(Amounts in thousands of Brazilian reais – R$, unless otherwise stated)


Companhia Brasileira de Meios de Pagamento, whose name was changed to Cielo S.A. (the "Company"), as approved at the Extraordinary Shareholders' Meeting held on December 14, 2009, was established on November 23, 1995 in Brazil, and is primarily engaged in providing services related to credit and debit cards and other payment methods, as well as providing related services, such as signing up of merchants and service providers, rental, installation and maintenance of Point of Sales – POS equipment, and data capture and processing of electronic and manual transactions.

On January 23, 2003, the Company opened a branch in Grand Cayman, Cayman Islands, British West Indies (Note 23), for the specific purpose of conducting abroad a receivables securitization transaction denominated in foreign currency (Notes 8, 19 and 26). 

The operations of the direct, indirect and jointly-owned subsidiaries are as follows:

Subsidiaries:


In November 2009, CBGS Ltda. was merged by CBGS, its jointly-owned subsidiary at the time, at book value and on the base-date October 31, 2009.


Indirect subsidiaries:


Restructuring of subsidiaries – Health Project

On August 28, 2006, the Company established CBGS Ltda. to operate in the health segment.

On November 8, 2006, the Company, through its subsidiary CBGS Ltda., Bradesco Saúde S.A. ("Bradesco Saúde") and Caixa de Assistência dos Funcionários do Banco do Brasil ("Cassi"), entered into an agreement to operate together in the electronic network interconnection services and other segments between health operators and health service providers. Under this agreement, Bradesco Saúde and Cassi established CBGS and granted this company access to their customer master file to provide these services on an exclusivity basis. The subsidiary CBGS Ltda. committed to acquire a 40.95% interest in CBGS for R$139,045, through new capital contributions with the assignment of assets.

On November 23, 2006 and July 26, 2007, the subsidiary CBGS Ltda. acquired all the shares of Polimed and Dativa.

On December 28, 2006, Bradesco Saúde (70.87%) and Cassi (29.13%) established CBGS, with capital of R$1,000, fully subscribed and paid up in cash. The capital of CBGS is represented by 1,000,000 registered common shares without par value.

On January 2, 2008, CBGS subscribed, in favor of subsidiary CBGS Ltda., 693,480 new common shares, without par value, for R$139,045.

Said amount was paid in through the transfer of ownership interest and in cash and entitles subsidiary CBGS Ltda. to a 40.95% interest in that company. Accordingly, as the formation of a joint venture is specifically excluded from the scope of IFRS 3 – Business Combination, the transfer of ownership interest to CBGS (joint venture) was accounted for at the same carrying amounts recognized at CBGS Ltda. (venturer) and the capital gain was accounted for in the Company's consolidated under IAS 31 – Interests in Joint Ventures and SIC 13 Jointly-controlled Entities – Nonmonetary Contributions by the Venturer. These standards require, therefore, the recognition of a gain or a loss reflecting the substance of the transaction, i.e., when the assets are retained by a joint venture and the venturer has transferred significantly all the risk and rewards incidental to ownership to the joint venture, the venturer recognizes the portion of gain or loss attributed to the interest of the other venturers.

Said amount was paid in by CBGS Ltda. as follows:


After the share subscription, the shareholding structure of the joint venture CBGS is as follows:

  %
CBGS Ltda. 40.95
Bradesco Saúde 41.85
Cassi 17.20


Pursuant to the Shareholders' Agreement, corporate resolutions and new investments require the approval of the majority of the shareholders; accordingly, CBGS was classified as a jointly-controlled entity (joint venture) and its financial statements were accounted for by the Company under the proportionate consolidation method, as recommended by IAS 31 -Interests in Joint Ventures.

On March 16, 2009, jointly-controlled entity CBGS acquired all the shares of Prevsaúde and Precisa, as shown below:

  Prevsaúde Precisa
     
Net assets acquired 1,628 (2,381)
Total acquisition price considered 9,000 1,000
Goodwill 7,372 3,381


Prevsaúde provides pharmaceutical benefit services to corporate clients, healthcare plans, public clients and large laboratories. Prevsaúde manages the relationship of its clients' employees with drugstores, doctors and the contracting company itself.

Precisa is a "drugstore" focused on the distribution of medicines to Prevsaúde's clients, especially chronic patients. It is responsible for delivering medicines regularly administered to Prevsaúde's clients with chronicle diseases, such as diabetes, cancer and heart and blood pressure conditions. It allows monitoring the delivery and use of medicines, increasing the treatment's effectiveness.

These acquisitions are in line with the Company's strategy of expanding its business in the health segment.

In November 2009, direct subsidiary CBGS Ltda. was merged by indirect subsidiary CBGS and on December 1st, 2009 CBGS was merged by Orizon. As a result of the mergers, all the operations of the merged companies were transferred to the acquirers, which will succeed the merged companies in all their assets, rights and obligations, for all legal purposes and with no interruptions, with the consequent termination of the merged companies.