Integration Review Special Edition

integration

in review

Bimonthly publication with news and information for InterCement employees

Special Edition

PREPARED FOR THE FUTURE Strategic definitions establish a new structure of the corporate areas and prepare InterCement and Cimpor for the new challenges ahead

EDITORIAL

A new structure fit for new times We have experienced very special moments in 2012. After a lot of planning and hard work we were able to achieve our strategic goal of becoming one of the 20 largest cement companies in the world. And now we are strengthening our foundations in order to face a new challenge: To become one of the five most profitable cement companies in the world.

To reach that point the post-merger integration of InterCement and Cimpor had to be nothing short of excellent. Excellence was needed in planning, in decision making and in carrying out all the required tasks.

The higher the level of quality and demands of the teams, the quicker the companies’ objectives would be aligned with one another.

Just over five months after the end of the takeover bid that led to the integration of InterCement and Cimpor, we established the new corporate structure and the aims of the Strategic and Executive Committees. We also carried out joint budget planning for InterCement Cimpor in 2013 and concluded the structural reorganisation of Cimpor.

The excellent work done by the teams as part of this post-merger integration (PMI) process made it possible for those strategic definitions, which are of supreme importance to the business, to be set out in great detail and with information about the opportunities and challenges of each operation.

The PMI was a challenging time: Employees from different cultures united to build a stronger and more competitive company. Of particular note were a commitment to results, sharing experiences, paying attention to capturing value and being open to and aware of opportunities for operational and organisational improvement.

This edition outlines that new structure and its objectives, along with other relevant issues. It is important for all of us to share our knowledge. I would also like to emphasise our transparency in sharing information and agility in decision making which, I am certain, bring our teams even closer together and in line with corporate objectives.

José Édison Barros Franco

Chairman of the Board of Directors of InterCement

IMPRINT

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Integration: Published by InterCement President: José Édison Barros Franco CEO Cimpor: Ricardo Lima Director of Corporate HR: Nelson Tambelini Júnior General Coordination: Fernanda Guerra Editorial Committee: Tatiana Nelsen and Virginia Vannoni

Everyone pulling in the same direction InterCement and Cimpor both have a successful business history. Both have trodden the path of excellence, both have built brands that are valued by the market and that are recognised for the high quality. They have also established successful internal programmes and secured significant positions in the regions where they operate.

During the initial PMI period the main challenge was to make use of all that expertise in the companies and make certain that best practices were maintained and reproduced throughout the organisation. Sharing information and carrying out detailed assessments made it possible for the integration teams to ensure excellence in capturing value. And everything that we planned for was achieved with great success.

It was not so easy to get so far. And neither was the whole post-merger integration process a simple one. The results are extremely positive and that is due to everyone pulling in the same direction, united and committed to building a stronger, more competitive and more global company as soon as possible. All of this can be achieved without giving up on standards of excellence in assessments and decision making.

With the definitions that are presented in this edition – Strategic Planning for 2013, consolidation of the Strategic and Executive Committees and Organisational Structure of Cimpor – we have moved up to a new level and 2013 has other challenging situations in store for us, as well as keeping hold of all the victories achieved in 2012!

Now that we know the operation much better, and we have identified synergies and made plans for our long and short term future, it is time to boost our best practices. It is also time to enhance our very healthy attitude to sharing knowledge, to using management tools extensively, to budget commitment and to seeking out new opportunities to improve our results.

Our teams have built up an extraordinary knowledge and that will be decisive for us in achieving positive results in what will be the first full year of our company’s global operations. I am particularly happy to be part of such a committed and focused team and want to take this opportunity to invite you along on this new, more exciting and challenging journey: The journey to build a new and even better company.

Ricardo Lima CEO Cimpor

Graphic and Editing Project: unodesign Text Editing: Vogal Comunicações Head Journalist: Alberto Sarmento Paz (MTb18523/SP) Reporting: Marcelo Couto and Luciana Fleury Texts in in the publication may be reproduced, with the original sources indicated and with prior permission from the editor 03

Budget planning for 2013

Challenges

to be overcome

Integration of InterCement and Cimpor, operational excellence and generating value in all processes are the guides for next year’s budget planning

In the beginning of December the Budget Plan for 2013 was consolidated at a meeting to align expectations and for operational planning with the Board of Directors of the Camargo Corrêa Group.

Drawing up the 2013 Budget Plan began in September as soon as the working fronts in each country concluded the main synergies, opportunities and challenges of the postmerger integration (PMI) project. This involved considerable effort as this is the company’s first integrated budget.

After that initial stage, the main executives from each country met in mid-October with the Executive Committees of InterCement and Cimpor, to present the principal guidelines.

After approval, each business unit was also able to review the Budget Plan for its operation, so as to potentially increase expectations based on the specifics of each location. These adjustments add to the approach from the beginning of the PMI, which believes knowledge of the local market

will be an important factor for the company in making strategic decisions.

Focusing on the strategic objective of becoming one of the five most profitable companies in the segment, the backdrop of the meeting to align the Budget Plan to expectations was the great challenges ahead in 2013: Concluding the InterCement Cimpor integration process, a strong focus on operational excellence, optimising working capital and ensuring that synergies identified as part of the PMI are secured.

The present time of the company requires total focus on better results and, as Ricardo Lima, Cimpor’s CEO, noted in the previous edition of Integration Magazine, “We have to focus inwards in operations and assess opportunities to reduce costs, synergies, applying good practices and continuous improvement.

In this period investments will be more selective, but we cannot take our eye of the future of the company.

We must continue to outline long term strategic plans.”

Global and local corporate guidelines In terms of 2012, we plan to focus on optimising working capital and generating cash flow in order to deal with the demands that integration throws up.

The other two important aspects are the consolidation of the InterCement Cimpor organisational structure, the redesign of which is 04

now taking shape as new structures for the Strategic and Executive Committees are approved (see page 6), and the continued search for capturing value.

In terms of capturing value the biggest objective is to obtain the synergies found as part of the PMI through strict and detailed supervision programmes (see box for some of the critical issues and actions).

We are building one of the world’s largest cement companies”.

As well as the global corporate guidelines, the alignment meeting also established and approved budget principles for each country. These detailed courses of action, relevant points and variables that can lead to scenario changes. It also outlined the expected financial results for each operation.

“Budget planning is a fundamental part of the company’s growth. The critical issues that are assessed lead to a course of action and detail the impact of each

action on operating results. Now that the Budget plan has been approved by the Board of Directors the target is to focus on complying with the points that have been approved and, thus to consolidate the new company that is emerging from the experiences and skills of InterCement and Cimpor. We are very optimistic and are counting on all our employees so that this can be a successful journey,” says José Édison Barros Franco, Chairman of the Board of InterCement.

ACTIONS

ISSUES

Integration

Development of a unique culture focused on results

Streamlining Investments

Optimisation of working capital in a scenario of strong growth.

Focus on cash flow

Incorporating synergies

Ensuring synergies are obtained as part of the PMI through strict and detailed supervision

Operating Efficiency

Integration of the Cimpor Performance Programme in the InterCement Management System and implementation in all the units of the new company

Execution of strategic projects on time and within budget

Strict control to ensure conclusion of the mill in Mozambique (Nov/2013); of the mill (June/2013) and the kiln (April/2014) in Paraguay; Moving ahead with the Caxitu and Cezarina units with a view to operations beginning in June/2014 and Nov/2014, respectively; And obtaining licenses for Manaus and Cerrado Grande to begin work in 2014

Planning the Operating Network

Exploring trading opportunities taking advantage of Portugal’s surplus capacity and other countries potential growth.

Concrete and Aggregates

Construction of a new business model for Concrete and Aggregates based on transferring inputs at market price.

Innovation

Implementation of radical and incremental innovation programmes

Sustainability

Adjusting all units to the Group’s model of sustainability.

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ORgAnISATIOnAL STRuCTuRE

prepared for

new challenges

Brazil Managing Director Argentina Managing Director Portugal Managing Dir Cleber Machado Osvaldo Schutz Luis Fernandes

Holding Finance VP Claudio Palaia

Engineering and Technology VP Jorge Martinez Organizational Development VP Nelson Tambelini

Strategic Planning Corporate Director Marco Zangari

Paraguay Cleber Ceroni

Legal Corporate Director Luiz Klecz

Azores JosĂŠ Maia

Audit and Risk Manag.

Corp. Dir Gueber Lopes

Strategic and Executive Committees In November the operating model of the senior management Strategic and Executive Committees was finalised. All aspects were minutely analysed for the new configuration to be aligned with the significant challenges that the company now faces.

The committees are the highest corporate levels and play a decisive role in defining, implementing and supervising strategic planning. They have a broad view of the entire operation and are thus able to assess and make decisions for the company to be completely focused on its objectives.

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Cape Verde Luis Moreira

Strategic Committee: Provide a senior management forum to develop the company’s long term strategic activities Executive Committee: Provide a senior management forum to develop, manage, coordinate and monitor the company’s critical activities (finance, operations and human resources)

rector

InterCement Chairman José Édison Barros Franco CFO Cimpor Armando Silva Cimpor CEO Ricardo Lima Operations Support Director Daniel Bastos

Egypt Managing Director Ricardo Barbosa

Mozambique Managing Director Sergio Bandeira

Angola Sergio Bandeira

Safety and Management Marco Túlio

South Africa Managing Director Pieter Strauss

Purchasing Tim Kuba Waste Co-Processing Francisco Leme

As one of the fundamental stages of preparing the company for future challenges, a new organisational structure has been set out. The new structure is the result of thorough analysis and data collection to achieve a configuration that ensures business agility in every situation as well as a focus on results. The new structure is aligned to the strategic objective of making the company one of the world’s five most profitable companies in the segment.

“We now have a much more complex operation, with specific engineering, production, marketing, business development and management needs based on local and regional conditions. This is also the case if we take into account potential complementary factors between business units,” says Ricardo Lima, the CEO of Cimpor.

Business Support Director André Gama

Trading Pedro Marques

IT Eugênio Pauperio

Aggregates & Concrete C. Center Jorge Reis

The new structure includes managing directors for each country – Paraguay will also be under the responsibilities of the Managing Director for Argentina; Cape Verde and Azores will answer to the Managing Director of Portugal; Angola’s operations to the one for Mozambique – vice presidencies and supporting corporate areas (see a complete diagram of the structure, with positions and names above).

New structure will provide better business agility and focus on producing results

The roles and main responsibilities of all key areas were also listed as part of the presentation of the new structure. “The road now, as we have been emphasising since the beginning of the integration process, is to work in order to make the company stronger and more competitive. I am sure that 2013 will be very exciting, as it will be our first year as a truly global company,” said Lima.

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BEHIND AN YEAR OF ACHIEVEMENTS AND ACCOMPLISHMENTS IS THE UNION OF GREAT PERSONS This card was designed with photos of InterCement professionals from around the world.

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