2012 annual report

2012 annual
report
GRUPO
index
24
02
06
07
08
10
12
16
TO THE READER
OUR RELATIONSHIP
NETWORK
MISSION, VISION
AND VALUES
MAP OF GRUPO
GALVÃO OPERATIONS
PERFORMANCE
SYNTHESIS
MESSAGE FROM
THE BOARD
Chapter 01
about us
34
48
68
100
116
126
133
Chapter 02
SEGMENT CONTEXT AND
GROWTH STRATEGY
Chapter 03
OUR GOVERNANCE
Chapter 04
our people
Chapter 05
our business
Chapter 06
SOCIAL AND ENVIRONMENTAL
RESPONSIBILITIES
Chapter 07
OUR RESULTS
our
indicators
Financial
STATEMENTS
2
Arena Castelão, Fortaleza (CE)
to the
reader
4
2012 annual report
Grupo Galvão
The report gives information regarding the companies Galvão Engenharia, CAB
ambiental, Galvão Energia, Galvão Óleo e Gás e Galvão Finanças.
For the third year in a row, Grupo Galvão presents its
Annual Report as part of a corporate commitment
to deliver accountability to stakeholders. The
document gathers the key facts and achievements
of the organization in 2012, as well as presents the
challenges and business strategies for the coming
years in order to increase sustainability.
What is new compared to previous reports is
the addition of the methodology of the Global
Reporting Initiative (GRI), an international organization responsible for the development of a
model which, through the use of performance
indicators, makes it possible to compare the organizations concerning social, environmental and
economic performance.
GRI
3.1
3.2
3.3
3.7
3.8
3.10
3.11
This edition, which follows the G3 version of
GRI guidelines, includes the period January 1 to
December 31, 2012. The previous edition of the
Annual Report referred to 2011. The report offers
information regarding the companies Galvão
Engenharia, CAB ambiental, Galvão Energia,
Galvão Óleo e Gás e Galvão Finanças, taking into
account the divisions, operations and subsidiaries.
Also included, for some indicators, is specific
information about Galvão Participações S.A., a
holding that controls the companies of the Group.
Information regarding the activities of Galvão
Engenharia Peru is also included in the report.
The content associated to GRI indicators appear
identified along the Report and also in the index in
the end.
Due to the fact that the companies of the Group
have different stages of development and internal
structure, thus resulting in different indicator
monitoring levels, it was not always possible to
gather data about the entire organization or some
companies. These cases are duly listed in the
Report.
GRI
3.6
to the reader
The materiality of the content, as well as its
relevance and approach, were defined in an
internal process that included the vision of two
large groups of stakeholders – the internal public,
through consulting employees; and the external
public, based on survey information published by
the media about Grupo Galvão from March 2011
until December 2012.
The issues raised in this process were gathered in
thematic blocks and submitted to evaluation by
managers and leaders of the several areas to verify
the feasibility of publishing consistent information
concerning the topics listed.
Regarding the limits of the Report, we only
included data concerning work sites, projects and
operations that the Group companies influence
or control in terms of social, environmental and
Result
Answer items:
1.1; 2.1 to 2.10;
3.1 to 3.8, 3.10 to 3.12;
4.1 to 4.4, 4.14 to 4.15.
Information about
G3 Management
Approach
Result
Not required
Result
Contents of the Report
G3 Profile
Respond to a minimum
of 10 Performance
indicators, including
at least one of the
following performance
areas: Social, Economic
and Environmental.
G3 Performance
Indicators &
Sector
Supplement
Performance
Indicators
C+
Identifying the topics of interest for the Report also
took into account the range of the Stakeholder Map
of the Group, elaborated in 2010 (see page 8). The
mapping has served as a basis to structure a commitment process for these stakeholders.
Thanks to the indicators and consultation with
stakeholders, the Annual Report reached the level C
of GRI guideline application.
The Report is available in Portuguese and English in
printed and PDF versions. Comments, suggestions
and criticisms are welcome and can be sent to the
following email: galvao@galvao.com
B
B+
Responds to the criteria listed
for Level C and: 1.2; 3.9, 3.13;
4.5 to 4.13; 4.16 to 4.17.
With External Verification
C
Application Level of the Report economic impacts. The operations of CAB ambiental that began in 2012 and were in the process
of a takeover were not reported to the GRI indicators. In total, 27 projects were chosen.
*Sector Supplement in its final version
Information about the
Management for each
Indicator Category
Respond to a minimum of
20 Performance indicators,
including at least one of the
following performance areas:
Economic, Environmental,
Human Rights, Labor Practices,
Society, Product Responsibility.
A
GRI
3.4
A+
The same as for level B
Management Approach
announced for each Indicator
Category
Respond to each core G3 indicator
and Sector Supplement* with due
regard to the Materiality Principle
in one of these ways: (a) responding
to the indicator or (b) explaining
the reason for omission.
With External Verification
3.5
With External Verification
GRI
5
6
2012 annual report
Grupo Galvão
OUR RELATIONSHIP
NETWORK
GRI
4.15
In 2010, Grupo Galvão mapped out the main stakeholders with
the goal of structuring a commitment process that guaranteed
greater relationship interaction, transparency and efficiency,
considering influence and dependency criteria. From this process,
the Stakeholder Map that appears on this page was strengthened.
Identifying these stakeholders served as a reference to
examine strategies to increase interaction with these
publics, an ongoing process supported by the management
tools, within the range of the initiatives of the Group
aimed at strengthening sustainability practices.
GRUPO
GRI
4.14
Banks, finance
and insurance agents
Surrounding
communities
Government – Executive,
Legislative and Legal
Organized social
movements
Associations
Employees
and administrators
Competition
Companies in consortium
Customers
Shareholders
Business partners
Galvão Family
Suppliers (material, services
and equipment)
Organizações da Sociedade
Civil de Interesse Público
(OSCIPs) – [Civil Society
Organization of Public
Interest]
Media
Union
F
amily of employees
and administrators
7
MISSION, VISION AND VALUES
Mission
Our mission is to develop a group of
companies through a business portfolio that
allows for the creation of economic value,
recognition by society, and the achievement
of the aspirations of employees, suppliers,
customers, partners, and shareholders,
sustainably and perennially.
Vision
Our vision is to be a leading group in the
infrastructure sector through engineering,
construction, and public services
concessions in Brazil and emerging
countries.
VALuES
• Agile and shared management
• Valuing people
• Commitment to transparency and to ethics
• Fostering health and safety
• Responsibility towards the
environment and the community
• Commitment to results
• Excellence in services to the customer
8
2012 annual report
Grupo Galvão
GALVÃO ENGENHARIA
Infrastructure and International Division
Work siteState
Turi Stream........................................................SP
CPTM Upkeep (Lines A, B and D)......................SP
Extension of Avenida Jornalista
Roberto Marinho (SP) – Lot 4............................SP
Metro Line 5.......................................................SP
Redevelopment of Favela do Sapé...................SP
Conservation of Highways – Pedro
de Toledo (DER).................................................SP
Interconnection Avenida Sena Madureira.......SP
Guarapiranga Project........................................SP
Córrego Bonsucesso Carioca.........................MG
Channeling the Acari River............................... RJ
FIOL Railway......................................................BA
PPP Arapiraca....................................................AL
Duplication of BR-104 Highway....................... PE
Transfer of the São Francisco River.................. PE
Access to Porto de Suape................................. PE
Arena Castelão..................................................CE
Access Events Center.......................................CE
Events Center...................................................CE
Anel Viário [Ring Road]......................................CE
Transfor..............................................................CE
Figueiredo Dam.................................................CE
International
Work site
Country - City
Complementary Works Sedapal......... Peru - Lima
special Projects
State
Arena Castelão (operator)................................CE
Belo Monte Hydroelectric power station........ PA
Industrial Engineering Division
Work siteState
Refinery Landolpho Alves (RLAM)....................BA
Unidade de Fertilizantes III (UFN III)................ MS
Refinery Paulínia (Replan).................................SP
Comperj............................................................. RJ
Refinery Abreu e Lima (Rnest)..........................CE
Refinery Premium............................................MA
ETE Angra.......................................................... RJ
Terminal Aquaviário de Ilha Comprida (TAIC)
[Waterway Terminal of Ilha Comprida].............. RJ
Revamp of the Pier............................................ RJ
Reab Tanques Sul................................. PR/SC/RS
CAB AMBIENTAL
Cab Canarana.................................................. Mt
Cab Pontes e Lacerda..................................... MT
Cab Comodoro................................................ MT
CAB Colider...................................................... MT
CAB Cuiabá....................................................... MT
CAB Alta Floresta............................................. MT
Itapoá Saneamento..........................................PR
Tubarão Saneamento....................................... SC
CAB Águas de Paranaguá................................. SC
Cab spat............................................................SP
Cab Piquete......................................................SP
Cab Guaratinguetá...........................................SP
Águas de Andradina..........................................SP
Águas de Castilho .............................................SP
Esap...................................................................SP
Sanessol............................................................SP
CAB Atibaia........................................................SP
CAB Águas do Agreste.....................................AL
GALVÃO ENERGIA
Wind Farms - São Bento do Norte................... RN
GALVÃO ÓLEO E GÁS
Office................................................................. RJ
offices
Headquarters....................................................SP
Fortaleza............................................................CE
Brasília................................................................DF
Belo Horizonte.................................................MG
Recife................................................................. PE
Rio de Janeiro.................................................... RJ
Arujá...................................................................SP
9
Grupo Galvão
operations
GRI
2.7
10
2012 annual report
Grupo Galvão
PERFORMANCE SYNTHESIS
GRI
2.8
EC1
ECONOMIC AND FINANCIAL PERFORMANCE
CONTRACT BACKLOG (BRL billions)
GROSS REVENUES (BRL billions)
34.1
3.6
2.7
2.6
13.9
9.3
2010
2011
NET REVENUE (BRL billions)
3.3
2.5
2010
2010
2012
2011
2012
BREAKDOWN OF GROSS REVENUES, 2012
0.4%
8.7%
2.4
2011
90.9%
Galvão Engenharia
CAB ambiental
Galvão Finanças
2012
ebitda (BRL millions)*
NET PROFIT (BRL millions)
68.9
216.8
181.1
31.9
85.9
2010
2010
2011
2011
2012
-85.8
* Without application of the IFRS/CPC BRGAAP standards
2012
performance synthesis
SOCIAL AND ENVIRONMENTAL PERFORMANCE
GRI
EC 1
ADDED VALUE DISTRIBUTION, 2012
13.52%
2.04%
18.46%
2012: BRL 1,563,337,000.00
0.00%
Employees
Government
Retained
Third parties
Shareholders
65.98%
GRI
LA 13
EMPLOYEE PROFILE, 2012
10.7%
9.2%
35.4%
90.8%
Men
Women
GRI
2.8
TOTAL DIRECT EMPLOYEES
Below 30
Between 30 and 50
Above 50
53.9%
GRI
EN 30
ENVIRONMENTAL INVESTMENTS (BRL millions)
21.2
9,455
7,221
6,235
2010
2011
2012
12.5
12.9
2010
2011
2012
11
12
2012 annual report
Grupo Galvão
MESSAGE
FROM THE BOARD
The success of a company cannot be measured
only by results obtained in a fiscal year or in a
limited set of years. What is evaluated is the
perennial perspective of an organization by the
foundations it can establish keeping a long-term
trajectory in mind.
We can announce that, in 2012, Grupo Galvão
has completed an important stage in the
construction of its future, thanks to the results
obtained in those issues that make a difference
in the life of companies and lead them towards
sustainable growth – planning, management
excellence, corporate responsibility and
operational quality.
In our specific case, the most important
achievement – and that, in a way, sums up all
these attributes – was the significant progress
in the balance of our contract backlog, which
reached a historical level of BRL 34.1 billion. This
is the result of the prospection, development
and creation of projects that were begun
a long time ago.
13
The accomplishment, which represented an evolution of
145% in comparison to 2011, corresponded fully to the plans
and strategies of the Board, which shows the growing participation of our companies in strategic infrastructure areas and in
projects of increasing technical complexity, with the achievement of profitability corresponding to our efforts thanks to
our competence and investments.
As a skills of our work in 2012, our net revenue also developed
significantly, going from BRL 2.4 billion to BRL 3.3 billion. Cash
generation followed the growth path, reaching BRL 204 million –
137% more than in 2011.
14
2012 annual report
Grupo Galvão
THE RESULTS DRIVE US
TO IMPLEMENT THE GROUP’S
STRATEGIC GUIDELINE,
WHICH, GIVEN THE
PARTICULAR CONJUNCTURE,
AIMS TO STRENGTHEN THE
PARTICIPATION IN BRAZILIAN
INFRASTRUCTURE PROJECTS
Clearly, all these figures show our progress, but,
alone, they do not convey the important year the
Group has gone through. Due to the fact that
we are an organization that does not hesitate
to adjust its steps to the combination of needs,
and reinvents itself whenever necessary, 2011
was a strategically important year for our future
– because of the challenges that were overcome,
and mainly because of the actions that, with longterm focus, aim to ensure growth stability.
Other achievements came from CAB ambiental,
which welcomed the Banco Nacional de Desenvolvimento Econômico e Social Participações
(BNDESPar) [National Bank for the Economic and
Social Development] as a partner, in 33.42% of
its capital, in the first operation of that type done
by a state body with a basic sanitation company
and an important tool to expand our investment
capacity.
CAB also celebrated the achievement of five
new water and sewer concession agreements
– Cuiabá (M), Tubarão e Itapoá (SC), Atibaia (SP)
and the first contact in the Northeast region,
the PPP for supply of water to ten cities in Alagoas. These accomplishments and another 13
contracts being achieved by the company in the
country already represent an important move
towards the Group’s goal to strengthen its contract backlog.
Last year’s fiscal year was also a period of
achievements that reaffirmed our technical skills.
One of the most significant facts was the conclusion of Arena Castelão (CE), the first stadium
inaugurated for the World Cup 2014 and whose
operation indicates a range of opportunities for
Grupo Galvão.
Also added to the list of actions of the year is the
implementation of works in Rio Grande do Norte
– four wind farms that should be finished by September 2013, and signing a contract with Petrobras to build, by 2016, for three drill ships and their
operation for 15 years. The contract represented
the start of drilling activities of OdjfellGalvão
Perfurações Ltda., created by Galvão Óleo e Gás
and by the Norwegian company Odjfell to provide
services to the petroleum exploration, especially
offshore.
What stands out in the engineering and construction area is the conclusion of the Centro de
Eventos do Ceará [Event Center in Ceará], the
acquisition of our first public work contract in Rio
de Janeiro and the strengthening of our position
as service providers in the oil and gas segment.
Last year was just as strategic to improve our
business model, which benefitted from the
consolidation of new processes, which is the
result of a collective effort that aims to offer
the Group increased safety and assertiveness
to control deadlines, monitor the evolution
message from the board
of costs and maintain the quality of contract
execution.
The year 2012 also included intense work in the
management of the cash flow and maintenance
and expansion of credit lines, seeking always the
best financing structure for projects, keeping
in mind that we must balance between available resources and investment demands of our
companies. That is how it was in 2012 and that is
how it will continue to be for the next few years,
as an expression of our company culture and our
responsibility towards the future.
The results and accomplishments drive us to
implement the Group’s Strategic Guideline, which,
given the particularities of the current conjuncture, aims to strengthen our participation in infrastructure projects in Brazil, in a more intense and
qualified manner.
In 2013 we will strive to finish the important
projects of Galvão Engenharia, as well as implement new contracts achieved by CAB ambiental.
Also, management processes will be object of our
attention. They will be increasingly optimized and
guided to use the synergy between the Group’s
companies, giving the organization more security.
The opportunities that the country gives us will
serve as a stimulus to continue the corporate
effort of the last years aiming at structuring
capital that allows us to overcome each and every
challenge.
GRI
1.1
The achievement of planned results is part of
a greater corporate commitment – sustainable evolution – seen as the daily construction
of the legacy that we intend to leave not only
to the organization but also to society. That is
why we understand that sustainability is nothing
more than the daily practice of our values as they
appear in our Business Management Policy. That
means that every strategic initiative of the group
is based on three pillars of sustainability – economic, social and environmental.
The search for sustainable practice should cover
the entire Group, involving all the employees.
From that vision comes, for example, the Sustainable Management Contest, which in 2012 celebrated its third edition in order to recognize the
sustainable initiatives of the teams in work sites,
departments and operations, and to promote the
diffusion of the best experiences throughout the
organization.
However, the participation of the employees
in the destinations of the Group is key in our
long-term project and an inspiration of initiatives
related to people management – and the results
obtained in the most recent professional commitment survey offer us important help in order
to increase the satisfaction and motivation of professionals, who are key factors for our long-lasting
success.
If, on one hand, the figures in 2012 show how
much we evolved in our commercial and business
strategies, on the other they show the tasks and
responsibilities we have ahead of us in order to
achieve our goals. With security and boldness,
characteristics that make up the Group’s history,
in 2013 we will seek to meet expectations and
overcome future challenges.
Dario Galvão,
president of Grupo Galvão
15
16
2012 annual report
Grupo Galvão
Paulínia Refinery (SP)
17
chapter
01
about
us
18
2012 annual report
Grupo Galvão
GRI
2.1
2.2
2.6
2.8
Formally instituted in 2009, Galvão Participações
S.A. represents the embodiment of our
aspirations to work in the infrastructure segment
in Brazil and abroad. Created by shareholders of
Galvão Engenharia S.A., a company that since
1996 is one of the most important in its segment,
Grupo Galvão manages a vast portfolio of
contracts that include providing services to public
and private customers in the following industries:
construction, basic sanitation, oil and gas, finance
and renewable energy.
Through our work, we want to consolidate ourselves among the leaders of the infrastructure
segment, generating economic value and wealth
to all the shareholders and contributing to the
sustainable development of the country and its
population, and in return, receive society’s recognition for our efforts. Transparency, ethics, value
of people, agile and shared management, excellence towards the customer, commitment with
GRI
2.3
results, social and environmental responsibility,
and foster health and safety of our employees are
values that sustain our company culture and guide
operational activities.
Structured as a holding, Galvão Participações is
controlled by the Empresa Nacional de Participações S.A. (Enpar), Moval Participações Ltda. and
Freccia Engenharia Ltda. With its headquarters in
São Paulo, we have 100% national capital. Under
our direct control are five complementary companies: Galvão Engenharia, CAB ambiental, Galvão
Energia, Galvão Óleo e Gás Participações and
Galvão Finanças.
Galvão Engenharia is the core of our businesses. It
works for public and private customers in the areas
of road, airport, port, railway and urban infrastructure, oil and gas, energy and sanitation, participating in some of the largest and most important
projects in Brazil.
main COMPANIES of the group
galvão participações S.A.
66.58%
CAB
ambiental
100%
galvão
engenharia
INFRASTRUCTURE
DIVISION
INDUSTRIAL
ENGINEERING
DIVISION
100%
galvão
energia
100%
galvão
óleo e gás
100%
galvão
finanças
GRI
2.6
about us
Galvão Engenharia stands out among the ten largest
companies in the segment in Brazil
Galvão is also present in Peru, where it develops services
for the state sanitation company. This is the beginning of a
long-term project to stand out in the international market.
Due to the significance of the contracts it signs and the revenue from increasingly qualified services, Galvão is among
the ten largest companies in the segment in Brazil.
GRI
2.9
Created in 2006, CAB ambiental manages concession
agreements and public-private partnerships with the segments of water and sewage public services. By the end of
2012, it was responsible for 18 operations in five Brazilian
states, offering, directly or indirectly, services to approximately 6.6 million people, making us leaders of the private
sector in terms of population served. Since 2012, CAB
has held a strategic partnership with the Banco Nacional
de Desenvolvimento Econômico e Social Participações
(BNDESPar), which holds 33.42% of the company capital.
Aiming at generating energy with renewable sources, Galvão
Energia helped reach the goal to work in such an important
segment and to contribute to national development. Since
THROUGH OUR
WORK, WE WANT
TO JOIN THE
LEADERS OF THE
INFRASTRUCTURE
SEGMENT,
GENERATING VALUE
TO SHAREHOLDERS
AND CONTRIBUTING
TO THE COUNTRY
19
20
2012 annual report
Grupo Galvão
2011, the company is in charge of implementing
four wind farms in Rio Grande do Norte, which will
generate a total of 97 MW to the country’s energy
grid once they are completed in 2013.
GRI
2.9
Galvão Óleo e Gás Participações S.A. provides services to the segment of extraction and production
of oil and gas offshore. Created in 2009 as a way to
position our Group in the vast territory of opportunities resulting from oil exploration in the pre-salt
region, in 2012 the company created OdjfellGalvão,
a joint venture with the Norwegian drilling company
Odfjell Drilling. Together with the investment company Sete Brasil,
COURSE OF Grupo Galvão
Company begins
participating in
the works of the
southern part of
the Rodoanel (SP)
Enters into
energy
segment
First large
contract, the
duplication of
the Rodovia
Pedro Taques,
between
Mongaguá –
Itanhaém (SP)
Company
begins
operating
in the
Northeast
CAB ambiental
is founded
Participation
of Galvão
Engenharia in
the renovation
works of
Aeroporto de
Congonhas (SP)
[Congonhas
Airport]
Company
begins
operating in
the oil and
gas market
Galvão
Engenharia S.A.
is founded
1996
1997
1998
2004
2006
Participation in the
Rodoanel Sul (SP)
works, gas pipeline
Cacimbas-Catu
(ES) and the
Refinaria Landulpho
Alves (BA)
First
concession
agreement
for sanitation
services in
Palestina
(SP)
Galvão Engenharia
is chosen by Istoé
Dinheiro magazine
as the company
with best human
resources
in the
engineering
and construction
industry
2007
Signing of a PPP
with Sabesp
to expand
the Sistema
Produtor do
Alto Tietê (SP),
the first contract
held with a private
company
Company begins
participating in
the works to
alter the Rio
São Francisco
(PE/PB)
Company begins
participating in
the works of the
Ferrovia Norte
Sul (GO/TO)
2008
about us
OdfjellGalvão will be responsible for executing
the contract signed with Petrobras to build and
charter, for 15 years, three oil and gas drill ships in
the pre-salt region.
Galvão Finanças is responsible for managing the
remaining resources of our businesses and for
supporting the development of the value chain of
the Group’s companies, formed by suppliers and
service providers.
Due to the wide range of services offered and
its geographical scope, today our companies are
present in 45 cities in 17 Brazilian states, thanks
CAB signs five
new concession
agreements
Signing of first
International
work contract
in Peru
1st place in
the Engineering,
Construction and
Real Estate in a
ranking of the
magazine Istoé
Dinheiro
Creation of
Galvão Óleo e Gás
Participações S.A.
Victory of Galvão
Energia in a bid to
build four wind
farms in Rio
Grande do Norte
Conclusion of the
works in Arena
Castelão and of
the Centro de
Eventos in Ceará
Company begins
participating in the
construction works of
the hydroelectric power
station Belo Monte (PA)
BNDESPar
becomes CAB’s
partner
Galvão Engenharia is
chosen as the best
company in the industry
in Melhores & Maiores
by the magazine
Exame
Company
begins operating
in the works
of Line 5 of
Metro-SP
Creation
of Galvão
Finanças
Creation of the
holding Galvão
Participações S.A.
2009
Galvão is
chosen as
Engineering
Company of
the Year by the
magazine
O Empreiteiro
2010
Creation
of Galvão
Energia
Creation of
the Centro
de Soluções
Compartilhadas
[Center for
Shared Solutions]
to serve all the
companies
of the Group
2011
Creation of Odfjell
Galvão and contract
signing with
Petrobras to build and
charter three drill
ships
Company begins
construction of
the wind farms in
Rio Grande do
Norte
2012
21
22
2012 annual report
Grupo Galvão
By the end of 2012, the Group was present in 45 cities in 17
states, besides Peru
THE OPERATIONS BENEFIT
FROM THE SYNERGY BETWEEN
THE GROUP’S AREAS
AND THE MANAGEMENT
SYSTEM THAT PROMOTES
DECENTRALIZATION,
ADMINISTRATIVE
EFFICIENCY AND SOCIAL
AND ENVIRONMENTAL
RESPONSIBILITY
to the work of 9,500 direct employees, 50% more
people than in 2011, thanks to the expansion of
our activities in national territory. They benefit
naturally from the synergy between the Group’s
different areas and the management system
that promotes the decentralization of activities,
administrative efficiency and social and environmental responsibility.
The competency of our staff and the experience
accumulated in the different segments related to
infrastructure have guaranteed the organization
a safe and planned growth. In 2012, the organizational model and the commercial strategies that
were implemented sustained a contract backlog
estimated at BRL 34.1 billion.
about us
GRI
2.10
AWARDS AND RECOGNITIONS
In our trajectory of providing services to the infrastructure industry and the country, we have been
distinguished by the society and industry organizations. In 2012, the highlights in the area were the
following:
to volunteer and support the communities involved
in the works. The award is had by the Associação
dos Dirigentes de Vendas e Marketing do Brasil
(ADVB) [Association of Sales and Marketing Managers
in Brazil].
Valor Carreira
As a result of the Commitment Research held by
AON Hewitt and the newspaper Valor Econômico,
Galvão Engenharia won 5th place in the ranking
of companies with the best people management
(category: organizations with 4001 to 10 thousand employees), published by the magazine Valor
Carreira. As a result of the same research, Galvão
was included among the 30 best companies in the
country in people management.
ANA 2012 award
A result of the partnership between CAB Águas
de Paranaguá, Instituto Trata Brasil and Pastoral da
Criança, the Projeto Água e Cidadania pela Vida was
one of the finalists, in the NGO category, of the ANA
2012 award, promoted by the Agência Nacional de
Águas as a recognition for the actions that contribute to the management and sustainable use of
water resources, thus promoting the fight against
pollution and waste.
Top Socioambiental
Developed by the team of Galvão Engenharia in
the Refinaria Abreu e Lima (PE), the project Criando
Laços [Creating Bonds] conquered the Top Socioambiental 2012 award, in the Socio-cultural category. The project focuses on stimulating employees
Created in 2010, the program works in low-income
neighborhoods in the city of Paranaguá (PR),
bringing awareness to the population on the need to
use water rationally and on the importance of basic
sanitation to preserve health and the environment
(find out more about the project on page 108).
Galvão Engenharia was included among the 30 best companies in people management according to the ranking of the magazine Valor Carreira
23
chapter
02
SEGMENT
CONTEXT
AND GROWTH
STRATEGY
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Grupo Galvão
Over the past years, investments in infrastructure have been one of the main propellers moving
Brazil towards overcoming historical challenges
that complicate the progress and the improvement of the population’s living conditions. What
the country lacks, however, is equivalent to the
potential that exists to succeed. Despite the
barriers that still inhibit full development, the
country has experienced a continuous transformation process in recent years, with the rise of
millions of Brazilians to a more favorable socioeconomic level.
With low unemployment rates, contrary to the
most harmful effects of the international finance
crisis, as seen in the USA and Europe, Brazil
foresees quite a favorable scenario in terms of
progress and accomplishments, as well as special
events, such as the beginning of oil exploration in
The Group’s goal is to include in the portfolio
projects that generate income and profitability
the pre-salt region, the progress of the Programa
de Aceleração Econômica (PAC) projects, and the
2014 World Cup and 2016 Olympic Games.
Nevertheless, the country still has important challenges ahead, like the consolidation of sustainable
economic growth levels, income distribution and,
in particular, expansion of the amount of resources
applied to infrastructure – unfortunately, we are
still ranked as one of the emerging nations with the
lowest level of investments in the segment.
For believing in the country’s capacity to
overcome those obstacles, Grupo Galvão is
committed to a national effort to promote
development, strategies that aim to increase
business contribution, and put the activities and
businesses that it controls in positions of greater
relevancy and participation.
SEGMENT CONTEXT AND GROWTH STRATEGY
The Group’s goal is to include in the portfolio
projects that generate income and profitability
Since our business organization seeks growth and
is always on the watch for business opportunities,
it has means and intelligence to reach long-term
goals. Planning is our tool for development. Also
part of the corporate drive is the strengthening the
productivity of our teams, an essential part of our
plan and a topic that the Administration has been
looking into carefully.
What guides our performance is the Strategic
Guideline, a corporate map that specifies the
stages projected for growth in the coming years
in the areas our companies work in. Currently, the
Strategic Guideline determines the organization’s
steps until 2020, and it is a reference to follow so
that we can position ourselves among the most
important businesses in the infrastructure segment in the country.
The Strategic Guideline foresees a series of goals
to accomplish, as well as the means to accomplish
them. The following goals stand out from those
defined for the 2010-2020 period:
• Turn Galvão Engenharia into a leader in the segment in the country.
• Create a complete portfolio of works of increasing complexity and commissioned by the main
customers of their regions and segments.
• Support the development of communities,
becoming a market leader in basic sanitation and
the preferred private partner for utility companies that offer water and sewage treatment
services.
• Be one of the main partners of the government
in the development of the oil and gas segment.
• Design engineering and construction projects in
the area of services and operations of concession agreements, as a way to increase the stability of the Group’s cash flow.
• Be among the ten best organizations in the
country to work in.
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2012 annual report
Grupo Galvão
IMPLEMENTATION SCHEDULE OF THE STRATEGIC PHASES
201020112012 20132014 20152016 2017 20182019 2020
Defend, increase
and differentiate the
core business
Balance the portfolio
PriorityStability
PreparationPriority
PreparationPriorityStability
Enter adjacent
areas
Transition
Stability
Phase 1
Phase 2
The scope of these and other equally important
goals is linked to the accomplishment of three welldefined evolution phases, which, in its most recent
configuration, are like this:
• defend and expand engineering and construction
activities (our core business);
• consolidate a balanced portfolio with projects and contracts that generate income and
profitability, emphasizing on basic sanitation
operations;
• enter into business areas that are linked to the
expansion of infrastructure or provide services
related to concession agreements.
Each one of these stages includes specific phases
to prepare, prioritize and stabilize progress according to the definitions of the Board of Directors and
the current business reality.
Strengthening the engineering and construction operations is the foundation for the entire
expansion projected for the coming years. Based
Phase 2
Phase 3
Phase 3
Next Phase
on that vision, 2012 proved to be a year of strategic decisions, like the decision to focus efforts,
investments and human resources in the activities of Galvão Engenharia in national territory,
with the corresponding decrease in the growth
of other segments.
This measure did not compromise the concept
defined by our Strategic Guideline, although in
this moment some activities included in the plan
had to follow a different rhythm than that which
was previously planned, such as the international
operations and those in the energy generation
segment.
The decision to strengthen the engineering and
construction activities in the country is also justified due to the range of opportunities that exist in
the national market. The Minister of Finance calculates, for example, that Brazil needs, until 2015,
approximately BRL 900 billion in infrastructure
(petroleum and gas, transportation and logistics,
energy, telecommunications and basic sanitation).
Despite the difficulties to fulfill such a project, a
lot can be done.
SEGMENT CONTEXT AND GROWTH STRATEGY
GROWTH PHASES OF Grupo Galvão
PHASE 1
Defend, expand and differentiate
the core business (engineering
and construction)
PHASE 2
Balance the portfolio with sanitation
and energy generation projects
PHASE 3
Enter adjacent areas,
with services to explore
and produce oil and gas
Currently the company is focusing on
engineering operations in national territory
ENGINEERING AND
CONSTRUCTION
The focus on engineering and construction
activities in Brazil is due to the conquest and
signing of contracts with greater complexity and profitability, and the development of
new business models, such as public-private
partnerships, which have been an important learning field for the development of
expertise to conduct technically complex
projects.
The search for new business opportunities
in the engineering and construction area
also imposes the challenge of improving the
administrative aspects. In this field, 2012
was a preparation period to establish new
management standards. The innovations
developed throughout the year, such as the
project to improve governance, business
security, workflow (see box on page 45) and
the Business Management Manual, will make
it possible for the Group to have greater
security control in deadlines, cost follow-ups
and to monitor the quality of services.
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2012 annual report
Grupo Galvão
CAB’S PRIORITY IS
TO WORK ON EXISTING
CONTRACTS, ALTHOUGH
IT IS OPEN TO NEW
BUSINESS OPPORTUNITIES
BASIC SANITATION
An important part in the development of our
Strategic Guideline, CAB has an important role to
play in the accomplishment of building a portfolio
with a variety of contracts that generate cash flow
to the Group. In compliance with the strategic
goals of expanding its activities, CAB celebrated
the achievement of five new concession agreements (see page 85), the result of a long process
of exploration and development.
With the new accomplishments, which made CAB
the holder of 18 contracts in five Brazilian states,
now there is a unfolding of the original strategy,
through which the company will return with greater
intensity to implement these contracts in the
management of existing operations and to fulfill
the contract obligations. The goal is to be sure that
the businesses will generate the economic value
projected by shareholders.
With the accomplishments in 2012, the company became
a holder of 18 concession agreements in five states
SEGMENT CONTEXT AND GROWTH STRATEGY
The Strategic Guideline defines a set of
goals to be reached by 2020
The focus on complying with existing contracts, a
strategy that must spread in coming years, is the
required condition in order to plan for new future
expansions, although CAB is also open to new
business opportunities in the short-term.
Going public is still our goal. An important step
toward that direction was taken in the beginning
of 2013 with the company entering the listing
segment Bovespa Mais, of BM&FBovespa, which
clearly shows its advanced corporate governance
and transparency, a requisite for companies that
wish to attract investors through an initial public
offer (IPO) in stocks.
CAB’s efforts are part of a scenario with good
prospects to work in the private sector, which
still lacks significant investments to reach the
universalization of services. According to data
from the Sistema Nacional de Informações
sobre Saneamento (SNIS) [National Information
System on Sanitation] in 2010, of the Ministry
of Cities, only 46.2% of the Brazilian population
has access to sewage collection, and only 37.9%
of the sewage collected undergoes some sort
of treatment. According to the Plano Nacional
de Saneamento Básico [National Plan of Basic
Sanitation], BRL 270 billion will be necessary,
by 2030, to make the supply of water and
sewer services universal.
oil and Gas
Our Strategic Guideline has a special role in developing businesses in the oil and gas industry. The
first step was taken in 2012 with the foundation
of OdjfellGalvão, result of the partnership with the
Norwegian group Odjfell in order to comply with the
contract signed with Petrobras that seeks to build
and charter three drill ships for exploration of oil
reserves in the pre-salt region.
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Grupo Galvão
INTANGIBLE ASSETS
The scope of the long-term strategies is directly dependent on the daily practice of corporate
values, which are principles that express the
corporate commitments with sustainability.
These values translate our “way of being” and,
together with our courage and agility, they make
up the competitive edge our companies have
in their markets, thus driving management and
operations.
• We take advantage of the experience of every
area to overcome our challenges.
• We focus no the best solution for the customer
(internal or external).
• We encourage employee commitment through
the freedom of acting responsibly (Strategic
Delegation).
• We use our processes, systems and management tools.
In the Business Management Policy, these attributes also form part of our intangible assets,
a qualitative heritage that drives our activities
and that must be respected by all employees.
See each one of these attributes and how they
influence our day to day:
EXCELLENCE IN CUSTOMER SERVICES
VALUING PEOPLE
• We treat work colleagues, teams, seniors,
customers, partners, suppliers and surrounding
community of our projects with respect and
courtesy.
• We incentivize sincere, transparent and
continuous feedback to our team, with
the goal of developing skills and improving
performance.
• We contribute to the training and development
of professionals for Grupo Galvão, prevailing
meritocracy at all levels.
• We respect diversity of opinion, gender, social
class, race, religion and we fight against any type
of discrimination.
• We establish and respect people development
policies.
AGILE AND SHARED MANAGEMENT
• We are open to suggestions and we are willing to
change our opinion when necessary.
• We seek customer satisfaction.
• We work seriously and responsibly to make
deadlines.
• We seek to overcome the technical quality of
products and services.
• We continuously look for creative and innovative
solutions.
• We anticipate expectations of customers.
• We dominate our business and are capable of
doing it using the best resources and practices.
• Our references are the best companies in the
world to be among them.
• We are committed to the experience of our
values and we are skilled and trained to perform
our tasks.
COMMITMENT TO RESULTS
• We are coherent and precise when establishing
our plan; we are disciplined regarding performance and focused when accomplishing established goals.
• We are bold in our search for individual and
collective goals (deliveries), without harming
the physical and psychological integrity of those
involved (employees, suppliers, communities and
customers), as well as, the company image and
reputation.
SEGMENT CONTEXT AND GROWTH STRATEGY
• We adopt creative and innovative solutions to
reduce the consumption of natural resources.
• We promote the environmental education of
the teams.
• We respect the local cultures and we are
development partners with the communities
where we operate, in order to leave a legacy
behind, such as projects that contribute to the
quality of life, well-being and future of these
communities.
FOSTERING HEALTH AND SAFETY
Corporate values translate the Group’s
“way of being” and market edge
• We seek to satisfy our customers by meeting
their needs, guaranteeing the generation of
added value for our shareholders, employees and
other business partners.
• We develop a constant relation with our customer so that we are always their choice, thus
generating new opportunities.
• We encourage, through constant dialogue,
strengthening the bonds between people and
teams in search for results.
RESPONSIBILITY TOWARDS
THE ENVIRONMENT AND THE COMMUNITY
• We implement long-lasting projects, together
with surrounding communities where we operate,
that respect the environment and reduce the
environmental and social impacts of our projects.
• We manage correctly the waste and effluents
generated in our activities and we monitored our
emissions.
• We are responsible and proactive in the adoption of healthy habits and in offering safe work
conditions.
• We identify and manage the risks that may
exist in our activities during every phase of the
project.
• We demand suppliers and service providers to
abide by our guidelines.
• We develop initiatives to promote and preserve
health.
COMMITMENT TO TRANSPARENCY
AND ETHICS
• We are correct with all our stakeholders and we
abide by the law.
• We give an example of good practices in our
activities, as well as maintain an open and constant dialogue with employees.
• We conduct our business and internal and
external relations in accordance to our Code
of Ethics.
• We value transparency through dialogue with
our stakeholders.
• We promote open dialogue with the teams
about: career, performance, strategy and
goals.
33
chapter
03
OUR
GOVERNANCE
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2012 annual report
Grupo Galvão
Efficiency, managerial flexibility, service excellence, social and environmental
responsibility and commitment to results lead management and operations
To support the growth and sustainable business
development strategies, we aim at maintaining a
corporate governance model in line with the market
best practices. We base our business on the principles of transparency, ethics, accountability and
fairness in interaction with various stakeholders.
In Grupo Galvão, we believe that our management structure is constantly being updated,
adapting to the needs of further improvement
in order to offer the necessary security to
perform in highly dynamic markets that require
agile decision-making, operational capacity and
responsible business practices.
Because of this, we maintain a lean organizational
structure with few hierarchical levels and clear
separation between the executive activities and
functions of planning, control and supervision, in
line with good corporate rules and, in particular, to
the rules of the Instituto Brasileiro de Governança
Corporativa (IBGC) [Brazilian Corporate Governance
Institute].
Our activities are coordinated by a holding - Galvão
Participações S.A, a privately held company responsible for providing the necessary stability to the
management, ensuring security for shareholders,
investors, staff, customers and partners. Our companies are under its guidance and seek to convey
the values of our culture to companies controlled by
them or in which they have a stake, such as subsidiaries, consortiums, joint ventures and public-private
partnerships (PPP).
Efficiency, managerial flexibility, service excellence, social and environmental responsibility and
commitment to results are fundamental principles
which lead management and operations. Our
companies actions are blueprinted by the Strategic
Guidance, a corporate document that covers all
the business and that, by having a timeframe of
GRI
2.8
our governance
achievements up to 2020, serves as a reference
for the formulation of strategic planning and business plans (read more about the Strategic Orientation document on page 25).
GRI
2.9
GRI
2.3
In 2012, our governance model continued to
evolve, with the introduction of changes that
aimed at keeping the management in line with
shareholder aspirations and market realities,
such as changes in the organizational structure
of Galvão Engenharia, with the incorporation of
the international business department to the
Infrastructure Division, the entrance of the Banco
National de Desenvolvimento Econômico e Social
Participações (BNDESPar) in the shareholding
structure of CAB ambiental and the creation by
Galvão Óleo e Gás of a joint venture to provide
services related to the deepwater extraction and
production of oil and gas.
Below is our corporate governance structure
profile:
ORGANIZATIONAL STRUCTURE OF GRUPO GALVÃO
Board of
Directors
External
Auditor
Advisory
Board
Risk
Committee
Presidency
Planning
and Management
Structured Finance
Vice Presidency
of Corporate
Management
Institutional
Relations
QSMS
Shared
Services Center
ambiental
Infrastructure
Division
ambiental
ambiental
Industrial Engineering
Division
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2012 annual report
Grupo Galvão
GOVERNANCE STRUCTURE
• Establish the general guidance of the company’s
business.
GENERAL SHAREHOLDERS MEETING
• Elect, remove, and replace company directors.
This is Galvão’s sovereign body, voting on issues
of interest to the society, as determined by
Corporate Law. Ordinary meetings are held four
months following the closure of the previous
fiscal year, whereas extraordinary meetings can
be summoned at any time when needed. Among
its attributions is the election of members to the
Board of Directors..
GRI
4.1
4.3
4.4
BOARD OF DIRECTORS
It is the forum of deliberation on strategic issues
regarding the organization. It is comprised of up to six
members, all of whom are shareholders and elected
at the General Shareholders Meeting. Members serve
for three years, with the right to successive reelections for the same period. The Board meets ordinarily
every quarter or upon extraordinary summons.
• Inspect management of directors.
• Select, and if necessary, remove independent
auditors.
• Assess the Annual Report and financial
statement, and approve its submission to the
General Shareholders Meeting.
• Approve the annual and pluri-annual budgets,
strategic plans, strategic plans and investment
programs of the company, as well as monitor
their implementation.
• Approve loans and financing whenever the principal is over 10% of equity.
Among its attributions, the following can be
highlighted:
GRI
• Decide on the summoning of the General Shareholders Meeting.
COMPOSITION OF THE GROUPS RESPONSIBLE FOR CORPORATE GOVERNANCE
LA13
By gender
Per age group
Groups
Shareholders/
Board of Directors
Total
Women
Men
Below 30
Between
30-50
Over 50
2011
1
5
0
2
4
6
2012
1
5
0
2
4
6
2011
2
28
0
11
19
30
2012
2
38
0
17
23
40
2011
0
4
0
4
0
4
2012
0
0
0
0
0
0
Executive Board
Advisors
our governance
• Decide on the issuance of securities.
• Approve the sale, alienation or encumbrance
of equity.
• Vote on spin-off, merger or consolidation
or restructuring proposals.
GRI
4.2
EXECUTIVE BOARD
With the responsibility to administer and manage
the activities and interests of Galvão Participações
and of the Group, the Executive Board is currently
comprised of five members: the Chief Executive
Officer, the Vice President of Corporate Management, the Chief Financial Officer, the Director of
Planning and Management and the Director of
Shared Services. Members serve for three years,
with the right to reelection, but may be removed at
any time by the Board of Directors.
The five companies of the Group (Galvão Engenharia, CAB ambiental, Galvão Óleo e Gás Participações, Galvão Energia and Galvão Finanças), act
under the general guidance of the Chief Executive
Officer, with their respective divisions, subsidiaries
and operations and respective strategic control
and operations bodies.
The Vice President of Corporate Management
coordinates the financial and capital structure
of the Group, including also the organs of planning and management. His main attributions are
to ensure the efficiency of corporate management and the maintenance of good corporate
governance practices and the principles of
non-discrimination, besides ensuring transparency, accountability and securing the financial
resources necessary to meet the working capital
needs and funding of long-term investments,
with the aim of contributing to making sure the
The Shared Service Centre provides support
to the Group’s companies activities
development of business is being done in line with
the strategic planning and business plans.
Our executive structure also relies on support
organs, such as the Institutional Relations, who,
under the inspiration of the Chief Executive Officer,
coordinates with government agencies, media
and society about the Group’s business, helping to
strengthen the transparency with which we seek to
interact with all audiences.
SHARED SERVICES CENTER (CSC)
Created in 2011, it provides support to the management and operations of our businesses in the
areas of staff management, human resources,
legal, corporate finance, controlling and information technology (read more about it on page 45).
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2012 annual report
Grupo Galvão
The Group maintains compliance practices to ensure the adaptation of its
control systems to the principles of corporate governance
ADVISORY BODIES
ADVISORY BOARD
Responsible for issuing recommendations on topics that are submitted to it by the Executive Board
or by the General Shareholders Meeting. The Board
is comprised of up to three members elected by
the Assembly for a one year term, with the right to
reelection for the same period.
• Ensure that business is conducted in accordance
with current legislation as well as internal policies
and procedures.
• Establish procedures for the receipt, retention and
treatment of claims and / or complaints submitted
by the employees or third parties.
• Discuss the effectiveness of internal controls
and processes with the Internal Audit.
AUDITING AND RISK COMMITTEE
It is comprised of at least three permanent members – a representative from the Executive Board
of Grupo Galvão, one from Galvão Participações
Corporate Management and one from the Group’s
compliance area. Among its attributions, the
following can be highlighted:
• Identify and monitor key strategic risks involved
in the activities of Grupo Galvão, and follow-up
on risk in management and operations mapped
by the management team of each company.
• Monitor the accounting closing process and preparation of Financial Statement as well as analyze
relevant information to be disclosed to the market.
• Monitor the activities of the internal auditors, in
addition to supervising the performance, independence and quality of work performed by the
independent auditors.
• Monitor the selection and hiring process of
external audit.
our governance
SUPERVISORY BODIES
Compliance
Has the responsibility to ensure, together with
the other areas, the adaptation and functioning
of the Group’s internal controls, in line with
good corporate governance practices. The
compliance area also operates in risk mapping
and in monitoring compliance of laws, regulations,
policies and guidelines.
INTERNAL AUDIT
Performs the audit of management and
operation processes in order to ensure
compliance with internal policies and procedures.
Also has the responsibility of validating the
efficiency and effectiveness of controls
established by the Executive Board for the
compliance area, through the issuance of reports
listing conformities and non-conformities.
This work serves as a basis for improvement of
internal policies and procedures.
SUPERVISORY BOARD
Non-permanent body which monitors
management, analyzes information and
Financial Statement, at least quarterly. It is
comprised of three to five members, with
mandate of one year and eligible for reelection.
INDEPENDENT EXTERNAL AUDIT
Chosen by the Board of Directors, it monitors and
oversees the yearly Financial Statement, issuing an
opinion on them.
The Governance model is based on transparency, ethics, accountability and
non-discrimination in the interaction with various publics
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Grupo Galvão
ETHICS IN
RELATIONSHIPS
As a business organization as deeply embedded in the life of the
Country and its communities, we seek to maintain fair, balanced
and respectful relationships with the various social segments.
Developed in a participatory manner, with the involvement of
employee representatives, the Code of Ethics is a disciplinary
tool for our all relationships - internal and external.
Attentive to the specificities of each area, but grounded
by the guidelines issued by the Group - this document
ultimately summarizes, our “way of being”, our culture
and our values regarding teams, customers, partners,
the government, communities, society, competition and
entities - class and sector specific.
By recognizing our importance as economic agents, we look to
participate in organizations that contribute to the sustainable
development of our industry and Country. Among them, we can
highlight the Associação Brasileira da Infraestrutura e Indústrias
de Base (Abdib) [Brazilian Association of Infrastructure and Base
Industries], Sindicato Nacional da Construção Pesada (Sinicon)
[National Trade Union of the Heavy Construction Industry], Federação das Indústrias do Estado de São Paulo (Fiesp) [Federation
of Industries of the State of Sao Paulo], Associação Nacional das
Empresas de Obras Rodoviárias (Aneor) [National Association
of Road Construction Companies], Associação Brasileira das
Concessionárias Privadas de Serviços Públicos de Água e Esgoto
(Abcon) [Brazilian Association of Private Water and Sewage
Operations], Sindicato Nacional das Concessionárias Privadas
de Serviços Públicos de Água e Esgoto (Sindcon) [National Union
of Private Concessionaries for Public Services for Water and
Sewage], Associação Brasileira de Engenharia Sanitária e Ambiental (Abes) [Brazilian Association of Sanitary and Environmental
Engineering] and Instituto Trata Brasil [Brazilian Trata Institute].
GRI
S06
DONATIONS TO POLITICAL PARTIES
We act in compliance with the financial contributions policy
to political parties and candidates, following the prevailing
legislation on the subject. We do this solely through
Galvão Engenharia. Donations to political parties, finance
committees and candidates, all in Brazil, reached a total of
BRL 18.7 million in 2012.
RISK MANAGEMENT
As part of the governance strategies and
commitment to the sustainability of the
business, we seek to maintain an effective risk management policy that may
impact operations, economic and financial results and our corporate image.
GRI
4.1
Aware of the inherent risks associated
with our businesses, we employ a management model that seeks to minimize
the effects of unexpected events in the
internal processes, project execution,
contract development and cash flow. As
we consider this issue to be of strategic
importance, we have a corporate body
exclusively devoted to the topic - the Risk
Committee, which reports directly to the
Executive Board and acts as a disciplinary
tool for the organization as a whole in this
subject.
Under general direction of the Committee, our actions aim at identifying,
analyzing, quantifying and documenting
the risks we are subjected to- including
those external to contracts - by adopting
measures which prevent the occurrence
of deviations or which mitigate their
consequences.
We mapped out four major risk groups.
They are:
Strategic Risks – Related to strategy,
image, reputation and governance of our
Group and of our companies. These are
risks that may affect the actions outlined
in our strategic plans.
our governance
The Group seeks to maintain an efficient management of risks that
could affect the operations, performance and corporate image
Managerial Risks – Related to business
performance and monitoring. These are
risks that may impact the Group’s activities
and companies in issues such as profitability
and debt.
Operational Risks – Related to the processes, to
the recognition of revenue, expenses, and the
safeguarding of assets. These are risks related
to operational activities, including processes,
activities and transactions.
Financial Risks – Related to capital structure,
guarantees to fulfill the commitments and
interest rate fluctuations that can impact our
economic-financial stability and cash flow.
OPERATIONAL RISK MANAGEMENT
As members of the Comissão de Estudo Especial
para Gestão de Riscos da Associação Brasileira
de Normas Técnicas (ABNT) [Comittee of Special
Studies for Risk Management of the Brazilian
Technical Standards Association], we guide our
actions based on the content of the internationally recognized ISO 31000 standard. This means,
for example, that our control tool, the Risk Management Plan (PGR), is in line with the principles
and guidelines of this standard. Developed internally, the PGR aims to monitor and propose measures to mitigate risks in our business operations.
Despite maintaining a decentralized operational
risk management, due to the local nature and the
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2012 annual report
Grupo Galvão
DESPITE MAINTAINING A
DECENTRALIZED OPERATIONAL
RISK MANAGEMENT, WE ALSO
HAVE A CONTROL AREA WHICH IS
RESPONSBILE FOR DISSIMINATING
diversity of our operations, we also have a
corporate area of management and control,
which is responsible for disseminating information, monitoring internal practices and updating
policies related to the theme. This area gives
the necessary support to the managers of each
project or operation so they can exercise their
responsibilities with regard to risk management.
INFORMATION, MONITORING
INTERNAL PRACTICES AND
UPDATING POLICIES
In 2012, the process of analysis and qualification of new businesses
from the perspective of opportunities and risks was introduced
In 2012, we experienced significant improvements to the management and control processes. One of the most important advances
was the introduction of a new business analysis
and qualification process from the perspective
of opportunities and risks. With this, the organization, as a whole, becomes more critical and
selective when examining potential projects,
analyzing risks and prioritizing the allocation of
investments in more qualified opportunities.
The expectation is that this model will be
improved and extended throughout the value
chain, consolidating the so called end-to-end
management. In this effort, the priority items
of work are as follows:
• Proactive management, with strategic
direction, business focus and effective support to projects and areas that require our
contribution.
• Improved analysis of budgets and reprogramming by consolidating the quantitative and qualitative results, providing
greater transparency and insight to the
values and projections of the projects.
• Selection of the most important and
relevant projects to monitor and deepen
the correct application of procedures of
our governance
The Group maintains insurance policies
compatible with the size of the activities
management, besides monitoring the physical
progress, the risk coefficient and management.
• Improvement in the control of expenses and investments in financially structured projects (Project
Finance), in correlation with the expected budget.
• Adoption of management information (actual
and planned) systems, simplifying paperwork
and deviation assessment reports.
Due to the nature of our activities as service providers, we are subject to internal and external risks
whose occurrence can slow the progress of our
works. Given the scope of our contracts, we are
subject, for example, to adverse weather conditions
affecting the pace of work and errors and unanticipated changes to the project. Externally, our operations are subject to legal obstacles, delays, project
postponement by customers and budget revisions.
FINANCIAL CAUTION
Our Group has a low level of exposure to financial risks. In addition to having a solid capital
structure and low leverage, our debt remains at
a compatible level with the size of the business
and expansion plans.
Also as part of the precautionary principle, we do
not operate in the financial market with options
and derivatives, which minimizes the possibility
of financial risks in our operations. Our cash and
cash equivalents are always invested in low risk
and high liquidity funds managed by leading banks.
Additionally, we are not subject to currency risk
in financial transactions, whether at funding level,
or in the import of goods and services. Our policy
requires all purchases in other currencies to be
supported by a foreign exchange hedge, thus
eliminating the risk of currency fluctuations.
GRI
EC4
45
46
2012 annual report
Grupo Galvão
In 2012, insurance contracted by our companies totaled BRL 1.7 billion
INSURANCE MANAGEMENT
Grupo Galvão maintains insurance policies
compatible with the size of the activities. We have
a policy that defines the mandatory insurances
and which risks may be borne by our businesses
and operations, as well as the boundaries that
should guide decisions. In other words: through the
analysis of each project, we define whether a given
risk can be assumed by the organization or if it will
be transferred to the insurance market.
Given that the analysis includes contractually required
insurance, insurance linked to the well-being of the staff
(life and health), liability and protection of property, we
can state that all of the Group’s projects have insurance.
In 2012, the value of insurance hired by our
companies totaled BRL 1.7 billion, an amount
corresponding to 47% of the Group’ annual
turnover. The total was 27% higher compared
to 2011, as a result of the corporate priority of
working in large projects.
Regarding the amount of insurance hired in 2012,
Galvão Engenharia accounted for BRL 1.2 billion
(38% of its annual revenue). CAB, on the other
hand, recorded an insured sum of BRL 514 million
(132% higher than its annual revenue).
As a result of fierce competition in the
insurance market, in 2012 we were able to
significantly reduce the bonds in comparison
to the previous year. Likewise, as a result of our
proactive relationship with the market and of
our economic-financial soundness, we were
successful in maintaining our limit with insurers.
our governance
SHARED SOLUTIONS CENTER (CSC)
As a result of the constant evolution of our
business model, we have a shared solutions center
(CSC) since 2011, a multidisciplinary body set
up to provide support to the management and
operations of our businesses through a unified
support system that brings together the fields of
law, human resources, staff management, control,
finance, administration and general services and
information technology.
With the establishment of the CSC, redundancies
were eliminated in the execution of services, by
aligning internal processes and procedures and by
adopting common guidelines for the various areas.
The initiative also provided the organization gains
in agility and cost optimization.
In 2012, the performance and service delivery
have been enhanced and strengthened with
the incorporation in the CSC of quality, safety,
environment and occupational health and
management and control. Another important
step was the consolidation of a new model for
allocating costs for the services executed, with
the objective of transferring resources to reflect,
as closely as possible, the level of demand of
each area of support by various companies and
operations.
In the last year, the Center’s work has also
evolved with the integration of areas relating to
the management of CAB ambiental, such as staff
management and human resources. At first, as a
way of promoting the progressive assimilation, by
the culture of the Group, of the responsibilities of
the CSC, we had chosen to keep these services
segregated in CAB’s structure, particularly in the
areas of taxation and accounting. Building on last
With the CSC we eliminated a superfluity in services
by aligning processes and internal procedures
year’s successful experience, other steps will
be taken in 2013, to promote the full integration
of CAB’s structure in the CSC, naturally taking
into account, for its implementation, the needs
and level of maturity of each of the company’s
operations.
The achievements of the year created conditions
so that we can, from now on, invest in providing
more advanced tools for management. Developed
in 2012, to be implemented in 2013, the project
to improve governance, enterprise security
and workflow will be accomplished through
optimization of routines, review of internal
processes and procedures and the integration
of databases used by companies and operations.
This action should generate, among other
advantages, the centralization of tax, accounting
and payments, the unification of supplier
registries, cost center and account plans, greater
predictability to control cash flow and greater
agility in providing financial information.
47
chapter
04
our
people
CAB Cuiabá (MT) offices
50
2012 annual report
Grupo Galvão
WE WORK TO ATTRACT,
DEVELOP AND RETAIN
TALENTED PROFESSIONALS
THAT ADD VALUE TO
MANAGEMENT, BUSINESS
AND OPERATIONS
At the end of 2012, the Group
had 9,455 direct employees
Valuing employees constitutes one of the
permanent goals of Grupo Galvão. It’s human
capital is its most important competitive
edge. With our actions and initiatives, we seek
to consolidate ourselves as one of the best
organizations in the country to work at. That
means offering an ethical, dynamic, creative
environment full of opportunities and that
respects diversity.
In order to reach that goal, we invested in training,
dialogue between teams and managers, incentive
to study as a way to evolve in the career and in
forming leaders.
We work to attract, develop and retain talented
professionals that add value to management,
business and operations. That is more than
justified if we see the evolution of the staff, the
size and the diversity of our operations, which
demand, more and more, skilled and apt workers to
overcome the challenges of the segments in which
we work. By the end of 2012 we had a total of 9,455
employees, about 50% more than last year.
COMMITMENT
It is in the Shared Solutions Center where
the policies related to human resources are
developed and applied. We seek to constantly
measure and qualify the opinion of employees
concerning the work, in order for us to have
concrete references to adopt measures to
improve and correct our path.
For that reason, diagnoses resulting from opinion
surveys are very important, since they refer to
the professional environment. An example is
the Commitment Survey conducted annually,
our people
with companies from all over the country, by the
consulting company AON Hewitt, together with
the newspaper Valor Econômico – which serves as
an important source of information for corporate
performance.
The 2012 edition of the survey was particularly
GRI
LA1
Number of employees by employment type, 2012
Company
Interns
Type of
employment
(Full Time)
Type of
employment
(Part Time)
8,248
8,235
13
8,159
89
CAB ambiental
1,164
1,161
3
1,152
12
Galvão Finanças
9
9
0
9
0
Galvão Energia
9
9
0
9
0
Galvão Óleo e Gás
1
1
0
1
0
24
24
0
24
0
9,455
9,439
16
9,354
101
Type of
employment
(Full Time)
Type of
employment
(Part Time)
Total
LA1
Total
Direct Employees
(working under
CLT regime for
undetermined time)
Galvão Engenharia
Galvão Participações
GRI
relevant to our organization. First of all,
because of the overall result, which indicated a
commitment of 70% of Grupo Galvão employees
– which kept us among the companies with “high
performance” in people management. Overall,
1,317 employees of the Group participated, 65%
of people invited to answer the survey.
Number of employees by employment type and region, 2012
Region
Total
Direct Employees
(working under CLT
regime for undetermined
time)
Interns
Mid-West
741
741
0
732
9
Northeast
2,054
2,044
10
2,038
16
22
22
0
22
0
6,322
6,316
6
6,248
74
South
192
192
0
190
2
Peru
124
124
0
124
0
Total
9,455
9,439
16
9,354
101
North
Southeast
51
52
2012 annual report
Grupo Galvão
NUMBER OF EMPLOYEES BY AGE RANGE
Employees
2011
2012
Below 30
2,256
3,345
From 30 to 50
3,393
5,091
676
1,019
6,325
9,455
Above 50
Total
BY GENDER
Employees
Men
Women
Total
2011
2012
5,647
8,585
678
870
6,325
9,455
BY LEVEL OF EDUCATION
Level of Education
2011
2012
17
12
Until 4th grade incomplete
elementary school, or
literate without regular
school attendance
485
565
Complete 4th grade
elementary school
397
547
From 5th to 8th grade
incomplete Junior high
585
1,043
Complete junior high
780
1,323
Incomplete high school
351
774
2,495
3,923
Incomplete college
195
211
Complete college
894
902
Postgraduate education
71
101
MBA completed
48
45
7
9
6,325
9,455
Illiterate
Complete high school
Master’s Degree completed
Total
The survey included topics such as career
opportunities, quality of life, human resources
practices and leader performance.
The survey brought good news to Galvão
Engenharia, which came back to the ranking
of 30 best companies in the country in people
management, with 81% commitment, a number
resulting from a random sampling used by Valor
Econômico using the survey data. Based on
the same criteria, the newspaper classified the
company in 5th place in its category (companies
from 4,001 to 10 thousand employees).
The survey also contributed with indicators that
point out necessary improvements, like it did
with CAB. Participating in the survey for third
time, the company presented a significantly
lower performance compared to 2011 – 63%
commitment in comparison to the 73% attained
last year.
The result did not just reflect the events
experienced by the company during the period,
such as changes in its management structure
that reflected on the routine of employees.
It also showed the importance of getting the
values out there to all the companies of the
Group; the values that make up our identity and
the corporate commitments that stimulate the
company to grow and reach results.
It is not by chance that one of the main focuses
of our performance in 2012 was strengthening
the Group’s culture internally, reinforcing a sense
of unity. An example of this is the review of the
hierarchy and salaries in CAB and Galvão Finanças,
adapting them to the rest of the organization.
One of the goals of the consolidation of this
joint structure was to simplify internal use of
our people
employees among companies, besides making
it possible for the organization to have a more
efficient career plan.
PROFESSIONAL DEVELOPMENT
ones. In 2012, in addition to activities aimed at the
Group’s culture, the trainings included topics like
leadership and feedback. As part of the unification
process, we integrated the CAB employees to
corporate trainings – before, the company’s
teams participated in specific training initiatives.
The development of professional aptitudes is also
an important aspect of the people management
actions adopted by the Group. For this, we use
several means – the one that stands out is the
implementation of training programs to train
professionals for their current tasks and future
We also expanded distance trainings, through
e-learning tools, making it easier for people to
access the programs developed. In the work
sites and operations environment, the behavioral
approach was one of the highlights, with trainings
on feedback and project management
The training programs aim to train employees
in their current tasks and future ones.
53
54
2012 annual report
Grupo Galvão
GRI
LA10
At the end of 2012, we counted a total of 217,844
thousand training hours (distance or in-class), with
an average load of 26.4 hours per employee. In total,
BRL 1.3 million were invested in professional training
programs, 44% less than in 2011.
Since we are in a segment that increasingly
demands more and more trained professionals
– and in greater quantity –, we have to pay
GRI
LA13
close attention to the development of young
talents. That is why, since 2006, we have the
Trainee Program, that represents a long-term
investment seeking to offer Engineer and
Business graduates opportunities to begin their
professional career. In 2012 we finished the
cycle that had begun in 2011 and it included the
participation of 48 people. In 2013 there will be a
new selection process.
PROFILE OF EMPLOYEES BY CATEGORY, ACCORDING TO GENDER AND AGE RANGE, 2012
By gender
By age range
Groups
Women
Shareholders/
Board of Directors
Men
Below 30
From 30
to 50
Total
Above 50
2011
1
5
0
2
4
6
2012
1
5
0
2
4
6
2011
2
28
0
11
19
30
2012
2
38
0
17
23
40
2011
0
4
0
4
0
4
2012
0
0
0
0
0
0
2011
15
151
0
120
46
166
2012
16
161
0
122
55
177
2011
98
390
219
226
43
488
2012
109
493
210
318
74
602
2011
51
549
73
396
131
600
2012
60
651
68
491
152
711
2011
334
598
460
404
72
932
2012
327
467
363
394
37
794
2011
174
3,924
1,504
2,235
359
4,098
2012
355
6,771
2,704
3,746
676
7,126
Administration
Consulting
Managers
Technicians
Coordinators/
Responsible
Management
Production
our people
Management strategies also aim to qualify professionals
to perform leadership roles
Other two important corporate initiatives in the
professional training aspect are the Incentive for
Education Program, which offers financial support
to employees interested in furthering their
schooling in university and postgraduate studies;
and the Building Knowledge Program, to train
workers in basic education (find out more about
the program on page 112).
LEADERSHIP TRAINING
The people management strategies aim to train
professionals to be in leadership positions, which
is one of the prerequisites to ensure the longlasting success of the organization. Our main
instrument is the Leader Development Program
(PDL), which in 2012 was spread to all the Group’s
companies.
The program’s main goal is to train these
employees to have strategic responsibilities and
to lead teams. Last year, a total of 112 managers
participated in the Program, with a 16-hour load,
distributed in trainings about topics such as
self-knowledge, feedback, situational leadership
and role of the leader in the spread of the
organizational culture.
A survey conducted in 2012 showed that the
perception of the leaders concerning the Program
was excellent. Conducted with 105 managers
(93% of the total participants), the survey
approached topics like teaching methodology,
quality of the didactic material, application and
consistency of information and knowledge
transmitted.
Supporting the development of leadership
skills is expressed also through actions to
spread knowledge that supersede the limits of
the organization, by making available articles,
interviews and recommending books, movies and
documentaries. In 2012, for example, the channel
“Minuto Gestão e Carreira” was created. It is a
weekly e-bulletin letter sent to managers, which
approaches issues like leadership, communication
and interpersonal relationships.
55
2012 annual report
Grupo Galvão
PERFORMANCE EVALUATION
AND FEEDBACK
SPREAD THROUGH ALL
OF THE GROUP’S COMPANIES
IN 2012, THE PDL PROGRAM IS
One of the greatest challenges of the Group’s people
management has been improving the dialogue between
leaders and their teams, making it a constant practice and
important resource to improve as employees.
THE MAIN ISTRUMENT
TO TRAIN LEADERS
AND SEEKS TO ENSURE
We have several tools available to improve this interaction,
which contributes to the motivation of employees and
their commitment with the corporate principles and
results to be reached.
THE ORGANIZATION’S
LONG-LASTING SUCCESS
One of the most important instruments is the
Performance Evaluation. It is conducted annually and
registers and consolidates the path and evolution of each
professional in the organization. It identifies technical
and behavioral skills and indicates paths that lead towards
more knowledge and individual growth.
EVALUATION OF THE SURVEY ABOUT THE LEADER DEVELOPMENT PROGRAM (IN %), 2012
66
59
82
83
57
73
86
47
58
52
Excellent
Good
41
t
men
Equip
s
room
ies o
f the
Phys
ical f
acilit
ation
al ma
teria
l
2
Educ
1
14
ed m
etho
dolo
Relat
gy
ionsh
ip be
twee
n inst
ructo
r and
Grou
p
ctivit
y
obje
ge
owle
d
r’s kn
ucto
Instr
abilit
y at w
ork
Appli
c
tion
form
a
of in
Volu
me
y of in
form
a
tion
3
47
51
42
26
1
17
Appli
18
Clarit
y and
38
34
Cons
isten
c
56
Fair
Weak
our people
Applied in each of the Group’s companies, the
Performance Evaluation has some essential
stages, such as: employee self-evaluation
concerning performance, performance analysis
carried out by an immediate manager, and
feedback that is given to each professional about
their performance and attitudes. Emplooyes also
receive feedback on the improvements necessary
in order to sharpen skills, essential to advance
career-wise.
GRI
LA12
In 2012, the Performance Evaluation was not
carried out. It gave way to communication
campaigns about the importance of feedback
and specific trainings concerning the topic.
The interruption was to promote the alignment
between all companies. An important
advancement was the implementation of a
procedure where employees evaluate their
leaders, thus increasing the level of transparency
in work relations.
In Grupo Galvão, 36% of employees regularly go
through some type of evaluation process, and
Program “Talk to the President” makes it possible for people
to speak about topics that impact their day to day at work
GRI
LA13
DISTRIBUTION OF LEADERSHIP ROLES BY GENDER
ROLE
Gender
Administrative
Engineer
specialists
Leadership
Operational
Technicians
Total
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
Female
334
328
49
39
72
78
174
355
49
70
678
870
Total females
participating
36%
41%
20%
17%
9%
8%
4%
5%
19%
19%
11%
9%
Male
598
466
199
192
735
855
3.924
6.771
191
301
5.647
8.585
Total males
participating
64%
59%
80%
83%
91%
92%
96%
95%
81%
81%
89%
91%
Total
932
794
248
231
807
933
4.098
7.126
240
371
6.325
9.455
57
58
2012 annual report
Grupo Galvão
Programa Fale com o Presidente possibilita a livre manifestação das
pessoas sobre temas que impactam o dia a dia do trabalho
receive analysesconcerning their performance
and career development. At Galvão Engenharia,
only full-time employees are analyzed. The other
companies have specific strategies.
“TALK TO THE PRESIDENT”
The consolidation of a good professional
environment is also directly related to the possibility
of people being able to discuss topics that impact the
environment and the organization’s performance.
Based on this principle, we have the program “Talk
to the President”, aimed at presenting criticisms,
suggestions, ideas and complaints (anonymous or
not) that help improve the Group’s activities, work
conditions and professional relationships.
Through boxes scattered in 28 locations all
over the companies, or through the corporate
web portal, the program seeks to be the
major expression channel for employees and
propositions to the administration, in addition to
increase daily contact between managers and
their teams.
In 2012, a period in which the integration process
of the program was established as a similar
program had by CAB, “Talk to the President”
registered a total of 181 messages, which were
duly analyzed and, when necessary, sent to be
solved with fair and adequate solutions.
GOAL PROGRAM
In 2012, the people management strategies
gained the Goal Program, created to strengthen
the commitment of people through recognizing
results obtained by employees in their daily
work. The program aims to monitor and reward
each person’s deliveries and award each one,
individually, for fulfilling the professional goals
agreed with their leaders.
Valuing meritocracy is the basis of the program,
which also works as a parameter to apply the
variable remuneration system and participate in
the results of the companies. These results are
based on the fulfillment of individual, area and
company goals. The initiative came up as a plan of
our people
action after the analysis of the 2011 Commitment
Survey results.
REMUNERATION AND REWARDS
The wage and rewards policy is an essential
element for the viability of our people
management strategies. That is why we have
constantly monitored the reward practices
adopted by companies in the infrastructure
segment and by organizations of other areas of
national economy, aiming to keep our wage levels
attractive and aligned to the best practices.
GRI
LA14
In 2012 we reviewed CAB’s job positions and
salaries aiming to integrate it to the Group’s
general guidelines. In the same way, we reviewed
its variable remuneration policy, in order to
reinforce employee commitment.
It’s worth mentioning that there is no gender and
age discrimination when hiring nor when giving
promotions or remunerations. As an expression
of our “way of being”, we value gender equality
when offering opportunities to employees
so they can grow professionally, take on
management positions and obtain wage raises.
RELATIONSHIP BETWEEN THE LOWEST WAGE
COMPARED TO MINIMUM LOCAL WAGE*
GRI
EC5
Wages (%)
Companies
2011
2012
Grupo Galvão
1.00
1.00
Galvão Engenharia
1.00
1.11
CAB ambiental
1.00
1.00
Galvão Energia
2.47
2.58
133.94
123.79
Galvão Finanças
3.41
3.77
Galvão Participações
1.92
2.04
Galvão Óleo e Gás
AVERAGE WAGE BY GENDER AND CATEGORY (IN BRL)
LA14
Role
Gender
Administrative
Specialist
engineers
LA4
The possible wage differences between people
in the same job position are due to objective
criteria, such as complexity of the job (which
varies depending on type of project or operation),
individual results and local economic factors,
such as conventions and agreements with labor
unions (all of our direct employees are covered by
a collective agreement) and lack of manpower. The
* In 2011, the calculation was done only for Galvão Engenharia. As of 2012, the
calculation was done for the whole Group.
GRI
GRI
Leadership
Operational
Technicians
2011
2012
2011
2012
2011
2012
2011
2012
2011
2012
Female
2,830
2,670
8,009
8,490
9,928
10,959
1,295
1,276
3,118
3,114
Male
3,383
3,194
9,349
9,653
9,962
11,955
1,487
1,601
3,502
3,808
Difference between
average wage between
females and males
-20%
-20%
-17%
-14%
0%
-9%
-15%
-25%
-12%
-22%
59
60
2012 annual report
Grupo Galvão
GRI
EC7
GRI
LA2
geographical factor also influences the proportion
between the lowest wage paid in a specific work
sites or operation and the minimum regional wage.
roles. Managers linked to regional units are natural
candidates for the leading roles in conquered
projects.
Concerning training processes for teams working
in our work sites and operations, we adopted local
hiring for operational and administrative roles, and
transfers and internal replacements for strategic
Our people management also pays attention to
the way in which employment is interrupted in
the organization. Our policy is to monitor all the
termination cases, in order to support or reuse
people in other areas or companies of the Group.
TURNOVER RATE – Grupo Galvão*
Company
WORK CONDITIONS
2011
2012
39,66%
26.75%
Cab ambiental
–
12.79%
Galvão Energia
–
0.00%
Galvão Finanças
–
25.00%
Galvão Óleo E Gás
–
0.00%
Galvão Participações
–
8.33%
Galvão Engenharia
By age range
2011
2012
Below 30
–
17%
From 30 to 50
–
23%
Above 50
–
35%
By gender
2011
2012
Women
–
22%
Men
–
25%
By region
2011
The Group’s concern with the quality of the
professional environment in construction sites
gained an additional instrument in 2012, with the
implementation by Galvão Engenharia, of the
first Workers’ Committee, based on the National
Commitment to Improve Labor Conditions in the
Construction Industry, signed by the President of
the Republic with the organizations that represent
employees and employers in the construction
industry.
Structured by project, the committees are
created by employees appointed by the unions
in each region. Its members are responsible for
representing their colleagues, obtaining claims,
questions and suggestions, serving as a support
for solving issues and helping to improve work
conditions
2012
Midwest
–
16%
Northeast
–
21%
North
–
30%
Southeast
–
24%
South
–
61%
Peru
–
43%
* In 2011, the calculation was done only for Galvão Engenharia. As of 2012,
the calculation was done for the whole Group.
GRI
TOTAL ADMISSIONS AND DISMISSALS
LA2
2011
2012
Admissions
213
169
Dismissals
217
175
our people
The Group develops preventive activities aimed at
health and quality of life of employees
GRI
LA3
EXCLUSIVE BENEFITS FOR FULL-TIME EMPLOYEES
(IN BRL THOUSAND)
Benefits
2011
2012
24,703
47,563
127,260
147,493
5,019
6,357
20.908
26,407
Safety and health at work
826
5,238
Training and professional
development
1.970
2,273
Participation in profits or
results
15,401
16,770
Others
43,304
9,451
239,391
261,551
Food
Compulsory social
contributions
Private pensions
Health
Total
Galvão has already installed three committees
– in Arena Castelão (CE), in the projects at the
Refinaria de Paulínia (Replan) and in the Belo Monte
hydroelectric power station. Under the National
Commitment, these ventures have already
implemented initiatives linked to recruiting, preselection and selection of employees, training and
professional qualification, health and safety, and
relationships with the community.
PENSION PLANS AND BENEFITS
All the employees in our companies have access
to the corporate private pension plan, Galvãoprev,
which aims to provide a financial complement
to the benefit offered by the Social Pension. We
have two types of participation: for those who
have a base salary above the Pension plan, the
companies and employees contribute with the
same percentage of resources.
GRI
EC3
LA3
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Grupo Galvão
COMMUNICATION
The nature and scope of our activities makes us
keep a continuous dialogue with the stakeholders. We do that through interaction channels
that aim to contribute to the organization’s
transparency.
In the internal sphere, one of the
communication’s main goals is to strengthen
the employees’ identification with the values of
the Galvão culture, thus favoring motivation and
professional commitment. We have several instruments available, each one with a specific role.
The corporate web portal is the main information
reference concerning the day to day of our companies and the corporate decisions that may affect
teamwork. The channel’s agility and reach are unique.
We also have a monthly e-newsletter “Galvão em
Ação Expresso”, that is sent by email to all the
employees that use computers at work. Focusing
on a deeper approach of the topics, the magazine
Grupo Galvão em Ação is distributed bimonthly to
Galvão TV can be accessed through the corporate web
portal or monitors installed in the Group’s units
production of theme material such as spelling
books, signs and pamphlets. The communication
aspect is complemented with actions that involve
not only the employees, but also their families.
An example is the celebration of Children’s Day,
which lets the children of employees, from ages
3 to 12, to celebrate the special occasion in the
Main Office in São Paulo, with fun activities.
every professional in our companies.
We also have TV Galvão, an institutional
communication vehicle that can be accessed
through the corporate web portal and monitors
installed in 13 of the Group’s units. In 2012, it
was spread to CAB spat headquarters, the first
of the company’s operations to receive the
images and information on TV.
Also part of that range of options we can find
murals placed in work sites and offices and the
In our relationship with stakeholders, we
emphasize the communication with the infrastructure sector, through institutional advertising in targeted channels, and interaction
with major media outlets as a way of ensuring
dialogue to present our positions as business
group. In 2012, the external communication was
strengthened with the creation of an e-newsletter (Grupo Galvão em Ação) that is distributed
to specific stakeholders chosen by the executives of the Group.
our people
healthy habits, we seek to encourage people to
practice sports.
Those who receive a base wage are offered
multiples of the salary when the employee retires
and leaves the company.
For example, we have running teams in São Paulo,
Rio de Janeiro and Fortaleza, which benefit about
70 employees with training programs and sports
consulting services, which elaborate personalized
routines and evaluate the individual performance of
the athletes.
We also offer direct employees a set of benefits
aligned to the best market practices. Among the
benefits are: food, transportation, day care center
aid, life insurance and health insurance. Our companies also have autonomy to negotiate benefits
according to specific realities. In 2012, the investments in benefits equaled BRL 261 million, 10%
more than in 2011.
OCCUPATIONAL SAFETY
AND HEALTH
QUALITY OF LIFE
Our people management is also involved in the
development of activities that positively reflect
in employee health and quality of life. Given the
decentralized nature of our activities, we have several
local programs. In the corporate scope, besides
awareness campaigns on preventive health and
GRI
LA7
Promoting health and safety of our employees is a
priority in our management model. Our companies
offer trainings for the prevention of accidents and
risk control in work sites, offices and operations,
aiming not only to abide by legal requirements, but
also to give the teams a more health environment
for their professional development. Exposure
to work risks is controlled by health and safety
RATE OF ABSENCE – GALVÃO ENGENHARIA, BY REGION
Region
Illness Benefit
Accident Benefit
(benefit/thousand employees)
(benefit/thousand employees)
2011
2012
2011
2012
Southeast
41.38
32.57
3.75
3.89
Midwest
270.09
7.90
1.89
0.26
Northeast
12.01
20.47
1.33
2.70
South
37.47
164.15
0
0
North
68.59
880.95
0
138.89
Total
33.83
27.24
2.92
3.28
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2012 annual report
Grupo Galvão
programs at work, which include monitoring,
supervising and educating efforts.
GRI
LA8
The health services management in work sites
includes two annual health internal audit cycles,
in order to ensure quality and improvement of
outpatient services in our ventures.
In the area of occupational health we work in
three aspects. We focus on primary prevention,
education and employee awareness on the most
prevalent illnesses in the population and those
related to occupational risks.
LA9
All our work sites and operations have the
Environmental Risks Prevention Program, a set of
actions that aim to preserve health and integrity
of the workers, through anticipation, recognition,
evaluation and control of the occurrence of existing
or potential environmental risks at work, taking into
account the protection of the environment and of
natural resources.
We have monthly talks about topics such as Aids and
sexually transmitted diseases, yellow fever, dengue,
cardiometabolic and bones and muscle diseases.
Concerning secondary prevention, we monitor
employees through medical protocols established
in the Medical Control and Occupational Health
Program, in order to trace and treat occupational
and degenerative diseases. We also have specific
initiatives regarding noise exposure through the
Hearing Conservation Program, and exposure to
dust and particles, with the Respiratory Protection
Program. Outpatient services also operate in
tertiary prevention with the follow-up program for
employees with hypertension and diabetes.
GRI
As a way of improving our perception of risks,
we apply identification methods like the
Preliminary Risk Analysis. We also incorporated
internal audits, which show us the current
scenario of each project and guide us to seek
excellence. We also encourage behavioral audits
and inspections designed to detect deviations
and unsafe work conditions, besides improving
employee behavior.
RATE OF ACCIDENTS PER REGION*
LA7
Region
Days lost
and charged
2011
Southeast
Days carried
forward
2012
2011
Total
2012
2011
TFCA
2012
TFSA
TG
2011
2012
2011
2012
2011
2012
571
266
1,066
317
1,637
583
3,34
0.86
4.63
3.31
28.93
31.24
0
12
0
90
0
102
0
0.00
0
0.00
0.00
23.51
13,804
461
116
84
13,920
545
2,04
1.83
2.41
3.40
1,292.13
37.03
South
109
0
0
0
109
0
6,17
0.00
7.60
0.00
112.06
0.00
North
0
0
0
0
0
0
0,00
0.00
0.00
0.00
0,00
0.00
14,484
739
1,182
491
15,666
1,230
2,95
1.15
3.67
3.67
492.06
32.22
Midwest
Northeast
Total
GRI
* Obs.: in 2012 we didn’t have projects in the South and North regions, TFCA calculations are used for international projects = (no. of accidents*200,000)/HHT; TFSA = (no.
of accidents*200,000)/HHT; TG = (Days lost + Days carried forward + Days charged)*200,000/HHT, while for Brazil we use the 1,000,000 factor according to NBR 14,280
our people
SIPAT involves employees in the safety cause through talks,
scavenger hunts, theater and motivational activities.
Performed before each workday, the Daily Safety
Dialogue is designed to discuss the activities
in terms of the risks related to the tasks and
application of control methods, stimulating
employee participation and commitment.
We have an annual Internal Week of Workplace
Accident Prevention (SIPAT), which, through
talks, scavenger hunts, theater and motivational
activities, communicates to employees the
importance of preventive behavior.
GRI
GRI
ACCIDENT STATISTICS GALVÃO ENGENHARIA (PERU)*
CONSOLIDATED ACCIDENT RATE – Grupo Galvão
LA7
2012
2011
2012
980,543
Total hours/men worked
31,837,500
38,173,216
Total accidents with leave of
absence (TFCA)
8
Total accidents with
leave of absence (TFCA)
94
44
Total accidents without leave
of absence (TFSA)
3
Total accidents without
leave of absence (TFSA)
117
140
Frequency rate with
leave of absence
2.95
1.15
3.67
3.67
Total hours/men worked
Frequency rate with leave of absence
1.63
Frequency rate without leave of absence
0.61
Severity rate
7
Frequency rate without
leave of absence
Total deaths
0
Severity rate
492.06
32.22
Total deaths
2
0
* The calculation for accident statistics in Peru is different from the calculation done
in Brazil. For that reason, the tables are separate
LA7
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Grupo Galvão
Our employees are represented by
occupational health and safety committees.
PRODUCTION CHAIN
The preventive effort concerning accidents
spreads to the partners that work or are involved
in constructions sites. As a way of expanding
safety in the projects, every service provider is
requested to abide by the norms and conducts
of the Group, following the guidelines of the
Integrated Management System. If providers don’t
abide by the contract provisions, it may lead to
sanctions.
In 2012, new advancements were made
to consolidate preventive culture. Galvão
Engenharia, which is responsible for the largest
number of employees involved in work sites and
operations, intensified monitoring of the reality of
work sites. In addition to internal audits in 100% of
the work sites, the company improved its control
instruments concerning service providers, in order
to avoid untrained employees from performing
roles that are incompatible with their skills. The
Zero Accidents Program was also implemented.
Throughout there year there was also a
strengthening of the Behavioral Audit Program,
which now directly involves shareholders and
company directors, who visited work sites to
monitor safety conditions. The program is
based on a methodology that seeks to prevent
accidents through observing employee behavior.
The involvement of the Administration adds
to the work done usually by regional directors,
contract managers and other representatives.
The results of the Behavioral Audits are
consolidated in the Indice de Prática Segura (IPS)
[Safe Practice Index].
On the other hand, the main implementation at
CAB was that of the monitoring of operational
procedures and instructions for activities
considered “Top 5” concerning accident risks –
work with electricity, excavation, work at heights,
work with chlorine gas and in confined spaces.
EMPLOYEE REPRESENTATION
Our employees are represented by occupational
health and safety committees. Every work site,
operation and office has an Internal Commission
for Accident Prevention (Portuguese), as required
by law. We also have a Specialized Service for
GRI
LA6
our people
GRI
LA9
GRI
PR1
GRI
PR2
Occupational Safety and Medicine (SESMT) and
quality and QEHS teams that regularly guide
employees and spread corporate policies and
guidelines.
The collective work agreements signed with
unions also include occupational safety and
health clauses. There are also special demands
that are covered in specific agreements, like
those related to the good conditions of sanitary
facilities, supply of individual uniforms and
protection equipment according to the risks,
first aid procedures, illness prevention and the
worker’s right to refuse to work in the event of
serious and imminent risk.
We mapped out our processes and activities in
order to evaluate the health and safety impacts
that occurred in the first stages of the life cycle
of our engineering, construction and water
and sewer services products. This includes
monitoring the phases of business prospecting,
services and post-sales (delivering projects to
customers and their use).
In 2012 Grupo Galvão didn’t register any
noncompliance with regulations and voluntary
codes related to possible impacts to health and
safety in its operations and services.
COMMUNICATING ACCIDENTS
When there is a work accident in the work sites
or operations, we dispose of a large support,
investigation and inspection structure. Those
responsible for the SSO area, representatives
and directors are quickly informed about the
incident through email, SMS and telephone, as
instructed by our communication protocols.
Then there is a Preliminary Accidents/Incidents
Communication, followed by a Safety Alert, which
is sent to the Group in order to avoid similar
incidents from happening in a work site or in
other units.
Each and every accident is registered in the
form, Relatório de Investigação de Acidentes
e Incidentes (RIAI) [Accidents and Incidents
Investigation Report]. For emergencies, we have
the Plano de Atendimento a Emergência (PAE)
[Emergency Plan]. Accidents (with and without
leave) are registered in the Accidents Registration
System and serve as a reference to improve
business practices.
The occurrence of any accident at work triggers extensive GRI
internal mobilization in order to prevent similar cases in the future
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Grupo Galvão
CHAPTER
05
OUR
BUSINESSES
Paulínia Refinery (SP)
OUR BUSINESSES
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Grupo Galvão
As an important business organization, Grupo
Galvão provides services to crucial segments
for the growth of the country, such as road
infrastructure, railways, ports, airports, basic
sanitation, oil and gas and power generation.
Below is a summary of our businesses’ performance in these areas.
has operations in 17 Brazilian states and abroad.
Galvão Engenharia
In 2012, the company consolidated a portfolio of
contracts of BRL 6.1 billion, with net revenues of
BRL 3.0 billion.
Founded on February 1, 1996, Galvão Engenharia
is one of the leading companies in the sector in
the country, providing services to customers in oil
and gas, energy, sanitation and road infrastructure,
ports, railways, subways, airports and urban.
Over the years, the company participated in some of
the most important works in progress in the country,
taking on projects of increasing complexity and technical demand. With 8,200 direct employees, Galvão
Arena Castelão (CE) was the first World Cup 2014 stadium to be inaugurated
In 2010, Galvão was chosen as the best company
in the construction sector, by Exame magazine’s
publication Melhores & Maiores, as well as the best
engineering, construction and real estate company
by Istoé Dinheiro magazine’s publication As Melhores da Dinheiro.
In its internal organization, Galvão has two major
business areas: the Industrial Engineering Division and the Infrastructure Division, which in 2012
incorporated the International Division, whose
operations are now controlled by a Regional Directorate focused on the Peruvian market.
Get to know Galvão Engenharia’s activities’ profile.
OUR BUSINESSES
INFRASTRUCTURE DIVISION
As the historical origin of our group, the engineering and construction services are the main focus
of our activities. The Infrastructure Division is the
operational arm of this area in Brazil. As part of
the decentralized management model, it has four
regional offices, divided by geographic boundaries. They are: North, Northeast, Central-East and
South. Galvão also has a Board dedicated specifically to the construction of the hydroelectric power
station of Belo Monte. The company holds 10%
stake in the Belo Monte construction consortium,
which brings together the ten largest engineering
firms in the country.
The past year was marked by achievements of
great importance for the Division’s activities, such
as the completion of the projects Arena Castelão
and Event Center of Ceará, the construction of
the Metro Line 5 in Sao Paulo, participation in
Belo Monte and signing of the first contract for
public works in the municipality of Rio de Janeiro,
the embryo of a more effective performance in a
market that will host the World Cup 2014 and the
Olympic Games 2016. Another major achievement
was the resumption of the construction project for
the west-east Railroad integration.
Apart from operational advances, 2012 also proved
to be a field of evolution for internal management,
with the invigoration of budget evaluation and risk
management mechanisms, with an emphasis on
good practices for project selection. In logistics,
cost control, reduction of inventories and greater
availability of proper equipment were reinforced.
Activities in structured projects also progressed,
which, through the support of Regional Boards
act at an early stage of a venture to final delivery, adding value to customer relationships. The
In 2012, the Infrastructure Division executed
27 contracts in 12 cities in five states
Infrastructure Division ended 2012 with a staff of
1,221, contingent 63% higher than 2011.
For 2013, the Division’s focus is in strengthening its
role in urban mobility projects, flood control, ports,
airports and railways. Below are the main works carried out in 2012.
Arena Castelão (CE)
Inaugurated on December 16, 2012, Arena Castelão
is a milestone for Galvão. With 188,000 m2 of built
area and 65,000 seats, all covered, this was the first
stadium of the 2013 Confederations Cup and 2014
World Cup to be 100% completed.
The largest and most modern sports and events
arena in the Northeast, the Castelão represented
the overcoming of several challenges – the deadline, since delivery was anticipated in approximately
four months and the cost control and management, since all execution was based on modality
engineering, procurement and construction (EPC),
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Grupo Galvão
WITH 8,200 DIRECT
EMPLOYEES, THROUGH
THE INFRASTRUCTURE AND
INDUSTRIAL ENGENEERING
DIVISIONS, GALVÃO HAS
OPERATIONS IN 17 BRAZILIAN
STATES AND ABROAD
whereby the service provider assumes the various
phases of a project - elaboration of the executive
project, supply of inputs and materials, construction, assembly and commissioning. Fruit of a
public-private partnership with the government of
Ceará, the redevelopment of the stadium was held
under the consortium.
Grupo Galvão will be responsible for managing Arena Castelão
Besides the stadium renovation, the contract
included the construction, at the site, of the
State’s sports headquarters, two parking lots (with
capacity for 1,900 vehicles) and an administrative
building. The inside of the arena also housed, among
other facilities, 52 cabins, three restaurants, 45
kiosks, 47 bathrooms and four locker rooms.
Infrastructure also included 240 CCTV cameras,
144 turnstiles in 18 accesses, 332 projectors, 350
telephone extensions and 2 screens of 92 m2 each.
EVENTS CENTER OF CEARÁ (CE)
Another important enterprise completed by the
Infrastructure Division in 2012 was the Events
Center of Ceará, a complex formed by two modules, with 177,000 m2 of built area. With a capacity of 30,000 people and 48 simultaneous events,
the center took the form of more modern square
for holding fairs and exhibitions in the country and
is the second largest of its kind in Latin America.
Another peculiarity concerns the operation of
its activities. Acting through a special purpose
entity (SPE), Grupo Galvão assumed responsibility for administering the arena for an initial period
of eight years. The role will also cover support for
the operation of restaurants and cafeterias and a
fashion shopping center focused on the wholesale
market, the sale of naming rights and marketing
of cabins.
The work, which began in 2009, met several
architectural and engineering innovations. Given
its size and possibilities of use it offers, the
center should promote progress for the State of
Ceará, as well as local business tourism. According to estimates of the State Department of
Tourism, responsible for the project, the space
has the potential to move 1% of the State’s
Gross Domestic Product.
OUR BUSINESSES
Six times larger than the previous State Convention Center, the development has two blocks
(subdivided into non-hermetic modules) that connect through a building that contains in its lower
floor the docks with all facilities necessary for the
organizers, and at the top, a convenience square,
endowed with a unique rounded roof formed by
2000 m2 of laminated glass plates.
As the first major civil construction contract
delivered by Galvão, the project was also a model
of sustainability. The acclimatization system has
central chilled water and a thermal accumulation
tank, which reduces electric energy consumption.
Furthermore, the toilets have vacuum drainage
systems to decrease water usage. The center
benefits from the reuse of rainwater and implementing environments that take advantage of
The completion of the Events Center of Ceará work endowed the state with
the most modern square for holding fairs and exhibitions in the country
natural light. The technology used in construction was also characterized by its low environmental impact.
FIGUEIREDO DAM (CE)
Galvão ended in 2012 the construction of the
Figueiredo Dam, a project developed for the
Departamento Nacional de Obras Contra a Seca
(Dnocs) [National Department of Works Against
Drought] in the municipality of Alto Santo (CE)
for the purpose of regulating the flooding of
Figueiredo River and storing 520 million m3 water.
The final step of the project was preceded by the
resettlement, in an agrovila, of 120 families living in
the flooded area of the reservoir and the execution
of rational deforestation in the basin. On top of its
main purposes, the dam can be used for irrigation,
aquaculture, recreation and tourism.
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Access to the Suape Porto (PE)
One of the most important development projects
of the state of Pernambuco, the Suape Port has
Galvão’s participation, responsible for building
road access of seven kilometers to the islands
of Tatuoca and Cocaia, creating a new access to
the South Atlantic Shipyard and relieving traffic to
the entrance of the port area. At the end of 2012,
about 80% of the work was already completed.
Located in the metropolitan area of Recife, the
area is divided into zones: Port, Industrial, Administrative and Services of Ecological Preservation
and Cultural Preservation. The industrial complex
of the Suape Port is considered a major center of
investments in the country. Its strategic location
in relation to major maritime navigation routes
keeps it connected to more than 160 ports on
all continents, with direct lines to Europe, North
America and Africa.
The more than 100 companies around the port are
responsible for about 25,000 direct jobs. Another
50 other ventures including industries such as
chemicals, metalworking, shipbuilding and logistics
are under implementation.
DUPLICATION OF BR-104 (PE)
Known as the Jeans highway and the main highway
of the Textiles Hub in Pernambuco, the BR 104 is
also used for the disposal of regional production, in
which the cities of Santa Cruz do Capibaribe, Toritama and Caruaru form the so-called “Triangle of
Textiles”, responsible for over 15% of the country’s
jeans production.
The doubling of the BR-104 extends to approximately 51 kilometers long and involved, besides the
duplication and various interventions urban planning,
restoration and construction of five bridges and 24
special works of art, including bridges and flyovers.
The construction of the access to the Suape Port places Galvão Engenharia as one of the
companies responsible for and important infrastructure work in Pernambuco
OUR BUSINESSES
Its duplication will foster the integration of consumer centers of major cities in the region and
improve the integration of economic hubs which
have developed along the highway, creating new
business opportunities and directly benefiting
about 430 thousand people.
FIOL RAILWAY (BA)
Responsible for Lot 2, with 118 kilometers, Galvão
integrates since 2010 one of the most important
infrastructure projects underway in the country, the construction of the FIOL Railway, which from
Tocantins, will form a transportation corridor to the
South Port in Ilhéus (BA). With its 1526 kilometers,
the railway will boost the flow of production of iron
ore, soybeans, soybean meal, and corn to other
regions, through the connection with the NorthSouth Railway.
Galvão’s work will result in, among others, the
movement of 13 million m3 in earthworks, construction of 8 bridges, a flyover and 137 kilometers of railway superstructure. The factory of
railroad ties installed at the company’s construction site, Jequié (BA), will produce about 230
thousand units. Valued in BRL 810 million, the
contract will absorb, at the peak of its operations,
a total of 2,500 staff.
Besides contributing to the development of the
national transportation grid, the company’s participation in the project will also strengthen its position
as a service provider for the rail segment, due to
the complexity of implementation and logistical
challenges that it entails, including the distance
between the jobsite and input supplier centers
suppliers and raw materials, the need for large displacements of teams and performance in difficult
areas to perform the services.
GALVÃO ENGENHARIA
ENDED 2012 WITH A
CONTRACT PORTFOLIO OF
BRL 6.1 BILLION AND NET
INCOME OF BRL 3.0 BILLION
CHANNELING ACARI RIVER (RJ)
Galvão was awarded its first contract in 2012
for public works in the municipality of Rio de
Janeiro, by winning the bid to channel Acari
River, in the North of the city, and the urbanization of a main avenue. It is a project of great
importance for the quality of life of about 1
million inhabitants of the city, who live in seven
districts usually affected by floods – the basin
of Acari River drains an area of about 107 km2,
which corresponds to 8% of the city.
Galvão is responsible for sections 4 and 5 of
the project, developing, among other activities,
channeling services, dredging and demolition of
houses along the river. It is a project of reasonable complexity, as it is inserted into the area of
high population density. Works should be completed in 2014.
Metrô-SP
Galvão participates since 2011 in the expansion of Line 5 (Purple) of the Sao Paulo Subway
system, which will link neighborhoods of Capão
Redondo and Chácara Klabin, through the subcenter of Santo Amaro. This line will have an
important role in structuring metropolitan public
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The Metro-SP work integrates initiatives of the
Infrastructure Division of Galvão Engenharia
transport, connecting to the Companhia Paulista
de Trens Metropolitanos (CPTM) [São Paulo
Metropolitan Train Company] and the Metro itself
(lines 1 and 2).
Galvão participates in Lot 2, comprising the
construction of the stations of Alto da Boa Vista
and Borba Gato, plus ventilation shafts and
emergency exits Alexandre Dumas and Paulo
Eiró, traffic deflections, finishing, installations and
visual communication in the stations, building
with operational technical rooms and redevelopment activities. When 100% completed, with its
17 stations, Line 5 will ensure transport for 644
thousand passengers per day.
TURI STREAM (SP)
The consortium which includes Galvão reached
the end of 2012 with the completion of 90% of
the implementation works of the sewage system
in the basin of the Turi Stream in Jacareí (SP). It
is the largest sanitation project in the history of
the city, which aims, in its entirety, to raise from
20% to 70% the local sewage treatment capacity. Moreover, it will contribute to the improvement of the conditions of the Paraíba do Sul river,
benefiting also other municipalities.
The sewage treatment plant, an important part
of the system, when in full operation, should
reach the average capacity of effluent flow input
of 230 liters per second. The installation of 20
kilometers of pipelines and construction of four
pumping stations, as well as trunk collectors,
delivery pipe lines, emissaries and sewage interconnections are also part of the work.
OUR BUSINESSES
Developed under the demand of the Serviço
Autônomo de Água e Esgoto de Jacareí (SAAE)
[Autonomous Water and Sewage Service of
Jacareí], the project Turi Limpo projects decisive
contributions to the improvement of public
health indicators, particularly those that measure
the occurrence of diseases associated with inadequate sanitation.
EXTENSION OF AVENIDA JOURNALISTA
ROBERTO MARINHO (SP) – LOT 4
Galvão is participating in one of the most important road projects in the city of Sao Paulo. It is
the extension of Avenida Jornalista Roberto
Marinho and Avenida Lino de Moraes Leme until
the Rodovia dos Imigrantes, a development that
will improve access to the southern region of the
state’s capital. The contract foresees the execution of three major works - the execution of road
connection with the construction of a tunnel
1,250 meters long and two flyovers connecting
with the Rodovia dos Imigrantes, totaling 1,250
meters in length.
The project also includes the construction of
buildings with a thousand social housing units
and the implementation of a linear park on the
banks of the Córrego Águas Espraiadas, result of
the recovery of the stream, the implementation
of main avenues, flyover and pedestrian walkway,
totaling 55 thousand m2 reurbanized area. The
contract is estimated at BRL 450 million.
Guarapiranga (SP)
Improvement of the urban infrastructure in the
region of the Guarapiranga reservoir in São Paulo,
through the execution of an urban plan, is the goal
of the project which Galvão, under a consortium,
participates in the program of the Restoration of
Watersheds in the city of Sao Paulo.
In order to do so, the removal and resettlement
of families occupying permanent preservation
areas surrounding the Guarapiranga dam and
nearby streams and in areas of risk, such as hills
and slopes, distributed in the thirteen areas that
comprise the scope of the contract with the City of
São Paulo will be necessary.
Estimated in BRL 396 million, the project includes,
among other activities, works of slope retention,
social housing units, the replanting of vegetation, landscaping, installation of leisure equipment
with adequate urban planning, standardization of the road system, drainage and sanitation
infrastructure.
In 2012, the removal of families living in a place
called Alto da Alegria began, one of the 13 program
Sewage work in the basin of the Turi Stream is the largest
sanitation project in the history of Jacarei (SP)
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areas, and the demolition of evacuated buildings.
The contractual deadline for completion of the
works is 36 months.
BELO MONTE HYDROELECTRIC POWER
STATION (PA)
Participation in the construction of the Belo
Monte project, the third largest hydroelectric
dam in the world in terms of generation capacity
(11,233 MW), marked the entry of Galvão in the
segment of large electricity generation projects.
As the main infrastructure work underway in Brazil,
the plant will produce enough energy to power 18
million homes.
The project includes the construction of a dam,
a spillway with 18 radial gates and a secondary powerhouse on the Pimental Site, one main
powerhouse of 18 units on the Belo Monte Site, a
diversion channel with 16 kilometers and 28 dikes
for forming the reservoir. At its peak, the project
will mobilize about 40,000 workers, including
direct and indirect staff. Programmed to operate
at full capacity in 2019, Belo Monte will have its
first generating unit of the main powerhouse in
operation in 2016.
In 2012, the project has advanced significantly,
reaching in December, 16 months after its inception, with 19.5% of the civil works undertaken. The
building of construction sites and access, in turn,
had, at the end of the year, 63% of the work completed. About 31 million m3 of excavation had been
done, of the 200 million m3 foreseen.
Responsible for the civil construction of the
project, the Belo Monte Construction Consortium
– in which Galvão Engenharia has a participation of 10% - expects to reach 50% of the works
executed in late 2013.
Participation in the Hydroelectric power station of Belo
Monte project was one of the highlights of the year
INDUSTRIAL ENGINEERING DIVISION
Galvão Engenharia works since 2006 in the implementation of services for the oil and gas industry,
with emphasis on activities like industrial assembly
of petrochemical plants, oil refineries and oil and
gas pipelines. Through the Industrial Engineering Division, the company has consolidated over
the years skills that qualify it as one of the leading
service providers in the industry in the country,
working for Petrobras and its subsidiaries.
Among the Division’s specializations is conducting
Engineering Procurement Construction (EPC)
projects, modality through which the service
provider assumes the various phases of a
project – development of the executive project,
supply of inputs and materials, construction,
assembly and commissioning. The execution of
EPC contracts brought to Galvão widespread
recognition for its ability to act in a hiring model
of greater technical complexity.
OUR BUSINESSES
The year was also marked by the efforts to expand
the operational excellence of Galvão in conducting
EPC contracts as a way to strengthen the training
of teams for winning and managing large and
complex projects. The Division also devoted itself
successfully to the development of new suppliers,
in orderto broaden the range of qualified partners
and obtain competitive prices compared to the
international market.
The Division ended 2012 with a total staff of 6,688,
contingent 46% higher than 2011.
Below are last year’s main projects:
PAULINIA REFINERY (SP)
The Division continued in 2012 with its
Expanding the capacity of Replan (SP) includes construction of
infrastructure for the portfolios of diesel and coke naphtha
participation in the expansion of the productive
capacity of the largest refinery of Petrobras in
volume production. Ongoing since 2010, activities
include the construction of hydro-treatment units
in the portfolio of diesel and coke naphtha.
Regarding the diesel portfolio, the contract
includes the installation and interconnection of
equipment, commissioning and testing, support, pre-operation and assisted operation for
hydrotreating units, hydrogen generation and
treatment of acid water.
Services for coke naphtha portfolio cover, among
other activities, providing of goods and provision
of services of executive project, civil construction
and electromechanical assembly, conditioning,
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testing, assistance to the operation, starting and
assisted operation of hydro-treatment units,
catalytic reforming and building the substation
and local control house.
telecommunications, road lighting, fire and
gas detection, property security and
grounding mesh. the project should be
completed in 2014.
Both projects fall within Petrobras’ plan to produce better quality fuels, with the guarantee of
environmental gains in the various processes.
Comperj (RJ)
Developed in the petrochemical complex in
Rio de Janeiro, in Itaboraí, the EPC project
consists on the implementation of the Middle
Distillate Hydroprocessing Unit (U-2500), the
Kerosene Hydroprocessing Unit (U-2600)
and electric power substations. In these
facilities, petroleum and petrochemical product
derivatives of first and second generation will
be produced. Galvão has a participation of 30%
in the consortium.
NITROGEN FERTILIZERS UNIT UFN III (MS)
Galvão, in a consortium with Sinopec (China
Petrochemical Company), continued the
implementation of the EPC contract for the
construction of one of the most important
projects of the second phase of the Growth
Acceleration Plan (PAC) of the Federal
Government. To be installed in Três Lagoas (MS),
Petrobras’ factory will be the country’s largest
in its segment, with a capacity to produce 2,200
tons per day of ammonia and 3,600 tons of urea.
Started in September 2011, the project will
help Brazil reduce its dependence on imports
of these inputs - currently, 70% of agricultural
fertilizers produced in the country depend on
raw materials from abroad. The work should be
completed in 2014.
ABREU E LIMA REFINERY (PE)
Started in September 2010, Galvão’s work
involves performing civil infrastructure and
electrical interconnections in the off-site
areas, key steps for implementing the Abreu e
Lima Refinery (PE), a development that aims to
satisfy the national demand (particularly of the
North and Northeast regions) of petrochemical
naphtha, diesel, liquefied petroleum gas, bunker
and petroleum coke. Also conducted in the
EPC model, the contract also includes, among
other services, interconnection networks of
The COMPERJ configures itself as a leading
enterprise in the history of Petrobras. Included
in the Growth Acceleration Program (PAC),
with completion in 2014, this work will also
contribute to the development of the Eastern
region of Rio de Janeiro State.
TAIC (RJ)
Galvão advanced in 2012 towards completing
the execution of the construction contract
to build a new Terminal Aquaviário da Ilha
Comprida (TAIC) [Water Transportation
Terminal of Ilha Comprida] and the revamping
of the Terminal of Ilha Redonda, in the
Guanabara Bay, a project started in 2008.
These projects will increase the storage
capacity and drainage, from ships, of liquefied
petroleum gas (GLP) processed in the Duque
de Caxias Refinery (Reduc), also in Rio de
Janeiro. Conducted in an area of 22 000 m2,
outside the continent the projects demand
complex infrastructure of staff and material
displacements.
OUR BUSINESSES
Construction of the Water Transportation Terminal of Ilha Redonda (RJ) expand
storage and drainage capacity, from ships, of liquefied petroleum gas
INTERNATIONAL BUSINESS
An integral part of our strategic direction and goal
to be consolidated long term, international business has proved to be a great source of learning
for the whole organization not only due to the
operational responsibilities it entails, but also the
challenges of implementing our corporate culture
beyond Brazilian territory.
Beginning in 2010 with the award, in Peru, of the
first service provision contract, international
operations experienced in 2012 a process of
priority readjustment, the result of the need to
devote attention to the great opportunities that
are presented to the group in Brazil, particularly in
engineering and construction.
In this context, we chose to limit temporarily our
expansion and commercial development in the
markets of South America and Africa, particularly in Colombia, Angola and Mozambique. As
a result, we concentrated operations in Peru,
where we currently are executing a contract
for state-owned Servicio de Agua Potable y
Alcantarillado (Sedapal) valued at US$ 52 million
for the implementation of the network of 37
kilometers directed to supplying five neighboring
districts of Lima, the Capital of the country,
a direct benefit to 1.6 million people.
At the end of last year, about 95% of the project
was already completed, expected to close in
March 2013. The financial results of the contract as well as the advancement of commercial prospects in other markets, showed the
potential of international operations, signaling
the importance of a more incisive presence of
this group in this business line in the medium
and long term.
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PRESENT IN FIVE STATES,
CAB HOLDS A DIVERSIFIED
PORTFOLIO OF LONG-TERM
CONTRACTS, OPERATING IN
SMALL, MEDIUM AND BIG CITIES
CAB manages 18 contracts and
serves about 6.6 million people
CAB ambiental
Established in 2006, the Companhia Águas
do Brasil (CAB ambiental) is, today, one of the
most important private companies of basic
sanitation in the country. It operates through
concessions and public-private partnership
in water and sewer services. The company
adopts a management model that favors the
decentralized activities; it manages 18 contracts
– five of them signed in 2012, reaching about
6.5 million consumers, directly and indirectly.
Present in five Brazilian states (São Paulo,
Mato Grosso, Paraná, Santa Catarina and
Alagoas), the company holds a diversified
portfolio of long-term contracts, operating in
small, medium and big cities, jointly with state
and city companies of basic sanitation. By
the end of 2012, six contracts covered places
with up to 20 thousand inhabitants; seven
accounted for medium cities (from 21 to 100
thousand inhabitants); and four operated big
cities (more than 100 thousand inhabitants).
Besides the Alagoas concession, focused
in the service for 10 cities and an estimated
population of 220 thousand inhabitants.
By means of its subsidiaries (SPEs), CAB works
in the management and in the operation of
water supply systems (collection, production,
distribution and water treatment and disposal
of sludge) and sanitary sewage system (collection, transportation, treatment and final
disposal of effluents, collection network and
treatment plants); and in customer relationship management (maintenance and update
of customer registration updates, customer
service, water meter installation and reading
and issue bills).
OUR BUSINESSES
CAB Cuiabá concession was one of the five
achieved by the company in 2012
Being one of the biggest private companies in
basic sanitation in the country, CAB seeks to
become a reference in the market, concerning
technology innovation, production efficiency,
customer service and social-environmental
activities. The company plays an important
role in communities, by means of developing
projects of environmental education and water
use awareness. Given thespecific nature of its
activities (water and sewer services) and its
straight-forward performance in places, CAB
is committed to the careful environmental
regulation of its operations and to the respect
for the concerning the legislation on the topic.
As part of its continuous process of management
model, in the beginning of 2013, the holding presented itself as a compact organizational structure, made of the Chair, two executive boards
– Financial Administrative/Relations between
Investors andCompanies – and five regional units
(Mato Grosso, São Paulo I, São Paulo II, South and
Northeast) that coordinate local activities and
play a role of intermediary with the subsidiary, in
their geographical areas of influence. This structure strengthens the decentralized and matrix
management model.
This management configuration also covers the
company’s new administrative and business reality.
In 2012, the company had an important boost in
its investment possibilities, with the acquisition
by BNDESPar of 33.42% of the company’s equity.
From this partnership, CAB’s Board of Directors
has from five to seven members, with the inclusion
of two BNDESPar representatives, qualifying the
model of corporate governance. Besides the new
members, the Board has four Galvão Participações
representatives and one independent member.
Last year, the governance structure also has the
Comitê de Gestão Ambiental, Segurança e Saúde
Ocupacional [Envionmental Management, Safety
and Occupational Health Committee], which
assists the Board of Directors (read more about
the subject in page 115).
Another important achievement was the implementation of the integrated accounting and
business data system in 13 companies, ensuring
greater security and transparency to the management and to the consolidation of corporate
information by a tool that controls strategic processes for the trading system and operating units,
such as customer registration, management of
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consumption and income, gross revenues and collection, customer service and after sales.
Projects one, which provides services to the Commercial area without being subordinated to it.
BODIES SUPPORTING GROWTH
Established in 2012, CAB Gerenciadora offers technical assistance to CAB Projetos and to future infrastructures implementations in the business plans of
the SPEs. Its activities are project design, planning
steps, follow-up and delivery. CAB Gerenciadora also
takes care of the appointment and hiring of suppliers to the construction works, seeking quality, safety,
cost-benefit ratio and deadlines compatible with
needs. It also subsidizes the holding when it comes
to investments in new construction works.
As a holding that manages companies and businesses, CAB also has two bodies supporting the
implementation of growth plans and the fulfillment
of the expansion goals foreseen in the contracts.
These bodies are: CAB Projetos e Investimentos
Ltda. and CAB Gerenciadora Ltda.
CAB Projetos e Investimentos was established in
2011, aiming to improve transparency, control and
transferring the costs of new business development to the companies. For this, it centralizes
all the spending resources needed to gain new
concessions or business, separating this spending
from the holding’s regular spending. New business
development has two areas – the Commercial,
under the regional units responsibility; and the
Partnering with ETE Fundão, Sanessol increased in
80% its range for local sewage treatment
Its establishment stemmed from CAB’s need to
have a structure operating in the investments
of companies’ management, due to the growing
demands for resources, as a result of the acquisition of new concessions and of the need for fulfill
the contractual obligations.
The company has five
business regional units
OUR BUSINESSES
ACHIEVEMENTS
In 2012, CAB lived a remarkable moment regarding
the range of its services with the addition of one
million inhabitants to the population served a result
from the concessions won at the cities of Cuiabá
(MT), Tubarão and Itapoá (SC) and Atibaia (SP) and
from the formalization of public-private partnership (PPP) to increase water supply in ten cities of
Alagoas state, the first contract of the company in
the Northeast region.
The victories completed a cycle of development
of the CABand placed the company to perform
new strategies and institutional initiatives. One of
them, in 2013, will be listing in BovespaMais, from
the BM&FBovespa, a preparation stage for the
company to go public in a medium term.
The main initiatives of CAB’s companies, in 2012,
are the following:
Sanessol (SP)
In 2012, the Empresa de Saneamento de Mirassol
(Sanessol) has significantly advanced in order to
universalize the assistance to the city’s inhabitants.
With ETE Fundão’s opening that adds to the operations of ETE Piedade, Sanessol increased from 3%
to 80% the range of local sewage treatment.
Another important step was the implementation
of pressure regulating valves and the construction
of a reservoir with storage capacity of 1.7 million
liters of water. In the past few years, Sanessol has
invested significantly in the replacement of water
meters park, leakage research, technical registration, telemetry, new networks and water pipes,
sewage lines,outfalls and collectors. Besides that,
it has also invested in the … …reduction of water
losses, reaching rates under 20%, half of the Brazilian average.
BY MEANS OF ITS SUBSIDIARIES,
CAB WORKS IN THE
MANAGEMENT AND IN THE
OPERATION OF WATER SUPPLY
AND SANITARY SEWAGE
SYSTEM AND IN CUSTOMER
RELATIONSHIP MANAGEMENT
Thanks to CAB Spat, Taiçubepa’s ETA already
serves 5 million residentes in Grande São Paulo
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damaged reservoirs and invested in the water
and sewage networks expansion to fulfill the
demand of the city’s growing population.
Until 2017, it is predicted a total investment of
BRL 4 million, resources that will be allocated to
the upgrading of sewage treatment plant and in
the implementation of sanitary sewage systems
in the city’s neighboring districts. The resources
will also be allocated to the upgrade of laboratory
equipment, replacement of pressure pumps,
acquisition of reserve pumps of water pumping
stations and improvements in the automation
system for distribution network.
Thanks to CAB Spat, Taiçubepa’s ETA already
serves 5 million residentes in Grande São Paulo.
For 2013, it is foreseen the construction of ETE
Fartura, which running will allow the city to have
100% of treated sewage. In addition to the full
recovery of the water harvesting system of São
José dos Dourados, of the deep well of Guarani
Aquifer and structural repair in the water treatment plant.
ESAP (SP)
Since 2008, about 10 thousand inhabitants of
Palestina have treated water in 100% of all local
consumer units and have their first generation of
children to drink water with fluorine in the city’s
history. Last year, the local CAB company performed the exchange of water meters, repaired
Águas de Andradina (SP)
Partnering with Sabesp since 2010, the Águas
de Andrina celebrated last year the total range of
90% of sewage treatment, a goal achieved much
earlier than expected. There was, also, the elimination of 100% of the irregular sewage
disposal, through the recovering of sewage
outfall and collectors, reducing the risk of environmental damages. Last year, the operation
finished the commercial registration of a 100%
(all) consumer units and the decrease in default,
from 23% to 16%.
In the coming five years, there will be an investment of BRL 24 million in activities, such as the
readjustment and upgrading of four sewage
treatment plant, the recovery of the deep well
of Guarani aquifer and the drilling of new wells,
besides water distribution network sectorization, the construction of reservoirs, relocation of
water and sewage networks and repair of water
and sewage pumping stations.
Águas de Castilho (SP)
Since Águas de Castilho began its activities in
OUR BUSINESSES
2010, it has already been invested BRL 2.2 million
in the city. In 2012, the main improvements for the
suitability of the water and sewerage system in
the city were: recovery and repair of ETE
Laranjeiras, implementation of networks and new
connections in housing projects, wells rehabilitation and outfalls restoration and the acquisition of
operational and administrative vehicles.
AS ONE OF THE LARGEST
By 2017, it is predicted an investment of
BRL 8 million in construction works for the
upgrading of ETEs, the repair of water and
sewage pumping stations, the drilling of deep
wells, water distribution network sectorization and
the implementation and recovery of reservoirs.
ENVIRONMENTAL PRACTICES.
CAB spat (SP)
A pioneering public-private partnership of Sabesp
with a private company, CAB spat, by the end of
2012, has fulfilled all the established contractual
goals and served about 5 million inhabitants of the
São Paulo city, due to the expansion of the Taiaçupeba Water Treatment Plant, in the Suzano city,
and the construction of the required infrastructure for the interconnection of the unit with the
City’s Water Main system.
Companhia de Serviços de Água e Esgoto e
Resíduos de Guaratinguetá (SAEG), a Brazilian
water and sewage utility, is responsible for the
operation and expansion of the local sanitary
sewage system. In 2012, CAB Guaratinguetá
continued the work, aiming to universalize the
collection services by 2020 and the sewage
treatment services by 2024. CAB also carried out important construction works in trunk
sewer, pumping stations and delivery pipe lines,
besides starting the second stage of the ETE
Pedregulho construction.
Upon the end of the investments, CAB spat still
has as contractual liability the maintenance of
performance indicators. One of the most important indicators is the reduction of water losses in
the process. In 2012, the operation performed a
comprehensive leakage inspection in large water
mainsat the east part of São Paulo city. Throughout the year, improvements in the treatment
system and implementation of maintenance
management software were also accomplished.
CAB Guaratinguetá (SP)
A public-private partnership (PPP) with the
COMPANIES IN THE PRIVATE
SECTOR, CAB SEEKS TO BE A
REFERECE IN INNOVATION,
PRODUCTION EFFICIENCY,
SERVICE AND SOCIO-
CAB Piquete (SP)
Undertaken contract in 2010 with the task to
ensure 100% of water supply throughout the contract and make sewage collection and treatment
universal by 2015. The concession had an important time of achievements in 2012, such as the
implementation of water and sewage networks in
many neighborhoods of the city, water metering
of nonstandard connections and the beginning
of the study and project for the regulation of the
supply system.
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CAB Atibaia (SP)
The newest operation in the company, with signed
contract in December of 2012, it is a publicprivate partnership (PPP) with the Companhia de
Saneamento Ambiental de Atibaia (SAAE). CAB
is committed to make the sewage collection and
treatment services universal within five years. For
this purpose, an investment of BRL 98.4 million is
predicted for the period.
CAB Canarana (MT)
Concession obtained by CAB in 2010 with the
purpose of offering treated water to 97% of the
population by 2020 and sewage collection and
treatment to 80% of the population by 2016.
Among the accomplishments of 2012, stands out
the expansion of the water distribution network,
the repair, expansion and upgrading of raw water
CAB Alta Floresta continued with the investments aiming to increase
the sewage collection and treatment to 70% of the population by 2016
collection and construction works for the Water
Treatment Plant expansion.
CAB Alta Floresta (MT)
Added to CAB’s portfolio in 2009, the concession
has a contractual commitment to supply sewage
collection and treatment to 70% of the population
by 2016. As development in 2012, the company
had the automation of the collection system, water
treatment and distribution and sewage collection
and treatment, completion of the water collection system II in the Taxidermista II River and the
exchange of 65% of all implemented water meters
in the consumer units.
CAB Cuiabá (MT)
Regarding the amount of population served
(about 550 thousand), the major achievement
of CAB in 2012 was the full water and sewage
concession in the city of Cuiabá (MT), that
aims to universalize the water supply by 2015,
and by 2022, to collect and treat 100% of the
local sewage.
In its first year operating, CAB Cuiabá provided
different services. One of the most important
activities was the integration of the team that
worked before to the Companhia de Saneamento
da Capital (Sanecap), a Brazilian water utility. A
room was created so that employees would learn
about the transition process, values and CAB’s
way of working. Approximately 14.000 hours of
training were held?
Throughout the year there was also an intense
work for the upgrading of the information technology infrastructure, with the implementation of
new management systems, software for document management and geographic information system, which allows the entire network
OUR BUSINESSES
With its companies and investments, CAB has contributed to the
progress of making services universal in the country
management through satellite images. There
was also the implementation of the maintenance
of equipment and fleet vehicle control system.
Regarding population service, it was created a
sector for water quality control, 59 wells were revitalized, ETE São Carlos and the pumping station
Estação Elevatória do Barbado were reactivated,
the pump farm responsible for the stability in
water supply was restored and water treatment
plants were improved, among other activities.
system, investments will be made to revitalize and
automate water collection, improve water treatment plant, water storage and distribution and in
the implementation and exchange of water meters.
CAB Colíder (MT)
Won in 2009, the full concession agreement
of water and sewage has as a goal, by 2020, to
reach 70% in sewage collection and treatment.
For this end, there will be investments to collection revitalization and automation, repairmen and
improvement in water treatment plant, expansion
of reservoirs capacity and implementation of new
household connections and collection networks,
besides improving pumping stations and expanding
sewage treatment.
CAB Comodoro (MT)
Partial water concession agreement has as a
goal to serve water for 99% of the population
by 2016. For this to happen, the company has
invested in water collection revitalization and
automation, raw water main rehabilitation,
refurbishment and improvement in the
water treatment plant and in the increase of
storage capacity. It has also invested in the
implementation and exchange of water meters
and in the expansion of distribution networks.
CAB Pontes e Lacerda (MT)
Since 2009, the full water and sewage concession
agreement has as one of its goals to reduce by
25% the water losses rate by 2031. For the water
Tubarão Saneamento (SC)
A result of the obtained concession in March, 2012,
the operation has as one the initial responsibilities to
provide treated water to 97% of the population by
For the sewage system, it is predicted the
implementation of new household connections
and collection networks, improvement in pumping
stations and the refurbishment and expansion of
the sewage treatment.
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CAB spat, by the end of 2012, has fulfilled all the established contractual
goals and served about 5 million inhabitants of the São Paulo city
2014 and sewage collection and treatment services
to 15% of the inhabitants by 2015 and to 80% by
2025. In its first months of activity, Tubarão Saneamento has invested resources to the upgrade of the
fleet vehicles, besides improving the treatment and
distribution system.
Last year, the number of equity holders fell from four
to two. As a result, CAB and Duane do Brasil currently
holds 50% of the company’s equity.
Itapoá Saneamento (SC)
To fulfill its contractual goal of universalizing the
water services by 2032, and the sewage collection
and treatment by 2041 (to reach 35% of the
population by 2020), the operation started the
construction project of a water treatment plant
(ETA) and a sewage treatment plant, predicted
to begin its activities in 2014. Throughout the 30
years of the agreement, Itapoá Saneamento will
invest about BRL 90 million – BRL 38 million within
the first five years.
CAB Águas de Paranaguá (PR)
In 2012 the operation had an important progress
in its services by adding to its city’s networkthe
neighboring districts of Alexandra, Ilha do Mel
and the Valadares region. To fulfill its goal of
universalizing sewage collection and treatment
to 100% of the population by 2016, the operation
began the construction of ETE Costeira, 30km of
network and a water treatment plant in the area
of the current ETA Colonia, which will improve the
water supply system capacity and reliability.
CAB Águas do Agreste (AL)
Starting, effectively, in September 1st of 2012, the
public-private partnership (PPP) established with the
Companhia de Saneamento de Alagoas, a Brazilian
utility, aims to expand the water supply in ten cities of
the state, during 30 years, which will benefit about 307
thousand inhabitants. With an investment of
BRL 215 million, the operation has as goals, among
other activities, the implementation of a new water
main of Agreste, between São Brás and Arapiraca,
with approximately 60 km, by 2014. The construction
work will end the continuous shortage of water supply
in the region, by producing 1.5 million liters of water
per hour. With the PPP it is also included the recovery
and maintenance of the current water mains, implementation of water meters and water connections.
OUR BUSINESSES
PROFILE OF CAB AMBIENTAL SUBSIDIARIES
Operation / Type
Population
Start /
Contract
time
Investment
(in BRL
million)
ESASP (SP) – Water and
sewage concession
9 thousand
2007,
30 years
8,5
• Treated water to 100% of the population by 2011
• Sewage collection and treatment to 99% of the population by 2022
Sanessol (SP) – Water and
sewage concession
52 thousand
2008,
30 years
47,5
• Sewage collection and treatment to 99% of the population y 2018
CAB Águas de Paranaguá (PR) –
Water and sewage concession
135
thousand
1997,
48 years
(until 2045)
357
• Sewage collection to 100% of the population by 2016
• Sewage treatment to 100% of the population by 2016
CAB Guaratinguetá (SP) –
sanitary sewage ppp
107
thousand
2008,
30 years
65
• Sewage collection to 100% of the population by 2020 *
• Sewage treatment to 100% of the population by 2024
5.5 million*
2009,
15 years
285
• Increase of water production in ETA of Taiaçupeba by 2011 from
10 m³/s to 15 m³/s
• Construction of 17.7 km of water mains and four reservoirs for 70
million liters of water
• Implementation of sludge treatment unit
CAB Pontes e Lacerda (MT) –
35 thousand
Water and sewage concession
2001,
30 years
20,7
• Reduction of water losses rate to 25% by 2031
CAB Colíder (MT) –
Water and sewage
concession
25 thousand
2002,
30 years
10,5
• Sewage collection and treatment to 70% of the population by 2022
• Reduction of unbilled water rate to 20% by 2017
CAB Alta Floresta (MT) –
43 thousand
Water and sewage concession
2002,
30 years
24,1
•Sewage collection and treatment to 70% of the population by 2016
CAB Comodoro (MT) –
13 thousand
Water and sewage concession
2007,
30 years
1,9
• Treated water to 99% of the population by 2016
CAB Piquete (SP) –
13 thousand
Water and sewage concession
2010,
30 years
5,8
• Treated water and sewage collection and treatment to 100% of
the population by 2015
CAB Canarana (MT) –
15 thousand
Water and sewage concession
2000,
30 years
8,9
• Treated water to 97% of the population by 2020
• Sewage collection and treatment to 80% of the population by 2016
• 25% reduction of losses by 2030
Águas de Andradina (SP) –
52 thousand
Water and sewage concession
2010,
30 years
29,7
• Sewage collection to 100% of the population by 2015
• Treated sewage to 100% of the population by 2019
Águas de Castilho (SP) –
14 thousand
Water and sewage concession
2011,
30 years
10,7
• Sewage collection and treatment to 100% of the population by 2016
CAB Cuiabá (MT) –
Water and sewage concession
2012,
30 years
882
• Treated water to 99% of the population by 2041
• Sewage collection and treatment to 91.3% of the population by 2022
14 thousand,
with
Itapoá Saneamento (SC) –
seasonal
Water and sewage concession population
over 100
thousand
2012,
30 years
90
Tubarão Saneamento (SC) –
88 thousand
Water and sewage concession
2012,
30 years
246
CAB Águas do Agreste (AL) –
Water PPP
307
thousand **
2012,
30 years
215
115
thousand
Contract
signed in
December 2012,
30 years
98,4
CAB spat (SP) - water PPP
CAB Atibaia (SP) –
Sanitary sewage PPP
541
thousand
* Estimated population in CAB spat’s contract
** Estimated urban population in relation to the served cities. Source: IBGE 2010
Contractual goals
• Treated water to 100% of the population by 2032
• Sewage collection and treatment to 35% by 2020, 70% by 2031
and 100% by 2041
• Treated water to 97% by 2014, 99% by 2016 and 100% of the
population by 2041
• Sewage collection and treatment to 15% of the population by
2015, 61% by 2019, 80% by 2025, 90% by 2033 and 94.7% by 2041
• Implementation of the new water main system (water main of
58km and ETA) by 2014
• Recovery of the current system by 2013
• Sewage collection to 100% of the population by 2018
• Sewage treatment to 100% of the population by 2018
91
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2012 annual report
Grupo Galvão
Galvão Energia
Since it is a segment of great potential regarding
its space in Brazil’s energy mix, the power from
renewable sources encouraged Grupo Galvão
administration to open a business aiming this
market, in 2008. Born to accomplish this corporate aspiration, Galvão Energia signed its first
deal in 2010, by winning in an auction promoted
by Agência Nacional de Energia Elétrica (Aneel),
a regulatory agency, the right to build four wind
farms in the coast of Rio Grande do Norte.
Situated in the city of São Bento do Norte, the
four projects will have installed capacity of 94 MW,
enough energy to supply about 350 thousand
people, in a clean and sustainable way. The wind
farms are part of a portfolio of projects developed
by the company throughout the years with an
installed capacity of approximately 1.000 MW.
From the necessary BRL 410 million up to
the full implementation of wind farms, about
BRL 282 million will be financed by the BNDES
resources. Galvão Energia was the first company, among the Aneel’s auction winners, in 2010,
to have financing approved by the BNDES.
Altogether, 47 wind turbines will be installed. When
in full commercial operation, projects must submit
an annual income of BRL 60 million. The construction of four wind farms started in 2012, along with
works of civil infrastructure (earthworks, access
paths of concrete placement for wind turbines and
the implementation of the first transmission lines)
are predicted to be complete by September, 2013.
By the end of last year, Galvão Energia held
25.1% of the share, partnering with Companhia Paranaense de Energia (Copel) and
Maestro. Commercialization contracts signed
with 15 distributors will assure revenue of
BRL 1 billion for the period of twenty years.
The conclusion of the projects within the stipulated
time and with predicted costs is the high priority
of Galvão Energia for 2013. The fulfillment of this
goal, in a safe and scheduled way is a prerequisite
for the exam and definition of new possibilities
of activities in the coming years in the segment
of energy from renewable sources, a segment of
great economic attractiveness in medium-term,
due to the needs of Brazil’s energy mix expansion.
Wind farms will have installed capacity of 94 MW to supply
350 thousand people
OUR BUSINESSES
OdjfellGalvão will be in the business segment of chartering and drill
ship for oil and gas exploitation in deep water
Galvão Óleo e Gás
Participações S.A.
2012, contracts for chartering and operating
drill ships in the drilling of Brazilian pre-salt.
In Brazil, the discovery of huge oil reserves
in the pre-salt encouraged the Group to
create, in 2009, the Galvão Óleo e Gás
Participações S.A. a company that aims to
provide services in drilling and production
of petroleum and gas, a strategic sector of great importance to the country.
Estimated at US$ 12 billion, the contracts
are for 15 years. Sete Brasil holds 80% of the
venture and its priority is to obtain financing
packages and required insurance. The shipyard
Estaleiro Jurong Aracruz, in Espírito Santo,
began its installation works at the end of 2012
and will be in charge of the ships construction.
Galvão Óleo e Gás operates mainly in the
chartering and activities of drilling units. For the
development of this segment, the company
created OdfjellGalvão Perfurações, partnering with the Norwegian company specialized in drilling, the Odfjell Drilling A.S.
Vessels will be delivered in 2016, 2018 and
2019. About US$ 3 billion will be invested
during nine years. OdfjellGalvão will be part
of the supervision team for the construction works, adding previous experiences of
Odfjell Drilling and developing the training
for those who will work in the units’ activities.
The building of new drilling teams is one of
the major challenges of pre-salt exploration.
Partnering with the investment company, Sete
Brasil, OdfjellGalvão signed with Petrobras, in
93
94
2012 annual report
Grupo Galvão
Galvão Finanças
Established in 2010, Galvão Finanças is responsible for the management ofremaining resources
of our business, through exclusive and restricted
investments funds and support to the stability and
development of the value chain, which is made
of suppliers and service providers that benefits
from the resources supply and financial solutions
tailored for their cash flow needs.
Besides financial management, the company also
plays an important role in the Group’s sustainable
growth, through constant interaction with the
Board of Structured Finances and treasury.
Galvão Finanças operates by means of two of its
subsidiaries – Galvão Serviços Financeiros and
Galvão Administradora de Recursos.
Galvão Serviços Financeiros main goal is to
spread the prepayment of receivables of suppliers and service provides of the Group, in order
to develop and aid these partners to access
resources in a fast and safe way, without the
need of using traditional bank loans. The prepayment is possible through a line of credit so that
the companies of the value chain can safely and
efficiently manage their cash flows, strengthening competitiveness.
Galvão Serviços Financeiros operates through
Fundo de Investimento em Direitos Creditórios
(FIDC) which provides resources for suppliers, service providers and consortium with shares of the
Group’s companies, with better cost-benefit conditions than those offered by the financial market.
FIDC considers the contract signed between
them and Grupo Galvão as a guarantee, reducing
credit risks and performance.
Besides the operational improvements, there was also improvement
in the internal management this year
In turn, Galvão Administradora de Recursos is
responsible for the management of all financial
investments of the Group’s companies, aiming to
assure the lowest risk and the highest return in
the investment portfolio, as part of the principle
of low exposure to market fluctuations.
Among the liabilities of Galvão Administradora
de Recursos is the management of two fixed
income funds, one of multimarket, one of variable income and one international fund, whose
development and implementation was a major
overcome challenge in 2012.
OUR BUSINESSES
COMMITTEES
In its activity of resources management, Galvão
Administradora de Recursos relies on three bodies that act as support in decision-making. The
Risk Committee’s functions are to set risk limits
for each asset class and segment (fixed income,
variable, derivative) and to monitor, daily, the
risks associated with fund portfolios performance. The Investment Committee proposes
and defines in which segment and asset classes
the funds resources will be invested. Credit
Committee, in its turn, evaluates and approves
deadlines and EMISSORES DE ATIVOS that will
be part of fund portfolios.
Financial management plays an important role in the Group’s
sustainable growth
THROUGH GALVÃO FINANÇAS
THE GROUP IMPLEMENTS
STRATEGIES THAT AIM AT
ADEQUATE MANAGEMENT
OF REMAINING FINANCIAL
RESOURCES AND SUPPORT THE
DEVELOPMENT OF THE VALUE
CHAIN, ESPECIALLY SUPPLIERS
95
96
2012 annual report
Grupo Galvão
RELATIONSHIP
WITH CUSTOMERS
GRI
PR5
Excellence in customer service is one of the
foundations of our service and commitment,
included in Group Galvão’s corporate values.
In everyday life, our companies strive continuously to improve its activities and products,
as a way to fulfill customer expectations and
requirements, contracts liabilities on quality,
meeting deadlines, foreseen results and end
users and society demands.
One of the main measuring tools of provided
services is regular satisfaction surveys. In the
building area, Galvão Engenharia adopts
standards and guidelines to monitor constantly the customer perception on the fulfillment of contractual requirements and on the
analysis and decision making to increase the
customer satisfaction.
Customer needs and expectations are also
measured by means of the frequent interaction between contract managers and customers. The feedback of needs is a regular
practice in the company and besides solving
any problems; it seeks to create closer relations and partnerships.
At Galvão Engenharia, the periodicity of formal
satisfaction surveys conforms to specific characteristics of each area and type of service.
Regarding Infrastructure Division, for example,
this survey is conducted every six months. In
relation to construction works from the Industrial Engineering Division for Petrobras and its
subsidiaries, the frequency of the surveys is
determined in each contract.
Given the specific nature of its activities –
direct service to end users of water and sewage
services –, CAB ambiental has more means to
interact with the public and to evaluate quality of
services, as a way to assure a proper customer
relationship management.
When it comes to other users (from concessions or PPPs), the service quality is measured through the Customer Satisfaction Index
(SATA), whereas operational excellence is
measured by the Public Service Satisfaction
Index (SATIS). In CAB’s companies, surveys are
conducted annually – if necessary, it may be
conducted in a shorter time.
After its consolidation, results follow an internal path – from representatives to the Board
of each company – aiming to solve problems of
greater urgency and to plan long-term actions.
The indexes are also examined in general in
performance meetings held by the Board, as a
way to complete the inner cycle of evaluations
regarding users’ perception on CAB’s services
in the country.
97
Satisfaction surveys measure customers and users perception
regarding the services provided by Grupo Galvão
GRI
PR5
GALVÃO ENGENHARIA CUSTOMER
SATISFACTION INDEX
GRI
PR5
CAB’S CUSTOMER SATISFACTION INDEX (%)
Company
2011
2012
General Average
8.0
8.3
QHES Perception
8.5
8.4
2011
2012
Esap
92.00
93.20
Sanessol
98.64
84.20
CAB Águas de Andradina
85.41
80.69
-
58.19
89.90
81.00
-
63.71
82.70
82.25
-
53.25
CAB Alta Floresta
75.11
81.47
CAB Colíder
88.23
76.00
CAB Pontes e Lacerda
84.19
75.83
CAB Comodoro
94.84
99.25
CAB Canarana
92.05
82.50
CAB Águas de Castilho
CAB Guaratinguetá
CAB Piquete
CAB spat
CAB Águas de Paranaguá
Besides conducting satisfaction surveys,
CAB’s companies receive feedback on their
work through regular channels of public
contact, like face-to-face service in stores,
telephone service and the institutional website on the internet.
Obs.: The survey data does not apply to the companies Itapoá
Saneamento, CAB Cuiabá, Tubarão Saneamento, CAB Águas do Agreste
and CAB Atibaia because they have less than one year of activity.
98
2012 annual report
Grupo Galvão
RELATIONSHIP
WITH SUPPLIERS
Responsible for the management of a large value
chain, we are also aware of our role as generators of
wealth and economic development and as drivers of
good practices in the relationship with suppliers and
service providers. In this role we use positive influence
in these partners, regarding quality standards in the
delivery of inputs, raw materials, products and services,
fulfillment of laws and adoption of social and environmental principles.
The regional offices, our construction works and
companies have autonomy in negotiations and in
the formalization of agreements with suppliers.
However, decisions should be taken in accordance
with the procedures and policies of our Management Manual, which establishes standards and limits
approvals, according to the price of each purchase.
Local representatives have the duty to monitor the
fulfillment of deadlines and practice quality control.
In return, we also have the responsibility for suppliers
training and development. This relation is governed
by rules, policies and procedures that, among other
goals, aim to guide potential partners in achieving
the minimum excellence standards established by
our companies.
Due to the closeness to the construction works
and companies and our commitment to help in the
social and environmental development of communities where we operate, local suppliers* are seen
as preferred partners of our projects, although
there is no fixed-minimum percentage of expenses and purchases to be spent with companies
with these characteristics. Still, for the effectiveness of a hiring, the local supplier must meet a
number of requirements, such as having financial
health, proper structure to meet our demands and
have employee training and qualification policies.
Our budget for shopping or contracting services is
managed in a decentralized way. That means that our
companies, when developing technical and commercial proposals for involvement in tenders and bids, set
available funds for the purchase of goods and services.
Except for some corporate dealings, products and
services that are done in a decentralized way.
* We consider as “local supplier” those within the state where the construction work is.
GRI
EC6
99
There are, however, specific cases in which corporative negotiations are more effective to obtain fair and
competitive prices, as it happens with the purchase of
construction steel, bulk cement, bulk fuel and imports.
There are situations involving the need to hire specialized services, like a consultancy for the draw up of basic
projects and environmental studies, advisory on regulatory issues and financial structure of projects – and
the search for suppliers of this type follows the logic of
the verification of proven expertise, regardless of the
geographical location of the company.
PURCHASE OF GOODS AND SERVICES
HUMAN RIGHTS
CONTRACTS WITH HUMAN RIGHTS TERMS
The relationship with suppliers and service
providers is guided by criteria of valuation and
protection of human rights. This includes the
adoption of strict contractual standards and raising awareness on the importance of understanding and adopting practices that protects the
rights of citizenship.
Our social responsibility, quality, safety, environment and safety guidelines to suppliers of
materials have specific terms to be met regarding
human rights. It is considered unacceptable suppliers practicing abuse of power, slave or forced
labor as well as discrimination by sex, age, race,
sexual orientation, social class, nationality, religion, mental or physical disability, union membership and political affiliation.
The agreement of these terms by partners is
a premise to the formalization of the business
agreement. For its part, our companies take the
responsibility to do a proper supervision on the
fulfillment of human rights terms during the term
of the contracts.
GRI
HR1
Galvão Engenharia
Type
2011
2012
Total expenses with suppliers
(in BRL Thousand)
1,640,546
1,873,296
Total expenses with local
suppliers (in BRL Thousands)
659,706
804,155
% of expenses with purchase
of goods and services in local
suppliers*
40.21
42.93
GRI
HR2
Company
Tipo
Galvão
Engenharia
CAB
ambiental
Contracts with a value
equal to or higher than
BRL 250 thousand
747
68
Contracts with a value
equal to or higher than
BRL 250 thousand with
human rights terms
692
68
92.64
100
% of contracts with human
rights terms
Build Knowledge Program, São Paulo (SP)
CHAPTER
06
SOCIAL AND
ENVIRONMENTAL
RESPONSIBILITY
102
2012 annual report
Grupo Galvão
The responsibility toward the environment and
society is one of our corporate values, influencing companies, business and the interaction with
different publics. In our Corporate Management
Policy we are committed to implement projects
that respect biodiversity and the communities
where we operate, taking actions that end with or
minimize the impacts of our activities; respecting
and value local cultures, contributing to a positive
legacy in favor of the people and the country.
Regarding environmental protection, we have
waste and effluent management plans for the
waste and effluents produced in our companies
and we monitors atmospheric emissions, always
Implementing projects that respects biodiversity and communities where we
operate is a commitment of our Corporate Management Policy
seeking to eliminate or mitigate the effects of
our intervention. We adopt creative and innovative solutions aiming to reduce the consumption
of natural resources and fossil fuels. We have
developed selective waste collection in the companies and we conduct internal audits, seeking
for excellence in meeting legal requirements.
We are committed to the regularization of all
environmental permits necessary to put into
practice our projects, as well as to the suitability
of our activities in relation to government agencies demands and to the implementation of
systems to monitor the fulfilling of environmental legislation. This concern is present in all of
SOCIAL AND ENVIRONMENTAL RESPONSIBILITY 103
WASTE AND EFFLUENT
MANAGEMENT, EMISSIONS
MONITORING AND
CONSTANT AUDITS ARE
PART OF OUR ACTIONS TO
MITIGATE THE EFFECTS
OF OUR INTERVENTION
ENVIRONMENTAL RESPONSIBILITY
The concern towards the environment is present
in all the Group’s activities, besides being a
precondition for the sustainable growth of the
company. The Integrated Management System
covers the Environmental Management System
and includes he guidelines for daily work. Among
the main procedures the following stand out:
• Survey of environmental aspects and impacts to
give priority to those actions that aims the conservation of natural resources and to eliminate
or mitigate impacts caused by our activities.
• Reduction of fossil fuel consumption and
potential gas emission.
our activities, especially in CAB’s companies for
they operate in local water and sewage services,
with additional responsibility regarding environmental protection.
• Establishment of selective waste collection.
• Reuse of materials in the activities.
We also consider as part of our duties to promote
environmental education to employees and communities where we operate. We seek to influence
our production chain to adopt the right practices.
• Initiatives to reduce environmental impacts,
like the reuse of rocky material, rainwater
harvesting, solvents recycling and reuse and the
use of biodegradable materials.
In the social area, it is a priority to build productive relationships with the communities surrounding our projects or that live in the areas of
our services, like the cities where we have basic
sanitation contracts.
Due to our recent configuration as a corporate
group and to our different business from recent
years, we have companies in different stages of
evolution regarding social and environmental
practices. Galvão Engenharia and CAB ambiental,
our two major companies – in relation to its path,
geographic reach and number of employees –
influence positively the whole Group, having its
actions seen as models to be followed.
Our ventures and companies develop with
autonomy social and environmental initiatives,
engaging in community activities, developing
partnerships with the government and independent organization and raising awareness of
employees, a workforce hired locally that can
benefit from our projects and contracts.
Since 2010, for example, CAB has an exclusive
policy dedicated to the topic of sustainability, which
points out the commitments, describes and lists the
104
2012 annual report
Grupo Galvão
Developed at Replan, the program allocates resources to social entities every time
that construction works employees reach or exceed performance goals
guidelines for the activities, guiding the company’s
daily life and its vision of the future, targeting the
universalization of water and sewage services, as
a way to improve health conditions, education,
economic development and quality of life of the
population and to protect the environment.
In 2012, as a part of the improvement process of
its management model, the company started a
broad assessment work of performance indexes
related to the policy as a way to measure the
adoption and progress of its implementation
in the companies. To strengthen its activities,
CAB also counts on an advisory committee of
the Board on social and environmental topics
and working conditions (find out more about the
committee on page 115).
To assist the management of many programs of
CAB’s companies, the Sustainability Committee
was created, made of subsidiaries’ employees
that have local support of multipliers, responsible
for the daily practice of initiatives.
RAISING THE AWARENESS
OF INTERNAL STAKEHOLDERS
We believe that the achievement of our goals
of environmental management depends on the
employees’ involvement. Based on this premise,
we develop activities that favor the team’s
awareness and its engagement. For this purpose,
we conduct specific training with a focus on
sustainability, give lectures, recreational activities
and we encourage planting of tree seedlings.
Among the most important corporate initiatives,
the Sustainable Management Contest stands
out, in its third edition in 2012, which mobilized
works and activities of all our companies (see
box on page 113) in presenting …social and
environmental projects or improvements in the
safety process and occupational health projects.
SOCIAL AND ENVIRONMENTAL RESPONSIBILITY 105
We also have events of mobilization, like those
that occur in the Week of the Environment, in
June. In 2012, the highlight was at the internal
campaign “Green Economy: does it includes
you?” developed by the United Nations (UN) and
spread internally by Galvão Energia to promote
environmental education and awareness in the
ventures. During the campaign, there were
lectures, games, contests and plays, seeking to
strengthen in the staff and service providers the
concepts of environmental responsibility and
sustainability.
RAW MATERIALS MANAGEMENT
Raw materials and inputs used in our activities
of engineering and construction are acquired
complying with the corporate procedure, which
has as one of its requirements the protection of
the environment. To be qualified and become part
of our supplier company’s registration of specific
segments, the supplier must present a copy of
all its environmental operation licenses, besides
the copy of other documents required by official
inspection and control agencies. These suppliers
are the following:
INFLUENCE ON THE PRODUCTION CHAIN
Our companies also spread among suppliers
and service providers the corporate vision on
environmental responsibility, seeking to influence
them and supervise their practices.
This concern already shows itself in the hiring
process, which prefers suppliers that meet the
social and environmental criteria established by
the Group. Therefore, every signed contract with
a new supplier includes the Social Responsibility,
Safety, Occupational Health, Environment and
Quality Guidelines.
By means of this document, we seek to make
service providers to follow the sustainable
strategies of the company. Among the rules that
the supplier must abide by, there is the control
of inputs and materials origin and the prohibition
of any practice of illegal exploitation of natural
resources, as well as the use of counterfeit
products, of criminal origin and of tax evasion.
Besides that, we often evaluate social and
environmental practices of our suppliers and we exam
the date of licenses and environmental permits in their
possession.
Environmental education of employees is a practice of the
Group in its activities
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Grupo Galvão
SUSTAINABLE
PRINTING
Established in 2012, this initiative aims
to promote a significant savings in paper
consumption in the Group’s companies, as
an effective sustainable action.
It is a tool developed by the Information
Technology area to decrease wasteful
printing of files, documents and reports, by
means of a more efficient management of
the services. Due to this new tool, printing
only occurs after a user badge validation in
the electronic reader in the equipment.
Adopted in São Paulo’s state offices, the
system should be implemented in the
other Group’s units during 2013. It is
estimated an annual saving of 1 million
sheets of paper with the new system.
In addition to its sustainable nature, the
tool also contributes to the improvement
of safety standards regarding the
managing of corporate strategic
documents. The system prevents
copies from being forgotten and allows
the printing of files from any Group’s
equipment – either from equipment in the
workplace or from a unit in another city.
This will help employees when traveling,
because they will be able to print their files
in the Group’s offices at other places, thus
preventing the transport of confidential
documents.
• Mining companies of natural ore deposits
(crushed stone, sand, calcium oxide, plaster,
marble, granite, decorative stones etc.).
• Companies of forest products (wood in
general, chipboard, pressed wood and
plywood boards, and others).
• Cement supplier companies (when purchased
straight from the manufacturer).
• Companies suppliers of explosives and
related products.
• Companies suppliers of controlled products
(ether, acetone, etc.).
REDUCTION OF LOSSES
In basic sanitation, we operate strongly in
investments that enable water loss reduction
in supply systems, one of the most serious
problems nowadays. For this purpose, CAB
develops programs and initiatives in its
companies, seeking to increase the efficiency
of its production systems. The company
also invests in the expansion of services in
communities that eliminates non-treated
sewage releases into nature and that ends with
illegal disposal of sludge from water and sewage
treatment plants.
energy consumption
Our companies also operate in the development
of solutions and processes that decrease the use
of natural materials and energy consumption.
SOCIAL AND ENVIRONMENTAL RESPONSIBILITY 107
ACTIVITIES CONCERNED
ENVIRONMENTAL INVESTMENTS
GRI
EN30
GRI
As a consequence of all our initiatives, in 2012,
we have invested BRL 21.2 million in activities
and programs for environmental protection and
preservation*. From this amount, BRL 7.1 million
was allocated to prevent events and environmental
management. About BRL 11.8 million went
to programs of waste disposal and emissions
treatment and reduce damages.
WITH RAISING AWARENESS
AND TRAININGS WITH
FOCUS ON SUSTAINABILITY
SEEK TO ENCOURAGE THE
EMPLOYEES ENGAGEMENT
DIRECT ENERGY CONSUMPTION (GALVÃO ENGENHARIA)
EN3
2011
Direct Energy Consumption
(DIESEL)
2012
Liters
Gigajoules
Liters
Gigajoules
Own fleet
6,931,866
265,816
4,995,595
191,566
Out sourced fleet
16,174,351
620,236
11,656,388
446,986
Total
23,106,217
886,052
16,651,983
638,552
Obs.: We do not monitor the consumption of other fuels because we consider the figures too small in relation to the nature of our activities
Obs.2: The other companies of Grupo Galvão do not monitor this indicator.
GRI
EN30
INVESTMENTS IN ENVIRONMENTAL PROTECTION (IN BRL)
Galvão Engenharia
Type
2011
2012
Waste disposal, emissions treatment and
remediation costs
5,905,017.15
11,828,983.21
Prevention costs and environmental management
7,048,132.14
7,104,757.61
3,000.00
411,905.05
12,956,149.29
21,294,663.75
Programs and/or external projects
Total
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2012 annual report
Grupo Galvão
THE DEVELOPMENT OF
SOCIAL AND ENVIRONMENTAL
PROGRAMS AIMS TO
SUPPORT AND BENEFIT THE
COMMUNITIES WHERE THE
GROUP’S COMPANIES HAVE
WORKS AND OPERATES
Water and Citizenship for Life Program was finalist of the award
sponsored by the Agência Nacional de Águas (ANA) [National
Water Agency] a Brazilian utility, at NGO category
SOCIAL RESPONSIBILITY
Because we believe that sustainability can only be
achieved through the joint action of society, the
production sector and the government, in order
to guarantee the right way of facing economic,
social and environmental challenges, our Group
presents itself as a promoting agent of initiatives
that appreciate citizenship, justice, ethics and
diversity, contributing to the collective welfare and
the communities development.
For acting directly in communities, we face the
challenge of consolidating a structure view
regarding our responsibilities towards society.
CITIZEN GALVÃO
In 2012, we took important steps to achieve
this goal with the structuring of the project
Citizen Galvão. Released at the beginning of
2013, this project will have the task of gathering
different corporate initiatives of social inclusion,
environmental protection and closer ties with
the population, giving them a more organic and
corporate meaning.
SOCIAL AND ENVIRONMENTAL
PROGRAMS
The main programs developed by our companies in
their specific areas of expertise and subordinated
to Citizen Galvão are the following:
WATER AND CITIZENSHIP FOR LIFE
Created in 2012 at the subsidiary CAB Águas
de Paranaguá (PR), the program focus on the
SOCIAL AND ENVIRONMENTAL RESPONSIBILITY 109
The Open Doors Program offers students a chance
to visit water and sewage treatment plants
population awareness-raising on the importance
of sanitation and its positive impact in public health,
education and community income. Partnering
with Pastoral da Criança and Instituto Trata Brasil,
the program operates in low-income areas for the
formation of “Friends of Water”, young people that
help in the empowerment of families to the rational
use of water, detection and repair of leakage and in
the understating toward consumption rates.
In 2012, the cycle of activities of the program
ended in two neighborhoods of Paranaguá,
chosen for the development of the work, reaching
1.700 families. In 2013, the initiative will spread
to other areas of the city, with “friends of water”
being responsible to train new knowledge
multipliers. In 2012, the “Water and Citizenship
for Life” was one of the finalists of the award
sponsored by the Agência Nacional de Águas
(ANA) [National Water Agency] in the NGO
category. (find out more on page 21).
OPEN DOORS
It is an environmental education initiative for
students from public and private schools to visits
CAB’s water and sewage treatment plants, receive
information on local procedures, increasing their
level of knowledge regarding the company’s
services and the importance of the rational use of
water.
Released in 2009 in the cities of Mirassol (SP) and
Paranaguá (PR), the program spread to the cities of
Guaratinguetá and Piquete (SP) and Alta Floresta,
Colíder, Comodo and Canarana (MT). In 2013, the
Open Doors shall be implemented in CAB Cuiabá’s
operations. Last year, 2.836 students participated
in the program, amounting 10 thousand visitants
since the beginning of the initiative.
FAT WON’T FIT IN THE SEWER
Program of awareness-raising towards the right
discard for cooking oil used in bars and restaurants,
as a way to prevent the accumulation of this type
of material in pipelines and to prevent the risk of
clogging pipes, sewage reflux, break of collection
networks, soil sealing and pollution of rivers and
streams.
110
2012 annual report
Grupo Galvão
The Fat Won’t Fit in the Sewer Program collected a total of 44
thousand liters in 2012
In 2009, the initiative began at Guaratinguetá (SP)
and spread to CAB’s companies in Paranaguá (PR),
Mirassol, Palestina and Castilho (SP). In 2012, the
campaign or fat collection reached a total of 44
thousand liters, a volume three times greater than
that collected in the previous year.
Another important step in the year was the
consolidation of indicators that relates the program
benefits with the decrease of internal expenses,
by decreasing the number of work orders issued to
serve events related to the inappropriate disposal
of cooking oil.
REFORESTATION OF RIVER SOURCES
It is the planting of native vegetation and
maintenance of areas, aiming to preserve the
quality of river sources. The initiative is already
being practiced by the subsidiaries CAB Alta
Floresta, CAB Colíder and CAB Pontes e Lacerda.
waste. The program also develops selective waste
collection and the maintenance of the school
gardens to value the importance of healthy eating.
RAINWATER IS NOT SEWAGE
Campaign developed in Guaratinguetá (SP),
since 2009 its goal is to raise the awareness of
the population regarding the proper disposal of
rainwater, preventing the runoff by the sewer main
and overloading treatment plants, with high risk of
flooding and sewage return to homes.
CLEAN WATER BOX
Free course on the importance of periodic cleaning
of household water towers as a way to ensure that
the water that comes out of the reservoirs arrives
in homes with the desired quality. The initiative held
in the cities of Andradina, Mirassol, Palestina and
Castilho (SP) and occurs in the cities’ anniversary.
PLUMBER COURSE
ENVIRONMENTAL EDUCATION PROGRAM
Developed in public school in Mirassol (SP), this
program aims to spread information on the
importance of responsible use of water in everyday
life, encouraging the change of habits and eliminate
Created at Paranaguá (PR), this course offers
to the population of many neighborhoods
guidance on how to use water rationally and to fix
household leaks, avoiding waste, and therefore,
to reduce losses and consumption bills. In its first
SOCIAL AND ENVIRONMENTAL RESPONSIBILITY 111
stage, the course was for women. Recently,
it has been adapted as domestic plumber
course. In 2012, the initiative is also offered
in the area of CAB Cuiabá.
INDICATORS ON DISEASES
RELATED TO INAPPROPRIATE
ENVIRONMENTAL SANITATION
First held in 2011, with an update in 2012, this
study characterizes the profile of morbidity
and mortality in the cities where CAB operates,
considering the expenses in public health and the
number of hospitalizations (mostly of children
under the age of five).
Developed according to the methodology of
Instituto Trata Brasil, the study uses data from
the Ministry of Health (DATASUS) and from the
Ministry of Cities, which maintains the National
Information on Sanitation (SNIS). The document
depicts the improvements made by the expansion
of water and sewage services in the cities that
CAB has operations and the challenges yet to be
overcome in this area to spread the company’s
contribution towards the Brazilian public health
and population’s quality of life.
CAB inovar
The recognition of the importance on innovation
in the workplace as a tool that contributes
to the corporate sustainability is the basis
upon which lies the award CAB inovar. Released
in 2009, the initiative aims to mobilize employees
around the development and presentation
of creative project that add value to the activities
and business, earning efficiency in processes
of production, administration, financial,
commercial, communication, customer and
community relationship and services to users.
Since its creation, the award had 123 papers
A team from CAB Águas de Andradina was one of
the winners of the trophy CAB inovar
submitted from 296 employees, awarding 12
of them.
In 2012, CAB inovar underwent improvements
and started to reward projects in three categories:
Operational, Commercial and Management and
Support. The webpage on CAB’s web portal gathers
information about the winning projects, enabling the
spread of good practices.
RESPECT FOR DIVERSITY PROGRAM
Created by Galvão Engenharia, it aims to develop
citizenship values in the internal environment of
the company. By means of its initiatives, it seeks to
raise awareness of employees on the importance
of respecting differences and individuality in the
workplace, encouraging a harmonious coexistence
between people.
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Grupo Galvão
BUILDING KNOWLEDGE PROGRAM
VOLUNTEERING
Created in 2007 by Galvão Engenharia, its
goal is to offer elementary school education
in the workplace, to employees that did not have
access to regular education. Over the years,
the program has graduated 224 employees that,
once approved, receive a certificate recognized
by the Ministry of Education, enabling them to
continue their studies.
Although we do not have in the Group a program of
employee engagement in volunteering practices, we
have specific initiatives in many construction works
and operation, with emphasis on activities like the
collection of donations for natural disasters victims,
environmental education for children, lectures in
communities, organization of Christmas parties and
distribution of toys and blood donation to hospitals.
The Building Knowledge Program works as
well as a tool for socialization and employability
of students, since education not only broadens
their professional horizons in the company,
but also strengthens their chances in the
market. In 2012, the program had 22 classes,
with 440 employees.
INTEGRATED SYSTEM OF GOALS (SIM)
Building Knowledge Program contributes to the education
and to strengthen the professional horizons of employees
Created by the Industrial Engineering Division
at the construction work of Refinaria de Paulínia
(Replan), it allocates resources to social entities of
the region every time that the employees at work
sites reach or exceed performance goals. Thanks
to this support, it has been possible to expand
service locations and improve infrastructure
SOCIAL AND ENVIRONMENTAL RESPONSIBILITY 113
Sustainable Management Contest awarded
cases of Galvão Engenharia and CAB
SUSTAINABLE MANAGEMENT CONTEST
Included as a corporate aspiration, the practice of sustainability principles is increasingly present in our companies. One important tool to achieve this purpose is
the Sustainable Management Contest, held annually.
The contest aims to recognize adopted initiatives
by works, companies and departments of the
Group that contributes to the improvement of
performances in the economic and financial, social
and environmental aspect and to spread the best
experiences in the company.
The 3rd edition of the Sustainable Management
Contest had 14 projects submitted; the choice of
seven finalists; and three winners were awarded.
As an improvement, the contest divided the
competitors into three categories, by business area
– Infrastructure Division and Industrial Engineering
Division, from Galvão Engenharia, and CAB ambiental.
Another improvement was in the evaluation of
projects by three dimensions that make the concept
of sustainability – the environmental, social and
economic-financial results. In its two first editions, the
social and environmental aspects were the focus of
the organizers.
The winners were announced in February of 2013. In
the Infrastructure Division, the winner was Consórcio
Galvão Serveng, responsible for the construction work
of Line 5 of Metro-SP. The team from Refinaria de
Abreu e Lima (RNEST) won against three other projects from the Industrial Engineering Division. And CAB
Cuiabá (MT) stood as number 1 within CAB dimension. In accordance with the tripod of sustainability, the
contest is likely to award projects by the “whole work”,
instead of sticking to one or another specific initiative.
Thus, while it presented environmental actions, the
construction work of Line 5 of the Metro-SP stood
out for initiatives regarding the employees’ health and
safety, proper disposal of waste and reuse of materials.
The Refinaria Abreu e Lima (RNEST) project
highlighted an important set of social and
environmental actions, such as the reduction of
waste production, decrease of natural resources
consumption and in the social and environmental
awareness raising in the neighboring community. CAB
Cuiabá was recognized for its efforts for employees’
integration from the former sanitation company
(Sanecap), for the identification of professional
talents to have a role in the new operation and for the
quality of the relationship the local population.
114
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Grupo Galvão
115
CAB’S ENVIRONMENTAL
MANAGEMENT COMMITTEE
As part of the strengthening process of its governance, CAB established in 2012 the
Environmental Management, Safety and Occupational Health Committee. With five members
and meetings every two months, the Committee advises the company’s Board, aiming to
contribute so that business comply with the law, ethics, guidelines, policies and internal
procedures. Among the duties of the Committee, the following stands out:
• Follow the development of programs to reduce water loss index in the distribution network
and recirculation in filters in treatment plants.
• Propose projects of effluents reuse and sludge reuse in treatment plants.
• Conduct studies and elaborate strategies to solve environmental issues
• Develop environmental regulation plans of future concessions that CAB may participate.
• Monitor the fulfillment of commitments made in the concession agreements.
• Propose measures and actions to prevent or remedy damages in the environment, safety
and occupational health that may be caused as a result of CAB’s or its subsidiaries/
affiliated activities.
• Ensure the issue of all necessary licenses and permits for the environmental regulation
for the company’s activities, as well as the fulfillment or execution of the Consent Decree
with the agencies or with the Brazilian Government Agency for Law Enforcement and
Prosecution of Crimes.
• Evaluate the performance of the subsidiaries/affiliated companies in order to reduce
environmental impacts, to promote users’ environmental education, improvement of
health and quality of life through the monitoring of performance indicators.
• Ensure that the subsidiaries/affiliated companies map out hazards and environmental
aspects, and that negative impacts and identified risks are controlled.
• Assess the feasibility of practices, controls and initiatives through objectives and goals.
Established in 2012, the Committee
advises CAB’s Board
CAB Cuiabá (MT)
chapter
07
our
results
118
2012 annual report
Grupo Galvão
In 2012, we lived a year of significant achievements
in the several areas of our companies, with very
positive consequences on the performance of
the main economic and financial indicators. The
results showed, once again, our strength as a
multidisciplinary business group and our ability
to generate, develop and execute high business
value, always with quality and compliance with
agreed deadlines. The performance scores showed
also the assertive corporate effort focused on
maintaining financial discipline, necessary condition
for the stability of the organization and to meet the
demands of our companies for investment.
The slowdown in economic activity recorded
in the country in 2012, as expected, influenced
negatively the infrastructure sector, which still
remains one of the segments of most low levels
of investment in comparison with the main
emerging nations of the planet.
This achievement, the fruits of the labor of a long
maturation, emphasizes not only the excellence
of our commercial and corporate strategies of
exploration, development and viability of projects
with higher added value and profitability, but also
the commitment of the entire organization with the
continuity of operations.
The participation of each business segment in
the composition of our portfolio of contracts
shown to be more diversified in 2012, as a result
of operational diversification and opening of new
fronts. The portfolio of contracts in sanitation
increased its sharefrom 48.9% to 58.7%, reaching
the amount of BRL 20 billion, compared to the
BRL 6.8 billion in 2011. The formalization of its
EVOLUTION OF THE CONTRACT PORTFOLIO OF
Grupo Galvão (IN BRL BilLIONs)
Despite this adverse environment reality, our
group had a higher average performance to those
of competitors in the relevant markets, strengthening the implementation of strategies and the
achievement of long term goals. The most significant result was presented by our contracts portfolio, that attained, at the end of 2012, the record
level of BRL 34.1 billion, an increase of 145.3%
when compared to the 2011 performance.
GRI
34.1
13.9
9.3
2010
2011
2012
PARTICIPATION OF THE AREAS IN THE CONTRACT PORTFOLIO (IN %)
2.8
Company
2010
2011
2012
Engineering and Construction
50.8
47.5
17.9
Sanitation
38.1
48.9
58.8
Energy
11.1
3.6
1.3
0
0
22.0
Oil and Gas
our results 119
first contract with Petrobrás for construction
and chartering of three ships-probes made
Galvão Óleo e Gás Participações, the holder of
a backlog of business in the order of BRL 7.5
billion, generating a 22% stake in the amount of
contracts in execution by the Group.
Overall, this performance is explained by the
evolution of our services in several areas of activity.
The engineering and construction activities were
responsible, alone, for the largest volume of net
income – BRL 3.0 billion, 31.8% higher to that
achieved in 2011.
The portfolio of the sector of engineering and
construction, on its turn, has presented for the
year a reduction in value of the order of 7.6%,
from BRL 6.6 billion in 2011 to BRL 6.1 billion
in 2012. This decrease is due to the closure
of several projects without the replacements
by the achievements of new contracts. The
increase in business of other areas of the group
has influenced in order that Galvão Engenharia
had a sharp drop (from 49.6% to 17.9%) in their
participation in the overall composition of the
Group’s portfolio.
This result was a natural result of the execution,
with ever larger scales, from large projects size
and an acting nearer relationship with customers.
The area of sanitation, in turn, contributed USD
355.2 million in revenue, distributed among
18 concession contracts and public-private
partnerships maintained in the country - five of
them won in 2012. The finance area, through
the operation of support of the supply chain and
from the management of the Group and the
organization’s resources, recorded net revenues
BRL 13.3 million.
RevenueS
GRI
2.8
The evolution of the Group was also significant
in other key performance indicators, such as
Revenues. In 2012, our gross operating revenues
reached the mark of BRL 3.6 billion, 40% higher
than 2011. The Net Revenue, in turn, grew 37.5%,
expanding from one year to another, from
BRL 2.4 billion to BRL 3.3 billion.
REVENUE, 2012 (in BRL)
Company
Gross revenue
Net revenue
Grupo Galvão
3.6 billion
3.3 billion
Galvão Engenharia
3.2 billion
3.0 billion
CAB ambiental
391.1 million
355.2 million
Galvão Finanças
14.3 million
13.3 million
Results, 2012 (IN BRL million)
Galvão
Participações
Gross revenue
Results
Galvão
Óleo e Gás
Galvão
Engenharia
CAB
ambiental
Galvão
Finanças
Galvão
Energia
Consolidado
-
0.8
3,226.5
391.1
14.3
-
3,593.8
38.5
-3.5
132.5
-12.4
7.7
-14.8
31.9
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2012 annual report
Grupo Galvão
Financial discipline was an essential tool for maintaining stability
and meeting the needs of business investment
GRI
2.8
EC1
OPERATIONAL COSTS BY COMPANY
(in brl)
Company
Galvão Engenharia
CAB ambiental
Galvão Finanças
Total
2.7 billion
250 million
3 million
OPERATIONAL EXPENSES BY COMPANY
(in brl million)
Company
Galvão Participações
Galvão Engenharia
Total
OPERATING COSTS AND EXPENSES
Another of our priorities in 2012 was the realization of
a meticulous work of cost management, particularly
in respect to control of operating expenses. Our costs
totaled BRL 2.8 billion, an increase of 45% compared to
the amounts of 2011, aligned with increased of Group
revenues. In the overall composition, Galvão Engenharia
accounted for USD 2.7 billion (92.7%), while CAB has borne
with USD 250 million (7.2%).
The Operational expenses, meanwhile, totaled USD 306
million for the year. Of this total, Galvão Engenharia was
responsible for 61.3%, followed by CAB with 29.0%.
3.0
187.2
CAB ambiental
88.7
Galvão Energia
20.8
Galvão Óleo e Gás
4.3
Galvão Finanças
1.5
CASH FLOW
As a result of the performance of the year, the operating
cash generation as measured by EBITDA (earnings before
financial result and taxes) has varied positively from
BRL 85.9 million to BRL 225.3 million in 2012, setting an
increase of 162.2% in the index.
our results 121
profit
EBITDA and margin EBITDA (%), 2012 (in BRL million)
Company
The behavior of revenues, costs and operating
expenses resulted in a net income BRL 31.9
million, very significant result if we take into
account the fact that Grupo Galvão has
recorded a loss of BRL 85.8 million
SALARIES AND BENEFITS
EBITDA
Grupo Participações
- 0.6
0
Galvão Óleo e Gás
- 3.2
0
Galvão Engenharia
137.1
5.8
CAB ambiental
73.9
21.7
Galvão Finanças
8.9
66.9
- 11.9
0
Galvão Energia
In 2012, our expenses with the payments
of salaries and granting of social benefits
employees totaled BRL 1 billion, 41.2% more
than in 2011. This volume of expenditure
remained on schedule and on budget, even
with the occurrence of the last few years
real increases in salaries granted to workers
operating in the infrastructure sector.
GRI
2.8
Margin
NET PROFIT, AFTER DIVIDENDS PAYOUT, 2012
(IN BRL MILLION)
Company
PAYMENTS TO INVESTORS
In 2012, we recorded a total of BRL 192.1 million
in payments on loans contracted to meet the
demands of expansion. The engineering and
construction sector accounted for BRL 75
million in financial expenses. As it is a capital
Total
Grupo Galvão
31.9
Galvão Participações
38.5
Galvão Engenharia
132.5
CAB ambiental
-12.4
Galvão Óleo e Gás
-3.5
Galvão Finanças
7.6
Galvão Energia
-17.9
cash flow, 2012 (in brl million)
Galvão
Participações
Galvão
Óleo e Gás
Galvão
Engenharia
CAB
Ambiental
Results
38.5
-3.5
132.5
-12.4
7.7
-17.9
31.9
EBITDA
-3.0
-3.5
177.8
28.9
8.9
-20.3
181.1
-
-
-4.1
48.3
-
-
44.2
-3.0
-3.5
173.7
77.2
8.9
-20.3
225.3
IFRS Effect
EBITDA
(w/o IFRS)
Galvão
Finanças
Galvão
Energia
Consolidated
122
2012 annual report
Grupo Galvão
intensive activity, CAB totaled BRL 51.1 million
in expenses of this nature. In the condition of
the holding of the various businesses of the
Group and responsible in some cases, for the
agreements with economic growth financial
organizations and financial agents for the access
to resources, Galvão Participações had in
2012, financial expenses in the amount of
BRL 65.6 million.
PAYMENTS TO THE GOVERNMENT
In 2012, the disbursement with salaries and benefits
concessions reached the level of BRL 1 billion.
EXPENDITURE WITH SALARIES AND BENEFITS,
2012 (IN BRL MILLION)
Company
Galvão Participações
Galvão Engenharia
Total
3.1
963.9
CAB ambiental
58.7
Galvão Finanças
2.8
Galvão Energia
2.4
Galvão Óleo e Gás
0.2
AMOUNTS OF DEBT OF Grupo Galvão, 2012
(IN BRL MILLION)
Company
Galvão Participações has recorded in the
year a disbursement of BRL 3.9 million for the
payment of taxes and duties, in accordance with
current legislation. The main contributor was
CAB, with a disbursement of BRL 1.6 million,
followed by Galvão Finance, which consolidated
a total payment of BRL 1.3 million, and Galvão
Engineering, with BRL 1 million.
Total
Galvão Participações
564.9
Galvão Engenharia
299.9
CAB ambiental
695.0
Galvão Energia
161.4
CAPITAL STRUCTURE
AND INDEBTEDNESS
We ended 2012 with a capital structure
consistent with the current stage of
development of our companies and the
organization as a whole.
Our level of indebtedness was also compatible
with the input requirements of resources to
meet the targets of operational commitments
and contractual requirements investments, as
a way of consolidating development projects,
particularly in the area of sanitation, with the
winning of five operations, and the opening of new
fronts of activities for the Group.
our results 123
The quality of our debt, the tenors for repayment
and the financial costs involved are in line with
the size of the organization and planning on the
entry of revenue for the next years, due to the
positive outlook performance of the various
projects and contracts.
At the end of 2012, the total debt of Grupo
Galvão totaled BRL 1.7 billion, 54.5% higher
when compared to 2011. This increase is
justified mainly due to an increase of BRL 259.6
million in the CAB, due to funding for the initial
investment in the concession of CAB Cuiabá,
besides the increase of BRL 136 million in
Galvão Energia, due to the loans for the
construction of wind farms in Rio Grande
do Norte State.
The increase in the Group’s debt is mostly
due to investments in long-term projects.
FINANCIAL MANAGEMENT
In 2012, we worked intensively on the cash flow
management of all Group companies, acting to
match availability of resources with the growing
business demands, always with reference to the
need to maintain the financial balance of the
organization.
One of the priorities is the effort to maintain and
expand the available credit lines, with the ultimate
goal of assembling the best financing structure
for the projects being developed. All this work
is worth the aid from the Board of Structured
Finance of Galvão Participações, which operates
in the feasibility of economic and financial
developments of the Group companies (learn
more on the Administration in page 127).
This discipline has also been extended to
the management of the surplus of funds of
the organization. In 2012, we continued the
conservative strategy regarding the profile of our
investments, which caused us to maintain the
policy of not assuming currency risk or conduct
derivative transactions.
Managing the cash flow was one of the Group’s
priorities in order to make compatible the availability
of resources with the demands for growth
124
2012 annual report
Grupo Galvão
The Group invested BRL 85.8 million in the expansion
projects and Productive improvements of the companies
INVESTMENTS
OUTLOOK
To deal with the commercial and operational
challenges of the business today and in the
coming years, we seek to maintain a consistent
policy of investments. In 2012, this strategy
resulted in the allocation of BRL 618 million
in projects of expansion and production
improvement of our companies. The previous
year, the total investment was of the order of
BRL 160.1 million.
The outlooks for improving indicators of the Brazilian
national economy, with more consistent growth
of the Gross Domestic Product, allied to the effort
of the federal government to expand the level
of investment in various infrastructure sectors,
strengthens our optimism regarding the expansion
of our business in 2013 and the following years.
The funds disbursed in 2012 were largely
directed to engineering and construction projects
(BRL 143.1 million), sanitation (BRL 321 million)
and energy (BRL 142 million). A major highlight
of the year was the entry of BNDESPar as a partner
of CAB, a transaction that has brought capital
to the company to face up to the investment
needs in contracts under execution and for the
new concessions.
GRI
2.8
ASSetS
We ended 2012 with a total of BRL 3.3 billion
in assets*, an amount 41.7% higher than that
of 2011. The majority portion of our assets
is concentrated in Galvão Engenharia, which
responds for about BRL 2.1 billion.
It should contribute to the growth scenario of
the strengthening of our participation in the
infrastructure works in Brazil and the focus on cash
generation and economic results, with emphasis to
the sanitation areas, which will be responsible for a
significant generation of EBITDA for the Group, as a
result of maturation of contracted projects.
TOTAL ASSETS OF THE GROUP, 2012 (IN BRL)
Company
Total
Galvão Participações
1.2 billion
Galvão Engenharia
2.1 billion
CAB ambiental
1.1 billion
Galvão Energia
260 million
Galvão Óleo e Gás
Galvão Finanças
9 million
6.8 million
* We have a total of elimination of assets among companies
(Investments and related parties) of 1.4 billion
GRI
2.8
our results 125
STRUCTURED FINANCE
Since 2012, we at Galvão Participações have
counted on the Board of Structured Finance,
the executive body that assists managers at
the various Group companies in formatting the
best financial structure for the various projects
and businesses. The goal is to ensure the best
use of corporate guarantees and the credit
limits to achieve the ideal composition between
shareholders’ capital and third party resources to
be used in the projects.
The development of customized solutions for each
project is the center of activity of the Board, which
develops its work in three steps. The first is the
qualification of the project, through the analysis of
business plans and items such as projected revenues,
cash flow, tax planning and the need to supply
resources. The qualification also involves analysis and
mitigation of the risks associated with the project,
reducing the financial cost and optimization of the
proposed return to shareholders.
The focus is on the structure of each new
business from a corporate vision that
encompasses the whole of the organization,
so that, by example, the distribution of credit
limits, guarantees and resources results in the
harmonization between the needs of the projects
and the availabilities.
The second phase of activity is the financial
contracting, phase which seeks the feasibility of the
projects, from negotiating with agents providers of
resources of the conditions for the financing and
of the guarantee structures. Complementing this
cycle by the monitoring of disbursements and the
project implementations itself.
The Management of Structured Finance Team, which operates in support of managers
of the companies in shaping the financial structure of their projects
126
2012 annual report
Grupo Galvão
our
indicators
our indicators 127
tabela Ibase - annual social report 2012
GRI
EC1
1- Calculation Basis
Net Revenue (NR)
Operating Results (OR)
Gross Payroll (GP)
2- Internal Social Indicators
Alimentation
Compulsory Social Charges
Private Pension Scheme
Health
Safety and health at work
Education
Culture
Capacity and professional development
Day-care or day-care assistance
Participation on Results or profit sharing
Others
Total – Internal Social Indicators
3- External Social Indicators
Education
Culture
Health and Sanitation
Sports
Hunger fighting and food security
Others
Total of the contributions to society
Taxes (excluding social charges)
Total – External Social Indicators
4 - Environmental Indicators
GRI
EN30
Investments related to production/Operation of the company
Investments on programs and/or External projects
Total of Environmental investments
Regarding the establishment of “annual goals” to minimize waste,
consumption during production / operation and increase efficient
use of natural resources, the company
5 - Functional Body Indicators
# of employees at the end of period
# of hirings during the period
# of outsourced employees
# of interns
# of employees above 45 years old
# of women working for the company
# of management staff occupied by women
# of Afro-American persons working for the company
# of management staff occupied by Afro American persons
# of disabled persons or with special needs
6 - Relevant information in regards to the exercise of
entrepreneurial citizenship
Relationship between the highest and the lowest remuneration
in the company
2012 Amount (Thousand BRL)
3,277,586
132,066
436,244
Amount
% on GP
% on NR
(K BLR)
47,563
12.4%
2,004.3%
147,493
38.4%
6,215.4%
6,357
1.7%
267.9%
26,407
6.9%
1,112.8%
5,238
1.4%
220.8%
184
0.0%
7.8%
0
0.0%
0.0%
2,273
0.6%
95.8%
12
0.0%
0.5%
16,770
4.4%
706.7%
9,451
2.5%
398.3%
261,747
68.2%
11,030.2%
Amount
% on OR
% on NR
(K BLR)
0
0.0%
0.0%
0
0.0%
0.0%
0
0.0%
0.0%
0
0.0%
0.0%
0
0.0%
0.0%
0
0.0%
0.0%
0
0.0%
0.0%
0
0.0%
0.0%
0
0.0%
0.0%
Amount
% on OR
% on NR
(K BLR)
21,200
81.5%
893.4%
0
0.0%
0.0%
21,200
81.5%
894.4%
( ) has no goals ( ) accomplishes from 51 to 75%
(x) accomplishes from 0 to 50%
( ) accomplishes from76 to 100%
2012
9,455
5,868
2,360
15
1,730
870
8%
1,311
7%
38
Total number of accidents at work
The social and environmental projects developed by the company
were defined by:
The company’s standards for safety and health in the workplace
were defined by:
Concerning freedom of association, the right to collective bargaining and internal representation (the) employees, the company
The pension plan covers:
The share of profits or results include:
In selecting suppliers, the same ethical, social and environmental
responsibility adopted by the company:
Regarding the participation of employees in programs, the
company:
Total number of complaints and criticism from consumers:
% of complaints and criticisms addressed or resolved:
Total value added to distribute (in thousand BRL):
Distribution of Value Added (DVA):
7 - Other Information
(*) This number is valid for accidents with absence.
2011 Amount (Thousand BRL)
2,372,847
26,304
383,737
Amount
% on GP
% on NR
(K BLR)
24,703
6.4%
1,041.0%
127,260
33.2%
5,362.8%
5,019
1.3%
211.5%
20,908
5.4%
881.1%
826
0.2%
34.8%
673
0.2%
28.4%
0
0.0%
0.0%
1,970
0.5%
83.0%
12
0.0%
0.5%
15,401
4.0%
649.0%
43,304
11.3%
1,824.9%
240,076
62.6%
10,117.0%
Amount
% on OR
% on NR
(K BLR)
0
0.0%
0.0%
0
0.0%
0.0%
0
0.0%
0.0%
0
0.0%
0.0%
0
0.0%
0.0%
0
0.0%
0.0%
0
0.0%
0.0%
0
0.0%
0.0%
0
0.0%
0.0%
Amount
% on OR
% on NR
(K BLR)
12,900
50.0%
546.0%
0
0.0%
0.0%
12,900
50.0%
546.0%
( ) has no goals ( ) accomplishes from 51 to 75%
(x) accomplishes from 0 to 50%
( ) accomplishes from76 to 100%
2011
6,325
5,255
1,725
5
1,305
678
9%
556
6%
28
2012
2011
154.09
153.20
44*
( ) direction
(x) directors
and managers
( ) all employees
94*
( ) all employees
( ) directors
(x) all+ Cipa
and managers
( ) does not
(x) follows ILO
( ) encourages and
involve itself
standards
follows the ILO
( ) top
( ) directors
(x) all employees
and managers
( ) direction
(x) directors
( ) all employees
and managers
( ) are not
(x) will be
( ) will be
considered
suggested
required
( ) does not
(x) supports
( ) organizes
involve itself
and encourages
in the company Procon
in Justice
1.952
0 (zero)
0 (zero)
in the company Procon
in Justice
0%
0%
0%
In 2012: 1,563,377
18.46% government 65.98% employees
2.04% shareholders 13.52% third parties
0,00% retained
( ) direction
( ) directors
and managers
( ) does not
involve itself
( ) top
( ) direction
(x) directors
and managers
( ) all employees
( ) all employees
(x) follows ILO
standards
( ) directors
and managers
(x) directors
and managers
(x) will be
suggested
( x) supports
( ) encourages and
follows the ILO
(x) all employees
(x) all + Cipa
( ) all employees
( ) are not
( ) organizes and
considered
encourages
( ) does not
( ) organiza e
involve itself
incentiva
in the company
Procon
in Justice
2.637
0 (zero)
0 (zero)
in the company
Procon
in Justice
0%
0%
0%
In 2011: 1,059,601
21.24% government 69.00% employees
17.85% third parties
8.09% shareholders
0.00% retained
128
2012 annual report
Grupo Galvão
GRI
3.12
GRI INDICATORS
THEME/INDICATOR
Reported
LOCATION IN
THE REPORT
Profile
1. Strategy and Analysis
1.1 Statement from the most senior decision maker of the organization (For example, CEO,
chairman of the board of directors or equivalent position) about the relevance of sustainability
to the organization and its strategy.
Yes
Page 15
2.1 Name of the organization.
Yes
Pages 18, 192
2.2 Main trademarks, products and/or services.
Yes
Page 18
2.3 Operational structure of the organization, including main divisions, operational units,
subsidiaries and joint ventures.
Yes
Pages 18, 37
2.4 Location at headquarters of the organization.
Yes
Page 192
2.5 Number of countries where the organization operates and name of countries of its main operations are located or are specially relevant to the sustainability covered by the report.
Yes
Page 9
2.6 Type and legal nature of the property.
Yes
Page 18
2.7 Served Markets (including geographical discrimination, sectors attended and types of clients/
beneficiaries)
Yes
Page 9
2.8 Size of the organization, including:
• number of employees;
• net sales (to the private sector organizations) or net revenue (to the organizations of the
Public sector;
• total capitalization discriminated in terms of the debt and net worth (to organizations of the
private sector;
• quantity of products and services offered.
Besides the above mentioned data, is suggested that organizations provide other information,
such as:
• total assets;
• beneficiary owners (including the identification and the participation percentage of the main
shareholders);
• discrimination by country/region of:
• sales/revenue by country/regions that correspond to 5% or more of total revenue;
• costs by country/regions that correspond to 5% or more of total revenue;
• number of employees.
Yes
Pages 10, 11,
118
2.9 Main changes during the period covered by the report in reference to size, structure or
shareholding participation, including:
• location or changes in operations, including facility openings, closings and expansions in
operational units;
• changes in the share capital structure and other capital formation, maintenance or alteration
of operations (for private sector organizations).
Yes
Pages 19, 20,
37
2.10 Bonus received in the period covered by the report.
Yes
Page 23
2. Organizational Profile
our indicators 129
THEME/INDICATOR
Reported
LOCATION IN
THE REPORT
3. Report Parameters
REPORT PROFILE
3.1 Reporting period (eg. fiscal / calendar year) for information provided.
Yes
Page 4
3.2 Date of most recent previous report (if any).
Yes
Page 4
3.3 Reporting cycle (annual, biennial, etc..) .
Yes
Page 4
3.4 Contact point for questions regarding the report or its contents.
Yes
Page 5
3.5 Process for defining report content, including:
• determining materiality;
• prioritizing topics within the report;
• identifying stakeholders the organization expects to use the report.
Yes
Page 5
3.6Boundary of the report (eg. countries, divisions, subsidiaries, leased facilities, joint ventures,
suppliers).
Yes
Page 4
3.7 State any specific limitations on the scope or boundary of the report.
Yes
Page 4
3.8 Basis for preparation of the report in relation to joint ventures, subsidiaries, leased facilities,
outsourced operations and other entities that can significantly affect comparability between
periods and/or between organizations.
Yes
Page 4
Yes
Page 4
Yes
Page 4
Yes
Page 128
4.1 Structure governance of the organization, including committees under the highest body of
governance responsible for specific tasks, such as setting strategy or organizational oversight.
Yes
Pages 38, 43
4.2 Indicate whether the Chair of the highest governance body is also an executive officer
(and, if so, their function within the organization’s management and the reasons for this
arrangement).
Yes
Page 39
4.3 For organizations that have a unitary board structure, state the number of independent or
non-executive members of the highest governance body.
Yes
Page 38
4.4 Mechanisms for shareholders and employees to provide recommendations or direction to the
highest governance body.
Yes
Page 38
4.14 List of stakeholder groups engaged by the organization.
Yes
Page 6
4.15 Basis for identification and selection of stakeholders with whom to engage.
Yes
Page 6
SCOPE AND EXTENT OF THE REPORT
3.10 Explanation of the effect of any restatements of information provided in earlier reports and
the reasons for such re-statement (eg. mergers or acquisitions, change the base year or
period, nature of business, measurement methods)
OBS.: This report does not include changes to the structure of the model year. To facilitate reader’s understanding,
measurement, calculation bases and specific changes are reported throughout the text..
3.11 Significant changes compared to previous years as the scope, boundary, or measurement
methods applied in the report.
SUMMARY OF THE CONTENTS OF GRI
3.12 Table identifying the location of information in the report..
4. Governance, Commitments and Engagement
GOVERNANCE
ENGAGEMENT OF STAKEHOLDERS
130
2012 annual report
Grupo Galvão
THEME/INDICATOR
Reported
LOCATION IN
THE REPORT
ECONOMIC
Economic Performance Indicators
ECONOMIC PERFORMANCE
EC1. Direct economic value generated and distributed, including revenues, operating costs, employee compensation, donations and other community investments, retained earnings and
payments to capital providers and government.
Yes
Pages 10, 11,
120, 127
EC3. Coverage of the pension plan defined benefit offered by the organization..
Partly
answered
Page 61
EC4. Significant financial assistance received from government.
Grupo Galvão has not received any kind of government benefits during the year.
Partly
answered
Page 45
EC5. Variation in the proportion of wage compared to local minimum wage in important operational unit.
Yes
Page 59
EC6. Policies, practices and proportion of spending on locally-based suppliers of important operational unit.
Yes
Page 98
EC7. Procedures for local hiring and proportion of senior management hired the local community
at significant locations of operation.
Yes
Page 60
Yes
Page 107
Yes
Pages 11, 107,
127
LA1. Total workforce by employment type, employment contract and region.
Partly
answered
Page 51
LA2. Total number and rate of employee turnover by age group, gender and region.
Yes
Page 60
LA3. Benefits provided to full-time employees that are not provided to temporary or part-time
employees, by major operations.
Yes
Page 61
LA4. Percentage of employees covered by collective bargaining agreements.
Yes
Page 59
LA6. Percentage of total workforce represented in formal safety and Health, composed of
managers and workers, who help monitor and counseling programs on occupational safety
and health.
Yes
Page 66
LA7. TRates of injury, occupational diseases, lost days, absenteeism and deaths related to work by
region.
Yes
Pages 63, 64,
65
MARKET PRESENCE
ENVIRONMENTAL
Environmental Performance Indicators
ENERGY
EN3. Direct energy consumption broken down by primary energy source.
geNEral
EN30. Total investments and environmental protection expenditures by type.
Social Performance
Performance Indicators Labor Practices and Decent Work
EMPLOYMENT
HEALTH AND SAFETY AT WORK
our indicators 131
THEME/INDICATOR
Reported
LOCATION IN
THE REPORT
LA8. Education, training, counseling, prevention and risk control, place to assist workforce members, their families, or community members regarding serious diseases.
Partly
answered
Page 64
LA9. Issues relating to health and safety covered in formal agreements with trade unions.
Yes
Pages 64, 67
LA10. Average hours of training per year per employee by functional category.
Partly
answered
Page 54
LA12. Percentage of employees receiving regular performance and career development.
Yes
Page 57
LA13. Composition groups responsible for corporate governance and discrimination of
employees per category according to gender, age group, minority and other indicators
of diversity.
Yes
Pages 11, 38,
54, 57
LA14. Ratio of basic salary of men to women by employee category.
Yes
Page 59
HR1. Percentage and total number of significant investment agreements that include human
rights clauses or that have undergone screening on human rights.
Yes
Page 99
HR2. Percentage of significant suppliers and contractors that have undergone screening on
human rights and actions take.
Yes
Page 99
Yes
Page 42
PR1. Phases of the life cycle of products and services in which health impacts are assessed for
improvement, and percentage of significant products and services categories subject to such
procedure.
Yes
Page 67
PR2. Total number of incidents of non-compliance with regulations and voluntary codes related
to the impacts of products and services on health and safety during the life cycle, by type of
outcome.
Partly
answered
Page 67
Fully
answered
Pages 96, 97
TRAINING AND EDUCATION
DIVERSITY AND EQUAL OPPORTUNITIES
Human Rights
Performance Indicators of Human Rights
PRACTICES OF INVESTMENT AND PURCHASE PROCESS
Society
social Performance Indicators Relating to the Company
PUBLIC POLICIES
SO6. Total value of financial and in-kind contributions to political parties, politicians or related
institutions by country.
PRODUCT RESPONSIBILITY
Performance Indicators Product Responsibility
HEALTH AND SAFETY OF THE CUSTOMER
LABELLING OF PRODUCTS AND SERVICES
PR5. Practices related to customer satisfaction, including results of surveys measuring
satisfaction.
132
2012 annual report
Grupo Galvão
Financial
statements
Financial statements on
December 31, 2012 and 2011
GRUPO
135
Galvão Participações S.A.
Financial statements on
December 31, 2012 and 2011
CONTENT
Management report....................................................................................137
Independent auditors’ report on the financial statements...............138
Balance Sheets.............................................................................................140
Statements of income................................................................................142
Statements of comprehensive income.................................................143
Statements of changes in shareholders’ equity..................................144
Statements of cash flows..........................................................................146
Notes to Financial Statements.................................................................147
136 galvão participações
Financial statements on
December 31, 2012 and 2011
137
MANAGEMENT REPORT
In compliance with the legal and statutory provisions, we submit for the consideration of
shareholders, the financial statements for the year ended on December 31, 2012. Such
information is accompanied by the report of the independent auditors on the financial
statements, which was discussed and reviewed by the Administration. These financial
statements are prepared in accordance with accounting practices adopted in Brazil and
reflect the financial position and the results recorded.
The Management
São Paulo, April 29, 2013
138 galvão participações
Financial statements on
December 31, 2012 and 2011
INDEPENDENT AUDITORS REPORT
ON THE FINANCIAL STATEMENTS
To the Directors and Shareholders
of Galvão Participações SA
São Paulo – SP
We have audited the financial statements of Galvão Participações SA (“Company”) individually and consolidated, which
comprise the balance sheet as at December 31, 2012 and the related profit and loss account, of the comprehensive
results, the changes in equity and cash flows for the year then ended, as well as the summary of significantly accepted
accounting practices and other explanatory notes.
Management’s responsibility for the financial statements
The Company’s management is responsible for the preparation and fair presentation of these financial statements in accordance
with accounting practices adopted in Brazil, as well as the internal control as management determines, is necessary to enable the
preparation of financial statements free from material misstatement, whether caused by fraud or error.
Independent Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit, conducted in accordance with
Brazilian and International Standards on Auditing. Those standards require that we comply with ethical requirements for
auditors and the audit is planned and performed in order to obtain reasonable assurance that the financial statements are
free of material misstatement.
An audit involves the performing of selected procedures to obtain audit evidence about the amounts and disclosures
presented in the financial statements. The procedures selected depend on the auditor’s judgment, including the
assessment of risks of material misstatement of the financial statements, whether caused by fraud or error. In this risk
assessment, the auditor considers relevant internal controls to the preparation and fair presentation of the financial
statements of the Company in order to plan the audit procedures that are appropriate in the circumstances, but not for
the purpose of expressing an opinion on the effectiveness of internal controls of the Company. 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 taken as a whole.
We believe that the audit evidence we have obtained is sufficient and appropriate to support our opinion.
139
Opinion
In our opinion, the consolidated and individual financial statements referred to above present fairly, in all material respects,
the financial position of Galvão Participações SA on 31 of December 2012, the results of its operations and its cash flows
for the year then ended, in accordance with the accounting practices adopted in Brazil.
Emphasis
As disclosed in the explanatory note # 23 to the financial statements, the Company maintains relations and operations in
significant amounts with related parties. Consequently, the results of its operations may be different from those that would
be obtained from transactions effected only with unrelated parties. Our opinion contains no caveat related to this subject.
Ribeirão Preto, 29 of April, 2013
KPMG
CRC 2SP014428/O-6
Alberto Bressan Filho
Accountant CRC – 1SP144380/O-7
140 galvão participações
Financial statements on
December 31, 2012 and 2011
Balance Sheets
As of December 31, 2012 and 2011
(In thousands of BRL)
Consolidated
Assets
Current
Cash and cash equivalents
Other investments
Accounts receivables and other receivables
Stocks
Taxes and recoverable contributions
Advances to suppliers
Prepaid expenses
Notes
6
7
8
9
10
11
2012
2011
Parent Company
2012
2011
463,703
173,062
762,023
201,669
160,259
209,755
8,719
245,151
1,091,977
68,641
51,051
29,960
9,646
627
1,647
7
-
2,119
153,364
1,547
8
2,923
1,979,190
1,496,426
2,281
159,961
416,928
1,441
23,717
551
31,064
4,671
478,637
404,462
379,150
566
17,530
662
37,536
887
270,762
185,707
64,057
1,140,136
67
-
45,929
827,551
80
-
Total of non-current assets 1,361,471
892,800
1,204,260
873,560
Total Assets
3,340,661
2,389,226
1,206,541
1,033,521
Total of current assets
Non-current
Long-term
Accounts receivables and other receivables
Escrow Deposits
Taxes and recoverable contributions
Advances to suppliers
Deferred tax assets
Investments
Property and equipment
Intangible
The accompanying notes are an integral part of these financial statements.
8
10
11
12
13
14
15
141
Consolidated
Liabilities
Notes
2012
Parent Company
2011
2012
2011
Current
Suppliers and other accounts payable
16
559,801
254,924
175,189
132
Loans and financing
17
507,665
382,671
1,607
256,852
Debentures
18
Provisions and labor charges
Tax obligations
19
Income tax and social contributions payable
Advances from customers
20
Total of current liabilities
95,781
63,046
61,037
63,046
121,815
79,712
324
446
139,562
87,141
46
158
4,197
4,550
-
-
162,415
222,377
38,945
38,945
1,591,236
1,094,421
277,148
359,579
Non-current
Long-term
Suppliers and other accounts payable
16
21,639
17,080
1,183
962
Loans and financing
17
590,960
414,012
28,343
6,845
Debentures
18
473,886
237,252
473,886
237,252
Tax obligations
19
42,401
41,711
-
-
Deferred tax liabilities
12
100,737
139,058
-
-
Provision for contingencies
21
21,789
15,268
-
-
Provision for losses on investments
Financial Instrument with
non-controlling shareholder
13
-
-
22,149
18,818
24f
76,487
-
-
-
1,327,899
864,381
525,561
263,877
312,146
89,690
1,996
312,093
97,972
-
312,146
89,690
1,996
312,093
97,972
-
403,832
410,065
403,832
410,065
17,694
20,359
-
-
421,526
430,424
403,832
410,065
Total liabilities
2,919,135
1,958,802
802,709
623,456
Total liabilities and shareholders’ equity
3,340,661
2,389,226
1,206,541
1,033,521
Total of non-current liabilities
Net worth
Registered Capital
Reserves
Equity valuation adjustment
Equity attributable to controlling
Non-controlling interest
Total shareholders’ equity
The explanatory notes are an integral part of these financial statements.
24
142 galvão participações
Financial statements on
December 31, 2012 and 2011
Income Statements
As of December 31, 2012 and 2011
(In thousands of BRL)
Consolidated
Notes
2012
Parent Company
2011
2012
2011
Net operating income
25
3,277,586
2,372,847
-
-
Cost of services
26
(2,839,898)
(2,021,395)
-
-
437,688
351,452
-
-
13
(13,953)
(284,503)
(7,167)
1,466
(5,562)
(320,352)
766
1,180
(3,001)
(10)
105,330
(13,810)
(916)
(27,131)
Results before net financial income
(expenses) and taxes
Financial income
Financial expenses
27
27
133,531
62,910
(192,098)
27,484
77,778
(165,631)
102,319
1,838
(65,645)
(41,857)
998
(45,595)
Net Income (expense)
27
(129,188)
(87,853)
(63,807)
(44,597)
4,343
(60,369)
38,512
(86,454)
Gross profit
Operational expenses
Commercial
General and administrative expenses
Other income (expense)
Equity equivalence results
26
26
Results before income taxes
Current Income tax and social contribution
12
(3,711)
(24,128)
-
-
Deferred Income and social tax contribution
12
31,285
(1,256)
-
-
31,917
(85,753)
38,512
(86,454)
Controlling shareholders
38,512
(86,454)
38,512
(86,454)
Non-controlling shareholders
(6,595)
701
-
-
Results for the year
31,917
(85,753)
38,512
(86,454)
Profit for the year
Profit attributable to:
The explanatory notes are an integral part of these financial statements.
143
Statements of comprehensive Income
Years ended on December 31, 2012 and 2011
(In thousands of BRL)
Consolidated
2012
Profit for the year before minority
non-controlling interests
Parent Company
2011
2012
2011
31,917
(85,753)
38,512
(86,454)
1,996
-
1,996
-
Total comprehensive results
33,913
(85,753)
40,508
(86,454)
Comprehensive results attributable to:
Controlling shareholders
Non-controlling shareholders
40,508
(6,595)
(86,454)
701
40,508
-
(86,454)
-
Total comprehensive results
33,913
(85,753)
40,508
(86,454)
Foreign exchange variations from international operations
The explanatory notes are an integral part of these financial statements.
144 galvão participações
Financial statements on
December 31, 2012 and 2011
Statements of changes in equity
Years ended on December 31, 2012 and 2011
(In thousands of BRL)
Capital
Notes
capital
to be paid in
subscribed
and paid
24
327,000
(16,950)
310,050
Net results
-
-
-
Realization of special profit reserves
-
-
-
Realization of reserve of unrealized profits
-
-
-
Transactions with shareholders recorded directly in the net worth
-
-
-
Contributions and distributions to shareholders
-
-
-
Distribution of interim dividends
-
-
-
Payment of Capital
-
2,043
2,043
Non-controlling interest
-
-
-
327,000
(14,907)
312,093
Net results for the fiscal year
-
-
-
Realization of special profit reserves
-
-
-
Compulsory dividends not distributed
-
-
-
Distribution of dividends disproportionately in subsidiary
-
-
-
Foreign exchange variations from international operations
-
-
-
Change in the participation in subsidiary
-
-
-
Transaction costs related to the capital increase
-
-
-
Distribution of interim dividends
-
-
-
Payment of Capital
-
53
53
Retained earnings
-
-
-
Non-controlling shareholders participation
-
-
-
327,000
(14,854)
312,146
Balance at January 1, 2011
Total balance at December 31, 2011
Total balance on December 31, 2012
The explanatory notes are an integral part of these financial statements.
24
24
145
Attributable to controlling shareholders
Reserves
legal
for
unrealized
profits
special
profits
Accumulated
profits
evaluation
Adjustments
for income
controllers
Total
Shareholders’
income
attributable to
controllers
12,545
164,266
38,147
-
-
525,008
6,556
531,564
-
-
-
(86,454)
-
(86,454)
701
(85,753)
-
-
(7,615)
7,615
-
-
-
-
-
(78,839)
-
78,839
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(30,532)
-
-
(30,532)
-
(30,532)
-
-
-
-
-
2,043
-
2,043
-
-
-
-
-
-
13,102
13,102
12,545
85,427
-
-
-
410,065
20,359
430,424
-
-
-
38,512
-
38,512
(6,595)
31,917
-
(1,926)
-
-
-
-
1,926
Participation
of noncontrollers
Total of
consolidated
net worth
-
18,293
-
(18,293)
-
-
-
-
-
-
-
(5,499)
-
(5,499)
-
(5,499)
-
-
-
-
1,996
1,996
-
1,996
-
-
-
37,743
-
37,743
-
37,743
-
-
-
-
-
-
-
-
-
(79,038)
-
-
-
(79,038)
-
(79,038)
-
-
-
-
-
53
-
53
-
-
50,537
(50,537)
-
-
-
-
-
-
-
-
-
-
3,930
3,930
14,471
24,682
50,537
-
1,996
403,832
17,694
421,526
146 galvão participações
Financial statements on
December 31, 2012 and 2011
Statements of Cash Flows
Years ended on December 31, 2012 and 2011
(In thousands of BRL)
Consolidated
Notes
Cash flow from operating activities
Results for the year
Adjustments for:
Depreciation and amortization
Residual value of permanent written off
Exclusion of investment
Net worth equivalence result
Provision for contingencies Provision/allowance for doubtful accounts
Allowance for losses on construction
Deferred Taxes (IT / SC)
Deferred Taxes (PIS / COFINS)
Interest on updating the accounts receivable
and other investments
Provision for accrued interest on loans and financing
2012
2011
Parent Company
2012
2011
31,917
(85,753)
38,512
(86,454)
49,028
18,064
(1,466)
6,521
8,178
(6,657)
(31,285)
2,731
28,938
43,275
14,750
(1,180)
5,052
4,472
7,432
1,256
-
21
(105,330)
-
22
27,131
-
(32,189)
117,933
122,407
42,858
44,685
Decrease (increase) in accounts receivable and other receivables
Increase in inventories
Increase in recoverable taxes and contributions
Increase in escrow deposits
Decrease (increase) in prepayments (Decrease) increase in suppliers other payables
Increase (decrease) in provisions and payroll taxes
Increase (decrease) in tax liabilities
Decrease (increase) in advances from customers
61,157
(133,028)
(115,395)
(875)
927
309,286
42,103
51,750
(59,962)
(356,241)
(29,485)
(7,908)
(165)
3,984
60,801
26,846
23,855
144,816
64,237
(100)
2,923
(1,798)
(122)
(112)
-
57
(201)
(2,923)
126
126
98
38,945
Interest paid on loans and financing
Taxes on income paid
(105,401)
(1,723)
(127,155)
(4,978)
(44,421)
-
(43,686)
-
211,614
(124,981)
(3,332)
(22,074)
(845)
(204,194)
(244,719)
(168,716)
523
4,528
(12,500)
(93,670)
(59,357)
852
(8)
5,435
(5,601)
(15)
3,772
Cash flows arising from investing activities
(617,951)
(160,147)
5,427
(1,844)
Cash flow from financing activities
Loans and financings
Payment of loans and financing
Capital contribution from shareholders
Capital contribution from non-controlling shareholders
987,183
(473,213)
53
118,904
1,121,971
(817,089)
2,043
-
48,444
(69,062)
53
-
250,000
(6,237)
2,043
-
(8,038)
-
(30,532)
(4,019)
6,378
(8,038)
2,001
23,015
(30,532)
(459,736)
266,293
Net cash provided by financing activities
624,889
278,752
(3,587)
21,831
Increase (decrease) in cash and cash equivalents
218,552
(6,376)
(1,492)
(2,087)
Cash and cash equivalents at January 1
245,151
251,527
2,119
4,206
Cash and cash equivalents at December 31
463,703
245,151
627
2,119
Net cash flow arising from operating activities
Cash flow from investing activities
Disposal of interest in subsidiaries, net of cash
Acquisition of investments
Acquisitions of fixed assets
Acquisitions of intangible assets
Other investments
Dividends received
Dividends paid
Related parties – Incoming assets and liabilities
Related parties - Payments and receipts
The explanatory notes are an integral part of these financial statements.
32
32
32
147
EXPLANATORY NOTES FOR THE FINANCIAL RESULTS
Years ended on December 31, 2012 and 2011
(In thousands of BRL)
1Operations
Galvão Participações SA (“Company” or “Parent Company”) is engaged in the investment in other companies, commercial,
concessionaries of public interest services and utilities as a partner or shareholder.
The holding company of the Company named “Grupo Galvão” and together with its subsidiaries is organized to act in the segments of
infrastructure, sanitation, renewable energy, oil and gas and financial services.
Grupo Galvão is therefore a private conglomerate that has investments in a portfolio of businesses, which are represented substantially
for their participation in the companies listed below:
a. Galvão Engenharia S.A. – operates in the provision of engineering services and construction sectors of great importance as oil
and gas, electricity, road infrastructure, airport, port, railway and urban, sanitation and civil construction industry. Also includes the
companies and their respective percentages of ownership below.
• 5 Vias Participações Ltda. – 32.71%;
• Galvão Logística, Exportação e Importação Ltda. – 99.99%;
• CAB-Sistema Produtor Alto Tietê S.A. – 5.00%;
• AGT Comércio Varejista de Equipamentos e Materiais de Construção Ltda. – 33.33%;
• Galvão Engenharia S.A. - Sucursal del Peru – 100.00%;
• Galvão Engenharia S.A. - Sucursal de Moçambique – 100.00%;
• Galvão Engenharia S.A. - Sucursal de Angola – 100.00%
• Indústria Naval de Pernambuco S.A – 50.00%;
• Arena Castelão Operadora de Estádio S.A – 93.00%;
The subsidiaries 5 Vias Participações Ltda and AGT Comércio Varejista e Materiais de Construção Ltda., were consolidated
in proportion to the share of Galvão Engenharia SA in its capital, because these companies are controlled jointly with other
shareholders, as their social contracts.
b. Galvão Energia Participações S.A. – operates in the development, implementation and operation of power projects and
management equity interests in companies that perform these same activities. Also includes companies and their respective
ownership percentages below:
• Dreen Brasil Investimentos e Participações S.A. – 100.00% and its subsidiaries:
• Cutia Empreendimentos Eólicos SPE S.A. 50.10%
• Dreen Mundo Novo Geração SPE S.A. 90.87%
• Dreen São Domingos Geração SPE S.A. 88.26%
• G&P Investimentos e Participações S.A. – 50.10%;
• São Bento Energia, Investimentos e Participações S.A. – 50.10% and its subsidiaries:
• GE Olho D’Água S.A. 100.00%
• GE Boa Vista S.A. 100.00%
• GE Farol S.A. 100.00%
• GE São Bento do Norte S.A. 100.00%
148 galvão participações
Financial statements on
December 31, 2012 and 2011
c. Companhia de Águas do Brasil – CAB ambiental – operates in the area of sanitation, directly or through companies in that
may participate as a partner or shareholder, through the performance of activities of collection, treatment, distribution, general
water collection and sewage treatment, project design and technical studies, as well as construction, operation, maintenance,
modernization, expansion, exploitation of works and sanitation system. In short, all activities necessary for the full performance in
the area of sanitation, and may also acquire businesses already deployed or to be deployed in that area and participation in other
companies as partner or shareholder. It also includes companies and their respective participation percentages below:
• Saneamento de Mirassol – SANESSOL S.A. – 90.00%;
• Empresa de Saneamento de Palestina – ESAP S.A. – 50.00%;
• CAB – Guaratinguetá S.A. – 100.00%;
• CAB – Sistema Produtor Alto Tietê S.A. – 95.00%;
• CAB – Águas de Paranaguá S.A. – 100.00%;
• CAB – MT Participações Ltda. – 80.00% and its subsidiaries:
• CAB Pontes Lacerda Ltda 100.00%
• CAB Colider Ltda. 100.00%
• CAB Alta Floresta Ltda. 100.00%
• CAB Comodoro Ltda. 100.00%
• CAC Participações Ltda. – 99.80%;
• CAB Piquete S.A. – 100.00%;
• CAB Canarana Ltda. – 100.00%;
• Águas de Andradina S.A. – 70.00%;
• Águas de Castilho S.A. – 70.00%;
• CAB Projetos e Investimentos em Saneamento Básico Ltda. – 100.00%;
• CAB Cuiabá S.A. – 100.00%;
• CAB Águas de Agreste S.A. – 100.00%;
• CAB Gerenciadora Ltda. – 100.00%;
• CAB Atibaia S.A. – 100.00% ;
• Tubarão Saneamento S.A. – 50.00%;
• Itapoá Saneamento Ltda. – 50.00%.
Although the Group has 50% of the voting power of the Empresa de Saneamento Palestina - ESAP S.A. the Group is able to govern the
financial and operating policies of the entity because of all the directors and the chairman of the Board of Directors are their representatives.
Accordingly, the Company consolidates the administration of the Empresa de Saneamento Palestina - ESAP S.A.
Although the Group has more than half of the voting power of the Águas de Andradina S.A. and of the Águas de Castilho S.A., the Group has
shared control contractually requiring unanimous consent for strategic and operational decisions. Consequently, the Group consolidates
proportionally Águas de Andradina S.A. and Águas de Castilho S.A.
d. Galvão Óleo & Gás Participações S.A. – Its purpose is to participate in other companies, commercial, civil and concessionaries of
public utilities as a partner, shareholder or member, as well as act as management and administration in societies where it participates
in developing business portfolios of services for the oil and gas industry in exploration, production and logistics. It also includes
companies and their respective percentages of ownership below:
• Galvão Oil & Gas Holding GmbH – 100.00%.
• Galvão Oil & Gas GmbH – 100.00% and its subsidiary:
• Galvão Oil & Gas Holding B.V. – 100.00% and its subsidiaries:
• Odfjell Galvão Perfurações B.V. - 100.00%
• Odfjell Galvão B.V. - 50.00% and its subsidiaries:
149
• Itaoca Drilling B.V. - 20.00%
• Siri Drilling B.V. - 20.00%
• Guarapari Drilling B.V. - 20.00%
e.Galvão Finanças S.A. – it aims to foster the supply chain of the Group and make management of financial assets group companies
and their shareholders as well as the provision of financial services, including asset management and development of suppliers,
to generate value and liquidity for its customers, employees, partners and society. It also includes companies and their respective
percentages of ownership below:
• Galvão Administradora de Recursos Ltda.- 100.00%;
• Galvão Serviços Financeiros Ltda. – 100.00%.
f. Toliman Fundo de Investimento Renda Fixa Crédito Privado – it aims to provide the appreciation of its shares through the investment
of funds in a diversified chain composed of any financial assets, securities and other operational modalities available in the financial market,
thus many different risk factors and different markets, under the law in force, without compromising concentration in any specific risk factor.
2GROUP ENTITIES
Percentage of ownership
Direct Subsidiaries
Country
2012
2011
Galvão Engenharia S.A.
Brazil
100.00%
100.00%
100.00%
Galvão Energia Participações S.A
Brazil
100.00%
Companhia de Águas do Brasil - CAB ambiental
Brazil
66.58%
100.00%
Galvão Óleo & Gás Participações S.A.
Brazil
100.00%
100.00%
Galvão Finanças Ltda.
Brazil
100.00%
100.00%
Indirect Subsidiaries
Country
Percentage of ownership
2012
2011
Galvão Engenharia S.A.
5 Vias Participações Ltda.
Brazil
32.71%
32.71%
Galvão Logística, Exportação e Importação Ltda.
Brazil
99.99%
99.99%
AGT Comércio Varejista de Equipamentos e Materiais para
Construção Ltda.
Brazil
33.33%
33.33%
Galvão Engenharia S.A. – Branch Peru
Peru
100.00%
100.00%
Galvão Engenharia S.A. – Branch Angola
Angola
100.00%
100.00%
Galvão Engenharia S.A. – Branch Mozambique
Mozambique
100.00%
100.00%
Indústria Naval de Pernambuco S.A.
Brazil
50.00%
50.00%
Arena Castelão Operadora de Estádio S.A.
Brazil
93.00%
93.00%
Brazil
50.10%
50.10%
GE Olho D’Água S.A.
Brazil
100.00%
100.00%
GE Boa Vista S.A.
Brazil
100.00%
100.00%
GE Farol S.A.
Brazil
100.00%
100.00%
GE São Bento do Norte S.A.
Brazil
100.00%
100.00%
Dreen Brasil Investimento e Participações S.A.
Brazil
100.00%
100.00%
Cutia Empreendimentos Eólicos SPE S.A.
Brazil
50.10%
50.10%
Dreen Mundo Novo Geração SPE S.A.
Brazil
90.87%
90.87%
Dreen São Domingos Geração SPE S.A.
Brazil
88.26%
88.26%
Brazil
100.00%
100.00%
Galvão Energia Participações S.A.
G&P Investimentos em Participações S.A.
São Bento Energia, Investimentos e Participações S.A.
150 galvão participações
Financial statements on
December 31, 2012 and 2011
Percentage of ownership
Indirect Subsidiaries (continued)
Country
2012
2011
Galvão Finanças S.A.
Galvão Administradora de Recursos Ltda.
Brazil
100.00%
100.00%
Galvão Serviços Financeiros Ltda.
Brazil
100.00%
100.00%
Empresa de Saneamento de Palestina – ESAP S.A.
Brazil
50.00%
49.99%
Saneamento de Mirassol - SANESSOL S.A.
Brazil
90.00%
89.63%
CAB - Águas de Paranaguá S.A.
Brazil
100.00%
99.96%
CAB Sistema Produtor Alto Tietê S.A.
Brazil
95.00%
95.00%
CAB Guaratinguetá S.A.
Brazil
100.00%
100.00%
CAB Cuiabá S.A.
Brazil
100.00%
-
CAB Águas de Agreste S.A.
Brazil
100.00%
-
CAB Gerenciadora Ltda.
Brazil
100.00%
100.00%
CAC Participações Ltda.
Brazil
99.80%
99.80%
CAB - MT Participações Ltda.
Brazil
80.00%
80.00%
CAB Pontes Lacerda Ltda
Brazil
100.00%
100.00%
CAB Comodoro Ltda.
Brazil
100.00%
100.00%
Companhia de Águas do Brasil - CAB ambiental
CAB Alta Floresta Ltda.
Brazil
100.00%
100.00%
CAB Colider Ltda.
Brazil
100.00%
100.00%
CAB Piquete S.A.
Brazil
100.00%
100.00%
CAB Canarana Ltda.
Brazil
100.00%
100.00%
Águas de Andradina S.A.
Brazil
70.00%
70.00%
CAB Atibaia S.A.
Brazil
100.00%
-
Águas de Castilho S.A.
Brazil
70.00%
70.00%
CAB Projetos e Investimentos em Saneamento Básico Ltda.
Brazil
100.00%
100.00%
Tubarão Saneamento S.A.
Brazil
50.00%
25.00%
Itapoá Saneamento Ltda.
Brazil
50.00%
-
Toliman Fundo de Investimento Renda Fixa Crédito Privado
Brazil
100.00%
-
Galvão Oil & Gas Holding GmbH
Austria
100.00%
100.00%
Galvão Oil & Gas GmbH
Austria
100.00%
-
Netherlands
100.00%
-
Odfjell Galvão Perfurações B.V.
Netherlands
100.00%
-
Odfjell Galvão B.V.
Netherlands
50.00%
-
Itaoca Drilling B.V.
Netherlands
20.00%
-
Siri Drilling B.V.
Netherlands
20.00%
-
Guarapari Drilling B.V.
Netherlands
20.00%
-
Galvão Óleo & Gás Participações S.A.
Galvão Oil & Gas Holding B.V.
151
3 BASIS OF PREPARATION
a. Declaration of conformity (with relation to the norms of the APC)
These consolidated and individual financial statements were prepared in accordance with accounting practices adopted in Brazil following
accounting pronouncements issued by the Accounting Pronouncements Committee (APC).
The issue of individual and consolidated financial statements was authorized by the Directors on 29 April 2013.
b. Basis of measurement
The individual and consolidated financial statements have been prepared on the historical cost basis, except for non-financial derivatives
instruments designated as fair value through profit or loss are measured at fair value.
c. Functional currency and presentation currency
These consolidated and individual financial statements are presented in BRL, which is the functional currency of the Company and its
subsidiaries, except of Galvão Engenharia SA - Branch del Peru whose functional currency is the new Soles. All financial information
presented in Brazilian Reais was rounded to the nearest thousand except when otherwise indicated.
d. Use of estimates and judgments
The preparation of financial statements and consolidated according to CPC standards requires management to make judgments,
estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, revenues and
expenses. Actual results may differ from these estimates.
Estimates and assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the
estimates are revised and in any future periods affected.
Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment within the
next financial year are included in the following notes:
• Note 8 - Provision for doubtful accounts
• Note 9 - Use of tax losses
• Note 11 - Property, fixed assets
• Note 12 - Impairment of intangible assets of concession contracts
• Note 20 - Provisions for contingencies
• Note 22 - Recognition of construction contracts.
4MAIN ACCOUNTING POLICIES
The accounting policies described in detail below have been applied consistently to all periods presented those financial statements
and consolidated. The accounting policies have been applied consistently by group entities.
a. Basis of consolidation
i.
Business combinations
For purchases made from January 1, 2009, the Company measures goodwill as the fair value of the consideration transferred by
deducting the fair value of identifiable assets and liabilities assumed, all measured at the acquisition date, ie the date on which control is
transferred to the Company and / or its subsidiaries. Transaction costs, which the Company and/or its subsidiaries incur in connection
with a business combination are recognized as expenses as they are incurred.
Business combinations are recorded using the acquisition method at the acquisition date, ie when control is transferred for the
Group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activity. When
determining the existence of control, the Group takes into consideration potential voting rights that are currently exercisable:
• The fair value of the consideration transferred: more
• The recognized amount of any non-controlling interest in the acquire: more
152 galvão participações
Financial statements on
December 31, 2012 and 2011
• If the acquisition is achieved in stages, the fair value of any interest in the acquire prior to the acquisition: less
• The net amount (generally fair value) of the identifiable assets acquired and liabilities assumed.
When the value is negative, the gain on bargain purchase is recognized directly in the income statement.
ii. Business combination between entities under common control
The measurement of transactions relating to acquisitions of subsidiaries under common control is made at book value.
iii. Participation of non-controlling shareholders
For each business combination, the Company and / or its subsidiaries elect to measure any non-controlling interest in the acquire
using one of the following criteria:
• At fair value: or
• For the proportionate share of the acquire’s identifiable net assets, which are generally at fair value.
Changes in the interest of the Company and its subsidiaries in a subsidiary that do not result in loss of control are accounted as
transactions with owners in their capacity of shareholders. Adjustments to non-controlling interests are based and a proportional
amount of the net assets of the subsidiary. No gain or loss is recognized in the income statement.
iv. Subsidiaries and jointly controlled
The financial statements of subsidiaries and jointly controlled entities are included in the consolidated financial statements from
the date on which control, shared control starts until the date that control, shared control, stop existing. The accounting policies of
subsidiaries and joint ventures are aligned with the policies adopted by the Company.
In the individual financial statements of the Company, the financial information of subsidiaries and jointly controlled are recognized
under the equity method.
Jointly controlled entities are those in which the Company has joint control, established by contract and requiring unanimous consent
for strategic decisions and operational.
For calculation of equivalence income and consolidation are used financial statements of the subsidiaries in the same base date of
the financial statements.
In consolidated financial statements, subsidiaries are consolidated and jointly controlled entities are consolidated proportionally.
v. Jointly controlled operations
Jointly controlled operations are enterprises over whose activities the Company controls, directly or indirectly, together with other
(s) investor (s), by contractual agreement and requiring unanimous consent for strategic financial and operational decisions. A jointly
controlled operation is an operation in which each venture uses its own assets in order to carry out joint operations. The consolidated
financial statements include the assets that the Company controls and the liabilities that it incurs in the course of activities aiming at
the joint operation as well as the expenses which the Company has incurred and its share in the revenue that it earns from the joint
operation seen.
vi. Transactions eliminated on consolidation
Intragroup balances and transactions, and any unrealized income and expenses arising from intercompany transactions are eliminated
in preparation of consolidated financial statements. Unrealized gains arising from transactions with investees recorded by the equity
method are eliminated against the investment to the extent of the participation of each investee.
Unrealized losses are eliminated in the same way are eliminated unrealized gains, but only to the point where there is no evidence of
loss impairment.
b. Financial instruments
i.
Non-Derivative financial assets
The Company and its subsidiaries recognize accounts receivable and other receivables initially on the date that they are originated.
All other financial assets (including assets designated at fair value through profit or loss) are initially recognized on the trade date at which
the Company and its subsidiaries become a party to the contractual provisions of the instrument.
The Company and its subsidiaries write a financial asset when the contractual rights to the cash flows from the asset expire, or when
the Company and its subsidiaries transfer the rights to receive the contractual cash flows on an asset in a financial transaction in which
substantially all the risks and benefits of ownership of the financial asset are transferred.
153
Any participation, either created or retained by the Company and its subsidiaries in transferred financial assets is recognized as a
separate asset or liability.
Financial assets and financial liabilities are offset and the net amount reported in the balance sheet when, only when, companies
hold the legal right to offset the amounts and intend either to settle on a net basis or to realize the asset and settle the liability
simultaneously.
The Company and its subsidiaries classify derivative financial assets in the following categories: other investments Accounts
receivable and other receivables and financial assets at fair value through profit or loss.
Financial assets at fair value through profit or loss
A financial asset is classified as measured at fair value through profit or loss if it is classified as held for trading, ie, designated as such
upon initial recognition. Transaction costs are recognized in profit as incurred. Financial assets at fair value through profit or loss are
measured at fair value, and changes in fair value of these assets, which take into account any gains dividends are recognized in income.
Financial assets classified as held for trading are actively managed to meet liquidity needsthe Company and its subsidiaries.
Financial assets designated as at fair value comprise repurchase agreements, securities: bonds for trading and held to maturity
securities and fixed income fund shares in other investments.
Sale and Repurchase Agreements
Repurchase transactions are recorded at the amount paid plus earnings or the value actually received plus interest accrued at the rate
of remuneration recognized in the financial result.
Securities
The securities are classified into two specific categories, according to the intention of trading the related parties Administrator Galvão
de Recursos Ltda. (Fund manager) with BNY Mellon Serviços Financeiros Distribuidora de Títulos e Valores Mobiliários S.A. (fund
administrator) to the following criteria for posting:
i.
Trading securities
Include securities acquired for the purpose of being traded frequently and actively being accounted for at fair value, where gains and /
or losses realized and unrealized on these securities are recognized the result.
ii. Fixed Income Securities
The securities and fixed income securities are recorded at cost, adjusted daily to fair value. The government securities are adjusted to
fair value based on quoted prices ANBIMA - Brazilian Association Entities of the Financial and Capital Markets. The private securities
are adjusted to fair value with based on the best estimate of the expected value of achievement.
Gains and / or losses are recognized in financial results.
The cost value of securities and fixed income securities in the portfolio of the Fund, presented in the statement of composition and
diversification of the portfolio, represents the acquisition cost, plus income based on the appropriate rate compensation determined
at the date of acquisition, less accumulated depreciation and / or interest received, if applicable.
Fund shares
Quotas of investment funds are recorded at cost, adjusted daily by the variation in the value of shares informed by the managers of
the respective investment funds, and are categorized as “trading securities”.
The appreciation and / or depreciation quotas of investment funds are presented in the financial result.
Accounts receivable and other receivables
Accounts receivable and other receivables are financial assets with fixed or determinable payments that are not quoted in the market
active. Such assets are recognized initially at fair value plus any directly attributable transaction costs. After initial recognition, they are
measured at amortized cost using the effective interest method, less any loss or impairment.
Accounts receivable and other receivables comprise cash and cash equivalents, trade and other receivables.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and investments with original maturities of three months or less from the date of
the contract, which are subject to an insignificant risk of change in value and are used in the management of short-term obligations.
Concessions
The subsidiary Companhia de Águas do Brasil - CAB Ambietntal recognizes a financial asset resulting from a sanitation concession
when has an unconditional contractual right to receive cash or another financial asset from the grantor for sanitation services provided
or improved. These financial assets are measured at fair value upon recognition. After initial recognition, financial assets are measured
at amortized cost.
154 galvão participações
Financial statements on
December 31, 2012 and 2011
If the subsidiary Companhia de Águas do Brasil – CAB Ambiental is paid by sanitation services partly through the means of a financial
asset and partly by an intangible asset, then each component of the consideration received or receivable is registered individually and
are initially recognized at fair value of the consideration received or receivable.
ii. Non derivative financial liabilities
The Company and its subsidiaries recognize their non-derivative financial liabilities initially on the date that they are originated.
All other financial liabilities are initially recognized on the trade date at which the Company and its subsidiaries is become a party to the
contractual provisions of the instrument. The Company and its subsidiaries write a financial liability when its contractual obligations
are discharged, canceled or expired.
Such financial liabilities are recognized initially at fair value less any attributable transaction costs. After initial recognition, these
financial liabilities are measured at amortized cost using the effective interest method.
The Company and its subsidiaries have the following non-derivative financial liabilities: loans and borrowings, debentures, trade and
other payables.
iii.Capital
Ordinary shares
Common shares are classified as equity. Additional costs directly attributable to issue of shares are recognized as a deduction from
equity, net of any taxable effects.
The Company’s Bylaws not determine the percentage of mandatory dividends. See Explanatory Note 24e.
c. Fixed Assets
i.
Recognition and measurement
Items of property and equipment are stated at historical cost of acquisition or construction, less accumulated depreciation and losses
of impairment (impairment) when applicable.
Cost includes expenditures that are directly attributable to the acquisition of an asset. The cost of assets constructed by the
Company includes:
• The cost of materials and direct labor;
• Any other costs to bring the asset to the location and condition necessary for them to be able to operate as intended by management;
• The costs of dismantling and restoring the site on which they are located, and
• Borrowing costs on qualifying assets.
When parts of an item of property and equipment have different useful lives, they are accounted for as separate items (major
components) asset.
Gains and losses on disposal of an item of fixed assets (calculated as the difference between the proceeds from disposal and the value
accounting of fixed assets) are recognized in other operating income / expenses in the income statement.
ii. Subsequent costs
Subsequent expenditure is capitalized to the extent that it is probable that future benefits associated with the expenditure will be
earned by the Company and its subsidiaries. Expenditures for maintenance and repairs are charged to income applicants when
incurred.
iii.Depreciation
Items of fixed assets are depreciated from the date they are installed and available for use, or in case of assets internally constructed,
the day on which the construction is completed and the asset is available for use.
Depreciation is calculated to write off the cost of items of property and equipment using the straight-line method based on the
useful lives estimated items. Depreciation is generally recognized in the income statement, unless the amount is included in the value
carrying amount of another asset. Land is not depreciated.
155
The estimated useful lives for the current and comparative year are as follows:
• Machinery and equipment • Furniture and fixtures • Computer equipment 10 years
9 years
5 years
• Field Equipment 17 years
• Vehicles 17 years
• Facilities 8 years
• Equipment 11 years
• Buildings 25 years
Depreciation methods, useful lives and residual values are reviewed at the end of each financial year and any adjustments are
recognized as changes in accounting estimates.
d. Intangible assets
i.
Right of concession contract - Subsidiary Companhia de Águas do Brasil – CAB Ambiental
These values come from increased participation and acquisition of subsidiaries in consolidated assets are classified as intangible.
ii. Concession contracts for services
The Company’s subsidiaries in Brazil Water - Environmental CAB recognizes an intangible asset arising from a contract of service
concession when he has a right to charge for the use of the concession infrastructure. An intangible asset received as compensation
for the provision of construction or improvements on a concession contract for services is measured at fair value upon initial
recognition. After initial recognition, intangible assets are measured at cost, which includes borrowing costs capitalized, less
accumulated amortization and any impairment losses impairment. The Amortization is done linearly during the concession period,
not exceeding the term of the concession.
iii. Development of wind and hydric projects - indirect subsidiary Galvão Energia Participações S.A.
Expenditures on research activities, undertaken with the opportunity to gain from hydro and wind projects, are recognized in the
financial income statement as incurred. Development activities involve a plan or project for the production of energy. The development
expenditures are capitalized only if development costs can be measured in a reliably manner, the product or process is technically and
commercially feasible, if the future economic benefits are probable, and if the company has the intention and resources to complete the
development and to use or sell the asset. Capitalized expenditures include the cost of materials, direct labor, and other costs that are
directly attributable to preparing the asset for its intended use, and borrowing costs. Other development expenditures are recognized
in income as incurred.
The amount of costs incurred in the development of wind and hydro projects are initially recognized at cost, being subsequently reduced
to its recoverable amount if applicable. The asset is recognized at the time when there is clear evidence and objective of economic
viability. These conditions are analyzed individually or jointly, considering the facts and circumstances.
iv. Other intangible assets
Other intangible assets that are acquired by the Company and its subsidiaries, which have finite useful lives, are measured at cost less
accumulated amortization and losses due to impairment losses, when applicable.
v. Subsequent expenditure
Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in a specific asset to which they
relate. All other expenditures are recognized in income as incurred.
vi.Amortization
Amortization is calculated on the cost of an asset, or other amount substituted for cost, less its residual value.
Amortization of other intangible assets is recognized in income based on the straight-line method over the useful estimated lives of
intangible assets that do not exceed the term of the concession, from the date they are available for use, since this is the method that
most closely reflects the pattern of consumption of future economic benefits embodied in the asset.
• Software
5 years
156 galvão participações
Financial statements on
December 31, 2012 and 2011
e.Inventories
Inventories are stated at the lower of cost and net realizable value. Inventories are valued at the average acquisition cost that does
not exceed the market value.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated
costs necessary to make the sales.
f. Impairment (impairment)
i.
Financial assets (including receivables)
A financial asset not measured at fair value through profit or loss is assessed at each reporting date to determine whether there is
objective evidence that there has been loss in its recoverable amount. A loss asset is impaired if the evidence objectively indicates
that a loss event has occurred after the initial recognition of the asset, and that the loss event had a negative effect on projected
future cash flows that can be estimated reliably.
The objective evidence that the financial assets have lost value can include non-payment or delay in payment by the debtor,
restructuring of the amount due to the Company and its subsidiaries on terms that the Company and its subsidiaries not accept in
other transactions, indications that a debtor or issuer will enter bankruptcy, or the disappearance of an active market for a security.
Financial assets measured at amortized cost
The Company and its subsidiaries consider evidence of impairment of assets measured at amortized cost for receivables both
individually and on an aggregate. Individually significant assets are assessed for specific impairment. All individually significant
receivables found not to have suffered impaired individually are then collectively assessed for any impairment that has occurred but
has not yet been identified. Assets that are individually significant are collectively assessed for impairment by grouping securities with
similar risk characteristics.
When assessing the impairment collectively, the Company and its subsidiaries use historical trends of probability of default, timing of
recoveries and the amount of loss incurred, adjusted to reflect the judgment of administration as to whether the economic and credit
conditions are present such that the actual losses are likely to be greater or less than suggested by historical trends.
An impairment loss in respect of a financial asset measured at amortized cost is calculated as the difference between the carrying
amount and the present value of future estimated cash flows discounted at the original effective interest rate of the asset.
Losses are recognized in profit or loss and reflected in an allowance account against receivables. Interest on assets that lost still
recognized through the unwinding of the discount. When a subsequent event indicates a reversal of the loss of value, the decrease in
impairment loss is reversed and recognized in the financial results.
The Directors of the Company and its subsidiaries did not identify any evidence that would justify the need for provision for impairment
at December 31, 2012 and 2011.
ii. Non-financial assets
The carrying amounts of non-financial assets of the Company and its subsidiaries, other than income tax and social contribution
deferred, are reviewed at each reporting date to determine whether there is indication of impairment. If such indication exists, then
the asset’s recoverable amount is determined.
The recoverable amount of an asset or a cash-generating unit is the higher of value in use and fair value less costs sales. In assessing
value in use, the estimated future cash flows are discounted to their present value using a rate discount before tax that reflects
current market as to the period of recoverability of capital and risks specific to the asset.
Losses from impairment are recognized in income. The impairment loss is reversed only to the condition in which the asset’s carrying
amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment
loss had been recognized.
The Directors of the Company and its subsidiaries did not identify any evidence that would justify the need for provision for impairment
at December 31, 2012 and 2011.
g. Employee Benefits
i.
Defined contribution plans
A defined contribution plan is a plan for post-employment benefits under which an entity pays fixed contributions into a separate
entity (fund) and will have no legal or constructive obligation to pay additional amounts.
Prepaid contributions are recognized as an asset under the condition that there is a cash reimbursement or a reduction in future
payments is available. Contributions to a defined contribution plan, maturing is expected for 12 months after the end of the period in
157
which the employee renders the service are discounted to their values present. Payment obligations for defined contribution plans
are recognized as an expense in which they are incurred. The Company and its subsidiaries have no other post-employment benefits.
ii. Short-term benefits to employees
Obligations of short-term benefits to employees are measured on an undiscounted basis and are incurred as expenses as the related
service is provided.
The liability is recognized at the amount expected to be paid under the cash bonus plans or profit sharing short within the Company
and its subsidiaries have a legal or constructive obligation to pay this amount as a result of past service provided by the employee and
the obligation can be estimated reliably.
h.Provisions
A provision is recognized on the basis of a past event, the Company and its subsidiaries have a legal or constructive obligation that can
be estimated reliably and it is probable that an outflow of economic benefits will be required to settle the obligation.
Onerous contracts
A provision for onerous contracts is recognized when the economic benefits that the Company and its subsidiaries expect receive
a contract are less than the unavoidable costs of meeting the obligations of the contract. The provision is measured the present
value at the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before
provision is made, the Company and its subsidiaries recognize any loss on impairment on assets related to that contract.
i.
Operating revenue
i.
Sale of goods
Operating revenue from the sale of goods in the ordinary course of business is measured at the fair value of the consideration received
or to receive. Operating revenue is recognized when there is persuasive evidence that the significant risks and rewards incidental to
ownership of the assets have been transferred to the buyer, it is probable that the economic benefits financial flow to the Company
and its subsidiaries, that the associated costs and possible return of goods can be estimated reliably, that there is no continuing
involvement with the goods sold, and the amount of revenue can be measured reliably. If it is probable that discounts will be granted
and the amount can be measured, then the discount is recognized as a reduction of revenue as the sales are recognized.
The correct timing of the transfer of risks and rewards vary depending on the individual terms of the contract of sale.
ii.Services
Revenue from services rendered is recognized in the income statement based on the stage of completion of service on the date of
presentation of the financial statements. No revenue is recognized if there are significant uncertainties in its realization.
The implementation phase of a contract is determined in accordance with the measurement of the work executed.
Concession contracts of sanitation, service revenues resulting from providing services and water collection and treatment of sanitary
sewer, corresponding to the last reading until the date of the balance sheet. Revenues not yet billed represent revenues incurred,
whose service was provided but not yet billed to the end of each period. They are recognized as accounts receivable based on monthly
estimates of the services completed.
iii. Construction contracts
Contract revenue includes the initial amount agreed in the contract plus variations due to additional requests, provided that it is
probable that they will result in revenue and can be measured reliably.
Therefore, the contract revenue is recognized as income as the stage of completion of the contract except for the works of the
Branch in Peru (Galvão Engenharia SA) which is accounted for cost plus margin which has a margin of 7% and the Arena Castelão
Operadora de Estádio S.A., which holds a work with a margin of 0.5%. Contract costs are recognized when incurred.
The stage of completion is assessed by reference to the survey of the work performed. Losses on contracts are recognized
immediately in the financial results.
iv. Concession contracts for services
Revenue related to construction or upgrade services under the concession contract services is recognized based on stage of
completion of the work performed, consistent with the Group’s accounting policy for revenue recognition on contracts service
concession sanitation ICPC 01 (R1). Revenue from operating or service is recognized in the period in which services are rendered
by the Company and its subsidiaries. When the Company provides more than one service on a contract service concession, the
consideration received is allocated by reference to the relative fair values of the services delivered.
158 galvão participações
Financial statements on
December 31, 2012 and 2011
j.
Financial income and expenses
Financial income includes interest income on funds invested and changes in the present value of financial assets measured at
amortized cost using the effective interest method. Interest income is recognized in income through effective interest
method.
Financial expenses comprise basically the bank fees and interest expense on loans and financing and assignment of
receivables. Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying
asset are recognized in income using the effective interest method.
k. Income tax and social contribution
Income tax and social contribution for the current year and deferred tax are calculated based on the rates of 15% plus an
additional 10% on taxable income in excess of BRL 240 for income tax and 9% on taxable profits for social contribution on
net profits, and consider the offsetting of tax losses and negative basis of social contribution limited to 30% of annual taxable
profits.
The expense for income tax and social contribution comprises current and deferred portions. Current tax and the tax assets
are recognized in income unless they are related to the business combination or items recognized directly in equity or in
other comprehensive income.
Current tax is the tax payable or receivable on the taxable profit or loss for the year, using tax rates enacted or substantively
enacted at the reporting date of the financial statements and any adjustment to tax payable in respect of previous years.
Deferred tax is recognized in respect of temporary differences and tax credits between the carrying amounts of assets and
liabilities and the corresponding amounts used for taxation purposes. Deferred tax is measured at the tax rates expected be
applied to the temporary differences when they are reversed, based on tax rates that have been enacted or substantively
enacted at the date of preparation of the financial statements.
The deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and
liabilities, and are related to taxes levied by the same tax authority on the same taxable entity, or on separate taxable entities,
but there is an intention to settle current tax liabilities and assets on a net basis or tax assets and liabilities will be realized
simultaneously.
An asset for income tax and social contribution taxes are recognized in respect of tax losses, tax credits and differences
deductible temporary unused to the extent that it is probable that future taxable profits are available and against which they
will be used.
Active income tax and social contribution taxes are reviewed at each date of preparation of the financial statements and will
be reduced to the extent that realization is not likely.
l. New standards and interpretations not yet adopted
Several standards, amendments to standards and interpretations issued by the CPC are not yet effective for the year ended
on December 31, 2012, these being:
i.CPC 36 (R3) - Consolidated, 19 CPC (R2) - Business together and CPC 45 - Disclosure of shareholdings in other companies.
The CPC 36 (R3) has introduced new control concept to determine which investee should be consolidated.
The goal of the CPC 36 (R3) is to establish principles for the presentation and preparation of consolidated financial
statements when an entity controls one or more other entities. The Company’s management concluded that there were
significant impacts with these financial statements arising from the adoption of this pronouncement.
By CPC 19 (R2), the structure of the business together, although it is still an important consideration, is not the main factor in
determining the type of business together and subsequent accounting:
•Operation ( joint operation), when the party members have rights to the assets and obligations for the liabilities related to
the business, is accounted for in accordance with the parties’ interests in the assets, liabilities, revenues and expenses.
•Jointly controlled venture ( joint venture), when the parties members have rights to the net assets of the business is
accounted for by the equity method, have been eliminated the proportional consolidation of enterprise controlled together.
159
The objective of this Standard is to establish principles for financial reporting by entities that have interests in jointly controlled
business (business together). The table below shows the principal effects of adopting these standards on consolidated
financial statements of December 31, 2012, to be represented in the comparative financial statements of December 31, 2013,
due to non-consolidation of jointly controlled entities: 5 Vias Participações Ltda.; Indústria Naval de Pernambuco S.A., AGT
Comércio Varejista de Equipamentos e Materiais de Construção Ltda., Águas de Castilho S.A., águas de Andradina S.A.; Tubarão
Saneamento S.A., Itapoá Saneamento Ltda. and Cutia Empreendimentos Eólicos SPE SA..
Impacts - New standards CPC
Total assets
(19,086)
Total liabilities
19,086
Net revenue
(17,484)
Cost
13,164
Expenses
17,065
Net financial
Equivalence result
568
(14,142)
Current taxes
363
Deferred taxes
466
The CPC 45 consolidates all requirements of disclosures that an entity should make when participating in one or more other
entities. The Management of the Company concluded that there aren’t impacts from these financial statements arising from
the adoption of this pronouncement.
ii. CPC 18 (R2) - Investment in associate in controlled and the joint venture
The main changes introduced by CPC 18 (R2) refer to the accounting results and transactions ascending (Upstream) between
the subsidiary and the Company and transactions between subsidiaries of the same group should be recognized in the financial
statements of the seller, but should not be recognized in the financial statements while assets of the Company are traded on
the balance sheet of the acquirer belongs to the business group.
The objective of this Standard is to establish the accounting for investments in associates and subsidiaries and define
requirements for the application of the equity method when accounting for investments in associates in subsidiaries and jointly
controlled entities (joint ventures). The Management of the Company concluded that there aren’t impacts from these financial
statements arising from the adoption of this pronouncement.
iii. CPC 33 (R1) - Employee Benefits
The main changes introduced by CPC 33 (R1) refer to the accounting for defined benefit plans. The Management of the Company
concluded that there aren’t impacts from these financial statements arising from the adoption of this pronouncement.
iv. CPC 46 - Fair Value Measurement
The CPC 46 defines fair value, explains how to measure it and determine what must be disclosed on this form of measurement.
The Management of the Company concluded that there aren’t impacts from these financial statements arising from the
adoption of this pronouncement. The new accounting pronouncements or changes pronouncements as listed above have not
been applied in preparing these financial statements. These new rules are effective for periods beginning on or after January 1,
2013, whose early adoption is permitted.
160 galvão participações
Financial statements on
December 31, 2012 and 2011
5 DETERMINATION OF FAIR VALUE
Several policies and disclosures of the Company and its subsidiaries require the determination of fair value, for both assets and
liabilities as for financial and as for non- financial. Fair values have been determined for measurement and/or disclosure purposes
based on the following methods. When applicable, further information about the assumptions made in determining fair values is
disclosed in the notes specific to that asset or liability.
i.
Accounts receivable and other receivables
The fair value of accounts receivable and other receivables, excluding construction in progress, but including contract
receivables provision of services, is estimated as the present value of future cash flows, calculated at the reporting date which
match the book value.
ii. Fixed Assets
The fair value of items of plant and equipment is based on the market approach and cost approaches using prices quoted on the
market for similar items when available and the replacement cost when appropriate.
iii. Intangible assets
The fair value of intangible assets received as consideration for providing construction services on a contract provision of services is
estimated by reference to the fair value of construction services. The fair value of services of construction provided is calculated as
the total estimated cost plus a profit margin of 2.27% estimated by the average internal costs of the subsidiary Companhia de Águas
do Brasil - CAB ambiental to manage the works. When the Company receives an intangible asset and a financial asset as consideration
for providing construction services in an agreement provision of services, the Company estimates the fair value of intangible assets
as the difference between the fair value of the services of construction rendered and the fair value of the financial asset received..
iv. Non derivative financial liabilities
The fair value, which is determined for disclosure purposes, is calculated based on the present value of principal and cash flows future
discounted at the market rate of interest determined at the date of the financial statements. For financial leases, the interest rate is
determined by reference to similar lease agreements.
6 CASH AND CASH EQUIVALENTS
Consolidated
Cash and cash equivalents
Financial investments
Parent Company
2012
2011
2012
2011
73,692
28,194
627
72
390,011
216,957
-
2,047
463,703
245,151
627
2,119
The investments that are short-term, highly liquid investments readily convertible into known amounts of cash and which are subject to
an insignificant risk of change in value.
The exposure of the Company and its subsidiaries, interest rate risk and a sensitivity analysis for financial assets and liabilities are disclosed
in explanatory note 22.
161
The composition of investments in consolidated statements is represented as follows:
Average Interest
rate p.a. %
Parent Company
Consolidated
2012
2011
2012
2011
Modality
Certificates of Deposit
99.97% of CDI
164,673
50,016
-
-
Sale and Repurchase Agreements
92.23% of CDI
135,623
140,777
-
2,047
Treasury bills
Agribusiness letters of credit
Time deposits
Investment funds
100% Selic
-
639
-
-
75,045
-
-
-
3.33%
4,403
16,110
-
-
103.07% of CDI
10,267
9,415
-
-
390,011
216,957
-
2,047
92.20% of CDI
7 Other investments
Consolidated
Financial investments
2012
2011
173,062
-
173,062
-
The investment fund shares classified as financial assets are measured at fair value through profit or loss, and in the year of 2012 the
average yield was 119.10% of CDI. They present maturities between 1 and 8 years, with predictability of immediate redemption.
These funds will be used for investments in assets required for completion of water networks and sewage of municipalities and other
investments foreseen in the concession contracts.
The composition of investments in the consolidated and in the parent company is represented as follows:
Investment Funds
Modality
Sale and Repurchase agreements
Fund Shares
Fixed Income Securities
Certificates of deposit
Interest rate
average p.a.
100% of CDI
Consolidated
2012
61,866
87.88% of CDI
886
95% to 100% of CDI
94,499
119.10 % of CDI
8,804
Investment Funds
97.46 % of CDI
809
Investment Funds
87.88 % of CDI
869
80% of CDI
5,329
Certificates of Deposit
173,062
The Group’s exposure to interest rate risk and a sensitivity analysis for financial assets and liabilities are disclosed in explanatory note 22.
162 galvão participações
Financial statements on
December 31, 2012 and 2011
8Account receivables and other receivables
Consolidated
Sanitation
Consulting and management
Construction billed
Construction rights to be billed
Allowance for doubtful accounts
Related parties - Note 23
Other accounts
Current
Noncurrent
Parent Company
2012
2011
2012
2011
508,062
451,784
-
-
6,329
2,562
-
-
8,341
84,765
-
-
628,647
918,896
-
153,364
(15,788)
(8,433)
-
-
1,135,591
1,449,574
-
153,364
45,929
2,968
1,170
64,057
40,392
20,383
-
-
43,360
21,553
64,057
45,929
1,178,951
1,471,127
64,057
199,293
(762,023)
(1,091,977)
-
(153,364)
416,928
379,150
64,057
45,929
The Company and its subsidiaries assessed the present value of their balances in accounts receivable on the dates of December 31, 2012
and 2011 and concluded that the amounts are not material for adjustment in the financial statements, for the turnover in their accounts
receivable is of short term.
The exposure of the Company and its subsidiaries to credit risks and currency losses and impairment related to accounts receivable are
disclosed in note 22.
9INVENTORIES
Consolidated
Materials inventory
Inventory resale
2012
2011
119,509
52,849
82,160
15,792
201,669
68,641
163
10Recoverable Taxes and Contributions
Consolidated
Parent Company
2012
2011
2012
2011
ICMS to recover
44,750
9,700
-
-
INSS to recover
19,044
7,564
-
-
9,185
5,207
-
-
42,166
21,488
-
-
PIS retained to be recovered
COFINS retained to be recovered
ISS recoverable
75
244
-
-
5,378
2,340
1,647
1,547
IRRF customers
27,496
175
-
-
CSL withheld at source
19,616
104
-
-
IRRF on investments
Other
Current
Noncurrent
16,266
21,759
-
-
183,976
68,581
1,647
1,547
(160,259)
(51,051)
(1,647)
(1,547)
23,717
17,530
-
-
During the year 2012, due to increased purchases of inventory materials, there was a significant increase in PIS, COFINS and ICMS, to be
used with the resulting outputs of these inventories, whose estimate does not exceed the tenor of 12 months.
11ADVANCE TO SUPPLIERS
Consolidated
2012
Advances – subcontractors
Advances - suppliers contractors
Advances - employees
Parent Company
2011
2012
2011
88
1,434
-
-
207,632
27,021
1
4
1,644
1,227
6
4
Advances – consortiums
399
399
-
-
Advances - partners
543
541
-
-
210,306
30,622
7
8
(209,755)
(29,960)
(7)
(8)
551
662
-
-
Current
Noncurrent
164 galvão participações
Financial statements on
December 31, 2012 and 2011
12 Deferred fiscal Assets and liabilities – Consolidated
Deferred tax assets, liabilities and results were presented in the financial statements by the equity in a manner consistent to all periods
presented in these financial statements.
Consolidated
Income tax and social contribution
Assets
Liabilities
Net worth
Result
2012
2011
2012
2011
2012
2012
2011
(1,596)
(778)
(883)
(970)
-
(731)
(349)
(350)
492
(24,509)
(20,148)
-
(5,203)
(5,973)
(2,216)
-
(69,925)
(110,024)
-
37,883
(28,067)
Attributable cost
-
-
(12,382)
(14,676)
-
2,294
2,985
Rights to be appropriated
-
-
(1,757)
-
564
(1,757)
-
Loans and financing
Accounts receivable – Net Fixed
assets concession agreements
Accounts receivable – deferred of
sale to public organization
Provisions for contingencies
219
171
7,188
5,020
-
2,216
1,717
Transaction costs
564
-
-
-
-
-
-
Profit to be appropriated
555
-
-
-
-
555
-
Loss of income tax and negative
basis of social contribution
33,972
38,747
1,434
369
-
(3,710)
36,365
Allowance for losses on construction
-
-
406
2,669
-
(2,263)
2,527
Adjust depreciation useful lifespan
- CPC 27
-
-
(2,383)
(835)
-
(1,548)
(835)
Adjustment of deferred net inflows
and cost of works of Peru - POC
-
-
(283)
(1,736)
-
1,453
(1,736)
1,325
1,341
2,441
750
-
1,675
455
989
1,637
674
736
-
(710)
(331)
(7,819)
(4,345)
-
-
-
(3,474)
(7,729)
5,421
271
(758)
(213)
-
4,605
(285)
31,064
37,536
(100,737)
(139,058)
564
31,285
(1,256)
Provision for loan losses
Deferred – Transition Tax Regime
Goodwill on reversed merger
Other provisions
Reconciliation of effective tax rate
Consolidated
2012
2011
2012
2011
Profit for the year before taxes
4,343
(60,369)
38,512
(86,454)
34%
34%
34%
34%
(1,477)
20,525
(13,094)
29,394
Statutory rate
Income tax expense at statutory rate
Parent Company
Adjustment of income tax and social contribution
Equity income
(498)
(401)
35,812
(9,225)
Nondeductible expenses
(6,120)
(1,435)
-
-
Permanent exclusions
80,291
(27,715)
-
-
165
Reconciliation of effective tax rate (continued)
Consolidated
Parent Company
2012
2011
2012
2011
Tax losses from prior years (a)
(15,617)
(15,071)
-
-
Deferred tax loss carryforwards and negative
basis not constituted (b)
(22,718)
-
(22,718)
(20,169)
(6,287)
(1,287)
27,574
(25,384)
-
-
Current tax
(3,711)
(24,128)
-
-
Deferred tax
31,285
(1,256)
-
-
Effective rate
635%
42%
-
-
Other
a.Based on estimates of the business plans, the Controlled Environmental CAB and its subsidiaries recognized tax assets deferred
on accumulated losses, considering that future taxable profits will be available and can be used against such losses..
b.The Company has not recorded deferred tax credits on tax loss carryforwards due to lack of premises to calculate the expected
generation of future taxable income.
Deductible temporary differences and accumulated tax losses do not expire under the current tax legislation.
13Investments
The Company recorded a gain of BRL 105,330 in 2012 (loss of BRL 27,131 in 2011) of the equivalent equity of its subsidiaries.
In the consolidated financial statements it has recorded a gain of BRL 1,466 (BRL 1,180 in 2011) of equivalent equity in investments with
significant influence.
None of the companies accounted for by the equity equivalence method has its shares traded on the stock exchange.
The table below presents a summary of financial information in the subsidiaries, associated companies and enterprises controlled together.
a) Breakdown of investments - Consolidated
2012
2011
Odfjell Galvão B.V.
3,640
-
GSMP S.A.
1,031
887
4,671
887
b) Breakdown of investments – Parent Company
2012
2011
Galvão Engenharia S.A.
938,730
642,068
Companhia de Águas do Brasil - CAB ambiental
152,379
123,920
Galvão Finanças Ltda.
Galvão Energia Participações S.A.
5,070
2,841
43,957
58,722
1,140,136
827,551
2012
2011
22,149
18,818
c) Provision for loss on investments – Parent Company
Galvão Óleo & Gás Participações S.A.
166 galvão participações
Financial statements on
December 31, 2012 and 2011
d) Data on participations – Parent Company
Current
assets
Participation
Noncurrent
assets
Total
assets
December 31, 2012
Galvão Engenharia S.A. (i)
Companhia de Águas do Brasil - CAB ambiental (i)
100.00%
1,658,079
399,375
2,057,454
66.58%
217,706
833,119
1,050,825
Galvão Finanças Ltda.
100.00%
6,457
315
6,772
Galvão Energia Participações S.A. (i)
100.00%
87,744
172,082
259,826
Galvão Óleo & Gás Participações S.A.
100.00%
5,338
3,691
9,029
1,975,324
1,408,582
3,383,906
December 31, 2011
Galvão Engenharia S.A. (i)
100.00%
1,243,536
235,305
1,478,841
Companhia de Águas do Brasil - CAB ambiental (i)
100.00%
91,019
577,828
668,847
Galvão Finanças Ltda.
100.00%
2,937
2,119
5,056
Galvão Energia Participações S.A. (i)
100.00%
776
105,232
106,008
Galvão Óleo & Gás Participações S.A.
100.00%
68
1,896
1,964
1,338,336
922,380
2,260,716
Machines,
appliances and
equipment
Furniture
and tools
Computers and
peripherals
Field
equipment
87,261
(i) Companies are audited by independent auditors and with individual financial statements
14fixed assets – Consolidated
Consolidated
Cost
Balance at January 1, 2011
6,488
4,478
6,800
Additions
34,783
4,108
3,030
14,107
Disposals
(1,913)
(789)
(695)
(3,785)
Transfers
212
1
(163)
63
Balance at December 31, 2011
39,570
7,798
8,972
97,646
Additions
86,499
7,650
7,237
38,277
Disposals
(287)
(218)
(2,158)
(6,064)
Transfers
-
-
-
-
125,782
15,230
14,051
129,859
Balance at January 1, 2011
(1,366)
(1,283)
(1,700)
(30,669)
Additions
(1,615)
(488)
(1,413)
(5,766)
Disposals
379
160
227
2,148
Transfers
(9)
-
32
(24)
Balance at December 31, 2011
(2,611)
(1,611)
(2,854)
(34,311)
Additions
(9,996)
(1,109)
(2,342)
(8,181)
Disposals
6
62
130
4,362
(12,601)
(2,658)
(5,066)
(38,130)
Balance at December 31, 2012
Depreciation
Balance at December 31, 2012
Net carrying value
Balance at December 31, 2011
36,959
6,187
6,118
63,335
Balance at December 31, 2012
113,181
12,572
8,985
91,729
167
Current
liabilities
Noncurrent
Total
liabilities
Net worth
Revenue
Expenses
Profit or
loss
Equity
equivalence
893,591
217,841
1,111,432
946,022
2,987,266
403,925
406,011
809,936
240,889
355,209
(2,854,732)
132,534
125,251
(367,597)
(12,388)
893
811
1,704
5,068
(9,293)
13,267
(5,605)
7,662
15,261
165,567
180,828
7,662
78,998
-
(17,865)
(14,762)
(14,762)
2,981
28,197
31,178
(22,149)
827
(4,355)
(3,528)
(3,528)
1,316,651
818,427
2,135,078
1,248,828
3,356,569
(3,250,154)
109,518
105,330
597,901
238,872
836,773
642,068
2,224,378
(2,221,992)
2,386
2,386
137,730
407,197
544,927
123,920
191,365
(190,245)
1,120
1,120
606
1,609
2,215
2,841
11,412
(5,795)
5,617
5,617
1,320
45,966
47,286
58,722
-
(15,655)
(15,655)
(15,655)
145
20,637
20,782
(18,818)
-
(20,599)
(20,599)
(20,599)
737,702
714,281
1,451,983
808,733
2,427,155
(2,454,286)
(27,131)
(27,131)
Vehicles
Facilities
Special
equipment
Buildings
Land
Advances to Construction in
suppliers
Progress
Total
97,441
3,933
9,141
191
9,129
406
559
19,450
687
13,806
533
-
48,350
5,285
144,139
(9,669)
(961)
(2,255)
-
-
(307)
-
(20,374)
225,827
1
-
(25)
-
-
(161)
72
-
107,223
3,659
20,667
724
9,129
48,288
5,916
349,592
14,499
14,180
478
1,090
-
20,688
58,405
249,003
(3,215)
(609)
(31)
-
-
-
-
(12,582)
-
5,914
(23)
-
-
(9,787)
3,896
-
118,507
23,144
21,091
1,814
9,129
59,189
68,217
586,013
(26,444)
(481)
(3,464)
-
-
-
-
(65,407)
(7,883)
(595)
(1,197)
(81)
-
-
-
(19,038)
1,258
107
1,336
-
-
-
-
5,615
-
-
1
-
-
-
-
-
(33,069)
(969)
(3,324)
(81)
-
-
-
(78,830)
(9,635)
(1,922)
(1,944)
(34)
-
-
-
(35,163)
2,037
20
-
-
-
-
-
6,617
(40,667)
(2,871)
(5,268)
(115)
-
-
-
(107,376)
74,154
2,690
17,343
643
9,129
48,288
5,916
270,762
77,840
20,273
15,823
1,699
9,129
59,189
68,217
478,637
168 galvão participações
Financial statements on
December 31, 2012 and 2011
Analysis of the recovery value
In accordance with IAS 36 (CPC 01 R1) Impairment of Assets, the Company and its subsidiaries assessed at the end of exercise, any
indications of devaluation of its assets that could generate the need for testing on their recovery value.
This evaluation was based on external and internal sources of information, considering variations in interest rates, changes in market
conditions, among others.
The result of this evaluation showed no need for a provision for impairment of these assets, and there is, therefore, impairment losses to
be recognized.
Collateral: The property given as collateral is disclosed in note 17.
15 Intangible Assets
Consolidated
Software
Project (i)
Concession
Development
(ii)
Intangible
ICPC 01 (R1)
(iii)
Granting of
concession
(iv)
goodwill (v)
Total
192,517
Balance on
January 1, 2011
3,837
46,771
53,746
88,163
-
-
Additions
2,235
17,802
397
27,955
1,225
6,368
55,982
Write-offs
(110)
(14,489)
(5,871)
-
-
(3,178)
(23,648)
-
(4,913)
-
-
-
-
(4,913)
5,962
45,171
48,272
116,118
1,225
3,190
219,938
11,581
3,619
181
106,753
122,585
-
244,719
(20)
(12,079)
-
-
-
-
(12,099)
17,523
36,711
48,453
222,871
123,810
3,190
452,558
Sale
Balance on
December 31, 2011
Additions
Write-offs
Balance on
December 31, 2012
Amortization
Balance on
January 1, 2011
(675)
-
(363)
(23,338)
-
-
(24,376)
Amortization
(894)
-
(3,063)
(5,926)
(17)
-
(9,900)
45
-
-
-
-
-
45
Balance on
December 31, 2011
(1,524)
-
(3,426)
(29,264)
(17)
-
(34,231)
Amortization
(2,895)
-
(1,091)
(8,055)
(1,824)
-
(13,865)
Balance on
December 31, 2012
(4,419)
-
(4,517)
(37,319)
(1,841)
-
(48,096)
Balance on
December 31, 2011
4,438
45,171
44,846
86,854
1,208
3,190
185,707
Balance on
December 31, 2012
13,104
36,711
43,936
185,552
121,969
3,190
404,462
Write-offs
Net book value
(i) Development projects
Galvão Energia Participações SA and its subsidiaries for the year recognized as intangible assets, the amount of BRL 3,619 (BRL 17,802
in 2011) for the development costs of projects from wind and water (Small Hydropower – PCH Hydroelectric - HPP and Wind Farms - EC).
Certain projects are under development and have proven commercial viability as technical requirements CFC Resolution 1.140/08, which
approved CPC 04 (R1) - Intangible Assets, development costs were recognized as intangible assets.
169
Expenditures on research activities, undertaken with the opportunity to gain from hydro and wind projects, are recognized in income as
incurred.
Amortization - Intangible assets with finite useful lives are amortized when the start-up of projects granted within the same.
(ii) Concession: (entitlements exploration concession acquired third) with the following remaining terms of amortization:
Concession end
In years
CAB Águas de Paranaguá S.A.
Intangible concession (indirect subsidiaries)
2045
33
CAB Canarana Ltda.
2040
28
CAB Colider Ltda.
2032
20
CAB Pontes e Lacerda Ltda
2031
19
CAB Alta Floresta Ltda
2032
20
Águas de Comodoro Ltda.
2037
25
The appraisal reports of the acquired companies have been developed considering the specific valuation methodologies established by
an independent specialist company and assumptions defined and provided by the Company considering projections of revenue, costs,
those shown below:
Direct and indirect subsidiaries
Real discount
Rate (p.a.)
Fair market
value (*)
Book value
Amortization
Net balance
2012
Nnet balance
2011
CAB Águas de Paranaguá S.A. (a)
13.63%
77,700
39,549
(3,915)
35,634
36,725
CAB Canarana Ltda. (e)
13.40%
896
602
(1)
601
603
CAB Colider Ltda.(b)
15.00%
12,000
1,688
(139)
1,549
1,548
2,442
Intangible concession
CAB Pontes e Lacerda Ltda. (c)
15.60%
13,000
2,678
(236)
2,442
CAB Alta Floresta Ltda.(d)
15.50%
4,700
2,599
(226)
2,373
2,373
CAB Comodoro Ltda. (f)
15.40%
2,100
1,155
-
1,155
1,155
Tubarão Saneamento
182
-
182
-
48,453
(4,517)
43,936
44,846
(*) Fair value was determined based on valuation report carried out by a specialized company on the acquisition date.
Below we detail the main values of intangible assets and concession recorded in the financial statements, in accordance with CPC4 R1
Intangible Assets.
(a) In May 2008, CAB Paranaguá SA acquired 100% of the shares representing the capital of the company Águaspar SA, in which had
almost all shares CAB Águas de Paranaguá SA, with the exception of four (4) preferred shares held members of the Board of CAB
Águas de Paranaguá SA for BRL 59,133, which revealed a gain the right to operate the concession of BRL 39,549 as a study conducted
by a specialized company. The subsidiary Companhias de Águas do Brasil – CAB Ambiental is amortizing this intangible linearly over the
concession period.
Through the Minutes of the Extraordinary General Meeting approved the merger of Paranaguá SA CAB by Águaspar SA and
subsequently the incorporation of SA Águaspar by CAB Águas de Paranaguá SA, and added value (concession), generated in the
acquisition of this investment was classified as intangible assets.
(b) During 2009, the CACOL Participações Ltda. acquired 80% of shares of the company CAB Colider Ltda., for BRL 5,755, having
recognized an asset for the right to operate the concession of BRL 3,198, according to studies prepared by a specialized company.
The subsidiary Companhia Águas do Brasil - CAB Ambiental is amortizing this intangible linearly over the concession period. To tax
purposes, this value has been classified as goodwill for expected future profitability, supported by the study of a specialized company.
170 galvão participações
Financial statements on
December 31, 2012 and 2011
Through the Minutes of the Extraordinary General Meeting approved the merger of CACOL Participações Ltda. by CAB Colider
Ltda. and the gain (concession) generated in the acquisition of this investment was a provision rectifier in contrast to the
special reserve of goodwill in the subsidiary’s equity, so that the effect on the equity reflects the tax benefit of the goodwill.
These changes affected the investment company controlled Companhia de Águas do Brasil - CAB Ambiental this subsidiary,
necessitating the creation of goodwill (right of the concession) deductible for tax purposes in the Companhia de Águas do Brasil
- CAB Ambiental in order to recompose it in the amount of BRL 1,548..
(c) During the year 2009, the CPL Participações Ltda. acquired 80% of shares of the company CAB Pontes e Lacerda Ltda., for
BRL 7,706, having recognized an asset for the right to operate the concession in the amount of BRL 5,702, according to a study
performed by a specialized company. The subsidiary Companhia de Águas do Brasil - CAB Ambiental is amortizing this intangible
linearly over the concession period. For tax purposes, this value has been classified as goodwill by expected future profitability,
supported by the study of a specialized company.
Through the Minutes of the Extraordinary General Meeting approved the merger of CPL Participações Ltda., the CAB and Pontes
Lacerda Ltda. and the gain (concession) generated in the acquisition of this investment was a provision rectifier in contrast to
the special reserve of goodwill in the subsidiary’s equity, so that the effect on the equity reflects the tax benefit of the goodwill.
These changes affected the investment Companhia de Águas do Brasil - CAB Ambiental this subsidiary, necessitating the
creation of goodwill (right of exploitation concession) deductible for tax purposes in the Companhia de Águas do Brasil - CAB
Ambiental in order to recompose it in the amount of BRL 2,443.
(d) During the year 2009, CALF Participações Ltda. acquired 80% of shares of the company CAB Alta Floresta Ltda. for BRL 8,205,
having recognized an asset for the right to operate the concession of BRL 4,919 as a study prepared by a specialized company.
The Subsidiary CAB Ambiental is amortizing this intangible linearly by the concession period. For tax purposes, this value has
been classified as goodwill for expected future profitability, reasoned study by a specialized company.
Through the Minutes of the Extraordinary General Meeting approved the merger of CALF Participações Ltda. by CAB Alta
Floresta Ltda. and the gain (concession) generated in the acquisition of this investment was a provision rectifier in contrast to
the special goodwill reserve of the subsidiary’s equity, so that the effect on the equity reflects the tax benefit of the goodwill.
These changes affected the investment company controlled Companhia de Águas do Brasil - CAB Ambiental this subsidiary,
necessitating the creation of goodwill (right of exploitation concession) deductible for tax purposes in the Companhia de Águas
do Brasil - CAB Ambiental in order to recompose it in the amount of BRL 2,372.
(e) During 2010, the Water Company of Brazil - CAB ambiental acquired 100% of shares of the company CAB Canarana Ltda., For
BRL 876, having recognized an asset for the right to operate the concession worth BRL 603 according to a study prepared by a
specialized company and linear amortization by 2040, which corresponds to the end of concession.
During 2010, the Water Company in Brazil - environmental CAB acquired 80% of shares of the company CAB Commodore Ltda.,
for BRL 2,000, having recognized an asset for the right to operate the concession worth BRL 1,155 according to a study prepared
by a specialized company and linear amortization until 2037, which corresponds to the end of the concession. In June 2011,
through corporate restructuring, the Companhia de Águas do Brasil - CAB Ambiental paid in investment and transferred asset
and liabilities relating to the acquisition of the company CAB Comodoro Ltda. in controlled CAB MT Participações Ltda.
171
(iii) Intangible ICPC 1 (R1)
2011
Changes in cost
Average rate of
amortization
% p.a.(*)
2012
Cost
Additions
Cost
CAB Águas de Paranaguá S.A. (a)
5.23
57,321
35,068
92,389
Saneamento de Mirassol - SANESSOL S.A. (b)
4.81
19,088
3,837
22,925
Empresa de Saneamento de Palestina - ESAP S.A.(c)
9.16
869
265
1,134
CAB Guaratinguetá S.A. (d)
3.81
1,713
1,221
2,934
CAB Piquete S.A. (e)
8.38
1,860
1,113
2,973
CAB Alta Floresta Ltda. (f)
19
12,834
1,997
14,831
CAB Pontes e Lacerda Ltda. (g)
17
10,146
1,600
11,746
CAB Colider Ltda. (h)
19
7,457
1,477
8,934
CAB Canarana Ltda. (i)
17
1,424
615
2,039
CAB Comodoro Ltda. (j)
8
1,388
1,021
2,409
Águas de Andradina S.A. (k)
6.27
1,755
3,524
5,279
Águas de Castilho S.A. (l)
6.89
263
1,105
1,368
-
53,910
53,910
116,118
106,753
222,871
CAB Cuiabá S.A. (m)
5
(*) The amortization periods do not exceed the terms of the concessions.
(a) Cost of the concession agreement administration plus a margin of 1.78%, the rate of depreciation is an integral part of the costs
related to the provision of sanitation services for the city of Paranaguá - Paraná. These costs are capitalized as assets intangible
possibly by an increase of future revenue as business plan management.
(b) Cost of the concession agreement administration plus a margin of 1.46%, the rate of depreciation is an integral part of the costs
related to the provision of sanitation services for Mirassol - São Paulo. These costs are capitalized as assets intangible possibly by an
increase of future revenue as business plan management.
(c) Cost of the concession agreement administration plus a margin of 1.35%, the rate of depreciation is an integral part of the costs
related to the provision of sanitation services for the city of Palestine - São Paulo.
(d) Cost of the concession agreement administration plus a margin of 0.84%, the rate of depreciation is an integral part of the costs
related to the provision of sanitation services for the city of Guaratinguetá - São Paulo.
(e) Cost of the concession agreement administration plus a margin of 2.44%, the rate of depreciation is an integral part of the costs
related to the provision of sanitation services for the city of Picket - São Paulo.
(f) Cost of the concession agreement administration plus a margin of 2.69%, the rate of depreciation is an integral part of the costs
related to the provision of sanitation services for the municipality of Alta Floresta - Mato Grosso.
(g) Cost of the concession agreement administration plus a margin of 4.96%, the rate of depreciation is an integral part of the costs
related to the provision of sanitation services for the city of Pontes e Lacerda - Mato Grosso.
(h) Cost of the concession agreement administration plus a margin of 3.38%, the rate of depreciation is an integral part of the costs
related to the provision of sanitation services for the city of Colider - Mato Grosso.
(i) Cost of the concession agreement administration plus a margin of 0.82%, the rate of depreciation is an integral part of the costs
related to the provision of sanitation services for the city of Canarana - Mato Grosso.
(j) Cost of the concession agreement administration plus a margin of 3.96%, the rate of depreciation is an integral part of the costs
related to the provision of sanitation services for the city of Comodoro - Mato Grosso.
(k) Cost of the concession agreement administration plus a margin of 1.83%, the rate of depreciation is an integral part of the costs
related to the provision of sanitation services for the city of Andradina - São Paulo.
172 galvão participações
Financial statements on
December 31, 2012 and 2011
(l) Cost of the concession agreement administration plus margins of 1.75%, the rate of depreciation is an integral part of the costs
related to the provision of sanitation services for the city of Castilho - São Paulo.
(m)Cost of the concession agreement administration plus margins of 2.27%, the rate of depreciation is an integral part of the costs
related to the provision of sanitation services for the city of Cuiabá - Mato Grosso.
(iv) Grant Award
2011
Changes in cost
Average rate of
amortization
% p.a.(*)
2012
Cost
Additions
Cost
1,925
Águas de Andradina S.A.
3.33
700
1,225
Águas de Castilho S.A.
3.33
525
105
630
CAB Cuiabá S.A.
3.33
-
121,255
121,255
1,225
122,585
123,810
(*) Refers to the fixed concession fee paid as a result of the concession agreement, which is being amortized linearly over the concession period.
(v) Goodwill
In June 2011, Dreen Brazil Investments acquired from third parties 35% of the shares of the subsidiary Agouti Ventures Wind
SPE SA for BRL 6,800, with goodwill of BRL 6,368 and that was based on expected future through financial study, carried out by a
specialized company.
16 Suppliers and other accounts payable
Consolidated
Suppliers contractors
Parent Company
2012
2011
2012
2011
348,601
147,052
175,115
-
Subcontractors suppliers
69,463
18,674
-
-
Various suppliers
34,785
11,033
-
132
Related parties - Note 23
14,945
248
1,183
962
Accounts payable – consortium
84,473
-
-
-
Other payables
Current liabilities
Noncurrent
29,173
94,997
74
-
581,440
272,004
176,372
1,094
(559,801)
(254,924)
(175,189)
(132)
21,639
17,080
1,183
962
On December 21st, 2012 the subsidiary Galvão Engenharia SA gave their titles suppliers based on “particular instrument assignment of
debt transfer “, transferring the amount of BRL 175,115 to the Company.
The Company and its subsidiaries assessed the present value of their suppliers’ balances on the dates of December 31st, 2012 and 2011
and concluded that the values are equivalent to amounts presented in the balance sheet accounting.
The exposure of the Company and its subsidiaries to the risks of currency and credit related to suppliers and other accounts payable is
disclosed in note 22.
173
17 Loans and financing
This note provides information about the contractual terms of loans and financing with interest rates, which are measured at amortized
cost. For more information on the exposure of the Company and its subsidiaries to the risk of interest rate and liquidity, see explanatory
Note 22.
Consolidated
Parent Company
Currency
Average
Interest (p.a.)
Maturity
2012
2011
2012
2011
Leasing (a)
BRL
CDI + 2.22%
2013-2019
7,627
4,665
-
51
BNDES (b) / (c)
BRL
TJLP +1.4% a
2.8%
2014-2030
451,577
302,348
-
-
FINEM and FINAME (d)
BRL
TJLP + 5.36%
2015-2022
105,184
77,162
-
-
Working Capital (b)
BRL
128.5% do CDI
2013
107,780
-
-
-
Bank credit note
BRL
15.4%
2012
-
120,066
-
-
Bank credit note
BRL
CDI + 4.25%
2012
-
9,516
-
9,516
Credit Note FCP-SAN (e)
BRL
TR + 10.4%
2019
9,256
9,872
-
-
Guaranteed Account
BRL
CDI + 3.55%
2012
-
1,463
-
-
Promissory Note (f)
BRL
125% do CDI
2013
182,250
250,384
-
250,384
Bank credit (g)
BRL
135% do CDI
2013-2014
224,191
10,154
3,145
-
Consumer credit (h)
BRL
8.34%
2016-2017
10,760
11,053
-
-
Related parties - Note 23
BRL
Line of Credit
Current liabilities
Noncurrent
-
-
26,805
3,746
1,098,625
796,683
29,950
263,697
(507,665)
(382,671)
(1,607)
(256,852)
590,960
414,012
28,343
6,845
(a) The Galvão Logística, Exportação e Importação Ltda. and Galvão Engenharia S.A. have balance payable for leasing of machinery, equipment
and vehicles with warranty as well as chattel mortgage, and the balance outstanding at December 31st, 2012 of BRL 7,181.
(b) The financing granted by BNDES - National Bank for Economic and Social Development against subsidiaries by CAB ambiental and
part of the working capital loans are secured by receivables and the carrying amount of BRL 453,187 (BRL 436,978 in 2011 and
BRLc353,468 in 2010).
(c) On March 19th, 2012, indirect subsidiaries of G&P Investimentos em Participações S.A signed contracts funding through credit facility with
BNDES - National Bank for Economic and Social Development occurring partial releases on December 31st, 2012 in a total amount of BRL
134,095. The purpose of this funding is deployment (construction) of wind farms.
The main terms of these loans are as follows:
• Pledge of shares issued by indirect subsidiaries belonging to G&P Investimentos em Participações S.A;
•Fiduciary assignment of receivables from revenue from sales of electricity indirect subsidiaries of G&P Investimentos em
Participações S.A;
• Fiduciary assignment of all machinery and equipment assembled or constructed with funds derived from these contracts financing;
•Guarantee provided by G&P Investimentos em Participações SA and the controlling Galvão Participações S.A, all commitments
assumed these contracts with Banco Nacional de Desenvolvimento Economico e Social - BNDES.
(d) The Company and its subsidiary Galvao Logística, Exportação and Importação Ltda. and the Belo Monte Construction Consortium
have contracts Program BNDES support investment - PSI - Product Finame, which are updated from 4.5% pa to TJLP + 7% p.a. The
contract guarantees as to liens on property subject of the contract funding. The outstanding balance on December 31st, 2012 of
BRL 104,854.
174 galvão participações
Financial statements on
December 31, 2012 and 2011
(e) The indirect CAB Alta Floresta Ltda., CAB Colider Ltda. and CAB Pontes e Lacerda Ltda. have financing agreements by opening credit
with Caixa Economica Federal.
The financing agreement is linked to the FCP-SAN Financiamento a Concessionário Privado de Saneamento by financing with FGTS
resources, the operational mode of sanitary sewage.
Warranties: pledge agreement emerging rights of the Concession Agreement and approval of the Parent Company Companhia de
Aguas do Brasil CAB – ambiental.
(f) Refers to the particular instrument of coordination and placement with restricted promissory notes under guarantee scheme firm
subscription, in a single series, the first issue of the indirect CAB Cuiabá. The operation was the guarantor Galvão Engenharia SA. 69
promissory notes of USD 5,000,000 were issued; the total amount of BRL 170 million.
(g) The Belo Monte project signed with Caterpillar from November 30th, 2011 for the purchase of machinery and heavy equipment.
The contract is adjusted by 135% of CDI. It is secured by machinery and equipment and the responsibility of the consortium limited to
its percentage in the consortium, if 10%. The outstanding balance at December 31st, 2012 of BRL 174,769.
(h) The Belo Monte project conducted from June 17, 2011 consumer credit with the bank for the purpose of buying Mercedes their trucks
through fixed rate of 8.34% pa. It Is secured by the trucks and the responsibility of the consortium limited to its percentage in the
consortium, if 10%. The outstanding balance at December 31st, 2012 of BRL 10,760..
Provision of guarantees, sureties and guarantees
On December 31st, 2012 and 2011, the Company provided to its subsidiaries the following guarantees and sureties:
Type
In favor of
Connection
2012
2011
Aval
Galvão Logística Exp. e Imp. Ltda.
Indirect
-
76,188
Aval
Aval
Dreen Brasil Investimentos e Participações S.A.
Indirect
407
783
CAB Águas de Paranaguá S.A.
Indirect
-
86,000
Aval
Companhia de Águas do Brasil - CAB ambiental
Direct
-
75,000
Aval
GE Olho D’ Água S.A.
Indirect
47,996
-
Aval
GE Boa Vista S.A.
Indirect
19,253
-
Aval
GE Farol S.A.
Indirect
25,849
-
Aval
GE São Bento do Norte S.A.
Indirect
43,134
-
Warranty
CAB – Sistema Produtor Alto Tietê S.A.
Indirect
-
25,000
136,639
262,971
18Debentures
Line of credit
Consolidated
Average interest
(p.a.)
Maturity
Parent Company
2012
2011
2012
2011
Debentures - 1st issue
(a)
CDI + 2.50%
2016
234,345
300,298
234,345
300,298
Debentures - 2nd issue
(b)
CDI + 3.05%
2018
300,578
-
300,578
-
Debentures – Companhia de Águas
do Brasil – CAB Ambiental
(c)
127% CDI
2013
34,744
-
-
-
569,667
300,298
534,923
300,298
Current liabilities
(95,781)
(63,046)
(61,037)
(63,046)
Noncurrent
473,886
237,252
473,886
237,252
175
(a) On May 25th, 2010 the Company issued 300 debentures not convertible into shares, unsecured, in an unique series, personal
guarantee, for public distribution with restricted placement efforts, which were issued by banks and received by Galvão Participações
SA on June 8th, 2010 in the amount of BRL 301,228. The Company capitalizes costs of issuing these debentures in the amount of BRL
4,759 recorded as a reduction of the liability account and will be amortized over the same period of the debentures.
The series debentures will only be entitled to payment corresponding to the accumulated variation of the average daily interbank
deposits - DI a day, “extra group”, expressed as a percentage per year of 252 days, capitalized by a spread or surcharge, equivalent to
2.5% per year.
The nominal value of the debentures and interest will be paid as follows:
Amortization: from the 24th (twenty-fourth) month from the date of issue, the debentures will be amortized annually in May 25th of
each year;
Interests: two annual installments, on May 25th and November 25h of each year;
Warranties:
- Galvão Engenharia SA is subject to garnishment 99.9% of the shares.
- Letter bail in the amount of BRL 300,000 of Galvão Engenharia SA.
- Fiduciary assignment of receivables resulting from the following hired: Contract 0800.0060661.10.2 between the Guarantor
and Petróleo Brasileiro SA - Petrobras in the amount of BRL 465,587, which payments will be made in future escrow account at
Banco Bradesco SA, and Contract No. 0800.0062504.10.2, between the Guarantor and Petroleo Brasileiro SA - Petrobras in the
amount of BRL 1,101,431, and payments related to such receivables should be performed in escrow account maintained at the
Bank of Brazil SA .
(b) On 10th July 2012 the Company issued 30,000 debentures not convertible into shares, unsecured, in unique series, personal
guarantee, for public distribution with restricted placement efforts, which were issued by banks and received by Galvão Participações
SA on July 31st, 2012 in the amount of BRL 300,000. The Company capitalizes costs of issuing these debentures in the amount of BRL
5,515 recorded as a reduction of the liability account and will be amortized over the same period of the debentures.
The series debentures will only be entitled to payment corresponding to the accumulated variation of the average daily deposits
Interbank - DI a day, “extra group”, expressed as a percentage per year of 252 days, capitalized by a spread or surcharge, equivalent
to 3.05% per annum.
The nominal value of the debentures and interest will be paid as follows:
Amortization: from 24th (twenty-fourth) month from the date of issue, the debentures will be amortized annually in December 22nd
of each year;
Interest: 4 annual installments, March 22nd , June 22nd , September 22nd and December 22nd of each year;
(c) On September 17th, 2012, the indirect subsidiary CAB Waters Wasteland SA issued 339 debentures not convertible into shares,
unsecured, personal guarantee, amounting to BRL 33,900. The remuneration shall be 127% of the variation accumulated average
daily rates of DI - Interbank Deposits day, over extra, expressed as a percentage per year of 252 days, calculated exponentially and
cumulatively pro rata, by calendar days. The Debentures have maturity of one year, when the par value plus the compensation will
be paid.
176 galvão participações
Financial statements on
December 31, 2012 and 2011
19 Fiscal Obligations
Consolidated
ICMS payable
Parent Company
2012
2011
2012
2011
45,755
5,643
-
-
IRRF o/Salaries
705
7,506
37
110
IRRF Third parties
191
518
-
12
16,440
13,755
-
-
9,020
8,660
-
-
COFINS payable
42,162
39,843
-
-
ISS, PIS, COFINS and CSL Retained
16,285
7,482
9
36
Special Installment PAES (RefisII) (i)
1,407
3,074
-
-
Installment Law 11.941/09 (ii)
1,642
535
-
-
41,766
39,035
-
-
6,590
2,801
-
-
181,963
128,852
46
158
(139,562)
(87,141)
(46)
(158)
42,401
41,711
-
-
ISS
PIS payable
PIS / COFINS
Other
Current liabilities
Noncurrent
(i) Refers to PIS and COFINS own debts and PIS, COFINS, IR and CSL company Engibrás Comercial Ltda., Incorporated in February 28th,
2005.
(ii) Refers to debts of PIS, COFINS, IR and CSL Company J. Ferreira Construction and Engineering Ltda., Incorporated on 18th of April
2007, for which payment is made monthly.
During the year 2012, due to an increase in sales of materials of controlled Galvão Engenharia SA, a significant increase in PIS / COFINS
and ICMS was payable.
20 Advances from customers
Consolidated
Parent Company
2012
2011
2012
2011
Norte Energia S.A.
70,939
86,943
-
-
Petrobrás S.A.
31,142
75,200
-
Servicio de Agua Potable y Alcantarillado de Lima – SEDAPAL
11,702
8,776
-
-
Companhia Paranaense de Energia – Copel (nota 23)
38,945
38,945
38,945
38,945
9,687
12,513
-
-
162,415
222,377
38,945
38,945
Other
The Company refers to the amount received for the sale of the participation in the indirectly controlled company São Bento Energia, as described
in explanatory note 23.
In consolidated financial statements refer to amounts received from customers for the purchase of fixed assets, materials production, inventories
to be applied in their respective works.
177
21Provisions for contingencies
The Company and its subsidiaries are defendants in lawsuits involving labor, civil and tax. To cope to future losses related to these
processes was a provision in an amount considered by management and its subsidiaries sufficient to cover losses considered
probable. The Company and two subsidiaries classify the risk of loss in lawsuits as “remote”, “possible” or “probable”. The likelihood
of loss in these actions, as well as the calculation of the amounts involved, was performed considering the claims of the plaintiffs in
the jurisprudence concerning the matters and opinion of legal advisors of the Company and its subsidiaries. The main information
processes are thus presented:
Labor
Civil
Tax
Total
Balance at January 1, 2011
8,355
1,554
307
10,216
Supplement
5,052
-
-
5,052
13,407
1,554
307
15,268
Balance at December 31, 2011
Supplement
Balance at December 31, 2012
4,449
2,072
-
6,521
17,856
3,626
307
21,789
Contingent liabilities not provisioned
Contingent liabilities are not recognized in financial statements in evaluated processes by legal counsel as possible risk in the amount
of BRL 56,696 (BRL 73,258 in 2011), for which no provision has been made in view that the accounting practices adopted in Brazil, do
not require accounting.
22 Financial instruments
Financial risk management
Overview
The Company and its subsidiaries are exposed to the following risks:
• Credit risk;
• Liquidity risk: and
• Market risk.
This note presents information about the exposure of the Company and its subsidiaries for each of the above risks, the objectives of
Company and its subsidiaries, policies and processes for measuring and managing risk and capital management.
Structure of risk management
The Board of Directors is responsible for monitoring the risk management policies of the Company and its controlled companies, and the
managers of each area are due to report regularly to the Council on its activities.
The risk management policies of the Company and its subsidiaries are established to identify and analyze the risks faced by the
Company and its subsidiaries, to set limits and appropriate risk controls, and to monitor risks and adherence to limits. Policies and
systems of risk management are reviewed frequently to reflect changes in conditions market and the activities of the Company and
its subsidiaries. The Company and its subsidiaries, through their policies and procedures training and management, aims to develop an
environment of disciplined and constructive control, in which all employees understand their roles and obligations.
Credit risk
Credit risk is the risk that the Company and its subsidiaries incurring losses arising from a customer or counterparty, a financial instrument
resulting from such failure to comply with its contractual obligations. The risk comes from the accounts receivable and other receivables
as shown below.
178 galvão participações
Financial statements on
December 31, 2012 and 2011
Exposure to credit risk
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the date of
financial statements was:
Consolidated
Parent Company
2012
2011
2012
2011
Cash and cash equivalents
463,703
245,151
627
2,119
Other investments
173,062
-
-
-
Accounts receivable and other receivables
1,178,951
1,471,127
64,057
199,293
Total
1,815,716
1,716,278
64,684
201,412
(1,398,788)
(1,337,128)
(627)
(155,483)
416,928
379,150
64,057
45,929
Current liabilities
Noncurrent
The Company and its subsidiaries are currently in the segment of receivables from construction and sanitation.
In the construction sector the main mitigation is to work with clients with low credit risk, generally publicly traded companies, often with
investment grade ratings made by renowned agencies such as Petrobras - Petróleo Brasileiro S / A.
In contracts with public institutions have risk of delay, but there is no history in the Company and its subsidiaries of comprehensive loss of
these receivables. In the remainder of cases, where we have risk of receiving these amounts are accrued on our balance.
In addition, we have an indicator to keep a balance of contract portfolio not less than 24 months.
The Company establishes an allowance for losses on recovery that represents its estimate of incurred expenses with bills receivable
and other receivables. The main component of this allowance is item specific loss related to individual exposures, and to a collective loss
established for groups of similar assets in respect of losses that have been incurred but not yet identified.
The collective loss is based on historical loss rates for similar assets.
Segment sanitation key mitigating credit risk are: the public-private partnership contracts whose receivables come from chip customers
such as the Basic Sanitation Company of the State of São Paulo - Sabesp contracts concession have direct control of the receivables
and the provision of services, in addition, there is supply contracts with forecasts of compensation in case of resignation of the grantor,
with a high degree of control over the receivables.
Losses from impairment:
The breakdown by maturity of receivables at the reporting date for which has not been recognized losses impairment was as follows:
Consolidated
To mature
2012
2011
1,057,837
1,419,459
Overdue from 1 to 30 days
21,811
16,517
Overdue from 31 to 90 days
20,231
3,211
Overdue from 91 to 120 days
13,212
4,137
Overdue from 121 to 180 days
15,457
5,551
Overdue from 181 to 360 days
15,229
1,071
7,602
8,061
1,151,379
1,458,007
Overdue for more than 360 days
The movement in the allowance for losses on impairment in relation to receivables and other receivables during the exercise was the following:
Consolidated
2012
2011
Balance at January 1
8,433
5,081
Provision for impairment recognized
8,178
4,472
Amounts written off
(823)
(1,120)
15,788
8,433
Balance at December 31
179
A provision for impairment is related to several clients of services for water and sewer. Due to their diversity, the subsidiaries use the default
history for global recording of this provision, which corresponds to receivables overdue for more than 180 days for the segment sanitation
and 360 days for construction that indicate that customers should not be unable to pay their outstanding balances.
The Company believes that no provision is required in relation to receivables not overdue.
Cash and cash equivalents
The Company and its subsidiaries held cash and cash equivalents of BRL 627 and BRL 463,703 in 2012 (BRL 2,119 and BRL 245,151 in
2011), respectively, which represents its maximum credit exposure on those assets. Cash and cash equivalents are held with banks and
financial institutions evaluated as low risk by rating agencies..
Other investments
The assessment of credit risk is carried by the related party Galvão Administração de Recursos Ltda. (fund manager) together with BNY
Mellon Serviços Financeiros Distribuidora de Títulos e Valores Mobiliários S.A (fund manager). It made monitoring the events of interest
payments, amortization and maturity of operations, when applicable. In the event of any default in the payment of these events, the
financial capacity of the issuer or counterparty is assessed by the Credit Committee of Administrator, where decisions are made for the
constitution or not the provision for losses.
Warranties
The Company’s policy is to provide financial guarantees only to the Group as described in note 17.
Liquidity risk
Liquidity risk is the risk that the Company and its subsidiaries will encounter difficulty in meeting obligations associated with its financial
liabilities that are settled with cash payments or other financial assets. The Company’s approach and its subsidiaries to managing liquidity is
to ensure, as much as possible, we always have sufficient liquidity to meet its obligations as they fall due under normal and stress conditions,
without causing unacceptable losses or risk damaging the reputation the Company and its subsidiaries.
The following is the carrying amount and the contractual maturities of financial liabilities, including estimated interest payments:
Consolidated
December 31, 2012
Book
value
Contractual
cash flow
0-12
months
13-24
months
25-36
months
37-48
months
49- 60
months
61-120
months
Non-derivative financial liabilities
Suppliers and other payables
Loans and financing
Debentures
581,440
581,440
559,616
21,824
-
-
-
-
1,098,625
1,421,015
599,919
98,512
94,552
92,598
84,072
451,362
732,338
146,361
162,728
151,274
134,429
71,697
65,849
2,734,793 1,305,896
283,064
245,826
227,027
155,769
517,211
37-48
months
49-60
months
61- 120
months
569,667
2,249,732
Parent Company
December 31, 2012
Book
value
Contractual
cash flow
0-12
months
13-24
months
25-36
months
176,372
176,372
175,189
1,183
-
-
-
-
3,145
3,362
1,824
1,538
-
-
-
-
Non-derivative financial liabilities
Suppliers and other payables
Loans and financing
Debentures
534,923
694,903
108,926
162,728
151,274
134,429
71,697
65,849
714,440
874,637
285,939
165,449
151,274
134,429
71,697
65,849
It is not expected that cash flows included in the maturity analysis of the Company and its subsidiaries, may occur significantly sooner or
at significantly different amounts.
180 galvão participações
Financial statements on
December 31, 2012 and 2011
Market risk
Market risk is the risk that changes in market prices, such as exchange rates and interest rates have on the results of the Company and
its subsidiaries or the value of its holdings of financial instruments. The goal of the management of the Market risk is to manage and
control market risk exposures within acceptable parameters, while optimize return.
Interest rate risk:
The operations of the Company and its subsidiaries are exposed to interest rate indexed to the Interbank Deposit Certificate - CDI,
TJLP and TR. Due to the prime rate does not fluctuate materially adopted, the risk of market fluctuations is not significant.
Profile
On the date of the financial statements, the profile of interest-bearing financial instruments of the Company and its subsidiaries was:
Consolidated
Company
2012
2011
2012
2011
Cash and cash equivalents
463,703
245,151
627
2,119
Other investments
173,062
-
-
-
Financial assets
Liabilities
Borrowings
Debentures
1,098,625
796,683
29,950
263,697
569,667
300,298
534,923
300,298
Sensitivity analysis of cash flows for variable rate instruments
Based on the balance of the debt, the payment schedule and interest rates on loans and financing, the debentures and assets, we perform
a sensitivity analysis of how much would have increased (decreased) equity and net income the year by the amounts shown below. Scenario
1 corresponds to the scenario considered most likely in exchange interest at the date of the financial statements. Scenario 2 corresponds
to a change of 25% in rates and scenario 3 corresponds to a change of 50% in rates. Separate the effects on appraisal and depreciation
rates according to the following tables.
Interest rate risk on financial assets and liabilities - assessment of fees:
Consolidated Scenarios
Elevation of the
index by 25%
Likely
Instruments
Elevation of the
index by 50%
Exposure 2012
Risk
%
Value
%
Value
%
Value
390,011
CDI
7.06%
(1,293)
8.83%
6,884
10.59%
13,767
(12,418)
Financial assets
Financial investments
Liabilities
BNDES
(451,577)
TJLP
5.50%
(7,603)
6.88%
(6,209)
8.25%
Finame
(105,184)
TJLP
5.50%
(2,255)
6.88%
(1,446)
8.25%
(2,893)
Promissory note
(182,250)
CDI
7.06%
(3,017)
8.83%
(3,217)
10.59%
(6,433)
Bank credit
(224,191)
CDI
7.06%
(5,480)
8.83%
(3,957)
10.59%
(7,914)
(10,760)
CDI
7.06%
(138)
8.83%
(190)
10.59%
(380)
(7,627)
CDI
7.06%
(262)
8.83%
(135)
10.59%
(269)
(569,667)
CDI
7.06%
(15,666)
8.83%
(10,055)
10.59%
(20,109)
Consumer credit
Leasing
Debentures
(35,714)
(18,325)
(36,649)
181
Interest rate risk on financial assets and liabilities - depreciation of rates
Consolidated Scenarios
Elevation of the
index by 25%
Likely
Instruments
Elevation of the
index by 50%
Exposure 2012
Risk
%
Value
%
Value
%
Value
390,011
CDI
7.06%
(1,293)
5.30%
(6,884)
3.53%
(13,767)
(451,577)
TJLP
5.50%
(7,603)
4.13%
6,209
2.75%
12,418
Financial assets
Financial investments
Liabilities
BNDES
Finame
(105,184)
TJLP
5.50%
(2,255)
4.13%
1,446
2.75%
2,893
Promissory note
(182,250)
CDI
7.06%
(3,017)
5.30%
3,217
3.53%
6,433
Bank credit
(224,191)
CDI
7.06%
(5,480)
5.30%
3,957
3.53%
7,914
(10,760)
CDI
7.06%
(138)
5.30%
190
3.53%
380
Consumer credit
Leasing
Debentures
(7,627)
CDI
7.06%
(262)
5.30%
135
3.53%
269
(569,667)
CDI
7.06%
(15,666)
5.30%
10,055
3.53%
20,109
(35,714)
18,325
36,649
Sources: CDI curves and TR were constructed with reference rates of the BMF&BOVESPA with the base date of the last day of 2012, and TJLP was based on
information from BNDES.
Capital management
The capital management of the Company and its subsidiaries is to balance the sources of own resources and third, balancing the
shareholder return and the risk to shareholders and creditors.
The net debt of the Company and its subsidiaries to adjusted capital ratio at year-end is as follows:
Consolidated
Parent Company
2012
2011
2012
2011
Total liabilities
2,919,135
1,958,802
802,709
623,456
(-) Cash and cash equivalents
(463,703)
(245,151)
(627)
(2,119)
(=) Net liabilities (a)
2,455,432
1,713,651
802,082
621,337
403,832
410,065
403,832
410,065
0.16
0.24
0.50
0.66
Total equity attributable to controlling (b)
Relationship net liability on adjusted capital (a / b)
Fair value versus book value
Several policies and disclosures of the Company and its subsidiaries require the determination of fair value, for both active and financial
liabilities and for nonfinancial. Fair values have been determined for measurement and/or disclosure.
182 galvão participações
Financial statements on
December 31, 2012 and 2011
Consolidated
Book value
Fair value
2012
2011
2012
2011
Cash and cash equivalents
463,703
245,151
463,703
245,151
Other investments
173,062
-
173,062
-
1,178,951
1,471,127
1,178,951
1,471,127
1,815,716
1,716,278
1,815,716
1,716,278
Financial assets
Accounts receivable and other receivables
Total
Liabilities
Suppliers and other payables
Loans and Financing
Debentures
581,440
272,004
581,440
272,004
1,098,625
796,683
1,098,625
796,683
569,667
300,298
569,667
300,298
2,249,732
1,368,985
2,249,732
1,368,985
Book values relating to financial instruments in the balance sheet, when compared with values that could be obtained in their trading in
an active market or, in their absence, with the net present value adjusted based on the prevailing interest rate in the market, approaching
substantially from their corresponding market values. Consolidated
2012
2011
Fair value by
means of result
Loans and
receivables
Amortized cost
Loans and
receivables
Amortized cost
Financial assets
Cash and cash equivalents
Other investments
Accounts receivable and other
receivables
Total
-
463,703
-
245,151
-
173,062
-
-
-
-
-
1,178,951
-
1,471,127
-
173,062
1,642,654
-
1,716,278
-
Financial Liabilities
Suppliers and other payables
-
-
581,440
-
272,004
Loans and Financing
-
-
1,098,625
-
796,683
Debentures
-
-
569,667
-
300,298
-
-
2,249,732
-
1,368,985
Fair value hierarchy
The following table presents the financial instruments recorded at fair value using a valuation method, in accordance with CPC 40 (R1) Financial Instruments - Disclosures.
The different levels are defined as follows:
Level 1: quoted prices (unadjusted) in active markets for identical assets and liabilities;
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (prices) or
indirectly (Derived from prices), and
Level 3: assumptions for the asset or liability that are not based on observable market data (unobservable inputs).
December 31, 2012
Consolidated
Level 1
Level 2
Level 3
-
173,062
-
Current Assets
Other investments
183
23Related Parties
Parent and ultimate controlling party
The ultimate controlling party of Galvão Participações S.A. is the Empresa Nacional de Participações S.A.
Transactions with key management personnel
Remuneration of key management personnel
In 2012 the remuneration of key management personnel, which includes the Director and the Board of Directors of the Company, totaled
BRL 1,423 (BRL 1,361 in 2011), and the Consolidated totaled BRL 16,856 (BRL 11,165 in 2011) recorded in group and administrative
expenses include salaries, fees, remuneration variables and direct and indirect benefits.
The Company and its subsidiaries have no other source of income, such as post-employment benefits, other benefits long-term benefits
or termination of employment contract.
Employee Benefits:
The Company and its subsidiaries provide its employees with benefits comprising basically pension plan with a defined contribution
managed by Bradesco Private Pension, life insurance, medical, dental, and the provision of transportation and meal voucher.
The Company and its subsidiaries include in their human resources policies, the Profit Sharing Plan (PPR), and all eligible employees with
formal employment relationship. The goals and criteria for defining and distributing the bonuses are agreed between the parties, including
unions representing employees, with goals of productivity gains from competitiveness, motivation and engagement of the participants.
The Profit Sharing Plan for the year ended December 31, 2012, was not accrued due to lack of premises practical and safe.
The amounts related to employee benefits are presented below:
Consolidated
Parent Company
2012
2011
2012
2011
Meal vouchers
44,067
24,401
125
136
Profit sharing
16,671
15,390
161
40
Health insurance
25,945
20,931
265
173
Private pensions
6,325
5,537
75
197
Mobility aid
Other
952
575
-
-
9,944
13,038
18
29
103,904
79,872
644
575
Other transactions with related parties
The principal balances of assets and liabilities at December 31, 2012 and 2011, as well as the transactions that affected the outcome of
the year, related to transactions with related parties arise mainly from transactions with shareholders and related companies of same
economic group.
184 galvão participações
Financial statements on
December 31, 2012 and 2011
CONSOLIDATED
Current
In accounts receivable and other receivables
Other
Assets
Results
2012
2011
(note 8)
(note 8)
2012
2011
506
82
581
-
916
1,546
2,462
1,088
1,088
468
468
-
2,968
1,170
1,049
-
2012
2011
2012
2011
(nota 16)
1,440
1,238
7,686
4,013
(nota 16)
217
-
(36)
-
-
568
31
(622)
26
(628)
16
14,945
248
(632)
(612)
2012
2011
2012
2011
(note 8)
(note 8)
36,322
27,382
353
64,057
24,188
20,545
1,196
45,929
6,837
6,837
20,545
20,545
2012
2011
2012
2011
(note 16)
(note 16)
1,183
1,183
962
962
(622)
(16,117)
(16,739)
(393)
(21,379)
(21,772)
(note 17)
2,000
24,805
26,805
(note 17)
2,000
1,746
3,746
-
-
Noncurrent
In accounts receivable and other receivables
GSMP (a)
Other
Passivo
In suppliers and other payables
ENOPS Engenharia Ltda. – payables (b)
SABESP S.A. (c)
Companhia Elétrica Paranaense – COPEL (d)
Maestro Holding de Energia Ltda. (e)
Galvão S.A. - property rental (f)
Other
Resultado
PARENT COMPANY
Noncurrent
In accounts receivable and other receivables
Galvão Energia Participações S.A. - intercompany loan (g)
Galvão Óleo & Gás Participações S.A. – recovery of expenses (h)
Other
Noncurrent
In suppliers and other payables
Galvão S.A. - locação de imóvel (f)
Galvão Engenharia S.A. - custos com serviços compartilhados (i)
Loans and financing
CAB Projetos Investimentos em Saneamento Básico Ltda. - loan (j)
Galvão Engenharia S.A. – intercompany loan (k)
Galvão Finanças Ltda. - loan (l)
Assets
Results
Passivo
Resultado
185
On December 21st, 2012, Galvão Engenharia S.A. gave their titles suppliers based on a “private instrument assignment of debt transfer
“, transferring the amount of BRL 175,115 to the Company. On December 28th, 2012, occurred an advance for future capital increase of
BRL 175,115, which will be converted into 175,115,000 new common shares to be subscribed, paid by the Company until December 30th,
2013.
During the year of 2012 the direct subsidiary Galvão Engenharia S.A. assigned receivables accounts receivable with his related party, the
Fund Arcturus FDIC Multisegmentos, having incurred expenses of BRL 7,226.
(a) Refers to the amount to be paid by the GSMP SA as dividends for the year of 2012 to 5-Vias Participações Ltda. that participates in
company to the proportion of 34.44%.
(b) Balance payable due to the increase in the shareholding in Shark Sanitation SA, in which the Company acquired 352,500 shares (25%
of the shareholding of ENOPS Engenharia S.A.).
(c) The granting of loans by agreement entered into on January 19th, 2012 with Águas de Andradina S.A. and Aguas de Castilho S.A.
bearing interest of CDI + 1.16% pa.
(d) Amount related to contractual obligation to remit funds by Companhia Elétrica Paranaense - Copel, signed with Galvão Participações
S.A., to the subsidiary São Bento Energia Investimentos e Participações S.A. in the proportion of 49.9%, of remittances of resources
sent by the Company to its subsidiary.
(e) Transfer of funds received to enable capital increase of its subsidiary São Bento Energia, Investimentos e Participações S.A..
(f) The Company has a commercial property located at Rua Gomes de Carvalho, 1510 - conjunto 192-19 º andar - Vila Olimpia, Edifício
Atrium VI, rented from Galvão S.A. (Group Company). The lease term is 5 years, beginning on September 10th, 2010 and ending on
September 10th, 2015. The monthly rent is BRL 53 annually adjusted by variation of the value of the IGP-M.
(g) Advance to Galvão Energia Participações S.A. for the purchase of the participation of São Bento Energia S.A. because it is waiting the
consent of BNDES for completion of the transaction.
(h) Amount related to business expenses Galvão Óleo & Gás Participações S.A. supported by the Company that are being charged to this
subsidiary.
(i) Rendering of operational services - provided by CSC Galvão Engenharia SA.
(j) Refers to the particular instrument of assumption of debt on the intercompany loan agreement signed between the parties on
December 6th, 2010 for the Company.
(k) Intercompany loan from Galvão Engenharia for the Company for the payment of financial expenses, without incurring interest.
(l) Balance of concession of lending made by the Company bearing interest at a remuneration corresponding to the variation accumulated
average daily rates for interbank deposits - DI of one day, “extra group”, expressed as a percentage per year of 252 days, capitalized by
a spread or surcharge, equivalent to 2.5% per year.
24 NETWORTH (Parent Company)
a.Capital
The Company’s registered paid-in capital is BRL 312,146 (BRL 327,000 subscribed and BRL 312,093 paid-in, in 2011). It is represented by
327,000,000 (327,000,000 in 2011) registered common shares without par value, belonging to the following shareholders:
2012
2011
235,439,996
235,439,996
Moval Participações Ltda.
58,859,999
58,859,999
Freccia Engenharia Ltda.
32,699,999
32,699,999
Empresa Nacional de Participações S.A.
Private Individuals
6
6
327,000,000
327,000,000
186 galvão participações
Financial statements on
December 31, 2012 and 2011
b. Legal Reserve
It is recorded at the rate of 5% of net income for each fiscal year pursuant to art. 193 of Law No. 6.404/76, to the limit of 20% of the capital.
c. Reserve for unrealized profits
Was formed by management in accordance with art. 197 of Law No. 6.404/76, with the allocation of 50% of earnings after the legal
reserve, the establishment of the reserve for unrealized profits, related to a portion of the profit that exceeds the financial achievement
after the end of the fiscal year, which will be subject to approval at the next General Meeting. Reserves by 2011 were approved during the
year of 2012.
d. Special profit reserves
It was formed by management in accordance with art. 202 of Law No. 6.404/76, with the retention of accumulated earnings, after the legal
reserve and after booking unrealized profits, the establishment of the special profit reserve, which will be subject to approval at the next
General Meeting. The reserves of December 31st, 2011 were approved during the year of 2012.
e.Dividends
The Company’s Bylaws not determine the minimum mandatory dividend, consequently, the Law 6.404/76 determines that it must be 50%
of net income, after reserves provision. It was distributed during the year 2012, dividends totaling BRL 79,038, from reserve account of
unrealized profits, relative to previous results.
f. Put option
The Company has a shareholder agreement signed on February 28th, 2012 with the noncontrolling shareholder BNDES Participações
S.A. - BNDESPAR on the investment held in the Companhia de Águas do Brasil – CAB Ambiental, of which was granted the option of sale to
this noncontrolling shareholder in the case if not conducting a public offering of shares of the Company until 2019. Thus, the consolidated
financial statements the participation as non-controlling on the investment in the Companhia de Águas do Brasil – CAB Ambiental was
presented on financial liabilities.
25 Net Operating Revenue
Consolidated
2012
2011
3,274,575
2,417,928
278,409
142,208
Consulting and management
15,107
12,368
Other income
25,677
-
(316,182)
(199,657)
3,277,586
2,372,847
Construction
Sanitation
Taxes on sales and services
Revenue from construction contracts was mostly determined with basis on the method of CPM (completed percentage method), ie, the
specialized engineers check the stage of completion of the work by a survey of the work carried out (See Note 4 i).
The subsidiaries recognize their sanitation revenue by the regime of an accrual basis as it provides operational services and for building
works in accordance with the proportion of the stage of completion of the contract. Both linked to the concession agreement services
under IFRIC 12 (ICPC 01 R1).
187
26 Expenditures by nature
Cost of sales and services
Consolidated
Personnel costs
Contracted services
Materials
Depreciation and amortization
Other Costs
2012
2011
(921,054)
(1,021,164)
(641,079)
(39,620)
(216,981)
(2,839,898)
(571,912)
(566,916)
(650,669)
(20,313)
(211,585)
(2,021,395)
Commercial expenses
Consolidated
Personnel expenses
Commission with collecting agents
Other income (expense)
2012
2011
(4,961)
(1,688)
(2,221)
(696)
(7,304)
(13,953)
(2,645)
(5,562)
Administrative expenses
Consolidated
Personnel expenses
Contracted services
Depreciation and amortization
Other income (expense)
Parent Company
2012
2011
2012
2011
(105,526)
(113,354)
(9,408)
(56,215)
(284,503)
(157,021)
(84,308)
(8,625)
(70,398)
(320,352)
(3,056)
(1,951)
(21)
2,027
(3,001)
(6,766)
(2,456)
(22)
(4,566)
(13,810)
27 Financial Revenue and Financial Expenses recognized in the PROFIT AND LOSS ACCOUNT
Consolidated
Financial Revenue
Interest received
Obtained Discounts
Income from Intercompany loans
Foreign Exchange variation
Other
Parent Company
2012
2011
2012
2011
48,138
3,410
59
1,873
9,430
62,910
57,285
2,832
4,768
10,051
2,842
77,778
461
1,377
1,838
998
998
(177,889)
(3,710)
(2,239)
(8,260)
(192,098)
(143,085)
(14,643)
(1,173)
(10)
(6,720)
(165,631)
(59,928)
(1,348)
(4,369)
(65,645)
(43,891)
(1,704)
(45,595)
(129,188)
(87,853)
(63,807)
(44,597)
Financial Expenses
Interest paid and incurred
Expenses with Derivative
Offered discounts
Foreign Exchange Variation
Other
188 galvão participações
Financial statements on
December 31, 2012 and 2011
28 INSURANCE COVERAGE (not audited)
The Company and its subsidiaries adopt the policy of contracting of insurance coverage for assets subject to risks at amounts considered
sufficient to cover any losses, considering the nature of its activity. The risk assumptions adopted, given their nature, are not part of the
scope of an audit of financial statements, and therefore were not analyzed by our independent auditors.
The Company and its subsidiaries adopt as practice to make individual risk analysis for each work. To fully meet these objectives, the
Company has in its organizational structure a specific department of risk analysis.
Insurance coverages are composed of:
Consolidated
Insurance coverage
Engineering Risk
Corporate Risk
2012
2011
809,401
221,012
22,769
817
Guarantee Insurance
625,741
1,118,020
Civil Liability
116,350
31,600
Equity (several risks - Equipment)
190,714
75,912
1,764,975
1,447,361
29 Commitments linked to Concession Contracts
a. Commitment to the Grantor
Indirectly controlled CAB Águas de Paranaguá S.A.
There is a fixed installment in CAB Águas de Paranaguá S.A. corresponding to 15,000 TRA (reference rate of water) and 9,000 TRE
(reference rate sewage), monthly until the end of the concession. The reference rate of water is calculated by considering the revenues
table (variation in rate) and expenses (variation in operating costs: collection, treatment and distribution) to be submitted by the bidder, and
its value limited to BRL 0.35/m³. The reference rate for sewage is equal to 60% of the TRA.
In 2012, the amount paid to the Grantor, corresponding to the fixed portion was BRL 604 (BRL 573 in 2011 and BRL 541 in 2010).
The reference rates for water and sewer shall be calculated considering the sublease period until 2045.
The minimum mandatory payments, calculated based on the TRA December 31st , 2012, will be paid as follows:
Fixed portion 2013
2014
2015
2016
Após 2016
708
708
708
708
20,532
Indirectly controlled Águas de Andradina S.A.
There are commitments of fixed concession in Águas de Andradina S.A. corresponding to a total of BRL 3,000 to be paid monthly in fixed
installments, non-adjustable and in a successive manner in the amount of BRL 125 started from May 2011.
In the year ended on December 31st, 2012, the amount paid to the Grantor, corresponding to the fixed portion was of BRL 1,750
(BRL 1,000 in 2011).
The remaining required minimum payments will be settled in 2013 for BRL 250.
Indirect subsidiary Aguas de Castilho S.A.
There is a fixed installment at Águas de Castilho S.A. corresponding to BRL 900, to be paid monthly until the end of the concession in fixed
installments, non-adjustable and in a successive manner in the amount of BRL 75 started from the month of March 2011.
In the year ended on December 31st, 2012, the amount paid to the Grantor, corresponding to the fixed portion was BRL 150 (BRL 750 in
2011), recorded in intangible assets (right grant award).
189
CAB indireta Cuiabá S.A.
There is a fixed installment at CAB in Cuiabá SA, amounting to BRL 140,000, while in 2012 the amount paid to the Grantor corresponding
to the fixed amount was of BRL 115,000; from April 2013. It will be paid the amount of BRL 25,000, divided into 24 consecutive installments
of BRL 1,042.
Indirectly controlled CAB – Sistema Produtor Alto Tietê S.A.
The Company has various commitments to services contracts with third parties to ensure operations concession agreement with the
Basic Sanitation Company of the State of São Paulo - SABESP. Commitments at December 3st 2012 and 2011 can be well estimated by
their nominal values:
December 31 , 2012
Service providers (suppliers)
Commitments to contracts
December 31 , 2011
Service providers (suppliers)
Commitments to contracts
Future
Commitments
12
months
1-2
years
2-5
years
Over
5 years
32,930
7,843
9,492
5,803
9,792
Future
Commitments
12
months
1-2
years
2-5
years
Over
5 years
44,581
14,953
12,246
8,183
9,199
The commitments will be recorded according to accounting regime of competence, when the services are rendered, and shall be paid
accordingly to their contractual maturities.
b. Arising from variable concession rights
Refers to the price of the public service delegation, represented by a variable amount corresponding to a percentage of revenues
effectively obtained monthly. In the indirectly controlled company CAB Águas de Paranaguá S.A., this percentage corresponds to 7%, in
indirectly controlled Empresa de Saneamento de Palestina - ESAP S.A. it corresponds to 5%, the indirectly controlled subsidiary
Saneamento de Mirassol - SANESSOL S.A. it corresponds to 3%, the indirectly controlled subsidiary Águas de Andradina S.A. this
percentage corresponds to 3% and in indirectly controlled subsidiary Águas de Castilho S.A this percentage corresponds to 2%.
In the indirectly controlled CAB Piquete S.A. is paid to the grantors Power 1.3% of gross sales plus 3.2% to SAAEP (Serviços Autônomos de
Água e Esgoto de Piquete) for its activities of regulating and supervising of the public water and sewer services.
In 2012, it was paid to the corresponding Grantors of the municipalities, the amount of BRL 2,417 (BRL 2,858 in 2011 and 2,362 in 2010)
for the variable concession rights.
In the indirect subsidiaries, CAB Alta Floresta Ltda., CAB Pontes e Lacerda Ltda. and CAB Colider Ltda. the amount paid to the grantor
corresponds to the monthly water consumption and the corresponding sewage of institutions indicated by the grantor in the concession
contract and in the indirectly controlled subsidiary CAB Cuiabá S.A. this amount corresponds to 5%, being that these consumptions
accounted for in 2012 the amount of BRL 1,631 (BRL 222 in 2011 and BRL 381 in 2010).
c. Commitments relating to concessions
In addition to payments to the Grantor, the subsidiaries in 2012 were fulfilling all contractual commitments, including goals to make the
investments foreseen in the concession contracts. Such contractual commitments and investments were not subjected to analysis of
auditors because it refers to non-financial items calculated by physical targets stated in the contract.
d. Fixed assets transferred by the grantor to the grant
The accounting practice adopted by the subsidiaries is to not register the assets transferred by the grantor to the grant, however, auxiliary
control is maintained with the segregation of the values of assets transferred and the amount related to the delegation of public services
(cost, accumulated depreciation and amortization).
190 galvão participações
Financial statements on
December 31, 2012 and 2011
30 Commitments to the Energy Contracts
The subsidiaries of Galvão Energia Participações S.A. have commitments to contracts to purchase wind turbines with third parties to
ensure the development and implementation of their projects. The commitments on December 31, 2012 and 2011 may therefore be
estimated by their nominal values:
December 31, 2012
Service providers (suppliers)
Commitments to contracts
Upcoming commitments
06-12 months
01-02 years
332,375
332,375
-
December 31, 2011
Service providers (suppliers)
Commitments to contracts
Upcoming commitments
06-12 months
01-02 years
352,747
242,964
109,783
31 Commitments to the oil and gas contracts
The subsidiaries of Galvão Óleo & Gás Participações S.A. have a contract whose object is the ship chartering probe to be used in the drilling
and/or evaluation and/or completeness and/or maintenance of oil wells and/or gas in Brazilian waters bounded by geographic coordinates
according to concession contracts, being the contracts signed with Petrobras S.A. on the 3rd of August 2012. The contract value of the
associate Guarapari Drilling BV is BRL 4,964,366, of Itaoca Drilling BV is BRL 5,023,896 and that of Siri Drilling BV is BRL 5,064,191, whose
final participation mounts to 10%.
The beginning of the contract period will occur when the unit is released by Petrobras S.A., on written notice to the contractor
for the beginning of the charter, to be held after the general test of equipment. The start date of the contract must occur before
20/01/2020 (90 months after notification from Petrobras) for the unit of Siri Drilling BV, 01/20/2018 (66 months after notification
from Petrobras) for the unit of Itaoca Drilling BV, and 20/07/2016 (48 months after notification from Petrobras SA), for the unit of
Guarapari Drilling BV.
The resources used to carry out the project are mostly pleaded with the bank BNDES, Brazil, Eksport Finans, Norway, and UKEF, England.
32 Cash Flow Statements – Consolidated
The statements of cash flows have been prepared in accordance with CPC 03 R2.
a. Cash and cash equivalents
Cash and cash equivalents comprise cash available in the Company and balances held by banks
b. Fixed assets – consolidated
During 2012, the Company and its subsidiaries acquired fixed assets to the total cost of BRL 249,003 (BRL 144,154 in 2011) of which
BRL 44,809 (BRL 39,753 in 2011) through financing and leasing. Payments in box BRL 204,194 (BRL 57,274 in 2011) were made for the
acquisition of fixed assets.
c. Outros investimentos - consolidado
The total investments of BRL 173,062, the amount in cash used was BRL 168,716, BRL 4,346 are non-cash items and refer financial
income funds temporarily invested will be used to purchase fixed assets. This interest income BRL 4,346 was recorded in the fixed assets
is deducted from the borrowing costs eligible for capitalization.
d. Investimentos – controladora
On February 28th, 2012 the BNDES Participações SA - BNDESPAR acquired interest in the subsidiary company Águas do Brasil - CAB
Ambiental in the amount of BRL 120,000, which diluted the Company’s interest and generated a non-cash effect of variation of BRL
37,753 of shareholding composition changes.
On December 28, 2012 the Company made an advance for future capital increase of BRL 75,115 for its controlled company Galvão
Engenharia SA by assignment of the securities of suppliers based on a “private instrument of assignment debt transfer “, transferring BRL
175,115, non-cash. Other non-cash items totaling BRL 114.
191
During the year of 2012, the indirect subsidiary Galvão Logística, Exportação e Importação Ltda. Distributed as dividends the amount of
(BRL 5,499) in a disproportional manner in a non-cash effect to the Company.
e. Dividends paid - and consolidated:
During the fiscal year of 2012, the Company paid to its shareholders as dividends BRL 79,038, being the amount of BRL 8,038 paid in cash
and the remaining BRL 71,000 upon receipt of assignment of rights.
33 Environmental Aspects
The facilities of the Company and its subsidiaries consider that their activities are subject to environmental regulations.
The Company and its subsidiaries reduce the risks associated with environmental issues, by applying operational procedures and
controls with investments in pollution control equipment and systems, as well as believing that no provision for losses related to
environmental matters is currently required, based on current laws and regulations.
*
*
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Composition of the Board
President
Dario de Queiroz Galvão Filho
Members
Eduardo de Queiroz Galvão
José Gilberto de A. Branco Valentim
José Rubens Goulart Pereira
Luciana Galvão de Andrade
Mário de Queiroz Galvão
Composition of the Board
Chief Executive Officer
Dario de Queiroz Galvão Filho
Executive Vice President of Corporate Management
Eduardo de Queiroz Galvão
Director of Planning and Management
Edison Martins
Director Shared Service Center
Frank Adriano Balarotti de Araújo
Accountant
Emídio Márcio Macedo da Rocha
CRC/SP nº 1 SP157889
192
2012 annual report
Grupo Galvão
Corporate information
Grupo Galvão
Galvão Participações S.A.
GRI
2.1
Board of Directors
Dario Galvão Filho
Eduardo Galvão
José Gilberto Valentim
José Rubens Goulart Pereira
Luciana Galvão
Mário Galvão
Planning Board and Management
Edison Martins
Institutional Relations
Guilherme Cunha
Vice President of Corporate Management
Eduardo Galvão
Shared Services Center
Frank Araújo
Galvão Engenharia
Infrastructure Division
José Gilberto Valentim
Industrial Engineering Division
Erton Medeiros
CAB ambiental
Mário Galvão
GRI
Galvão Energia
Otávio Silveira
Galvão Óleo e Gás Participações
Leonel Vianna
2.4
Galvão Participações S.A.
Rua Gomes de Carvalho, 1.510 - 19º andar
Vila Olímpia - CEP 04547-005
São Paulo - SP
Tel.: + 55 11 2199 0425
galvao@galvao.com
193
Overall Coordination
Corporate Communications Team
Support
QHSE Team
Text production
Buscato Corporate Information
Graphic Design and Layout
Adesign
Photography
Stock photos Galvão
Fotocontexto - Eduardo Barcellos,
Marcos Peron, Vagner Medeiros
Translation
CLL Traduções
Print
Stilgraf
We thank all the employees
who helped produce this report.
FSC
The paper used in this material comes from
planted forests, renewable sources and
follows those standards and norms.
GRUPO
galvao@galvao.com