GRI 1.1; 2.2; SO2
Algar is a Holding Company that carries out nationwide operations through a global vision. The Company supports the philosophy of keeping a close relationship with the communities that neighbor its operations, understanding and respecting the regional peculiarities and local companies.
The Company’s business diversification is supported by a strategic policy: to invest in high growth potential businesses, with focus on segments which the Company counts on vast expertise, such as Telecom/IT and Agribusiness.
Algar Group has adopted, since 1989, its own management model, named Network Company, whose main feature is a participatory management at all corporate levels. This model encourages commitment and autonomy with responsibility, thus allowing each associate, regardless of his or her position, to monitor and participate effectively in the decisions that guide the course of operations conducted by the entire Algar Group.
In order to facilitate the process of this participatory management, this model considers the Group’s companies as a series of internal units called Results Centers. Each has its own goals and budgets, and contributes to the execution of the Group’s strategic plan. Following the approval of budgets, the subsidiaries take total autonomy to execute their planning and strategies, thus allowing greater agility in the decision-making process. The Holding Company’s Executive Board, in turn, manages the Results Centers strategically by aligning them with the goals set out jointly with the Board of Directors.
Likewise, the Network Company management model is replicated within each of the Algar companies. In order to ensure the efficiency of the model in each of the Group’s subsidiaries, the Network Company concept requires a democratic corporate culture, in which everyone is prepared to give suggestions, receive criticisms and, foremost, to learn.
Commercial Culture
Business Segments
The Algar Group companies are structured into four distinct business segments: IT/Telecom, Agribusiness, Services and Tourism. In 2011, nearly two million people, among individuals and corporations from all over the country, consumed the products or services provided by the nine subsidiaries.
Algar holds a diversified business portfolio, with a definite focus on each of the areas of operations. The current business segments have emerged so as to complement the operations as supporting services, and have developed until they became independent companies.
Algar Telecom
Established in 1954, the Telecom segment’s activities currently include telephony services (fixed and cellular phone services), broadband Internet access (ADSL and 3G), data transmission, Internet provider services and pay TV. Over the next years, the main focus will be the expansion of its operating area for retail services related to Band H in the State of Minas Gerais market, the last frequency band available for 3G telecom services in Brazil. The Company acquired the Band H concession at an auction held by ANATEL (the Brazilian National Telecommunications Agency) in December 2010. Band H covers new areas in State of Minas Gerais (area codes 34, 35 and 37) adjacent to the Company’s operating area, in which Algar Telecom was already authorized to provide voice and data services.
In 2011, for the first phase of the expansion program called “Expansão Minas”, Algar Telecom invested R$150 million, of which R$47 million was used for the purchase of equipment and leasing of third party network, and the remainder was used in the construction of own network infrastructure, with the adoption of the HSPA+ technology. After overcoming the challenges concerning both the operational structure and personnel, the Company entered into 19 municipalities: Patrocínio, Monte Carmelo, São Gotardo, Coromandel, Araxá, Sacramento, Ibiá, Perdizes (Alto Paranaíba), Divinópolis, Itaúna, Bom Despacho, Santo Antônio do Monte, Cláudio, Pompéu, Itapecerica, Carmo do Cajuru, Oliveira (Mid-West), Araguari (Triângulo Mineiro) and Abaeté (Center).
The execution of the expansion plan in a swift and innovative manner, as well as the other goals that were fulfilled and/or surpassed during the course of 2011, corroborate the correctness of the Company’s strategic plan. The renowned rating agency Standard & Poor’s upgraded the Company rating for the second consecutive year. Based on the cash generation, business diversification and adequate debt levels criteria, it upgraded the Company’s rating from “brA+” to “brAA-”.
Click here to access Algar Telecom's 2011 Sustainability Report.
Algar Tecnologia
Algar Tecnologia has been being presented in the corporate market since 1998, providing business processes technology solutions by means of Business Process Outsourcing (BPO), Information Technology (IT) and Consulting. Its diversified portfolio consists of over 200 clients operating in several distinct segments, such as Health, Financial, Education, Industry, Utilities, Media & Entertainment, and Government. Algar Telecom remains its main individual client, although it accounts for just nearly 12% of the overall portfolio.
For the business process outsourcing, the Company holds over 9,000 work positions to serve collecting services (with focus on credit recovery operations), customer service, telesales, business back office and Business Experience Management. As for the IT business, the Company provides IT infrastructure from three strategic located data centers – two in the city of Uberlândia (State of Minas Gerais) and one in Campinas (State of São Paulo) – which serve both the domestic and international markets, as well as the managed services, comprising a service desk, IT asset management and a software factory. The Consulting Business includes customized projects, tailored to customer needs.
The attraction and retention of talents remained to be among Algar Tecnologia’s main challenges throughout 2011. Due to the nature of the contact center business, the Company’s Human Talents area carried out over 8,800 new hires during 2011. Algar Tecnologia invested R$7.6 million in over 286,000 class/hours in 2011, in training of the new associates to become prepared for their job positions, in addition to developing the human and professional potential of the already existing talents, thus contributing to their career evolution. The valuation of the associates was also performed by means of 1,464 internal promotions.
Engeset
Founded in 1991, Engeset provides consulting services, develops projects, installs and maintains telecom networks. The company has installed over 20,000 km of optical fiber networks and is currently in charge of maintenance works on 23,000 km. It has 23 business units throughout Brazil in the cities of São Paulo, Rio de Janeiro, Belo Horizonte, Salvador, Campinas, Recife, Fortaleza, Brasília, Macaé, Goiânia, Curitiba, Porto Alegre, Uberlândia, Uberaba and Franca.
For 2012, the prospects are positive. Although it has an expanding addressable market, Engeset is going to continue playing a strategic role in contributing to the development of Algar Telecom.
Algar Mídia
Created over 40 years ago, Algar Mídia produces and markets the Sabe phone directory, Sei and Netsabe guides (search engine websites with directory and guide contents), in addition to owning the Correio de Uberlândia newspaper, in print and online versions. Aware of market trends, Algar Mídia began to invest and market digital media solutions.
The new business front consisting of online and offline tools led to the creation of Rede Alooh in 2011, with 500 electronic information monitors installed in areas of high traffic and people concentration, such as supermarkets, bus terminals, gyms, clinics and hospitals. This new solution of the portfolio, called Out-of-Home Digital Media, shows a great growth potential for the next five years.
Click here to access Algar Agro’s 2011 Sustainability Report.
Algar Aviation operates in the Sales of Executive Aircrafts, Maintenance and Chartering segments, including the transportation of passengers and light cargoes, such as pouches, values and laboratory equipment, in addition to providing airport and hangar services.
With a view to meet the market needs, Algar Aviation acquired an aircraft P180 Avanti II, thus enlarging its fleet to eight airplanes. The charter business accounted for 24% of overall business in 2011.
The new aircraft was built by Piaggio Aereo, an Italian company for which Algar Aviation became an exclusive representative concerning sales and services in Brazil. In line with the Algar Group’s commitment to reduce the environmental impact of its operations, the P180 Avanti II aircraft is equipped with two turboprop engines made by the Canadian-based Pratt & Withney, which provide high performance and economical fuel consumption. Operating costs can be reduced by up to 40% in comparison with other aircrafts of the same category.
The partnership with Piaggio Aereo also aims at increasing the Company’s potential for growth in the Aircraft Sales segment.
Algar Aviation is also the exclusive distributor of TBM aircrafts.
As for maintenance services, the Company’s main business – it accounted for 50% of overall revenues in 2011 – Algar Aviation is prepared to service the major executive aircraft models (turboprops and jets), such as King Air, Xingu, Bandeirante, TBM, Citation and Learjet. In 2011, the Company became an Embraer Authorized Service Center to perform the maintenance services of the Phenom 100 and Phenom 300 aircrafts. In view of the booming domestic market for executive aviation, the Company’s strategy to expand business in this area involves the inauguration of two additional hangars in the State of Minas Gerais in 2012, being one in the Pampulha airport located in the state capital, and the other in the Uberlândia terminal.
Comtec
The Urban Terminal and Commercial Center Administration Company (Comtec) belongs to Algar Group in partnership with Andrade Gutierrez, and is the concessionaire in charge of managing the terminals that make up the Urban Public Transportation Integrated System of Uberlândia (SIT), in addition to being entitled to perform the commercial exploitation of the five terminals under its management.
The increasing purchasing power of Classes C and D was the main driver to cause a 9% growth in business in 2011. For 2012, Comtec plans to invest R$1.5 million in a new roofing of Santa Lucia Terminal, and a further R$5.4 million in the construction of two new bus terminals to be integrated into SIT.
Algar Segurança
Algar Segurança holds strategically located operational facilities and is present in the States of Minas Gerais, São Paulo, Goiás and Paraná. The Company provides property, electronic and document security to different segments, of special notes to the Industry, Commerce, Agribusiness sectors, and foremost, to the Sugar-Ethanol and Residential segments.
In 2011, Algar Segurança invested nearly R$3.2 million to keep up with the pace of the accelerated growth, in line with the excellent results achieved over the last years. For the fourth consecutive year, the Company stood out in the Brazilian Property and Electronic Security segment, for its performance in the Sugar-Ethanol segment, and won the Fifth Visão Agro Paulista Award, delivered in the city of Piracicaba (State of São Paulo).
Due to improvements carried out concerning internal controls and accounting practices, the 2011 net income had an impact from non-recurring events that took place during the last and the previous fiscal years. For 2012, the major challenge is keeping up the growing pace, by prioritizing the geographic areas in which the Company already operates, in addition to upgrading the services-related technological resources with the purpose to enhance the efficiency of the services provided.
Risk Management
Algar Group maintains a Risk Audit and Management Committee, which reports to the Board of Directors, aimed at managing the process of identifying, assessing, rating and mitigating the different risks inherent to the Algar companies’ business operations.
The model adopted by the Group is based on the Enterprise Risk Management (ERM) methodology, adopted by the Committee of Sponsoring Organizations (COSO), a global organization that sets out and disseminates the best practices concerning risk management, internal controls and fraud detection.
During 2011, risk management activities focused on mapping process initiated in the previous year, by reinforcing the risk control within the business management process itself. The first phase involved the Holding Company, Algar Telecom, Algar Tecnologia and Algar Agro, and consisted in identifying the strategic risks and devising action plans to deal with them. For 2012, the Committee plans to proceed with this process, which includes monitoring the degree of exposure of those companies to the risks that have been identified, and the execution of the action plans to mitigate them, as well as reinforcing controls, and extending the mapping process to other subsidiaries.
The adopted measures are aligned with the best corporate governance practices, and aim at complying with the strategic guidelines and ensuring the protection of the Organization’s assets.
Algar Group is also aware to the risks connected with the risks related to corruption. In 2011, the evaluation of this type of risk covered Algar Telecom, Algar Agro, Algar Serviços and Rio Quente Resorts. No corruption cases were found between 2009 and 2011.
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Algar is a Holding Company that carries out nationwide operations through a global vision. The Company supports the philosophy of keeping a close relationship with the communities that neighbor its operations, understanding and respecting the regional peculiarities and local companies.
The Company’s business diversification is supported by a strategic policy: to invest in high growth potential businesses, with focus on segments which the Company counts on vast expertise, such as Telecom/IT and Agribusiness.
Network Company
Principles of Algar Group's Network Company Management
Team work spirit
Commitment
Human and professional development
Educational leadership
Autonomy with responsibility
Participation in the decision-making process
Recognition of different levels of responsibility
Associate rather than employee
Commitment
Human and professional development
Educational leadership
Autonomy with responsibility
Participation in the decision-making process
Recognition of different levels of responsibility
Associate rather than employee
Algar Group has adopted, since 1989, its own management model, named Network Company, whose main feature is a participatory management at all corporate levels. This model encourages commitment and autonomy with responsibility, thus allowing each associate, regardless of his or her position, to monitor and participate effectively in the decisions that guide the course of operations conducted by the entire Algar Group.
In order to facilitate the process of this participatory management, this model considers the Group’s companies as a series of internal units called Results Centers. Each has its own goals and budgets, and contributes to the execution of the Group’s strategic plan. Following the approval of budgets, the subsidiaries take total autonomy to execute their planning and strategies, thus allowing greater agility in the decision-making process. The Holding Company’s Executive Board, in turn, manages the Results Centers strategically by aligning them with the goals set out jointly with the Board of Directors.
Likewise, the Network Company management model is replicated within each of the Algar companies. In order to ensure the efficiency of the model in each of the Group’s subsidiaries, the Network Company concept requires a democratic corporate culture, in which everyone is prepared to give suggestions, receive criticisms and, foremost, to learn.
Commercial Culture
Pillars of Algar Group's Commercial Culture
Appreciation and respect to the clients
Associate as sales person
Ethics in the relationship with the market
Marketing tools
Effectiveness in customer service processes
Boldness with profitability
Celebration of achievements
Associate as sales person
Ethics in the relationship with the market
Marketing tools
Effectiveness in customer service processes
Boldness with profitability
Celebration of achievements
Philosophy of keeping a close relationship with the communities that neighbor its operations, understanding and respecting the regional peculiarities and local companies
“Client, our reason to exist.” This motto translates, amongst the Algar Group’s values, a quote from the founder Alexandrino Garcia, which guides the relationship between all subsidiaries and their clients, as individuals and corporations. In order to consistently enhance this relationship, by better meeting the clients’ needs and consequently ensuring the sustainability of its companies, the Algar Group maintains a Commercial Culture based on the same principles applied to the segments of IT/Telecom, Agribusiness, Services and Tourism.
Although the Algar companies focus on quite distinct markets, they all experience similar everyday challenges. Therefore, this understanding gave rise to the idea of creating a set of tools that encourage the exchange of experiences and synergies between the sales consultants.
In 2011, the Algar Group’s Commercial Culture was further enhanced with the implementation of the Business Community, a social network exclusively aimed at the sales consultants’ exchanging of contacts and content via Internet. This new tool came to reinforce the already existing strengths, such as: the Sales Academy, aimed at conducting the Commercial area’s knowledge management and developing the sales force; and the Sales Club, aimed at capturing sales synergies among the companies; and the Indica Algar Channel, a program through which the associates may enjoy exclusive benefits in the purchase of Algar products and services, or to indicate friends and relatives to become clients, thus accumulating points that can be exchanged for prizes.
Although the Algar companies focus on quite distinct markets, they all experience similar everyday challenges. Therefore, this understanding gave rise to the idea of creating a set of tools that encourage the exchange of experiences and synergies between the sales consultants.
In 2011, the Algar Group’s Commercial Culture was further enhanced with the implementation of the Business Community, a social network exclusively aimed at the sales consultants’ exchanging of contacts and content via Internet. This new tool came to reinforce the already existing strengths, such as: the Sales Academy, aimed at conducting the Commercial area’s knowledge management and developing the sales force; and the Sales Club, aimed at capturing sales synergies among the companies; and the Indica Algar Channel, a program through which the associates may enjoy exclusive benefits in the purchase of Algar products and services, or to indicate friends and relatives to become clients, thus accumulating points that can be exchanged for prizes.
Business Segments
The Algar Group companies are structured into four distinct business segments: IT/Telecom, Agribusiness, Services and Tourism. In 2011, nearly two million people, among individuals and corporations from all over the country, consumed the products or services provided by the nine subsidiaries. Algar holds a diversified business portfolio, with a definite focus on each of the areas of operations. The current business segments have emerged so as to complement the operations as supporting services, and have developed until they became independent companies.
IT/Telecom Segment
Algar TelecomEstablished in 1954, the Telecom segment’s activities currently include telephony services (fixed and cellular phone services), broadband Internet access (ADSL and 3G), data transmission, Internet provider services and pay TV. Over the next years, the main focus will be the expansion of its operating area for retail services related to Band H in the State of Minas Gerais market, the last frequency band available for 3G telecom services in Brazil. The Company acquired the Band H concession at an auction held by ANATEL (the Brazilian National Telecommunications Agency) in December 2010. Band H covers new areas in State of Minas Gerais (area codes 34, 35 and 37) adjacent to the Company’s operating area, in which Algar Telecom was already authorized to provide voice and data services.
In 2011, for the first phase of the expansion program called “Expansão Minas”, Algar Telecom invested R$150 million, of which R$47 million was used for the purchase of equipment and leasing of third party network, and the remainder was used in the construction of own network infrastructure, with the adoption of the HSPA+ technology. After overcoming the challenges concerning both the operational structure and personnel, the Company entered into 19 municipalities: Patrocínio, Monte Carmelo, São Gotardo, Coromandel, Araxá, Sacramento, Ibiá, Perdizes (Alto Paranaíba), Divinópolis, Itaúna, Bom Despacho, Santo Antônio do Monte, Cláudio, Pompéu, Itapecerica, Carmo do Cajuru, Oliveira (Mid-West), Araguari (Triângulo Mineiro) and Abaeté (Center).
The execution of the expansion plan in a swift and innovative manner, as well as the other goals that were fulfilled and/or surpassed during the course of 2011, corroborate the correctness of the Company’s strategic plan. The renowned rating agency Standard & Poor’s upgraded the Company rating for the second consecutive year. Based on the cash generation, business diversification and adequate debt levels criteria, it upgraded the Company’s rating from “brA+” to “brAA-”.
| Consolidated Highlights – 2011 – R$ million | |
|---|---|
| Net Revenues | R$1,234.2 |
| EBITDA | R$361.8 |
| Net Margin | 29.3% |
| Net Income | R$127.1 |
| CAPEX | R$318.8 |
| Number of Associates | 1,634 |
Click here to access Algar Telecom's 2011 Sustainability Report.
Algar Tecnologia
Algar Tecnologia has been being presented in the corporate market since 1998, providing business processes technology solutions by means of Business Process Outsourcing (BPO), Information Technology (IT) and Consulting. Its diversified portfolio consists of over 200 clients operating in several distinct segments, such as Health, Financial, Education, Industry, Utilities, Media & Entertainment, and Government. Algar Telecom remains its main individual client, although it accounts for just nearly 12% of the overall portfolio.
For the business process outsourcing, the Company holds over 9,000 work positions to serve collecting services (with focus on credit recovery operations), customer service, telesales, business back office and Business Experience Management. As for the IT business, the Company provides IT infrastructure from three strategic located data centers – two in the city of Uberlândia (State of Minas Gerais) and one in Campinas (State of São Paulo) – which serve both the domestic and international markets, as well as the managed services, comprising a service desk, IT asset management and a software factory. The Consulting Business includes customized projects, tailored to customer needs.
The attraction and retention of talents remained to be among Algar Tecnologia’s main challenges throughout 2011. Due to the nature of the contact center business, the Company’s Human Talents area carried out over 8,800 new hires during 2011. Algar Tecnologia invested R$7.6 million in over 286,000 class/hours in 2011, in training of the new associates to become prepared for their job positions, in addition to developing the human and professional potential of the already existing talents, thus contributing to their career evolution. The valuation of the associates was also performed by means of 1,464 internal promotions.
| Consolidated Highlights – 2011 – R$ million | |
|---|---|
| Net Revenues | R$415.9 |
| EBITDA | R$35.4 |
| Net Margin | 8.5% |
| Net Income | R$6.9 |
| CAPEX | R$38.2 |
| Number of Associates | 10,913 |
Engeset
Founded in 1991, Engeset provides consulting services, develops projects, installs and maintains telecom networks. The company has installed over 20,000 km of optical fiber networks and is currently in charge of maintenance works on 23,000 km. It has 23 business units throughout Brazil in the cities of São Paulo, Rio de Janeiro, Belo Horizonte, Salvador, Campinas, Recife, Fortaleza, Brasília, Macaé, Goiânia, Curitiba, Porto Alegre, Uberlândia, Uberaba and Franca.
For 2012, the prospects are positive. Although it has an expanding addressable market, Engeset is going to continue playing a strategic role in contributing to the development of Algar Telecom.
| Consolidated Highlights – 2011 – R$ million | |
|---|---|
| Net Revenues | R$119.8 |
| EBITDA | R$7.3 |
| Net Margin | 6.1% |
| Net Income | R$5.9 |
| CAPEX | R$12.1 |
| Number of Associates | 2,193 |
Algar Mídia
Created over 40 years ago, Algar Mídia produces and markets the Sabe phone directory, Sei and Netsabe guides (search engine websites with directory and guide contents), in addition to owning the Correio de Uberlândia newspaper, in print and online versions. Aware of market trends, Algar Mídia began to invest and market digital media solutions.
The new business front consisting of online and offline tools led to the creation of Rede Alooh in 2011, with 500 electronic information monitors installed in areas of high traffic and people concentration, such as supermarkets, bus terminals, gyms, clinics and hospitals. This new solution of the portfolio, called Out-of-Home Digital Media, shows a great growth potential for the next five years.
| Consolidated Highlights – 2011 – R$ million | |
|---|---|
| Net Revenues | R$42.0 |
| EBITDA | R$5.5 |
| Net Margin | 13.0% |
| Net Income | R$4.0 |
| CAPEX | R$2.9 |
| Number of Associates | 320 |
Agribusiness Segment
Algar AgroInvests in high growth potential businesses, with focus on segments on which the Company has vast expertise
Established in 1978, Algar Agro was the first company based in the Triângulo Mineiro region (State of Minas Gerais) to operate in the soybean market. The company produces, processes and sells soybean in the domestic and export markets, and produces its own brand of soybean meal, RaçaFort, and soybean oil, ABC de Minas, which is a market leader in the State of Minas Gerais. Since 2008, the retail food products mix also includes olive oil, vegetable oil, as well as tomato paste and tomato sauce, all under the ABC de Minas brand. The Company is also involved in agriculture (soybean and maize) as well as cattle farming (beef and dairy).
The year of 2011 had many accomplishments for Algar Agro, starting with a record origination of soybean, repeating the performance of recent years. The volume of soybean originated reached 1.3 million tons in the three regions where the Company operates: Minas Gerais, Mato Grosso and Goiás; and in MAPITOPA, which groups the States of Maranhão, Piauí, Tocantins and Pará.
The year was also marked by good exports sales performance. The increase in world population, and increasing demand for industrialized food products, boosted the exports of soybeans. International sales reached US$250 million for soybeans, and US$57 million for RaçaFort soybean meal.
As for the domestic retail market, the ABC de Minas soybean oil once again kept ahead of competition, with a market share of 28% in the Triângulo Mineiro region. For 2012, Algar Agro’s strategic plan includes the increase in its market share for soybean oil in the North and Northeast regions. To this end, the company plans to invest around R$50 million in the construction of a new refinery in the Porto Franco plant (State of Maranhão), with operations expected to start up during the first half of 2012.
The year of 2011 had many accomplishments for Algar Agro, starting with a record origination of soybean, repeating the performance of recent years. The volume of soybean originated reached 1.3 million tons in the three regions where the Company operates: Minas Gerais, Mato Grosso and Goiás; and in MAPITOPA, which groups the States of Maranhão, Piauí, Tocantins and Pará.
The year was also marked by good exports sales performance. The increase in world population, and increasing demand for industrialized food products, boosted the exports of soybeans. International sales reached US$250 million for soybeans, and US$57 million for RaçaFort soybean meal.
As for the domestic retail market, the ABC de Minas soybean oil once again kept ahead of competition, with a market share of 28% in the Triângulo Mineiro region. For 2012, Algar Agro’s strategic plan includes the increase in its market share for soybean oil in the North and Northeast regions. To this end, the company plans to invest around R$50 million in the construction of a new refinery in the Porto Franco plant (State of Maranhão), with operations expected to start up during the first half of 2012.
| Consolidated Highlights – 2011 – R$ million | |
|---|---|
| Net Revenues | R$1,132.5 |
| EBITDA | R$53.6 |
| Net Margin | 4.7% |
| Net Income | R$25.6 |
| CAPEX | R$35.3 |
| Number of Associates | 464 |
Click here to access Algar Agro’s 2011 Sustainability Report.
Services Segment
Algar AviationAlgar Aviation operates in the Sales of Executive Aircrafts, Maintenance and Chartering segments, including the transportation of passengers and light cargoes, such as pouches, values and laboratory equipment, in addition to providing airport and hangar services.
With a view to meet the market needs, Algar Aviation acquired an aircraft P180 Avanti II, thus enlarging its fleet to eight airplanes. The charter business accounted for 24% of overall business in 2011.
The new aircraft was built by Piaggio Aereo, an Italian company for which Algar Aviation became an exclusive representative concerning sales and services in Brazil. In line with the Algar Group’s commitment to reduce the environmental impact of its operations, the P180 Avanti II aircraft is equipped with two turboprop engines made by the Canadian-based Pratt & Withney, which provide high performance and economical fuel consumption. Operating costs can be reduced by up to 40% in comparison with other aircrafts of the same category.
The partnership with Piaggio Aereo also aims at increasing the Company’s potential for growth in the Aircraft Sales segment.
Algar Aviation is also the exclusive distributor of TBM aircrafts.
As for maintenance services, the Company’s main business – it accounted for 50% of overall revenues in 2011 – Algar Aviation is prepared to service the major executive aircraft models (turboprops and jets), such as King Air, Xingu, Bandeirante, TBM, Citation and Learjet. In 2011, the Company became an Embraer Authorized Service Center to perform the maintenance services of the Phenom 100 and Phenom 300 aircrafts. In view of the booming domestic market for executive aviation, the Company’s strategy to expand business in this area involves the inauguration of two additional hangars in the State of Minas Gerais in 2012, being one in the Pampulha airport located in the state capital, and the other in the Uberlândia terminal.
| Consolidated Highlights – 2011 – R$ million | |
|---|---|
| Net Revenues | R$45.8 |
| EBITDA | R$3.2 |
| Net Margin | 6.9% |
| Net Income | R$0.1 |
| CAPEX | R$13.1 |
| Number of Associates | 190 |
Comtec
The Urban Terminal and Commercial Center Administration Company (Comtec) belongs to Algar Group in partnership with Andrade Gutierrez, and is the concessionaire in charge of managing the terminals that make up the Urban Public Transportation Integrated System of Uberlândia (SIT), in addition to being entitled to perform the commercial exploitation of the five terminals under its management.
The increasing purchasing power of Classes C and D was the main driver to cause a 9% growth in business in 2011. For 2012, Comtec plans to invest R$1.5 million in a new roofing of Santa Lucia Terminal, and a further R$5.4 million in the construction of two new bus terminals to be integrated into SIT.
| Consolidated Highlights – 2011 – R$ million | |
|---|---|
| Net Revenues | R$9.9 |
| EBITDA | R$2.6 |
| Net Margin | 26.1% |
| Net Income | R$1.0 |
| CAPEX | R$0.6 |
| Number of Associates | 9 |
Algar Segurança
Algar Segurança holds strategically located operational facilities and is present in the States of Minas Gerais, São Paulo, Goiás and Paraná. The Company provides property, electronic and document security to different segments, of special notes to the Industry, Commerce, Agribusiness sectors, and foremost, to the Sugar-Ethanol and Residential segments.
In 2011, Algar Segurança invested nearly R$3.2 million to keep up with the pace of the accelerated growth, in line with the excellent results achieved over the last years. For the fourth consecutive year, the Company stood out in the Brazilian Property and Electronic Security segment, for its performance in the Sugar-Ethanol segment, and won the Fifth Visão Agro Paulista Award, delivered in the city of Piracicaba (State of São Paulo).
Due to improvements carried out concerning internal controls and accounting practices, the 2011 net income had an impact from non-recurring events that took place during the last and the previous fiscal years. For 2012, the major challenge is keeping up the growing pace, by prioritizing the geographic areas in which the Company already operates, in addition to upgrading the services-related technological resources with the purpose to enhance the efficiency of the services provided.
| Consolidated Highlights – 2011 – R$ million | |
|---|---|
| Net Revenues | R$102.3 |
| EBITDA | R$1.1 |
| Net Margin | 1.1% |
| Net Income | -R$0.2 |
| CAPEX | R$3.2 |
| Number of Associates | 3,413 |
Tourism Segment
Rio Quente ResortsIn 2011, nearly two million people, among individuals and corporations from all over the country, consumed the products or services provided by the nine subsidiaries
Inaugurated in 1964 in the middle of the Brazilian Cerrado (tropical savanna ecoregion), Rio Quente Resorts stands out as the larger warm-water tourist complex in South America. It belongs to Algar Group (Uberlândia) in partnership with Gebepar Group (Goiânia), and provides leisure services in four segments: Hospitality, Entertainment, Tourism and Vacation Ownership. Within a synergetic model, aimed at providing more services to the clients and to capitalize on results, the Company’s business units operate under the “mixed use” concept.
In 2011, the Rio Quente Group received nearly 1.2 million guests and visitors, generated over 1,900 direct job positions, and in December started up the operations of the Grand Vacation Hotel & Resort, with 196 rooms, which is expected to be formally inaugurated to guests in early 2012. It is the first premium hotel in Brazil, oriented to the Vacation Ownership segment, that is, of exclusive use to the Rio Quente Vacation Club's (RQVC) clients.
All the sustainability guidelines set out by the Algar Group’s policies have been considered in this project consisting of five facilities – three of which exclusively dedicated to boarding – and a 400 square-meter borderless pool facing the savanna. Construction site residues, such as styrofoam, plaster, wood, steel and cardboard planks and panels, were subject to recycling, and aimed at energy saving, the Company adopted the systems of thermal solar panels to heat water and LED technology for the entire lighting project. Rio Quente Resorts also develops rational control programs for natural resources, water quality monitoring, solid waste control, forest fire-fighting and environmental awareness-raising initiatives, involving associates, visitors, clients, suppliers and the community.
For 2012, as part of the expansion plan that involves improving, enlarging and inaugurations to be completed by 2013, investments are earmarked for the construction of a Food Processing Center, the launching of a new attraction at the Hot Park, the upgrading of 120 rooms of the Hotel Turismo, in addition to the renovation of furniture and machinery.
In 2011, the Rio Quente Group received nearly 1.2 million guests and visitors, generated over 1,900 direct job positions, and in December started up the operations of the Grand Vacation Hotel & Resort, with 196 rooms, which is expected to be formally inaugurated to guests in early 2012. It is the first premium hotel in Brazil, oriented to the Vacation Ownership segment, that is, of exclusive use to the Rio Quente Vacation Club's (RQVC) clients.
All the sustainability guidelines set out by the Algar Group’s policies have been considered in this project consisting of five facilities – three of which exclusively dedicated to boarding – and a 400 square-meter borderless pool facing the savanna. Construction site residues, such as styrofoam, plaster, wood, steel and cardboard planks and panels, were subject to recycling, and aimed at energy saving, the Company adopted the systems of thermal solar panels to heat water and LED technology for the entire lighting project. Rio Quente Resorts also develops rational control programs for natural resources, water quality monitoring, solid waste control, forest fire-fighting and environmental awareness-raising initiatives, involving associates, visitors, clients, suppliers and the community.
For 2012, as part of the expansion plan that involves improving, enlarging and inaugurations to be completed by 2013, investments are earmarked for the construction of a Food Processing Center, the launching of a new attraction at the Hot Park, the upgrading of 120 rooms of the Hotel Turismo, in addition to the renovation of furniture and machinery.
| Consolidated Highlights – 2011 – R$ million | |
|---|---|
| Net Revenues | R$176.1 |
| EBITDA | R$49.1 |
| Net Margin | 27.9% |
| Net Income | R$26.8 |
| CAPEX | R$59.6 |
| Number of Associates | 1,940 |
Risk Management
Algar Group maintains a Risk Audit and Management Committee, which reports to the Board of Directors, aimed at managing the process of identifying, assessing, rating and mitigating the different risks inherent to the Algar companies’ business operations.The model adopted by the Group is based on the Enterprise Risk Management (ERM) methodology, adopted by the Committee of Sponsoring Organizations (COSO), a global organization that sets out and disseminates the best practices concerning risk management, internal controls and fraud detection.
During 2011, risk management activities focused on mapping process initiated in the previous year, by reinforcing the risk control within the business management process itself. The first phase involved the Holding Company, Algar Telecom, Algar Tecnologia and Algar Agro, and consisted in identifying the strategic risks and devising action plans to deal with them. For 2012, the Committee plans to proceed with this process, which includes monitoring the degree of exposure of those companies to the risks that have been identified, and the execution of the action plans to mitigate them, as well as reinforcing controls, and extending the mapping process to other subsidiaries.
The adopted measures are aligned with the best corporate governance practices, and aim at complying with the strategic guidelines and ensuring the protection of the Organization’s assets.
Algar Group is also aware to the risks connected with the risks related to corruption. In 2011, the evaluation of this type of risk covered Algar Telecom, Algar Agro, Algar Serviços and Rio Quente Resorts. No corruption cases were found between 2009 and 2011.
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