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    Institutional presentation 2010 Institutional presentation 2010 Presentation Transcript

    • Institutional Presentation – 2010
    • CSU: leader in technology and BPO services in Brazil Card base of more than 20 million The largest independent electronic payment processor in Latin America 55% market share among independent vendors Business model: Full BPO (Business Process Outsourcing) for issuers and 20 years of customization focused on acquirers of electronic payment the Brazilian market transactions Market intelligence team to maximize clients’ cardholders base profitability Relaunching of contact center 3,757 workstations providing inbound infrastructure, management and BPO (Customer Care and HelpDesk) and services outbound (Telemarketing and The best and most efficient site Collection) services (Alphaview) in Latin AmericaComposição da Receita 2010Gross Revenues (2010)(in % of total revenues)do faturamento) (% 2
    • Consistent track record of profitable growth Innovation and consolidation Business and client Sustainable of the business model diversification growth 5x EBITDA and 4x Net Revenue Relaunch of CSU Contact Center: new site Creation of the Entry of CSU Institute Launch of solution for Best of the Century Private Equity the acquirer´s market marketing award professional investor Start of Launch of the Contact Center first Private operations R$ 395CSU: first CSU develops Label cardsindependent electronic R$ 314card processor voucher IPO R$ 383in Brazil First company to operate with 3 brands R$ 96 50%+ market 15 years with 15 million share in EBITDA cards under management Brazil Net Revenue (in R$ million) 3
    • Renowned customers in each market segment Net Revenues (2010) Banking (in % of total revenues) Credit Institutions Retail & Manufacturing 12% Banking 37% Convergence 32% Credit Insurance & Institutions Healthcare 11% 8%Insurance & ConvergenceHealthcareRetail &Manufacturing 4
    • • Brazils electronic payment industry has experienced significant growth in recent years (CAGR 17%+) • The penetration of cards in total spending made by Brazilian households rose from 8% in 1999 to 25% in 2010. It is expected to reach 55% by 2025. Number of Cards (in million of units) & Number of Transactions (in billion of units) Participation of cards in household consumption (% of total) CAGR 04- CAGR 04- 10E 10E 17% 20%700 8,00 628 55%600 565 7,00 514 7.13 6.11 6,00 45%500 453 5.32 38% 388 5,00 4.43400 336 31% 4,00 277 3.70 25%300 222 3.16 3,00 183 2.52200 151 1.94 2,00 1.63100 1.37 1,00 0 0,00 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010* 2010 2013 2017 2020 2025 * Source: ABECS 5
    • Electronic payment chain Money Money Brands Request for Approval Request for Approval Approval Approval Issuers (Banks and Retailers) Acquirers Capture ofMoney Card / Billing Electronic Money Transactions Commercial Transactions Cardholders Merchants 6
    • CSU offers a full range of services to card issuers • Financial Information • Authorization • Interchange • Information System • Electronic Transaction Processing • Contact Center • Accounting Brands • Processing • Fraud Prevention • Operational Control Issuers(CSU Clients) Acquirers CSU plays a central role CSU CardSystem in Brazil’s electronic • Billing transaction industry • Invoicing • Conflict Resolution • Customer SupportCardholders Merchants 7
    • • Brazilian acquirer market is under a new regulatory framework: Previous situation Current situation • Two acquirers dominated the • Market is open to competition Brazilian market Antitrust authorities • Exclusivity agreements with Visa forced the end and MasterCard limited of the exclusivity competitiveness agreement as of July’2010 Opportunity • Acquirers generated extraordinary • New operators in Brazils acquirer profits marketNet Income and Net Margin Number of Acquirers (in units) and of Transactions (in billion of units)(in USD million and % of revenues) 1098 62.713 840 8.185 6.110 45.8 53.5 405 194 105 7.7 10 0.851 11.3 2 12 Cielo Redecard Fidelity TSYS USA Brazil UK Mexico Net Income Net Margin Source: BIS, Central Banks and ABECS Source: Companies’ Annual Reports 8
    • CSU offers a complete solution for acquirers and merchants New Services • Operation management • Authorization • Billing Brands • Network • Accounting • Processing • Back Office • Information System Issuers Acquirers(CSU Clients) (CSU Clients) • Network Capture (POS) CSU CardSystem • Contact Center • Conflict Resolution • BillingCardholders Merchants 9
    • Brazilian demand per type of client • Brazilian market estimated at R$ 12 billion in 2011, (in R$ million) with a CAGR of 12/13% p.a. in the upcoming years; Financial Institutions 6.430 • Growth in demand for customer service; Convergence 3.980 Retail 424 • Recognition of those providers best able to meet Manufacturing 355 contracted SLAs; Services 239 Insurance 208 • Continuous growth in collection, telemarketing and Utilities 165 on-site customer services; Government 117 Healthcare 34 • Merger of Dedic into Contax. 0 2000 4000 6000 8000Brazilian demand per type of service Market Share(in % of sales) (in % of sales) Collection Agencies Contax Collection Customer 21,5% 23,0% 38% Care 40% Other Call Atento Centers 18,0% 22% Tivit Other players Teleperform Dedic 4,5% Telemarketing 7% ance CSU Algar4,0% 15% 2.5% 1,6% 2,7% 10
    • Growth strategy is supported by a differentiated platform TECHNOLOGY INDEPENDENCE• Flexible, secure and robust PERFORMANCE infrastructure (mainframe) • Independent shareholding• World-class systems and structure with no commercial applications, extensively • Accelerated time to market activity competing with customized for the Brazilian to new clients prospects and clients market • Dedicated commercial teams to • Lower operating costs• Highly qualified team of leveraged by scale gains each business lines professionals • First vendor to receive • Excellent infrastructure and• Innovation and new products, superior operations facilities MasterCard certification to among a complete range of provide services for acquirers solutions • Opportunity for various partnerships and M&A 11
    • Our strategy prioritizes growth with sustainable profitability Keep expanding Continue investing in in the card issuers technology and software segment: development: organic + inorganic competitive advantage Relaunch market Improve and expand intelligence & CRM contact center/BPO andsolutions and expand increase profitability:commercial approach: self sustainable value added service Consolidate entry as a vendor into the acquiring segment: greenfield growth 12
    • Main focus in the short term• Tap new market segments, beyond financial institutions• Attract mid-sized banks as funding partners to specific projects• Serve as strategic partners to global players• Successful launch the first project• Second flight in commercial expansion• Serve as strategic partners to global players• Market repositioning with broader range of services• Commercial approach outside CSU´s clients base• Effective turn around of the business unit• Focus on reaching full capacity• New offerings in Collections and Telemarketing 13
    • Continuous investments and substantial improvement in net debtInvestments(in R$ million) • CSU continuously invests in its 43.7 46.9 40.6 technological platform a minimum 28.9 21.0 11.4 28.5 25.4 24.4 13.9 2.2 of 6/7% of net revenues. 4.3 19.3 15.0 25.9 21.1 29.2 26.3 2005 2006 2007 2008 2009 2010 Software and Hardware Others • Significant reduction inNet Debt and Net Debt/EBITDA indebtedness over the last 2 years;(in R$ million and ratio) • 2011 investment plan may require 109.1 95.0 debt expansion and capital 3.2x structure optimization, adding 59.5 55.5 3.2x 1.5x 1.5x more value to the business. 0.5x 0.7x 21.6 1.5x 0.7x 23.8 1.5x0,4x 0.3x 2005 2006 2007 2008 2009 2010 14
    • Cash Generation Operating cash generation: R$ 69.5 million• Decrease in net debt from R$ 55.5 million to R$ 23.8 million;• Long-term debt represents 52.3% of the gross amount;• Cash balance: R$ 30.1 million (R$ 11.0 million in 2009)• Earnings distribution to shareholders equivalent to 50% payout and 5% yield: • R$ 7.8 million interest on shareholders’ equity paid in January • Dividends of R$ 8.0 million to be approved at the ASM in April’ 2011 15
    • Consistent recovery in profitabilityNet Revenues(in R$ million) 395 383 364 314 318 319 229 • Recent commercial achievements will present 134,3 177,8 major contribution to revenues as of 2Q11. 96,1 • Increase in gross profit • Strong cash generation as measured by EBITDA. 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 • Second year of record net income generation: • Dividend distributionProfitability Evolution • Share buy back program(in R$ million) 106.0 114.6 • Consistent investments 73.7 78.9 • Reduction in indebtedness 78.1 46.3 45.5 64.4 17.0 33.1 39.3 33.9 6.7 2006 2007 2008 2009 2010 -11.1 -6.3 Gross Income Net Income EBTIDA 16
    • -> strong and consistent operating performanceAverage Cardbase(in million of units) • Track record of cardbase growth, despite punctual 23.4 clients leave; 22.1 18.5 19.0 19.9 • Constant investment in technology and scale lead 15.4 to higher margins; • Operational leverage gains of scale are shared with clients to increase loyalty and discourage competition. 2008 2009 2010 Billed cards Registered CardsGross Revenue Gross Income and Gross Margin(in R$ million) (in R$ million and % of net revenues) CAGR 06-10 253.7 CAGR 06-10 103.3 240.8 17% 213.9 20% 94.3 71.2 156.7 159.2 54.4 50.9 46.3% 40.4% 37.7% 36.0% 34.4% 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010 17
    • -> positioned for profitable growthNumber of Workstations • Top 10 among Brazilian contact centers;(in units) • Important structural changes concluded in 2010 to 4.796 strengthen repositioning; 4.283 4.225 3.494 3.757 • Effective creation of a business unit; • Dedicated sales team: new offerings and expanded prospects base; • Specialized HR professionals: labor intensive activity. 2006 2007 2008 2009 2010Gross Revenue Gross Income and Gross Margin(in R$ million) (in R$ million and % of net revenues) 11.6 11.3 198 174 177 173 172 7.2% 7.0% 1.5% 0.5% 2.4 0.9 2006 2007 2008 2009 2010 -3,2% 2006 2007 2008 2009 2010 -5.4 18
    • Consolidated Financial Information(in R$ million and % of net revenues) 2006 2007 2008 2009 2010Net Revenue 317.9 318.6 363.7 394.8 383.3Gross Income 46.3 45.5 73.7 106 114.6Gross Margin 14.6% 14.3% 20.3% 26.8% 29.9% 54.4 50.9 71.2 94.3 103.3 Gross Margin 37.7% 34.4% 36.0% 40.4% 46.3% -8.1 -5.4 2.4 11.6 11.3 Gross Margin 0.5% -3.2% 1.5% 7.2% 7.0%EBITDA 39.2 33.9 64.4 78.9 78.1Net Income -16.9 -6.3 9.5 17.9 33.1Net Debt 59.5 109.1 95.0 55.5 23.8Capex 28.9 46.9 25.4 40.6 28.5 19
    • CARD3 is traded at inexpensive levels as compared to the market Net revenue Gross Margin EBITDA Margin Net Margin Company name (US$ million- EV/EBITDA P/E (%) (%) (%) 12M) 2,315.2 72.5% 66.3% 46.5% 6.4 9.2 10,235.7 66.7% 17.6% - - - 1,707.3 64.6% 22.3% 10.9% 9.1 19.4 1,535.2 77.6% 65.7% 55.8% 8.6 9.5 1,712.4 - 28.6% 12.1% 6.7 16.3 Financial Services Average 3,501.2 70.4% 40.1% 31.3% 7.7 13.6 1,383.8 17.1% 14.3% 5.9% 5.1 12.6 2,314.6 39.5% 8.1% 5.8% 9.4 15.6 594.6 25.0% 18.2% 7.3% 10.0 23.5 Contact Center Average 1,431.0 27.2% 13.5% 6.3% 8.2 17.2 229.5 28.8% 20.9% 6.0% 3.7 12,41. Current data: Last 12 months - Last balance sheet and income statement - reference date Jan. 31, 20112. Methodology for calculating EBITDA standardized by Economática 20
    • High level of Corporate Governance100% common shares and 44% free floatNovo Mercado (100% tag-along rights; no poison pills)Majority of independent board membersFiscal Council3 members, with 1 appointed by minority shareholdersSolid investor relations cultureInvestment by private equity funds since 1997Well structured internal controlsStock based compensation plan for executivesActive Sustainability Arm (CSU Institute) 21
    • CSU Executive Board Organizational Chart CEO Chief Financial, IR and CorporateCommercial Director Operations Executive Officer Legal, HR Officer Development CSU CardSystem Director of CSU Contact and Controller Officer 22
    • Additional Information Mônica Hojaij Carvalho Molina Carlos Montenegro Investor Relations Tel: +55 (11) 2106-3821 E-mail: ri@csu.com.br Web Site: www.csu.com.br/riThis material is the property of CSU CardSystem S.A., and any partial or total reproduction without the Company’s writtenapproval is prohibited. All rights reserved. Opinions expressed in this document are subject to change without prior notice.