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Redecard Prospectus

Redecard Prospectus

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OFFERING MEMORANDUM

STRICTLY CONFIDENTIAL

150,827,527 Common Shares
(Including Common Shares in the Form of Global Depositary Shares)

REDECARD S.A.
R$27.00 per Common Share US$28.57 per Global Depositary Share
We are offering a total of 15,555,555 common shares, and certain selling shareholders are offering a total of 135,271,972 common shares, including common shares in the form of Global Depositary Shares, or GDSs. Each GDS represents two common shares and will be evidenced by a Global Depositary Receipt, or GDR. We and the selling shareholders are offering the common shares and the GDSs to (1) the public in Brazil only in the form of common shares, (2) certain qualified institutional buyers, or QIBs (as defined in Rule 144A under the U.S. Securities Act of 1933, as amended, or the Securities Act) in the United States and (3) institutional and other investors outside the United States and Brazil that are not U.S. persons (as defined in Regulation S under the Securities Act). We have applied to register this offering with the Brazilian Securities Commission (Comissão de Valores Mobiliários), or CVM. Currently, no public market exists for our common shares or GDSs. We have applied to list our common shares on the Novo Mercado segment of the São Paulo Stock Exchange (Bolsa de Valores de São Paulo), or the BOVESPA, under the symbol "RDCD3." The selling shareholders have granted to Banco Itaú BBA S.A. an option, exercisable upon consultation with the other bookrunners, for a period of up to 30 days from the first business day following the date of publication in Brazil of the announcement of commencement of this offering to purchase up to an 21,124,128 additional common shares including common shares in the form of GDSs, to cover over-allotments, if any.

Investing in the common shares and the GDSs involves risks. See "Risk Factors" beginning on page 12.
The common shares and the GDSs have not been and will not be registered under the Securities Act or under any U.S. state securities laws. The common shares and the GDSs may not be offered or sold within the United States or to U.S. persons, except to qualified institutional buyers and to certain non-U.S. persons outside the United States and Brazil in reliance on Regulation S. By purchasing our common shares or GDSs in the United States, you will be deemed to have represented to us that you are a qualified institutional buyer. Prospective purchasers that are qualified institutional buyers are hereby notified that we and the selling shareholders may be relying on the exemption from the provisions of Section 5 of the Securities Act provided by Rule 144A. See "Transfer Restrictions" on page 131 for a description of restrictions on transfers of our common shares and GDSs. Neither the U.S. Securities and Exchange Commission, or the SEC, any state securities commission, the CVM, the BOVESPA nor any other regulatory authority has approved or disapproved of these securities nor have any of the foregoing authorities passed upon or endorsed the merits of this offering or the accuracy or adequacy of this offering memorandum (or the prospectus in Portuguese used in connection with the offering of our common shares in Brazil, or the Brazilian offering). Any representation to the contrary is a criminal offense.

Offering Price: R$27.00 per common share and US$28.57 per GDS
Investors residing outside Brazil, including qualified institutional buyers in the United States and institutional and other investors outside the United States and Brazil, may purchase our common shares if they comply with the registration requirements of CVM Instruction No. 325, dated January 27, 2000, and Resolution No. 2,689, dated January 26, 2000, of the Brazilian National Monetary Council (Conselho Monetário Nacional), or CMN. For a description on how to comply with these registration requirements, see "Market Information—Investment in Our Common Shares by Non-residents of Brazil" on page 22. Payment for our common shares will be required to be made in reais, through the facility of the Brazilian Custody and Clearing Company (Companhia Brasileira de Liquidação e Custódia), or CBLC, and we and the selling shareholders expect to deliver our common shares through the facility of the CBLC on or about July 17, 2007. We expect to deliver the GDSs against payment in U.S. dollars through the book-entry facilities of The Depository Trust Company, or DTC, on or about July 17, 2007. Joint Bookrunners

Citi

Itaú BBA
July 11, 2007

Unibanco
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TABLE OF CONTENTS Page Presentation of Financial and Other Information iv Forward-looking Statements ................................ x Summary .............................................................. 1 The Offering ......................................................... 6 Summary Financial and Operating Information ... 9 Risk Factors........................................................ 12 Use of Proceeds .................................................. 19 Market Information ............................................ 20 Dividends and Dividend Policy.......................... 24 Exchange Rates .................................................. 27 Capitalization...................................................... 28 Dilution............................................................... 29 Selected Financial Information........................... 31 Management's Discussion and Analysis of Financial Condition and Results of Operations...34 Industry Overview .............................................. 53 Our Business....................................................... 57 Page Our Management ................................................78 Principal and Selling Shareholders .....................84 Related Party Transactions .................................86 Description of Our Share Capital .......................88 Description of Global Depositary Shares .........102 Taxation of Our Common Shares and Global Depositary Shares .......................118 Certain ERISA Considerations .........................126 Plan of Distribution ..........................................128 Transfer Restrictions.........................................131 Notice to Canadian Residents...........................136 Legal Matters....................................................137 Independent Accountants .................................137 Enforcement of Judgments and Service of Process ..................................138 Index to Financial Statements........................... F-1

You should rely only on the information contained in this offering memorandum. Neither we, the selling shareholders, the Brazilian underwriters nor the international underwriters appointed by the Brazilian underwriters to facilitate the placement of common shares outside of Brazil, have authorized anyone to provide you with information that is different or additional from that contained in this offering memorandum. If anyone provides you with different or additional information, you should not rely on it. You should assume that the information in this offering memorandum is accurate only as of the date on the front cover of this offering memorandum, regardless of time of delivery of this offering memorandum or any sale of our common shares or GDSs. Our business, financial condition, results of operations and prospects may change after the date on the front cover of this offering memorandum. Neither we, the selling shareholders, the Brazilian underwriters nor the international underwriters are making an offer to sell the common shares or GDSs in any jurisdiction where the offer or sale is not permitted. In this offering memorandum, references to "Redecard," "Company," "we," "us" and "our" refer to Redecard S.A., except where the context requires otherwise. References to "common shares" and "GDSs" refer to the common shares and GDSs, respectively, of Redecard S.A., except where the context requires otherwise. When used in this offering memorandum, the term "selling shareholders" refers to Banco Citibank S.A., or Citibank, Banco Itaucard S.A., or Itaucard, which is controlled by Banco Itaú Holding Financeira S.A., or Itaú Holding, and Unibanco Participações Societárias S.A., or UPS. References to "controlling shareholders" of Redecard are to (1) Citibank, (2) Itaucard, (3) UPS, (4) Unibanco - União de Bancos Brasileiros S.A., or Unibanco, and (5) Dibens Leasing S.A. - Arrendamento Mercantil, or Dibens, which is an entity controlled by Unibanco. References to "shareholders" are to our controlling shareholders and MasterCard International Inc., or MasterCard International, unless the context requires otherwise. The term "Brazil" refers to the Federative Republic of Brazil. The phrase "Brazilian government" refers to the federal government of the Federative Republic of Brazil, and the term "Central Bank" refers to the Banco Central do Brasil, or the Central Bank of Brazil. All references in this offering memorandum to "real," "reais" or "R$" are to the legal currency of Brazil and all references to "U.S. dollar," "U.S. dollars" or "US$" are to the legal currency of the United States.

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This offering memorandum is highly confidential, and we have prepared it for use solely in connection with the proposed offering of our common shares and GDSs outside Brazil. This offering memorandum is personal to the offeree to whom it has been delivered by the international underwriters and does not constitute an offer to any other person or to the public in general to subscribe for or otherwise to acquire our common shares or GDSs. Distribution of this offering memorandum to any person other than the offeree is unauthorized, and any disclosure of any of its contents without our prior written consent is prohibited. Each offeree, by accepting delivery of this offering memorandum, agrees to the foregoing and agrees to make no photocopies of this offering memorandum, in whole or in part. We and the selling shareholders are relying on an exemption from registration under the Securities Act for offers and sales of securities that do not involve a public offering. Our common shares and GDSs offered through this offering memorandum are subject to restrictions on transferability and resale, and may not be transferred or resold in the United States except as permitted under the Securities Act and applicable U.S. state securities laws pursuant to registration or exemption from them. By purchasing these securities, you will be deemed to have made the acknowledgements, representations and warranties and agreements described under the heading "Transfer Restrictions" in this offering memorandum. You should be aware that you may be required to bear the financial risks of this investment for an indefinite period of time. In making an investment decision, you must rely on your own examination of our business and the terms of this offering, including the merits and risks involved. You must comply with all applicable laws and regulations in force in any jurisdiction in which you purchase, offer or sell our common shares or GDSs or possess or distribute this offering memorandum and must obtain any consent, approval or permission required for your purchase, offer or sale of our common shares or GDSs under the laws and regulations in force in any jurisdiction to which you are subject or in which you make these purchases, offers or sales, and neither we, the selling shareholders nor the international underwriters will have any responsibility therefor. We, the selling shareholders and the international underwriters reserve the right to reject any offer to purchase, in whole or in part, and for any reason, our common shares or GDSs offered hereby. We, the selling shareholders and the international underwriters also reserve the right to sell or place less than all of our common shares and GDSs offered hereby. Unless otherwise indicated, all information contained in this offering memorandum assumes no exercise by Banco Itaú BBA S.A. of its option to place up to an additional 21,124,128 common shares, including common shares in the form of GDSs. The offering of our common shares is being made in Brazil by a prospectus in Portuguese that has been filed with the CVM and that has the same date as this offering memorandum but has a different format and contains certain information generally not included in this offering memorandum. This offering is made in the United States and elsewhere outside Brazil solely on the basis of the information contained in this offering memorandum. Investors should take this into account when making investment decisions. This communication is directed only at persons who (1) are outside the United Kingdom, or (2) are investment professionals falling within Article 19(5) of the Financial Services and Markets Act of 2000 (Financial Promotion) Order 2005, or the Order or (3) are persons falling within Article 49(2)(a) to (d), or high net worth companies, incorporated associations etc. of the Order, all such persons together are being referred to as relevant persons. This communication must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this communication relates is available only to relevant persons and will be engaged in only with relevant persons. We and the selling shareholders are not, and the Brazilian underwriters and the international underwriters are not, making any representation to any purchaser of our common shares or GDSs regarding the legality of an investment in our common shares or GDSs by the purchaser under any legal investment or similar laws or regulations. You should not consider any information in this offering memorandum to be legal, business or tax advice. You should consult your own attorney, business advisor and tax advisor for legal, business and tax advice regarding an investment in our common shares or GDSs.

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NOTICE TO NEW HAMPSHIRE RESIDENTS NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A LICENSE HAS BEEN FILED UNDER RSA 421-B OF THE NEW HAMPSHIRE REVISED STATUTES WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE CONSTITUTES A FINDING BY THE SECRETARY OF STATE THAT ANY DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A TRANSACTION MEANS THAT THE SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATION OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY, OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER, OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH.

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PRESENTATION OF FINANCIAL AND OTHER INFORMATION Our financial statements are prepared in accordance with accounting practices adopted in Brazil that are referred to in this offering memorandum as Brazilian GAAP, which consist of the accounting principles set forth under: • • • • Brazilian Corporate Law (Law No. 6,404, dated December 15, 1976, as amended); Accounting standards issued by the Brazilian Institute of Independent Accountants (Instituto dos Auditores Independentes do Brasil), or IBRACON; Accounting standards issued by the Brazilian Federal Accounting Council (Conselho Federal de Contabilidade); and Rules and regulations issued by the CVM.

Brazilian GAAP differs in certain significant respects from accounting principles generally accepted in the United States, or U.S. GAAP, and from International Financial Reporting Standards, or IFRS. There are significant differences between U.S. GAAP and IFRS and Brazilian GAAP. Accordingly, the financial statements contained in this offering memorandum differ from those that would be prepared based upon U.S. GAAP or IFRS. We have made no attempt to identify or quantify the impact of those differences. No reconciliation to U.S. GAAP or IFRS of any of the financial statements presented in this offering memorandum has been prepared for the purpose of this offering memorandum or for any other purpose. There can be no assurance that reconciliations would not identify material quantitative differences as well as disclosure and presentation differences between our financial statements as prepared in accordance with Brazilian GAAP and any financial statements as prepared under U.S. GAAP or IFRS. Our accounting records are denominated in reais. The following financial information is included in this offering memorandum: • Our financial statements as of and for the years ended December 31, 2004, 2005 and 2006, and as of and for the three-month periods ended March 31, 2006 and 2007, including balance sheets, statements of income, statements of changes in shareholders' equity, statements of changes in financial position, and explanatory notes, prepared in accordance with Brazilian GAAP.

Solely for the convenience of the reader, certain real amounts in this offering memorandum as of and for the year ended December 31, 2006 and as of and for the three months ended March 31, 2007 have been translated into U.S. dollars at the commercial selling rate at closing for purchase of U.S. dollars, as reported by the Central Bank, as of March 31, 2007 of R$2.0504 to US$1.00, respectively. The U.S. dollar equivalent information should not be construed to imply that the real amount represents, or could have been or could be converted into, U.S. dollars at this rate or at any other rate. Redecard Consortium History Late in the 1970's Citibank, Itaucard and Unibanco formed Credicard S.A., or Credicard, a credit card management company. It was a successful initiative from the very beginning, which set successive records both as a card issuer and in terms of the number of affiliated merchants. In 1983, in a joint venture with Visa International, Credicard began to issue Visa branded cards. In 1987, Credicard terminated its agreement with Visa International and a joint venture was formed with MasterCard International. In 1990, Credicard managed a credit card portfolio encompassing 60 financial institutions located in Brazil. Credicard did not undertake the risks of granting credit to cardholders, it had a share of the results from operations related to the credit card portfolio then carried out jointly with these financial institutions, as it was still the exclusive issuer of MasterCard branded cards.

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This exclusivity terminated in 1996, mainly as a result of changes in the financial market, including the merger of former Banco Nacional by Unibanco. As a result of this merger, one financial conglomerate concentrated operations as a card issuer for Visa branded cards (Banco Nacional) and for MasterCard branded cards (Unibanco, who had exclusivity through Credicard to issue MasterCard branded credit cards). At the time, thus, MasterCard and Visa card issuers operated both in granting credit to cardholders and in the affiliation of merchants to accept either these credit card brands as a means of payment for goods and services, as well as other local and international card brands. Redecard S.A was founded on September 2, 1996 as a result of the spin-off of the merchant acquiring and payment processing departments of Credicard. The shareholders of Redecard were the same shareholders of Credicard. After its formation, MasterCard International also became a shareholder of Redecard. Redecard's focus has been on relationships with merchants and development and maintenance of specific systems and processes to serve issuers of MasterCard and Diners Club credit cards in Brazil, in addition to Redeshop and Maestro branded debit card issuers. On November 1, 1996, the shareholders of Redecard decided that the most effective vehicle to implement their joint venture was a consortium and, as a result, the Redecard Consortium was created with the purpose of managing the base of credit cards already issued by Credicard, as well as Credicard's merchant acquiring and payment processing network and systems that were already in place and had been transferred to Redecard. The Redecard Consortium was organized in accordance with Articles 278 and 279 of Brazilian Corporate Law. Under these provisions, the Redecard Consortium was not considered as a partnership or a corporation. The consortium's contractually stated business purpose was that of a "joint venture for provision of services related to the use of Redecard system in connection with cards issued by the associated issuers: (1) management of affiliated merchants network; (2) capture, transmission, processing and settlement of transactions resulting from the use of credit and debit cards; and (3) development of other related or connected businesses." Initially, Credicard and Redecard were members of the Redecard Consortium. Later, in April 1997, pursuant to a first amendment to the Redecard Consortium formation contract, Credicard assigned to our controlling shareholders part of its rights in the income distribution of the Redecard Consortium according to its share in the consortium's revenues. Subsequently, in December 1997, pursuant to a second amendment to the Redecard Consortium formation contract, Itaucard had the same rights as Credicard in the income distribution of the Redecard Consortium as a result of the assignment of another portion of Credicard's share in the consortium's revenues, which corresponded to the credit card base issued by Itaucard. Then, in January 2006, pursuant to a third amendment to the Redecard Consortium formation contract, Credicard withdrew from the Redecard Consortium and assigned to the shareholders of Redecard its remaining rights to income distribution of the Redecard Consortium. Lastly, pursuant to a fourth amendment to the Redecard Consortium formation contract, dated March 31, 2007, the Redecard Consortium was terminated. Results of Operations Our statements of income as of and for the years ended December 31, 2004, 2005 and 2006, as well as our statements of income as of and for the three-month periods ended March 31, 2006 and 2007, relate only to the results of our share in the Redecard Consortium. To facilitate the analysis of our financial statements, we have in the past prepared an explanatory note to our financial statements "Result from Redecard Consortium Participation" that showed the revenues, expenses and the operating income of the Redecard Consortium as a whole, and not only the results attributed to Redecard S.A.

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Therefore, we believe that the statement of income that would best reflect the results of operations is the one contained in the explanatory note to our financial statements "Result from Redecard Consortium Participation" for the years ended December 31, 2004, 2005 and 2006, and for the three-month periods ended March 31, 2006 and 2007, because this note shows full statements of income related to the activities that we currently carry out.
Year ended December 31, 2004 2005 2006 2006 (in millions of U.S. (in millions of reais) dollars) Net Revenue Operating revenue ..................... Service tax(1) ............................ PIS(2) ........................................ COFINS(3)................................ Financial revenue ...................... Financial expenses .................... Cost of services rendered .......... Gross profit.............................. Operating expenses Administrative expenses ........... Depreciation and amortization .. Other operating expenses .......... Operating income.................... Distribution of income Redecard S.A. ........................ Other consortium members ....... Total ......................................... 1,005.6 (39.8) (13.4) (58.3) 409.0 (145.7) 1,157.4 (173.7) 983.7 (237.7) (75.0) (191.5) (504.2) 479.5 226.4 253.1 479.5 1,315.0 (50.7) (9.3) (61.2) 541.1 (217.3) 1,517.6 (214.3) 1,303.3 (283.2) (153.6) (211.6) (648.4) 654.9 285.8 369.1 654.9 1,600.4 (58.8) (12.3) (68.6) 562.0 (213.3) 1,809.4 (295.3) 1,514.1 (242.7) (134.2) (199.9) (576.8) 937.3 442.8 494.5 937.3 780.6 (28.7) (6.0) (33.5) 274.1 (104.0) 882.5 (144.0) 738.5 (118.4) (65.5) (97.5) (281.4) 457.1 216.0 241.1 457.1 361.5 (13.5) (3.2) (17.0) 148.5 (55.0) 421.3 (70.8) 350.5 (73.9) (34.6) (52.9) (161.5) 189.0 83.6 105.4 189.0 418.2 (15.3) (2.7) (16.7) 208.0 (45.7) 545.8 (62.7) 483.1 (58.0) (28.3) (51.5) (137.8) 345.3 149.1 196.2 345.3 203.9 (7.5) (1.3) (8.1) 101.5 (22.3) 266.2 (30.6) 235.6 (28.3) (13.8) (25.1) (67.2) 168.4 72.7 95.7 168.4 Three-month period ended March 31, 2006 2007 2007 (in millions of U.S. (in millions of reais) dollars)

(1) Tax on Services (Imposto sobre Serviços), or ISS tax. (2) Contribution to the Social Integration Program (Programa de Integração Social), or PIS. (3) Contribution for the Financing of Social Security (Contribuição para Financiamento da Seguridade Social), or COFINS.

For the purpose of presenting financial information of the statements of income for the years ended December 31, 2004, 2005 and 2006 in the table above, the total amounts in the line item "other operating expenses" of R$365.2 million, R$426.0 million and R$495.2 million, respectively, were segregated between the line items "cost of services rendered" and "other operating expenses, so that the presentation of the statements of income for the years ended December 31, 2004, 2005 and 2006 conform to the presentation of the statements of income for the three months ended March 31, 2006 and 2007." Line items below operating income could not be presented in the above note because the operating income of the Redecard Consortium was distributed directly to its members. From April 1, 2007, after the termination of the Redecard Consortium on March 31, 2007, we will present our statements of income until the line item "net income," which will include certain taxes which were not applicable to the Redecard Consortium.

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For this reason, based on assumptions that our management believes to be reasonable, we calculated our pro forma net income, which presents the estimated net income that we would probably have realized had the revenues and expenses, in the respective periods, been fully allocated to us. Below we present a reconciliation between the operating income stated in the explanatory note "Result from Redecard Consortium Participation" and the pro forma net income used in this offering memorandum:
Year ended December 31, 2005 2006 Three-month period ended March 31, 2006 2006 2007 2007 (in millions (in millions of U.S. of U.S. dollars) (in millions of reais) dollars) 457.1 (15.1) 442.0 (39.3) (109.1) 293.6 189.0 (5.6) 183.4 (15.1) (44.5) 123.8 345.3 (11.3) 334.0 (30.0) (87.0) 217.0 168.4 (5.5) 162.9 (14.6) (42.4) 105.9

2004

(in millions of reais) Redecard Consortium operating income ....................... Adjusted PIS/COFINS taxes(1)....... Pro forma income before income and social contribution taxes ....... Social contribution tax(2)................ Income tax(2) .................................. Redecard pro forma net income ... 479.5 (19.2) 460.3 (41.3) (116.5) 302.5 654.9 (24.5) 630.4 (58.0) (160.7) 411.7 937.3 (31.0) 906.3 (80.6) (223.8) 601.9

(1) We apply the PIS and COFINS rates based on the non-cumulative method. On this calculation basis, we apply the PIS and COFINS rates of 1.6% and 7.6%, respectively. For more information, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Our Main Sources of Revenue and Expenses⎯Description of the Main Line Items in Our Results of Operations—Net Revenue—PIS and COFINS." (2) For the calculation of social contribution and income taxes, we used the effective rates ascertained in accordance with our accounting and tax book records. For this reason, the proportion of these taxes is variable in each of the periods. The effective social contribution tax rates vary between 8.2% and 9.2%, while the effective income tax rates vary between 24.3% and 26.0%.

Unless expressly stated otherwise, all statement of income information in this offering memorandum is based on: (1) the financial information in the explanatory note "Result from Redecard Consortium Participation," and (2) the reconciliation of the pro forma net income mentioned in this offering memorandum. Beginning on April 1, 2007, our statements of income should consist substantially of the same line items as those presented in the explanatory note "Result from Redecard Consortium Participation," and results after this date will be substantially different from our results, after the distribution of the results in the Redecard Consortium, for the years ended December 31, 2004, 2005 and 2006 and for the three-month periods ended March 31, 2006 and 2007. Adjusted EBITDA Reconciliation Our Adjusted EBITDA consists of our operating income plus depreciation and amortization and adjusted by net financial results, which, however, includes financial income related to prepayment of receivables to merchants, which we consider as part of our operating activities and thus we add it back to our Adjusted EBITDA . By advancing payments to merchants, we anticipate the payment that we would have to make on the due date related to the credit card transactions. Adjusted EBITDA is not a measure of financial performance under Brazilian GAAP, and should not be considered individually, as either an alternative to net income as a performance indicator or operating cash flow or a measure of liquidity. Adjusted EBITDA does not have standardized meanings and our definition of Adjusted EBITDA may not compare to Adjusted EBITDA as used by other companies. We believe that the Adjusted EBITDA reconciliation that would best reflect our activities is that based on the results of operations for the years ended December 31, 2004, 2005 and 2006 and for the three-month periods ended March 31, 2006 and 2007 as set forth in the explanatory note "Result from Redecard Consortium Participation," as explained in "—Redecard Consortium."

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The table below sets forth the Adjusted EBITDA calculation for the periods indicated:
Year ended December 31, 2005 2006 Three-month period ended March 31, 2006 2006 2007 2007 (in millions (in millions of U.S. of U.S. dollars) (in millions of reais) dollars) 457.1 65.5 (274.1) 104.0 178.0 530.5 189.0 34.6 (148.5) 55.0 94.3 224.5 345.3 28.3 (208.0) 45.7 105.8 317.0 168.4 13.8 (101.4) 22.3 51.6 154.7

2004

(in millions of reais) Operating income .............................. (+) Depreciation and amortization(1) .. (-) Total financial revenue .................. (+) Total financial expenses ................ (+) Net financial income related to prepayment of receivables.............. Adjusted EBITDA ............................. 479.5 75.0 (409.0) 145.7 266.7 557.9 654.9 153.6 (541.1) 217.3 323.7 808.4 937.3 134.2 (562.0) 213.3 365.0 1,087.9

(1) The variation in depreciation and amortization expenses occurred in 2004 and 2005 was due to the reduction in the depreciation period of the point-of-sale, or POS, electronic capture equipment, on the basis of a technical report issued by a specialized institute. The depreciated value of the equipment was adjusted to the new useful life of the equipment in 2005. For more information, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies—Depreciation and Amortization."

Other Information References in this offering memorandum to "merchant" refer to any organization that accepts credit or debit cards for the payment of goods and services. References to "card issuers" are to financial institutions that issue credit and debit cards to approved applicants and are identifiable by their trade name typically imprinted on the issued card. References to "cardholders" are to an approved applicant for a credit and debit card from a card issuer, and who may also be an entity, for which a card issuer wishes to extend a line of credit, such as a consumer or a corporation. The cardholder may use the card at any merchant location that meets the qualification standards of the relevant "card association," such as Diners Club. In this offering memorandum, we use the term "brand" to address the name of card associations that is imprinted on the issued card. Card associations consist of members, generally financial institutions, who establish uniform regulations that govern much of the industry. For further information, see "Summary—Overview⎯Characteristics of the Merchant Acquiring and Payment Processing Industry in Brazil." References to "merchant discount rate" are to the fee we charge to merchants for our services of capturing, processing, transmission and settlement of transactions performed with credit or debit cards. The merchant discount rate is charged on the value of the transaction. References to "commercial discount rate" are to the fee we charge to merchants for the prepayment of receivables resulting from credit card transactions. References to "interchange fee" are to the fee we charge to merchants and that we pass on to the card issuer as part of its remuneration for approving transactions carried out with the cards issued by the card issuer. References to "chargeback" are to cancellation of transactions carried out with credit or debit cards caused by the non-acceptance by the cardholder of the transaction or because the transaction does not comply with the rules of the card association. It may be a transaction that is returned by the card issuer to the merchant acquirer because of a violation of rules or procedures, or because of allegations of invalidity of the transaction by the merchant. References to "active merchants" are to merchants that registered with us with at least one credit or debit card transaction during the preceding three-month period. Certain amounts and percentages in this offering memorandum were rounded up or down. The totals presented in some of the tables may not be exactly the sum of the preceding amounts.

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The information included in this offering memorandum relating to the industry where we operate, as well as the estimates concerning market shares, were obtained through internal research, public information and publications on the industry. Information was used from reports prepared by official public sources, such as the Central Bank and the Brazilian Institute of Geography and Statistics (Instituto Brasileiro de Geografia e Estatística), or IBGE, among others. The information in these publications is taken from sources that are regarded as reliable, but we cannot guarantee the precision and integrity of this information. These internal findings and estimates have not been independently confirmed. We, the selling shareholders, the Brazilian underwriters and the international underwriters cannot guarantee the validity of this information. This offering memorandum contains translations of various real amounts into U.S. dollars at specified rates solely for your convenience. You should not construe these translations as representations by us that the real amounts actually represent these U.S. dollar amounts or could be converted into U.S. dollars at the rates indicated. Unless otherwise indicated, we have translated the real amounts as of and for the year ended December 31, 2006, and as of and for the three months ended March 31, 2007, using a rate of R$2.0504 to US$1.00, which was the commercial rate for the purchase of U.S. dollars in effect as of March 31, 2007, as reported by the Central Bank. As of July 11, 2007, the commercial selling exchange rate was R$1.890 to US$1.00, as reported by the Central Bank. For further information regarding the translation of reais into U.S. dollars, see "Exchange Rates." The information in our website or that may be accessed through it is not part of this offering memorandum and is not incorporated in this offering memorandum by reference.

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FORWARD-LOOKING STATEMENTS This offering memorandum includes forward-looking statements in particular in the sections "Summary," "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business." These statements are based on current expectations and projections related to future events and financial trends that affect or may affect our business, results of operations, financial condition, cash flow, prospects and the market price of our common shares and GDSs. Words such as "believe," "anticipate," "expect," "estimate," "plan," "intend," "will," "may," "can," "seek," "could," "predict," "project," and other similar words are used in this offering memorandum to identify forward-looking statements. Neither our independent auditors nor any other auditors or independent consultants have compiled, examined or adopted any procedure concerning the operating or financial projections discussed in this offering memorandum, or issued any opinion or given any other form of assurance as to their materialization. While we believe they are based on reasonable assumptions, these forward-looking statements are subject to risks and uncertainties, and rely on information currently available to us, and therefore do not constitute guarantees of future results, which could substantially differ from those results anticipated in our forward-looking statements due to several factors, including, but not limited to, the following: • • • • • • • • • • • • • general economic, political, and business conditions in Brazil; inflation, depreciation of the Brazilian real and interest rate fluctuations; foreign exchange controls and liquidity in the Brazilian financial and securities markets; continued success of our efforts to affiliate merchants and implement partnerships with card issuers of MasterCard and Diners Club branded credit and debit cards; our ability to successfully implement our growth strategy; changes in the competitive scenario in the merchant acquiring and payment processing industry; availability of credit for cardholders; changes in the interests of our controlling shareholders; increases in our costs or the interchange fee, as well as reductions in the merchant discount rate or commercial discount rate; the level of our indebtedness and other financial liabilities; changes in the policies and rules related to the MasterCard and Diners Club brands; loss of the license to operate as an acquirer for MasterCard branded cards; changes in the existing laws and regulations that apply to us, as well as future laws and regulations, including government measures, related to taxation and other matters; and other factors discussed under "Risk Factors."

These forward-looking statements are subject to risks and uncertainties, and therefore do not constitute a guarantee of future results or our future performance, which could substantially differ from those results anticipated in our forward-looking statements due to any of the factors discussed above or other factors not specifically addressed in this offering memorandum. In light of the risks and uncertainties described herein, the forward-looking statements included in this offering memorandum may prove inaccurate. Given these limitations, you should not make any decision to invest in our common shares or GDSs on the basis of the forward-looking statements contained in this offering memorandum. The forward-looking statements included in this offering memorandum are made only as of the date of this offering memorandum, and neither we, the selling shareholders, the Brazilian underwriters nor the international underwriters undertake any obligation to update or revise this information.

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SUMMARY This summary of our activities and financial and operating information does not present all of the information that you should consider before investing in our common shares or GDSs. You should read this entire offering memorandum, including the information contained in the sections "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations," as well as in our financial statements and the explanatory notes thereto before making a decision to invest in our common shares or GDSs. Overview We are one of the leading companies in the merchant acquiring and payment processing industry in Brazil, and currently we are the only acquirer of MasterCard and Diners Club cards in Brazil. We are responsible for acquiring merchants to accept credit and debit cards as a means of payment for goods and services, as well as for the capturing, transmission, processing and settlement of credit and debit card transactions. In 2006, we had a 34.0% market share based on the value of transactions with credit and debit cards in Brazil, which reached a total of R$246.3 billion. According to data from the Brazilian Association of Credit Card and Service Companies (Associação Brasileira das Empresas de Cartões de Crédito e Serviços, or ABECS), this market represented 17.6% of the total private consumption in Brazil during the same year. In 2002, we captured and processed 569 million transactions, and in 2006 we captured and processed more than 1.5 billion transactions, which represented a 27.8% average annual growth rate since 2002. In 2006, we had more than one million affiliated merchants and were present in all Brazilian municipalities with electrical power and telecommunications infrastructure. Out of the total number of our affiliated merchants, 639,000 were active in 2006, which if compared to similar companies in the United States, would make us the fifth-largest merchant acquirer and payment processor in the United States in terms of number of active merchants, according to data from the Nilson Report regarding the U.S. market for 2006. We also offer additional services to our merchants and other customers, which include voucher management companies and financial companies. These services include rental of point of sale, or POS, electronic equipment, prepayment to merchants of receivables from credit card sales, check verification services (credit analysis of consumers) through the POS electronic equipment and capture and transmission services for transactions carried out with voucher and private-label cards. The table below sets forth the main financial and operating indicators for the periods indicated:
Year ended December 31, Growth (20042006) 56.3% 95.0 11.9p.p. 95.5% 99.0% 7.2p.p. 54.6% 43.4% 85.3% 72.6% 23.5% 1.3p.p. CAGR (20042006) 25.0% 39.7 – 39.7% 41.1% – 24.3% 19.8% 36.1% 31.4% 11.1% – Three-month period ended March 31, Growth (20062007) 29.6% 41.2% 4.8p.p. 82.7% 75.3% 10.4p.p. 19.0% 13.9% 29.8% 24.4% 11.7% 0.5p.p.

2004 Net revenue ................................................. Adjusted EBITDA(1) ................................. Adjusted EBITDA Margin(2) ................... Operating income....................................... Pro forma net income ................................. Pro forma net margin(3) ............................ Credit cards Value of transactions.................................... Number of transactions (in thousands) ........ Debit cards Value of transactions.................................... Number of transactions (in thousands) ........ Affiliated merchants .................................. Electronic capture of transactions (%)....

2005 2006 (in millions of reais) 1,517.6 808.4 53.3% 654.9 411.7 27.1% 47,285.8 586,830 19,592.1 441,483 901,448 99.2% 1,809.4 1,087.9 60.1% 937.3 601.9 33.3% 57,240.5 680,972 25,813.7 559,119 1,018,776 99.9%

2006 2007 (in millions of reais) 421.3 224.5 53.3% 189.0 123.8 29.4% 12,469.7 152,971 5,660.8 126,013 924,355 99.4% 545.8 317.0 58.1% 345.3 217.0 39.8% 14,839.3 174,204 7,346.6 156,778 1,032,948 99.9%

1,157.4 557.9 48.2% 479.5 302.5 26.1% 37,021.5 474,848 13,929.0 324,033 825,104 98.6%

(1) Our Adjusted EBITDA consists of our operating income plus depreciation and amortization and adjusted by net financial results, which, however, includes financial income related to prepayment of receivables to merchants, which we consider as part of our operating activities and thus we add it back to our Adjusted EBITDA . By advancing payments to merchants, we anticipate the payment that we would have to make on the due date related to the credit card transactions. Adjusted EBITDA is not a measure of financial performance under Brazilian GAAP, and should not be considered individually, as either an alternative to net income as a performance indicator or operating cash flow or a measure of liquidity. Adjusted EBITDA does not have standardized meanings and our definition of Adjusted EBITDA may not compare to Adjusted EBITDA as used by other companies. For further information on our Adjusted EBITDA, see "Presentation of Financial Information and Other Information—Adjusted EBITDA Reconciliation." (2) Adjusted EBITDA margin is the Adjusted EBITDA divided by our net revenue. (3) Pro forma net income divided by net revenue.

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Our history dates back to 1970, when Citibank, who is among the largest financial institutions and credit card issuers worldwide, along with Itaucard and Unibanco, who are among the largest financial institutions and credit card issuers in Brazil, formed Credicard. In 1996, Citibank, Itaucard and Unibanco believed it was necessary to have a company specialized in merchant acquiring and payment processing and founded Redecard by spinning off Credicard's merchant acquiring and payment processing activities. In that same year, MasterCard International also became a shareholder of Redecard. Since then, we have been the only, although non-exclusive, merchant acquirer and payment processor for MasterCard and Diners Club branded credit and debit cards in Brazil. Characteristics of the Merchant Acquiring and Payment Processing Industry in Brazil The prevailing business model in the Brazilian credit card industry is that of association, in which the card associations, the merchant acquirers and payment processors and the card issuers have specific roles within the rules established by the card associations. In this model, the merchant acquirers and payment processors, including us, hold a license to use the card association brands' trademark and are responsible for acquiring merchants to accept credit and debit cards as a means of payment for goods and services and for the capturing, transmission, processing and settlement of credit and debit card transactions. The figure below illustrates how the merchant acquiring and payment processing industry is organized in Brazil and identifies the five main participants involved in that business model:
1. Card Associations Other Brands

5. Issuers
Others Unibanco Itau Citibank

2. Merchant Acquirers and Payment Processors
Others

4. Cardholders

3. Merchants

(1) Card associations determine the general rules for the organization and functioning of the merchant acquiring and payment processing system and guarantee the settlement of the transactions; (2) Merchant acquirers and payment processors, such as us, are responsible for acquiring merchants to accept credit and debit cards as a means of payment for goods and services as well as for the capturing, transmission, processing and settlement of transactions; (3) Merchants supply goods and services and are affiliated by merchant acquirers and payment processors to accept credit and debit cards as a means of payment for goods and services; (4) Cardholders are individuals or agents of legal entities who hold credit or debit cards as a means of payment granted by card issuers, and are users and/or consumers of products and services; and (5) Card issuers grant credit to cardholders for use in Brazil and/or abroad.

According to data from ABECS, the value of transactions paid with credit and debit cards reached R$203.2 billion in 2005 and R$246.3 billion in 2006, of which R$151.2 billion were credit card transactions, R$69.4 billion were debit card transactions and R$25.7 billion were private-label card transactions, representing a growth of 21.0%, 23.0%, 19.0% and 17.0%, respectively, in 2006 compared to 2005. In 2006, the use of credit cards in Brazil as a means of payment represented 17.6% of total household consumption, according to data from ABECS and IBGE, compared to 11.8% in 2002. In the United States and Canada, for example, transactions with credit and debit cards represented 37.0% and 55.0% of the private household consumption in these countries in 2005, respectively, according to data from the central banks of each of these countries. According to data from the Central Bank, in 2005 credit and debit cards represented 45.0% of all non-cash payment methods in Brazil compared to 21.0% in 2000. During the same period, the use of checks as a means of payment decreased from 57.0% to 27.0% of all non-cash payment methods, which we believe demonstrates that consumers are increasingly choosing credit and debit cards over checks.

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Strengths Strong growth combined with high return to shareholders. In the period from 2002 through 2006, we achieved a 27.7% average annual growth rate when measured based on the value of credit and debit card transactions, a 30.0% annual growth rate in Adjusted EBITDA and an 12.0% increase in Adjusted EBITDA margin. The constant organic growth of our activities and financial results to date stems from economies of scale that result from our operational efficiency and business model. In 2006, our Adjusted EBITDA margin was 60.1% over our net revenue and our pro forma net income margin was 34.3% over our net revenue. In 2004, 2005 and 2006, we distributed R$141.3 million, R$177.4 million and R$292.3 million in dividends, respectively, while the Redecard Consortium distributed R$253.1 million, R$ 369.1 million and R$494.5 million in income, respectively. We believe that our high margins and continued growth assure us of a solid financial situation and enable us to deliver high levels of return to our shareholders. Recurring and predictable revenues, combined with diversified base of affiliated merchants. Our revenues are recurring and predictable due to the nature of our business. Once we affiliate merchants to accept credit and debit cards as a means of payment for goods and services, merchants generate credit and debit card transactions on an ongoing basis, which represent sources of recurring and predictable revenues for us. In 2006, 95.6% of the value of our credit and debit card transactions was carried out by merchants who had been acquired before 2005. Our revenues also consist of rental payments of POS electronic equipment, which we believe represent another recurring and predictable source of revenues for us. We have adequate staffing and equipment to provide constant support to merchants in order to stimulate them to encourage the use of MasterCard and Diners Club credit and debit cards as a means of payment. Our network of affiliated merchants is diverse and fragmented and there is no significant concentration in any specific market segment. In 2006, our largest customer represented 3.9% of the total credit and debit card transactions processed. Broad network of affiliated merchants and market penetration. We have over one million affiliated merchants, in all Brazilian cities that have electric power and telecommunications infrastructure and processed 1.5 billion transactions annually. Since 2002, we have had a 14.7% average annual growth rate in our number of affiliated merchants and a 16.8% growth in our number of active merchants, which resulted in a 27.8% average annual increase in the number of captured transactions. Between 2002 and 2006 we invested approximately R$459.0 million in the expansion of our network of electronic capture equipment, and we have installed more than 647,500 devices of this type of equipment. We believe that our broad and diversified network of affiliated merchants to accept cards as a means of payment will allow us to achieve more activations in our capture network, regardless of new affiliations of merchants. High availability, quality and security of equipment and electronic capture network. Our information processing platforms ensure high availability for our electronic capture network and provide automatic contingency support in two data centers. We own and operate 84 centers (called concentrators) for electronic capture spread throughout Brazil, which keep the electronic capture network available 24 hours a day, every day of the year, and provides us with high capacity for monitoring transactions, allowing us to rarely rely on telephone operators. We capture 99.9% of credit and debit card transactions electronically, and currently 89.9% of our POS electronic equipment are able to use card reading technology through the use of chips, which allows us to provide greater security to all participants in the merchant acquiring and payment processing industry. Our highly secure information processing systems and platforms are reflected in our very low rate of fraudulent transactions, which represented only 0.0006% of our captured transactions in 2006. In addition, we have invested in wireless POS electronic capture equipment, which gives merchants and credit card holders safety and convenience, as well as the development of our own secure capture application for transactions carried out in the Internet, called Komerci. We believe that the high availability of our capture network and the security of our technology allow us to provide quality service to our customers, without compromising the growth in the number of our affiliated merchants. Diversification of products and services offered to merchants. We offer to merchants value-added products and services in addition to the capture, transmission, processing and settlement of credit and debit card transactions, such as rental payments of POS electronic capture equipment, prepayment of receivables to merchants of the sales performed with the use of credit cards, check verification services (credit analysis of consumers) through the POS electronic equipment and capture and transmission services for transactions carried out with voucher and private-label cards. We believe that the broad range of value-added products and services that we offer to merchants distinguishes us from our competitors, in that it attracts merchants and enables us to affiliate more merchants to accept MasterCard and Diners Club cards as a means of payment for goods and services.

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Shareholders' support and experienced management. Our controlling shareholders are part of the financial conglomerates Citibank, Itaú and Unibanco, which are among the largest financial institutions in Brazil, in the case of Itaú and Unibanco, and worldwide, in the case of Citibank. The financial conglomerates of which our controlling shareholders are a part are committed to high standards of corporate governance and have been active in the credit and debit card industry in Brazil for over 35 years. In addition, Itaucard and Unibanco are also among the largest issuers of credit cards in Brazil and Citibank is one of the largest card issuers worldwide, which gives them their strategic importance and credibility in the merchant acquiring and payment processing industry, and enables us to gain access to a broad network of cardholders and merchants. MasterCard International is also one of our shareholders and is one of the most recognized brands of payment cards, both domestically and internationally, which gives us strategic strength in the acceptance of our services. We also count on senior management that combine extensive experience in the merchant acquiring and payment processing industry with managerial expertise and a strong commitment to results. Our senior management has been key to our success and includes professionals with more than 30 years of experience in the merchant acquiring and payment processing industry and with an average industry experience of over 11 years. Strategies Increase the activation and market penetration with our capture network. In addition to our sales structure directed towards constant assistance to merchants, we count on a network of 9,218 bank branches involved in the affiliation of new merchants on behalf of Redecard, 3,522 of which belong to our controlling shareholders. We also pursue activations through our sales team, and through companies that provide specialized services in the merchant acquiring and payment processing industry, as well as by hiring telemarketing companies. Stimulate the issuance of MasterCard branded cards by card issuers. To stimulate the issuance of, and to promote, MasterCard branded credit cards, we and MasterCard International have agreed on March 27, 2006 that (1) MasterCard International management would define and implement a new interchange fee structure, applicable to all Brazilian MasterCard branded credit card transactions, according to which the interchange fee was higher than the one generally used in the market at the time, provided that (2) we make available a new service to all MasterCard branded card issuers who have at least 35.0% of the total value of their portfolio of card transactions generated by MasterCard branded cards. This new service consists of our depositing of merchants' receivables in checking accounts of merchants at the financial institution card issuers upon previous authorization from merchants to us for a certain period of time, called "assurance of banking domicile," and for a limit of up to 300.0% of the total transactions generated by MasterCard branded credit cards of these financial institution card issuers. During this period, we commit ourselves not to make prepayments of receivables to merchants from MasterCard branded credit card sales, which gives to financial institution card issuers the possibility of offering several banking services to merchants. With this strategy, we expect to increase our operating results as a result of the increase in (1) the number of MasterCard branded cards issued, and, consequently, (2) the volume of MasterCard branded card transactions, which we believe should offset the loss in our results due to the increase in the interchange fee and the decrease in the volume of prepayment to merchants of receivables from credit card sales. Encourage the use of credit and debit cards in Brazilian household consumption and in new market segments. In 2006, the use of credit and debit cards reached 17.6% of private consumption of Brazilian households, while in more developed markets such as the United States and Canada, the use of credit and debit cards reached 37.0% and 55.0%, respectively. We constantly develop and carry out market research to identify new market segments where the use of credit and debit cards is a viable and attractive means of payment. We believe that there are opportunities for growth in new market segments in which the use of POS electronic equipment associated with mobile technology is growing, such as door-to-door sales, transportation services (i.e., taxis) and delivery services, among others. In this connection, we have already tested mobile technology for electronic capture in door-to-door sales. We are also evaluating the use of credit and debit cards in the wholesale sector. This will allow us to be present in an increasing number of commercial and financial transactions in the Brazilian market.

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Constant focus on technological innovation. We will continue to constantly seek technological update and innovation. As an example of this effort, we have developed our own application for the secure capture of transactions carried out in the Internet, called Komerci. We were the first merchant acquirer and payment processor in the Brazilian market to introduce the technology for wireless POS capture, which provides cardholders with convenience and security at merchant locations, such as restaurants and gas stations. Furthermore, we have been the pioneer in affiliating merchants in new market segments in Brazil, such as taxi services and food delivery services. We were the first MasterCard licensees to have capture equipment with chip reading technology outside of Europe, using the worldwide standard established by the European MasterCard and Visa Consortium EMV, or EMV. We intend to continue to seek constant improvement of our technology and for the implementation of new technology, which will allow us to continue to offer electronic capture and processing services using the industry's most advanced technology. Continued improvement of operational efficiency. We achieved a 13.1% average annual reduction in cost per captured transaction in the period between 2002 and 2006. In order to increase our economies of scale we will continue to improve our business model to maximize the use of our electronic capture network, increasing standardization, simplicity and speed in capturing transactions through optimized operating processes. We believe that continued reduction in operating costs and greater agility in installing new POS electronic equipment will allow us to take advantage of economies of scale and, simultaneously, assure the quality and security of our services. Our headquarters are located at 1400 Avenida Presidente Juscelino Kubitschek, 13th floor, São Paulo, São Paulo, Brazil, and our investor relations telephone number is +55-11-2121-0952. Our website is www.redecard.com.br. The information available in the website, as well as that included in any marketing material published through the media and in newspaper and magazine advertisements is not part of this offering memorandum.

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THE OFFERING Issuer ........................................... Redecard S.A. Selling Shareholders .................. Banco Citibank S.A., Banco Itaucard S.A. and Unibanco – Participações Societárias S.A. Brazilian Underwriters.............. Banco Itaú BBA S.A., Citigroup Global Markets Brasil, Corretora de Câmbio, Títulos e Valores Mobiliários S.A. and Unibanco – União de Bancos Brasileiros S.A. International Underwriters ...... Citigroup Global Markets Inc., Itaú Securities, Inc. and Unibanco Securities Inc. Offering....................................... We and the selling shareholders are offering a total of 150,827,527 common shares, including common shares in the form of GDSs, represented by GDRs: • • to the public and institutional investors in Brazil pursuant to an offering registered in Brazil, only in the form of common shares; to qualified institutional buyers in the United States in reliance on exemptions from registration under the Securities Act and the rules thereunder; and to institutions and investors outside the United States and Brazil to purchasers that are not U.S. persons, in reliance on Regulation S under the Securities Act.

Investors other than investors in Brazil will have to observe the investment mechanisms regulated by the CMN, the Central Bank of Brazil and the CVM. Offering Price ............................. R$27.00 per common share and US$28.57 per GDS. Over-allotment Option .............. The selling shareholders have granted Banco Itaú BBA S.A. an option, exercisable upon consultation with the other bookrunners, to place up to 21,124,128 additional common shares, including common shares in the form of GDSs, solely to cover over-allotments, if any. The over-allotment option may be exercised within 30 days after the announcement of commencement of the offering. Share Capital.............................. Our share capital immediately prior to the offering consists of 657,415,150 common shares, without par value. After completion of this offering, our capital stock will consist of 672,970,705 common shares, assuming the full placement of the common shares initially offered hereby. The common shares to be issued or sold in this offering rank fully pari passu with all our common shares outstanding as of the date of this offering memorandum, including with regard to trading and settlement. Retail Offering............................ At least 10.0% of 14,083,344 common shares in the offering, are being offered exclusively to non-institutional investors in Brazil who have executed a reserve request.

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Institutional Offering................. The common shares in the offering are being marketed to institutional investors in Brazil, QIBs in the United States, and investors outside of Brazil and the United States. In the case of QIBs in the United States, and investors outside of Brazil and the United States, the common shares may be offered in the form of GDSs. Distribution Period .................... Up to six months following publication of the announcement of commencement of the offering (anúncio de início) or up to the publication of the completion of the offer, whichever occurs first. Tag-along Rights ........................ In the event of a sale of the controlling stake in us, the holders of our remaining shares have the right to be included in the public tender offer to be made by the buyer of shares representing the control, in order to assure the holders of our remaining shares treatment equal to the one given to the controlling shareholder selling its stake. Voting Rights.............................. Each of our common shares entitles its holder to one vote at our annual or special shareholders meetings. See "Description of Our Share CapitalRights of Common Shares". Holders of GDSs will be entitled to instruct the depositary to vote the underlying common shares, subject to the terms of the applicable deposit agreement. See "Description of Global Depositary Shares." Lock-up Agreements.................. We, our officers and directors, and the selling shareholders have agreed that we and they will not issue, offer, sell, or otherwise dispose of any common shares of our share capital or securities convertible or exercisable for any common shares of our share capital during the 180-day period following the date of this offering memorandum, except for the additional shares to cover over-allotment options and in the event of assignment or loans of common shares for the purpose of exercising stabilization activities. According to the rules of the Novo Mercado, the controlling shareholders, the members of our board of directors and our officers, subject to certain exceptions, cannot sell or offer to sell shares issued by us for the first six months after the beginning of the trading of our common shares on the Novo Mercado. After this initial period of six months, the controlling shareholders and directors and officers will not be entitled to sell or offer more than 40.0% of the common shares that they hold for an additional six months. On June 20, 2007, Itaucard, Unibanco, Citibank and MasterCard International entered into a lock-up agreement pursuant to which MasterCard International has agreed that it will not sell, transfer or otherwise dispose of any common shares of our share capital during the period from the commencement of this offering through the announcement in Brazil of the completion of this offering (the “period of restriction”). In addition, during the period beginning at the end of the period of restriction up until six months after the date in which our common shares begin trading on the BOVESPA (the “initial period of restriction”), MasterCard International may sell up to 25% of its common shares in our share capital in an organized fashion by means of one or several transactions on the BOVESPA, either by means of transactions structured as block sales or ordinary sales on the BOVESPA, or both, provided that the number of shares that MasterCard International may sell on a certain determination date, at a discount higher than 5% in relation to the average weighted price on BOVESPA on the immediately preceding date, shall not exceed 10% of the volume of our common shares traded on

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the BOVESPA during the immediately preceding date to the sale (the “organized sale”). MasterCard International has also agreed that it will not sell, transfer or otherwise dispose of 75% of its common shares in our share capital (the “restricted shares”) during the initial period of restriction. After expiration of the initial period of restriction and up until six months after the date in which the initial period of restriction has expired (the “final period of restriction”), MasterCard International may sell the restricted shares only by means of an organized sale. MasterCard International may sell part or all its common shares in our share capital, including the restricted shares at any time after the period of restriction in block sales to qualified institutional investors. After the expiration of the final period of restriction, MasterCard International may sell part of all of the restricted shares in the manner MasterCard International deems appropriate. Use of Proceeds........................... We intend to use the net proceeds we receive from the offering for investment in our technological infrastructure, in particular the purchase of POS electronic equipment, and acquisition of software related to the capture, processing and settlement of credit and debit card transactions. We will not receive any portion of the proceeds of the offering received by the selling shareholders. Dividends .................................... Our bylaws as of April 23, 2007 provide that an amount equal to at least 40.0% of our adjusted net income for any given year, after deducting allocations to the legal reserve, statutory reserve, and contingency reserve, if any, or adding reversed contingency reserve amounts from prior years, if any and unrealized profit reserve amounts, upon their realization and if not absorbed by subsequent losses, if any, should be available for distribution as a mandatory dividend or interest on shareholders' equity. Our new shareholders will be entitled to dividends from the third quarter of 2007 onwards, since we (1) have already declared and paid dividends related to the first quarter of 2007 in April 2007; and (2) we will declare and pay dividends related to the second quarter of 2007 before the completion of the offering. See "Dividends and Dividend Policy." Listing ......................................... On June 18, 2007, we entered into the Novo Mercado listing agreement. We have applied to list our common shares on the Novo Mercado segment of the BOVESPA and after BOVESPA's approval our common shares will be traded under the symbol "RDCD3" on the first business day following the publication of the notice of commencement of the offering in Brazil. Transfer Restrictions ................. Our common shares and GDSs have not been registered under the Securities Act and are subject to restrictions on transfer. For information on restriction on transfer of our common shares and GDSs, see "Transfer Restrictions." Transfer of our common shares, including by and between non-residents of Brazil, may only be effected in Brazil. Risk Factors................................ An investment in our common shares and GDSs involves risks. See section "Risk Factors" for information on certain factors that should be carefully analyzed before investing in the common shares.

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SUMMARY FINANCIAL AND OPERATING INFORMATION You should read and analyze the information below in conjunction with our financial statements and related notes included elsewhere in this offering memorandum, as well as with the information in the sections "Presentation of Financial and Other Information," "Selected Financial Information" and "Management's Discussion and Analysis of Financial Condition and Results of Operations." Our financial statements are prepared in accordance with Brazilian GAAP. Our accounting records are maintained in reais. The following financial information is included in this offering memorandum: • Our financial statements as of and for the years ended December 31, 2004, 2005 and 2006, and as of and for the three-month period ended March 31, 2006 and 2007, including balance sheets, statements of income, statements of changes in shareholders' equity, statements of changes in financial position and explanatory notes prepared in accordance with Brazilian GAAP.

Our statements of income as of and for the years ended December 31, 2004, 2005 and 2006, and as well as our statements of income as of and for the three-month periods ended March 31, 2006 and 2007, relate only to the results of our share in the Redecard Consortium. To facilitate the analysis of our financial statements, we have in the past prepared an explanatory note to our financial statements "Result from Redecard Consortium Participation" that showed the revenues, expenses and the operating income of the Redecard Consortium as a whole, and not only the results attributed to Redecard S.A. Therefore, we believe that the statement of income that would best reflect the results of operations is the one contained in the explanatory note to our financial statements "Result from Redecard Consortium Participation" for the years ended December 31, 2004, 2005 and 2006 and for the three-month periods ended March 31, 2006 and 2007, because this note shows full statements of income related to the activities that we currently carry out.
Year ended December 31, 2005 2006 Three-month period ended March 31, 2006 2006 2007 2007 (in millions (in millions of U.S. of U.S. dollars) (in millions of reais) dollars) 780.6 (28.7) (6.0) (33.5) 274.1 (104.0) 882.5 (144.0) 738.5 (118.4) (65.5) (97.5) (281.4) 457.1 216.0 241.1 457.1 361.5 (13.5) (3.2) (17.0) 148.5 (55.0) 421.3 (70.8) 350.5 (73.9) (34.6) (52.9) (161.5) 189.0 83.6 105.4 189.0 418.2 (15.3) (2.7) (16.7) 208.0 (45.7) 545.8 (62.7) 483.1 (58.0) (28.3) (51.5) (137.8) 345.3 149.1 196.2 345.3 203.9 (7.5) (1.3) (8.1) 101.5 (22.3) 266.2 (30.6) 235.6 (28.3) (13.8) (25.1) (67.2) 168.4 72.7 95.7 168.4

2004

(in millions of reais) Net Revenue Operating revenue ............................... 1,005.6 Service tax(1)...................................... (39.8) PIS(2).................................................. (13.4) COFINS(3).......................................... (58.3) Financial revenue ................................ 409.0 Financial expenses .............................. (145.7) 1,157.4 Cost of services rendered .................... (173.7) 983.7 Gross profit........................................ Operating expenses Administrative expenses ..................... (237.7) Depreciation and amortization ............ (75.0) Other operating expenses .................... (191.5) (504.2) 479.5 Operating income.............................. Distribution of income Redecard S.A. ..................................... 226.4 253.1 Other consortium members ................. 479.5 Total ................................................... 1,315.0 (50.7) (9.3) (61.2) 541.1 (217.3) 1,517.6 (214.3) 1,303.3 (283.2) (153.6) (211.6) (648.2) 654.9 285.8 369.1 654.9 1,600.4 (58.8) (12.3) (68.6) 562.0 (213.3) 1,809.4 (295.3) 1,514.1 (242.7) (134.2) (199.9) (576.8) 937.3 442.8 494.5 937.3

(1) Tax on Services (Imposto sobre Serviços), or ISS tax. (2) Contribution to the Social Integration Program (Programa de Integração Social), or PIS. (3) Contribution for the Financing of Social Security (Contribuição para Financiamento da Seguridade Social), or COFINS.

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For the purpose of presenting financial information of the statements of income for the years ended December 31, 2004, 2005 and 2006 in the table above, the total amounts in the line item "other operating expenses" of R$365.2 million, R$426.0 million and R$495.2 million, respectively, were segregated between the line items "cost of services rendered" and "other operating expenses, so that the presentation of the statements of income for the years ended December 31, 2004, 2005 and 2006 conform to the presentation of the statements of income for the three months ended March 31, 2006 and 2007." Line items below operating income could not be presented in the above note because the operating income of the Redecard Consortium was distributed directly to its members. From April 1, 2007, after the termination of the Redecard Consortium on March 31, 2007, we will present our statements of income until the line item "net income," which will include certain taxes which were not applicable to the Redecard Consortium. For this reason, based on assumptions that our management believes to be reasonable, we calculated our pro forma net income, which presents the estimated net income that we would probably have realized had the revenues and expenses, in the respective periods, been fully allocated to us. Below we present a reconciliation between the operating income stated in the explanatory note "Result from Redecard Consortium Participation" and the pro forma net income used in this offering memorandum:
Year ended December 31, 2005 2006 Three-month period ended March 31, 2006 2006 2007 2007 (in millions (in millions of U.S. of U.S. dollars) (in millions of reais) dollars) 457.1 (15.1) 442.0 (39.3) (109.1) 293.6 189.0 (5.6) 183.4 (15.1) (44.5) 123.8 345.3 (11.3) 334.0 (30.0) (87.0) 217.0 168.4 (5.5) 162.9 (14.6) (42.4) 105.9

2004

(in millions of reais) Redecard Consortium operating income ....................... Adjusted PIS/COFINS taxes(1)....... Pro forma income before income and social contribution taxes ....... Social contribution tax(2)................ Income tax(2) .................................. Redecard pro forma net income.... 479.5 (19.2) 460.3 (41.3) (116.5) 302.5 654.9 (24.5) 630.4 (58.0) (160.7) 411.7 937.3 (31.0) 906.3 (80.6) (223.8) 601.9

(1) We apply the PIS and COFINS rates based on the non-cumulative method. On this calculation basis, we apply the PIS and COFINS rates of 1.6% and 7.6%, respectively. For more information, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Our Main Sources of Revenue and Expenses⎯Description of the Main Line Items in Our Results of Operations—Net Revenue—PIS and COFINS." (2) For the calculation of social contribution and income taxes, we used the effective rates ascertained in accordance with our accounting and tax book records. For this reason, the proportion of these taxes is variable in each of the periods. The effective social contribution tax rates vary between 8.2% and 9.2%, while the effective income tax rates vary between 24.3% and 26.0%.

Unless expressly stated otherwise, all statement of income information in this offering memorandum is based on: (1) the financial information in the explanatory note "Result from Redecard Consortium Participation," and (2) the reconciliation of the pro forma net income mentioned in this offering memorandum. Beginning on April 1, 2007, our statements of income should consist substantially of the same line items as those presented in the explanatory note "Result from Redecard Consortium Participation," and results after this date will be substantially different from our results, after the distribution of the results in the Redecard Consortium, for the years ended December 31, 2004, 2005 and 2006 and for the three-month periods ended March 31, 2006 and 2007.

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The table below sets forth our results of operations after the distribution of operating income to the members of the Redecard Consortium in the periods indicated:
Year ended December 31, 2005 2006 Three-month period ended March 31, 2006 2007 2007 (in millions of U.S. (in millions of reais) dollars) 83.6 83.6 (6.9) (20.4) 56.3 149.1 149.1 (13.5) (26.7) 108.9 72.7 72.7 (6.6) (13.0) 53.1

2004

(in millions of reais) Result from Redecard Consortium participation................................................. Income before income and social contribution tax .................................................................. Social contribution tax....................................... Income tax.......................................................... Net income for the year ................................... 226.4 226.4 (20.3) (57.3) 148.7 285.8 285.8 (26.2) (72.8) 186.7 442.8 442.8 (39.6) (109.4) 293.6

2006 (in millions of U.S. dollars) 216.0 216.0 (19.3) (53.3) 143.2

The table below shows our balance sheet data for the periods indicated:
2004 As of December 31, 2005 2006 (in millions of reais) Assets Current assets Cash and cash equivalents............................ Accounts receivable - issuers ....................... Other accounts receivable ............................ Deferred income and social contribution taxes ...................................... Total current assets.......................................... Long-term assets Deferred income and social contribution taxes ...................................... Judicial deposits ........................................... Total long-term assets ..................................... Permanent assets Fixed assets................................................... Accumulated depreciation............................ Total permanent assets.................................... Total assets........................................................ Liabilities Current liabilities Accounts payable to merchants.................... Labor obligations.......................................... Taxes payable ............................................... Borrowings ................................................... Other accounts payable ................................ Total current liabilities.................................... Long-term liabilities Provisions for contingent liabilities ............. Total long-term liabilities................................ Shareholders' equity........................................ Capital .......................................................... Revenue reserve ........................................... Total liabilities and shareholders' equity ..................................... 13.4 5,939.0 33.3 33.2 6,018.8 13.9 8,006.1 35.3 45.3 8,100.6 215.4 9,940.5 56.8 69.2 10,281.9 As of March 31, 2006 2007 2007 (in millions of (in millions of (in millions of U.S. dollars) reais) U.S. dollars) 105.1 4,848.1 27.7 33.7 5,014.6 16.7 8,444.3 59.0 54.5 8,574.5 8.1 4,118.4 28.8 26.6 4,181.9

36.6 9.4 46.0 475.1 (239.9) 235.3 6,300.1

48.9 12.4 61.4 583.1 (378.2) 204.9 8,366.9

40.7 13.8 54.5 677.5 (502.3) 175.3 10,511.7

19.8 6.7 26.5 330.4 (245.0) 85.4 5,126.5

26.1 13.7 39.8 704.3 (530.3) 174.0 8,788.3

12.7 6.7 19.4 343.5 (258.6) 84.9 4,286.2

5,390.7 8.6 11.5 393.2 293.3 6,097.3 149.3 149.3 53.6 45.2 8.4 6,300.1

7,313.3 9.9 8.6 362.0 414.5 8,108.3 195.8 195.8 62.9 53.6 9.3 8,366.9

9,420.5 11.0 29.2 375.7 427.3 10,263.7 183.7 183.7 64.3 53.6 10.7 10,511.7

4,594.5 5.4 14.2 183.2 208.3 5,005.6 89.6 89.6 31.3 26.1 5.2 5,126.5

7,738.2 11.7 18.7 361.9 477.1 8,607.7 116.3 116.3 64.3 53.6 10.7 8,788.3

3,774.0 5.7 9.1 176.6 232.7 4,198.1 56.8 56.8 31.3 26.1 5.2 4,286.2

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RISK FACTORS An investment in our common shares and GDS involves a high degree of risk. You should carefully consider all the information set forth in this offering memorandum, particularly the risks described below, before making an investment decision. Our business, financial condition and results of operations could be materially and adversely affected by any of these risks. The risks described below are those that we currently believe may materially affect us. Additional risks and uncertainties not currently known to us, or those that we currently deem to be immaterial, may also materially and adversely affect our business, our financial condition or results of operations. The market price of our common shares and GDSs could decline due to any of these risks or other factors, and you may lose all or part of your investment. Risks Relating to Brazil The Brazilian government has exercised, and continues to exercise, significant influence over the Brazilian economy. This involvement, as well as Brazilian political and economic conditions, may adversely affect us and the market price of our common shares and GDSs. The Brazilian government frequently intervenes in the Brazilian economy and occasionally makes significant changes in policy and regulations. The Brazilian government's actions to control inflation and other policies and regulations have often involved, among other measures, increases in interest rates, changes in tax policies, price controls, currency devaluations, capital controls and limits on imports. Our business, financial condition and results of operations may be adversely affected by changes in policy or regulations involving or affecting factors, such as: • • • • • • • interest rates; exchange controls and restrictions on remittances abroad; currency fluctuations; inflation; liquidity of domestic capital and lending markets; tax policies and rules; and other political, social and economic developments in or affecting Brazil.

Uncertainty over whether the Brazilian government will implement changes in policy or regulation affecting these or other factors in the future may contribute to economic uncertainty in Brazil and to heightened volatility in the Brazilian securities markets and in the securities issued abroad by Brazilian issuers.

Inflation and the Brazilian government's efforts to combat inflation may contribute significantly to economic uncertainty in Brazil and could adversely affect us and the market price of our common shares and GDSs.
Brazil has historically experienced extremely high rates of inflation. Inflation, along with government measures to combat inflation and with public speculation about possible future government measures, has had significant negative effects on the Brazilian economy, and contributed to economic uncertainty in Brazil and heightened volatility in the Brazilian securities market. The 12-month accumulated inflation rate at the three months ended March 31, 2007 was 2.9%, as measured by the extended consumer price index (Índice de Preços ao Consumidor Amplo), or IPCA, and for the end of 2003, 2004, 2005 and 2006, inflation rates were 8.7%, 12.4%, 1.2% and 3.8%, respectively. The Brazilian government's measures to control inflation have often included maintaining a tight monetary policy with high interest rates, thereby restricting the availability of credit and reducing economic growth. As a result, interest rates have fluctuated significantly. For example, the official interest rate in Brazil, as set by the Brazilian Committee on Monetary Policy (Comitê de Política Monetária), or COPOM, was 3.0% as of the three months ended March 31, 2007, and 16.5%, 17.8%, 18.0% and 13.3% at the end of 2003, 2004, 2005 and 2006, respectively.

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Inflation, government measures to combat inflation and speculation related to possible measures regarding inflation may also significantly contribute to uncertainties regarding the Brazilian economy and weaken investors' confidence in Brazil, adversely affecting our ability to gain access to financing sources, including the international markets. Future Brazilian governmental actions, including interest rate decreases, intervention in the foreign exchange market and actions to adjust or fix the value of the real, may trigger increases in inflation. If Brazil experiences high inflation in the future, we may not be able to adjust the prices we charge merchants to offset the effects of inflation on our cost structure, which could increase our costs and reduce our net and operating margins. Exchange rate instability may adversely affect the Brazilian economy, us and the market price of our common shares and GDSs. The Brazilian currency has been devalued periodically in relation to the U.S. dollar and other foreign currencies during the last four decades. During this period, the Brazilian government implemented various economic plans and utilized a number of exchange rate policies, including sudden devaluations, periodic mini-devaluations during which the frequency of adjustments has ranged from daily to monthly, floating exchange rate systems, exchange controls and dual exchange rate markets. From time to time, there were significant fluctuations in the exchange rate between the Brazilian currency and the U.S. dollar and other currencies. For example, the real depreciated 18.7% and 52.3% against the U.S. dollar in 2001 and 2002, respectively. Although the real appreciated 18.2%, 8.1%, 13.7% and 8.7% against the U.S. dollar in 2003, 2004, 2005 and 2006, respectively, there can be no assurance that the real will not depreciate or be devalued against the U.S. dollar again. As of March 31, 2007, the U.S. dollar-real exchange rate was R$2.0504 per US$1.00. As of July 11, 2007, the U.S. dollar-real exchange rate was R$1.890 per US$1.00. Depreciation of the real relative to the U.S. dollar could create additional inflationary pressures in Brazil and lead to increases in interest rates, which may negatively affect the Brazilian economy as a whole, us and the market price of our common shares and GDSs. Developments and the perception of risk in other countries, especially emerging market countries, may adversely affect the market price of Brazilian securities, including our common shares and GDSs. The market value of securities of Brazilian companies is affected to varying degrees by economic and market conditions in other countries, including other Latin American and emerging market countries. Although economic conditions in these countries may differ significantly from economic conditions in Brazil, investors' reactions to developments in these other countries may have an adverse effect on the market value of securities of Brazilian issuers. Crises in other emerging market countries or economic policies of other countries may diminish investor interest in securities of Brazilian issuers, including ours. This could adversely affect the market price of our common shares and GDSs, and could also make it more difficult for us to access the capital markets and finance our operations in the future, on acceptable terms or at all. Risks Relating to Us and to the Merchant Acquiring and Payment Processing Industry We face competition in the merchant acquiring and payment processing industry in Brazil. We are currently the only merchant acquirer and payment processor of credit and debit cards for MasterCard and Diners Club in Brazil. Our profitability depends on our ability to increase and retain the number of merchants who accept MasterCard and Diners Club cards as a means of payment for goods and services. We do not have an exclusive license agreement with MasterCard International. If international or local merchant acquirers and payment processors, with significant scale, capital and technological resources, enter the Brazilian market and become acquirers and processors for MasterCard and Diners Club cards, our market share may be significantly reduced, adversely affecting us. Our market share may also be adversely affected if international or local competitors start to operate new card associations or brands, and introduce these other card associations or brands to merchants who will start accepting other cards as a means of payment for goods and services. In addition, there are other entities that already have authorization to act as MasterCard and Diners Club merchant acquirers and payment processors in Brazil but we believe that they are not currently so acting. If these companies start operating as merchant acquirers and payment processors of MasterCard and Diners Club cards in Brazil, our competitive position may be adversely affected.

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We also face stiff competition from other means of payments, such as cash and checks. Credit card transactions represented only 17.6% of the total private consumption in Brazil in 2006. We cannot assure you that the card industry will expand significantly, which may cause a material adverse effect upon us. There is no assurance that we will be able to continue to compete successfully in the merchant acquiring and payment processing industry or at historical levels. If we are unable to respond satisfactorily to competitive pressure, we may be adversely affected. We depend on MasterCard International and the number of MasterCard and Diners Club cards issued to maintain our competitive position. To date, we have exclusively offered MasterCard and Diners Club cards to merchants to be used as a means of payment for goods and services. In addition, our competitive position in the industry is also affected by the number of MasterCard and Diners Club cards issued and by investment, strategic and marketing decisions taken by MasterCard International. As a result of increased competition from new or existing card associations or brands against MasterCard and Diners Club in Brazil, or from negative effects resulting from decisions taken by MasterCard International, there may be an increased number of cards of these competing associations or brands issued by Brazilian institutions, as well as the decrease in the number of transactions carried out with MasterCard branded cards. We may be adversely affected if there is a decrease in the number of transactions carried out with MasterCard branded cards, and if MasterCard and Diners Club cards lose market share in the Brazilian market to new or existing card associations or brands. We are subject to policies and rules imposed by MasterCard International and Diners Club card association. Our business operations must follow the policies and rules set forth by MasterCard International and Diners Club card association. Any significant changes in the policies and rules of MasterCard International and Diners Club card association, mainly of MasterCard International, may have a material adverse effect upon us. We depend upon the merchant acquirer license granted to us by MasterCard International. We act as merchant acquirer and payment processor in Brazil under a non-exclusive license granted to us by MasterCard International. Pursuant to the license agreement, MasterCard International is entitled to several rights, such as the right to grant licenses to other merchant acquirers in Brazil. In addition, under the terms of this license agreement, we have to previously notify MasterCard International of any change of our control. MasterCard International has the right, at its sole discretion, to terminate the license agreement or suspend the use of its trademarks by us and/or impose conditions for the continuity of the agreement according to MasterCard International rules and bylaws. We cannot assure you that the license granted by MasterCard International to us will not be revoked. We will be materially and adversely affected if the license agreement is terminated by MasterCard International. Our inability to adopt new alternative means of payment, associated with new technology, may cause a material and adverse effect on us. The merchant acquiring and payment processing sector has to constantly track any changes in the preferences of credit and debit card holders, as well as technological advances. We expect that new alternative means of payment associated with new technology, for example, transactions captured by mobile phones, will be developed and implemented to meet cardholders' demand for ease of use, transaction security and speed in credit and debit cards transactions. If we are not able to keep up with the trends in the sector and changes in cardholders' preferences, as well as implement new alternative means of payment and acquire new technology, we will be materially and adversely affected. Unauthorized disclosure of merchant and cardholder data through breach of our computer systems or otherwise could cause a material adverse effect on us. Our computer systems are exposed to breaches by third parties who may penetrate our systems to obtain information relating to merchants and cardholders, with an aim to misuse it. If our computer systems are breached and there is unauthorized disclosure of information relating to merchants and cardholders, we may be exposed to claims for fraudulent use of this information, loss of reputation and judicial claims with potentially high liability, which could have a material adverse effect on us.

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Our systems and our third-party providers' systems may fail due to factors beyond our control. We depend on the efficient and uninterrupted operation of our computer network systems, software, data center and telecommunications networks, as well as the systems of third parties. Our systems and operations or those of our third-party providers could be exposed to damage or interruption from, among other things, fire, natural disaster, power loss, telecommunications failure, unauthorized entry and computer viruses. Defects in our systems or those of third parties, errors or delays in the processing of payment transactions, telecommunications failures or other difficulties could have a material adverse effect upon us. Pressure from merchants to decrease the merchant discount rate, as well as increases in the interchange fee imposed by card associations and brands, may adversely affect us. We are subject to the effects of changes in the interchange fee imposed by card associations and brands. We are also subject to decreases in the merchant discount rate because of competition by other means of payment in the market. In 2006, the interchange fee of MasterCard International increased and we cannot predict when and if there will be further increases in the interchange fee imposed by MasterCard International. If there are increases in the interchange fee paid to card issuers or decreases in the merchant discount rate, our profit margins and results of operations may be adversely affected. Laws and regulations that may be enacted to regulate the card industry in Brazil may have an adverse effect on us. Several bills are under debate at the Brazilian Federal Congress to regulate different aspects related to the card industry. Recently, a new bill was presented to the Senate, which aims at regulating the card industry. This bill is still in its initial stages and has not been submitted to the appropriate Senate committees. It is not possible to predict whether this bill or other will be approved and if approved, it is not possible to predict the impact that the new legislation will have on us. The loss of our senior management could have a material adverse effect on us. Our ability to maintain our competitive position depends to a large degree upon the services of our senior management team. None of the members of our senior management team is subject to a long-term employment agreement or a non-compete agreement. There can be no assurance that we will be successful in retaining our current qualified senior management personnel or hiring new qualified personnel. The loss of any of the members of our senior management team or our inability to attract and retain additional qualified senior management personnel could prevent us from achieving our targeted results of operations. Risks Relating to Our Common Shares and GDSs The international underwriters and the selling shareholders belong to the same financial conglomerates. The international underwriters and the selling shareholders belong to the same financial conglomerates: Citigroup, Itaú and Unibanco. Potential investors should take into account the existence of a potential conflict of interests because of the fact that the international underwriters and the selling shareholders are part of the same financial conglomerates. We cannot assure you that the Brazilian and international underwriters will carry out the offering impartially because they are part of the same conglomerates of the selling shareholders. The volatility and illiquidity of the Brazilian securities markets may substantially limit your ability to sell our common shares and GDSs at the price and time you desire. Investing in securities that trade in emerging markets, such as Brazil, often involves greater risk than investing in securities of issuers in other countries, and these investments are generally considered to be more speculative in nature. The Brazilian securities market is substantially smaller, less liquid, more concentrated and can be more volatile than major securities markets, such as the United States. The BOVESPA had a market capitalization of approximately US$723 billion (R$1.5 trillion) as of December 31, 2006 and an average daily trading volume of US$1.1 billion (R$2.4 billion) in the year ended December 31, 2006. As a comparison, the New York Stock Exchange, or NYSE, had a market capitalization of US$25.0 trillion as of December 31, 2006 and an average daily trading volume of US$86.8 billion in the year ended December 31, 2006. There is a significant concentration in the Brazilian capital markets. The top ten stocks in terms of trading volume accounted for approximately 46.1% and 42.0% of all trading on the BOVESPA for the year ended December 31, 2006 and the first quarter ended March 31, 2007, respectively. These features of the Brazilian capital markets may significantly limit your ability to resell our common shares and GDSs at the price and time desired, which may have a material adverse effect on the market price of our common shares and GDSs.

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The offering price was set based on the bookbuilding procedure and it is not an indication of the price of our common shares and GDSs that will prevail on the market after this offering. The market price of our common shares and GDSs may significantly fluctuate due to several reasons, including the risk factors mentioned in this offering memorandum or reasons not related to our performance. After completion of this offering, your ability to sell our common shares and GDSs at the price and time you wish may be substantially limited. An active and liquid market for our common shares and GDSs may not develop. Before this offering, there was no market for our common shares and GDSs. There can be no assurance that a liquid and active market for our common shares and GDSs will develop or be maintained after this offering. Liquid and active trading markets generally result in lower price volatility and higher efficiency in the performance of sale and purchase orders from persons who have no relation with the issuer. The liquidity of a securities market is frequently determined by the volume of outstanding shares and GDSs. In addition, the minimum percentage of 25.0% of free float (shares not held by the controlling shareholders) required by the Novo Mercado rules may not be reached after completion of this offering. We requested the BOVESPA to grant us a term of three years to reach this percentage and during this period we shall maintain at least 16.0% of free float. If we do not reach the minimum of 25.0% of free float within the three-year term, our controlling shareholders may be obligated to pay fines and the trading of our common shares may be disclosed separately from the trading of shares of other companies listed on the Novo Mercado segment. Accordingly, your ability to sell our common shares and GDSs at the price and time you wish may be substantially limited. Substantial sales of our common shares and GDSs after this offering could cause the price of our common shares and GDSs to decrease. In addition, we, the selling shareholders, and certain of our directors and executive officers have agreed, subject to certain exceptions, not to issue, offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any common shares or any securities convertible into or exercisable or exchangeable for common shares; or enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the common shares, for 180 days after the date of this offering memorandum. After this 180-day period expires, these common shares will be eligible for sale in the public market. In addition, according to Novo Mercado regulations, our controlling shareholders, directors and officers, may not sell or offer to sell shares issued by us and derivatives related to our shares, during the first six months after this offering, beginning on the first trading date of our common shares on the Novo Mercado. After this initial six-month period, our controlling shareholders, directors and officers cannot, for an additional six months, sell or offer to sell more than 40.0% of shares issued by us and derivatives related to our common shares which they held immediately after this offering. The market price of our common shares and GDSs could drop significantly if the holders of our common shares and GDSs sell them, or the market perceives that we, our controlling shareholders, and our directors and officers intend to sell them. Our bylaws do not contain provisions to prevent amendments to exclude from our bylaws protection mechanisms for the dispersion of the shareholders' base and against attempts of hostile takeovers by third parties. Our bylaws contain provisions for protection against attempts of hostile takeovers by third parties. These provisions require that any acquiring shareholder (as defined in our bylaws), who may become the holder of rights to shareholdings related to 26.0% or more of our capital stock (excluded treasury shares and involuntary increases of shareholdings set forth in our bylaws), carry out a public tender offer to acquire all of our shares at a price provided in the bylaws and legislation within 30 days from the date of acquisition or the date of the event that resulted in the ownership of the shares or rights. However, our bylaws do not set forth mechanisms that impose restrictions to the exclusion from our bylaws of provisions related to the need for the acquiring shareholder to carry out a public tender offer in the situations provided in our bylaws. Therefore, our general shareholders' meeting may deliberate the exclusion of these provisions from our bylaws.

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The interests of our controlling shareholders may conflict with your interests. Our controlling shareholders have the power, among others, to elect the majority of our board of directors and determine the outcome of any action requiring shareholders' approval, including transactions with related parties, corporate reorganizations, dispositions, partnerships and the timing and amount of any future payment of dividends, subject to minimum dividend payment requirements imposed under Brazilian Corporate Law. Our controlling shareholders may have an interest in pursuing acquisitions, dispositions, partnerships, financings or similar transactions that could conflict with your interests. In addition, our controlling shareholders operate or may operate, by means of entities that are part of their respective financial conglomerates, in segments in which we currently operate. This may represent a potential conflict of interest in decisions of our controlling shareholders related to our strategy in segments in which our controlling shareholders and us operate or may operate in the future. We may need additional resources, and may elect to obtain them through the issuance of securities, which may affect the price of our common shares and GDSs and result in a dilution of your holdings in our common shares and GDSs. We may need to obtain additional resources in the future through a public or private issuance of shares or securities convertible into, or exchangeable for, shares. Any public issue of shares or securities convertible into, or exchangeable for, shares may affect the price of our common shares and GDSs and result in the dilution of your holdings in our common shares and GDSs. Holders of GDSs may be unable to exercise preemptive rights with respect to their common shares unless there is a registration statement in effect that covers those rights or unless an exemption from registration applies. Holders of GDSs will not be able to exercise preemptive rights relating to our common shares (including common shares in the form of GDSs) unless a registration statement under the Securities Act is effective with respect to those rights, or an exemption from the registration requirements of the Securities Act is available. We are not obligated to file a registration statement. Unless we file a registration statement or an exemption from registration applies, you may receive only the net proceeds from the sale of your preemptive rights by the depositary, or if the preemptive rights cannot be sold, they will lapse and you will not receive any value for them. For more information on the exercise of your rights, see "Description of Our Share Capital⎯Preemptive Rights." If a holder of our GDSs exchanges GDSs for our common shares, he or she risks losing Brazilian tax advantages and the ability to remit foreign currency abroad. The Brazilian custodian for the common shares underlying our GDSs must obtain a certificate of registration from the Central Bank to be entitled to remit U.S. dollars abroad for payments of dividends and other distributions relating to our common shares or upon the disposition of our common shares. If a holder decides to exchange his or her GDSs for the underlying common shares, he or she will be entitled to continue to rely, for five business days from the date of exchange, on the custodian's certificate of registration. After that period, the holder may not be able to obtain and remit U.S. dollars abroad upon the disposition of our common shares, or distributions relating to our common shares, unless he or she obtains his or her own certificate of registration or registers under CMN Resolution No. 2,689, which entitles registered foreign investors to buy and sell shares on the Brazilian stock exchanges without obtaining separate certificates of registration. If the holder does not obtain a certificate of registration or does not register under CMN Resolution No. 2,689, he or she will generally be subject to less favorable tax treatment on distributions with respect to our common shares. If a holder attempts to obtain his or her own certificate of registration, he or she may incur expenses or suffer delays in the application process, which could delay his or her ability to receive dividends or distributions relating to our common shares or the return of his or her capital in a timely manner. We cannot assure you that the custodian's certificate of registration or any foreign capital registration obtained by a holder may not be affected by future legislative changes, or that additional restrictions applicable to the holder, the disposition of the underlying common shares or the repatriation of the proceeds from disposition will not be imposed in the future.

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Holders of GDSs may find it difficult to exercise voting rights with respect to our shareholders' meetings. Holders may exercise their voting rights with respect to our common shares represented by the GDSs only in accordance with the deposit agreements relating to the GDSs. There are practical limitations upon the ability of holders of GDSs to exercise their voting rights due to the additional steps involved in communicating with holders of GDSs. For example, we are required to publish a notice of our shareholders' general meetings in certain newspapers in Brazil. Holders of our common shares can exercise their right to vote at a shareholders' general meeting by attending the meeting in person or voting by proxy. By contrast, holders of GDSs will receive notice of a shareholders' general meeting by mail from the GDR depositary following our notice to the GDR depositary requesting the GDR depositary to do so. To exercise their voting rights, holders of GDSs must instruct the GDR depositary on a timely basis. This noticed voting process will take longer for holders of GDSs than for direct holders of our common shares. If it fails to receive timely voting instructions for your GDSs, the GDR depositary shall not vote your shares. See "Description of Global Depositary Shares." We cannot assure you that you will receive the voting materials in time to ensure that you can instruct the depositary to vote our common shares underlying your GDSs. In addition, the depositary and its agents are not responsible for failing to carry out your voting instructions or for the manner of carrying out your voting instructions. This means that you may not be able to exercise your right to vote and you may have no recourse if our common shares held by you are not voted as you requested.

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USE OF PROCEEDS Based on the offering price of R$27.00 per share, we estimate that we will receive net proceeds from the primary offering of approximately R$404.2 million, after deducting estimated commissions payable by us. We intend to allocate the gross proceeds from the primary offering to our capital stock account, increasing the current amount from R$53.6 million to R$473.6 million, based on the assumptions above mentioned. We intend to allocate the entire net proceeds from the primary offering, of approximately R$404.2 million, to investments in our technological infrastructure, in particular the purchase of POS electronic capture equipment, and acquisition of software related to the capture, processing and settlement of credit and debit card transactions. We will not receive any of the proceeds from the secondary offering. The selling shareholders will receive the entire net proceeds from their sale of common shares and GDSs in the secondary offering, including in the event the over-allotment option is exercised.

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MARKET INFORMATION General On June 18, 2007, we entered into the Novo Mercado listing agreement. We have applied to list our common shares on the Novo Mercado segment of the BOVESPA and after BOVESPA's approval our common shares will be traded under the symbol "RDCD3" on the first business day following the publication of the notice of commencement of the offering in Brazil. We have not issued any securities other than our common shares and our GDSs. Trading on the BOVESPA The BOVESPA is a nonprofit entity owned by its member brokerage firms. Trading on the BOVESPA is limited to member brokerage firms and a limited number of authorized nonmembers. Trading is conducted between 10:00 a.m. and 5:00 p.m., or between 11:00 a.m. and 6:00 p.m. during daylight savings time in Brazil. The BOVESPA also permits trading from 5:45 p.m. to 7:00 p.m., or between 6:45 p.m. to 7:30 p.m. during daylight savings time in Brazil, during a different trading period of time, called the "after market." Trading on the after market is subject to regulatory limits on price volatility and on the volume of shares transacted through Internet brokers. When shareholders trade in common or preferred shares on the BOVESPA, the trade is settled three business days after the trade date without adjustment of the purchase price for inflation. The seller is generally required to deliver the shares to the exchange on the morning of the third business day following the trade date. Delivery of and payment for shares are made through the facilities of the CBLC, an independent clearing house. In order to better control BOVESPA index variation, the BOVESPA adopted a "circuit breaker" system pursuant to which trading sessions are suspended for a period of 30 minutes or one hour whenever the index of the BOVESPA falls below the limits of 10.0% or 15.0%, respectively, in relation to the closing index of the previous trading session. Trading on the BOVESPA is significantly less liquid than trading on the New York Stock Exchange or other major exchanges in the world. Although any of the outstanding shares of a listed company may trade on the BOVESPA, in most cases fewer than half of the listed shares are actually available for trading by the public, the remainder being held by a group, by small groups of controlling persons or by government entities. As of the end of 2006 and the first quarter of 2007, the BOVESPA had a total market capitalization of approximately R$1.54 trillion and R$1.63 trillion, respectively, and an average daily trading volume of R$2.4 billion and R$2.3 billion, respectively. The top ten stocks in terms of 2006 trading volume accounted for approximately 46.1% of all shares traded on the BOVESPA as of December 31, 2006. The top ten stocks in terms of the first quarter of 2007 trading volume accounted for approximately 42.0% of all shares traded on the BOVESPA as of March 31, 2007. Trading on the BOVESPA by a holder not deemed to be domiciled in Brazil for Brazilian tax and regulatory purposes, or a "non-Brazilian holder," is subject to certain limitations under Brazilian foreign investment regulations. With limited exceptions, non-Brazilian holders may trade on Brazilian stock exchanges in accordance with the requirements of CMN Resolution No. 2,689, which requires that securities held by non-Brazilian holders be maintained in the custody of financial institutions authorized by the Central Bank and by the CVM or in deposit accounts with financial institutions. In addition, Resolution No. 2,689 requires non-Brazilian holders to restrict their securities trading to transactions on the BOVESPA or qualified over-the-counter markets. With limited exceptions, non-Brazilian holders may not transfer the ownership of investments made under Resolution No. 2,689 to other non-Brazilian holders through a private transaction.

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Regulation of the Brazilian Securities Market The Brazilian securities markets are regulated by the CVM, which has regulatory authority over the stock exchanges and securities markets, as well as by the Central Bank, which has, among other powers, licensing authority over brokerage firms and regulates foreign investment and foreign exchange transactions. The Brazilian securities markets are governed by Law No. 6,385, of December 7, 1976, as amended, as well as by the Brazilian Corporate Law and by regulations issued by the CVM. These laws and regulations provide for, among other things, disclosure requirements, restrictions on insider trading and price manipulation and protection of minority shareholders. Under the Brazilian Corporate Law, a company is either publicly-held and listed, a sociedade por ações de capital aberto, or privately held and unlisted, a sociedade por ações de capital fechado. All listed companies are registered with the CVM and are subject to reporting and regulatory requirements. A company registered with the CVM may trade its securities either on the BOVESPA or in the Brazilian over-the-counter market. Shares of companies listed on the BOVESPA, once duly registered with the CVM may also be traded privately, subject to several limitations. The Brazilian over-the-counter market consists of direct trades between individuals in which a financial institution registered with the CVM serves as intermediary. No special application, other than registration with the CVM, is necessary for securities of a publicly-held company to be traded in this market. The CVM requires that it be given notice of all trades carried out in the Brazilian over-the-counter market by the respective intermediaries. The trading of securities of a listed company on the BOVESPA may be halted at the request of such company in prepayment of a material announcement. The company should also halt its trading in international stock exchanges where its securities are traded. Trading may also be suspended on the initiative of the BOVESPA or the CVM, among other reasons, based on or due to a belief that a company has provided inadequate information regarding a significant event or has provided inadequate responses to inquiries by the CVM or the BOVESPA. The Brazilian Corporate Law, the regulations issued by the CVM and the Novo Mercado regulations establish, among other things, requirements of disclosure of information, restrictions on transactions based on privileged information and price manipulation, as well as protection to minority shareholders. See "Description of Our Share Capital." Corporate Governance Practices and the Novo Mercado In 2000, the BOVESPA introduced three special listing segments, known as Nível 1, Nível 2 and the Novo Mercado, aiming at fostering a secondary market for securities issued by Brazilian companies with securities listed on the BOVESPA by prompting such companies to follow good practices of corporate governance. The listing segments were designed for the trading of shares issued by companies voluntarily undertaking to abide by corporate governance practices and disclosure requirements in addition to those already imposed by applicable Brazilian law. These rules generally increase shareholders' rights and enhance the quality of information provided to shareholders. To become a Nível 1 company, in addition to the obligations imposed by applicable law, the issuer must agree to: (1) ensure that shares of the issuer representing at least 25.0% of its total capital are effectively available for trading; (2) adopt offering procedures that favor widespread ownership of shares whenever making a public offering; (3) comply with minimum quarterly disclosure standards; (4) follow stricter disclosure policies with respect to transactions made by controlling shareholders, members of its board of directors and its executive officers involving securities issued by the issuer; (5) submit any existing shareholders' agreement and stock option plans to the BOVESPA; and (6) make a schedule of corporate events available to shareholders.

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To become a Nível 2 company, in addition to the obligations imposed by applicable law, an issuer must agree to: (1) comply with all of the listing requirements for Nível 1 companies; (2) grant tag-along rights for all shareholders in connection with a transfer of control of the company (a) offering the same price paid per share of controlling block for each common share and (b) 80.0% of the price paid per share of controlling block for each preferred share; (3) grant voting rights to holders of preferred shares in connection with certain corporate restructurings and related party transactions, such as (a) any transformation of the company into another corporate form; (b) any merger, consolidation or spin-off of the company; (c) approval of any transactions between the company and its controlling shareholder or parties related to the controlling shareholder; (d) approval of any valuation of assets to be delivered to the company in payment for shares issued in a capital increase; (e) appointment of an expert to ascertain the fair value of the company in connection with any deregistration and delisting tender offer from Nível 2; and (f) any changes to these voting rights, which will prevail as long as the adhesion contract to the Nível 2 regulation with the BOVESPA is in effect; (4) have a board of directors consisting of at least five members out of which a minimum of 20.0% of the directors must be independent and limit the term of all members to two years; (5) prepare annual financial statements in English, including cash flow statements, in accordance with international accounting standards, such as U.S. GAAP or IFRS; (6) if it elects to delist from the Nível 2 segment, conduct a tender offer by the company's controlling shareholder (the minimum price of the shares to be offered will be the economic value determined by an independent specialized firm with requisite experience); and (7) adhere exclusively to the Market Arbitration Chamber for resolution of disputes between the company and its investors. To be listed in the Novo Mercado, an issuer must meet all of the requirements for Nível 1 and Nível 2 companies and, in addition, the issuer must: (1) issue only common shares; and (2) grant tag-along rights for all shareholders in connection with a transfer of control of the company, offering to the minority shareholders the same price paid per share of controlling block. Investment in Our Common Shares by Non-residents of Brazil Investors residing outside Brazil, including institutional investors, are authorized to purchase equity instruments, including our common shares, on the Brazilian stock exchange provided that they comply with the registration requirements set forth in Resolution No. 2,689 of the CMN, which we refer to as Resolution No. 2,689, and CVM Instruction No. 325, from January 27, 2000, as amended. With certain limited exceptions, under Resolution No. 2,689 investors are permitted to carry out any type of transaction in the Brazilian financial capital markets involving a security traded on a stock, future or organized over-the-counter market. Investments and remittances outside Brazil of gains, dividends, profits or other payments under our common shares are made through the exchange market. In order to become a Resolution No. 2,689 investor, an investor residing outside Brazil must: • • • appoint a representative in Brazil with powers to take actions relating to the investment; appoint an authorized custodian in Brazil for the investments, which must be a financial institution duly authorized by the Central Bank and CVM; and through its representative, register itself as a foreign investor with the CVM and register the investment with the Central Bank.

Securities and other financial assets held by foreign investors pursuant to Resolution No. 2,689 must be registered or maintained in deposit accounts or under the custody of an entity duly licensed by the Central Bank or the CVM. In addition, securities trading by foreign investors are generally restricted to transactions involving securities listed on the Brazilian stock exchanges or traded in organized over-the-counter markets licensed by the CVM. See "Taxation––Brazilian Tax Considerations––Gains" for a description of certain tax benefits extended to non-Brazilian holders who qualify under Resolution 2,689.

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Provisional Contribution on Financial Transactions (Contribuição Provisória sobre a Movimentação Financeira) The offering of our shares constitutes a "non-organized over-the-counter transaction" under Brazilian law. Each investor who is not a resident of Brazil should note that because our shares will be acquired in a "non-organized over-the-counter transaction," provisional contribution on financial transactions (Contribuição Provisória sobre a Movimentação Financeira), or CPMF tax, in the amount of 0.38% of the purchase price may be withheld by the custodian or other party closing the foreign exchange transaction from the amounts deposited by such investor when such amounts are transferred to the CBLC. Any amounts withheld would have the effect of reducing the amount of our common shares purchased by the investor. Therefore, each such investor should consult its own legal and financial advisors with respect to the applicability of CPMF tax to its purchase as well as other tax consequences of such investment. For a detailed description of the tax consequences to an investor residing outside Brazil of investing in our common shares in Brazil, see "Taxation––Brazilian Tax Considerations."

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DIVIDENDS AND DIVIDEND POLICY Amounts Available for Distribution At each annual shareholders' meeting, our board of directors is required to advise our shareholders on how to allocate our net income for the preceding year. The allocation is subject to approval by our shareholders. The Brazilian Corporate Law defines "net income" for any fiscal year as the results in a given year after the deduction of accrued losses from prior years, the provisions for income and social contribution taxes for that year, and any amounts allocated to profit-sharing payments to the employees and management. Our bylaws provide that an amount equal to at least 40.0% of our adjusted net income for any given year, after deducting allocations to the legal reserve, statutory reserve, and contingency reserve, if any, or adding reversed contingency reserve amounts from prior years, if any and unrealized profit reserve amounts, upon their realization and if not absorbed by subsequent losses, if any, should be available for distribution as a mandatory dividend or interest on shareholders' equity. Such amount represents the minimum mandatory dividend. Moreover, the minimum mandatory dividend may be limited to the 'realized' portion of net income. Our calculation of net income and allocations to reserves for any year, as well as the amounts available for distribution, are determined on the basis of our financial statements prepared in accordance with Brazilian Corporate Law. For more information, see "⎯Payment of Dividends and Interest on Shareholders' Equity⎯Dividends" below. Reserve Accounts. The financial statements of companies incorporated under Brazilian law usually present two main reserve accounts under the line 'shareholders' equity': income reserve account and capital reserve account. Income Reserve Accounts. Pursuant to the Brazilian Corporate Law, our profit reserve accounts are comprised of the legal reserve, unrealized profit reserve, contingency reserve, statutory reserves and retained income reserve. Legal Reserve. Under the Brazilian Corporate Law, we are required to maintain a legal reserve to which we must allocate 5.0% of our net income for each fiscal year until the aggregate amount of the reserve equals 20.0% of our share capital. However, we are not required to make any allocations to our legal reserve in a year in which the legal reserve, when added to our other established capital reserves, exceeds 30.0% of our share capital. The purpose of the legal reserve is to ensure the integrity of a company's share capital. The amounts allocated to such reserve must be approved by our shareholders in a shareholders' meeting, and may only be used to increase our share capital or to offset net losses. Therefore, they are not available for the payment of dividends. As of December 31, 2006, the balance of our legal reserve amounted to R$10.7 million. Unrealized Income Reserve. Pursuant to Brazilian Corporate Law, the amount by which the mandatory dividend exceeds the 'realized' net income in a given year may be allocated to an unrealized income reserve account, and the mandatory dividends may be limited to the 'realized' portion of the net income. Brazilian Corporate Law defines 'realized' net income as the amount by which our net income exceeds the sum of our net positive results, if any, from the equity method of accounting; and the income, gains or profits resulting from transactions that occurred in the relevant fiscal year but that will be received by us after the end of the next year. Income recorded in the unrealized income reserve, if realized and not absorbed by losses in subsequent years, must be added to the next mandatory dividend distributed after the realization. As of December 31, 2006, we did not have an unrealized income reserve. Contingency Reserve. Pursuant to Brazilian Corporate Law, a percentage of our net income may be allocated to a contingency reserve for anticipated losses that are deemed probable in future years, if their amount may be estimated. Management must indicate the cause of the anticipated loss and justify the establishment of the reserve for allocation of the percentage of our net income. Any amount so allocated must be reversed in the fiscal year in which a loss that had been anticipated fails to occur as projected or charged off in the event that the anticipated loss occurs. The allocations to the contingency reserve are also subject to approval of our shareholders in a shareholders' meeting. As of December 31, 2006, we did not have a contingency reserve.

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Statutory Reserves. Pursuant to Brazilian Corporate Law, we are permitted to provide for the allocation of part of our net income to discretionary reserve accounts that may be established in accordance with our bylaws, which must also indicate the purpose, allotment criteria and maximum amount of the reserve. The allocation of our net income to discretionary reserve accounts may not be made if it affects the payment of the minimum mandatory dividend. Our bylaws do not contemplate any statutory reserve. Retained Profit Reserve. Pursuant to Brazilian Corporate Law, our shareholders may decide at the annual shareholders' meeting to retain a portion of our net income, as provided for in a capital expenditure budget that has been previously approved. The allocation of funds to this reserve cannot jeopardize the payment of the minimum mandatory dividends. As of December 31, 2006, we did not have a retained income reserve. Payment of Dividends and Interest on Shareholders' Equity Brazilian Corporate Law requires that the bylaws of a Brazilian company specify a minimum percentage of the available income for the annual distribution of dividends, known as mandatory dividend, which must be paid to shareholders as either dividends or interest on shareholders' equity. The basis of the mandatory dividend is a percentage of the net income, as adjusted pursuant to Brazilian Corporate Law. Under our bylaws, a minimum of 40.0% of our adjusted net income should be intended for the distribution and payment of the mandatory dividend to our shareholders. However, the payment of mandatory dividends to our shareholders may be limited to the amount of realized net income in a given year, provided the difference should be recorded as unrealized income reserve. Our calculation of net income and allocations to reserves for any year, as well as the amounts available for distribution, are determined on the basis of our non-consolidated financial statements prepared in accordance with the Brazilian Corporate Law. Additionally, our board of directors may advise our shareholders that additional dividends may be distributed from other income or reserves legally available for distribution. Brazilian Corporate Law allows, however, a company to suspend such dividend distribution if its board of directors reports at our annual shareholders' meeting that the distribution would be inadvisable given the company's financial condition. The fiscal council, if in place at the time, should review any suspension of the mandatory dividend. In addition, our management should submit a report to the CVM setting forth the reasons for the suspension. Net income not distributed by virtue of a suspension is allocated to a separate reserve and, if not absorbed by subsequent losses, is required to be distributed as dividends as soon as the financial condition of the company should permit such payment. The mandatory dividend may also be paid as interest on shareholders' equity, in which event it is deemed a deductible expense for purposes of our corporate income and social contribution taxes on net income. Our new shareholders will be entitled to dividends from the third quarter of 2007 onwards, since we (1) have already declared and paid dividends related to the first quarter of 2007 in April 2007; and (2) we will declare and pay dividends related to the second quarter of 2007 before the completion of the offering. Dividends We are required by Brazilian Corporate Law and our bylaws to hold an annual shareholders' meeting no later than April 30 of each year, at which time the allocation of the results of operations in any year and the distribution of an annual dividend are reviewed. The payment of annual dividends is based on our unconsolidated, audited financial statements prepared for the immediately preceding fiscal year. Any holder of record of shares at the time a dividend is declared is entitled to receive dividends. Under Brazilian Corporate Law, dividends are generally required to be paid within 60 days following the date on which the dividend is declared, unless the shareholders' resolution established another payment date, which, in any event, must occur before the end of the year in which the dividend is declared. Our bylaws do not require that dividend payments be adjusted for inflation. Shareholders have a three-year period from the date of the dividend payment to claim the dividends or interest on shareholders' equity with respect to their shares, after which the aggregate amount of any unclaimed dividend legally reverts to us.

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Pursuant to our bylaws, our board of directors may declare interim dividends or interest on shareholders' equity based on realized profits verified in semi-annual financial statements. Additionally, our board of directors may declare dividends based on our unaudited quarterly financial statements, provided that the total amount of dividends paid in each semester should not exceed the amounts accounted for in our capital reserve account, ascertained in the latest annual or semi-annual financial statements. Interim dividends may also be paid from profit reserve accounts based on the latest annual or semi-annual financial statements. Any payment of interim dividends may be set off against the amount of mandatory dividends relating to the net income earned in the year in which the interim dividends were paid. Interest on Shareholders' Equity Since January 1, 1996, Brazilian companies have been authorized to pay interest on shareholders' equity to shareholders, and to treat those payments as a deductible expense for purposes of calculating corporate income tax and, since 1998, the social contribution tax. The amount of the tax deduction in each year is limited to the greater of 50.0% of our net income (before the distribution and any deduction of allowances for social contribution and income taxes and before any interest attributable to shareholders' equity) for the period in respect of which the payment is made; and 50.0% of our accumulated profits and profit reserves at the beginning of the relevant period. Payments of interest on shareholders' equity, net of withholding income tax, may be considered as part of the mandatory dividend distribution. The rate applied in calculating interest on shareholders' equity cannot exceed the pro rata die variation of the long-term interest rate (Taxa de Juros de Longo Prazo), or TJLP. Under applicable law, we are required to pay to our shareholders an amount sufficient to ensure that the net amount they receive in respect of interest on shareholders' equity, after payment of any applicable withholding tax, plus the amount of distributed dividends, is at least equivalent to the minimum mandatory dividend amount. Payments of interest on shareholders' equity to our shareholders, whether or not residing in Brazil, are subject to Brazilian withholding tax at the rate of 15.0%, provided that a tax rate of 25.0% applies if the shareholder receiving such interest on shareholders' equity is a resident of a tax haven jurisdiction (defined as a country where income tax is not levied or is levied at a maximum rate lower than 20.0% or where the local legislation imposes restrictions on disclosure of shareholding composition or ownership of the investment). See "Taxation—Brazilian Tax Considerations." Under applicable tax law N. 9,249/95, interest on shareholders' equity paid or payable to our shareholders, should be computed in our results for the year under financial expenses. For purposes of the presentation of financial statements, however, these amounts revert to the statement of income charged to accumulated earnings as profit distribution. As of December 31, 2006, we had not distributed interest on shareholders' equity.

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EXCHANGE RATES Until March 4, 2005, there were two legal foreign exchange markets in Brazil: the commercial rate exchange market and the floating rate exchange market. On March 4, 2005, the Central Bank issued Resolution No. 3,265, providing for several changes in Brazilian foreign exchange regulation, including: the unification of the foreign exchange markets into a single exchange market, the easing of several rules for acquisition of foreign currency by Brazilian residents, and the extension of the term for converting foreign currency derived from Brazilian exports. Additionally, on March 9, 2005, the Central Bank issued Circular No. 3,280, which governs the Brazilian foreign exchange market, capital held offshore by Brazilians and foreign capital in Brazil. It is expected that the Central Bank will issue further regulations in relation to foreign exchange transactions, as well as on payments and transfers of Brazilian currency between Brazilian residents and non-residents (these transfers being commonly known as the international transfer of Brazilian reais). Since the beginning of 2001, the Brazilian exchange market has been increasingly volatile, and, until early 2003, the value of the Brazilian real declined relative to the U.S. dollar, primarily due to financial and political instability in Brazil and Argentina. In 2004 and 2005 and 2006, however, on average the Brazilian real appreciated in relation to the U.S. dollar 8.1%, 13.7% and 8.7%, respectively. Although the Central Bank has intervened occasionally to control unstable movements in the foreign exchange rates, the exchange market may continue to be volatile as a result of this instability or other factors, and, therefore, the Brazilian real may substantially decline or appreciate in value in relation to the U.S. dollar in the future. The following tables set forth the selling rate expressed in Brazilian reais per U.S. dollar for the periods indicated.
Year-end Year 2002 ...................................................................... 2003 ...................................................................... 2004 ...................................................................... 2005 ...................................................................... 2006 ...................................................................... Average for year(1) Low (reais per U.S. dollar) 2.930 3.072 2.926 2.434 2.177 2.270 2.821 2.654 2.163 2.059 High

3.533 2.889 2.654 2.341 2.138 Period-end

3.955 3.662 3.205 2.762 2.371 High

Average for period(2) Low (reais per U.S. dollar) 2.161 2.154 2.140 2.097 2.095 2.036 1.980 1.934 1.904 2.135 2.138 2.125 2.077 2.050 2.023 1.929 1.904 1.890

Month November 2006..................................................... December 2006 ..................................................... January 2007 ......................................................... February 2007 ....................................................... March 2007 ........................................................... April 2007 ............................................................. May 2007 .............................................................. June 2007 .............................................................. July 2007 (through July 11) ..................................

2.167 2.138 2.125 2.118 2.050 2.032 1.929 1.926 1.890

2.167 2.169 2.156 2.118 2.139 2.048 2.031 1.963 1.918

Source: Central Bank. (1) Represents the average of the exchange rates of each trading date. (2) Represents the average of the lowest and highest rates in the month.

As of July 11, 2007 the selling rate published by the Central Bank was R$1.890 per US$1.00.

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CAPITALIZATION The table below presents our short- and long-term indebtedness, shareholders' equity and our total capitalization as of March 31, 2007, and as adjusted to reflect receipt of about R$404.2 million in estimated net proceeds from the primary offering, based on the offering price per share of R$27.00 without giving effect to the exercise of the over-allotment option, and after deducting estimated commissions payable by us. The information provided below (in reais) has been derived from our audited financial statements for the three-month period ended March 31, 2007, prepared in accordance with Brazilian GAAP. You should read it in conjunction with the information included in the sections "Selected Financial Information" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our financial statements, and related notes, included elsewhere in this offering memorandum. The "as adjusted" information below is illustrative only and our capitalization after this offering is subject to adjustment based on the actual initial offering price and other terms of this offering determined at pricing.
As of March 31, 2007 After this offering Before this As adjusted(1) offering Actual (in millions (in millions of (in millions (in millions of of reais) U.S. dollars) of reais) U.S. dollars) Short-term indebtedness ..................................................... 361.9 176.5 361.9 176.5 Long-term indebtedness ..................................................... Total indebtedness.............................................................. Shareholders' equity ........................................................... Total capitalization(2) ........................................................ – 361.9 64.3 426.2 – 176.5 31.3 207.8 – 361.9 468.5 830.4 – 176.5 228.5 404.9

(1) As adjusted based on the offering price per share of R$27.00 to reflect receipt of the net proceeds from this offering in the amount of approximately R$15.0 million. (2) Corresponds to the sum of total loans and financing and total shareholders' equity.

There have not been significant changes in our capitalization since March 31, 2007.

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DILUTION As of March 31, 2007, our shareholders' equity was R$64.3 million, and our shareholders' equity per share as of the same date was R$0.10 per share. Shareholders' equity per share represents the net book value of our total assets less the net book value of our total liabilities, divided by the total number of shares issued by us as of March 31, 2007. After giving effect to the issue of 15,555,555 shares in the primary offering, based on the offering price per share of R$27.00, after deducting estimated commissions payable by us, the adjusted net book value of our shareholders' equity as of March 31, 2007, would be approximately R$468.5 million, or R$0.70 per share issued by us. Based on the above offering price per share, this offering would represent to existing shareholders an immediate increase in the book value of our shareholders' equity per share of R$0.60, whereas to new shareholders purchasing shares in this offering, it would represent an immediate dilution in the book value of our shareholders' equity as of March 31, 2007, of R$26.30 per share. Dilution for this purpose represents the difference between the price per share paid by investors in this offering and the shareholders' equity per share immediately after completion of this offering. The table below illustrates this dilution:
As of March 31, 2007 In reais except In U.S. dollars except percentages percentages Price per share ......................................................................... Shareholders' equity per share as of March 31, 2007 .............. Increase in the shareholders' equity per share attributed to existing shareholders .......................................................... Shareholders' equity per share after this offering .................... Dilution in net book value per share to new shareholders ....... Percentage of dilution per share to new shareholders.............. 27.00 0.10 0.60 0.70 26.30 97.4% 13.17 0.05 0.29 0.34 12.83 97.4%

The price per share to be paid by investors in this offering is not related to our shareholders' equity, and will be determined on the basis of a bookbuilding process, pursuant to Article 44 of CVM Instruction No. 400, having as parameter the level of interest shown by prospective institutional buyers in Brazil and abroad with respect to the demand in terms of volume and price of the common shares. For a more detailed description of pricing and the conditions of this offering, see "The Offering." On June 18, 2007, the shareholders present at the special shareholders' meeting approved the hiring of a specialized company to study a stock option plan of acquisition or subscription of Redecard shares, addressed to our directors, executive officers and employees, as well as individuals who provide services to us and to directors, executive officers and employees of other entities that are directly or indirectly controlled by us. This plan will be implemented in the course of the years, and the option will be granted in the proportion of up to 0.5% of maximum dilution of Redecard shares, limited to our authorized capital stock. The terms and conditions of the stock option plan have not yet been defined, and when defined, they will be subject to the approval of our shareholders at a general shareholders' meeting. After approval, the beneficiaries, the grant of the plan, the number of shares that each of the beneficiaries will have the right to subscribe for, as well as the price of exercise of the stock option will be submitted to the approval of our board of directors. The price of exercise of the stock option that may be granted has not yet been defined and it may be established at a price below the offering price of our common shares in connection with this offering, or the stock option may even be granted without any consideration. According to Article 171, Paragraph 3, of Brazilian Corporate Law, shareholders will not have rights of first refusal in the exercise of the stock option plan. As of the date of this offering memorandum, stock option plans have not been approved by our shareholders at a general shareholders' meeting or by our board of directors, nor any stock option has been granted. The issuance of shares upon the exercise of the stock option according to the terms of a plan that will be implemented would result in the dilution of our shareholders.

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Taking into account the capital increase in connection with the stock option plan, the offering price per share of R$27.00, after deducting estimated commissions payable by us, the estimated net book value of our shareholders' equity as of March 31, 2007, would be approximately R$559.4 million, or R$0.83 per share issued by us, resulting, therefore, in an immediate increase in the book value of our shareholders' equity per share of R$0.73 to existing shareholders, and an immediate dilution in the book value of our shareholders' equity as of March 31, 2007, of R$26.17 per share to new shareholders purchasing shares in this offering. Dilution for this purpose represents the difference between the price per share paid by investors in this offering and the shareholders' equity per share immediately after completion of this offering. The table below illustrates this dilution:
As of March 31, 2007 In reais except In U.S. dollars percentages except percentages Price per share ..................................................................................................... Shareholders' equity per share as of March 31, 2007........................................... Increase in the shareholders' equity per share attributed to existing shareholders ........ Shareholders' equity per share after this offering................................................. Dilution in net book value per share to new shareholders.................................... Percentage of dilution per share to new shareholders .......................................... 27.00 0.10 0.73 0.83 26.17 96.9% 13.17 0.05 0.35 0.40 12.76 96.9%

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SELECTED FINANCIAL INFORMATION Our financial statements are prepared in accordance with Brazilian GAAP. Our accounting records are maintained in reais. The following financial information is included in this offering memorandum: • Our financial statements as of and for the years ended December 31, 2004, 2005 and 2006, and as of and for the three-month period ended March 31, 2006 and 2007, including balance sheets, statements of income, statements of changes in shareholders' equity and the statements of changes in financial position and explanatory notes, prepared in accordance with Brazilian GAAP.

Our statements of income as of and for the years ended December 31, 2004, 2005 and 2006, as well as our statements of income as of and for the three-month periods ended March 31, 2006 and 2007, relate only to the results of our share in the Redecard Consortium. To facilitate the analysis of our financial statements, we have in the past prepared an explanatory note to our financial statements "Result from Redecard Consortium Participation" that showed the revenues, expenses and the operating income of the Redecard Consortium as a whole, and not only the results attributed to Redecard S.A. Therefore, we believe that the statement of income that would best reflect the results of operations is the one contained in the explanatory note to our financial statements "Result from Redecard Consortium Participation" for the years ended December 31, 2004, 2005 and 2006, and for the three-month periods ended March 31, 2006 and 2007, because this note shows full statements of income related to the activities that we currently carry out.
Year ended December 31, 2005 2006 Three-month period ended March 31, 2006 2007 2007 (in millions of U.S. (in millions of reais) dollars) 361.5 (13.5) (3.2) (17.0) 148.5 (55.0) 421.3 (70.8) 350.5 (73.9) (34.6) (52.9) (161.5) 189.0 83.6 105.4 189.0 418.2 (15.3) (2.7) (16.7) 208.0 (45.7) 545.8 (62.7) 483.1 (58.0) (28.3) (51.5) (137.8) 345.3 149.1 196.2 345.3 203.9 (7.5) (1.3) (8.1) 101.5 (22.3) 266.2 (30.6) 235.6 (28.3) (13.8) (25.1) (67.2) 168.4 72.7 95.7 168.4

2004

(in millions of reais) Net Revenue Operating revenue..................................... Service tax(1)............................................ PIS(2) ........................................................ COFINS(3) ............................................... Financial revenue...................................... Financial expenses.................................... Cost of services rendered.......................... Gross profit.............................................. Operating expenses Administrative expenses........................... Depreciation and amortization ................. Other operating expenses ......................... Operating income ................................... Distribution of income Redecard S.A. ..... Other consortium members ...................... Total ......................................................... 1,005.6 (39.8) (13.4) (58.3) 409.0 (145.7) 1,157.4 (173.7) 983.7 (237.7) (75.0) (191.5) (504.2) 479.5 226.4 253.1 479.5 1,315.0 (50.7) (9.3) (61.2) 541.1 (217.3) 1,517.6 (214.3) 1,303.3 (283.2) (153.6) (211.6) (648.4) 654.9 285.8 369.1 654.9 1,600.4 (58.8) (12.3) (68.6) 562.0 (213.3) 1,809.4 (295.3) 1,514.1 (242.7) (134.2) (199.9) (576.8) 937.3 442.8 494.5 937.3

2006 (in millions of U.S. dollars) 780.6 (28.7) (6.0) (33.5) 274.1 (104.0) 882.5 (144.0) 738.5 (118.4) (65.5) (97.5) (281.4) 457.1 216.0 241.1 457.1

(1) Tax on Services (Imposto sobre Serviços), or ISS tax. (2) Contribution to the Social Integration Program (Programa de Integração Social), or PIS. (3) Contribution for the Financing of Social Security (Contribuição para Financiamento da Seguridade Social), or COFINS.

For the purpose of presenting financial information of the statements of income for the years ended December 31, 2004, 2005 and 2006 in the table above, the total amounts in the line item "other operating expenses" of R$365.2 million, R$426.0 million and R$495.2 million, respectively, were segregated between the line items "cost of services rendered" and "other operating expenses, so that the presentation of the statements of income for the years ended December 31, 2004, 2005 and 2006 conform to the presentation of the statements of income for the three months ended March 31, 2006 and 2007."

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Line items below operating income could not be presented in the above note because the operating income of the Redecard Consortium was distributed directly to its members. From April 1, 2007, after the termination of the Redecard Consortium on March 31, 2007, we will present our statements of income until the line item "net income," which will include certain taxes which were not applicable to the Redecard Consortium. For this reason, based on assumptions that our management believes to be reasonable, we calculated our pro forma net income, which presents the estimated net income that we would probably have realized had the revenues and expenses, in the respective periods, been fully allocated to us. Below we present a reconciliation between the operating income stated in the explanatory note "Result from Redecard Consortium Participation" and the pro forma net income used in this offering memorandum:
Year ended December 31, 2005 2006 Three-month period ended March 31, 2006 2007 2007 (in millions of U.S. (in millions of reais) dollars) 189.0 (5.6) 183.4 (15.1) (44.5) 123.8 345.3 (11.3) 334.0 (30.0) (87.0) 217.0 168.4 (5.5) 162.9 (14.6) (42.4) 105.9

2004

(in millions of reais) Redecard Consortium operating income .................................................. Adjusted PIS/COFINS taxes(1)................ Pro forma income before income and social contribution taxes ....................... Social contribution tax(2) ......................... Income tax(2)............................................ Redecard pro forma net income ............ 479.5 (19.2) 460.3 (41.3) (116.5) 302.5 654.9 (24.5) 630.4 (58.0) (160.7) 411.7 937.3 (31.0) 906.3 (80.6) (223.8) 601.9

2006 (in millions of U.S. dollars) 457.1 (15.1) 442.0 (39.3) (109.1) 293.6

(1) We apply the PIS and COFINS rates based on the non-cumulative method. On this calculation basis, we apply the PIS and COFINS rates of 1.6% and 7.6%, respectively. For more information, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Our Main Sources of Revenue and Expenses⎯Description of the Main Line Items in Our Results of Operations—Net Revenue—PIS and COFINS." (2) For the calculation of social contribution and income taxes, we used the effective rates ascertained in accordance with our accounting and tax book records. For this reason, the proportion of these taxes is variable in each of the periods. The effective social contribution tax rates vary between 8.2% and 9.2%, while the effective income tax rates vary between 24.3% and 26.0%.

Unless expressly stated otherwise, all statement of income information in this offering memorandum is based on: (1) the financial information in the explanatory note "Result from Redecard Consortium Participation," and (2) the reconciliation of the pro forma net income mentioned in this offering memorandum. Beginning on April 1, 2007, our statements of income should consist substantially of the same line items as those presented in the explanatory note "Result from Redecard Consortium Participation," and results after this date will be substantially different from our results, after the distribution of the results in the Redecard Consortium, for the years ended December 31, 2004, 2005 and 2006 and for the three-month periods ended March 31, 2006 and 2007. The table below sets forth our results of operations after the distribution of operating income to the members of the Redecard Consortium in the periods indicated:
Year ended December 31, 2005 2006 Three-month period ended March 31, 2006 2007 2007 (in millions of U.S. dollars) (in millions of reais) 83.6 83.6 (6.9) (20.4) 56.3 149.1 149.1 (13.5) (26.7) 108.9 72.7 72.7 (6.6) (13.0) 53.1

2004

(in millions of reais) Result from Redecard Consortium participation ......................................... Income before income and social contribution tax ..................................... Social contribution tax.............................. Income tax................................................. Net income for the year ........................... 226.4 226.4 (20.3) (57.3) 148.7 285.8 285.8 (26.2) (72.8) 186.7 442.8 442.8 (39.6) (109.4) 293.6

2006 (in millions of U.S. dollars) 216.0 216.0 (19.3) (53.3) 143.2

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The table below shows our balance sheet data for the periods indicated:
2004 As of December 31, 2005 2006 (in millions of reais) Assets Current assets Cash and cash equivalents...................................... Accounts receivable - issuers ................................. Other accounts receivable ...................................... Deferred income and social contribution taxes ............................................... Total current assets.................................................... Long-term assets Deferred income and social contribution taxes ............................................... Judicial deposits...................................................... Total long-term assets................................................ Permanent assets Fixed assets............................................................. Accumulated depreciation...................................... Total permanent assets.............................................. Total assets.................................................................. Liabilities Current liabilities Accounts payable to merchants.............................. Labor obligations.................................................... Taxes payable ......................................................... Borrowings ............................................................. Other accounts payable .......................................... Total current liabilities.............................................. Long-term liabilities Provisions for contingent liabilities ....................... Total long-term liabilities.......................................... Shareholders' equity .................................................. Capital..................................................................... Revenue reserve...................................................... Total liabilities and shareholders' equity ................ 13.4 5,939.0 33.3 33.2 6,018.8 13.9 8,006.1 35.3 45.3 8,100.6 215.4 9,940.5 56.8 69.2 10,281.9 As of March 31, 2006 2007 2007 (in millions of (in millions (in millions of U.S. dollars) of reais) U.S. dollars) 105.1 4,848.1 27.7 33.7 5,014.6 16.7 8,444.3 59.0 54.5 8,574.5 8.1 4,118.4 28.8 26.6 4,181.9

36.6 9.4 46.0 475.1 (239.9) 235.3 6,300.1

48.9 12.4 61.4 583.1 (378.2) 204.9 8,366.9

40.7 13.8 54.5 677.5 (502.3) 175.3 10,511.7

19.8 6.7 26.5 330.4 (245.0) 85.4 5,126.5

26.1 13.7 39.8 704.3 (530.3) 174.0 8,788.3

12.7 6.7 19.4 343.5 (258.6) 84.9 4,286.2

5,390.7 8.6 11.5 393.2 293.3 6,097.3 149.3 149.3 53.6 45.2 8.4 6,300.1

7,313.3 9.9 8.6 362.0 414.5 8,108.3 195.8 195.8 62.9 53.6 9.3 8,366.9

9,420.5 11.0 29.2 375.7 427.3 10,263.7 183.7 183.7 64.3 53.6 10.7 10,511.7

4,594.5 5.4 14.2 183.2 208.3 5,005.6 89.6 89.6 31.3 26.1 5.2 5,126.5

7,738.2 11.7 18.7 361.9 477.1 8,607.7 116.3 116.3 64.3 53.6 10.7 8,788.3

3,774.0 5.7 9.1 176.6 232.7 4,198.1 56.8 56.8 31.3 26.1 5.2 4,286.2

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion concerning our financial condition and results of operations is based on, and should be read in conjunction with, our audited financial statements for the years ended December 31, 2004, 2005 and 2006, our unaudited financial statements for the three-month period ended March 31, 2006, which have been the subject of limited review, our audited financial statements for the three-month period ended March 31, 2007, and related notes included elsewhere in this offering memorandum, as well as the information contained in the sections "Presentation of Financial and Other Information", "Summary Financial and Operating Information" and "Selected Financial Information." The preparation of the financial statements referred to in this section required the adoption of assumptions and estimates that affect the amounts recorded as assets, liabilities, revenues and expenses in the years addressed and are subject to certain risks and uncertainties. The actual results may vary substantially from those indicated as a result of various factors that affect our business including, among others, those mentioned in the sections "Forward-looking Statements" and "Risk Factors", and other questions discussed elsewhere in this offering memorandum. Overview We are one of the leading companies in the merchant acquiring and payment processing industry in Brazil, and are currently the only acquirer of the MasterCard and Diners Club cards in Brazil. We are responsible for acquiring merchants to accept credit and debit cards as a means of payment for goods and services, as well as for the capturing, transmission, processing and settlement of credit and debit card transactions. In 2006, we had a 34.0% market share based on the value of transactions with credit and debit cards in Brazil, which reached a total of R$246.3 billion. According to data from the ABECS, this market represented 17.6% of the total private consumption in Brazil during the same year. In 2002, we captured and processed 569 million transactions, and in 2006 we captured and processed more than 1.5 billion transactions, which represented a 27.8% average annual growth rate since 2002. In 2006, we had more than 1.0 million affiliated merchants and were present in all Brazilian municipalities with electrical power and telecommunications infrastructure. Out of the total number of our affiliated merchants, 639,000 were active in 2006, which if compared to similar companies in the United States, would make us the fifth-largest merchant acquirer and payment processor in the United States in terms of number of active merchants, according to data from the Nilson Report regarding the U.S. market for 2006. In addition to our activities of affiliating merchants to accept credit and debit cards as a means of payment for goods and services, and the capturing, transmission, processing and settlement of credit and debit card transactions, we also offer additional services to our merchants and other customers, which include voucher management companies and financial companies. These services include rental of point of sale, or POS, electronic capture equipment, prepayment to merchants of receivables from credit card sales, check verification services (credit analysis of consumers) through the POS electronic equipment and capture and transmission services for transactions carried out with voucher and private-label cards.

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The table below sets forth the main financial and operating indicators for the periods indicated:
Year ended December 31, 2004 Net revenue ......................................... Adjusted EBITDA(1) ......................... Adjusted EBITDA Margin(2) ........... Operating income............................... Pro forma net income ......................... Pro forma net margin(3) .................... Credit cards Value of transactions............................ Number of transactions (in thousands).................................... Debit cards Value of transactions............................ Number of transactions (in thousands).................................... Affiliated merchants .......................... Electronic capture of transactions (%).......................... 1,157.4 557.9 48.2% 479.5 302.5 26.1% 37,021.5 474,848 13,929.0 324,033 825,104 98.6% 2005 1,517.6 808.4 53.3% 654.9 411.7 27.1% 47,285.8 586,830 19,592.1 441,483 901,448 99.2% 2006 1,809.4 1,087.9 60.1% 937.3 601.9 33.3% 57,240.5 680,972 25,813.7 559,119 1,018,776 99.9% Growth (2004-2006) 56.3% 95.0 11.9p.p. 95.5% 99.0% 7.2p.p. 54.6% 43.4% 85.3% 72.6% 23.5% 1.3p.p. CAGR 25.0% 39.7% – 39.8% 41.1% – 24.3% 19.8% 36.1% 31.4% 11.1% – Three-month period ended March 31, 2006 421.3 224.5 53.3% 189.0 123.8 29.4% 12,469.7 152,971 5,660.8 126,013 924,355 99.4% 2007 545.8 317.0 58.1% 345.3 217.0 39.8% 14,839.3 174,204 7,346.6 156,778 1,032,948 99.9% Growth (2006-2007) 29.6% 41.2% 4.8.p. 82.7% 75.3% 10.4p.p. 19.0% 13.9% 29.8% 24.4% 11.7% 0.5p.p.

(1) Our Adjusted EBITDA consists of our operating income plus depreciation and amortization and adjusted by net financial results, which, however, includes financial income related to prepayment of receivables to merchants, which we consider as part of our operating activities and thus we add it back to our Adjusted EBITDA . By advancing payments to merchants, we anticipate the payment that we would have to make on the due date related to the credit card transactions. Adjusted EBITDA is not a measure of financial performance under Brazilian GAAP, and should not be considered individually, as either an alternative to net income as a performance indicator or operating cash flow or a measure of liquidity. Adjusted EBITDA does not have standardized meanings and our definition of Adjusted EBITDA may not compare to Adjusted EBITDA as used by other companies. For further information on our Adjusted EBITDA, see "Presentation of Financial Information and Other Information—Adjusted EBITDA Reconciliation." (2) Adjusted EBITDA margin is the Adjusted EBITDA divided by our net revenue. (3) Pro forma net income divided by net revenue.

Brazilian Economic Situation Since 2004, the main Brazilian economic indicators have improved significantly. In 2004, Brazil's gross domestic product, or GDP, increased by 5.7%. The average unemployment rate in the main metropolitan regions of Brazil decreased from 12.3% for the year ended December 31, 2003, to 11.5% for the year ended December 31, 2004, according to IBGE estimates, resulting in an increase in demand for goods and services in those regions. The primary tax surplus was 4.2% of the GDP for the year ended December 31, 2004, and the current account balance was US$11.7 billion. Average inflation, as measured by the IPCA, was 7.6%, and the average Brazilian long-term interest rate, or TJLP interest rate, was 9.8%. In 2004, the real appreciated 8.1% against the U.S. dollar as compared to 2003. Between December 31, 2004 and 2005, the real appreciated by 11.8% against the U.S. dollar. Despite this appreciation, Brazil's current account balance was US$14.0 billion, a historic high. The average unemployment rate in the principal metropolitan regions of Brazil decreased from 11.5% for the year ended December 31, 2004, to 9.8% for the year ended December 31, 2005, according to the IBGE estimates. In 2005, inflation, as measured by the IPCA, was 5.7% and the average TJLP interest rate was 9.8% per annum. GDP grew by 2.9% in the same year. The real appreciated 8.7% against the U.S. dollar between December 31, 2005 and 2006. Notwithstanding the real's appreciation, Brazil's current account balance was US$13.5 billion. The average unemployment rate in the principal metropolitan regions of Brazil increased from 9.8% for the year ended December 31, 2005, to 10.0% for the year ended December 31, 2006, according to IBGE estimates. In 2006, inflation, as measured by the IPCA, was 3.1% and the average TJLP interest rate was 7.9% per annum. The real apreciated 4.10% against the U.S. dollar between December 31, 2006 and March 31, 2007. Brazil's current account balance was US$13.79 billion, twelve months roll, as of March 31, 2007. The average unemployment rate in the principal metropolitan regions of Brazil decreased from 9.9% in the first quarter of 2006, to 9.77% in the first quarter of 2007, according to IBGE estimates. In the first quarter of 2007, inflation, as measured by the IPCA, was 1.3% and the average TJLP interest rate was 6.54% per annum.

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The table below sets forth the rate of GDP growth, exchange rate variation, inflation rate and interest rates for the periods indicated:
Three-month period ended March 31, 2007 0.8% 1.1% 1.3% 12.7% 6.5% (4.1)% R$2.050 R$2.089

2002 GDP growth(1)............................................................. Inflation (IGP-M)(2) .................................................... Inflation (IPCA)(3) ...................................................... CDI rate(4) ................................................................... TJLP(5) ........................................................................ Increase in real value against U.S. dollar .................... Exchange rate (at period end) R$ per US$1.00 ........... Average exchange rate R$ per US$1.00(6) ................. 2.7% 25.3% 12.5% 22.7% 10.0% (52.3)% R$3.533 R$2.929

Year ended December 31, 2003 2004 2005 1.1% 8.7% 9.3% 16.9% 11.0% 18.2% R$3.533 R$3.071 5.7% 12.4% 7.6% 17.5% 9.8% 8.1% R$2.889 R$2.927 2.9% 1.2% 5.7% 18.2% 9.8% 11.8% R$2.341 R$2.435

2006 3.7% 3.8% 3.1% 13.1% 6.8% 8.7% R$2.138 R$2.177

Sources: Brazilian National Bank for Socio-Economic Development (Banco Nacional de Desenvolvimento Econômico e Social), or BNDES, Central Bank and Fundação Getúlio Vargas. (1) Calculated according to the currently applicable methodology as revised in 2007. Source: IBGE. (2) The inflation rate (IGP-M) is the general index of market prices (Índice Geral de Preços-Mercado), as calculated by Fundação Getúlio Vargas. (3) The inflation rate (IPCA) is the extended consumer price index (Índice de Preços ao Consumidor Amplo), as calculated by the IBGE. (4) The Interbank Deposit Certificate (Certificado de Depósito Interbancário), or CDI rate, is the average daily interbank deposit index in Brazil (at the end of each month and annually). (5) Represents the Taxa de Juros de Longo Prazo, which is the interest rate applied by BNDES for long-term financing (at the end of the period). (6) Average of the exchange rate for the last day of each month during the period.

Factors that Affect Our Results of Operations Inflation Inflation affects the costs of the major agreements we have entered into with our suppliers, in particular, agreements with: (1) fixed and cellular telephone operators, due to the price adjustments linked to the General Market Price Index (Índice Geral de Preços – Mercado), or IGP-M, and (2) suppliers of data processing services, because these suppliers have a large number of employees whose remuneration is subject to inflation adjustment. Our revenues are indirectly adjusted for inflation because (1) the increased costs resulting from inflation are automatically reflected in the value of credit and debit card transactions, and (2) our revenues derive from a merchant discount rate, which is measured as a percentage of the total value of the transactions. Interest Rates Our practice of prepayment of receivables from credit card sales is related to our very short-term liquidity. We anticipate receivables to merchants 47 days on average. If we face difficulties in our very short-term liquidity, we may ask for prepayment of receivables to card issuers. However, this prepayment of receivables from card issuers or any raising of funds in the capital markets is subject to changes in interest rates. We did not incur any financial losses arising from increasing interest rates during the years ended December 31, 2004, 2005 and 2006 and the three-month periods ended March 31, 2006 and 2007. Exchange Rates The purchase price of POS electronic capture equipment, as well as maintenance parts, is indexed to the U.S. dollar. Consequently, variations in the price of the U.S. dollar may affect our results of operations. In 2002, due to the significant devaluation of the real, we reduced our investment in the expansion of our installed equipment base, because there was a disparity between the rise in rental prices and the price to acquire the equipment. In the following year, 2003, we reviewed the equipment maintenance prices with our suppliers and as a result we granted suppliers price increases that were greater than the rate of inflation. This caused merchant acquirers to seek new equipment from other suppliers and, during the following three years, both the strengthening of the real and the entry of new suppliers into the business caused prices for the acquisition and maintenance of POS electronic capture equipment to decrease. We have passed on these savings to merchants by reducing the equipment's average rental price. In addition, we have no material obligations indexed to foreign currencies that could substantially affect our results of operations.

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Increased Use of Credit and Debit Cards Our results of operations are affected by the use of credit and debit cards in Brazil. According to the Central Bank, the use of checks in total transactions except for cash transactions decreased from 57.0% in 2000 to 27.0% in 2005, while the use of cards increased from 21.0% to 45.0% in the same period. Comparing this data with the Bank for International Settlements, or BIS', statistics, Brazil registered the fastest rate of substitution of credit and debit cards for checks among all the countries that were analyzed by the BIS. However, Brazil faces material obstacles that could affect this trend. These obstacles are: (1) restricted access of low-income consumers to the banking system, and (2) informal economy and tax evasion. Presentation of Financial Statements Our financial statements are prepared in accordance with Brazilian GAAP. Our accounting records are maintained in reais. The following financial information is included in this offering memorandum: • Our financial statements as of and for the years ended December 31, 2004, 2005 and 2006, and as of and for the three-month period ended March 31, 2006 and 2007, including balance sheets, statements of income, statements of changes in shareholders' equity, statements of changes in financial position and explanatory notes prepared in accordance with Brazilian GAAP.

Redecard Consortium History Late in the 1970's Citibank, Itaucard and Unibanco formed Credicard, a credit card management company. It was a successful initiative from the very beginning, which set successive records both as a card issuer and in terms of the number of affiliated merchants. In 1983, in a joint venture with Visa International, Credicard began to issue Visa branded cards. In 1987, Credicard terminated its agreement with Visa International and a joint venture was formed with MasterCard International. In 1990, Credicard managed a credit card portfolio encompassing 60 financial institutions located in Brazil. Credicard did not undertake the risks of granting credit to cardholders, it had a share of the results from operations related to the credit card portfolio then carried out jointly with these financial institutions, as it was still the exclusive issuer of MasterCard branded cards. This exclusivity terminated in 1996, mainly as a result of changes in the financial market, including the merger of former Banco Nacional by Unibanco. As a result of this merger, one financial conglomerate concentrated operations as a card issuer for Visa branded cards (Banco Nacional) and for MasterCard branded cards (Unibanco, who had exclusivity through Credicard to issue MasterCard branded credit cards). At the time, thus, MasterCard and Visa card issuers operated both in granting credit to cardholders and in the affiliation of merchants to accept either these credit card brands as a means of payment for goods and services, as well as other local and international card brands. Redecard S.A was founded on September 2, 1996 as a result of the spin-off of the merchant acquiring and payment processing departments of Credicard. The shareholders of Redecard were the same shareholders of Credicard. After its formation, MasterCard International also became a shareholder of Redecard. Redecard's focus has been on relationships with merchants and development and maintenance of specific systems and processes to serve issuers of MasterCard and Diners Club credit cards in Brazil, in addition to Redeshop and Maestro branded debit card issuers. On November 1, 1996, the shareholders of Redecard decided that the most effective vehicle to implement their joint venture was a consortium and, as a result, the Redecard Consortium was created with the purpose of managing the base of credit cards already issued by Credicard, as well as Credicard's merchant acquiring and payment processing network and systems that were already in place and had been transferred to Redecard.

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The Redecard Consortium was organized in accordance with Articles 278 and 279 of Brazilian Corporate Law. Under these provisions, the Redecard Consortium was not considered as a partnership or a corporation. The consortium's contractually stated business purpose was that of a "joint venture for provision of services related to the use of Redecard system in connection with cards issued by the associated issuers: (1) management of affiliated merchants network; (2) capture, transmission, processing and settlement of transactions resulting from the use of credit and debit cards; and (3) development of other related or connected businesses." Initially, Credicard and Redecard were members of the Redecard Consortium. Later, in April 1997, pursuant to a first amendment to the Redecard Consortium formation contract, Credicard assigned to our controlling shareholders part of its rights in the income distribution of the Redecard Consortium according to its share in the consortium's revenues. Subsequently, in December 1997, pursuant to a second amendment to the Redecard Consortium formation contract, Itaucard had the same rights as Credicard in the income distribution of the Redecard Consortium as a result of the assignment of another portion of Credicard's share in the consortium's revenues, which corresponded to the credit card base issued by Itaucard. Then, in January 2006, pursuant to a third amendment to the Redecard Consortium formation contract, Credicard withdrew from the Redecard Consortium and assigned to the shareholders of Redecard its remaining rights to income distribution of the Redecard Consortium. Lastly, pursuant to a fourth amendment to the Redecard Consortium formation contract, dated March 31, 2007, the Redecard Consortium was terminated. Results of Operations Our statements of income as of and for the years ended December 31, 2004, 2005 and 2006, as well as our statements of income as of and for the three-month periods ended March 31, 2006 and 2007, relate only to the results of our share in the Redecard Consortium. To facilitate the analysis of our financial statements, we have in the past prepared an explanatory note to our financial statements "Result from Redecard Consortium Participation" that showed the revenues, expenses and the operating income of the Redecard Consortium as a whole, and not only the results attributed to Redecard S.A. Therefore, we believe that the statement of income that would best reflect the results of operations is the one contained in the explanatory note to our financial statements "Result from Redecard Consortium Participation" for the years ended December 31, 2004, 2005 and 2006, and for the three-month periods ended March 31, 2006 and 2007, because this note shows full statements of income related to the activities that we currently carry out.
Year ended December 31, 2005 2006 2006 (in millions (in millions of of reais) U.S. dollars) 1,315.0 (50.7) (9.3) (61.2) 541.1 (217.3) 1,517.6 (214.3) 1,303.3 (283.2) (153.6) (211.6) (648.4) 654.9 285.8 369.1 654.9 1,600.4 (58.8) (12.3) (68.6) 562.0 (213.3) 1,809.4 (295.3) 1,514.1 (242.7) (134.2) (199.9) (576.8) 937.3 442.8 494.5 937.3 780.6 (28.7) (6.0) (33.5) 274.1 (104.0) 882.5 (144.0) 738.5 (118.4) (65.5) (97.5) (281.4) 457.1 216.0 241.1 457.1 Three-month period ended March 31, 2006 2007 2007 (in millions (in millions of of reais) U.S. dollars) 361.5 (13.5) (3.2) (17.0) 148.5 (55.0) 421.3 (70.8) 350.5 (73.9) (34.6) (52.9) (161.5) 189.0 83.6 105.4 189.0 418.2 (15.3) (2.7) (16.7) 208.0 (45.7) 545.8 (62.7) 483.1 (58.0) (28.3) (51.5) (137.8) 345.3 149.1 196.2 345.3 203.9 (7.5) (1.3) (8.1) 101.5 (22.3) 266.2 (30.6) 235.6 (28.3) (13.8) (25.1) (67.2) 168.4 72.7 95.7 168.4

2004

Net Revenue Operating revenue ................................... Service tax(1) .......................................... PIS(2) ...................................................... COFINS(3).............................................. Financial revenue .................................... Financial expenses .................................. Cost of services rendered ........................ Gross profit............................................ Operating expenses Administrative expenses ......................... Depreciation and amortization................ Other operating expenses........................ Operating income.................................. Distribution of income Redecard S.A. ...................................... Other consortium members..................... Total........................................................ 1,005.6 (39.8) (13.4) (58.3) 409.0 (145.7) 1,157.4 (173.7) 983.7 (237.7) (75.0) (191.5) (504.2) 479.5 226.4 253.1 479.5

(1) Tax on Services (Imposto sobre Serviços), or ISS tax. (2) Contribution to the Social Integration Program (Programa de Integração Social), or PIS. (3) Contribution for the Financing of Social Security (Contribuição para Financiamento da Seguridade Social), or COFINS.

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For the purpose of presenting financial information of the statements of income for the years ended December 31, 2004, 2005 and 2006 in the table above, the total amounts in the line item "other operating expenses" of R$365.2 million, R$426.0 million and R$495.2 million, respectively, were segregated between the line items "cost of services rendered" and "other operating expenses, so that the presentation of the statements of income conform to the presentation of those of the three months ended March 31, 2006 and 2007." Line items below operating income could not be presented in the above note because the operating income of the Redecard Consortium was distributed directly to its members. From April 1, 2007, after the termination of the Redecard Consortium on March 31, 2007, we will present our statements of income until the line item "net income," which will include certain taxes which were not applicable to the Redecard Consortium. For this reason, based on assumptions that our management believes to be reasonable, we calculated our pro forma net income, which presents the estimated net income that we would probably have realized had the revenues and expenses, in the respective periods, been fully allocated to us. Below we present a reconciliation between the operating income stated in the explanatory note "Result from Redecard Consortium Participation" and the pro forma net income used in this offering memorandum:
Year ended December 31, 2005 2006 2006 (in millions (in millions of of reais) U.S. dollars) 654.9 (24.5) 630.4 (58.0) (160.7) 411.7 937.3 (31.0) 906.3 (80.6) (223.8) 601.9 457.1 (15.1) 442.0 (39.3) (109.1) 293.6 Three-month period ended March 31, 2006 2007 2007 (in millions (in millions of of reais) U.S. dollars) 189.0 (5.6) 183.4 (15.1) (44.5) 123.8 345.3 (11.3) 334.0 (30.0) (87.0) 217.0 168.4 (5.5) 162.9 (14.6) (42.4) 105.9

2004

Redecard Consortium operating income........ Adjusted PIS/COFINS taxes(1) .......................... Pro forma income before income and social contribution taxes............................ Social contribution tax(2) ................................... Income tax(2) ...................................................... Redecard pro forma net income.......................

479.5 (19.2) 460.3 (41.3) (116.5) 302.5

(1) We apply the PIS and COFINS rates based on the non-cumulative method. On this calculation basis, we apply the PIS and COFINS rates of 1.6% and 7.6%, respectively. For more information, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Our Main Sources of Revenue and Expenses⎯Description of the Main Line Items in Our Results of Operations—Net Revenue—PIS and COFINS." (2) For the calculation of social contribution and income taxes, we used the effective rates ascertained in accordance with our accounting and tax book records. For this reason, the proportion of these taxes is variable in each of the periods. The effective social contribution tax rates vary between 8.2% and 9.2%, while the effective income tax rates vary between 24.3% and 26.0%.

Unless expressly stated otherwise, all statement of income information in this offering memorandum is based on: (1) the financial information in the explanatory note "Result from Redecard Consortium Participation," and (2) the reconciliation of the pro forma net income mentioned in this offering memorandum. Beginning on April 1, 2007, our statements of income should consist substantially of the same line items as those presented in the explanatory note "Result from Redecard Consortium Participation," and results after this date will be substantially different from our results, after the distribution of the results in the Redecard Consortium, for the years ended December 31, 2004, 2005 and 2006 and for the three-month periods ended March 31, 2006 and 2007. Critical Accounting Policies We describe below our main accounting policies that currently affect our financial condition and results of operations and which require that our management make specific estimates and assumptions using its experience and other factors that are considered reasonable and relevant. These include estimates and assumptions related to the provision for doubtful accounts and for contingent liabilities as well as to determine the residual value of property, plant and equipment. The adoption of these estimates and assumptions requires that our management make assumptions relating to the effects on its financial condition and results of operations of matters that are inherently uncertain. Should our management decide to change these estimates and assumptions, our financial condition and results of operations could be materially affected. Below is information relating to our critical accounting policies. See the notes to our financial statements included elsewhere in this offering memorandum for more information on the accounting policies set forth below and the other accounting policies used by us.

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Provisions for Doubtful Accounts Provisions for doubtful accounts are made on the basis of risk analyses of the amounts receivable from card issuers and merchants, mainly based on default history. The provisions are recorded for amounts that our management considered sufficient to cover probable losses. In the years ended December 31, 2005 and 2006, it was not necessary to record a provision for accounts receivable from card issuers. In these periods we recorded provisions for the amounts of: (1) rent for non-active POS electronic capture equipment installed at merchant locations, considered to be inactive by us, and (2) transactions not accepted by credit card holders (chargebacks). All provisions are fully recorded in the results of the Redecard Consortium and are disclosed in the explanatoru note to our financial statements "Result from Redecard Consortium Participation." Contingent Liabilities Contingent liabilities arise from judicial proceedings related to the normal course of our business. The contingencies are evaluated by internal counsel, external counsel and experts and are quantified using criteria that allow for their adequate measurement, despite the inherent uncertainty concerning the duration and amounts of these lawsuits. We make provisions for contingencies classified as probable. For contingencies classified as possible, we disclose the risks of the contingency according to Brazilian GAAP and do not make any provisions. For contingencies classified as remote, there is no disclosure of the risks involved in the contingency or provision. Our policy is to make provisions for all tax and labor proceedings. For civil contingencies, we make provisions based on our internal counsel's opinion in light of the evolution of the proceedings and considering our external legal counsel's opinion. We make provisions for civil contingencies that are considered as probable loss. Depreciation and Amortization We periodically reevaluate the need for tests on the ability to recover long-term assets based on many indicators, including the level of profitability of the business and technological development. When necessary, upon the occurrence of any negative event, such as a significant drop in the market value of fixed assets or a material adverse change in the manner in which long-term assets are being used, cash flow statements are prepared to determine whether the book value of fixed assets and deferred assets are recoverable. To estimate future cash flows, we use several assumptions and estimates that may be influenced by different internal and external factors, such as economic and industry trends, interest rates, exchange rates, changes in business strategies and in the types of products offered to the market. We record fixed asset depreciation expenses using the straight-line method. The assets' useful life is periodically revised based on existing facts and circumstances. Due to the nature of our business, determining the useful life of the equipment requires considerable judgment. If we are required to significantly change the assumptions used, depreciation expenses, losses from obsolescence and book value of fixed assets may be materially different. During 2005, based on a technical opinion issued by a specialized institute and in accordance with applicable legislation, the depreciation rate for the POS electronic capture equipment was changed from 20.0% to 33.3% per year to better reflect the useful economic life of the equipment in the results of the Redecard Consortium. Our Main Sources of Revenues and Expenses The main sources of our revenues and expenses are the capture, transmission, processing and settlement of transactions performed with the use of MasterCard and Diners Club credit and debit cards. They consist essentially of: (1) the merchant discount rate charged to merchants based on the value of the transactions processed and (2) costs related to these activities, such as: equipment maintenance, processing, handling and telephone use, among others.

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The table below sets forth our operating results for the periods indicated:
For years ended December 31, 2005 2006 (in millions of reais) 790.7 921.1 151.7 202.9 315.5 406.3 16.8 23.4 23.2 29.6 6.3 10.6 10.8 6.5 1,315.0 (50.7) (9.3) (61.2) (121.2) 323.8 1,517.6 (214.3) (283.2) (153.6) (211.6) (648.4) 654.9 1,600.4 (58.8) (12.3) (68.5) (139.6) 348.6 1,809.4 (295.3) (242.7) (134.2) (199.9) (576.8) 937.3 For the three-month periods ended March 31, 2006 2007 2007 (in millions (in millions of of reais) U.S. dollars) 206.8 226.4 110.4 44.2 57.8 28.2 93.6 115.0 56.1 5.6 6.1 3.0 6.7 8.3 4.0 1.3 4.6 2.2 3.3 0 0 361.5 (13.5) (3.2) (17.0) (33.7) 93.5 421.3 (70.9) (73.9) (34.6) (52.9) (161.4) 189.0 418.2 (15.3) (2.7) (16.7) (34.7) 162.3 545.8 (62.7) (58.0) (28.3) (51.5) (137.8) 345.3 204.0 (7.5) (1.3) (8.1) (16.9) 79.2 266.2 (30.6) (28.3) (13.8) (25.1) (67.2) 168.4

2004

Credit .............................................. Debit................................................ Equipment rental............................. Check verification........................... Voucher........................................... Private-label.................................... Others.............................................. Operating revenue........................... ISS................................................... PIS................................................... COFINS .......................................... Taxes............................................... Net financial income....................... Net revenue.................................... Cost of services rendered................ Administrative expenses................. Depreciation and amortization........ Other operating expenses................ Operating expenses....................... Operating income .........................

606.2 107.7 248.0 12.7 19.7 4.7 6.6 1,005.6 (39.8) (13.4) (58.3) (111.6) 263.3 1,157.4 (173.7) (237.7) (75.0) (191.5) (504.2) 479.5

2006 (in millions of U.S. dollars) 449.2 99.0 198.2 11.4 14.4 5.2 3.2 780.5 (28.7) (6.0) (33.4) (68.1) 170.0 882.5 (144.0) (118.4) (65.5) (97.5) (281.4) 457.1

Description of the Main Line Items in Our Results of Operations Net Revenue Operating Revenue Our main source of revenues is the capture, transmission, processing and settlement of transactions performed with MasterCard and Diners Club credit and debit cards. These revenues are calculated based on the merchant discount rate negotiated with merchants on the value of the captured transactions, which is charged to our results on the date the respective transaction is processed. These revenues are realized when we receive the amount of the captured transaction from the card issuer, net of the interchange fee. This occurs, on average, 28 days after the capture of the transaction with credit cards and one day after the capture of the transaction with debit cards. We pay the amount of the transaction, net of the merchant discount rate, on average, 30 days after the capture of the transactions. The merchant discount rate for credit card transactions for payments in installments is charged to merchants when we receive the amount of each installment from card issuers. In addition, we receive revenues from the rental of POS electronic capture equipment. Equipment rental fees vary in accordance with criteria such as the merchant's business segment and its location. The rental arrangement is formalized through a technology lease agreement. Charging of the equipment rental does not depend on the merchant's use of equipment and is discounted when we pay the merchant the transaction amounts. We have other sources of revenues from the provision of services, such as vouchers, private-labels, check verification, from which we receive a fee for each captured transaction. Service Tax (ISS tax) Our revenues are subject to ISS tax at a 5.0% rate on (1) revenues from the merchant discount rate charged to merchants on transactions, (2) revenues from the provision of services for check verification, and (3) fees charged with respect to the voucher and private-labels businesses. ISS tax is not charged on revenues from: (1) rental of POS electronic capture equipment and (2) commercial discount rates charged to merchants on the prepayment of receivables.

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PIS and COFINS Prior to March 31, 2007, we used two methods for calculating PIS and COFINS on revenues from the provision of services (except financial revenue) from the Redecard Consortium: the cumulative method and the non-cumulative method. Under the cumulative method, rates for PIS and COFINS were 0.6% and 4.0%, respectively. The cumulative method was used by the financial institutions that were members of the Redecard Consortium. Itaucard and Unibanco always operated under this method. Citibank joined in June 2006, when FNC Comércio e Participações Ltda., or FNC, a non-financial institution affiliated to Citibank, assigned its shareholding in Redecard to Citibank. Under the non-cumulative method, the rates for PIS and COFINS were 1.6% and 7.6%, respectively. This method was used by Redecard for revenues from the provision of services (except financial revenue) from the Redecard Consortium. On March 31, 2007, according to the "Termination Agreement of the Redecard Consortium," the members of the Redecard Consortium approved its winding up and termination. Beginning on April 1, 2007, we assumed all activities that were under the responsibility of the Redecard Consortium related to the management and operation of Redecard network. The obligations, rights, revenues, expenses and financial and operating results of the Redecard Consortium have been fully allocated to us. The subsequent effects on us are directly related to the calculation of taxes, especially PIS, COFINS and income and social contribution taxes. With respect to PIS and COFINS, the rates levied on operating revenue will be levied according to the non-cumulative method provided by Laws No. 10,637/02 and 10,833/03, i.e., the rates of 1.65% and 7.6% for PIS and COFINS, respectively. This change will cause an adverse effect on our results. Previously, the rates of PIS and COFINS for the members of the Redecard Consortium were levied according to the cumulative method (1.65% and 3.0% for PIS and COFINS, respectively). In 2007, this effect will be of approximately R$50.0 million, i.e., 3.2% on our operating revenue. For income and social contribution taxes, the change will be in the calculation basis for the taxes, which will be our income before income tax. Previously, our income before income tax was distributed to the members of the Redecard Consortium and the taxation on Redecard's results was based on its share in the Redecard Consortium. Net Financial Income Our financial revenue derives from the commercial discount rate on the prepayment of receivables to merchants, when receivables from transactions using MasterCard and Diners Club credit cards captured by us are paid in advance. These revenues are generated when we pay merchants, settling our obligation (recorded under "Accounts payable to merchants"). Financial expenses corresponding to the prepayment of our receivables by card issuers are recorded at the time we obtain the necessary funds to anticipate receivables to merchants. We believe the net financial income obtained in anticipating receivables to merchants is operating income because, as a merchant acquirer and payment processor, we anticipate our compliance with our obligation to settle the captured transaction to the merchant. In addition, financial expenses arising from bank loans are accounted for in accordance with the accrual basis method. Cost of Services Rendered Cost of services rendered includes all costs related to our operations and varies according to the number of captured transactions. Main costs are: (1) fees paid to the MasterCard and Diners Club brands; (2) expenses on the telecommunications network and with telephone operating companies; (3) data-processing expenses; (4) expenses providing telephone assistance to merchants; (5) POS electronic capture equipment maintenance expenses; and (6) expenses on materials used by merchants such as rolls of paper.

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Operating Expenses Our operating expenses include general and administrative expenses, depreciation and amortization and other operating expenses. Administrative Expenses Administrative expenses consist mainly of (1) expenses related to salaries, charges and benefits of employees, including executive officers; (2) expenses on infrastructure of our head offices building, such as rental and maintenance of property; (3) expenses related to marketing and development of products; (4) expenses related to maintenance of information technology systems and automation of our administrative operations, such as expenses on software licenses, as well as maintenance of systems of integrated management of accounting, treasury, financial planning and costs; and (5) advisors' services, such as auditors and external legal counsel. Depreciation and Amortization Depreciation and amortization expenses include depreciation of POS electronic capture equipment, computer and office automation equipment, as well as amortization of improvements made to rented properties. As of December 31, 2005, we changed the estimated useful life of POS electronic capture equipment, based on a technical report issued by a specialized institute. This change resulted in an increase in the depreciation and amortization expenses in 2005, from 20.0% to 33.3% per year. Other Operating Expenses Other operating expenses include all expenses related to (1) acquiring merchants through the use of our employees, such as trips, accommodation, transportation, among others, and remuneration expenses related to third parties, such as card issuers and service providers; (2) fees paid to MasterCard International; (3) maintenance of software and equipment that are not directed to capturing and processing transactions; and (4) provisions for losses related to default in payment of rental of POS electronic capture equipment and for losses arising from fraud. Discussion and Analysis of the Results of Operations Three-month Period Ended March 31, 2007 Compared to Three-month Period Ended March 31, 2006 Net Revenue Net revenue increased R$124.5 million, or 29.6% from R$421.3 million in the three-month period ended March 31, 2006, to R$545.8 million in the same three-month period in 2007. This increase in net revenue occurred due to the factors described below. Operating Revenue Operating revenue increased R$56.7 million, or 15.7%, from R$361.5 million in the three-month period ended March 31, 2006 to R$418.2 million in the same three-month period in 2007. This increase in operating revenue occurred mainly due to the factors described below: (1) Increase in rental revenue from POS electronic capture equipment, in the amount of R$21.4 million, representing a 22.9% increase, mainly as a result of the 15.5% increase in the number of devices of POS electronic capture equipment, and, to a lesser extent, the increase in the average monthly rent paid by merchants; (2) Increase of R$19.6 million, or 9.5%, in revenues from the merchant discount rate charged to merchants for the capture of credit card transactions, due to the 19.0% increase in the total value of transactions. This 9.4% increase in revenues from the merchant discount rate reflected little of the 19.0% increase in the total value of credit card transactions as a result of the increase in the interchange fee of approximately 12.8%, which was negotiated with card issuers and MasterCard International and implemented on March 27, 2006. The interchange fee showed an increase of 14.4% in the period; and

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(3) Increase of R$13.6 million, or 30.9%, in revenues from the merchant discount rate charged to merchants for the capture of debit card transactions, due to a 29.8% increase in the total value of debit card transactions. Service Tax (ISS tax) ISS tax payments increased R$1.8 million, or 13.3%, from R$13.5 million in the three-month period ended March 31, 2006 to R$15.3 million in the same three-month period in 2007. This increase is a direct result of the increase in revenues from the merchant discount rate charged to merchants on credit and debit card transactions. PIS and COFINS PIS and COFINS tax payments calculated on our operating income decreased R$0.5 million and R$0.3 million, or 15.6% and 1.5%, from R$3.2 million and R$17.0 million, respectively, in the three-month period ended March 31, 2006 to R$2.7 million and R$16.7 million, respectively, in the same three-month period in 2007. The decrease in the amount of PIS and COFINS was due to the fact that in the three-month period ended March 31, 2006, FNC, the non-financial institution affiliated with Citibank, was still our shareholder. As a result, the PIS and COFINS rates applicable to revenues received by FNC in the Redecard Consortium were 1.6% and 7.6%, respectively. In the three-month period ended March 31, 2007, PIS and COFINS rates applicable to the revenues received by Citibank were lower (0.6% for PIS and 4.0% for COFINS), because FNC assigned its stake in Redecard to Citibank in June 2006. Net Financial Income Net financial income increased R$68.8 million, or 73.6%, from R$93.5 million in the three-month period ended March 31, 2006 to R$162.3 million in the same three-month period in 2007. This increase was mainly a result of the reversion of the provision for tax contingency related to the inclusion of financial revenue in the calculation base of PIS and COFINS, in the amount of R$62.7 million because of a decision in our favor issued by the Brazilian Federal Supreme Court. Cost of Services Rendered Cost of services rendered decreased R$8.2 million, or 11.6%, from R$70.9 million in the three-month period ended March 31, 2006 to R$62.7 million in the same three-month period in 2007, mainly as a result of a decrease in costs in the amount of (1) R$3.0 million in maintenance expenses of POS electronic capture equipment because of changes in operating processes and price negotiations with suppliers of POS electronic capture equipment, (2) R$2.5 million in maintenance expenses related to capture software, (3) R$1.5 million in processing expenses of data resulting from price negotiations and system improvements, and (4) R$1.2 million in expenses on materials due to price negotiations with suppliers of paper rolls used in POS electronic capture equipment. Operating Expenses Administrative Expenses Administrative expenses decreased R$15.9 million, or 21.5%, from R$79.9 million in the three-month period ended March 31, 2006 to R$58.0 million in the same three-month period in 2007, due to the decrease of: (1) R$2.9 million in marketing expenses due to increased seasonal marketing activities in the first quarter of 2006, which resulted in a decrease in marketing expenses in the three-month period ended March 31, 2007, (2) R$6.5 million in maintenance expenses and advisory expenses related to systems and administrative infrastructure, (3) R$2.0 million in expenses related to data-processing system and (4) R$3.8 million related to several other expenses, including the amount of R$1.1 million in labor expenses. Depreciation and Amortization Depreciation and amortization expenses decreased R$6.3 million, or 18.3%, from R$34.6 million in the three-month period ended March 31, 2006 to R$28.3 million in the same three-month period in 2007, mainly due to the reduction in the acquisition price of POS electronic capture equipment, which, for example, fell by approximately 15.0% between the three-month periods ended March 31, 2007 and 2006.

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Other Operating Expenses There has not been any relevant variation in the amount of other operating expenses from the three-month period ended March 31, 2006 to the three-month period ended March 31, 2007. Operating Income Operating income increased R$156.3 million, or 82.7%, from R$189.0 million in the three-month period ended March 31, 2006 to R$345.3 million in the same three-month period in 2007. This increase was mainly due to the following factors: (1) Non-recurring reversion of provisions for tax contingencies in the amount of R$62.7 million, with respect to a lawsuit decided in our favor related to the inclusion of financial revenue in the calculation basis for PIS and COFINS; (2) Increase in operating income in the amount of R$56.7 million from merchant discount rates charged to merchants in credit and debit card transactions, and also in revenues from POS electronic equipment rental; and (3) Decrease in cost of services rendered in the amount of R$8.2 million and in operating expenses in the amount of R$23.6 million. ProForma Net Income The pro forma net income increased R$93.2 million, or 75.3%, from R$123.8 million in the three-month period ended March 31, 2006 to R$217.0 million in the same three-month period in 2007. The pro forma net income assumed the PIS and COFINS expenses of R$11.3 million, social contribution tax of R$30.0 million and income tax of R$87.0 million. We applied to both the social contribution tax and the income tax calculations the effective rates determined in accordance with our accounting and tax records . As a result, the proportion of these taxes varies in each of the periods. The table below contains the reconciliation of the pro forma net income for the periods indicated:
Three-month period ended March 31, 2006 2007 (in millions of reais) Redecard Consortium operating income ............................................................. Adjusted PIS/COFINS taxes(1)................................................................................ Pro forma income before income and social contribution taxes ............................. Social contribution tax(2) ......................................................................................... Income tax(2)............................................................................................................ Redecard pro forma net income............................................................................. 189.0 (5.6) 183.4 (15.1) (44.5) 123.8 345.3 (11.3) 334.0 (30.0) (87.0) 217.0

(1) We apply the PIS and COFINS rates for the non-cumulative method. On this calculation basis, we apply the PIS and COFINS rates of 1.6% and 7.6%, respectively. For more information, see "⎯Description of the Main Line Items in Our Results of Operations—Net Revenue—PIS and COFINS." (2) For the calculation of social contribution and income taxes, we used the effective rates ascertained in accordance with our accounting and tax books. For this reason, the proportion of these taxes is variable in each of the periods. The effective social contribution tax rates vary between 8.2% and 9.2%, while the effective income tax rates vary between 24.3% and 26.0%.

Year Ended December 31, 2006 Compared to the Year Ended December 31, 2005 Net Revenue Net revenue increased R$291.8 million, or 19.2%, from R$1,517.6 million in 2005 to R$1,809.4 million in 2006. The increase in revenue is a result of the factors described below.

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Operating Revenue Operating revenue increased R$285.4 million, or 21.7%, from R$1,315.0 million in 2005 to R$1,600.4 million in 2006. This growth was mainly due to the following factors: (1) Increase of R$130.4 million, or 16.5%, in revenues resulting from the merchant discount rate charged to merchants for the capture of credit card transactions, which reached R$921.1 million in 2006 from R$790.7 million in 2005. This variation resulted from (a) an increase of 21.0% in the value of credit card transactions and (b) an increase in the merchant discount rate charged to merchants for the capture credit card transactions of 0.03 percentage points, due to the increase of the participation of interest-free installment transactions in the total value of transactions. This increase was partially offset by the increase of the interchange fee by approximately 12.8% from March 27, 2006; (2) Increase in rental revenues from POS electronic capture equipment of R$90.8 million, or 28.8%, to R$406.3 million in 2006 from R$315.5 million in 2005. The monthly average installed equipment for the electronic capture of transactions increased by 31.3% between 2005 and 2006. This increase was partially offset by the decrease in average monthly rental value by 7.0%; and (3) Increase of R$51.2 million, or 33.7%, in revenues from the merchant discount rate charged to merchants for the capture of debit card transactions, to R$202.9 million in 2006 from R$151.7 million in 2005. This increase results from the growth of 31.8% in the total value of these transactions and from an increase of 0.7% in the merchant discount rate charged to merchants. Service Tax (ISS tax) ISS tax payments increased R$8.1 million, or 15.9%, to R$58.8 million in 2006 from R$50.7 million in 2005. This increase was mainly due to the increase in revenues from the merchant discount rate charged to merchants and from the provision of services. PIS and COFINS PIS and COFINS tax payments calculated on our operating income increased R$3.0 million and R$7.3 million, or 32.3% and 12.0%, respectively, from R$9.3 million and R$61.2 million in 2005, respectively, to R$12.3 million and R$68.6 million in 2006. Before June 2006, Itaucard and Unibanco were the only members of the Redecard Consortium considered to be financial institutions. The PIS and COFINS rates applicable on their revenues was lower than the PIS and COFINS rates on the revenues of Redecard and FNC. FNC assigned its stake in Redecard to Citibank in June 2006. Net Financial Income Net financial income increased R$24.8 million, or 7.7%, from R$323.8 million in 2005 to R$348.6 million in 2006. This variation is due to an increase of 12.6% in the volume of prepayment of receivables to merchants. This increase was partially offset by the decrease in the commercial discount rate applied to prepayment of receivables to merchants, as a result of the reduction of the basic interest rate that has occurred during the last two years, from 19.1% in 2005 per year to 15.2% in 2006 per year. Cost of Services Rendered Cost of services rendered increased R$81.0 million, or 37.8%, from R$214.3 million in 2005 to R$295.3 million in 2006, as a result of a 20.6% increase in the number of credit and debit card transactions we captured between 2005 and 2006, which corresponded to an increase in direct costs. Operating Expenses Administrative Expenses Administrative expenses decreased R$40.5 million, or 14.3%, from R$283.2 million in 2005 to R$242.7 million in 2006, mainly because of the reversion of part of the provision for tax contingencies, regarding the ISS tax levied on POS electronic capture equipment rental, due to a change in the law and in the

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rule of the IBRACON, which favored us, resulting in the reversion of the amount of R$46.0 million. These decreases were partially offset by the increase in marketing expenses, in the amount of R$4.0 million, due to our efforts to encourage the use of credit or debit cards in merchant locations. Depreciation and Amortization Depreciation and amortization expenses decreased R$19.4 million, or 12.6%, from R$153.6 million in 2005 to R$134.2 million in 2006, mainly due to the decrease of the acquisition price of POS electronic capture equipment, which between 2006 and 2005 decreased approximately 26.6%. Other Operating Expenses Other operating expenses decreased R$11.7 million, or 5.5%, from R$211.6 million in 2005 to R$199.9 million in 2006. The decrease was mainly due to a reduction in the amount of (1) R$5.2 million in expenses on fees paid to MasterCard International; (2) R$2.4 million in commissions paid to banks for acquiring merchants; (3) R$2.9 million in the provision for loss in POS electronic capture equipment, and (4) R$1.1 million in other expenses. Operating Income Operating income increased R$282.4 million, or 43.1%, from R$654.9 million in 2005 to R$937.3 million in 2006. This increase was mainly due to an increase in operating income, which was R$285.4 million, during the years ended December 31, 2006 and 2005. Pro Forma Net Income Pro forma net income increased R$190.2 million, or 46.2%, from R$411.7 million in 2005 to R$601.9 million in 2006. Pro forma net income assumed expenses with PIS and COFINS taxes of R$31 million, social contribution tax of R$80.6 million and income tax of R$223.8 million. For the calculation of both the social contribution and income taxes, we used the effective rate applied in accordance with our accounting and tax records. The proportion of these taxes varies within each of the periods. Set forth below is a table with the reconciliation of the pro forma net income for the years indicated:
For the years ended December 31, 2004 2005 2006 (in millions of reais) Redecard Consortium operating income ..................................................... Adjusted PIS/COFINS taxes(1)........................................................................ Pro forma income before income and social contribution taxes ..................... Social contribution tax(2) ................................................................................. Income tax(2).................................................................................................... Redecard pro forma net income..................................................................... 479.5 (19.2) 460.3 (41.3) (116.5) 302.5 654.9 (24.5) 630.4 (58.0) (160.7) 411.7 937.3 (31.0) 906.3 (80.6) (223.8) 601.9

(1) We apply the PIS and COFINS rates for the non-cumulative method. On this calculation basis, we apply the PIS and COFINS rates of 1.65% and 7.6%, respectively. For more information, see "⎯Description of the Main Line Items in Our Results of Operations—Net Revenue—PIS and COFINS." (2) For the calculation of social contribution and income taxes, we used the effective rates ascertained in accordance with our accounting and tax books. For this reason, the proportion of these taxes is variable in each of the periods. The effective social contribution tax rates vary between 8.2% and 9.2%, while the effective income tax rates vary between 24.3% and 26.0%.

Year Ended December 31, 2005 Compared to Year Ended December 31, 2004 Net Revenue Net revenue increased R$360.2 million, or 31.1%, from R$1,157.4 million in 2004 to R$1,517.6 million in 2005. The increase in net revenue is a result of the factors described below.

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Operating Revenue Operating revenue increased R$309.4 million, or 30.8%, from R$1,005.6 million in 2004 to R$1,315.0 million in 2005. This increase was mainly due to the following factors: (1) Increase of R$184.5 million, or 30.4%, in revenues from the merchant discount rate charged to merchants for the capture of credit card transactions to R$790.7 million in 2005 from R$606.2 million in 2004 mainly due to a 27.7% increase of in the value of the transactions captured; (2) Increase in rental revenues from POS electronic capture equipment in the amount of R$67.5 million, or 27.2%, as a result of a 32.5% increase in the number of devices of equipment rented, which was partially offset by the 4.1% decrease in the average amount of monthly rent; and (3) Increase of R$44.0 million, or 40.9%, in revenues from the merchant discount rate charged to merchants for the capture of debit card transactions, resulting from a 40.7% increase in the value of transactions captured during 2004 and 2005. Service Tax (ISS tax) ISS tax payments increased R$10.9 million, or 27.3%, from R$39.8 million in 2004 to R$50.7 million in 2005. This increase was a result of the increase of revenues from merchant discount rate charged to merchants on credit and debit card transactions. PIS and COFINS PIS decreased R$4.1 million, or 30.7%, and COFINS increased R$2.9 million, or 5.0%, from R$13.4 million and R$58.3 million, respectively, in 2004 to R$9.3 million and R$61.2 million, respectively, in 2005. The amount of PIS and COFINS taxes paid reflected a decrease that was proportional to gross revenues. The PIS and COFINS rates levied on Itaucard and Unibanco, considered financial institutions, were 0.6% and 4.0%, respectively, while for Redecard and FNC, the rates for PIS and COFINS were 1.6% and 7.6%, respectively. Net Financial Income Net financial income increased R$60.5 million, or 23.0%, from R$263.3 million in 2004 to R$323.8 million in 2005. This increase was mainly due to a 26.4% increase of in the volume of prepayment of receivables to merchants during 2004 and 2005. Cost of Services Rendered Cost of services rendered increased R$40.6 million, or 23.4%, from R$173.7 in 2004 to R$214.3 million in 2005, mainly as a result of a 28.7% increase in the number of credit and debit card transactions captured by us between 2004 and 2005. The increase in the cost of services rendered was of (1) R$23.4 million in maintenance of POS electronic capture equipment; (2) R$8.7 million in sales materials and signaling of merchant locations; (3) R$3.8 million in capturing and processing of transactions; and (4) R$4.5 million in costs related to assistance call center to merchants.

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Operating Expenses Administrative Expenses Administrative expenses increased R$45.5 million, or 19.1%, from R$237.7 million in 2004 to R$283.2 million in 2005, mainly due to the increase of (1) R$14.5 million in personnel expenses due to a salary adjustment of 14.0%, (2) R$13.6 million in expenses with outsourced services due to the separation of our information technology system from that of Credicard because of its corporate reorganization at the end of 2004, (3) R$5.4 million in processing expenses and financial administrative services provided by Orbitall, whose prices increased after its corporate reorganization in the beginning of 2005, (4) R$2.7 million in marketing expenses, and (5) R$4.5 million in other expenses represented by corporate telephone calls, expenses with rent and building maintenance and banking expenses, among others. Depreciation and Amortization Expenses Depreciation and amortization expenses increased R$78.6 million, from R$75.0 million in 2004 to R$153.6 million in 2005, due to the adjustment in the amount of R$62.0 million recorded on our accounting in 2005, resulting in the adjustment of the depreciation of the equipment to the new estimate of useful life (reduced from five years to three), i.e., to the change in the rates of depreciation of the equipment, from 20.0% per year to 33.3% per year, in accordance with the technical report prepared by a specialized institute. Other Operating Expenses Other operating expenses increased R$20.1 million, or 10.5%, from R$191.5 million in 2004 to R$211.6 million in 2005, mainly as a result of a R$16.0 million increase in fees paid to MasterCard International and R$2.4 million in provisions for civil lawsuits. Operating Income Operating income increased R$175.4 million, or 36.6%, from R$479.5 million in 2004 to R$654.9 million in 2005. This increase was mainly due to an increase in operating income and gains in operational efficiency. Pro Forma Net Income Pro forma net income increased R$109.2 million, or 36.0%, from R$302.5 million in 2004 to R$411.7 million in 2005. Pro forma net income assumed expenses with PIS and COFINS of R$24.5 million, social contribution tax of R$58.0 million and income tax of R$100.7 million. We used the effective rates determined in accordance with our accounting and tax records to calculate the social contribution and the income taxes. The proportion of these taxes varies within each of the periods. Adjusted EBITDA Our Adjusted EBITDA consists of our operating income plus depreciation and amortization and adjusted by net financial results, which, however, includes financial income related to prepayment of receivables to merchants, which we consider as part of our operating activities and thus we add it back to our Adjusted EBITDA. By advancing payments to merchants, we anticipate the payment that we would have to make on the due date related to the credit card transactions. Adjusted EBITDA is not a measure of financial performance under Brazilian GAAP, and should not be considered individually, as either an alternative to net income as a performance indicator or operating cash flow or a measure of liquidity. Adjusted EBITDA does not have standardized meanings and our definition of Adjusted EBITDA may not compare to Adjusted EBITDA as used by other companies.

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We believe that the Adjusted EBITDA reconciliation that best reflects our activities is that based on the results of operations for the years ended December 31, 2004, 2005 and 2006 and for the three-month periods ended March 31, 2006 and 2007 as set forth in the explanatory note "Result from Redecard Consortium Participation, "as explained in"—Redecard Consortium." The table below sets forth the Adjusted EBITDA calculation for the periods indicated:
Year ended December 31, 2005 2006 2006 (in millions (in millions of of reais) U.S. dollars) 654.9 153.6 (541.1) 217.3 323.7 808.4 937.3 134.2 (562.0) 213.3 365.0 1,087.9 457.1 65.5 (274.1) 104.0 178.0 530.5 Three-month period ended March 31, 2006 2007 2007 (in millions (in millions of U.S. dollars) of reais) 189.0 34.6 (148.5) 55.0 94.3 224.5 345.3 28.3 (208.0) 45.7 105.8 317.0 168.4 13.8 (101.4) 22.3 51.6 154.7

2004

Operating income..................................... (+) Depreciation and amortization(1)........ (-) Total financial revenue ........................ (+) Total financial expenses ...................... (+) Net financial income related to prepayment of receivables................. Adjusted EBITDA ...................................

479.5 75.0 (409.0) 145.7 266.7 557.9

(1) The variation in depreciation and amortization expenses occurred in 2004 and 2005 was due to the reduction in the depreciation period of the POS electronic capture equipment, on the basis of a technical report issued by a specialized institute. The depreciated value of the equipment was adjusted to the new useful life of the equipment in 2005. For more information, see "—Critical Accounting Policies—Depreciation and Amortization."

Liquidity and Capital Resources Our operations are substantially financed by the cash generated by our operating activities, through loans and financing for working capital and, after this offering, by the proceeds from the primary offering. We believe that the operating cash flow generated and the proceeds from the primary offering will be sufficient to meet our liquidity needs and our financial commitments. Sources and Use of Proceeds We mainly rely on cash flow from our operations to finance our operating activities and investments. Cash Flow
Year ended December 31, 2004 2005 2006 (in millions of reais) Cash generated by operating activities....................... Cash used in investment activities.............................. Cash from financing activities.................................... Income distribution from Redecard Consortium participation ......................................... 889.2 (127.1) (507.0) (253.1) 2.0 701.5 (123.4) (208.5) (369.1) 0.5 1,049.8 (75.2) (278.6) (494.6) 201.4 Three-month period ended March 31, 2006 2007 186.7 (41.7) (43.0) (105.5) (3.5) 146.9 (26.7) (122.6) (196.2) (198.6)

Cash generated by operating activities decreased by 21.1%, or R$187.7 million from 2004 to 2005, an increase of 49.6%, or R$348.3 million from 2005 to 2006 and a decrease by 21.3%, or R$39.8 million from the three-month period ended March 31, 2006 to the same period in 2007. These variations are basically a result of the accounts receivable from card issuers and the accounts payable to merchants affected by credit card transactions and possibly by prepayment of receivables to merchants from credit card transactions. Cash used in investment activities decreased by 2.9%, or R$3.7 million from 2004 to 2005, and by 39.1%, or R$48.2 million from 2005 to 2006 and from the three-month period ended March 31, 2006 to the same period in 2007, there was a decrease of 35.9%, or R$15.0 million, because of the reduction in the purchase price of POS electronic capture devices.

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Cash from financing activities decreased R$298.5 million from 2004 to 2005, due to the amortization of the principal amount and interest of loans we had contracted. From 2004, we began to use the prepayment of our receivables with card issuers for the purpose of obtaining less expensive financial resources for the prepayment of receivables. This led us to liquidate part of the loans we had contracted with resources generated by our operating activities and our need to take out bank loans decreased from 2004. The 33.0% increase, or R$70.1 million, and the 185.0% increase, or R$79.6 million, from 2005 to 2006 and from the three-month periods ended March 31, 2006 and 2007, respectively, were a result of the increase on the amount of dividends paid. The amounts presented in the line item "income distribution from Redecard Consortium participation" represent the amounts paid to each member of the consortium. The changes occurred during 2004, 2005 and 2006 and from the three-month period ended March 31, 2006 to the same period of 2007, were a result of the increase in our operating revenues. Investments Our main investments are being made in the expansion of our activities and were distributed in the following manner for the periods indicated:
Three-month periods Years ended December 31, ended March 31, 2004 2005 2006 2006 2007 (in millions of reais) POS electronic equipment ......................................................... Information technology equipment (office automation)........... Others......................................................................................... 106.2 11.8 9.9 127.9 113.5 4.9 5.9 124.3 95.3 6.0 6.2 107.5 38.9 1.3 1.5 41.7 25.9 0.8 0.5 27.2

Investments for POS electronic equipment are made as a function of the increase in the base of active merchants. Currently almost all of the transactions we capture (99.9%) derive from electronic equipment that belongs either to us or to merchants. These investments reduce our operating costs and those of merchants, as well as improve the security of the transactions made with credit and debit cards. In recent years, we have been investing in office automation, which has contributed to the increase in operational efficiency, improving the internal control system and integration among our areas. Debt Our debt as of December 31, 2006 reached R$375.7 million, remaining relatively stable in relation to 2005 and 2004. All of our debt is short term. The table below summarizes our debt by type and line of financing for the three-month periods ended March 31, 2007 and 2006 and the years ended December 31, 2006, 2005 and 2004:
Three-month period Year ended December 31, ended March 31, 2004 2005 2006 2006 2007 (in millions of reais) Working capital agreements ...................................................... Interest on working capital agreements..................................... Credit balances in bank checking accounts (reclassified from available) .................................................. 379.6 13.6 – 393.2 348.6 13.4 – 362.0 348.6 10.1 17.0 375.7 348.6 13.8 11.5 373.9 348.6 7.0 6.3 361.9

As of March 31, 2007, the average rates for our working capital agreements were 103.4% of the interbank deposit rate, and the contracts had an average maturity of 149 days, while as of March 31, 2006, the average rates for our working capital contracts were 103.4% of the interbank deposit rate and the average maturity was 154 days. As of December 31, 2006, our working capital agreements matured within 148 days and had an average rate of 103.5% of the interbank deposit rate, while as of December 31, 2005 and 2004, the average rates were 103.3% of the interbank deposit rate and 103.1% of the interbank deposit rate, respectively. We have been extending the maturity of our working capital contracts because the cost of extension is lower than the cost incurred with prepayment of our receivables from card issuers and than the cost of other credit mechanisms and lines of credit available on the financial market.

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Contractual Obligations The table below summarizes the maturity of material contractual obligations with an impact on our liquidity as of December 31, 2006, including obligations related to loans and financing obligations, as well as other material contractual obligations. The table below does not include provisions for contingencies, deferred income tax and estimated interest payments on our loans and financing. The amounts of the contracts included as other contractual obligations represent estimated amounts related to agreements with our major suppliers, whose prices are based on estimated volume resulting from our normal course of business, according to the estimated time, as described in the table below:
Maturity by period Total Loans and financing............................ Contractual obligations....................... Total contractual obligations........... 348.6 1,225.1 1,573.7 Less than 1 year 348.6 234.5 583.1 1-3 years (in millions of reais) – 530.5 530.5 3-5 years – 460.1 460.1 More than 5 years – – –

The contractual obligations refer to service contracts we entered into with (1) Atento related to the provision of call center and telemarketing services, (2) Orbitall related to the provision of data-processing services, (3) MasterCard International related to the fees on the number and value of the transactions, and (4) manufacturers of POS electronic capture equipment related to the maintenance of this equipment. For more details about these contracts, see the section "Business—Material Contracts." Off-balance Sheet Arrangements We do not have any operations, agreements, obligations or other types of commitments in companies that are not consolidated in our results or other operations that may generate a material effect, in the present or future, on our financial condition and changes in our financial condition, revenues or expenses, results of operations, liquidity, expenses with capital or capital resources, that are not registered on our balance sheet. Quantitative and Qualitative Information on Market Risks We are exposed to market risks as a result of our business. These market risks mainly involve changes in interest rates and foreign exchange rate, which could adversely affect the amount of financial liabilities or future cash flow, as well as our results. Market risk is the potential loss resulting from adverse changes in interest and foreign exchange rates. Interest Rate Risk We are not materially exposed to the risk of changes in interest rates. We are exposed to a very short-term interest rate risk. For further information, see "—Factors that Affect Our Results of Operations—Interest Rates." Our exposure to financial instruments subject to interest rates as of March 31, 2007 was limited to working capital agreements entered into with financial institutions in Brazil in the amount of R$361.9 million, with interest indexed to the interbank deposit rate, at an average of 103.4% of the interbank deposit rate for terms of up to 149 days. Foreign Exchange Rate Risk We are not directly and materially exposed to foreign exchange rate risk since all of our loans and financing are denominated in reais. We had not entered into any derivative or hedge agreements as of March 31, 2007. There is foreign exchange risk that is not material to credit card transactions issued abroad and captured in merchant locations. The bearers of these cards purchase in Brazil and the transactions are directed to the issuer abroad, through the MasterCard or Diners Club brands. At the time of authorization, MasterCard International's and Diners Club card association's systems convert the amount of the transaction in reais to dollars, using a conversion rate based on the foreign exchange rate for the day before the transaction as published by the Central Bank. We receive the amount in dollars in a checking account abroad on the second business day after the transaction. We sell the dollars that are available in our checking account abroad on a daily basis. The currency risk therefore lasts for two days on the amount of these transactions. For the year ended December 31, 2006, the value of the transactions carried out with credit cards issued abroad represented 1.4% of the total value of credit card transactions captured, while for the years ended December 31, 2005 and 2004, the value of the transactions with credit cards issued abroad represented 1.8% and 2.2%, respectively.

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INDUSTRY OVERVIEW The current business model in the Brazilian credit card industry is the association model, in which the credit card brands, the merchant acquirers and payment processors and the issuers have specific roles within the rules established by the credit card brands. In this model, merchant acquirers and payment processors, including us, hold licenses to use the credit card brands' trademarks and are responsible for acquiring merchants to execute the transactions and for the capture, transmission, processing and settlement of credit and debit cards transactions. The figure below illustrates how the merchant acquiring and payment processing card industry is organized in Brazil and identifies the five main participants involved in that business model:
1. Brands
Other Brands

5. Issuers
Others Unibanco Itaú Citibank

2. Merchant Acquirers and Payment Processors
Others

4. Cardholders

3. Merchants

(1) Brands determine the general rules for the organization and functioning of the merchant acquiring and payment processing system and guarantee the settlement of the transactions; (2) Merchant acquirers and payment processors, such as us, are responsible for acquiring merchants to execute transactions and for the capture, transmission, processing and settlement of transactions; (3) Merchants supply goods and services and request affiliation to accept credit and debit cards as a means of payment; (4) Cardholders are individuals or agents of legal entities who use credit and debit cards as a means of payment granted by card issuers, and are users and/or consumers of products and services; and (5) Card issuers give credit to the cardholders for use by cardholders in Brazil and abroad.

History of Credit Cards There are several versions of the history that attempt to trace the origin of the credit card. The most famous dates back to 1950, when Frank McNamara introduced the Diners card, whose instant success led other companies to issue cards for the purchase of goods and payment of services. In 1951, Franklin National Bank became the first bank to issue a plastic card to replace the former paper card, increasing its use and acceptance among merchants connected with the bank. This new concept soon spread to other banks, which also started to issue credit cards. In 1958 Bank of America successfully launched its BankAmericard, the first to offer credit to its cardholders. In 1966, the Interbank Card Association was organized as an association of banks. In 1974, this association changed its name to Master Charge Cards and in 1979, to MasterCard. Before this, in 1970, after facing problems with some franchisees, Bank of America converted its system into an association of members called NBI (National Bank Americard, Inc.), which in 1976 was renamed Visa. In Brazil, the first steps toward introducing a credit card were taken in 1954, when businessman Hanus Tauber purchased the Diners Club franchise, in partnership with Horácio Klabin. The first card under this partnership was launched in 1956. However, this card was only used as a payment card and did not feature the credit function.

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Banco Bradesco S.A. launched the first card with a credit function in Brazil in 1968, under the name Elo. Starting in 1971, this card was adopted by a pool of 23 banks associated with BankAmericard, and in 1977, when this pool was terminated, each bank began issuing its own credit card. In 1970, Citibank, Itaucard and Unibanco together founded a company that played a critical role in the consolidation of the credit card market in Brazil: Credicard. The Company was an immediate success, and by the end of that year had issued over 180,000 cards and affiliated 15,000 merchants. Starting in the 1990's, the market for credit and debit cards witnessed significant growth, which was due to a number of factors: (1) the end of the exclusivity of brands in credit card issuance; (2) the opening of the market and resulting entry of international cards; (3) emergence of new card issuers; (4) economic stability brought by the Plano Real; and (5) the early stages of electronic commerce. The Credit and Debit Card Market The card market in Brazil has achieved significant growth in recent years. In 2006 the industry reached R$246.3 billion, according to data from ABECS, in terms of the value of transactions carried out with credit cards, debit cards and private-label cards. Out of this total volume of transactions paid for with cards, credit cards were responsible for approximately 61.0% of the total transaction value in 2006. In addition, the share of debit card transactions reached 28.0% in 2006. The increase in credit card transactions is due to their use as credit granted by the financial institutions issuing the card and, as a result, credit cards are normally used for higher value transactions in comparison to debit cards. ABECS data for the card industry in 2004, 2005 and 2006 is set forth below:
2004 Total Cards (million) ........................................... Transactions (billion) ................................. Value of transactions (R$ billion) .............. Cards (million) ........................................... Transactions (billion) ................................. Value of transactions (R$ billion) .............. Cards (million) ........................................... Transactions (billion) ................................. Value of transactions (R$ billion) .............. Cards (million) ........................................... Transactions (billion) ................................. Value of transactions (R$ billion) .............. 277 2.9 164.1 53 1.4 101.3 138 1.1 44.2 86 0.5 18.6 2005 338 3.7 203.2 68 1.7 123.0 171 1.4 58.2 99 0.6 22.0 2006 379 4.3 246.3 79 2.0 151.2 187 1.6 69.4 112 0.7 25.7 Growth 2004-2006 36.8% 48.3% 50.1% 49.1% 42.9% 49.3% 35.5% 48.4% 57.0% 30.2% 34.8% 38.2% CAGR (2004-2006) 17.0% 21.8% 22.5% 22.1% 19.5% 22.2% 16.4% 21.8% 25.3% 14.1% 16.1% 17.5%

Credit

Debit

Private-label

Source: ABECS.

The increase in the number of transactions with debit cards linked to checking accounts is a result of the growth in the percentage of the population holding a bank account. This shift also results in increased access to financial services, as well as changes in the habits of consumers and merchants, who consider debit cards to be a safer payment method. All debit card transactions require the use of passwords and both issuers and merchant acquirers and payment processors have been making significant investments to enhance the safety of debit card transactions. Despite this expansion, the main challenge for companies in the industry is to increase the usage of credit cards by current cardholders, given that the usage rate for cards is still low. This is an indication of the industry's significant growth potential. According to data from the Central Bank, in 2006, credit and debit cards accounted for 45.0% of all transactions, when all non-cash payment methods are considered, compared with 21.0% in 2000. During the same period, the use of checks decreased from 57.0% to 27.0%, indicating that consumers are increasingly replacing checks by credit and debit cards.

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Checks Versus Electronic Means of Payment The historical evolution of different payment methods in Brazil shows that checks were the most used instrument in 1999, with approximately 2.5 billion checks issued that year, representing 63.4% of all non-cash payments. During the same year, electronic instruments, including credit cards, debit cards, direct deposits, credit transfers, which include available electronic transfers (Transferências Eletrônicas Disponíveis, or TEDs) and credit documents (Documentos de Crédito, or DOCs), and payment vouchers, were responsible for the remaining 36.6%, led by credit transfers (626 million), credit cards (553 million), direct debit (219 million) and debit cards (107 million). By 2002, the use of checks had already fallen to less than 46.0% of total non-cash payments, with electronic instruments representing the majority of payments. In 2004 the use of checks, which represented 34.0% of total non-cash payments, was surpassed by the use of credit and debit cards, which together were responsible for 37.0% of non-cash payments. In 2005, there were 1.87 billion credit card payment transactions, representing 28.0% of total non-cash payments, while the number of checks issued was approximately 1.83 billion, representing 27.4% of total non-cash payments. The graph below sets forth the percentage of the various non-cash payment methods in 2005, against the total number of transactions:
Interbank Credit Transfer 16.0% Checks(1) 27.4%

Direct Debit 11.4%

Credit Cards 28.0%

Debit Cards 17.2%

(1) Checks with interbank liquidation. Source: Central Bank and clearinghouses and compensation liquidation service providers.

In 2005, over 1.15 billion transactions were carried out with debit cards, representing 17.2% of total non-cash payments, closely followed by credit transfers, with 1.07 billion transactions, representing 16.0% of total non-cash payments. Use of Checks in the Brazilian Market An ABECS study, released in July 2006, compares payment transactions made by final consumers, using as a reference only checks below the limit of R$299.99, as defined by the Central Bank . The study assumed that, within this limit, the focus of comparison would be on private consumption, such as those most frequently carried out by credit and debit cards. According to data from the ABECS study, since mid-2004, the monthly volume of transactions paid with cards (including credit, debit and private-label cards) has been higher than payments with checks issued by individuals for the purchase of goods and services (within the limit mentioned). In January 2004, payments with cards totaled approximately R$12.0 billion, reaching R$20.0 billion per month in May 2006. The total value of checks under R$299.99, on the other hand, decreased from R$13.0 billion in January 2004 to R$11.9 billion in May 2006, with more significant drops in some months. The study also reported a decrease in the number of checks issued per month within the same value limit, from 135.9 million to 105.6 million in the same period, vis-à-vis, the growth in the number of monthly transactions with credit and debit cards from 211.1 million to 353.1 million, also in the same period.

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Even with the decrease in the use of checks, in terms of the total amount paid, they are second in importance only to credit transfers. These two methods are responsible for payment values much higher than credit and debit cards, which are normally used for much smaller amounts. In 2005, credit transfers totaled R$3.0 trillion, which represents 69.2% of all non-cash payments. Checks totaled R$1.0 trillion, representing 23.2% in the same year. In 1999, checks had a much larger share, representing 41.2% of all non-cash payments. Credit and debit cards together totaled approximately R$190.0 billion in payments, with a share of 3.1% and 1.2%, respectively. Although they have a much smaller share, cards have recorded strong growth in terms of values. From 1999 to 2005, the use of credit cards increased approximately 285.0% in volume of payments and the use of debit cards increased 958.0%, according to Central Bank data. Use of Checks in Other Countries The trend in Brazil is in line with the worldwide trend of replacing checks with electronic means of payment. Despite the significant decrease, the use of checks in the payment structure in Brazil still stands out in comparison with other countries, and is second only to the United States. In 2004, checks represented nearly 40.0% of non-cash transactions in the United States, according to data from the Central Bank. Credit and debit card usage has also increased in the United States and represents 47.5% of the total non-cash payments. Another market in which checks have an important share is France, where they represent 30.0% of total non-cash payments. On the other hand, there are various countries in Europe where the usage of checks is very low, representing less than 1.0% of all non-cash payments. These countries include Germany, Belgium, Finland, Holland and Switzerland. In Brazil, the process of migration to electronic means of payment is taking place via credit and debit cards and this pattern indicates that the process will continue in the medium-term. In other countries, however, this change has taken place by other means, such as credit transfers and direct debit, as in Japan, Germany, Belgium, Finland and Switzerland, where there is a strong use of credit transfers representing more than 40.0% of non-cash payments. Direct debit transactions stand out in Germany and Spain, also representing approximately 40.0% of non-cash payments. Increase in the Acceptance of Cards The constant expansion of the network of merchants able to accept payment by cards is also one of the fundamental factors that explains the industry's performance, since an increase in the acceptance network reinforces the use of cards and attracts new consumers to the market. Currently, over 1.0 million merchants are able to accept cards as a means of payment. Credit Expansion The performance of the cards industry is also tied to the evolution of the volume of consumer credit granted by banks and consumer finance companies. Eleven years ago, in 1996, the volume of credit granted to individuals was approximately R$18.0 billion and represented 2.9% of the gross domestic product, or GDP. In recent years, this figure has grown substantially, reaching R$155.88 billion at the end of 2005, the equivalent of 9.7% of the GDP. In June 2006, the balance was R$177.16 billion, demonstrating that credit has been growing at a faster rate than the GDP. Increase in the Number of Bank Accounts The recent increase in the percentage of the Brazilian population having bank accounts can be seen by the creation of approximately 31.4 million new checking accounts between 2000 and 2005, according to data from the Central Bank. In 2000, there were 63.7 million accounts, and, in the end of 2005, 50.0 million people held 95.1 million accounts. This growth was reflected in the recent expansion of debit cards, linked to these new accounts. Increase in Employment and Income Indicators Recent economic growth has improved the employment rate and income levels of workers – variables that directly affect cardholders' expenditures. In 2006, with a GDP growth of 3.7%, family consumption grew by 4.3%, marking the second consecutive year of growth.

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OUR BUSINESS Overview We are one of the leading companies in the merchant acquiring and payment processing industry in Brazil, and currently we are the only acquirer of MasterCard and Diners Club cards in Brazil. We are responsible for acquiring merchants to accept credit and debit cards as a means of payment for goods and services, as well as for the capturing, transmission, processing and settlement of credit and debit card transactions. In 2006, we had a 34.0% market share based on the value of transactions with credit and debit cards in Brazil, which reached a total of R$246.3 billion. According to data from the Brazilian Association of Credit Card and Service Companies, this market represented 17.6% of the total private consumption in Brazil during the same year. In 2002, we captured and processed 569 million transactions, and in 2006 we captured and processed more than 1.5 billion transactions, which represented a 27.8% average annual growth rate since 2002. In 2006, we had more than one million affiliated merchants and were present in all Brazilian municipalities with electrical power and telecommunications infrastructure. Out of the total number of our affiliated merchants, 639,000 were active in 2006, which if compared to similar companies in the United States, would make us the fifth-largest merchant acquirer and payment processor in the United States in terms of number of active merchants, according to data from the Nilson Report regarding the U.S. market for 2006. We also offer additional services to our merchants and other customers, which include voucher management companies and financial companies. These services include rental of point of sale, or POS, electronic equipment, prepayment to merchants of receivables from credit card sales, check verification services (credit analysis of consumers) through the POS electronic equipment and capture and transmission services for transactions carried out with voucher and private-label cards. The table below sets forth the main financial and operating indicators for the periods indicated:
Year ended December 31, 2004 2005 2006 (in millions of reais) Net revenue ............................... Adjusted EBITDA(1)............... Adjusted EBITDA Margin(2) .............................. Operating income..................... Pro forma net income............... Pro forma net margin(3).......... Credit cards Value of transactions ................. Number of transactions (in thousands) ......................... Debit cards Value of transactions ................. Number of transactions (in thousands) ......................... Affiliated merchants ................ Electronic capture of transactions (%) ................... 1,157.4 557.9 48.2% 479.5 302.5 26.1% 37,021.5 474,848 13,929.0 324,033 825,104 98.6% 1,517.6 808.4 53.3% 654.9 411.7 27.1% 47,285.8 586,830 19,592.1 1,809.4 1,087.9 60.1% 937.3 601.9 33.3% 57,240.5 680,972 25,813.7 Growth CAGR (2004-2006) (2004-2006) 56.3% 95.0 11.9p.p. 95.5% 99.0% 7.2p.p. 54.6% 43.4% 85.3% 72.6% 23.5% 1.3p.p. 25.0% 39.7 – 39.7% 41.1% – 24.3% 19.8% 36.1% 31.4% 11.1% – Three-month period ended March 31, 2006 2007 (in millions of reais) 421.3 224.5 53.3% 189.0 123.8 29.4% 12,469.7 152,971 5,660.8 126,013 924,355 99.4% 545.8 317.0 58.1% 345.3 217.0 39.8% 14,839.3 174,204 7,346.6 156,778 1,032,948 99.9% Growth (2006-2007) 29.6% 41.2% 4.8p.p. 82.7% 75.3% 10.4p.p. 19.0% 13.9% 29.8% 24.4% 11.7% 0.5p.p.

441,483 559,119 901,448 1,018,776 99.2% 99.9%

(1) Our Adjusted EBITDA consists of our operating income plus depreciation and amortization and adjusted by net financial results, which, however, includes financial income related to prepayment of receivables to merchants, which we consider as part of our operating activities and thus we add it back to our Adjusted EBITDA . By advancing payments to merchants, we anticipate the payment that we would have to make on the due date related to the credit card transactions. Adjusted EBITDA is not a measure of financial performance under Brazilian GAAP, and should not be considered individually, as either an alternative to net income as a performance indicator or operating cash flow or a measure of liquidity. Adjusted EBITDA does not have standardized meanings and our definition of Adjusted EBITDA may not compare to Adjusted EBITDA as used by other companies. For further information on our Adjusted EBITDA, see "Presentation of Financial Information and Other Information—Adjusted EBITDA Reconciliation." (2) Adjusted EBITDA margin is the Adjusted EBITDA divided by our net revenue. (3) Pro forma net income divided by net revenue.

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Our history dates back to 1970, when Citibank, who is among the largest financial institutions and credit card issuers worldwide, along with Itaucard and Unibanco, who are among the largest financial institutions and credit card issuers in Brazil, formed Credicard. In 1996, Citibank, Itaucard and Unibanco believed it was necessary to have a company specialized in merchant acquiring and payment processing and founded Redecard by spinning off Credicard's merchant acquiring and payment processing activities. In that same year, MasterCard International also became a shareholder of Redecard. Since then, we have been the only, although non-exclusive, merchant acquirer and payment processor for MasterCard and Diners Club branded credit and debit cards in Brazil. Strengths Strong growth combined with high return to shareholders. In the period from 2002 through 2006, we achieved a 27.7% average annual growth rate when measured based on the value of credit and debit card transactions, a 30.0% annual growth rate in Adjusted EBITDA and an 12.0% increase in Adjusted EBITDA margin. The constant organic growth of our activities and financial results to date stems from economies of scale that result from our operational efficiency and business model. In 2006, our Adjusted EBITDA margin was 60.1% over our net revenue and our pro forma net income margin was 34.3% over our net revenue. In 2004, 2005 and 2006, we distributed R$141.3 million, R$177.4 million and R$292.3 million in dividends, respectively, while the Redecard Consortium distributed R$253.1 million, R$ 369.1 million and R$494.5 million in income, respectively. We believe that our high margins and continued growth assure us of a solid financial situation and enable us to deliver high levels of return to our shareholders. Recurring and predictable revenues, combined with diversified base of affiliated merchants. Our revenues are recurring and predictable due to the nature of our business. Once we affiliate merchants to accept credit and debit cards as a means of payment for goods and services, merchants generate credit and debit card transactions on an ongoing basis, which represent sources of recurring and predictable revenues for us. In 2006, 95.6% of the value of our credit and debit card transactions was carried out by merchants who had been acquired before 2005. Our revenues also consist of rental payments of POS electronic equipment, which we believe represent another recurring and predictable source of revenues for us. We have adequate staffing and equipment to provide constant support to merchants in order to stimulate them to encourage the use of MasterCard and Diners Club credit and debit cards as a means of payment. Our network of affiliated merchants is diverse and fragmented and there is no significant concentration in any specific market segment. In 2006, our largest customer represented 3.9% of the total credit and debit card transactions processed. Broad network of affiliated merchants and market penetration. We have over one million affiliated merchants, in all Brazilian cities that have electric power and telecommunications infrastructure and processed 1.5 billion transactions annually. Since 2002, we have had a 14.7% average annual growth rate in our number of affiliated merchants and a 16.8% growth in our number of active merchants, which resulted in a 27.8% average annual increase in the number of captured transactions. Between 2002 and 2006 we invested approximately R$459.0 million in the expansion of our network of electronic capture equipment, and we have installed more than 647,500 devices of this type of equipment. We believe that our broad and diversified network of affiliated merchants to accept cards as a means of payment will allow us to achieve more activations in our capture network, regardless of new affiliations of merchants. High availability, quality and security of equipment and electronic capture network. Our information processing platforms ensure high availability for our electronic capture network and provide automatic contingency support in two data centers. We own and operate 84 centers (called concentrators) for electronic capture spread throughout Brazil, which keep the electronic capture network available 24 hours a day, every day of the year, and provides us with high capacity for monitoring transactions, allowing us to rarely rely on telephone operators. We capture 99.9% of credit and debit card transactions electronically, and currently 89.9% of our POS electronic equipment are able to use card reading technology through the use of chips, which allows us to provide greater security to all participants in the merchant acquiring and payment processing industry. Our highly secure information processing systems and platforms are reflected in our very low rate of fraudulent transactions, which represented only 0.0006% of our captured transactions in 2006. In addition, we have invested in wireless POS electronic capture equipment, which gives merchants and credit card holders safety and convenience, as well as the development of our own secure capture application for transactions carried out in the Internet, called Komerci. We believe that the high availability of our capture network and the security of our technology allow us to provide quality service to our customers, without compromising the growth in the number of our affiliated merchants.

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Diversification of products and services offered to merchants. We offer to merchants value-added products and services in addition to the capture, transmission, processing and settlement of credit and debit card transactions, such as rental payments of POS electronic capture equipment, prepayment of receivables to merchants of the sales performed with the use of credit cards, check verification services (credit analysis of consumers) through the POS electronic equipment and capture and transmission services for transactions carried out with voucher and private-label cards. We believe that the broad range of value-added products and services that we offer to merchants distinguishes us from our competitors, in that it attracts merchants and enables us to affiliate more merchants to accept MasterCard and Diners Club cards as a means of payment for goods and services. Shareholders' support and experienced management. Our controlling shareholders are part of the financial conglomerates Citibank, Itaú and Unibanco, which are among the largest financial institutions in Brazil, in the case of Itaú and Unibanco, and worldwide, in the case of Citibank. The financial conglomerates of which our controlling shareholders are a part are committed to high standards of corporate governance and have been active in the credit and debit card industry in Brazil for over 35 years. In addition, Itaucard and Unibanco are also among the largest issuers of credit cards in Brazil and Citibank is one of the largest card issuers worldwide, which gives them their strategic importance and credibility in the merchant acquiring and payment processing industry, and enables us to gain access to a broad network of cardholders and merchants. MasterCard International is also one of our shareholders and is one of the most recognized brands of payment cards, both domestically and internationally, which gives us strategic strength in the acceptance of our services. We also count on senior management that combine extensive experience in the merchant acquiring and payment processing industry with managerial expertise and a strong commitment to results. Our senior management has been key to our success and includes professionals with more than 30 years of experience in the merchant acquiring and payment processing industry and with an average industry experience of over 11 years. Strategies Increase the activation and market penetration with our capture network. In addition to our sales structure directed towards constant assistance to merchants, we count on a network of 9,218 bank branches involved in the affiliation of new merchants on behalf of Redecard, 3,522 of which belong to our controlling shareholders. We also pursue activations through our sales team, and through companies that provide specialized services in the merchant acquiring and payment processing industry, as well as by hiring telemarketing companies. Stimulate the issuance of MasterCard branded cards by card issuers. To stimulate the issuance of, and to promote, MasterCard branded credit cards, we and MasterCard International have agreed on March 27, 2006 that (1) MasterCard International management would define and implement a new interchange fee structure, applicable to all Brazilian MasterCard branded credit card transactions, according to which the interchange fee was higher than the one generally used in the market at the time, provided that (2) we make available a new service to all MasterCard branded card issuers who have at least 35.0% of the total value of their portfolio of card transactions generated by MasterCard branded cards. This new service consists of our depositing of merchants' receivables in checking accounts of merchants at the financial institution card issuers upon previous authorization from merchants to us for a certain period of time, called "assurance of banking domicile," and for a limit of up to 300.0% of the total transactions generated by MasterCard branded credit cards of these financial institution card issuers. During this period, we commit ourselves not to make prepayments of receivables to merchants from MasterCard branded credit card sales, which gives to financial institution card issuers the possibility of offering several banking services to merchants. With this strategy, we expect to increase our operating results as a result of the increase in (1) the number of MasterCard branded cards issued, and, consequently, (2) the volume of MasterCard branded card transactions, which we believe should offset the loss in our results due to the increase in the interchange fee and the decrease in the volume of prepayment to merchants of receivables from credit card sales. Encourage the use of credit and debit cards in Brazilian household consumption and in new market segments. In 2006, the use of credit and debit cards reached 17.6% of private consumption of Brazilian households, while in more developed markets such as the United States and Canada, the use of credit and debit cards reached 37.0% and 55.0%, respectively. We constantly develop and carry out market research to identify new market segments where the use of credit and debit cards is a viable and attractive means of payment. We believe that there are opportunities for growth in new market segments in which the use of POS electronic equipment associated with mobile technology is growing, such as door-to-door sales, transportation services

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(i.e., taxis) and delivery services, among others. In this connection, we have already tested mobile technology for electronic capture in door-to-door sales. We are also evaluating the use of credit and debit cards in the wholesale sector. This will allow us to be present in an increasing number of commercial and financial transactions in the Brazilian market. Constant focus on technological innovation. We will continue to constantly seek technological update and innovation. As an example of this effort, we have developed our own application for the secure capture of transactions carried out in the Internet, called Komerci. We were the first merchant acquirer and payment processor in the Brazilian market to introduce the technology for wireless POS capture, which provides cardholders with convenience and security at merchant locations, such as restaurants and gas stations. Furthermore, we have been the pioneer in affiliating merchants in new market segments in Brazil, such as taxi services and food delivery services. We were the first MasterCard licensees to have capture equipment with chip reading technology outside of Europe, using the worldwide standard established by the European MasterCard and Visa Consortium EMV, or EMV. We intend to continue to seek constant improvement of our technology and for the implementation of new technology, which will allow us to continue to offer electronic capture and processing services using the industry's most advanced technology. Continued improvement of operational efficiency. We achieved a 13.1% average annual reduction in cost per captured transaction in the period between 2002 and 2006. In order to increase our economies of scale we will continue to improve our business model to maximize the use of our electronic capture network, increasing standardization, simplicity and speed in capturing transactions through optimized operating processes. We believe that continued reduction in operating costs and greater agility in installing new POS electronic equipment will allow us to take advantage of economies of scale and, simultaneously, assure the quality and security of our services. Company History Our history dates back to 1970, when Citibank, which is among the largest financial institutions and card issuers in the world, and Itaucard and Unibanco, which are among the largest financial institutions and card issuers in Brazil, founded Credicard. Credicard's activities included those of a credit card brand, an issuer and a merchant acquirer and payment processor. By 1980, Credicard had issued 500,000 cards and affiliated 120,000 merchants. In 1987, Credicard began issuing MasterCard branded cards and, by 1994, it had issued 5 million cards. During that same year, Credicard launched the Redeshop debit card, which was the first debit card in the Brazilian market and allowed merchants to receive payment for their sales on the first business day following the charge to the cardholder's account by the issuer. In 1996, in order to specialize in the provision of merchant acquiring and payment processing services, Citibank, Itaucard and Unibanco jointly decided to form Redecard, as the spin-off of Credicard's merchant acquiring and payment processing activities. In that same year, MasterCard International also became shareholder of Redecard. Since then, Redecard has been the only MasterCard and Diners Club merchant acquirer and payment processor in Brazil. Since its formation, Redecard was the leader of the Redecard Consortium. The corporate purposes of the Redecard Consortium, which was incorporated according to Brazilian Corporate Law, were the same as the ones we currently pursue: affiliating merchants to accept credit and debit cards, and capturing, transmitting, processing and settling transactions carried out with MasterCard and Diners Club International credit and debit cards in Brazil. The members of the Redecard Consortium included the controlling shareholders of Redecard and Redecard. The Redecard Consortium ceased to exist on March 31, 2007, and after its termination, all its assets were fully transferred to us and we assumed all its rights and obligations. As the leader of the Redecard Consortium, we performed and carried out all the activities necessary for the development of the Redecard Consortium. Redecard Consortium's results were distributed in accordance with the share of each consortium member in its revenues and certain revenues and expenses were borne by the consortium members in the same proportion as their respective shareholdings in Redecard, in accordance with criteria defined in the consortium formation contract.

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Corporate Structure As of the date of this offering memorandum, we have six shareholders: the controlling shareholders, UPS and MasterCard International. The table below sets forth the shareholding held by each shareholder as of the date of this offering memorandum:
Shareholders Banco Citibank S.A.................................................... Banco Itaucard S.A. ................................................... Unibanco – União de Bancos Brasileiros S.A............ Unibanco Participacões Societárias S.A..................... Dibens Leasing S.A. – Arrendamento Mercantil(1) ... Members of management(2) ...................................... Others......................................................................... Total .......................................................................... Redecard Shares Held 209,999,998 209,999,998 350 82,178,949 127,820,698 7 27,415,150 657,415,150 % of Overall Redecard Shares Held 31.9 31.9 0.0 12.5 19.4 0.0 4.2 100.0

(1) Legal entity that is part of the same financial conglomerate of Unibanco. (2) Except for Mr. Castro Neto, who owns one share of Redecard, the other members of our board of directors hold shares issued by the Company by means of usufruct of shares owned by our controlling shareholders.

Our Activities Our main activities include the affiliation of merchants to accept credit and debit cards as means of payment for goods and services, and the capture, transmission, processing and settlement of transactions using MasterCard and Diners Club credit and debit cards. We also offer other products and services to merchants such as the rental of POS electronic equipment, prepayment of receivables to merchants for sales made using credit cards, check verification services through POS electronic equipment, and capture and transmission services for voucher and private-label transactions. Market Segments of Merchants We classify merchants according to the following market segments: • • • • • • • • • Clothing – including clothing, shoes, jewelry and watch retailers and dry cleaners and laundry services; Home – including furniture stores, electronic equipment and appliances stores and hardware stores; Food – including supermarkets, hypermarkets, butcher shops, bakeries, candy stores and convenience stores; Vehicle – including car dealerships, mechanical shops, vehicles parts and accessory stores, gas stations, parking lots, toll booths and couriers; Health – including drugstores, hospitals, specialized medical centers, physicians, healthcare facilities and laboratories; Travel and entertainment – including restaurants, hotels, travel agencies, airlines, car rental stores and movie theaters; Education – including schools, universities, school and office supplies stores, bookstores and newspaper/magazine stands; Hobbies – sports stores, fitness centers, beauty salons, photo centers, toy stores, information technology stores and musical instruments stores; Other – financing companies, public utilities, fairs and events, telephone operators and insurance companies.

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Products Credit Cards The process of capturing, transmitting, processing and settling transactions for merchants performed using MasterCard and Diners Club credit cards is our main product. Revenues from the capture, transmission, processing and settlement of credit card transactions represented 50.9% of our net revenue as of December 31, 2006, which represented an increase of 16.5% over our net revenue as of December 31, 2005, and average annual growth of 18.7% during the period between 2002 and 2006. In the three-month period ended March 31, 2007, our net revenue was R$226.3 million, representing an increase of 9.4% compared to the same period in 2006. The interchange fee (part of the merchant discount rate we charge merchants) paid to credit card issuers increased by 12.6% compared to interchange fees paid in 2005. This was the result of a MasterCard policy implemented in 2006 after negotiations between card issuers and us, as a means of distinguished remuneration for card issuers and ourselves, based on the type of credit card used in each transaction and the segment in which the merchant closing a transaction operates. We cannot predict when and if there will be new increases in the interchange fee by MasterCard International. In the Brazilian market, credit cards may be used in two ways: • • Immediate payment – when the cardholder has an average of 30 days after the transaction to pay the respective bill, and Payment in installments – the payment of the purchase price is made in installments, pursuant to one of the following: – Interest-bearing financing, which is granted by the card issuer, and whereby the merchant is paid the sale amount in one lump sum, and – Interest-free financing, which is granted by the merchant so that payment for the sale is made in the same number of installments extended to the cardholder. In either case, whether immediate payment or in installments, the merchant receives the amount of the transaction directly from Redecard within the contractually agreed period, unless the merchant requests prepayment of its receivables. The financial settlement is guaranteed by Redecard, which in turn receives a guarantee from the card issuer for payment of the transaction as authorized. Card issuers are responsible for authorizing all credit card transactions. Below is a flow chart showing a credit card transaction.

Transaction

D: date of transaction. D + 26: date of payment of the credit card bill by the cardholder. D + 28: date of payment by the card issuer to Redecard. D + 30: date of payment by Redecard to the merchant.

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Payment may be split into up to twelve installments with the average being 3.5. Interest-free installment payments represented 47.8% of our total volume of transactions captured for the year ended December 31, 2006 and 47.4% of this volume in the three-month period ended March 31, 2007. The clothing and home segments represented approximately 59.3% of our net revenues from the capture of credit card transactions payable in installments based on data related to the period from April through September 2006. The amount represented by credit card transactions captured presented an average annual growth of 23.1% between 2002 and 2006 and 21.1% between 2005 and 2006. The table below sets forth the share of each market segment in our total billing volume from the capture of credit card transactions based on data related to the period from January through December 2006: Market segment: Food..................................................................................................................... Clothing ............................................................................................................... Home ................................................................................................................... Vehicles............................................................................................................... Travel and entertainment ..................................................................................... Health .................................................................................................................. Education............................................................................................................. Hobbies................................................................................................................ Other.................................................................................................................... % of total transactions 22.0 19.0 17.0 12.0 13.0 6.0 2.0 2.0 7.0

The number of credit card transactions captured and processed by us exceeded 680 million in the year ended December 31, 2006, representing an average annual growth rate of 17.7% since 2002. Debit Cards We capture, transmit, process and settle transactions for merchants performed using MasterCard Maestro and Redeshop branded debit cards. MasterCard International acquired the Redeshop brand in 2004. It is in the process of being replaced by MasterCard Maestro. Revenues from the capture, transmission, processing and settlement of debit card transactions represented 11.2% of our net revenues for the year ended December 31, 2006, representing a growth of 33.7%, compared to the year ended December 31, 2005, and average annual of 43.3% for the period between 2002 and 2006. In the three-month period ended March 31, 2007, our net revenue was R$57.8 million, representing a growth of 30.9% compared to the same period in 2006. Currently, the interchange fee paid to debit card issuers corresponds to 50.0% of the merchant discount rate. Increasingly, in the Brazilian market, debit cards are replacing checks as a means of payment because they offer greater security to merchants, as there is need to use a password and electronically confirm personal data. Settlement takes place on the business day following capture by Redecard, which in turn is fully captured and approved by the issuer electronically. Below is a flow chart showing a debit card transaction.

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Debit Card Transaction Flow

Transaction

D: date of transaction. D + 1: date of charge to the cardholder's bank account and corresponding payment of the transaction by the card issuer to Redecard. D + 1: date of payment of the transaction by Redecard to the merchant.

The table below sets forth the share of each market segment in our total amount of billing from the capture of debit card transactions based on data related to the period from January through December 2006: Market segment: Food....................................................................................................................... Clothing ................................................................................................................. Home ..................................................................................................................... Vehicles................................................................................................................. Travel and entertainment ....................................................................................... Health .................................................................................................................... Education............................................................................................................... Hobbies.................................................................................................................. Other...................................................................................................................... % of amount of transactions 33.0 17.0 14.0 14.0 9.0 6.0 2.0 2.0 3.0

The number of debit card transactions captured and processed by us amounted to approximately 559 million in the year ended December 31, 2006, representing an average annual growth rate of 38.1% since 2002. Prepayment of Receivables to Merchants The net financial revenues from prepayment of receivables to merchants resulting from credit card transactions captured by us represented 20.2% of our net revenue for the year ended December 31, 2006. This represented a growth of 12.8% compared to 2005, and an average annual growth of 31.9% for the period between 2002 and 2006. In the three-month period ended March 31, 2007, this revenue was R$105.8 million, representing a growth of 12.2% compared to the same period in 2006. The affiliation and adhesion agreements to the Redecard system that we execute with merchants require us to pay the merchants on average on the 30th day after each transaction, provided there is no chargeback. We usually receive payment from Brazilian card issuers on average on the 28th day following the date of authorization of the transaction. In the case of foreign card issuers, MasterCard International pays Redecard on the second day following the date of authorization of the transaction. Prepayment of receivables to merchants from credit card transactions takes place when the merchant requests to us the payment of receivables from credit card transactions prior to the settlement date. After the merchant and we have agreed on the commercial discount rate to be charged on these advances, actual advances take place until the first business date following the request.

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We adopt certain measures to mitigate risks related to prepayment of receivables to merchants, which include: (1) definition of an overall limit which applies to each merchant, based on the business segment of each merchant; (2) follow up of the record of chargebacks and cancellation of transactions. Our revenues from prepayment of receivables to merchants should reflect a declining trend in the coming years, as we have adopted a strategy of seeking greater involvement by credit card issuers in operations related to prepayment of receivables, in exchange for increases in the volume of MasterCard and Diners Club branded credit cards issued by them. See "Summary—Strategies." Other Products and Services Rental of POS Electronic Equipment We own the equipment we rent to merchants. Our revenues from the lease of POS electronic equipment for electronic capture of transactions represented 22.5% of our net revenue for the year ended December 31, 2006, corresponding to a 28.8% increase compared to 2005 and an average annual growth of 29.7% for the period between 2002 and 2006. In the three-month period ended March 31, 2007, this revenue totaled R$115.0 million, representing an increase of 22.9% compared to the same period in 2006. Check Verification Revenues from check verification services provided to merchants represented 1.2% of our gross revenues for the year ended December 31, 2006. This was an increase of 39.6% compared to our gross revenues for the year ended December 31, 2005, and our average annual growth rate was 43.0% for the period between 2002 and 2006. In the three-month period ended March 31, 2007, revenues from check verification services totaled R$6.1 million, representing an increase of 10.2% over the same period in 2006. Our check verification services involve checking the Credit Protection Service of the Bank Services Centralizing Corporation (Centralização de Serviços de Bancos S.A.), or SERASA, credit bureau database through the same POS electronic equipment used for credit and debit cards. Our remuneration derives from a monthly subscription paid by the merchants. Through this subscription, each merchant has the right to make a specific number of check verification requests, and each additional request is charged at a unit price set forth in the contract with the merchant. We pay SERASA a monthly fee per check verified. The number of check verifications increased at an average annual rate of 9.4% in the period between 2002 and 2006. However, there was a reduction of 9.9% in the number of check verifications between 2005 and 2006 as a result of a reduction in the use of checks in Brazil. Vouchers The revenues from the capture, routing and transmission of data on voucher transactions in merchants' stores represented 1.6% of our revenues for the year ended December 31, 2006. These revenues increased 27.7% compared to the year ended December 31, 2005, and grew at an average annual growth rate of 46.1% for the period between 2002 and 2006. In the three-month period ended March 31, 2007, these revenues totaled R$8.3 million, an increase of 23.8% over the same period in 2006. Our remuneration is determined pursuant to a price list based on the number of captured and routed transactions, rather than a percentage of the value of transactions. Our customers voucher management companies are responsible for processing and settling the transactions with merchants. These customers are large voucher management companies such as Ticket, Sodexho and VR. The value of voucher transactions we captured exceeded R$200.0 million in the year ended December 31, 2006, representing an average annual growth of 55.4% since 2002. Private-label Cards Revenues from the data capturing, routing and transmitting related to private-label card transactions with merchants represented 0.6% of our net revenue for the year ended December 31, 2006. These revenues grew 67.4% in the year ended December 31, 2006, as compared to the year ended December 31, 2005, and achieved an average annual growth rate of 51.7% during the period between 2002 and 2006. In the three-month period ended March 31, 2007, these revenues totaled R$4.6 million, representing an increase of 253.9% compared to the same period in 2006.

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Our remuneration for private-label card transactions is determined pursuant to a price list based on the number of captured and routed transactions, rather than a percentage over the value of transactions. Our customers are financial companies, who are responsible for processing and settling the transactions with merchants. These financial companies have a large number of credit operations of small values. The number of private-label transactions we captured exceeded 60 million in the year ended December 31, 2006, representing an average annual growth of 36.9% since 2002. Capture Network and Commercial Structure Our capture network is present in all Brazilian municipalities where electricity and telecommunications infrastructure is available. Our commercial structure is divided into five regional centers covering all of Brazil. Each regional center is composed of one executive officer, managers for each of our branches, account executives and sales agents. The allocation of these human resources per regional center takes into account the geographic distribution of affiliated merchants and card issuer banking branches. The map below shows the geographic division into regional centers and their share in (1) the overall amount of credit and debit card transactions captured by us; and in (2) our capture network base:

Northeastern Region 25% Valor das Transações: Northern Region
Percentage over total transactions: 9% Merchants: 10% Estabelecimentos: 24% Estabelecimentos: 24% Percentage over total transactions: 13% Merchants: 17%

States of Rio de Janeiro, Minas Gerais and Espirito Santo
Percentage over total transactions: 25% Merchants: 24%

Interior of the State of São Paulo and Southern Region
Percentage over total transactions: 25% Merchants: 35%

Estabelecimentos: 35%

Greater São Paulo
Percentage over total transactions: 28% Merchants: 14%

In addition, we have two commercial teams, one of which provides differentiated and specialized services to certain merchants, such as hotel chains, airlines and renowned restaurants in the principal Brazilian urban centers. The second team provides services to large wholesale and retailer chains, such as hypermarkets and electrical and electronic equipment stores, construction materials, clothing and other commercial businesses. Services to merchants are generally divided into market segments, based on the value of transactions captured per POS terminal. This segmentation defines our commercial approach, coverage and type of services provided. We classify the type of services provided into seven segments, where groups I, II and III pertain to one larger class of billing and receive preferential services. This classification is shown as follows by revenue:
Gro up VII 9% Gro up VI 10%

Gro up I 32%

Gro up V 6%

Gro up IV 7%

Gro up III 16%

Gro up II 20%

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The breakdown of the segments by the number of points of sale of affiliated merchants is as follows:
Gro up I 3% Gro up II 6% Gro up III 6% Gro up IV 3% Gro up V 4%

Gro up VI 15% Gro up VII 63%

Merchants are affiliated to accept MasterCard and Diners Club credit and debit cards as a means of payment by banks with which we maintain sales agreements, as well as by service providers, by our sales team and telemarketing team. In the year ended December 31, 2006, merchant affiliations by banks represented 73.0% of all affiliations, whereas 12.0% were affiliations by service providers, 11.0% were affiliations by our sales team and 3.0% affiliations by our telemarketing team. The number of our affiliated merchants has been growing at an average annual rate of 14.7% since 2002, whereas the number of active merchants grew at a rate of 16.8% in the same period. In the year ended December 31, 2006, we had over 1.0 million affiliated merchants in our capture network. Our affiliated merchant base is divided into market segments as follows:
Food 4% Education 7% Others 4% Hobby 10% Housing 23% Travel & Entertainment 11% Vehicle 10% Clothing 12%

Health 19%

According to data collected by the Nilson Report related to the U.S. market, if we operated in the U.S. market with a capture network comprising 640,000 active merchants, we would be among the five largest merchant acquirers and payment processors in terms of active merchants. Below is a list of the five principal merchant acquirers payment processors operating in the American market:
Company Chase Paymentech Solutions ............................................................................................. Bank of America Merchant Services.................................................................................. Nova................................................................................................................................... FDC.................................................................................................................................... Global Payments ................................................................................................................ Number of active merchants (in thousands) 1,027.2 880.3 861.0 800.1 486.0

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Electronic Capture Equipment and Applications We have a variety of electronic capture equipment or systems. The principal equipment we adopt include: • • • Fixed equipment, also known as POS equipment; Wireless equipment, also known as wireless POS, and Electronic cash transfers or electronic capture register, or ECR technology (Transferência Eletrônica de Fundos – TEF ), adopted in the case of large merchants with their own electronic cash registers to which we provide ECR technology.

In the year ended December 31, 2006, 99.9% of the transactions that we captured were electronically captured. More than 60.0% of the total transactions captured, were captured through fixed or wireless equipment, whereas approximately 39.0% was captured through the use of our ECR technology by the merchants' POS equipment. Fixed Equipment or POS Desktop In the three-month period ended March 31, 2007, we had 623,417 POS desktop terminals installed, which represented 50.8% of the volume of transactions that we captured. Wireless Equipment or Wireless POS There are two types of wireless POS electronic equipment: indoor terminals and outdoor terminals. In the three-month period ended March 31, 2007, we had 36,160 wireless POS electronic capture equipment installed, which represented 7.6% of the volume of transactions we captured. ECR Technology ECR technology is a software that interfaces with the automated sales system used by the merchants to allow transaction capture and access to the products and services we provide through our system, including POS equipment, which we call ECR equipment, compatible with all types of transactions we offer. We approve certain companies specialized in automated sales solutions to make the ECR technology available and provide activation and support services. ECR equipment is different from POS equipment because ECR equipment is the merchant's property and has models and accessories that the merchant acquires according to its needs and volume of the transactions carried out. We have also been investing in pin pads, as a means to read and encrypt transaction data, as well as card data originating from ECR equipment. Pin pads have been installed at all merchant locations that carry out large volumes of card transactions as part of our efforts to improve security of our entire capture network. In the three-month period ended March 31, 2007, transactions captured from ECR equipment with ECR technology approved by us represented 41.0% of our overall transactions captured. Internet Transactions We have developed our own capture application which we call the Komerci system. In the three-month period ended March 31, 2007, we had 10,263 customers who were active users of this system, which represented 0.1% of all transactions carried out in this period.

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Technology We were the first merchant acquirer and payment processor of MasterCard International, outside Europe, to capture a transaction by means of chip reading technology according to the worldwide standard established by EMV. To date, 89.0% of our POS electronic equipment are already equipped with this technology, which offers greater security to all parties in credit and debit card transactions. We were the first merchant acquirer and payment processor in the Americas to adopt the MasterCard TIP (Terminal Integration Process) certification in the POS electronic capture equipment, contributing to the inter-functionality of this technology worldwide. We were the first merchant acquirer and payment processor in the Brazilian market to introduce the technology for wireless POS capture, which provides cardholders with convenience and security in merchant locations, such as restaurants and gas stations. Furthermore, we have been pioneers in affiliating merchants in new market segments, such as for example, taxi services and food delivery services, allowing for the use of credit and debit cards in all these new market segments. To increase the capture of transactions monitored by card issuers due to the change in the pattern of consumption of the relevant cardholder, we developed and implemented a technological solution to verify and confirm data of cardholders directly in the POS electronic capture device, which reduces the approval time of the transaction from 10 minutes to a few seconds. Capture of Transactions Via Cellular Telephones On June 13, 2007, we launched Foneshop for the payment of purchases by means of any cellular telephone that receives messages of the SMS type in Brazil. With this technology, the cellular telephone works as an electronic wallet, since it is possible for the holder to have several credit cards from different card issuers under only one cellular telephone number. The holder decides which card to use at the moment of the transaction. Foneshop has several advantages, such as speed, convenience and security in transactions, without the need for the physical presence use of the credit card and without additional costs to merchants and cardholders. Foneshop allows for an increased use of MasterCard and Diners Club branded credit cards in the network of affiliated merchants of Redecard and also allows for expansion in new business segments, such as transportation services (i.e., taxis), delivery services, door-to-door sales, among others. Contingency Plan Our information processing platforms allow our electronic capture network to have high capacity and to have automatic parallel backup in two data centers, one in downtown São Paulo, and the other in the neighborhood of Santo Amaro, in the southern part of the city of São Paulo. We maintain our own network of 83 points for electronic capture, which we call points of presence. These points of presence are spread throughout Brazil so that our electronic capture network is available 24 hours a day, every day of the year, providing us the ability to monitor transactions and to have a low level of dependence on telephone companies. In the case of other company systems that are unrelated to the capture network, data replication from one to another data center takes place in real time, and if there is a problem, our second data center may be activated within twelve hours. In addition, we can access our data server through external servers to perform operating and administrative activities, and have the ability to operate outside our premises, with 80 employees, within 72 hours. Suppliers Our principal suppliers provide services related to transaction data processing, telephone assistance to merchants, electronic capture equipment maintenance and other services. Data processing services and call center services are provided to us by Orbitall and Atento, respectively. If our agreements with these providers terminate, the costs associated with obtaining other providers and reestablishing the services would be relatively high. Additionally, manufacturers of POS electronic equipment also provide services to us. Because this type of equipment involves specific technology, the provision of equipment maintenance services depend on these manufacturers, who include, among others, Ingenico do Brasil Ltda., Lipman do Brasil, Hypercom do Brasil Indústria e Comércio Ltda., Netset – SP Tecnologia e Serviços em Teleinformática Ltda., Verifone do Brasil Ltda. and Speedpak Encomendas Expressas Ltda.

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In addition, we entered into a services agreement with Embratel – Empresa Brasileira de Telecomunicações S.A. for telephone and data-processing services. For more information on our agreements with Orbitall, Atento and the suppliers of POS electronic equipment, see "—Material Contracts." Marketing We invested R$42.2 million in marketing in the year ended December 31, 2006, which represented an average annual increase of 26.9% since 2002. We invest principally in partnerships with merchants, which represented 48.0% of our marketing investments in 2006, and in merchant locations' signaling, which represented 35.0% of our marketing investments in 2006. We also invest in campaigns for specific events, festivals and celebrations, in addition to advertisement in selected travel destinations. Our marketing activities follow the rules and practices adopted by MasterCard International. Competition We believe that our main competition comes from other means of payment, such as cash, checks and electronic cash transfers. Within the credit and debit card industry in Brazil, we are currently the only, but not exclusive, merchant acquirers and payment processor of credit and debit cards for MasterCard and Diners Club. There are some merchant acquirers and payment processing companies that have already been authorized by MasterCard to work in the Brazilian market. To date, these companies have not begun affiliating merchants to accept MasterCard and Diners Club credit and debit card transactions. We have increased our market share amongst other merchant acquirers and payment processor operating in Brazil, having obtained in 2006 34.0% of the financial volume of credit and debit card transactions carried out in the Brazilian market, compared to a market share of 32.9% in 2005. The Brazilian Means of Payment Company (Companhia Brasileira de Meios de Pagamento), known as Visanet, a merchant acquirers and payment processor for the Visa brand in Brazil, and the American Express system, which is a card brand, as well as a card issuer and a merchant acquirers and payment processor, are our main competitors. Hiper Card, which is a company controlled by Unibanco, one of our controlling shareholders, operates in the merchant acquisition business and in the issuance of credit cards with its own brand, is also one of our competitors. Seasonality Seasonality in our industry reflects the retail calendar, among other factors. At certain times of the year, such as at the Christmas selling season, our revenue increases because of the increase in retail consumption, among other factors. The chart below shows our quarterly revenues for the years ended December 31, 2004, 2005 and 2006:
33% 24% 20% 23% 24% 34% 36%

21% 22%

21% 22% 21%

2004 1st Quarter

2005 2nd Quarter 3rd Quarter

2006 4th Quarter

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Human Resources Adequate human resources planning and management are essential to our success. The objective of our human resources management strategy is to contribute toward making us the preferred employer in our industry. Our human resources managers develop and execute standardized recruitment and training procedures and processes. The table below sets forth our employees and their respective areas for the periods indicated:
Work area Technical and sales (assistants)...................................................... Specialized technical personnel, .................................................... Account executives and managers ................................................. Operational personnel .................................................................... Total .............................................................................................. 2004 357 200 163 720 2005 469 226 147 842 2006 479 224 151 854

Approximately 79.0% of our employees work at our headquarters and 21.0% work at branches. The average age of our employees is 35, and women make up 50.4% of our workforce. Compensation and Benefits Policy We offer our employees the following benefits: (1) health insurance; (2) mental health counseling; (3) life insurance; (4) daycare center; (5) meal vouchers; (6) transportation vouchers, and (7) private pension plan, among others. Certain employees also have a company car, complete medical checkup, and additional health insurance. We have a variable remuneration system for our employees in the sales area that assures these employees variable compensation tied to our results and to individual targets, seeking to recognize and compensate individual productivity and motivate standards of excellence in job performance. Since 2001, we have offered all of our employees the opportunity to participate in a profit sharing program in accordance with Brazilian legislation. Payments under this program are made each year in February. Pursuant to our program, our employees are expected to meet certain goals. Actual sharing in our profits is contingent on our ascertaining profits before taxes projected and approval by our board of directors. Under our profit sharing program, we distributed profits totaling to R$9.2 million, R$12.9 million and R$ 15.6 million in the years ended December 31, 2004, 2005 and 2006, respectively. Unions None of our employees is a protected member of the Union of Employees of Independent Sales Agents and of Consulting, Expertise, Information, Research and Accounting Firms of the State of São Paulo, with which our employees are affiliated. We believe we have a good relationship with the employees' unions and with our employees. We have never experienced a strike or work stoppage. Each year the industry union and our workers' union negotiate salaries and the terms and conditions of collective bargaining agreements. Stock Option Plan Our by-laws include a provision that we may, within the limit of our authorized share capital, grant stock options to our senior management members and employees, as well as to individuals providing services to us, or the senior management members and employees of our subsidiaries and affiliates. When issuing shares upon the exercise of stock options, we are not required to grant preemptive rights for the purchase of these shares by our shareholders. On June 18, 2007, the shareholders present at the special shareholders' meeting approved the hiring of a specialized company to study a stock option plan of acquisition or subscription of Redecard shares, addressed to our directors, executive officers and employees, as well as individuals who provide services to us and to directors, executive officers and employees of other entities that are directly or indirectly controlled by us. This plan will be implemented in the course of the years, and will be granted in the proportion of up to 0.5% of maximum dilution of Redecard shares, limited to our authorized capital stock. The terms and conditions of the stock option plan have not yet been defined, and when defined, they will be subject to the approval of our

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shareholders at a general shareholders' meeting. After approval, the beneficiaries, the grant of the plan, the number of shares that each of the beneficiaries will have the right to subscribe for, as well as the price of exercise of the stock option will be submitted to the approval of our board of directors. The price of exercise of the stock option that may be granted has not yet been defined and it may be established at a price below the offering price of our common shares in connection with this offering, or the stock option may even be granted without any consideration. According to Article 171, Paragraph 3, of Brazilian Corporate Law, shareholders will not have rights of first refusal in the exercise of the stock option plan. As of the date of this offering memorandum, stock option plans have not been approved by our shareholders at a general shareholders' meeting or by our board of directors, nor any stock option has been granted. The issuance of shares upon the exercise of the stock option according to the terms of a plan that will be implemented would result in the dilution of our shareholders. Training We directly invested approximately R$1.2 million, R$1.3 million and R$2.6 million in professional training programs in 2004, 2005 and 2006, respectively. We develop institutional training programs aimed at communicating our values and goals to our employees. Fixed Assets We own all of our assets and equipment that we believe are essential to our operations. Currently, our fixed assets consist of (1) POS electronic capture equipment; (2) capture network equipment; (3) information technology equipment; (4) data-processing systems – software; and (5) other assets that are necessary to give support to our operations, such as installations, furniture and instruments, vehicles, among others. In the three-month period ended March 31, 2007, we owned 800,736 POS electronic capture devices, which represented 60.8% of the number of transactions electronically captured by us. We do not own real estate properties. Our offices are installed in properties that are rented, including our head offices in the city of Sao Paulo. The duration of the lease agreements is on average 60 months, except for the lease agreement related to our head offices, which is for a period of 120 months. Intellectual Property We hold the following trademarks, which are either registered or the subject of applications for registration with the Brazilian Patent and Trademark Office (Instituto Nacional de Propriedade Industiral), or INPI, and include work marks, logo or a mixture of both: "Redecard," "Click-Card," "Credi-Click," "Safenet Redecard," "Komerci," "Electronic Referral Redecard," "Radar de Transações Redecard," "Redecard Debit Alert", "Vitrine Redecard" and "Foneshop." We do not hold any patents, nor do we hold other trademarks or licenses, the absence of which could have a material adverse effect on our operations. We also own the domain name "redecard.com.br." Insurance We have insurance for all of our facilities and equipment and consider the coverage amounts to be adequate for a company of our size and sufficient to cover the intrinsic risks of our operations. In the years ended December 31, 2004, 2005 and 2006, our expenses with insurance payments amounted to R$0.4 million, R$0.3 million and R$0.2 million, respectively. Material Contracts Agreements with MasterCard International On November 15, 1996, we executed with MasterCard International a license agreement for non-exclusive use of the MasterCard brand in connection with our activities as a merchant acquirer and payment processor. The agreement was entered into for an indefinite term and we are required to observe the MasterCard affiliation standards, rules and policies in the affiliation of merchants, which include rules related to the exposure of the brand at merchant locations, title over trademarks and other rights.

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On October 24, 2002, we executed with MasterCard International a trademark license agreement for non-exclusive use of the Redeshop trademark, which MasterCard International had previously acquired from Credicard. On March 29, 2004, we entered into a services agreement with MasterCard Brasil Soluções de Pagamento Ltda., which were previously rendered and collected by MasterCard International, which are described in the "MasterCard Consolidated Billing System Manual." On April 27, 2005, we entered into a license agreement with MasterCard International, pursuant to which MasterCard International granted to us, on a non-exclusive basis, the right to use the trademarks of MasterCard brand, including MasterCard Maestro and other logos of the MasterCard brand. All of the licenses granted to us by MasterCard International have been granted on a non-exclusive basis and MasterCard International has the right to grant licenses for the use of its trademarks to other acquirers in Brazil. Because we entered into these agreements with MasterCard International, we are subject to its bylaws, rules, regulations and manuals, which are incorporated by reference in the agreements for use of trademarks of the MasterCard brand. The relationship between us and the MasterCard brand is based on equal market conditions (arm's length basis). Mastercard International, according to the card member license agreement, has the right to terminate this agreement, revoking the license in the following cases: (1) if we cease to be a card member of Mastercard International, (2) if we fail to reasonably comply with one or more of the established standards for use of the trademarks or with any obligations imposed in the agreement, or (3) if we discontinue the use of the trademarks in connection with our merchant acquiring and payment processing businesses for a period of one year. If any of the mentioned event happens as a result of our failure, Mastercard International may give us a written notice and a term of 90 days after this notice to cure the failure. The agreement will be terminated after 90 days, if we do not cure the failure. In addition, Mastercard International may terminate this agreement if we are unable, by virtue of statutes, regulations or other requirements imposed by the Brazilian government to comply with any of the standards for use of the trademarks or other obligations set out in the agreement. In accordance to its bylaws, rules, regulations and manuals, MasterCard International has the right, and in some cases at its sole discretion, to revoke the license agreement entered into with us and/or impose certain conditions for the continuity of the license agreement under certain circumstances. The agreements we entered into with MasterCard International are governed by New York law. In particular, according to its rules, Mastercard International may temporarily, at its sole discretion (1) revoke our membership and/or one or more of our licenses, which may lead to the termination of the card member license agreement, as explained above, or (2) amend or vary our rights and/or obligations, under special circumstances, such as: (a) if our activities or financial situation puts MasterCard International and/or its members at risk for monetary liability, and/or (b) if our activities jeopardize the goodwill and value of the Mastercard International's brand. In addition, according to the rules, we must advise MasterCard International of any change of control or assignment of our portfolio of affiliated merchants. The failure to advise MasterCard International of this change or assignment may result in termination of the card member license agreement. MasterCard International may, temporarily, at its sole discretion, (1) revoke our membership and/or one or more of our licenses, which may lead to the termination of the card member license agreement, as explained above, or (2) amend or vary our rights and/or obligations, or terminate our membership, if there is a (a) transfer or an attempt to transfer control to another entity, (b) merger into or consolidation with another entity, (c) substantial sale of our assets or our merchant acquirer and payment processor portfolio, (d) change in control or ownership, having been taken by a government or a governmental regulatory authority; or (e) transfer or assignment or an attempt to transfer or assign the membership. Moreover, according to its rules, Mastercard International will develop and, on a an on going basis, will apply criteria to evaluate our financial soundness and ability to comply with the rules. From time to time, Mastercard International may condition continuity of membership on compliance with special conditions, such as additional guarantees. For further information, see "Related Party Transactions – Letters of Credit in Favor of MasterCard International." As of December 31, 2006, the total amount paid by us as a result of the agreements discussed above was R$94.6 million. Our financial obligations under these agreements are guaranteed by Brazilian banks, in the amount of R$1.1 billion, in favor of MasterCard International.

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Affiliation and Adhesion Agreements to the Redecard System The standard affiliation and adhesion agreement for merchants to the Redecard system is an agreement pursuant to which we affiliate merchants to accept debit and credit cards from MasterCard International and Diners Club brands as a means of payment for goods and services. The agreement also establishes the prices and payment schedule, POS equipment to be furnished for the electronic capture of transactions. In addition, it states the amounts to be paid as rent for the equipment and describes the rules and procedures of MasterCard International and Diners Club that we and merchants must follow. This agreement makes new products and services available for these merchants and it sets forth the merchant discount rate to be paid by the merchant. These agreements have a indefinite term of duration. Agreements for Maintenance of POS Electronic Capture Equipment We enter into agreements for maintenance of POS electronic capture equipment with manufacturers of this equipment. Maintenance comprises the replacement of spare parts to ensure the safe operation of the equipment. As a result of the technical features of each equipment, each manufacturer has exclusivity over the maintenance of the equipments supplied to us by them. There is an additional agreement entered into with a call center company that is the first contact for merchants who try to solve functioning problems in POS electronic capture equipment owned by us. In the event it is not possible to solve the problem by means of the call center, the manufacturer is contacted to provide maintenance services on site. These services are not exclusive and may be contracted from other specialized companies. The procurement process involves a bid opened to all interested companies. These maintenance agreements include the description and the prices for the following services: (1) applications load on site or at the laboratory; (2) telephone consultants for maintenance and adjustments of the equipment; (3) maintenance services on site or at the laboratory; (4) presence in fairs and events; (5) 24 hour technical services; and (6) structure to service the contingency plan. These agreements enable us to assure the proper operation of the equipment during their useful lives. The maintenance service providers are the manufacturers of the POS electronic capture equipment, such as Verifone, Ingenico, Lipman, Dionica and Hypercom. Cmagnani is the call center company that we hired to solve functioning problems in the POS electronic capture equipment and be the first contact to assist merchants in maintenance services. These agreements have a two-year term, which allows for periodic reviews and renegotiation of prices. The agreements for maintenance of POS electronic capture equipment have a termination clause that allows for termination upon a 60-day prior notice. Furthermore, the agreement entered into with Cmagnani may be terminated upon a 90-day prior notice. There is no contractual penalty for the early termination of these agreements. The termination of agreements entered into with manufacturers of POS electronic capture equipment may subject us to the suspension of maintenance services by that manufacturer for a indefinite term, as a result of our being dependant upon the replacement of spare parts, which is an exclusivity of each manufacturer. For the year ended December 31, 2006, the amount paid for these services was R$115.4 million. Service Agreement with Orbitall On June 30, 2006, retroactively to January 1, 2006, we entered into a service agreement with Orbitall, a related party controlled by Itaú Holding, which also controls Itaucard, our controlling shareholder, for Orbitall to provide technology services to us related to (1) data processing, (2) provision of hardware and software infrastructure and equipment maintenance for our head quarter offices and branch offices, and (3) support, management, operation and administration of data processing platforms, among other services.

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Payments are made on a monthly basis to the supplier and invoices are issued based on the following metrics: (a) mainframe platform (high processing capacity): services are charged based on the number of MIPs (million of information processed), either for equipment used on a daily basis, or for equipment that is kept as contingency; (b) RISC platform (average processing capacity): for the processing systems in the RISC equipment, charges are paid based on a fixed price for each machine that is used by Redecard; (c) networking (communication network): consists of services rendered for managing communication and connectivity bands, as well as services contracted with telecommunication operators, which have fixed prices for each service; (d) supply services: services rendered for the issuance, reception and commercial analysis of public bidding processes for general purchase, which are executed upon request by Redecard managers, as a way of keeping functions segregated and independence in the purchase processes of Redecard. A fixed price charged on a monthly basis irrespective of the number of public bidding processes that were executed; and (e) additional services: services rendered upon Redecard request that consist of simulation and tests in operating systems, in addition to customization, implementation and update of systems, as well as additional processes that cause changes in Orbitall operations. The prices are negotiated according to the hours spent in the execution of the services. The services we contracted have levels of services and prices corresponding to market practice. The last revision of prices was carried out at the end of 2005, with the support of a consulting company specilized in information technology. The agreement will be in effect through December 31, 2008 and may be terminated after the 24th month from the date it entered into effect, without the imposition of contractual penalties, upon a 180-day prior notice between the parties. Call Center Agreement with Atento On February 15, 2007, we entered into an agreement with Atento for the provision of electronic and assisted call center services, including electronic telephone assistance to affiliated merchants and telemarketing services for the affiliation of new merchants. The Atento call centers answer over 2,200 calls per month, which include manually authorized transactions, receipt of requests for prepayment of receivables and provision of technical support to the POS electronic capture equipment, among others. The agreement may be terminated by any of the parties after the 19th month fom the date of execution and only upon 120-day prior notice. Until the 19th month, the termination will take place mainly in the event of insolvency or bankruptcy of any of the parties, of default under the agreement by us or non-compliance by Atento of any of the levels of services described in the agreement. As of December 31, 2006, our expenditures for services provided by Atento were R$34.4 million. Redecard currently has 700 call center positions and approximately 1,200 operators. Services are divided into four basic functions: (a) authorization center: personalized assistance is rendered by means of equipment with hearable reply (Unidade de Resposta Audível – URA) or personnal assistance. Prices are different for each type of assistance; (b) telemarketing: the assistance may be: (1) upon personnal assistance for services of registering merchant locations and assistance for the installation of equipment for electronic capture of transactions, and (2) by means of equipment with URA system as a predominant form to receive request of prepayment of receivables of sales from merchants. In these cases, there are also different prices for each service; (c) assistance: may also be automated assistance by means of equipment with the URA system or assisted, usually related to orders of material supplies for the use of equipment for the electronic capture of transactions, cancelling sales, requests of equipment and capacitation for other Redecard products, analysis of captured and processed transactions, requests of banking reports and other documents that evidence captured transactions, change in passwords, among others. The price is charged per each call answered and it is different if the assistance is automated or personnal; (d) technical support: is the assistance directed to merchant locations acquired with the objective of solving on line problems related to the equipment for electronic capture of transactions. However, in case the solution is not feasible by telephone, the operator will schedule a visit by a technician by means of the assistance system. The price charged is for average time of assistance. Legal and Administrative Proceedings We are a party to legal and administrative proceedings in the civil, tax and labor areas that result from the normal course of our business. Our policy concerning contingency provisions is to provision for 100.0% of the tax and labor contingencies. Contingencies related to civil cases are provisioned based on the evolution of the lawsuits and considering our internal and external counsel's opinion. We make provisions for civil lawsuits where the loss is considered probable. We believe that no individual pending court or administrative case would materially and adversely affect our financial condition or results of operations, if the outcome of any of such cases were to be unfavorable to us.

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Tax Proceedings As of March 31, 2007, we were party to approximately 12 legal proceedings and one administrative proceedings of tax nature, which involved contingency amounts of approximately R$128.5 million. As of the same date, the consolidated amount of provisions related to these proceedings was R$102.5 million. Social Contribution Tax Currently, we are disputing in a legal proceeding the deductibility of the social contribution tax for determination of our taxable income, in the amount of R$41.8 million, where our prospects for loss are probable, in the opinion of our legal counsel, for which reason we made a provision in the amount of R$41.8 million. Income and Social Contribution Taxes Currently, we are disputing amounts considered as due by the Federal Revenue Service (Secretaria da Receita Federal) related to income and social contribution taxes because we deducted expenses related to losses arising from fraud in the calculation of income tax and social contribution tax, which deduction was not recognized by the Federal Revenue Service. The Council of Tax Payers of the Treasury Ministry (Conselho dos Contribuintes do Ministerio da Fazenda) ruled in our favor. However, the Federal Revenue Service appealed against this decision to the Appeal Chamber (Câmara de Recursos), and no final decision has been yet issued. The amount involved in this dispute is of R$26.0 million. Based on our internal counsel's opinion, the chance of loss in this proceeding is remote. Service Tax Currently, we are disputing at judicial and administrative levels, the levy by some municipalities of service tax on the rent of POS electronic capture equipment. The amount involved in these proceedings is of approximately R$44.6 million. Based on our external counsel's opinion, the chance of loss in these proceedings is possible. PIS and COFINS In 2001, we obtained a preliminary injunction related to the period of February 1999 and subsequent years to suspend the levy of PIS and COFINS according to Law No. 9,718/99 on revenues that are not part of the definition of operating results, such as financial revenue, including monetary adjustments and interest revenues. In April 2002, the judicial decision that was partially in our favor was published, so that once declared the inconstitutionality of Paragraph 1 of Article 3 of Law No. 9,718/99, we could collect PIS and COFINS according to the definition of operating results set forth in Complementary Law No. 70/91, however, at the rate of 3.0%. The Federal government appealed against this decision. In February 2007, an unfavorable decision to the Federal government was published, confirming the decision that considered inconstitutional the increase in the PIS and COFINS calculation base. The Brazilian Federal Supreme Court (Supremo Tribunal Federal) has already decided that the PIS and COFINS, according to Law No. 9,718/99 may only be levied on revenues arising from sales of goods and/or services of Redecard. Because revenues resulting from exchange variation were the object of request for clarification by the Brazilian Federal Supreme Court, we decided to keep the provision on these revenues, taking into account the principles of accounting records of legal obligations which evaluation of risk of loss is considered as possible based on our external counsel's opinion. As of March 31, 2007, the amount provisioned was R$5.4 million. In March 2004, we filed a writ of mandamus requesting that the fiscal authority does not levy PIS and COFINS, based on the "non-cumulative" method at the rates of 1.65% and 7.6%, respectively, according to Laws No. 10,637/02 and Law No. 10,833/03. We started to make court deposits of the amounts calculated on a monthly basis. In July 2004, the decision that ruled that our request was undue was published. Therefore, we reverted the conversion of court deposits in favor of the Federal government. The amount of the provision is R$6.4 million, exactly the same as the amount of the court deposit. Contribution of the Intervention in the Economic Domain (Contribuição da Intervenção no Domínio Econômico – CIDE) In July 2004, the decision that ruled against us was published regarding our request to suspend the levy of CIDE payment, created by Law No. 10,168/2000, amended by Law No. 10,332/2001. In July 2004, the appeal was filed and since then we began to make court deposits of amounts due regarding this contribution. In September 2006, we requested the waiver of the appeal and converted the court deposits in favor of the Federal government. As of December 31, 2007, the amounts provisioned were R$3.7 million, exactly the same as the amount of court deposit.

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Civil and Regulatory Cases As of March 31, 2007, we were a party to 821 civil cases, 266 of which are a result of claims filed by merchants who object to our retention of credit after we suspect fraudulent activity and delayed the prepayment of receivables to those merchants and 222 chargeback claims. The estimated contingency amount of those lawsuits is R$21.9 million. We have provisioned R$6.4 million in connection with civil cases where our prospects for loss have been evaluated as probable by our internal and external counsel. In addition, the Federal Public Prosecution Service initiated a preliminary injunction claim in preparation for a legal proceeding related to formation of cartel against all merchant acquirer companies with respect to setting merchant discount rates and rent of POS electronic equipment. However, to date, we have not made provisions for this legal proceeding because we consider the risk loss as remote based on recent decisions of the Administrative Board of Economic Defense (Conselho Administrativo de Defesa Economica), or CADE in two administrative proceedings initiated against merchant acquirer companies, which ruled that there was no formation of cartel with respect to setting merchant discount rates and rent of POS electronic capture equipment charged to affiliated merchants. Labor Claims As of March 31, 2007, we were a defendant in 129 labor claims, of which 86 were brought by our former employees, in addition to cases related to former employees of outsourced service providers. The total amount of the contingency is R$7.4 million. A substantial part of these cases involve indemnity claims on account of alleged repetitive strain injuries and claims for salary equalization. Based on the opinion of our internal counsel and on the calculation carried out by an accounting expert hired by us, our total estimated losses in these claims is R$7.4 million for which we have made provisions.

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OUR MANAGEMENT Board of Directors Our board of directors is a collective decision-making corporate body, which is responsible for defining our general business policies and overall strategic guidelines, including our long-term strategies. The duties of the board of directors also include, among other things, supervising management. Consistent with the rules applying to the Novo Mercado listing segment of the BOVESPA, to which we have adhered, our by-laws set forth that our board of directors is composed of a minimum of five and a maximum of ten directors. The actual number of members of our board of directors will be defined by a majority vote at a meeting of our shareholders. Our directors are elected for unified two-year terms, reelection being permitted, and may be removed at any time pursuant to a decision of our shareholders' meeting. According to the terms of our bylaws, the maximum age for the member of the board of directors to be elected is 65 years, provided that our general shareholders' meeting may deliberate for the extension of this limit. According to Brazilian Corporate Law, holders of an interest in our shares in the aggregate representing a minimum of five percent of our voting stock may request that cumulative voting be adapted at shareholders' meetings held to elect our directors. If this is not the case, our directors are elected by a majority vote of the holders of our common shares that attend the meeting in person or represented by proxy. Shareholders or groups of shareholders wishing to submit director nominations should do so by giving notice to us as early as five days prior to the date of the shareholders' meeting. In addition, under the Brazilian Corporate Law holders of an interest in our shares in the aggregate representing a minimum of 15.0% of our voting stock may elect one effective member of our board of directors and his/her alternate pursuant to a separate voting process. The collegiate body of the CVM, by majority of votes, on November 8, 2005 adopted the position that in the event this percentage is not reached, shareholders holding 10.0% of our capital stock may together appoint a member of the board of directors and respective alternate. According to Novo Mercado regulations, our directors are required, prior to taking office, to sign an instrument of adherence to the rules and regulations of the Novo Mercado and of the Market Arbitration Chamber established by the Bovespa, as well as adherence to the provisions of our agreement for participation in the Novo Mercado. Our board of directors is currently composed of a total of seven members elected at the special shareholders' meeting held on April 25, 2006 and May 28, 2007. Their term of office should extend to the date of the shareholders' meeting to be held to analyze and judge our financial statements as of and for the year ended December 31, 2009. The table below shows the names, age, titles and date of election of the members of our board of directors:
Name Hélio de Mendonça Lima Joaquim Francisco de Castro Neto Gilberto Caldart Hector Nevarez Cláudio Rudge Ortenblad Márcio de Andrade Schettini Horacio Lafer Piva Age 62 63 48 52 53 43 50 Title Chairman Vice-chairman Director Director Director Director Independent director First elected to our board in 2001 2006 1996 2005 2005 2005 2007 Last elected to our board in 2007 2007 2007 2007 2007 2007 2007

According to Brazilian Corporate Law, each of our directors must be a shareholder, although there is no requirement as to a minimum number of shares. According to Novo Mercado regulations, a minimum of 20.0% of the members of our board of directors should be independent, with no ties to us or our controlling shareholder.

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Should this percentage result in a fractional number, our board of directors may proceed to round it (i) up, if the fraction is equal to or higher than 0.5; or (ii) down, if lower than 0.5. Therefore, if our board of directors comprises six members, at least one member must be an independent director. The minutes of the shareholders' meeting that elects the independent director must identify this member of our board of directors as such. Currently, Mr. Horacio Lafer Piva is our independent director. Decisions of our board of directors are generally taken by a majority vote of the directors attending a board meeting. In addition, under the Brazilian Corporate Law, our directors are prohibited from voting in meetings of our shareholders and from taking part in company transactions or operations in which they may have a conflict of interest with us. For a description of the agreements or other material undertakings between our directors and us, see "Related Party Transaction." Board of Executive Officers Our executive officers are our legal representatives, and are principally responsible for our day-to-day management and for implementing the policies and general guidelines set by our board of directors. According to Brazilian Corporate Law, all our executive officers must be residents of Brazil and may or may not be our shareholders. In addition, a maximum of one-third of our directors may also serve as our executive officers. According to the terms of our bylaws, the maximum age for the executive officer to be elected is 60 years, provided that our board of directors may deliberate for the extension of this limit. Our executive officers are elected at a meeting of our board of directors for two-year terms, reelection being permitted. According to our by-laws, our officers may be removed at any time by a decision of our board of directors. In addition, according to our by-laws, our board of executive officers is composed of a minimum of three and a maximum of eight members. There are currently seven executive officers in office. Their term of office should extend to the date of the board meeting after the shareholders' meeting to be held to analyze and judge our financial statements as of and for the year ended December 31, 2007. Moreover, according to the Novo Mercado regulation, prior to taking office our executive officers are required to sign an instrument of adherence to the rules and regulations of the Novo Mercado and the Market Arbitration Chamber established by the BOVESPA, as well as adherence to the provisions of our agreement for participation in the Novo Mercado. The table below shows the names, age, titles and year of election of the members of our board of executive officers.
Year in which started working at Redecard First elected in Last elected in 1974(1) 2000 2006 1999 1995(1) 1971(1) 2007 1996 2000 2006 1999 2005 1998 2007 2006 2006 2006 2006 2006 2006 2007

Name Anastácio Vasconcelos Ramos Edson Luiz dos Santos Marcos Negreiros Vicente Fábio Pinto Palmeira Alessandro Tavares Raposo Irélio Pedro Frigo Ronaldo Cerqueira Varela

Age 55 50 41 56 36 58 47

Title Chief executive officer Chief financial officer, in charge of risk and controls and investor relations' officer Chief commercial officer Chief operating officer Chief technology officer Chief human resources officer Chief marketing and product officer

(1) Taking into account the year in which the executive officer started working for Credicard S.A.

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Biographical Descriptions Below is brief biographical description of the members of our board of directors and board of executive officers: Directors Hélio de Mendonça Lima has been an executive officer of Banco Itaucard S.A. since 2002. From 1997 to 2001, he was chief executive officer of American Express, chief executive officer of Prever Seguros e Previdência from 1992 to 1997, chief executive officer of Credicard from 1982 to 1986, of Citibank N/A from 1972 to 1986 and of Citibank Florida from 1990 to 1992. He has been a member of our board of directors since 2001. Mr. Lima graduated in mechanical engineering from Pontifícia Universidade Católica – PUC of Rio de Janeiro and has a master's degree in business administration from Michigan State University. Joaquim Francisco de Castro Neto joined Unibanco as an executive officer of Finasul, where he held various positions prior to being elected a member of the Unibanco conglomerate. He was a member of the board of directors of Banco Fininvest S.A., chairman of the board of Dibens, chief executive officer of Unibanco Distribuidora de Títulos e Valores Mobiliários S.A., in addition to holding executive offices within the group. He is currently a director of Unibanco and Visa International Inc. in Latin America. He has been a member of our board of directors since 2004. Mr. Castro graduated in business administration from Fundação Getúlio Vargas and has an associate degree in sales administration, marketing and product development from IMEDE in Lausanne. Gilberto Caldart is an executive officer of the Global Consumer Group of Citibank in Brazil, having joined Citibank in 1982, where he performed various jobs prior to being elected a member of the board of executive officers. He has been a member of our board of directors since 2005. Mr. Caldart graduated in business administration from Universidade Federal do Rio Grande do Sul and has a master's degree in business administration from Duke University. Hector Nevarez has been the chief executive officer of Banco Citicard S.A. since May 2006. Previously, he was the Regional Credit Card Officer for Latin America, for which he was appointed in 2002. He has been a member of our board of directors since 2006 and a member of our board since 2007. Mr. Nevarez graduated in marketing from Universidad de Puerto Rico, has an MBA in marketing and finance from Universidad de Puerto Rico and in business administration from the INSEAD. Cláudio Rudge Ortenblad has been with Itaucard since 2000, when he was appointed Senior Managing Officer. He has been a member of our board of directors since 2005 and a member of our board since 2007. He graduated in economics from Universidade de São Paulo and has a postgraduate degree in finance and economic engineering from Universidade de São Paulo. Márcio de Andrade Schettini worked for several companies and financial institutions prior to joining the Unibanco group in 1997, where he has been chief executive officer of Unicard, Fininvest and other companies of the group. He was elected deputy chief executive officer of Unibanco in 2004 and has been a member of our board of directors since 2005 and a member of our board since 2007. Mr. Schettini graduated in electrical engineering and has a master's degree in administration from Pontifícia Universidade Católica in Rio de Janeiro. Horacio Lafer Piva has been a member of the board of directors of Klabin S.A. since 1997, Atmofera Gestão e Higienização de Têxteis since 2006 and Tarpon Investment Group Ltd. since May 2007. He has participated in the advisory councils of Brasilpar Serviços Financeiros, Spread Teleinformática and Banco Privado Português since 2005. He has been the chairman of the board of directors of Associação Brasileira de Papel e Celulose, the Brazilian pulp and paper association, or Bracelpa, since 2006, Semco Group since 2005, DNA Brasil Institute since 2006 and the Associação de Assistência à Criança Deficiente, association for assistance to handicapped children, or AACD since March 2007. He was president of Federação e Centro das Indústrias do Estado de São Paulo, the federation and center of the industries of the state of São Paulo, or FIESP/CIESP, of Serviço Social da Indústria, the social service for the industry, or SESI, Serviço Nacional de Aprendizagem Industrial, the Brazilian industrial apprenticeship service, or SENAI, from 1998 to 2004, Serviço Brasileiro de Apoio às Micro e Pequenas Empresas, the Brazilian micro and small business support service, or SEBRAE, from 1998 to 2000 and of the economic policy council of the Confederação Nacional da Indústria,

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the Brazilian industry confederation, or CNI, until 2004. Mr. Piva is also a member of the board of the following entities: Ethos Institute, Antonio Prudente Foundation, Fundação de Amparo à Pesquisa do Estado de São Paulo, the research foundation of the state of São Paulo, or FAPESP, Orquestra Sinfônica do Estado de São Paulo, the São Paulo official orchestra, or OSESP, Conselho de Desenvolvimento Econômico e Social, the economic and social development council, or CDES, and Associação Brasileira de Distrofia Muscular, the Brazilian association of muscular dystrophy, or ABIM. He has been the independent member of our board of directors since 2007. He graduated in economics and has a postgraduate degree from the business school of Fundação Getúlio Vargas. Executive Officers Anastácio Vasconcelos Ramos was a sales agent, sales executive, branch manager, regional manager and commercial vice president of Credicard, where he has worked for more than 23 years. Prior to joining our company he worked in the bankcard departments of the Andrade Arnaud and Hales banks. He was an executive officer of the Brazilian Association of Credit Card and Service Companies. He was our chief commercial officer for more than eight years, and was elected our chief executive officer in 2005. Mr. Ramos graduated in business management with concentration in marketing. Edson Luiz dos Santos began his career working in finance, as a financial analyst at Phillip Morris, where he later worked as cost manager, planning manager, controller and treasurer. He is a former chief financial officer of Durametalic, of SEA Containers and DHL, and also a deputy chief executive officer and chief financial officer of Crown Cork. He is currently an executive officer of the Brazilian Association of Credit Card and Service Companies. Since 2000 has been our chief financial officer, in charge of risk and controls and investor relations' officer. Mr. Santos has a postgraduate degree in business administration from Michigan State University, where he also attended an executive development program. He also attended the Advanced Management Program of Fundação Dom Cabral and the INSEAD. Marcos Negreiros Vicente has worked as marketing manager, commercial manager and sales manager of different international manufacturers of consumption products and durable goods. He was also an executive officer at Reckitt Benckiser, Multibrás, Procter & Gamble (for twelve years) and Accenture. He was elected our chief commercial officer in 2006. Mr. Vicente graduated in production engineering from Universidade de São Paulo. Fábio Pinto Palmeira graduated in economics and worked for 17 years for Chase Manhattan Bank, as well as for Banco Nacional and Banco Bozano Simonsen, as manager of credit and risk. He joined our company nine years ago as executive officer in charge of risk management and since December 2005 has been our chief operating officer. Alessandro Tavares Raposo worked in the technology departments of Credicard and Citibank. He joined our company in 1997, was our systems manager, manager of system architecture, logistics, technology infrastructure, telecommunications and research & development. Since December 2005 has been our chief technology officer. Mr. Raposo graduated in information technology and attended a management program at the Kellogg School of Management. Irélio Pedro Frigo graduated in business administration and was formerly a human resources and services manager of Banco Crefisul and of Banco Bamerindus. He is our chief human resources officer since 1996. Ronaldo Cerqueira Varela was an executive officer of marketing, technology and products in companies such as Promom, Booz Allen & Hamilton, Northern Telecom and Union Carbide. Until 2007, he was the regional executive officer of new business for Latin America of Telefonica. He has been our chief marketing and product officer since 2007. He graduated from the Business School of Pontifícia Universidade Católica of Salvador and has an MBA degree from Kenan Business School of the University of North Carolina. Share Ownership The table below indicates the number of shares issued by us, held by our directors as of the date of this preliminary offering memorandum, as well as the percentage of our capital stock and total outstanding shares they represent. As of the date of this offering memorandum, our executive officers do not hold shares of Redecard. Except for Mr. Castro Neto, who owns one share of Redecard, the other members of our board of directors hold shares issued by Redecard by means of usufruct of shares owned by our controlling shareholders.

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Directors/Officers Joaquim Francisco de Castro Neto.......................................... Hélio de Mendonça Lima........................................................ Claudio Rudge Ortenblad........................................................ Gilberto Caldart ...................................................................... Hector Nevarez ....................................................................... Marcio de Andrade Schettini................................................... Horacio Lafer Piva .................................................................

Number of shares 1 1 1 1 1 1 1

Percentage (%) 0.0001% 0.0001% 0.0001% 0.0001% 0.0001% 0.0001% 0.0001%

Compensation Pursuant to Brazilian Corporate Law, our shareholders are responsible for establishing, at a shareholders' meeting, the annual aggregate amount of the compensation we pay to the members of our senior management. According to our bylaws, our general shareholders' meeting is responsible for establishing the annual global compensation of our directors and executive officers, and our board of directors is responsible for allocating this amount among our directors and executive officers. In the year ended December 31, 2006, the compensation we paid to the members of our board of directors and board of executive officers totaled R$5.2 million, of which approximately R$2.2 million were related to compensation and R$3.0 million were in profit sharing. For the year ended December 31, 2007, our general shareholders' meeting held on April 27, 2007 established the compensation of our directors and executive officers was approved in the amount of up to R$15.0 million. In addition, since 2001, we have offered a profit sharing program to all our employees according to the federal legislation which payment is made in the month of February of each year. This program has targets to be reached by us and is subject to the attainment of income before income tax projected and approved by our board of directors. We distributed R$9.2 million, R$12.9 million and R$15.6 million in profit sharing with respect to the years ended December 31, 2004, 2005 and 2006, respectively. Stock Option Plan Our by-laws include a provision that we may, within the limit of our authorized share capital, grant stock options to our senior management members and employees, as well as to individuals providing services to us, or the senior management members and employees of our subsidiaries and affiliates. When issuing shares upon the exercise of stock options, we are not required to grant preemptive rights for the purchase of these shares by our shareholders. On June 18, 2007, the shareholders present at the special shareholders' meeting approved the hiring of a specialized company to study a stock option plan of acquisition or subscription of Redecard shares, addressed to our directors, executive officers and employees, as well as individuals who provide services to us and to directors, executive officers and employees of other entities that are directly or indirectly controlled by us. This plan will be implemented in the course of the years, and will be granted in the proportion of up to 0.5% of maximum dilution of Redecard shares, limited to our authorized capital stock. The terms and conditions of the stock option plan have not yet been defined, and when defined, they will be subject to the approval of our shareholders at a general shareholders' meeting. After approval, the beneficiaries, the grant of the plan, the number of shares that each of the beneficiaries will have the right to subscribe for, as well as the price of exercise of the stock option will be submitted to the approval of our board of directors. The price of exercise of the stock option that may be granted has not yet been defined and it may be established at a price below the offering price of our common shares in connection with this offering, or the stock option may even be granted without any consideration. According to Article 171, Paragraph 3, of Brazilian Corporate Law, shareholders will not have rights of first refusal in the exercise of the stock option plan. As of the date of this offering memorandum, stock option plans have not been approved by our shareholders at a general shareholders' meeting or by our board of directors, nor any stock option has been granted. The issuance of shares upon the exercise of the stock option according to the terms of a plan that will be implemented would result in the dilution of our shareholders.

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Family Relationships Among Any of Our Directors or Executive Officers and Among Our Directors or Executive Officers and the Controlling Shareholders There is no family relationship among our directors and executive officers or among them and our controlling shareholders. Material Agreements or Obligations Among Our Directors and Executive Officers and Us There is no material agreement of obligations among our directors and executive officers and us.

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PRINCIPAL AND SELLING SHAREHOLDERS Our capital stock is composed solely by common shares. The table below sets forth information relating to the ownership of our common shares by each holder of five percent or more of our capital stock, as well as by our directors and officers and the selling and controlling shareholders as of the date of this offering memorandum and following the closing of this offering, without giving effect to the exercise of the over-allotment option:
Shareholders Citibank............................................................................... Itaucard ............................................................................... Unibanco............................................................................. UPS(2) ................................................................................ Dibens(2) ............................................................................ Senior management members(3)......................................... Other ................................................................................... Total ................................................................................... Before the offering Shares (%) 209,999,998 209,999,998 350 82,178,949 127,820,698 7 27,415,150 657,415,150 31.9 31.9 0.0 12.5 19.4 0.0 4.2 100 After the offering(1) Shares (%) 168,242,674 163,242,674 350 35,421,625 127,820,698 7 178,242,677 672,970,705 25.0 24.3 0.0 5.3 19.0 0.0 26.5 100.0

(1) Assuming no exercise of the over-allotment option. (2) Legal entities from the same financial conglomerate of Unibanco. (3) Except for Mr. Castro Neto, who owns one share of Redecard, the other members of our board of directors hold shares issued by the Company by means of usufruct of shares owned by the controlling shareholders.

The selling shareholders are the following: Citibank Banco Citibank S.A., a financial institution registered with the National Corporate Taxpayers Register of the Ministry of Finance under CNPJ/MF No. 33.479.023/0001-80. As of the date of this offering memorandum, Citibank holds an interest in our common shares representing approximately 31.9% of our capital stock. Citibank is a participant in the Citigroup financial conglomerate and offers a wide range of financial products and services, including banking services, consumer credit, insurance, investments and stock brokerage. Citibank operates in over 100 countries worldwide and its customers comprise over 200 million bank accounts. Citigroup has been established in Brazil since 1915, the year when Citibank first opened a branch in the city of Rio de Janeiro. Citigroup currently holds a portfolio comprising over 300 thousand account holders, R$30.8 billion in total assets, has net assets amounting to R$3.2 billion and over seven thousand employees and has its shares listed on the NYSE. Itaucard Banco Itaucard S.A, a financial institution registered with the National Corporate Taxpayers Register of the Ministry of Finance under CNPJ/MF No. 17.192.451/0001-70. As of the date of this offering memorandum, Itaucard holds an interest in our common shares representing approximately 31.9% of our capital stock. Itaucard is a multi-service bank controlled by Itaú Holding. As of December 31, 2006, Itaú Holding had consolidated assets amounting to R$ 209.6 billion and net assets of R$23.5 billion. Itaú Holding began operating in 1945 and currently provides banking and other services to individual and corporate customers, government entities, institutional investors and other customers. Its corporate purpose includes underwriting, custody services, stock brokerage, credit cards, purchasing pools, insurance, capitalization and pension funds, as well as financing, including vehicle financing. Itaú Holding is a publicly held corporation listed on the stock exchanged of São Paulo, New York and Buenos Aires.

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Unibanco Participacões Societárias S.A. and Unibanco – União de Banco Brasileiros S.A. Unibanco Participações Societárias S.A., a company registered with the National Corporate Taxpayers Register of the Ministry of Finance under CNPJ/MF No. 04.662.287/0001-76, is a selling shareholder in this offering. As of the date of this preliminary offering memorandum, UPS holds an interest in our common shares representing approximately 12.5% of our capital stock. UPS is a company controlled directly or indirectly by Unibanco, which holds an interest of approximately 90% of the voting capital, and has DBR Investments Co. Limited. This is a non-financial company that is part of the Deutsche Bank group, as a minority shareholder with an interest of approximately 10% of the voting capital and approximately 49% of the voting capital of UPS. Unibanco, founded in 1924, is the oldest private financial institution operating throughout Brazil. Unibanco currently provides banking and other services to a diversified portfolio of customers, including individual and corporate customers in the following segments, retail banking, wholesale banking, insurance, pension funds and asset management. Unibanco is a publicly held corporation listed on the BOVESPA since 1968. In 1997, Unibanco became the first Brazilian bank whose units were listed on the New York Stock Exchange. Shareholders' Agreement On June 18, 2007, our controlling shareholders who held on the execution date shares representing approximately 96.0% of our capital stock entered into a shareholders' agreement. The shareholders' agreement regulates the guidelines of the relationship among the shareholders before and after this offering, including voting rules and provisions related to our management and sale of shares of our capital stock. According to the terms of the shareholders' agreement, the deliberations at general shareholders' meetings and at meetings of our board of directors depend on the affirmative vote of the shareholders who entered into the shareholders' agreement. To this end, previous meetings may be held in which the shareholders who entered into the shareholders' agreement will decide how to cast the vote. The shareholders' agreement also provides that for the composition of our board of directors, the shareholders who entered into the shareholders' agreement should always indicate the same number of members. The shareholders' agreement sets forth rules for the sale of shares of the shareholders who entered into the shareholders' agreement, taking into account the grant of the right of first refusal in the sale of these shares. By means of this mechanism, all shareholders who entered into the shareholders' agreement (and future third parties who acquire shares) will maintain shares representing at least 50.0% of our capital stock. The shares of each shareholder who entered into the shareholders’ agreement that exceed 17.0% of our share capital may be object of private sale to third parties or public sale on the stock exchange or over-the-counter market, and a faster procedure will be applied for the right of first refusal of the other shareholders who entered into the shareholders’ agreement, provided that this sale be carried out in an organized fashion to avoid an adverse effect on the price of our shares on the stock exchange. Any transfer of shares subject to the shareholders’ agreement may only be carried out to a qualified investor, which is defined under Brazilian law as the individual or legal entity of good reputation with economic-financial capacity compatible with the size, nature and objectives of Redecard and who is also acceptable to the other shareholders who entered into the shareholders’ agreement. Except for the exceding shares, there is a restriction for the partial sale of our shares held by shareholders who entered into the shareholders’ agreement. Any sale of our shares that are subject to the shareholders’ agreement shall include all shares held by the shareholder who entered into the shareholders’ agreement. The restrictions to the transfers of shares set forth in the shareholders’ agreement are not applicable to the transfers carried out to controlling companies of, or companies controlled by, or under common control of, the shareholders who entered into the shareholders’ agreement.The shares that are acquired by third parties will only remain subject to the agreement upon previous and express approval of the shareholders who entered into the shareholders' agreement. The term of the shareholders’ agreement is eight years from the execution date and it will be automatically renewed for successive periods of 10 years in case there is no express six-month prior written notice to the contrary by any of the shareholders who entered into the agreement. Any disputes or controversies arising out of the shareholders’ agreement shall be subject to arbitral court according to the terms of the International Chamber of Commerce.

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RELATED PARTY TRANSACTIONS The Brazilian underwriters, either directly or through their affiliates, are our controlling shareholders. Unibanco, jointly with UPS and Dibens, Citi, through its affiliate Citibank, and Itaucard, which belongs to Banco Itaú BBA's financial conglomerate, each holds 31.9% of our common shares and are the selling shareholders in connection with the offering of our common shares. Unibanco and the entities belonging to Banco Itaú BBA's conglomerate render certain banking services and sell banking products to us. Citibank's conglomerate renders consulting and investment banking services to us. We can, in the future, hire Unibanco, Banco Itaú BBA and Citi, as well as other entities belonging to the same financial conglomerate, to assist us with investing, placement of securities or other transactions in our regular course of business. Additionally, Banco Itaú S.A. is the financial institution hired by us to render bookkeeping services, Citibank N.A. is the depositary in connection with the GDSs, and Citibank Distribuidora de Títulos e Valores Mobiliários S.A. is the custodian of the shares underlying our GDSs. In the ordinary course of our business we maintain certain arms' length transactions with related parties, all of which observe ordinary market standards and practices, which are briefly discussed below. As of March 31, 2007, our transactions with related parties were transactions with respect to accounts receivable from card issuers, which are also our controlling shareholders, as well as expenses for services provided by Orbitall.
Accounts receivable from issuers Citibank.............................................................................................................................. Itaucard.......................................................................................................................... Unibanco ....................................................................................................................... Expenses with service received Orbitall(1)...................................................................................................................... (1) Orbitall is controlled by Itaú Holding, which controls Itaucard, our controlling shareholder. R$ million 1,860.8 3,187.7 853.8 11.1

Our accounts receivable from issuers refer to payment owed by card issuers to us concerning the amount of transactions carried out with credit and debit cards branded MasterCard and Diners Club, which we subsequently pass on to affiliated merchants. We entered into a services agreement with Orbitall for the provision of technology, office automation and financial management services. We have also entered into agreements with (1) our shareholder MasterCard International, in connection with trademark licensing and rules for merchant affiliations to accept credit and debit cards as a means of payment for goods and services, among other things. For a more detailed description of the agreements entered into between us and Orbitall or us and MasterCard International, see "Business⎯Material Contracts." Services Agreements of Assurance of Banking Domicile We entered into services agreements of assurance of banking domicile with Citibank, Itaucard and Unibanco for an undetermined period of time. The object of these agreements is to assure to Citibank, Itaucard and Unibanco the banking domicile of affiliated merchants who may carry out financial operations with them. By assuring the banking domicile to Citibank, Itaucard and Unibanco, we assure that credits arising from credit and debit card transactions be deposited in the accounts of Citibank, Itaucard and Unibanco. In case of termination of these services agreements, we will continue to be obligated to make deposits in the relevant accounts until the end of the term of authorization for the assurance of the banking domicile given by the relevant merchant. During the period of the assurance of the banking domicile, we commit ourselves not to make prepayments of receivables from credit card transactions to merchants.

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Letters of Credit in Favor of MasterCard International. We entered into letters of credit with Brazilian banks that are not part of the financial conglomerates of the controlling shareholders. The letters of credit are in favor of MasterCard International to guarantee all our obligations arising out of the license agreement and the settlement of the transactions with merchants acquired by us. The letters of credit will expire on March 12, 2008 and they have to be renewed every year for as long as we are a merchant acquirer and payment processor of MasterCard International. As of March 31, 2007, the total amount of the letters of credit was R$1.1 billion. GDRs Deposit Agreement with Citibank, N.A. On June 6, 2007, we filed with the CVM for its approval of our Rule 144A GDR and Regulation S GDR programs two agreements entered into with Citibank N.A. for the deposit of our common shares and the issuance of the corresponding number of GDSs, which are, the Regulation S Deposit Agreement and the Rule 144A Deposit Agreement. According to these agreements, Citibank, N.A. will act as the depositary for the issuance of GDSs and it will be responsible for forwarding all amounts to the holders of GDSs. Citibank N.A. is a company incorporated according to the laws of the United States of America and it is part of the Citigroup finance group, which is also the economic group of the our controlling shareholder Citibank. The Rule 144A deposit agreement and the Regulation S deposit agreement will be amended and restated to be dated on or about July 17, 2007. Custodian Services Agreement On April 19, 2007, we executed an agreement with the Banco Itaú S.A. and the Itaú Corretora de Valores S.A. for the custody of our common shares. According to this agreement, Banco Itaú S.A. will be the custodian of our common shares and the issuer of our shares certificates. This agreement has a indefinite term and it may be terminated by any of the parties with a 90-days prior notice. The Banco Itaú S.A. and the Itaú Corretora de Valores S.A. are part of the same economic group of our controlling shareholder Itaucard.

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DESCRIPTION OF OUR SHARE CAPITAL The discussion below is a summary of certain significant provisions of our bylaws, Brazilian Corporate Law and the rules and regulations of the CVM and the Novo Mercado, of our management, periodic and occasional reporting, as well as of other corporate aspects applying to us. This discussion does not purport to be complete and is qualified by reference to some provisions of our bylaws, the Brazilian Corporate Law and the regulations of the CVM and of the Novo Mercado listing segment of the BOVESPA. General We are currently a publicly held corporation (sociedade por ações de capital fechado) incorporated under the laws of Brazil. On April 27, 2007, we applied for our registration with the CVM as a publicly held corporation, and the registration was granted by the CVM on July 11, 2007. Share Capital As of the date of this offering memorandum, our capital stock was R$473,551,217.67, all of which has been fully paid in and divided into 672,970,705 registered common shares, without par value. Pursuant to our bylaws, our board of directors may increase our capital stock, without amending our bylaws, up to a total of 1,750,000,000 common shares. Our shareholders must approve in a shareholders' meeting any capital increase that exceeds our authorized capital. According to the agreement we have executed with the BOVESPA to list our shares on the Novo Mercado segment of BOVESPA, we may not issue non-voting shares, shares with restricted voting rights or participation certificates (partes beneficiárias). Treasury Shares We do not hold treasury shares. History of Our Share Capital The table below sets forth the evolution of our capital stock since our incorporation:
Date 09.02.1996 11.28.1996 05.09.1997 04.30.1999 06.30.1999 04.28.2000 04.30.2002 12.19.2003 10.28.2005 07.11.2007 Meeting Meeting of Incorporation Extraordinary Shareholders' Meeting Meeting of the Board of Directors General Shareholders' Meeting Extraordinary Shareholders' Meeting General Shareholders' Meeting General Shareholders' Meeting Extraordinary Shareholders' Meeting Extraordinary Shareholders' Meeting Meeting of the Board of Directors Original Capital Stock – R$ 1,800,000.00 R$ 12,107,500.00 R$13,728,916.66 R$16,179,533.30(1) R$18,759,576.59 R$23,886,000.00 R$ 34,631,200.00 R$ 45,198,046.71 R$53,551,232.67 Final Capital Stock R$1,800,000.00 R$12,107,500.00 R$13,728,916.66 R$16,475,000.00 R$18,759,576.59 R$23,886,000.00 R$34,631,200.00 R$45,198,046.71 R$53,551,232.67 R$473,551,217.67

(1) A cancellation of a capital stock increase in the amount of R$295,466.70 was approved.

On June 15, 2007, the shareholders present at our general shareholders' meeting approved a stock split at a ratio of one common share to 350 common shares. Before the stock split, our share capital was divided in 1,878,329 common shares and after the stock split it has been divided in 657,415,150 common shares. Trading on the BOVESPA Our common shares will be traded on the Novo Mercado segment of the BOVESPA, a not-for-profit entity owned by its member brokers. Trading on such exchange is carried out by member brokers. On May 25, 2007, we applied for our registration as a publicly held corporation with the BOVESPA and listing of our shares on the Novo Mercado segment. The common shares will start trading on the Novo Mercado segment of the BOVESPA on the first business day after the date of this offering memorandum under the code "RDCD3" pursuant to the Novo Mercado Participation Agreement entered into on June 18, 2007. Pursuant to the Novo Mercado Participation Agreement, we will have a three-year term from the date of publication of the announcement of of the commencement of the offering to reach the minimum free float of 25.0% of shares outstanding, as required by Novo Mercado regulations. During this period, however, we will commit ourselves to keep a minimum percentage of free float of 16.0%.

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The CVM and the BOVESPA have discretionary authority to suspend trading in shares of a particular issuer under certain circumstances. The trading in securities listed on the BOVESPA, including in the Novo Mercado, Nível 1 and Nível 2 special listing segments, may be affected by trading taking place on the non-organized over-the-counter market. The settlement of transactions involving the sale of shares on the BOVESPA takes place within three business days after the trading date. The delivery and the payment of the common shares are made through the facility of CBLC, which is managed by the BOVESPA. The CBLC is the clearing house for the transactions carried out on the BOVESPA, handling multilateral settlement of both financial obligations and transactions involving securities. According to the regulations of the CBLC, financial settlement is carried out through the Central Bank's Reserve Transfer System. Clearing in turn takes place in the CBLC custody system. Both clearing and settlement are final and irreversible. Restrictions on Foreign Investments No restrictions apply to individuals or entities domiciled abroad holding our shares. However, the right to convert dividend payments and the proceeds from the sale of shares into foreign currency, and to remit these amounts abroad, is subject to foreign exchange restrictions and to the Brazilian legislation on foreign investments, which among other formalities, requires foreign investments to be electronically registered with the Central Bank. Foreign investors may register their investments with the Central Bank, as a direct foreign investment, pursuant to Law 4,131/62, or with the CVM, as a foreign portfolio investment, pursuant to CMN Resolution 2,689 and CVM Instruction 325. Direct foreign investors may sell their shares either in private transactions, on the stock exchange or over-the-counter market, but are generally subject to a less favorable tax treatment than foreign portfolio investors. CMN Resolution 2,689 provides that, with certain exceptions, such as in the case of purchases of shares in public offerings, foreign portfolio investors may only purchase and sell shares on the stock exchange or organized over-the-counter market, and are generally granted a more favorable tax treatment than direct foreign investors. Corporate Purpose As defined in our bylaws, our corporate purpose consists of: (1) coordinate payments with merchants, by means of the capture, transmission, processing and settlement of credit and debit card transactions, as well as the maintenance of those amounts in the system, (2) provision of the credentials of merchants providing services and suppliers of goods that can be paid by credit or debit cards; (3) provision of electronic terminals to facilitate the capture, transmission and processing of card transactions; (4) representation of national and international franchises by means of payments; (5) holding interest in other partnerships; and (6) developing other activities that may be of interest to us. Rights of Common Shares Each of our common shares entitles its holder to: • • one vote at our annual or special shareholders' meetings; right to mandatory dividends during each fiscal year, not lower than 40.0% of net income for each year, adjusted according to the terms of Article 202 of Brazilian Corporate Law, and additional dividends that may be distributed based on deliberation of our shareholders at a shareholders' meeting, provided that new shareholders will be entitled to dividends from the third quarter of 2007 onwards, since (1) we have already declared and paid dividends related to the first quarter of 2007 in April 2007; and (2) we will declare and pay dividends related to the second quarter of 2007 before the completion of the offering; right to participate in our other profit distributions and exercise all intrinsic rights pertaining to our common shares, as may be declared by us, beginning on the date of settlement of this offering; tag-along rights, in the event of the disposition of our control in one or a series of successive transactions, under the same terms and conditions extended to our controlling and selling shareholder;

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right to dispose of common shares, in the case of acquisition by any shareholder of 26.0% of more of our capital stock, in a public tender offer to be carried out by the acquiring shareholder at a price not lower than 1.5 times of the higher value of (1) 100.0% of the average unit trading of shares issued by the Company during a 90-day period before the public tender offer, weighted by the trading volume at the stock exchange in which there is a higher trading volume of shares issued by the Company; or (2) 100.0% of the highest value paid by the acquiring shareholder for shares of the Company in any type of trading in the period of twelve months before the date in which the public tender offer; or (3) the fair value calculated in the valuation report; and all rights and benefits afforded to our shares under the Novo Mercado regulation, our bylaws and the Brazilian Corporate Law.

As long as we are listed on the Novo Mercado, we may only issue common shares. In addition, if we decide to delist from the Novo Mercado, our controlling shareholder must conduct a public offering to acquire shares from the other shareholders. See "⎯Delisting from the Novo Mercado." Shareholders' Meetings At properly called and convened shareholders' meetings, shareholders are authorized to make decisions relating to our corporate purpose and to pass such resolutions as they deem to be in our interest. Shareholders at the annual shareholders' meeting have the exclusive power to approve our financial statements and to determine the allocation of our net income and the payment of dividends with respect to the fiscal year ended immediately prior to the shareholders' meeting. The election of the members of our board of directors typically takes place at the annual shareholders' meeting, although this may also occur at a special shareholders' meeting. Members of our fiscal council, if such council is installed at the request of a sufficient number of shareholders, may be elected either at the annual or the special shareholders' meeting. A special shareholders' meeting may be held at any time, including concurrently with the annual shareholders' meeting. The following actions, among others, may be taken exclusively at a shareholders' meeting: • • • • • • • • • amendment of our bylaws; election and dismissal of the members of our board of directors; determination of the aggregate compensation of the board of directors, board of executive officers, and fiscal council, if installed; approval of share split; approval of a stock option plan; approval of management accounts and our financial statements; approval of the allocation of net income and distributions of profits and payment of dividends, as well as creating profit reserves, except for mandatory reserves; delisting from the Novo Mercado segment of the BOVESPA, or going private process; retaining, from a list of institutions identified by our board of directors, of a specialized firm to prepare a valuation report with respect to the value of our shares in the event of any public offering as set forth in our by-laws or the Novo Mercado regulation; authorization of the issuance of convertible or secured debentures; suspension of a shareholder's rights in the event of noncompliance with Brazilian Corporate Law or our bylaws; approval of the appraisal of assets offered by a shareholder in consideration for the subscription of shares of our capital stock; approval of our transformation into a limited liability company (sociedade limitada) or into any other corporate form provided in the Brazilian Corporate Law;

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approval of our consolidation, merger or spin off; authorization to petition for our bankruptcy or request our judicial reorganization and/or authorization to petition for bankruptcy of our controlled companies or request judicial reorganization of our controlled companies; and approval of our dissolution or liquidation, and appointment or dismissal of the respective liquidators and the fiscal council that should operate during the liquidation, as well as approval of the report prepared by the liquidator describing our acts, transactions and final accounts.

According to the Brazilian Corporate Law, a company's bylaws, or actions taken at a shareholders' meeting may not deprive a shareholder of the following rights: • • • the right to participate in profit distributions; the right to participate equally and ratably in any remaining residual assets in the event of our liquidation; preemptive rights in the event of subscription of shares, convertible debentures and subscription warrants, except in some specific circumstances foreseen in the Brazilian Corporate Law and described in "⎯Preemptive Rights;" and the right to withdraw from the company in the cases specified in the Brazilian Corporate Law, as described in "⎯Withdrawal and Redemption Rights."

• Quorum

Brazilian Corporate Law generally provides that a quorum for a shareholders' meeting consists of shareholders representing at least 25.0% of a company's issued and outstanding voting capital stock on the first call and, if that quorum is not reached, any percentage of our voting capital stock on the second call. As a general rule, the affirmative vote of shareholders representing at least the majority of our issued and outstanding common shares present at a shareholders' meeting in person, or represented by a proxy, is required to approve any proposed action, with abstentions not taken into account. However, the affirmative vote of shareholders representing at least 50.0% of our issued and outstanding voting capital is required to: • • • • • • • • reduce the mandatory dividend for distribution to our shareholders; change our corporate purpose; approve our consolidation or merger with another company; approve our spin-off; approve our participation in a corporate group; apply for termination of our liquidation; approve our dissolution; and approve the merger of our shares into another company.

Notice of a Shareholders' Meeting Brazilian Corporate Law requires that a notice of a shareholders' meeting be published on three different dates in the Federal Official Gazette and another widely circulated newspaper in the state in which our registered office is located, which in our case include the Diário Oficial do Estado de São Paulo, which is the official newspaper of the government of the State of São Paulo, and the DCI – Diário Comércio, Indústria & Serviços. The first notice must be published no later than 15 days before the date of the meeting on the first call, and no later than eight days before the date of the meeting on the second call. In certain circumstances, the CVM may also require that the first notice be published not later than 30 days prior to the meeting.

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Location of our Shareholders' Meetings Our shareholders' meetings are held at our headquarters in São Paulo. Brazilian Corporate Law allows our shareholders to hold meetings outside our headquarters in the event of force majeure, provided that the meetings are held in the city of São Paulo and the relevant notice contains a clear indication of the place where the shareholders' meeting will take place. Who May Call a Shareholders' Meeting Our board of directors may call shareholders' meetings, although they may also be called by the following: • • any shareholder, if our directors fail to call a shareholders' meeting within 60 days after the date they were required to do so under applicable laws and our by-laws; shareholders holding at least 5.0% of our capital stock, if our directors fail to call a meeting within eight days after receipt of a justified request to call the meeting by those shareholders indicating the proposed agenda; shareholders holding at least 5.0% of our shares if our directors fail to call a meeting within eight days after receipt of a request to call the meeting for the creation of the fiscal council; and our fiscal council, if one is active and if our board of directors fails to call an annual shareholders' meeting within one calendar month after the date it was required to do so under applicable law. The fiscal council, if active, may also call a special shareholders' meeting if it believes that there are important or urgent matters to be addressed.

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Conditions of Admission Shareholders attending a shareholders' meeting must prove their status as shareholders and present proof that they hold title to the shares they intend to vote. A shareholder may be represented at a shareholders' meeting by a proxy appointed less than a year before the meeting, which proxy should be our shareholder, our corporation officer, a lawyer or a financial institution. An investment fund must be represented by its investment fund officer. Fiscal Council Under Brazilian Corporate Law, the Conselho Fiscal, or fiscal council, must be a corporate body independent of our management and our independent auditors. The primary responsibilities of a fiscal council include monitoring management activities, reviewing the company's financial statements, and reporting its findings to the company's shareholders. The fiscal council is not permanent but may be installed at the request of shareholders, such as described below. The fiscal council, if installed, is composed of three members and their respective alternates. Under Brazilian Corporate Law, when it is not permanent, the fiscal council may be installed at the request of shareholders representing at least 10.0% of the outstanding common shares, with a term of office extending through the first annual shareholders' meeting held after its installment and election of its members. In addition, minority shareholders representing a minimum of 10.0% of the outstanding common shares are entitled to elect one fiscal council member and his alternate by a separate vote. The fiscal council may not include members of our board of directors, our board of executive officers, employees of a subsidiary or a company from our economic group, or be a spouse or relatives of our managers. In addition, Brazilian Corporate Law requires fiscal council members to receive as compensation an amount equal to at least 10.0% of the average annual amount paid to the company's executive officers, which excludes benefits and other allowances or profit-sharing arrangements All elected members of our fiscal council are required to sign an instrument of adherence to the rules of the Novo Mercado prior to taking office. This document also requires them to adhere to our agreement for participation in the Novo Mercado listing segment and the regulations of the Market Arbitration Chamber of the BOVESPA.

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Audit Committee As part of the corporate governance practices we adopt, in addition to those expressly required by the Novo Mercado regulation, we maintain an internal audit committee, which is also in charge of risk and finance management. Our audit committee, under implementation phase which is not contemplated in our bylaws, is responsible for assisting our board of directors in decisions involving our internal and independent audits and also matters related to financial processes and controls, and to risk management, and seeks to ensure the consistency of our financial policies, strategic guidelines and business risk profile. It is comprised of the minimum of three and the maximum of seven members, whose terms of office are of one year, reelection being permitted. Withdrawal and Redemption Rights Withdrawal Any of our shareholders who disagree with certain decisions taken in a shareholders' meeting have the right to withdraw and receive the net worth of their shares. Pursuant to the Brazilian Corporate Law, the right of withdrawal may be exercised under the following circumstances: • • • • • our spin-off (in the circumstances described below); a reduction of our mandatory dividend to be paid to shareholders; a change of our corporate form or purpose; our merger into or consolidation with another company (in the circumstances described below); and our participation in a corporate group (as defined in the Brazilian Corporate Law);

As long as we are listed on the Novo Mercado, we may not issue preferred shares or participation certificates, and in the event of a going private process or delisting from the Novo Mercado, a tender offer for the purchase of our outstanding shares would have to be carried out. Brazilian Corporate Law further provides that our spin-off will only give rise to the right of withdrawal if it results in: • • • a change of our corporate purpose, except to the extent that the principal business purpose of the entity into which the spun-off assets and liabilities were transferred is consistent with our corporate purpose; a reduction of the mandatory dividend to be paid to shareholders; or our participation in a group of companies (as defined in the Brazilian Corporate Law).

In case of our merger into or consolidation with another company, where we are not the surviving company, or participation in a centralized group of companies (as defined in the Brazilian Corporate Law), our shareholders will not be entitled to withdraw rights if our shares: (a) are liquid, meaning they are part of the BOVESPA Index or some other traded stock exchange index, as defined by the CVM, and (b) are widely held, such that the controlling shareholder or companies it controls hold less than 50.0% of our common shares. The right of withdrawal expires 30 days after publication of the minutes of the relevant shareholders' meeting. Additionally, we are entitled to reconsider (by a majority vote of shareholders attending a meeting called by our board of directors) any decision giving rise to withdrawal rights within 10 days after the expiration of those rights, if the redemption of shares of dissenting shareholders would jeopardize our financial stability. If shareholders exercise withdrawal rights, they are entitled to receive the net worth of their shares, based on the last balance sheet approved by the shareholders. If the resolution giving rise to the withdrawal rights is made later than 60 days after the date of the last approved balance sheet, the shareholder may demand that his or her or its common shares be valued according to a new balance sheet dated no more than 60 days before the resolution date. In this case, we must immediately pay 80.0% of the equity value of the common shares, according to the most recent balance sheet approved by our shareholders, and the balance must be paid within 120 days after the date of the resolution of the shareholders' meeting.

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Redemption Pursuant to the Brazilian Corporate Law, our shares may be redeemed if our shareholders decide to do so at a special shareholders' meeting. Registration of Our Common Shares Our common shares are held in book-entry form with Banco Itaú S.A. The transfer of common shares is made through an entry, made by Banco Itaú S.A, in its accounting systems, debited from the disposing shareholder's account and credited to the buyer's account, pursuant to a written order of the disposing shareholder or a judicial order or authorization. Preemptive Rights Except as described below, our shareholders have a general preemptive right to subscribe for common shares in any capital increase according to the proportion of their interest in our Company at the time of the capital increase, except however in the event of issues of stock options, or of exercise of stock options by shareholders, or of conversions of debentures into shares. While our shareholders also have preemptive rights to subscribe for convertible debentures and subscription warrants, no preemptive rights apply to actual conversions of debentures, common share acquisitions resulting from the exercise of subscription warrants and offerings of call options and their exercise. In accordance with Brazilian law, a period of at least 30 days from the publication of notice of issuance of shares, convertible debentures or warrants is granted for the exercise of preemptive rights, which rights may be transferred or disposed of for value. Restrictions on Actions Outside the Scope of Our Corporate Purpose In addition, our bylaws prohibit us from granting any financing or offering guarantees of any kind to third parties in connection with any transactions or business outside the scope of our corporate purposes. Restrictions on Trading of Our Securities by Our Controlling Shareholders, Directors and Officers Our direct or indirect controlling shareholders, and our directors, officers and members of our fiscal council, if active, all of whom are considered insiders under the Securities Market Law and CVM Instruction No. 358, are prohibited from trading in our securities or securities backed by or linked to our securities, including, as follows: • • • • before the public disclosure of any material act or fact with respect to our business; whenever there is an intention to merge us into another company or to carry out our merger, total or partial spin-off, consolidation, transformation or corporate restructuring; during the 15-day period before the disclosure of our quarterly (ITR) and annual financial statements (IAN and DFP), as required by CVM; or with respect only to our controlling shareholders, directors and officers, in the event of acquisition or sale of our shares by us or the acquisition or sale of our shares by any of our controlled or affiliates or any other company under common control with us.

Restrictions on Transactions of Interest to Related Parties Our bylaws require approval by our board of directors for any transaction or series of related transactions entered into between us and our controlling shareholders, any individual or spouse or close family members of any individual holding control of our controlling shareholders, or any company in which any of our controlling shareholders may hold an equity interest directly or indirectly, including through a spouse or close family members.

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Under the Brazilian Corporate Law, a director (and an officer) must not: • perform any charitable act at our expense, except for such reasonable charitable acts for the benefit of employees or of the community in which we participate, upon approval by the board of directors or the executive officers; by virtue of the director's or officer's position, receive any type of direct or indirect personal advantage from third parties without authorization in our bylaws or from a shareholders' meeting; and take part in any corporate transaction in which the director or officer has an interest that conflicts with our interest, or in the decisions made by other directors or officers on the matter.

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Disclosure of Transactions within Our Conglomerate and with Other Related Parties Under the Novo Mercado regulation, we are required to send to the BOVESPA and disclose to the market information on any and all transactions or series of successive transactions, whether or not for the same or related purposes, that within a period of one year equal or exceed R$0.2 million, or the equivalent of or more than 1.0% the value of our net equity, whichever is greater, which is or are entered into between us and any of our subsidiaries or affiliates, or our controlling shareholders, or their subsidiaries and affiliates, or any of our directors, individually or in a group of persons or entities sharing similar interests. Disclosed information on these transactions should identify the purpose of the transactions, duration, value and conditions of termination, as well as the possible influence on our management or course of business. For more information see "Related Party Transactions." Purchases of Our Own Shares by Us Our bylaws authorize our board of directors to approve the acquisition of our own shares or issue stock options. The decision to acquire our shares and maintain them as treasury stock or cancel the common shares may not, among other things: • • result in a reduction of our capital stock; require the use of funds in excess of our retained earnings and reserves (other than the legal reserve, unrealized profit reserve, revaluation reserve and special mandatory dividend reserves) recorded in our most recent financial statements; directly or indirectly create, through action or omission, any artificial demand, share offering or price conditions, or involve unfair practices; or be used to purchase unpaid shares or shares held by our controlling shareholder.

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Any acquisition of our shares by us must be made on a stock exchange, unless the shares are traded on the over-the-counter market, and may not be made pursuant to private transactions unless prior approval for such acquisition is obtained from the CVM. We also may purchase our own shares for the purpose of going private. Moreover, we may acquire or issue put or call options related to our shares. Disclosure of Trading of Our shares by Us, Our Controlling Shareholders, Directors, Officers and Fiscal Council Members Pursuant to CVM rules, our directors and officers, members of our fiscal council, if active, as well as members of our audit committee or any other technical or advisory committee created under our bylaws, are required to disclose to us, the CVM and BOVESPA the number and type of securities issued by us, or our publicly held subsidiaries, held by them or by persons related to them, as well as any alteration in their respective interests in the twelve preceding months. In the case of individuals, they should include information as to securities held by a spouse, companion or dependent for income tax purposes, and by companies directly or indirectly controlled by these persons. The information on these transactions, including as to number of securities, price and date of purchase, should be provided to the CVM and the BOVESPA within ten days from the end of the month in which trading take place.

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Additionally, the Novo Mercado regulation requires our controlling shareholders to provide the same information in relation to securities issued by us, including derivatives and to disclose their plans for future trading. Information on trading of our securities should include: • • • name and identification of the acquirer; number, kind, class and characteristics of the securities, including identification of the issuer; and form (private transaction, trading on the stock exchange, etc.), price and date of purchase.

Pursuant to CVM Instruction 358 dated January 3, 2002, if our controlling shareholders, or shareholders which have elected our directors and fiscal council members either individually or in a group of persons or entities sharing similar interests, should directly or indirectly increase or reduce their interest in our capital stock by more than five percent, such persons or entities must disclose to us, the CVM and BOVESPA the following information: • • the name and identification of the person providing the information; the number, kind and class and other characteristics of the shares, warrants, subscription rights, call options, and convertible debentures, if an interest is already held by their acquirer or any related person; form of acquisition (private transaction, trading on the stock exchange, etc.); the reasons and purpose of the transaction; information regarding any agreement regulating the exercise of voting rights or the purchase and sale of our securities; and average trading price of securities of the same characteristics issued by us, which were acquired on the stock exchange in the preceding 90-day period.

• • • •

Arbitration We, our shareholders, our directors and officers, and the members of our fiscal council, if active, should submit to arbitration any dispute relating to the application, legality, effectiveness, interpretation, violation and effects of violation of the provisions in the Agreement for Participation in the Novo Mercado, and to the Novo Mercado regulations, the Arbitration Regulation instituted by the BOVESPA, the provisions of the Brazilian Corporate Law, the rules of the CMN and the Central Bank, the regulations of the CVM and BOVESPA and other rules generally applying to the Brazilian capital market. Any such dispute should be settled by arbitration carried out before the Market Arbitration Chamber of the BOVESPA, under its rules. Going Private Process We may become a private company if we or our controlling shareholders conduct a public tender offer for the acquisition of all of our outstanding shares in accordance with the rules and regulations of the Brazilian Corporate Law, the CVM and the Novo Mercado which, among other things, require that the offering price be the fair value of our shares, as defined pursuant to a valuation report, and that holders of common shares representing more than two thirds of the outstanding common shares should have agreed to the delisting or accepted the offer; provided, however, that for such purposes outstanding shares shall mean shares the holders of which shall have enrolled to participate in the offer. The valuation report must be prepared by a specialized and independent firm of recognized experience, chosen at a shareholders' meeting from a list of three institutions presented by our board of directors, pursuant to a decision of shareholders representing a majority of the outstanding shares held by holders attending the meeting, not including blank votes. This shareholders' meeting will be convened upon attendance by holders of a minimum of 20.0% of our outstanding shares on the first call, or any number of shareholders, in the second call. All the expenses and costs incurred in connection with the preparation of the valuation report must be paid for by the controlling shareholders and/or us, as offerors.

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Shareholders holding at least 10.0% of our outstanding shares may require our management to call a special shareholders' meeting to determine whether to perform another valuation using the same or a different valuation method. This request must be made within 15 days following the disclosure of the price to be paid for the shares in the public offering. The shareholders that make such request, as well as those voting in its favor, must reimburse us for any costs involved in preparing the new valuation, if the new valuation price is not higher than the original valuation price. If the new valuation price is higher than the original valuation price, the public offering must either be cancelled or carried out at the higher price, and this decision must also be disclosed to the market. Delisting from the Novo Mercado We may at any time delist our shares from the Novo Mercado, provided that shareholders representing the majority of our shares approve the action and that we give at least 30 days written notice to BOVESPA. Our delisting from the Novo Mercado would not result in the loss of our registration as a public company with BOVESPA. If the shareholders' meeting decides to delist in order for our shares to be tradable outside the Novo Mercado, or as a result of a corporate reorganization in which the surviving company is not listed on the Novo Mercado, our controlling shareholder or group of controlling shareholders should conduct a public offering to purchase our outstanding shares. In any such event, the offering price per share should be no less than the fair value of our shares, as determined in a valuation report prepared by a specialized and independent firm of recognized experience, chosen at a shareholders' meeting from a list of three institutions presented by our board of directors, pursuant to a decision of shareholders representing the absolute majority of the votes of holders of our outstanding shares, not including blank votes. This shareholders' meeting will be convened upon attendance by holders of a minimum of 20.0% of our outstanding shares on the first call, or any number of shareholders, in the second call. All the expenses and costs incurred in connection with the preparation of the valuation report must be paid by the controlling shareholders and/or us, as offerors. According to the Novo Mercado listing regulations, in the event of a transfer of our control within 12 months following our delisting from the Novo Mercado, the acquirer of control and the seller of control must offer to purchase the shares of all other holders of our shares for the same price, terms and conditions offered to the seller of control, as adjusted for inflation. If our shares are delisted from the Novo Mercado, we will not be permitted to have shares listed on the Novo Mercado for a period of two years following the delisting date, unless there is a change in our control following this delisting. Mechanisms for Protection of Free Float Our bylaws contain provisions intended to avoid the concentration of shares issued by us in the hands of a small number of investors, thus favoring free float. One such provision requires any person acquiring or becoming the holder of shares issued by us, or other rights in our shares (including beneficial owner rights under a share usufruct or a trust), as long as the shares comprise a total interest of 26.0% or more of our total shares, is required within 30 days following this event to conduct or register a tender offer to purchase all our outstanding shares, pursuant to the provisions of the Brazilian Corporate Law, the regulations of the CVM and BOVESPA and our by-laws. This requirement is not applicable to shareholders that on the date of the publication of the announcement of commencement of this offering already hold 26.0% or more of our total shares, or their future successors, including our controlling shareholders and their shareholders, if they acquire a direct interest in us pursuant to future corporate restructuring transactions, and other investors that become our shareholders pursuant to certain transactions specified in our bylaws. The tender offer must be directed to all our shareholders, completed at an auction carried out at the BOVESPA, launched for an offering price determined as discussed below, and paid on demand, in Brazilian currency, against purchase at the auction. The offering price per share in this case may not be lower than the greater of 150% of the fair value of the shares, as determined pursuant to a valuation report; 150% of the issue price of our shares in any capital increase implemented through a primary distribution, if one has taken place in the period of 12 months preceding the date on which the tender offer becomes mandatory; 150% of the average trading price of our shares, during the period of 90 days preceding the date of the offering, weighted by the trading volume on the stock exchange at which the largest volume of our shares is traded; and 150% of the highest price paid by the acquirer of our shares in any trading or transaction taking place in the period of 12 months preceding the date on which the tender offer becomes mandatory.

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The obligation to conduct a tender offer will not apply to persons acquiring more than 26.0% of our total shares as a result of legal succession, on condition that the successor must sell the excess shares within 30 days following the succession; a merger of another company into ours, a merger of the shares of another company into ours; and a subscription for our shares in a single primary issue approved by a shareholders' meeting held in connection with a capital increase proposal submitted by our board, provided the issue price of our shares is based on fair value, as determined in a valuation report prepared by a specialist firm of recognized experience in the valuation of publicly-held companies. The calculation of 15% of our total shares will not compute involuntary increases in the percentage interest that result from the cancellation of treasury shares or a capital reduction implemented through share cancellation. If the CVM regulations applying to the tender offer to be conducted in any such event require the adoption of a specific calculation criterion to establish the offering price per share, which results in a higher price than determined as indicated above, then the higher price determined in accordance with the CVM regulations prevails. Pursuant to the applicable regulations, the requirement for a tender offer to be completed in any such event is not exclusive of another offering being carried out concurrently by either a shareholder or ourselves, as the case may be. If our shareholders' meeting passes a resolution to change our bylaws to limit the rights of our shareholders to have their shares purchased in a public offering, or to exclude this mechanism, shareholders that vote in favor of such amendment to, or deletion from, the bylaws are required to conduct a tender offer pursuant to the rules discussed above. The provisions of our bylaws related to the obligation to carry out a public tender offer are not applicable to shareholders that as of the date of settlement of this offering hold 20.0% or more of our total shares outstanding and acquire new shares of Redecard, directly or indirectly, in public or private transactions. Change of Control According to the Novo Mercado listing regulation, the sale of control over our company, in one transaction or in a series of successive transactions should contemplate an obligation by the acquirer of control to conduct a tender offer for the acquisition of all other outstanding shares on the same terms and conditions offered for disposition of control so as to assure equal treatment among all of our shareholders. For such purposes, the selling controlling shareholders and the acquirer shall inform the CVM and BOVESPA of the price and other conditions of such sale. A tender offer is also required: • • • when there is a significant assignment of share subscription rights or rights in other securities convertible into our shares, which results in the transfer of our control; in case of an indirect transfer of our control, through a transfer of control over our controlling shareholders; and in case a shareholder acquires our control pursuant to a private transaction for purchase of our shares. In this event, the acquiring shareholder must conduct a tender offer for the acquisition of all our outstanding shares on the same terms and conditions offered for disposition of control and must also reimburse the counterparties from whom it has acquired our shares on the stock exchange in the six-month period preceding the transaction that resulted in a change in control. The reimbursement amount corresponds to the positive difference between the price paid to the seller of control and the adjusted price paid in transactions carried out on the stock exchange during this six-month period.

The buyer, if applicable, should take all necessary measures to reconstitute the minimum 25.0% free float within six months of the acquisition. The controlling shareholder may not transfer the shares to the purchaser of our control, and we shall not register the transfer of such shares, if the buyer fails to execute an instrument of adherence to the Novo Mercado regulation and the Rules of the Market Arbitration Chamber established by the BOVESPA. Moreover, we will not register any shareholders' agreement that regulates the exercise of control rights until the signatories thereto execute the Terms of Consent of the Novo Mercado regulations and the Rules of the Market Arbitration Chamber established by the BOVESPA.

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Tender Offers to Purchase Our Shares Pursuant to our bylaws, if more than one of the requirements to conduct a tender offer is satisfied at the same time, as discussed above under "⎯Change of Control," we or our shareholders may decide to conduct one single tender offer, provided it is possible to follow the procedures required for both tender offers and, provided further, that there is no prejudice to the beneficiaries of the offering and that authorization is obtained from the CVM, when legally required. Suspension of Rights of Acquiring Shareholders for Violation of Our Bylaws If an acquiring shareholder fails to comply with the provisions of our bylaws concerning the tender offer requirements applying as a result of a change in our control or of a purchase of shares representing 15.0% or more of our capital stock, the rights of such acquiring shareholder will be suspended pursuant to a deliberation taken at a meeting of our shareholders. If this were to occur, we would be required to call the shareholders' meeting and the acquiring shareholder would not be entitled to vote at such meeting. Disclosure Requirements As a publicly held company, we are subject to the reporting requirements established by the Brazilian Corporate Law and the CVM regulations. Furthermore, because our common shares will be listed on the Novo Mercado, we must follow the disclosure requirements contained in the Novo Mercado listing regulations. Periodic and Occasional Disclosure of Information As a publicly-held company, we are subject to the reporting requirements established by the Securities Market Law requiring that we provide periodic information to the CVM and the BOVESPA, which include standardized financial statements, the annual and quarterly information, quarterly management reports and independent audit reports. In addition we are required to file all shareholders' agreements, call notices and copies of minutes of shareholders' meetings with the CVM. Furthermore, in addition to the requirements of the corporate legislation and CVM regulations, we must also observe the following disclosure requirements: • within six months following the listing of our shares on the Novo Mercado, we must disclose our financial statements prepared at the end of each quarter (except the last quarter) and at the end of each year, including a cash flow statement, which should indicate, at a minimum, the changes in our cash and cash equivalents, divided into operational, finance and investment cash flows for the relevant quarter or year; beginning with the disclosure of our financial statements for the second year following the listing of our shares on the Novo Mercado, and no later than four months following the end of the year, we should disclose our consolidated financial statements prepared in accordance with the U.S. GAAP or International Financing Reporting Standards, or IFRS, in Brazilian reais or US dollars, translated into English, together with the management report, the accompanying notes, including information on the net income and shareholders' equity calculated at the end of the year, prepared in accordance with Brazilian GAAP, as well as management's proposal for allocation of net income, and the independent auditors' report; or disclose, in the English language, the full financial statements, management report and accompanying notes, prepared in accordance with Brazilian GAAP, together with an additional note explaining the reconciliation of the year-end results and shareholders' equity calculated in accordance with Brazilian GAAP and U.S. GAAP or IFRS, as the case may be, which must include the principal differences between the adopted accounting principles, and also the independent auditors' report; and within 15 days after the term established by Brazilian law for disclosure of our quarterly information, we must: disclose our full quarterly information translated into the English language; or disclose our consolidated financial statements prepared in accordance with U.S. GAAP or IFRS, accompanied by the independent auditors' opinion or special review report.

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Quarterly and Annual Information In addition to the information required pursuant to applicable legislation and regulation, a company with shares listed on the Novo Mercado listing segment of the BOVESPA, such as ours, must disclose the following information together with our quarterly and annual information: • a consolidated balance sheet, a consolidated statement of results and the accompanying letter to shareholders, if the company is obligated to disclose consolidated financial statements at year-ends, within the six months following the authorization to be listed under the Novo Mercado segment; any direct or indirect ownership interest in excess of five percent of our capital stock, looking through to any ultimate individual beneficial owner; the aggregate number and characteristics of the securities held directly or indirectly by our controlling shareholders, directors, officers and fiscal council members, if this is active; changes in the number of securities held by our controlling shareholders, directors, officers and fiscal council members, if this is active, within the immediately preceding 12 months; include a cash flow statement in the accompanying notes; the number of shares in free float and their respective percentage vis-à-vis the total number of shares issued by us; and the information relating to the third, fourth and sixth items above must also be included in the section "Additional Information Deemed Relevant by the Company" of the quarterly report and in our Annual Information, or IAN. In addition, we should confirm that we have undertaken and are bound to submit to arbitration by the market arbitration chamber of the BOVESPA in the event of disputes.

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Disclosure of Trading in Our Shares by Us, Our Controlling Shareholders, and Directors, Officers and Fiscal Council Members Our management and members of our fiscal council, if active or of any technical or advising body created under our bylaws are required to disclose to us, to the CVM and to the BOVESPA the number, type and form of trading of securities issued by us, our subsidiaries and our controlling shareholders that are held by them or by persons closely related to them, and any changes in their respective ownership positions. The information regarding the acquisition of such securities (amount and characteristics of the securities, form, price and date of trade) must be provided to us within 10 days following the end of the month in which they were traded. In addition, the regulations of the Novo Mercado require our controlling shareholders, our directors, officers and members of our fiscal council, if active, to disclose the abovementioned information to the BOVESPA, including information regarding derivatives. According to CVM Instruction 358, if any direct or indirect controlling shareholder or any shareholder electing members of our board of directors increases or decreases participation in our capital stock by more than 5.0%, such person or entity must disclose to the CVM and to the BOVESPA the following information: name and identification of the person acquiring the shares; reason of the participation and quantity aimed; the number, kind and class and other characteristics of the shares, warrants, subscription rights, call options, and convertible debentures if an interest is already held by their acquirer or any related person; and information regarding any agreement regulating the exercise of voting rights or the purchase and sale of securities issued by us. Disclosure of Material Developments Pursuant to the Securities Market Law, we are required to inform the CVM and the BOVESPA of any material developments relating our company and our business. We should also publish notices to disclose such information to the market. A material development consists of an event with the potential to affect the price of our securities, the decision of investors to buy, sell, or keep such securities, or their decision to exercise any of the rights inherent in such securities. In exceptional circumstances, we may submit to the CVM a request for confidential treatment of certain material developments when our controlling shareholders or officers believe that disclosure would place our legitimate interest at risk.

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Public Meeting with Analysts The Novo Mercado regulation stipulates that at least once a year we and our directors and officers should hold a public meeting with analysts and any other interested parties to disclose information concerning our economic/financial condition, our projects and prospects. Annual Calendar of Events The Novo Mercado regulations further requires that we and our directors and officers send to the BOVESPA and disclose to the market, by the end of January of each year at the latest, an annual calendar informing our scheduled corporate events, and include information about us, these events, and the date and time when they should take place, in addition to the publication and remittance to the BOVESPA of any documents to be discussed at such events. Subsequent changes to this calendar should also be promptly disclosed to the BOVESPA and the market.

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DESCRIPTION OF GLOBAL DEPOSITARY SHARES Citibank, N.A. has agreed to act as the depositary for the Global Depositary Shares, or "GDS." Citibank's depositary offices are located at 388 Greenwich Street, New York, New York 10013. Rule 144A and Regulation S Global Depositary Shares are referred to as "Rule 144A GDSs" and "Regulation S GDSs," respectively. In this summary we intend to use the term "GDSs" to refer to the Rule 144A GDSs and to the Regulation S GDSs. Unless we otherwise state, you should assume that the term "GDSs" encompasses both Rule 144A GDSs and Regulation S GDSs. GDSs are represented by certificates that are commonly known as "Global Depositary Receipts" or "GDRs." The GDSs we are selling in the United States are referred to and will be issued as Rule 144A GDS and the GDSs we are selling outside the United States are referred to and will be issued as the Regulation S GDSs. GDSs represent ownership interests in securities that are on deposit with the depositary. The depositary has appointed a custodian to safekeep the securities on deposit. In this case, the custodian is Citibank DTVM S.A., having its principal office at Avenida Paulista 1.111, São Paulo, SP 01311-920. We have appointed Citibank as depositary pursuant to two separate amended and restated deposit agreements, one for the Rule 144A GDSs, the "Rule 144A deposit agreement," and one for the Regulation S GDSs, the "Regulation S deposit agreement" to be dated on or about July 17, 2007. A copy of the deposit agreements may be obtained from the depositary. This is a summary description of the material terms of the GDSs and of your material rights as an owner of GDSs. Please remember that summaries by their nature lack the precision of the information summarized and that the rights and obligations of an owner of GDSs will be determined by reference to the terms of the applicable deposit agreement and not by this summary. We urge you to review the deposit agreements in their entirety. Each GDS represents the right to receive two common shares, on deposit with the custodian. A GDS will also represent the right to receive any other property received by the depositary or the custodian on behalf of the owner of the GDS but that has not been distributed to the owners of GDSs because of legal restrictions or practical considerations. If you become an owner of GDSs, you will become a party to the applicable deposit agreement and therefore will be bound to its terms and to the terms of the GDR that represents your GDSs. The deposit agreement and the GDR specify our rights and obligations as well as your rights and obligations as owner of GDSs and those of the depositary. As a GDS owner you appoint the depositary to act on your behalf for the common shares represented by your GDSs, either upon (1) your specific instructions when we call a meeting of shareholders, distribute an elective dividend or make a rights offering, or (2) the specific terms of the deposit agreement to receive any dividends we distribute in Reais or common shares and to convert the Reais received. The deposit agreement is governed by New York law. However, our obligations to the holders of common shares will continue to be governed by Brazilian laws, which may be different from the laws in the United States. In addition, we note that the laws and regulations of Brazil may restrict the deposit and withdrawal of the common shares into or from the depositary receipts facility. In addition, applicable laws and regulations may require you to satisfy reporting requirements and obtain regulatory approvals in certain circumstances. You are solely responsible for complying with such reporting requirements and obtaining such approvals. Neither the depositary, the custodian, us or any of their or our respective agents or affiliates shall be required to take any actions whatsoever on behalf of you to satisfy such reporting requirements or obtain such regulatory approvals under applicable laws and regulations. Presently, you may hold your GDSs only through a brokerage or safekeeping account. As such, you must rely on the procedures of your broker or bank to assert your rights as GDS owner. Please consult with your broker or bank to determine what those procedures are. When we refer to "you," we assume the reader owns GDSs and will own GDSs at the relevant time. When we refer to a "holder" we assume the person owns GDSs and such person's agent (i.e., broker, custodian, bank, trust company) is the holder of the applicable GDR.

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Distinctions between "Rule 144A GDSs" and "Regulation S GDSs" The Rule 144A GDSs and the Regulation S GDSs are similar in many ways but are different primarily on account of the requirements of the U.S. securities laws. The Rule 144A GDSs are "restricted securities" under the U.S. securities laws and as such are subject to limitations on their issuance, transfer and cancellation. The Regulation S GDSs are not per se "restricted securities" under the U.S. securities laws, but we have imposed certain contractual restrictions on the Regulation S GDSs in an effort to prevent the transfer of Regulation S GDSs in violation of the U.S. securities laws. These restrictions we impose on the Regulation S GDSs will be in place for a period of 40 days after we close the last offering of the Regulation S GDSs described in this offering memorandum, including any exercise of the over-allotment option. We will refer to this 40-day period as the "restricted period." The differences between the Regulation S GDSs and the Rule 144A GDSs and the restrictions imposed on the Rule 144 A GDSs and the Regulations S GDSs cover primarily the following: • The venue for trading the GDSs: • the Regulation S GDSs may be traded only outside the United States; and the Rule 144A GDSs may only be traded in PORTAL among "Qualified Institutional Buyers" (as defined in Rule 144A). only "Qualified Institutional Buyers" (as defined in Rule 144A) and persons other than "U.S. persons" (as defined in Regulation S) may own and trade Rule 144A GDSs; upon the expiration of the "restricted period," any person may own and trade Regulation S GDSs; and during the "restricted period," only persons other than U.S. persons (as defined in Regulation S) may own and trade the Regulation S GDSs and only outside the United States. only persons other than "U.S. persons" (as defined in Regulation S) may deposit common shares to receive Regulation S GDSs; and only "Qualified Institutional Buyers" (as defined in Rule 144A) and persons other than "U.S. persons" may deposit common shares to receive Rule 144A GDSs. you may transfer Rule 144A GDSs only to "Qualified Institutional Buyers" (as defined in Rule 144A) or to persons other than "U.S. persons" (as defined in Regulation S); and during the "restricted period," you may transfer the Regulation S GDSs only in transactions off-shore the United States (in compliance with Regulation S) and to persons other than "U.S. persons" (as defined in Regulation S) or to "Qualified Institutional Buyers" (as defined in Rule 144A) but in this latter case only after "converting" the Regulation S GDSs into Rule 144A GDSs. Please refer to "Legends" below. Please refer to "Settlement and Safekeeping" below.

The persons who may own and trade the GDSs: -

The persons who may create additional GDSs: -

The persons to whom you may transfer the GDSs, upon sale or otherwise: -

• •

The restrictions on the transfers and withdrawal of the common shares represented by the GDSs. The eligibility to book-entry transfer.

These distinctions and the requirements of the U.S. securities laws may require us and the depositary to treat the Regulation S GDSs and the Rule 144A GDSs differently at any time in the future. There can be no guarantee that holders of Rule 144A GDSs will receive the same entitlements as holders of Regulation S GDSs and vice versa.

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Settlement and Safekeeping Rule 144A GDSs The depositary has made arrangements with The Depository Trust Company ("DTC") to act as securities depository for the Rule 144A GDSs. All Rule 144A GDSs issued in this offering will be registered in the name of Cede & Co. (DTC's nominee). One Master Rule 144A GDR will represent all Rule 144A GDSs issued to and registered in the name of Cede & Co. Transfers of ownership interests in Rule 144A GDSs are to be accomplished by entries made on the books of DTC and of the participants in DTC acting on behalf of Rule 144A GDS owners. Owners of Rule 144A GDSs will not receive certificates representing their ownership interests in the Rule 144A GDSs, except in the event that a successor securities depository can not be appointed. DTC may discontinue providing its services as securities depository with respect to the Rule 144A GDSs at any time by giving reasonable notice to depositary. Under such circumstances, in the event that a successor securities depository can not be appointed, Rule 144A GDRs will be printed and delivered to the applicable Rule 144A GDS owners. Regulation S GDSs We and the depositary have made arrangements with DTC, Euroclear ("Euroclear") and Clearstream, Luxembourg ("Clearstream") to act as securities depositories for the Regulation S GDSs. All Regulation S GDSs issued in this offering will be registered in the name of Cede & Co. (DTC's nominee). One Master Regulation S GDR will represent all Regulation S GDS issued to and registered in the name of Cede & Co. Euroclear and Clearstream will hold the Regulation S GDSs on behalf of their participants through their respective depositories, which are participants in DTC (any such participant of Euroclear, Clearstream or DTC, a "Participant"), and, during the restricted period, transfers will be permitted only within Euroclear and Clearstream in accordance with usual rules and operating procedures of the relevant system. Transfers of ownership interests in Regulation S GDSs are to be accomplished by entries made on the books of Euroclear, Clearstream and DTC and of participants in Euroclear, Clearstream and DTC, acting in each case on behalf of Regulation S GDS owners. Owners of Regulation S GDSs will not receive certificates representing their ownership interests in the Regulation S GDSs, except in the event that use of the DTC book-entry system for the Regulation S GDSs is discontinued. DTC may discontinue providing its services as securities depository with respect to the Regulation S GDSs at any time by giving reasonable notice to the depositary. Under such circumstances, in the event that a successor securities depository can not be appointed, Regulation S GDRs will be printed and delivered to the applicable Regulation S GDS owners. If at any time Euroclear, Clearstream or DTC, as the case may be, cease to make its respective book-entry settlement systems available for the Regulation S GDSs, the Company and the Depositary will attempt to make other arrangements for book-entry settlement. If alternative book-entry settlement arrangements cannot be made, the Depositary will make available Regulation S GDSs in physical certificated form.

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Transfer Restrictions The GDSs may be resold, pledged or otherwise transferred only in compliance with the U.S. securities laws and are subject to the following restrictions: Restrictions Upon the Transfer of Rule 144A GDSs Regulation S GDSs

The Rule 144A GDSs may be resold, pledged or During the "restricted period", Regulations S GDSs otherwise transferred only: may be resold, pledged or otherwise transferred only: (i) outside the U.S. to a person other than a U.S. person (as defined in Regulation S under the Securities Act) in accordance with Regulation S; (ii) to a "Qualified Institutional Buyer" (as defined in Rule 144A) in a transaction meeting the requirements of Rule 144A; (iii) pursuant to Rule 144 under the U.S. Securities Act of 1933, if available; or (iv) pursuant to an effective registration statement under the U.S. Securities Act of 1933. (i) outside the U.S. to a person other than a U.S. person (as defined in Regulation S under the Securities Act) in accordance with Regulation S; (ii) to a "Qualified Institutional Buyer" (as defined in Rule 144A) in a transaction meeting the requirements of Rule 144A; (iii) pursuant to Rule 144 under the U.S. Securities Act of 1933, if available; or (iv) pursuant to an effective registration statement under the U.S. Securities Act of 1933. If the Regulation S GDSs are transferred to a "Qualified Institutional Buyer" in a transaction meeting the requirements of Rule 144A, the transfer is required to convert the Regulation S GDSs into Rule 144A GDSs and make delivery of the Rule 144A GDSs to the transferee. After the "restricted period," the Regulation S GDSs shall be freely transferable. Restrictions Upon Deposit of Common Shares Rule 144A GDSs Regulation S GDSs

Common shares will be accepted for deposit Common shares will be accepted for deposit only under the Regulation S deposit agreement only if if delivered by, or on behalf of, a person that is: delivered by, or on behalf of, a person that is: (a) not Redecard or an affiliate of Redecard or a (a) not Redecard or an affiliate of Redecard or a person acting on behalf of Redecard or an person acting on behalf of Redecard or an affiliate of Redecard; and affiliate of Redecard; and (b) is (i) a "Qualified Institutional Buyer" (as (b) is a person other than a "U.S. Person" (as defined in Rule 144A), or (ii) a person other defined in Regulation S). than a "U.S. Person" (as defined in Regulation S).

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Restrictions Upon the Withdrawal of Common Shares Rule 144A GDSs Regulation S GDSs

Common shares may be withdrawn from the During the "restricted period" common shares Rule 144A deposit agreement only by: may be withdrawn under the Regulation S deposit agreement only by: (i) a person other than a "U.S. Person" (as defined in Regulation S) who will be the (i) a person other than a "U.S. Person" (as beneficial owner of the common shares defined in Regulation S) who will be the upon withdrawal; beneficial owner of the common shares upon withdrawal or who has sold the (ii) a "Qualified Institutional Buyer" (as common shares to a person other than a defined in Rule 144A) who: U.S. Person or to a "Qualified Institutional Buyer" (as defined in Rule 144A) in which (x) has sold the Rule 144A GDSs to case delivery will be made in the form of another "Qualified Institutional Buyer" Rule 144A GDSs; or (as defined in Rule 144A) in a transaction meeting the requirements (ii) a "Qualified Institutional Buyer" (as of Rule 144A, or to a person other than defined in Rule 144A) who will cause the a "U.S. Person" (as defined in Regulation S GDSs to be exchanged for Regulation S) in accordance with Rule 144A GDSs: Regulation S; or After the "restricted period" common shares (y) will be the beneficial owner of the common shares and agrees to observe may be withdrawn, by any person and are freely the transfer restrictions applicable to transferable. Rule 144A GDSs in respect of the common shares so withdrawn. Dividends and Distributions As a holder, you generally have the right to receive the distributions we make on the securities deposited with the custodian. Your receipt of these distributions may be limited, however, by practical considerations and legal limitations. Holders will receive such distributions under the terms of the deposit agreements in proportion to the number of GDSs held as of a specified record date. Distributions of Cash Whenever we make a cash distribution for the securities on deposit with the custodian, we will deposit the funds with the custodian. Upon receipt of confirmation from the custodian of the receipt of the requisite funds, the depositary will arrange for the funds to be converted into U.S. dollars and for the distribution of the U.S. dollars to the holders, subject to Brazilian laws and regulations. The conversion into U.S. dollars will take place only if, in the judgment of the depositary it is practicable and if the U.S. dollars are transferable to the United States. The amounts distributed to holders will be net of the fees, expenses, taxes and governmental charges payable by holders under the terms of the deposit agreements. The depositary will apply the same method for distributing the proceeds of the sale of any property (such as undistributed rights) held by the custodian in respect of securities on deposit. The distribution of cash will be made net of the fees, expenses, taxes and governmental charges payable by holders under the terms of the deposit agreements.

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Distributions of Common Shares Whenever we make a free distribution of common shares for the securities on deposit with the custodian, we will deposit the applicable number of common shares with the custodian. Upon receipt of notice of such deposit from the custodian, the depositary will either distribute to holders new GDSs representing the common shares deposited or modify the GDS-to- common shares ratio, in which case each GDS you hold will represent rights and interests in the additional common shares so deposited. Only whole new GDSs will be distributed. Fractional entitlements will be sold and the proceeds of such sale will be distributed as in the case of a cash distribution. The distribution of new GDSs or the modification of the GDS-to- common shares ratio upon a distribution of common shares will be made net of the fees, expenses, taxes and governmental charges payable by holders under the terms of the deposit agreements. In order to pay such taxes or governmental charges, the depositary may sell all or a portion of the new common shares so distributed. No such distribution of new GDSs will be made if it would violate U.S. law (i.e., the U.S. securities laws) or if it is not operationally practicable. If the depositary does not distribute new GDSs as described above, it will sell the common shares received in accordance with the terms of the applicable deposit agreement and will distribute the proceeds of the sale as in the case of a distribution of cash. Distributions of Rights Whenever we intend to distribute rights to purchase additional common shares, we will give prior notice to the depositary and we will assist the depositary in determining whether it is lawful and reasonably practicable to distribute rights to purchase additional GDSs to holders. The depositary will establish procedures to distribute rights to purchase additional GDSs to holders and to enable such holders to exercise such rights if it is lawful and reasonably practicable to make the rights available to holders of GDSs, and if we provide all of the documentation contemplated in the applicable deposit agreement (such as opinions to address the lawfulness of the transaction). You may have to pay fees, expenses, taxes and other governmental charges to subscribe for the new GDSs upon the exercise of your rights. The depositary is not obligated to establish procedures to facilitate the distribution and exercise by holders of rights to purchase new common shares other than in the form of GDSs. The depositary will not distribute the rights to you if: • • • We do not timely request that the rights be distributed to you or we request that the rights not be distributed to you; or We fail to deliver satisfactory documents to the depositary; or It is not reasonably practicable to distribute the rights.

The depositary will sell the rights that are not exercised or not distributed if such sale is lawful and reasonably practicable. The proceeds of such sale will be distributed to holders as in the case of a cash distribution. If the depositary is unable to sell the rights, it will allow the rights to lapse. Elective Distributions Whenever we intend to distribute a dividend payable at the election of shareholders either in cash or in additional common shares, we will give prior notice thereof to the depositary and will indicate whether we wish the elective distribution to be made available to you. In such case, we will assist the depositary in determining whether such distribution is lawful and reasonably practicable. The depositary will make the election available to you only if it is lawful and reasonably practicable and if we have provided all of the documentation contemplated in the deposit agreement. In such case, the depositary will establish procedures to enable you to elect to receive either cash or additional GDSs, in each case as described in the deposit agreements.

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If the election is not made available to you, you will receive either cash or additional GDSs, depending on what a shareholder in Brazil would receive upon failing to make an election, as more fully described in the corresponding deposit agreement. Other Distributions Whenever we intend to distribute property other than cash, common shares or rights to purchase additional common shares, we will notify the depositary in advance and will indicate whether we wish such distribution to be made to you. If so, we will assist the depositary in determining whether such distribution to holders is lawful and reasonably practicable. If it is reasonably practicable to distribute such property to you and if we provide all of the documentation contemplated in the deposit agreements, the depositary will distribute the property to the holders in a manner it deems practicable. The distribution will be made net of fees, expenses, taxes and governmental charges payable by holders under the terms of the deposit agreement. In order to pay such taxes and governmental charges, the depositary may sell all or a portion of the property received. The depositary will not distribute the property to you and will sell the property if: • • • We do not request that the property be distributed to you or if we ask that the property not be distributed to you; We do not deliver satisfactory documents to the depositary; or The depositary determines that all or a portion of the distribution to you is not reasonably practicable.

The proceeds of such a sale will be distributed to holders as in the case of a cash distribution. Redemption Whenever we decide to redeem any of the securities on deposit with the custodian, we will give prior notice thereof to the depositary. If it is practicable and if we provide all of the documentation contemplated in the deposit agreements, the depositary will distribute notice of the redemption to the holders. The Custodian will be instructed to surrender the common shares being redeemed against payment of the applicable redemption price. The depositary will convert the redemption funds received into U.S. dollars upon the terms of the deposit agreements and will establish procedures to enable holders to receive the net proceeds from the redemption upon surrender of their GDSs to the depositary. You may have to pay fees, expenses, taxes and other governmental charges upon the redemption of your GDSs. If less than all GDSs are being redeemed, the GDSs to be retired will be selected by lot or on a pro rata basis, as the depositary may determine. Changes Affecting Common Shares The common shares held on deposit for your GDSs are subject to change from time to time. For example, there may be a change in nominal or par value, a split-up, cancellation, consolidation or reclassification of such common shares or a recapitalization, reorganization, merger, consolidation or sale of assets. If any such change were to occur, your GDSs would, to the extent permitted by law, represent the right to receive the property received or exchanged in respect of the common shares held on deposit. The depositary may in such circumstances deliver new GDSs to you or call for the exchange of your existing GDSs for new GDSs. If the depositary may not lawfully distribute such property to you, the depositary may, with our approval, sell such property and distribute the net proceeds to you as in the case of a cash distribution.

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Issuance of GDSs Upon Deposit of Common Shares Subject to limitations set forth in the deposit agreements and the GDRs, the depositary may create GDSs on your behalf if you or your broker deposit common shares with the custodian. The depositary will deliver these GDSs to the person you indicate only after you pay any applicable issuance fees and any charges and taxes payable for the transfer of the common shares to the custodian and you provide the applicable deposit certification. Your ability to deposit common shares and receive GDSs may be limited by U.S. and Brazilian legal considerations applicable at the time of deposit. The Depositary will refuse to accept common shares for deposit whenever it is notified in writing that such deposit would result in any violation of applicable laws, including ownership restrictions under Brazilian laws. The Depositary will also refuse to accept certain common shares for deposit under the Rule 144A deposit agreement if notified in writing that the common shares are listed an a U.S. securities exchange or quoted on a U.S. automated inter-dealer quotation system, unless accompanied by evidence satisfactory to the Depositary that any common shares presented for deposit are eligible for resale pursuant to Rule 144A. The issuance of GDSs may be delayed until the depositary or the custodian receives confirmation that all required approvals have been given and that the common shares have been duly transferred to the custodian. The depositary will only issue GDSs in whole numbers. When you make a deposit of common shares, you will be responsible for transferring good and valid title to the depositary. As such, you will be deemed to represent and warrant that: • • • • The common shares are duly authorized, validly issued, fully paid, non-assessable and legally obtained; All preemptive (and similar) rights, if any, with respect to such common shares have been validly waived or exercised; You are duly authorized to deposit the common shares; The common shares presented for deposit are free and clear of any lien, encumbrance, security interest, charge, mortgage or adverse claim and, in the case of a deposit of common shares under the Regulation S deposit agreement, are not, and the Regulation S GDSs issuable upon such deposit will not be, "restricted securities" (as defined in the corresponding deposit agreement); and The common shares presented for deposit have not been stripped of any rights or entitlements.

If any of the representations or warranties are incorrect in any way, we and the depositary may, at your cost and expense, take any and all actions necessary to correct the consequences of the misrepresentations. When you deposit common shares to receive Rule 144A GDSs, you will be required to provide the depositary with a deposit certification stating, inter alia, and that: • you acknowledge that the common shares and the Rule 144A GDSs have not been and will not be registered under the U.S. Securities Act of 1933 or with any securities regulatory authority in any state or other jurisdiction in the United States; you are not our "affiliate" of and you are not acting on behalf of us or one of our "affiliates;" you certify that you are, or are acting on behalf of, (i) a "Qualified Institutional Buyer" (as defined in Rule 144A), or (ii) a person other than a U.S. Person (as defined in Regulation S); and

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you agree, as the owner of the Rule 144A GDSs, to offer, sell, pledge and otherwise transfer the Rule 144A GDSs or the common shares represented by the Rule 144A GDSs in accordance with the applicable U.S. state securities laws and only: (a) to a "Qualified Institutional Buyer" (as defined in Rule 144A) in a transaction meeting the requirements of Rule 144A; (b) outside the United States to a person other than a "U.S. Person" (as defined in Regulation S) in accordance with Regulation S; (c) in accordance with Rule 144 under the U.S. Securities Act of 1933, if available; or (d) pursuant to an effective registration statement under the U.S. Securities Act of 1933.

A copy of the form of deposit certification for Rule 144A GDSs is attached to the Rule 144A deposit agreement and may be obtained from the depositary upon request. When you deposit common shares to receive Regulation S GDSs, you will be required to provide the depositary with a deposit certification stating, inter alia, that: • you acknowledge that the common shares and the Regulation S GDSs have not been and will not be registered under the U.S. Securities Act of 1933 or with any securities regulatory authority in any state or other jurisdiction in the United States; you are not our "affiliate" and you are not acting on behalf of us or one of our "affiliates;" you certify that you are, or are acting on behalf of, a person other than a U.S. Person (as defined in Regulation S), located outside the U.S. and acquired the Shares outside the U.S.; and you agree, as the owner of the Regulation S GDSs, to offer, sell, pledge and otherwise transfer the Regulation S GDSs or the common shares represented by the Regulation S GDSs in accordance with the applicable U.S. state securities laws and during the "restricted period" only: (a) to a "Qualified Institutional Buyer" (as defined in Rule 144A) in a transaction meeting the requirements of Rule 144A, in which case you are required to "convert" the Regulation S GDSs into Rule 144A GDSs prior to making delivery to the transferee; (b) outside the United States to a person other than a "U.S. Person" (as defined in Regulation S) in accordance with Regulation S; (c) in accordance with Rule 144 under the U.S. Securities Act of 1933, if available; or (d) pursuant to an effective registration statement under the U.S. Securities Act of 1933. A copy of the form of deposit certification for Reg S GDSs is attached to the Regulation S deposit agreement and may be obtained from the depositary upon request. Withdrawal of Common Shares Upon Cancellation of GDSs Subject always to the withdrawal of deposited property being permitted under Brazilian laws and regulations, as a holder, you will be entitled to present your GDSs to the depositary for cancellation and then receive the corresponding number of underlying common shares at the custodian's offices. Your ability to withdraw the common shares may be limited by U.S. and Brazilian law considerations applicable at the time of withdrawal. Subject always to the withdrawal of deposited property being permitted under Brazilian laws and regulations, you may also request that the common shares represented by your GDSs be sold on your behalf. The depositary may require that you deliver your request for sale in writing. Any sale of our common shares will be conducted according to applicable Brazilian law through a securities company in Brazil on the applicable Brazilian Stock Exchange or in other manner as is permitted under applicable Brazilian law. Any sale will be at your risk and expense. You may also be required to enter into a separate agreement to cover the terms of the sale of our common shares.

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Upon receipt of any proceeds from any sale, subject to any restrictions imposed by Brazilian law and regulations, the depositary shall convert the proceeds into U.S. dollars and distribute the proceeds to you, net of any fees, expenses, taxes or governmental charges (including, without limitation, any Brazilian and U.S. taxes) incurred in connection with the sale. Sales of our common shares may be subject to Brazilian taxation on capital gains and will be subject to a securities transaction tax in Brazil. For tax consequences under Brazilian law, see "Taxation of Our Common Shares and Global Depositary Shares—Brazilian Tax Considerations." In order to withdraw or instruct the sale of the common shares represented by your GDSs, you will be required to pay to the depositary the fees for cancellation of GDSs and any charges and taxes payable upon the transfer of the common shares being withdrawn and you will be required to provide to the depositary the applicable withdrawal certification. You assume the risk for delivery of all funds and securities upon withdrawal. Once canceled, the GDSs will not have any rights under the corresponding deposit agreement. If you hold a GDR registered in your name, the depositary may ask you to provide proof of identity and genuineness of any signature and such other documents as the depositary may deem appropriate before it will cancel your GDSs. The withdrawal of the common shares represented by your GDSs may be delayed until the depositary receives satisfactory evidence of compliance with all applicable laws and regulations. Please keep in mind that the depositary will only accept GDSs for cancellation that represent a whole number of securities on deposit. When you request the withdrawal of the common shares represented by your Rule 144A GDSs, you will be required to provide the depositary with a withdrawal certification stating, inter alia, that: • you acknowledge that the common shares represented by your Rule 144A GDSs have not been and will not be registered under the U.S. Securities Act of 1933 or with any securities regulatory authority in any state or other jurisdiction in the United States; and you certify that: (X) you are, or are acting on behalf of, a "Qualified Institutional Buyer" (as defined in Rule 144A) who is the beneficial owner of the Rule 144A GDSs presented for cancellation, and (A) either (i) you have sold or agreed to sell the common shares to a person other than a "U.S. Person" (as defined in Regulation S) in accordance with Regulation S, or (ii) you have sold or agreed to sell the common shares to a "Qualified Institutional Buyer" (as defined in Rule 144A) in a transaction meeting the requirements of Rule 144A, or (iii) you (or the person on whose behalf you are acting) will be the beneficial owner of the common shares upon withdrawal and you (or the person on whose behalf you are acting) will sell the common shares only (a) to another Qualified Institutional Buyer (as defined in Rule 144A) in a transaction meeting the requirements of Rule 144A, or (b) to a person other than a "U.S. Person" (as defined in Regulation S) in accordance with Regulation S, or (c) in accordance with Rule 144 (if available), or (d) pursuant to an effective registration statement under the U.S. Securities Act of 1933; and (B) you (or the person on whose behalf you are acting) will not deposit the common shares in any depositary receipts facility that is not a "restricted" depositary receipts facility; or (Y) you are a person other than a "U.S. Person" (as defined in Regulation S) and you acquired or agreed to acquire the common shares outside the United States and will be the beneficial owner of the common shares upon withdrawal.

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When you request the withdrawal of the common shares represented by your Regulation S GDSs at any time during the "restricted period", you will be required to provide the depositary with a withdrawal certification stating, inter alia, that: • you acknowledge that the common shares represented by your Regulation S GDSs have not been and will not be registered under the U.S. Securities Act of 1933 or with any securities regulatory authority in any state or other jurisdiction in the United States; and you certify that: (X) you are, or are acting on behalf of, a person other than a "U.S. Person" (as defined in Regulation S) who is, located outside the U.S. and acquired the Shares outside the U.S. and is the beneficial owner of the Regulation S GDSs presented for cancellation; and (A) either (i) you have sold or agreed to sell the common shares to a person other than a "U.S. Person" (as defined in Regulation S) in accordance with Regulation S, or (ii) you have sold or agreed to sell the common shares to a "Qualified Institutional Buyer" (as defined in Rule 144A) in a transaction meeting the requirements of Rule 144A, and will make delivery thereof in the form of Rule 144A GDSs, or (iii) you (or the person on whose behalf you are acting) will be the beneficial owner of the common shares upon withdrawal and you (or the person on whose behalf you are acting) will at any time during the "restricted period" sell the common shares only: (a) to a Qualified Institutional Buyer (as defined in Rule 144A) in a transaction meeting the requirements of Rule 144A, or (b) to a person other than a "U.S. Person" (as defined in Regulation S) in accordance with Regulation S, or (Y) you are a "Qualified Institutional Buyer" (as defined in Rule 144A, you have agreed to acquire the Regulation S GDSs in a transaction made in reliance on Rule 144A and you will take all action necessary to cause the common shares to be withdrawn and deposited under the Rule 144A deposit agreement for the purpose of receiving Rule 144A GDSs. Voting Rights As a holder, you generally have the right under the deposit agreement to instruct the depositary to exercise the voting rights for the common shares represented by your GDSs. The voting rights of holders of common shares are described in this offering memorandum under the Section entitled "Description of Our Share Capital". At our request, the depositary will distribute to you any notice of shareholders' meeting received from us together with information explaining how to instruct the depositary to exercise the voting rights of the securities represented by GDSs. If the depositary timely receives voting instructions from a holder of GDSs, it will endeavor to vote the securities represented by the holder's GDSs in accordance with such voting instructions. Please note that the ability of the depositary to carry out voting instructions may be limited by practical and legal limitations and the terms of the securities on deposit. We cannot assure you that you will receive voting materials in time to enable you to return voting instructions to the depositary in a timely manner. Securities for which no voting instructions have been received will not be voted.

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Fees and Charges As a GDS holder, you will be required to pay the following service fees to the depositary: Service
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Fees Up to 5¢ per GDS issued Up to 5¢ per GDS canceled Up to 5¢ per GDS held Up to 5¢ per GDS held Up to 5¢ per GDS held Up to 5¢ per GDS held on the applicable record date established by the Depositary $1.50 per certificate presented for transfer

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Issuance of GDSs Cancellation of GDSs Distribution of cash dividends or other cash distributions Distribution of GDSs pursuant to stock dividends, free stock distributions or exercise of rights. Distribution of securities other than GDSs or rights to purchase additional GDSs Depositary Services Fee Transfer of GDRs

As a GDS holder you will also be responsible to pay certain fees and expenses incurred by the depositary and certain taxes and governmental charges such as: • • • • • Fees for the transfer and registration of common shares charged by the registrar and transfer agent for the common shares in Brazil (i.e., upon deposit and withdrawal of common shares); Expenses incurred for converting foreign currency into U.S. dollars; Expenses for cable, telex and fax transmissions and for delivery of securities; Taxes and duties upon the transfer of securities (i.e., when common shares are deposited or withdrawn from deposit); and Fees and expenses incurred in connection with the delivery or servicing of common shares on deposit.

We have agreed to pay certain other charges and expenses of the depositary. Note that the fees and charges you may be required to pay may vary over time and may be changed by us and by the depositary. You will receive prior notice of such changes. In addition, the depositary may reimburse us for certain expenses incurred by us in respect of the GDR program established pursuant to the deposit agreements upon such terms and conditions as we and the depositary may agree from time to time. Amendments and Termination We may agree with the depositary to modify the deposit agreements at any time without your consent. We undertake to give holders 30 days' prior notice of any modifications that would materially prejudice any of their substantial rights under the deposit agreements. We will not consider to be materially prejudicial to your substantial rights any modifications or supplements that are reasonably necessary for the GDSs to be registered under the Securities Act, in each case without imposing or increasing the fees and charges you are required to pay. In addition, we may not be able to provide you with prior notice of any modifications or supplements that are required to accommodate compliance with applicable provisions of law. You will be bound by the modifications to the deposit agreements if you continue to hold your GDSs after the modifications to the applicable deposit agreements become effective. In no event shall any amendment or supplement impair the right of the Holder to surrender a GDS and receive therefor the deposited securities represented thereby, except in order to comply with mandatory provisions of applicable law. We have the right to direct the depositary to terminate the deposit agreements. Similarly, the depositary may in certain circumstances on its own initiative terminate the deposit agreements. In either case, the depositary must give notice to the holders at least 30 days before termination.

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After termination, the depositary will continue to collect distributions received (but will not distribute any such property until you request the cancellation of your GDSs) and may sell the securities held on deposit. After the sale, the depositary will hold the proceeds from such sale and any other funds then held for the holders of GDSs in a non-interest bearing account. At that point, the depositary will have no further obligations to holders other than to account for the funds then held for the holders of GDSs still outstanding (after deduction of applicable fees, taxes and expenses). Books of Depositary The depositary will maintain GDS holder records at its depositary office. You may inspect such records at such office during regular business hours but solely for the purpose of communicating with other holders in the interest of business matters relating to the GDSs and the deposit agreements. The depositary will maintain in New York facilities to record and process the issuance, cancellation, combination, split-up and transfer of GDRs. These facilities may be closed from time to time, to the extent not prohibited by law. Limitations on Obligations and Liabilities The deposit agreements limit our obligations and the depositary's obligations to you. Please note the following: • • We and the depositary are obligated only to take the actions specifically stated in the deposit agreements without negligence or bad faith; The depositary disclaims any liability for any failure to carry out voting instructions, for any manner in which a vote is cast or for the effect of any vote, provided it acts in good faith and in accordance with the terms of the deposit agreements; The depositary disclaims any liability for any failure to determine the lawfulness or practicality of any action, for the content of any document forwarded to you on our behalf or for the accuracy of any translation of such a document, for the investment risks associated with investing in common shares, for the validity or worth of the common shares, for any tax consequences that result from the ownership of GDSs, for the credit-worthiness of any third party, for allowing any rights to lapse under the terms of the deposit agreements, for the timeliness of any of our notices or for our failure to give notice; We and the depositary will not be obligated to perform any act that is inconsistent with the terms of the deposit agreements; We and the depositary disclaim any liability if we are prevented or forbidden from acting on account of any law or regulation, any provision of our Articles of Incorporation, any provision of any securities on deposit or by reason of any act of God or war or other circumstances beyond our control; We and the depositary disclaim any liability by reason of any exercise of, or failure to exercise, any discretion provided for the deposit agreements or in our Articles of Association or in any provisions of securities on deposit; We and the depositary further disclaim any liability for any action or inaction in reliance on the advice or information received from legal counsel, accountants, any person presenting common shares for deposit, any holder of GDSs or authorized representatives thereof, or any other person believed by either of us in good faith to be competent to give such advice or information; We and the depositary also disclaim liability for the inability by a holder to benefit from any distribution, offering, right or other benefit which is made available to holders of common shares but is not, under the terms of the deposit agreements, made available to you; We and the depositary may rely without any liability upon any written notice, request or other document believed to be genuine and to have been signed or presented by the proper parties; and We and the depositary also disclaim any liability for consequential or punitive damages for any breach of the terms of the applicable deposit agreements.

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Pre-Release Transactions The depositary may, in certain circumstances, issue GDSs before receiving a deposit of common shares or release common shares before receiving GDSs for cancellation. These transactions are commonly referred to as "pre-release transactions." The deposit agreements limit the aggregate size of pre-release transactions and imposes a number of conditions on such transactions (i.e., the need to receive collateral, the type of collateral required, the representations required from brokers, etc.). The depositary may retain the compensation received from the pre-release transactions. Taxes You will be responsible for the taxes and other governmental charges payable on the GDSs and the securities represented by the GDSs. We, the depositary and the custodian may deduct from any distribution the taxes and governmental charges payable by holders and may sell any and all property on deposit to pay the taxes and governmental charges payable by holders. You will be liable for any deficiency if the sale proceeds do not cover the taxes that are due. The depositary may refuse to issue GDSs, to deliver, transfer, split and combine GDRs or to release securities on deposit until all taxes and charges are paid by the applicable holder. The depositary and the custodian may take reasonable administrative actions to obtain tax refunds and reduced tax withholding for any distributions on your behalf. However, you may be required to provide to the depositary and to the custodian proof of taxpayer status and residence and such other information as the depositary and the custodian may require to fulfill legal obligations. You are required to indemnify us, the depositary and the custodian for any claims with respect to taxes based on any tax benefit obtained for you. Foreign Currency Conversion The depositary will arrange for the conversion of all foreign currency received into U.S. dollars if such conversion is practicable, and it will distribute the U.S. dollars in accordance with the terms of the deposit agreements. You may have to pay fees and expenses incurred in converting foreign currency, such as fees and expenses incurred in complying with currency exchange controls and other governmental requirements. If the conversion of foreign currency is not practicable or lawful, or if any required approvals are denied or not obtainable at a reasonable cost or within a reasonable period, the depositary may take the following actions in its discretion: • • • Legends The Rule 144A GDR(s) issued to represent the Rule 144A GDSs offered for sale herein shall contain, and all owners of Rule 144A GDSs shall be bound by the terms of, the following legend: NEITHER THIS RULE 144A GDR, NOR THE RULE 144A GDSs EVIDENCED HEREBY, NOR THE SHARES REPRESENTED THEREBY HAVE BEEN OR WILL BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES. THE OFFER, SALE, PLEDGE OR OTHER TRANSFER OF EACH OF THIS RULE 144A GDR, THE RULE 144A GDSs EVIDENCED HEREBY AND THE SHARES REPRESENTED THEREBY IS SUBJECT TO CERTAIN CONDITIONS AND RESTRICTIONS. THE HOLDERS AND THE BENEFICIAL OWNERS HEREOF, BY PURCHASING OR OTHERWISE ACQUIRING THIS RULE 144A GDR AND THE RULE 144A GDSs EVIDENCED HEREBY, ACKNOWLEDGE THAT SUCH RULE 144A GDR, THE RULE 144A GDSs EVIDENCED HEREBY AND THE SHARES REPRESENTED THEREBY HAVE NOT BEEN Convert the foreign currency to the extent practicable and lawful and distribute the U.S. dollars to the holders for whom the conversion and distribution is lawful and practicable; Distribute the foreign currency to holders for whom the distribution is lawful and practicable; and Hold the foreign currency (without liability for interest) for the applicable holders.

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REGISTERED UNDER THE SECURITIES ACT AND AGREE FOR THE BENEFIT OF THE COMPANY AND THE DEPOSITARY THAT THIS RULE 144A GDR, THE RULE 144A GDSs EVIDENCED HEREBY AND THE SHARES REPRESENTED THEREBY MAY BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES ACT AND APPLICABLE LAWS OF THE STATES, TERRITORIES AND POSSESSIONS OF THE UNITED STATES GOVERNING THE OFFER AND SALE OF SECURITIES AND ONLY (1) OUTSIDE THE UNITED STATES TO A PERSON OTHER THAN A U.S. PERSON (AS SUCH TERMS ARE DEFINED IN REGULATION S UNDER THE SECURITIES ACT) IN ACCORDANCE WITH RULE 903 OR 904 OF REGULATION S UNDER THE SECURITIES ACT, (2) TO A PERSON WHOM THE HOLDER AND THE BENEFICIAL OWNER REASONABLY BELIEVE IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ANOTHER QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (3) PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), OR (4) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT. THE BENEFICIAL OWNER OF SHARES RECEIVED UPON CANCELLATION OF ANY RULE 144A GDS MAY NOT DEPOSIT OR CAUSE TO BE DEPOSITED SUCH SHARES INTO ANY DEPOSITARY RECEIPT FACILITY ESTABLISHED OR MAINTAINED BY A DEPOSITARY, OTHER THAN A RULE 144A RESTRICTED DEPOSITARY RECEIPT FACILITY, SO LONG AS SUCH SHARES ARE "RESTRICTED SECURITIES" WITHIN THE MEANING OF RULE 144(a)(3) UNDER THE SECURITIES ACT. NO REPRESENTATION CAN BE MADE AS TO THE AVAILABILITY OF THE EXEMPTION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT FOR RESALE OF THE SHARES OR THE RULE 144A GDSs. EACH HOLDER AND BENEFICIAL OWNER, BY ITS ACCEPTANCE OF THIS RULE 144A GDR OR A BENEFICIAL INTEREST IN THE RULE 144A GDSs EVIDENCED HEREBY, AS THE CASE MAY BE, REPRESENTS THAT IT UNDERSTANDS AND AGREES TO THE FOREGOING RESTRICTIONS. The Regulation S GDR(s) issued to represent the Regulation S GDSs offered for sale herein shall contain, and all owners of Regulation S GDSs shall be bound by the terms of, the following legend: NEITHER THIS REGULATION S GDR, NOR THE REGULATION S GDSs EVIDENCED HEREBY, NOR THE SHARES REPRESENTED THEREBY HAVE BEEN OR WILL BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES. THE OFFER, SALE, PLEDGE OR OTHER TRANSFER OF THIS REGULATION S GDR, THE REGULATION S GDSs EVIDENCED HEREBY AND THE SHARES REPRESENTED THEREBY EACH IS SUBJECT TO CERTAIN CONDITIONS AND RESTRICTIONS. THE HOLDERS AND THE BENEFICIAL OWNERS HEREOF, BY PURCHASING OR OTHERWISE ACQUIRING THIS REGULATION S GDR AND THE REGULATION S GDSs EVIDENCED HEREBY, ACKNOWLEDGE THAT SUCH REGULATION S GDR, THE REGULATION S GDSs EVIDENCED HEREBY AND THE SHARES REPRESENTED THEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT AND AGREE FOR THE BENEFIT OF THE COMPANY AND THE DEPOSITARY THAT THIS REGULATION S GDR, THE REGULATION S GDSs EVIDENCED HEREBY AND THE SHARES REPRESENTED THEREBY MAY BE REOFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY IN COMPLIANCE WITH THE SECURITIES ACT AND APPLICABLE LAWS OF THE STATES, TERRITORIES AND POSSESSIONS OF THE UNITED STATES GOVERNING THE OFFER AND SALE OF SECURITIES AND, PRIOR TO THE EXPIRATION OF THE RESTRICTED PERIOD (DEFINED AS 40 DAYS AFTER THE LATER OF (I) THE COMMENCEMENT OF THE OFFERINGS OF (A) REGULATION S GDSs OUTSIDE THE UNITED STATES IN RELIANCE ON REGULATION S AND ANY OTHER APPLICABLE LAW IN TRANSACTIONS EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT, (B) RULE 144A GDSs IN THE UNITED STATES TO QUALIFIED INSTITUTIONAL BUYERS AND (C) SHARES IN BRAZIL IN RELIANCE ON REGULATION S AND (II) THE CLOSING DATE WITH RESPECT TO THE REGULATION S GDRs) ONLY (1) OUTSIDE THE UNITED STATES TO A PERSON OTHER THAN A U.S. PERSON (AS SUCH

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TERMS ARE DEFINED IN REGULATION S UNDER THE SECURITIES ACT) IN ACCORDANCE WITH RULE 903 OR 904 OF REGULATION S UNDER THE SECURITIES ACT, OR (2) TO A PERSON WHOM THE HOLDER AND THE BENEFICIAL OWNER REASONABLY BELIEVE IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ANOTHER QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (3) PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), OR (4) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT; PROVIDED THAT IN CONNECTION WITH ANY TRANSFER UNDER (2) ABOVE, THE TRANSFEROR SHALL, PRIOR TO THE SETTLEMENT OF SUCH SALE, WITHDRAW THE SHARES IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF THE REGULATION S DEPOSIT AGREEMENT AND INSTRUCT THAT SUCH SHARES BE DELIVERED TO THE CUSTODIAN UNDER THE RULE 144A DEPOSIT AGREEMENT FOR ISSUANCE, IN ACCORDANCE WITH THE TERMS AND CONDITIONS THEREOF, OF RULE 144A GDSs TO OR FOR THE ACCOUNT OF SUCH QUALIFIED INSTITUTIONAL BUYER. UPON THE EXPIRATION OF THE RESTRICTED PERIOD, THIS REGULATION S GDR, THE REGULATION S GDSs EVIDENCED HEREBY AND THE SHARES SHALL NO LONGER BE SUBJECT TO THE RESTRICTIONS ON TRANSFER PROVIDED IN THIS LEGEND, PROVIDED THAT AT THE TIME OF SUCH EXPIRATION THE OFFER AND SALE OF THE REGULATION S GDSs EVIDENCED HEREBY AND THE SHARES REPRESENTED THEREBY BY THE HOLDER THEREOF IN THE UNITED STATES WOULD NOT BE RESTRICTED UNDER THE SECURITIES LAWS OF THE UNITED STATES OR ANY STATE, TERRITORY OR POSSESSION OF THE UNITED STATES. EACH HOLDER AND BENEFICIAL OWNER, BY ITS ACCEPTANCE OF THIS REGULATION S GDR OR A BENEFICIAL INTEREST IN THE REGULATION S GDSs EVIDENCED HEREBY, AS THE CASE MAY BE, AT ANY TIME DURING THE RESTRICTED PERIOD, REPRESENTS THAT IT UNDERSTANDS AND AGREES TO THE FOREGOING RESTRICTIONS.

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TAXATION OF OUR COMMON SHARES AND GLOBAL DEPOSITARY SHARES The following summary contains a description of certain Brazilian and U.S. federal income tax consequences of the acquisition, ownership and disposition of common shares or GDSs, but it does not purport to be a comprehensive description of all the tax considerations that may be relevant to a decision to purchase common shares or GDSs. The summary is based upon the tax laws of Brazil and regulations thereunder and on the tax laws of the United States and regulations thereunder as in effect on the date hereof, which are subject to change. Prospective purchasers of common shares or GDSs should consult their own tax advisors as to the tax consequences of the acquisition, ownership and disposition of common shares or GDSs. Although there is at present no income tax treaty between Brazil and the United States, the tax authorities of the two countries have had discussions that may culminate in such a treaty. No assurance can be given, however, as to whether or when a treaty will enter into force or how it will affect the U.S. Holders (as defined below) of common shares or GDSs. Prospective holders of common shares or GDSs should consult their own tax advisors as to the tax consequences of the acquisition, ownership and disposition of common shares or GDSs in their particular circumstances. Brazilian Tax Considerations The following discussion summarizes the principal Brazilian tax consequences of the acquisition, ownership and disposition of common shares or GDSs by a holder that is not domiciled in Brazil for purposes of Brazilian taxation ("Non-Resident holder"). This discussion is based on Brazilian law as currently in effect. Any change in that law may change the consequences described below. The tax consequences described below do not take into account the effects of any tax treaties or reciprocity of tax treatment entered into by Brazil and other countries. Nevertheless, please note that Brazil has not entered into any tax treaty with the United States. The discussion also does not address any tax consequences under the tax laws of any state or locality of Brazil. The description below is not intended to constitute a complete analysis of all tax consequences relating to the acquisition, exchange, ownership and disposition of common shares or GDSs. Prospective purchasers of common shares or GDSs are advised to consult their own tax advisors with respect to an investment in our common shares or GDSs in light of their particular investment circumstances. Income Tax Dividends. Dividends paid by a Brazilian corporation, such as our company, including stock dividends and other dividends paid to a Non-Resident holder of common shares or GDSs, are currently not subject to withholding income tax in Brazil, as far as such amounts are related to profits generated after January 1, 1996. Dividends paid from profits generated before January 1, 1996 may be subject to Brazilian withholding income tax at varying rates, according to the tax legislation applicable to each corresponding year. Interest on Shareholders' Equity. Law No. 9,249, dated December 26, 1995, as amended, permits a Brazilian corporation, such as our company, to make distributions to shareholders of interest on shareholders' equity as an alternative to making dividend distributions. These distributions may be paid in cash. For tax purposes, this interest is limited to the daily pro rata variation of the TJLP, as determined by the Central Bank from time to time, and may not exceed the greater of: • 50.0% of net income (after the deduction of the provisions for social contribution tax on net income but before taking into account the provision for income tax and the interest on shareholders' equity) for the period in respect of which the payment is made; and 50.0% of the sum of retained profits and profit reserves as of the date of the beginning of the period in respect of which the payment is made.

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Payments of interest to a Non-Resident holder may be deducted for Brazilian corporate income tax as far as the limits described above are observed. Such payments are subject to withholding income tax at the rate of 15.0%, or 25.0% if the Non-Resident holder is domiciled in a tax haven—that is, a country or location that does not impose income tax or where the maximum income tax rate is lower than 20.0% or where the local legislation imposes restrictions on disclosing the shareholding composition or the ownership of the investment ("Tax Haven Resident"). These payments may be included, at their net value, as part of any mandatory dividend. To the extent payment of interest on shareholders' equity is so included, the corporation is required to distribute to shareholders an additional amount to ensure that the net amount received by them, after payment of the applicable withholding income tax, plus the amount of declared dividends is at least equal to the mandatory dividend. Gains According to Law No. 10,833, the disposition or sale of assets located in Brazil by a Non-Resident holder, whether to another non-Brazilian resident or to a Brazilian resident, may be subject to capital gain taxes in Brazil. With respect to the disposition of the common shares, as they are assets located in Brazil, the Non-Resident holder may be subject to income tax on the gains assessed, following the rules described below, regardless of whether the disposition is conducted in Brazil or with a Brazilian resident. With respect to the GDSs, although the matter is not free from doubt, arguably the gains realized by a Non-Resident holder on the disposition of GDSs to another Non-Resident holder are not taxed in Brazil, based on the argument that GDSs would not constitute assets located in Brazil for purposes of Law No. 10,833. However, we cannot assure you of how Brazilian courts would interpret the definition of assets located in Brazil in connection with the taxation of gains realized by a Non-Resident holder on the disposition of GDSs to another Non-Resident holder. As a result, gains on a disposition of GDSs by a Non-Resident holder to Brazilian residents, or even to Non-Resident holders, in the event that courts determine that GDSs would constitute assets located in Brazil, may be subject to income tax in Brazil according to the rules applicable to a disposition of common shares. As a general rule, gains realized as a result of a disposition or sale transaction of common shares or GDSs are the positive difference between the amount in reais realized on the sale or exchange of the security and its acquisition cost measured in Brazilian reais (without correction for inflation). Under Brazilian law, however, income tax rules on such gains can vary, depending on the domicile of the Non-Resident holder, the type of registration of the investment by the Non-Resident holder with the Central Bank and how the disposition is carried out, as described below. There are grounds, however, to sustain that the acquisition cost should be determined based on the amount in foreign currency registered with the Brazilian Central Bank, in case the investment in the security has been subject to registration with the Brazilian Central Bank. Capital gains assessed by Non-Resident holders on a disposition of common shares carried out on the Brazilian stock exchange (which includes the transactions carried out on the organized over-the-counter market) are: • exempt from income tax when assessed by a Non-Resident holder that (1) has registered its investment in Brazil with the Central Bank under rules of Resolution No. 2,689/01 ("2,689 Holder") and (2) is not a Tax Haven Resident; or subject to income tax at a rate of 15.0% in any other case, including a case of gains assessed by a Non-Resident holder that is not a 2,689 Holder, or is a Tax Haven Resident. In these cases, a withholding income tax of 0.005% of the sale value will be applicable and can be later offset with the eventual income tax due on the capital gain.

Any other gains assessed on a disposition of the common shares that is not carried out on a Brazilian stock exchange are subject to income tax at the rate of 15.0%, except for Tax Haven Residents which, in this case, are subject to income tax at the rate of 25.0%. If these gains are related to transactions conducted on the Brazilian non-organized over-the-counter market with intermediation, the withholding income tax of 0.005% shall also be applicable and can be offset against the eventual income tax due on the capital gain.

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In the case of a redemption of common shares or GDSs or a capital reduction by a Brazilian corporation, such as our company, the positive difference between the amount received by the non-resident and the acquisition cost of the common shares or GDSs redeemed in reais is treated as capital gain derived from the sale or exchange of shares not carried out on a Brazilian stock exchange market and is therefore subject to income tax at the rate of 15.0%, or 25.0%, as the case may be. Any exercise of preemptive rights relating to the common shares or GDSs will not be subject to Brazilian income tax. Gains realized by a Non-Resident holder on the disposition of preemptive rights in Brazil will be subject to Brazilian income tax according to the same rules applicable to the sale or disposition of common shares. As a Non-Resident holder of GDSs, you may cancel your GDSs and exchange them for common shares and no income tax may be levied on such exchange, as long as the appropriate rules are complied with in connection with the registration of the investment with the Central Bank. Although there are grounds to sustain otherwise, the deposit of common shares by Non-Resident holders in exchange for GDSs may be subject to Brazilian income tax if the acquisition cost of the common shares is lower than (a) the average price per common share on a Brazilian stock exchange on which the greatest number of such common shares were sold on the day of deposit; or (b) if no common shares were sold on that day, the average price on a Brazilian stock exchange on which the greatest number of common shares were sold in the 15 trading sessions immediately preceding such deposit. The difference between the acquisition cost and the average price of the common shares will be considered to be a capital gain subject to income tax at a rate of 15.0% or 25.0%, as the case may be. There can be no assurance that the current favorable treatment of 2,689 Holders will continue in the future. Tax on Foreign Exchange and Financial Transactions Foreign Exchange Transactions. Brazilian law imposes a Tax on Foreign Exchange Transactions, or "IOF/Exchange Tax," on the conversion of reais into foreign currency and on the conversion of foreign currency into reais. Although the current applicable rate for almost all foreign currency exchange transactions is zero, the Ministry of Finance is permitted to increase the rate at any time up to 25.0% on the foreign exchange transaction amount. However, any increase in rates is only authorized to apply to future transactions. Tax on Transactions Involving Bonds and Securities. Brazilian law imposes a Tax on Transactions Involving Bonds and Securities, or "IOF/Bonds Tax," due on transactions involving bonds and securities, including those carried out on a Brazilian stock exchange. The rate of IOF/Bonds Tax applicable to transactions involving common shares is currently zero, although the Minister of Finance is permitted to increase such rate at any time up to 1.5% of the transaction amount per day, but only in respect of future transactions. Provisional Contribution on Financial Transactions (CPMF tax) As a general rule, transactions carried out in Brazil that result in the transfer of reais from an account maintained with a Brazilian financial institution are subject to the CPMF tax, at the rate of 0.38%. Therefore, transactions carried out by the depositary or by a holder of common shares which involve the transfer of Brazilian currency through Brazilian financial institutions could be subject to the CPMF tax. Currently, funds transferred for the acquisition of shares on the Brazilian stock exchange and the remittance abroad of the proceeds earned from the disposition of shares in Brazil are exempt from the CPMF tax. In addition, according to Law No. 11,312, the CPMF tax rate is reduced to zero on withdrawals from bank accounts used to buy common shares in a public offering whenever the public offering is registered with the CVM and the issuer is listed on a Brazilian stock exchange. The CPMF tax will be in effect until December 31, 2007. However, it may be extended. When applicable, the CPMF tax must be withheld from the amounts transferred from such account and must be collected in favor of the Brazilian government by the financial institution that carries out the relevant financial transaction.

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Other Brazilian Taxes There are no Brazilian inheritance, gift or succession taxes applicable to the ownership, transfer or disposition of common shares or GDSs, except for gift and inheritance taxes imposed by some Brazilian states on gifts or bequests by individuals or entities not domiciled or residing in Brazil to individuals or entities domiciled or residing within such states. There are no Brazilian stamp, issue, registration or similar taxes or duties payable by holders of common shares or GDSs. Certain U.S. Federal Income Tax Consequences To ensure compliance with Internal Revenue Service Circular 230, you are hereby notified that any discussion of tax matters set forth in this offering memorandum was written in connection with the promotion or marketing, within the meaning of Internal Revenue Service Circular 230, of the transactions or matters addressed herein and was not intended or written to be used, and cannot be used, by any prospective investor for the purpose of avoiding tax-related penalties under federal, state or local tax law. Each prospective investor should seek advice based on its particular circumstances from an independent tax advisor. The following summary describes certain U.S. federal income tax consequences of the acquisition, ownership and disposition of our common shares or GDSs as of the date hereof. Except where noted, this discussion deals only with U.S. Holders (as defined below) that hold our common shares or GDSs as capital assets for U.S. federal income tax purposes (generally, property held for investment). This summary does not represent a detailed description of the U.S. federal income tax consequences applicable to you if you are subject to special treatment under the U.S. federal income tax laws, including if you are: • • • • • • • • • • • • • • a dealer in securities or currencies; a financial institution; a regulated investment company; a real estate investment trust; an insurance company; a grantor trust; a tax-exempt organization; a person that received our common shares or GDSs as compensation for the performance of services; a person holding our common shares or GDSs as part of a hedging, integrated or conversion transaction, a constructive sale or a straddle; a trader in securities that has elected the mark-to-market method of accounting for your securities; a person liable for alternative minimum tax; a person who owns 10.0% or more, by voting power or value, of our stock; a partnership or other pass-through entity for U.S. federal income tax purposes; or a person whose "functional currency" is not the U.S. dollar.

The discussion below is based upon the provisions of the Internal Revenue Code of 1986, as amended, or the Code, and regulations, rulings and judicial decisions thereunder as of the date hereof, and such authorities may be repealed, revoked or modified so as to result in U.S. federal income tax consequences different from those discussed below, possibly with retroactive effect. In addition, this summary is based, in part, upon representations made by the depositary to us and assumes that the deposit agreements, and all other related agreements, will be performed in accordance with their terms.

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This summary does not contain a detailed description of all the U.S. federal income tax consequences to you in light of your particular circumstances and does not address the effects of any state, local or non-U.S. tax laws. Moreover, it does not address the U.S. federal estate and gift or alternative minimum tax consequences of the acquisition, ownership and disposition of our common shares or GDSs. If you are considering the purchase, ownership or disposition of our common shares or GDSs, you should consult your own tax advisors concerning the U.S. federal income tax consequences to you in light of your particular situation as well as any consequences arising under the laws of any other taxing jurisdiction. As used herein, "U.S. Holder" means a beneficial holder of our common shares or GDSs that is for U.S. federal income tax purposes: • • • • an individual citizen or resident of the United States; a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia; an estate the income of which is subject to U.S. federal income taxation regardless of its source; or a trust if it is subject to the primary supervision of a court within the United States and one or more U.S. persons have the authority to control all substantial decisions of the trust; or has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person.

A "Non-U.S. Holder is a beneficial owner, other than a partnership or an entity treated as a partnership for the U.S. federal income tax purposes, of our common shares or GDSs that is not a U.S. Holder. If a partnership (or other entity treated as a partnership for U.S. federal income tax purposes) holds our common shares or GDSs, the tax treatment of a partner in such partnership will generally depend on the status of the partner and the activities of the partnership. If you are a partner of a partnership holding our common shares or GDSs, you should consult your tax advisors. GDSs If you hold GDSs, for U.S. federal income tax purposes, you generally will be treated as the owner of the underlying common shares that are represented by such GDSs. Accordingly, deposits or withdrawals of common shares for GDSs will not be subject to U.S. federal income tax. The United States Treasury Department has expressed concern that depositaries for Global Depositary receipts, or other intermediaries between the holders of shares of an issuer and the issuer, may be taking actions that are inconsistent with the claiming of United States foreign tax credits by U.S. holders of such receipts or shares. Accordingly, the analysis regarding the availability of a United States foreign tax credit for Brazilian taxes and sourcing rules described below could be affected by future actions that may be taken by the United States Treasury Department. Taxation of Dividends Subject to the discussion below under "⎯Passive Foreign Investment Company," the gross amount of any distributions on our common shares or GDSs (including amounts withheld to reflect Brazilian withholding taxes and distributions of interest on shareholders' equity, as described above under "—Brazilian Tax Considerations") will be taxable as dividends to the extent paid out of our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Such dividends will be includable in your gross income as ordinary income on the day actually or constructively received by you.

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Distributions in excess of our current and accumulated earnings and profits will be treated first as a non-taxable return of capital reducing such U.S. Holder's adjusted tax basis in our common shares or GDSs, and thereafter as either long-term or short-term capital gain depending upon whether the U.S. Holder held our common shares or GDSs for more than one year. Because we do not expect to keep earnings and profits in accordance with U.S. federal income tax principles, U.S. Holders should expect that a distribution will generally be treated as a dividend for U.S. federal income tax purposes. Distributions of additional common shares or GDSs to U.S. holders that are part of a pro rata distribution to all our shareholders generally will not be subject to U.S. federal income tax. As used below, the term "dividend" means a distribution that constitutes a dividend for U.S. federal income tax purposes. Such dividends will not be eligible for the dividends received deduction allowed to corporations. Under current law, dividends received before January 1, 2011 by non-corporate U.S. investors on shares (or GDSs underlying such shares) of certain foreign corporations will be subject to U.S. federal income tax at lower rates than other types of ordinary income if certain conditions are met. However, because our common shares and GDSs are not readily tradable on an established securities market in the United States and there is no income tax treaty between Brazil and the United States, we currently do not expect that those conditions will be met. Thus, we do not expect that dividends we pay will be entitled to such reduced rates. If you are a U.S. Holder, the amount of any dividend paid in reais to you will equal the U.S. dollar value of the reais received calculated by reference to the exchange rate in effect on the date the dividend is actually or constructively received by you, which in the case of GDSs is the date it is received by the depositary, regardless of whether the reais are converted into U.S. dollars. If the reais received as dividend are converted into U.S. dollars on the date of receipt, you generally should not be required to recognize foreign currency gain or loss with respect to such dividend. If the reais received as a dividend are not converted into U.S. dollars on the date of receipt, you will have a tax basis in the reais equal to their U.S. dollar value on the date of receipt. Any gain or loss realized on a subsequent conversion or other disposition of the reais will be treated as U.S. source ordinary income or loss. The amount of any distribution of property other than cash will be the fair market value of such property on the date of distribution. Subject to certain complex conditions and limitations, Brazilian withholding taxes on dividends may be treated as foreign taxes eligible for credit against your U.S. federal income tax liability. For taxable years beginning after December 31, 2006, such dividends will constitute "passive category income" or "general category income" for U.S. foreign tax credit purposes. If you do not elect to claim a credit for any foreign taxes paid during a taxable year, you may instead claim a deduction in respect of such foreign taxes. For purposes of calculating the foreign tax credit, dividend income paid on our common shares or GDSs will be treated as income from sources outside the United States. Further, in certain circumstances, if you: • • have held our common shares or GDSs for less than a specified minimum period during which you are not protected from risk of loss; or are obligated to make payments related to the dividends.

You will not be allowed a foreign tax credit for foreign taxes imposed on dividends paid on our common shares or GDSs. The rules governing the foreign tax credit are complex. You are urged to consult your tax advisors regarding the availability of the foreign tax credit under your particular circumstances. Distributions of our common shares or GDSs that are received as part of a pro rata distribution to all of our shareholders generally will not be subject to U.S. federal income taxes. Subject to the discussion below under "—Information Reporting and Backup Withholding," if you are a Non-U.S. Holder, you generally will not be subject to United States federal income or withholding tax on dividend income received by you on your common shares or GDSs, unless you conduct a trade or business in the United States and such income is effectively connected with that trade or business.

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Sale, Exchange or Other Taxable Disposition of Common Shares or GDSs Subject to the discussion under "—Passive Foreign Investment Company Rules" below, a U.S. Holder generally will recognize capital gain or loss upon the sale, exchange or other taxable disposition of common shares or GDSs measured by the difference between the amount realized on the sale, exchange or other taxable disposition of our common shares or GDSs and the U.S. Holder's adjusted tax basis in such common shares or GDSs. Any gain or loss will be long-term capital gain or loss if our common shares or GDSs have been held for more than one year. Certain U.S. Holders (including individuals) may be eligible for preferential rates of U.S. federal income tax in respect of long-term capital gains under current law. The deductibility of capital losses is subject to limitations under the Code. If a Brazilian tax is withheld on the sale or other disposition of common shares or GDSs, the amount realized by a U.S. Holder will include the gross amount of the proceeds of that sale or other taxable disposition before deduction of the Brazilian tax. Capital gain or loss, if any, realized by a U.S. Holder on the sale, exchange or other taxable disposition of common shares or GDSs generally will be treated as U.S.-source gain or loss for U.S. foreign tax credit purposes. Consequently, in the case of a gain from the disposition of a common share or GDSs that is subject to Brazilian tax (see "—Brazilian Tax Considerations—Gains"), the U.S. Holder may not be able to benefit from the foreign tax credit for that Brazilian tax, unless the U.S. Holder can apply the credit against U.S. federal income tax payable on other income from foreign sources. Alternatively, the U.S. Holder may take a deduction for the Brazilian tax, provided that the U.S. Holder elects to deduct all foreign taxes paid or accrued for the taxable year. Passive Foreign Investment Company Rules Special U.S. federal income tax rules apply to U.S. persons owning shares of a passive foreign investment company, or PFIC. A non-U.S. corporation generally will be classified as a PFIC for U.S. federal income tax purposes in any taxable year in which, after applying relevant look-through rules with respect to the income and assets of subsidiaries, either: • • at least 75.0% of its gross income is "passive income"; or on average at least 50.0% of the gross value of its assets is attributable to assets that produce passive income or are held for the production of passive income.

For this purpose, passive income generally includes, among other things, dividends, interest, rents, royalties, gains from the disposition of passive assets and gains from commodities transactions. Based on certain estimates of our current and projected gross income and gross assets, we do not expect our common shares or GDSs to be considered shares of a PFIC for our current fiscal year or for foreseeable future fiscal years. However, because the determination of whether our common shares or GDSs constitute shares of a PFIC will be determined by us on an annual basis, and is based upon the composition of our income and assets (including, among others, entities in which we hold at least a 25.0% interest), and the nature of our activities, from time to time, we cannot assure U.S. Holders that our common shares or GDSs will not be considered shares of a PFIC for any fiscal year. If our common shares or GDSs were shares of a PFIC for any year, U.S. Holders (including certain indirect U.S. Holders) may be subject to adverse tax consequences upon a sale or other disposition of such common shares or GDSs, or upon the receipt of certain "excess distributions" from us. If we are or become a PFIC, unless a U.S. Holder elects to be taxed annually on a mark-to-market basis with respect to its common shares or GDSs, any gain realized on a sale or other taxable disposition of our common shares or GDSs and certain "excess distributions" (generally distributions in excess of 125.0% of the average distribution over the shorter of a three-year period or the U.S. Holder's holding period for our common shares or GDSs) would be treated as realized ratably over the U.S. Holder's holding period for our common shares or GDSs, and amounts allocated to prior years while we were a PFIC would be taxed at the highest tax rate in effect for each such year. An additional interest charge may apply to the portion of the U.S. federal income tax liability on such gains or distributions treated under the PFIC rules as having been deferred by the U.S. Holder. Amounts allocated to the current year and to any year before we became a PFIC would be taxed as ordinary income in such current year.

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If we are treated as a PFIC, the rules described above can be avoided by a U.S. Holder that makes a so-called "mark-to-market" election. A U.S. Holder may make a mark-to-market election for our common shares or GDSs, if our common shares constitute "marketable stock" as defined in the U.S. Treasury regulations. Our common shares or GDSs will be marketable stock if they are regularly traded on a "qualified exchange or other market" within the meaning of the Treasury Regulations. We cannot provide any assurance that our common shares or GDSs are or will be considered "marketable stock" for this purpose. In particular, it is unclear whether the BOVESPA would meet the requirements for a "qualified exchange or other market." If a mark-to-market election is made, a U.S. Holder would take into account each year the appreciation or depreciation value of its common shares or GDSs as if our common shares or GDSs were sold at fair market value at the end of the year. Such appreciation or depreciation generally would be treated as ordinary income or ordinary loss to the extent of the net amount previously included in income as a result of the mark-to-market election (any losses in excess of the net amount previously included in income would generally be capital losses), as would gains or losses on actual dispositions of common shares or GDSs. A U.S. Holder who owns shares during any taxable year that the company is a PFIC would be required to file IRS Form 8621. U.S. Holders should consult with their tax advisor regarding the application of the PFIC rules to our common shares or GDSs and the availability and advisability of making an election to avoid the adverse tax consequences of the PFIC rules should we be considered a PFIC for any taxable year. Information Reporting and Backup Withholding In general, information reporting will apply to dividends in respect of our common shares or GDSs and the proceeds from the sale, exchange or redemption of our common shares or GDSs that are paid to you within the United States (and in certain cases, outside the United States), unless you are an exempt recipient such as a corporation, a payee that is not a United States person that provides an appropriate certification and certain other persons. A backup withholding tax may apply to such payments if you fail to provide your correct taxpayer identification number or certification of other exempt status or fail to report in full dividend and interest income. A payor may rely on a certification provided by a payee that it is not a United States person only if such payor does not have actual knowledge or a reason to know that any such information or certification stated in such certificate is incorrect. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules will be allowed as a refund or a credit against your U.S. federal income tax liability provided the required information is timely furnished to the Internal Revenue Service. The above description is not intended to constitute a complete analysis of all tax consequences relating to the acquisition, ownership or disposition of our common shares or GDSs. You should consult your own tax advisor concerning the tax consequences of your particular situation.

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CERTAIN ERISA CONSIDERATIONS This disclosure was written in connection with the promotion and marketing of the common shares or GDSs, and it cannot be used by any holder for the purpose of avoiding penalties that may be asserted against the holder under the Internal Revenue Code of 1986, as amended, or the Code. Prospective purchasers of the common shares or GDSs should consult their own tax advisors with respect to the application of the U.S. federal income tax laws to their particular situations. The Employee Retirement Income Security Act of 1974, as amended, or "ERISA", imposes certain requirements on employee benefit plans subject to Title I of ERISA and on entities that are deemed to hold the assets of such plans ("ERISA Plans"), and on those persons who are fiduciaries with respect to ERISA Plans. Investments by ERISA, or Plans are subject to ERISA's general fiduciary requirements, including, but not limited to, the requirement of investment prudence and diversification and the requirement that an ERISA Plan's investments be made in accordance with the documents governing the ERISA Plan. Section 406 of ERISA and Section 4975 of the Code prohibit certain transactions involving the assets of an ERISA Plan (as well as those plans that are not subject to ERISA but which are subject to Section 4975 of the Code, such as individual retirement accounts (together with ERISA Plans, "Plans")) and certain persons (referred to as "parties in interest" or "disqualified persons") having certain relationships to such Plans, unless a statutory or administrative exemption is applicable to the transaction. A party in interest or disqualified person who engages in a prohibited transaction may be subject to excise taxes and other penalties and liabilities under ERISA and the Code. Prohibited transactions within the meaning of Section 406 of ERISA or Section 4975 of the Code may arise if common shares or GDSs are acquired by a Plan with respect to which we, the selling shareholders, the Brazilian underwriters or the international underwriters or any of their respective affiliates is a party in interest or a disqualified person. Certain exemptions from the prohibited transaction provisions of Section 406 of ERISA and Section 4975 of the Code may be applicable, however, depending in part on the type of Plan fiduciary making the decision to acquire a share and the circumstances under which such decision is made. Included among these exemptions are Section 408(b)(17) of ERISA and Section 4975(d)(20) of the Code (relating to transactions involving non-fiduciary service providers who are parties in interest or disqualified persons) and Prohibited Transaction class exemption ("PTCE") 96-23 (relating to transaction directed by an "in-house asset manager"); PTCE 95-60 (relating to transactions involving insurance company general accounts); PTCE 91-38 (relating to investments by bank collective investment funds), PTCE 84-14 (relating to transactions effected by a "qualified professional asset manager") and PTCE 90-1 (relating to investments by insurance company pooled separate accounts). There can be no assurance that any of these class exemptions or any other exemption will be available with respect to any particular transaction involving common shares or GDSs. Any Plan fiduciary that proposes to cause a Plan to purchase the common shares or GDSs should consult with its counsel regarding the applicability of the fiduciary responsibility and prohibited transaction provisions of ERISA and Section 4975 of the Code to such an investment, and to confirm that such purchase and holding will not constitute or result in a non-exempt prohibited transaction or any other violation of an applicable requirement of ERISA or the Code. Non-United States plans, governmental plans (as defined in Section 3(32) of ERISA) and certain church plans (as defined in Section 3(33) of ERISA), while not subject to the fiduciary responsibility provisions of ERISA or the prohibited transaction provisions of ERISA and Section 4975 of the Code, may nevertheless be subject to other federal, state, local or foreign laws or regulations that are substantially similar to the foregoing provisions of ERISA and the Code ("Similar Law"). Fiduciaries of any such plans should consult with their counsel before purchasing the common shares or GDSs to determine the need for, if necessary, and the availability of, any exemptive relief under any Similar Law.

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Each purchaser of the common shares or GDSs will be deemed to have represented and agreed either: (A) the purchaser is not (i) a Plan, (ii) an entity whose underlying assets are considered "plan assets" within the meaning of ERISA and 29 C.F.R. § 2510.3-101 or (iii) a non-United States, governmental or church plan subject to Similar Law or (B) the purchaser's purchase, holding and subsequent disposition of the common shares or GDSs either (i) are not a prohibited transaction under ERISA or the Code and are otherwise permissible under all applicable Similar Laws or (ii) are entitled to exemptive relief from the prohibited transaction provisions of ERISA and the Code in accordance with one or more available statutory, class or individual prohibited transaction exemptions and are otherwise permissible under all applicable Similar Laws. The sale of any common shares or GDSs, or any interest respectively therein, to a Plan or a governmental, church or non U.S. plan that is subject to Similar Laws is in no respect a representation by the selling shareholders, the underwriters of the Brazilian offering and the international underwriters, or their respective affiliates, that such an investment meets all relevant legal requirements with respect to investments by such plans generally or any particular such plan; that the prohibited transaction exemptions described above, or any other prohibited transaction exemption, would apply to such an investment by such plan in general or any particular such plan; or that such an investment is appropriate for such plan generally or any particular such plan. The discussion of ERISA and Section 4975 of the Code contained in this confidential offering memorandum, is, of necessity, general, and does not purport to be complete. Moreover, the provisions of ERISA and Section 4975 of the Code are subject to extensive and continuing administrative and judicial interpretation and review. Therefore, the matters discussed above may be affected by future regulations, rulings and court decisions, some of which may have retroactive application and effect.

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PLAN OF DISTRIBUTION Subject to the terms and conditions stated in the underwriting agreement dated July 11, 2007, each Brazilian underwriter named below has severally agreed to place the number of common shares set forth opposite their names below.
Brazilian Underwriters Unibanco – União de Bancos Brasileiros S.A. ................................................................................. Citigroup Global Markets Brasil, Corretora de Câmbio, Títulos e Valores Mobiliários S.A. ......................... Banco Itaú BBA S.A. ....................................................................................................................... Total ................................................................................................................................................. Number of Common Shares 50,275,843 50,275,842 50,275,842 150,827,527

Unibanco – União de Bancos Brasileiros S.A., Citigroup Global Markets Brasil, Corretora de Câmbio, Títulos e Valores Mobiliários S.A. and Banco Itaú BBA S.A. will act as bookrunners. Unibanco Securities Inc. will act as international underwriter on behalf of Unibanco – União de Bancos Brasileiros S.A., Citigroup Global Markets Inc. will act as international underwriter on behalf of Citigroup Global Markets Brasil, Corretora de Câmbio, Títulos e Valores Mobiliários S.A. and Itaú Securities, Inc. will act as international underwriter on behalf of Banco Itaú BBA S.A. in connection with the placement of the common shares, including sale of common shares in the form of GDSs, to investors outside Brazil. The underwriting agreement provides that the obligations of the Brazilian underwriters to place the common shares are subject to approval of legal matters by counsel and to other conditions. We have also entered into a placement facilitation and purchase agreement dated July 11, 2007 with the international underwriters relating to the placement of our common shares and the sale of common shares in the form of GDSs outside Brazil, which contains conditions for the placement of common shares and sale of GDSs by the international underwriters similar to those of the underwriting agreement. The Brazilian underwriters and the international underwriters propose to offer the common shares or GDSs at the offering price set forth on the cover page of this offering memorandum within the United States to QIBs (as defined in Rule 144A) in reliance on Rule 144A and outside the United States in reliance on Regulation S. See "Transfer Restrictions." The price at which the common shares and GDSs are offered may be changed at any time without notice. The common shares and GDSs have not been and will not be registered under the Securities Act or any state securities laws and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons (as defined in Regulation S) except in transactions exempt from, or not subject to, the registration requirements of the Securities Act. In addition, hedging transactions involving the shares may not be conducted except as permitted by the Securities Act. See "Transfer Restrictions." In addition, until 40 days after the commencement of this offering, an offer or sale of our common shares or GDSs within the United States by a dealer that is not participating in this offering may violate the registration requirements of the Securities Act if that offer or sale is made otherwise than in accordance with Rule 144A. The selling shareholders have granted to Banco Itaú BBA S.A. an option, exercisable upon consultation with the other bookrunners, within 30 days from the date of this offering memorandum, to place up to 21,124,128 additional common shares, including common shares in the form of GDSs, to cover over-allotments, if any, at the offering price less the discount. Any common shares or GDSs issued or sold under the option will be issued and sold on the same terms and conditions as the other common shares and GDSs that are the subject of this offering. We, certain of our officers and directors and the selling shareholders have agreed that, for a period of 180 days from the date of this offering memorandum, we and they will not dispose of or hedge any of our shares or any securities convertible into or exchangeable for our shares. Additionally, we, our officers and directors and the selling shareholders have agreed with the Brazilian underwriters and the international underwriters, for the 180-day period referred to in the preceding sentence, not to enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any shares of our capital stock or any securities convertible into or exercisable or exchangeable for any shares of our capital stock,

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or warrants or other rights to purchase any shares of our capital stock, whether any such transaction is to be settled by delivery of shares of our capital stock or such other securities, in cash or otherwise, and not to publicly announce an intention to effect any transaction specified in this paragraph. We call these actions, other than issuance, "transfer." After this initial period of six months, the controlling shareholders and our directors and executive officers have also agreed not to sell or offer to sell more than 40% of the shares that they hold, or derivatives linked to those shares, for an additional six months. Under this agreement, transfers of these securities could be made under the following circumstances: • • • • pursuant to bona fide gifts; pursuant to dispositions to any trust for the direct or indirect benefit of the transferor and/or the immediate family of the transferor; transfers to any affiliates of the transferor (as such term is defined in Rule 405 under Securities Act); in connection with a loan to Banco Itaú BBA S.A. of a certain amount of common shares held by the selling shareholders, for the purpose of the stabilization activities to support the market price of the common shares in the BOVESPA; or with the prior consent of Unibanco – União de Bancos Brasileiros S.A., Citigroup Global Markets Brasil, Corretora de Câmbio, Títulos e Valores Mobiliários S.A., Banco Itaú BBA S.A. and the international underwriters, such consent not to be unreasonably withheld.

In either of the first three cases, it will be a condition of the transfer that the transferee agrees that it is receiving and holding the transferred securities subject to the provisions of the lock-up agreement and that the transferee will not transfer the securities except in accordance with the lock-up agreement for the remainder of its term. It will also be a condition that any such transfer of securities will not involve a disposition for value. We cannot assure you that Unibanco – União de Bancos Brasileiros S.A., Citigroup Global Markets Brasil, Corretora de Câmbio, Títulos e Valores Mobiliários S.A., Banco Itaú BBA S.A. and the international underwriters will not waive these lock-up obligations, in which case these shares would become eligible for sale earlier. We cannot predict the effect, if any, that future sales of our shares, or the availability of such shares for future sale, will have on the market price of our common shares or GDSs prevailing from time to time or on our ability to raise capital in the future. Sales of substantial amounts of our shares in the public market, or the perception that such sales could occur, could adversely affect the prevailing market price of the common shares and GDSs and our ability to sell the common shares or GDSs in the future at a time and at a price that we deem appropriate. Prior to this offering, there has been no public market for our common shares or GDSs. Consequently, the offering prices for the common shares and GDSs were determined by negotiations among us, the selling shareholders and the representatives. Among the factors considered in determining the offering price were our results of operations, our current financial condition, our future prospects, our markets, the economic conditions in and future prospects for the industry in which we compete, our management, and currently prevailing general conditions in the equity securities markets, including current market valuations of publicly traded companies considered comparable to our Company. The common shares and GDSs will constitute a new class of securities with no established trading market. We have applied to have our common shares listed on the Novo Mercado segment of the BOVESPA. However, we cannot assure you that the prices at which the common shares or GDSs will sell in the market after this offering will not be lower than the initial offering price or that an active trading market for the common shares or GDSs will develop and continue after this offering. The underwriters have advised us that they currently intend to make a market in the common shares and GDSs. However, they are not obligated to do so and they may discontinue any market-making activities with respect to the common shares and GDSs at any time without notice. In addition, market-making activity will be subject to the limits imposed by the Securities Act and the Exchange Act and may be limited during the pendency of any shelf registration statement. Accordingly, we cannot assure you as to the liquidity of or the trading market for the common shares and GDSs.

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In connection with the offering, the underwriters may purchase and sell common shares and GDSs in the open market. Purchases and sales in the open market may include short sales, purchases to cover short positions, which may include purchases pursuant to the underwriters' option to purchase additional common shares or GDSs and stabilizing purchases. • Short sales involve secondary market sales by the underwriters of a greater number of common shares or GDSs than they are required to purchase in the offering. - "Covered" short sales are sales of common shares or GDSs in an amount up to the number of common shares or GDSs represented by the underwriters' option to purchase additional common shares or GDSs. - "Naked" short sales are sales of common shares or GDSs in an amount in excess of the number of common shares or GDSs represented by the underwriters' option to purchase additional common shares or GDSs. • Covering transactions involve purchases of common shares or GDSs either pursuant to the underwriters' option to purchase additional common shares or GDSs or in the open market after the distribution has been completed in order to cover short positions. - To close a naked short position, the underwriters must purchase common shares or GDSs in the open market after the distribution has been completed. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the common shares or GDSs in the open market after pricing that could adversely affect investors who purchase in the offering. - To close a covered short position, the underwriters must purchase common shares or GDSs in the open market after the distribution has been completed or by exercising their option to purchase additional common shares or GDSs. In determining the source of common shares or GDSs to close the covered short position, the underwriters will consider, among other things, the price of common shares or GDSs available for purchase in the open market as compared to the price at which they may purchase common shares or GDSs by exercising their option to purchase additional common shares or GDSs. • Stabilizing transactions involve bids to purchase common shares or GDSs so long as the stabilizing bids do not exceed a specified maximum.

Purchases to cover short positions and stabilizing purchases, as well as other purchases by the underwriters for their own accounts, may have the effect of preventing or retarding a decline in the market price of the common shares or GDSs. They may also cause the price of the common shares and GDSs to be higher than the price that would otherwise exist in the open market in the absence of these transactions. The underwriters may conduct these transactions in the over-the-counter market or otherwise. If the underwriters commence any of these transactions, they may discontinue them at any time. The Brazilian underwriters, either directly or through their affiliates, are our controlling shareholders. Unibanco, jointly with UPS and Dibens, Citi, through its affiliate Citibank, and Itaucard, which belong to Banco Itaú BBA's financial conglomerate, each holds 31.9% of our common shares and are the selling shareholders in connection with the offering of our common shares. Please refer to the section "Related Party Transactions." In addition, the Brazilian underwriters have performed investment banking and advisory services for us from time to time for which they have received (and may in the future receive) customary fees and expenses. The Brazilian underwriters may, from time to time, engage in transactions with and perform services for us in the ordinary course of their business. WE HAVE AGREED TO INDEMNIFY THE UNDERWRITERS AGAINST CERTAIN LIABILITIES, INCLUDING LIABILITIES UNDER THE SECURITIES ACT, OR TO CONTRIBUTE TO PAYMENTS THAT THE UNDERWRITERS MAY BE REQUIRED TO MAKE BECAUSE OF ANY OF THOSE LIABILITIES.

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TRANSFER RESTRICTIONS Because of the following restrictions, investors are advised to consult legal counsel prior to making any offer, resale, pledge or other transfer of our common shares and GDSs. Notice to Prospective Investors in the United States Our common shares and GDSs have not been registered under the Securities Act. They may not be offered or sold within the United States except: • • in compliance with the registration requirements of the Securities Act and all applicable securities laws in the states of the United States; or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and any applicable securities laws of the states of the United States.

Accordingly, our common shares and GDSs are being offered and sold only: • • inside the United States to qualified institutional buyers, as defined in Rule 144 under the Securities Act; and outside the United States to non U.S. persons in reliance on Regulation S under the Securities Act.

In addition, purchasers of our common shares and GDSs may not be able to exercise the preemptive rights relating to the common shares or GDSs unless an exemption from the registration requirements of the Securities Act is available or a registration statement under the Securities Act is effective with respect to those rights. We are not obligated to file a registration statement with respect to the common shares and GDSs relating to these preemptive rights, and we may not file such a registration statement. Each purchaser of our common shares or GDSs in the United States will be deemed to have agreed not to deposit such common shares into any unrestricted American depositary receipt facility we may establish in the future for as long as those shares are "restricted securities" within the meaning of Rule 144 under the Securities Act. Each initial purchaser of our common shares or GDSs will be deemed to have represented and agreed as described below. These representations will only be true in the case of initial purchasers of GDSs, subsequent holders will instead be subject to the transfer restrictions described in the section "Description of Global Depositary Shares." 1. It understands and acknowledges that the common shares or GDSs have not been registered under the Securities Act or any other applicable securities law, are being offered in transactions not requiring registration under the Securities Act or any other securities law, and, unless so registered, may not be offered, sold or otherwise transferred except in compliance with the registration requirements of the Securities Act, or any other applicable securities law, pursuant to an exemption from registration or in a transaction not subject to registration. We make no representation as to the availability of the exemption provided by Rule 144 under the Securities Act for resales of our common shares and GDSs. It understands that the common shares (to the extent they are in certified form in the future), unless otherwise determined in accordance with applicable law, will bear a legend substantially to the following effect:

2.

THIS SHARE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933 (THE "SECURITIES ACT") OR WITH ANY SECURITIES REGULATORY AUTHORITY OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) IN ACCORDANCE WITH RULE 144A UNDER THE SECURITIES ACT TO A PERSON THAT THE HOLDER AND ANY PERSON ACTING ON ITS BEHALF REASONABLY BELIEVE IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER, (2) IN AN OFF-SHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR 904 OF REGULATION S UNDER THE SECURITIES ACT OR (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. NO REPRESENTATION CAN BE MADE AS TO THE AVAILABILITY OF THE EXEMPTION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT FOR RESALE OF THIS SHARE.

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3.

It is not an affiliate (as defined in Rule 144 under the Securities Act) of us or acting on our behalf and it is either: • a qualified institutional buyer as defined under Rule 144A (or a QIB) and is aware that any sale of the common shares or GDSs to it will be in reliance on an exemption from the Securities Act. Such acquisition will be for its own account or for the account of another QIB; or a person who, at the time the buy order for the common shares or GDSs was originated, was outside the United States and was not a U.S. person (and was not purchasing for the account or benefit of a U.S. person) within the meaning of Regulation S under the Securities Act.

4.

If it is a purchaser in a sale that occurs outside the United States within the meaning of Regulation S under the Securities Act, it agrees that until the expiration of a 40-day "distribution compliance" period within the meaning of Rule 903 of Regulation S under the Securities Act, no offer or sale of the common shares or GDSs shall be made by it to a U.S. person or for the account or benefit of a U.S. person within the meaning of Rule 902(k) of the Securities Act except to a QIB and in compliance with the applicable selling restrictions. Pursuant to Brazilian Resolution No. 2,689, transfers of common shares including by or between residents of jurisdictions outside Brazil, may be effected only in Brazil. See "Market Information." Neither we, the selling shareholders, the underwriters nor any person representing us, the selling shareholders, or the underwriters have made any representation to it with respect to us or the offering or sale of any common shares of GDSs, other than the information contained in this offering memorandum, which has been delivered to it and upon which it is relying in making its investment decision with respect to the common shares or GDSs. It acknowledges that no representation or warranty is made by the underwriters or their agents as to the accuracy or completeness of such materials. It has had access to such financial and other information concerning us and the common shares or GDSs as it has deemed necessary in connection with its decision to purchase the common shares or GDSs, including an opportunity to ask questions of and request information from us, the selling shareholders, and the underwriters or their agents. It acknowledges that we, the selling shareholders, the underwriters and their agents and our respective counsel will rely upon the truth and accuracy of the foregoing acknowledgments, representations and agreements and agrees that, if any of the acknowledgments, representations or warranties deemed to have been made by its purchase of shares or GDSs are no longer accurate, it shall notify us, the selling shareholders and the underwriters. In the event that it is acquiring any shares or GDSs as a fiduciary or agent for one or more investment accounts, it represents that it has sole investment discretion with respect to each such account and that it has full power to make the foregoing acknowledgments, representations and agreements on behalf of each such account. In the event that an agent or representative of the purchaser is making any acknowledgment, representation or agreement on behalf of the purchaser, such agent or representative represents that it is duly authorized to execute the subscription agreement on behalf of the purchaser and has confirmed the foregoing acknowledgments, representations and agreements with the purchaser.

5. 6.

7.

We acknowledge that for so long as the common shares and GDSs are "restricted securities" within the meaning of Rule 144(a)(3) under the Securities Act, holders of such restricted securities, and prospective purchasers (as designated by such holders) of such restricted securities, shall have the right to obtain upon request any information required to be provided by Rule 144A(d)(4) under the Securities Act during any period in which we are no subject to and in compliance with Section 13 or 15(d) of the Exchange Act, or we are not exempt from such reporting requirements pursuant to and in compliance with Rule 12g3-2(b) under the Exchange Act. In addition, holders of our GDSs will be subject to the transfer restrictions described in "Description of Global Depositary Shares."

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Notice to Prospective Investors in the European Economic Area In relation to each member state of the European Economic Area that has implemented the Prospectus Directive (each, a relevant member state), with effect from and including the date on which the Prospectus Directive is implemented in that relevant member state (the relevant implementation date), an offer of shares or GDSs described in this offering memorandum may not be made to the public in that relevant member state prior to the publication of a prospectus in relation to the shares or GDSs that has been approved by the competent authority in that relevant member state or, where appropriate, approved in another relevant member state and notified to the competent authority in that relevant member state, all in accordance with the Prospectus Directive, except that, with effect from and including the relevant implementation date, an offer of securities may be offered to the public in that relevant member state at any time: • • • to any legal entity that is authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities; to any legal entity that has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than €43,000,000 and (3) an annual net turnover of more than €50,000,000, as shown in its last annual or consolidated accounts; in any other circumstances that do not require the publication of a prospectus pursuant to Article 3 of the Prospectus Directive.

Each purchaser of shares or GDSs described in this offering memorandum located within a relevant member state will be deemed to have represented, acknowledged and agreed that it is a "qualified investor" within the meaning of Article 2(1)(e) of the Prospectus Directive. For purposes of this provision, the expression an "offer to the public" in any relevant member state means the communication in any form and by any means of sufficient information on the terms of the offer and the securities to be offered so as to enable an investor to decide to purchase or subscribe the securities, as the expression may be varied in that member state by any measure implementing the Prospectus Directive in that member state, and the expression "Prospectus Directive" means Directive 2003/71/EC and includes any relevant implementing measure in each relevant member state. The sellers of the shares or GDSs have not authorized and do not authorize the making of any offer of shares or GDSs through any financial intermediary on their behalf, other than offers made by the underwriters with a view to the final placement of the shares as contemplated in this offering memorandum. Accordingly, no purchaser of the shares or GDSs is authorized to make any further offer of the shares or GDSs on behalf of the sellers or the underwriters. Notice to Prospective Investors in the United Kingdom This offering memorandum is only being distributed to, and is only directed at, persons in the United Kingdom that are qualified investors within the meaning of Article 2(1)(e) of the Prospectus Directive ("Qualified Investors") that are also (i) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order") or (ii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as "relevant persons"). This offering memorandum and its contents are confidential and should not be distributed, published or reproduced (in whole or in part) or disclosed by recipients to any other persons in the United Kingdom. Any person in the United Kingdom that is not a relevant person should not act or rely on this document or any of its contents. Notice to Prospective Investors in France Neither this offering memorandum nor any other offering material relating to the shares or GDSs described in this offering memorandum has been submitted to the clearance procedures of the Autorité des Marchés Financiers or by the competent authority of another member state of the European Economic Area and notified to the Autorité des Marchés Financiers. The shares or GDSs have not been offered or sold and will not be offered or sold, directly or indirectly, to the public in France. Neither this offering memorandum nor any other offering material relating to the shares or GDSs has been or will be: • • released, issued, distributed or caused to be released, issued or distributed to the public in France; or used in connection with any offer for subscription or sale of the shares or GDSs to the public in France.

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Such offers, sales and distributions will be made in France only: • to qualified investors (investisseurs qualifiés) and/or to a restricted circle of investors (cercle restreint d'investisseurs), in each case investing for their own account, all as defined in, and in accordance with, Article L.411-2, D.411-1, D.411-2, D.734-1, D.744-1, D.754-1 and D.764-1 of the French Code monétaire et financier; or to investment services providers authorized to engage in portfolio management on behalf of third parties; or in a transaction that, in accordance with article L.411-2-II-1°-or-2°-or 3° of the French Code monétaire et financier and article 211-2 of the General Regulations (Règlement Général) of the Autorité des Marchés Financiers, does not constitute a public offer (appel public à l'épargne).

• •

The shares or GDSs may be resold directly or indirectly, only in compliance with Articles L.411-1, L.411-2, L.412-1 and L.621-8 through L.621-8-3 of the French Code monétaire et financier. Notice to Prospective Investors in Germany The shares and GDSs offered by this offering memorandum have not been and will not be offered to the public within the meaning of the German Sales Prospectus Act (Verkaufsprospektgesetz) or the German Investment Act (Investmentgesetz). The shares and GDSs have not been and will not be listed on a German exchange. No sales prospectus pursuant to the German Sales Prospectus Act has been or will be published or circulated in Germany or filed with the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht) or any other governmental or regulatory authority in Germany. This offering memorandum does not constitute an offer to the public in Germany and it does not serve for public distribution of the shares or GDSs in Germany. Neither this offering memorandum, nor any other document issued in connection with this offering, may be issued or distributed to any person in Germany except under circumstances which do not constitute an offer to the public within the meaning of the German Sales Prospectus Act or the German Investment Act. Notice to Prospective Investors in Italy This offering has not been registered with the Commissione Nazionale per le Società e la Borsa (CONSOB) pursuant to Italian securities legislation. The shares or GDSs offered by this offering memorandum may not be offered or sold nor may the offering memorandum or any other offering materials be distributed in the Republic of Italy unless such offer, sale or distribution is: • made by an investment firm, bank or financial intermediary permitted to conduct such activities in the Republic of Italy in accordance with Legislative Decree No. 385 of September 1, 1993 (Decree No. 385), Legislative Decree No. 58 of February 24, 1998, CONSOB Regulation No. 11971 or May 14, 1999 and any other applicable laws and regulations; made (i) to professional investors (operatori qualificati) as defined in Article 31, second paragraph of CONSOB Regulation No. 11422 of July 1, 1998, as amended, or Regulation No. 11522, (ii) in circumstances where an exemption from the rules governing solicitations to the public at large applies pursuant to Article 100 of Legislative Decree No. 58 of February 24, 1998 and Article 33, first paragraph, of CONSOB Regulation No. 11971 of May 14, 1999, as amended or (iii) to persons located in the Republic of Italy who submit an unsolicited request to purchase shares or GDSs; and in compliance with all relevant Italian securities and tax laws and regulations.

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Notice to Prospective Investors in Hong Kong The shares or GDSs may not be offered or sold in Hong Kong, by means of this offering memorandum or any document other than to persons whose ordinary business is to buy or sell shares or debentures, whether as principal or agent, or in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap. 32) of Hong Kong. No advertisement, invitation or document relating to our shares or GDSs, whether in Hong Kong or elsewhere, which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the securities laws of Hong Kong) will be issued other than with respect to shares which are or are intended to be disposed of only to persons outside Hong Kong or only to "professional investors" within the meaning of the Securities and Futures Ordinance (Cap. 571) of Hong Kong and any rules made thereunder. Notice to Prospective Investors in Japan The shares and GDSs offered in this offering memorandum have not been registered under the Securities and Exchange Law of Japan. The shares or GDSs have not been offered or sold and will not be offered or sold, directly or indirectly, in Japan or to or for the account of any resident of Japan, except (i) pursuant to an exemption from the registration requirements of the Securities and Exchange Law and (ii) in compliance with any other applicable requirements of Japanese law. Notice to Prospective Investors in Singapore This offering memorandum has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this offering memorandum and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the shares or GDSs may not be circulated or distributed, nor may the shares or GDSs be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the "SFA"), (ii) to a relevant person pursuant to Section 275(1), or any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA, in each case subject to compliance with conditions set forth in the SFA. Where the shares or GDSs are subscribed or purchased under Section 275 of the SFA by a relevant person which is: • a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an accredited investor,

shares, debentures and units of shares and debentures of that corporation or the beneficiaries' rights and interest (howsoever described) in that trust shall not be transferred within six months after that corporation or that trust has acquired the shares pursuant to an offer made under Section 275 of the SFA except: • to an institutional investor (for corporations, under Section 274 of the SFA) or to a relevant person defined in Section 275(2) of the SFA, or to any person pursuant to an offer that is made on terms that such shares, debentures and units of shares and debentures of that corporation or such rights and interest in that trust are acquired at a consideration of not less than S$200,000 (or its equivalent in a foreign currency) for each transaction, whether such amount is to be paid for in cash or by exchange of securities or other assets, and further for corporations, in accordance with the conditions specified in Section 275 of the SFA; where no consideration is or will be given for the transfer; or where the transfer is by operation of law.

• •

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NOTICE TO CANADIAN RESIDENTS This offering memorandum is not, and under no circumstance is to be construed as, an advertisement or a public offering of the common shares or GDSs in Canada or any province or territory thereof. Any offer or sale of the common shares or GDSs in Canada will be made only pursuant to an exemption from the requirements to file a prospectus with the relevant Canadian securities regulators and only by a dealer properly registered under applicable provincial securities laws or, alternatively, pursuant to an exemption from the dealer registration requirement in the relevant province or territory of Canada in which such offer or sale is made.

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LEGAL MATTERS The validity of our common shares under Brazilian law will be passed upon by Mattos Filho, Veiga Filho, Marrey Jr. e Quiroga Advogados, Brazilian counsel to our company and the selling shareholder, and by Souza, Cescon Avedissian, Barrieu e Flesch Advogados, Brazilian counsel to the Brazilian underwriters and the international underwriters. We and the selling shareholders have been represented as to U.S. legal matters by Shearman & Sterling LLP. The Brazilian underwriters and the international underwriters have been represented as to certain U.S. legal matters by Cleary Gottlieb Steen & Hamilton LLP. INDEPENDENT ACCOUNTANTS Our financial statements as of and for the years ended December 31, 2004, 2005 and 2006, and as of and for the three-month period ended March 31, 2007 have been audited in accordance with auditing standards accepted in Brazil, by KPMG Auditores Independentes. Our financial statements as of and for the three-month period ended March 31, 2006, have been subject to a limited review, in accordance with specific rules established by IBRACON by KPMG Auditores Independentes. KPMG report on these financial statements, included in this offering memorandum, states that the scope of a limited review is significantly less than that of an audit and does not provide them with a base to express an opinion on the financial statements taken as a whole. Accordingly, the degree of reliance on their report on such information should be restricted in light of the limited nature of the review procedures applied.

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ENFORCEMENT OF JUDGMENTS AND SERVICE OF PROCESS We are incorporated under the laws of Brazil. All of our directors and officers named herein reside in Brazil, and substantially all of our assets and those of other persons are located in Brazil. As a result, it may not be possible (or it may be difficult) for you to effect service of process upon us or these other persons within the United States or to enforce judgments obtained in United States courts against us or them, including those predicated upon the civil liability provisions of the federal securities laws of the United States. In addition, any claims under the Novo Mercado regulations must be submitted to arbitration conducted in accordance with the rules of the Market Arbitration Chamber of the BOVESPA. See "Description of Our Share Capital—Arbitration." We have been advised by our Brazilian counsel, Mattos Filho, Veiga Filho, Marrey Jr. e Quiroga Advogados, that a judgment of a United States court for civil liabilities predicated upon the federal securities laws of the United States may be enforced in Brazil, subject to certain requirements described below. Such counsel has advised that a judgment against us, the directors and officers or certain advisors named herein obtained in the United States would be enforceable in Brazil upon confirmation of that judgment by the Superior Tribunal de Justiça (STJ). That confirmation, generally, will be available if the U.S. judgment: • • • • • • fulfills all formalities required for its enforceability under the laws of the United States; is issued by a court of competent jurisdiction after proper service of process; is not subject to appeal; is for payment of a sum certain; is authenticated by a Brazilian consular office in the United States and is accompanied by a sworn translation into Portuguese; and is not contrary to Brazilian national sovereignty or public policy.

Notwithstanding the foregoing, we cannot assure you that confirmation will be obtained, that the process described above will be conducted in a timely manner or that Brazilian courts will enforce a monetary judgment for violation of the United States securities laws with respect to the ordinary shares. We have been further advised by Mattos Filho, Veiga Filho, Marrey Jr. e Quiroga Advogados that an action may be brought in Brazilian courts in connection with this offering memorandum predicated solely on the federal securities laws of the United States and that, subject to applicable law, Brazilian courts may enforce liabilities in such action against us (provided that provisions of the federal securities laws of the United States do not contravene Brazilian policy, good morals or national sovereignty and provided further that Brazilian courts can assert jurisdiction over the particular action) or the directors and officers and certain advisors named herein and the ability of a judgment creditor or the other persons named above to satisfy a judgment by attaching certain assets of ours or of the selling shareholders, respectively, is limited by provisions of Brazilian law. In addition, a plaintiff (whether Brazilian or not) that resides outside Brazil during the course of litigation in Brazil must post bond to secure payment of costs and fees if the plaintiff owns no real property in Brazil. This bond must have a value sufficient to satisfy the payment of court fees and defendant attorney's fees, as determined by the Brazilian judge, except in the case of the enforcement of foreign judgments that have been duly confirmed by the Superior Tribunal de Justiça (STJ). Notwithstanding the foregoing, we cannot assure you that confirmation of any judgment will be obtained, or that the process described above can be conducted in a timely manner.

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INDEX TO FINANCIAL STATEMENTS Audited Consolidated Financial Statements as of and for the Year Ended March 31, 2007 Report of Independent Auditors ...................................................................................................................... F-7 Balance Sheets as of March 31, 2007.............................................................................................................. F-8 Statements of Income for the Year Ended March 31, 2007............................................................................. F-9 Statements of Shareholders’ Equity............................................................................................................... F-10 Changes in Financial Position for the Year Ended March 31, 2007.............................................................. F-11 Notes to the Financial Statements as of and for the Year Ended March 31, 2007......................................... F-12 Audited Consolidated Financial Statements as of and for the Year Ended December 31, 2006 Report of Independent Auditors .................................................................................................................... F-40 Balance Sheets as of December 31, 2006...................................................................................................... F-41 Statements of Income for the Year Ended December 31, 2006..................................................................... F-42 Statements of Shareholders’ Equity............................................................................................................... F-43 Changes in Financial Position for the Year Ended December 31, 2006........................................................ F-44 Notes to the Financial Statements as of and for the Year Ended December 31, 2006................................... F-45 Audited Consolidated Financial Statements as of and for the Year Ended December 31, 2005 Report of Independent Auditors .................................................................................................................... F-67 Balance Sheets as of December 31, 2005...................................................................................................... F-68 Statements of Income for the Year Ended December 31, 2005..................................................................... F-69 Statements of Shareholders’ Equity............................................................................................................... F-70 Changes in Financial Position for the Year Ended December 31, 2005........................................................ F-71 Notes to the Financial Statements as of and for the Year Ended December 31, 2005................................... F-72 Audited Consolidated Financial Statements as of and for the Year Ended December 31, 2004 Report of Independent Auditors .................................................................................................................... F-83 Balance Sheets as of December 31, 2004...................................................................................................... F-84 Statements of Income for the Year Ended December 31, 2004..................................................................... F-85 Statements of Shareholders’ Equity............................................................................................................... F-86 Changes in Financial Position for the Year Ended December 31, 2004........................................................ F-87 Notes to the Financial Statements as of and for the Year Ended December 31, 2004................................... F-88

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Redecard S.A.
Financial statements March 31, 2007 and 2006
(A translation of the original report in Portuguese as published in Brazil containing financial statements prepared in accordance with accounting practices adopted in Brazil)

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Redecard S.A. Financial statements March 31, 2007 and 2006 CONTENTS Independent auditors' report ............................................................................................................................F-7 Balance sheets ................................................................................................................................................F-8 Statements of income ......................................................................................................................................F-9 Statements of changes in shareholders' equity ..............................................................................................F-10 Statements of changes in financial position ..................................................................................................F-11 Notes to the financial statements ..........................................................................................................F-12 – 32

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INDEPENDENT AUDITORS' REPORT To The Board of Directors and Shareholders Redecard S.A. São Paulo – SP We have examined the balance sheet of Redecard S.A., as of March 31, 2007 and the related statements of income, changes in shareholders' equity and changes in financial position for the period from January 01, to March 31, 2007, which are the responsibility of its management. Our responsibility is to express an opinion on these financial statements. Our examination was conducted in accordance with auditing standards accepted in Brazil and included: (a) planning of the audit work, considering the materiality of the balances, the volume of transactions and the accounting systems and internal accounting controls of the Company; (b) verification, on a test basis, of the evidence and records which support the amounts and accounting information disclosed; and (c) evaluation of the most significant accounting policies and estimates adopted by Company management, as well as the presentation of the financial statements taken as a whole. In our opinion the financial statements referred to above present fairly, in all material respects, the financial position of Redecard S.A. as of March 31, 2007, the results of its operations, changes in its shareholders' equity and changes in its financial position for the period from January 01, to March 31, 2007, in conformity with accounting practices adopted in Brazil. The financial statements for the period ended March 31, 2006 were reviewed by us, and based on this limited review, we are not aware of any significant modifications that should be made to these financial statements for them to be in accordance with accounting practices adopted in Brazil. However, the scope of a limited review is significantly less than that of an audit and does not provide us with a base to express an opinion on the financial statements taken as a whole. April 19, 2007, with the exception of notes 1, 3i, 6, 7, 8, 10, 11, 14, 15 and 16 to the financial statements, dated June 06, 2007, which were expanded to better reflect the disclosures required by the Brazilian Securities and Exchange Commission, as reported in note 3. KPMG Auditores Independentes CRC 2SP014428/O-6 Original report in Portuguese signed by Giuseppe Masi Accountant CRC 1SP176273/O-7

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Redecard S.A.

Balance sheets

March 31, 2007 and 2006

(In thousands of Reais) Note 8,574,467 4 3f 5 7 8 16,679 8,444,262 59,032 54,494 10,386 6,513,271 36,033 39,009 Accounts payable to merchants Labor liabilities Tax liabilities Borrowings Other liabilities Non current liabilities Non current liabilities Provision for contingent liabilities 5 Shareholders' equity Capital Revenue reserves 26,097 13,707 174,021 704,296 (530,275) 8,788,292 6,874,701 624,907 (414,292) 8,788,292 6,874,701 210,615 52,384 13,003 11 9 3f 6,598,699 Current liabilities 2007 2006 Liabilities Note 2007 8,607,713 7,738,331 11,696 18,691 361,888 477,107 180,579 116,318 116,318 64,261 53,552 10,709 2006 6,601,983 5,840,309 11,198 15,650 373,857 360,969 272,718 208,457 208,457 64,261 53,552 10,709

Assets

Current assets

Cash and cash equivalents Accounts receivable from issuers Other receivables Deferred income tax and social contribution 213,825 39,804 65,387 276,002

Non current assets

Non current

F-8
6

Deferred income tax and social contribution Legal deposits

Permanent assets

Property, plant and equipment Accumulated depreciation

See the accompanying notes to the financial statements

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Redecard S.A. Statements of income January 01, to March 31, 2007 and 2006 (In thousands of Reais, except net income per share) Note 2007 2006

Result from Redecard Consortium Participation (Operational profit from Consórcio Redecard in 2007 R$ 345,269 and 2006 R$ 189,025) Income before income and social contribution taxes Income tax and social contribution Current Deferred Net income for the period Net income per share - R$

14

149,092

83,573

149,092 12 (40,246) (11,387) (28,859) 108,846 57.95

83,573 (27,300) (24,400) (2,900) 56,273 29.96

See the accompanying notes to the financial statements

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Redecard S.A. Statements of changes in shareholders' equity January 01, to March 31, 2007 and 2006 (In thousands of Reais) Revenue reserves Capital subscribed and paid up 53,552 Legal reserve 9,338 Retained earnings 56,273

Note Shareholders' equity at December 31, 2005 Net income for the period Destination: Legal reserve Distribution of dividends Shareholders' equity at March 31, 2006 Shareholders' equity at December 31, 2006 Net income for the period Distributions: Dividends distributed Shareholders' equity at March 31, 2007 9 9

Total 62,890 56,273

53,552 53,552 -

1,371 10,709 10,709 -

(1,371) (54,902) # 108,846

(54,902) 64,261 64,261 108,846

53,552

10,709

(108,846) -

(108,846) 64,261

See the accompanying notes to the financial statements

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Redecard S.A. Statements of changes in financial position January 01, to March 31, 2007 and 2006 (In thousands of Reais)
2007 Origin of funds From operations Net income for the period....................................................................................... Expenses that do not affect working capital Depreciation and amortization ............................................................................ Profit on sale of fixed assets................................................................................ Decrease in non current assets .............................................................................. 2006

108,846 28,265 (261) 14,728 151,578

56,273 34,636 – – 90,909 89 1,360 12,686 14,135 105,044

From third parties Sales value of fixed assets........................................................................................ Disposal of fixed assets at a loss .............................................................................. Increase in non current liabilities .............................................................................

462 – – 462 152,040

Applications of funds Investments in Property, plant and equipment ................................................................................. Increase in non current assets ....................................................................................... Decrease in non current liabilities ................................................................................ Distribution of dividends ..............................................................................................

27,210 – 67,426 108,846 203,482 (51,442)

41,805 4,005 – 54,902 100,712 4,332

Increase/(decrease) ecrease in net working capital ....................................................... Change in net working capital Beginning Current assets ............................................................. Current liabilities ....................................................... Net working capital.................................................. See the accompanying notes to the financial statements 10,281,907 10,263,711 18,196 2007 End 8,574,467 8,607,713 (33,246)

Variation (1,707,440) (1,655,998) (51,442)

2006 Variation (1,501,943) (1,506,275) 4,332

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Redecard S.A. Notes to the financial statements January 01 to March 31, 2007 and 2006 (In thousands of Reais) 1 Operations

Redecard S.A. was constituted on November 01, 1996, and its main activity is to act as a trader for transactions using the credit cards under the banners MasterCard®, MasterCard Electronic® and Diners Club International®, and with the debit cards MasterCard Maestro®, RedeShop® and Maestro®, through registering and approving trade merchants. The business model for Redecard's trading activities consists of registering and approving trade and service entities, and also capturing, transmitting, processing and settling transactions that use the aforementioned credit and debit cards. Redecard's operations are organized between the following businesses:

a. Credit and Debit cards: through capturing, processing and settling trade and financial transactions using
the aforementioned cards. For the services provided, Redecard charges these establishments an administration fee, which comprises the issuer's remuneration, referred to as interchange and remuneration for the services provided by Redecard;

b. Anticipated financial settlement to registered trade merchants for amounts receivable from the credit
cards MasterCard and Diners Club International, through requests made by these establishments and only for those transactions made using these cards. Redecard earns financial income from these operations;

c. Hire of equipment to register the electronic transactions, referred to as POS. The Company earns monthly
income from hiring this equipment;

d. Services provided to partner companies through capturing, routing and transmitting transactions made
using benefit cards (vouchers), such as: food, meals, fuel, etc, as well as Private Label cards, usually issued by financial companies. The income earned by Redecard consists of the fees charged to the voucher and financial companies;

e. Services provided to trade merchants by means of consulting checks using the POS equipment, together
with the Serasa data base. The income earned by Redecard consists of the fees charged directly to these establishments and a small margin on the costs from Serasa. Redecard was the leader of a consortium (Consórcio Redecard), constituted on November 1st, 1996, the date the Company started operating, and which was terminated on March 31, 2007, consisting of the following consortium members, besides Redecard S.A: Banco Itaucard S.A, Unibanco – União de Bancos Brasileiros S.A. and Banco Citibank S.A. After the Consórcio Redecard ended, all of its activities were assumed by Redecard S.A. Consórcio Redecard was not a corporate legal entity; and operated as a common enterprise to provide services related to the use of credit and debit cards and other means of payment, at establishments registered and approved by Redecard in Brazil, and its activities included developing promotional and publicity activities aimed to encourage the use of the aforementioned cards.

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Redecard S.A. Notes to the financial statements January 01 to March 31, 2007 and 2006 (In thousands of Reais) Redecard Consortium Background At the end of 1970, three large banks, Citibank, Itaú and Unibanco, founded Credicard, a company set up to administer credit cards. Since the start, Credicard issued credit cards and registered merchant outlets. In 1983, it joined Visa International, and started to issue its cards according to the rules under this banner. In 1987, Credicard interrupted its contract with Visa and joined MasterCard International. In 1990, Credicard administered the credit card portfolio of 60 financial institutions in Brazil, sharing the results earned from the credit card portfolio, since it still had exclusive right to issue Mastercard credit cards. Its exclusive right to issue credit cards under the MasterCard banner was interrupted in 1996, as a result of the changes in the market, mainly from the incorporation of the activities of Banco Nacional by Unibanco. This incorporation resulted in the same Corporation having an entity responsible for issuing Visa Cards (Banco Nacional) and another entity (Unibanco) being exclusively responsible for issuing, via Credicard, the credit cards with the MasterCard banner. Until then, both Credicard, the issuer authorized for the MasterCard banner, and also the issuers of credit cards authorized by Visa, maintained as part of their operations, the activities related to granting credit to the credit card holders and those that consisted of registering merchant entities so that they could accept payments for their sales through the use of credit cards with these two banners. The interruption in the exclusive right to the MasterCard and Visa banners for issuing credit cards, resulted therefore, in the need to define mechanisms and processes that would encourage the issue of the maximum possible volume of its credit cards, but at the same time, mitigating risks and reducing costs. Consequently, on September 02, 1996, Redecard was constituted from the spin off of the area responsible for registering merchant entities from Credicard, with the three main shareholders of Credicard being retained in the company. Later, during 1997, MasterCard International became a shareholder of Redecard. The focus of Redecard was on the relationships with the trading merchants and developing and maintaining the systems and specific processes to attend the credit card issuers with the MasterCard banner in Brazil, as well as the debit card issuers with Redeshop and Maestro banners. In addition, within the concept of a two sided market, it was necessary to create mechanisms to improve the incentive for issuing credit cards with the MasterCard and Redeshop banners, by other credit card administrators. The constitution of the Redecard Consortium, since the first day of Redecard's operations, on November 01, 1996, was the most effective means identified by the Controlling Shareholders to formalize the association and administer Redecard, taking into consideration the credit card base issued by Credicard and the systems that had been operating at Credicard, which were transferred to Redecard.

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Redecard S.A. Notes to the financial statements January 01 to March 31, 2007 and 2006 (In thousands of Reais) Initially, the RedeCard consortium was constituted with the participation of two consortium members: Credicard and Redecard. In April 1997, in the first alteration to the Statutes of the RedeCard Consortium, Credicard assigned part of its rights to the results from the Consortium directly to the controlling shareholders, common to the two companies. In December 1997, in the second alteration to the Statutes, the shareholder Itaú was entitled to the results on the same basis as Credicard, through the assignment of the participation equivalent to the credit card base issued by Itaucard. In the third alteration in January 2006, Credicard withdrew from the Redecard Consortium and the controlling shareholders of Redecard started to receive the results, which until then, were distributed to Credicard. Finally, the fourth and last alteration, dated March 31, 2007, refers to the interruption and liquidation of the Redecard Consortium. The legal basis for the Contract for the Constitution of the Redecard Consortium was articles 278 e 279 of law 6.404 of December 15, 1976; it was not a legal entity, and its objects, according to the Third Clause of the Contract, consisted of " common enterprise to produce the following services related to the use, through the Redecard system, of credit cards issued by its Members: a. Administration of the network of merchant entities that accept transactions using credit cards;

b. Obtaining, transmitting, processing and settling transactions generated from using credit cards; c. Develop other activities that are similar or related to the interests of the Consortium.

The rights and obligations related to income and the allocation of expenses were regulated in annexes I, II, III and IV. Annex I established the rules to preserve the results from the portfolio of credit cards issued by Credicard and subsequent to December 1997, also by Itaucard. This Annex determined the distribution to the Consortium members Credicard and Itaucard, of the income from the discount rates charged to the merchant entities, from using the credit cards issued by Credicard and Itaucard, in proportion to their participation in the income earned. Annex II includes the income from the discount rates earned from transactions undertaken at the merchant entities, using credit cards issued by the other credit card administrators authorized by MasterCard, both in Brazil and overseas. In addition, income from the hire of POS equipment was also included. The income was distributed to the Consortium members based on their shareholding interest in Redecard, except MasterCard. The purpose of separating the consortium members, in accordance with these two Annexes, was to admit new partners that issue credit cards with the MasterCard banner, increasing and encouraging business for Redecard, but, at the same time, the shareholders did not wish to share the results that could be earned from the credit card base that Credicard had built up over the 25 years of its operations. Annex III of the Consortium's contract included income from the discount rates charged to the establishments on transactions undertaken using debit cards with the banners Redeshop and Maestro, and also income from anticipation of amounts payable to the establishments. Annex IV of the Consortium's contract presented a summary and a diagram of the distribution of income, based on the nature of such, according to Annexes I, II and III. Expenses incurred by Redecard, the leader of the consortium, were allocated between all of the consortium members based on the nature of the expense and considering the proportional participation of each member in the consortium income. Thus, all of the expenses were allocated except those of a financial nature, which were allocated directly to the results from the business from the anticipation of amounts payable to the establishments.

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Redecard S.A. Notes to the financial statements January 01 to March 31, 2007 and 2006 (In thousands of Reais) The partnerships idealized at the time of constituting the Redecard Consortium, however, did not occur, and in fact the changes in the corporate structure of Credicard in 2004, resulted in changes being made to the Consortium Contract. The Redecard Consortium operated until March 31, 2007, and its objects referred to the same activities as those currently undertaken by the Company, which include the registering of establishments to accept credit card payments and also obtaining, transmitting, processing and settling transactions undertaken using MasterCard and Diners credit and debit cards in Brazil. On this date, the members of the Redecard Consortium were the controlling shareholders and Redecard. The Company, as the leader of the Redecard Consortium, performed all of the activities and acts of the Redecard consortium. Since March 31, 2007, with the end of the activities undertaken by the Redecard Consortium, the obligations, rights, income, expenses and financial and operational results, refer solely to Redecard. Results Redecard's statements of income for the three months ended March 31, 2006 and 2007, refer only to the results from the distribution of the Company's participation in the Redecard consortium. To facilitate the analysis of the Company's audited financial statements, in the past, a note to the statements was prepared with the heading "results from Redecard Consortium participation", which reported the income, expenses and operational profit of the Redecard Consortium, and not just the results from Redecard S.A.'s participation. Thus, the Company believes that the statement of income that best reflects the operational activities for the three months ended March 31, 2006 and 2007, is that presented in note 14 "results from participation in the consortium", since it presents the total results for the period from the activities currently undertaken by the Company. 2 Distribution of net income to the consortium members

Net income recognized by Consórcio Redecard is distributed according to criteria set forth in the Consórcio Redecard Organization Agreement, consisting basically of the allocation of income and expenses. 3 Presentation of significant accounting policies

The financial statements were prepared based on Corporate Legislation and accounting practices adopted in Brazil, observing the rulings including in Corporate Law. These financial statements include the alterations introduced by the following accounting norms: Accounting Norms and Procedures, number 27 – NPC 27, "Presentation and Disclosures", Accounting Norms and Procedures, number 22 – NPC 22, "Provisions, Liabilities, Contingent liabilities and Contingent Assets", both issued by IBRACON – Institute of Independent Auditors in Brazil, on October 03, 2005. These financial statements were prepared as part of the process to register the Company with the Securities Commission, and therefore the figures for the same period from the previous year have been presented for comparison purposes.

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Redecard S.A. Notes to the financial statements January 01 to March 31, 2007 and 2006 (In thousands of Reais)

a. Statement of income
Income and expenses are recognized in the income statement on an accruals basis. Income earned from credit and debit card transactions is appropriated to results on the dates the transactions are processed. Income from services provided to partners and to trade merchants is recognized to results based on the realization of such. Consórcio Redecard income and expenses (Note 14) were recorded for the consortium members and for Redecard S.A according to their respective shares in the consortium, based on the criteria stated in the Contract for Constituting the Consórcio Redecard.

b. Accounting estimates
The preparation of the financial statements in accordance with accounting practices adopted in Brazil requires that management uses its judgment in determining and recording accounting estimates. Significant assets and liabilities subject to these estimates and assumptions include the residual value of property, plant and equipment, the provision for doubtful accounts, deferred income tax and social contribution and the provision for contingencies. The settlement of transactions involving these estimates may result in significantly different amounts due to the inaccurates inherent to determining such. The Company reviews the estimates and assumptions at least annually.

c.

Foreign currency

Monetary assets and liabilities denominated in foreign currencies were translated into reais at the foreign exchange rate ruling at the balance sheet date. Foreign exchange variations arising on translation are recognized in the income statement. These balances originate mainly from transactions undertaken at establishments using credit and debit cards issued by foreign institutions, licenced to use MasterCard and Diners Club International cards.

d. Property, plant and Equipment
Property, plant and equipment are recorded at acquisition cost and depreciated using the straight-line method at rates which take into account the estimated useful lives of the assets. The costs incurred from replacing a fixed asset component are not capitalized given the difficulty in estimating the future economic benefit from such.

e.

Income tax and social contribution

The income and social contribution taxes, both current and deferred, are calculated based on the rates of 15% plus a surcharge of 10% on taxable income in excess of R$240 thousand for income tax and 9% on taxable income for social contribution on net income. The provision for these taxes is recorded to "Tax liabilities". The deferred tax assets arising from temporary differences have been recorded in accordance with CVM Instruction 371 of June 27, 2002, and take into consideration past profitability and the expectation of future taxable profits based on a technical viability study (Note 5).

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Redecard S.A. Notes to the financial statements January 01 to March 31, 2007 and 2006 (In thousands of Reais)

f.

Accounts receivable – Issuers and accounts payable to trade merchants

These amounts refer to the values of transactions undertaken by holders of credit cards issued by financial institutions licensed to use MasterCard and Diners Club International cards; the balances for accounts receivable from issuers are net of interchange fees and the balances for accounts payable to merchants are net of administration fees (discount), with recovery from the issuers and payment to the merchants falling due within one year.

g. Borrowings
Stated at the amounts borrowed from financial institutions, plus contractual charges incurred to the balance sheet date.

h. Provision for doubtful debts
The provision for doubtful debts is recorded based on an analysis of risks from recovering credits receivable from issuers and merchants, mainly based on the past history of recovery, default and inactivity of issuers and merchants, and is recorded for an amount considered sufficient to cover possible losses. At March 31, 2007 and 2006, it was not necessary to record a provision for accounts receivable from issuers. A provision has been recorded for the rental of equipment for capturing transactions (POS) installed at merchants considered to be inactive by the Company, and for amounts claimed by credit-card holders against merchants that had not been registered and approved by the Company, at the time of the complaint or that do not have credits receivable from transactions undertaken using MasterCard and Diners Club International credit cards.

i.

Contingent liabilities

These arise from legal processes inherent to the normal course of business, filed by third parties and exemployees, through civil and labor claims. These contingencies are evaluated by legal advisors and are quantified using models and criteria that enable the amounts to be adequately determined, despite the uncertainty inherent to the period and amount. The contingencies are classified between probable, for which a provision is recorded; possible, which are disclosed but for which no provision is recorded; and remote, for which disclosure or a provision is not required. The provisions that involve tax processes are recorded for an amount equivalent to the total value of the taxes being legally disputed, plus updates for inflation and interest for late payment, as if due, to the balance sheet date. The provisions for the proceedings with the Labor Courts related to Redecard have been recorded for the total value of the labor claims, updated for inflation, plus interest calculated to the balance sheet dates.

j.

Provisions

A provision is recognized in the balance sheet when the Company has a legal obligation or is constituted as a result of a past event, and it is probable that economic resources will be required to settle the obligation. Provisions are recorded considering the best estimates of the risk involved.

k. Other current and non current assets and liabilities
Stated at net realizable values, at known or calculated amounts, plus, when applicable, the related charges, monetary and/or exchange variations incurred to the balance sheet date.

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Redecard S.A. Notes to the financial statements January 01 to March 31, 2007 and 2006 (In thousands of Reais) 4 Cash and cash equivalents

Consist of amounts available in the Company's bank accounts, represented by amounts deposited with financial institutions that issue credit cards, with these amounts used to settle transactions with merchants on the first business day of the month subsequent to the balance sheet date. 5 a. Tax credits Tax credits held at the balance sheet date are recorded as assets, as deferred income tax and social contribution, and calculated on the temporary differences arising from the following non deductible provisions at March 31, 2007:
Income tax Temporary differences: Provision for tax contingencies............................................................ Provision for civil contingencies ......................................................... Provision for labor contingencies ........................................................ Provision for other expenses................................................................ Total ...................................................................................................... 17,517 1,599 1,845 40,069 61,030 Social contribution 3,896 576 664 14,425 19,561

b. Expected realization, which takes into consideration the nature of the non deductible provisions and future taxable profits being generated, is presented below:
Year of realization 2007 ........................................................................................................ 2008 ........................................................................................................ 2009 ........................................................................................................ 2010 ........................................................................................................ Total ....................................................................................................... Income tax 35,167 7,450 5,263 13,150 61,030 Social contribution 12,265 1,561 1,839 3,896 19,561

Deferred income tax and social contribution are recorded to reflect the future tax effects attributable to temporary differences between the tax base for assets and liabilities and the respective book values. The book value of the deferred tax asset is periodically revised, in the event of significant factors that alter the forecasts, and these are revised by the Company during the year. Management considers that the deferred assets arising from temporary differences will be realized at the time of the final resolution of the contingencies and events. At March 31, 2007 and 2006, the Company did not have significant balances for tax losses and negative taxable base.

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Redecard S.A. Notes to the financial statements January 01 to March 31, 2007 and 2006 (In thousands of Reais) 6 Property, plant and equipment
Annual depreciation rate (%) Equipment for recording transactions (POS) . Network equipment for transactions capturing ...................................................... EDP Equipment ............................................. Data processing system – Softwares .............. Vehicles ......................................................... Fixtures and fittings ....................................... Facilities......................................................... Leasehold improvements ............................... Fixed assets in progress.................................. Total .............................................................. 33.33 20 20 20 20 10 10 9.5 – Cost value 606,584 33,875 15,362 29,364 4,829 3,174 1,801 7,636 1,671 704,296 2007 Accumulated depreciation (462,893) (29,063) (11,432) (19,704) (1,820) (1,731) (873) (2,759) – (530,275) Cost value 530,271 32,341 19,811 23,741 4,602 2,973 1,822 6,352 2,994 624,907 2006 Accumulated depreciation (354,508) (24,826) (13,721) (15,911) (1,527) (1,433) (719) (1,647) – (414,292)

The net amount reported as "Equipment for Capturing Transactions (POS)" of R$143,691, in 2007, net of accumulated depreciation (R$175,763 in 2006), refers to the equipment for recording electronic transactions available at the establishments registered with the Redecard System. At March 31, 2007, the Company had installed 659,577 items of "POS" equipment, which represented 58.4% of the volume of transactions recorded electronically by the Company. Redecard has two different types of equipment:
a.

Fixed equipment, also called POS (Points of Sale) Desktop. At March 31, 2007, the Company had installed 623,417 items of equipment. 36,160 items of equipment, which were separated between: • • Indoor: for internal use by registered establishments. Outdoor: for external use by registered establishments.

b. Wireless equipment, also called POS Wireless. At March 31, 2007, the Company had installed

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Redecard S.A. Notes to the financial statements January 01 to March 31, 2007 and 2006 (In thousands of Reais) 7 Borrowings

Represented by the contracts stated below and refer to fundings from financial institutions for the total amount of R$361,888 (R$373,857 during the first quarter of 2006). There are no restrictive clauses or reciprocal clauses in the contracts presented below.
Domestic currency Banco Bradesco .................................................................................................. Financing, subject to variation in the rate for Interbank Certificates of Deposit (CDI) forecast at 104.0%, with no guarantee. Maturities: 15% April 2007; 47% May 2007 and 38% August 2007 Banco Safra......................................................................................................... Financing, subject to variation in the rate for Interbank Certificates of Deposit (CDI) forecast at 103.2%, with no guarantee. Maturities: 40% in June 2007; 52% in July 2007 and 8% in August 2007 Guaranteed account........................................................................................... Total .................................................................................................................... Average period – Days incurred 59 31/03/2007 146,270

65

209,648

5,970 361,888

8

Other accounts payable Represented by the following obligations:
31/03/2007 31/03/2006 179,022 123,053 58,894 360,969

Due to suppliers and provisions for expenses ...................................................... Participation in the consortium payable ............................................................... Dividends to distribute ......................................................................................... Total ....................................................................................................................

172,084 196,177 108,846 477,107

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Redecard S.A. Notes to the financial statements January 01 to March 31, 2007 and 2006 (In thousands of Reais) Participation in the consortium payable – Refers to the amounts recorded as "participation in Consortium payable" which refers to the results calculated for the period January 01, to March 31, 2007 (January 01, to March 31, 2006 – notes 1 and 15), according to the Contract for the Constitution of the Redecard Consortium, with subsequent alterations. These amounts were settled in the month subsequent to the results being calculated (April 2007 and April 2006). Dividends to distribute – The amount recorded to this heading refers to the amount for Redecard S.A., the leader in the Redecard Consortium, from the distribution of the Consortium's results in accordance with the Contract for the Constitution of the Redecard Consortium, according to the results calculated for the period January 01 to March 31, 2007 (January 01, to March 31, 2006), (Notes to the financial statements 12 and 14). These amounts were liquidated, in accordance with article 16 of the Statutes, in the month subsequent to the results being calculated (April 2007 and 2006). 9 Capital

Capital is represented by 1,878,329 shares, being 626,110 ordinary shares and 1,252,219 preference shares, nominative, with no par value, distributed as follows:
% Banco Citibank S.A. .............................................................................................................................. Banco Itaucard S.A. ............................................................................................................................... Unibanco – União de Bancos Brasileiros S.A........................................................................................ Mastercard International Incorporated ................................................................................................... 31.9433 31.9433 31.9433 4.1701

As from 2006, the shares belonging to FNC – Comércio e Participações Ltda. were transferred to Banco Citibank S.A., and the shares belonging to Unicard Banco Múltiplo S.A., were transferred to Unibanco – União de Bancos Brasileiros S.A. Revenue reserves represent the amounts recorded to the Legal Reserve, at the rate of 5% of net profit, determined each financial year, under the terms of article 193 of Law 6404/76, up to a limit of 20% of capital. The preference shares do not have voting rights, but have priority in the distribution of dividends as provided in Law 6404/76, with the new text provided under Law 9457/97. Minimum statutory compulsory dividends correspond to 25% of adjusted net profit for the year. The dividends for the first quarter of 2007 were distributed in April 2007. Dividends were calculated as follows:
31/03/2007 Net profit for the period ................................................................................. Calculation base ............................................................................................. (=) Dividends payable.................................................................................... 108,846 108,846 108,846 31/03/2006 56,273 56,273 56,273

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Redecard S.A. Notes to the financial statements January 01 to March 31, 2007 and 2006 (In thousands of Reais) 10 Related party transactions The related party transactions at March 31, 2007 and 2006 refer to accounts receivable from the issuers, who are also the Company's controlling shareholders, and also the cost of services provided by Orbitall.
31/03/2007 Accounts receivable from issuers Citibank............................................................................................................ Itaucard ............................................................................................................ Unibanco .......................................................................................................... Service expenses Orbitall(1) ........................................................................................................ 1,860,827 3,187,704 853,770 11,071 31/03/2006 1,588,080 2,656,837 701,317 12,462

(1) Orbitall Serviços e Processamento de Informações Comerciais S.A. is a subsidiary company of Itaú Holding Financeira S.A., the same controlling shareholder of the controlling shareholder Itaú.

The amounts for accounts receivable from issuers refers to the amounts due to the Company, from transactions from consumers undertaken using credit and debit cards with the banners MasterCard and Diners Club, which will be subsequently paid out by the Company to the registered merchant establishments. The terms for contracting the issuers are established based on the regulations and manuals issued by the banners MasterCard and Diners Club. Consequently, these related party transactions are performed at prices and terms similar to those practiced by the other credit or debit card issuers authorized under the banners MasterCard and Diners Club. The Company agreed a service contract with Orbitall, including the maintenance and supply of hardware infra-structure, both for the mainframe platform and for the distributed platform, and also for the management, operation and administration of communications between these platforms and third party platforms, and also data processing. The contractual terms, for both the prices and the minimum levels for the services contracted, are consistent with those normally found on the market. On November 15, 1996, Redecard agreed with MasterCard International a Contract for Licensing Brand names, whereby MasterCard International licensed the Company, with non exclusive rights, to use the MasterCard brand name for registering merchant establishments. The period for this contract is not specified, and Redecard has to comply with the standards established by Mastercard for registering merchant establishments, which include rules on the signs for the establishments, ownership rights to brand names, etc. On October 24, 2002, Redecard agreed with MasterCard International a Contract for Licensing Brand names, whereby MasterCard International licensed the Company, with non exclusive rights, to use the Redeshop brand name, previously acquired by MasterCard International from Credicard. On April 27, 2005, Redecard agreed with MasterCard International a Contract for Licensing Brand names, whereby MasterCard International licensed the Company, with non exclusive rights, to use the MasterCard brand names, including MasterCard Maestro and other logos under the MasterCard brand name. 11 Contingent liabilities Redecard S.A. is party to administrative processes and legal claims with various courts and government bodies, arising from its normal operations, which involve tax, labor, civil and other questions.

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Redecard S.A. Notes to the financial statements January 01 to March 31, 2007 and 2006 (In thousands of Reais) The balances in the financial statements refer to the provisions which, according to Company management, and based on the opinion of its legal advisors, have been recorded for amounts considered adequate to cover losses expected to be incurred. These provisions are periodically reviewed by Company management and consist of: Provisions for tax contingencies – R$102,545 (first quarter of 2006 – R$197,380) and Civil and Labor contingencies – R$13,773 (first quarter of 2006 – R$11,077). The corresponding legal deposits in guarantee are corrected according to the regulation in force and are reported as non current assets – R$13,707 (first quarter of 2006 – R$13,003). a. Composition of provisions

Management, based on information from its legal advisors, analyses of pending legal claims and, with respect to labor claims, based on prior experience from amounts claimed, has recorded a provision for an amount considered sufficient to cover losses estimated from the outstanding claims, as follows:
Nature Civil ...................................................................................................................... Labor..................................................................................................................... Tax........................................................................................................................ Total ..................................................................................................................... 31/03/2007 6,396 7,377 102,545 116,318 31/03/2006 5,628 5,449 197,380 208,457

b.

Movement on provisions
December 31, 2006 Opening balance 6,168 7,412 170,164 183,744 January 01, to March 31, 2007 Additions to Closing provision balance Used Reversals 228 159 6,927 7,314 – (194) – (194) – – (74,546) (74,546) 6,396 7,377 102,545 116,318

Nature Civil ............................................................................ Labor........................................................................... Tax.............................................................................. Total ...........................................................................

Management, based on information from its legal advisors, during the period analyzed reversed amounts recorded as "Tax Contingencies". These amounts refer to: a) PIS and Cofins calculated on financial income, for the amount of R$48,017; and b) deductibility of CSLL charged on adjusted profit, for the amount of R$26,529. c. Total risk
31/03/2007 6,396 7,377 102,545 116,318 31/03/2006 5,628 5,449 197,380 208,457

Nature Civil ...................................................................................................................... Labor..................................................................................................................... Tax........................................................................................................................ Total .....................................................................................................................

The value of the total risk from contingencies reported above was calculated considering the claims filed by plaintiffs for each of the processes.

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Redecard S.A. Notes to the financial statements January 01 to March 31, 2007 and 2006 (In thousands of Reais) d. Tax processes (disputed in court)

Provisions have been made for the legal processes of a tax nature for the total value of the risk and consist of the following:
2007 Tax on services from hire of assets............................................................................................................ Non deductibility of social contribution on net profit in the taxable profit calculation ............................. PIS and COFINS – Extension of the calculation base on the results from foreign exchange variations.... PIS and COFINS – Injunction against laws 10.637/02 and 10.833/03 ...................................................... CIDE – Suspension of tax liability ............................................................................................................ Demand for withholding tax, PIS and COFINS for 1999 – PIS Repique .................................................. Total .......................................................................................................................................................... 44,642 41,774 5,426 6,370 3,697 636 102,545

ISS on hire of assets – Service Tax or ISS, is a tax charged by the municipal and due on income earned from services of any nature. The Company, understanding that the hire of assets does not constitute a fact subject to ISS, has not paid the tax on this income as from November 2000. However, since it considers this tax a legal obligation, the Company has recorded a provision until Complementary Law 116/03, of August 2003, comes into force. A Declaratory Action was filed, aimed at the anticipated concession of the effects of the court order under the terms of article 273, I, of the civil process code, combined with article 151, V, of the National Tax Code, with the text provided by Complementary Law 104/2001, to suspend the liability for ISS, on rental of assets, in the municipals of São Paulo, Belo Horizonte, Brasília, Rio de Janeiro, Recife, Salvador, Manaus and Maceió. According to the evaluation performed by Management and its legal consultants, the risk of loss is considered possible. Non deductibility of social contribution from income tax base – The Company filed an action in court against the Federal Tax Office, on April 16, 1998, through a Court injunction filed against Law 9.316/96, which made social contribution on net profit non deductible for purposes of determining taxable profit. The risk of loss is possible, however, since it refers to a legal obligation, a provision has been recorded. PIS and COFINS

a. In 2001, the Company through the concession of the restraining order, related to the base period
February 1999 and subsequent periods, to suspend the liability for PIS and COFINS under the terms of Law 9.718/98, at the rate of 3%, on income that does not fall within the concept of revenue (financial income, including monetary variations and interest income, etc.), guaranteeing the payment in accordance with Complementary Law 70/91, or, at least, to guarantee the right to set off in full the expenses arising from foreign exchange variation, including that from repass and swap/hedge contracts, for purposes of calculating PIS and COFINS. In April 2002, a sentence was published which partially granted the injunction filed, which declared the unconstitutional nature of paragraphs 1 of article 3, of Law 9.718/98, enabling the Company to pay PIS and COFINS – in accordance with the concept of revenue stated in Complementary Law 70/91, but maintaining the rate of 3%. The Federal Tax Office has appealed.

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Redecard S.A. Notes to the financial statements January 01 to March 31, 2007 and 2006 (In thousands of Reais) In February 2007, a decision was published that was unfavorable to the Federal Tax Office, confirming the sentence that declared the unconstitutional nature of the increase in the PIS and COFINS calculation base, which should be considered as revenue to the Company, but retaining the rate of 3%. The Company requested that the Supreme Court provide further clarifications as to the concept of revenue. With respect to the risk involved, the Supreme Court decided that COFINS and PIS, under the terms of Law 9.718/98, can only be demanded on income arising from the sale of goods and/or services. Given the jurisprudence established, as a result of the decisions passed by the Supreme Court, and considering the evaluation of the loss, the Company has reversed the provisions, as reported in item "b" – Movement on provisions. Since the income arising from the foreign exchange variations was the specific object of the declaratory appeals, the Company decided to maintain the provision recorded, thus observing the accounting concepts for registering legal obligations, since the risk from loss is considered to be possible.

b. In March 2004, the Company filed an injunction against Laws 10.637/02 and 10.833/03, suspending the
liability for PIS and COFINS contributions, calculated using the non cumulative method, at the rates of 1.65% and 7.60%, respectively, and made legal deposits for the amounts calculated each month. In July 2004, a sentence was published judging the request to be unfounded. Consequently, the Company requested an official dispatch to Caixa Econômica Federal, so that the legal deposits could be converted to income for the State. The accumulated value of the legal deposits is R$6,370.

c. In October 2004, Redecard was informed of a tax foreclosure with respect to a debt from "PIS Repique"
for 1999, for amounts declared in the DCTF but not located in the payments made. In the same month, Redecard requested the suspension (i) of the course of the tax foreclosure; and (ii) the cancellation of the Company's name in the register of tax debtors with the Federal Government. In November 2004, a legal decision was passed in favor of the two requests. In July 2005, a petition was dispatched with a copy of the payment document and in the following month, a stay of execution was registered, which is awaiting an opinion to be given by the National Treasury. The tax foreclosure has been suspended. The risk of loss has been classified as possible. The provision recorded is for the amount of R$0.6 million. Contribution for Intervention in the Economic Domain (CIDE) – Court injunction aimed at suspension of liability for payment of CIDE, Law 10.168/2000, altered by law 10.332/2001. In July 2004, a sentence was declared judging the request unfounded. An appeal was filed in July 2004, and since then the Company has made legal deposits for the amounts. In September 2006, the Company requested the withdrawal of the appeal, and requested an official dispatch to the Caixa Econômica Federal, to enable the legal deposits to be converted to income for the State. The accumulated value of the legal deposits is R$3,697. Management understands that since provisions have been made for all of the tax, labor and civil discussions, it does not anticipate additional significant reductions to the Company's shareholders' equity/results, when the processes are concluded.

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Redecard S.A. Notes to the financial statements January 01 to March 31, 2007 and 2006 (In thousands of Reais) 12 Income tax and social contribution: Presented below is the effective rate for income tax and social contribution for the periods January 01 to March 31, 2007 and 2006:
31/03/2007 Net profit before income tax and social contribution...................................................... Income tax and social contribution at the rates in force – 34%....................................... Effect from net permanent differences............................................................................ Reversal of provision ...................................................................................................... Income tax and social contribution ................................................................................. Current ............................................................................................................................ Deferred .......................................................................................................................... Reversal of provision ...................................................................................................... 149,092 50,691 1,394 (11,839) 40,246 (22,750) (29,335) 11,839 31/03/2006 83,573 28,415 (1,115) – 27,300 (24,400) (2,900) –

13 Financial instruments The estimated realizable values of the Company's financial assets and liabilities were determined based on information available on the market and appropriate evaluation methodologies. However, considerable judgment was required in interpreting market data to arrive at the most appropriate estimated realizable values. Consequently, the following estimates do not necessary reflect the amounts that could be realized on a current exchange market. The use of different market methodologies could have a material effect on the estimated realizable values. These instruments are managed by means of operational strategies aimed at liquidity, profitability and security. The control policy consists of permanently accompanying the rates contracted compared to market rates in force. The Company does not make speculative investments in derivatives or any other high risk assets.

a. Composition of balances
In compliance with CVM Instruction 235/95, the book balances and the market values of financial instruments included in the balance sheet as at March 31, 2007 and 2006, are presented below:
Description Borrowings – Domestic currency ......................................................................... Book balance 361,888 Market value 361,888

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Redecard S.A. Notes to the financial statements January 01 to March 31, 2007 and 2006 (In thousands of Reais)

b. Criteria, premises and limitations adopted to calculate market values

Borrowings The market values of borrowings were calculated based on their present values calculated based on future cashflows, using interest rates applicable to instruments of a similar nature, with similar terms and risks, or based on market quotations for these securities.

Limitations The market values were estimated at the balance sheet date, based on 'relevant market information". Any changes in the premises could significantly affect the estimates reported.

c.

Credit risk

The values for accounts receivable from issuers represent the values of transactions undertaken by cardholders issued by financial institutions licensed by the banners MasterCard and Diners Club International and are guaranteed by these banner institutions in the event of default. These guarantees are stipulated in the regulations issued by these two credit card systems. In addition, MasterCard stipulates the requirement for effective guarantees (real or bank guarantees) for each participant in the system, without which it is not possible to obtain a license, or the license could be lost if this requirement is not fulfilled. The company is the only registering entity in Brazil for the banners MasterCard and Diners Club International and has a specific policy for registering and approving trade merchants, for them to accept these two credit cards for their commercial and financial activities. This policy defines the criteria for approving trade merchants, which considers, amongst other factors, the type of trade activity and the time they have been trading, and also specifies the documents required and the investigation method to enable the Company to register the trade merchant. The Company has operational systems and a portfolio management area that accompanies the sales performance recorded daily by the approved merchants, and any deviations in performance are monitored and measures are taken to mitigate losses being incurred by any of the participants in the credit card system. For those authorized merchants that do not have their own systems for recording transactions, the Company can deliver equipment for registering electronic transactions (POS), under rental contract. The rental value is deducted, on the due date, from the value of the transactions settled with the merchants. However, it is possible that the rent is not received on the due date in the event balances payable by the merchants do not exist. In such cases, the Company charges the amount using firms specialized in recovering credits, and significant losses from rents may exist. The systems used by the credit card companies also provide for the possibility that transactions undertaken using credit cards are questioned by the titleholders, within a certain period as from the date of performing the transaction. If the merchant is not authorized on the date of the complaint or there are no amounts receivable from the Company, collection is made through firms specialized in recovering credits, with the possibility of losses being incurred by the Company.

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Redecard S.A. Notes to the financial statements January 01 to March 31, 2007 and 2006 (In thousands of Reais) The Company also has a provision for doubtful debts, for the amount of R$17,347 thousand (first quarter 2006 – R$16,685 thousand) representing 29.4% of the balance for other accounts receivable outstanding (first quarter 2006 – 46.3%), to cover credit risks.

d. Foreign exchange risk
The Company's income is not subject to significant variations from the effects of foreign exchange variations on liabilities tied to foreign currencies, mainly the North American dollar.

e.

Interest rate risk

The Company's results are susceptible to significant variations from borrowings contracted based on variable exchange rates. In accordance with its financial policies, the Company has not undertaken operations involving financial instruments of a speculative nature. 14 Results from Redecard Consortium Participation The net income of Consórcio Redecard, for the periods ended March 31, 2007 and 2006, is composed of the following:
31/03/2007 Net revenue Operational revenue........................................................................................... Taxes on services ............................................................................................... PIS COFINS ............................................................................................................. Financial revenue............................................................................................... Financial expenses ............................................................................................. Net revenue .......................................................................................................... Operating cost .................................................................................................... Gross profit.......................................................................................................... Operational expenses Administrative ................................................................................................... Administrative – provision for profit share........................................................ Depreciation and amortization ........................................................................... Other operational expenses ................................................................................ 418,188 (15,279) (2,758) (16,715) 208,031 (45,672) 545,795 (62,687) 483,108 (51,297) (6,738) (28,265) (51,539) (137,839) 345,269 149,092 196,177 345,269 31/03/2006 361,481 (13,501) (3,217) (16,956) 148,516 (55,052) 421,271 (70,883) 350,388 (66,965) (6,892) (34,636) (52,870) (161,363) 189,025 83,573 105,452 189,025

Operational profit.................................................................................................. Distribution of income Redecard S.A. .................................................................................................... Other consortium members................................................................................ Total .....................................................................................................................

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Redecard S.A. Notes to the financial statements January 01 to March 31, 2007 and 2006 (In thousands of Reais) 15 Subsequent events The Redecard Consortium operated until March 31, 2007, and its activities were the same as those currently undertaken by the Company, which include the registering of establishments to accept credit card payments and also obtaining, transmitting, processing and settling transactions undertaken using MasterCard and Diners credit and debit cards in Brazil. The members of the Redecard consortium are the same controlling shareholders of Redecard S/A. On March 31, 2007, according to the "Term of Dissolution of the Redecard Consortium", the consortium members approved the dissolution and liquidation of the Redecard Consortium. Consequently, Redecard will exercise, under its own name, all of the activities which until then were the responsibility of the Redecard Consortium – related to the operationalization and functioning of the Redecard System. In order to adapt to the New Market rules, the Company revised its Statutes on May 28, 2007, converting the preference shares (note 9) to ordinary shares. Since this date, the liabilities, assets, income, expenses, and financial and operational results refer only to Redecard S.A. The subsequent effects refer directly to the tax calculations – PIS, Cofins, corporate income tax and social contribution on profit. With respect to PIS and COFINS, the rates charged on operational income are based on the non cumulative rule (Laws 10.637/02 and10.833/03), that is, 1.65% for PIS and 7.6% for Cofins. This alteration will have an unfavorable impact on the Company's results. The rates previously charged to the consortium members were based on the cumulative method (1.65% for PIS and 3% for Cofins). The effect, in 2007, will be approximately R$50 million, that is, 3.2% of operational income. For income tax and social contribution the alteration will be made to the calculation base, which will be the total LAIR for the business. Previously, the LAIR was distributed to the consortium members, and taxation for Redecard S.A. referred only to its share in the Consortium. The rate remains the same, that is, 34%. (25% IRPJ and 9% CSLL). 16 Additional information a. On November 15, 1996, Redecard agreed with MasterCard International to a Contract for Licensing Brand names, whereby MasterCard International licensed the Company, with non exclusive rights, to use the MasterCard brand name for registering merchant establishments. The period for this contract is not specified, and Redecard has to comply with the standards established by Mastercard for registering merchant establishments, which include rules on the signs for the establishments, ownership rights to brand names, etc. The obligations assumed by Redecard towards MasterCard International, include the concession or delivery of formal guarantees for all of the amounts considered exposed, according to the Regulations and Policies of the MasterCard banner. The exposed amounts are considered to be those arising from transactions undertaken using credit cards issued with the banner MasterCard received from the issuers of Redecard but still not paid to the establishments. This exposure is equivalent, on average, to three days worth of transactions.

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Redecard S.A. Notes to the financial statements January 01 to March 31, 2007 and 2006 (In thousands of Reais) In order to provide this guarantee, the Company contracted from Brazilian financial institutions, that are not shareholders, the concession of surety letters, for approximately R$1.1 billion, with the beneficiary being MasterCard International. The related financial costs are supported in full by Redecard. The surety letters were issued on March 12, 2007, and mature in one year, on March 12, 2008, and submission of such to Mastercard is an essential condition for the continuity of the licensing of Redecard by MasterCard:
Financial institution Banco Santander .................................................................................................................... Banco do Brasil...................................................................................................................... Banco Bradesco...................................................................................................................... Banco Real ............................................................................................................................. Banco Safra ............................................................................................................................ Value – R$ million 342 300 246 142 70

The Company's Statutes prohibit sureties, bonds, endorsements or any other guarantees from being provided that are not related to the corporate objects, that is, contrary to that provided in the Statutes, and the surety, bond or other guarantee, with the exception of bonds or other guarantees necessary for the transfer and accommodation of the employees. The Company does not provide a surety, bond or guarantee without previous authorization from its Board of Directors, under the terms of article 16, letter "f" of its Statutes. b. Although the Company has reported a low risk from claims, it adopts the policy to contract insurance coverage for its assets. The insurance policies contracted with Royal SunAlliance, through AON Risk Services, as the Company's insurance broker, effective from April 2007 to April 2008, are divided as follows:
Sector RD Equity Assets assured Buildings, fixtures, fittings and facilities that comprise the Company's establishments, (head office and branches), described in the policy. All of the company's vehicles Equipment allocated to the network of establishments registered with Redecard against the risk of fire, lightening, theft and/or burglary, etc. Value At risk R$27 million Amounts covered (*)

Vehicles "POS" equipment

R$5 million (**)

R$5 million R$500 thousand

(*) The most significant insured values, according to the insurance policy, are: (i) fire, lightening and explosion, for the Company's offices – R$23 million; (ii) Civil Responsibility – R$2 million. (**) The total value of this equipment is approximately R$600 million, with the purchase cost recorded to the fixed asset account – Equipment for capturing transactions , (POS). This equipment is installed at the establishments approved by Redecard throughout Brazil, amounting to more than 1 million locations. In order to define the "value of the risk", several variables are analyzed, including the probability of simultaneous claims being made at all of the establishments. Historically, the value of the claims made during the duration of the policy, was approximately R$100 thousand.

c.

Employee participation in the Company's results was calculated based on the plan for goals established by management and approved by the Board of Directors. For the year ended December 31, 2006, the Company paid a total of R$15.6 million to its employees as profit share (R$12.9 million for the year ended December 31, 2005) which has been registered to the Consortium.

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Redecard S.A. Notes to the financial statements January 01 to March 31, 2007 and 2006 (In thousands of Reais) d. Remuneration of directors and Board of Directors: (i) the directors are the Company's legal representatives, responsible, mainly for its daily administration and for implementing the general guidelines and policies established by the Board of Directors. They are all Brazilian and resident in Brazil. The Directors are elected by the Board of Directors, and have a mandate of two years, with re-election permitted, and they can at any time, be removed from office by the Board. According to the Company's Statutes, the Board of Directors should comprise a minimum of three and maximum of ten members. At March 31, 2007, the company's board of directors consisted of six members, with one Managing Director. During the year ended December 31, 2006, remuneration paid to management amounted to R$5.2 million, divided between: (i) salaries for the current year; and (ii) Company profit share, for the year 2005. During the quarter ended March 31, 2007, management remuneration was R$4.5 million, divided between: (i) salaries for the first quarter of 2007; and (ii) Company profit share for 2006, in accordance with the program approved by the Board of Directors. The expenses related directors fees are recorded to the Consortium, in accordance with the model in force (Note 1). The Board of Directors comprises 4 effective members and 4 substitutes. The remuneration for the Board was fixed at R$900.00 per annum, individually, in accordance with the ordinary general meeting of April 25, 2006. However, in this same meeting, the board members presented a request to refrain from receiving this remuneration, in favor of social works to be defined in the future. The directors are not shareholders in the Company and do not have options to purchase shares granted by the Company. e. Redecard sponsors the retirement and Credicard supplementary retirement plans, both maintained by CITIPREVI – Closed Entity for Complementary Pensions. Redecard is not the only sponsor for these plans, but its adhesion to the plans is not joint, that is, the costing and the assets of the retirement plans to which Redecard adhered are segregated from the other sponsors. Redecard is responsible for 100% of the costs of the retirement benefits provided to its employees, which is a defined benefit plan (Credicard Retirement plan – Sponsor: Redecard). In addition, it makes 50% of the contributions for a retirement benefit plan for those employees that opted for this plan, which is a defined contribution plan (Credicard supplementary retirement plan – Sponsor: Redecard). The employees can participate in both plans, in one plan or in none of the plans. The benefit plans are evaluated by an actuary at the end of the year, in order to check whether the contribution rates are sufficient to create the reserves necessary for the commitments towards existing and future payments. CITIPREVI – Closed Entity for Complementary Pensions, is a closed complementary pension entity, constituted in accordance with complementary law 109, of May 29, 2001, as a corporate entity that is separate from its sponsors.

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Redecard S.A. Notes to the financial statements January 01 to March 31, 2007 and 2006 (In thousands of Reais) Presented below is a summary of the actuarial position for the liabilities related to the retirement plans, at December 31, 2006, according to the actuarial reports issued by Mercer Human Resource Consulting Ltda. and approved by the Deliberative Body of CITIPREVI – Closed Entity for Complementary Pensions, under the terms of the Statutes of CITIPREVI, of June 28, 2005, approved by Notification 2256/SPC/DETEC/CGAT of November 30, 2005:
R$(000) Actuarial liability........................................................................... Benefits granted ............................................................................. Benefits to grant............................................................................. Accumulated technical surplus ...................................................... Contingency reserve ...................................................................... Funds (pension) ............................................................................. Defined benefit 28.278 4.620 23.658 6.335 6.335 – Defined contribution 26.165 891 25.274 686 686 501

In the actuarial report issued on March 28, 2007, the "Unit Credit" method was used for the Defined Benefit Plan (Credicard Retirement Plan – Sponsor: Redecard), given that the plan has surplus amounts, and it is not necessary to maintain such conservative capitalization as that adopted for the actuarial evaluation for 2005. The impact of this change is not to project salaries for the active population until their retirement dates, with the commitments anticipated in the Plan recognized as they occur. The values for the Pension Fund for the Defined Contribution Retirement Plan were constituted with the contributions from the Sponsor, to which the participants were not entitled since they left the Sponsor before they became eligible to the benefits from the Plan. According to Complementary Law 109, of May 29, 2001, article 20, paragraph 3, the Sponsor will use the amounts from the Pension fund to offset against its contributions during 2007. The main factor that resulted in the surpluses being constituted in the Retirement Plans, both the defined benefit plan and defined contribution plan, was the profitability earned by CITIPREVI in 2006, above the actuarial goal for the Plans, which is IGP-DI + 6% p.a., in addition to the surplus that existed at December 31, 2005. There are no shortfalls of reserves for the plans and there are no overdue liabilities. The surplus amounts were not registered as assets by the Company. The cost for the Company, for the quarter ended March 31, 2007, from sponsoring the two retirement plans, as described above, was R$239 thousand (quarter ending March 31, 2006, R$244 thousand). The administrative excess of CITIPREVI can not exceed 15% of total income from contributions forecast for 2007, in accordance with item number 42 of Resolution MPAS/CPC number 1, of October 9, 1978. The amount paid by the Company, during the quarter ended March 31, 2007, as administrative costs, was R$39 thousand (quarter ending March 31, 2006, R$39 thousand). The Company is not responsible for the administrative expenses of the tied or self-sponsored participants, who participate in the defined contribution retirement plan, and who did not make payments to CITIPREVI for such. The Company's Statutes do not include any reference to commitments in relation to equity shortfalls.

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Redecard S.A.

Financial statements December 31, 2006 and 2005
(A free translation of the original report in Portuguese containing financial statements prepared in accordance with accounting practices adopted in Brazil)

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Redecard S.A. Financial statements
December 31, 2006 and 2005

Contents Management report Independent auditors’ repor Balance sheets Statements of income Statements of changes in shareholders’ equity Statements of changes in financial position Notes to the financial statements
F-37 F-40 F-41 F-42 F-43 F-44 F-45 - 61

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Management Report 2006
Dear Shareholders: We present the Management Report and the financial statements of Redecard S.A. for the year ended December 31, 2006, together with the Independent Auditors’ Report.

Economic environment
The growth in GDP in 2006 was 3.7%, basically as a result of the increase in domestic demand, which represented a significant change compared to the previous year, when expansion was sustained by high export levels. Throughout 2006, IBGE introduced changes in the criteria for calculating the GDP, recalculating the size of the economy since 1995, particularly from 2000 to date. The performance for Family Consumption completed, at the end of 2006, its 14th consecutive quarter of marginal expansion (high of 4.3%, compared to the last quarter of 2005), due mainly to the significant increase in real income (5.7%), the reduced costs of food products and continued credit expansion (30.8% of GNP in December/2006 compared to 28.1% in December/ 2005). The Gross formation of Fixed Capital (FBFC) reported significant growth during the year, mainly during the last quarter (6.3% in the last quarter of 2006); far higher than the total GNP. This performance was due to accelerated domestic demand, a decrease in real interest rates, the increase in federal public investments and the relative decrease in the price of machinery and equipment (due to the increase in the penetration of imported capital goods). Even with the reduction in the nominal interest rates, measured by the CDI (from 17.99% p.a. in December 2005 to 13.13% in December 2006), the anticipated increase in the exchange rate did not occur, in fact the opposite occurred, the Real appreciated 6.28% between December 2005 and December 2006 (average rate), which contributed towards maintaining Brazil’s surplus balance of trade and the high level of real interest rates. Inflation reported a significant reduction between 2005 and 2006, whether measured by the IPCA (from 5.69% p.a. to 3.14% p.a.) or by the IPC-Fipe (decreased from 4.53% p.a. to 2.54% p.a.). Panorama for the Sector According to data published by ABECS (Brazilian Association of Credit Card Companies and Services), the number of cards issued, which includes those with credit and debit functions and those referred to as shop cards, reached a record of 360 million, representing growth of 16% compared to 2005.

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The number of transactions and respective financial volumes increased 18% and 20%, respectively, demonstrating the growing acceptance of cards by trade entities and service entities, replacing the traditional means of payment, mainly check payments. According to the Central Bank of Brazil, the use of checks for transactions without using cash, decreased from 62.5% in 1999 to 28.5% in 2005, whilst the use of credit cards increased from 16.5% to 42.8% during the same period. If we compare these data with the statistics from the Bank for International Settlements (BIS), we can observe that in no other country was the replacement between two forms of payment so rapid, mainly if we make the comparison between those countries where there was a stronger preference for checks until recently, as was the case in Brazil. In addition, according to data from ABECS, the financial volume from payments made using payment cards reached the total of R$ 246 billion in 2006, which, according to forecasts by Redecard, should represent penetration of 17.6% of total Family Consumption, but still representing very low levels compared to those reported by countries such as the United States and the European Community. Company performance Redecard recorded more than 1.5 billion transactions. Of this total, 1.2 billion refer to credit and debit cards transactions using the banners MasterCard®, MasterCard Electronic® and Diners Club International®, and debit cards from MasterCard Maestro®, RedeShop® and Maestro®, promoting relationships with trade merchants and partnerships with banks and companies from a variety of market segments. The volume of transactions recorded during 2006 and the corresponding financial volume reported growth in excess of that reported on the market, of 21% and 24% respectively, compared to that recorded for 2005. Redecard is the only authorizing entity in Brazil, for the banners MasterCard and Diners Club International, which guarantee financial settlement with the merchants, for all of the transactions undertaken using these cards. The Company has developed state of the art technology in order to offer speed and security for transactions undertaken at more than one million authorized establishments throughout the country, located in all of the Brazilian municipals where the necessary technological resources exist for recording transactions, such as electricity and telecommunications. Redecard has an information technology structure appropriate for the company’s normal operations and also to cover contingency plans and disasters. The number of authorized trade merchants has grown at annual rates of 15% demonstrating the Company’s commitment to enlarge the trade merchant base so that potential card holders are interested in acquiring and using the cards. We have invested significant sums in equipment for recording electronic transactions mainly for cards with chips, thus participating with the Banners and the issuers to increase efficiency and reduce the number of frauds to the electronic payment system. This equipment is acquire by Redecard and then rented to the merchants, with Redecard guaranteeing installations and maintenance.

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These investments have been made using funds provided by Brazilian financial institutions, from short term operations, without real guarantees, at normal market interest rates. Of the total transactions processed, 99.9% are recorded electronically, with the majority, approximately 62%, through equipment belonging to Redecard. Another important factor is that 90% of this equipment is capable of reading cards with chips, which has consequently resulted in significant savings in the costs of recording transactions, as well as increasing security against frauds. During 2006, Redecard developed training programs to train its managers to develop skills aimed at leadership, with the theoretical support from one of the most renown management teaching institutions in Brazil, and has also continually provided specialization courses to improve the technical skills of its employees. Dividends are distributed quarterly from total net profit earned during the quarter, and distributed based on the shareholder’s investment interest. These payments are made by the 15th of the first month for each quarter, based on the results of the previous quarter, as anticipated distribution of annual results, in accordance with Redecard’s Statutes. The Independent Auditors of Redecard, KPMG Auditores Independentes, did not provide other services during the year of 2006, besides those directly related to the independent audit work.

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KPMG Auditores Independentes R. Dr. Renato Paes de Barros, 33 04530-904 - São Paulo, SP - Brasil Caixa Postal 2467 01060-970 - São Paulo, SP - Brasil

Central Tel Fax Nacional Internacional Internet

55 (11) 2183-3000 55 (11) 2183-3001 55 (11) 2183-3034 www.kpmg.com.br

Independent auditors’ report
To The Shareholders and Board of Directors Redecard S.A. São Paulo - SP

We have examined the balance sheets of Redecard S.A. as of December 31, 2006 and 2005 and the related statements of earnings, changes in shareholders’ equity and changes in financial position for the years then ended, which are the responsibility of its management. Our responsibility is to express an opinion on these financial statements. Our examinations were conducted in accordance with auditing standards applied in Brazil and included: (a) planning of the audit work, considering the materiality of the balances, the volume of transactions and the accounting systems and internal accounting controls of the Company; (b) verification, on a test basis, of the evidence and records which support the amounts and accounting information which is disclosed; and (c) evaluation of the most significant accounting policies and estimates adopted by Company management, as well as the presentation of the financial statements taken as a whole. In our opinion, the aforementioned financial statements present fairly, in all material respects, the financial position of Redecard S.A. as of December 31, 2006 and 2005, and the results of its operations, changes in its shareholders’ equity and changes in its financial position for the years then ended, in conformity with accounting practices adopted in Brazil. February 12, 2007, with the exception of the notes to the financial statements dated March 17, 2007, which were enlarged to better reflect the disclosures required by the Securities Commission as reported in note 3.

KPMG Auditores Independentes CRC 2SP014428/O-6 Original report in Portuguese signed by Giuseppe Masi Accountant CRC 1SP176273/O-7

KPMG Auditores Independentes, uma sociedade simples brasileira e firma-membro da rede KPMG de firmas-membro independentes e afiliadas à KPMG International, uma cooperativa suíça.

KPMG Auditores Independentes is a Brazilian entity and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative.

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Redecard S.A.

Balance sheets

December 31, 2006 and 2005

(In thousands of Reais)

Assets 10,281,907 Current liabilities 3f 4 3f 5 7 8 215,369 9,940,542 56,767 69,229 13,891 8,006,121 35,284 45,346 Accounts payable to merchants Labor obligations Taxes payable Borrowings Other accounts payable Non current liabilities 54,531 Long-term liabilities Provision for contingent liabilities 5 Shareholders' equity Capital Revenue reserve 9 40,697 13,834 175,278 6 6 10,511,716 8,366,918 677,535 (502,257) 583,102 (378,208) 10,511,716 204,894 48,947 12,435 11 61,382 183,744 183,744 64,261 53,552 10,709 9,420,451 11,005 29,231 375,681 427,343 8,100,642 10,263,711

Note

2006

2005

Liabilities

Note

2006

2005 8,108,258 7,313,320 9,875 8,562 362,035 414,466

Current assets

Cash and cash equivalents Accounts receivable - Issuers Other accounts receivable Deferred income and social contribution taxes

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Non current assets

Long-term assets

195,770 195,770 62,890 53,552 9,338

Deferred income and social contribution taxes Judicial deposits

Permanent assets

Fixed assets Accumulated depreciation

8,366,918

See the accompanying notes to the financial statements. 0

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Redecard S.A. Statements of income
Years ended December 31, 2006 and 2005
(In thousands of Reais, except net income per share)

2006

2005

Result from Redecard Consortium Participation (Note 13) (Operational profit from Consócio Redecard in 2006 R$ 937,332 - R$ 654,872 in 2005) Income before income and social contribution taxes Social contribution tax Income tax Net income for the year Net income per share - R$

442,763

285,808

442,763 (39,675) (109,425) 293,663 156.34

285,808 (26,238) (72,816) 186,754 99.43

See the accompanying notes to the financial statements.

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Redecard S.A.

Statements of changes in shareholders' equity
Years ended December 31, 2006 and 2005
(In thousands of Reais)

Revenue reserve Legal reserve 8,353 (8,353) Retained earnings 186,754

Capital Balances at January 1, 2005 Capital increase Net income for the year Distributions: Legal reserve Dividends distributed Dividends to be distributed Balances at December 31, 2005 Balances at January 1, 2006 Net income for the year Distributions: Legal reserve Dividends distributed Balances at December 31, 2006 45,199 8,353 -

Total 53,552 186,754

53,552 53,552 -

9,338 9,338 9,338 -

(9,338) (120,513) (56,903) 293,663

(120,513) (56,903) 62,890 62,890 293,663

53,552

1,371 10,709

(1,371) (292,292) -

(292,292) 64,261

See the accompanying notes to the financial statements.

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Redecard S.A.

Statements of changes in financial position
Years ended December 31, 2006 and 2005
(In thousands of Reais)

2006 Sources of funds From operations Net income for the year Depreciation and amortization Income/(expense) on sale of fixed assets (Gain)/loss on investments Decrease in long-term assets

2005

293,663 134,195 (1,111) (28,313) 6,851 405,285

186,754 153,587 110 116 340,567

From third parties Disposal of fixed assets Disposal of investments Incrase in long-term liabilities

4,097 28,313 32,410 437,695

903 46,482 47,385 387,952

Application of funds Investments in Fixed assets Increase in long-term assets Decrease in long-term liabilities Dividends distributed

107,565 12,026 292,292 411,883

124,293 15,417 177,416 317,126 70,826

Increase in net working capital Changes in net working capital 2006 Beginning Current assets Current liabilities Net working capital 8,100,642 8,108,258 (7,616) End 10,281,907 10,263,711 18,196

25,812

2005 Variation 2,181,265 2,155,453 25,812 Variation 2,081,796 2,010,970 70,826

See the accompanying notes to the financial statements.

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Redecard S.A. Notes to the financial statements
Years ending December 31, 2006 and 2005
(In thousands of Reais)

1

Operations
Redecard S.A. was constituted on November 1, 1996, and its main activity is to act as a trader for transactions using the credit cards under the banners MasterCard®, MasterCard Electronic® and Diners Club International®, and with the debit cards MasterCard Maestro®, RedeShop® and Maestro®, through registering and approving trade merchants. The business model for Redecard’s trading activities consists of registering and approving trade and service entities, and also capturing, transmitting, processing and settling transactions that use the aforementioned credit and debit cards. Redecard’s operations are organized between the following businesses: a. Credit and Debit cards: through capturing, processing and settling trade and financial transactions using the aforementioned cards. For the services provided, Redecard charges these establishments an administration fee, which comprises the issuer’s remuneration, referred to as interchange and remuneration for the services provided by Redecard; b. Anticipated financial settlement to registered trade merchants for amounts receivable from the credit cards MasterCard and Diners Club International, through requests made by these establishments and only for those transactions made using these cards. Redecard earns financial income from these operations; c. Hire of equipment to register the electronic transactions, referred to as POS. The Company earns monthly income from hiring this equipment; d. Services provided to partner companies through capturing, routing and transmitting transactions made using benefit cards (called vouchers), such as: food, meals, fuel, etc, as well as Private Label cards, usually issued by financial companies. The income earned by Redecard consists of the fees charged to the voucher and financial companies; e. Services provided to trade merchants by means of consulting checks using the POS equipment, together with the SERASA data base. The income earned by Redecard consists of the fees charged directly to these establishments and a small margin on the costs from SERASA.

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Redecard S.A. Notes to the financial statements
(In thousands of Reais)

Redecard is the leader of a consortium (Consórcio Redecard), constituted on November 1, 1996, the date the Company started operating, which consists of the following consortium members, besides Redecard S.A.: Banco Itaucard S.A., Unibanco - União de Bancos Brasileiros S.A. and Banco Citibank S.A. Consórcio Redecard is not a corporate legal entity; and operated as a common enterprise to provide services related to the use of credit and debit cards and other means of payment, at establishments registered and approved by Redecard in Brazil, and its activities included developing promotional and publicity activities aimed to encourage the use of the aforementioned cards. Redecard S.A., as the leader of Consórcio Redecard, performs all acts necessary in order for it to operate through its legal representatives and/or attorneys-in-fact, including active and passive representation before third parties (see Note 13 - Equity in income of Consórcio Redecard).

2

Distribution of net income to the consortium members
Net income recognized by Consórcio Redecard is distributed according to criteria set forth in the Consórcio Redecard Organization Agreement, consisting basically of the allocation of income and expenses.

3

Presentation of significant accounting policies
The financial statements were prepared based on Corporate Legislation and accounting practices adopted in Brazil, observing the rulings including in Corporate Law. These financial statements include the alterations introduced by the following accounting norms: Accounting Norms and Procedures, number 27 - NPC 27, “Presentation and Disclosures”, Accounting Norms and Procedures, number 22 - NPC 22, “Provisions, Liabilities, Contingent liabilities and Contingent Assets”, both issued by IBRACON - Institute of Independent Auditors in Brazil, on October 3, 2005.

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Redecard S.A. Notes to the financial statements
(In thousands of Reais)

These financial statements were prepared as part of the process to register the Company with the Securities Commission (CVM), and therefore the figures for the same period from the previous year have been presented for comparison purposes, as required by the CVM.

a. Statement of income
Income and expenses are recognized in the income statement on an accruals basis. Income earned from credit and debit card transactions is appropriated to results on the dates the transactions are processed. Income from services provided to partners and to trade merchants is recognized to results based on the realization of such. Consórcio Redecard income and expenses (Note 13) are recorded for the consortium members and for Redecard S.A. according to their respective shares in the consortium, based on the criteria stated in the Contract for Constituting the Consórcio Redecard.

b. Accounting estimates
The preparation of the financial statements in accordance with accounting practices adopted in Brazil requires that management uses its judgment in determining and recording accounting estimates. Significant assets and liabilities subject to these estimates and assumptions include the residual value of property, plant and equipment, the provision for doubtful accounts, deferred income tax and social contribution and the provision for contingencies. The settlement of transactions involving these estimates may result in significantly different amounts due to the inaccurates inherent to determining such. The Company reviews the estimates and assumptions at least annually.

c. Foreign currency
Monetary assets and liabilities denominated in foreign currencies were translated into reais at the foreign exchange rate ruling at the balance sheet date. Foreign exchange variations arising on translation are recognized in the income statement. These balances originate mainly from transactions undertaken at establishments using credit and debit cards issued by foreign institutions, licenced to use MasterCard and Diners Club International cards.

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Redecard S.A. Notes to the financial statements
(In thousands of Reais)

d. Fixed assets
Fixed assets are recorded at acquisition cost and depreciated using the straight-line method at rates accepted for tax purposes and which take into account the estimated useful lives of the assets. The costs incurred from replacing a fixed asset component are not capitalized given the difficulty in estimating the future economic benefit from such.

e. Income and social contribution taxes
The income and social contribution taxes, both current and deferred, are calculated based on the rates of 15% plus a surcharge of 10% on taxable income in excess of R$ 240 thousand for income tax and 9% on taxable income for social contribution on net income. The provision for these taxes is recorded to “Tax liabilities”. The deferred tax assets arising from temporary differences have been recorded in accordance with CVM Instruction 371 of June 27, 2002, and take into consideration past profitability and the expectation of future taxable profits based on a technical viability study (Note 5).

f. Accounts receivable - Issuers and accounts payable to merchants
These amounts refer to the values of transactions undertaken by holders of credit cards issued by financial institutions licensed to use MasterCard and Diners Club International cards; the balances for accounts receivable from issuers are net of interchange fees and the balances for accounts payable to merchants are net of administration fees (discount), with recovery from the issuers and payment to the merchants falling due within one year.

g. Borrowings
Borrowings are stated at the amounts borrowed from financial institutions, plus contractual charges up to the financial statements closing date.

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Redecard S.A. Notes to the financial statements
(In thousands of Reais)

h. Provision for doubtful debts
The provision for doubtful debts is recorded based on an analysis of risks from recovering credits receivable from issuers and merchants, mainly based on the past history of recovery, default and inactivity of issuers and merchants, and is recorded for an amount considered sufficient to cover possible losses. At December 31, 2006 and 2005, it was not necessary to record a provision for accounts receivable from issuers. A provision has been recorded for the rental of equipment for capturing transactions (POS) installed at merchants considered to be inactive by the Company, and for amounts claimed by credit-card holders against merchants that had not been registered and approved by the Company, at the time of the complaint or that do not have credits receivable from transactions undertaken using MasterCard and Diners Club International credit cards.

i. Contingent liabilities
These arise from legal processes inherent to the normal course of business, filed by third parties and ex-employees, through civil and labor claims. These contingencies are evaluated by legal advisors and are quantified using models and criteria that enable the amounts to be adequately determined, despite the uncertainty inherent to the period and amount. The contingencies are classified between probable, for which a provision is recorded; possible, which are disclosed but for which no provision is recorded; and remote, for which disclosure or a provision is not required. The provisions that involve tax processes are recorded for an amount equivalent to the total value of the taxes being legally disputed, plus monetary correction and interest for late payment, as if due, to the balance sheet date.

j. Provisions
A provision is recognized in the balance sheet when the Company has a legal obligation or is constituted as a result of a past event, and it is probable that economic resources will be required to settle the obligation. Provisions are recorded considering the best estimates of the risk involved.

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Redecard S.A. Notes to the financial statements
(In thousands of Reais)

k.

Other current and non current assets and liabilities
Stated at net realizable values, at known or calculated amounts, plus, when applicable, the related charges, monetary and/or exchange variations incurred to the balance sheet date.

4

Cash and cash equivalents
Consist of amounts available in the Company’s bank accounts, represented by amounts deposited with financial institutions that issue credit cards, with these amounts used to settle transactions with merchants on the first business day of the month subsequent to the balance sheet date.

5

Tax credits
a. Tax credits held at the balance sheet date are recorded as assets, as deferred income tax and social contribution, and calculated on the temporary differences arising from the following non deductible provisions at December 31, 2006: Social contribution 3,772 556 668 18,199 23,195

Income tax Temporary differences Provision for tax contingencies Provision for civil contingencies Provision for labor contingencies Provision for other expenses Total 86,731 32,308 1,541 1,853 50,554 475

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Redecard S.A. Notes to the financial statements
(In thousands of Reais)

b. Expected realization, which takes into consideration the nature of the non deductible provisions and future taxable profits being generated, is presented below: Social contribution 16,072 1,532 1,820 3,771 23,195

Year of realization 2007 2008 2009 2010 Total

Income tax 46,203 19,141 5,215 16,172 86,731

Deferred income tax and social contribution are recorded to reflect the future tax effects attributable to temporary differences between the tax base for assets and liabilities and the respective book values. The book value of the deferred tax asset is periodically revised and the forecasts are reviewed annually, in the event of significant factors that alter the forecasts, they are revised by the Company during the year. Management considers that the deferred assets arising from temporary differences will be realized at the time of the final resolution of the contingencies and events. At December 31, 2006 and 2005, the Company did not have balances for tax losses and negative taxable base.

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Redecard S.A. Notes to the financial statements
(In thousands of Reais)

6

Fixed assets
Annual depreciation rate % Equipment for recording transactions (POS) (a) Equipment Systems Vehicles Fixed assets in progress Fixtures and fittings Other Total Accumulated depreciation

2006

2005 499,946 40,504 23,738 4,573 3,643 2,836 7,862 583,102 (378,208) 204,894

33.33 581,223 20.00 48,888 20.00 25,647 20.00 4,974 - 4,741 10.00 3,077 - 8,985 677,535 (502,257) 175,278

(a) During 2005, based on a technical report issued by a specialized company and consistent with legislation in force, the depreciation rate for POS equipment was altered from 20.00% to 33.33% per annum in order to better reflect the economic useful life of the assets. The impact on results for that period, of R$ 62,660, is due to the difference in the depreciation rate in previous years adjusted to reflect the new useful life of the asset.

7

Borrowings
Comprises to funding from financial institutions in the total amount of R$ 375,681 (R$ 362,035 in 2005), which mature in up to 148 days and carry interest rates of 103.53% (2005 103.32%) of the variation in the Interbank deposit rate (DI) CETIP. The amounts reported under this heading are monetarily corrected based on the contractual rates. There are no restrictive clauses or reciprocal clauses in the contracts with the financial institutions.

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Redecard S.A. Notes to the financial statements
(In thousands of Reais)

8

Other accounts payable
Represented by the following obligations: Payable to suppliers and provisions for expenses Participation in the consortium payable Dividends to be distributed Total 2006 220,659 137,255 69,429 427,343 2005 198,277 159,286 56,903 414,466

9

Capital
Capital stock comprises 1,878,329 shares, of which 626,110 are common shares and 1,252,219 preferred shares, all nominative, with no par value, distributed as follows: % Banco Citibank S.A. Banco Itaucard S.A. Unibanco - União de Bancos Brasileiros S.A. Mastercard International Incorporated 31.9433 31.9433 31.9433 4.1701

As from 2006, the shares of right of FNC - Comercio e Participações Ltda. were transferred to Banco Citibank S.A., and the shares of right of Unicard Banco Múltiplo S.A., were transferred to Unibanco - União de Bancos Brasileiros S.A. Revenue reserves represent the amounts recorded to the Legal Reserve, at the rate of 5% of net profit, determined each financial year, under the terms of article 193 of Law 6404/76, up to a limit of 20% of capital. The preference shares do not have voting rights, but have priority in the distribution of dividends as provided in Law 6404/76, with the new text provided under Law 9457/97 to the Company’s bylaws call for a minimum dividend equal to 25% of adjusted net income for the year. The dividends for the fourth quarter of 2006 were transferred to current liabilities, and will be distributed in January 2007. Of the total dividends for 2006, R$ 292,292 (R$ 177,416 in 2005), R$ 222,863 (R$ 120,513 in 2005) were distributed during the financial year.

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Redecard S.A. Notes to the financial statements
(In thousands of Reais)

Dividends were calculated as follows: 2006 Net profit for the year (-)Legal reserve Calculation base (-) dividends anticipated from profit for the period (=) Dividends payable 293,663 1,371) 292,292 (222,863) 69,429 2005 186,754 9,338) 177,416 (120,513) 56,903

(

(

10

Related party transactions
Related party transactions at December 31, 2006 refer to the values from transactions undertaken by credit card holders through intermediary by the issuer banks in accordance with the rules established by MasterCard and Diners, recorded to the heading “Accounts receivable from Issuers” and expenses related to services, as presented below: 2006 Accounts receivable - Issuers: Credicard Banco S.A. Banco Citibank S.A. Banco Itaucard S A (in2005 - Itaucard Financeira S.A. Crédito, Financiamento e Investimento). Unibanco - União de Bancos Brasileiros (in 2005 - Unicard Banco Múltiplo S.A.) Service expenses - Orbitall subsidiary of Itaú Holding Financeira S.A 2,208,104 3,597,681 755,929 2005 3,016,508 231,272 1,564,588 627,636

48,942

63,447

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Redecard S.A. Notes to the financial statements
(In thousands of Reais)

In 2005 Credicard Banco was at the stage of determining the credit card base between the issuers Citibank and Itaú for the spin off and effective separation between the two shareholders, at the time, Itaucard and Citibank, consequently it is not possible to separate the information on related parties base on the same criteria adopted at the end of 2006. Thus, Management believes it is more appropriate not to separate or assume any balance receivable from Credicard Banco different from that disclosed in the financial statements for the year ended December 31, 2005.

11

Contingent liabilities
Redecard S.A. is party to administrative processes and legal claims with various courts and government bodies, arising from its normal operations, which involve tax, labor, civil and other questions. The balances in the financial statements refer to the provisions which, according to Company’s management opinion, and based on the opinion of its legal advisors, have been recorded for amounts considered adequate to cover possible losses. These provisions are periodically reviewed by Company management and consist of: provisions for tax contingencies - 170,164 (in 2005-R$ 184,918) and civil and labor contingencies - R$ 13,580 (in 2005 - R$ 10,852). The corresponding judicial deposits in guarantee are corrected according to the regulation in force and are reported as non current assets - R$ 13,761 (in 2005 R$ 12,369).

a. Composition of provisions
Management, based on information from its legal advisors, analyses of pending legal claims and, with respect to labor claims, based on prior experience from amounts claimed, has recorded a provision for an amount considered sufficient to cover losses estimated from the outstanding claims, as follows: Nature Civil Labor Tax Total 2006 6,168 7,412 170,164 183,744 2005 5,617 5,235 184,918 195,770

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Final_Redecard_e5

Redecard S.A. Notes to the financial statements
(In thousands of Reais)

b. Movement of provisions
Nature 2005
Opening balance Addition s to provision

2006
Closing balance

Used

Reversals

Civil Labor Tax
Total

5,617 5,235 184,918 195,770

1,197 2,416 33,350 36,963

( 646) ( 239) (2,207) (3,092)

(45,897) (45,897)

6,168 7,412 170,164 183,744

c. Total risk
Nature Civil Labor Tax Total 2006 6,355 7,412 170,164 183,744 2005 5,617 5,235 184,918 195,770

The value of the total risk from contingencies reported above was calculated considering the claims filed by plaintiffs for each of the processes. Provisions for the legal processes which refer to tax issues have been recorded for the total value of the risk.

12

Financial instruments
The estimated realizable values of the Company’s financial assets and liabilities were determined based on information available on the market and appropriate evaluation methodologies. However, considerable judgment was required in interpreting market data to arrive at the most appropriate estimated realizable values. Consequently, the following estimates do not necessary reflect the amounts that could be realized on a current exchange market. The use of different market methodologies could have a material effect on the estimated realizable values.

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Redecard S.A. Notes to the financial statements
(In thousands of Reais)

These instruments are managed by means of operational strategies aimed at liquidity, profitability and security. The control policy consists of permanently accompanying the rates contracted compared to market rates in force. The Company does not make speculative investments in derivatives or any other high risk assets.

a. Composition of balances
In compliance with CVM Instruction 235/95, the book balances and the market values of financial instruments included in the balance sheet as at December 31, 2006, are presented below:

Description Borrowings - domestic currency

Book balance 375,681

Market value 375,681

b. Criteria, premises and limitations adopted to calculate market values Borrowings - domestic currency
The market values of borrowings were calculated based on the principal value plus interest incurred from the start of the contract to the balance sheet date, based on contractual rates in force. Given that the contracts do not have restrictive clauses and since it is not possible to calculate the market values under risk conditions different from those which the Company has or maintains with financial institutions, management understands that the market value is the same as that reported at the balance sheet date.

Limitations
The market values were estimated at the balance sheet date, based on ‘relevant market information”. Management understands that changes in the premises would not significantly affect the estimates reported.

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Redecard S.A. Notes to the financial statements
(In thousands of Reais)

c. Credit risk
The values for accounts receivable from issuers represent the values of transactions undertaken by cardholders issued by financial institutions licensed by the banners MasterCard and Diners Club International and are guaranteed by these banner institutions in the event of default. These guarantees are stipulated in the regulations issued by these two credit card systems. In addition, MasterCard stipulates the requirement for effective guarantees (real or bank guarantees) for each participant in the system, without which it is not possible to obtain a license, or the license could be lost if this requirement is not fulfilled. The company is the only registering entity in Brazil for the banners MasterCard and Diners Club International and has a specific policy defining the guidelines and procedures for analyzing risks for registering and approving trade merchants, for them to accept these two credit cards for their commercial and financial activities. This policy defines the criteria for approving trade merchants, which considers, amongst other factors, the type of trade activity and the time they have been trading, and also specifies the documents required and the investigation method to enable the Company to register the trade merchant. The Company has operational systems and a portfolio management area that accompanies the sales performance recorded daily by the approved merchants, and any deviations in performance are monitored and measures are taken to mitigate losses being incurred by any of the participants in the credit card system. For those authorized merchants that do not have their own systems for recording transactions, the Company can deliver equipment for registering electronic transactions (POS), under rental contract. The rental value is deducted, on the due date, from the value of the transactions settled with the merchants. However, it is possible that the rent is not received on the due date in the event balances payable by the merchants do not exist. In such cases, the Company charges the amount using firms specialized in recovering credits, and significant losses from rents may exist.

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Redecard S.A. Notes to the financial statements
(In thousands of Reais)

The systems used by the credit card companies also provide for the possibility that transactions undertaken using credit cards are questioned by the titleholders, within a certain period as from the date of performing the transaction. If the merchant is not authorized on the date of the complaint or there are no amounts receivable from the Company, collection is made through firms specialized in recovering credits, with the possibility of losses being incurred by the Company. The Company also has a provision for doubtful debts, for the amount of R$ 17,020 thousand (2005 - R$ 14,960 thousand) representing 30.3% of the balance for other accounts receivable outstanding (2005 - 42.4%), to cover credit risks.

d. Foreign exchange risk
The Company’s income is not subject to significant variations from the effects of foreign exchange variations on liabilities tied to foreign currencies, mainly the North American dollar (the Brazilian Real reported a valuation of 8.7% in 2006), given the reduced volume of operations indexed to the dollar in relation to the Company’s total operations.

e. Interest rate risk
The Company’s results are susceptible to significant variations from borrowings contracted based on variable exchange rates. In accordance with its financial policies, the Company has not undertaken operations involving financial instruments of a speculative nature.

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Redecard S.A. Notes to the financial statements
(In thousands of Reais)

13

Results from Redecard Consortium Participation
The net income of Consórcio Redecard, for the years ended December 31, 2006 and 2005 is composed of the following: 2006 Net revenue Operating revenue Service tax PIS tax COFINS tax Financial revenue Financial expenses 2005

( ( (

1,600,378 58,776) 12,265) 68,526) 561,968 ( 213,330) 1,809,449

( ( (

1,315,027 50,715) 9,350) 61,193) 541,120 ( 217,302) 1,517,587

Operating expenses Administrative and general Depreciation and amortization Other operating expenses

( 242,692) ( 134,188) ( 495,237) ( 872,117)

( 283,158) ( 153,587) ( 425,970) ( 862,715) 654,872

Operating income Distribution of operating income Redecard S.A. Other consortium members Total

937,332

442,763 494,569 937,332

285,808 369,064 654,872

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Redecard S.A. Notes to the financial statements
(In thousands of Reais)

14

Social responsibility
Redecard S.A. has supported a series of non profit making institutions as part of its objective to make a social contribution. During 2006, it made contributions amounting R$ 1,285 (R$ 1,418 in 2005).

15

Additional information
a. Redecard, as the authorizer of the MasterCard banner, contracted a guarantee letter with financial institutions in Brazil, for significant amounts, with the beneficiary being MasterCard International Incorporated. This guarantee, unconditionally and irrevocably, guarantees the beneficiary immediate payment for all amounts due by Redecard and not settled to merchants, from transactions undertaken using credit and debit cards that were issued by companies licensed from MasterCard. At the same time, MasterCard, as established in its regulations, guarantees the Company financial settlement of the transactions approved by companies issuers of MasterCard credit cards. b. The Company, despite the low level of risk from claims, has a policy to contract insurance coverage for the electronic payment equipment (POS), and for vehicles, both at market values. c. The Company does not provide guarantees, sureties or bonds, without previous authorization from the Board of Directors, under the terms of article 16, letter “f” of the Company’s Statutes. d. Employee participation in Company income was calculated based on the goals established by Management and approved by the board of directors. e. The Company makes monthly contributions to the Retirement plan, CitiPrevi, a closed private pension plan, for all of its employees, and incurred expenditure of R$ 3,750 in 2006 (R$ 823 in 2005), from the Plan.

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Redecard S.A.

Financial statements December 31, 2005 and 2004
(A translation of the original report in Portuguese as published in Brazil containing financial statements prepared in accordance with accounting practices adopted in Brazil)

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Final_Redecard_e5

Redecard S.A. Financial statements
December 31, 2005 and 2004

Contents Independent auditors’ report Balance sheets Statements of income Statements of changes in shareholders’ equity Statements of changes in financial position Notes to the financial statements
F-67 F-68 F-69 F-70 F-71 F-72 - 78

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Final_Redecard_e5

KPMG Auditores Independentes R. Dr. Renato Paes de Barros, 33 04530-904 - São Paulo, SP - Brasil Caixa Postal 2467 01060-970 - São Paulo, SP - Brasil

Central Tel Fax Nacional Internacional Internet

55 (11) 2183-3000 55 (11) 2183-3001 55 (11) 2183-3034 www.kpmg.com.br

Independent auditors’ report
To The Shareholders and Board of Directors Redecard S.A. São Paulo - SP

We have examined the balance sheets of Redecard S.A. as of December 31, 2005 and 2004 and the related statements of income, changes in shareholders’ equity and changes in financial position for the years then ended, which are the responsibility of its management. Our responsibility is to express an opinion on these financial statements. Our examinations were conducted in accordance with auditing standards applied in Brazil and included: (a) planning of the audit work, considering the materiality of the balances, the volume of transactions and the accounting systems and internal accounting controls of the Company; (b) verification, on a test basis, of the evidence and records which support the amounts and accounting information disclosed; and (c) evaluation of the most significant accounting policies and estimates adopted by management of the Company, as well as the presentation of the financial statements taken as a whole. In our opinion, the aforementioned financial statements present fairly, in all material respects, the financial position of Redecard S.A. as of December 31, 2005 and 2004, and the results of its operations, changes in shareholders’ equity and changes in financial position for the years then ended, in conformity with accounting practices adopted in Brazil.

February 3, 2006

KPMG Auditores Independentes CRC 2SP014428/O-6 Original report in Portuguese signed by Giuseppe Masi Accountant CRC 1SP176273/O-7

KPMG Auditores Independentes, uma sociedade simples brasileira e firma-membro da rede KPMG de firmas-membro independentes e afiliadas à KPMG International, uma cooperativa suíça.

KPMG Auditores Independentes is a Brazilian entity and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative.

F-67

Final_Redecard_e5

Redecard S.A.

Balance sheets
December 31, 2005 and 2004
(In thousands of Reais)

Assets Current assets Cash and cash equivalents Accounts receivable - Issuers Other accounts receivable Deferred income and social contribution taxes Long-term assets Deferred income and social contribution taxes Judicial deposits Permanent assets Fixed assets Accumulated depreciation Investments

2005 8,100,642 13,891 8,006,121 35,284 45,346

2004 6,018,846 13,411 5,938,975 33,290 33,170

Liabilities Current liabilities Accounts payable to merchants Labor obligations Taxes payable Borrowings Other accounts payable Long-term liabilities Provision for contingent liabilities

2005 8,108,258 7,313,320 9,875 8,562 362,035 414,466 195,771 195,771 62,889 53,551 9,338

2004 6,097,288 5,390,718 8,624 11,479 393,206 293,261 149,288 149,288 53,552 45,199 8,353

61,382

45,965

48,947 12,435 204,894 583,102 (378,208) -

36,589 9,376 235,317 475,141 (239,940) 116

Shareholders' equity Capital Revenue reserve

8,366,918

6,300,128

8,366,918

6,300,128

See the accompanying notes to the financial statements.

F-68

Final_Redecard_e5

Redecard S.A. Statements of income
Years ended December 31, 2005 and 2004
(In thousands of Reais, except net income per share)

2005

2004

Result from Redecard Consortium Participation (Note 10) (Operational profit of Consórcio Redecard in 2005 R$ 654.872 - R$ 479.487 in 2004) Income before income and social contribution taxes Social contribution tax Income tax Net income for the year Net income per share - R$

285,808

226,424

285,808 (26,238) (72,816) 186,754 99.37

226,424 (20,313) (57,371) 148,740 79.19

See the accompanying notes to the financial statements.

F-69

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Redecard S.A.

Statements of changes in shareholders' equity
Years ended December 31, 2005 and 2004
(In thousands of Reais)

Revenue reserve Legal reserve 916 Retained earnings 148,740

Capital Balances at January 1, 2004 Net income for the year Distributions: Legal reserve Dividends distributed Dividends to be distributed Balances at December 31, 2004 Balances at January 1, 2005 Capital increase Net income for the year Distributions: Legal reserve Dividends distributed Dividends to be distributed Balances at December 31, 2005 45,199 -

Total 46,115 148,740

45,199 45,199 8,353 -

7,437 8,353 8,353 (8,353) -

(7,437) (90,949) (50,354) 186,754

(90,949) (50,354) 53,552 53,552 186,754

53,552

9,338 9,338

(9,338) (120,513) (56,903) -

(120,513) (56,903) 62,890

See the accompanying notes to the financial statements.

F-70

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Redecard S.A.

Statements of changes in financial position
Years ended December 31, 2005 and 2004
(In thousands of Reais)

2005 Sources of funds From operations Net income for the year Income/(expenses) not affecting working capital Depreciation and amortization Income/(expense) on sale of fixed assets (Gain)/loss on investments

2004

186,754 153,587 110 116 340,567

148,740 74,985 (63) 223,662

From third parties Disposal of fixed assets Increase in long-term liabilities

903 46,482 47,385 387,952

830 46,117 46,947 270,609

Application of funds Investments in Fixed assets Increase in long-term assets Dividends distributed

124,293 15,417 177,416 317,126

127,934 19,458 141,303 288,695 (18,086)

Increase/(decrease) in net working capital Changes in net working capital 2005 Beginning Current assets Current liabilities Net working capital 6,018,846 6,097,288 (78,442) End 8,100,642 8,108,258 (7,616)

70,826

2004 Variation 2,081,796 2,010,970 70,826 Variation 1,318,819 1,336,905 (18,086)

See the accompanying notes to the financial statements.

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Redecard S.A. Notes to the financial statements
Years ended December 31, 2005 and 2004
(In thousands of Reais)

1

Operations
Redecard S.A. operations comprise the registration and approval of merchants, as well as the administration of payments to the network affiliated merchants due to the use of credit and debit cards. Redecard is the leader of a consortium (Consórcio Redecard), which is not a corporate legal entity and administers the merchants’ network and the funding, transmission, processing and settlement of transactions generated through credit and debit cards use. Redecard S.A., as leader of Consórcio Redecard, performs all acts necessary in order for it to operate through its legal representatives and/or attorneys-in-fact, including active and passive representation before third parties (see Note 10 - Equity in income of Consórcio Redecard).

2

Distribution of net income to consortium members
Net income recognized by Consórcio Redecard is distributed according to criteria set forth in the Consórcio Redecard Organization Agreement, that takes into consideration the volume of transactions made with credit and debit cards issued by consortium members, and each member’s share in Redecard S.A.

3

Description of significant accounting policies
The financial statements were prepared in accordance with accounting practices adopted in Brazil.

a. Recognition of income and expenses
Income and expenses are recognized in the income statement on the accrual basis.

F-72

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Redecard S.A. Notes to the financial statements
(In thousands of Reais)

Discount rates for payments to merchants were recorded on the books of Consórcio Redecard, and allocated to the income statement on the validation date for processing of the respective sales invoices. Consórcio Redecard income and expenses (Note 10) are transferred to consortium members and Redecard S.A. according to their respective shares in the consortium.

b. Fixed assets
Fixed assets are recorded at acquisition cost and the depreciation is provided by using the straight-line method at rates, which take into account the estimated useful lives of the assets.

c. Income and social contribution taxes
Income tax was calculated at the rate of 15% plus surtaxes of 10% provided for in current laws. Social contribution tax was calculated at the rate of 9%. The provision for these taxes is stated under “Taxes payable”. The deferred income and social contribution taxes were calculated at the rate of 34% (25% for income tax and 9% for social contribution) on expenses, which will be deductible in the future. These tax credits will be realized within five years.

d. Accounts receivable - Issuers and accounts payable to merchants
These amounts refer to the values of transactions made by cardholders, which are transferred by the issuers (Accounts receivable - Issuers) to Redecard, the leader of Consórcio Redecard, so that it can pay the merchants (Accounts payable to merchants) in accordance with contractual terms.

e. Borrowings
Borrowings are stated at the amounts borrowed, plus contractual charges up to the financial statement closing date.

F-73

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Redecard S.A. Notes to the financial statements
(In thousands of Reais)

4

Fixed assets
Annual depreciation rate % Equipment for recording transactions (POS) (a) Equipments Systems Vehicles Construction in progress Fixtures and fittings Others Total Accumulated depreciation 33.33 20.00 20.00 20.00 10.00 -

2005 499,946 40,504 23,738 4,573 3,643 2,836 7,862 583,102 (378,208) 204,894

2004 399,969 39,233 19,262 4,613 2,158 2,701 7,205 475,141 (239,940) 235,201

(a) During 2005, based on a technical report issued by a specialized company and consistent with legislation in force, the depreciation rate for POS equipment was altered from 20.00% to 33.33% per annum in order to better reflect the economic useful life of the assets.

5

Borrowings
Comprises funding from financial institutions in the total amount of R$ 362,035 (R$ 393,206 in 2004), which mature in up to 145 days and carry interest rates of 103.32% (2004 - 103.17%) of the variation of the Interbank Deposit Certificate (CDI) CETIP.

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Redecard S.A. Notes to the financial statements
(In thousands of Reais)

6

Other accounts payable
Represented by the following liabilities: 2005 Payable to suppliers and provisions for expenses Participation in the consortium payable Dividends to be distributed Total 198,277 159,286 56,903 414,466 2004 134,557 108,350 50,354 293,261

7

Capital
Capital stock comprises 1,878,329 shares, of which 626,110 are common shares and 1,252,219 preferred shares, all nominative and without par value, with the number of shares unaltered since 2003, and distributed as follows: % FNC - Comércio e Participações Ltda. Itaucard Financeira S.A. Crédito, Financiamento e Investimento Unicard Banco Múltiplo S.A. Mastercard International Incorporated 31.9433 31.9433 31.9433 4.1701

As from 2005 the shares of right of Unibanco União de Bancos Brasileiros S.A. were transferred to Unicard Banco Múltiplo S.A. The Company’s bylaws call for a minimum dividend equal to 25% of adjusted net income for the year. The dividends for the fourth quarter of 2005 were transferred to Current liabilities and will be distributed in January 2006. Of the total dividends for 2005, R$ 177,416 (R$ 141,303 in 2004), R$ 120,513 (R$ 90,949 in 2004) were distributed during the financial year.

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Redecard S.A. Notes to the financial statements
(In thousands of Reais)

8

Related party transactions
The related party transactions at December 31, 2005, refer to credit card transactions and expenses related to services, as demonstrated below: Accounts receivable - Issuers: Credicard Banco S A FNC - Comércio e Participações Ltda. Itaucard Financeira S A Crédito, Financiamento e Investimento Unibanco - Representação e Participação Ltda. Service expenses - Orbitall

3,016,508 231,272 1,564,588 627,636 63,447

9

Contingent liabilities
Refer to provisions that, according to Company’s management opinion, and based on the opinion of its legal advisors, were constituted in amounts considered sufficient to cover possible losses. These provisions are periodically reviewed by Company management and consist of: provisions for tax contingencies - R$ 184,918 (in 2004 - R$ 139,998) and civil and labor contingencies R$ 10,853 (in 2004 - R$ 9,290).

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Redecard S.A. Notes to the financial statements
(In thousands of Reais)

10

Results from Redecard Consortium Participation
The net income of Consórcio Redecard, for the years ended December 31, 2005 and 2004, is composed of the following: 2005 Net revenue: Operating revenue Service tax PIS tax COFINS tax Financial revenue Financial expenses 1,315,026 50,715) 9,350) 61,194) 541,120 ( 217,302) 1,517,586 Operating expenses: Administrative and general Depreciation and amortization Other operating expenses ( 283,158) ( 153,587) ( 425,969) ( 862,715) Operating income 654,872 2004 1,005,642 39,841) 13,416) 58,299) 408,997 ( 145,659) 1,157,424 ( 237,656) ( 74,984) ( 365,297) ( 677,937) 479,487

( ( (

( ( (

Distribution of operating income: Redecard S.A. Other consortium members Total

285,808 369,063 654,872

226,424 253,063 479,487

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Redecard S.A. Notes to the financial statements
(In thousands of Reais)

11

Social responsibility
Redecard S.A., has supported a series of non profit making institutions as part of its objective to make a social contribution. During 2005, it made contributions amounting to R$ 1,418 (R$ 1,224 in 2004).

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Redecard S.A.

Financial statements December 31, 2004 and 2003
(A free translation of the original report in Portuguese containing financial statements prepared in accordance with accounting practices adopted in Brazil)

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Redecard S.A.

Financial statements
December 31, 2004 and 2003

Contents Independent auditors’ report Balance sheets Statements of earnings Statements of changes in shareholders’ equity Statements of changes in financial position Notes to the financial statements
F-83 F-84 F-85 F-86 F-87 F-88 - 93

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KPMG Auditores Independentes R. Dr. Renato Paes de Barros, 33 04530-904 - São Paulo, SP - Brasil Caixa Postal / P.O.Box 2467 01060-970 - São Paulo, SP - Brasil

Central Tel Fax National International Internet

55 (11) 3067-3000 55 (11) 3079-3752 55 (11) 3079-2916 www.kpmg.com.br

Independent auditors’ report
The Administrative Council and Shareholders Redecard S.A. São Paulo - SP

We have examined the balance sheets of Redecard S.A. as of December 31, 2004 and 2003 and the related statements of earnings, changes in shareholders’ equity and changes in financial position for the years then ended, which are the responsibility of its management. Our responsibility is to express an opinion on these financial statements. Our examinations were conducted in accordance with auditing standards generally accepted in Brazil and included: (a) planning of the audit work, considering the materiality of the balances, the volume of transactions and the accounting systems and internal accounting controls of the Company; (b) verification, on a test basis, of the evidence and records which support the amounts and accounting information which is disclosed; and (c) evaluation of the most significant accounting policies and estimates adopted by Company management, as well as the presentation of the financial statements taken as a whole. In our opinion, the aforementioned financial statements present fairly, in all material respects, the financial position of Redecard S.A. as of December 31, 2004 and 2003, and the results of its operations, changes in its shareholders’ equity and changes in its financial position for the years then ended, in conformity with accounting practices adopted in Brazil.

February 11, 2005

KPMG Auditores Independentes CRC 2SP014428/O-6

Original Report in Portuguese signed by Giuseppe Masi Accountant CRC 1SP176273/O-7

KPMG Auditores Independentes é uma sociedade brasileira, simples, membro da KPMG International, uma cooperativa suíça.

KPMG Auditores Independentes is a Brazilian entity, member firm of KPMG International, a Swiss cooperative.

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Redecard S.A.

Balance sheets
December 31, 2004 and 2003
(In thousands of Reais)

Assets Current assets Cash and cash equivalents Accounts receivable - Issuers Other accounts receivable Deferred income and social contribution taxes Long-term assets Deferred income and social contribution taxes Judicial deposits Permanent assets Fixed assets Accumulated depreciation Investments

2004 6,018,846 13,411 5,938,975 33,290 33,170

2003 4,700,027 11,460 4,635,137 31,148 22,282

Liabilities Current liabilities Accounts payable to merchants Labor obligations Taxes payable Borrowings Other accounts payable Long-term liabilities Provision for contingencies

2004 6,097,288 5,390,718 8,624 11,479 393,206 293,261 149,288 149,288 53,552 45,199 8,353

2003 4,760,383 3,782,094 6,722 21,252 758,967 191,348 103,171 103,171 46,115 45,199 916

45,965

26,507

36,589 9,376 235,317 475,141 (239,940) 116

25,665 842 183,135 359,386 (176,367) 116

Shareholders' equity Capital Revenue reserve

6,300,128

4,909,669

6,300,128

4,909,669

See the accompanying notes to the financial statements.

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Redecard S.A. Statements of earnings
Years ended December 31, 2004 and 2003
(In thousands of Reais, except net income per share)

2004 Equity in earnings of Redecard S.A. in the consortium (Note 10) (Net operating income of Redecard consortium in 2004 R$ 479,487 and R$ 403,089 in 2003) Income before income and social contribution taxes Social contribution tax Income tax Net income for the year Net income per share - R$

2003

226,424

183,039

226,424 (20,313) (57,371) 148,740 79.19

183,039 (16,379) (45,200) 121,460 64.66

See the accompanying notes to the financial statements.

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Redecard S.A.

Statements of changes in shareholders' equity
Years ended December 31, 2004 and 2003
(In thousands of Reais)

Revenue reserve Capital Legal reserve 5,410 (10,567) Retained earnings 121,460

Total 40,042 121,460

Balances at January 1st , 2003 Capital increase with reserves Net income for the year Distributions: Legal reserve Dividends distributed Dividends to be distributed Balances at December 31st, 2003 Balances at January 1st , 2004 Net income for the year Distributions: Legal reserve Dividends distributed Dividends to be distributed Balances at December 31st, 2004

34,632 10,567 -

45,199 45,199 -

6,073 916 916 -

(6,073) (76,847) (38,540) 148,740

(76,847) (38,540) 46,115 46,115 148,740 (90,949) (50,354) 53,552

45,199

7,437 8,353

(7,437) (90,949) (50,354) -

See the accompanying notes to the financial statements.

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Redecard S.A.

Statements of changes in financial position
Years ended December 31, 2004 and 2003
(In thousands of Reais)

2004 Sources of funds From operations Net income for the year Expenses not affecting working capital Depreciation and amortization Income on sale of fixed assets

2003

148,740 74,985 (63) 223,662

121,460 50,833 1,645 173,938

From third parties Income on sale of fixed assets Increase in long-term liabilities

830 46,117 46,947 270,609

891 39,772 40,663 214,601

Application of funds Investments in Fixed assets Increase in long-term assets Dividends distributed

127,934 19,458 141,303 288,695

87,455 13,522 115,387 216,364 (1,763)

Decrease in net working capital Changes in net working capital 2004 Beginning Current assets Current liabilities Net working capital 4,700,027 4,760,383 (60,356) End 6,018,846 6,097,288 (78,442)

(18,086)

2003 Variation 1,318,819 1,336,905 (18,086) Variation 1,253,818 1,255,581 (1,763)

See the accompanying notes to the financial statements.

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Redecard S.A. Notes to the financial statements
Years ended December 31, 2004 and 2003
(In thousands of Reais)

1

Operations
Redecard S.A. operations comprise the registration and approval of merchants, as well as the administration of payments to the network of affiliated merchants due to the use of credit and debit cards. Redecard is the leader of a consortium (Consórcio Redecard), which is not a legal entity and which administers the merchants’ network and the funding, transmission, processing and settlement of transactions generated through use credit and debit cards. Redecard S.A., as leader of Consórcio Redecard, performs all acts necessary in order for it to operate through its legal representatives and/or attorneys-in-fact, including active and passive representation before third parties (see Note 10 - Equity in income of Consórcio Redecard).

2

Distribution of net income to consortium members
Net income recognized by Consórcio Redecard is distributed according to criteria set forth in the Consórcio Redecard Organization Agreement, which takes into consideration the volume of transactions made with credit and debit cards issued by consortium members, and each member’s share in Redecard S.A.

3

Description of significant accounting policies
The financial statements were prepared in accordance with accounting practices derived from the Brazilian Corporation Law.

a. Recognition of revenues
Income and expenses are allocated to the income statement on the accrual basis. Discount rates for payments to merchants were recorded in the books of Consórcio Redecard, and allocated to the income statement on the validation date for processing of the respective sales invoices. The income and expenses of Consórcio Redecard (Note 10) are transferred to consortium members and Redecard S.A. according to their respective shares in the consortium.

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Redecard S.A. Notes to the financial statements
(In thousands of Reais)

b. Fixed assets
Fixed assets are recorded at the cost of acquisition and depreciation is provided using the straight-line method at rates, which take into account the estimated useful lives of the assets.

c. Income and social contribution taxes
Income tax was calculated at the rate of 15% plus surtaxes of 10% provided for in current laws. Social contribution tax was calculated at the rate of 9%. The provision for these taxes is stated under “Taxes payable”. The deferred income and social contribution taxes were calculated at the rate of 34% (25% for income tax and 9% for social contribution) on expenses, which will be deductible in the future. These tax credits will be realized in up to 5 years.

d. Accounts receivable - Issuers and accounts payable to merchants
These amounts refer to the transactions made by cardholders, which are transferred by the issuers (Accounts receivable - Issuers) to Redecard, the leader of Consórcio Redecard, so that it can pay the merchants (Accounts payable to merchants) in accordance with contractual terms.

e. Borrowings
Borrowings are stated at the amounts borrowed, plus contractual charges up to the financial statement closing date.

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Redecard S.A. Notes to the financial statements
(In thousands of Reais)

4

Fixed assets
Annual depreciation rate % Equipment Systems Vehicles Construction in progress Other Total Accumulated depreciation 20 20 20 -

2004 439,202 19,262 4,613 2,158 9,906 475,141

2003 322,490 16,353 3,884 12,298 4,361 359,386

(239,940) (176,367) 235,201 183,019

5

Borrowings
Comprises funding from financial institutions in the total amount of R$ 393,206 (R$ 758,967 in 2003) which mature in up to 178 days and carry average interest rates of 103.17% (103.08% in 2003) of the variation of the Interbank Deposit Certificate (CDI) CETIP.

6

Other accounts payable
Represented by the following obligations: 2004 Amounts payable to suppliers and provisions for expenses Interest in the Consortium payable Dividends to be distributed Total 134,557 108,350 50,354 293,261 2003 86,705 66,103 38,540 191,348

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Redecard S.A. Notes to the financial statements
(In thousands of Reais)

7

Capital
Capital comprises 1,878,329 shares, of which 626,110 are common shares and 1,252,219 are preferred shares, all nominative and with no par value. The number of shares in the year 2003 is the same as in 2004, and is distributed as follows: % FNC - Comércio e Participações Ltda. Itaucard Financeira S.A. Crédito, Financiamento e Investimento Unibanco União de Bancos Brasileiros S.A. Mastercard International Incorporated 31.9433 31.9433 31.9433 4.1701

As from 2004 the shares which were the rights of Unibanco - Representação e Participação Ltda. were transferred to Unibanco União de Bancos Brasileiros S.A. The Company’s bylaws call for a minimum dividend equal to 25% of adjusted net income for the year. The dividends referring to the 4th quarter of 2004 were transferred to Current Liabilities and will be distributed in January 2005. Of the total dividends for 2004 of R$ 141,303 (R$ 115,387 in 2003), R$ 90,949 (R$ 76,847 in 2003) was distributed in the fiscal year.

8

Transactions with related parties
On December 31, 2004 transactions with related parties refer to credit card electronic transactions and expenses with services rendered, as shown below: Accounts receivable - Issuers: Credicard Banco S.A. FNC - Comércio e Participações Ltda. Itaucard Financeira S.A. Crédito, Financiamento e Investimento Unibanco União de Bancos Brasileiros S.A. Expenses with services rendered by Orbitall

2,143,876 186,553 1,210,716 402,060 57,735

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Redecard S.A. Notes to the financial statements
(In thousands of Reais)

9

Contingent liabilities
Refer to provisions that, according to Company’s Management Judgments and based on the opinion of its legal counsel, were recorded in amounts considered sufficient to cover possible losses. These provisions are periodically evaluated by Company Management and are composed of provisions for fiscal contingencies - R$ 139,998 (in 2003 - R$ 94,364) and civil and labor contingencies - R$ 9,290 (in 2003 - R$ 8,807).

10

Equity in income of Consórcio Redecard
The net income of Consórcio Redecard, for the years ended December 31, 2004 and 2003, is composed of the following: 2004 Net operating income: Operating income Service tax PIS COFINS Financial income Financial expenses Operating expenses: Administrative and general Depreciation and amortization Other operating expenses ( ( ( 1,005,642 39,841) 13,416) 58,299) 408,997 ( 145,659) 1,157,424 ( 237,656) ( 74,984) ( 365,297) ( 677,937) Operating income Distribution of operating income: Redecard S.A. Other consortium members Total 479,487 226,424 253,063 479,487 2003 821,498 ( 31,587) ( 16,936) ( 36,634) 391,754 (171,098) 956,997 (210,940) ( 50,833) (292,135) (553,908) 403,089 183,039 220,050 403,089

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Redecard S.A. Notes to the financial statements
(In thousands of Reais)

11

Social responsibility
Redecard S.A., focusing on making a contribution to society, has been supporting a number of nonprofit institutions. In 2004 it contributed the amount of R$ 1,224 (R$ 1,500 in 2003).

12

Derivative financial instruments
At December 31, 2004 and 2003, Redecard had no operations involving derivative financial instruments.

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HEAD OFFICE OF THE COMPANY Redecard S.A. Av. Pres. Juscelino Kubitschek, 1400 CEP 04545-000-São Paulo, São Paulo, Brazil

LEGAL ADVISORS TO THE COMPANY AND TO THE SELLING SHAREHOLDERS As to U.S. Law Shearman & Sterling LLP Av. Brig. Faria Lima, 3400 04538-132 – São Paulo, São Paulo, Brazil As to Brazilian Law Mattos Filho, Veiga Filho, Marrey Jr. e Quiroga Advogados Al. Joaquim Eugênio de Lima, 447 01403-001 – São Paulo, São Paulo, Brazil

LEGAL ADVISORS TO THE JOINT BOOKRUNNERS As to U.S. Law Cleary Gottlieb Steen & Hamilton LLP One Liberty Plaza, New York, New York 10006 As to Brazilian Law Souza, Cescon Avedissian, Barrieu e Flesch – Advogados Rua Funchal, 418, 11th floor 04551-060 – São Paulo, São Paulo, Brazil AUDITORS KPMG Auditores Independentes

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150,827,527 Common Shares (Including Common Shares in the Form of Global Depositary Shares)

REDECARD S.A.

OFFERING MEMORANDUM

July 11, 2007

Citi Itaú BBA Unibanco

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