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

3.1. IFRS transition basis
3.1.1. Application of IFRS 1

The consolidated financial statements for the year ended December 31, 2009 are the first to be presented in conformity with IFRS, as described in Note 2.1.

The Company prepared its opening balance sheet assuming a transition date of January 1st, 2008, pursuant to IFRS 1; the Company, therefore, applied the mandatory exemptions and certain optional exemptions to the full retrospective application of IFRS.

3.1.2. Exemptions to the full retrospective application elected by the Company

The Company adopted the utilization of the following optional exemptions to the full retrospective application of IFRS:

a) Exemption for business combination: the Company elected not to remeasure business acquisitions carried out prior to the transition date to IFRS, in conformity with IFRS 3; therefore, goodwill arising on acquisitions prior to this date was maintained at the balances net of amortization, determined on the IFRS transition date, in conformity with Brazilian accounting practices (BR GAAP).

b) Exemption for presenting the fair value of fixed assets as cost of purchase: the Company opted not to remeasure its property, plant and equipment on the transition date at fair value and elected to maintain the cost of purchase adopted under BR GAAP as amount of property, plant and equipment.

c) Exemption related to compound financial instruments measurement: the Company does not have compound financial instruments on the IFRS transition date.

d) Exemption related to the recognition of interests in subsidiaries, joint ventures (jointly-controlled entities) and associates: the Company's subsidiaries, jointly-controlled subsidiaries and associates did not present IFRS financial statements as of the transition date; accordingly, the Company elected to adopt the same IFRS transition date for all its subsidiaries, joint ventures and associates.

e) Exemption related to the classification of financial instruments: the Company elected to designate financial assets and financial liabilities on the IFRS transition date.

3.1.3. Mandatory full retrospective application exemptions followed by the Company

No impacts were identified on the Company's consolidated financial statements arising on the application of mandatory exemptions set out in IFRS 1.

3.2. Reconciliation between IFRS and BR GAAP

Description of the main differences between IFRS and BR GAAP that affect the Company's financial statements:

a) Intangible assets: under the IFRS, preoperating costs do not fall into the definition of intangible assets and should be recorded as expenses. Usually costs incurred on an internally generated intangible asset are not capitalized.

Under BR GAAP, up to 2008, preoperating costs and expenses on projects were recorded in assets at cost. Amortization was calculated under the straight-line method on cost, at rates determined based on the projection of the implemented projects in relation to their installed capacities. In 2008, BR GAAP was amended by CPC 04 – Intangible Assets to converge with the IFRS accounting treatment adopted, which was prospectively adopted and accounted for by the Company in 2008.

b) Formation of joint ventures: under the IFRS, nonmonetary assets contributed to form a joint venture in exchange for an interest are accounted for by the joint venture at fair value or book value plus the venturer's premium. CBGS (joint venture) accounted for the funds contributed by CBGS Ltda. (venturer) at the same carrying amounts recorded at CBGS Ltda. (venturer) as interests, plus premium. Additionally, CBGS accounted for as capital contribution, at fair value, the intangible assets contributed by the other venturers, Bradesco and Cassi, and the related subsequent amortization of such intangible assets over the useful lives defined by the joint venture's Management.

Under BR GAAP, the intangible assets contributed by the other venturers, Bradesco and Cassi, were not accounted for as assets forming the capital of the joint venture. Accordingly, all the monetary and nonmonetary assets contributed by CBGS Ltda. to the joint venture are considered as increases in investment prorated by 40.95%, and the remaining interest as goodwill arising on capital payments, as the other venturers did not contribute any accountable asset to hold a
59.05% interest.

c) Capital contribution of Visa Inc. shares: under IFRS, the capital contribution of Visa Inc. shares was accounted for at fair value on the date the shares were received, recorded in line items "Investments – available-for-sale financial assets" and "Capital reserves", less deferred tax. Additionally, the changes in fair value of the shares since receiving date to the sale date, and afterward to the date of the transfer to shareholders, as explained in Note 20, were accounted for in the statement of comprehensive income and then reversed to income for the year, in line item "Other operating (expenses) income, net."
Under the BR GAAP, the receipt of these Visa Inc. shares was accounted for as a donation at cost of R$2, directly in income for the year. Subsequently, on the date of the sale of part of the shares, the Company accounted for a capital gain of R$502,893, recorded in income for the year. 

d) Deferred income tax and social contribution: accounted for on differences between BR GAAP and IFRS, when applicable.

e) Segment reporting: under IFRS, publicly-traded companies are required to present information per business segment. IFRS 8 requires identification of operating segments on the basis of internal reports that are regularly reviewed by the Company's chief operating decision maker in order to allocate resources to the segment and assess its performance.

A business or geographical segment is required to be disclosed if most of the revenue recorded arises from sales to external customers and represents 10% or more of total internal and external sales of all segments, or 10% or more of the combined revenue of all segments, or 10% or more of total assets of all segments. Information shall be provided on additional segments if the total external revenues attributable to the segments on which information has been provided account for less than 75% of total consolidated or company's revenues. The Company's internal reporting is regularly reviewed by the acquirer segment, which represents basically the consolidated operations, and the Health Project segment, which results from the CBGS joint venture, and represents less than 10% of the amounts above. The Health Project is accounted for under the proportionate consolidation method and disclosed on a condensed basis in Note 4.2. Accordingly, in terms of materiality, the Company understands that segment reporting will not add any information to these financial statements.

The main service revenues are disclosed as presented in the statements of income for the years ended December 31, 2009 and 2008 and are fully earned in Brazil.

Under BR GAAP, specific standards regulating segment reporting were issued in 2009 and are applicable to annual reporting periods ended on or after December 2010.

f.) Earnings per share: under IFRS, publicly-traded entities shall disclose basic and diluted earnings per share (see Note 21).

Basic earnings per share shall be calculated by dividing the net income for the period attributable to shareholders by the weighted average of outstanding shares during the period, including the issue of rights and subscription warrants.

An entity shall calculate diluted earnings per share taking into account the net income attributable to shareholders and the weighted average of outstanding shares, plus effects of all potential shares. All instruments and contracts that can result in the issue of shares are considered to be potential shares.

Comparative figures shall be adjusted to reflect capitalizations, issue of subscription warrants or stock splits. If these alterations occur after the balance sheet date but before the authorization for the issuance of financial statements, then the calculation per share of these or any financial statements for prior periods shall be based on the new number of shares.

Under the BR GAAP, earnings per share are calculated by dividing the net income for the year by the number of outstanding shares at yearend. The concept of diluted earnings per share does not exist. The prior periods' figures must not be adjusted for stock splits or reverse stock splits or similar transactions.

g.) Reclassification under IFRS: the main reclassifications made in the financial statements consolidated under IFRS are as follows:

• Em IFRS, os depósitos judiciais estão sendo apresentados de forma bruta no ativo não circulante. Em BR GAAP, os depósitos judiciais foram apresentados de forma líquida das contingências no passivo não circulante.
  
  
• Em IFRS, os saldos de imposto de renda e contribuição social diferidos foram integralmente reclassificados como não circulante. Em BR GAAP, os saldos de imposto de renda e contribuição social diferidos foram apresentados no circulante e não circulante, conforme expectativa de realização.
  
  
• Em IFRS, o saldo de lucros acumulados acima dos dividendos mínimos obrigatórios permanece no patrimônio líquido. Em BR GAAP, o saldo de lucros acumulados foi integralmente provisionado no passivo circulante como dividendos a pagar.

h.) Accrual for dividends payable: under the Company's bylaws, shareholders are entitled to a minimum dividend of 50% of adjusted net income for each year. For IFRS purposes, dividends are recognized as liabilities when approved at a shareholders' meeting. Therefore, at year end, the Company recognizes as liabilities the amount corresponding to minimum dividends not paid during the year up to the limit of the mandatory minimum dividend described above. Dividends exceeding the amount set forth in the bylaws that do not qualify for recording under IFRS are reversed and credited to shareholders' equity, less retained earnings only when approved by the shareholders' meeting. Under BR GAAP, the Company records dividends proposed by Management as liabilities, which after yearend are submitted to the approval of shareholders.

3.2.1. Reconciliation of the Company's consolidated balance sheet on the IFRS transition date – January 1^st, 2008

ASSETS	BR GAAP	Effects of transition to IFRS	Note 3.2.	IFRS
CURRENT ASSETS
Cash and cash equivalents	995,224	-		995,224
Trade accounts receivable	14,703	-		14,703
Prepaid and recoverable taxes	877	-		877
Deferred income tax and social contribution	35,118	(35,118)	g	-
Other receivables	6,674	-		6,674
Receivables – securitization abroad	149,119	-		149,119
Interest receivable – securitization abroad	6,544	-		6,544
Prepaid expenses	1,950	-		1,950
Total current assets	1,210,209	(35,118)		1,175,091
NONCURRENT ASSETS
Long-term assets:
Receivables – securitization abroad	367,516			367,516
Deferred income tax and social contribution	94,150	62,613	a. g	156,763
Escrow deposits	-	221,687	g	221,687
Other receivables	249	-		249
Investments:
Other investments	288	-		288
Property, plant and equipment	210,483	-		210,483
Intangible assets:
Goodwill on acquisition of investments	41,157	-		41,157
Other intangible assets	124,681	(80,868)	g	43,813
Total noncurrent assets	838,524	203,432		1,041,956
TOTAL ASSETS	2,048,733	168,314		2,217,047

LIABILITIES AND SHAREHOLDERS' EQUITY	BR GAAP	Effects of transition to IFRS	Note 3.2.	IFRS
CURRENT LIABILITIES
Financing – lease transactions	1,034	-		1,034
Payables to merchants	437,487	-		437,487
Trade accounts payable	85,595	-		85,595
Taxes payable	227,803	-		227,803
Reserve for contingencies	2,520	-		2,520
Payables – securitization abroad	148,941	-		148,941
Interest payable – securitization abroad	6,544	-		6,544
Dividends payable	-	-		-
Other payables	98,632	-		98,632
Total current liabilities	1,008,556	-		1,008,556
NONCURRENT LIABILITIES
Payables – securitization abroad	367,516			367,516
Reserve for contingencies	60,773	221,687	g	282,460
Other payables	868	-		868
Total noncurrent liabilities	429,157	221,687		650,844
SHAREHOLDERS’ EQUITY				-
Capital	74,534			74,534
Capital reserve	3,627			3,627
Earnings reserve – legal	14,907			14,907
Retained earnings	517,952	(53,373)	a. d	464,579
Treasury shares	-	-		-
Total shareholders’ equity	611,020	(53,373)		557,647
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	2,048,733	168,314		2,217,047

Reconciliation of shareholders' equity – BR GAAP versus IFRS on the IFRS transition date – January 1^st, 2008.

	Note 3.2.
BR GAAP shareholders' equity		611,020
IFRS adjustments:
Reversal of effects of write-off of IFRS deferrals on 2008 net income	a	(80,868)
Deferred income tax and social contribution	d	27,495
IFRS shareholders' equity		557,647

3.2.2. Reconciliation of the BR GAAP consolidated financial statements for the last year presented – december 31, 2008

ASSETS	BR GAAP	Effects of transition to IFRS	Note 3.2.	IFRS
CURRENT ASSETS
Cash and cash equivalents	1,072,157	-		1,072,157
Trade accounts receivable	162,943	-		162,943
Receivables from subsidiary	177	-		177
Prepaid and recoverable taxes	1,219	-		1,219
Deferred income tax and social contribution	37,054	(37,054)	g	-
Other receivables	4,941	-		4,941
Receivables – securitization abroad	207,979	-		207,979
Interest receivable – securitization abroad	6,341	-		6,341
Prepaid expenses	4,488	-		4,488
Total current assets	1,497,299	(37,054)		1,460,245
NONCURRENT ASSETS
Long-term assets:
Receivables – securitization abroad	277,000	-		277,000
Deferred income tax and social contribution	132,344	37,054	g	169,398
Escrow deposits	-	323,073	g	323,073
Other receivables	1,703	-		1,703
Investments:
Other investments	174	-		174
Property, plant and equipment	213,295	-		213,295
Intangible assets:
Goodwill on acquisition of investments	17,795	-		17,795
Other intangible assets	49,075	20,766	b	69,841
Total noncurrent assets	691,386	380,893		1,072,279
TOTAL ASSETS	2,188,685	343,839		2,532,524

LIABILITIES AND SHAREHOLDERS' EQUITY	BR GAAP	Effects of transition to IFRS	Note 3.2.	IFRS
CURRENT LIABILITIES
Financing – lease transactions	401	-		401
Payables to merchants	487,628	-		487,628
Trade accounts payable	96,604	-		96,604
Taxes payable	275,066	-		275,066
Dividends payable	542,985	(542,985)	h	-
Payables to joint venture	-	20,766	b	20,766
Payables – securitization abroad	207,943	-		207,943
Interest payable – securitization abroad	6,341	-		6,341
Other payables	66,526	-		66,526
Total current liabilities	1,683,494	(522,219)	-	1,161,275
NONCURRENT LIABILITIES
Payables – securitization abroad	277,000	-		277,000
Reserve for contingencies	68,390	323,073	g	391,463
Other payables	740	-		740
Total noncurrent liabilities	346,130	323,073		669,203
SHAREHOLDERS’ EQUITY
Capital	75,379	-		75,379
Capital reserve	68,606	-		68,606
Earnings reserve – legal	15,076	-		15,076
Retained earnings	-	542,985	h	542,985
Total shareholders’ equity	159,061	542,985	h	702,046
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	2,188,685	343,839	-	2,532,524

	2008
	BR GAAP	Effects of transition to IFRS	Note 3.2.	IFRS
GROSS REVENUE
Revenue from commissions	2,184,840			2,184,840
Rental income	903,061			903,061
Revenue from services	127,652	-		127,652
Revenue from commissions, rentals and services	3,215,553	-		3,215,553
Taxes on services	(340,087)	-		(340,087)
NET OPERATING INCOME	2,875,466	-		2,875,466
COST OF SERVICES	(851,119)	-		(851,119)
GROSS PROFIT	2,024,347	-		2,024,347
OPERATING (EXPENSES) INCOME
Personnel	(95,613)	-		(95,613)
General and administrative	(147,386)	(15,098)	a. b	(162,484)
Management and officer compensation	(9,520)	-		(9,520)
Marketing	(77,948)	-		(77,948)
Other operating income, net	325,101	(63,344)	a. b. c	261,757
OPERATING INCOME BEFORE FINANCIAL INCOME (EXPENSES)	2,018,981	(78,442)		1,940,539
FINANCIAL INCOME (EXPENSES)
Financial income	153,405	-		153,405
Financial expenses	(59,875)	-		(59,875)
Prepayment of receivables	17,388	-		17,388
Exchange rate variation, net	947	-		947
	111,865	-		111,865
INCOME BEFORE INCOME TAX AND SOCIAL CONTRIBUTION	2,130,846	(78,442)		2,052,404
INCOME TAX AND SOCIAL CONTRIBUTION
Current	(774,180)	-		(774,180)
Deferred	37,177	26,671	a. d	63,848
NET INCOME	1,393,843	(51,771)		1,342,072

Reconciliation of shareholders' equity – BR GAAP versus IFRS as of December 31, 2008.

	Note 3.2.
BR GAAP shareholders' equity		159,061
IFRS adjustments:
Reclassification of dividends above mandatory minimum dividends to shareholders' equity	h	542,985
IFRS shareholders' equity		702,046

	Exercício findo em 31 de dezembro de 2008
	BR GAAP	Effects of transition to IFRS	Note 3.2.	IFRS
Net cash provided by operating activities	1.067.557	(172.394)	c	895.163
Net cash provided by investing activities	312.826	13.084		325.910
Net cash used in financing activities	(1.303.450)	159.310	c	(1.144.140)
INCREASE IN CASH AND CASH EQUIVALENTS	76.933	-		76.933
CASH AND CASH EQUIVALENTS
Closing balance	1.072.157	-		1.072.157
Opening balance	995.224	-		995.224
INCREASE IN CASH AND CASH EQUIVALENTS	76.933	-		76.933