2012 Annual Sustainability Report

Grupo Algar remains optimistic about the performance of the Brazilian economy in 2013 and the Group's ability to seize all the opportunities that the country has to offer. The Algar companies have good operational and financial structure, as well as highly-skilled teams committed to the future.

In 2013, the Group as a whole is planning to invest about R$420 million. Most of this amount will be allocated to the two main drivers of growth, which are still IT/ telecom and agribusiness owing to their good performance in the last few years and the booming demand. A projected R$350 million and R$76 million will be invested in each of these segments respectively in the period.

Algar Telecom will invest mainly in improving its infrastructure, which is essential for the business to expand in the authorization area and in other areas and to increase the corporate client base. In 2013, the company will continue expanding its operations in cities and towns along the existing backbone in order to reach at least ten new cities and strengthen the brand to increase penetration in the geographic areas in which it is already present. Grupo Algar is planning to open new headquarters in Belo Horizonte in 2013, which will help it achieve this goal in the coming years. The new investments, coupled with ANATEL's regulatory measures, will also allow Algar Telecom to compete more aggressively in the mobile phone market.

Algar Agro's goals for 2013 are to increase soybean origination by 9% to 1.463 million tonnes and achieve a total production of 10,900 million boxes of soybean oil–6,500 million at the Uberlândia refinery to supply the Triângulo Mineiro area, in which it is the market leader, and the remainder at the Porto Franco refinery, in Maranhão State, to increase the product's share in the Northern and Northeastern markets.

Algar Agro will invest mainly in maintaining and upgrading its physical assets, which involves upgrading the Uberlândia plant and converting the energy mix of the Porto Franco refinery. In this regard, this effort reaffirms the company's commitment to having more and more sustainable operations, in addition to aiming at financial gains. However, about 66% of the investments will be allocated to new warehouses to prepare the Company for Brazil's soybean boom. Brazil's soybean crop is expected to increase by about 25% year-over-year, to 82 million tonnes.

Concerning the investments allocated to the Company's other businesses, it is worth noting the Food Production and Distribution Center of Rio Quente Resorts, scheduled to be opened in June 2013, and the upgrading of a hangar in Belo Horizonte, Minas Gerais State, acquired last year.

Strengthening the Algar companies' culture of innovation, which made great progress in 2012, is still an essential tool for the Group's sustainable growth. Grupo Algar will be investing R$20 million in this effort in 2013. Furthermore, the Group will continue improving its risk controls and other corporate governance tools, undertaking the social initiatives organized by Instituto Algar and expanding the processes that effectively help reduce GHG emissions.