www.bradespar.com

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IndexMISSION aNd COMPaNY PROFILEaPPRECIaTION OF INVESTMENTSMESSaGE TO SHaREHOLdERSTIMELINE

CREdIBILITY MaINTaINEd THROUGH SUSTaINEd GROWTH

Strategy Corporate GovernanceOwnership StructureTag Along Board of DirectorsBoard of Executive OfficersControl Bodies

SOLIdITY IN THE FaCE OF MaRKET VOLaTILITY

Economic and Financial aspectsOperating RevenuePayroll, General and Administrative ExpensesFinancial ResultNet IncomeDividends and Interest on Equity

PERFORMaNCE aNd VaLUE GENERaTION

Capital Markets LiquidityPremium/discountInvesteesVALECPFL EnergiaSustainabilityOutlook

COMPaNY INFORMaTIONFINaNCIaL STaTEMENTS

02030406

10111213131313

141415151516

1819202222242626

2729

1

2

3

Continuous Solidity

2

MISSION

To generate value and optimize returns for its shareholders.

COMPANY PROFILE

Incorporated in March 2000 after the partial split-off of Banco Bradesco S.A., BRADESPAR currently focuses its investments in VALE and CPFL Energia. At the close of 2011, the market value of its assets, after deducting net debt, was around R$12.7 billion.

% V = Voting Capital% T = Total Capital

BRADESPAR

Antares

BrumadoMillennium

CPFL energia VALe

Valepar

100% V/T

100% V/T

3.6% V/T 1.7% V/T 54.1% V34.1% T

100% V/T

21.2% V17.0% T

0.0% V0.4% T

3

APPRECIATION OF INVESTMENTS

During more than ten years of participation in the capital market, the net value of BRADESPAR’s assets have grown at an average annual rate of 24.3%, while the CDI rate yielded 15.1% and the Ibovespa rose by 10.4%.

net Market Value of Assets (R$ million) 12.29.2011 2. 29.2000Valepar/VALE (1) 11,944.7 764.4CPFL Energia (1)(2) 1,315.1 201.2Net Serviços (1) - 725.1CSN (1) - 694.2Scopus Tecnologia (1) - 16.0Total Assets 13,259.8 2,400.9

Net Debt (3) (583.4) (1,431.1)net Value of Assets 12,676.5 969.8

Return on InvestmentAccumulated Annual Average

Net Value of Assets 1207% 24.3%CDI 428% 15.1%Ibovespa 221% 10.4%

(1) Investments and divestments in investees are reflected in BRADESPAR’s net debt.(2) Book value of VBC (holding company of CPFL Energia) on February 29, 2000.(3) Net debt on February 29, 2000, adjusted by: (i) capital increases of R$500 million in 2001 and R$1 billion in 2004, and

(ii) payment of interest on equity and dividends by BRADESPAR between May 2001 and November 2011. These amounts were

discounted by the accumulated CDI rate between February 29, 2000 and the respective payment dates.

4

MESSAGE TO SHAREHOLDERS

In 2011, despite the global economic slowdown and the consequent financial turbulence, BRADESPAR achieved record results, thanks to the healthy performance of its investees VALE and CPFL Energia.

BRADESPAR posted net income of R$2 billion, 15% up on 2010 and its highest ever figure. Shareholder payments in the form of dividends and interest on equity totaled R$575.4 million, also a new record, confirming the Company’s commitment to adding more value to its shareholders.

The Company also worked on the financial restructuring of its debt, settling the Second Series of the Second Public Issue of Simple Debentures, totaling R$807.5 million, and placing the Third Public Issue of Simple Debentures, in the amount of R$800 million.

VALE, BRADESPAR’s main investment, performed exceptionally well in 2011, fueled by record operating revenue, cash flow, operating margins and net income, resulting in equity income of R$1.9 billion, 23.6% higher than the previous year. Note that BRADESPAR participates actively in VALE’s Board of Directors and Advisory Committees, making a positive contribution, together with Valepar S.A.’s other controlling shareholders, to the strategic decision-making process in order to increase the company’s profitability and growth rate.

5

CPFL Energia, in turn, is the leader of a sector that plays a strategic role in the country’s economic development. In 2011, its results generated dividends of R$64.8 million.

BRADESPAR is constantly concerned with transparency and consistency in its relations with analysts and investors, which it consistently seeks to strengthen through systematic information disclosure and periodic meetings. In 2011, this communication strategy, combined with best corporate governance practices, was exemplified by meetings with APIMEC (Association of Capital Market Analysts and Investment Professionals) in São Paulo and Rio de Janeiro, as well as participation in events and meetings with several investors and financial institutions in Brazil and abroad.

We thank our management and employees for their dedication and efficiency, and our shareholders for their support and trust, which are absolutely essential for the prosperity and continuity of our business.

São Paulo, SP, March 15, 2012.

Lázaro de Mello BrandãoChairman of the Board of Directors

6

TIMELINE 11 years of continuous growth

2011JulyFinancial settlement of the Second Series of the Second Public Issue of Simple Debentures, totaling R$807.5 million, and placement of the Third Public Issue of Simple Debentures, totaling R$800 million.

2010JulyFinancial settlement of the First Series of the Second Public Issue of Simple Debentures in the amount of R$152.9 million.

2009JanuaryFirst Public Issue of Simple Debentures in the amount of R$610 million and Second Public Issue of Promissory Notes in the amount of R$690 million.

MaySale of 16,600,000 common shares issued by CPFL Energia in the amount of R$531.2 million and partial financial settlement of the First Public Issue of Simple Debentures.

JuneFinancial settlement of the balance of the First Public Issue of Simple Debentures.

JulySecond Public Issue of Simple Debentures in the amount of R$800 million and financial settlement of the Second Public Issue of Promissory Notes.

2008JulyFirst Public Issue of Promissory Notes, which raised R$1.4 billion. The funds were used in the R$1,376 million investment in VALE’s stock offering through Valepar.

7

2007January through MayReduction of expenses through corporate restructuring, through which general and administrative services were outsourced and the number of statutory officers was reduced to two.

2006February through AprilCorporate restructuring at Bradesplan with the transfer of its interest in Antares and Millennium to BRADESPAR through a spin-off and capital reduction. As a result, Bradesplan’s remaining assets were tax credits and Globopar’s Euronotes.

MaySale of Bradesplan for R$308 million in cash, and settlement of the bonds issued by the subsidiary Millennium for US$50 million, which zeroed the group’s debt.

decemberCorporate restructuring at VBC/CPFL Energia, with BRADESPAR exiting VBC and now directly holding 43,049,000 CPFL Energia shares, not binding upon the Shareholders’ Agreement and representing 8.97% of the capital stock, which may be traded in the open market.

2005MarchElimination of BRADESPAR’s interest in NET Serviços, with the sale of the company’s shares on the stock market.

SeptemberSale of 9.5 million BRADESPAR shares held by Grupo Espírito Santo through a Secondary Public Tender Offer, increasing the free float from 60.7% to 71.6%.

Preferred shareholders granted 80% tag along rights and those of minority common shareholders were increased from 80% to 100%.

OctoberAnnouncement of the Minimum Dividend Policy, which increased the predictability of shareholder remuneration by way of dividends and interest on equity.

8

2004MarchAcquisition of Valepar shares owned by Opportunity for R$376.9 million, with the simultaneous spin-off of Elétron1, which increased the liquidity of BRADESPAR’s interest in Valepar.

SeptemberCPFL Energia conducted its IPO, raising over R$821 million. The operation enabled the partial sale of CPFL Energia shares held by VBC, a holding company in which BRADESPAR held 33.3% interest in the secondary market.

decemberPublic Tender Offer of BRADESPAR Preferred Shares, which raised over R$1 billion - the second largest offering in Brazil’s capital markets in 2004.

2003MarchIncrease in BRADESPAR’s interest in Valepar through the acquisition of 45% of Sweet River’s interest for R$827 million.

SeptemberSale of interest in Valepar to Mitsui for R$2.5 billion. The sale price of the shares at that time represented a 64% premium on the market price of VALE’s common shares.

2002FebruarySale of Scopus Tecnologia for R$37 million.

AugustIncorporation of CPFL Energia (former Draft II Participações), the CPFL group’s holding company for the generation, distribution and sale of energy.

1 Elétron: a company whose purpose was holding an interest in Valepar. Its capital stock was 85.6% held by BRADESPLAN and 14.4%

by the Opportunity Group.

9

decemberConsolidation of Valepar’s control in VALE through a capital increase, through which Valepar’s interest in VALE’s voting capital grew from 42% to 52%.

2001JanuaryCapital increase at BRADESPAR in the amount of R$500 million as a result of the entry of Grupo Espírito Santo into the Company’s ownership structure and the respective signature of the Shareholders’ Agreement.

MarchFinancial settlement to unwind the cross-shareholding of VALE and CSN, allowing VALE to focus its strategy on mining and logistics activities.

2000MarchCreation of BRADESPAR.

AugustBRADESPAR shares begin trading on the stock exchange.

SeptemberPublic tender offer for BRADESPAR shares by its controlling shareholders. No shareholders tendered their shares in the operation, evidence of shareholder confidence in the company.

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CREDIBILITY MAINTAINED THROUGH SUSTAINED GROWTH

Strategy

Focusing on the creation of value and the sustained growth of its investments, BRADESPAR has been posting excellent results year after year, in a continuous and secure manner. Despite the uncertainties in the capital market, the Company has maintained its solidity and strengthened its credibility with shareholders.

Essentially, the maintenance of the strategies outlined by BRADESPAR’s top management is based on its active participation in the definition and implementation of the strategies of its main investee, VALE. BRADESPAR’s representation on the Board of Directors and the Strategic, Executive Development, Governance and Sustainability, and Controllership and Financial Committees gives it a high degree of influence over VALE’s long-term decisions.

BRADESPAR also holds a significant interest in CPFL Energia, the largest privately-owned company in the Brazilian electricity sector, whose consistent healthy performance has provided BRADESPAR with growing returns, thereby optimizing returns for its own shareholders.

As part of its strategic positioning in regard to these investments, BRADESPAR also analyzes divestment opportunities and seeks mechanisms and structures that increase the liquidity of its interests.

Focusing on the creation of value and the sustained growth of its investments, BRADESPAR has been posting excellent results year after year

11

Corporate Governance

Throughout its history, BRADESPAR has been building a solid reputation through the adoption of good corporate governance practices. The Company does everything possible to ensure transparency, accountability and the equitable treatment of information, based on the twin pillars of generating shareholder value and respecting its minority shareholders.

In line with these principles, in 2001 BRADESPAR adhered to the Level 1 Corporate Governance listing segment of the Brazilian Securities, Commodities and Futures Exchange (BM&FBOVESPA), in which companies assume additional transparency commitments to those required by the prevailing legislation.

Also in 2001, BRADESPAR was included in the BM&FBOVESPA’s Special Corporate Governance Stock Index (IGC), allowing its shares to be traded with the Corporate Governance Quality Seal and marking another important step in the evolution of its management.

Among the initiatives to ensure clear and transparent communications with the market, the Company maintains an open channel with its shareholders through conference calls, quarterly earnings releases, material facts and two-weekly investor bulletins, in addition to the Annual Report.BRADESPAR also holds public meetings with market analysts and investors, most of which took place in São Paulo and Rio de Janeiro in 2011, in addition to meetings with investors in Europe.

A complete list of the Company’s activities as well as information and disclosed documents are available on its website (www.bradespar.com) in Portuguese and English.

12

Ownership Structure

BRADESPAR’s controlling group comprises the same shareholders that control Banco Bradesco S.A., one of the largest private financial groups in Brazil: Cidade de Deus – Companhia Comercial de Participações, Nova Cidade de Deus Participações S.A., Fundação Bradesco and NCF Participações S.A.

Base date: 12.31.2011

BRADESPAR

Number of sharesCommon 122,523,049Preferred 227,024,896Total 349,547,945

Control Group

77.6% On1.4% Pn28.1% Total

22.4% On98.6% Pn71.9% Total

Free Float

13

Tag Along

BRADESPAR grants tag along rights at levels higher than those determined by law. The tag along for common shares corresponds to 100% of the amount paid to the controlling shareholders on disposal of the Company’s control, and for preferred shares, 80% of the amount paid to the controlling shareholders. Preferred shareholders also receive dividends 10% higher than those paid to common shareholders.

Board of directors

BRADESPAR’s Board of Directors is composed of eight members, who have a one-year term of office and are eligible for re-election. The Board is responsible for the Company’s strategic policy, risk management and the taking of important business decisions, as well as for electing the Executive Officers and overseeing their activities. In 2011, the Board held 23 meetings.

Board of executive Officers

BRADESPAR’s Board of Executive Officers consists of João Moisés de Oliveira, the CEO, who is also a member of the Board of Directors of Valepar S.A. and an alternate member of the Board of VALE, and Renato da Cruz Gomes, the Investor Relations Officer, who also sits on the Boards of VALE and Valepar S.A. and is an Executive Officer at Valepar S.A. The Board is responsible for managing the Company’s business, executing the strategies outlined by the Board of Directors and achieving the Company’s objectives.

Control Bodies

Through its corporate governance model, BRADESPAR seeks to balance the quality of its management and the effective functioning of its control bodies, represented by the Fiscal Council and the external auditors.

The Fiscal Council, which is composed of three members and their respective alternates, is a non-permanent body that is independent of management and the external auditors. It is responsible for monitoring management’s activities and accounts. It held five meetings in 2011.

The independent external audit is under the responsibility of PricewaterhouseCoopers Auditores Independentes, which does not provide any other services to BRADESPAR other than those related to the audit.

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Economic and Financial Aspects

The table below shows the Company’s consolidated results, in accordance with the accounting practices adopted in Brazil.

Operating Revenue

As an investment company, BRADESPAR’s operating revenue comes from equity income, which includes dividends and interest on equity from Valepar/VALE, interest on redeemable shares from Valepar, and dividends and interest on equity from CPFL Energia.

Income Statement (R$ thousand)4Q11 4Q10 % Chg. 2011 2010 % Chg.

Equity Income 438,229 499,043 -12.2% 1,947,329 1,575,536 23.6%Redeemable Shares - Interest 45,187 70,654 -36.0% 216,845 248,186 -12.6%Dividends from Investments - - - 64,801 75,167 -13.8%Operating Revenue 483,416 569,697 -15.1% 2,228,975 1,898,889 17.4%Payroll Expenses (2,121) (949) 123.5% (6,566) (4,784) 37.2%General and Administrative Expenses (3,879) (3,795) 2.2% (9,581) (11,458) -16.4%Financial Revenue (Expenses) (17,808) (16,776) 6.2% (80,678) (61,301) 31.6%Tax Expenses (17,879) (19,731) -9.4% (48,279) (35,748) 35.1%Other Operating Revenue 3,151 - - 3,151 - -Operating Result 444,880 528,446 -15.8% 2,087,022 1,785,598 16.9%

Result before Income Tax / Social Contribution

444,880 528,446 -15.8% 2,087,022 1,785,598 16.9%

Income Tax / Social Contribution 19,284 (12,727) - (63,470) (25,792) -net Income 464,164 515,719 -10.0% 2,023,552 1,759,806 15.0%

SOLIDITY IN THE FACE OF MARKET VOLATILITY

15

In 2011, BRADESPAR posted operating revenue of R$2.2 billion, 17.4% more than in 2010. comprising contributions from investees, as follows:

• R$1.9 billion in equity income from Valepar/VALE, 23.6% more than in 2010;

• R$216.8 million in interest on redeemable shares from Valepar, 12.6% down on 2010, due to the reduced number of shares after earlier redemptions; and

• R$64.8 million in dividends from CPFL Energia, 13.8% less than in 2010.

It is worth mentioning that, despite the challenging economic scenario, VALE recorded net income of R$37.8 billion in 2011, its best ever annual result, thanks to record operating revenue, operating income, cash flow and operating margins. Shareholder returns totaled US$12 billion, also a new record, underlining the Company’s commitment to creating shareholder value.

Payroll, General and Administrative expenses

In 2011, payroll, general and administrative expenses totaled R$16.1 million, 0.6% less than in 2010.

Financial Result

BRADESPAR’s net financial expenses came to R$80.7 million in 2011, 31.6% up on the previous year, chiefly influenced by interest on BRADESPAR debentures, calculated based on the CDI rate, which climbed from 9.7% in 2010 to 11.6% in 2011, impacted by the period increase in the SELIC basic interest rate.

net Income

BRADESPAR posted net income of R$2 billion in 2011, 15% more than in 2010 and the Company’s highest ever figure, while return on average equity (ROAE) stood at 28.9%.

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VALE’s record net income was the main factor contributing to this result.

dividends and Interest on equity

At BRADESPAR, the predictability of dividends and/or interest on equity is assured by the Minimum Annual Shareholder Payment Policy created, without prejudice to the Bylaws, which determines the distribution of at least 30% of adjusted net income.

Accordingly, on February 28, 2011, BRADESPAR announced the Board of Executive Officers’ proposal to effect the minimum mandatory payment of dividends and interest on equity in the amount of Brazilian reais equivalent to US$300 million, which was paid in two equal installments of US$150 million in May and November.

The payment of the first installment on May 13, 2011 comprised the amount in Brazilian reais equivalent to US$204.1 million, R$255 million of which as dividends and R$65.6 million as interest on equity.

2000* 2003 20062001 2004 20072002 2005 2008 2009 2010 2011

9.1%

-9.8%

26.3%30.9%

-9.7%

10.4%

-16.7%

26.0% 25.6%19.3%

31.4% 28.9%

93.0

(162.0)(222.1)

(144.0)

174.2

636.9764.3

1,084.8 1,126.3

1,759.8

2,023.6

962.4

Net Income - R$ million

Loss - R$ million

ROAE - %

*Corresponds to 10 months of operations.Note: ROAE = Net Income/Average Shareholders’ Equity – excluding the mark-to-market effect of Securities Available for Sale in the Balance Sheet.

17

The second installment, comprising the amount in Brazilian reais equivalent to US$150 million, comprising R$253 million in interest on equity and R$1.8 million in dividends, was paid on November 14, 2011.

Total interest on equity and dividends paid in 2011 came to R$575.4 million, equivalent to US$354.1 million, 18% higher than the Minimum Annual Payment of US$300 million announced, the highest annual amount ever paid by BRADESPAR.

In December 2011, BRADESPAR provisioned an additional R$407.1 million for the payment of dividends and interest on equity related to fiscal year 2011, in accordance with the Company’s Bylaws.

In February 2012, BRADESPAR announced a minimum payment of US$320 million for the current fiscal year, to be converted into Brazilian reais based on the U.S. dollar sell rate (Ptax option 5) announced by the Central Bank of Brazil on the business day immediately prior to the Board of Directors’ Meetings scheduled for April 26 and October 31, 2012.

Payment of div. / Interest on equity Amount Cash effect Year Reference Year

5.30.2001 27,811 2001 (27,811)

2000 (27,811)

1.24.2005 80,000 2005 (180,000)

2004 (80,000)

11.11.2005 100,000 2005 (227,445)5.15.2006 127,445 2006

(212,957)11.13.2006 85,512 2006 (262,827)1.08.2007 120,000

2007(385,111)

5.15.2007 57,31584,932

2007 (379,996)11.14.2007 41,864

81,00015.5.2008 172,200 2008

(383,710)11.14.2008 68,000 2008 (376,910)143,510

5.15.2009 165,4002009

(392,740)52,980

2009 (322,740)11.13.2009 128,000

46,360

5.14.2010 95,4002010

(344,330)77,810

2010 (569,530)

11.12.2010 160,00011,120

5.13.2011 65,6002011

(575,400)255,000

11.14.2011 253,000 2011 (254,800)1,800

(R$ thousand)

Interest on Equity Dividends

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Capital Markets

Since its inception, BRADESPAR’s shares have been traded under the tickers BRAP3 (common shares) and BRAP4 (preferred shares) and are included in the Ibovespa, the BM&FBOVESPA’s most important index, comprising the Brazilian market’s most liquid companies. Thanks to its excellent corporate governance model, BRADESPAR’s shares are listed on Level 1 of the Stock Exchange and are included in the Corporate Governance Index (IGC).

In order to expand its trading options and increase the liquidity of its shares on the international market, BRADESPAR’s shares are also listed in euros on the Latibex, the Madrid Stock Exchange’s Latin American Companies Market, through the Depositary Receipt Program (DRP).

- 30%

10%

20%

30%

40%

0%

-10%

-20%

BRAP3: -17.0%

CPFE3: +34.0%VALE3: -24.1%BRAP4: -23.5%

IBOVESPA: -18.1%

03-Ja

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02-F

eb

04-M

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03-A

pr

03-M

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02-Ju

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02-Ju

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01-A

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31-A

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30-S

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30-O

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29-N

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29-D

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Performance of Stock on BM&FBOVeSPA in 2011

Prices adjusted for shareholder payments, including dividends and/or interest on equity.Source: Economatica

3PERFORMANCE AND VALUE GENERATION

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Liquidity

In 2011, BRADESPAR’s preferred shares recorded average daily traded volume of R$35.4 million.

0.2 0.1 0.1 0.1 0.4 0.5 1.3 0.9 0.4 0.4 0.3 0.2

8.12.1 1.1 1.5

5.4

14.1

32.2

58.3

47.7

32.8 33.9 35.4

2000 2003 20062001 2004 20072002 2005 2008 2009 2010 2011

Average daily Financial Trading Volume (R$ million)

BRAP3BRAP4

Source: Economatica

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Premium/Discount

At the close of 2011, the market capitalization of the interests held by BRADESPAR totaled R$13.3 billion, excluding any control premium for the interest it holds in VALE. Of this total, 90.1% came from the investment in VALE and 9.9% from the investment in CPFL Energia.

In relation to the market capitalization of the interests in its investees, BRADESPAR’s own market capitalization, after deducting net debt of R$583.4 million, represented a discount of 9.4%.

Dec/10 Mar/11 Jun/11Jan/11 Apr/11 Jul/11Feb/11 May/11 Aug/11 Sep/11 Oct/11 Nov/11 Dec/11

11.4%

8.7%9.6%

13.0%

10.4% 11.0%

9.1% 9.4%9.7%

7.2% 7.8% 8.0% 8.3%

discount between BRAdeSPAR’S net asset value and market capitalization

Note: Discount on last business day of each month.

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Companies

Bradespar’s Stake

Price(R$/share)

number of Shares

% of Total Capital

Market Value(R$

thousand)

Market Value(US$

thousand)

Market Value(eURO

thousand)VALE ON (1) 39.45 299,380,600 5.87% 11,810,565 6,296,282 4,874,356 VALE PNA (1) 37.82 3,547,702 0.07% 134,174 71,529 55,375 CPFL-E ON 26.02 50,541,820 5.25% 1,315,098 701,086 542,756

Bradespar’s Total Assets Value (A) 13,259,837 7,068,897 5,472,487

Bradespar’s net debt (B) (2) (583,371) (310,998) (240,764)Bradespar’s Cash and Cash Equivalents 263,495 140,471 108,747 Bradespar’s Gross Debt (846,866) (451,469) (349,511)

Bradespar’s net Asset Value (C) = (A) + (B) 12,676,466 6,757,899 5,231,723

Bradespar’s Market Capitalization (d) 11,485,176 6,122,815 4,740,065 Common Shares (BRAP3) 35.02 122,523,049 4,290,757 2,287,428 1,770,845 Preferred Shares (BRAP4) 31.69 227,024,896 7,194,419 3,835,387 2,969,220

difference between net asset value and market capitalization (C) - (d) 1,191,290 635,084 491,658

dISCOUnT(3) 9.4%

(1) The number of VALE shares were calculated by considering the indirectly owned stakes in Valepar. (2) Net Debt on 12/29/11.(3) ((Bradespar’s Market Cap)/(Asset Value + Net Debt)) - 1

Bradespar’s net Asset Value x Bradespar’s Market Capitalization (closing prices on december, 29)

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Investees

VALe

VALE is the largest private-sector company in Latin America and the world’s second-largest diversified mining company. Present in 38 countries, VALE is engaged in mining (production and sales), logistics and electricity generation. In the mining segment, it is the world’s largest producer of iron ore and pellets, essential raw materials for the steel industry, and the second largest producer of nickel, used in the stainless steel and aircraft industries, among others. It also produces manganese, iron alloys, thermal and metallurgical coal, bauxite, copper and fertilizers, which are important global industrial and agricultural inputs.

In 2011, despite the challenging economic scenario and severe weather conditions in its operating regions, VALE’s iron ore, pellet and coal production all reached record levels.It also posted anexcellent financial performance, with record operating revenue, operating income and net income, totaling R$105.5 billion, R$53.1 billion and R$37.8 billion, respectively.

Net income totaled R$37.8 billion and shareholder payments came to US$12 billion, US$9 billion (R$15 billion) of which in dividends and interest on equity, and US$3 billion through the share buyback program.

This result was leveraged by the company’s highest ever iron ore and pellet shipments, which totaled more than 300 million metric tons (Mt), while nickel and copper sales recorded their best figures since 2008.

Annual investments, excluding acquisitions, amounted to US$18 billion, a substantial 42% up on the US$12.7 billion invested in 2010. Of this total, US$11.7 billion went to project development, US$1.7 billion to R&D and US$4.6 billion to existing operations.

VALE shares are traded on the BM&FBOVESPA (VALE3 and VALE5), the New York Stock Exchange (NYSE) (VALE and VALE.P), the NYSE Euronext Paris (VALE3 and VALE5), the Latibex (XVALO and XVALP) and the Hong Kong Stock Exchange (HKEx) (6210 and 6230). In 2005 it became the first Brazilian company to be awarded investment-grade status by Moody’s Investors Service, Dominion.

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VALE’s main highlights in 2011 were:

• Operating revenue of R$105.5 billion;• Operating income, measured by EBIT (earnings before interest and tax), of R$53.1 billion;• EBIT margin from existing operations of 49.1%;• Cash flow, measured by EBITDA (earnings before interest, tax, depreciation and amortization), of R$57.7 billion;• Net income of R$37.8 billion, equivalent to R$7.17 per share; • Investments (excluding acquisitions) of US$18 billion; and• Shareholder payments of US$12 billion, US$9 billion (R$15 billion) of which as dividends and interest on equity, equivalent to R$2.88 per share, and US$3 billion as share buybacks.

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CPFL energia

CPFL Energia is a holding company operating in Brazil’s electricity sector through subsidiaries and affiliated companies. It is the largest private company in the sector, operating in the energy distribution, generation and trading segments, as well as services. It has eight distributors, with a joint market share of 13%, located in the states of São Paulo, Rio Grande do Sul, Paraná and Minas Gerais, with 7 million consumers. It also has an 11% share of the energy trading market.

The 2011 highlight was the creation of CPFL Renováveis, which has led the renewable energy segment in Latin America since its inception. Created through the merger of CPFL Energia and ERSA’s assets and projects and the subsequent acquisition of 100% of Jantus, CPFL Renováveis is focused exclusively on the development of energy generation projects using alternative and renewable sources (small hydroelectric plants, biomass-fueled thermal plants and wind farms). CPFL Energia holds 63% of the new company’s capital.

Considering CPFL Energia’s share of conventional energy generation projects, and its 63% interest in CPFL Renováveis, the Group closed 2011 with an operational generating capacity of 2,644 MW.

Control of CPFL is shared between VBC Energia S.A. (Camargo Corrêa), with 25.7%, BB Carteira Livre I FIA (Previ), with 31%, and Bonaire Participações S.A. and Energia São Paulo FIP (Funcesp, Petros, Sistel and Sabesprev), with a joint 12.6%. The remaining 30.7% corresponds to the free float, 5.3% of which is held by BRADESPAR.

CPFL’s shares are traded on the Novo Mercado listing segment of the BM&FBOVESPA and its Level III ADRs are traded on the NYSE. The Company continuously promotes interaction between management and shareholders, being totally committed to transparency, equality of treatment, accountability and corporate responsibility.

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Throughout the years, CPFL Energia has been developing a consistent strategy of expanding its market share of the segments where it operates, acting as a sector consolidator, by benefiting from business opportunities that ensure efficiency gains and rates of return compatible with the Group’s investment guidelines.

CPFL Energia’s 2011 results were:

• Net income of R$1.6 billion;• Net operating revenue of R$12.8 billion;• Gross operating revenue of R$18.9 billion; and• EBITDA of R$3.8 billion.

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Sustainability

BRADESPAR’sgreatest contribution to sustainable development is through the practices adopted by its investees, but it is also renowned for building solid relations with society, underpinned by transparency and the highest ethical standards.Both VALE and CPFL Energia are fully committed to acting in a socially and environmentally responsible manner in their respective segments. In this context, and considering the markets in which they operate, the companies have been focusing on reducing the social and environmental impact of their activities.

Outlook

The two industries in which BRADESPAR concentrates all of its investments are recognized as strategic for the country’s economic development.

With a solid presence in their markets, VALE and CPFL Energia are both in the process of developing and expanding for the years ahead.

Both the mining and energy sectors, as well as CPFL Energia and VALE themselves, have a promising future of sustainable growth, offering BRADESPAR the prospect of continuing to generate and distribute excellent results, in line with those of recent years.

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COMPANY INFORMATION

Board of DirectorsChairmanLázaro de Mello Brandão

Vice-ChairmanAntônio Bornia

MembersMário da Silveira Teixeira JúniorJoão Aguiar AlvarezDenise Aguiar AlvarezLuiz Carlos Trabuco CappiCarlos Alberto Rodrigues GuilhermeMilton Matsumoto

Board of Executive OfficersCeOJoão Moisés de Oliveira

Investor Relations OfficerRenato da Cruz Gomes

Fiscal CouncilAriovaldo PereiraJoão Batista de MoraesSérgio Nonato Rodrigues

Head OfficeAvenida Paulista, 1450 – 9º andar01310-917 – São Paulo – SPPhone: 55 11 2178-6300Fax: 55 11 2178-6315e-mail: bradespar@bradespar.com

Shareholder ServicesBanco Bradesco S.A.Shares and Custody DepartmentCidade de Deus, s/n – Prédio Amarelo,3º andar – Vila Yara06029-900 – Osasco – SPPhone: 55 11 3684-9495Fax: 55 11 3684-2944e-mail: 4010.acecustodia@bradesco.com.br

Independent AuditorsPricewaterhouseCoopers Auditores Independentes

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Publications and InformationBRADESPAR’s financial statements are in accordance with the International Financial Reporting Standards (IFRS), implemented in Brazil through the Accounting Pronouncements Committee (CPC) and are published annually in widely circulated newspapers: the Diário Oficial do Estado de São Paulo and Diário do Comércio. All material facts of BRADESPAR and its subsidiaries are disclosed to shareholders, Brazilian authorities and regulatory agencies, and the market in general. The quarterly and annual financial statements, presentations, conference calls, material facts and notices to shareholders are available on the Company’s website (www.bradespar.com).

Financial Statements

Balance Sheet 30

Statement of Income 32

Statement of Comprehensive Income 33

Statement of Changes in Equity 34

Statement of Indirect Cash Flows 35

Statement of Value Added 36

Notes to the Financial Statements 37

Independent Auditor’s Report 72

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ASSETSPARENT COMPANY CONSOLIDATED

12.31. 2011 12.31. 2010 01.01.2010 12.31. 2011 12.31. 2010 01.01.2010CURRENT ASSETS 705,489 461,910 329,257 730,296 489,059 341,139 Cash and cash equivalents (Note 7) 250,468 156,985 287,780 263,983 173,529 289,327Receivables from redeemable preferred shares (Note 8) 185,467 233,103 23,441 196,754 244,390 34,462 Amounts receivable (Note 18a) 269,554 71,822 18,036 269,559 71,140 17,350

NON-CURRENT ASSETS 9,484,570 7,587,906 6,349,823 10,009,130 8,029,675 6,732,032 Long-term receivables 658,969 853,583 1,037,317 2,427,560 2,355,374 2,388,598 Available-for-sale financial assets (Note 16a) - - - 1,315,098 1,041,161 892,316 Receivables from redeemable preferred shares (Note 8) 559,949 726,773 935,870 999,995 1,166,819 1,375,916 Taxes recoverable or available for offset (Note 13) 98,858 91,656 66,302 112,305 112,240 85,221 Judicial deposits 162 152 143 162 152 143 Deferred income tax and social contribution (Note 13) - 35,002 35,002 - 35,002 35,002 Investments (Note 9) 8,825,564 6,734,290 5,312,455 7,581,533 5,674,268 4,343,383 Property and equipment 37 33 51 37 33 51

TOTAL 10,190,059 8,049,816 6,679,080 10,739,426 8,518,734 7,073,171

BALANCE ShEET - In thousands of reais

The accompanying notes are an integral part of these financial statements.

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LIABILITIES AND EQUITYPARENT COMPANY CONSOLIDATED

12.31. 2011 12.31. 2010 01.01.2010 12.31. 2011 12.31. 2010 01.01.2010CURRENT LIABILITIES 760,737 1,113,201 270,814 773,286 1,138,439 271,832 Payroll and related charges 125 31 31 125 31 31 Taxes and contributions payable 13,171 44 43 25,720 25,282 1,061 Interest on stockholders' equity and dividends paid (Note 12b) 413,783 325,763 99,626 413,783 325,763 99,626 Debentures payable (Note 10) 306,882 760,530 144,428 306,882 760,530 144,428 Other liabilities (Note 18b) 26,776 26,833 26,686 26,776 26,833 26,686

NON-CURRENT LIABILITIES 754,669 158,541 807,374 1,291,487 602,221 1,200,447 Debentures payable (Note 10) 540,036 - 686,421 540,036 - 686,421 Provision for income tax and social contribution - - - 536,818 443,680 393,073 Provisions and legal obligations (Note 11) 214,633 158,541 120,953 214,633 158,541 120,953

CONTROLLING INTEREST'S EQUITY 8,674,653 6,778,074 5,600,892 8,674,653 6,778,074 5,600,892 Capital (Note 12a) 3,220,000 3,000,000 3,000,000 3,220,000 3,000,000 3,000,000 Revenue reserves 4,568,545 3,426,863 2,235,751 4,568,545 3,426,863 2,235,751 Carrying value adjustments 886,108 351,211 361,447 886,108 351,211 361,447 Retained earnings - - 5,156 - - 5,156 Treasury stock - - (1,462) - - (1,462)

TOTAL 10,190,059 8,049,816 6,679,080 10,739,426 8,518,734 7,073,171

BALANCE ShEET - In thousands of reais

The accompanying notes are an integral part of these financial statements.

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STATEMENT OF INCOME - In thousands of reais, except share data

(*) Net income is the result of ongoing operations, attributable to controlling interest.The accompanying notes are an integral part of these financial statements.

Years ended December 31PARENT COMPANY CONSOLIDATED

2011 2010 2011 2010OPERATING INCOME (EXPENSES) 2,157,631 1,826,422 2,167,700 1,846,899 Equity in the results of investees (Note 9) 2,071,854 1,701,683 1,947,329 1,575,536 Interest on redeemable preferred shares (Note 8) 143,165 168,816 216,845 248,186 Dividends from investments (Note 18c) - - 64,801 75,167 General and administrative expenses (Note 18d) (15,889) (15,634) (16,147) (16,242)Tax expenses (44,650) (28,443) (48,279) (35,748)Other operating income 3,151 - 3,151 - INCOME BEFORE FINANCIAL INCOME AND EXPENSES AND TAXES

2,157,631 1,826,422 2,167,700 1,846,899

Financial Income (Note 14) 25,455 22,527 28,609 28,026 Financial expenses (Note 14) (108,933) (89,143) (109,287) (89,327)

INCOME BEFORE TAXES ON INCOME 2,074,153 1,759,806 2,087,022 1,785,598 Income tax and social contribution (Note 13) (50,601) - (63,470) (25,792)

NET INCOME FOR ThE YEAR (*) 2,023,552 1,759,806 2,023,552 1,759,806

Basic and diluted earnings per share in the weighted average number of shares attributable to stockholders (expressed in reais per share): Earnings per common share 5.44 4.73 Earnings per preferred share 5.98 5.20

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STATEMENT OF COMPREhENSIVE INCOME - In thousands of reais

The accompanying notes are an integral part of these financial statements.

Years ended December 31PARENT COMPANY AND CONSOLIDATED

2011 2010NET INCOME FOR ThE YEAR 2,023,552 1,759,806 OThER COMPREhENSIVE INCOME 534,897 (10,236)Unrealized gain on available-for-sale investments 180,798 98,237 Effects of jointly controlled investments 354,099 (108,473) COMPREhENSIVE INCOME FOR ThE YEAR 2,558,449 1,749,570

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E V E N T S CAPITAL

REVENUE RESERVES

OThER COMPRE-hENSIVE INCOME

TREASURY STOCK

RETAINED EARNINGS

CONTROL-LING

INTEREST’S EQUITY

LEGAL STATUTORY

AT DECEMBER 31, 2009 3,000,000 241,619 1,994,132 361,447 (1,462) 5,156 5,600,892 Net income for the year - - - - - 1,759,806 1,759,806 Available-for-sale financial assets - - - 98,237 - - 98,237 Effects of joint venture - - - (108,473) - - (108,473)Other comprehensive income - - - - - - 1,749,570 Acquisition of treasury shares - - - - (2,858) - (2,858)Cancellation of treasury shares - - (4,320) - 4,320 - -

Appropriations: - - Reserves - 88,248 1,107,184 - - (1,195,432) - - Interim interest on stockholders' equity and dividends - - - - - (248,930) (248,930)

- Accrued interest on stockholders' equity and dividends - - - - - (320,600) (320,600)

AT DECEMBER 31, 2010 3,000,000 329,867 3,096,996 351,211 - - 6,778,074 Net income for the year - - - - - 2,023,552 2,023,552 Available-for-sale financial assets - - - 180,798 - - 180,798 Effects of joint venture - - - 354,099 - - 354,099 Other comprehensive income - - - - - - 2,558,449 Capital increase through reserves 220,000 - (220,000) - - - -

Appropriations:- Reserves - 101,178 1,260,504 - - (1,361,682) - - Interim interest on stockholders' equity and dividends - - - - - (254,800) (254,800)

- Interest on own capital and dividends accrued - - - - - (407,070) (407,070)

AT DECEMBER 31, 2011 3,220,000 431,045 4,137,500 886,108 - - 8,674,653

STATEMENT OF ChANGES IN EQUITY - In thousands of reais

The accompanying notes are an integral part of these financial statements.

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The accompanying notes are an integral part of these financial statements.

Years ended December 31 PARENT COMPANY CONSOLIDATED

2011 2010 2011 2010CASh FLOWS FROM OPERATING ACTIVITIESNET INCOME BEFORE INCOME TAX AND SOCIAL CONTRIBUTION

2,074,153 1,759,806 2,087,022 1,785,598

ADJUSTMENTS TO NET INCOME BEFORE TAXES: -1,994,160 -1,619,672 -1,946,061 -1,580,745Equity in the results of investees (2,071,854) (1,701,683) (1,947,329) (1,575,536)Interest on redeemable preferred shares (18,643) (24,006) (29,930) (35,293)Dividends from investments - - (64,801) (75,167)Interest and monetary and exchange variations, net 53,938 76,606 53,600 75,840 Provisions for legal obligations 44,177 28,160 44,177 28,160 Depreciation 6 18 6 18 Other (1,784) 1,233 (1,784) 1,233 ADJUSTED NET INCOME 79,993 140,134 140,961 204,853 (Increase) in other assets (88,725) (148,747) (151,694) (210,980)Increase in other liabilities 45,811 8,766 46,042 12,491 Interest on stockholders' equity and dividends received 394,562 338,652 405,159 347,621 Redeemable preferred shares 209,097 - 209,097 -Income tax and social contribution paid - - (11,856) (183)NET CASh PROVIDED BY OPERATING ACTIVITIES 640,738 338,805 637,709 353,802 CASh FLOWS FROM INVESTING ACTIVITIESAcquisition of property and equipment (10) - (10) - NET CASh USED IN INVESTING ACTIVITIES (10) - (10) - CASh FLOWS IN FINANCING ACTIVITIESIssuance of debentures, net 799,323 - 799,323 - Settlement of debentures (807,481) (152,873) (807,481) (152,873)Interest on stockholders' equity and dividends paid (539,087) (313,869) (539,087) (313,869)Acquisition of treasury shares - (2,858) - (2,858)NET CASh USED IN FINANCING ACTIVITIES (547,245) (469,600) (547,245) (469,600)NET INCREASE (DECREASE) IN CASh AND CASh EQUIVALENTS

93,483 (130,795) 90,454 (115,798)

Cash and cash equivalents at the beginning of the year 156,985 287,780 173,529 289,327 Cash and cash equivalents at the end of the year 250,468 156,985 263,983 173,529 NET INCREASE (DECREASE) IN CASh AND CASh EQUIVALENTS

93,483 (130,795) 90,454 (115,798)

STATEMENT OF INDIRECT CASh FLOWS - In thousands of reais

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Years ended December 31 PARENT COMPANY CONSOLIDATED

2011 2010 2011 2010INCOME 3,151 - 3,151 - Other income 3,151 - 3,151 -

GOODS AND SERVICES ACQUIRED FROM ThIRD PARTIES (9,196) (10,732) (9,377) (11,271)Third-party services (7,149) (8,581) (7,318) (8,873)Other (2,047) (2,151) (2,059) (2,398)GROSS VALUE ADDED (6,045) (10,732) (6,226) (11,271)Depreciation (6) (18) (6) (18)NET VALUE ADDED (6,051) (10,750) (6,232) (11,289)VALUE ADDED TRANSFERRED FROM OThERS 2,240,474 1,893,026 2,257,584 1,926,915 Equity in the results of investees 2,071,854 1,701,683 1,947,329 1,575,536 Interest on redeemable preferred shares 143,165 168,816 216,845 248,186 Dividends from investments - - 64,801 75,167 Financial income 25,455 22,527 28,609 28,026 TOTAL VALUE ADDED TO BE DISTRIBUTED 2,234,423 1,882,276 2,251,352 1,915,626 DISTRIBUTION OF TOTAL VALUE ADDED 2,234,423 1,882,276 2,251,352 1,915,626 Personnel 5,885 4,301 5,885 4,301 Taxes, charges and contributions 45,370 28,963 61,944 62,148 Remuneration of third-party capital 159,616 89,206 159,971 89,371 Remuneration of own capital 2,023,552 1,759,806 2,023,552 1,759,806 Interest on stockholders' equity and dividends 661,870 569,530 661,870 569,530 Retained earnings 1,361,682 1,190,276 1,361,682 1,190,276

STATEMENT OF VALUE ADDED - In thousands of reais

The accompanying notes are an integral part of these financial statements.

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NOTES TO ThE FINANCIAl STATEmENTS (In thousands of reais, unless otherwise stated)

1. OPERATIONS

The main activity of BRADESPAR S.A. (BRADESPAR, the Company or PARENT COmPANY), a publicly traded corporation headquartered in São Paulo, State of São Paulo, Brazil, is to invest in other companies as a partner or stockholder.

The main direct and indirect investments are held in the following companies:

a) Antares holdings Ltda. (ANTARES)

The main activity of this company is to manage, lease, purchase and sell its own assets and to invest in other companies as a quotaholder or shareholder.

b) Brumado holdings Ltda. (BRUMADO)

The main activity of this company is to invest in other companies as a partner or shareholder.

c) Millennium Security holdings Corp. (MILLENNIUM)

The main activity of this company is to participate in any acts or activities which are not prohibited by the legislation effective in the British Virgin Islands.

d) Valepar S.A. (VALEPAR)

The main activity of VAlEPAR, a privately held corporation, is to invest exclusively as a stockholder in the capital of Vale S.A. (VAlE).

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e) Vale S.A. (VALE)

VAlE is a publicly traded corporation principally engaged in the research, production and marketing of iron ore and pellets, nickel, fertilizers, copper, coal, manganese, iron alloys, cobalt, platinum group metals and other precious metals. The Company also acts in the energy, logistics and steel manufacturing industries.

2. FINANCIAl STATEmENT PRESENTATION

We present the financial statements of BRADESPAR (PARENT COmPANY) and of the CONSOlIDATED company, which includes BRADESPAR, ANTARES, BRUmADO and mIllENNIUm at December 30, 2011 and 2010.

The individual and consolidated financial statements were prepared and are presented in accordance with Brazilian Corporation law (law 6404/76) and the changes introduced by laws 11638/07 and 11941/09 and also based on the international financial reporting standards (IFRS), issued by the International Accounting Standards Board (IASB), implemented in Brazil through the Brazilian Accounting Pronouncements Committee (CPC), and the related technical interpretations (ICPCs) and guidelines (OCPCs) approved by the Brazilian Securities Commission (CVm).

In conformity with CVm Decision 666/11, which approved Technical Standard CPC 19 (R1) for listed companies, establishing, in the case of joint ventures, the use of the equity method of accounting in the individual balance sheet of each joint controller and in the consolidated statements the use of either the equity method or the proportional consolidation method, BRADESPAR opted to use the equity method for preparing its financial information for the year ended December 31, 2011, and presented the balance sheet in comparison to those as at December 31, 2010 and January 1, 2010, as required by CPC 23. The use of this option had no effect on the Company’s equity and results.

The accounting practices adopted in Brazil applied to individual financial statements differ from IFRS applicable to separate financial statements, only in relation to the measurement of investments in subsidiaries, associates and joint ventures based on equity accounting, while IFRS require measurement based on cost or fair value.

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The accounting estimates used for preparing the financial statements related to deferred tax assets and liabilities, provisions and contingent liabilities consider the most appropriate available evidence and are based on assumptions existing at the year-end closing dates. Actual results, after realization, could differ from the estimated amounts.

BRADESPAR is a holding company and its main activity is to invest as a partner or stockholder in other companies and, accordingly, it does not present its information by segment.

Consolidation Principles

The consolidated financial statements reflect the balances and transactions of the parent company and its direct and indirect subsidiaries. The investment in the joint venture is recorded on the equity method of accounting.

The accounting practices of the subsidiary and associated companies are adjusted to ensure that they are consistent with the policies adopted by the parent company. Transactions between the consolidated companies and the related balances and unrealized gains and losses are eliminated.

The consolidated financial statements of BRADESPAR include the following direct and indirect subsidiaries:

CompaniesBRADESPAR’s direct and indirect

percentage ownershipDecember 31, 2011 December 31, 2010

- ANTARES 100.00 100.00 - mIllENNIUm 100.00 100.00 - BRUmADO 100.00 100.00

BRADESPAR has evaluated the subsequent events up to march 15, 2012, which is the date on which the financial statements were authorized for issue.

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3. SIGNIFICANT ACCOUNTING PRACTICES – PARENT COmPANY AND CONSOlIDATED

I) FUNCTIONAL CURRENCY AND REPORTING CURRENCY

The financial statements are presented in reais which is BRADESPAR’s functional currency.

II) CURRENT AND NON-CURRENT ASSETS

These are stated at realizable amounts or at cost including, where applicable, related income and monetary and exchange variations (on a daily pro rata basis), adjusted to probable realizable amounts, where appropriate.

Deferred tax assets are recorded at their probable realizable amounts and comprise income tax and social contribution benefits related to tax losses and temporary differences and are recognized, where applicable, in current and non-current assets - long-term receivables.

a) Cash and cash equivalents

Cash and cash equivalents comprise cash in local currency and investments in investment funds, with maturities at the original investment date equal to or less than 90 days and which present an immaterial risk of change in fair value. These are used by the Company to manage its short-term commitments. The market value of the investment funds is determined based on the price of the quota on the last day of the reporting period, disclosed by the fund administrator.

The analysis of the available funds and investments recorded in cash and cash equivalents is presented in Note 7.

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b) Financial assets

The Company classifies its financial assets in accordance with the purpose for which they were purchased and determines their classification at initial recognition in the following categories:

• Loans and receivables – these are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. The principal and interest of the redeemable preferred shares of Valepar are classified in this category. The analysis of receivables from redeemable shares is presented in Note 8.

• Available-for-sale – these are non-derivative assets that are initially recognized at cost of acquisition, which is the fair value of the price paid, including transaction costs. Subsequent to initial recognition, they are re-measured at fair value based on their market value at the balance sheet date, as a counter entry to equity, less tax effects, which will only be recognized in results when effectively realized. The shares of CPFl Energia S.A. (CPFl) are classified in this category.

c) Investments

Investments in subsidiaries, associates and joint ventures are accounted for under the equity method and, where applicable, plus/net of unamortized goodwill/negative goodwill and a provision for impairment.

The analysis of investments is presented in Note 9.

d) Impairment of financial assets

At the end of each reporting period, the Company assesses whether there is any objective evidence of the impairment of its financial assets. If an impact on its cash flows is confirmed as a result of the impairment of its assets and this amount can be reliably estimated, an impairment loss is recognized in income. In 2011 and 2010, there were no impairment losses.

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III) CURRENT AND NON-CURRENT LIABILITIES

These are stated at known or estimated amounts including the related charges and monetary and exchange variations (on a daily pro rata basis), where applicable.

The Company classifies its financial liabilities in the following categories:

• At amortized cost – these are the financial liabilities which are not measured at fair value through profit or loss, initially they are recognized at their fair value and, subsequently, they are re-measured at amortized cost.

• At fair value through profit or loss designated at initial recognition – these are recorded and measured at fair value and the corresponding changes in fair value recognized immediately in results. Debentures issued by the Company are classified in this category. The analysis of debentures is presented in Note 10.

The provision for federal income tax is calculated at the standard rate of 15% of taxable income, plus a 10% surcharge, where applicable.

The provision for social contribution is recorded on taxable profit at the rate of 9% of pre-tax income. Provisions were recorded for other taxes and social contributions, pursuant to the specific applicable legislation.

In transactions for obtaining funds through the issuance of securities, the related expenses are recorded as a discount to the corresponding liability account and appropriated to results over the term of the transaction.

IV) PROVISIONS, CONTINGENT ASSETS AND LIABILITIES AND LEGAL OBLIGATIONS

The recognition, measurement, and disclosure of the provisions, contingent assets and liabilities and legal obligations are based on the criteria defined by CPC 25, approved by CmN Decision 594/09, as follows:

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• Contingent assets: these are not recorded except when management has full control of the situation or when there are real guarantees or favorable unappealable court sentences, characterizing an almost certain gain and through confirmation of recoverability through receipt or offset against another liability. When a successful outcome is deemed probable, the contingent assets are disclosed in the notes to the financial statements.

• Provisions: these are recorded taking into consideration the opinion of the legal advisors, the nature of the lawsuits, similarity with prior lawsuits, complexity and the Court’s position, whenever the loss is evaluated as probable, resulting in a probable outflow of funds to settle the obligations and when the amounts involved can be reliably estimated.

• Contingent liabilities: pursuant to CPC 25, the term “contingent” is used for liabilities which are not recognized, since their existence will only be confirmed upon the occurrence of one or more future and uncertain events which cannot be fully controlled by management. Contingent liabilities do not meet the criteria for recognition since they are considered as a possible loss and are only disclosed in the notes to the financial statements when individually significant. Those classified as a remote loss require neither provision nor disclosure.

• Legal obligations – Provision for tax risks: these arise from lawsuits contesting the legality or constitutionality of the tax liabilities and which, regardless of the evaluation of their probability of success. are recorded in the financial statements at the full amounts in dispute.

The details on the legal proceedings, as well as the activity of the amounts recorded, are presented in Note 11.

V) NET INCOME FOR ThE YEAR

Net income is determined on the accrual basis of accounting, which establishes that income and expenses should be included in the determination of the results for the periods in which they occur, simultaneously when correlated, irrespective of receipt or payment.

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VI) NET EARNINGS PER ShARE

Net earnings per share are calculated by dividing the amount of the income attributable to the Company’s stockholders by the weighted average number of outstanding shares (total number of shares less treasury shares). There are no profit dilution factors.

4. CRITICAl ACCOUNTING ESTImATES AND JUDGmENTS The presentation of financial statements in accordance with the principles of recognition and measurement based on the accounting standards issued by CPC and IASB requires Company management to make judgments, estimates and assumptions that may affect the amounts of the assets and liabilities presented.

These estimates are based on management’s best current knowledge for each period and on the actions plans to be implemented and are constantly reviewed based on available information. Changes in facts and circumstances could lead to a review of the estimates and as a result actual future results could differ from these estimates.

We present below the significant estimates and assumptions used by Company management:

Classification and measurement of financial assets

The classification of financial assets is based on management’s intention on the date of their acquisition to hold or trade these securities. The accounting treatment of the securities depends on how they are classified by the Company.

Fair value is estimated using quoted market prices, where available. The amount may be affected by the volume of shares traded and, moreover, may not reflect the “control premium” arising from the shareholder agreements. Nevertheless, management considers that prices quoted in the market are the most appropriate fair value indicators. In determining fair value when there are no market price quotations

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available, management uses its own judgment, since the models depend on how the different factors are weighted and the quality of the information received. This judgment should also establish whether a decrease in fair value to below the adjusted cost of an available-for-sale security is temporary or not, so that a devaluation in the adjusted cost can be recognized and the decrease can be reflected as an expense. Upon analysis, if a devaluation is deemed not to be temporary, management decides which historical period should be considered and how severe a loss can be recognized.

These evaluation methods may lead the Company to determine different results, if the models used or the assumptions and estimates are inaccurate.

Income tax and social contribution

The evaluation is based on the analysis of the Company’s deferred tax assets and liabilities and income tax and social contribution payable. In general, this analysis requires management to estimate the future amounts of the deferred tax assets and income tax and social contribution payable. The evaluation of the possibility that a deferred tax asset will be realized is subjective and involves assessments and assumptions which are of uncertain origin. The realization of the deferred tax assets is subject to changes in future tax rates and to the development of the Company’s tax planning strategies. The basis of the evaluations and assumptions could change over time as a result of unforeseen events or circumstances, affecting how the Company determines the amount of its tax liabilities. The Company permanently monitors and evaluates the impact of new taxation laws on its obligations and any events which could affect the evaluations and assumptions used in the analysis of the future realization of its deferred tax assets. A high degree of judgment must be used to determine whether it is more likely than not that an income tax or social contribution position will be sustained under close examination, even after the outcome of any related legal or administrative suit, based on technical merits. An additional judgment may then be necessary to determine the amount of the benefit that qualifies for recognition in the Company’s financial statements.

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Provisions and contingent liabilities

Accounting provisions are recorded taking into consideration the opinion of the legal advisors, the nature of the lawsuits, similarity with prior lawsuits, complexity and the Court’s position, whenever a loss is deemed probable, resulting in a probable outflow of funds to settle the obligations and when the amounts involved can be reliably estimated. The contingent liabilities classified as a possible losses are not recorded and are only required to be disclosed in the financial statements when individually significant, while those classified as remote require neither provision or disclosure. The legal proceedings are permanently monitored to evaluate, among others: (i) their nature and complexity; (ii) the development of the proceedings; (iii) the opinion of the legal advisors and (iv) the Company’s experience in similar lawsuits. For the purpose of determining whether a loss is probable and in estimating its amount, the following are also taken into consideration:

• the probability of loss arising from lawsuits which were filed prior to or on the balance sheet date, but which were identified by the Company subsequent to the reporting date of these statements but prior to their publication. • the need to disclose processes filed or events which occurred subsequent to the date of the financial statements, but prior to their publication.

5. ACCOUNTING PRONOUNCEmENTS

The Company prepared its consolidated financial statements pursuant to IFRS, based on the standards that have been issued by CPC and ratified by CVm. The Company will not be an early adopter of the standards which have been set by IASB, but not yet issued by CPC and accordingly not ratified by CVm.

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a) Pronouncements, interpretations and guidelines issued and/or updated by CPC, that were adopted in 2011

CPC “00” (R1) - Basic conceptual pronouncement – Conceptual framework for the preparation and presentation of financial statementsCPC 19 (R1) - Investments in joint venturesCPC 20 (R1) - Cost of loansCPC 21 (R1) - Interim financial statementsCPC 26 (R1) - Presentation of the financial statementsCPC 35 (R1) - Separate financial statements – Correlation to international accounting standardsCPC 36 (R2) - Consolidated financial statements

b) Pronouncements and interpretations issued and/or updated by IASB and not yet ratified by CVM, consequently, not adopted by the Company

IAS 01 - Presentation of financial statementsIAS 19 - Benefits to employeesIAS 28 - Investments in associates IFRS 09 - Financial instrumentsIFRS 10 - Consolidated financial statementsIFRS 11 - Joint arrangementsIFRS 12 - Disclosure of interests in other entitiesIFRS 13 - Fair value measurement

6. RISK mANAGEmENT

The Company considers that risk management is essential for strategic planning and financial flexibility. Accordingly, its risk management strategy has been developed to provide an integrated view of the risks to which it is exposed.

48

BRADESPAR is a holding company in which income is originated mainly from equity in the results of its subsidiaries and jointly controlled investments. Accordingly, the Company is subject, principally, to the impact of the variables traded in the financial market on the results of the business (market risk), the risk arising from the obligations assumed by third parties with the Company (credit risk), those inherent to internal processes (operational risk) and those arising from economic factors (liquidity risk).

Liquidity risk management

The liquidity risk arises from the possibility that the Company may not be able to settle its contractual obligations on the established due dates, or may face difficulties in meeting its cash requirements given the liquidity constraints in the financial markets.

To mitigate this risk, the accounts receivables from redeemable preferred shares are recorded in the Company’s assets with scaled maturity dates to ensure that the liabilities assumed with third parties are settled on a timely basis. moreover, these shares are a part of the guarantees offered on issuance of the debentures by the Company. Credit risk management

Credit risk arises from potential negative effects on the Company’s cash flows as a result of uncertainty in the ability of counterparties to meet their contractual obligations. Accordingly, credit risk arises mainly from cash and cash equivalents, deposits in financial institutions and from exposure to outstanding accounts receivables.

The Company considers that the credit risk exposure originated by the financial investments is low, since the amounts invested are not significant and dividends and/or interest on stockholders’ equity are regularly distributed to shareholders during the year, and the interest and/or principal of the debentures issued is settled on a timely basis.

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• Exposure to counterparties

The Company’s qualitative risk analysis takes into consideration the payment history of the counterparties, their commercial relationship with BRADESPAR and their strategic position in the corresponding economic sector. VAlE’s parent company VAlEPAR is the Company’s main investee and provides its most important cash flow.

Depending on the specific counterparty, the Company uses its corporate guarantee strategy to mitigate credit risk. The Company controls its receivables to ensure that there are no principal or interest amounts pending settlement by the counterparties.

Market risk

The Company is exposed to the behavior of a number of market risk factors that could impact its cash flows, such as the risk of changes in the price of shares, comprising investments maintained as available for sale and interest rate risk arising from debentures issued at floating rates. This potential impact is evaluated periodically to support the decision making process and the Company’s growth strategy and to monitor the volatility of future cash flows.

Operational risk

Operational risk management is the structured approach used by BRADESPAR to manage uncertainty related to the possible inadequacy or weakness of internal processes, people, systems and external events. New controls are created and existing ones are improved to mitigate the operational risk.

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8. RECEIVABlES FROm REDEEmABlE PREFERRED ShARES

In 2008, BRADESPAR subscribed 23,724,193 redeemable class C preferred shares of VAlEPAR, with the following characteristics:

a) They will not be entitled to vote at VAlEPAR’s general meetings except when permitted by law.b) They are entitled to a cumulative fixed dividend to be paid semiannually from 2009, at a fixed rate of 16% p.a.c) They are redeemable semiannually between may 5, 2011 and November 5, 2015.d) They will not be convertible into any other type or class of VAlEPAR shares.

In 2009, BRADESPAR sold 7,587,000 redeemable class C preferred shares to its indirect subsidiary BRUmADO, and remains with 16,137,193 shares.

In 2011, BRADESPAR received the amount of R$ 209,097 from VAlEPAR, related to the redemption of 3,605,128 preferred shares. BRADESPAR and its indirect subsidiary BRUmADO hold 20,119,065 redeemable class C preferred shares.

At December 31, 2011, redeemable preferred shares held by BRADESPAR and its indirect subsidiary BRUmADO amount to R$ 1,166,819 (December 31, 2010 and January 1, 2010 - R$ 1,375,916), of which the amount of R$ 166,824 (December 31, 2010 – R$ 209,097) is recorded in current assets and R$ 999,995 (December 31, 2010 – R$ 1,166,819 and January 1, 2010 – R$ 1,375,916) in non-current assets.

The interest receivable on redeemable preferred shares of BRADESPAR and its indirect subsidiary BRUmADO amounts to R$ 29,930 (December 31, 2010 – R$ 35,293 and January 1, 2010 – R$ 34,462).

7. CASh AND CASh EQUIVAlENTS

Parent company Consolidated2011 2010 2011 2010

Cash in local currency 5 11 788 841Financial investment funds 250,463 156,974 263,195 172,688TOTAL 250,468 156,985 263,983 173,529

At December 31

51

9. INVESTmENTS

a) Equity accounting adjustments were recorded in Equity in the results of investees and corresponded for the year ended December 31, 2011, in the Parent Company, to earnings of R$ 2,071,854 (2010 – R$ 1,701,683), and in the Consolidated to earnings of R$ 1,947,329 (2010 - R$ 1,575,536).

b) We present below BRADESPAR’S direct investments, accounted for on the equity method:

(1) Considers results determined by the companies and includes equity variations in the investees not derived from results, as well as adjustments

arising from the equalization of accounting principles, where applicable.(2) Joint venture.(3) Adjusted equity includes R$ 700,656 relating to the change in the PARENT COmPANY’S accounting policy regarding the amortization period of

goodwill based on expected future profitability, which ceased to be amortized from 2009, as provided for in CPC 13.(4) Company whose information for the year ended December 30, 2011 was reviewed by the same independent auditor as BRADESPAR.

Companies CapitalAdjusted

equityAdjusted

result

Number of shares

held (thou-sand)

Number of quotas

held (thou-sand)

Percen- tage

capital owner-ship%

Total investmentsEquity accounting

adjustment (1)

COMMON ON

12.31.2011 12.31.2010 01.01.2010 2011 2010

Antares (4) 322,700 1,244,031 124,525 - 322,700 100.000 1,244,031 1,060,022 969,072 124,525 126,147Valepar (2) (3) (4) 7,258,855 43,467,108 11,164,596 275,966 - 17.442 7,581,533 5,674,268 4,343,383 1,947,329 1,575,536

Total 8,825,564 6,734,290 5,312,455 2,071,854 1,701,683

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c) Analysis of the Consolidated investments

(1) Considers results determined by the companies and includes equity variations in the investees not derived from results,

as well as adjustments arising from the equalization of accounting principles, where applicable.(2) Carrying value adjustments, pursuant to law 11638/07 and CPC Standards 2 and 8, which are recorded as a

contra-entry to equity.

10. DEBENTURES PAYABlE

In 2009, BRADESPAR conducted the second public issuance of 800,000 debentures not convertible into shares, with a unit par value of R$ 1,000.00 (one thousand reais), totaling R$ 800,000 in two series: (i) 140,000 debentures were allocated to the first series maturing in 361 days and (ii) 660,000 debentures were allocated to the second series, maturing in 721 days from the date of issue. The interest on the first series corresponded to 105% of the accumulated variation in the average one-day DI (Interbank Deposit) rates, calculated and disclosed daily by CETIP, on a 252 business-day basis, calculated on a pro rata basis from the date of issue up to the end of the capitalization period and was paid together with the principal in 2010, in the amount of R$ 152,873. The interest on the second series corresponded to 108% of the accumulated variation in the average one-day DI (Interbank Deposit) rates, calculated and disclosed daily by CETIP, on a 252 business-day basis, calculated on a pro rata basis from the date of issue up to the end of the capitalization period and was paid together with the principal in 2011, in the amount of R$ 807,481.

In 2011, BRADESPAR conducted the third public issuance of 80,000 debentures not convertible into shares, with a unit par value of R$ 10,000.00 (ten thousand reais), totaling R$ 800,000, in two series: (i) 29,000 debentures were allocated to the first series maturing in 366 days as from the date of issue, i.e. July 4, 2012 and (ii) 51,000 debentures were allocated to the second series, maturing in 731 days as

CompanyTotal investments

Equity accounting adjustment (1)

12.31.2011 12.31.2010 01.01.2010 2011 2010

- VAlEPAR 7,515,114 5,961,948 4,522,706 1,947,329 1,575,536- VAlEPAR – adjusted effect (2) 66,419 (287,680) (179,323) - -Total 7,581,533 5,674,268 4,343,383 1,947,329 1,575,536

53

from the date of issue, i.e. July 4, 2013. The interest on the first series of debentures will correspond to 103.8% of the accumulated variation in the average one-day over extra group DI (Interbank Deposit) rates, calculated and disclosed daily by CETIP, on a 252 business-day basis, expressed as an annual percentage (“DI rate”), payable on the unit par value of the debentures. The interest on the second series will correspond to 105.5% of the DI rate, payable on the unit par value of the debentures, both calculated as from the date of issue up to the end of the capitalization period on a pro rata basis. At December 31, 2011, the adjusted balance totals R$ 846,918.

11. PROVISIONS, CONTINGENT ASSETS AND lIABIlITIES AND lEGAl OBlIGATIONS a) Contingent assets

No contingent assets were recorded, however, there are a number of lawsuits the successful outcome of which is deemed probable, among which the most important are as follows:

- COFINS – R$ 9,374 (2010 – R$ 8,960): claiming the refund or offset of COFINS, paid under the terms of law 9718/98, during the period from January to October 2001, in excess of that which would be payable on revenues.

- Social Integration Program (PIS) - R$ 2,031 (2010 – R$ 1,941): claiming the refund or offset of PIS, paid under the terms of law 9718/98, during the period from January to October 2001, in excess of that which would be payable under the terms of Complementary law 7/70 (PIS Repique) or, when less, in excess of that which would be payable on revenues.

b) Provisions classified as probable loss and legal obligations

The companies comprising the CONSOlIDATED are parties to tax suits arising in the normal course of their business.

54

management considers the following when recording the provisions: the opinion of the legal advisors, the nature of the lawsuits, similarity with prior lawsuits, complexity and the Court’s position, whenever a loss is evaluated as probable.

BRADESPAR’s management considers that the provision recorded is sufficient to cover losses that may arise from the related legal proceedings.

The liability related to the legal obligation in dispute is maintained until the case is won, based on favorable judicial decisions, against which there can be no further appeals, or until expiry of the corresponding limitation period.

I) Provisions

Pursuant to the Agreement for the Sale of Shares of Bradesplan Participações ltda. (BRADESPlAN), entered into with Banco Bradesco S.A. (BRADESCO) in may 2006, BRADESPAR is liable for the tax suits (PIS and COFINS) of its former subsidiary BRADESPlAN, and a provision for contingencies was recorded in the amount of R$ 49,774, of which R$ 21,960 was reversed, following a favorable final and unappealable sentence related to the COFINS lawsuit. At December 31, 2011, the adjusted amount was R$ 35,941 (2010 – R$ 35,285).

II) Legal obligations

BRADESPAR is challenging in the courts the legality and constitutionality of certain taxes and contributions, for which provisions have been recorded in the full amount, despite the likelihood of a successful medium and long-term outcome, based on the opinion of their legal advisors.

The main issues are as follows:

- PIS and COFINS – R$ 168,550 (2010 – R$ 112,209): claiming the non-inclusion in the calculation bases of PIS and COFINS, of interest on stockholders’ equity received from the investees, since these amounts are legally considered dividends, and accordingly not subject to these taxes.

- COFINS – R$ 10,098 (2010 – R$ 9,609): claiming the right to calculate and pay COFINS, from November 2001 to January 2004, based on the actual revenues, as established in Article 2 of Complementary law 70/91, without considering the unconstitutional increase in the calculation base established by paragraph 1, Article 3 of law 9718/98.

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Parent company and Consolidated2011 2010

At the beginning of the year 158,541 120,953Additions net of reversals 41,026 28,150Indexation 15,066 9,438At the end of the year 214,633 158,541

At December 31

III) Activity in provisions and legal obligations

c) Contingent liabilities classified as possible losses

BRADESPAR maintains a system to monitor all the administrative and legal proceedings in which it is the plaintiff or defendant and, based on the opinion of its legal advisors, classifies the lawsuits in accordance with the expectation of an unfavorable outcome. As a result, the contingent lawsuits assessed as having a risk of possible loss are not recognized in the books and disclosed only in the notes to the financial statements.

BRADESPAR is party to an Arbitral Procedure moved by Elétron S.A. (ElÉTRON) against the Company and litel Participações S.A. (lITEl), in which ElÉTRON seeks recognition of its right to (i) acquire a specific number of shares of VAlEPAR, which may not exceed 37,825,097 common shares and (ii) receive indemnification for possible pain and suffering. On October 3, 2011, the Court of Arbitration, based on the prior interim sentence, decided by majority vote that BRADESPAR and lITEl are obliged to: (i) proceed with the sale of the shares of VAlEPAR to ElÉTRON for the amount of R$ 632 million, which should be adjusted based on the UFIR-RJ rate, from June 12, 2007 to the date of effective payment and (ii) recoup the dividends and interest on own capital, distributed by VAlEPAR, from June 12, 2007, in the amount of some R$ 133 million at December 31, 2011, including adjustments based on the CDI rate. The claim for pain and suffering was rejected by the Court of Arbitration. The Company filed an action for annulment of the sentence handed down by the arbitration court of the Rio de Janeiro judiciary district and considers that the amount which could affect its financial statements will not exceed 2% of its equity at December 31, 2011.

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ANTARES, a direct subsidiary of BRADESPAR, was assessed by the Brazilian Federal Revenue authority, since it is the successor to the split-off portion of VBC Participações S.A. (VBC), as regards the offset in the latter of income tax and social contribution losses, at the time of its split-off and subsequent winding up, in an amount exceeding the 30% limit imposed pursuant to Articles 42 and 58 of law 8981/95. These assessments at December 31, 2011 total R$ 127,994 for income tax and R$ 45,784 for social contribution on net income (2010 – R$ 121,787 for income tax and R$ 43,564 for social contribution on net income).

12. EQUITY a) Share capital in number of shares

Fully subscribed and paid-up capital comprises nominative book-entry shares, with no par value, as follows:

At the Extraordinary General meeting held on April 28, 2011, approval was given for a capital increase of R$ 220,000, from R$ 3,000,000 to R$ 3,220,000, through the capitalization of the balance of the “Revenue reserve – Statutory” account, with no new issue of shares.

b) Interest on stockholders’ equity and/or dividends

Non-voting preferred shares are entitled to all rights and benefits attributed to common shares as well as, in conformity with the bylaws, priority to repayment of capital and 10% additional interest on stockholders’ equity and/or dividends, in accordance with the provisions of paragraph 1, item II, of Article 17 of law 6404/76, as reworded by law 10303/01.

2011 2010Common 122,523,049 122,523,049Preferred 227,024,896 227,024,896Total 349,547,945 349,547,945

At December 31

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In conformity with the by-laws, stockholders are entitled to interest on stockholders’ equity and/or dividends which total at least 30% of net income for the year, adjusted in accordance with Brazilian corporate legislation.

We present below the calculation of interest on stockholders’ equity and proposed dividends for 2011:

(1) Percent interest on stockholders’ equity/dividends applied to the adjusted calculation base.

In the pursuit to improve its Corporate Governance practices and with the objective of facilitating the projection of stockholders’ compensation, BRADESPAR adopted, in 2006, the Indicative Policy of minimum Annual Compensation to be distributed in the form of dividends and/or interest on stockholders’ equity, based on the Company’s projected cash flows as follows:

• The Company’s Executive Board announces, up to the last business day of February of each year, a proposal to be presented to the Board of Directors for payment of a minimum compensation to stockholders, stipulated in US dollars, in two semiannual installments due by may 15 and November 15.

• The amounts approved are translated into local currency at the US dollar selling rate (Ptax-opção 5), published by the Brazilian Central Bank on the last business day prior to that of the Board of Directors meetings during which the declaration and payment of this compensation are decided.

In reais % (1)

Net income for the year 2,023,552(-) legal reserve (101,178)Adjusted calculation base 1,922,374Interest on stockholders' equity paid 253,000Complementary interest on stockholders' equity accrued 65,000Withholding tax on interest on stockholders’ equity (47,700)Interest on stockholders' equity (net) 270,300Dividends paid 1,800Complementary dividends accrued 342,070Interest on stockholders’ equity (net) and dividends accrued for 2011 614,170 31.95Interest on stockholders’ equity (net) and dividends accrued for 2010 535,690 31.95

58

• Further, the Executive Board may also propose to the Board of Directors, based on an analysis of the growth in the Company’s cash flows, the declaration and payment of dividends and/or interest on stockholders’ equity in addition to the minimum compensation to be announced.

On may 13, 2011, BRADESPAR paid the first installment of the Stockholders’ Annual Compensation in the amount of US$ 204,139, in excess of the minimum installment of US$ 150,000, as follows:

• Interest on stockholders’ equity in the amount of R$ 65,600, at the gross amount of R$ 0.176225449 per common share (R$ 0.149791632, net of withholding income tax) and at R$ 0.193847994 per preferred share (R$ 0.164770795, net of withholding income tax).

• Dividends, in the amount of R$ 255,000, at R$ 0.685022706 per common share and R$ 0.753524977 per preferred share.

On November 14, 2011, BRADESPAR paid the second installment of the Stockholders’ Annual Compensation in the amount of US$ 150,000, as follows:

• Interest on stockholders’ equity in the amount of R$ 253,000, at R$ 0.679649979 per common share (R$ 0.577702482, net of withholding income tax) and at R$ 0.747614978 per preferred share (R$ 0.635472731, net of withholding income tax).

• Dividends in the amount of R$ 1,800, at R$ 0.004835454 per common share and R$ 0.005319001 per preferred share.

c) Treasury shares

BRADESPAR has a program for the acquisition of own shares to be held in treasury and subsequently sold or cancelled. The Company’s Executive Board is authorized, over a six-month period, to acquire up to 1,500,000 nominative book-entry shares, with no par value, comprising 500,000 common and 1,000,000 preferred shares. The authorizations are renewed semiannually by the Board of Directors.

59

13. TAXES RECOVERABlE OR AVAIlABlE FOR OFFSET AND DEFERRED TAX ASSETS

I) PARENT COMPANY

a) Taxes recoverable and available for offset comprise mainly prior-year income tax and social contribution, and withholding tax on financial investments and interest on stockholders’ equity received, in the amount of R$ 98,858 (2010 - R$ 91,656).

b) Calculation of income tax and social contribution charges:

c) Deferred tax assets

During the year ended December 31, 2011, the deferred tax assets were written off, since no taxable income is expected to be recorded in the forthcoming periods. At December 31, 2010, these comprised tax losses related to income tax of R$ 24,682, to social contribution of R$ 9,552 and temporary differences of R$ 768. The unrecorded deferred tax assets, at December 31, 2011, totaled R$ 491,412 (2010 - R$ 448,328).

INCOME TAX AND SOCIAL CONTRIBUTION 2011 2010Income before income tax and social contribution 2,074,153 1,759,806Total expense for income tax and social contribution at the statutory rates of 25% and 9%, respectively (705,212) (598,334)

Effect of additions and deductions in the calculation of taxes:Investments in subsidiaries, taxed in the corresponding companies 704,430 578,572Non-deductible expenses and provisions, net of non-taxable income (9,388) (8,720)Interest on stockholders’ equity (received and receivable) (105,542) (38,138)Interest on stockholders’ equity (paid) 108,324 86,836Unrecorded deferred tax assets (43,237) (20,216)Other amounts 24 -Income tax and social contribution expense for the year (50,601) -

Years ended December 31

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II) CONSOLIDATED

a) Taxes recoverable and available for offset comprise mainly prior-year income tax and social contribution, and withholding tax on financial investments and interest on stockholders’ equity received, in the amount of R$ 112,305 (2010 - R$ 112,240).

b) Calculation of income tax and social contribution charges:

c) Deferred tax assets

During the year ended December 31, 2011, the deferred tax assets were written off, since no taxable income is expected to be recorded in the forthcoming periods. At December 31, 2010, these comprised tax losses related to income tax of R$ 24,682, to social contribution of R$ 9,552 and temporary differences of R$ 768. The unrecorded deferred tax assets, at December 31, 2011, totaled R$ 530,047 (2010 -R$ 487,031).

INCOME TAX AND SOCIAL CONTRIBUTION 2011 2010Income before income tax and social contribution 2,087,022 1,785,598Total expense for income tax and social contribution at the statutory rates of 25% and 9%, respectively (709,587) (607,103)

Effect of additions and deductions in the calculation of taxes:Investments in subsidiaries, taxed in the corresponding companies 662,092 535,682Non-deductible expenses and provisions, net of non-taxable income (13,243) (12,561)Interest on stockholders’ equity/dividends (received and receivable) (67,957) (8,744)Interest on stockholders’ equity (paid) 108,324 86,836Unrecorded deferred tax assets (43,170) (20,085)Other amounts 71 183Income tax and social contribution expense for the year (63,470) (25,792)

Years ended December 31

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14. FINANCIAl RESUlT

15. RElATED PARTIES

I) The main balances and transactions between BRADESPAR and its subsidiaries are presented below:

a) BRADESPAR

b) ANTARES

Parent company Consolidated2011 2010 2011 2010

Income on financial investments 16,689 16,985 19,381 21,540Change in fair value and interest on debentures (93,833) (79,714) (93,833) (79,714)Others (6,334) (3,887) (6,226) (3,127)Total (83,478) (66,616) (80,678) (61,301)

Assets (liabilities) Income (expenses)2011 2010 2011 2010

Dividends on redeemable shares and interest on stockholders’ equity:- ANTARES - 686 - -- VAlEPAR 288,030 94,902 537,328 304,992Redeemable shares- VAlEPAR 729,773 935,870 - -

Assets (liabilities) Income (expenses)2011 2010 2011 2010

Dividends on redeemable shares and interest on stockholders’ equity:- BRADESPAR - (686) - -

Years ended December 31

At December 31

At December 31

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c) BRUMADO

d) VALEPAR

II) Compensation of key management personnel

Annually, the Ordinary General meeting establishes the following:

• Total annual compensation of Directors, which is distributed at the meeting of the Board of Directors to the members of the Board itself and to the Executive Officers, as established by the bylaws.

• The amount appropriated to finance the BRADESPAR Directors’ and Officers’ Supplementary Pension Plans.

For 2011, a maximum amount of R$ 3,500 thousand was determined as compensation for Directors and Officers and R$ 2,500 for financing the defined contribution supplementary pension plans.

Assets (liabilities) Income (expenses)2011 2010 2011 2010

Dividends on redeemable shares:- VAlEPAR 11,287 11,287 73,680 79,370Redeemable shares- VAlEPAR 440,046 440,046 - -

Assets (liabilities) Income (expenses)2011 2010 2011 2010

Dividends on redeemable shares and interest on stockholders’ equity:- BRADESPAR (288,030) (94,902) (537,328) (304,992)- BRUmADO (11,287) (11,287) (73,680) (79,370)Redeemable shares- BRADESPAR (729,773) (935,870) - -- BRUmADO (440,046) (440,046) - -

At December 31

At December 31

63BRADESPAR provides no long-term benefits, or benefits related to employment contract rescissions or share-based compensation to its key management personnel.

Other Information

Shareholding

The members of the Board of Directors and Executive Board together have the following shareholding in BRADESPAR:

At December 31

At December 31

At December 31

Short-term benefits to directors and officers

Post-employment benefits

2011 2010Salaries 3,264 2,443Social security contributions (INSS) 653 488Total 3,917 2,931

2011 2010Common shares 0.6934% 0.6879%Preferred shares 0.5661% 0.5444%Total shares 0.6107% 0.5947%

2011 2010Supplementary pension plans with defined contribution 2,466 1,837

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16. FINANCIAl INSTRUmENTS

Financial instruments are classified as follows:

Parent Company ConsolidatedLoans and

receivablesAvailable

for saleTotal

Loans and receivables

Available for sale

Total

Financial assetsCash and cash equivalents 250,468 - 250,468 263,983 - 263,983Receivables from redeemable preferred shares 745,416 - 745,416 1,196,749 - 1,196,749Available-for-sale financial assets - - - - 1,315,098 1,315,098Total assets 995,884 - 995,884 1,460,732 1,315,098 2,775,830

Parent Company ConsolidatedLoans and

receivablesAvailable

for saleTotal

Loans and receivables

Available for sale

Total

Financial assetsCash and cash equivalents 156,985 - 156,985 173,529 - 173,529Receivables from redeemable preferred shares 959,876 - 959,876 1,411,209 - 1,411,209Available-for-sale financial assets - - - - 1,041,161 1,041,161Total assets 1,116,861 - 1,116,861 1,584,738 1,041,161 2,625,899

Parent Company Consolidated

Amortized cost

Fair value through

profit or lossTotal

Amortized cost

Fair value through

profit or lossTotal

Financial liabilitiesDebentures payable - 846,918 846,918 - 846,918 846,918Other obligations 26,302 - 26,302 26,302 - 26,302Total liabilities 26,302 846,918 873,220 26,302 846,918 873,220

At December 31, 2011

At December 31, 2010

65

a) Financial assets

The main financial instruments recorded as assets in balance sheet accounts consist of amounts of the principal and interest of the redeemable preferred shares held, directly and indirectly, in VAlEPAR and the indirect investments in CPFl. Redeemable preferred shares are measured at amortized cost, as described in Note 8 and the investments in CPFl are classified in available-for-sale financial assets at market value, with a contra-entry in equity.

BRADESPAR and its subsidiaries had no transactions with derivative financial instruments at December 31, 2011 and 2010.

Credit quality of financial assets

The credit quality of financial assets, which are not past due and have no indication of loss, may be assessed based on external credit classifications (if existing) or historical information on the counterparty’s default rates. None of the fully performing financial assets were renegotiated during the year and none of the amounts recorded in accounts receivable were past due or show any evidence of loss.

b) Financial liabilities

We present below the non-derivative financial liabilities, by due date, for the remaining period of the balance sheet to the contractual due date. The amounts presented are the undiscounted cash flows contracted.

Parent company Consolidated

Amortized cost

Fair value through

profit or lossTotal

Amortized cost

Fair value through

profit or lossTotal

Financial liabilitiesDebentures payable - 760,530 760,530 - 760,530 760,530Other obligations 26,833 - 26,833 26,833 - 26,833Total liabilities 26,833 760,530 787,363 26,833 760,530 787,363

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c) Sensitivity analysis

In compliance with CVm Instruction 475/08, we present below the sensitivity of the positions subject to price or market rate volatility:

The sensitivity analyses were based on scenarios prepared at the corresponding dates, considering market information at the time and scenarios which would have a negative effect on the Company’s positions.

Scenario 1:

Scenario 2:

Based on market information (Bm&FBOVESPA, ANBImA, etc.), 1 basis point shocks were applied to the interest rate and a 1% variation to prices. For example: the fixed interest rate for 1 year applied to the positions at December 30, 2011 was 10.06% p.a.

25% shocks were determined based on market information. For example: the fixed interest rate for 1 year applied to the positions at December 30, 2011 was 12.56% p.a. The scenarios for the other risk factors also comprised a 25% shock applied to the corresponding curves or prices.

Parent Company and Consolidated

Less than1 year Between 1 and 2 years TotalAt December 31, 2011 Debentures payable 306,882 540,036 846,918At December 31, 2010 Debentures payable 760,530 - 760,530

Scenarios

Risk Factors DefinitionDecember 31, 2011 December 31, 2010

1 2 3 1 2 3

Interest rate in reais

Exposures subject to changes in fixed interest

rates and interest rate coupon

(14) (3,628) (7,152) (14) (3,932) (7,743)

Total (14) (3,628) (7,152) (14) (3,932) (7,743)

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17. FAIR VAlUE ESTImATE It is assumed that the fair values of the balances of cash and cash equivalents, receivables from redeemable preferred shares and other obligations are compatible with their carrying amounts. BRADESPAR applies CPC 40 (IFRS 7) for financial instruments measured at fair value, which require disclosure of the fair value measurements at the following levels of the fair value measurement hierarchy:

Scenario 3:

Level 1:

Level 2:

Level 3:

50% shocks were determined based on market information. For example: the fixed interest rate for 1 year applied to the positions at December 30, 2011 was 15.07% p.a. The scenarios for the other risk factors also comprised a 50% shock applied to the corresponding curves or prices.

Quoted prices in active markets for identical assets or liabilities. level 1 assets and liabilities include financial investment funds and available-for-sale financial assets traded in an active market.

Observable data other than level 1 prices, such as prices quoted for similar assets or liabilities; prices quoted in non-active markets; or other data which are observable in the market or which can be confirmed by observable market data over substantially all of term of the assets or liabilities. level 2 assets and liabilities include receivables from redeemable preferred shares and debentures, including the corresponding appreciation.

Inputs not based on observable market data which are supported by little or no market activity and which are significant to the fair value of the assets and liabilities. level 3 assets and liabilities generally include financial instruments, whose amounts are determined based on pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires a high degree of judgment or estimates by management.

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(*) There were no level 3 assets or liabilities.

18. OThER INFORmATION

a) Amounts receivable in the PARENT COmPANY in the amount of R$ 269,554 (December 31, 2010 – R$ 71,822) and in the CONSOlIDATED in the amount of R$ 269,559 (2010 – R$ 71,140) consists substantially of interest on stockholders’ equity receivable from VAlEPAR.

Consolidated

Carrying amount Level 1 Level 2 Total (*)

Financial assetsAvailable-for-sale financial assets 1,315,098 1,315,098 - 1,315,098Total assets 1,315,098 1,315,098 - 1,315,098Financial liabilitiesDebentures payable 846,918 - 846,918 846,918Total liabilities 846,918 - 846,918 846,918

Consolidated

Carrying amount Level 1 Level 2 Total (*)

Financial assetsAvailable-for-sale financial assets 1,041,161 1,041,161 - 1,041,161Total assets 1,041,161 1,041,161 - 1,041,161Financial liabilitiesDebentures payable 760,530 - 760,530 760,530Total liabilities 760,530 - 760,530 760,530

At December 31, 2011

At December 31, 2011

The following tables present the assets and liabilities measured at fair value:

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b) Other obligations in the PARENT COmPANY and CONSOlIDATED mainly comprise fractions of shares from the reverse stock split approved at the Extraordinary General meeting of April 30, 2004, which were sold at the auction held by Bm&FBovespa on July 14, 2004, with the amount of R$ 25,614 (2010 – R$ 25,676) credited or made available to the stockholders.

c) Dividends from investments comprise dividends received from CPFl, in the amount of R$ 64,801 (2010 – R$ 75,167).

d) General and administrative expenses in the PARENT COmPANY consist of Personnel expenses in the amount of R$ 6,566 (2010 – R$ 4,784) and Other general and administrative expenses in the amount of R$ 9,323 (2010 – R$ 10,850). In the CONSOlIDATED, they comprise Personnel expenses in the amount of R$ 6,566 (2010 – R$ 4,784) and Other general and administrative expenses in the amount of R$ 9,581 (2010 – R$ 11,458).

19. SUBSEQUENT EVENTS

a) At the Board of Directors’ meeting held on January 27, 2012, approval was given for the renewal of the program for the acquisition of own shares to be held in treasury and subsequently sold or cancelled, maintaining the same number of shares, with no capital decrease. In addition, the Executive Board was authorized to acquire up to 1,500,000 nominative book-entry shares, with no par value, comprising 500,000 common and 1,000,000 preferred shares over a six-month period.

b) On February 28, 2012, BRADESPAR announced a proposal for the payment of minimum compensation in the amount of US$ 320 million to the stockholders for 2012, corresponding to US$ 0.859636337 per common share and US$ 0.945599971 per preferred share. The amount will be paid in two semiannual installments of US$ 160 million each, on may 15 and November 14, 2012, translated into local currency at the US dollar selling rate (Ptax-opção 5), disclosed by the Brazilian Central Bank, on the last business day prior to that of the Board of Directors’ meetings scheduled for April 26 and October 31, 2012.

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20. ADDITIONAl INFORmATION ON ThE JOINT VENTURES

BRADESPAR adopted Technical Pronouncement CPC 19 (R1) and opted to use the equity method of accounting. If BRADESPAR had opted for proportional consolidation, the effects would be proportional to the corresponding investments in the joint ventures.

The amounts presented below are those disclosed by VAlEPAR and VAlE and do not comprise BRADESPAR’s proportional percentage ownership of these companies.

20.1. CONDENSED BALANCE ShEETS AND STATEMENTS OF OPERATIONS OF ThE JOINTLY CONTROLLED INVESTMENTS

We present below the condensed balance sheets and statements of income as disclosed by the main direct and indirect joint ventures of BRADESPAR:

BALANCE ShEET AT DECEMBER 31

VALE VALEPAR

2011 2010 2011 2010

ASSETSCurrent assets 42,095,216 54,268,731 754,510 2,698,964Non-current assets - long-term receivables 10,913,071 8,088,196 1,411,348 249,036Non-current – Investments 10,917,110 3,944,565 51,564,506 39,908,578Non-current – Intangible assets 19,752,321 18,273,788 - -Non-current – Property, plant and equipment 158,105,394 130,086,834 - -TOTAL 241,783,112 214,662,114 53,730,364 42,856,578LIABILITIES AND EQUITYCurrent liabilities 22,225,074 31,384,171 3,178,209 2,227,843Non-current assets 72,867,671 66,951,081 6,384,514 7,395,869Equity 146,690,367 11 6,326,862 44,167,641 33,232,866TOTAL 241,783,112 214,662,114 53,730,364 42,856,578% direct and indirect ownership 5.94% 5.81% 17.44% 17.44%

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STATEMENT OF INCOME FOR ThE YEAR ENDED DECEMBER 31

VALE VALEPAR

2011 2010 2011 2010

Net sales revenue 103,195,407 83,225,006 - -Cost of sales and services rendered (40,488,870) (33,756,067) - -Gross profit 62,706,537 49,468,939 - -Operating income (expenses) (9,567,586) (8,978,903) (304,691) (158,052)Net financial result (6,622,546) (2,762,529) (1,220,126) (1,315,478)Equity in the results of investees (51,527) (48,080) 12,691,790 9,954,038Income before taxation 46,464,878 37,679,427 11,166,973 8,480,508Income tax and social contribution (9,064,654) (7,035,459) (2,502) -Result of discontinued operations - (222,276) - -Net income 37,400,224 30,421,692 11,164,471 8,480,508Net income attributable to controlling interest 37,813,723 30,070,051 11,164,471 8,480,508Net income attributable to non-controlling interest (413,499) 351,641 - -

VAlE is a publicly traded corporation and is obliged to file its annual financial statments at the Brazilian Securities Commission (CVm). As a result, detailed information on VAlE at December 31, 2011 and 2010 can be obtained directly from the CVm website www.cvm.gov.br

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INDEPENDENT AUDITOR’S REPORT

To the Board of Directors and StockholdersBradespar S.A.

We have audited the accompanying financial statements of Bradespar S.A. (“Parent Company”), which comprise the balance sheet as at December 31, 2011 and the statements of income, comprehensive income, changes in equity and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information.

We have also audited the accompanying consolidated financial statements of Bradespar S.A. and its subsidiaries (“Consolidated”), which comprise the consolidated balance sheet as at December 31, 2011 and the consolidated statements of income, comprehensive income, changes in equity and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management’s responsibility for the financial statementsmanagement is responsible for the preparation and fair presentation of the parent company financial statements in accordance with accounting practices adopted in Brazil, and for the consolidated financial statements in accordance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and accounting practices adopted in Brazil, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Brazilian and International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

(A free translation of the original in Portuguese)

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Opinion on the parent company financial statementsIn our opinion, the parent company financial statements referred to above present fairly, in all material respects, the financial position of Bradespar S.A. as at December 31, 2011, and its financial performance and cash flows for the year then ended, in accordance with accounting practices adopted in Brazil.

Opinion on the consolidated financial statementsIn our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Bradespar S.A. and its subsidiaries as at December 31, 2011, and their financial performance and cash flows for the year then ended, in accordance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and accounting practices adopted in Brazil.

Emphasis of matterAs discussed in Note 2 to these financial statements, the parent company financial statements have been prepared in accordance with accounting practices adopted in Brazil. In the case of Bradespar S.A., these practices differ from IFRS applicable to separate financial statements only in relation to the measurement of investments in subsidiaries, associates and jointly controlled entities based on equity accounting, while IFRS require measurement based on cost or fair value. Our opinion is not qualified in respect of this matter.

Other mattersSupplementary information – statements of value addedWe also have audited the parent company and consolidated statements of value added for the year ended December 31, 2011, which are the responsibility of the Company’s management. The presentation of these statements is required by Brazilian corporate legislation for listed companies, but is considered supplementary information by IFRS. These statements were subjected to the same audit procedures described above and, in our opinion, are fairly presented, in all material respects, in relation to the financial statements taken as a whole.

São Paulo, march 15, 2012

PricewaterhouseCoopersAuditores Independentes CRC 2SP000160/O-5

Luís Carlos Matias RamosContador CRC 1SP171564/O-1

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Board of directors

chairman Lázaro de Mello Brandão

Vice PresidentAntônio Bornia Members Mário da Silveira Teixeira Júnior João Aguiar AlvarezDenise Aguiar Alvarez Luiz Carlos Trabuco CappiCarlos Alberto Rodrigues GuilhermeMilton Matsumoto

executiVe Board

chief executive officer João Moisés de Oliveira

officerRenato da Cruz Gomes

fiscal councilfull members Ariovaldo PereiraJoão Batista de MoraesOlidio Aralde Junior

alternatesMarlos Francisco de Souza AraújoPaulo Ricardo Satyro BianchiniSergio Nonato Rodrigues

cid de oliveira GuimarãesContador - CRC 1SP218369/O-0

MANAGEMENT BODIES CREDITS

General coordination and textBradespar S.A.

editorial content, revision and coordination supportBRIC Integrated Corporate Communications

PhotosShutterstockBradespar ArchivesCPFL ArchivesVALE Archives

Graphic and editorial designMZ Design

Preprinting and PrintingAtrativa Indústria Gráfica Ltda.