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



2.1. Presentation of financial statements

The Company's consolidated financial statements have been prepared in conformity with the International Financial Reporting Standards – IFRS, issued by the International Accounting Standards Board – IASB, and the interpretation of the International Financial Reporting Interpretations Committee – IFRIC.

The consolidated financial statements for the years ended December 31, 2009 and 2008 are the first IFRS financial statements and January 1st, 2008 is the first-time adoption date (opening balance sheet), and in conformity with IFRS 1 – First-time Adoption of IFRS.

The Company's consolidated financial statements are prepared and presented in conformity with Brazilian accounting practices ("BR GAAP"), based on the provisions set out in Brazilian Corporate Law and standards issued by the Brazilian Securities and Exchange Commission (CVM) until December 31, 2009; which differ in some aspects from the IFRS. When preparing the consolidated financial statements for 2009, the Company adjusted certain accounting, valuation and presentation methods under BR GAAP in order to conform with IFRS. The 2008 comparative data were restated to reflect such adjustments, except for those described in the release from optional and mandatory accounting practices in Notes 3.1.2 and 3.1.3 These consolidated financial statements have been prepared in conformity with IFRS, pursuant to CVM Instruction 457, of July 13, 2007. 

The reconciliation and description of the effects of transition from Brazilian accounting practices to IFRS, relating to shareholders' equity, net income and cash flows, are stated in Note 3.

2.2. Functional and reporting currency

The Company's consolidated financial statements are presented in Brazilian reais (R$), which is the functional and reporting currency.

2.3. Cash and cash equivalents

Include cash, bank accounts and highly-liquid short-term investments with low risk of variation in the fair value stated at cost plus interest earned.

2.4. Receivables from card-issuing banks and payables to merchants

Refer to transactions carried out by the holders of credit cards issued by financial institutions licensed by Visa International Service Association, consisting of receivables from card-issuing banks less interchange fees and payables to merchants less processing fees (discount rate), both with maturities of less than one year (see Note 14).

2.5. Property, plant and equipment

Stated at historical cost, less depreciation. Depreciation is calculated under the straight-line method, based upon the estimated useful lives of the assets.

Subsequent costs are added to the residual value of property, plant and equipment or recognized as a specific item, as appropriate, only if the economic benefits associated to these items are probable and the amounts can be reliably measured. The residual balance of the replaced item is written off. Other repairs and maintenance are recognized directly in income for the year when incurred.

The residual value and useful lives of the assets are reviewed and adjusted, if necessary, at year end.

The residual value of property, plant and equipment is written off immediately at their recoverable value when the residual balance exceeds the recoverable value.

2.6. Intangible assets

Stated at acquisition cost, less amortization calculated under the straight-line method at the rates mentioned in Note 12. Intangible assets are amortized taking into consideration their effective use or a method that reflects their expected economic benefits, considering that they have finite useful lives, or on a monthly basis. The residual value of intangible assets is written off immediately at their recoverable value when the residual balance exceeds the recoverable value.

2.7. Allowance for impairment of long-lived assets

Management reviews the carrying amount of long-lived assets, especially property, plant and equipment and intangible assets, to be held and used in the Company's operations, to determine and assess possible impairment on a periodic basis or whenever events or changes in circumstances indicate that the book value of an asset or group of assets might not
be recovered.

Analyses are performed in order to identify circumstances that could require testing long-lived assets for impairment and measure potential impairment losses. Assets are grouped and tested for impairment based on expected future discounted cash flows over the estimated remaining useful lives of the assets. In this case, an impairment loss would be recognized based on the amount by which the carrying amount exceeds the probable recoverable value of a long-lived asset. The probable recoverable value of an asset is determined as the higher of: (a) fair value of assets less estimated costs to sell, and (b) its value in use, which is equal to the present value of discounted cash flows derived from the asset or cash generating unit.

2.8. Investments in joint ventures (jointly-controlled entities)

Joint ventures are those jointly controls by the Company and with one or more partners. Investments in joint ventures are recognized under the proportionate consolidation method, since the date the jointly control is acquired. Under this method, the components of the joint ventures' assets and liabilities, and income and expenses are added to the consolidated accounting positions proportionally to the venturer's interest in its capital.

2.9. Current and deferred income tax and social contribution

Income tax was calculated at the rate of 15%, plus a 10% surtax on annual taxable income exceeding R$240. Social contribution was calculated at the rate of 9% on adjusted net income.

Deferred income tax and social contribution are recognized according to IAS 12 on the differences between assets and liabilities recognized for tax purposes and related amounts recognized in the consolidated financial statements. However, deferred income tax and social contribution are not recognized if generated in the initial record of assets and liabilities in operations that do not affect the tax bases, except in business combination operations. Deferred income tax and social contribution are determined based on the tax rates (and laws) in effect at the date of the financial statements and applicable when the respective income tax and social contribution are paid.

Deferred income tax and social contribution assets are recognized only to the extent that it is probable that there will be a positive tax base for which temporary differences can be used and tax losses can be offset.

2.10. Employee benefits

The Company and its subsidiaries are co-sponsors of a defined contribution pension plan. Contributions are made based on a percentage of the employees' compensation. This benefit is accounted for pursuant to IAS 19.

2.11. Financial assets and liabilities
a) Financial assets

Financial assets are classified in the following categories: at fair value through profit or loss, held to maturity, available for sale and loans and receivables. Classification is made according to the nature and purpose of the financial assets and is determined upon initial recognition.

Financial assets at fair value through profit or loss

Financial assets are classified at fair value through profit or loss when assets are held for trading or designated at fair value through profit or loss when acquired. A financial asset is classified as held for trading if it is:


A financial asset that is not held for trading can be designated at fair value through profit or loss upon initial recognition when:


Financial assets at fair value through profit or loss are measured at fair value, together with gains and losses recognized in income for the year. Net gains or losses recognized in income include dividends or interest income by the financial asset.

Held-to-maturity securities

Financial assets with fixed or determinable payments and fixed maturities, for which the Company has the intent and ability to hold to maturity, are classified as held to maturity. Held-to-maturity financial assets are measured at amortized cost using the effective interest method, less the allowance for impairment losses. Revenue is recognized using the effective interest method.

Loans and receivables

Loans and receivables are financial assets and financial liabilities with fixed or determinable payments, not quoted in an active market. Loans and receivables are measured at amortized cost using the effective interest method, less the allowance for impairment losses. Interest income is recognized by applying the effective rate method, except for short-term receivables, when the recognition of interest would be immaterial.

Available-for-sale securities

Available-for-sale financial assets are nonderivative financial assets designated as available for sale and not classified in any of the categories above.

Available-for-sale financial assets are measured at fair value. Interest, inflation adjustment and foreign exchange variation, when applicable, are recognized in income or loss when incurred. Changes arising from measurement at fair value are recognized in a specific line item of shareholders' equity when incurred, and are charged to income when realized or considered unrecoverable.

Effective interest method

The effective interest method is a method for calculating the amortized cost of a financial asset or a financial liability and allocating interest income or interest expenses over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts (including all fees paid or received that are an integral part of the effective interest rate, transaction costs, and other premiums or discounts) through the expected financial asset life, or, when appropriate, for a shorter period.

b) Financial liabilities

Financial liabilities are classified at fair value through profit or loss or as other financial liabilities.

Financial liabilities at fair value through profit or loss

Financial liabilities are classified at fair value through profit or loss when liabilities are held for trading or designated at fair value through profit or loss.

A financial liability is classified as held for trading if it is:


Financial liabilities that are not held for trading can be designated at fair value through profit or loss upon initial recognition when:


Financial liabilities at fair value through profit or loss are measured at fair value, together with gains and losses recognized in profit or loss. Net gains or losses recognized in profit or loss comprise any interest paid on financial liabilities.

Other financial liabilities

Other financial liabilities are initially measured at fair value, net of transaction costs. Other financial liabilities are subsequently measured at amortized cost using the effective interest method, with interest expense recognized on an effective yield basis. The effective interest method is a method for calculating the amortized cost of a financial liability and allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability or, when appropriate, a shorter period.

2.12. Revenue and expense recognition

Revenues and expenses are recognized on the accrual basis. Revenues from credit and debit card transactions are recognized when transactions are processed. Revenues from services to associates and merchants are recognized when the service is provided.

2.13. Provisions

Recognized when there is a present obligation, legal or constructive, as a result of a past event, with probable outflow of resources, and the amount of the obligation can be reliably estimated.

The amount recognized as a provision is the best estimate of the settlement amount at the end of the reporting period, considering the risks and uncertainties related to the obligation. When the economic benefit required to settle a provision is expected to be received from third parties, this amount receivable is recorded as an asset, when reimbursement is virtually certain and the amount can be reliably estimated.

Provisions recognized by the Company refer substantially to lawsuits arising in the normal course of business, filed by third parties or former employees. These contingencies are assessed by the Company's and its subsidiaries' Management and its legal counsel, using criteria that allow their proper measurement, despite the uncertainty concerning their period and amount.

Reserves for tax lawsuits are recorded based on the total taxes under legal dispute, plus inflation adjustment and late payment interest incurred through the balance sheet dates.


2.14. Foreign currency

Monetary assets and monetary liabilities denominated in foreign currencies were translated into Brazilian reais at the exchange rate in effect at the balance sheet dates, and currency translation differences were recorded in the statement of income.

2.15. Use of estimates

The preparation of financial statements requires the Management of the Company and its subsidiaries to make estimates and assumptions that affect the reported amounts of certain assets and liabilities, disclosure of contingent assets and liabilities at the reporting dates, and the reported amounts of revenues and expenses during the reporting periods. Significant assets and liabilities subject to these estimates and assumptions include the net book value of property, plant and equipment and intangible assets, allowance for doubtful accounts (lease of POS equipment), deferred income tax and social contribution assets, and reserve for contingencies. Since Management's judgment involves making estimates concerning the likelihood of future events, actual amounts could differ from those estimates. The Company and its subsidiaries review estimates and assumptions annually.

2.16. Share-based compensation

The Company offers a stock option plan to its officers and executives, and to the officers and executives of its subsidiary Servinet. Options are priced at fair value on the grant date of the plans and are recognized on a straight-line basis as a contra entry to shareholders' equity. At the balance sheet dates, the Company reviews its estimates of the number of vested options based on the plan's terms and conditions and recognizes the impact of the revision of initial estimates, if any, in the statement of income, as a contra entry to shareholders' equity, according to the criteria set out in IFRS 2 – Share-based Payment.

2.17. New IFRSs and IFRIC Interpretations

The following new and revised standards and interpretations went into effect and were adopted in 2009 and/or 2008, and impacted the amounts disclosed in these financial statements:


The following new pronouncements, amendments and interpretations were issued but are not effective for the year ended December 31, 2009 and have not been early adopted by the Company: