)
66,268
Net income
Percentage of
(loss) for the
voting and total
year
capital
(1,687)
354,528
80,480
49.00
32,290
368,864
856,136
211,849
307,425
215,985
76,002
80,230
30,345
194,283
90,114
36,916
28,749
9,209
75,416
38.26
51.00
27.57
25.00
51.00
25.00
51.00
74,326
25,642
(4,234)
7,187
1,398
(3,416)
327,535
108,043
84,763
53,996
38,761
20,057
15,476
914,640
(81,277)
16.69
(13,480)
152,736
206,670
35,087
32,565
13,514
(25,834)
(10,128)
(566)
(1,098)
50.00
50.00
50.00
50.00
(12,917)
(5,064)
(283)
(549)
166,137
17,544
16,282
6,757
(6,429)
96,863
110,674
1,553,893
Represent the investees of the consolidated entity Silcar - Empreendimentos Comércio e Participações Ltda. Under the terms of the shareholders agreement, the
Company can only participate in certain defined financial and operating decisions with respect to certain matters and certain activities of the investees and, as such, the
Company does not control these entities. Dividends related to these entities may be distributed, at amounts not proportional to the percentage of ownership, if decided
by the shareholders.
Represent investees in which the Company holds less than 20% of the voting interest but over whose activities the Company exerts significant influence through
shareholders agreements to which the Company is a party.
The investments Cementos Avellaneda S.A. and Suwannee American Cement LLC consider, at December 31, 2014, the amounts of R$ 181,523 and R$ 71,210 (2013 – R$
204,344 and R$ 62,830) respectively relating to the goodwill paid on the acquisition of the investments.
57 of 105
(b)
Information on investees
Below is a summary of selected financial information of the Company’s main associates, subsidiaries and joint ventures in the years ended:
Parent company
2014
Votorantim Cement North America Inc.
Votorantim Cimentos N/NE S.A.
Votorantim Cimentos EEA Inversiones S.L.
Voto - Votorantim Overseas Trading Operations IV Ltda.
Votorantim Cementos Chile Ltda.
Votorantim Cimentos Argentina S.A.
Seacrown do Brasil, Com . Import. e Part. S.A.
Percentage of
voting and total capital
Current
assets
100.00
100.00
100.00
100.00
50.00
29.50
100.00
99.94
40.45
100.00
Non-current
assets
Current
liabilities
1,105,534
907,813
1,828,769
28,147
26,889
175,709
10,036
38,651
276
4,239,883
2,350,033
2,627,785
744,028
843,235
80,283
167,538
24
8,145
466,501
813,823
966,578
88
1,110
(820)
3,369
78
2,920
310
Non-curent
liabilities
533,896
421,944
656,513
107,041
507,853
9,267
Non-controlling
interests
Comprehensive
income (loss)
2,866
6,247
385,028
(7,085)
21,515
6,726
27,315
13,737
(5,197)
(2,535)
(3)
32,761
(4,746)
215,456
Net equity
(i) Net revenue
4,345,020
2,022,079
2,618,007
665,134
363,091
243,356
177,496
32,889
1,864
2,290,280
2,043,638
1,716,493
Financial
result
96,133
604,030
215,770
(487)
(28,335)
(135,964)
(18,443)
(6,184)
(51,731)
10,060
(2)
10,476
44,069
318,899
250,122
134,591
(51,731)
4,983
12,570
6,698
(718)
(1)
(410)
(2,449)
(227)
(176)
(3)
(31,563)
Net income
(loss) for the
year
Operational
result
(49)
Parent company
2013
Percentage of
Current
assets
Non-current
assets
Current
liabilities
475,225
523,467
955,831
Votorantim Cem ent North America Inc.
Votorantim Cimentos N/NE S.A.
Votorantim Cimentos EEA Inversiones S.L.
Acariúba Mineração e Participação Ltda.
Voto - Votorantim Overseas Trading Operations IV Ltda.
Itacamba Cemento S.A.
Votorantim Cimentos Argentina S.A.
Seacrown do Brasil, Com. Import. e Part. S.A.
Eromar S.A.
100.00
100.00
100.00
100.00
29.50
100.00
100.00
100.00
50.00
50.01
99.94
40.45
100.00
1,041,989
578,042
1,854,533
23,636
159,095
1,566
12,538
1,782
53,204
28,557
28,738
168
598
3,903,391
4,744,663
2,707,552
649,119
74,772
172,479
180,288
116,648
742,649
9,985
100.00
105
1,539
58 of 105
8,886
1,992
482
9
3,767
(1,543)
4,504
12
221
218
104
Non-curent
liabilities
554,231
973,884
871,396
100,857
8,748
3,913
41,795
8,105
754,270
352
Non-controlling
interests
341,155
Comprehensive
income (loss)
491,707
(1,298)
(54,614)
19,375
9,756
24,895
(13,664)
1,534
5,482
(3,153)
6,248
27,947
(4,713)
Net equity
(i) Net revenue
3,915,924
3,825,354
2,393,703
571,898
224,637
170,123
147,264
110,325
43,126
33,686
28,726
2,585
2,372
(26,407)
2,002,758
1,965,303
1,843,051
32,257
29,510
Operational
result
Financial
result
143,953
640,737
249,907
2
(2,605)
(69)
2,527
(1,867)
11,209
15,451
(18,756)
(5,242)
939
18
(89)
2
(24,406)
818
3,465
(11)
(1,645)
(469)
(48)
4
(40)
3
Net income
(loss) for the
year
106,442
488,607
144,758
95,662
(1,687)
(13,938)
1,158
(12,441)
(22,514)
2,647
(11)
(9,322)
(509)
(5,596)
Percentage of
Cemento Bio Bio S.A.
Maré Cimento Ltda.
Mizu S.A.
Polimix Cimento Ltda.
Suwannee American Cement LLC.
Superior Building Materials LL.
Sumter Cement Co LLC.
Trinity Materials LLC.
38.26
16.70
49.00
27.57
51.00
29.50
25.00
25.00
51.00
51.00
105,444
478,846
361,452
271,073
340,308
175,709
276,010
56,064
51,154
50.00
50.00
50.00
50.00
54,317
39,303
(60,958)
117
Percentage of
Cemento Bio Bio S.A.
Maré Cimento Ltda.
Mizu S.A.
Polimix Cimento Ltda.
Suwannee American Cement LLC.
Superior Building Materials LL.
Sumter Cement Co LLC.
Trinity Materials LLC.
Current
assets
Current
assets
16.70
38.26
49.00
27.57
29.50
25.00
51.00
25.00
51.00
51.00
461,820
72,238
270,454
265,893
159,095
247,199
299,796
50,533
68,343
50.00
50.00
50.00
50.00
51,707
23,555
(53,055)
139
Non-current
assets
Current
liabilities
888,704
1,676,003
245,099
295,645
355,901
80,283
217,349
65,079
91,879
30,345
2,523
321,828
189,833
194,368
123,618
3,369
188,066
11,591
35,403
18,314
827,913
5,692
47,320
311,608
9,267
96,446
284
8,663
200,301
49,742
97,088
15,228
15,649
36,165
6
3
27,336
926
Non-controlling
interests
83,117
Current
liabilities
Non-curent
liabilities
1,791,820
787,192
250,097
221,071
74,772
259,396
304,481
39,331
68,556
30,345
388,363
2,326
150,101
137,906
482
196,933
126,715
9,334
24,147
866,424
968
15,922
41,633
8,748
93,677
265,713
300
36,750
193,327
47,276
85,625
13,414
19,556
35,744
5
39
18,808
Comprehensive
income (loss)
16,924
(46,579)
(31,535)
1
13,737
1
26,407
6,207
4,262
1,781
270
Non-current
assets
(i) Stockholders’ equity comprises the balance of comprehensive income presented.
59 of 105
Non-curent
liabilities
Non-controlling
interests
84,213
Comprehensive
income (loss)
141,111
28,409
(48,037)
(1,454)
9,756
270
5
28,565
3,998
4,190
1,744
Net equity
(i) Net revenue
Consolidated
2014
Net income
(loss) for the
Operational
result
Financial
result
(557)
105,998
145,700
43,133
86,711
(2,449)
31,565
(26)
16,329
549
105,998
145,700
43,133
86,711
(2,449)
31,565
(26)
16,329
93,300
179,325
(139)
2,120
(19,250)
(479)
(7)
(189)
(70)
(74)
Net equity
(i) Net revenue
Operational
result
Financial
result
Consolidated
2013
Net income
(loss) for the
1,121,080
773,184
136,008
(591)
115,302
44,802
(2,605)
25,505
144,891
(81,277)
194,283
80,480
36,916
(1,687)
28,749
90,114
75,416
9,209
(25,834)
(10,128)
(566)
(1,098)
973,311
921,991
411,026
325,030
260,983
243,356
208,847
109,268
98,967
30,345
211,633
51,954
36,124
15,072
1,207,057
872,304
816,146
695,224
1,890,894
914,640
856,136
354,528
307,425
224,637
215,985
211,849
80,230
76,002
30,345
1,256,936
161,412
13,019
152,274
(591)
120,176
47,802
(2,671)
24,413
144,891
72,144
13,019
206,670
35,087
32,565
13,514
78,058
138,388
(26,075)
(11,386)
(473)
(1,127)
(289)
(122)
(123)
(8)
789,197
1,002,340
(1,134)
210,251
77,105
88,033
33,575
64,923
4,983
12,862
70,459
32,976
(21,444)
733
(703)
(223)
(c)
Changes in investments
Parent company
(i)
(ii)
(d)
Consolidated
2014
2013
2014
2013
Equity in the results in investments
Dividends received (i)
Exchange gains (losses) on investments abroad
Cash flow hedge accounting in investees
Other comprehensive income of investees
Capital increases in other investees
Capital increase in the investee VCEAA
Capital increase in the investee Votorantim Cimentos Argentina
Acquisition of additional interest in the investee Avellaneda
Capital increase in the investee Bio Bio
Capital increase in the investee Voto IV (Note 1 (viii))
Goodwill on acquisition of investment in subsidiary through the repurchase
of shares in VCNNE (Note 1 (i))
Capital reduction of VCNNE (Note 1 (iii))
Consolidated investment after obtaining control Artigas
Consolidated investment after obtaining control Antequera
Reclassification from non-controlling interests to revenue reserve (Note 24 (c))
Reclassification of investment to assets held for sale (Note 1 (vi))
Liquidation of investments (MAESA)
Disposal of investments
Partial disposal of investment VCEAA
Purchase of investment VCNA
Capital spin-off of investee VCNNE (Note 1 (iv))
Write-off of investment in PPN (Note 1 (iii))
Write-off of investment in Acariúba (Note 1 (iii))
Transfer of goodwill in PPN (ii)
Capital reduction of VCEAA
Other
13,257,456
743,025
(602,408)
425,028
2,156
(22,891)
11,064
12,122,599
774,123
(124,230)
665,051
2,446
(25,503)
69,320
484,174
31,891
1,553,893
187,687
(56,236)
(14,177)
(1,168)
3,576
4,963
2,105,385
96,863
(79,992)
16,491
1,571
2,221
14,102
12,173,326
267,200
14,699
158,532
32,232
(38,206)
(1,421,333)
(52,670)
(48,720)
(12,645)
(42,774)
(682,155)
(39,822)
(682,155)
(39,822)
(90,126)
(1,055)
5,228
(500)
(157,047)
(111,189)
(11,700)
(15,887)
(5,596)
13,257,456
1,677,115
(11,179)
1,553,893
Of the total dividends received the parent company during 2014, R$ 554,256 were paid by the subsidiary
VCNNE.
As a result of the transfer of the investment to subsidiary VCNNE, the goodwill on acquisition of PPN was
transferred to intangible assets.
Investments in listed equity investees
2014
Carrying
value
Cementos Bio Bio S.A. (*)
153,964
2013
Market value Carrying value
98,538
152,736
Market value
108,946
(*) Calculated proportionally to the Com pany's interes t
(e)
Impairment testing of investments in associates
Cementos Bio Bio S.A.
The recoverable amount of the Cementos Bio Bio S.A. investment was calculated based on the value in use, using
the cash flow based on the financial budget projections for the next five years approved by management, without
any need for impairment.
60 of 105
16
(a)
Analysis
Parent company
Cost
Accumulated depreciation
Net balance
Acquisitions
Disposals
Spin-off (Note 1 (iv))
Depreciation
Reclassification to assets held for sale (Note 33(c))
Transfer to taxes recoverable (i)
Provision for asset impairment
Effects of merged associated company
Transfers (ii)
Cost
Net balance at the end of the year
Average annual depreciation rates - %
61 of 105
Land and buildings
Machinery,
equipment and
facilities
Leasehold
improvements
Vehicles
Furniture and
fixtures
1,462,183
(497,842)
964,341
5,226,680
(2,252,573)
2,974,107
28,878
(13,469)
15,409
386,131
(278,520)
107,611
58,106
(47,018)
11,088
2,123
(4,872)
(2,544)
(19,891)
(12,475)
6,654
(15,862)
1,611
(393)
(209)
(185,710)
(23,238)
(6,109)
(6,594)
(1,865)
(36,926)
(796)
Construction in
progress
873,200
873,200
563,884
(10,038)
(1,875)
(79,737)
(69)
2014
2013
Total
Total
8,035,178
(3,089,422)
4,945,756
7,427,789
(2,929,980)
4,497,809
574,272
(31,374)
(2,544)
(246,267)
(36,509)
(79,737)
(12,772)
816,719
(1,530)
(34,882)
(224,885)
39,517
(47,222)
46,705
266,703
7,142
34,846
2,417
(486,107)
967,278
3,016,060
20,686
105,953
11,352
861,202
4,982,531
4,945,756
1,484,463
(517,185)
967,278
5,438,947
(2,422,887)
3,016,060
36,000
(15,314)
20,686
414,784
(308,831)
105,953
59,663
(48,311)
11,352
861,202
8,295,059
(3,312,528)
4,982,531
8,035,178
(3,089,422)
4,945,756
2
5
5
20
10
861,202
(128,294)
(99,770)
Consolidated
2014
Cost
Net balance
Acquisitions
Disposals
Spin-off (Note 1 (iv))
Depreciation
Reclassification to assets held for sale (Note 33 (c))
Exchange variations
Provision for asset impairment
Transfer to taxes recoverable (i)
Transfers (ii)
Cost
Average annual depreciation rates - %
Land and buildings
Machinery,
equipment and
facilities
Leasehold
improvements
Vehicles
Furniture and
fixtures
3,810,628
(1,270,712)
2,539,916
13,222,388
(7,306,975)
5,915,413
361,309
(165,171)
196,138
999,040
(725,480)
273,560
120,217
(96,692)
23,525
14,883
(21,118)
(17,982)
(72,576)
(67,331)
51,642
(6,129)
37,001
(21,065)
3,878
(2,805)
905
(291)
(81,387)
(796)
12,330
(982)
(5,147)
(14)
936
(85)
(519,808)
(136,436)
60,930
(7,742)
(1,325)
(283)
(13,897)
10,863
Construction in
progress
Outros
Total
Total
1,420,341
48,198
(32,637)
15,561
19,982,121
(9,597,667)
10,384,454
18,068,828
(8,646,945)
9,421,883
1,280,789
(14,656)
6,409
(11,173)
1,343,865
(72,433)
(18,265)
(697,632)
(204,838)
163,858
(20,557)
(79,737)
1,420,341
450,210
21,592
68,939
5,040
(858,557)
5,778,503
213,088
272,737
24,869
1,769,457
3,889,403
(1,332,886)
13,663,310
(7,884,807)
402,039
(188,951)
1,061,367
(788,630)
126,177
(101,308)
2,556,517
5,778,503
213,088
272,737
24,869
9
18
11
32,317
10,647,488
10,384,454
69,771
(37,454)
20,981,524
(10,334,036)
19,982,121
(9,597,667)
32,317
10,647,488
10,384,454
(4,817)
135,212
5
(151,227)
1,316,157
(19,895)
(36,757)
(672,314)
104,560
275,610
(4,678)
(187,108)
206,600
(19,604)
(261)
27,157
(5,619)
(79,737)
2,556,517
2
2013
1,769,457
1,769,457
26,337
10
(i)
In 2014 refer to ICMS tax credits granted by the State of Santa Catarina in consideration for expenses incurred for the repair of roads in that State (especially related to
the access to the Vidal Ramos Plant). This amount was fully offset in the first half of 2014. Although the Company believes that the prior classification as “Property,
plant and equipment” was not appropriate, the comparative periods presented were not reclassified because the amount of the reclassification within assets is not
material for the comparative periods presented.
(ii)
The transfers in intangible assets during the year relate to the reclassification of “construction in progress” from property, plant and equipment to “software” and
“rights to use natural resources” within intangible assets.
62 of 105
(b)
Review of and adjustments to estimated useful lives
The Company periodically reviews the estimated economic useful lives of its property, plant and equipment
used to calculate depreciation. During 2013 the Company reviewed the useful lives of its property, plant
and equipment based on an appraisal report issued by an independent valuation company, and on January
1, 2013 the Company changed the depreciation rates used prospectively. During 204, there was no changes
in the useful life, according the analysis of the management.
(c)
Construction in progress
The balance of construction in progress is made up mainly of projects for the expansion and optimization
of the industrial units, as described below:
2014
New plant in Edealina/GO (i)
New plant in Primavera/PA (ii)
New plant in Yacuses - Santa Cruz/Bolivia (iii)
New plant in Cuiabá/MT (iv)
New coprocessing lines (v)
New plant in Ituaçú/BA
Equipment refurbishment - Cement
Slag removal - Cement
New plant in Cuiabá/MT
New m ortar plant in Camaçari - BA
Slag removal - Aggregates
New plant in Sobral/CE
New production line in Rio Branco/PR
New production lines - Concrete
Cem ent milling in Im bituba/SC
Cem ent milling in São Luis/MA
Cem ent milling in Santa Helena/SP
New production line in Salto de Pirapora/SP
Other projects of less than 200 thousand
Parent company
2013
492,384
263,952
34,140
24,587
36,063
35,208
16,924
5,748
69,084
99,567
10,708
8,547
2,360
2,306
1,024
46,077
1,024
2014
492,384
327,401
124,405
77,696
51,328
45,114
44,128
38,594
16,924
14,708
10,708
8,499
2,360
2,306
1,024
224
Consolidated
2013
263,952
148,424
4,510
38,372
45,392
11,192
71,960
99,567
8,547
2,528
46,077
230,086
7,948
2,735
343,931
511,654
1,024
417
7,948
2,735
667,696
861,202
873,200
1,769,457
1,420,341
During the year, borrowing charges capitalized as part of construction in progress totaled R$ 19,643 (2013
- R$ 60,754), and in the consolidated R$ 33,114 (2013 - R$ 73,189). The capitalization rate used was 0.66%
per month (2013 - 0.62% p.m.).
(i)
Expansion of the cement business with new unit located in Edealina – GO. This is an ongoing project
estimated to be completed by the second half of 2015, which includes core processes and industrial mining
equipment, limestone crushing, milling, kiln and cyclone tower, bag filters, storage silos, bagging
machines, palletizers, substations and electric rooms.
(ii)
Expansion of the cement business - new unit located in Primavera – PA . This is an ongoing project
estimated to be completed by the second half of 2015, which includes core processes and industrial
equipment, limestone crushing, milling, kiln, bagging machines, palletizers, substations and electric rooms.
(iii)
Expansion of the cement business - new unit located in Yacuses – Santa Cruz/Bolivia. This is an ongoing
project estimated to be completed by the second half of 2016, which includes core processes and industrial
mining equipment, limestone crushing, milling, kiln and cyclone tower, bag filters, storage silos, bagging
machines, palletizers, substations and electric rooms.
63 of 105
(iv)
Expansion of the cement business - new production line in Xambioá – TO. Projected started operation in
July 2014, although some expenditures are still being incurred with the project stabilization. This project
includes core processes and industrial equipment, cement milling, silos and palletizers.
(v)
Investment in co-processing, technology that consists of using industrial waste and scrap tires as fuel
substitutes and/or to replace nonrenewable raw materials used to manufacture cement—such as limestone,
clay and iron ore—in cement plants duly licensed for this purpose. At the same time, it is a final waste
disposal method that allows the elimination of several environmental liabilities.
(d)
Impairment testing of property, plant and equipment
Based on the impairment tests conducted and taking into account certain events, especially: (a) the
discontinuation and/or downsizing of cement operations; (b) the slow progress or suspension of projects in
progress, VCSA has written down the carrying amount of its assets to their recoverable amounts, based on
the cash flows projected for the next five years or over the remaining useful lives, or to their realizable
values in case of disposal or discontinuations. The property, plant and equipment impairment losses at
December 31, 2014 amounted to R$20,557 (2013 - R$4,678) and were recognized in line item “Other
operating income, net”.
The adjustment for impairment refers to: (a) the suspension of the Volta Redonda, RJ unit’s activities,
amounting to R$12,771; (b) the write-off of the Ituaçú, BA unit amounting to R$5,617 since the
construction works have not evolved according to expectations and projections; and (c) write-off of assets
amounting to R$2,169 of Petrolina Mineração Zeta Ltda. due to the discontinuation of the company’s
activities following the lawsuit that claimed its return to its former owners.
64 of 105
17
(a)
Intangible assets
Analysis
Rights to use
natural resources
Cost
Accumulated amortization and depletion
Net balance
Acquisitions
Disposals
Amortization and depletion
Provision for impairment
Remeasurement of ARO (Note 20 (a))
Revision of estimated cash flow (Note 20 (a))
Transfers (ii)
Cost
Accumulated amortization and depletion
Average annual amortization/depletion rates %
65 of 105
Software
534,784
(133,107)
401,677
102,110
(86,115)
15,995
1,152
(10,637)
(38,302)
(868)
(54)
(5,270)
115,406
468,428
12,888
23,559
639,822
(171,394)
468,428
114,456
(90,897)
23,559
Goodwill (i)
298,269
298,269
Asset retirement
obligation (ARO)
77,082
(30,679)
46,403
Other
3,510
(306)
3,204
(19,955)
6
20
309,969
309,969
Parent company
2013
Total
Total
1,015,755
(250,207)
765,548
978,014
(205,848)
772,166
1,152
(11,899)
(45,401)
(868)
(1,208)
(1,829)
11,700
309,969
2014
23,411
3,204
(19,955)
139,994
828,571
51,220
(27,809)
23,411
3,510
(306)
3,204
1,118,977
(290,406)
828,571
4
2,116
(44,434)
(26,357)
9,735
(10,542)
62,864
765,548
1,015,755
(250,207)
765,548
Cost
Accum ulated amortization and depletion
Net balance
Acquisitions
Disposals
Amortization and depletion
Effects of companies included in consolidation
Reclassification to assets held for s ale (Note 33)
Exchange variations
Provis ion for impairment
Revis ion of estim ated cash flow (Note 20 (a))
Trans fers (ii)
Use of public
assets (Note 22)
Rights to use
natural resources
197,342
(56,023)
141,319
1,984,309
(353,101)
1,631,208
198,914
(155,301)
43,613
(6,435)
63,633
(13,633)
(69,437)
673
(54)
(8,971)
61,904
(868)
3,377
Goodwill (i)
3,051,700
3,051,700
Asset retirement
obligation (ARO)
Other
Total
Total
331,184
(153,859)
177,325
124,204
(51,811)
72,393
68,558
(29,287)
39,271
5,956,211
(799,382)
5,156,829
5,242,152
(581,241)
4,660,911
(19,421)
(1,826)
(3,411)
64,475
(15,513)
(107,867)
20,848
(348)
(100,779)
282,577
169
(192)
3
1,641
(179)
1,217
21,214
3,129,137
179,118
55,662
(921)
39,544
(11,752)
151,227
5,267,054
327,765
(27,973)
9,735
(15,964)
57
5,156,829
375,519
(196,401)
179,118
108,201
(52,539)
55,662
60,936
(21,392)
39,544
6,142,416
(875,362)
5,267,054
5,956,211
(799,382)
5,156,829
(12,956)
17,366
56,004
2,248,668
(441,079)
1,807,589
219,955
(163,951)
56,004
4
22
(136,088)
216,488
(50,745)
127,135
(49,698)
1,204
134,782
1,807,589
Consolidated
2013
Contractual
customer
relationships and
non-competition
agreements
(136,088)
Cost
Accum ulated amortization and depletion
Average annual amortization/depletion rates %
Software
2014
3,129,137
3,129,137
7
4
(i)
Net of the goodwill allocated to the China operations included in the assets of the disposal group classified as held for sale in the balance sheet (Note 33(a)).
(ii)
The transfers in intangible assets during the year relate to the reclassification of “construction in progress” from property, plant and equipment to “software” and “rights
to use natural resources” within intangible assets.
66 of 105
(b)
Goodwill arising on acquisitions
Goodwill is allocated to the Cash-generating units (CGUs), which are identified at the operating segment
level.
An operating segment-level summary of the goodwill allocation is presented below:
Parent company
2014
2013
North America
Europe, Africa and Asia
South America
Brazil
Companhia Cimento Ribeirão Grande
Engemix S.A.
CJ Mineração Ltda.
Mineração Potilíder Ltda.
Petrolina Zeta Mineração Ltda.
Other
2014
Consolidated
2013
1,844,754
927,238
11,421
1,731,182
911,697
11,402
205,939
75,882
15,641
35,755
205,939
75,882
15,641
205,939
75,882
15,641
11,700
807
807
11,700
807
205,939
75,882
15,641
71,455
13,548
11,700
3,254
309,969
298,269
3,129,137
3,051,700
Goodwill is based on the expectation of future profitability of the investments.
(c)
Impairment testing of goodwill
The Company and its subsidiaries assess at least annually the recoverability of the carrying amount of the
operating segments of the CGUs. The process of estimating these values involves using assumptions,
judgments and estimates of future cash flows which represent the Company´s best estimate.
Management determined budgeted gross margin based on past performance and its expectations of market
development. The discount rates used are after-tax and reflect specific risks relating to the relevant
operating segment or to the CGU being tested.
Value-in-use calculations use pre-income tax and social contribution cash flow projections based on
financial budgets approved by management covering a five-year period. Cash flows beyond the five-year
period are extrapolated using the estimated growth rates stated below. The growth rate does not exceed
the long-term average growth rate for the business in which the CGU operates.
Value-in-use calculations were based on the discounted cash flow model and are based on market
assumptions.
At December 31, 2014, the Company recognized impairment of goodwill of R$ 49,698 (2013 - R$ 27,973)
relating to investees Mineração Potilíder Ltda. (R$ 35,700), Petrolina Zeta Mineração Ltda. (R$ 13,548)
and Lidermarc Indústria e Comércio Ltda. (R$ 450).
67 of 105
Mineração Potílíder Ltda.
The recoverable amount of the Mineração Potílíder Ltda. investment was calculated based on the value in
use, using the cash flow based on the financial budget projections for the next 5 years approved by
management
As a result of the calculus, the recoverable amount was lower than its carrying amount of the investment at
December, 2014. Accordingly, an impairment of R$ 35,700 was recognized. Due to the renegotiation of the
purchase contract, there was an equal reversion of a contingent consideration (earnout) from a liability,
which compensated the impairment impact on the result under the row “Other operating income, net”.
Petrolina Zeta Mineração Ltda.
Companhia Petrolina Zeta Ltda. is not currently in operation due to the lawsuit for returning the company
to its former owner. The articles of dissolution were requested by the Company in February 2013 and the
company is in the phase of litigation. The entire amount recognized as goodwill, R$ 13,548, is being
considered as impairment in “Other operating income, net”.
Lidermarc Indústria e Comércio Ltda.
The recoverable amount of the Lidermac Indústria e Comércio Ltda. investment was calculated based on
the value in use, using the cash flow based on the financial budget projections for the next five years
approved by management
As a result of this calculation, the recoverable amount of the investment was lower than its carrying
amount at December 31, 2014. Accordingly, the entire amount recognized as goodwill, R$ 450, is being
charged as impairment in “Other operating income, net”.
68 of 105
18
Loans and financing
(a)
Analysis and maturity profile
Type
Average annual charges (i)
In local currency
Debentures
BNDES
FINAME
Development agency
Agência de fomento
111.01% of CDI
4.93% Pre BRL / TJLP + 2.81%
4.64% Pre BRL / TJLP + 2.60%
TJLP + 3.50%
2014
Current
2013
122,241
243,454
24,902
891
8,885
400,373
106,100
214,128
19,711
895
13,748
354,582
4,397,545
630,264
129,424
56,836
76,371
1,463
62,295
19,708
216,673
50,126
85,543
2014
Non-current
2013
Parent company
Total
2014
2013
4,799,143
765,104
106,186
888
9,419
5,680,740
4,519,786
873,718
154,326
891
10,954
5,559,675
4,905,243
979,232
125,897
1,783
23,167
6,035,322
2,928,250
2,423,888
170,679
122,890
5,645,707
3,377,086
3,123,826
798,323
241,580
140,363
7,681,178
2,978,376
2,509,431
44,733
17,542
197,944
3,320,250
3,047,455
796,860
179,285
120,655
7,464,505
617,046
552,526
12,623,807
11,326,447
13,240,853
11,878,973
Interest on loans and financing
Current portion of long term loans and financing (principal)
270,953
346,093
251,093
301,433
Total loans and financing
617,046
552,526
In foreign currency
Eurobonds - USD
Eurobonds - EUR
Syndicated loans
BNDES
Development agency
7.25% Pre USD
3.89% Pre EUR
LIBOR 3M USD + 0.81%
UMBNDES + 2.45%
2,069
5,159,302
BNDES
BRL
CDI
EUR
FINAME
LIBOR
TJLP
UMBNDES
- National Bank for Economic and Social Development
- Local currency – Brazilian Reais
- Interbank Deposit Certificate
Euro
- Government Agency for Machinery and Equipment Financing
- London Interbank Offered Rate
- Long-Term Interest Rate set by the National Monetary Council, the TJLP is the basic cost of financing of the BNDES
- Monetary unit of the BNDES, reflecting the weighted basket of currencies of foreign currency debt obligations. At December 31, 2014, the basket was 99.14% comprised of US Dollars.
USD
- U.S. Dollar
(i) The average annual charges are presented only for agreements with greater share as to the total debt amount.
69 of 105
215,412
140,432
5,843,651
The maturity profile of loans and financing at December 31, 2014 was as follows:
2015
In local currency
Debentures (i)
BNDES
FINAME
Development agency
Other
%
In foreign currency
Eurobonds - USD
Eurobonds - EUR (i)
BNDES
Development agency
Syndicated loans
%
Total
%
(i)
2016
2017
2018
2019
2020
2021
2023
2024
4,519,786
873,718
154,326
891
10,954
5,559,675
122,241
243,454
24,902
891
8,885
400,373
(727)
238,495
26,075
99,093
184,283
22,161
2,269,365
119,522
16,512
1,149,814
87,964
15,529
640,000
240,000
14,684
14,182
12,806
6,154
1,321
15
263,858
305,537
2,405,399
1,996
1,255,303
58
654,742
254,182
12,806
6,154
1,321
7.20
4.75
5.50
43.27
22.58
11.78
4.57
0.23
0.11
0.01
(5,535)
28,222
18,686
(5,536)
1,614
18,686
2,095,716
13,813
8,940
4,472
41,373
14,764
2,109,529
8,940
4,472
3,320,250
43.23
56,836
76,371
62,295
19,708
1,463
216,673
3,320,250
(5,535)
61,633
18,686
59,026
133,810
973,880
51,887
18,686
501,727
1,546,180
(5,535)
35,929
18,686
236,107
285,187
2.82
1.74
20.13
3.71
0.54
0.19
27.46
0.12
0.06
617,046
397,668
1,851,717
2,690,586
1,296,676
669,506
2,363,711
21,746
10,626
1,321
3,320,250
4.66
3.00
13.98
20.32
9.79
5.06
17.85
0.16
0.08
0.02
25.08
The balances presented as negative refer to borrowing costs that are amortized on a straight-line basis.
70 of 105
2022
Parent company
2025
onwards
Total
3,377,086
3,123,826
241,580
140,363
798,323
7,681,178
13,240,853
2014
Current
2013
2014
Non-current
2013
2014
Consolidated
Total
2013
Type
Average annual charges (i)
In local currency
Debentures
BNDES
FINAME
Development agency
Other
111.01% of CDI
4.84% Pre BRL / TJLP + 2.79%
4.73% Pre BRL / TJLP + 2.60%
TJLP + 3.50% / 7.06% Pre BRL
122,241
329,484
26,804
905
16,920
496,354
106,100
294,679
22,721
895
15,613
440,008
4,397,545
739,780
143,506
10,085
18,286
5,309,202
4,799,143
956,133
110,670
888
13,152
5,879,986
4,519,786
1,069,264
170,310
10,990
35,206
5,805,556
4,905,243
1,250,812
133,391
1,783
28,765
6,319,994
In foreign currency
Eurobonds - USD
Eurobonds - EUR
Syndicated loans/Bilateral agreements
BNDES
Development agency
Working capital
Other
7.29% Pre USD
3.89% Pre EUR
LIBOR 1M USD + 1.50% / LIBOR 3M USD + 0.81% / EURIBOR 1M + 0.90% / 3.54% Pre TND
UMBNDES + 2.43%
8.74% Pre INR
56,426
76,371
4,203
80,961
19,708
36,501
1,844
276,014
49,354
85,543
67,287
59,920
17,542
3,574,177
3,047,455
1,375,024
208,945
120,655
3,293,088
2,423,888
831,340
212,391
122,890
3,342,442
2,509,431
898,627
272,311
140,432
2,091
281,737
17,364
8,343,620
16,013
6,899,610
3,630,603
3,123,826
1,379,227
289,906
140,363
36,501
19,208
8,619,634
772,368
721,745
13,652,822
12,779,596
14,425,190
13,501,341
Interest on loans and financing
Current portion of long term loans and financing (principal)
275,670
496,698
256,823
464,922
Total loans and financing
772,368
721,745
BNDES
- National Bank for Economic and Social Development
BRL
- Local currency – Brazilian Reais
CDI
- Interbank Deposit Certificate
EUR
- Euro
EURIBOR - Euro Interbank Offered Rate
FINAME - Government Agency for Machinery and Equipment Financing
INR
- Indian Rupee
LIBOR
- London Interbank Offered Rate
TJLP
- Long-Term Interest Rate set by the National Monetary Council, the TJLP is the basic cost of financing of the BNDES
UMBNDES - Monetary unit of the BNDES, reflecting the weighted basket of currencies of foreign currency debt obligations. At December 31, 2014, the basket was 99.14% comprised of US Dollars.
USD
- U.S. Dollar
(i) The average annual charges are presented only for agreements with greater share as to the total debt amount.
71 of 105
18,104
7,181,347
The maturity profile of consolidated loans and financing at December 31, 2014 was as follows:
Consolidated
2015
In local currency
Debentures (i)
BNDES
FINAME
Development agency
Other
%
In foreign currency
Eurobonds - USD (i)
Eurobonds - EUR (i)
BNDES
Development agency
Working capital
Other
%
Total
%
122,241
329,484
26,804
905
16,922
496,356
8.55
2016
(727)
299,339
27,934
2017
2018
2019
2020
2022
2023
2024
2,269,365
136,169
18,184
1,260
1,701
2,426,679
1,149,814
90,876
17,158
1,260
1,996
1,261,104
640,000
111
16,313
1,261
56
657,741
240,000
111
15,812
1,261
17
14,327
1,261
7,530
1,261
1,948
1,261
6,385
332,931
99,093
213,157
24,300
1,260
8,146
345,956
257,184
15,605
8,791
3,209
5.73
5.96
41.80
21.72
11.33
4.43
0.27
0.15
0.06
56,426
76,371
80,961
19,708
4,203
36,501
1,842
276,012
(742)
(5,535)
76,664
18,686
61,354
2,456
152,883
3.20
(742)
973,880
60,697
18,686
825,458
(742)
(5,535)
40,611
18,686
238,434
(742)
(5,535)
29,358
18,686
249,778
256,895
(5,536)
1,615
18,686
2,371
1,880,350
1,569
293,023
811
292,356
1.77
21.81
3.40
772,368
485,814
2,226,306
5.35
3.37
15.43
Total
4,519,786
1,069,264
170,310
10,990
35,206
5,805,556
3,320,250
2,095,716
13,815
8,940
4,470
900
272,560
995
2,110,526
1,098
10,038
1,209
5,679
4,504
4,504
1,453
3,321,703
3.39
3.16
24.49
0.12
0.07
0.05
38.54
2,719,702
1,553,460
930,301
2,367,710
25,643
14,470
7,713
3,321,703
18.85
10.77
6.45
16.41
0.18
0.10
0.05
23.04
(i) The balances presented as negative refer to borrowing costs that are amortized on a straight-line basis.
72 of 105
2021
2025
onwards
3,630,603
3,123,826
289,906
140,363
1,379,227
36,501
19,208
8,619,634
14,425,190
(b)
Changes
Parent company
2014
11,878,973
3,521,136
(2,692,093)
(980,990)
990,603
New loans and financing
Payments
Interest paid (i)
Interest accrual
Exchange variation
Realization of fair value related to business combination
2013
10,904,928
807,954
(699,780)
(792,532)
832,955
Consolidated
2014
13,501,341
4,342,064
(4,060,286)
(1,040,380)
1,060,476
523,224
825,448
621,975
13,240,853
11,878,973
14,425,190
2013
12,784,049
1,489,205
(2,226,676)
(859,411)
883,884
1,068,381
378,684
(16,775)
13,501,341
(i) The increase in interest on loans and financing is basically due to debts indexed to the CDI, which had an impact
on the average cost of approximately 46% (12.93% in 2014 and 8.85% in 2013).
(c)
Analysis by currency
Real
U.S. Dollar
Euro
Currency basket
2014
Current
2013
400,373
81,714
76,371
58,588
617,046
354,582
67,742
85,543
44,659
552,526
2014
Real
U.S. Dollar
Euro
Currency basket
Other
73 of 105
496,354
83,374
76,437
75,477
40,726
772,368
Current
2013
440,008
131,388
85,570
59,541
5,238
721,745
2014
5,159,302
4,250,146
3,047,455
166,904
12,623,807
2014
5,309,202
4,758,938
3,368,859
191,476
24,347
13,652,822
Non-current
2013
5,680,740
3,057,950
2,423,888
163,869
11,326,447
Non-current
2013
5,879,986
4,250,030
2,423,888
200,247
25,445
12,779,596
Parent company
Total
2014
2013
5,559,675
4,331,860
3,123,826
225,492
13,240,853
2014
5,805,556
4,842,312
3,445,296
266,953
65,073
14,425,190
6,035,322
3,125,692
2,509,431
208,528
11,878,973
Consolidated
Total
2013
6,319,994
4,381,418
2,509,458
259,788
30,683
13,501,341
(d)
Analysis by index
In local currency
CDI
TJLP
Fixed rate
In foreign currency
LIBOR
UMBNDES
Fixed rate
In local currency
CDI
TJLP
Fixed rate
Other
2014
2014
Non-current
2013
122,241
217,492
60,640
400,373
106,100
190,994
57,488
354,582
4,397,545
581,433
180,324
5,159,302
4,799,143
692,529
189,068
5,680,740
4,519,786
798,925
240,964
5,559,675
4,905,243
883,523
246,556
6,035,322
21,170
62,295
133,208
216,673
17,542
44,733
135,669
197,944
917,515
179,285
6,367,705
7,464,505
122,890
170,679
5,352,138
5,645,707
938,685
241,580
6,500,913
7,681,178
140,432
215,412
5,487,807
5,843,651
617,046
552,526
12,623,807
11,326,447
13,240,853
11,878,973
2014
Current
2013
2014
Non-current
2013
2014
Consolidated
Total
2013
106,100
266,076
67,746
86
440,008
4,397,545
694,640
217,017
4,799,143
866,379
214,464
4,519,786
997,771
287,999
5,309,202
5,879,986
5,805,556
173,524
21,463
66
80,961
140,930
80,887
5,740,054
944,798
59,920
6,645,977
1,167,293
321,405
208,945
276,014
281,737
8,343,620
212,391
2,367
6,899,610
6,819,501
1,188,756
321,471
289,906
772,368
721,745
13,652,822
12,779,596
122,241
303,131
70,982
496,354
In foreign currency
Fixed rate
LIBOR
EURIBOR
UMBNDES
Other
Parent company
Total
2014
2013
Current
2013
4,905,243
1,132,455
282,210
86
6,319,994
5,880,984
1,025,685
8,619,634
272,311
2,367
7,181,347
14,425,190
13,501,341
(e)
New loans
(i)
In 2014, the Company and its consolidated entities received R$ 219,861 from BNDES to finance expansion and
modernization projects, including the purchase of machinery and equipment. Of the total amount of this
transaction, R$ 111,142 was obtained at the TJLP rate + 2.78% p.a, R$ 45,611 at the UMBNDES rate + 2.44%
p.a, and R$ 63,108 at a fixed rate of 5.39% p.a.
(ii)
In April 2014, the Company issued bonds with maturity in 2021 and an annual coupon of 3.25%, totaling EUR
650 million. This cash inflow occurred on April 24, 2014 and the new issuance was the first made by the
Company in the international market without guarantees and is rated BBB, Baa3 and BBB by rating agencies
S&P, Moody’s and Fitch, respectively. As part of the proceeds, the Company repurchased bonds (Tender Offer)
with maturity in 2017 and annual coupon of 5.25%, totaling EUR 446 million. The transaction generated the
payment of a premium of R$ 147,301, recorded as financial expenses.
74 of 105
(iii)
In April 2014, the investee Votorantim Cement North America Inc made an amendment to its revolver line
contracted in October 2010, increasing it from US$ 125 million to US$ 300 million and extending the maturity
until 2019. The company used part of this amount for the early settlement of the syndicated loan. From August
to December 2014, the subsidiary VCNA settled in advance US$ 90 million related to its revolver line. As this is
a revolver line, the amount continues to be available to the company.
(iv)
In June 2014, Voto IV repurchased bonds (Tender Offer) with maturity in 2020 and annual coupon of 7.75%,
totaling US$ 112 million and 50% of this amount was guaranteed by the Company. The repurchase transaction
generated the payment of a premium of R$ 28,135, recorded as financial expenses.
(v)
In July 2014 the subsidiary VCEAA settled in advance US$ 20 million of the loan contracted on September 5,
2013. In September 2014, VCEAA contracted a loan of EUR 100 million, at the Euribor rate + 0.90% p.a. and
maturity in March 2017. This amount was used for the early settlement of the remaining amount of US$ 150
million of the same transaction.
(vi)
In October 2014, the Company completed its seventh public issue of simple, non-convertible, non-privileged,
unsecured debentures in three series. The debentures were distributed under restricted placement efforts and
exempt from registration with the Brazilian Securities Commission ("CVM"), pursuant to Article 6 of CVM
Instruction 476, of January 16, 2009. The 1st issue of R$ 150,000 yields 108.8% of the Interbank Deposit
Certificate (CDI) p.a. and has final maturity in September 2018, the 2nd series of R$ 300,000 yields 107.91% of
the CDI p.a. and has final maturity in September 2019, and the 3rd series of R$ 150,000 yields 109.4% of the
CDI and has final maturity in September 2019. Part of the proceeds from this issue were used to amortize the
1st series of the Company’s fourth public issue of debentures amounting to R$ 500,000 and the swap related to
the transaction.
(vii) In October 2014, the Company entered into loan agreements in the total amount of US$ 300 million and final
maturity in October 2017 and October 2018. These transactions, after conducting swaps, resulted in a final cost
of 103.3% of the CDI. Part of the proceeds from this issue were used for the early redemption of the 2nd series
of the Company’s first public issue of debentures amounting to R$ 500,000.
(viii) In December 2014, the Company entered into loan agreements with Banco da Amazônia in the aggregate
amount of R$ 207,000 related to expansion project financing. Only R$ 10,085 of this amount was received in
2014, at the cost of 7% p.a.
(ix)
In 2013, the Company and its consolidated entities received R$ 332,274 thousand from BNDES to finance
expansion and modernization projects, including the purchase of machinery and equipment. The average
funding cost was TJLP + 2.69% p.a.
(x)
In December 2013, the Company completed its sixth public issue of simple, non-convertible, non-privileged,
unsecured debentures, in a single series. The debentures were distributed under restricted placement efforts
and exempt from registration with the Brazilian Securities Commission ("CVM"), pursuant to Article 6 of CVM
Instruction 476, of January 16, 2009. The issue of R$ 500,000 yields 109.03% of the Interbank Deposit
Certificate (CDI) p.a. and has final maturity in February 2019. The proceeds from the issue were used to
amortize the 1st series of the Company’s 1st public issue of debentures amounting to R$ 500,000.
(xi)
In April 2013, VCNA extended the maturity of its syndicated loans until May 31, 2018. The other contractual
conditions remain unchanged. The change in the loan term was accounted for as a modification.
75 of 105
(f)
Fair value of loans and financing
The values below were calculated according to the criteria in Note 5.3.
Parent company
2013
2014
In local currency
Development agency
BNDES
Debentures
FINAME
Other
In foreign currency
Development agency
BNDES
Eurobonds - EUR
Eurobonds - USD
Working capital
Other
76 of 105
Consolidated
2013
2014
Carrying amount
Fair value
Carrying amount
Fair value
Carrying amount
Fair value
Carrying amount
Fair value
891
873,718
4,519,786
154,326
10,954
5,559,675
816
751,178
4,397,458
116,471
8,170
5,274,093
1,783
979,232
4,905,243
125,897
23,167
6,035,322
1,748
901,527
5,175,319
102,979
19,609
6,201,182
10,990
1,069,264
4,519,786
170,310
35,206
5,805,556
8,813
922,604
4,397,458
128,369
18,217
5,475,461
1,783
1,250,812
4,905,243
133,391
28,765
6,319,994
1,748
1,156,522
5,175,319
109,752
18,453
6,461,794
140,363
241,580
3,123,826
3,377,086
798,323
137,819
251,250
3,150,428
3,453,923
787,742
140,432
215,412
2,509,431
2,978,376
139,995
233,263
2,587,997
2,869,413
139,995
294,068
2,587,997
3,283,994
920,436
7,781,162
13,055,255
5,843,651
11,878,973
5,830,668
12,031,850
137,819
301,709
3,150,428
3,741,528
1,377,817
36,501
19,209
8,765,011
14,240,472
140,432
272,311
2,509,431
3,342,442
898,627
7,681,178
13,240,853
140,363
289,906
3,123,826
3,630,603
1,379,227
36,501
19,208
8,619,634
14,425,190
18,104
7,181,347
13,501,341
18,102
7,244,592
13,706,386
(g)
Guarantees
At December 31, 2014, R$ 6,148,198 (2013 - R$ 11,967,013) of the balance of loans and financing of the
Company and its subsidiaries was collateralized by sureties (Note 13 (c)), and R$ 170,310 (2013 – R$ 133,391)
was collateralized through liens on the financed assets.
19
Current and deferred income tax and social contribuition
(a)
Reconciliation of income tax and social contribution expenses
The income tax and social contribution amounts presented in the statement of income for the year ended
December 31 are reconciled to their Brazilian statutory rates as follows:
Parent company
Profit before taxation
Standard rate
Income tax and social contribution at standard rates
Adjustments for the calculation of income tax and
social contribution at applicable rates
Equity in the results of investees
Realization of other comprehensive income on disposals of investments
Tax incentives
Effect due to the changes in the taxation of exchange
variations from a cash to an accruals basis
Donations and grants for investment
Amounts not subject to additional income tax
Difference in tax rate for subsidiaries outside Brazil
Reversal of deferred tax on provision for investment loss
Interest on capital
Other permanent exclusions, net
Current
Deferred
Income tax and social contribution on the income statement
Effective rate - %
77 of 105
Consolidated
2014
2013
2014
2013
1,166,635
34%
1,651,071
34%
1,346,867
34%
2,023,600
34%
(396,656)
(561,364)
(457,935)
(688,024)
252,629
263,202
10,555
63,814
32,933
10,565
17,453
19,396
18,898
(21,188)
11,365
68,207
33
48,040
(16,042)
(18,609)
70,266
5,145
46,463
(21,908)
50,660
(8,935)
(9,775)
50,660
(14,511)
(40,192)
(83,404)
(323,247)
(222,296)
(585,908)
8,502
(91,906)
(304,079)
(19,168)
(231,789)
9,493
(551,810)
(34,098)
(83,404)
(323,247)
(222,296)
(585,908)
7.15
19.58
16.50
28.95
(b)
Analysis of deferred tax balances
Deferred income tax and social contribution balances are as follows:
2014
Tax los ses
Temporary differences
Deferred exchange gains (i)
Provision
Us e of public ass ets (Note 33 (c.1))
Provision for taxes under litigation with judicial deposits
Provision for profit s haring - PPR
Impairment provis ion
Provision for inventory loss es
Ass et retirement obligation
Adjustments to the useful lives of property, plant and equipment (depreciation)
Exces s purchas e price allocated to ass ets
Amortization of goodwill
Interest capitalized
Adjustment to present value
Deferral CSLL credit on depreciation (Law 11,051/04)
Other
Parent company
2013
231,609
230,536
606,679
202,253
111,037
148,973
202,253
181,791
40,243
32,675
14,080
17,085
9,405
5,244
(279,320)
(27,757)
(317,420)
(42,863)
(32,530)
40,243
31,900
9,841
16,312
10,643
5,269
(234,058)
(29,424)
(277,146)
(34,042)
(29,248)
(6,895)
(43,154)
2,683
(107,518)
Deferred tax as sets
Deferred tax liabilities
(i)
2014
65,902
40,133
38,290
24,387
15,648
10,883
(491,454)
(329,409)
(328,497)
(61,184)
(37,061)
(7,903)
(19,743)
(89,285)
Consolidated
2013
462,916
196,461
95,902
65,931
38,376
24,629
23,607
44,786
12,060
(440,541)
(362,870)
(285,836)
(47,655)
(32,209)
(7,903)
34,108
(178,238)
421,662
320,080
(510,947)
(498,318)
In January 2014, the Company changed its system for calculating foreign exchange gains and losses on loans
for income tax and social contribution purposes, from an accruals basis to a cash basis. This change resulted in
the recognition of R$ 202,253 related to deferred income tax and social contribution assets during the year
ended December 31, 2014.
The Company decided to reclassify the presentation of the financial statement, presenting for each separate
legal entity the deferred income tax and social contribution net, between the assets and liabilities on the
balance sheet, when offset is possible. The comparative column of 2013 was reclassified as below:
2013
As set
Liability
78 of 105
Reclassificado
Parent company
Original
Reclassified
Consolidated
Original
(107,518)
502,157
(609,675)
(178,238)
1,012,916
(1,191,154)
(c)
Effects of deferred tax and income tax and social contribution expense on profit or loss for the
year and other comprehensive results
Parent
107,518
(173,560)
91,906
17,290
Balance at beginning of year
Effect on comprehensive income
Effect on income for the period
Tax loss and negative basis compensation (i)
Asset transfer to held for sale
Exchange variation
Other
43,154
Balance at end of year
Consolidated
178,238
(182,509)
(9,493)
35,247
83,185
(9,674)
(5,709)
89,285
(i)
During 2014, the Company offset tax losses of R$ 35,247, substantially for payment related to the Tax Amnesty
and Refinancing Program ("REFIS”) (Note 19 (f)). This transaction did not have an impact on the profit or loss
for the year and other comprehensive results in the realization of the deferred income tax and social
contribution.
(d)
Realization of deferred income tax and social contribution
Credits related to tax losses are expected to be realized in accordance with the following schedule:
Parent company
2015
2016
2017
2018
2019 onwards
231,609
231,609
2014
Consolidated
245,865
27,919
32,485
74,345
226,065
606,679
At December 31, 2014, the Company has income tax and social contribution losses amounting to R$ 1,072,100
(2013 - R$ 1,379,978) for which it recorded a deferred tax asset up to the amount that can be offset against
future taxable profits. The balances of income tax and social contribution losses are distributed to the
subsidiaries as follows:
Consolidated
Year
Brazil
North
America
Europe, Africa
and Asia
Total
2014
705,184
660,057
95,083
1,460,323
2013
794,033
517,539
68,406
1,379,978
Breakdown of tax losses
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(e)
Transition tax regime (Regime Tributário de Transição - "RTT")
Provisional Measure 627 was converted into Law 12.973/14 on May 13, 2014, confirming the repeal of the RTT
from 2015, with the option to advance its effects for 2014.
On November 7 2014, the Company opted to early adopt the effects of the repeal of the RTT for calendar year
2014, as set forth in Law 12,973/14. The Company analyzed the possible impacts of this option and elected to
apply the requirements of Articles 1 and 2 and 4 to 70.
(f)
Tax Amnesty and Refinancing Program (REFIS)
Pursuant to Las 12.996 of June, 18, 2014, amended by Law 13.043 of November 14, 2014, the Company and its
subsidiary Interávia Transportes Ltda. chose to include into the categories “on demand” and “payment in 30
instalments” tax and other debts totaling R$ 140,075. With the benefits of the mentioned legislation, the total
of the debts were reduced to the amount of R$ 86,460. From this balance, R$ 21,708 was settled using tax loss
and negative base from social contribution from this balance related to fine and interest. The remaining
balance of R$ 64,741 was settled in cash.
20
Provision
The changes in the provisions for asset retirement obligations, restructuring and legal claims are as follows:
Parent company
2014
Asset Retirement Obligation
Present value adjustment
Additions
Revers als
Judicial deposits, net of write-off
Write-off
Settlement
Interes t and indexation
Revision of es timated cas h flow (Note 17 (a))
77,706
1,021
Tax
Labor
Environmental
9,930
Legal claims
Civil
446,795
-
48,529
7,944
(111,736)
(26,322)
13,322
(2,852)
(1,536)
109
(601)
24,989
(5,653)
(687)
(90,671)
63,319
(8,934)
(22)
699
(1,400)
8,580
(1,379)
(26,276)
51,072
289,329
10,115
74,358
Total
582,960
1,021
46,364
(120,842)
(28,545)
(1,379)
(101,027)
72,598
(26,276)
424,874
Parent company
2013
Additions
Revers als
Judicial deposits, net of write-off
Settlement
Remeas urement of ARO (Note 17 (a))
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80,422
(1,909)
Tax
533,718
32,507
(57,182)
14,696
(88,849)
11,905
Labor
8,087
11,810
(2,063)
(13,127)
(4,832)
125
Environmental
6,216
Legal claims
Civil
4,276
4,706
(2,577)
(1,826)
(861)
4,342
673,188
(1,909)
49,297
(62,658)
(257)
(94,542)
20,648
9,735
(10,542)
9,930
48,529
582,960
274
(836)
44,745
9,735
(10,542)
77,706
446,795
Total
Consolidated
2014
Pres ent value adjustment
Additions
Reversals (i)
Judicial depos its, net of write-off
Write-off
Settlem ent
Exchange variation
194,757
1,128
4,207
Restructuring
Tax
Labor
Environmental
11,757
Legal claims
Civil
43,295
592,816
71,365
(23,726)
15,311
(147,603)
(17,730)
20,749
(8,453)
6,870
138
(607)
58,503
(16,958)
(11,694)
(92,764)
92,408
1,447
(14,449)
(29)
823
(15,945)
30,129
(70)
(7,574)
2,286
4,897
(19,173)
180,528
(253)
19,316
443,885
244
4,961
12,082
115,330
Total
913,990
1,128
98,908
(197,347)
(22,554)
(7,574)
(123,187)
125,646
6,265
(19,173)
776,102
Consolidated
2013
(i)
(a)
Additions
Revers als
Judicial depos its , net of write-off
Settlement
Interest and indexation
Exchange variation
Revis ion of estimated cas h flow (Note 17 (a))
190,866
(3,539)
13,083
5,114
9,735
(15,964)
194,757
Restructuring
86,913
Labor
Environmental
Legal claims
Civil
697,030
12,861
7,004
76,125
19,453
(4,248)
(23,773)
(4,129)
136
(1,766)
13,144
(24,310)
(2,252)
(3,642)
12,300
17,125
100,952
(125,876)
11,262
(116,317)
24,256
1,509
43,295
592,816
(1,424)
(4,538)
Tax
(59,319)
6,383
(164)
11,757
71,365
Total
1,070,799
(3,539)
146,768
(157,624)
(14,763)
(187,945)
42,939
23,584
9,735
(15,964)
913,990
The reversal related to the “restructuring provision” is due to the update of the balance based on new
estimates.
Asset retirement obligation
The measurement of asset retirement obligations involves judgment and the use of assumptions. For
environmental purposes, this relates to currently existing obligations to restore or recover the environment in
the future to similar or equivalent conditions to those existing at the moment when the project was initiated. If
there is no possibility of restoring the environment to its pre-existing condition, there may instead be an
obligation to take compensating measures, agreed with the applicable regulators or organizations. These
obligations are the result of either the environmental impact of the asset in question, or of formal
commitments assumed to the environmental regulator, under which the Company needs to compensate the
applicable regulators or organization for this impact. The dismantling and removal of a plant or other asset
occurs when it is permanently deactivated, by discontinuing its activities or through its sale.
As these are long term obligations, they are revised periodically for inflation and discounted to their present
value, using real interest rates. The discount rate used was 6.68% for 2024 and 4.23% p.a. for 2013. The
liability recognized is adjusted periodically based on these rates and revised for inflation.
During 2014, the Company reviewed the assumptions underlying the calculation for some mines, following the
revaluation of the respective cash flows with corresponding entries in intangible assets, which resulted in a net
decrease of R$ 26,276 in the parent company figures and R$ 19,173 in the consolidated figures.
(b)
Provision for tax, civil, labor and environmental contingencies
The Company is party to labor, civil, tax and environmental ongoing lawsuits and is contesting these matters at
both at the administrative and judicial levels, which are backed by judicial deposits, when applicable.
The amounts of contingencies are periodically estimated and updated. The classification of losses as possible,
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probable or remote is supported by the advice of the Company's legal counsel.
The provisions and the corresponding judicial deposits are as follow:
Parent company
2013
2014
Judicial
deposits
Tax
Civil
Labor
Environmental
Provision
Total, net
(370,886)
(14,787)
(17,778)
660,215
89,145
17,778
10,115
289,329
74,358
(403,451)
777,253
373,802
Judicial
deposits
Provision
Total, net
(344,564)
(14,100)
(16,242)
791,359
62,629
16,242
9,930
446,795
48,529
(374,906)
880,160
505,254
10,115
Consolidated
2013
2014
Judicial
deposits
Tax
Civil
Labor
Environmental
(c)
9,930
Judicial
deposits
Provision
Total, net
Provision
Total, net
(483,713)
(26,710)
(25,345)
927,598
142,040
30,306
12,082
443,885
115,330
4,961
12,082
(465,983)
(15,016)
(32,215)
1,058,799
86,381
32,215
11,757
592,816
71,365
(535,768)
1,112,026
576,258
(513,214)
1,189,152
675,938
11,757
Outstanding judicial deposits
The Company has deposited with the courts the amounts below in relation to proceedings classified by the
Company, and supported its legal advisors as having a possible or remote possibility of loss, and therefore,
without respective provisions.
2014
Tax
Civil
Labor
Parent company
2013
2014
Consolidated
2013
108,391
4,164
14,048
98,292
1,948
32,129
163,218
14,068
18,867
160,644
10,819
35,316
126,603
132,369
196,153
206,779
(d)
Comments on provision with likelihood of loss considered probable
(i)
Provision for tax contingencies
These refer mainly to disputes concerning Federal, State and Municipal taxes. The main tax lawsuits refer to
collection of ICMS (State Value-added Tax on Sales and Services), PIS (Social Integration Program), COFINS
(Social Contribution on Revenues), IRPJ (Corporate Income Tax) and CSLL (Social Contribution on Net
Income).
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(a)
Financial Compensation for the Exploration of Mineral Resources
The Company has various tax assessment notices issued by the National Department of Mineral Production for
alleged non-payment or underpayment of Financial Compensation for the Exploration of Mineral Resources
royalties for the periods 1991 to 2012. At December 31, 2014, the amount under litigation totaled R$ 487,250,
and the Company believes that R$ 87,402 represents probable losses, and this amount is recorded as a
provision. Currently, the lawsuits are at the administrative or judicial levels.
(b)
Exclusion of ICMS and ISS from the PIS and COFINS Tax Base
The Company and its subsidiaries filed lawsuits to exclude the ICMS and ISSQN taxes from the PIS and
COFINS taxable base, and for a certain period the Company elected to make deposits with the courts for the
amount under litigation. At December 31, 2014, the deposits total R$ 372,209, which is fully provided for.
(ii)
Provision for civil contingencies
The Company and its subsidiaries are parties to civil lawsuits involving claims for compensation for property
damage and pain and suffering, collection and execution, and administrative claims.
(iii)
Labor lawsuits
The Company and its subsidiaries are party to 2,569 labor lawsuits filed by former employees, third parties and
labor unions mostly claiming the payment of indemnities on dismissals, health hazard premiums and
hazardous duty premiums, overtime, and commuting hours, as well as indemnity claims by former employees
and third parties based on alleged occupational illnesses, work accidents, property and personal damage, in
ordinary courts under Constitutional Amendment 45 and normative clauses. These claims also comprises
administrative labor proceedings mainly involving Statutory Accounts, Working Hours and Regulatory
Standards.
The provision is booked based on the historical average balance of settlement of the labor processes.
(iv)
Provisions for environmental contingencies
The Company and its subsidiaries are subject to laws and regulations in the various countries in which they
operate. Votorantim has established policies and procedures to comply with environmental laws.
The Company performs analyses on a regular basis to identify environmental legal risks so as to ensure that the
systems in place are adequate to manage these risks.
Moreover, the environmental litigation of the Company and its subsidiaries consists basically of civil public
actions in order to obtain the environmental licensing for manufacturing units and indemnity actions for
alleged environmental impacts arising from the Company's activities.
(e)
Litigation with likelihood of loss considered as possible
The Company and its subsidiaries are parties to other litigation involving a risk of possible loss, as detailed
below:
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2014
Civil
Tax
Environm ental
Parent company
2013
2014
Consolidated
2013
4,061,207
1,199,192
30,387
3,728,215
1,176,531
28,394
4,568,810
1,925,367
33,339
3,933,364
1,634,138
31,737
5,290,786
4,933,140
6,527,516
5,599,239
(e.1) Comments on contingent liabilities with likelihood of loss considered possible
The contingent liabilities relating to tax lawsuits in progress with a likelihood of loss considered as possible, for
which no provisions are recorded, are as below:
Nature of the lawsuits
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
(i)
-
Civil class action – Cartel
Administrative investigations by SDE (Secreta of Economic Law)
Arbitration – Petrolina aggregates operation
Tax assessment notice – IRPJ / CSLL
Litigation with a transportation company in São Paulo
IRPJ and CSLL – profits earned abroad
Litigation with a transportation company in the northeast
Other lawsuits with individual am ounts lower than R$ 50 m illion
2014
Consolidated
2013
3,012,720
665,700
284,646
188,961
166,157
119,965
86,130
2,003,237
2,800,000
604,320
6,527,516
5,599,239
173,800
157,600
109,000
79,800
1,674,719
Civil Class Action – Cartel
The Office of the Public Prosecutor of the State of Rio Grande do Norte filed a civil class action against the
Company, together with eight other defendants, including several of Brazil's largest cement manufacturers, as
a result of alleged cartel formation, demanding that the defendants pay an indemnity, on a joint basis, in favor
of the class action plaintiffs for moral and collective damages, as well as demanding penalties under the
Brazilian antitrust laws. Because the current amount of the claims in this civil class action is R$ 5,600,000
and the civil class action alleges joint liability, the Company has estimated that, based on its market
participation, its share of the liability would be approximately R$ 2,4000,000. However, there can be no
assurance that this apportionment would prevail and that the Company will not be held liable for a different
portion, which may be larger, or for the entire amount of this claim. In July 2012, the Company filed its
defense. The Office of the Public Prosecutor presented its responses to the defenses filed in October 2012. In
September 2014 the court issued a final and unappealable decision on the appeal, which declared the secrecy of
the documents protected by tax and corporate secrecy laws. Since then, there has been no significant decision
on the action. The probability of loss under this matter is considered possible, and the Company has not
established any provision for this claim. At December 31, 2014, the updated amount under litigation was R$
3,012,720.
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(ii)
Administrative Proceedings by SDE
The Administrative Council for Economic Defense (“CADE” - Conselho Administrativo de Defesa Econômica)
is responsible for adjudicating anti-competitive acts referred by the Secretary of Economic Law of the Ministry
of Justice (currently General Superintendence). CADE adjudicates on matters related to concentration and
conduct, including cases of cartels. The minimum quorum for the Council to make decisions is five
Counselors.
With respect to administrative procedures, a company condemned by CADE for anti-competitive behavior can
be required to pay an administrative fine ranging from 0.1% to 20% of the company's, group's or
conglomerate's annual revenue after the deduction of taxes relating to the fiscal year immediately preceding
the year in which the alleged violation occurred.
Other penalties can be imposed ,such as prohibiting borrowing from official or State financial institutions, a
mandatory split of the company, transfer of control, mandatory sale of assets or an obligation to cease certain
activities and waive certain tax benefits as well as waiving participation in State related bidding promoted by
the Federal, State and Municipal Public Administration for a minimum period of five years, as well as other
non-pecuniary sanctions, when these penalties are considered necessary to prohibit the conduct or correct
anti-competitive practices of the market.
In 2006, the SDE, currently General Superintendence of CADE, initiated an administrative proceeding against
the Cement Industry Union, some industry associations (cement and concrete), the largest Brazilian cement
companies, including Votorantim Cimentos, and some executives. This proceeding relates to allegations of
anti-competitive practices of various companies and associations, including the formation of a cartel.
On January 22, 2014, CADE initiated the trial in relation to these proceedings and on May 28, 2014, after
suspending the first trial session, issued its final decision on the administrative proceeding, imposing the
following penalties on Votorantim Cimentos: (i) the payment of a fine amounting to R$ 1.6 billion; (ii) the sale
of 20% of the Company’s assets from concrete producing activities in Brazil, which shall be sold in relevant
markets in which there is more than one concrete producing company owned or possessed by the company;
(iii) the sale of all of its interests, minority or otherwise, in other companies operating in the cement or
concrete markets; (iv) prohibition against contracting with Brazilian official financial institutions until the date
of sale of the assets, counted from the decision publication date; (v) recommendation to the Federal Revenue
and other appropriate bodies not to authorize the installment payment of Federal taxes due or to cancel, in
whole or in part, any tax incentives or public subsidies; (vi) cancelation of any interests among the condemned
companies existing in the cement and concrete markets, either directly or through minority interests in other
companies that are not part of group of the condemned companies; (vii) prohibition against any concentration
among the condemned companies in the cement market, by any means, for a period of five years counted from
the decision publication date; (viii) prohibition against any concentration in the concrete market, by any
means, for a period of five years counted from the decision publication date; (ix) prohibition against any
association for greenfield, by any means, in the cement, concrete and slag sectors, for a period of five years
counted from the decision publication date, with any of the condemned companies; (x) other non-monetary
sanctions, among them: (a) the publication of the decision in newspapers; (b) registration with the National
Consumer Protection Register; and (c) the obligation to inform the Brazilian Competition Protection System of
any transaction carried out in the cement and concrete sectors, for a period of five years counted from the
decision publication date; and (xi) the sale of a specific cement asset.
On July 1, 2014, the decision with the Counselors’ votes was published, with the confidential versions provided
to the condemned companies on the following day. On July 14, 2014 the Company filed a Motion to Clarify
(administrative appeals) to resolve contradictions, omissions and obscurities in CADE’s decision. The
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Company is awaiting the analysis of the matter, and there is no legal term for such analysis. Until the trial of
the administrative appeal by CADE, CADE's decision will not be concluded at the administrative level and,
therefore, it will not have legal effects on the parties.
The Company does not agree with any of the accusations and intends to appeal against CADE’s decision
through the Courts at the appropriate time because it understands that there were no anti-competitive
practices, and as such it should not be subject to any sanctions or penalties.
The company classified the probability of loss of this process as possible. At December 31, 2014, the amount
under controversy was R$ 665,700.
(b)
Previously, in 2003, the SDE, the current General Superintendence of CADE, initiated administrative
proceedings against the largest concrete producing Brazilian cement companies, including the Company itself.
This proceeding relates to allegations by certain ready-mix concrete producers that the large cement
companies may have breached Brazilian antitrust laws by not selling certain types of cement to ready-mix
concrete companies. The evidence phase of this lawsuit ended in April 2012 and until now there are no
indications that the General Superintendence of CADE intends to submit any recommendation to the CADE
Board, conducting future investigations into this matter. If the Company is found to have violated these
antitrust laws, it could be subject to administrative and criminal penalties, including an administrative fine
that could range from 0.1% up to 20.0% (if the new Brazilian antitrust law is applied) of our cement company’s
annual after-tax revenues relating to its fiscal year immediately prior to the year in which the administrative
proceedings were initiated. The Company and its external legal advisors believe that Votorantim Cimentos will
not be subject to any administrative and/or criminal penalties. The likelihood of loss of this proceeding is
considered to be remote.
(iii) Arbitration – Petrolina Aggregates Operation
Refers to a arbitration proceeding filed with the CIESP/FIESP Conciliation, Mediation and Arbitration
Chamber, initiated in January 2014, which discussed the sale of shares of the companies São Francisco Zeta
and Petrolina Zeta to Pedreira Pedra Negra, and the sellers’ obligation to engage in a new business in Palmas
(TO), which afterward would be sold to Pedra Negra. The Claimants request (i) the rescission of the agreement
entered into by the parties, even if partially; and (ii) that Pedra Negra be sentenced to pay compensation for
damages and pain and suffering. Pedra Negra, on the other hand, requests: (i) that the sellers be sentenced to
buy back the shares held by shareholders P-z and SF-z and pay the amounts agreed with the Defendant in the
Agreement for the Acquisition of São Francisco Zeta and Petrolina Zeta Shares, or alternatively (ii) the
termination of the agreements by exclusive fault of the sellers, and that the sellers be sentenced to return the
amounts disbursed by Pedra Negra under such agreements, duly adjusted for inflation; and (iii) that the sellers
be sentenced to pay compensation for damages related to the nonperformance of the agreements entered into
by the parties. The expectation of loss under this matter is considered possible, and the Company has not
established any provision for this claim. At December 31, 2014, the amount under litigation was R$ 284,646.
(iv)
Tax assessment notice – IRPJ/CSLL
In December 2011, the Company was assessed by the Federal Revenue of Brazil for R$ 184,797 for alleged nonpayment or underpayment of IRPJ and CSLL relating to the period from 2006 to 2010, due to: (i) alleged
incorrect amortization of goodwill; (ii) utilization of tax losses above the 30% limit permitted by the tax
regulations (merger); and (iii) non-payment of IRPJ and CSLL obligations due on a monthly estimated basis.
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At December 31, 2014 the total amount of the litigation was R$ 235,246, of which R$ 139,948 is classified as a
possible loss (the remaining balance is considered to represent a remote loss). In the Court decision, the judges
ordered the reduction of the assessed amount by approximately R$ 50 million. Currently, the lawsuit awaits a
decision on the mandatory appeal and voluntary appeal filed with the Administrative Board of Tax Appeals.
In December 2011, the Company was assessed by the Federal Revenue of Brazil for R$ 448,208 for alleged
non-payment of IRPJ and CSLL in 2006 and the disallowance of income tax and social contribution losses in
2007, due to the contribution of assets of Cimento Tocantins, Cimento Rio Branco and Companhia de Cimento
Portland Itaú to Votorantim Cimentos Brasil, which opted for the taxation regime based on presumed income.
At December 31, 2014, of the updated amount of R$ 570,569, the Company believes that the best estimate of
possible contingencies is only R$ 49,013. The Federal Revenue Office judged the tax assessment notice to be
partially valid, reducing the tax assessment notice to approximately 50% of the assessed amount. Currently the
Company is awaiting judgment on the mandatory appeal and voluntary appeal filed with the Administrative
Board of Tax Appeals.
(v)
Litigation with a transportation company in São Paulo
In September 2003, a transportation company filed a claim against VCB (a company merged into the
Company) seeking compensation for material damages amounting to R$84,200 and moral damages at an
unspecified value, alleging that the Company failed to perform two oral contracts. The transportation
company argues that those breaches caused the discontinuation of the activities of its sales department and
significant losses to its transportation area. The Company presented its response in September 2009, arguing
that: (1) the statute of limitations had expired; (2) the Company did not change the general conditions of the
reverse repurchase agreement; and (3) the transportation company mismanaged its business and caused its
own insolvency. In August 2011, the Court rejected the argument of the expiration of the statute of limitations
and determined the expert examination, as requested by the parties. The expert examination was concluded
and the report was presented. The parties filed their challenges to the report and the lawsuit was sent to the
expert for his opinion. In June 2014, clarifications were provided by the expert. On June 24, 2014, the
Company’s challenge was presented. In December 2014 the Company received a decision declaring the end of
the fact-finding phase and requesting the parties to declare if they would be interested in holding a conciliation
hearing. Management considers the likelihood of loss in relation to this allegation amounting to R$ 166,157 as
possible.
(vi)
IRPJ/CSLL – Profits earned abroad
In October 2013, the Company was assessed by the Federal Revenue of Brazil for the amount of R$ 106,664,
for alleged non-payment of IRPJ and CSLL on profits earned abroad in the calendar years 2008 to 2010,
through its subsidiaries and associates. At the Lower Court, the judges decided that the tax assessment notice
is valid. Currently, the subsidiary is awaiting a decision on the voluntary appeal filed with the Administrative
Board of Tax Appeals. At December 31, 2014, the amount under litigation was R$ 119,965, considered as a
possible loss.
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(vii) Litigation with a transportation company in the northeast
In August 2010, a transport company filed a claim against VCNNE seeking compensation for damages in the
amount of R$123,714, alleging that VCNNE failed to comply with the minimum transportation volume
established in the cement transportation agreement entered into by the parties. VCNNE was notified of this
claim in March 2011 and presented its response challenging the jurisdiction and the merit of the claim, in that
there was no written agreement regarding the minimum volume, and the fact that the breach and losses borne
by the transportation company were due to poor management and did not have any relation to VCNNE. On
January 22, 2013, the Court issued its decision accepting the Company's plea and transferring the case to the
Civil Court in the city of Recife. In November 2013, the Court accepted the transportation company's appeal to
confirm the Court of São Luís-MA as the competent authority to decide the case. VCNNE appealed this
decision. In April 2014 the appeal was accepted and a Motion to Clarify against this decision was filed by the
transportation company, which was challenged by VCNNE. On June 17, 2014 a decision was issued, rejecting
the Motion to Clarify. The evidentiary and sentencing hearing was held in September 2014. The arbitration
court issued a decision in November 2014 accepting the motion for clarification filed to remedy the indicated
omission, and refusing the request for the production of expert accounting proof. In December 2014 an
interlocutory appeal was filed against the ruling that refused the request for the production of expert
accounting proof. Based on the position of its external legal advisors, VCNNE believes that the likelihood of
loss in this lawsuit amounting to R$ 86,130 is possible.
(viii) Public Action – Tocantins
In August 2007, a private citizen filed a Public Action against VCNNE seeking the cancelation of the bid that
transferred the mineral rights related to the process DNPM No. 860.933/1982 to VCNNE, due to errors in the
bidding procedures. The claimant also requested an injunction to suspend all of the effects of the bidding
process, which had not yet been approved. In May 2008, VCNNE presented its defense, arguing that the action
is connected with another action and that it has yet to compile data. Management believes the bidding process
was carried out in accordance with the law. In April 2009, the prosecutor agreed that the actions should both
be judged together. In March 2013 the judge ordered that the actions were judged together, requiring that the
case be sent to the third Treasury and Public Registers Court. Management considers the possibility of loss to
be possible and the action does not involve the payment of money, but may have operational implications if the
concession is suspended.
(f)
Commitments
The subsidiary VCEAA has purchase agreements with Total Oil for the purchase of petroleum coke, effective up
to 2017.
Votorantim Cimentos S.A. and St. Marys Cement Inc. have supply agreements with steel mills for the purchase
of slag, effective up to 2023.
21
Payables - trading
This refers to purchases of certain raw materials from trading companies. The payment terms are up to 360
days with fees calculated over the total purchase value, and agreed between the parties, before or at the time of
each commercial transaction.
88 of 105
22
At September 30, 2014, the balances of the subsidiary VCNNE related to use of public assets of the Pedra do
Cavalo hydroelectric power plant were reclassified to assets and liabilities classified as held for sale. (Note 33
(c))
23
Other liabilities
Parent company
Accounts payable on acquisitions of investments
Accounts payable for services
REFIS
Provision for utilities - water, energy and gas
Supliers - long term
Provision for freight
Provision for maintenance
Taxes recoverable - long term
Environmental liabilities
Other
Current
Non-current
24
Stockholders' equity
(a)
Capital
Consolidated
2014
2013
2014
2013
51,512
44,316
47,772
36,354
7
18,595
6,305
3,835
4,100
3,262
95,876
10,780
55,661
14,289
4
20,223
5,481
81,294
4,040
1,590
161,744
100,150
47,772
45,843
32,277
43,796
20,631
14,773
4,416
34,290
193,948
79,478
78,983
17,651
37,338
39,770
15,976
91,661
4,040
7,237
216,058
289,238
505,692
566,082
(131,944)
84,114
(119,859)
169,379
(263,405)
242,287
(231,919)
334,163
At December 31, 2014, the fully subscribed and paid-up capital, amounting to R$ 2,730,875 (2013 – R$
2,731,385), comprised 5,120,940,004 (2013 – 5,121,460,621) common shares and 300,571,428 (2013 –
300,571,428) preferred shares.
At the Extraordinary General Meeting held on December 31, 2014, Management approved the partial spin-off
of assets and liabilities to VID. As a result, the Company reduced its capital by R$ 500 (canceling the
equivalent to 520,617 shares).
At the Extraordinary General Meeting held on December 31, 2013, Management approved the partial spin-off
of assets to VID. As a result, the Company reduced its capital by R$ 3,623 (canceling the equivalent to
3,709,042 shares).
On September 30, 2013, the parent company VID contributed to the Company the net assets of Voto IV, in the
amount of R$ 32,232, with the issuance of 33,558,020 new registered common shares.
At the Extraordinary General Meeting held on September 30, 2013, Management approved the partial spin-off
of assets to VID. As a result, the Company reduced the capital by R$ 43,260 (canceling the equivalent to
45,316,929 shares).
89 of 105
On June 11, 2013, the shareholders approved the conversion of 300,571,328 common shares into 300,571,328
preferred shares.
On May 27, 2013, the shareholders approved a stock split by which 16,368,388 additional common shares were
issued to shareholders in exchange for their 5,421,131,562 common shares previously held. The number of
shares outstanding at December 31, 2012 after retrospective adjustment for the stock conversion and the stock
split was 5,437,500,000, comprising 5,437,499,900 common shares and 100 preferred shares.
On April 30, 2013 the shareholders approved a stock split by which 5,310,496,224 additional common shares
were issued to shareholders in exchange for the 110,635,338 common shares
previously held.
On April 5, 2013 the shareholders approved the conversion of 100 common shares into 100 preferred shares.
The rights of preferred shares are identical to those of common shares including rights with respect to
dividends and allocation of net income except that preferred shares do not have voting rights (other than in
certain limited matters established in the by-laws). Preferred shares have tag-along rights in the event of
change of control and priority in the repayment of capital in the event of liquidation.
(b)
Dividends and interest on capital
Dividends are calculated based on 25% of the profit for the year, net of a legal reserve, pursuant to the
Company's bylaws.
The calculation of the amount of minimum dividends payable is as follows:
2014
2013
1,083,231
(54,162)
(55,583)
1,327,824
(66,391)
(33,425)
Dividend calculation basis
973,486
1,228,008
Minimum dividends - 25% in accordance with bylaws
Supplementary dividends
243,372
244,000
307,002
592,998
Total dividends proposed
487,372
900,000
Dividends per share - R$
0.09
0.17
Total number of shares
5,421,511
5,422,032
Nature of remuneration
Interest on capital
Dividends
126,650
360,722
487,372
900,000
900,000
Net incom e for the year
Legal reserve
During 2014, the Company approved dividends and interest on capital amounting to R$ 360,722 and
R$ 126,650, respectively. The distribution of interest on shareholders equity to its shareholders was made
based on the variation of the long term interest rate, considering it as minimum dividends payable.
Additionally, dividends of R$ 44,162 were paid to the non-controlling stockholders of the investees of the
90 of 105
subsidiary VCEAA, of which R$ 31,932 was from Asment De Temara, S.A., R$ 11,670 from Cementos Artigas
S.A., and R$ 560 from Yibitas Yozgat Isci Birligi Insaat Malzemeleri Ticaret ve Sanayi A.S.
(c)
Legal reserve and profit retention reserve
The legal reserve is credited annually with 5% of the net income for the year and cannot exceed 20% of the
share capital. The purpose of the legal reserve is to retain sufficient capital. This reserve can only be used to
increase capital and offset accumulated losses.
The profit retention reserve was created to preserve the undistributed balance of retained earnings in order to
fund expansion projects pursuant to the Company's investment plan.
During 2014, the Company reclassified R$ 42,774 from non-controlling interests to the revenue reserve, in
relation to the fair value of the assets not recognized by the parent company in the recording of the acquisition
of 30% of the non-controlling interest of the investee Cimpor Macau – Companhia de Investimentos S.A.
(“Macau”) on April 16, 2013.
(d)
The tax incentive reserve is credited with the benefits of tax incentives, which are recognized in the statement
of income and allocated from retained earnings to this reserve. These incentives are not included in the
calculation of the minimum mandatory dividend.
(e)
Other comprehensive income
The Company recognizes in other comprehensive income the effects of foreign exchange gains/losses on direct
and indirect investments abroad.
This account also includes foreign exchange gains/losses on debts and derivatives designated to mitigate risks
related to foreign exchange (net investment hedges), interest rate (cash flow hedges), actuarial gains and losses
on pension plans.
The changes in the cumulative other comprehensive income are as follows:
Cumulative
currency
translation
adjustments
At January 1, 2013
Rem easurement of actuarial gains (losses) on
retirement benefits
Realization of other com prehensive incom e for s ale of inves tments
Hedge accounting of investm ents abroad
Interest in other comprehens ive incom e of investees
Deferred taxes
At Decem ber 31, 2013
At January 1, 2014
Rem easurement of actuarial gains (losses) on
retirement benefits
Hedge accounting of investm ents abroad
Interest in other com prehensive income of investees
Deferred taxes
At Decem ber 31, 2014
91 of 105
644,227
Cumulative
remeasurements of
employment benefit
obligations
Hedge of a net
investment
(134,942)
(12,934)
Interest in comprehensive
income of associated
companies or joint ventures
81,374
665,051
665,051
71,736
71,736
(31,045)
(15,720)
(854,062)
(7,361)
1,278,233
1,278,233
425,028
(29,529)
(92,735)
290,381
(576,615)
58,293
(92,735)
(576,615)
58,293
(27,511)
(510,471)
(1,396)
1,703,261
Total
577,725
8,950
(111,296)
173,559
(913,527)
56,897
(46,765)
(854,062)
(7,361)
260,852
667,176
667,176
425,028
(27,511)
(510,471)
(1,396)
182,509
735,335
(f)
Non-controlling shareholders
2014
Cementos Artigas S.A.
Asment de Témara
Yacuces, S.L.
Itacamba Cemento S.A.
Yibitas Yozgat Isci Birligi Insaat M.T.S
Votorantim Cimentos N/NE S.A. (1(i))
Outros (i)
189,406
126,390
49,920
30,384
22,472
24,595
443,167
(i)
25
2013
199,729
134,283
11,226
18,595
100,102
(11,457)
452,478
The negative balance refers substancially to subsidiaries that presentd a negative stockholders equity at the end
of the period.
Revenues
Parent company
2014
Domestic revenue
Revenue from outside of Brazil
Taxes on sales and services
Returns and rebates
Net revenue
92 of 105
2013
8,890,822
21,935
8,912,757
8,431,347
17,449
8,448,796
(2,209,097)
(61,215)
(2,270,312)
(2,035,653)
(82,235)
(2,117,888)
6,642,445
6,330,908
Consolidated
2014
2013
11,557,638
4,343,881
15,901,519
11,102,328
3,876,527
14,978,855
(2,938,635)
(79,318)
(3,017,953)
(2,732,993)
(103,574)
(2,836,567)
12,883,566
12,142,288
26
Parent company
Tax benefits
Gain (loss) on sale of property, plant & equipment and intangible as sets
Revenue from co-process ing
Gain on waste sales
Gain (loss) on sale of investment
Recovery of taxes
Impairment of property, plant and impairm ent (Note 16)
Impairment of intangible ass ets (Note 17)
Impairment of advances to s uppliers
Contingent consideration Reversal unrealized (Note 17 (c))
27
Consolidated
2014
55,583
(30,824)
8,590
6,123
(609)
39
(12,772)
(868)
(3,647)
2013
35,646
6,897
8,949
6,593
596
16,636
(26,357)
(2,587)
41,199
62,814
13,411
59,784
2014
200,614
31,258
11,495
9,283
1,446
1,057
(20,557)
(50,745)
(24,889)
35,700
39,431
234,093
2013
207,982
20,478
10,942
8,451
36,757
18,275
(4,678)
(27,973)
(4,517)
60,408
326,125
Expenses by nature
2014
Freight cost
Em ployee benefit expense
Raw m aterials and consumables used
Electric power - consum ption
Fuel costs
Maintenance
Depreciation, amortization and
Services, miscellaneous
Packaging materials
Other expenses
Reconciliation
Selling expenses
General and administrative expenses
93 of 105
Parent company
2013
2014
Consolidated
2013
915,737
897,817
595,841
528,462
554,244
461,567
291,668
353,092
147,837
306,016
831,444
796,989
583,765
381,688
562,806
465,289
269,319
401,213
143,182
327,731
1,557,363
1,654,211
1,542,422
1,012,568
960,082
870,926
805,499
646,475
238,487
1,228,771
1,435,461
1,479,595
1,432,165
835,723
953,582
824,965
773,093
634,221
229,376
1,188,744
5,052,281
4,763,426
10,516,804
9,786,925
3,767,944
721,169
563,168
3,664,506
592,665
506,255
8,568,924
1,061,881
885,999
8,102,841
893,711
790,373
5,052,281
4,763,426
10,516,804
9,786,925
28
Employee benefit expenses
Parent company
2014
Direct remuneration
Pension plan
Social charges
Benefits
29
Consolidated
2013
486,724
434,365
266,201
144,892
897,817
2014
2013
237,974
124,650
1,029,316
14,914
385,651
224,330
910,791
18,198
350,102
200,504
796,989
1,654,211
1,479,595
Financial income (expenses), net
Parent company
2014
Financial income
Incom e from financial investments
Discounts obtained
Asset indexation
Interest from financial assets
Interest on related party transactions (Note 13 (a) and (b))
Other financial income
Financial expenses
Interest payable on loans, financing and other
Capitalization of borrowing costs - CPC 20
Indexation charges on provisions
Premium paid on bond repurchase (Tender Offer) (Note 18 (e) (ii) (iv))
Discounts granted
Incom e tax on remittance of interest abroad
Interest and indexation charges - UBP
Interest on taxes payable
Interest on related party loans (Note 13 (a) and (b))
Other financial expenses
Net foreign exchange result
Financial results, net
94 of 105
2013
141,722
40,507
37,724
19,529
14,770
11
84,657
7,870
57,856
25,143
9,663
254,263
(990,603)
19,643
(64,997)
(147,301)
(76,624)
(74,686)
(832,955)
60,754
(3,897)
(10,824)
(13,842)
(37,063)
(26,730)
(1,423,027)
(11,860)
(3,673)
(42,544)
(5,550)
(925,452)
Consolidated
2014
2013
182,853
8,099
103,628
33,803
11,227
1,141
149,356
54,216
51,510
39,582
16,575
2,773
5,876
186,330
319,888
376,101
(42,988)
(42,739)
(1,060,476)
33,114
(140,649)
(175,436)
(89,273)
(74,686)
(34,592)
(28,295)
(16,316)
(273)
(92,399)
(1,679,281)
36,491
(883,884)
73,189
(23,740)
(47,051)
(42,739)
(41,589)
(15,399)
(8,923)
(29,118)
(52,898)
(1,072,152)
(60,604)
(42,241)
(82,282)
(89,745)
(1,229,368)
(781,363)
(1,441,675)
(785,796)
30
Pension plan and post-employment health care benefits
The table below shows where the balances and activities related to post-employment benefit are allocated in
the Company's financial statements.
2014
Balance sheet obligation for:
Defined pension benefits
Supplementary pension plans
Post-employm ent m edical benefits
Liabilities in the balance sheet
Income statem ent charge included in operating profit for:
Defined pension benefits
Supplementary pension plans
Post-employm ent m edical benefits
Rem easurement for:
Defined benefits - gross balance
Deferred incom e tax and social contribution
Defined pension benefits - net balance
(a)
2013
22,891
27,269
104,154
154,314
19,713
36,021
85,163
140,897
7,402
7,512
14,914
10,162
706
7,330
18,198
27,511
(8,950)
18,561
(71,736)
29,529
(42,207)
Defined contribution
The Company and VCNNE sponsor private pension plans administered by Fundação Senador José Ermírio de
Moraes (FUNSEJEM), a private, not-for-profit, pension fund, which is available to all employees. Under the
fund regulations, the contributions from employees to FUNSEJEM are matched based on their remuneration.
For employees with remuneration lower than the limits established by the regulations, contributions up to 1.5%
of their monthly remuneration are matched. For employees with remuneration higher than the limits,
contributions of employees up to 6% of their monthly remuneration are matched. Voluntary contributions can
also be made to FUNSEJEM. After the contributions to the plan are made, no further payments are required
for the Company.
(b)
Defined benefit
The Company has defined benefit plans in North America, Latin America, Brazil and Europe, which follow
similar regulatory standards. The defined benefit plans of North America and Europe also offer health care
and life insurance, among other benefits. The cost of retirement benefits and other benefits of these plans were
granted to eligible employees and is determined using the projected benefit method "pro rata", based on the
management's best estimate for the return of plans and plan assets, wages readjustments, cost trends and
mortality rates and average retirement ages of employees.
95 of 105
The amounts recognized in the balance sheet are determined as follows:
Present value of funded obligations
Fair value of plan assets
Present value of non-funded obligations
Total deficit of defined benefit pension plans
Im pact of the minimum funding requirement/assets ceiling
Assets and liabilities in the balance sheet
96 of 105
2014
576,533
(588,826)
(12,293)
161,305
149,012
3,058
152,070
2013
525,405
(491,627)
33,778
102,386
136,164
3,678
139,842
The changes in the defined benefit obligation and the fair value of the plan assets during the year were as
follows:
Present
value of
obligation
At January 1, 2014
Current service cost
Interest expense/(income)
Past service cost and curtailments
Rem easurements:
Return on plan assets, excluding amounts included in
interest incom e
Gain from change in demographic assumptions
Gain from change in financial assumptions
Experience losses
Change in asset ceiling, excluding amounts included in
interest expense
627,791
6,408
35,065
102
41,575
Fair value of
plan assets
(491,627)
(27,051)
(27,051)
Total
136,164
6,408
8,014
102
14,524
(43,478)
28,257
(746)
(746)
(746)
27,511
(264)
8,201
8,465
19,033
(51,191)
(32,158)
Benefit payments
(45,933)
737,838
39,693
(588,826)
(6,240)
149,012
Present
value of
obligation
97 of 105
390
71,735
(15,172)
Exchange differences
Contributions:
Employers
Payments from plans:
Benefit payments
Assum ed/(acquired) in a business combination
390
Total
139,842
6,408
8,404
102
14,914
(43,478)
6,430
62,239
3,066
23,637
Rem easurements:
Return on plan assets, excluding amounts included in
interest incom e
Gain from change in demographic assumptions
Gain from change in financial assumptions
Experience (gains)/losses
Change in asset ceiling, excluding amounts included in
interest expense
3,678
(43,478)
6,430
62,239
3,066
Exchange differences
Contributions:
Employers
At January 1, 2013
Current service cost
Interest expense/(income)
Past service cost and curtailments
Impact of minimum
funding
requirement/asset
ceiling
591,252
7,247
32,792
(1,439)
38,600
Fair value of
plan assets
(406,700)
(20,414)
(20,414)
(31,687)
(3,452)
(29,810)
(10,681)
769
Total
184,552
7,247
12,378
(1,439)
18,186
(32,158)
3,058
Impact of minimum
funding
requirement/asset
ceiling
260
12
12
(31,687)
(3,452)
(29,810)
(9,912)
(43,943)
(30,918)
(74,861)
50,678
(26,940)
23,738
(33,755)
(33,755)
34,971
(7,871)
(491,627)
(6,446)
24,750
136,164
(41,417)
32,621
627,791
(43,478)
6,430
62,239
3,066
(6,240)
152,070
Total
184,812
7,247
12,390
(1,439)
18,198
(31,687)
(3,452)
(29,810)
(9,912)
3,125
3,125
17
3,125
(71,736)
23,755
264
(33,491)
3,678
(6,446)
24,750
139,842
The defined benefit obligation and plan assets by country are composed as follows:
2014
Pres ent value of obligations
Fair value of plan assets
Impact of the minimum funding
requirements/as set ceiling
Brazil
59,411
(64,713)
(5,302)
Europe
45,036
(3,404)
41,632
North
America
631,128
(520,708)
110,420
3,058
(2,244)
41,632
110,420
South
America
2,263
2013
2,263
Total
737,838
(588,826)
149,012
Brazil
41,917
(46,376)
(4,459)
Europe
39,513
(2,811)
36,702
North
America
546,361
(442,440)
103,921
2,263
3,058
152,070
3,404
(1,055)
274
36,976
103,921
Total
627,791
(491,627)
136,164
3,678
139,842
The principal actuarial assumptions used were as follows:
Percentual
2013
2014
Discount rate
Inflation rate
Salary growth rate
Pension growth rate
Brazil
11.15%
5.20%
6.25%
5.20%
Europe
8.46%
2.38%
5.88%
North
America
4.00%
2.00%
2.50%
South
America
10.00%
7.60%
3.00%
Total
8.4%
4.3%
4.4%
5.2%
Brazil
11.0%
5.0%
6.0%
5.0%
Europe
8.0%
7.0%
5.0%
North
America
5.0%
2.0%
3.0%
Total
8.0%
4.7%
4.7%
5.0%
The assumptions relating to mortality experience are set based on the advice of actuaries in accordance with
published statistics and experience in each territory. The mortality assumptions for the more significant
countries are based on the following tables of post-retirement mortality:
(i) Brazil: AT-2000 Basic segregated by gender and board entry into disability RRB-1994 modified and
increased by 15%, segregated by gender.
(ii) Europe: CSO80 with a projection period of 10-15 years and
(iii) North America: RP-2000 segregated by gender with a projection period of 8 years.
The sensitivity of the defined benefit obligation to the changes in the main assumption is:
Change in
assumptions
Discount rate
Salary growth rate
Pension growth rate
0.5%
0.5%
0.25%
Impact on defined benefits
Increase in
Decrease in
assumptions
assumptions
Decrease by 5.62% Increase by 6.33%
Increase by 10.19% Decrease by 12.8%
Increase by 4.59% Decrease by 5.05%
Increase in
assumption by
one year
Life expectancy
Increase by 2.3%
Decrease in
assumption by
one year
Decrease by 2.3%
The above sensitivity analyses are based on a change in an assumption while holding all other assumptions
constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated.
When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the same
98 of 105
method (present value of the defined benefit obligation calculated with the projected unit credit method at the
end of the reporting period) has been applied as when calculating the pension liability recognized within the
balance sheet.
The methods and types of assumptions used in preparing the sensitivity analysis did not change compared to
the previous period.
(c)
Post-employment benefits (pension and health care)
The Company operates post-employment benefit plans through its subsidiary in North America,
VCNA, and in Europe, VCEAA. The method of accounting, assumptions and frequency of valuations are similar
to those used for the defined benefit pension plans. Most of these plans are not funded.
The obligations related to these plans are included in the change in the defined benefit obligations, above.
31
Tax benefits
The Company and its subsidiaries have tax incentives, the most significant of which are related to:
(a)
FDI - Ceará Industrial Development Fund - Sobral and Pecém - CE
The Ceará Industrial Development Fund (State Law 10,367 of December 7, 1979 and State Decree 29,183 of
February 8, 2008), or the FDI Program, is a program created by the State of Ceará to foster the development of
industrial activities in the State by means of tax and financial benefits. The FDI Program aims at the
development, expansion, modernization, diversification or recovery of companies through tax and financial
incentives. Under this program, the Company and its subsidiaries are entitled to the following tax benefits
until September 2016 and July 2020, respectively: (i) deferral of ICMS on import of fixed assets and raw
materials; and (ii) financing of 75% and 64% of the ICMS on sales of manufactured products, with the payment
of 25% of this initial amount after 36 months.
(b)
PSDI – Sergipe Industrial Development Program - Laranjeiras - SE
The Sergipe Industrial Development Program (State Law 3,140 of December 23, 1991), or PSDI, was created to
foster the social and economic development of the State of Sergipe through tax and financial benefits. In
connection with this program, the Company and its subsidiaries are entitled to the following tax benefits until
June 2016: (i) deferral of ICMS on import of raw materials to be used exclusively in our manufacturing
process; and (ii) payment of only 8% of the incremental ICMS tax on additional sales of manufactured
products.
(c)
Pro-Indústria – Tocantins Industrial Development Program - Xambioá - TO
The Tocantins Industrial Development Program (State Law 1,385 of July 9, 2003), or Pro-Indústria, is a
program created by the State of Tocantins to foster the development of industrial activities in the State by
means of tax and financial benefits. In connection with this program, the Company requested and obtained on
April 16, 2008 the application of a special regime under which the Company benefits from the following tax
incentives until February 2023:
- tax burden of 2.0% related to ICMS on sales of manufactured products,
- exemption from tax substitution of ICMS on goods or services to be used in the
production, transformation or manipulation process,
- exemption from ICMS on import of raw materials (including semi-finished products or
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finished products for packaging) and fixed assets without similar assets in the State market to be used
exclusively in our manufacturing process, and
- exemption from ICMS on interstate purchase of fixed assets.
(d)
PRODIC – Industrial, Commercial and Mineral Development Program
of the State of Rondônia - Porto Velho - RO
The Industrial, Commercial and Mineral Development Program of the State of Rondônia (State Law 61, of July
21, 1992 and State Law 1,558, of December 26, 2005), or PRODIC, was created to foster the development,
expansion and modernization of the State of Rondônia through tax and financial benefits. Under this program,
the Company is entitled to the following tax incentives until May 2018: (i) presumed credit of 85% of the
ICMS; (ii) deferral of ICMS on imports of raw materials without similar materials in the domestic market; and
(iii) reduction of 50.0% in the tax base of the ICMS on purchases of electricity, interstate transportation and
communication services.
(e)
PRODEIC - Mato Grosso Industrial and Commercial Development Program – Nobres and
Cuiabá, MT
The Mato Grosso Industrial and Commercial Development Program (State Law 7,958, of September 25, 2003
and State Decree 1,432, of September 29, 2003), or PRODEIC, is a program created by the State of Mato
Grosso to design a plan for the development of industrial and commercial activities in the state by means of tax
reliefs and financial incentives. PRODEIC aims at the expansion, modernization, and diversification of the
economic activities by stimulating investments, technological upgrading of production facilities, and the
increase of the state’s competitiveness, with emphasis on job creation and income generation, and the
reduction of social and regional inequality. Under this program, the Company and its subsidiaries are entitled
to the following tax benefits until August 2021 and May 2023, respectively: (i) deferral of ICMS on imports of
fixed assets and raw materials; (ii) deferral of ICMS related to the tax rate difference levied on interstate
acquisitions of fixed assets; and (iii) decrease of the tax base/deemed credit of 85.88% and 90% of ICMS on
sales of manufactured products.
(f)
Paraná Competitivo Program - Rio Branco do Sul - PR
The Paraná Competitivo Program (State Decree 630, of February 24, 2011) was created to foster the industrial
development of the State of Paraná by means of tax and financial benefits. In connection with this program,
the Company requested and obtained on December 5, 2011 the application of a special regime under which the
Company benefits from the following tax incentives:
- payment of incremental ICMS on sales of manufactured products in two installments: 10% in the
subsequent month, after the occurrence of the taxable event and 90% after eight years, without monetary
restatement,
- deferral of ICMS on electricity purchases for eight years or within a defined limit,
- suspension of payment of ICMS on import of fixed assets,
- suspension of payment of ICMS on interstate purchase of fixed assets,
- suspension of ICMS on import of raw materials, intermediate materials and packaging materials
until the shipment of the industrialized products,
- possibility of transfer and receipt of accumulated ICMS credits of taxpayers enrolled in the
State of Paraná.
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32
Insurance coverage
Pursuant to the Company's Insurance Management Corporate Policy, different types of insurance policies are
contracted, such as operational risk and civil liability insurance, to protect assets against production
interruptions and for damages caused to third parties.
The Company and its subsidiaries have civil liability insurance for their operations in Brazil, Canada and the
United States, for which the coverage and conditions are considered by the Company´s management to be
appropriate for the risks involved.
For the main plants in Brazil and operations abroad, an "All Risks" policy is contracted for all assets, including
coverage against losses resulting from production interruptions.
The operational insurance coverage as at December 31, 2014 was as follows:
Assets
Type of coverage
Insured amount
Facilities, equipm ent and products in
inventory
Property damage
18,723,023
Loss of profits
4,385,289
Operational and civil liability insurance of the Pedra do Cavalo
hydroelectric power plant– VCNNE
An "allRisks" insurance policy for operational risks is contracted annually for the hydroelectric power plant,
with a total insured amount of R$ 199,050. The Company has a civil liability policy for this plant, for which the
coverage and conditions are considered by the Company's management to be adequate for the risks involved.
33
Non-current assets (or disposal groups) held for sale
The Company intends to sell certain assets, summarized as follows:
China (a)
Baraúna's property, plant and equipment (b)
Equipment (i)
Hydroelectric power plants (c)
(i)
a)
2014
803,806
44,962
190
436,827
1,285,785
Assets
2013
742,585
44,961
435
787,981
2014
461,224
Consolidated
Liabilities
2013
390,305
434,011
895,235
390,305
Corresponds to kiln/pyro processing equipment in Spain, classified as held for sale from January 1, 2013.
China operations
The Company does not intend to continue its operations in China that were acquired as part of the Cimpor
asset exchange, and consequently this operation has been classified as held for sale since December 21, 2012.
The Company continues to present these operations separately in this category and is fully committed to
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marketing this operation and completing the planned sale. The principal factor contributing to the delay of the
planned sale is of a regulatory nature.
(a.1)
Assets held for sale
2014
52,314
114,942
263,574
280,016
57,737
35,223
803,806
Inventory
Deferred income tax and social contribution
Goodwill
Intangible assets
Other assets
(a.2)
214,775
279,973
48,033
151,963
742,585
Liabilities related to assets held for sale
Accounts payable
Provision
Loans and financing
Other liabilities
b)
2013
47,841
2014
2013
39,629
33,357
61,320
310,490
16,428
461,224
57,512
32,036
42,690
253,826
4,241
390,305
Baraúna assets
VCNNE intends to sell certain assets (industrial equipment) that it holds in the city of Baraúna, State of Rio
Grande do Norte, and is negotiating with Mizú S.A. Consequently these assets have been classified as held for
sale since September 30, 2013. Management continues to present these assets separately in this category and is
fully committed to marketing this operation and completing the planned sale. The development of this process
in 2014 indicates that a favorable resolution will be reached.
c)
(c.1)
Hydroelectric power plants
Assets held for sale
Pedra do Cavalo
Intangible as sets
95,902
168,329
136,088
400,319
Machadinho
36,508
36,508
2014
Total
95,902
204,837
136,088
436,827
In 2014, Management approved the transfer sale of its share of 5.62% on the Consortium of the Machadinho
hydroelectric power plant and of the Pedra do Cavalo’s concession, as mentioned in Note 1(ii). The transfers
mentioned above are still subject to and conditional on approval from Agência Nacional de Energia Elétrica –
ANEEL.
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(c.2)
Liabilities related to assets held for sale
2014
Pedra do Cavalo
d)
The Company presented the following results from discontinued operations:
2014
2013
261,504
(273,070)
185,127
(210,123)
(11,566)
33,884
(24,996)
(24,994)
Profit (loss) before taxation
22,318
(49,990)
Deferred
(6,097)
Net incom e (loss) for the year
16,221
Revenue
Gross loss
Financial incom e (expenses), net
34
434,011
434,011
1,133
(48,857)
Financial information by operating segment
The operating and reportable segments used for decision making, and regularly reviewed by the Chief
Operating Decision Maker (“CODM”) defined as the Chief Executive Officer, are: organized by geographical
areas, and has three operating segments which are based on the locations of the Company’s main assets, as
follows: (1) Brazil, (2) South America, (3) North America, (4) Europe, Africa and Asia.
Each of these operating and reportable segments derives its revenues from the sale of the following lines of
products:
1.
2.
3.
4.
Cement,
Concrete/ready-mix,
Aggregates, and
Other building materials.
The key financial performance indicator for the management of the reportable segments is Adjusted EBITDA
which is reported on a monthly basis to the CODM for each of the Company´s operating segments (Brazil,
South America, North America, and Europe, Africa and Asia) and also according to each product line. Adjusted
EBITDA is calculated based on net income plus/less financial income (expenses), plus income tax and social
contribution plus depreciation or amortization and depletion, less equity in results of investees, plus dividends
received from investees less exceptional non-cash items. Non-cash items considered by management as
exceptional are excluded from the measurement of Adjusted EBITDA. As result of using Adjusted EBITDA for
measuring the performance of the Company´s operating segments, the Company does not include financial
income and expenses, income tax expenses and equity in investees as part of the measurement, and as a result,
such information is not disclosed in the tables below.
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2014
South
America
340,365
72,868
(14,939)
Revenue
Operating profit before results of investments and financial results
Adjusted EBITDA
2,676,729
87,806
302,172
425,877
PP&E and intangible assets additions (CAPEX)
1,016,534
119,753
130,022
142,031
1,408,340
15,116,028
708,375
5,345,418
4,456,554
25,626,375
Total assets
North America
2,290,280
96,133
(206,039)
Europe, Africa
and Asia
1,716,493
254,728
(187,370)
Brazil
8,536,428
2,177,126
(397,151)
Consolidated
12,883,566
2,600,855
(805,499)
3,492,584
2013
Revenue
Operating profit before results of investments and financial results
Brazil
8,266,968
2,242,078
(379,534)
South
America
260,582
66,891
(7,087)
Adjusted EBITDA
2,709,435
73,978
356,195
372,570
PP&E and intangible ass ets additions (CAPEX)
1,081,436
5,259
113,847
115,615
1,316,157
14,133,895
269,467
4,945,379
4,562,085
23,910,826
Total ass ets
North America
2,002,758
143,953
(207,564)
Europe, Africa
and Asia
1,611,980
228,566
(178,908)
Consolidated
12,142,288
2,681,488
(773,093)
3,512,178
In 2014, the results of operations of the South America countries, which were presented in the operating
segment Brazil, were segregated into a specific operating segment called South America. The 2013 segment
information has been restated on a comparative basis.
(a)
Information by operating segments
(i)
There are no sales between the operating segments. The following table reconciles Adjusted EBITDA for
operating segments to net income:
Note
Net incom e for the year
Additions (exclus ions ):
Equity in the res ults of as s ociates
Financial incom e, net - continuing operations
Financial incom e, net - dis continued operations
Incom e tax and s ocial contribution - continuing operations
Incom e tax and s ocial contribution - dis continued operations
EBIT
Depreciation, am ortization and depletion - continuing operations
EBITDA
13
33(d)
33(d)
16 and 17
.
Additions (exclus ions ):
Dividends received
Exceptional item s :
EBITDA - dis continued operations
Gain on dis pos al of inves tm ents - FINOR
Gain on dis pos al of inves tm ents - C+PA
Adjus tm ent of non-recurring item :
Im pairm ent of property, plant and equipm ent
Im pairm ent of intangible as s ets
Im pairm ent of goodwill
Adjus ted EBITDA
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16
2014
2013
1,140,792
1,388,835
(187,687)
1,441,675
(33,884)
222,296
6,097
2,589,289
805,499
(127,908)
785,796
24,994
585,908
(1,133)
2,656,492
773,093
3,394,788
3,429,585
50,628
61,704
11,566
24,996
(1,853)
(34,904)
20,557
1,047
13,998
4,678
26,356
1,616
3,492,584
3,512,178
(b)
Revenue by line of products
Revenue from customers
Cem ent
Ready-m ix/concrete
Aggregates
Other
105 of 105
2014
2013
9,000,085
2,651,101
434,521
797,859
8,329,674
2,280,468
754,835
777,311
12,883,566
12,142,288

4Q14 Financial Statements

Transcription

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