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3Q10 EARNINGS
November 9
th
, 2010
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Forward-looking Statements
This presentation may contain certain statements that express the management's expectations, beliefs and assumptions
about future events or results. Such statements are not historical facts, being based on currently available competitive,
financial and economic data, and on current projections about the industries BM&FBovespa works in.
The verbs "anticipate," "believe," "estimate," "expect," "forecast," "plan," "predict," "project," "
target" and the like are
intended to identify these forward-looking statements, which involve risks and uncertainties that could cause actual results
to differ materially from those projected in this presentation and do not guarantee any future BM&FBovespa performance.
The factors that might affect performance include, but are not limited to: (i) market acceptance of BM&FBOVESPA services;
(ii) volatility related to (a) the Brazilian economy and securities markets and (b) the highly-competitive industries
BM&FBovespa operates in; (iii) changes in (a) domestic and foreign legislation and taxation and (b) government policies
related to the financial and securities markets; (iv) increasing competition from new entrants to the Brazilian markets; (v)
ability to keep up with rapid changes in technological environment, including the implementation of enhanced functionality
demanded by BM&FBovespa customers; (vi) ability to maintain an ongoing process for introducing competitive new
products and services, while maintaining the competitiveness of existing ones; (vii) ability to attract new customers in
domestic and foreign jurisdictions; (viii) ability to expand the offer of BM&FBovespa products in foreign jurisdictions.
All forward-looking statements in this presentation are based on information and data available on the date they were
made, and BM&FBovespa undertakes no obligation to update them in light of new information or future development.
This presentation does not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be
any sale of securities where such offer or sale would be unlawful prior to registration or qualification under the securities
law. No offering shall be made except by means of a prospectus meeting the requirements of the Brazilian Securities and
Commission (CVM) Instruction 400 of 2003, as amended.
2
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338.4
389.2
3Q09
3Q10
262.0
336.4
3Q09
3Q10
3Q10 vs. 3Q09 Highlights
Adjusted net income (BRL millions)
EBITDA (BRL millions) / EBITDA margin (%)
Net revenues (BRL millions)
3Q10 EARNINGS
Adjusted EPS of BRL0.194 compared with BRL0.169 in 3Q09; and
GAAP EPS of BRL0.146 versus BRL0.123
Operating expenses grew 26.5% over 3Q09 and Adjusted Operating
expenses
grew 35.0% compared with 3Q09
Payout: BRL 235.9 million (80% payout ratio on GAAP net income)
VOLUMES
Bovespa segment: recovery in volumes after Petrobras offering and
historical high in Oct'10 (BRL7.77 billion)
BM&F segment: despite the reduction in market uncertainty and volatility,
volumes are still high (ADTV above 2 million contracts)
OTHER HIGHLIGHTS AND DEVELOPMENTS
HFT volumes: these investors represented 4.4% of the derivatives
volumes in 3Q10 and 6.4% in Oct'10 (since Nov'10, a new pricing policy
is in place)
Share buyback program: 26.4 million shares were already bought back
Public offerings activity: more than BRL72 billion in public offerings in
2010
IFRS: adoption of standards and interpretations mandatory for 2010
3
15.0%
28.4%
69.1%
68.4%
383.0
486.9
3Q09
3Q10
27.1%
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Growth in the Adjusted Net Income
4
3Q10 GAAP and adjusted net income reconciliation (BRL millions)
In BRL thousands
3Q10
3Q09
% Change
3Q10 / 3Q09
2Q10
% Change
3Q10 / 2Q10
Gaap net income
293,208
246,795
18.8%
307,614
-4.7%
Stock options
5,489
11,937
7,011
Deferred liability
111,647
79,645
111,647
Equity accounting*
(21,139)
-
-
Adjusted net income
389,205
338,377
15.0%
426,272
-8.7%
293.2
(21.1)
389.2
5.5
111.6
Gaap net income
Stock options
Deferred liability
Equity Accounting
Adjusted net
income
·
CME Group equity accounting net of taxes
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Revenues
Growth due to the market recovery
In BRL thousands
3Q10
3Q09
% Change
3Q10/ 3Q09
Gross operating revenues
541,609
426,505
27.0%
BOVESPA Trd. / Sttmnt
232,890
210.117
10.8%
BOVESPA
­
Others*
41,922
8,902
370.9%
BM&F Trd. / Sttmnt
186,802
132,017
41.5%
Other operating revenues
79,995
75,469
6.0%
Depository and custody
21,447
17,235
24.4%
Vendors
15,352
16,082
-4.5%
Trading access (Brokers)
11,317
11,491
-1.5%
Listing
10,928
9,562
14.3%
Securities lending
12,714
8,866
43.4%
Bolsa Brasileira de Mercadorias
1,762
3,535
-50.2%
Settlement Bank
2,117
2,194
-3.5%
Other
4,358
6,504
-33.0%
Operating performance
3Q10
3Q09
% Change
3Q10/3Q09
BM&F ADTV (thousands)
2,428.1
1,422.3
70.7%
BM&F RPC (in BRL)
1.167
1.391
-16.1%
BOVESPA ADTV (in BRL million)
5,905.8
5,214.4
13.3%
BOVESPA Margin (in bps)
6.162
6.296
-0.134bp
5
Bovespa segment revenues
BM&F segment revenues
Other revenues
219.0
274.8
3Q09
3Q10
132.0
186.8
3Q09
3Q10
75.5
80.0
3Q09
3Q10
25.5%
41.5%
6.0%
* It includes the fee from the settlement of the Petrobras Offering
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13.3%
-0.13bp
BOVESPA Segment
Strong market recovery in the last two months
6
Revenue share
Average Daily Traded Value (ADTV)
Average market capitalization 18.0% higher than 3Q09
52.7% growth in the ADTV of local institutional investors
Turnover velocity decreased to 59.2% in 3Q10 from 62.6% in 3Q09
(it was 71% in Oct´10 )
Trading / Settlement margin
Decrease to 6.16bps from 6.30bps, due mainly to the increase in
the participation of local institutional investors in the overall volume,
once this group of investors pay a lower fee in comparison with
other investors
Recent recovery in the equity market
­
ADTV (BRL billions)
51%
-11.6%
13.3%
31.7%
5.2
6.8
6.6
6.7
5.9
5.4
5.6
6.7
7.8
3Q09
4Q09
1Q10
2Q10
3Q10
Jul-10
Aug-10
Sep-10
Oct-10
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1.7 1.6 1.5
2.4
1.4 1.3
1.7 1.6 1.5
1.9
1.4 1.4 1.5 1.7 1.4 1.6
1.9 2.2
3.1 3.1
2.5
2.1
2.9
2.4
2.0 2.1
0.3
2007
2008
2009
Y
T
D
*
J
a
n
-
09
F
e
b
-
09
M
a
r
-
09
A
p
r
-
09
M
a
y
-
09
J
u
n
-
09
J
u
l
-
09
A
u
g
-
09
S
e
p
-
09
O
c
t
-
09
N
o
v
-
09
D
e
c
-
09
J
a
n
-
10
F
e
b
-
10
M
a
r
-
10
A
p
r
-
10
M
a
y
-
10
J
u
n
-
10
J
u
l
-
10
A
u
g
-
10
S
e
p
-
10
O
c
t
-
10
Additional ADTV from outlier months - Mar'10, Apr'10 and Jul'10 (millions)
ADTV excluding outlier months (millions)
2.1
70.7%
BM&F Segment
Despite the reduction of uncertainty in the market, volumes are still high
7
Revenue share
Average Daily Traded Volume
­
ADTV
Climb in interest rates in BRL volumes (119.8% growth)
4.0% increase of FX volume and 21.2% increase of index based
contracts
Average Revenue per Contract - RPC
Increase in the participation of interest rates in BRL contracts in the
overall volume, to 68.4% from 53.1%
Negative impact due to FX appreciation (FX, interest rates in USD
and commodities contracts)
The higher the volume, the lower the RPC (volume tier based pricing)
Growth of HFT and DMA in the overall volume
Structural growth in the derivatives market (ADTV in millions of contracts)
34%
-16.1%
* Updated until October 2010
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Other Revenue Lines
Non-trading / clearing revenues grew 6.0% year-on-year
8,866
12,714
9,562
10,928
16,082
15,352
17,235
21,447
3Q09
3Q10
3Q09
3Q10
3Q09
3Q10
3Q09
3Q10
Se
cu
ri
t
i
e
s
l
e
n
d
i
n
g
L
i
st
i
n
g
V
e
n
d
o
rs
D
e
p
o
si
t
o
ry
a
n
d
cu
st
o
d
y
43.4%
14.3%
-4.5%
24.4%
BRL thousands
17.8% increase in the average number of custody accounts
25.9% growth in value under custody (excluding non-residents and
ADR programs)
New pricing policy implemented in Aug'10 reduced the fees for DMA
used by retail investors (Home Broker)
Negatively impacted from the BRL appreciation, since part of these
revenues are denominated in USD
Increase of listing analysis fees
Growth in revenues from annual fees paid by listed companies (12
IPOs in the last twelve months and reduction in discounts)
Activity growth of BTC services
37.9% climb in the average value of the open interest, to BRL20.8
billion from BRL15.1 billion
8
Revenue share
15%
Recovery in the market
The recovery and growth of the market also impacted
positively on non-trading revenues, among which securities
lending, depository / custody and listing services stand out
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3Q10
In BRL thousands
3Q10
3Q09
% Change
3Q10/ 3Q09
Operating Expenses
(167,561)
(132,502)
26.5%
Personnel
(71,687)
(63,883)
12.2%
Data processing
(27,400)
(24,233)
13.1%
Deprec. and amortization
(15,067)
(11,546)
30.5%
Outsourced services
(12,293)
(9,370)
31.2%
Communication
(6,622)
(6,219)
6.5%
Marketing
(15,772)
(5,841)
170.0%
Maintenance
(2,529)
(2,750)
-8.0%
Board compensation
(1,507)
(1,184)
27.3%
Other
(14,684)
(7,476)
96.4%
3Q09
9
In BRL thousands
3Q10
3Q09
% Change
3Q10/3Q09
Operating expenses
(167,561)
(132,502)
26.5%
Depreciation
15,067
11,546
Stock option plans
5,489
11,937
Tax related to equity accounting
2,003
-
Provision for doubtful accounts
(845)
957
Adjusted operating expenses
(145,846)
(108,062)
35.0%
Operating Expenses Breakdown
Expense breakdown
43%
16%
9%
7%
10%
15%
Personnel
Data processing
Dep. and Amort.
Third party serv.
Marketing
Other
48%
18%
9%
7%
5%
13%
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51,946
66,198
11,937
5,489
3Q09
3Q10
P
e
r
s
o
n
n
e
l
Adj. Personnel
Stock Options
Increase in data processing expenses related to:
The new back up data center (rent)
Enhancement of capacity and improvement of
performance in both segments
Operating Expenses
71.687
63,883
13.1%
Annual bargain of 6% (Aug'10) and 20.1% growth
in the average headcount year-over-year (most of
the new employees are allocated in IT and
business development)
Adjusted Personnel expenses (excluding stock
option expenses) increased 27.4%
Growth of marketing expenses reflects our strategy
to increase the number of participants in our
markets
Launch of a mass media campaign focused on
attracting new local retail investors and other
educational programs
BRL thousands
10
24,233
27,400
3Q09
3Q10
D
a
t
a

P
r
o
c
e
s
s
i
n
g
5,841
15,772
3Q09
3Q10
M
a
r
k
e
t
i
n
g
12.2%
170.0%
31.2%
The increase in expenses is due to payments to
legal advisors, stemming from international
partnership and other international initiatives
9,370
12,293
3Q09
3Q10
O
u
t
s
o
u
r
c
e
d
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520
540
2010 old
2010e
272
250
2010 old
2010e
2010 Opex and Capex Budget Reviews
Adjusted Opex in 2010 (BRL thousands)
11
Opex Review
Launch of a mass media campaign under the slogan "
Quer ser Sócio
?" (
Wanna be a partner?), which focuses on attracting
new local retail investors
Increase in personnel expenses, especially in IT and business development areas
Hiring brought forward to support IT initiatives undertaken by the company (development of new network structure and a
new trading system) and to deal with other initiatives (market popularization programs, international partnership and
products development)
Also, due to the payment of variable compensation
2010 new Opex and Capex budgets
From BRL540 to
BRL545 million
33,270
32,546
36,476
5,328
9,870
15,772
21,266
24,642
27,400
54,718
57,360
66,198
1Q10
2Q10
3Q10
Others
Marketing
Data processing
Adjusted Personnel
124,418
145,846
114,582
Growth in personnel, IT and marketing
Capex Review
Replacement from a single target to a range
From BRL250 to
BRL272 million
Opex budget
­
BRL millions
Capex budget
­
BRL millions
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BRL44.1 million in 3Q10: BRL36.2 million in IT and BRL7.9
million in other areas. The main projects were capacity increase
and the new trading platform
9M10: BRL138.1 million
3,659
3,688
·
*Includes market participants cash collateral, earnings and rights on securities in custody and dividends and interest on capital pending payment
·
** Includes third-party deposits (BRL175 million in 2Q10 and BRL142 million in 3Q10) and restricted funds (BRL10 million in both 2Q10 and 3Q10) from BM&F
Settlement Bank.
Financial Highlights
Solid financial position with strong cash generation
12
Cash, cash equivalents and investments (BRL millions)
Financial income
BRL77.4 million in 3Q10: 35.7% higher than 3Q09
Financial revenues: BRL100.6 million in 3Q10, 52.7%
increase compared to 3Q09, mainly due to the increase of the
average interest rate
Financial expenses: BRL23.2 million in 3Q10, 162.4% higher
than 3Q09, mainly due to the financial cost of debt
Capex
From Aug'10 to Nov'10,
26.4 million shares were bought within
the program (BRL362 million)
The company can buy up to 31 million shares until Dec'10
Buyback program
BRL235.9 million as dividends, representing 80% of the GAAP
Net income in 3Q10
To be paid on November 25, 2010, based on the ownership
prevailing as of November 11, 2010
Earnings distribution (payout)
939
1,022
487
491
309
264
1,924
1,911
2Q10
3Q10
Market participants cash collateral and others*
Restricted funds
Subsidiaries**
Available funds
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Final Remarks
CONSISTENT REVENUE AND NET INCOME GROWTH
RECENT RECOVERY IN THE BOVESPA SEGMENT VOLUME
­
ALL-TIME
HIGH REACHED IN OCT'10
IPOs AND FOs RESUMING (AFTER THE CONCLUSION OF THE
PETROBRAS OFFERING)
BM&F VOLUMES REMAIN HIGH, DESPITE THE REDUCTION IN MARKET
VOLATILITY AND UNCERTAINTY
OPEX BUDGET REVIEWED TO CAPTURE THE GROWTH
OPPORTUNITIES RELATED TO THE POPULARIZATION PROGRAM
FOCUS ON IT INFRASTRUCTURE, PERFORMANCE, CAPACITY AND
COST CONTROLS
13
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APPENDIX
14
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Excellence in IT Solutions and Post-Trading Services
IT Developments
Initiatives to support future growth
15
We have been working consistently to boost the throughput capacity of our
trading systems to 400 thousand daily trades in the BM&F segment (from the
current 200 thousand) and to 3 million daily trades (from 1.5 million at present)
in the Bovespa segment. Implementation in the BM&F segment was completed
in the third quarter, and in the Bovespa segment it will completed before
December 2010.
BVMF-CME joint development of multi-asset class
trading platform:
Throughput capacity:
DMA models 2, 3 and 4 for Bovespa segment:
Phase 1 of the project (derivatives and FX modules to replace the GTS system)
will be implemented in the first quarter of 2011.
CVM has recently authorized the implementation of Direct Market Access
models 2, 3 and 4 for the Bovespa segment: DMA via Provider, via Direct
Connection and via Investor Co-location. These DMA
models have been
effective since September 1, 2010.
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Seven active investors
21 active participants in Sept'10
BM&F Segment: High Frequency Trading (HFT)
HFT is ever more important in the derivatives market
* Updated until: October 29
th
, 2010
HFT
(ADTV in thousands of contracts and mkt. share)
HFT
(participation per group of contracts)
Co-location
BM&F Segment: 28 units (half-racks)
Both Segments: 8 units (half-racks)
In the pipeline: 40 units
BM&F Segment (thousands of contracts)
4
20
41
50
69
155
74
92
73
58
75
0
5
18
44
41
50
43
40
45
43
45
4
7
22
53
77
93
90
85
87
98
125
0.3%
1.0%
2.8%
4.8%
3.8%
6.0%
4.4%
4.0% 4.5% 5.7%
6.4%
-1%
0%
2%
3%
4%
5%
6%
7%
8%
9%
10%
-
50
100
150
200
250
300
350
400
450
500
1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10
Jul-10 Aug-10 Sep-10 Oct-10
FX
Equities
Mini contracts
% in Overall Volume
0
1
3
7
12
15
13
17
20
25
84
164
162
151 156
162
203
Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10
3.2%
1.4%
3.3% 3.2% 2.6%
4.1%
4.8%
7.5%
23.6%
62.5%
FX contracts
Index-based contracts
Mini contracts
16
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BOVESPA Segment: Operating highlights
17
ADTV (BRL millions)
3Q09
4Q09
1Q10
2Q10
3Q10
Oct-10
% Change
3Q10 / 3Q09
% Change
3Q10 / 2Q10
Cash market
4,885.6
6,377.1
6,110.1
6,166.3
5,508.2
7,314.2
12.7%
-10.7%
Options market
213.8
327.9
330.2
378.4
264.4
311.1
23.7%
-30.1%
Forward market
113.0
134.8
157.9
134.9
132.0
151.6
16.8%
-2.2%
Fixed income and others
2.1
1.5
1.4
3.0
1.3
0.8
-39.1%
-58.8%
Total
5,214.4
6,841.3
6,599.6
6,682.6
5,905.8
7,777.8
13.3%
-11.6%
Number of trades (thousands)
3Q09
4Q09
1Q10
2Q10
3Q10
Oct-10
% Change
3Q10 / 3Q09
% Change
3Q10 / 2Q10
Cash market
279.9
318.9
326.7
348.1
338.5
412.1
20.9%
-2.8%
Options market
53.0
71.1
77.8
81.5
76.8
97.4
45.0%
-5.7%
Forward market
1.4
1.8
1.9
1.5
1.4
1.5
-3.6%
-6.4%
Fixed income and others
0.0
0.0
0.0
0.0
0.0
0.0
86.0%
-7.6%
Total
334.4
391.8
406.4
431.1
416.7
511.0
24.6%
-3.3%
Trading margin (basis points)
3Q09
4Q09
1Q10
2Q10
3Q10
% Change
3Q10 / 3Q09
% Change
3Q10 / 2Q10
Cash market
5.79
5.53
5.75
5.40
5.61
-3.2%
3.8%
Options market
14.27
14.68
14.50
15.31
14.02
-1.7%
-8.4%
Forward market
13.00
13.15
13.00
13.00
13.00
0.0%
0.0%
Fixed income and others
11.29
78.60
15.15
46.42
74.74
561.9%
61.0%
Total
6.30
6.13
6.36
6.13
6.16
-2.1%
0.5%
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BM&F Segment: Operating highlights
18
ADTV (thousands of contracts)
3Q09
4Q09
1Q10
2Q10
3Q10
Oct-10
% Change
3Q10 / 3Q09
% Change
3Q10 / 2Q10
Interest Rates in BRL
755.6
800.8 1,605.8 1,635.7 1,661.0
1,266.6
119.8%
1.5%
FX Rates
463.0
494.1
589.8
603.5
481.3
539.8
4.0%
-20.2%
Stock Indices
69.6
98.4
85.2
99.3
84.4
103.7
21.2%
-15.0%
Interest Rates in USD
64.4
83.2
77.9
84.5
95.8
95.8
48.7%
13.3%
Commodities
10.1
11.3
11.5
10.1
15.0
17.9
47.5%
47.9%
Mini Contracts
50.7
57.6
68.2
79.5
76.5
100.0
50.8%
-3.8%
OTC
8.8
13.8
15.3
10.8
14.1
14.0
59.7%
31.4%
Total
1,422.3 1,559.2 2,453.6 2,523.4 2,428.1
2,137.7
70.7%
-3.8%
RPC (BRL)
3Q09
4Q09
1Q10
2Q10
3Q10
Oct-10
% Change
3Q10 / 3Q09
% Change
3Q10 / 2Q10
Interest Rates in BRL
1.068
1.037
0.838
0.905
0.951
1.016
-10.9%
5.1%
FX Rates
2.031
1.927
1.929
1.838
1.989
1.926
-2.1%
8.2%
Stock Indices
1.559
1.577
1.527
1.515
1.499
1.758
-3.8%
-1.1%
Interest Rates in USD
1.178
1.017
1.218
1.163
1.076
1.103
-8.6%
-7.5%
Commodities
2.440
2.345
1.878
2.106
2.181
2.544
-10.6%
3.6%
Mini Contracts
0.175
0.150
0.134
0.129
0.125
0.118
-28.5%
-3.4%
OTC
1.485
1.508
1.526
1.772
1.687
1.318
13.6%
-4.8%
Total
1.391
1.333
1.126
1.145
1.167
1.258
-16.1%
1.9%
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48%
46%
44%
44%
43%
43%
42%
40%
21%
24%
26%
25%
29%
27%
30%
31%
19%
19%
20%
22%
22%
25%
22%
22%
9%
8%
8%
6%
4%
4%
4%
4%
3%
3%
2%
2%
2%
2%
1%
2%
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
Oct-10
Central Bank
Companies
Retail
Foreign Investors
Institutional Investors
Financial Institutions
Operating Highlights: Participation in Total Volume
19
BM&F Segment (Investors' Participation in Total Volume)
BOVESPA Segment (Investors' Participation in Total Volume)
33%
30%
30%
29%
31%
26%
26%
23%
24%
25%
26%
27%
30%
35%
36%
32%
34%
37%
35%
32%
27%
29%
29%
33%
6%
6%
6%
10%
9%
8%
7%
9%
2%
2%
2%
2%
2%
2%
2%
3%
0%
0%
0%
0%
0%
0%
0%
0%
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
Oct-10
Retail
Institutional Investors
Foreign Investors
Financial Insitutions
Companies
Others
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In BRL thousands
ASSETS
Jun'10
Dec'09
LIABILITIES AND
SHAREHOLDERS' EQUITY
Jun'10
Dec'09
Current assets
3,143,141
3,474,540 Current liabilities
1,422,836 1,142,076
Cash and cash equivalents
42,890
50,779 Collateral for transactions
984,766
810,317
Financial investments
2,917,792
3,295,356 Others
438,070
331,759
Others
182,459
128,405 Non-current liabilities
1,698,725
352,872
Non-current assets
19,217,204
17,383,299 Financing
1,027,188
2,495
Long-term receivables
1,099,771
973,305 Deferred Inc. Tax and Social Contrib.
616,448
300,930
Financial investments
727,517
605,648 Others
55,089
49,447
Others
372,254
367,657 Minority interest in subsidiaries
15,905
16,356
Investments
1,643,962
39,723
Shareholders' equity
19,238,784 19,362,891
Property and equipment
287,869
241,939 Capital
2,540,239 2,540,239
Capital reserve
16,533,760 16,512,260
Intangible assets
16,185,602
16,128,332 Others
148,880
294,036
TOTAL ASSETS
22,360,345
20,857,839
TOTAL LIAB. AND SHAREHOLDERS'
EQUITY
22,360,345 20,857,839
Balance Sheet
20
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