Integrated Report 2014 2 VOTORANTIM CIMENTOS List of Contents

How to read this report 4 Business Model 5 Management Letter 8 Performance Highlights for 2014 11

Who we are 12 Market Context 25 Corporate Identity 28 Material Issues 30 Business Overview 35 Economic and Financial Performance 93 Future Trends and Prospects 100

Economic, Environmental and Social Performance 102 GRI Content Index for ‘In accordance’ – Core 116 Material Issues and GRI Aspects 144 UN GLOBAL COMPACT PRINCIPLES 148 CORRELATIONS – IIRC CAPITALS 149 About the report 150 Letter of Assurance 151 financial statements 153 report production 166 CrEdits 167 Integrated report 2014

How to read this report [G4-17 and G4-31]

This report focuses on the strate- The full version of the report gic aspects of our operations, both is available on the Votoran- financial and non-financial. tim Cimentos web site at: www.votorantimcimentos.com. The preparation of the report followed the rules established by the The report contains information on International Financial Reporting the company regarding: business Standards (IFRS) for the consolida- strategy; products and services; tion of the financial and non-finan- performance; governance; market cial information and indicators. The context; risk management; environ- report does not include information mental practices and initiatives; and on the company’s minority interests relations with the community and in Argentina, Chile and Peru, its SAC key stakeholder groups. joint-venture in the United States or the assets put on sale in China. We would be pleased to have your The scope of the consolidation has feedback to assist us in improving changed compared to the 2013 report our reporting, and will respond to due to the inclusion of the company’s questions, comments or suggestions shareholding in Artigas, Uruguay and and provide further information on the exclusion of its shareholding in request. Suwannee, United States. [G4-23] Please contact us by e-mail at: The electronic version of this report [email protected]. will be distributed to the company’s employees and representatives of We hope you find the report a good other stakeholder groups with which read! the company maintains relations, such as, investors, government, economic and market analysts, community leaders, civil society and trade organizations, regulators, the media, among other groups.

4 VOTORANTIM CIMENTOS Financial capital Intellectual and manufactured capital OUR VISION MATERIALITY Human capital Social and relationship capital Natural capital Our head-office is in Brazil and we have operations in 13 countries in the Americas, Europe, Asia and Africa. We speak many languages, Alternative sources of electrical Occupational health energy and fuel oils and safety with many accents but we are united in a single voice, a single team, with a common objective: to be a construction materials company 1 Ethics, transparency and integrity that is committed to customer success through excellence. 2 3 CO2 emissions

13 Air emissions (particulate OUR VISION Supply chain 12 Matter, NO , SO ) Extremely high Extremely management X X 4 Anti-corruption practices, Customer Empowered Best in Class Sustainable cartels and anti- competitive behavior Focus People Operations Practices Regulatory 5 6 7 Level of risks • We drive our decisions • We value and recognize • We constantly monitor • Safety first! importance 8 Economic performance: based on customer needs leaders who lead through our performance and of economic, economic value generated • We are trustworthy and distributed others – creating strong, are obsessed with environmental Community 9 • We develop innovative and ethical in our actions and social relations products & solutions diverse and engaged teams continuous improvement according to law and impacts Contribution to local development in partnership with our • We want people who have • We make decisions regulations 15 customers the autonomy to take action quickly and intelligently, • We promote eco- 10 Water consumption • We have all areas of and use the Integrated in a disciplined and efficiency through the use 14 Management System (IMS) to consistent manner Management and re-use the company focused on of innovative products, Customer 16 17 11 leverage performance of construction waste and improving customer service • We maximize practices and solutions satisfaction reverse logistics for used cement bags • We work together to productivity in all areas • We foster local dialogue Preservation of Government Energy develop creative solutions and relationships with biodiversity relations efficiency and make things happen communities to perpetuate High the Votorantim legacy High Level of importance for the decisions Extremely high and/or perceptions of stakeholders BUSINESS PILLARS RESEARCH MODEL AND PLANT INDUSTRIAL SALES AND CONSTRUCTION MINING INPUTS PROCESS LOGISTICS

RESOURCES Investment Equipment Investment Equipment, labor, mineral Investment Labor Labor deposits, water, electrical energy, Equipment Land industrial waste from other Fuel Fuel production processes, by-products Labor Electrical Energy such as ash, slag.

clay, ACTIVITIES GEOLOGICAL RESEARCH DIGGING GRINDING MILL cement STORAGE CUSTOMERS limestone PURCHASE OF concrete RESIDENTIAL RESEARCH AND DEVELOPMENT (R&D) DETONATING (calcite and materials for maintenance STORAGE SILOS MIXER aggregates TRANSPORT COMMERCIAL MARKET RESEARCH LOADING dolomite) and consumption, coal, other KILN COOLER complementary INDUSTRIAL PLANT CONSTRUCTION CRUSHING aggregates fossil fuels and chemical products (mortar, INFRASTRUCTURE lime, agricultural (sand and additives. PAVING STORING lime) gravel) AGRIBUSINESS

RESULTS

Removal of vegetation Impacts on the soil, Generation Use of waste and Noise and CO2 emissions biodiversity and communities of taxes from the industrial by-products as Noise acquisition of products alternative sources of Rehabilitation of degraded Truck traffic ENVIRONMENTAL Social and environmental education and services. energy and raw materials areas and biodiversity Archaeological and paleontological in the production process Generation of management preservation employment and incom SOCIAL Waste, CO2 emissions, Maintenance waste Rehabilitation of degraded areas other air emissions,effluents, impacts on the soil Generation of taxes from the ECONOMIC Financial compensation for sale of products and services Overloading of local infrastructure mineral exploration (CFEM) Positive impacts Generation of employment and i ncome Generation of employment and income Negative impacts Modernization of public administration

Generation of taxes related to contracting of services during construction RAW GRINDING MILL ZERO LOSS PRODUCTION AND APPLICATION PROGRAM ADDITIVES HARDENED CONCRETE

POSITIVE IMPACTS DELIVERY METHOD: BULK BAGS CONCRETING CONSTRUCTION SOFT CONCRETE CIVIL CRUSHING WASTE ALTERNATIVE ADDITIVES FUELS GRINDING ADDITIVES

FLOUR MILL AGGREGATES MINING  CLAY ROTATING KILN ELECTRICAL ENERGY Concrete floor VERTICAL SAND HOMOGENIZATION CONCRETE LIMESTONE CLAY AND CALCITIC LIMESTONE KILN Concrete and AGGREGATES TRADITIONAL CRUSHED IRON ORE FUELS concrete blocks used LIMESTONE LIMESTONE BAUXITE in paving outdoors. WATER CEMENT CRUSHING GRINDING

QUICKLIME WOOD MILL HYDRATION  Concrete blocks They are precast and

GRINDING MILL CLINKER CRUSHED used to build load- LIMESTONE MINERALS AGGREGATES bearing walls. WATER LIMESTONE FILLER LIMESTONE ADDITIVE Eucalyptus HYDRATED LIMESTONE FILLER CHEMICAL STORAGE ADDITIVES MIXER PLASTER POZZOLAN  Concrete

LIME LIME Composed of a SAND SLAG CEMENT CHEMICAL ADDITIVES mixture of cement, STORAGE ASH sand, aggregatesand MIXER water, it is the most AGGREGATES MIXER GRINDING MILL common construction DECORATTA FINISHING AGRICULTURAL LIMESTONE material. STANDARD MORTAR

CEMENT LIME PAINT HYDRATED LIME - CH III  White cement STORAGE It is a type of ADHESIVE MORTAR cement and is used in construction in general, for industrial, commercial and residential surfaces and floors.

 Aggregates  Agricultural lime  Mortar  Hydrated lime  Lime paint  Cement Materials used for making It corrects soil acidity, and It is used principally to Substance with More economically viable than It is the basic component concrete and mortar. They are is used in agriculture. lay blocks or bricks and binding power, used conventional paints, it allows of concrete and mortars. also used in the production of for surface finishing. in construction and large areas to be painted at a It is used in all types of asphalt and for street paving. production of mortars. lower cost. construction.

GLOBAL USA CANADA MOROCCO SPAIN TURKEY CHINA OUR SUSTAINABILITY COMMITMENTS FOR 2020 PRODUCT SAFETY ECO-EFFICIENCY AND INNOVATION compared to 1990 levels • To ensure the effective adoption of the • Environmental Policies: to ensure the • Air emissions: to reduce dust, NOx and Global Health and Safety Policy and the Life implementation of our Global Environmental RANGE SO2 emissions per ton of clinker to 65g, Saving Rules Policy and Green Rules 1950g and 750g / ton of clinker, respectively • To implement sustainable supply chain • Supply chain standards: to promote • Water and biodiversity: to prepare and PERU standards sustainable supply chain standards by way Cement implement water management plans for all In Peru we own a • To promote healthy working conditions of our business units units in water-stressed regions. To ensure that Concrete shareholding in a and zero harms environment for all our • Sustainable products and services: all mines have closure plans. To ensure that all limestone mine. Aggregates employees. To reach zero fatalities LTI* to promote the implementation of new units in areas of high biodiversity value prepare Rate for direct employees of less than 0.4 sustainable solutions, products, services and and implement biodiversity management plans Complementary BOLIVIA In Bolivia we own innovation – achieve a clinker/cement factor Products (mortar, of 72% lime) lime a grinding mill. ETHICS AND COMPLIANCE COMMUNITY ENGAGEMENT • Ethical Business Practices: to ensure • Non-fossil fuels: to use 30% non-fossil • To ensure the implementation of that all of our operations are carried out in fuels in our cement plants a community engagement plan in

an ethical manner and in conformity with • CO2 emissions: to reduce our CO2 communities where we operate that have a the Votorantim´s Code of Conduct emissions per ton of cement by 25% high degree of social vulnerability

CHILE ARGENTINA URUGUAY BRAZIL TUNISIA INDIA *Lost Time Injury **The clinker/cement factor, describes the ratio between total clinker consumption and total production of cement or cement products RELATÓRIO INTEGRADO 2014 7 Management Letter [G4-1, G4-2 and G4-13] The beginning of a new journey

In 2014 Votorantim went through We successfully implemented our company with an increasingly global a period of great change and made new governance structure, in line reach. With operations in North and considerable advances. In the mid- with that for Votorantim Indus- South America, Europe, Asia and Af- dle of the changes going on in our trial as a whole. Although the new rica, we can respond to the growth production processes and business structure is more decentralized, and in cement consumption, both in activities, our management teams appropriate to conducting business emerging markets with growth around the world paid special atten- in an increasingly complex and global potential, such as Turkey, Tunisia tion to the issues which are key to market, it ensures that Votorantim’s and Bolivia, and mature economies the company’s future. “Our Vision” values and corporate identity are that are recovering, such as the and strategic drivers were widely preserved. Florida and Great Lakes regions in communicated and discussed. the United States and Canada. As a result of the new structure, we established our own Board of Direc- We ended the year with net tors. The Board will be responsible revenues of R$ 12,884 million, an In 2014, we experienced for defining and monitoring the increase of 6.1% compared to the a year of substantial company’s mission and strategy and previous year, and a net profit of positive transformation monitoring its performance in order R$ 1,141 million. We sold 37.8 million and positioned ourselves to ensure its long-term business con- metric tons of cement, 11.2 million tinuity based on adequate financial cubic meters of concrete, 28.3 mil- effectively as a company returns and sustainable practices. lion metric tons of aggregates and with an increasingly 1.8 million metric tons of mortar. global reach. This is third report that Votorantim Cimentos has published and distrib- These results were achieved by hard uted to a wide range of stakeholders work, supported by our strategic in the market and society. It provides drivers of customer focus, empow- information on our vision and strate- ered employees operational excel- gies and our activities and results. lence and sustainable practices. We implemented a new sales approach, In 2014, we carried out a significant based on customer segmentation, process of internal engagement. and improved our cost controls. Our leadership teams, in the various countries where we operate, were We are able to leverage competitive mobilized to build, together, a com- advantages that have been con- pany that will be even better for our structed over a long period of time. employees, customers and society as One of those advantages is geo- a whole. We reviewed our processes, graphical diversification. We are pres- identifying the best practices in the ent in all the Brazilian regions and in regions where we operate and trans- some of the major global markets. forming them into global policies. This strategy allows us to maximize opportunities for some regions and This was the year in which we po- reduce the negative impact of mar- sitioned ourselves, effectively, as a kets with more moderate growth.

8 VOTORANTIM CIMENTOS Management letter

To make the most of these oppor- Since 2011, Votorantim Industrial has will increase and diversify our access to tunities, the Board held in-depth been a signatory of the United Na- local and international investors. strategy discussions and, with the tions Global Compact principles. Our support of its Advisory Commit- strategic plan encompasses other We have established our goals for tees, it was decided to prioritize, voluntary commitments, such as the 2015 and the years to come. We seek for example, investments in the Cement Sustainability Initiative. to continue to generate positive re- faster-growing markets such as the sults and grow in the regions where Northeast and Center-West Regions In addition to our internal efforts to we operate even in the challenging in Brazil, Bolivia and Turkey, and disseminate this culture, we have situation that lies ahead. We will markets that were recovering, such turned our gaze on the communities continue with our current invest- as the United States. where we are present. We have ad- ment plans, and will search for new opted measures to minimize the im- opportunities to expand our global We moved ahead with our investment pacts of our activities and maintain production capacity. We will also plan, which is focused on expanding genuine and transparent relations seek to introduce innovations in our production capacity, and ended 2014 with our neighboring communities. range of products and services and with a cement capacity of 54.5 million continuously improve our sales and metric tons/year, of which 59% is Safety is our highest priority. Despite marketing approaches. located in Brazil, our principal market. great advances, we deeply regret the We will continue to invest, preparing occurrence of three fatalities among The opening of the company’s capi- the company for new growth cycles our employees and one fatality tal is still on the agenda and we are in the various markets in which we involving contract staff.I n addition, prepared to make the move, waiting operate. We have entered into an there were seven fatalities of third- only for the right moment in the agreement to construct a new cement parties in our distribution chain. We capital markets. plant in Bolivia and have approved seek to ensure that our workforce an investment to expand our units in has a safe environment in which to We will continue working towards Brazil, Turkey and the United States. do their jobs. In order to disseminate realizing our vision, paying special our Global Health and Safety Policy attention to safety and employee In everything we do, we seek to and “Rules for Life” safety program, development, to ensure that our incorporate sustainability principles we mobilized our employees to par- people are always motivated, and add value to our business and ticipate in the event “Global Safety focused, and proud to work at Vo- customers. This positioning goes Day” which from now on will be a torantim Cimentos. far beyond simple compliance with permanent fixture in the company’s the legislation. We have developed annual calendar of events. We would like to thank all our busi- a number of initiatives, seeking, for ness partners who have contributed example, new energy sources and Even though there is still room for to getting us here and would also re- the rational use of inputs, in a pro- improvement in many areas, we also iterate our invitation to go forward cess of continuous improvement to have achievements to celebrate. One together, to create a solid founda- more work more efficiently.A nd we of our most important achievements tion for a future which is increas- want to do even more. We always during the year was obtaining invest- ingly promising for all of us. include sustainability considerations ment grade ratings from the three in our business decisions and day- major rating agencies, Standard & Walter Dissinger to-day activities. Poor’s, Fitch Ratings and Moody’s. This CEO of Votorantim Cimentos

2014 Integrated Report 9 10 VOTORANTIM CIMENTOS Performance Highlights for 2014

Annual cement production ca- million metric tons, as from 2017; (iii) Invested R$ 67.8 million in envi- pacity at year-end was 54.5 million a grinding mill in Pecém (CE) with an ronmental projects. metric tons, 0.6 million metric tons annual capacity of 0.5 million metric higher than 2013, due to the expan- tons, as from 2017; and (iv) expansion Invested R$ 16.38 million in long- sion of the Xambioá (TO) plant. of the annual capacity of the North term social projects and initiatives American operations by 0.6 million (almost 35% more than in 2013), Net revenues for the year totaled metric tons in Charlevoix, as from which generated economic and R$ 12,884 million, an increase of 6.1% 2017. In September 2014 we signed social value for the communities in compared to 2013. agreements with Cementos Molins which we operate. (Spain) and COCECA (Bolivia) and Adjusted EBITDA was R$ 3,493 initiated the construction of a new ce- million, practically unchanged ment factory in the region of Yacuces, (-0.6%) compared to 2013. Bolivia, with an additional annual production capacity of 0.9 million metric Net profit was R$ 1,141 million, a tons, and start-up planned for 2016. reduction of 17.9% compared to 2013, due to increased financial expenses Obtained investment grade rat- (premium paid for bond repurchase ings on a global scale, from the three and higher interest rates in Brazil main rating agencies: Standard & (CDI)) and a lower operational result. Poor’s (BBB, stable outlook), Moody’s (Baa3, stable outlook) and Fitch Rat- Quality Index of Products (IQP) ings (BBB, stable outlook). increased to 95%, an increase of 3% over the previous year. Implemented our global strategic plan and established an integrated Continued to invest in new ce- financial model that will strengthen ment plants, in Edealina (GO), the investments being made in the with an annual capacity of 2 million regions, as well as a new sales ap- metric tons, and in Primavera (PA), proach in Brazil where the previous with an annual capacity of 1.2 mil- product focus has been replaced by a lion metric tons. These plants are customer focus, enabling us to give scheduled to start up operations in our total attention to the needs of the second semester of 2015. each segment and each customer.

In 2014, the Board approved the Developed our Strategic Sustain- following investments: (i) a brown- ability Plan and approved a formal field project to expand the annual document containing Our Sustain- capacity of our plant in Turkey by 1.2 ability Commitments for 2020. million metric tons, as from 2017; (ii) an integrated plant in Sobral (CE) with Expanded our Global Health and an annual production capacity of 1 Safety Policy.

2014 Integrated Report 11 Who we are [G4-3, G4-4, G4-5, G4-6, G4-7, G4-8, G4-9, G4-16, G4-17 and G4-57]

W e are the market leader Company and Business in Spain, Turkey, Tunisia, Morocco, In- in cement in Brazil and Profile dia and China. In South America, we the eighth largest global operate through partnerships with producer in terms of Votorantim Cimentos (VC) is a com- local and/or international companies pany of the Votorantim Group, one in Bolivia, Uruguay, Argentina, Chile, installed capacity. of the largest and most traditional and Peru. Brazilian business organizations. We are an industrial company that pro- At year-end 2014 we had 15,779 duces cement, concrete, aggregates employees, including interns and and complementary products such apprentices. as mortar and lime. Our operations are vertically integrated and we have a diverse and wide range of products and services.

We are a 100% Brazilian-owned company. We started our business activities in 1933 in the city of Votorantim, in the interior of the State of São Paulo, with the initiation of the construction of the Santa Helena cement plant. We are the market leader in cement in Brazil and the eighth largest global producer in terms of installed capacity, according to data published in the Global Cement Report 2013, and excluding Chinese companies.

In addition to Brazil, we operate in South America, North America, Europe, Asia and Africa, through shareholdings and partnerships. Our head-office is inS ão Paulo (SP). Our international activities are carried out with the support of two holding companies: Votorantim Cimentos North America (VCNA), in the United States and Canada, and Votorantim Cimen- tos Europe, Asia and Africa (VCEAA),

12 VOTORANTIM CIMENTOS 2014 Integrated Report 13 Who we are

Our History

2013-2017 2012 Expansion plan currently underway in Brazil, Bolivia, Exchanged assets Turkey and the United States. with Cimpor, In Brazil, the goal is to add 5.3 expanding the 2007 2009 million metric tons to our annual company’s Expanded in South installed cement production operations to include America with the capacity by the end of 2017. Spain, Morocco, acquisition of Tunisia, Turkey, India shareholdings in cement and China. companies in Chile, Uruguay and Argentina. 2010-2011 Acquired a 21.21% shareholding in Cimpor (Cimentos de Portugal). 2001 2005 Installed cement production capacity Acquired the Charlevoix reached 22 million metric tons/year. and Dixon plants. Initiated international operations with the acquisition of St. Marys 2002-2005 Cement Inc. which has cement plants Expanded operations in Canada and the United States. in Brazil with the acquisition of minority shareholdings and the 1977 diversification of the Established a product mix. leadership position in the Brazilian market. 1933 Initiated the construction of Votorantim Cimentos’ 1938 first operating unit, the Votorantim Cimentos Santa Helena cement was selected by public plant, in the city of 1936 tender to remodel a viaduct in the Votorantim (SP) - Brazil. Inaugurated center of São Paulo, the Santa called the Viaduto Helena plant. do Chá. The original metal structure was replaced by one made of reinforced concrete.

*Acquisition of a 4% shareholding in 2010 and the completion of an asset exchange with Lafarge in 2011 resulted in a total shareholding of 21.21%.

14 VOTORANTIM CIMENTOS Who we are 54.5 million metric tons per year Where we operate Bio Bio SA, in Chile, and Cementos Artigas, in Uruguay. We also partici- Our global installed cement We are present in all regions of Brazil pate in a green-field project inP eru. production capacity. (VCBR). Overseas we have opera- In total these companies have five tions in 13 countries: United States, cement plants, three grinding mills, Canada, Argentina, Bolivia, Chile, one clinker plant, 51 concrete centers, Peru, Uruguay, Spain, Morocco, Tuni- 18 aggregates plants and two mortar sia, Turkey, India and China. In total plants. Of the companies mentioned we have an installed cement capacity above, the only ones included in our of 54.5 million metric tons/year. consolidated results are Cementos Artigas, in Uruguay and Itacamba We do business in Brazil In North America, we are repre- Cementos SA, in Bolivia. and in 13 countries in sented by our subsidiary Votorantim the Americas, Europe, Cimentos North America (VCNA). We In Europe, Asia and Africa, we have Asia and Africa. operate in the Great Lakes region, both operations in China, Spain, India, in Canada and in the United States, Morocco, Tunisia and Turkey, through and in the southern United States, spe- our subsidiary Votorantim Cimentos cifically in Florida. We have four cement Europe, Asia and Africa (VCEAA). In plant, two grinding mills, 110 concrete these regions, we have 14 cement centers and 44 aggregates plants and plants, 8 grinding mills, 21 aggregates have a 50% shareholding in a cement plants and 1 mortar plant. plants through a joint-venture (SAC). The joint-venture is not consolidated In Brazil we have 16 cement plants, in our results, in accordance with the 10 grinding mills, 103 concrete cen- International Financial Reporting Stan- ters, 20 aggregate plants, 8 mortar dards (IFRS) rules. plants, and 1 lime plant.

In South America, besides Brazil, In the global consolidated balance we operate through shareholdings sheet we have 34 cement plants, 22 in companies producing cement, grinding mills, 322 concrete centers, concrete, aggregates and mortar. 86 aggregates units, one clinker These companies are Cementos plant, 9 mortar plants and 60 Avellaneda, in Argentina, Itacamba limestone reserves with an average Cementos SA, in Bolivia, Cementos useful life of more than 60 years.*

* These include three cement plants and two grinding mills in China.

2014 Integrated Report 15 Who we are

Global network [G4-4 and G4-8] THE DIAGRAM BELOW SHOWS OUR CEMENT PRODUCTION CAPACITY BY COUNTRY OR REGION

Great 5.2 1.8 tunisia china 5.9 Lakes

spain 3.2 3.0 Turkey

5 braZil 32.3 florida 0.8 1.2 Morocco India 1.2

SÃO PAULO 0.2 3 bolivia COMPANY’S HEAD OFFICE

uruguay4 0.5 Installed capacity in Mtpy 2.26 chile2 argentina1 2.86 (million metric tons per year)

VCBR SOUTH AMERICA7 VCEAA VCNA

16 cement plants 5 cement plants 14 cement plants 4 cement plants 10 grinding mills 3 grinding mills 8 grinding mills 2 grinding mills 103 concrete centers 51 concrete centers 99 CONCRETE CENTERS 110 concrete centers 20 aggregates plants 18 aggregates plants 21 aggregates plants 44 aggregates plants 8 mortar plants 2 mortar plants 1 mortar plant 1 lime plant 1 clinker plant 45 distribution centers 4 lime plants 1 limestone mine

1 49% shareholding in Avellaneda, Argentina. 2 16.7% shareholding in Bío Bío, Chile. 3 67% shareholding in the Itacamba plant, Bolivia. 4 51% shareholding in Artigas, Uruguay. 5 Includes 100% of annual installed capacity of Suwannee, which was not consolidated in December 2013. 6 Includes 100% of annual installed capacity of Bío Bío and Avellaneda, which were not consolidated in December 2013. 7 Includes minority shareholdings.

16 VOTORANTIM CIMENTOS Who we are

Products and Services in the remaining countries in South America, 5.2 million tons in North We offer a wide We produce and market a wide range America and 16.3 million tons in Eu- range of products of materials for the construction rope, Asia and Africa. Our investment and materials for the sector. We have four main business in research and development has construction sector. areas: cement, concrete, aggregates resulted in the creation of a number and complementary products. of high-tech products with a variety of applications. We always have a We sell various types of cements, product to meet the specific needs of concretes and mortars, and also construction projects, regardless of crushed stone, lime, limestone and their size, in any of the regions where other materials. We have a customer we operate. base that ranges from retail outlets (building supply stores) to large com- Concrete panies in real-estate development, Our concrete brand in Brazil, Enge- construction infrastructure projects mix, is recognized as being one of the and industry. largest companies in the segment in Brazil. Our company is well-known for A PRODUCT RANGE THAT IS the manufacture of dosed concrete CONSTANTLY EVOLVING at specialized centers. It operates more than 100 concrete centers in 15 Cement Brazilian states. It has four product This is our main product and our larg- ranges: general construction (con- est business. It does not restrict the crete services and development of expansion of our other product areas. new products for medium and large Our annual cement production capac- construction companies); self-con- ity is composed of 32.3 million metric struction (small projects, with a focus tons in Brazil, 0.7 million metric tons on retail services); housing construc-

tion (large-scale real-estate develop- asphalt, concretes, pre-cast slabs, ment projects); and construction sites, reinforced concrete structures, pre- focused on large clients. In 2014, in the cast concrete artifacts, concrete, and region of Campinas (SP), we complet- materials for landfills, drainage, base ed a successful pilot project to replace and sub-base of highways and paved our operational control system, which areas, among others. includes the management of subsidiaries, contracts and services. The new Complementary Products system will be extended to all of our for the construction and concrete operations in 2015, improv- agribusiness sectors ing operational efficiency, which is an In Brazil these products include mor- important competitive differential in tars, hydrated lime, lime paint, blocks, this market. The goal is to make the floor tiles, white cement and agricul- Engemix name be recognized as the tural lime. We produce two ranges of best brand in the concrete market. mortars under different brand names: the Matrix brand which is a range of In North America, we have 110 con- standard mortars, and the Votomassa crete centers of which 86 are located brand, a range of adhesive mortars. in the Great Lakes region and 24 in New products are launched every Florida. year. We have nine production plants, of which eight are for mortar and one In our operations in Europe, Asia and for lime. Projects for a further two Africa, we have 99 concrete centers, plant expansions have been approved, of which 77 are in Spain, 6 in Morocco one in Rio de Janeiro and one in and 16 in Turkey. Pernambuco. In the agricultural lime segment, we have an investment plan We also have 10 concrete centers in to expand the existing plant in Xam- South America, all located in Uru- bioá (TO), and build two new plants in guay, through shareholdings. the Northeast (one in Camaçari (BA) and another in Recife (PE)), and one in Aggregates the Southeast (Seropédica - RJ). These In Brazil, we manufacture and plants will come on-stream in the sell crushed stone and a variety of next five years, and will complement grades of sand, for construction and the five plants already operating. concreting. The product applications include the manufacture of In Spain we have one mortar plant.

Sobral Cement Plant

Expansion and Investment We expanded the annual cement We are also strengthening our pres- production capacity at the Xambioá ence in the mortar segment in the We plan to continue to grow and (TO) plant by 600 thousand metric Northeast Region, with the con- expand our market share, in Brazil tons, raising its capacity to 1.1 million struction of a new plant in Camaçari and internationally. We are currently metric tons. (BA), which has an annual mortar implementing an investment plan production capacity of 206 thousand that began in 2007 and runs through Also in these two regions, we con- metric tons. This new plant went to 2017. The total investments tinued with our investments in two into operation in February 2015. amounted to around R $ 10 billion new cement plants, one in Edealina between 2007 and 2014 and a further Units (GO), with an annual capac- R$ 5 billion by 2017, and are distrib- ity of 2 million metric tons, and the uted in all the company’s businesses. other in Primavera (PA), with an annual capacity of 1.2 million tons. In 2014, the total capital invested Both plants are scheduled to start (CAPEX) was R $ 1,276 million, of up operations in the second semes- which R $ 700 million were destined ter of 2015. to improvements in industrial plants and other projects, and R $ 576 mil- The next target in our investment lion to expansions of existing plants, plan is the Northeast Region, mainly in Brazil. another developing region and a priority in our business strategy. In We completed the expansion of the state of Ceará, we will build an the Xambioá plant in the State of integrated plant in Sobral, which Tocantins. This plant is important will add 1 million metric tons to our to enable us to meet the demand of annual installed cement produc- the retail self-construction market tion capacity, and a grinding mill in sector in the North and Center-West Pecém with an annual capacity of 0.5 regions of Brazil. million metric tons.

R$ 1.276 R$ 15 billion

Our investments in 2014. billion

The total amount of our investment plan, up to 2017.

Expansion overseas Voluntary Commitments [G4-15]

In line with the goal to continue We are signatories of voluntary to expand our global operations, global and national pacts and initia- we have invested in the other tives, such as: regions where we operate. We have prioritized emerging markets with 1) United Nations Global Compact growth potential in Europe, Africa (UNGC) – The UNGC is an United Na- and South America, such as Turkey tions initiative to encourage compa- and Bolivia, without neglecting nies to respect human rights, support regions in mature economies with decent work, protect the environment prospects of recovery, such as Florida and fight corruption. and the Great Lakes region in the United States and Canada. 2) Cement Sustainability Initiative (CSI) – The CSI is an international ce- In 2014, we approved a major project ment industry protocol, signed by the to expand our operations in Bolivia, 24 largest producers of construction for the construction of a new cement materials in the world, to promote factory, to serve the region of Santa the adoption of best practices in the Cruz de la Sierra, one of the country’s cement sector. main markets, and which is experi- encing a strong phase of growth. 3) Business Pact – “Na Mão Certa” Project – By signing this compact the We also approved, in 2014, the con- signatories committed to combat the struction of a new plant in Turkey, in sexual exploitation of children and ado- the region of Anatolia and the expan- lescents on Brazilian highways. sion of our plant in Charlevoix, in the United States. 4) SBE-VC-RBMA Technical Coopera- tion Agreement – This is a partnership between Votorantim Cimentos, the Brazilian Society for Speleology (SBE), and the Atlantic Forest Bio- sphere Reserve (RBMA) to develop social and environmental practices that contribute to the protection of caves and the Atlantic Forest biome.

A wARDS Focus/Category (s) Country Best and Biggest – Exame Brazil Major Honors Construction Industry and Awards Magazine Best Companies in Brazil – Construction and Decoration Brazil In 2014, we received the following Época 360º Magazine Materials major honors and awards: 1,000 Largest Companies in Largest Company for Brazil Brazil - Valor Newspaper Construction and Decoration Materials The von Martius Prize for Brazil Sustainability - German- Sustainability Brazilian Chamber of Commerce Sustainable Innovation Award Brazil Sustainable Innovation - FINEP Occupational Health and Safety Cement Industry Employer's Turkey W e have been Performance Award Union recognized by the Ontario Concrete Awards Material Development and Canada Innovation market for our activities Structural Material and initiatives. Innovation Sustainable Concrete Construction Institutional Building

Indiana Mineral and Aggregates Safety Excellence Award United Association – Environmental States Stewardship Council Excellence in Minning National Stone Sand Gravel Environmental United Association Excellence Award States Safety Excellence Award Illinois Association of Aggregate Rock Solid Safety Award United Producers Gold Safety Award States Anamaco Awards - National Brazil Leadership in the Association for Building Material construction sector Retailers (ANAMACO) 16º Edition of Awards for Brasil Excellence in the Brazilian Metals and Mining Industry Excellence and Innovation – Brazilian Mining Institute (IBRAM)

2014 Integrated Report 21 Who we are votorantim cimentos is here, there and everywhere See the “what” and the “where” of our products

22 VOTORANTIM CIMENTOS 2014 Integrated Report 23 24 VOTORANTIM CIMENTOS Market Context [G4-2]

A diverse global Brazil economic panorama According to the Global Cement According to the Global Cement Report, Brazil was the country with Report, global cement consumption in the fourth largest cement consump- 2012 was 3.7 billion metric tons and the tion in 2012. The cement consumed in market was expected to grow strongly Brazil is primarily produced domes- to reach 4.14 million metric tons in tically. In 2012 there were approxi- 2014. In terms of countries, China mately 82 cement manufacturers in stood out with a consumption of 2.16 Brazil, distributed throughout the In 2014, the global billion metric tons in 2012, represent- country, and with a combined annual economy experienced ing 58% of the global total. The United production capacity of 82 million a year of important States and Brazil were the third and metric tons. adjustments and fourth largest markets, respectively. Cement is the most utilized con- expectations. One of the most important market struction material in Brazil and has indicators to compare countries is been produced on an industrial scale the per capita consumption. Also since 1926. Cement is sold both in according to the Global Cement bags and in bulk. In the case of our Report, the per capita cement domestic sales of cement in bags we consumptions for China, the United have established strong brand names States and Brazil were 1,518 kg, 232, and we have a vast retail network kg and 348 kg, respectively. covering all the regions in Brazil. Bulk sales are made principally to produc- The combined sales of the 10 largest ers of concrete and other industrial cement manufacturers represented consumers such as manufacturers of 26% of global consumption in 2012, masonry cement and mortars. according to the Global Cement Re- port. The largest manufacturers in de- The year of 2014 was marked by veloped countries, such as the United unfavorable macroeconomic condi- States, have positioned themselves tions and a low GDP growth which, in the emerging markets through at 0.2%, was well below the market’s acquisitions and organic expansion expectations. The domestic base in- projects particularly in countries with terest rate increased from 10.00% to attractive consumption indicators. 11.75% p.a. and the US Dollar revalued At a global level, Votorantim Cimen- strongly against the Real (+13.4%), tos is now the eighth largest cement compared to 2013. manufacturer in terms of production capacity and the fifth largest in terms of EBITDA, excluding the Chinese companies in both cases.

2014 Integrated report 25 Market Context

Despite being an untypical year, part driven by the ample supply of In 2014, the total annual cement marked by important events, energy at competitive prices. This production capacity of Votorantim principally the World Cup and the impacted several economic sectors Cimentos North America (VCNA) presidential elections, Brazil’s ce- and led to a gradual improvement remained constant at 5.2 million ment sector registered a growth in employment, investment growth metric tons and we believe we are rate of 2.3%, according to data from and the average level of business well positioned to take advantage of the National Cement Industry Union confidence. the upturn in the region’s economies. (SNIC). This reinforces our view that the main drivers of market growth As a result of these more favorable Europe, Asia and Africa remain strong. conditions, the construction sector recovered considerably. According Our operations in Europe, Asia and In such a context, we believe we are to the Portland Cement Association Africa recorded another year of the Brazilian company that is best (PCA), the total consumption of consistent results, mainly due to the positioned to meet the varying levels cement in the United States in 2014 impacts of the turn-around process, of demand across the regions due was 86.8 million metric tons, an which started in 2013. The results to our highly pulverized distribution increase of 8.9% compared to 2013. were driven by the good results of network, strong brand recognition, In the case of the regions where we the operations of Turkey and Tunisia, and wide range of construction ma- operate, the growth was 18.0% in and were partially offset by declines terial products that are tailored to a Florida and 10.8% in the Great Lakes. in Spain, Morocco and India. variety of consumer segments, such as retail, construction, infrastructure In the case of Canada, overall ce- The highlights of the cement market in and real estate. ment consumption declined by 1%. each country in 2014 were as follows: However in the Ontario region, North America where we operate, consumption Turkey: The country’s GDP grew increased by 1% and exports of by 3.7% in 2014. Despite the crisis The United States economy has Portland cement grew by 8.9%, in Europe, the growth in the con- recovered and become a strong according to data published by the struction industry in the neighbor- factor in promoting global eco- Canadian Cement Association. ing countries has been good. The nomic recovery. Its recovery was in industry grew at a record average

26 VOTORANTIM CIMENTOS Market Context

Our operations in Europe, Asia and Africa recorded another year of consistent results.

The increase in cement consumption in the United States in 2014, compared to the previous year.

compound growth rate of 7.7% Spain: The market’s performance The cement industry in Bolivia has between 2008 and 2014. This growth was adversely affected by the coun- grown significantly in recent years was stimulated by ongoing govern- try’s weak economic fundamentals, and, in 2014, cement consumption ment incentives for foreign direct as GDP fell by 2.0%. Despite this ce- reached 3.4 million metric tons, an investment and public-private ment consumption increased slightly increase of 8.7%. partnerships. Turkey is the seventh by 0.4% during the year. According largest market for cement consump- to the Spanish Cement Association The cement industry in Uruguay has tion behind China, India, the United (Oficemen) cement production was grown consistently as a result of the States, Brazil Russia and Iran. affected primarily by the construc- strong growth of the overall econo- tion segment. my. In addition, Uruguay still has one Tunisia: The country’s GDP grew of the lowest ratios of per capita ce- by 2.7% in 2014. The retail segment is India: The country’s GDP grew by ment consumption to GDP in South expected to grow due to increased 6.0% in 2014, stimulated by growth America, thus having a potential for income, urbanization and a larger in agriculture and construction. The expansion due to the country’s pros- middle class. We believe that invest- cement industry has grown at an av- pects for economic growth. ments in infrastructure develop- erage compound growth rate of 8.0% ment, particularly in highways, in the last decade despite economic ports and airports, present positive problems in recent years. Even so the prospects for the cement market. cement consumption per capita is still below the global average, accord- Morocco: The country’s GDP grew ing to the Global Cement Report. by 4.5% in 2014. The construction market was boosted by investments South America in infrastructure by the government, the tourist industry and residential In South America, we operate in the housing. However, despite this the production, marketing and distribu- overall consumption of cement fell tion of cement (Uruguay and Bolivia) by 5.4%. and concrete (Uruguay), through partnerships with local producers.

2014 Integrated report 27 Corporate Identity [G4-56, G4-57 and G4-58]

Our corporate Following the implementation of Values identity is one of the the new governance structure for foundations of our the holding company, Votorantim Our values are represented business activities . Industrial, in 2014, each industrial by the acronym SEREU: subsidiary now has more autonomy to manage its own business opera- Solidity – To seek sustainable tions while, of course, observing the growth with value creation. macro guidelines set by Votorantim Industrial. Ethics – To act responsibly and transparently. As a result of the changes to the overall structure, each industrial Respect – To respect people and subsidiary has established its own be willing to learn. internal governance structure. Nevertheless, the essential iden- Entrepreneurship – To have the tity of the organization as a whole courage to grow, innovate and remains unchanged. So, in the case invest. of Votorantim Cimentos, we have developed a vision for our business, Union – The whole is stronger but have maintained the values and than the sum of the parts. management beliefs that are valid for Votorantim as a whole. Management Beliefs

Another key point is that, in 2014, Talent Development – We invest we carried out a wide-ranging review time and resources in developing to define Votorantim’s DNA. Our our talented people because we DNA is represented by our values, believe in and trust them. principles and practices that have been built up throughout the organi- Meritocracy – We believe that zation’s long history. All Votorantim’s people are individuals and deserve industrial subsidiaries participated in to be treated fairly and in accor- this process. dance with their personal performance.

Vision Excellence – We believe we can always do more and better, over- To be a construction coming challenges with discipline, materials company that humility and simplicity. is committed to customer success through excellence. Pragmatism – We believe that it is essential to devote time and

28 VOTORANTIM CIMENTOS energy to what is most relevant, Sense of ownership – We believe and society in general. It is an instru- with objectivity and without losing in people that take on responsibili- ment for daily use, to guide actions sight of the big picture and the future ties, work with passion and lead by and decisions. The rules of the Code trends. example, celebrating their achieve- are mandatory for the organization’s ments and using mistakes as oppor- employees and also serve as a refer- Open dialogue – We believe that tunities for learning. ence for our partners and suppliers. an atmosphere of trust fosters open dialogue and ensures that all have Code of Conduct The Code is aimed at Votorantim room to talk and to be heard, and employees in Brazil or overseas, con- that a diversity of opinions leads to Votorantim’s Code of Conduct was tract staff, partners, suppliers and better solutions. launched in 2005 to provide the basic other stakeholders, and is available guidelines for our behavior in day-to- for access, in a number of languages, Partnership – We believe our day business activities. The Code ex- at: http://www.votorantim.com.br/ success is a result of collaborative presses the company’s commitment pt-br/ouvidoria/codigoconduta/Pagi- efforts, strengthened by genuine to ethics in relations with customers, nas/codigoConduta.aspx relationships and partnerships in employees, shareholders, suppliers, which everyone wins. government, media, communities

2014 Integrated report 29 Material Issues [G4-19, G4-20, G4-21, G4-23, G4-24 and G4-37]

Definition of the The results were consolidated and The material issues guide Material Issues that guide submitted to the company’s senior our sustainability strategy. our Strategy management for their approval. Of the 39 material issues identified in For this report, we have used the the review, 17 were selected as being results of the materiality assessment the most relevant to Votorantim conducted during 2013 and 2014, Cimentos. where we identified the relevant material issues from the specific These materials issues were used to viewpoint of the cement sector. develop our sustainability strategy and in the selection and manage- This assessment, carried out with ment of the GRI indicators in this re- the support of BSD Consulting, port. All of them have been discussed included the following materiality and monitored in all the regions assessment criteria: where we operate, through research or relationship channels, with em- Analysis of internal and industry ployees, customers, suppliers and the documents. community.

Survey of employees’ opinions regarding the Report for 2012.

Face-to-face interviews with managers at all levels.

Interviews, both face-to-face and by phone, with representatives of priority stakeholder groups (customers, suppliers, Board members, employees, government agencies and financial institutions).

We consulted 42 representatives of stakeholder groups, of which 19 were internal and 23 external, in the four macro-regions where we operate (Brazil, South America, North America and Europe/Asia/Africa).

30 VOTORANTIM CIMENTOS

materiality

Materiality Matrix

Financial Capital Human Capital Manufactured and Intellectual Capital Social and Relationship Capital Natural Capital

1 Level of importance 2 3 of economic, environmental and 13 12 social impacts 4

er 5 6 V y high materiality 7 8

15 10 14 16 17 11

high V ery high materiality

Leve l of importance for the decisions and/ or perceptions of The correlation between these material issues and the IIRC stakeholders concept of capitals is shown in the table below (please see the section “About the Report” for more information):

1 Ethics, transparency and integrity 10 Government relations 2 Occupational health and safety 11 Energy efficiency 3 12 CO2 emissions Alternative sources of electrical energy and fuel oils 4 13 Anti-corruption practices, cartels and Air emissions (Particulate Matter, NO X , SO X ) anti-competitive behavior 14 Management and re-use of construction waste and reverse 5 Regulatory risks logistics for used cement bags 6 Supply chain management 15 Water consumption 7 Contribution to local development 16 Customer satisfaction 8 Economic performance: economic value 17 Preservation of biodiversity generated and distributed 9 Relations with the community

32 VOTORANTIM CIMENTOS materiality

How materiality influenced our actions in 2014 – some examples

DEMAND STAKEHOLDER OUR RESPONSE (material issues) Employees 2 Global Safety Day /Global Safety Roadmap. Customers 16 Go to Market Project. Suppliers 6 Development of local suppliers. We revised our Global Policies for Anti-Corruption and Compliance with Competition Laws, reinforcing our commitment to comply 1, 4 and 5 with the legislation. We carried out a series of internal campaigns to disseminate these policies among our employees. These policies resulted in a number of specific initiatives related to compliance, Government bodies anti-corruption and fair competition. 15 We developed projects to reduce water consumption and to increase water re-use in all regions where we operate. We conserve a nature reserve that is located in the area of our Nobres (MT) unit. The reserve has been formally recognized by the 17 environmental authorities as a Private Natural Heritage Reserve. We obtained investment grade ratings from the three major rating Investor Relations 8 agencies. Communities 9 Social investments in communities.

2014 Integrated report 33

Business Overview [G4-2, G4-8, G4-24, G4-26 and G4-27]

Management Approach system that consolidated, in a single platform, our processes, manage- In 2014, we worked hard to ensure ment methods and key performance that our processes and our culture indicators. were consistent with our geographic presence, seeking to generate value With this in place, we can ensure for the company in the short, me- that strategies are understood and dium and long terms, in the different deployed in all countries, at all levels markets in which we operate. from senior management to opera- tors. This will strengthen our capac- We mobilized our employees around ity to generate, in an integrated the world to develop a concept that manner, positive economic, social we call “One Team, One Company”. and environmental outcomes. The objective is to align our strategies and our people’s efforts around The strategic value generated a single vision: To be a construction in 2014 88% materials company that is committed to We developed a corporate gov- customer success through excellence. ernance structure for our global operations and incorporated the of Votorantim In this process, we learned a lot and governance of sustainability at the Cimentos’ employees identified synergies and best practic- company’s highest decision-making are committed to our es. Based on these results, we defined level. policies to position our business strategic vision and 76% around the world. At the core of all We implemented the global strate- believe that the vision we do are the strategic drivers that gic plan and an integrated financial will be positive for the support our vision: Customer Focus; model, to leverage the investments company (Climate Empowered People; Operational Ex- made in the regions. Survey 2014). cellence; and Sustainable Practices. We also developed a Strategic We disseminated our strategy to our Sustainability Plan and prepared a employees in Europe, Asia, Africa, the formal document that defined Our United States, Canada, and Brazil and Sustainability Commitments for the other countries in South America. 2020. This process involved discus- We implemented a governance struc- sions among representatives from all ture that will enable us to play an even the regions where we operate. The more prominent role in the interna- plan includes goals for community en- tional markets in the years to come. gagement, safety, ethics and compliance, eco-efficiency and innovation. At the same time, we began to develop an integrated management We continued with our investment

2014 Integrated report 35 Business Overview

Our goal: achieve an improvement of up to 15% in operating efficiency, including the targets for Our Sustainability Commitments for 2020.

program and expanded production three-year plan for each plant will ployees will be encouraged to learn capacity, both in existing projects in be developed, with specific actions how they can contribute individually Brazil and new projects, approved for and priorities, in accordance with the to achieving the company’s strategic Bolivia, Turkey and United States. characteristics of each region. and financial objectives.

We defined our long-term guide- Integrated Management System Excellence Assessment Program lines, to be applied globally, related In 2014 we developed the Integrated ensures efficient management to each of the strategic drivers that Management System (IMS), which is practices, recognizing and rewarding comprise our vision. a set of practices, processes, methods the best-performing teams for their and data (KPIs) that applies to all busi- achievements. In Brazil, we implemented a new ness units in all regions and countries, sales approach, totally focused on including manufacturing and admin- The IMS provides a common lan- the needs of each segment and each istrative units. It provides guidance guage that facilitates communica- client. as to how people should work on a tion between the different levels day-to-day basis to meet targets and of the company, enabling faster Global Performance Program solve problems in order to achieve the decision-making and promoting In this program, we will analyze in- company’s annual budget and realize rapid cultural change in operations. formation on technical performance, its medium and long- term strategy. It also increases career opportunities costs, sustainability and safety, for within the company, encouraging the past five years, in more than 50 The IMS aims to promote a high per- greater internal mobility. production facilities in: Brazil (VCBR); formance organizational culture and South America and North America covers three elements that collectively The first phase of the system will be (VCNA); and Europe, Asia and Africa guide the company’s efforts to effec- implemented in 2015, in the cement (VCEAA). The project was developed tively realize its strategy and targets: business, in VCBR, VCEAA and VCNA. in 2014 and will be put into practice In the near future, it will be extended in the first quarter 2015. Performance Management System to the company’s other business promotes operational stability and areas (Aggregates, Concrete and As a result, a database will be gener- the continuous improvement of re- Complementary Products) and func- ated which will enable us to carry out sults, and provides the necessary re- tional areas. internal and external benchmarking sources to enable constant progress. studies to identify opportunities for improving operational excel- Employee integration through lence. Based on this information, a communication and training, our em-

36 VOTORANTIM CIMENTOS Business Overview

Our Vision – Strategic Drivers [G4-56] The Strategic Drivers are as follows: Our Vision and its Strategic Driv- ers, allied to our Corporate Identity Customer Focus Best in Class Operations (Vision, Values and Management We drive our decisions based on We constantly monitor our per- Beliefs), constitute the foundations customer needs. formance and are obsessed with of our business activities. continuous improvement. We develop innovative products Business strategy & solutions in partnership with our We make decisions quickly and customers. intelligently, in a disciplined and Our business strategy is based on consistent manner. the expansion of our operations, We have all areas of the compa- increased operational and manage- ny focused on improving customer We maximize productivity in all ment efficiency, a wide range of service. areas. products and services and constant attention to cost control. We grow Empowered People Sustainable practices both organically by investing in ex- We value and recognize leaders Safety first! pansion projects and also by making who lead through others – creat- acquisitions. ing strong, diverse and engaged We are trustworthy and ethical teams. in our actions according to law The principal elements of our strat- and regulations. egy are: We want people who have the autonomy to take action and use We promote ecoefficiency Achieve organic growth by the Integrated Management Sys- through the use of innovative increasing production capacity by tem (IMS) to leverage performance. products, practices and solutions. expansion projects in existing plants or from building new plants. We We work together to develop We foster local dialogue and invest not only in expanding cement creative solutions and make things relationships with communities to production, but also in new plants for happen. perpetuate the Votorantim legacy. concrete, aggregates and complementary products.

Establish a position as a global company and increase our international business by acquisitions and investments in growth and external expansion. We have redesigned our organi- with business needs in Brazil and Presence throughout Brazil and in zational structure to improve the overseas. The new management important global markets. definition of internal functions and approach ensures better team roles and redesign processes and cohesion and is in line with best We have restructured the Sales procedures. This has contributed to practices in corporate governance, Area aiming to optimize customer a better definition of our targets. controls and risk management. relations. We are focusing on ser- We created a new global structure vice level, market segmentation, to avoid overlapping functions and customer satisfaction, and new ensure quicker decision-making. procedures for customer service and This new structure is simpler management. and more efficient and aligned

Corporate Governance domestic and international capital Legal and Government Relations; [G4-13, G4-34, G4-35, G4-36, G4-38, markets. Corporate Development; and Energy, G4-39, G4-40, G4-41, G4-43, G4-45, Sustainability and Safety. GET holds G4-46, G4-47, G4-48 and G4-49] The new governance structure monthly meetings to discuss, decide demonstrates a balanced view of and monitor the actions that are Global governance model the business challenges and the necessary to realize our vision. In 2014, we defined a new global factors influencing the markets in governance system for Votorantim our four business regions - VCBR This structure is reproduced in Cimentos. With this move we raised (Brazil), South America, VCNA the regions, with executive teams our governance standards to the (North America) and VCEAA (Eu- addressing the strategic issues of same level as the companies listed rope, Asia and Africa ), encouraging their local operations: in Brazil, we on the São Paulo and New York stock the exchange of good practices and have the Brazilian Executive Team exchanges. Furthermore, we ob- investment decisions. (BET); in North America, the North tained investment grade ratings on American Executive Team (NAET); a global scale, from the three main Each region is represented in the in Europe, Asia and Africa, the Euro- rating agencies: Standard & Poor’s Global Executive Team (GET). pean, Asian and African Executive (rating BBB), Moody’s (Baa3) and In addition to the vice-presidents Team (EAAET). Fitch Ratings (BBB). responsible for these regions, GET includes Votorantim Cimentos’ Thus, our strategic drivers, including With this, we have achieved the basic global president and the executive those related to sustainability, are requirements to open the company’s directors of five global functional managed at the highest decision- capital, when the market is favor- areas that are strategic to the com- making levels of the company that re- able, and to be more competitive in pany: Finance and Investor Rela- port directly to the Board of Directors. terms of attracting investors in the tions; People and Management;

Our governance structure

Global Internal Audit

Latin America Shareholdings

New Businesses & Innovation

VCBR VCNA VCEAA

Energy, People & Corporate Finance Legal Sustaintability Management Development and Safety

Board of Directors and Advisory of a minimum of three and maximum ance; and Community Engagement. Committees of five members, it is responsible It is also responsible for preparing the Responsible for managing strategic is- for: monitoring and analyzing the annual Integrated Report. sues and determining short and long- context of the Brazilian and global term policies, the Board of Directors industry and the implications for The head of this Directorate is a consists currently of five members the company’s competitive position; member of the Global Executive Team elected by the General Assembly for a discussing and advising the Board on (GET), which proposes initiatives and two-year term. One of the members is short, medium and long-term strate- monitors the company’s overall per- independent. The Board of Directors is gic issues, including competitiveness, formance. Reporting to the Director- supported by four Advisory Commit- new markets and products, innova- ate is a team of specialists in environ- tees, as follows: tion and sustainability; advising on ment, safety and social responsibility investment opportunities and/or matters that provides support for Statutory Audit Committee – divestitures; proposing long-term the development and execution of Composed entirely of independent strategy and defining guidelines for projects. The company’s performance directors, with a five-year term, multi-year plans; and advising the in environmental, safety and social is responsible for monitoring is- Board and the Remuneration and responsibility matters is managed sues related to the preparation of Personnel Committee on setting centrally for all regions. We also have financial reports, including financial incentives to capture the company’s environmental focal points in each statements, internal controls, risk value potential. region, country and industrial plant. management, complaints received by the Ombudsman, compliance The Board of Directors, as a rule, In addition, we have established with laws and regulations, as well as meets bimonthly and analyzes the forums to further engage the teams interaction with, and monitoring of, impacts, risks and opportunities, in with the targets set out in our Strate- internal and external audits. general, related to the company. gic Sustainability Plan.

Finance Committee – Composed Sustainability governance of three members, is responsible for In 2014, to accelerate the synergy monitoring issues related to: Brazil- between the units and to engage ian macroeconomic and global envi- employees in their efforts to achieve ronments and their potential effects the targets set in Our Sustainability on the company’s financial position; Commitments for 2020 (see the item proposals on cash management “Sustainability for Us,” below), we guidelines and liquidity; guidance on enhanced our global structure for the hedging policy, financing alterna- governance of sustainability. tives and capital structure; and an evaluation of exposure to financial, We reinforced the structure that we fiscal and regulatory risks. had begun implementing in late 2013, by establishing the Global Director- Remuneration and People – ate for Energy, Sustainability and Composed of three members, it is Safety. The new Directorate has the responsible for advising the Board on role of developing and monitoring decisions related to human resources. the guidelines in four areas selected as priorities: Safety; Eco-efficiency Strategy Committee – Composed and Innovation; Ethics and Compli-

Global sustainability governance structure

Board of Final Approval (reporting and strategic validation) Directors

GET (Global Executive Team) Approval

Global Sustainability Committee

Technical approval

Sustainability governance discussion forums We have established discussion forums to promote alignment between the short and medium-term actions, both globally and in the regions where we operate, and the company’s long-term strategic positioning.

FREQUENCY DISCUSSION FORUM MEMBERS OF MEETINGS Global President Regional Vice-Presidents GET – Global Executive Bimonthly Team Executive Directors of global areas, including Energy, Sustainability & Safety (ESS)

ESS Global Executive Director GLOBAL Environmental Regional Operations Directors Semiannually Committee Global Head of Environment Regional Sustainability Leaders Global Head for the Environment Technical meetings Regional Coordinators for the Environment and Quarterly Sustainability

BET – Brazilian Global CEO Bimonthly Executive Team Directors of VCBR including Technical Director Technical Director Environmental Business Directors Quarterly Committee VCBR Global Head for the Environment and VCBR Environmental Leaders Annual meetings with the Board and the VCBR Social Responsibility Directors Semiannually Committee Meeting with the Board to approve the external social investment NAET – North America Regional Representative Bimonthly Executive Team Regional Vice-Presidents Environmental North America Environmental Leaders Quarterly VCNA Committee Marketing and Manufacturing Support and Technical Areas Semiannually Committee

Sustainability for Us materials, and services, to our cus- and long-term positioning on sus- [G4-25] tomers; acting in an ethical, transpar- tainability and was approved by the ent manner and in accordance with Global Executive Team (GET) and the Throughout our long history, we the laws and regulations; providing a Board of Directors. have promoted the social and motivating, healthy and safe work en- environmental development of the vironment for our employees, contract At the end of the year, we formalized communities where we operate and staff and third-parties; supporting our our position in the document called have made important contributions local communities and encouraging Our Sustainability Commitments to initiatives that promote sustain- their progress. for 2020 with goals that go far ability in the cement sector. beyond legal and regulatory compli- To speed up the achievement of ance. Indeed, we want these goals For us, sustainability means achieving these goals, in 2014, we revised our to inspire us to continue to operate our growth ambitions, in the follow- Strategic Sustainability Plan with in harmony with society and to cre- ing way: taking the present and future the participation of teams of employ- ate value for the company and our needs of society into account; offering ees from all the regions. This plan stakeholders over time. eco-efficient and innovative building represents the company’s medium

How we intend to get there

How the strategy was We defined the global and developed regional targets at the end of last year and the performance What we achieved in 2014 1 Our Vision (strategic direction). indicators to monitor them. 2 We conducted a process to identify In 2015, these targets will be We set ourselves ambitious goals the material issues for our stakehold- cascaded down, year by year, in key areas for sustainability ers. This included collecting informa- up to 2020. in our industry, making it clear tion through specific opinion surveys For each target, an action which issues would be prioritized with customers, employees and plan has been defined. and where we wanted to be by communities and our established Sustainability targets are 2020. communication channels for rela- part of our managers’ perfor- tions with stakeholders. mance evaluation, accounting 3 Swot Analysis (strengths, weak- for between 20% and 80% of nesses, opportunities and threats). a manager’s remuneration, 4 Internal (regions) and external from the highest level to the benchmarking studies. starting level. 5 Current industry and market standards. 6 Major trends in sustainability.

HEALTH AND SAFETY Our Sustainability Safety first!

Commitments for ETHICS AND COMPLIANCE W e are ethical and trustworthy, 2020 and act in accordance with the Our sustainability strategy is based laws and regulations. on four strategic dimensions: ECO-EFFICIENCY AND INNOVATION W e promote eco-efficiency through innovative processes and products.

COMMUNITY ENGAGEMENT W e foster dialogue and good relations with the local communities, seeking to perpetuate the legacy of Votorantim.

Our Sustainability tices for health and safety, in order to have been intensified. Under this Commitments for 2020 prevent fatalities. program the unit managers carry out – in detail health and safety inspections, closely We have improved our frequency rate monitoring the operations. We have Health and Safety of accidents with lost time (number instituted, and are practicing, the Safety is Votorantim Cimentos’ most of accidents with lost time per million Right of Refusal, under which an important value, and is placed ahead hours worked), which decreased from employee can refuse to work if he/ of everything we do. It is one of the 1.09 in 2013 to 0.94 in 2014. Despite she considers that the conditions are pillars of our Strategic Sustainability the good progress made fatalities unsafe. The implementation of Criti- Plan, and has a clearly defined goal: occurred during the year, which we cal Protocols to Prevent Fatalities zero accidents. profoundly regret. Three of the fatali- has progressed significantly. Invest- ties were own employees and one ment plans have been developed to Our initiatives to promote health and involved contract staff. In addition adapt our operations to conform to safety are governed by the Global there were seven fatalities involving regulatory norms and international Health and Safety Policy which, third-parties in our supply chain. technical standards. Finally, our as from 2014, began to be used to operational security methods were guide our operations globally. The A single loss of life is one too many. revitalized, to further improve our Rules for Life are a set of norms that We have investigated the causes of procedures for Risk Analysis, Work aim to ensure an accident-free work such accidents and intensified safety Approvals and Procedures for Haz- environment and they have also been programs in order to prevent fatali- ardous Tasks. All of these measures implemented globally. Furthermore, ties in all our operations. Programs are aimed at eliminating the factors we began to implement critical to promote safe behavior, such as that lead to a high risk of accidents safety protocols, based on best prac- “Manager walking in the area”, and preventing serious accidents.

Take care So you can take care of of yourself your loved ones and enjoy life’s precious moments

Every day we care about the most important thing: your life. Safety is in your hands, in every moment and in every gesture. Be sure you are aware of our Life Saving Rules and the Global Safety & Health Policy, and know how to follow them.

You are doing it for you and your loved ones. Safety begins with me

In order to disseminate the Global the managers’ responsibilities Global Health Policy and Safety and Rules for health and safety. The mes- for Life, we mobilized our employ- sage was relayed to our 25 thou- Safety Day ees to participate in Global Safety sand employees and contractors Day, on June 27th 2014. This will now worldwide, through videos that be a permanent fixture in the com- emphasized the role of each person pany’s annual calendar of events. in the promotion of safety and the In this first edition of Global Safety elimination of accidents, as well as Day the activities began with a participating in the events in each message from the president to all location. managers, in which he highlighted

Our targets for 2020 Implement the requirements of the Implement critical standards of CSI Safe Driving recommendations in safety throughout the value chain, Implement a robust Safe Behav- our business. with the aim of ensuring the use of ior Program, aiming to increase the controls that prevent serious ac- employee’s level of risk perception and Improve the sharing of best prac- cidents. the manager’s level of engagement. tices and learning from incidents in order to prevent repetitions of those Promote healthy working condi- Make progress in the Manage- with a high risk probability. tions for all members of the work- ment of Critical Risks, implementing force. the requirements of the Critical Risk Ensure the effective implementa- Protocols in the businesses of each tion of the Global Health and Safety Based on these initiatives, achieve region. Policy and the Rules for Life. Zero Fatalities and an Injury Fre- quency Rate with lost time for direct employees of less than 0.4.

F atalities Cement, Concrete, Aggregates and Complementary Products

9 8 8 7

3 2 2 1

2012 2013 2014 2012 2013 2014*

EMPLOyees CONTRACT STAFF THIRD-PARTIES

L ost Time Injury Frequency Rate

1.28 1.14 1.06

0.9 0.77 0.47

2012 2013 2014 2012 2013 2014

Employees CONTRACT STAFF

* Note: In 2014, the fatalities were reclassified due to a revised interpretation of the CSI criteria.

”More Life” program – health and quality of life

The “More Life” Program encom- Employee Help Program: provides passes a number of initiatives guidance on legal, financial, emo- involving employees and their tional, marital and family matters. families. Some examples of these initiatives are as follows: Mother, Baby & Co.: provides support and guidance to preg- VC Cares for your Health: monitors nant women, and is conducted by people’s health conditions by tele- health professionals. phone and provides support to par- ticipants in caring for their health.

Ethics and Compliance levels and geographical regions of [G4-SO3, G4-41 and G4-43] the company. Making employees We revised our new Global Compli- conscious of compliance issues and ance Program in 2014. The program the dissemination of the respec- was developed based on Votoran- tive policies are company priorities. tim’s Code of Conduct, Values and Therefore, in order to inform, pro- Management Beliefs, and has the vide guidance, educate and engage following main objectives: all of the company’s employees and business partners, the Global Policy Guide the company in terms of for Anti-Corruption and Compliance compliance, and conformity with with Fair Competition was dated laws and regulations and com- and divulged in 2014. mitments undertaken in signed contracts and agreements. As part of the company’s practice of continuously improving its controls Ensure conformity with the condi- and reinforcing its culture, it carries tions required to obtain the licenses, out regular risk assessments focused permits and certifications neces- on conformity with its anti-corrup- sary for our operations. tion and fair competition policies.

Ensure conformity with our com- Ombudsman [G4-41 and G4-HR9] mitment to the defense of competi- The Ombudsman service is available tion and the prevention of fraud and in Brazil and overseas, in 8 languages corruption. and can be accessed by employees, customers, suppliers and other Additionally, we have carried out a stakeholders. Users may ask ques- series of training courses and initia- tions or report complaints regard- tives to disseminate the culture of ing alleged violations of the Code of combating corruption and comply- Conduct. Among the complaints the ing with fair competition laws at all most prominent relate to issues such

Our Code of Conduct provides guidelines for our business activities and our relations with stakeholders.

as harassment, discrimination, abuse Internal Audit Department, which is an countries where the company operates. of power, corruption or other forms of advisory body reporting to the Board of unethical behavior. Directors. Also, in line with best practices, Vo- torantim Cimentos is committed to All reports received are handled by the Reports that have a high level of sen- the continuous improvement of the Ombudsman area with impartiality sitivity or refer to members of senior systems used by the Ombudsman area. and confidentiality.T he area analyzes management are subject to review by The company has contracted a provider the reports and distributes them to be the Business Ethics Council, composed of world-class call center services, certi- resolved. The company is committed of the Directors of Audit/Ombudsman, fied according international market to investigating all the reports received People and Management, Legal and the standards. This is a guarantee that the and to respond, in a timely manner, company’s President. reports received will be handled in strict with remedial and educational actions, confidence. as applicable. The training of the employees who work in the Ombudsmen area is In 2014, thirteen incidents related to The company is committed to the conducted in various ways including discrimination were reported. Of these, resolution of cases in an appropri- both in-person courses and distance 11 were considered unfounded or lack- ate time frame, seeking to improve learning, based on on-line e-learning ing in information, one was considered and shorten this period as much as platforms. These courses are available valid, and one is still under review. The possible. The Ombudsman area has a in several languages. Ombudsman staff received training on system which allows the person filing the company’s revised global policies. the report to monitor the process at The Ombudsman area takes data Therefore overall we achieved a rate of any time, while preserving his/her privacy and protection issues, inherent over 92% for the resolution of discrimi- identity by using a code. in its activities, very seriously. The area nation incidents. is structured, in line with best mar- The Ombudsman area is an indepen- ket practices, so as to strictly comply Votorantim Cimentos’ Ombudsman is dent body, linked to the Statutory with the applicable legislation related available to all stakeholders (in Brazil Audit Committee, through the Global to data privacy and protection in the and overseas) including employees,

T otal number of ALLEGED discrimination incidents and actions taken [G4-HR3]

ALLEGED Discrimination incidents reported 2014

Complaints received by the Ombudsman 13

Complaints considered valid 1

Notes: a) Refers to the complaints received in discrimination incidents. The topics identified were: race, age, sex, religion, social origin or physical characteristics. b) The complaints of harassment were not included in this indicator.

suppliers, customers, communities, degree of importance determined by media and others. All kinds of issues our Risk Matrix. can be reported, especially those Contact the covered by our Code of Conduct, such Based on discussions with managers, as harassment (moral, sexual), dis- we defined limits for risk tolerance and Ombudsman crimination, suspected fraud, abuse of appetite, and strategies for mitigation Brasil: 0800-8911729 power, embezzlement, illegal acts and or prevention. More than 60 people United States and Canada: other forms of non-compliance. were involved in this process. The re- 1-866-340-6689 sults were approved by the areas them- For countries in Europe, Asia All requests and complaints are selves, the global president, the chief and Africa: please see the phone treated confidentially (identification is financial officer, theA udit Committee numbers on the website at: optional) and with impartiality. and Votorantim Cimentos’ Board of https://secure.ethicspoint.com/ Directors. domain/media/pt/gui/27543/ Risk Management [G4-14] index.html The Risk Management area has been We revised our Global Risk Manage- working on a number of initiatives ment Policy, and also provided hand- since 2011. books and advice to the areas to explain the methodology in order to ensure In 2014, the area focused on business that the processes were adhered to and risk management, and developed a that progress was being made. methodology based on best market practices, principally ISO 31000. We At the same time, we defined indica- defined a scale to measure impacts tors and a strategy for continuously with criteria to classify questions monitoring our exposure to risks. We related to financial, legal, reputation, developed action plans, and worked to- environmental and social aspects. gether with the various areas to reduce We weighted them according to the the company’s exposure to risks.

Administrative investigations by the Economic Law Secretariat (SDE)

In 2003, the Economic Law Secretariat, or had be sold in the those markets where risk of loss, provisioned an amount of SDE, opened administrative proceedings VCSA had more than one ready-mix R$ 682,020,000. If it fails to win the against the largest producers of cement plant and (3) other cement assets (not administrative appeal, or other future and concrete in Brazil, including Votoran- yet disclosed to VCSA), which, in CADE’s legal processes, the application of these tim Cimentos S.A. (VCSA). The proceedings opinion, were directly related to the sanctions could cause a material adverse concerned allegations by certain ready- alleged illegal acts/crimes of which VCSA effect on the company. mix concrete producers that these large was accused. In addition, CADE also cement companies may have violated imposed non-monetary sanctions on At an earlier date, in 2003, the SDE, Brazilian anti-trust law by not selling cer- VCSA, including a restriction on access which is currently the CADE General tain types of cement to ready-mix concrete to financing by the Brazilian govern- Superintendency, initiated another ad- companies. ment, together with its recommenda- ministrative process involving cement tion to restrict or limit some other tax production companies in Brazil, including Furthermore in 2006, the SDE initiated benefits and incentives, as detailed in Votorantim. This case concerned allega- administrative proceedings against the its decision PA 08012.011142 / 2006 -79, tions by some concrete producers that largest cement companies in Brazil, published on July 1st, 2104. the large cement companies had violated including VCSA, related to allegations of Brazilian anti-competitive legislation, by anti-competitive practices that included On July 1st, 2014, the decision and votes not selling them certain types of cement. price-fixing and the formation of a cartel. of the Board members were published, The instruction phase of this process was and the confidential versions for the terminated in April 2012 and, to date, On January 22nd, 2014, the Administrative companies sentenced were made avail- there is no evidence that the General Council for Economic Defense (CADE) initi- able the following day. As a result, on Superintendency intends to submit any ated the judgment of the proceedings that July 14th, the company filed an admin- recommendation to the CADE tribunal had been initiated in 2006 by SDE, with istrative appeal seeking clarification of for judgment, or is conducting further four of the five directors voting for the im- certain contradictions, omissions and research on this topic. If the company is position of certain penalties. On May 28th, obscure points in CADE’s decision. Up to found guilty of violating the law, it could 2014, after suspending the first session of the present date VCSA has not received be subject to criminal and administrative its judgment, it delivered its decision, in any response to its appeal, and there sanctions, including an administrative which it imposed sanctions on six Brazilian is no legal deadline for this to occur. fine that could range from 0.1% to 20.0% cement companies including VCSA, for Until this administrative appeal has (if the new anti-trust law is applied) of alleged anti-competitive practices. been judged, CADE’s decision will not the gross revenues of its activities, for be formally completed at the adminis- the fiscal year immediately preceding the The sanctions imposed by CADE against trative level and, therefore, sanctions year in which the administrative process VCSA, included a fine of approximately can not be applied. If CADE’s decision was initiated. In the opinion of the com- R$ 1,566,000,000 and an instruction to is confirmed, CSAV intends to appeal pany, and of its legal counsel, Votorantim VCSA to sell (1) all of its shareholdings in in the judicial system. The company will not be subject to any administrative other cement and concrete companies in has classified the chances of losing this and/or criminal penalties in this process. Brazil, (2) 20% of its installed capacity for judicial process as a possible loss and The possibility of a loss in this process is ready-mix services in Brazil; this capacity on March 31st, 2015, considering this considered to be remote.

Watching out for child, forced or compulsory labor [G4 and G4-HR5-HR6]

The issues related to child, forced or Annual audit plans are prepared, which Third-party audits related to the topic compulsory labor are addressed in our include audits of suppliers, in order to are conducted by outside specialist Code of Conduct and also through op- evaluate the main risks for each busi- contractors. erational control audits. The data gener- ness unit. These plans are discussed ated by the system is monitored regu- and approved by the business unit’s Furthermore, there are specific clauses larly and this information is reported to senior management, in such a way that in our contracts related to this topic. the Ethics and Conduct Committee. there is a reasonable level of coverage Suppliers that have been blacklisted considering the number of operating by IBAMA or the Ministry of Labour are Any suspected violations of policies or units in each business area and also automatically deleted from our system. allegations of child, forced or compul- the rotation of emphasis. Additionally sory labor are directed firstly to the the existence of an Ombudsman area, In 2014, we did not identify any Audit area and then, after an inquiry or supported by an independent informa- transactions or suppliers with a risk investigation, depending on the circum- tion system. This facilitates access to of involvement with child, forced or stances, they are sent to the People and the Ombudsman area by employees compulsory labor. Management area for the implementa- and other stakeholders, if they observe tion of appropriate remedial measures. violations of policies.

Eco-efficiency and Both policies were approved by the Innovation [G4-EN27] Global Executive Team (GET) and the Board of Directors and they We are committed to the protection will be disseminated throughout of natural resources and promote the company in 2015. This process eco-efficiency through the implemen- includes communication initiatives, tation of innovative practices and training and the cascading down of products. In 2014, we made signifi- targets, from senior management cant progress on this topic. to the operational areas.

Based on contributions from specialists in the regions, we reformulated our Environmental Policy and Green Rules. The Green Rules are a set of 10 norms that describe the behaviors expected of employees in relation to environmental issues. The revised version, in addition to informing the requirements regarding compliance with laws and regulations, includes norms and guidelines to promote eco-efficiency and reduce environmental impacts.

Ou r tARGETS for 2020

TARGETS FOR 2020 ACHIEVEMENTS IN 2014 We developed a new Global Environmental Policy and Ensure implementation of the Global Environmental revised the Green Rules, introducing and emphasizing the Policy and Green Rules. concept of eco-efficiency. Achieve a clinker/cement factor of 72%. We reduced the clinker/cement factor by 1.9%, down to 74.7 %. We increased the use of these fuels by 14.2% , reaching a Use 30% of non-fossil fuels in our cement plants. substitution factor of 7.6%. Reduce our CO emissions per metric ton of 2 We reduced our emissions by 15.8% compared to the base cementitious material by 25% compared to the base year (1990). year (1990).

Reduce emissions of particulate matter, NOX and We reduced emissions of particulate matter by 5.2 % (108

SO2 per ton of clinker, by 65, 1,950 and 750 grams, g/ton clinker), NOX by 12.1% (1,977 g/ton clinker) and SO2 by respectively. 28.4% (683 g/ton clinker) compared to the previous year. We completed a risk analysis study on water-stressed Implement water management plans in all business areas in Brazil and began to implement the Global Water units that are in water-stressed areas. Tool methodology in other countries. Develop Biodiversity Management Plans for 100% of We developed a Biodiversity Management Plan for the the units that overlap with areas of high biodiversity Ribeirão Grande (SP) plant. value.

OUR GLOBAL ENVIRONMENTALPOLICY

Always comply with the legal requirements, standards and 1 regulations applicable to the organization and the voluntary commitments it has subscribed to.

Implement and maintain an Environmental Management System, 2 appropriate to our nature, scale and the environmental impacts of our activities, products and services, to ensure compliance with our commitments, focusing on continuous improvement and pollution prevention.

Ensure the eco-efficient and responsible use of natural resources to reduce the consumption of fossil fuels, raw materials, water, 3 energy and other inputs.

Address the challenges of climate change by developing a strategy for reducing greenhouse gas emissions. Focus on the 4 use of low-carbon, alternative fuels, and the responsible use of fuels and raw materials.

Define and implement environmental standards to assess and 5 monitor atmospheric emissions and set reduction targets.

Minimize the generation of waste. Reduce consumption, reuse 6 and recycle materials when possible and dispose of waste appropriately and responsibly.

Assess, control and reduce the environmental impacts of our 7 activities, focusing on continuous improvement and best industry practices. Invest in environmental innovation in our processes, products and services throughout the life-cycle, seeking to reduce our environmental impacts.

Develop rehabilitation and closure plans for all our active mining 8 operations, considering stakeholders’ expectations. Continuous monitoring and reporting of our biodiversity performance, focusing on conservation and increasing awareness.

Promote ethical and transparent relations with our stakeholders, 9 by providing environmental information about our operations and products on a regular basis and maintaining a process of open dialogue.

Protect and respect the natural environment – 1 air, land and water 2 Protect Biodiversity – flora and fauna

Minimize the generation of waste – reuse, 3 recycling and responsible waste disposal

Maximize energy efficiency and reduce greenhouse gas emissions (in production, The Green Rules were 4 transportation and support operations) developed based on our Environmental Policy Continuously monitor environmental impacts principles to facilitate and develop a plan to define reduction targets the understanding and 5 dissemination of the Commit to using the highest level of pollution policy to all employees. 6 control technology whenever possible

Respect caves and cultural, geological, historical, 7 archeological and paleontological sites

Maintain a process of open dialogue. Respect 8 neighbors and stakeholders

Reduce the use of virgin raw materials whenever possible. Maximize the efficient and responsible 9 use of resources

Rehabilitate company sites – during operations With this and other environmental education and post-closure initiatives we are contributing to achieving 10 Target 1 of Strategic Goal A of the Convention on Biological Diversity. This target aims to promote awareness of the value of biodiversity and the measures that can be taken to conserve and use biodiversity in a sustainable manner.

Environmental Investments T otal environmental EXPENDITURE [G4-EN31] in R$ 51,242,110 79,070,976 41,629,016 In 2014, our environmental invest- 67,804,164 ments (Capex) totaled R$ 67.8 27,787,572 million and our environmental op- 31,690,068 erating expenses (Opex) increased Environmental to R$ 41.7 million, already reflecting Operating Expenses (Opex) the benefits of the investments Environmental made in prior years. The increases Investments (Capex) were due to disbursements for new 2012 2013 2014 projects for the co-processing of waste and the modernization of industrial plants, seeking to increase energy efficiency and reduce particu- ENVIRONMENTAL EXPENDITURE late emissions in cement production. BY TYPE – in R$ 17,487,837 Other important investments in- 64,692,581 9,475,277 cluded projects for heat recovery and 48,132,668 62,082,463 Other Environmental emissions control in our operating 37,875,439 Expenses units in Europe, Asia and Africa. 24,880,414 Environmental 31,826,306 Prevention and Management Expenses Waste Disposal, Treatment of Emissions and Remediation Expenses 2012 2013 2014

ENVIRONMENTAL EXPENDITURE By Region – IN %

92% VCBR South America VCEAA VCna

Materials – clinker/cement Clinker/Cement Factor factor Target for 2020: 72% One of the main challenges for 81% sustainability in the cement industry is to reduce the clinker/cement factor, that is, the amount of clinker used to produce each ton of cement. 76% Reducing this factor is important for 75% reducing CO2 emissions, since the 74% manufacture of clinker consumes fossil fuels.

Because of this, one of our major focuses of research is to find new additives to replace clinker, while main- 1990 2012 2013 2014 taining cement quality standards. Today, our average clinker/cement factor is 74.7%. We have achieved this by the use of alternative cementitious materials, mainly, natural or A ward-winning practice: artificial pozzolan, limestone, steel furnace slag and fly ash (the residue use of pozzolan in the Porto from burning coal in thermal electric- power plants). Our goal is to reach a Velho and Nobres plants clinker/cement factor of 72% by 2020.

A number of issues affect progress in this area, particularly, the legislation and the availability of cementitious materials in the various regions. In North America, for example, we have plants with a clinker/cement factor of 96%, due to restrictions on the use of additives. In Brazil, we have units with a high proportion of eco-efficient ma- Pozzolan terials. In the Cubatão plant (SP), for produced at the example, the use of slag has reduced Porto Velho plant the clinker/cement factor to 65%. By investing, in partnership with As a result of using this material, suppliers, to develop furnaces that these units decreased the use of activate clays by calcination, our clinker by 35% by the end of 2014. plants in Porto Velho (RO) and Other benefits were: the production Nobres (MT) have succeeded in pro- of artificial pozzolan reducesC O 2 ducing high-performance artificial emissions by 50%, fuel consumption pozzolan. The material presents by 25% and water usage by 40%, advantages compared to using compared to the conventional clin- clinker, resulting in cement that has ker production process. The project greater strength and durability. was awarded the FINEP Award in the category Sustainable Innovation.

Energy Other major challenges facing the 4% cement industry major, related to climate change, are to increase energy efficiency and to promote the sub- The reduction in electrical stitution of fossil fuels by alternative energy consumption at fuels and bio-mass. The consump- the Rio Branco do Sul Unit tion of energy, both electrical and thermal, is an important contributor in 2014. Since 2001, the unit’s Internal Committee to CO2 emissions. for the Conservation of We have worked intensely to im- Energy and Water has prove energy efficiency and co-pro- originated a series of cessing. This involved redirecting our changes to production investment priorities and working on creating an internal culture of energy processes. conservation.

A benchmark for energy efficiency in North America

Our plant in Bowmanville, Ontario, Canada

Our plant in Bowmanville, Ontario, has continued to improve its efficien- Canada, was the first industrial com- cy, achieving a reduction in consump- plex in North America to be certified tion of 10.3 million kilowatt-hours, for energy management under ISO equivalent to savings of US $ 1 million 50001, in 2011. Since then, the plant per year, from 2012 to 2014.

Specific Consumption of Electrical Energy KWH/ton Cementitious Product

108.8 109.4 110.0

Energy efficiency One of the criteria for the allocation 1990 2012 2013 2014 of resources to constructing new plants or expanding capacity is the Note: The figure for 2014 does not include the North American operations specification of more energy-efficient equipment, even if the initial cost is higher. One example is the installa- tion of vertical mills, which consume 30% less energy.

These investments were complement- ed by measures to reinforce management and employee awareness. In Rio Branco do Sul, the unit established a Conservation Committee in 2001. The committee has originated a series of changes to processes. The result was a reduction of 4% in the unit’s electricity Thermal Energy - Substitution of Fossil consumption during the year. Fuels by Alternative Fuels and Biomass % V CNA’s head-office inT oronto, Can- ada installed a triple combined-cycle heat and power system, completed 7.2% 7.6% in early 2015. This system will gener- 6.6% ate 100% of the building’s electricity requirements using natural gas, with heat recovery for its heating and air conditioning systems. It will serve as a pilot project for the adoption of this technology in the whole region. 1.0% For Votorantim Cimentos as a whole the energy consumption outside the organization, principally transpor- 1990 2012 2013 2014 tation and distribution activities,

totaled 427,969 tons CO2 eq.

Energy and Water Conservation Committee

Members of the Internal Committee for the Conservation of Energy and Water at the Rio Branco do Sul Unit

Composed of volunteers from all Among the initiatives under- areas of the Rio Branco do Sul (PR) taken in the area during 2014 were unit, the Committee has focused projects related to improving the its activities on promoting the energy efficiency of industrial efficient use, and reduction of equipment and the small hydro- wastage, of water and energy. The electric power plant in Environmen- Committee set up teams dedicated tal Square. They were also active in to the themes of education, fight- social projects in the community. ing wastage and efficiency projects.

New solutions for co-processing amounted to more than R $ 33 mil- We have installed co-processing lion during the year. equipment in our plants that use biomass and waste, thus diversifying our We installed an entirely new system thermal energy mix and reducing fossil in the plant in Sobradinho (DF) and

fuel consumption and CO2 emissions. retrofitted equipment at the plants in Nobres (MT), Itaú de Minas (MG), Investments in co-processing Sobral (CE) and Cantagalo (RJ).

GHG Emissions Specific CO2 Emissions

For the cement plants, our inventory kg CO2/ton of cimentitious product of greenhouse gas emissions (GHGs) is prepared in accordance with the 763 763 0% Cement Sustainability Initiative (CSI) methodology and focuses 5% mainly on carbon dioxide (CO2). In the case of aggregates, concrete and complementary products, we adopt 657 10% 650 653 the Greenhouse Gas Protocol. In all 645 637 643 cases the base year is 1990. 15% Our emissions have fallen substantially, compared to the base year, 20% due to three main factors: investments in the modernization of our 1990 2012 2013 2014 installations to improve electrical energy efficiency; substitution of fossil fuels by alternative fuels and Gross bio-mass (thermal energy); and the Net use of alternative materials. Reduction

Air Emissions In 2014, we invested in large projects

(PM, NOx, SO2) in Tunisia, where the wind makes it We have accurate processes to man- difficult to control the dispersion of age and measure air emissions. Our particulate matter. The materials air emissions were audited by the CSI storage areas and industrial installa- and were considered to be 100% in tions were covered or sealed. conformity with its standards.

We have continued to present improvements in our indicators, with significant reductions in emissions

of NOX and SO2 in our operations in Brazil, Europe, Asia and Africa. This was due to investments in air filtra- tion systems and the containment of particulate matter in the various units and management.

Reduction of NOX at the Vidal Ramos plant Vidal Ramos Plant

Inaugurated in 2011, the Vidal Ramos To achieve this, we invested in a as modifying equipment. Finally, (SC) plant has installed the first selective non-catalytic reduction we achieved decreases of 35% in the vertical mill for cement grinding in system, (SNCR) which uses urea chimney emissions and of more than the company. In 2012, we initiated diluted to 40%, associated with 50% in the consumption of urea, an optimization project at the unit, co-processing. For two years, we during 2013 and 2014. in order to substantially reduce urea conducted a series of adjustments consumption and NOx emissions. to processes and operations as well

Specific Particulate Matter Emissions Grams of PM/Ton of Clinker

0% 205 5% 10% 15% 143 20% 114 108 25% 30% 35% 40%

Specific Emissions 45% Reduction (%) 50%

2000 2012 2013 2014

Specific NOx Emissions

Grams of NOx /Ton Clinker

0% 2,249 5% 1,977 10% 1,599 1,599 15% 20% Water Resources 25% In accordance with the internal poli- 30% cies for water management, we are 35% identifying which units are in water- stressed areas using the methodol- 40% ogy called “Global Water Tool for the 45% Cement Sector” developed by the World Business Council for Sustain- 2000 2012 2013 2014 able Development (WBCSD) and Aq- ueduct (World Resources Institute). Specific Emissions Reduction (%) In addition to collecting the data necessary to use these tools, we monitor the water levels in the principal dams and reservoirs of the hydro-electric

Specific SOx Emissions plants in the National Interconnect-

Grams of SO2/Ton Clinker ed System (SIN) for electrical energy.

This strategy was adopted in order to 0% prioritize the management of data on water resources for those units in 981 953 5% areas where water availability is more 792 10% critical. This is also a factor to con- 683 15% sider in planning the expansion of the company’s global operations. In this 20% way, we intend to have, in the years 25% to come, a water management plan for all units in water-stressed areas. 30% 35% Accordingly, in addition to setting targets, we have internally dis- 2000 2012 2013 2014 seminated best practices, such as that implemented in our plants in Specific Emissions Turkey (see below). This stimulated Reduction (%) the search for solutions on this issue throughout the company.

Our objective is to implement the Water Management Plan, composed of six main initiatives, for all the units in water-stressed areas. The six initiatives are as follows:

1 - Measurement and monitoring: This consists of analyzing and understanding the unit’s water footprint, measuring the amount of water used in production, identifying the operational limits and locations for the withdrawal and discharge of water.

2 - Reduction in consumption: This will be achieved through a variety of measures including water re- WATER: WE ECONOMIZE, cycling and reuse. It will also require changes in production processes WE TRANSFORM to make them more efficient and reduce losses. HVow otorantim Cimentos impacts and is impacted by water resources. 3 - Protection of water resources: We seek to protect the springs and We consume electrical energy before discharging them back headwater areas that contribute to which is generated in hydro- into the water bodies. restoring groundwater levels. electric plants that need dams and reservoirs to store water in The protection of springs and 4 - Promoting best practices: order to operate. headwater areas that feed into We encourage our partners, suppli- and maintain groundwater levels ers and buyers to adopt sustainable Votorantim Cimentos’ units contributes positively to improv- measures, and respect Votorantim and their local communities use ing the quality of water bodies Cimentos’ Green Rules. water directly for operations and and the increase in flow rate. residential use respectively. The 5 - Innovation that protects the water is withdrawn from surface Our concrete centers also con- environment: sources, such as rivers, and from sume large volumes of water This consists of the development and underground sources, through since it is incorporated in the implementation of more efficient boreholes. The discharge of final product and embedded technologies for water treatment effluents into water bodies may in the construction of houses, and for reducing consumption. impair their quality. Because of buildings, and other structures. this, we regularly measure the The operations and activities in 6 - Partnerships for a better future: quality of our effluents and the construction sites also consume We enter into partnerships with mu- local water bodies and, when water and are part of, directly or nicipalities, NGOs, and the scientific necessary, we send the effluents indirectly, the company’s con- community, to provide encourage- to an effluent treatment plant struction value chain. ment and contribute to developing new technologies that stimulate water conservation and improve management systems.

62 VOTORANTIM CIMENTOS água Business Overview A GENTE ECONOMIZA, W aTER Consumption Cycle A GENTE TRANSFORMA.

A Votorantim Cimentos (2) utiliza prejudicando a própria VC e as 1 HYDROELECTRIC PLANT energia de centrais hidrelétricas (1) comunidades próximas. Por isso, MINE que, para a sua operação, é fundamental que haja 6 COMMUNITIES necessitam de um reservatório de a mensuração e o monitoramento 3 água. A VC e as comunidades (3) dessa água. EFFLUENT também fazem uso direto da água 5 TREATMENT nas suas operações, seja por Nossas centrais de Concreto (7) PLANT 2 VOTORANTIM captação de rios (superficial) ou também utilizam a água na CIMENTOS por captação de poços artesianos incorporação do produto final que (subterrânea). A proteção das será utilizado na construção de 4 HEADWATERS nascentes (4) e das áreas casas e prédios (8), entre outras de recarga do lençol freático estruturas, que também consomem contribuem positivamente para água em suas operações o aumento da quantidade de água e participam, direta ou disponível e para a melhoria da sua indiretamente, da cadeia de qualidade. Os lançamentos dessas construção civil da qual a VC

águas podem alterar essa faz parte. 7 CONCRETE CENTERS qualidade. Por conta disso, realizamos avaliações É um longo ciclo, onde cada um seguidamente e, quando precisa contribuir para o uso 5 necessário, encaminhamos os sustentável da água, lançamentos para uma estação implementando as seguintes INDUSTRIES AND CITIES 8 de tratamento de esgoto (ETE) (5) medidas: medição e antes de lançá-los de volta à monitoramento, redução do natureza. consumo, proteção dos recursos WATER WITHDRAWAL hídricos, incentivo de boas DISCHARGE OF EFFLUENTS Além disso, o bombeamento da práticas, inovação que contribui cava da mina (6) pode impactar com o meio ambiente e parcerias o nível da água subterrânea, por um futuro melhor.

Rain water used to suppress particulate matter

The cement plants in Turkey have Instead of filing for authorization a high degree of dependence on to use rainwater runoff a project groundwater, and this form of with- was set up to collect and reuse drawal requires deep boreholes. rainwater for the suppression of To reduce the risks to the business particulate matter. The initiative is from the impact of new regulations, already responsible for 28.5% of the our team has developed a solution water needed for the suppression Cement plant in of particulate matter in the plants Çorum, Turkey that is unique in the country’s cement industry. in Yozgat, Çorum and Sivas. The consumption of groundwater was reduced by 21 thousand m3 per year.

Units located in water-stressed areas based on the Global Water Tool, the Aqueduct Methodology and Votorantim Cimentos’ internal criteria*

VCBR Aggregates and Cement Concrete Complementary Products 9 units 9 units 14 units

Cement 7 units

* Global Water Tool - This tool, which enables companies to identify their water resource risks and opportunities, was developed by the World Business Council for Sustainable Development (WBCSD). Aqueduct - This tool, which is used to measure, map and analyze water resource risks at a global level, was developed by the World Resources Institute (WRI).

2014 Integrated report 65 Business Overview Target for 2020

Develop biodiversity management plans for 100% of the units that overlap with areas of high biodiversity value.

Biodiversity Brazil. This study was developed due Atlantic Rainforest Biosphere Re- [G4-EN11 and G4-MM2] to the complexity of the systems of serve (RBMA) and the Brazilian Spe- As a basis for managing biodiver- classification of protected areas and leogical Society (SBE). The project sity we have adopted the Cement of the areas of high biodiversity value aims to disseminate and implement Sustainability (CSI) guidelines for in Brazil. best environmental practices in the this topic and our commitments to mine’s life cycle, with an emphasis on contribute to the Aichi 2020 targets In 2014, based on these methodolo- karst areas (occurrence of caves), in of the Convention on Biological gies, we evaluated all of Votorantim order to promote and share posi- Diversity. We have identified the Cimentos’ mining areas in Brazil, tive and mitigating actions on local operating units whose area of influ- North America, and Europe, Asia biodiversity. This will contribute to ence overlaps with areas of high and Africa. Overall, we identified 120 the construction of a new model of biodiversity value and each of these mines, of which 58% (70 units) had sustainable development and should units is responsible for preparing and some degree of overlap with areas be a commitment for Votorantim implementing a biodiversity man- of high biodiversity value in a radius Cimentos’ entire production chain. agement plan. of 5 km. Following the updating of the tool, we discovered that new Another initiative being carried out Votorantim Cimentos manages bio- protected areas had been created. under the SBE/RBMA/VC cooperation diversity issues using the Integrated This resulted in the need to prepare agreement is the Social and Environ- Biodiversity Assessment Tool (IBAT). a biodiversity management plan at mental Assets Project. This aims to The use of the tool is coordinated by additional operating units. develop a Sustainable Land Manage- the corporate environmental area, ment Model for limestone mining which collects data from each unit. Thus, as a way of addressing this in the A tlantic Forest biome. This question, we set up a project to project includes the development of In addition to using this tool, a con- prepare a Handbook on Best Envi- the methodology and its application sulting company was contracted to ronmental Practices in Mining, under in two pilot projects at the units in Ri- carried out a survey of areas of high the SBE/RBMA/VC cooperation beirão Grande (SP), which has already biodiversity value for the units in agreement, in partnership with the been completed, and Laranjeiras (SE).

Private Natural Heritage Reserve (RPPN) in the Nobres unit

In December 2014, the area known should guide and regulate the use area of more than 77 thousand as the Tombador Waterfall Nature of the area. The Reserve is a legacy hectares, the Environmental Pro- Reserve, close to the Nobres for all, but especially for the local tection Area of the Paraguay River (MT) plant in Brazil, was officially population. Headwaters (APA). designated as a Private Natural Heritage Reserve (RPPN), by the This preserved area of 296 hect- With this, and its initiatives for environmental agency of the State ares has been recognized to be of other protected areas, the com- of Mato Grosso (Brazil). high biodiversity value. It plays a pany is contributing to achieving very important role in the preser- Aichi Target 11, regarding conser- In 2015, we will initiate the devel- vation of the Cerrado and Amazon vation áreas, of the Convention opment of a management plan transition biomes, since it forms on Biological Diversity. that will establish the zoning part of an ecological corridor, of the area and the norms that together with another protected

2012 2013 2014 Unit Total number of units 81 119 120 Number The total number of units identified as having the need for a 47 62 70 Number Biodiversity Management Plan (BMP). Percent of total units that were evaluated according to the criteria 58% 52% 58% % for the need for a BMP. Number of units which have a BMP in place. 2 4 4 Number

Percentage of units which have a BMP in place. 4.3% 6.5% 5.7% %

Identification of UNITS REQUIRING biodiversity management plans Areas of high biodiversity value

70 62 47

2012 2013 2014

Number of mines located in areas of high biodiversity value Number of units with Biodiversity Management Plans in place

Plan for the closure monitoring by the global area for the final closure costs and mitigate and recovery of units the environment. The plans address the liabilities. [G4-MM10] both environmental rehabilitation The plans for closure, deactiva- and the relations with the relevant In 2014, the closure plans for the tion, decommissioning, recovery stakeholders. units in Sobradinho (DF) and Rio Ne- or rehabilitation of areas that were gro (RJ) were initiated, with comple- developed from 2013 onwards were The action plan for the closure phase tion scheduled for the beginning of prepared according to the Cement includes the initiation of activities the first quarter of 2015.A lso by then Sustainability Initiative (CSI) guide- to mitigate liabilities even while all VCBR cement units will have de- lines on this subject. the unit is still operating. A review veloped closure plans. Thus, for 2014, of the closure plan details is carried of the total 120 units considered, 94 The preparation and execution out every five years to update the (78%) had already developed rehabili- of these plans are the responsibil- measures to be taken and the costs. tation plans. ity of the respective units, with The main advantage is to amortize

A quaculture project in the Aberfoyle unit

The Aberfoyle unit in Canada with one input and one output, carried out a project to prepare a taking advantage of the structure mining area that had been deacti- of the mine. The flow of water is vated for a new use in the future. continuous and is maintained at This area, which was considered the desired level of water quality, to have potential for fish produc- which allows breeding in higher tion, needed a few improvements densities in the trough. Moreover, to enable the large-scale produc- it is a closed-loop system, since tion of fish.T he technical solution the organic waste from the final implemented was composed of process may be used for soil treat- rectangular basins or channels ment and as fertilizer. made of concrete and equipment

Oranges in the mines of Cortijo Nuevo

In Spain, our plant in La Rinconada, closed down in 2035. Even so, 10 Seville, produces between 300 and hectares have already been reha- 400 thousand tons of aggregates bilitated and planted with orange per year. Today, alongside the open- trees. In addition an area is being cast mining, there are orange trees prepared to plant a further three growing. This was made possible hectares. Thus, by the time the by a land rehabilitation project that mining operations in Cortijo Nuevo runs in parallel with the mining are closed down, virtually all of the activities. area will have been restored to its original condition and replanted The mining operations began in with orange trees. 1994 and are only expected to be

Organic farming in Peterborough

VCNA mine in In North America, we had the chal- quality of the adjacent agricultural Peterborough, lenge of developing a decommis- areas, which had not had mining Ontario, Canada sioning plan for a limestone mine activities. owned by our aggregates plant in Peterborough, Ontario in Canada. The project began in 2012 and the first two years were dedicated to In partnership with local farmers, evaluating the effectiveness of a and with the help of consultants, variety of techniques for fertiliza- we established the goal of restoring tion, seed mixes and crop rotations, the soil quality to a level that would in an area of 937 m2. In 2015, the not only allow agricultural produc- area will be expanded, promoting tion in the former mining area, organic agriculture and increasing but also contribute to raising the productivity.

Plans for Mine Closures/Rehabilitation of Areas

2013 2014 Total number of operations that have 93 (78%) 94 (78%) plans for closure/rehabilitation of area Value of the total financial provision 194,757,886 180,000,000 for the closure of operations (R$)

Research and development cement in our Salto de Pirapora (SP) and Jirau), in Teles Pires, Mato Grosso, In Brazil we have restructured the plant by the addition of slag. In ad- and in Belo Monte, Pará, in which we Research & Development and Quality dition to providing an appropriate will supply more than 1 million metric area, merging the departments that and creative disposal method for this tons of products. had previously worked separately waste the performance of the final in each business (cement, concrete, product was improved. Quality Indicators aggregates and complementary In 2014, our Quality Index of Products products). Large projects (IQP) increased to 95%, an increase of Our research into improving the qual- 3% over the previous year. The R & D team, which reports to the ity and reactivity of our products has Technical Directorate, works closely enabled the company to be consid- Our contracts contain specific with the Sales area to develop new ered as an excellent supplier for cer- product performance characteris- eco-efficient products and services tain large hydro-electric plants under tics, with requirements that go far aimed at meeting consumer demands. construction in Brazil. We have signed beyond technical standards. long-term contracts to supply cement We are researching new sources for the construction of the dams of of cementitious materials. We are the hydro-electric plants in the Ma- already producing a new type of deira River complex (Santo Antônio

Permeable concrete

Another focus of the R & D area is pacting concrete which, among to find alternatives to substitute other advantages, increases the the materials traditionally used in speed of construction and reduces construction. the noise during its application, and permeable concrete, which A number of innovations have helps improve drainage, contribut- Demonstration of self-compacting been incorporated into our product ing to flood prevention flooding concrete range. Two examples are self-com- and rainwater reuse.

What the community is saying

In 2014, we carried out a second Favorability Survey. The objective was to calculate a Favorability Index to measure the institutional, social, economic and environmental impacts of our plants on the local communities. The survey was conducted in the communities close to our plants in Cantagalo (RJ), Imbituba (SC), Itaú de Minas (MG), Laranjeiras (SE), Muribeca (SE), Rio Branco do Sul (PR), Sobradinho (DF), Sobral (CE) and Xambioá (TO).

More than 400 interviews were conducted with a representative sample of our stakeholders. The main results were as follows:

Does Votorantim Cimentos contribute to the development of the municipality or region? - 91% Is the company socially responsible? - 95% Overall Favorability Index - 85% Would you like to work in the company? - 70%

Community Engagement Brazil, in four areas: human capital have been defined considering the [G4-SO1] (education, culture, sports, work, social characteristics of the com- rights of children and adolescents); munities and prioritized to help us A structured program of activities institutional capital (strengthening to identify in which locations we will with the local communities in the NGOs and public administration); act more decisively. locations where we are present is a social capital (stakeholder engage- strategic element for the future of our ment, community councils); and The locations were prioritized ac- operations. By promoting the develop- economic growth (generation of cording to: representativeness, the ment of communities, we create value jobs and income and development degree to which our operations im- for society and our business, strength- of local suppliers). pacted the community and the com- ening our values and our reputation. munity impacted our operations. We It also improves the work atmosphere The social investment for the year have prioritized 36 of our 53 cement in our operating units contributing of R$ 16.38 million was almost 35% plants in Brazil, and for 31 of these to a higher level of motivation and higher than for 2013. This increase we have developed long-term plans increased competitiveness. was due to the expansion of the (5 to 10 years). social responsibility initiatives in our In 2014, in partnership with the operations. Our social investment Votorantim Institute, we sponsored decisions are guided by medium and 94 social projects in 31 locations in long-term strategic goals, which

72 VOTORANTIM CIMENTOS Business Overview 35%

The increase in the amount of social investment in 2014, compared to the previous year.

Some examples of projects that Cantagalo (RJ), Rio Branco do Sul market. They are carried out with focused on our relations with (PR), primavera (PA), Vidal Ramos highly respected institutions such as communities, which were carried (SC) and Edealina (GO). the National Industrial Apprenticeship in 2014 in Brazil, are as follows: This program offers technical support Service (SENAI), the Federal Center and training to municipalities for of Technological Education (Cefet), ReDes (“Networks”) Program the development of projects aimed the National Rural Training Service This program is a partnership between at modernizing management in tax, (SENAR) and ESPRO, which prepares Votorantim Cimentos, the Votorantim administration, education and health, young people to be apprentices. Institute, and the National Bank for as well as the development/revision of Another initiative is the Evolve Economic and Social Development the Municipal Plan for Basic Sanitation program which provides technical (BNDES). The program promotes inclu- or the Participative Master Plan. Our training in maintenance (mechanical, sive business, and focuses on structur- actions followed the guidelines of Law electrical and mining. ing production chains in municipalities 10.257, (“Estatuto das Cidades”), and with critical social indicators. other applicable legislation. Infrastructure support In order to stimulate social and We have a total of 11 ongoing projects The preparation of detailed plans economic development, we have in the communities near our plants in and projects enables municipali- contributed to the improvement of Xambioá (TO), Sobradinho (DF), Can- ties to raise funds to improve basic infrastructure in the locations where tagalo (RJ), Laranjeiras (SE), Rio Branco infrastructure through federal we operate or plan to operate. We help do Sul (PR), Vidal Ramos (SC), Várzea government programs. The program meet the communities’ demands by Grande (MT) and Nobres (MT ). is present in six municipalities. Due establishing partnerships and techni- to the program the municipality of cal cooperation agreements, identify- A good example of the program’s Cantagalo (RJ), obtained a loan of R$ ing infrastructure needs and assisting potential is “XambiArt “, a handicraft 14.9 million from the National Health in contacts with the relevant instances business set up by 19 women in Foundation, for a project to collect of government. Xambioá (TO). They received technical and treat sewage. According to the training and support in management, newspaper Valor Econômico around One example is a program in the mu- manufacturing and marketing for the 70% of municipalities fail to obtain nicipality of Primavera, in Pará, where production of bio-jewelry and handi- federal funds for sanitation projects, we plan to construct a new plant. Even crafts, using materials such as mud, for lack of a plan. before starting to construct the plant clay, coconut and straw. we signed a Technical Cooperation Training of the local workforce Agreement with the municipal Overall, in 2014, more than 1,600 fami- Our training programs provide government, in partnership with lies in these communities benefited opportunities for young people in the Votorantim Institute. The agree- from the ReDes program. socially vulnerable situations to ment focuses on long-term initiatives improve their level of qualifications in six areas: infrastructure and basic Public administration support and access to the labor market. We sanitation, education, health, social program In 2014, we contributed to offer training courses in technical action, training for public administra- strengthening public administration professions and also in the general tion and the promotion of productive in six municipalities: Xambioá (TO), preparation for entry into the labor and cultural chains.

Breakdown of Social Investment 4% 2%2% 4% 4%

ReDes Program 5% Public Administration Professional Training 5% 47% Development Projects 5% Education Culture 6% Votorantim Program for Education 7% Sport 9% Rights of Children and Adolescents Community Engagement Organizational Proficiency Management and Logistics

Engagement with stakeholders Community Councils Throughout the year, we developed Another important engagement engagement plans with stakeholders initiative was the establishment of in 10 locations. We identified strategic Community Councils. This serves groups and material issues and es- as a communication channel with tablished action plans to improve our the community, and aims to arrive relations with our local communities. at balanced solutions in responding to the demands of the various local Based on these plans, we implement- stakeholder groups. ed a number of initiatives in these locations. At the Salto de Pirapora To date we have sponsored the es- Unit (SP), we implemented the proj- tablishment of 13 Community Coun- ect called “Beyond the Walls” that cils in the municipalities of: Xambioá aims to promote the engagement of (TO), Laranjeiras (SE), Cuiabá (MT), our external and internal stakehold- Sobradinho (DF), Itaú de Minas (MG), ers through educational, social and Cantagalo (RJ), Rio Branco do Sul financial development initiatives. (PR), Vidal Ramos (SC), Imbituba (SC), Salto de Pirapora (SP), São Luis The project consists of 14 initiatives (MA), Sobral (CE) and Jaboatão dos divided into six focus areas: dialogue Guararapes (PE). and relations; safety; the environment; professional training; sport; These councils are composed of and volunteering. Some of them representatives of business and gov- have already been integrated into the ernment and local opinion leaders. unit’s day-to-day routine. They prepare, collectively, an agenda

Invfrastructureestimento em ValAmoountsres i PNúubmblicero of DPeriuraoçdã ofo d o infvraestruturaestment nInvvestedestid o(Rs$) (R$) Benebeneficiadiciarieso Iinnvestiestmmentento EPstradarimavera de (APAcesso) em MaisMore de than 5.000 5,000 1 1 ano year. . CConcluídoompleted em in R$ 9.000.0009,000,000 PArimaveraccess Road beneficiáriosbeneficiaries Dezembroecember 2014de 2014

to promote community develop- People Management [G4-10] To achieve this, we have developed ment, with initiatives in areas such what we call the People Cycle, which as education, culture and entrepre- Empowered people is an annual schedule of activities, neurship. The alignment of the organization involving mangers and their teams. structures in the various regions All managers participate in these The methodological approach to manage their strategies led to activities which include: cascading encourages a productive dialogue advances in the use of best practices down of targets; reporting results; with our various stakeholder groups, in people management. Within this awarding bonuses; performance which include other cement com- broader view, in 2014, the Global Ex- evaluations; a process of open panies in region. It aims to mobilize ecutive Team (GET) approved policies dialogue between managers and the various social actors to develop that began to guide the units’ actions employees; and the definition of indi- solutions that lead to an improved as from 2015. vidual development plans in order to quality of life in these communities. raise employee performance. The overall goal is to reinforce Vo- Infrastructure support [G4-EC7] torantim Cimentos’ position in the Our objective, with these initiatives, In 2014, Votorantim Cimentos, in market as an employer of choice, is to ensure that our approximately partnership with state governments, with its reputation founded on 16 thousand employees feel valued developed two projects focused on people’s willingness to work with us. and have the opportunity to build a investments in infrastructure and successful career in the company. services: access roads in Primavera Our vision is to have the best team (PA) and Edealina (GO). Both initia- in the industry, made up of people tives were aimed at improving safety who are highly trained and have a indicators and the quality of life of pro-active attitude to make things the communities surrounding the happen, at the pace that the busi- company’s operating units. ness demands.

The workplace environment we want Transparency, open dialogue, connected people, appreciation of our products and an inspiring atmosphere. These are the points that guide our people management initiatives.

The new global headquarters of Votorantim Cimentos in Brazil, in the district of Vila Olímpia, São Paulo (SP), reflects this aspiration.

Total number of employees [G4-10]

Own Employees Men Women Total Paid Monthly 11,116 1,514 12,630 Paid Hourly 2,430 143 2,573 Trainees 6 5 11 Others 291 274 565 Overall Total 13,843 1,936 15,779

Fixed employees by job category – 2014

Job Category Men Women Total Director/President 46 3 49 Manager/General Manager 466 87 553 Coordinator/Consultant 423 128 551 Technician/Analyst/Supervisor 2,622 646 3,268 Trainee 6 5 11 Operator 9,989 793 10,782 Others 291 274 565 Total 13,843 1,936 15,779

Number of employees by type of contract – 2014

Men Women Total Fixed-term Contracts 368 285 653 Permanent Contracts 10,478 1,355 11,833 Total 10,846 1,640 12,486

Note: The data from VCNA was not included in this table. This is the reason for the different total number of employees reported in the other tables above.

Number of employees by type of employment – 2014

Men Women Total Full-time 10,555 1,366 11,921 Part-time 291 274 565 Total 10,846 1,640 12,486 Nota: The data from VCNA was not included in this table. This is the reason for the different total number of employees reported in the other tables above.

Number of contract staff by region – 2014

Men Women Total South Region 2,015 467 2,482 Southeast Region 3,807 573 4,380 Center-West Region 1,440 196 1,636 North Region 0 0 0 Northeast Region 1,271 225 1,496 Total 8,533 1,461 9,994 Note: The data on employees by region refers only to Brazil.

Development and training T o support this process, a study [G4-LA11] was carried out to identify all the In 2014, we utilized the Votorantim operational and management Development System (VDS) [LA11] job categories at a global level, and at all organizational levels in Brazil to the knowledge required for each and North America, covering 100% category. Based on this, we set up of our employees. In the case of our a new series of technical training VCEAA (Europe, Asia and Africa) courses, thus increasing the level operations, which were acquired only of transparency in employee career recently, in 2012, the VDS system did expectations. not cover all operational positions. We started to structure a corporate The VDS is a system that encompasses university to support the business the complete cycle of performance eval- needs, with programs related to the uation and career planning. Employee company’s four strategic drivers. For performance is evaluated in relation to the year, the investment in employee the company’s vision and strategic driv- training totaled R $ 15.1 million. ers. Each employee receives feedback and, together with his/her manager, agrees on the development actions necessary to increase performance and take the next career steps.

A verage Hours of Training per Year system for advertising job vacan- By Employee Category cies called “Moves”, and the above- mentioned Votorantim Development 2013 2014 System. In 2014, 70% of the vacancies for leadership positions in Brazil 5.56 Apprentice were filled by internal candidates. 9.4 In addition, in order to promote the international development of our 104.65 Intern highest performing employees, and 20.84 leverage the business and activities, 21.84 a clear policy of global mobility for Operator 55.42 the management of international missions was developed. 120.00 Trainee To increase our rate of internal 179.14 promotion, which has been stable Technician/Analyst/ 82.32 for four years at around 69%, we Supervisor 113.24 revitalized the Potentialize Program Coordinator/ 59.57 and initiated the Master Leadership Consultant 62.27 Program. This latter program, which lasts 14 months, is aimed at training Manager/ 34.91 a group of 38 managers and general General Manager 68.90 managers to take on new challenges. The rate of internal promotion 25.37 Director/President for senior management was 70% in 7.87 the year.

Recruitment and selection T urnover and recruitment [G4 – EC6] We recorded a 4% reduction in In 2014, we advanced in our turnover in the cement area. This de- discussions on the development of crease was due to the improvement a Global Recruitment and Selection in the process of exit interviews, Policy. This is aimed at strengthening enabling us to identify problems with our commitment to hire and develop greater precision and to respond in a local labor, by giving priority to more focused way to find solutions. candidates from the country that originated the vacant position. Local We expect that the company’s aver- labor is defined as persons born or age turnover, which was 28% in 2014, naturalized in the country where the will continue to reduce as a result of operation is located. In the case of the ongoing improvements in the Brazil, 95% of senior management processes of the People and Manage- (general managers, directors ment area. and presidents) and 99.9% of the workforce met the criteria for local During the year we recruited 2,500 labor for the year. new employees. To attract talented people, we improved our Internship For management positions, we priori- Program by creating a schedule for tize internal recruitment. This policy the regular monitoring of these young is managed using the Votorantim people. We held the third edition of

the Cement Leaders Program. Under the program nine young engineers will undergo an 18-month training course 4% preparing them to become future plant managers. Another initiative was the Trainee Program where we selected The decrease in turnover nine graduates from around 800 in 2014, compared to 2013. candidates after a selection program that began with 10,200 applicants.

Remuneration and Benefits We have adopted a remuneration policy consisting of fixed and variable components. That is based on perfor- Turnover (%) mance and rewards employees who By Age Group are aligned to the company’s strategic objectives. 2013 2014

For managers and specialists in Salary 14.00 Group (GS) 29 and above, the vari- 12.34 able remuneration is calculated based on their performance in relation to 9.00 individual and corporate targets. For 6.57 operational employees in GS 28 and 3.05 below, collective goals are established. 2.00

The variable component is allocated according to the job category and the Less than Between 30 More than salary group. The employee receives 30 years old and 50 years 50 years old an increase in total compensation pro- old vided he/she achieves the indicators established in his/her target dashboard. To define the SG , the job categories are Rate of New Hires (%) evaluated according to the require- By Age Group ments in terms of knowledge, complexity and responsibility 2013 2014 for results. 10.60 10.30 10.08 9.21 The total remuneration is comple- mented by a benefits package. In addition, to the standard items, the package includes maternity leave of six months, reimbursement of expenses for children’s school materials and a 0.60 1.01 private pension plan.

Internal communication Less than Between 30 More than The mission of Votorantim Cimentos’ 30 years old and 50 years 50 years old internal communication is to contrib- old

ute to the dissemination of the desired ments. The aim was to enhance local dent and employees; strategy, best corporate culture through communi- communication practices and es- practices, recognition, questions cation initiatives that strengthen our tablish synergies between countries, and answers; aimed at employees in employees’ pride and sense of belong- encouraging dialogue, and face-to- administrative functions; quarterly. ing. Our communication channels face communication. In addition, we are designed to reach all employees, launched our first global newsletter, Executive Report – electronic regardless of their position or location. called “Connection” and distributed it report for managers; strategic We use face-to-face communication to all the managers. This newsletter information; guidelines, procedures, to disseminate our vision, strategic aims to divulge the President’s mes- projects, placements; published on drivers and targets, so that each sages, disseminate best practices and an ad-hoc basis. employee can understand the value of provide information on the highlights his/her work in relation to achieving of our businesses and operations. Radar – newsletter which is specif- the company’s business goals. ic to countries and companies; issues For 2015, the challenge is to consoli- relevant to operations, new projects In these face-to-face interactions, date this global platform. Firstly, we and programs, product launches, the employee is encouraged to ask need to evaluate the internal com- awards, recognitions, events, pro- questions, discuss and learn about the munication vehicles that already exist motions, transfers and internal job company’s strategy and participate in in the regions in order to develop an opportunities; aimed at employees in the debate on how we can achieve our international system of internal com- administrative functions in countries targets. Managers interact with their munication. Secondly, we need to and companies; weekly. team members in discussion forums, ensure that the information distrib- breakfasts and open meetings. These uted is consistent and aligned with Unit Radar – bulletin for specific events are supported by unit focal the corporate identity, while respect- operating units; news, awards, rec- points that prepare presentations and ing local peculiarities. Thirdly, we plan ognitions, initiatives, drives, pro- use other methods to add dynamism to launch a global intranet, “One VC”, motions, transfers and internal job to this employee engagement process. our first global internal social media. opportunities, local events; aimed at One VC will connect all company employees in administrative func- One of the face-to-face events most employees and facilitate the forma- tions in countries and companies; appreciated by our employees in tion of work groups, the exchange weekly. Brazil, which occurs quarterly, is called of information, the sharing of files, “With VC”. In this event the company’s and will have traditional social media Psst – corporate newspaper for President speaks directly to employ- features, such as, “Like”, “Comment”, distribution on bulletin boards with ees, live and via satellite link, about “Share” and “Follow”. pages for local items; best practices the company’s strategy and current between units, countries and busi- performance and the situation of Our current internal communication nesses, promotions, transfers and markets in which we operate. Any vehicles are as follows: internal job opportunities, awards, employee can send questions before production records and number of or during these transmissions in a Connection – global channel; stra- days without accidents, training, number of different ways S( MS, email tegic information for managers in the celebrations; aimed at employees in and WhatsApp). regions; quarterly. operational functions; weekly.

In 2014, with the aim of strengthening One VC – global intranet; news, E-Psst – electronic version of the the “One team, One Company” philos- policies, guidelines, values, beliefs corporate newspaper; news specific ophy, we took an important step in es- and social interaction; aimed at em- to the Units; best practices between tablishing a communication platform ployees in administrative functions in units, countries and businesses, pro- for all the countries where we operate. the regions; updated daily. motions, transfers and internal job We developed a comprehensive policy opportunities, awards, production on internal communication, based on Com VC – web-conference; direct records and number of days without macro policies, procedures and instru- communication between the presi- accidents, training, celebrations;

aimed at employees in administrative new methodology for this survey to maintain the diversity of our workforce. functions; daily publication. make it more focused and objective. In relation to the proportions of men The survey was carried out in Brazil in and women employed, the company First Hand – an e-newsletter for the 2014, and will be applied in all other aims to develop, as from 2014, the con- regions; companies and countries; countries in 2015 and then every two cept of “Model Units”. Under this con- important and highly relevant news; years on average. cept at least one unit in each business aimed at employees in administrative must be a benchmark for this theme. functions; published on an ad-hoc The survey registered an increase of In late 2013, the project began to be basis. six percentage points in favorability implemented in Cajamar (SP), where at compared to the previous survey, con- that time 90% of the employees were Right Now – newsletter for the re- ducted in 2012. The overall favorability men. In that unit, the company plans gions; companies and countries; news index increased from 66% to 72%. to increase the proportion of women which is urgent and of public interest; in the workforce structural projects. aimed at employees in administrative It should be remembered that all These range from providing support for functions; published on an ad-hoc employees have access to the Om- primary education in local schools to basis. budsman to report conflicts with our improvements in the units themselves. Code of Conduct, in total confidence. VC Portal – exclusive intranet for The Ombudsman service is widely Brazil; institutional information, publicized internally and in the inte- news, products, applications, portals; gration information package given to aimed at employees in administrative new employees. functions; updated daily. Diversity [G4-LA12] Listen and speak Promoting diversity is a topic that has Our leaders are encouraged to be in received more and more attention. regular and direct communication We have had many discussions in or- with their team members, listening der to make progress on the subject. to their opinions and sharing challenges. Another important mecha- In our day-to-day activities we are nism is the Climate and Engage- committed to recruiting people with ment Survey. We have adopted a special needs as part of our efforts to

Relations with % Female Employees Shareholders and Investors 10.90 12.27 The establishment of an Investor 10.90 9.15 Relations area in 2014 brought Vo- torantim Cimentos in closer contact with international investors, rating agencies and lenders in Brazil. Up until 2.54 2.30 2013, under the previous governance 0.81 1.38 structure, this role was performed centrally by the industrial holding company, Votorantim Industrial. 2013 2014 Following the creation of the new area, the objective is to improve the Management/Coordination Positions company’s relations with the finan- Operational Positions cial markets, enabling the company Interns and Apprentices to have a constant and diversified ac- Total Female Employees cess to sources of funding in order to finance our expansion plans in Brazil and overseas. The main challenge is to continue to evolve in terms of % Employees more than 50 years old transparency and communication channels, with a schedule for the regular disclosure of information. 17.97 16.57 For this reason, we have reinstated the website for relations with inves- 8.88 9.72 tors and have begun to establish a schedule for press conferences, visits to investors and participations in 1.36 national and international industry 0.83 0.01 0.01 events.

2013 2014 Customer Relations

Management/Coordination Positions In 2014, we transformed the way that Operational Positions we manage our relations with cus- Interns and Apprentices tomers. One of the company’s strate- T otal employees more than 50 years old gic drivers, Customer Focus, inspired a significant change: the company began to focus on customer needs, and not only on its own products.

We developed an internal project called “Galileo” where the customer is at the center of the “Votorantim Universe”. We undertook studies to

“There was a big change in Votorantim Cimentos’ level of customer service. In our case, we were having difficulty in producing a certain type of roofing. The team at Votorantim Cimentos came up with a solution that added value to our product.”

Marco Daroz, Managing Director of Infibra, a manufacturer of fiber-cement corrugated sheets and a customer of Votorantim Cimentos since 1970.

deepen our knowledge of each of We already had a competitive advan- In Brazil, we increased our target segments (real-estate, tage when we started this project our customer base self-construction, infrastructure since, in Brazil, we can offer, in all by about 10% to and industry) and targeted our ac- geographical regions, a wide range around 60 thousand tions on the specific needs of each of basic construction materials: segment. cement, concrete, aggregates and companies, of which complementary products (including 45 thousand are active. We carried out research to under- mortars and lime). stand these segments in detail, which we referred to as “paths”. Through our Customer Relationship We tried to understand who these Center (CRC), we offer a number of customers were, where they were lo- alternative channels for customer con- cated, what they needed, what were tacts and self-service. For self-service the main difficulties that they faced we offer systems forI nteractive Voice on a daily basis, how they earned Response (IVR) and Short Message their money, and other aspects. We Service (SMS). By using these systems did all of this to be able to structure the customer can check his order or and provide solutions and products credit limit and request duplicates of according to the needs of each one. invoices. This can also be done through the internet, via the company’s portal The Sales team was restructured, to “VC Online” (vconline.vcimentos.com. improve efficiency and increase the br). The VC Online portal, in addition reach of the network. As a result, to the above-mentioned options, we began to work with a new sales allows the customer to place orders approach where one salesperson 24 hours a day and 7 days a week, and became responsible for serving the make payments. customer, for all ranges of products and services, and no longer a differ- We view this is being a significant ent salesperson for each range, as change in culture: based on a better had previously been the case. The understanding of each segment, we new approach was first tested, in a can anticipate customer demands, by pilot process in 2013, and was then having information on his planning, the implemented in all the regions dur- products he will consume, when he will ing 2014. need them and what form is required.

“With the new system of customer service, we are establishing a much more mature relationship in which each side has the opportunity to explain its needs so that together we can find solutions. This proximity has enabled a substantial increase in contracts. We were able to acquire industrial materials, which we had previously produced ourselves on site, with gains in quality and process reliability.”

Yorki Estefan, Director of Engineering at Conx Construtora e Incorporadora a Votorantim Cement customer for the last 23 years.

Customer relations and classified as “promoters”.T he Net customer satisfaction, specifically satisfaction [G4-PR5] Promoter Score is calculated by sub- in the case of concrete sales, is to In 2014, in addition to the new sales tracting the percentage of detractors send the customer an SMS on approach, we invested in developing (scores 1 to 6) from the percentage of the day after the receipt of the closer relations with the profession- promoters (scores 9 and 10). product/service. The client replies als working in the construction by rating his level of satisfaction sector. We launched a campaign In the first survey we carried out us- with the product/service received on to recognize and value the work of ing this methodology, the NPS for the a scale of 0 to 5. In 2014, the average bricklayers and construction site self-construction segment (cement, customer rating was approximately foremen, who have important roles mortar and lime) in Brazil was 44%. 4, which indicated that there had in this market. We provide trained In 2015, we will extend the survey to been consistent improvements in for bricklayers and also demonstrate all the other customer segments. this regard. For 2015, our target is to our products and technologies to achieve an average rating of 4.5. engineers and consultants. In addition to calculating the NPS, for those customers that contacted our Supplier Management In 2014, we conducted training Customer Relations and Customer [G4-12, G4-13] courses for 12,541 building site profes- Service, Centers, we conducted a sionals throughout Brazil, in order to survey of post-service satisfaction. Strengthening demonstrate our products and their At the end of every telephone contact partnerships to advance applications. the customer is transferred automati- In 2014 we began to restructure our cally to the survey, which consists Procurement area. In this project, We adopted a new methodology for of two questions: Has your request referred to internally as “No Borders”, our customer satisfaction survey, been resolved? How would you rate we revised processes, restructured the “Net Promoter Score (NPS)”, the service received? Based on this the area’s organization, and reviewed which indicates the percentage of information, we started monitoring the way in which it approached the customers who would recommend the rate of resolution of requests on supplier market. The goals of the our company. In this type of survey, the first contact, FirstC all Resolution Procurement area are to increase the the client is asked to assign a grade (FCR), and the degree of customer level of service to internal customers, to Votorantim Cimentos, on a scale satisfaction with the service received, and to increase the creation of value of 1 to 10, where 0 is “I would definite- enabling us to take corrective actions for Votorantim Cimentos, through ly not recommend” and 10 is “I would and strengthen customer relations. stronger relations with suppliers, definitely recommend”. Customers continuous improvement, research that attribute scores of 9 or 10 are Another method for measuring and development and innovation.

Our Goal for 2020

Promote sustainability in our value chain.

Lighter-weight cement bags

We carried out a project, together with a supplier of paper products, to develop a lighter-weight cement bag, which would consume less paper and, therefore, The teams responsible for the main cate- natural resources. As a result of the project we obtained gories of products purchased are headed cost savings, which were shared with our suppliers. up by trained managers who know these supply chains in great detail. These managers also play a strategic role, by defining which are the most appropriate suppliers for each category. This process includes evaluating the the supplier in relation to financial, environmental and social criteria, as well as checking the necessary legal licenses and certificates. The evaluation covers the use of materials, reverse logistics, environmental and social improvements and projects, both existing and planned.

The overall goal is to make the system more robust, obtaining benefits that go far beyond the price, by considering the total cost of supply, including productivity. Understanding the entire supply chain in depth, at national and global levels, helps us to identify opportunities and risks, establish partnerships and achieve improvements in raw materials and more appropriate services. For example, we managed to reduce the consumption of explosives in our limestone mines.

This approach presents a wide In 2014, 49.53% of the total purchas- system, where, on arrival, the range of opportunities. It enables es made by Votorantim Cimentos driver places his finger on a totem. us to identify new technologies, were contracted from local suppli- Once properly identified, he is anticipate cost pressures and supply ers. The criterion for defining local informed, through a panel at the constraints, and build joint solutions suppliers of inputs and services is entrance gate, of the waiting time that benefit both sides. In addition, that they are registered in the same before loading. In the units, where based on a better understanding of Brazilian state as the operating unit a pilot project has been implement- the supply chain, we can seek alter- that makes the purchase. ed, the driver can wait inside the native forms of supply, reducing risk plant, where he will have access to and increasing value creation. Also in 2014, we initiated a pilot our facilities, including bathrooms project in the plants in Xambioá and a snack bar, or in his truck. He As part of this restructuring process, (TO) and Sobral (CE), called the Sup- will be informed of his loading time we created a global procurement plier Development Program (SDP) by an SMS message. group with company representa- which has the objective of identify- tives in Brazil, Europe and North ing potential local suppliers and For the company as a whole we America. It is a benchmark group developing them, with the support handle around 5 thousand truck that meets every 45 days, to iden- of local government authorities and movements per day, and, in 2014, we tify the best practices in the area of trade associations. The program moved around 29 million metric tons global suppliers. As a result of this will continue in 2015 and we have of raw materials and finished prod- initiative, the Brazilian procurement already held business meetings in ucts. Having resolved the queuing team, because of its experience in both municipalities, where we ex- system issue, making it more orga- the company’s expansion projects in plained the company’s procurement nized and transparent, our next goal Brazil, participated in the purchase processes. We also met with dozens is to reduce the average customer of equipment for the expansion of of local suppliers, to find out more service time (TMAC), that is, the time our plant in Turkey. about their products and services. between the truck’s arrival and its exit with the product. We are now Development of local Logistics in Brazil developing projects to reduce TMAC. suppliers [G4 – EC9] T ransportation is an important We created a regional procurement component of our supply chain - Furthermore, due to the high cost structure, which is responsible for 60% of our freight requirements are of diesel, which currently represents developing the local service providers carried out by trucking companies about 35% of our total transporta- in those regions where we have op- and 40% by independent truckers. tion costs, we have increased the erations. The goal for 2015 is to sign volume of our railway transportation contracts at each manufacturing By increasing fleet productivity and budget for 2015 by 20%, with a focus plant for selected service categories. implementing structural projects, on the South and Northeast regions. we have been able to meet our cost Our Procurement area, in partner- targets, without re-passing inflation Approval of suppliers ship with the Votorantim Institute, in the freight costs, which makes us [G4-EN32, G4-LA14 and G4-HR10] is responsible for identifying and more competitive. In 2014, in Brazil, we increased developing local suppliers. the requirements in our supplier We have made improvements in approval process. We added a new Additionally, we have the Contract our facilities for receiving truck criterion to the selection process, Management Program (for the drivers and the process for truck which already included the prohibi- certification and evaluation of sup- reception and loading was auto- tion child labor or compulsory labor, pliers). This contributes to achieving mated, with the implementation and compliance with environmental our aim to develop our trading part- of the Totem Project. The manual and labor laws. ners and to maintain sustainable, system for controlling the queue of long-term, relations. trucks, using coded paper tickets, has been replaced by a biometric

The new criterion, effective imme- pliers are eligible to compete in our 427 diately, is to exclude any supplier program of awards and certifications. mentioned in a report issued by the Federal Comptroller General (CGU), In 2014, we developed a system to The number of new which lists companies considered automate and increase the reliability suppliers approved in disreputable and those punished of the management of information 2014. under the Anti-Corruption Law (no. in the supplier approval process. This 12,846/2013). system will be implemented in 2015.

In 2014, we approved a further 427 Relations with trade unions suppliers. [G4-11] The company respects the employ- We use an approval matrix to identify ees’ rights to free association with those critical suppliers, consider- trade unions, and has affirmed this ing various aspects, that must go in its Code of Conduct. We maintain through the approval evaluation close relations and open dialogue process. On the basis of this analy- with the unions that represent the sis we decide to contract, or not, a employees in our industry sector. Col- particular supplier. If approved, the lective negotiations always include contract is valid for one year. Also, the presence of representatives of if the supplier does not keep his ap- these unions, and the results are proval process up to date, then when disclosed to our employees through it comes up for renewal, he will be our internal communication vehicles. considered for replacement. Although not a common practice, the company would not be opposed Concerning the environmental to considering the participation of criteria, the approval matrix consid- employees in the negotiating rounds, ers the suppliers that are critical to if it were requested by the union. ensure the quality of the final prod- On the days of the union assembly uct. They must demonstrate that meetings to vote on the collective they comply with the environmental agreements, the company provides legislation, and our environmental employees with transportation to policy and green rules, among other the location of the meeting, releasing documents. them from work early, if necessary.

We verify their compliance with hu- In 2014, we did not receive any warn- man rights and labor requirements ings or sanctions of any kind, with re- by checking documents. Further- gard to the processes of association more, the contracts include clauses and collective bargaining, from the that prohibit child, forced or com- relevant supervisory bodies. Votoran- pulsory labor. We check 100% of our tim Cimentos does not have any suppliers against a list of companies operation in which the employee’s identified with practices published by rights to exercise freedom of associa- the Ministry of Labor. Such com- tion may be at risk. [G4-HR4] panies are blocked in our supplier control system. In Votorantim Cimentos, 100% of our employees are covered by collective We encourage suppliers to comply bargaining agreements. with all the aspects analyzed in the approval process. Only approved sup-

Relations with line with our standard practice the government bodies handbook was updated prior to the elections in 2014. Our relations with government bodies, at all levels, are strictly technical In addition we have a Corporate and concern strategic and/or busi- Policy for Election Donations, which ness issues. establishes corporate guidelines for the company’s donations in elec- Votorantim Cimentos set up the tion campaigns. This policy can be Advocacy Work Group, a multi- consulted on our website at: disciplinary group of employees, to (www.votorantim.com). identify and address issues that have the potential to impact the business In the 2014 elections, we made environment and that require nego- contributions amounting to R $ tiations with government entities. 9.71 million. These donations were made in accordance with current On a day-to-day basis, we monitor legislation and company policies. the activities of parliamentary com- All donations are registered at the mittees and projects being discussed Superior Electoral Court (TSE). This in the various legislative bodies that information can be consulted at the have some connection to the com- following link: http://inter01.tse.jus. pany’s industry or business areas. We br/spceweb.consulta.receitasdespe- also identify organizations and enti- sas2014 ties that bear some relation to the company’s projects or initiatives. Link: http://inter01.tse.jus.br/spceweb.consulta.receitasdespesas2014 In addition, we are in constant contact with the state and municipal P arTICIPATIOn in Forums governments of the regions where and Associations [G4-16] we operate, and support the development of local communities. We participate in various forums and entities in the cement industry, in We participate in forums at various the various countries where we oper- levels of government (ministries, de- ate. We contribute to the discussion partments and other public bodies) of the paths to sustainability in the to discuss and present demands or industry. proposals for regulations that have some connection with our activities. Among the most important participations, are: Conduct in elections Our relations with candidates for public office in elections are guided by our Handbook for Conduct in Electoral Processes.

The handbook is distributed to all the company’s managers, and provides information and recommendations on Votorantim Cimentos’ corporate conduct in electoral processes. In

ORGANIZATION OBJECTIVE

Sector discussions on the environment, climate change Brazilian Portland Cement Association (ABCP) and energy.

Sector discussions on the environment, climate change The National Cement Industry Union (SNIC) and energy.

The cement industry initiatives to accelerate progress Cement Sustainability Initiative (CSI) towards sustainable development at a global level.

Brazilian Speleological Society and Partnership to develop ecosystem conservation standards the Atlantic Forest Biosphere Reserve (SBE/RBMA) in karst areas and the Atlantic Forest biome in Brazil.

World Business Council for Sustainable Development Participation in a business initiative for sustainable (WBCSD) development at a global level.

Durham Region Roundtable on Climate Change Initiatives on climate change in partnership with (DRRCC) government.

Portland Cement Association & Cement Association Debates and positioning in the cement sector on climate of Canada change and general topics.

Debates and positioning on sustainability in the aggregate Ontario Stone, Sand & Gravel Association (OSSGA) sector, in Ontario.

Ready Mixed Concrete Association of Ontario Debates and positioning on sustainability in the concrete (RMCAO) sector, in Ontario.

European Cement Research Academy (ECRA) Strategy to reduce CO2 emissions and innovation

Discussions and positioning on sustainability in the Brazilian Mining Institute (IBRAM) mining sector.

Spanish Association of Cement Manufacters Sector discussions on the environment, climate change (OFICEMEN) and energy.

Andalusian Association of Cement Manufacters Sector discussions on the environment, climate change (AFCA) and energy.

Labour Foundation for Cement and environment Debates on cement and how to promote sustainable (CEMA) development within the sector.

ORGANIZATION OBJECTIVE

Andalusian Labour Foundation for Cement and Debates on cement and how to promote sustainable Environment (FLACEMA) development within the sector.

Debates on aggregates to bring new ideas into the Spanish National Association of Aggregate mainstream, forming the basis for the sustainable Manufacturers (ANEFA) development of business and industry.

Debates on aggregates to bring new ideas into the Spanish Aggreagate Federation (FDA) mainstream, forming the basis for the sustainable development of business and industry.

Professional Institute for Cement Manufacturers - Sector discussions on the environment, climate change Morocco (APC) and energy.

Sector discussions on the environment, climate change Turkish Cement Manufacturers’ Association (TCMA) and energy.

Sector discussions on the environment, climate change Indian Cement Manufacturing Association (CMA) and energy.

Indian Cement Sustainability Initative (CSI) Similar to CSI, but with focus on India.

Corporate Communication the profile of Votorantim Cimentos globally and the company’s product and Brand Image [G4-26] as one of the major global players in brands. This architecture will begin to the industry. be implemented in 2015, through the We started working on a reputation many different communication chan- platform with initiatives to promote In the case of brand image, we initi- nels that Votorantim Cimentos has closer relations with stakeholders ated a corporate positioning project, with its stakeholders. and to define rules for the use of the in order to translate our company Votorantim Cimentos institutional vision into an inspiring proposition. In Brazil, we have defined the brand, globally. Our positioning will be launched in reputation performance indicators Brazil in 2015, and globally in 2016. We that will be measured annually from In the case of relations with stake- will direct all the communications on 2016. The next step will be to define holders, we are restructuring our the corporate brand to both internal the reputation indicators in the media relations activities in Brazil, and external stakeholders. We are other countries where we operate. in order to be closer to local and still working on the development The objective is to understand how regional opinion leaders, and ensure of our brand architecture, with the we are perceived by key stakeholder greater responsiveness in discus- objective of defining one that best groups, internal and external, and sions with them. We started to reflects the philosophy of OneT eam, based on these perceptions, define approach global media companies One Company. We want to establish action plans to promote the conver- specialized in the construction guidelines to interrelate the corporate gence of the perceived and desired materials market in order to raise brand, the brands of our subsidiaries images for the organization.

2014 Integrated report 91

R esults of good management [G4-EC1, G4-2 and G4-17]

In 2014, we achieved Results of good The consolidated net profit was positive and consistent management [G4-EC1] R$ 1,141 million, a decrease of 17.9% results in our global compared to 2013, due mainly to the operations. Our geographical diversification, premium paid for the repurchase wide range of products and services, of bonds (R$ 175 million), increased strict cost management, commer- Brazilian interest rates (CDI) on loans cial and operational efficiency and and financing (R$ 176 million) and adequate pricing were some of the lower operating results (R$ 80 mil- factors that enabled us to generate lion). If we excluded the effect of the good global results in 2014. premium on the bond repurchase, in the amount of R $ 175 million, and The consolidated net income was maintained the effective rate for the R $ 12,884 million, an increase of 6.1% period, net profit would have been over 2013 , due to higher cement R$ 1,256 million in 2014, an increase of prices in almost all of our regions, 10.1% compared to the previous year. and the positive effects of exchange rate movements on the consolidated results, partially offset by reduced volumes in Europe, Asia and Africa. EBITDA was R $ 3,493 million, a decrease of 0.6% compared to the previous year. This was impacted mainly by the lower performance of operations in North America and Brazil, partially offset by the operations inE urope, Asia and Africa and South America.

Notes: a) The fixed costs of salaries and benefits in Brazil increased compared to the previous year, due to adjustments in the salary structure following the implementation of the new governance structure and the new sales approach. b) There were also cost increases in our overseas operations, principally: freight costs for VCNA’s operations due to contingencies used to meet market demand; rising production costs in North America, mainly for energy, due to the harsh winter; and increased energy costs in Tunisia due to price increases following the deregulation of the market by the government. In addition, the consolidated expenses for 2014 were impacted by non-recurring items of R$ 109 million, due primarily to inventory adjustments and contingency provisions in Brazil.

2014 Integrated report 93 Economic and Financial Performance

Sales volumes – by product type (million metric tons)

12.09 10.72 Cement (million metric tons) Aggregates (million metric tons) 8.02 Concrete (million m³) Mortar (million metric tons) 5.36 4.28 4.33 4.16

1.73 2.37 0.66 0.05 0.17 0.22 0.01

Brazil North Europe, Asia South America and Africa America

ADJUSTED EBITDA 2012 2013 2014 (R$ thousands)

Brazil 2,775,051 2,709,435 2,676,763

South America – 73,978 87,806

Europe, Asia and Africa – 372,570 425,877

North America 296,873 356,195 302,172

Consolidated 3,071,924 3,512,178 3,492,584

94 VOTORANTIM CIMENTOS Economic and Financial Performance

Distribution of Net Revenue by value-added (DVA) product type (%)

6% 14% 20% 3% 21% 26% 70% 40%

Value-added for employees Cement Value-added for government (taxes) Concrete Remuneration of third-party capital Aggregates Remuneration of own equity Other

The DVA corresponds to the direct economic value generated and distributed by the company, including revenues, operating costs, employee remuneration, donations and other community investments, retained earnings and payments to capital providers and governments. In 2014, the company generated R$ 12.9 billion of net revenues and R$ 8.3 billion of value added.

Net Revenue by product type 2013 2014 (R$ thousands)

Cement 8,329,674 9,000,085

Concrete 2,280,468 2,651,101

Aggregates 754,835 434,521

Other 777,311 797,895

Total 12,142,288 12,883,602

3 3% Regional Results due to adjustments in the salary . structure following the implementa- How we progressed in Brazil tion of the new governance structure The increase in our net Cement sales volumes totaled 25 mil- and the new sales approach, and revenues in 2014. lion metric tons, a reduction of 404 extraordinary items amounting to thousand metric tons (1.6%) com- R$ 109 million, primarily for inven- pared to 2013. tory adjustments and provisions for contingencies in the last quarter. The sales volumes for aggregates Excluding these effects, the adjusted and concrete decreased by 19.2% and EBITDA would have been 2.8% higher 11.9%, respectively, compared to the than in 2013. previous year. This was mainly due to the downturn in the real-estate mar- North America ket in large urban centers such as São Cement sales volumes totaled 4.2 Paulo, Rio de Janeiro and Curitiba. million metric tons, an increase of 7.7% compared to 2013. This growth Despite the slight decline in cement reflected the recovery of theU nited volumes, net revenues increased by States economy. In the last quarter, 3.3%, due to the increase in average the market was boosted by increased prices of 8%. government spending on paving in the United States and also higher Adjusted EBITDA from operations demand from the construction sector totaled R $ 2,677 million, down 1.2%. in Canada, mainly for residential and The adjusted EBITDA margin was commercial condominiums. The total 31.4%, representing a decline of 1.4 volume for the year, could have been percentage points. The reduction in higher if, in the first quarter, the win- EBITDA margin was due primarily to ter had not been so long and severe, the increase of fixed costs in Brazil, especially in the Great Lakes region.

The volume of aggregates sales change in EBITDA can be explained the government, offset by strong decreased by 0.6%, which is equiva- by three main factors: increased export volumes which grew by lent to 65 thousand metric tons. This energy costs due to production 86%. In Morocco, the sales volume decrease was also due to lower sales interruptions/restarts (higher fuel of sales fell 8% in the year, due to in the first quarter, because of the consumption) due to the severe reduced government investments severe weather conditions. winter; increase in freight costs, in infrastructure. The Spanish due to supply contingencies in domestic market also contracted, The volume of concrete sales certain markets; increased costs but the impact on volume was totaled 4.3 million cubic meters, an of third party materials, due to pro- compensated by the increase in increase of 8.9%. This increase was duction shutdowns provoked by exports. due to the economic recovery of the severe winter. These negative our markets in the Great Lakes and effects were partially offset by in- The sales volumes in Turkey in- Florida regions. creased sales volumes and a favor- creased by 3%, driven by favorable able net foreign exchange variation market conditions. In India, the Net revenues totaled R$ 2,290 in the consolidated results. volume of sales increased by 11.8% million, 14.4% higher than in 2013. due to sales and marketing initia- The increase in revenues was due to Europe, Asia and Africa tives and more efficient logistics, higher sales volumes, the improved Cement sales volumes totaled 8.0 as we focused on the regions closer performance of the United States million metric tons, a reduction to our plants. economy, and the net exchange rate of 164 thousand metric tons (2%) effects on consolidated results, main- compared to 2013. The aggregates business in- ly the revaluation of the US Dollar creased sales by 4.6%, driven by against the Brazilian Real by 8.4%. The decrease in sales volumes stronger demand in the Moroccan occurred primarily in Tunisia and market. The concrete business, Adjusted EBITDA was R$ 302 million, Morocco. The total volume in Tuni- however, registered a reduction a decrease of 15.2%. The adjusted sia decreased by 16%, due to higher in sales volumes of 11.3%, mainly EBITDA margin was 13.2%, a reduc- local competitiveness and the due to the Spanish and Moroccan tion of 4.6 percentage points. The deregulation of energy prices by markets.

Our net revenues in the region were South America R $ 1,716 million, an increase of 6.5% The volume of cement sales was 656 compared to 2013, as a result of thousand metric tons, an increase of improved sales prices in almost all 46 thousand metric tons (7.6%) com- countries (except in Spain), which pared to 2013. Net revenues totaled offset the lower sales volumes in R$ 340 million, an increase of 43%. Tunisia and Morocco. The adjusted EBITDA from opera- In 2014, the consolidated EBITDA tions was R $ 88 million, representing for VCEAA totaled R$ 426 million, an an increase of 30% compared to 2013. increase of 14.3%. The region’s EBITDA The adjusted EBITDA margin was margin was 24.8%, 1.7 percentage 25.8%, a reduction of 2.6 percentage points higher than in 2013. This points. increase was due mainly to higher sales prices in almost all regions Debt Reduction (except Spain) and improved cost efficiency.T hese two factors partially In 2014, Votorantim Cimentos issued compensated the slight decrease in bonds in the international fixed sales volumes and the increased cost income markets, for the first time of energy in Tunisia, due to market without the corporate guarantee deregulation. of Votorantim Industrial (VID). We

In 2014, we received investment grade ratings from the three main risk rating agencies: Standard & Poor’s (BBB, stable outlook), Moody’s (Baa3, stable outlook) and Fitch Ratings (BBB, stable outlook).

issued EUR 650 million of bonds in subsidiaries) and reduced this level Financial Policies the European markets. The proceeds to about 43% by year-end. of this issue were used to repurchase We implemented global financial EUR 445 million of the company’s The company’s management of policies during the year, in order to outstanding bonds in the market, liquidity and leverage seeks to main- have a single standard for assessing significantly reducing costs while tain parameters that are comparable liquidity, exposure to counter-parties extending the term of the debt. to those necessary to obtain a BBB and risk management. (or equivalent) investment grade We repurchased the existing bonds rating, on a global scale, and with a The Finance Committee, which is maturing in 2017, replacing them stable outlook, from the main rating responsible for advising the Board with new bonds maturing in 2021. agencies. and the Global Executive Team on The fixed interest rate, in Euros, on the company’s liquidity strategy, the new bonds of 3.25% p.a. was The objective of our capital structure held monthly meetings, and, as a significantly lower than that of the management is to ensure the com- result, was able to improve finan- repurchased bonds of 5.25% p.a. pany’s long-term business continuity. cial governance which had, previ- We aim to achieve an ideal capital ously, been the responsibility of In 2014, we renegotiated a number structure that optimizes costs, thus Votorantim Industrial. of other financial transactions, in providing greater returns to share- both the domestic and international holders. markets, to exclude the Votoran- tim Industrial guarantees. The new In this respect, we ended the year transactions were based on the with a total gross debt of R$ 14.4 company’s own long-term invest- billion and a financial leverage, ment grade credit ratings from the measured by Net Debt/EBITDA, of 3.4 three main rating agencies. We times. Our cash position at year-end strengthened our financial discipline was R$ 2,526 million, sufficient to within the new corporate gover- cover our debt service for the next nance structure. We started 2014 3.5 years. In December 2014, the aver- with 88% of our debt guaranteed age term of our outstanding debt by Votorantim Industrial (and/or its was 9.2 years.

2014 Integrated report 99 Future trends and prospects [G4-2]

Prepared to grow water. Even in this weak demand tinue to invest for the medium and situation we anticipate that new the long terms. We seek to anticipate We know that we will have to face competitors will enter the market, trends and position the company to two more difficult years, especially impacting our business, especially in capitalize on future growth cycles. in Brazil, where a large proportion the South, Southeast and Northeast In 2015, we will review our long-term of Votorantim Cimentos’ business is regions. strategy and we intend to announce concentrated. the next steps in our global invest- Despite this, our goal is to continue ment plan. Assuming a context of low GDP to grow. We have the advantages growth, the prospects for our mar- of a broad and diverse geographical Given the likelihood of a challeng- kets are to maintain sales volumes. reach, a wide range of products and ing short-term situation, we will We expect to see cost pressures, services, a new customer service ap- strengthen our cost control and our especially for important inputs such proach and an aggressive investment focus on our four strategic driv- as electrical energy, fossil fuels and program. ers: customer focus, empowered employees, operational excellence, Several factors give us confidence and sustainable practices. One of our that we can achieve our goals. We priorities is to work hard to improve are well positioned in Brazil, in those safety, ensuring a healthy workplace regions that will continue to grow, environment, with zero accidents. especially the Northeast, North and Center-West. We will maintain the The new governance structure has pace of our investments in Brazil and had very positive impacts on the Even in the face of a overseas. company, and its effects will con- challenging economic tinue to be felt for some time. The situation, our objective The prospects are also good in company still intends to open its is to continue to grow. several countries where our Europe, capital. However the timing is con- Asia and Africa subsidiary operates. ditioned on the market conditions In addition to building a new plant in being appropriate. Turkey, we are looking at an expansion project in Morocco and a power In short, Votorantim Cimentos will generation project to supply our continue to make every effort to be operations in Tunisia. We remain on recognized by the market and society the look-out for good opportunities as a strong and durable company for acquisitions outside of Brazil. that has quality products, exemplary management and sustainable prac- As a company that takes a long-term tices, and one which aspires to create view, we have invested and will con- a better world for future generations.

100 VOTORANTIM CIMENTOS 2014 Integrated report 101 Performance Economic Performance

CSI GRI 2012 2013 2014 Economic value generated and distributed G4-EC1 (R$ thousands) Gross sales revenues of products and services, 12,190,637 15,160,055 16,020,805 other income and provision for bad debts Inputs acquired from third parties -5,009,488 -7,309,195 -7,743,472 Gross value added 7,181,149 7,850,860 8,277,333 Net value added produced 6,636,842 7,077,767 7,471,834 Total value added received in transfers 135,911 1,471,613 792,987 Total value added to be distributed 6,772,753 8,549,380 8,264,821 Distribution of value added 6,772,753 8,549,380 8,264,821 Net revenues by product (R$ thousands) G4-EC1 Cement 6,221,178 8,329,674 9,000,085 Concrete 2,099,121 2,280,468 2,651,101 Aggregates 378,932 754,835 434,521 Complementary Products 706,192 777,311 797,859

Creating value for Votorantim and key stakeholders Value added for employees (R$ thousands) G4-EC1 1,106,852 1,479,595 1,654,211 Value added for government (taxes) 2,709,736 3,444,661 3,290,326 (R$ thousands) Remuneration of third-party capital 1,315,682 2,236,289 2,179,492 (R$ thousands) Remuneration of own equity (R$ thousands) 1,640,483 1,388,835 1,140,792 Sales of cement (million metric tons) 28.12 38.06 37.83 Sales of aggregates (million metric tons) 26.69 31.17 28.34 Sales of concrete (million m³) 8.76 11.76 11.20 Sales of complementary products 1.72 1.83 1.79 (million metric tons)

102 VOTORANTIM CIMENTOS Performance

CSI GRI 2012 2013 2014

Suppliers Proportion of spending with local suppliers at G4-EC9 significant operating locations* Total amount spent with suppliers (R$) - 4,482,644,388 3,761,621,473 Proportion of spending with local suppliers - 55% 50% Contracting of suppliers * % of new suppliers that were screened using G4-EN32 - 100% 92% environmental criteria % of new suppliers that were screened using G4-HR10 - 89% 93% human rights criteria % of new suppliers that were screened using G4-LA14 - 89% 93% labor practices criteria * Results refer to VCBR operations

Government relations Political Contributions (in R$) * G4-SO6 - 0 9,710,000 *The contributions were estimated in accordance with the limits set out in relevant legislation and the Corporate Policy for Election Dona- tions registered at the 6th Office of Deeds and Documents. Available at: http://www.portalvotorantim.com.br/sites/vpar/SiteCollection- Documents/Politicas_Corporativas/controladoria/Manual_Conduta_Processos_Eleitorais_2014_Votorantim.pdf.

Consumer relations Net Promoter Score (NPS) survey results G4-PR5 44%

*Results refer to NPS survey in Brazil, for the retail self-construction path for cement, mortar and lime.

To tal number of employees who received anti-corruption training Total number of employees who received G4-SO4 anti-corruption training Director/President 34 32 Manager/General Manager 45 60 Coordinator/Consultant 2 74 Technician/Analyst/Supervisor - 98

2014 Integrated report 103 Performance

CSI GRI 2012 2013 2014 Trainee - 1 Operator - 13 Intern - 8 Total* 81 286 Other regions 199 Overall Total 81 485 * In 2013, 81 employees received anti-corruption training in Brazil and North America. In 2014, 485 employees received training in the VCBR, VCNA, VCSA and VCEAA regions.

To tal number of legal actions for anti-competitive behavior, trust and monopoly practices and their outcomes G4-SO7 Total number of legal actions 2 0 0 Value of legal actions (R$) 5600046920 - -

Number of processes and monetary value of significant fines for non-compliance with laws or regulations G4-SO8 No. tax legal actions 313 No. of labor and social security legal actions 1,220 No. of civil legal actions 325 Value of tax legal actions (R$) 420,390,746 Value of labor and social security legal 269,902,515 actions (R$) Value of civil legal actions (R$) 355,302,668

No. discrimination incidents received by the Ombudsman G4-HR3 Race 4 Color 0 Age Group 1 Sex 3 Religion 2 Political Opinion 0 Nationality 0 Social Class 2 Other relevant forms of discrimination involving internal and/or external 0 stakeholders in operations. Harassment and Abuse of Power 0

CSI GRI 2012 2013 2014 Other cases (discrimination) 1 Analyzed and considered unfounded 11 Under analysis 1 Considered valid* 1

*Following the confirmation of the discrimination incident the employee was dismissed.

Ombudsman Number of reports registered Reports related to environmental impacts G4-EN34 16 Reports related to labor issues G4-LA16 371 Reports related to impacts on society G4-SO11 400 Reports processed Reports related to environmental impacts G4-EN34 16 Reports related to labor issues G4-LA16 371 Reports related to impacts on society G4-SO11 400 Reports resolved Reports related to environmental impacts G4-EN34 0 Reports related to labor issues G4-LA16 107 Reports related to impacts on society G4-SO11 115 Note: G4-HR12 No reports on incidents of child, forced or compulsory labor were received in 2014. Other remaining topics related to human rights are included in the G4-HR3 indicator.

2014 Integrated report 105 Performance Environmental Performance

CSI GRI 2012 2013 2014

Number of plants included in the evaluation Cement 30 32 33 Aggregates 15 16 13 Concrete 92 92 90

Environmental Investments and Compliance Total environmental CAPEX and OPEX, by type. G4-EN31 Environmental investments (CAPEX) (R$) 31,690,068 79,070,976 67,804,164 Environmental expenses (OPEX) (R$) 27,787,572 51,242,110 41,629,016 Waste disposal, emissions treatment and 31,826,306 48,132,668 37,875,439 remediation costs (R$) Costs of environmental prevention and 24,880,414 64,692,581 62,082,463 management (R$) Other environmental costs (R$) 2,770,920 17,487,837 9,475,277 Monetary value of fines G4-EN29 2,012 2,013 2014* No. of legal actions filed against the company 2 2 - in the year No. of administrative sanctions received in 16 27 17 the year No. of TAC's or TC's received in the year 5 4 - Total value of legal actions (R$) 3,565,945 6,953,481 447,049

* Results 2014 refer only to the fines received byV CBR.

Reduction of CO2 emissions Cement

Absolute gross CO2 emissions (million x G4-EN15 26.7 28.5 28.1 metric tons)

Absolute net CO2 emissions (million x 26.4 28.1 27.7 metric tons)

Specific grossC O2 emissions/(kg CO2 /metric x G4-EN18 644.6 657.2 653.3 ton cementitious materials)

Specific netC O2 emissions/(kg CO2 /metric x 637.1 649.7 642.5 ton cementitious materials)

CSI GRI 2012 2013 2014

% Reduction in CO2 emissions - base 1990 x G4-EN19 16.5 14.8 15.8 (kg CO2 /metric ton cementitious materials) Aggregates

Absolute gross emissions of CO2 (million G4-EN15 0.017 0.019 0.013 metric tons)

Specific net emissions of CO2 (kg CO2/metric G4-EN18 1.99 ton of product) Concrete

Absolute gross emissions of CO2 (million G4-EN15 0.058 0.052 0.024 metric tons)

3 Specific gross emissions of CO2 (kg CO2/m ) G4-EN18 0.0022

Indirect emissions of CO2

Indirect emissions of CO2 from energy purchases (million metric tons) Cement G4-EN16 1.13 1.28 1.37 Other indirect greenhouse gas (GHG) emissions - Scope 3 (tCO2eq) Transportation of inputs and final products* G4-EN17 410,172 432,112 427,969 *Includes Scope 3 emissions for the cement, concrete and aggregates units.

Energy Thermal energy mix for clinker production (%) G4-EN3 Coal 13% 12% 19% Petroleum coke 75% 78% 72% Heavy fuel oil 0.52% 0.39% 0.17% Diesel oil 0.29% 0.37% 0.35% Other fuels 0.00% 0.01% 0.01% Natural gas 0.62% 1.00% 0.73% Gasoline 0.02% 0.01% 0.01% Shale and lignite 2.31% 0.84% 0.09% Alternative fossil fuels 3.4% 3.3% 4.9% Alternative fuels from biomass x 3.8% 3.3% 2.7% Thermal substitution rate (% Thermal energy 7.2% 6.6% 7.6% derived from alternative fuels)

CSI GRI 2012 2013 2014 Thermal efficiency (MJ/metric ton of clinker) x 3,478 3,542 3,513 Types of waste used as alternative fuels (%) Oil 2.5% 1.8% 1.6% Tires 26.1% 31.5% 26.8% Plastics 3.7% 2.2% 9.2% Solvents 0.001% 0.0% 0.0% Contaminated sawdust 0.0% 0.0% 7.2% Mixed industrial waste 13.0% 14.6% 15.4% Other fossil fuels/mixed waste 6.7% 5.8% 10.3% Dry sewage sludge 0.04% 0.0% 0.0% Dry sawdust 2.1% 1.7% 2.5% Agricultural waste, organic waste, diapers 32.0% 3.1% 1.1% and coal Other bio-masses 13.9% 39.3% 25.9% Clinker factor (average % of clinker in cement) x 74.2% 76.1% 74.7% Fuel consumption G4-EN5 Cement (MJ/metric ton of cementitious 2.66 product) Aggregates (MJ/metric ton of product) 0.03 Concrete (MJ/metric ton of product) 0.00003 Total fuel consumption (TJ/year) G4-EN5 Cement 114,496 Aggregates 166 Concrete 297 Specific consumption of electrical energy (kWh/metric ton) Cement (kWh/metric ton of cementitious x 113.73 product) Aggregates kWh/ metric ton 2.70 Concrete (kWh/m3) 0.0019 Total consumption of electrical energy (million kWh/year) Cement x 4,462 4,598 4,658 Aggregates 28.881 Concrete 8.01 Energy consumption inside the organization (GJ) G4-EN3 Cement 117,327,217

CSI GRI 2012 2013 2014 Aggregates 270,324 Concrete 296,911 Energy consumption outside the organization (GJ) G4-EN4 T ransport and distribution 5,544,162

Environmental impacts G4-EN30 Quantitative data for logistics: Energy consumption (GJ) 9,096,332 9,422,545 5,595,184

GHG emissions (tons CO2 eq ) 482,003 499,299 427,780 * Transportation is the main source of greenhouse gas emissions from burning fossil fuels.

Materials used (metric tons) G4 - EN1 Cement 41,415,553 55,689,684 54,912,189 Other business 30,525,691 34,167,696 58,293,440 Total non-renewable materials 71,941,244 89,857,380 113,205,629

Other Air Emissions NOx Number of furnaces reported G4-EN21 51 52 48 Total emissions (metric tons/year) x 47,951 70,596 62,128 Specific average concentration (g/metric ton x 1,599 2,249 1,977 clinker) % Reduction in NOx compared to the previous year 12.1%

SO2 Number of furnaces reported G4-EN21 51 52 48 Total emissions (metric tons/year) x 23,759 29,921 21,461 Specific average concentration (g/metric ton x 792 953 683 clinker)

% Reduction in SO2 compared to the previous year 28.4% PM Number of furnaces reported G4-EN21 51 52 48 Total emissions (metric tons/year) x 4,301 3,567 3,385 Specific average concentration (g/metric ton x 143 114 108 clinker) % Reduction in PM compared to the previous year 5.2%

CSI GRI 2012 2013 2014 Mercury Number of furnaces reported G4-EN21 51 52 48 Total emissions (kg/year) x 341 538 272 Specific average concentration (mg/metric x 11.4 17.1 8.6 ton clinker) % Reduction in mercury compared to the 49.6% previous year VOCs Number of furnaces reported G4-EN21 51 52 48 Total emissions (metric tons/year) x 339 590 706 Specific average concentration (g/metric ton x 11.3 18.8 22.5 clinker) % Reduction in VOCs compared to the -19.5% previous year Dioxins/Furans Number of furnaces reported G4-EN21 51 52 48 Total emissions (mg/year) x 789 596 431 Specific average concentration (ng/metric ton x 26.3 19.0 13.7 clinker) % Reduction in dioxins/furans compared to 28% the previous year HM1 (Cadmium + Thallium) Number of furnaces reported G4-EN21 51 52 48 Total emissions (kg/year) x 566 717 636 Specific average concentration (mg/metric x 18.9 22.8 20.2 ton clinker) % Reduction in HM1 compared to the previous year 11% HM2 (Antimony + Arsenic + Lead + Chromium + Cobalt + Copper + Manganese + Nickel + Vanadium) Number of furnaces reported G4-EN21 51 52 48 Total emissions (kg/year) x 23,607 16,098 14,716 Specific average concentration (mg/metric x 787.0 512.0 468.2 ton clinker) % Reduction in HM2 compared to the previous year 9% Monitoring Data Total Monitoring Coverage Rate (KP1) - x G4-EN21 65% 65% 57% Total Coverage Rate *1 Continuous Monitoring Coverage Rate (KP ) - 2 x 80% 84% 88% PM, NOx and SO2 *Percentage of clinker produced in kilns covered by the monitoring system for Particulate Material, NOx, SO2, VOC/THC, heavy metals (Hg, Cd, Tl, Sb, As, Pb, Cr, Co, Cu, Mn, Ni and V) and PCDD/F.

CSI GRI 2012 2013 2014 Biodiversity and resource conservation Total number of mines Cement and Aggregates 81 119 120 Number of areas of high biodiversity value* G4-EN11 Cement and Aggregates x 47 62 70 Number of areas of high biodiversity value with biodiversity management plans (BMP) G4-MM2 in place* Cement and Aggregates x 2 4 4 % of mines in areas of high biodiversity value G4-MM10 with recovery plans for degraded areas* Cement and Aggregates x 49 78 78 *Indicator includes information for VCBR (Cement and Aggregate), VCNA (Cement and Aggregate) and VCEAA (Cement).

Management and Recycling Waste generated and disposed (metric tons) Cement Waste production G4-EN23 Total non-hazardous waste (metric tons) Non-hazardous waste produced internally 1,331 and co-processed Non-hazardous waste sent to industrial 343,456 landfill Non-hazardous waste sent for recovery 1,368 Non-hazardous waste sent for reuse/recycling 1,148,268 Non-hazardous waste sent for recovery 845 Total non-hazardous waste disposed of 1,495,269 Total hazardous waste (metric tons) Hazardous waste produced internally and 54,493 co-processed Hazardous waste sent to industrial landfill 4,821 Hazardous waste sent for recovery 141,145 Hazardous waste sent for reuse/recycling 37,406 Total hazardous waste disposed of 237,865

* Only Vceaa and VCBR were considered in this indicator. VCNA data will be considered in the next year.

2014 Integrated report 111 Performance Social Performance

CSI GRI 2012 2013 2014 Employees by region G4-10 Brazil 9,759 9,920 9,994 South America - 306 307 North America 3,128 3,552 3,293 Europe, Asia and Africa - 2,978 2,185

Employee turnover (%) G4-LA1 By region Brazil 25% 17.5% Other countries - 4.5% By gender G4-LA1 Women 3% 3% Men 22% 19% By Age Group G4-LA1 Less than 30 years old 9% 7% Between 30 and 50 years old 14% 12% More than 50 years old 2% 3%

Rate of new hires G4-LA1 By region Brazil 21% 16.85% Other countries 3.15% By gender G4-LA1 Women 2.20% 2.60% Men 19.00% 17.40% By Age Group G4-LA1 Less than 30 years old 10% 9% Between 30 and 50 years old 11% 10% More than 50 years old 1% 1%

CSI GRI 2012 2013 2014 % Female workers G4-LA12 % Management and supervisory positions 0.81% 1.38% % Operating Positions 10.90% 9.15% % Female workers 11.71% 10.53%

% Employees over 50 years old G4-LA12 % Management and coordinator positions 0.82% 1.36% % Operating Positions 9.03% 16.57% % Employees over 50 years old 9.88% 17.93%

Training Calculation of the average number of hours of training per employee G4-LA9 Men Director/President 4 5 Manager/General Manager 73 35 Coordinator/Consultant 49 54 Technician/Analyst/Supervisor 61 75 Trainee 165 144 Operator 72 39 Women Director/President 8 27 Manager/General Manager 68 35 Coordinator/Consultant 65 61 Technician/Analyst/Supervisor 129 84 Trainee 185 100 Operator 54 21 Average hours of training 64 38 (men and women)

CSI GRI 2012 2013 2014 Total number of employees covered by collective bargaining agreements G4-11 Employees covered by collective bargaining 12,210 agreements Total employees 15,779 Percentage of employees covered 77%

Local hiring and proportion of senior management hired from the local community in important operating units* G4-EC6 Percentage of senior management hired from 95% local communities Percentage of employees from local 99.86% communities *Includes senior managers, general managers, directors and the president.

Occupational Health and Safety Number of fatalities - cement, aggregates and concrete* G4-LA6 Directly employed (on site) x 2 1 2 Employees (off site) x 0 1 1 Indirect employees (on-site) x 2 3 1 Contract Staff (off-site) x 6 6 0 Other x 5 8 7

* Includes on-site and off-site

LTI Frequency Rate G4-LA6 Employees x 1.06 1.28 1.14 Contract Staff x 0.47 0.90 0.77 Total - Employees + Contract Staff 2.19 1.09 0.94

Days lost due to accidents (calendar days) G4-LA6 Employees x 2,927 3,195 3,108 Contract Staff x 515 1,548 543

Note: In 2014, the fatalities were reclassified due to a revised interpretation of the CSI criteria.

CSI GRI 2012 2013 2014 LOCAL COMMUNITY ENGAGEMENT PROGRAMS G4-SO1 Distribution of social investment (%) ReDes ("Networks") Program 47 Public Administration 9 Training for work 7 Development projects 6 Education 5 Culture 5 Votorantim Program for Education (PVE) 5 Sport 4 The rights of children and young people 4 Community engagement 2 Qualification of Social organisations 2 Group of Community participation 4

2014 Integrated report 115 GRI Content Index for ‘In accordance’ - Core [G4-32]

General Standard Disclosures Page/response External assurance

Strategy and Analysis G4-1 Declaration by the most senior decision-maker of Page 8 No, page 118. the organization (For example: President, Chairman of the Board of Directors or equivalent senior position) about the relevance of sustainability to the organization and its sustainability strategy G4-2 Description of key impacts, risks and Pages 8, 25, 35, 93 No, page 118. opportunities: focus on the organization’s main and 100 impacts on sustainability and its effects for stakeholders Organizational profile G4-3 Name of organization Page 12 No, page 118. G4-4 Principal brands, products and services Pages 12 and 16 No, page 118. G4-5 Location of the organization’s headquarters Page 12 No, page 118. G4-6 Number of countries where the organization Page 12 No, page 118. operates, and the names of countries where its main operations are located or which are specifically relevant to the sustainability topics covered in the report G4-7 Nature of ownership and legal form of Page 12 No, page 118. organization G4-8 Markets in which the organization operates (with Pages 12, 16 and 35 No, page 118. geographic breakdown, sectors covered and types of clients and beneficiaries) G4-9 Size of the organization Page 12 No, page 118. G4-10 Total number of employees UNGC Pages 75, 77 and 112 No, page 118. G4-11 Percentage of total employees covered by Pages 88 and 114 No, page 118. collective bargaining agreements UNGC G4-12 Description of the organization’s supply chain Page 85 No, page 118. G4-13 Significant changes which occurred during the Pages 8, 38 and 85 No, page 118. reporting period regarding size, structure, ownership and supply chain G4-14 If and how the organization adopts the Page 49 No, page 118. precautionary approach or principle G4-15 List of charters, principles or other initiatives of Page 20 No, page 118. economic, environmental and social nature that the organization subscribes to or endorses

116 VOTORANTIM CIMENTOS GRI List of Contents

G4-16 List of participations in associations (for example: Pages 12 and 89 No, page 118. industry associations) and national or international advocacy organizations Identified MaterialA spects and Boundaries G4-17 A list of all entities included in the organization’s Pages 4, 12 and 93 No, page 118. consolidated financial statements or equivalent documents G4-18 Explanation of the process adopted used to Page 150 No, page 118. define the eportr content and Aspect Boundaries G4-19 List of all the material Aspects identified in the Page 30 No, page 118. process to define report content G4-20 For each material, Aspect report the Aspect Pages 30 and 145 No, page 118. Boundary within the organization G4-21 For each material, Aspect report the Aspect Pages 30 and 145 No, page 118. Boundary outside the organization G4-22 Effect of any re-statements of information Não há pontos a serem No, page 118. provided in earlier reports and the reasons for such salientados. reformulations G4-23 Significant changes to the periods covered by Pages 4, 30 and 150 No, page 118. previous reports in Scope and Aspect Boundaries Stakeholder Engagement G4-24 List of stakeholder groups engaged by the Pages 30 and 35 Yes, page 151. organization G4-25 Basis used for identification and selection of Page 43 Yes, page 151. stakeholders with whom to engage G4-26 Approach adopted by the organization to Pages 35 and 91 Yes, page 151. engage with stakeholders including the frequency of engagement, broken down by type and group, with an indication of any type of engagement specifically carried out as part of the report preparation process G4-27 Key topics and concerns raised during Page 35 Yes, page 151. engagement with stakeholders and the measures adopted by the organization to address these topics and concerns, including in the process of reporting them. Report which of the stakeholder groups raised each of the issues and concerns mentioned

Report profile G4-28 Reporting period (for example: fiscal or calendar Page 150 Yes, page 151. year) for information provided G4-29 Date of the most recent previous report (if any) Page 150 Yes, page 151. G4-30 Reporting cycle (annual, biennial, etc.) Page 150 No G4-31 Contact point for questions about the report or Pages 4 and 150 No its contents

2014 Integrated report 117 GRI List of Contents

G4-32 Report the “in agreement” option chosen by the Page 150 No, page 118. organization Governance G4-33 Policy and current practice adopted by the Pages 150 No, page 118. organization to submit the report to external The indicators assured were verification determined by considering the level of assurance, the materiality for Votorantim Cimentos and PwC’s internal studies on materiality in specific sectors. A sampling procedure was used as the basis for defining the indicators to be audited, therefore some indicators were not included in its scope. The assurance was carried out in full accordance with the NBCTO 3000 standard, which is the basis for PwC’s limited. assurance.process. G4-34 Governance structure of the organization, Page 38 No, page 118. including the committees of the highest governance body. Identify all committees responsible for advising the board in making decisions that have economic, environmental and social impacts

G4-35 Process used for delegating authority on The Board of Directors is No, page 118. economic, environmental and social issues by the responsible for defining highest governance body to senior executives and the company’s long-term other employees macro strategies, in terms of economic, environmental and social aspects. The Board approves all appointments of Directors and above, as well as the short, middle and long-term targets for these executives in relation to the above aspects. G4-36 Report whether the organization has designated Page 38 No, page 118. one or more positions and executive level roles as responsible for the economic, environmental and social issues and whether those responsible report directly to the highest governance body G4-37 Consultation processes used between Page 30 No, page 118. stakeholders and the highest governance body in regard to economic, environmental and social topics. If the consultation is delegated to other structures, organs or persons, indicate to whom any existing feedback processes to the highest governance body G4-38 Composition of the highest governance body and Page 38 No, page 118. its committees

G4-39 If the Chair of the highest governance body is Page 38 No, page 118. also an executive officer (and, if so, his/her function in the organization’s management and the reasons for this accumulation) G4-40 Selection and appointment process for the Page 38 No, page 118. highest governance body and its committees, as well as the criteria used to select and appoint the members of the highest governance body

G4-41Processes used for the highest governance body Pages 38 and 47 No, page 118. to ensure the prevention and management of conflicts of interest. Report whether conflicts of interest are disclosed to stakeholders G4-42 Roles of the highest governance body and the The company’s senior managers No, page 118. senior executives in the development, approval and may propose, at any time, updating of purpose, mission statement, vision and improvements to the company’s values, and the definition of strategies, policies and managemnt approach, which must be approved by the Board. goals related to economic, environmental and social impacts of the organization

G4-43 Measures taken to develop and enhance In addition to undergoing No, page 118. the knowledge of the highest governance body on specific training courses, economic, environmental and social topics Board members receive regular analytical reports from the relevant company’s departments, to assist them in their decision-making. G4-44 Assessment procedures of the highest The Board carries out a self- No, page 118. governance body’s performance with regard to the evaluation at each meeting. governance of economic, environmental and social topics. Report whether this assessment is independent or not and how often it is performed. Report whether this evaluation is a self-assessment G4-45 Role of the highest governance body in the Page 38 No, page 118. identification and management of impacts, risks and opportunities derived from economic, environmental and social issues. Mention the role of the highest governance body in the implementation of due diligence processes G4-46 Role of the highest governance body in Risk management is a No, page 118. analyzing the effectiveness of the organization’s risk permanent item on the Board’s management processes for economic, environmental agenda both in terms of and social topics analyzing existing processes and evaluating new investments. G4-47 The frequency of the highest governance body’s Page 38 No, page 118. review of the impacts, risks and opportunities derived from economic, environmental and social issues

G4-48 The highest committee or position that formally Page 38 No, page 118. reviews and approves the organization’s sustainability report and ensures that all material Aspects are addressed G4-49 Process used to communicate critical concerns Page 38 No, page 118. to the highest governance body G4-50 Nature and total number of critical concerns The Board addresses all critical No, page 118. communicated to the highest governance body and issues related to the company’s the mechanism(s) adopted to address and resolve them strategy, expansion plans and business activities. G4-51 Remuneration policies for the highest We do not disclose this type of No, page 118. governance body and senior management information since, due to its strategic nature, it is only for internal discussions. G4-52 Process adopted for determining the We do not disclose this type of No, page 118. remuneration. Report whether compensation information since, due to its consultants are involved in the determination strategic nature, it is only for of remuneration and if they are independent of internal discussions. management. Report any other relations between the compensation consultants and the organization

G4-53 Report how opinions of stakeholders are sought We do not disclose this type of No, page 118. and taken into account in relation to remuneration, information since, due to its including the results of votes on remuneration policies strategic nature, it is only for and proposals, if applicable internal discussions. G4-54 Ratio of the total annual remuneration of the We do not disclose this type of No, page 118. highest paid individual in the organization in each information since, due to its country where the organization has significant strategic nature, it is only for operations and the median annual total compensation internal discussions. of all employees (excluding the highest paid individual) in the same country

G4-55 Ratio of the percentage increase in the annual We do not disclose this type of No, page 118. total compensation of the highest paid individual in the information since, due to its organization in each country where the organization strategic nature, it is only for has significant operations and the median percentage internal discussions. increase in the annual total compensation of all employees (excluding the highest paid individual) in the same country Ethics and integrity G4-56 Organization’s values, principles, standards and Pages 28 and 37 No, page 118. norms of behavior, such as codes of conduct and ethics G4-57 Internal and external mechanisms adopted by Pages 12 and 28 No, page 118. the organization to seek guidance on ethical and lawful behavior, such as help or advice lines (for example: ombudsman)

G4-58 Internal and external mechanisms adopted by Pages 28 No, page 118. the organization to communicate concerns about unethical or unlawful behavior and issues related to organizational integrity, such as escalation through line management, whistle-blowing mechanisms or hotlines

Material DMAs and Page/response Omission External Aspects indicators assurance SPECIFIC STANDARD DISCLOSURES Economic category Economic G4-DMA Votorantim Cimentos is a privately-held Yes, page 151. performance Management company that adopts the accounting and UNGC approach governance practices of listed companies. This includes having a Board which gives overall guidance for the organization’s long-term direction and ensures the preservation of its values and beliefs. The decisions on investments and debt policies are made at the corporate level, and are aimed at maintaining the company’s investment grade rating. Our long-term plans are based on information on macroeconomic scenarios, and the supply and demand for raw materials and energy. The strategic planning cycle encompasses all material aspects of sustainability as guiding parameters. Budgets are made based on “Year 1” of the strategic plan, and short and medium-term targets are established for all managers. Other employees also have targets as a result of the cascading down of the budget to the level of operating unit. The monitoring of budget performance includes a DVA (distribution of value added) analysis, which details the amount of taxes paid and the amounts distributed to the company’s various stakeholder groups. The strategic plan includes a risk analysis of all the material aspects, including those related to climate change. Insurance policies are managed and controlled, especially those directly linked to aspects of manufacturing operations and supply of raw materials. G4-EC1 Direct VCBR/VCNA/VCEAA Yes, page 152 economic value Pages 93 and 102 generated and distributed

Material DMAs and Page/response Omission External Aspects indicators assurance Market G4-DMA In our licensing processes there are No, page 118. Presence Management typically specified issues related to approach investment in the impacted communities. Votorantim Cimentos has a policy of a making a comprehensive evaluation of this process, seeking to incorporate the items to be developed, issues related to the development of the community in relation to the possibilities generated by implementing the business activity, both with direct aspects, such as hiring local suppliers and employees, and with indirect aspects, such as those related to promoting the improvement of the educational quality of young children. At the consolidated operational level there is a corporate goal to foster the development of communities considered to be priorities. In these cases the organization contributes to developing plans to improve public management and to other initiatives for the economic and social development of the community. G4-EC6 Proportion VCBR No, page 118. of members Pages 79 and 114 of senior management hired from the local community at significant locations of operation Indirect G4-DMA In our licensing processes there are No, page 118. economic Management typically specified issues related to impacts approach investment in the impacted communities. Votorantim Cimentos has a policy of a making a comprehensive evaluation of this process, seeking to incorporate the items to be developed, issues related to the development of the community in relation to the possibilities generated by implementing the business activity, both with direct aspects, such as hiring local suppliers and employees, and with indirect aspects, such as those related to promoting the improvement of the educational quality of young children. At the consolidated operational level there is a corporate goal to foster the development of communities considered to be priorities. In these cases the organization contributes to developing plans to improve public management and to other initiatives for the economic and social development of the community.

Material DMAs and Page/response Omission External Aspects indicators assurance Indirect G4-EC7 VCBR No, page 118. economic Development Page 75 impacts and impact of infrastructure investments and services supported Procurement G4-DMA In 2012, the company established a No, page 118. Practices Management corporate policy to develop local suppliers. approach Then, in 2013, a number of pilot projects were initiated at some of Votorantim Cimentos’ units. The management of the process is currently being fully developed. G4-EC9 Proportion VCBR No, page 118. of spending on Pages 87 and 103 local suppliers at significant locations of operation Environmental Category UNGC Materials G4-DMA Votorantim Cimentos’ requirements for Yes, page 151. Management raw materials are managed based on approach five-year demand forecasts (strategic planning), the available inventories of resources (renewable and non- renewable), the management of mining exploration and production licenses and production capacity. In the annual budgets the consumption volumes for the following year are updated and, during the current year, sales and production volumes are planned on a quarterly basis in order to administer the flow of materials. G4-EN1 Materials VCBR, VCNA and VCEAA Yes, page 151. used by weight or Page 109 volume Energy G4-DMA The energy demand by segment is defined Yes, page 151. Management in the strategic plan. Action plans are approach prepared to meet this demand with medium and long-term supply contracts. For day-to-day energy management, the units have energy efficiency programs to optimize the use of inputs, and the technology and development areas research the possibilities for new processes and energy sources. The energy data (in GJ) reported in the EN3 and EN4 indicators are consolidated in Votorantim Cimentos using a protocol for energy and emissions.

Material DMAs and Page/response Omission External Aspects indicators assurance Energy G4-EN3 Energy VCBR, VCNA and VCEAA Yes, page 151. consumption Pages 107 and 108 inside the organization G4-EN4 Energy VCBR, VCNA and VCEAA Yes, page 151. consumption Page 108 outside of the organization G4-EN5 Energy VCBR, VCNA and VCEAA Yes, page 151. intensity Page 109

Water G4-DMA Not responded Yes, page 151. Management approach G4-EN8 Total water Not responded No information Yes, page 151. withdrawn by available. With the source expansion of operations to Europe, Asia and Africa (VCEAA) in 2013, we are making a study to identify the areas of greatest water stress and consumption in our units. Therefore, we do not have detailed information available on the total water withdrawn by source for this reporting cycle. This information will be reported in the years to come. Biodiversity G4-DMA Votorantim Cimentos uses a tool called Yes, page 151. Management IBAT to evaluate the overlaps between approach the company’s operations and areas of high biodiversity value. All of the legal requirements for biodiversity issues in the licensing of our operations are managed in a centralized system. In addition, Votorantim’s industrial companies, due to their mining and forestry activities, prepare reports on their impacts and dependence on biodiversity and ecosystem services. G4-EN11 VCBR/VCNA/VCEAA Yes, page 151. Operational sites Pages 66 and 111 owned, leased, or managed in, or adjacent to, protected areas and areas of high biodiversity value which are in areas outside of protected areas

Material DMAs and Page/response Omission External Aspects indicators assurance Emissions G4-DMA All the legal parameters regarding Yes, page 151. Management authorizations for gaseous emissions and approach particulate matter comply strictly with the legal aspects and numerical values specified in their licensing processes. The company has a goal of reducing emissions per metric ton of production in all its processes, especially those related to greenhouse gases. Votorantim Cimentos continuously monitors the emissions of its major pollutants (particulate matter, NOx and SO2). It also monitors, on a non- continuous basis, using third-party isokinetic measurements, the emissions from major and minor pollutants (metals, dioxins and furans, THC etc.). G4-EN15 Direct VCBR, VCNA and VCEAA Yes, page 151. greenhouse gas Pages 106 and 107 (GHG) Emissions (Scope 1) G4-EN16 VCBR, VCNA and VCEAA Yes, page 151. Energy indirect Page 107 greenhouse gas (GHG) emissions (Scope 2) G4-EN17 VCBR Yes, page 151. Other indirect Page 107 greenhouse gas (GHG) emissions (Scope 3) G4-EN18 VCBR, VCNA and VCEAA Yes, page 151. greenhouse gas Pages 106 and 107 (GHG) emissions intensity G4-EN19 Reduction VCBR, VCNA and VCEAA Yes, page 151. of greenhouse gas Page 106 (GHG) emissions

G4-EN21 NOx,SOx, VCBR, VCNA and VCEAA Yes, page 151. and other Pages 109 and 110 significant air emissions

Material DMAs and Page/response Omission External Aspects indicators assurance Effluents and G4-DMA We comply with all legal requirements Yes, page 151. waste Management concerning effluents and waste and approach with the values specified in the licensing process. G4-EN23 Total VCBR/VCNA/VCEAA Yes, page 151. weight of waste by Page 111 type and disposal method Products G4-DMA We follow all the criteria demanded by No, page 118. and services Management customers related to these issues. approach For the products destined to direct consumption, for example, cement for construction, we have developed best practice manuals for their use. G4-EN27 Extent of VCBR/VCNA No, page 118. impact mitigation Page 51 of environmental impacts of products and services Compliance G4-DMA Votorantim Cimentos has a centralized Yes, page 151. Management management system for operating approach licenses, which controls the deadlines and the budget for legal issues and licensing operations. In the event of fines, a technical analysis is undertaken, and, when appropriate, an appeal to the appropriate judicial bodies is made. In addition, the company’s internal policies dictate that fines and other legal processes must be quantified and the respective amounts allocated in the balance sheet, following the IFRS accounting rules, and in accordance with the criteria for establishing whether a loss is possible/probable or remote in the case of legal action. G4-EN29 Monetary VCBR Yes, page 151. value of significant Page 106 fines and total number of non-monetary sanctions due to non- compliance with environmental laws and regulations Transport G4-DMA Votorantim Cimentos, by means of its No, page 118. Management logistics and supply area, encourages approach its suppliers to adhere to the principles established in our global environmental policy and green rules.

Material DMAs and Page/response Omission External Aspects indicators assurance Transport G4-EN30 VCBR No, page 118. Significant Page 109 environmental impacts of transporting products and other goods and materials used for the organization’s operations, and the transportation of its employees General G4-DMA The budget for environmental issues No, page 118. Management and CAPEX projects are decided during approach the strategic planning process, which defines the allocation of resources for the next five years. The next step of the management process is the preparation of the annual budget, where the investments are detailed and approved for implementation. The monitoring of the budget is performed monthly using data available in SAP and is discussed in internal meetings held at each unit. CAPEX projects are monitored monthly, at Engineering meetings, in accordance with the CAPEX Manual. G4-EN31 Total VCBR/VCNA/VCEAA No, page 118. environmental Pages 54 and 106 protection expenditures and investments, by type

Supplier G4-DMA We evaluate suppliers in terms of Yes, page 151. environmental Management environmental criteria with regard to their assessment approach eligibility, registration and capability. In the phase of eligibility and registration, 100% of new suppliers are subject to an assessment of their Conformity Certificates (Federal Taxes, Social Security (INSS) and FGTS payments). The evaluation of supplier capability also includes relevant environmental criteria. However, the evaluation of capability is only carried out for the main supplier group or on demand. G4-EN32 VCBR Yes, page 151. Percentage of new Pages 87 e 103 suppliers that were screened using environmental criteria

Material DMAs and Page/response Omission External Aspects indicators assurance Environmental G4-DMA The company has an Ombudsman area No, page 118. grievance Management which is available in Brazil and overseas, mechanisms approach in 8 languages. It can be accessed by employees, customers, suppliers and other stakeholders. Users may ask questions or report complaints regarding alleged violations of the Code of Conduct. Among the complaints the most prominent relate to issues such as harassment, discrimination, abuse of power, corruption or other forms of unethical behavior. All reports received are handled by the Ombudsman area with impartiality and confidentiality. The area analyzes the reports and distributes them to be resolved. The company is committed to investigating all the reports received and to respond, in a timely manner, with remedial and educational actions, as applicable. The company is committed to the resolution of cases in an appropriate time frame, seeking to improve and shorten this period as much as possible. The Ombudsman area has a system which allows the person filing the report to monitor the process at any time, while preserving his/her identity by using a code. The training of the employees who work in the Ombudsmen area is conducted in various ways including both in-person courses and distance learning, based on on-line e-learning platforms. These courses are available in several languages. The Ombudsman area takes data privacy and protection issues, inherent in its activities, very seriously. The area is structured, in line with requirements of the data privacy and protection legislation in the countries where Votorantim Cimentos operates, and is comparable to the best market practices. G4-EN34 Number VCBR, VCNA and VCEAA No, page 118. of grievances Page 105 related to environmental impacts filed, addressed and resolved through formal grievance mechanisms

Material DMAs and Page/response Omission External Aspects indicators assurance CateSocial category - labor practices and decent work UNGC Employment G4-DMA Votorantim Cimentos’ guidelines and No, page 118. Management policies for human resources include: approach 1) Hiring: the company values competence, with fair and equitable opportunities for all. 2) Career management: the company values: meritocracy, pragmatism, excellence, open dialogue for all questions, and a sense of belonging. Career management includes setting short and long-term targets, management of an opportunities pipeline and professional training, including courses at the corporate university (Votorantim Academy). 3) Termination: a questionnaire of the degree of satisfaction/motives for leaving is conducted for both voluntary and involuntary terminations in order to understand the circumstances and improve the management of the subject. G4-LA1 Total VCBR/VCNA/VCEAA No, page 118. number and rates Page 112 of new employee hires and employee turnover by age group, gender and region Occupational G4-DMA Votorantim Cimentos seeks to use best Yes, page 151. health and Management practices for the efficient management safety approach of the health and safety of its employees and third parties. In 2014, in order to disseminate our Global Health and Safety Policy and “Rules for Life” safety program, we mobilized our employees to participate in the event Global Safety Day which from now on will be a permanent fixture in the company’s annual calendar of events. G4-LA6 Type VCBR/VCNA/VCEAA Yes, page 151. of injury and Page 114 rates of injury, occupational diseases, lost days, absenteeism and total number of work-related fatalities, by region and gender

Material DMAs and Page/response Omission External Aspects indicators assurance Training and G4-DMA Each unit develops training plans based No, page 118. education Management on the technical and management needs approach of its operations. For management positions there is a Corporate University (Votorantim Academy), where courses are given on leadership development and the preservation of the company’s values and management beliefs. Performance evaluations are carried out annually. The objectives and the targets to be achieved during the current period are defined for each position. In January each year, the results are evaluated using a standard format. A bonus is paid according to the consensus classification of performance agreed between the manager of the area and the employee. G4-LA9 Average VCBR/VCNA/VCEAA No, page 118. number of hours Page 113 of training per year per employee, broken down by gender and employee category G4-LA11 Percentage Page 78 No, page 118. of employees receiving regular performance and career development reviews, by gender and employee category. Diversity G4-DMA All new Votorantim Cimentos’ hires are No, page 118. and equal Management based on criteria for competence and opportunity approach there is no distinction between genders, age groups, minorities, ethnic groups, or other forms of discrimination. In some of the industrial companies, specific diversity committees seek to broaden the understanding of the topic, expanding opportunities.

Material DMAs and Page/response Omission External Aspects indicators assurance Diversity G4-LA12 VCBR/VCNA/VCEAA No, page 118. and equal Composition of Pages 82 and 113 opportunity governance bodies and breakdown of employees per employee category according to gender, age group, minority group membership, and other indicators of diversity Equal G4-DMA Not reported No, page 118. remuneration Management for women approach and men G4-LA13 Ratio of Not responded Not applicable. basic salary and We do not manage remuneration of remuneration by gender, women to men, by so this item is not applicable to our employee category, business. Votorantim by significant Cimentos does not locations of differentiate salaries operation between men and women. Our practice is to prepare a job description and evaluation, and classify jobs into salary groups according to the operational, technical, management and financial responsibilities. There is no relation or distinction of sex for the person that holds or will hold the job position.

Supplier G4-DMA We evaluate suppliers in terms of labor Yes, page 151. assessment for Management practices criteria with regard to their labor practices approach eligibility, registration and capability. In the phase of eligibility and registration, 100% of new suppliers are subject to an assessment of their Conformity Certificates (Federal Taxes, Social Security (INSS) and FGTS payments). The evaluation of supplier capability also includes labor practices criteria. However, the evaluation of capability is only carried out for the main supplier group or on demand. G4-LA14 Percentage VCBR Yes, page 151. of new suppliers Pages 87 and 103 that were screened using labor practices criteria

Material DMAs and Page/response Omission External Aspects indicators assurance Labor practices G4-DMA The company has an Ombudsman area No, page 118. grievance Management which is available in Brazil and overseas, mechanisms approach in 8 languages. It can be accessed by employees, customers, suppliers and other stakeholders. Users may ask questions or report complaints regarding alleged violations of the Code of Conduct. Among the complaints the most prominent relate to issues such as harassment, discrimination, abuse of power, corruption or other forms of unethical behavior. All reports received are handled by the Ombudsman area with impartiality and confidentiality. The area analyzes the reports and distributes them to be resolved. The company is committed to investigating all the reports received and to respond, in a timely manner, with remedial and educational actions, as applicable. The company is committed to the resolution of cases in an appropriate time frame, seeking to improve and shorten this period as much as possible. The Ombudsman area has a system which allows the person filing the report to monitor the process at any time, while preserving his/her identity by using a code. The training of the employees who work in the Ombudsmen area is conducted in various ways including both in-person courses and distance learning, based on on-line e-learning platforms. These courses are available in several languages. The Ombudsman area takes data privacy and protection issues, inherent in its activities, very seriously. The area is structured, in line with requirements of the data privacy and protection legislation in the countries where Votorantim Cimentos operates, and is comparable to the best market practices. G4-LA16 Number VCBR, VCNA and VCEAA No, page 118. of grievances Page 105 about labor practices filed, addressed, and resolved through formal grievance mechanisms

Material DMAs and Page/response Omission External Aspects indicators assurance Social category - human rights UNGC Non- G4-DMA Votorantim Cimentos monitors the data Yes, page 151. discrimination Management generated in the Ombudsman system on a daily basis. This information is reported UNGC approach monthly to the Audit Committee, and bimonthly to the Conduct Committee, as a basis for the discussion of the strategies to be adopted. Cases related to harassment and abuse of power are directed to the area of Human and Organizational Development, which is responsible for the implementation of training for managers. These training courses aim to improve the organizational climate and decrease complaints/reports received. G4-HR3 Total VCBR, VCNA and VCEAA Yes, page 151. number of Paginas 49 and 105 incidents of discrimination and corrective actions taken Freedom of G4-DMA Votorantim Cimentos has a code of No, page 118. association Management conduct with regard to free association, and collective approach recognizes trade unions as legal bargaining representatives of employees and seeks, consistent with its values and UNGC management beliefs, to encourage open dialogue between company employees and their union representatives. The company negotiates directly with unions, in which besides the unions the employees may participate at the negotiating table G4-HR4 Operations VCBR, VCNA and VCEAA No, page 118. and suppliers Page 88 identified in which the right to exercise freedom of association and collective bargaining may be violated or at significant risk, and measures taken to support these rights

Material DMAs and Page/response Omission External Aspects indicators assurance Child Labor G4-DMA Child labor is not permitted by the No, page 118. UNGC Management organization. The issues related to approach this topic are addressed in the Code of Conduct and also in operational control audits. Complaints about such incidents should be sent to the Ombudsman. G4-HR5 Operations VCBR/VCNA No, page 118. and suppliers Page 50 identified as having significant risk for incidents of child labor, and measures taken to contribute to the effective abolition of child labor Forced or G4-DMA Forced and compulsory labor is not No, page 118. compulsory Management permitted by the organization. The issues labor approach related to this topic are addressed in the Code of Conduct and also in operational UNGC control audits. Complaints about such incidents should be sent to the Ombudsman.

G4-HR6 Operations VCBR/VCNA No, page 118. and suppliers Page 50 identified as having significant risk for incidents of forced or compulsory labor and measures taken to contribute to the elimination of all forms of forced or compulsory labor Assessment G4-DMA At Votorantim Cimentos the results of No, page 118. Management internal audits are presented promptly approach to the Audit Committee. These reports include information on the status of the audits, according to the annual audit plan, the main points identified and the status of the action plans prepared by the areas being audited. At these same meetings information is presented on the Ombudsman’s activities, including the number of complaints received and their classification according to level of response or solution. The time period for responding to complaints is one of the targets of the Ombudsman and Audit areas.

Material DMAs and Page/response Omission External Aspects indicators assurance Assessment G4-HR9 Total VCBR/VCNA/VCEAA No, page 118. number and Page 47 percentage of operations that have been subject to human rights reviews or impact assessments Supplier G4-DMA To be included in Votorantim Cimentos’ Yes, page 151. human rights Management register of suppliers, they must submit assessment approach to an evaluation of their situation with respect to the following items: financial, tax and social security issues; clearance certificate for labor debts. All contracts include specific provisions defining the responsibility for payment of social taxes and the prohibition of child and forced or compulsory labor. We conduct regular audits of the service providers who carry out their activities within our operating units and, when necessary, at the suppliers’ facilities. In Brazil, suppliers listed on the Ministry of Labor’s blacklist are automatically blocked in our system. G4-HR10 VCBR Yes, page 151. Percentage of Pages 87 and 103 new suppliers that were screened using human rights criteria

Material DMAs and Page/response Omission External Aspects indicators assurance Human rights G4-DMA The company has an Ombudsman area No, page 118. grievance Management which is available in Brazil and overseas, mechanisms approach in 8 languages. It can be accessed by employees, customers, suppliers and other stakeholders. Users may ask questions or report complaints regarding alleged violations of the Code of Conduct. Among the complaints the most prominent relate to issues such as harassment, discrimination, abuse of power, corruption or other forms of unethical behavior. All reports received are handled by the Ombudsman area with impartiality and confidentiality. The area analyzes the reports and distributes them to be resolved. The company is committed to investigating all the reports received and to respond, in a timely manner, with remedial and educational actions, as applicable. The company is committed to the resolution of cases in an appropriate time frame, seeking to improve and shorten this period as much as possible. The Ombudsman area has a system which allows the person filing the report to monitor the process at any time, while preserving his/her identity by using a code. The training of the employees who work in the Ombudsmen area is conducted in various ways including both in-person courses and distance learning, based on on-line e-learning platforms. These courses are available in several languages. The Ombudsman area takes data privacy and protection issues, inherent in its activities, very seriously. The area is structured, in line with requirements of the data privacy and protection legislation in the countries where Votorantim Cimentos operates, and is comparable to the best market practices. G4-HR12 Number VCBR, VCNA and VCEAA No, page 118. of grievances about Page 105 human rights impacts filed, addressed and resolved through formal grievance mechanisms

Material DMAs and Page/response Omission External Aspects indicators assurance Social category – society Local G4-DMA One of Votorantim Cimentos’ Yes, page 151. communities Management sustainability principles is to engage with in the communities in which it UNGC approach operates. The company has developed a Stakeholder Engagement Handbook and a methodology to evaluate social risks. There is an annual review of the relations with each community and the projects to be developed and the priorities for action are defined. G4-SO1 Percentage Pages 72 e 115 Yes, page 151. of operations with implemented local community engagement, impact assessment and development programs Anti- G4-DMA The company’s governance structure Yes, page 151. corruption Management for fighting corruption includes: the Ombudsman; Anti-corruption UNGC approach Policy; Policy for Transactions with Stakeholders; internal audit; internal controls; and compliance. Training sessions on these policies are held annually for managers. All other stakeholders are informed about them through the Code of Conduct. We launched our Global Anti-Corruption and Compliance Policies. They explain the rules that apply to our relations with public officials and our commitment to comply with the legislation, in a totally transparent manner. We carried out a series of internal campaigns to disseminate these policies among our employees. These policies resulted in a number of specific initiatives related to compliance, and anti-corruption and fair competition legislation. We also implemented projects related to anti-competitive behavior. G4-SO3 Total VCBR/VCNA Yes, page 151. number and Page 47 percentage of operations that were evaluated for risks related to corruption and the significant risks identified

Material DMAs and Page/response Omission External Aspects indicators assurance Anti- G4-SO4 VCBR No, page 118. corruption Communication Page 104 UNGC and training on anti-corruption policies and procedures G4-SO5 Confirmed VCBR/VCNA/VCEAA No, page 118. incidents of corruption and Votorantim Cimentos did not receive any actions taken complaints related to incidents of corruption through the Ombudsman channel. Public policy G4-DMA Our relations with candidates for Yes, page 151. UNGC Management public office in elections are guided by approach our Handbook for Conduct in Electoral Processes. The handbook is distributed to all the company’s managers, and provides information and recommendations on Votorantim Cimentos’ corporate conduct in electoral processes. In line with our standard practice the handbook was updated prior to the elections in 2014. In addition we have a Corporate Policy for Election Donations which establishes corporate guidelines for the company’s donations in election campaigns. This policy is available on our website at: (www.votorantim.com). G4-SO6 Total value VCBR Yes, page 151. of contributions Page 103 to politicians and political parties, broken down by country and recipient/ beneficiary Anti- G4-DMA We launched our Global Anti-Corruption Yes, page 151. competitive Management and Compliance Policies. They explain behavior approach the rules that apply to our relations with public officials and our commitment to comply with the legislation, in a totally transparent manner. We carried out a series of internal campaigns to disseminate these policies among our employees. These policies resulted in a number of specific initiatives related to compliance, and anti-corruption and fair competition legislation. We also implemented projects related to anti-competitive behavior.

Material DMAs and Page/response Omission External Aspects indicators assurance Anti- G4-SO7 Total VCBR/VCNA/VCEAA Yes, page 151. competitive number of legal Page 104 behavior actions for anti- competitive behavior, anti-trust and monopoly practices and their outcomes Compliance G4-DMA In the event of fines, a technical analysis No, page 118. Management is undertaken, and, when appropriate, an approach appeal to the appropriate judicial bodies is made. In addition, the company’s internal policies dictate that fines and other legal processes must be quantified and the respective amounts allocated in the balance sheet, following the IFRS accounting rules, and in accordance with the criteria for establishing whether a loss is possible/probable or remote in the case of legal action. G4-SO8 Monetary VCBR/VCNA No, page 118. value of significant Page 104 fines and total number of non-monetary sanctions due to non-compliance with laws and regulations Supplier G4-DMA Not responded No, page 118. assessment for Management impacts approach on society G4-SO9 Percentage Not responded Votorantim Cimentos Yes, page 151. of new suppliers does not currently that were screened have data available to using criteria for report this indicator. We are reviewing the impacts on society appropriate way to measure and manage this broad subject for our suppliers.

Material DMAs and Page/response Omission External Aspects indicators assurance Grievance G4-DMA The company has an Ombudsman area No, page 118. mechanisms Management which is available in Brazil and overseas, for impacts on approach in 8 languages. It can be accessed by society employees, customers, suppliers and other stakeholders. Users may ask questions or report complaints regarding alleged violations of the Code of Conduct. Among the complaints the most prominent relate to issues such as harassment, discrimination, abuse of power, corruption or other forms of unethical behavior. All reports received are handled by the Ombudsman area with impartiality and confidentiality. The area analyzes the reports and distributes them to be resolved. The company is committed to investigating all the reports received and to respond, in a timely manner, with remedial and educational actions, as applicable. The company is committed to the resolution of cases in an appropriate time frame, seeking to improve and shorten this period as much as possible. The Ombudsman area has a system which allows the person filing the report to monitor the process at any time, while preserving his/her identity by using a code. The training of the employees who work in the Ombudsmen area is conducted in various ways including both in-person courses and distance learning, based on on-line e-learning platforms. These courses are available in several languages. The Ombudsman area takes data privacy and protection issues, inherent in its activities, very seriously. The area is structured, in line with requirements of the data privacy and protection legislation in the countries where Votorantim Cimentos operates, and is comparable to the best market practices.

G4-SO11 Number VCBR, VCNA e VCEAA No, page 118. of grievances Page 105 related to impacts on society filed, addressed and resolved through formal grievance mechanisms

Material DMAs and Page/response Omission External Aspects indicators assurance Social category – product responsibility Product G4-DMA We adopted a new methodology for our No, page 118. and service Management customer satisfaction survey, the “Net labeling approach Promoter Score (NPS)”, which indicates the percentage of customers who would recommend our company. In this type of survey, the client is asked to assign a grade to Votorantim Cimentos, on a scale of 1 to 10, where 0 is “I would definitely not recommend” and 10 is “I would definitely recommend”. Customers that attribute scores of 9 or 10 are classified as “promoters”. The Net Promoter score is calculated by subtracting the percentage of detractors (scores 1 to 6) from the percentage of promoters (scores 9 and 10). G4-PR5 Results VCBR No, page 118. of surveys Page 85 e 103 measuring customer satisfaction Category Sector Supplement – Mining and Metals Biodiversity G4-DMA We use the IBAT tool to evaluate our Yes, page 151. Management operations that overlap in highly approach relevant areas of biodiversity and establish biodiversity management plans for such areas. G4-MM2 Number VCBR/VCNA/VCEAA Yes, page 151. and percentage Pages 66 and 111 of total sites identified as requiring biodiversity management plans according to stated criteria and the number (percentage) of those sites with plans in place

Material DMAs and Page/response Omission External Aspects indicators assurance Communities G4-DMA The company has an Ombudsman area No, page 118. Management which is available in Brazil and overseas, approach in 8 languages. It can be accessed by employees, customers, suppliers and other stakeholders. Users may ask questions or report complaints regarding alleged violations of the Code of Conduct. Among the complaints the most prominent relate to issues such as harassment, discrimination, abuse of power, corruption or other forms of unethical behavior. All reports received are handled by the Ombudsman area with impartiality and confidentiality. The area analyzes the reports and distributes them to be resolved. The company is committed to investigating all the reports received and to respond, in a timely manner, with remedial and educational actions, as applicable. The company is committed to the resolution of cases in an appropriate time frame, seeking to improve and shorten this period as much as possible. The Ombudsman area has a system which allows the person filing the report to monitor the process at any time, while preserving his/her identity by using a code. The training of the employees who work in the Ombudsmen area is conducted in various ways including both in-person courses and distance learning, based on on-line e-learning platforms. These courses are available in several languages. The Ombudsman area takes data privacy and protection issues, inherent in its activities, very seriously. The area is structured, in line with requirements of the data privacy and protection legislation in the countries where Votorantim Cimentos operates, and is comparable to the best market practices. G4-MM7 The VCBR/VCNA/VCEAA No information No, page 118. extent to which available. Votorantim grievance Votorantim Cimentos did not register Cement monitors the mechanisms were any complaints on this topic during the number of grievances through its Ombudsman used to resolve reporting period. area. However, disputes related to these grievances are land use relating consolidated to land use, and cannot be separated customary rights of into individual categories local communities for 2013. As from and indigenous from the 2015 report, the peoples, and the company will report the outcomes events by category.

Material DMAs and Page/response Omission External Aspects indicators assurance Compliance G4-DMA Votorantim Cimentos complies with the Yes, page 151. Management applicable legislation in the countries approach where it operates and adopts the best operating practices. The company makes provisions for the costs related to such operations (ARO) in accordance with the IFRS accounting standards. G4-MM10 Number VCBR/VCNA/VCEAA Yes, page 151. and percentage of Pages 68 and 111 operations with closure plans

2014 Integrated report 143 Correlations

Material Issues and GRI Aspects

Ethics, transparency and integrity Biodiversity preservation Occupational health and safety Customer relations and satisfaction CO2 emissions Management of business risks Anti-corruption practices, cartels and unfair compe- Policies, reviews, audits, licenses and certification tition of systems Regulatory risks Fines and legal compliance Supply chain management Employment and labor relations Contribution to local development T raining, capacity-building and employee Economic performance: economic value generated development and distributed Respect for human rights in operations and Relations with the community supply chain Government relations Partnerships and strategic alliances Energy efficiency Alternative sources of raw materials and resources Alternative energy sources and alternative fuels Low carbon products

Air emissions (Particulate Matter, NOX, SOX) Product life-cycle and social and environmental Management and reuse of construction waste, and impacts reverse logistics of cement bags Innovation, research and development Water consumption Climate change mitigation and adaptation Sustainable concrete Inclusive and sustainable construction Mining life-cycle processes Water and effluent management

Certifications obtained and adaptation to international standards Internal engagement on sustainability Social dialogue and freedom of association Indigenous peoples’ rights Diversity and social inclusion Environmental product declaration

YVER HIGH DEGREE OF MATERIALITY High degree of materiality Medium degree of materiality Low degree of materiality

144 VOTORANTIM CIMENTOS Correlations

Correlation of material issues and GRI aspects [G4-21 and G4-20]

V C Material Issues GRI Issues Indicators Stakeholders

G4-LA5

Health and Safety G4-LA6 Employees own employees LA – Occupational Health and Safety afety Shareholders S and contractors G4-LA7

G4-LA8

G4-56 Ethics, Employees General Standard Disclosures - Ethics And Transparency G4-57 Shareholders Integrity and Integrity Society G4-58

Regulatory Risks None None

G4-SO3

Employees SO – Anti-corruption G4-SO4 Anti-corruption Society practices; cartels G4-SO5 and unfair competition Competitors Shareholders SO – Anti-competitive Behavior G4-SO7 Society ompliance

C General Standard Disclosures – Organizational G4-12 Suppliers Profile

G4-EN32 Employees

thics and Suppliers E EN – Supplier Environmental Assessment Customers G4-EN33 Society Environment Supply chain management Employees (includes: Suppliers LA – Supplier Assessment for Labor Practices G4-LA15 evaluation and Customers management Society of suppliers, Employees auditing, etc.) Suppliers HR – Supplier Human Rights Assessment G4-HR11 Customers Society

G4-SO9 Employees SO – Supplier Assessment for Impacts on Suppliers Society Customers G4-SO10 Society

G4-EN8 Water EN – Water G4-EN9 Environment consumption G4-EN10

G4-EN3

G4-EN4 Energy efficiency Environment (alternative energy EN – Energy G4-EN5 Customers sources G4-EN6

G4-EN7

G4-EN20 Environment EN – Emissions Atmospheric Society Emissions (PM, G4-EN21 NO , SO ) x x Environment EN – Transportation G4-EN30 Employees nnovation I G4-EN15

G4-EN16 Environment CO EN – Emissions G4-EN17 2 Emissions Society fficiency and E G4-EN18 co- E G4-EN19

G4-EN1 Environment EN – Materials Society Management G4-EN2 Suppliers and reuse of construction EN – EffluentsA nd Waste G4-EN23 Environment waste, and reverse logistics of used G4-EN27 cement bags Environment EN – Products and Services Customers G4-EN28

G4-EN11

G4-EN12 Biodiversity EN – Biodiversity Environment preservation G4-EN13

G4-EN14

G4-EC5 Employees EC – Market Presence Shareholders G4-EC6 Society

G4-EC7 EC – Indirect Economic Impacts Society Contribution to G4-EC8 local development Employees EC – Procurement Practices G4-EC9 Suppliers

G4-SO1 SO – Local Communities Society G4-SO2

G4-24 Employees G4-25 Customers General standard disclosures – Stakeholder Suppliers Engagement G4-26 Society Government G4-27 ngagement E Society EN – Environmental Grievance Mechanisms G4-EN34 Environment Stakeholder relations

ommunity (government, LA – Labor Practices Grievance Mechanisms G4-LA16 Employees C customers and community) Employees HR – Human Rights Grievance Mechanisms G4-HR12 Suppliers Customers

SO – Local Communities MM7 Society

Society SO – Public Policy G4-SO6 Government

SO – Grievance Mechanisms for Impacts on G4-SO11 Society Society

Employees Economic value Suppliers generated and EC – Economic Performance G4-EC1 Shareholders distributed Government Society Customer relations PR – Rotulagem de produtos e serviços G4-PR5 Customers and satisfaction

UN Global Compact Principles

The UN Global Compact Principles HUMAN RIGHTS 1. Support and respect the protection of internationally proclaimed human rights; and 2. Make sure that they are not complicit in human rights abuses. LABOR 3. Uphold the freedom of association and the effective recognition of the right to collective bargaining; 4. The elimination of all forms of forced and compulsory labor; 5. The effective abolition of child labor; and 6. The elimination of discrimination in respect of employment and occupation. ENVIRONMENT 7. Support a precautionary approach to environmental challenges; 8. Undertake initiatives to promote greater environmental responsibility; and 9. Encourage the development and diffusion of environmentally friendly technologies. ANTI-CORRUPTION 10. Work against corruption in all its forms, including extortion and bribery.

Correlations IIRC Capitals

Material Issues Form of Capital Ethics, transparency and integrity Social and Relationship Capital Occupational health and safety Human Capital

CO2 emissions Natural Capital Anti-corruption practices, cartels and unfair competition Social and Relationship Capital Regulatory risks Social and Relationship Capital Supply chain management Social and Relationship Capital Contribution to local development Social and Relationship Capital Economic performance: economic value generated and distributed Financial Capital Relations with the community Social and Relationship Capital Government relations Social and Relationship Capital Energy efficiency Natural Capital Alternative energy sources and alternative fuels Natural Capital

Air emissions (Particulate Matter, NOX, SOX) Natural Capital Management and reuse of construction waste, and reverse logis- Natural Capital tics of cement bags Water consumption Natural Capital Customer relations and satisfaction Social and Relationship Capital Biodiversity preservation Natural Capital

About the Report [G4-18, G4-23, G4-28, G4-29, G4-30, G4-31, G4-32 and G4-33]

The financial and non-financial For the first time, we are publishing a the Table of GRI Indicators or in com- information presented in this report report in the format of an integrated ments referenced in the body of the covers the units located in Brazil report. This report, the Votoran- report. The report is issued annually (VCBR), in VCNA (US and Canada), tim Cimentos Integrated Report and the previous report contained in VCEAA (Spain, Morocco, Tunisia, 2014, aims to present our activities the information for 2013. Turkey, India and China) and in South during the year in a transparent and America (Argentina, Bolivia, Chile, structured manner. We have pro- Our independent auditors, Pricewa- Peru and Uruguay). vided information on our strategy, terhouseCoopers (PwC), have audited business model, market positioning, the financial information and provided It encompasses our four main busi- material issues, activities, perfor- limited external assurance on the non- ness areas: cement, concrete, aggre- mance and the initiatives with our -financial information in the report. gates, and complementary products main stakeholder groups and society. In addition the Global Reporting Ini- (mortars and agricultural lime). tiative (GRI) has reviewed the report The report was prepared based on the in relation to the aspect of Materiality most recent version (G4) of the Global Disclosure. Although not required by Reporting Initiative (GRI) guidelines internal policies, the external assuran- for sustainability reporting and the ce process was a requirement set by recommendations of the Interna- senior management. tional Integrated Reporting Council (IIRC) for integrated reporting. The Votorantim Cimentos Integrated Report 2014 is being published in Por- Based on the above guidelines we tuguese and English, and in print and have integrated both financial and PDF versions. non-financial information, in a single narrative, permeated by the The PDF version of the report is avai- issues which are most relevant to lable at: www.votorantimcimentos. Votorantim Cimentos, including our com. corporate identity, governance structure sustainability strategy, market Your opinion is very important to us. positioning and business activities Please send your feedback, comments and results. or questions to:[email protected].

This report covers the strategies, projects, initiatives, products, services, operations and business activities of Votorantim Cimentos for 2014. De- tailed information on GRI Indicators, and any specific limitations on the scope or boundaries, can be found in

150 VOTORANTIM CIMENTOS Letter of Assurance

Independent auditor’s limited assurance report on information related to sustainability included in the 2014 Integrated Report

To the Board of Directors Votorantim Cimentos S.A. São Paulo - SP

Introduction We have been engaged by Votorantim Cimentos S.A. (“Company”) to present our limited assurance report on the compilation of the information related to sustainability included in the Company’s 2014 Integrated for the year ended December 31, 2014.

Responsibilities of the management of the Company The management of the Company is responsible for the preparation and fair presentation of the information related to sustainability included in the 2104 Integrated Report, in accordance with the guidelines of the Global Reporting Initiative (GRI-G4), and for such internal control as it determines is necessary to enable the preparation of information free from material misstatement, whether due to fraud or error.

Independent auditor’s responsibility Our responsibility is to express a conclusion on the information related to sustainability included in the 2014 Integrated Report, based on our limited assurance engagement carried out in accordance with the Technical Communication CTO 01, “Issuance of an Assurance Report Related to Sustainability and Social Respon- sibility”, issued by the Brazilian Federal Accounting Council (“CFC”), based on the Brazilian standard NBC TO 3000, “Assurance Engagements Other than Audit and Review”, also issued by the CFC, which is equivalent to the international standard ISAE 3000, “Assurance engagements other than audits or reviews of historical financial information”, issued by the International Auditing and Assurance Standar- ds Board (IAASB). Those standards require that we comply with ethical requirements, including independence requirements, and perform our engagement to obtain limited assurance that the information related to sustainability included in the 2014 Integrated Report, taken as a whole, is free from material misstatement.

2014 IntegratedIntegrated reportreport 151 Correlations Letter of Assurance

A limited assurance engagement conducted in accordance The limited assurance engagement also included tests to with the Brazilian standard NBC TO 3000 and ISAE 3000 assess compliance with the guidelines and criteria applied in mainly consists of making inquiries of management and other the preparation of the information related to sustainability professionals of the entity involved in the preparation of the included in the 2014 Integrated Report. information, as well as applying analytical procedures to obtain evidence that allows us to issue a limited assurance conclusion We believe that the evidence we have obtained is sufficient on the information, taken as a whole. A limited assurance enga- and appropriate to provide a basis for our limited assurance gement also requires the performance of additional procedures conclusion. when the independent auditor becomes aware of matters that lead him to believe that the information taken as a whole might Scope and limitations present significant misstatements. The procedures applied in a limited assurance engagement are substantially less than those applied in a reasonable assu- The procedures selected are based on our understanding of rance engagement, the objective of which is the issuance of the aspects related to the compilation and presentation of an opinion on the information related to sustainability in the the information related to sustainability included in the 2014 report. Consequently, we were not able to obtain reasonable Integrated Report, other circumstances of the engagement, assurance that we were aware of all significant matters that and our analysis of the areas in which significant misstate- might be identified in a reasonable assurance engagement, ments might exist. The following procedures were adopted: the objective of which is the issuance of an opinion. Had we performed an engagement with the objective of issuing an (a) planning the work, taking into consideration the materia- opinion, we might have identified other matters and possible lity and the volume of quantitative and qualitative informa- misstatements in the information related to sustainability tion and the operating and internal control systems that included in the 2014 Integrated Report. Accordingly, we do not were used to prepare the information related to sustainabili- express an opinion on this information. ty included in the 2014 Integrated Report; Non-financial data are subject to more inherent limitations (b) understanding the calculation methodology and the pro- than financial data, due to the nature and diversity of the cedures adopted for the compilation of indicators through in- methods used to determine, calculate and estimate these data. terviews with the managers responsible for the preparation Qualitative interpretations of the relevance, materiality and of the information; accuracy of the data are subject to individual assumptions and judgments. Furthermore, we did not consider in our engage- (c) interviewing the members of management responsible ment the data reported for prior years, nor future projections for the information of Votorantim Cimentos São Paulo and and goals. Curitiba, Çorum (Turkey) and Rio Branco (indicators referring to Votorantim Cimentos); Conclusion Based on the procedures performed, as described herein, no (d) applying analytical procedures to quantitative informa- matter has come to our attention that causes us to believe tion and making inquiries regarding the qualitative informa- that the information related to sustainability included in the tion and its correlation with the indicators disclosed in the Votorantim Cimentos S.A 2014 Integrated Report has not information related to sustainability included in the 2014 been compiled, in all material respects, in accordance with Integrated Report; the guidelines of the Global Reporting Initiative (GRI-G4).

(e) obtaining evidence about the most significant GRI-G4 São Paulo, May 29, 2015 indicators included in the 2014 Integrated Report and presented in the “GRI Index”; and PricewaterhouseCoopers André Pannunzio Contadores Públicos Ltda Candido Oliveira (f) comparing the financial indicators with the financial CRC 2SP023.173/O-4 Contador CRC 1SP-196603/O-1 statements and/or accounting records.

152 VOTORANTIMVOTORANTIM CIMENTOSCIMENTOS Financial Statements Financial Statements

Balance Sheet Years ended December 31 All amounts in thousands of reais P arent company Consolidated Assets 2014 2013 2014 2013 Current assets

Cash and cash equivalents 188,676 14,218 955,327 665,588 Financial investments 1,456,432 1,027,785 1,570,713 1,274,323 Derivative financial instruments 15,010 17,526 T rade accounts receivable 305,571 302,390 1,148,809 1,096,596 Inventory 432,225 484,343 1,302,235 1,305,655 Other taxes recoverable 107,497 86,900 196,346 179,448 Current income tax and social contribution receivable 28,694 95,826 75,212 161,686 Advances to suppliers 29,314 31,239 82,826 74,401 Dividends receivable 42,741 143,974 31,224 24,555 Other assets 33,427 61,122 149,678 154,578 2,624,577 2,262,807 5,512,370 4,954,356 Assets of disposal group classified as held for sale 36,509 1,285,785 787,981 2,661,086 2,262,807 6,798,155 5,742,337 Non-current assets

Long-term receivables

Derivative financial instruments 91,156 91,156 Related parties 23,983 17,833 135,687 103,767 Judicial deposits 126,603 132,369 196,153 206,779 Deferred taxes 421,662 320,080 Other taxes recoverable 155,904 172,802 247,500 269,802 Other assets 53,075 61,243 144,405 172,885 450,721 384,247 1,236,563 1,073,313 Investments in associates and joint ventures 12,204,889 13,283,863 1,677,115 1,553,893 Property, plant and equipment 4,982,531 4,945,756 10,647,488 10,384,454 Intangible assets 828,571 765,548 5,267,054 5,156,829 18,015,991 18,995,167 17,591,657 17,095,176 Total assets 21,127,798 21,642,221 25,626,375 23,910,826

2014 Integrated report 153 Financial Statements

Balance Sheet Years ended December 31 All amounts in thousands of reais P arent company Consolidated Liabilities and stockholders’ equity 2014 2013 2014 2013 Current liabilities

Loans and financing 617,046 552,526 772,368 721,745 Derivative financial instruments 76,386 182 76,386 2,450 T rade payables 373,041 351,961 1,232,301 910,705 Payables - Trading 116,240 112,445 116,240 112,445 Salaries and payroll charges 166,997 159,981 316,668 292,606 Income tax and social contribution payable 14,138 68,618 T axes payable 137,044 99,489 220,417 205,783 Dividends payable 116,722 1,880 122,100 45,664 Advances from customers 5,013 6,990 25,491 69,957 Use of public assets 24,859 Other liabilities 131,944 119,859 263,405 231,919 1,740,433 1,405,313 3,159,514 2,686,751

Liabilities of disposal group classified as held for sale 895,235 390,305 1,740,433 1,405,313 4,054,749 3,077,056 Non-current liabilities

Loans and financing 12,623,807 11,326,447 13,652,822 12,779,596 Derivative financial instruments 3,826 3,826 Related parties 459,311 2,860,017 71,445 151,623 Provisions 424,874 582,960 776,102 913,990 Deferred taxes 43,154 107,518 510,947 498,318 Payables to investees 31,563 26,407 Use of public assets 398,525 Pension liabilities 154,314 140,897 Other liabilities 84,114 169,379 242,287 334,163 13,666,823 15,076,554 15,407,917 15,220,938 Total liabilities 15,407,256 16,481,867 19,462,666 18,297,994

154 VOTORANTIM CIMENTOS Financial Statements

P arent company Consolidated Liabilities and stockholders’ equity 2014 2013 2014 2013 Stockholders’ equity

Capital 2,730,875 2,731,375 2,730,875 2,731,375 Revenue reserves 2,254,332 1,761,803 2,254,332 1,761,803 Cumulative other comprehensive income 735,335 667,176 735,335 667,176 Total equity attributable to owners of the parent 5,720,542 5,160,354 5,720,542 5,160,354 Non-controlling interests 443,167 452,478 Total stockholders’ equity 5,720,542 5,160,354 6,163,709 5,612,832 Total liabilities and stockholders’ equity 21,127,798 21,642,221 25,626,375 23,910,826

Income Statement Years ended December 31 All amounts in thousands of reais P arent company Consolidated 2014 2013 2014 2013 Continuing operations

Revenue 6,642,445 6,330,908 12,883,566 12,142,288

Cost of sales and services (3,767,944) (3,664,506) (8,568,924) (8,102,841)

Gross profit 2,874,501 2,666,402 4,314,642 4,039,447 Operating income (expenses)

Selling (721,169) (592,665) (1,061,881) (893,711) General and administrative (563,168) (506,255) (885,999) (790,373) Other operating income, net 62,814 59,784 234,093 326,125 (1,221,523) (1,039,136) (1,713,787) (1,357,959) Operating profit before equity results and net financial results 1,652,978 1,627,266 2,600,855 2,681,488 Results of investees

Equity in the results of associates and joint ventures 743,025 774,123 187,687 96,863 Realization of other comprehensive income on disposal 31,045 31,045 of investments 743,025 805,168 187,687 127,908

Income Statement Years ended December 31 All amounts in thousands of reais P arent company Consolidated 2014 2013 2014 2013 Net financial results

Financial income 254,263 186,330 319,888 376,101 Financial expenses (1,423,027) (925,452) (1,679,281) (1,072,152) Exchange variations, net (60,604) (42,241) (82,282) (89,745) (1,229,368) (781,363) (1,441,675) (785,796) Profit before taxation 1,166,635 1,651,071 1,346,867 2,023,600

Income tax and social contribution

Current 8,502 (304,079) (231,789) (551,810) Deferred (91,906) (19,168) 9,493 (34,098) Profit for the year from continuing operations 1,083,231 1,327,824 1,124,571 1,437,692 Discontinued operations

Profit (loss) for the year from discontinued operations 16,221 (48,857) Net income for the year 1,083,231 1,327,824 1,140,792 1,388,835 Net income attributable to the owners of the parent 1,083,231 1,327,824 1,083,231 1,327,824 Net income attributable to non-controlling interests 57,561 61,011 Net income for the year 1,083,231 1,327,824 1,140,792 1,388,835 Total number of shares - thousand (*) 5,421,511 5,422,032 5,421,511 5,422,032 Basic and diluted earnings per share - R$ (*) 0.1998 0.2449 0.1998 0.2449 From continuing operations: 0.1998 0.2449 0.1968 0.2539 Basic and diluted earnings per share - R$ (*) From discontinued operations: 0.0030 (0.0090) Basic and diluted earnings (loss) per share - R$ (*)

Statement of Comprehensive Income Years ended December 31 All amounts in thousands of reais P arent company Consolidated 2014 2013 2014 2013 Net income for the year 1,083,231 1,327,824 1,140,792 1,388,835 Other comprehensive income (loss) net of taxes, all of which can be reclassified to statement of income

Interest in other comprehensive income of investees (1,396) (7,361) (21,926) 17,216 Hedge accounting of net investments abroad (336,912) (563,681) (336,912) (563,681) Realization of other comprehensive income (31,045) (31,045) on disposal of investments in VILA Realization of other comprehensive income (15,720) (15,720) on disposal of investments Currency translation of investees located abroad 425,028 665,051 444,351 660,475 86,720 47,244 85,513 67,245 Other comprehensive income (loss) net of taxes, all of which cannot be reclassified to statement of income

Remeasurements of retirement benefits (18,561) 42,207 (18,561) 42,207 Other comprehensive income (loss) for the year, net of taxes 68,159 89,451 66,952 109,452 Total comprehensive income for the year 1,151,390 1,417,275 1,207,744 1,498,287 Comprehensive income (loss) attributable to the owners of the parent

Continuing operations 1,151,390 1,417,275 1,191,523 1,547,144 Discontined operations 16,221 (48,857) 1,151,390 1,417,275 1,207,744 1,498,287 Comprehensive income (loss) attributable to Comprehensive income (loss) attributable to the owners 1,151,390 1,417,275 of the parent Comprehensive income (loss) attributable to 56,354 81,012 non-controlling interests 1,207,744 1,498,287

Statement of changes in equity Years ended December 31 All amounts in thousands of reais

attributable to owners of the parent revenue reserves Cumulative other Total Tax incentive Retained Non-controlling Capital Legal Profit retention comprehensive Total stockholders’ reserve earnings interests income equity At January 1, 2013 2,746,024 544,441 353,070 436,711 577,725 4,657,971 252,279 4,910,250 To tal comprehensive income for the year

Net income for the year 1,327,824 1,327,824 61,011 1,388,835 Other comprehensive income for the year 89,451 89,451 20,001 109,452 Total comprehensive income for the year 1,327,824 89,451 1,417,275 81,012 1,498,287 To tal contributions by and distributions to stockholders

Decrease in non-controlling interest Macau (9,600) (9,600) (27,900) (37,500) Increase in non-controlling interest Artigas 224,795 224,795 Increase in non-controlling interest Antequera 6,120 6,120 Capital reduction - partial spin-off of assets (46,881) (46,881) (46,881) Acquisition of non-controlling interest VCNNE (52,670) (52,670) (83,828) (136,498) Capital increase 32,232 32,232 32,232 Reversal of lapsed unclaimed dividends 62,027 62,027 62,027 Allocation of net income

T ax incentive reserve 207,982 (207,982) Legal reserve 66,391 (66,391) Dividends approved (R$ 0.17 per share) (900,000) (900,000) (900,000) Profit retention 153,451 (153,451) Total contributions by and distributions to stockholders (14,649) 207,982 66,391 153,208 (1,327,824) (914,892) 119,187 (795,705) At December 31, 2013 2,731,375 752,423 419,461 589,919 667,176 5,160,354 452,478 5,612,832

attributable to owners of the parent revenue reserves Cumulative other Total Tax incentive Retained Non-controlling Capital Legal Profit retention comprehensive Total stockholders’ reserve earnings interests income equity At January 1, 2013 2,746,024 544,441 353,070 436,711 577,725 4,657,971 252,279 4,910,250 Total comprehensive income for the year

Net income for the year 1,327,824 1,327,824 61,011 1,388,835 Other comprehensive income for the year 89,451 89,451 20,001 109,452 Total comprehensive income for the year 1,327,824 89,451 1,417,275 81,012 1,498,287 Total contributions by and distributions to stockholders

Decrease in non-controlling interest Macau (9,600) (9,600) (27,900) (37,500) Increase in non-controlling interest Artigas 224,795 224,795 Increase in non-controlling interest Antequera 6,120 6,120 Capital reduction - partial spin-off of assets (46,881) (46,881) (46,881) Acquisition of non-controlling interest VCNNE (52,670) (52,670) (83,828) (136,498) Capital increase 32,232 32,232 32,232 Reversal of lapsed unclaimed dividends 62,027 62,027 62,027 Allocation of net income

Tax incentive reserve 207,982 (207,982) Legal reserve 66,391 (66,391) Dividends approved (R$ 0.17 per share) (900,000) (900,000) (900,000) Profit retention 153,451 (153,451) Total contributions by and distributions to stockholders (14,649) 207,982 66,391 153,208 (1,327,824) (914,892) 119,187 (795,705) At December 31, 2013 2,731,375 752,423 419,461 589,919 667,176 5,160,354 452,478 5,612,832

Statement of changes in equity Years ended December 31 All amounts in thousands of reais

attributable to owners of the parent revenue reserves Cumulative other Total Tax incentive Retained Non-controlling Capital Legal Profit retention comprehensive Total stockholders’ reserve earnings interests income equity At January 1, 2014 2,731,375 752,423 419,461 589,919 667,176 5,160,354 452,478 5,612,832 To tal comprehensive income for the year

Net income for the year 1,083,231 1,083,231 57,561 1,140,792 Other comprehensive income for the year 68,159 68,159 (1,207) 66,952 Total comprehensive income for the year 1,083,231 68,159 1,151,390 56,354 1,207,744 To tal contributions by and distributions to stockholders

Acquisition of non-controlling interest VCNNE (38,206) (38,206) (100,102) (138,308) Increase in non-controlling interest Yacuces 47,745 47,745 Increase in non-controlling interest Itacamba 13,385 13,385 Capital reduction - partial spin-off of assets (500) (500) (500) Reclassification from non-controlling interests to revenue reserve (42,774) (42,774) 42,774 Allocation of net income

T ax incentive reserve 200,614 (200,614) Legal reserve 54,162 (54,162) Dividends approved (R$ 0,09 per share) (244,000) (116,722) (360,722) (69,467) (430,189) Interest on stockholders' equity (R$ 0.03 per share) (149,000) (149,000) (149,000) Profit retention 562,733 (562,733) Total contributions by and distributions to stockholders (500) 200,614 54,162 237,753 (1,083,231) (591,202) (65,665) (656,867) At December 31, 2014 2,730,875 953,037 473,623 827,672 735,335 5,720,542 443,167 6,163,709

attributable to owners of the parent revenue reserves Cumulative other Total Tax incentive Retained Non-controlling Capital Legal Profit retention comprehensive Total stockholders’ reserve earnings interests income equity At January 1, 2014 2,731,375 752,423 419,461 589,919 667,176 5,160,354 452,478 5,612,832 Total comprehensive income for the year

Net income for the year 1,083,231 1,083,231 57,561 1,140,792 Other comprehensive income for the year 68,159 68,159 (1,207) 66,952 Total comprehensive income for the year 1,083,231 68,159 1,151,390 56,354 1,207,744 Total contributions by and distributions to stockholders

Acquisition of non-controlling interest VCNNE (38,206) (38,206) (100,102) (138,308) Increase in non-controlling interest Yacuces 47,745 47,745 Increase in non-controlling interest Itacamba 13,385 13,385 Capital reduction - partial spin-off of assets (500) (500) (500) Reclassification from non-controlling interests to revenue reserve (42,774) (42,774) 42,774 Allocation of net income

Tax incentive reserve 200,614 (200,614) Legal reserve 54,162 (54,162) Dividends approved (R$ 0,09 per share) (244,000) (116,722) (360,722) (69,467) (430,189) Interest on stockholders' equity (R$ 0.03 per share) (149,000) (149,000) (149,000) Profit retention 562,733 (562,733) Total contributions by and distributions to stockholders (500) 200,614 54,162 237,753 (1,083,231) (591,202) (65,665) (656,867) At December 31, 2014 2,730,875 953,037 473,623 827,672 735,335 5,720,542 443,167 6,163,709

Cash Flow Statement Years ended December 31 All amounts in thousands of reais P arent company Consolidated Cash flow from operating activities 2014 2013 2014 2013 Profit before income tax and social contribution 1,166,635 1,651,071 1,346,867 2,023,600 Income (loss) from discontinued operations 16,221 (48,857) Adjustments to reconcile net income to cash from operations

Depreciation, amortization and depletion 291,668 269,319 805,499 773,093 Impairment of advances to suppliers, property, 17,287 28,943 96,191 37,168 plant and equipment and intangible assets Loss (gain) on sale of property, plant and equipament 30,824 (6,897) (31,258) (20,478) and intangible assets Realization of other comprehensive income on disposal (31,045) (31,045) of investments Loss (gain) on disposal of other investments 609 (596) (1,446) (1,853) Gain on disposal of investments C+PA (34,904) Equity in the results of associates and joint ventures (743,025) (774,123) (187,687) (96,863) Allowance for doubtful accounts 12,549 15,167 35,489 41,351 Provision for (reversal of) inventory losses 15,338 (3,501) 30,701 (16,257) Contingent consideration Reversal unrealized (35,700) Interest, indexation and exchange variations 1,086,171 857,132 1,376,458 1,101,344 Fair value adjustment of derivative instruments (3,768) (6,336) (2,325) (9,823) Provision (75,857) 93,061 (125,938) 188,108 1,798,431 2,092,195 3,323,072 3,904,584 Decrease (increase) in assets

Financial investments (286,925) 306,914 (147,034) 758,116 T rade accounts receivable (22,579) (51,675) (88,699) (139,480) Inventory 36,780 (88,481) (30,149) (82,685) Other taxes recoverable 75,936 (48,287) 85,141 (24,472) Related parties 10,878 (56,500) (27,436) 18,264 Other assets 39,905 (16,077) (50,241) (210,428) Increase (decrease) in liabilities

T rade payables 21,080 (31,606) 311,596 46,929 T axes payable 114,249 183,707 (49,428) 60,796 Salaries and payroll charges 7,016 25,696 24,062 59,590 Advances from customers (1,977) (4,338) (44,466) 45,796 Accounts payable and other liabilities (188,596) (274,861) (69,887) (434,211) Cash provided by operations 1,604,198 2,036,687 3,236,531 4,002,799 Interest paid (980,990) (792,532) (1,055,672) (872,761) Premium paid on partial repurchase of bond (147,301) (175,436) Income tax and social contribution paid (1,060) (28,626) (135,733) (234,549) 162 VOTORANTIM CIMENTOS Net cash provided by operating activities 474,847 1,215,529 1,869,690 2,895,489 Financial Statements

P arent company Consolidated Cash flow from investing activities 2014 2013 2014 2013

Cash obtained from the acquisition of the subsidiary Artigas 91,034 Increase in interest in Bio Bio (14,699) Capital increase in investees (11,064) (69,320) (10,191) (14,102) Acquisition of equity investment in C+PA (27,900) Acquisition of equity investment in Cementos Artigas (50,795) Acquisition of equity investment in Cementos Avellaneda (121,909) Acquisition of equity investment in VCEAA (155,946) (155,946) Acquisition of equity investment (net of cash obtained) in Antequera (12,728) Acquisitions of property, plant and equipment (545,861) (780,962) (1,275,915) (1,282,118) Acquisitions of intangible assets (1,152) (2,116) (64,475) (20,848) Proceeds from disposals of property, plant and equipment and 12,449 8,427 119,204 40,721 intangible assets Proceeds from sales of non-current assets C+PA 60,200 Proceeds from investment disposal 112,600 Dividends received 48,150 51,313 50,628 61,704 Net cash used in investing activities (497,478) (948,604) (1,180,749) (1,334,786)

P arent company Consolidated Cash flow from financing activities 2014 2013 2014 2013

Acquisition of non-controlling interest in Macau (37,500) New loans and financing 3,472,003 754,253 4,280,971 1,435,420 Derivative financial instruments (2,840) (346) (3,074) (3,095) Payments of loans and financing (2,671,371) (681,836) (4,038,008) (2,206,930) Related parties, net (63,178) 655,749 (84,662) (65,882) Proceeds from capital reduction VCEAA 15,887 Portion of capital contribution Voto IV 52,294 Acquisition of non-controlling interest in VCNNE (138,308) (136,498) Increase in non-controlling interest in Yacuces 47,745 Increase in non-controlling interest in Itacamba 13,385 Capital increase in investees Voto IV (158,532) Interest on capital (150,880) (150,880) Dividends paid (244,000) (986,092) (351,826) (986,563)

Cash Flow Statement Years ended December 31 All amounts in thousands of reais P arent company Consolidated CASH FLOW FROM FINANCING ACTIVITIES 2014 2013 2014 2013

Net cash (used in) provided by financing activities 197,089 (258,272) (424,657) (1,948,754) Effects of exchange rate changes on cash and cash 25,455 117,385 equivalents of foreign subsidiaries Increase (decrease) in cash and cash equivalents 174,458 8,653 264,284 (388,051) Cash and cash equivalents at the beginning of the year 14,218 5,565 665,588 936,254 Cash and cash equivalents at the end of the year 188,676 14,218 955,327 665,588 Principal non-cash transactions

Offsetting of dividends receivable from related parties (liabilities) 655,491 Capital reduction in investee VCNNE offsetting related parties 1,421,333 (liabilities) Payment in kind of investments offsetting related parties (liabilities) 268,236 Payment of REFIS Art 33 da MP 651/14 with deferred tax on tax losses 17,290 35,247 Loans from FINAME for acquisition of property, plant and equipment 49,133 53,701 61,093 53,785 Disposal of investment in VILA 682,155 682,155 Acquisition of investee Voto IV 32,232 32,232

Statement of value added Years ended December 31 All amounts in thousands of reais P arent company Consolidated 2014 2013 2014 2013 Revenue

Sales of products and services 8,851,542 8,366,561 15,822,201 14,875,281 Other operating income 62,814 59,784 234,093 326,125 Allowance for doubtful accounts (12,549) (15,167) (35,489) (41,351) 8,901,807 8,411,178 16,020,805 15,160,055 Inputs acquired from third parties

Raw materials and other production inputs (2,362,083) (2,294,864) (5,213,503) (5,014,286) Materials, energy, oustourced services and other (1,343,121) (1,248,190) (2,529,969) (2,294,909) (3,705,204) (3,543,054) (7,743,472) (7,309,195) Gross value added 5,196,603 4,868,124 8,277,333 7,850,860

P arent company Consolidated 2014 2013 2014 2013 Depreciation, amortization and depletion (291,668) (269,319) (805,499) (773,093) Net value added generated by the Company 4,904,935 4,598,805 7,471,834 7,077,767 Value added received through transfer

Equity in the results of investees 743,025 805,168 187,687 127,908 Financial income and exchange gains 442,455 1,077,844 605,300 1,343,705 1,185,480 1,883,012 792,987 1,471,613 Total value added to distribute 6,090,415 6,481,817 8,264,821 8,549,380 Distribution of value added

Personnel and payroll charges

Direct remuneration 486,724 434,365 1,029,316 910,791 Pension plan 14,914 18,198 Social charges 266,201 237,974 385,651 350,102 Benefits 144,892 124,650 224,330 200,504 897,817 796,989 1,654,211 1,479,595 Taxes and contributions

Federal 726,172 977,648 1,166,253 1,434,708 State 1,515,504 1,410,183 2,103,078 1,940,548 Municipal 27,579 31,586 30,488 35,307 Deferred taxes 91,906 19,168 (9,493) 34,098 2,361,161 2,438,585 3,290,326 3,444,661 Third-party capital remuneration

Financial expenses and exchange losses 1,671,823 1,859,207 2,046,975 2,129,501 Rentals 76,383 59,212 132,517 106,788 1,748,206 1,918,419 2,179,492 2,236,289 Own capital remuneration

Non-controlling interests 57,561 61,011 Dividends 116,722 900,000 186,189 900,000 Interest on capital 149,000 149,000 Reinvested profits 817,509 427,824 731,821 476,681 Income (loss) from discontinued operations 16,221 (48,857) 1,083,231 1,327,824 1,140,792 1,388,835 Value added distributed 6,090,415 6,481,817 8,264,821 8,549,380

2014 Integrated report 165 Report Production

Energy, Sustainability VC Contributors and Safety Directorate Alexandre Henrique Takano, Ale- Director Responsible xandre Levantino Amaro, Alexandre Edvaldo Araújo Rabelo Paraiso Cari, Ana Carolina Marques Correia, Ana Claudia Soares Mar- General Coordination tins Trittoni, Ana Paula de Medeiros Global Head for the Environment Carracedo, Ana Paula Santana dos Patricia Monteiro Montenegro Santos, Barbara Almeida Souza, Bru- na Bedim Batista, Bruna Elisabeth Environment Team de Moraes, Carolina Moreira Meira, Carolina Moreira Meira, Alexandre Daniel Gonçalves da Silva Fonseca, Henrique Takano, Janaina de Oliveira Delma Luiza Trevisan Barcellos, Barros, Helena Kowarick Spiritus, Dirlane Maria Albino, Dirley Antonio Guilherme Tanferri and Stefanie Maia, Eduardo Ferreira Abrahão, Palma. Eduardo Montenegro Bortoleto, Elaine Bohme Pellacani, Fabio dos Finance and Investor Santos Sant Anna, Fernanda Teves de Relations Directorate Souza, Frederico Cruvinel, Gabriela Woge, Giuliano Giordano, Guilherme Gabriela Woge, Wellington De Paula Tanferri, Helena Kowarick Spiritus, Oliveira, Daniel Gonçalves da Silva Ian Yoshio Ohta Primo, Janaina de Fonseca and Thiago José Braga Lobato. Oliveira Barros, Katia Helena Ubal de Rodrigues, Leandro Badi Taouil, P eople & Management Luiz Humberto Fernandes, Maikon Directorate Cristofer Melo, Malu Weber, María Alejandra Repetto, Maria de Fatima Global General Management Peixoto Nascimento, Mario Pinto, for Corporate Communication & Martin Vroegh, Maurilo Rodrigues Brand Management Moura, Patrícia Vilhena Duarte, Malu Weber, Bruna Gomes and Patricia Monteiro Montenegro, Paula Carolina Simonetti. Vieira Fava, Ricardo Turra, Roberto Akiau, Rogier Hans Hofman, Ruben Plaza, Sandra Regina Gregório, Silvia Maria Sotero, Silvia Regina Soares da Silva Vieira, Stefanie Palma, Thiago José Braga Lobato, Vanessa Wu Fer- nandes, Wagner Teixeira Florentino, and Wellington De Paula Oliveira. Credits

GRI Consulting and design Report Sustentabilidade Team: Pâmela Jabbour (project management and relations), Karina Simão (GRI consulting), Guilherme Falcão (graphic design), Flavia Ocaranza (layout) and Thais Benite (graphic production).

Editing Eduardo Dantas

Revision Assertiva Produções Editoriais

English translation Richard Wightwick

Photography Leonardo Rodrigues and Votorantim Cimentos Image Bank.

Infographic The Infographics Company – Business Model pages 5 and 6. Cássio Bittencourt – pages 22 and 23

Typography Fedra Sans, by Peter Biľak, 2001.