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Corporate PresentationAugust, 2012
DISCLAIMERThe Company makes forward looking statements that are subject to risks anduncertainties. These statements are ba...
BRAZIL | CARD INDUSTRY                         Penetration Of Cards as Means of Payment in the Private                    ...
BRAZIL | MACROECONOMIC SCENARIO                                          GDP ( %)   7.5                     18            ...
BRAZIL | ECONOMIC SCHEME                                            MERCHANTS                                             ...
BRAZIL | TRANSACTION FLOW               Credit Transaction                          Debit TransactionISSUER               ...
MAIN ENTRY BARRIER | BANKINGDISTRIBUTIONBrazil has a total areaof 8,514,876 km²Banking distribution is the mainbarrier to ...
CIELO | TIMELINE           1995               2009             2010   4 Visa acquirers                        R$ 8.4 billi...
CIELO | OWNERSHIP                655.096.224 common shares                             0.3%                               ...
CIELO | PLANNING MATRIX                          Partnership with                          Cybersource                    ...
CIELO | PORTFOLIO OF BRANDS                      UPCOMING SOONCREDIT AND DEBITVOUCHER                                     ...
CIELO | LOYALTY PROGRAM                                   Cielo Fidelidade                                   is the larges...
CIELO | ADDING VALUE TO MERCHANTS                 CIELO INNOVATES ONE MORE TIME                 AND BRINGS AN ADVANCED TEC...
CIELO | PREMIA’S MAIN ADVANTAGES             The card owner with a differentiated SURPRISES   payment experience          ...
CIELO | FIXED DAY AND TIME                     IT GIVES THE CLIENT                     A GIFT OR A DISCOUNT               ...
CIELO | FIXED DAY AND TIME  *** CONGRATULATIONS!***     DISCOUNT TO YOU          10% discount      At the end of the day  ...
CIELO | INNOVATIVE PRODUCTS    Unprecedented         payment       solution     application in Brazil for iPhone, iPad an...
CIELO | CREDIÁRIO PRODUCT   Crediário is a unique and exclusive   technology developed by Cielo through        which merch...
CIELO | CREDIÁRIO PRODUCT    CREDIÁRIO: more advantages to participants        MERCHANT        • More sales volume: more t...
CIELO | MeS ACQUISITION      Agreement to acquire 100% of MeS for $670 millionMeS Highlights                              ...
MERCHANT e-SOLUTIONS AT A GLANCE                                                                   WEB-BASED DELIVERY     ...
CIELO | ORIZON AQUISITION  Founded in 2006  Ownership interest of 40.95%;  Interconnection between healthcare and denta...
CIELO | M4U AQUISITION     Founded in 2000     innovation in the development of technological mobility platforms     la...
CIELO | Paggo Soluções JV    Combine Oi’s mobile payment experience with Cielo’s     coverage and experience with electro...
CIELO | BRASPAG AQUISITION  Deal announced May 2011  Total amount of R$ 40 million  Founded in 2005  Leader as a gatew...
CIELO | BRASPAG POSITION                                                           Acquirers                              ...
CIELO | ADR Cielo has a sponsored Level I ADR Ticker: CIOXY ADR Ratio (ADR:ORD): 1:1 Depositary bank: Deutsche Bank Trust ...
CIELO | FINANCIAL INDICATORS                                                                                     2Q12 X  F...
CIELO | OPERATING PERFORMANCE        Cielo- Number of Transactions (R$ million)                                  Transacti...
CIELO | FAIR SHARE                                     Financial Volume Breakdown (in R$)Considering the 2 main participan...
CIELO | REVENUES               Commissions Revenues (R$ million)                                                     Equip...
CIELO | PREPAYMENT OF RECEIVABLES                                                       Revenue of Prepayment of Receivabl...
CIELO | COSTS                                                                                                        Costs...
CIELO | EXPENSES                       Operating Expenses- 2Q12 X 2Q11 (R$ million)                                       ...
CIELO | FINANCIAL PERFORMANCE                          Adjusted EBITDA (R$ million)                                       ...
CIELO | WHY INVEST?Leader in a fast growing marketStrong balance sheet, highcash generation and lowcapex requirementsMinim...
Investor Relations Contacts:www.cielo.com.br/riEmail: ri@cielo.com.brPhone.: + 55 11 2596 1701
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Apresentação Institucional 2012

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Transcript of "Apresentação Institucional 2012"

  1. 1. Corporate PresentationAugust, 2012
  2. 2. DISCLAIMERThe Company makes forward looking statements that are subject to risks anduncertainties. These statements are based on the beliefs and assumptions of our management as wellas on information currently available to us. Forward-looking statements include information regarding ourcurrent intent, beliefs or expectations, in addition to those of the members of the Board of Directors andExecutive Officers of the Company.Forward-looking statements also include information regarding our possible or assumed future operatingresults, as well as statements preceded or followed by, or that include, the words believes”, may”,will”, continues”, expects”, anticipates”, intends”, plans”, estimates”, or similarexpressions.Forward-looking statements are not guarantees of performance. They involve risks, uncertainties andassumptions, for they relate to future events, thus depending on circumstances that may or may notoccur. Our future results and the creation of value to shareholder s may differ significantly from thoseexpressed in or suggested by these forward-looking statements. Many factors determining theseresults and values are beyond Cielo’s ability to control or predict. 2
  3. 3. BRAZIL | CARD INDUSTRY Penetration Of Cards as Means of Payment in the Private Consumption Expenditure (PCE) 26.9% 27.1% 24.3% 22.5% 20.7% 18.9% 17.1% 2006 2007 2008 2009 2010 2011 1Q12* Source: ABECS e IBGE * the Q1 numbers are estimated) 3
  4. 4. BRAZIL | MACROECONOMIC SCENARIO GDP ( %) 7.5 18 Retail Trade Sales (%) 16 6.1 14 5.1 12 4.0 10 8 2.7 9.0 1.9 6 4 2 -0.2 0 2006 2007 2008 2009 2010 2011 2012(E)PIB: IBGE(E) Estiimates- Focus Report- BCB Source: IBGE Unemployment (%) Credit Credit Evolution Credit/GDP (R$million)10 2.500 2,167 50,0 9 2,030 2.000 8 1,704 40,0 1.500 1,414 53% 60% 30,0 7 1,227 56% 1.000 936 57% 6 54% 20,0 55% 5 500 40% 47% 10,0 46% 43% 44% 45% 4 0 0,0 2007 2008 2009 2010 2011 jul/12 Individuals Legal Entities Credit/GDPSource: IBGE Source: BCB 4
  5. 5. BRAZIL | ECONOMIC SCHEME MERCHANTS The brand defines the interchange fee. The acquirer negotiates the gross MDR with the merchant. Gross MDR Net MDR Interchange Fee 5
  6. 6. BRAZIL | TRANSACTION FLOW Credit Transaction Debit TransactionISSUER ISSUERCARD HOLDERS MERCHANTS CARD HOLDERS MERCHANTS 6
  7. 7. MAIN ENTRY BARRIER | BANKINGDISTRIBUTIONBrazil has a total areaof 8,514,876 km²Banking distribution is the mainbarrier to new players70% of the affiliations are donethrough banks NUMBER OF BRANCHES NORTH 293 277 82 48 92 35 0 0 3 NORTHEAST 1,127 833 288 196 411 56 3 7 9 MIDWEST 459 344 293 95 193 105 1 6 6 SOUTHEAST 2,338 2,387 2,528 1,832 1,137 427 7 103 69 SOUTH 1,049 772 637 356 501 239 441 10 16 TOTAL 5,266 4,613 3,828 2,527 2,334 862 452 126 103 7 SOURCE: BRAZILIAN CENTRAL BANK , MARCH 2012
  8. 8. CIELO | TIMELINE 1995 2009 2010 4 Visa acquirers R$ 8.4 billion IPO Multi-brand acquirer June 2009 + Single Visa Acquirer 8
  9. 9. CIELO | OWNERSHIP 655.096.224 common shares 0.3% 28.6% 42.4% 28.6% Banco Bradesco Banco do Brasil Free-float Treasury 9
  10. 10. CIELO | PLANNING MATRIX Partnership with Cybersource 10
  11. 11. CIELO | PORTFOLIO OF BRANDS UPCOMING SOONCREDIT AND DEBITVOUCHER 11
  12. 12. CIELO | LOYALTY PROGRAM Cielo Fidelidade is the largest B2B loyalty program in Latin America Cielo Fidelidade Scheme: accrual of points based on the merchant’s is the only loyalty volume with Cielo and program developed redemption of points for more exclusively to merchants than 20 thousand products 12
  13. 13. CIELO | ADDING VALUE TO MERCHANTS CIELO INNOVATES ONE MORE TIME AND BRINGS AN ADVANCED TECHNOLOGY CHANGING THE CULTURE OF CARRYING OUT PROMOTIONS AT THE POINT S OF SALES CIELO PREMIA IS THE MOST FLEXIBLE AND THE EASIEST TO USE PROMOTIONAL MARKETING TOOL IN THE MARKET 13
  14. 14. CIELO | PREMIA’S MAIN ADVANTAGES The card owner with a differentiated SURPRISES payment experience The card owner through multiple ENGAGES gifts and discounts The promotion according to your needs SEGMENTS (Bank/Card Brand/Card type/Purchasing option: Debit or Credit) The promotion automatically MANAGES reducing operational costs strongly 14
  15. 15. CIELO | FIXED DAY AND TIME IT GIVES THE CLIENT A GIFT OR A DISCOUNT ON A SPECIFIC DAY / TIME ADVANTAGES TO CIELO CLIENT IT INCREASES THE RETURN FREQUENCY ON A DAY WITH LOW MOVEMENT 15
  16. 16. CIELO | FIXED DAY AND TIME *** CONGRATULATIONS!*** DISCOUNT TO YOU 10% discount At the end of the day On Mondays PRIZE BALANCE -------------------------- EXPIRING DATE: 01/31/2011 16
  17. 17. CIELO | INNOVATIVE PRODUCTS  Unprecedented payment solution application in Brazil for iPhone, iPad and iPod touch as well as Android system and Blackberry  Devices used as POS terminal for mobile payment with Visa, MasterCard, American Express and Elo cards 17
  18. 18. CIELO | CREDIÁRIO PRODUCT Crediário is a unique and exclusive technology developed by Cielo through which merchants can offer an additional payment method that allows cardholders to pay in up to 48 installments, accessing a pre-approved credit line from their checking accounts through their bank cards. Banco do Brasil and Bradesco made available R$100 billion in credit to the product. In the coming months others banks will join (HSBC and Caixa Ecônomica Federal). 18
  19. 19. CIELO | CREDIÁRIO PRODUCT CREDIÁRIO: more advantages to participants MERCHANT • More sales volume: more than 20 million cardholders from BB and Bradesco with pre-approved lines of credit; • Additional payment scheme without directly financing the cardholder; • Better cash flow as funds are received in D+1; • Increase in average ticket; CARDHOLDER • Pre-approved credit line from the bank; • Attractive interest rates; • Additional to credit card’s limit; • Simulation at the point of sale; CIELO • More sales volume; • Merchant Discount Rate similar to credit in installments. 19
  20. 20. CIELO | MeS ACQUISITION Agreement to acquire 100% of MeS for $670 millionMeS Highlights Rationale• Leading e-Commerce payment services • Enhancement of Technology Platform provider with full range of merchant – Opportunity to leverage MeS’ technology to acquiring, e-Commerce & fraud the Brazilian market and Rest of World management solutions – MeS platform designed to achieve maximum• Proprietary, internet-based, next- scalability, efficiency and reliability at a low generation technology platform with best- cost in-class scalability, analytical capabilities, • E-Commerce Improvement delivery speeds and cost of services – E- Commerce is fastest growth merchant• In-house development of products and category in payments services provides superior transaction – MeS has expertise and proprietary economics across the value chain technology tailored to serving e-commerce merchants• Portable platform with upside for expansion • Strong MeS Financial Performance• Good organic revenue growth, margins and – High organic growth and attractive margins free cash flow• Seasoned management team 20
  21. 21. MERCHANT e-SOLUTIONS AT A GLANCE WEB-BASED DELIVERY FULL RANGE OF ACQUIRING, E-COMMERCE & MOBILE PAYMENT SERVICES MERCHANTS AGENT BANKSYear Founded 2000 • End-to-end payment processing • A white-label and fully customizable functionality: business solution:Number of 70,000+ – e-Commerce – Transaction Processing & ReportingMerchants – Business-to-Business – E-Commerce & MobileProcessing $14bn+ – Mobile Commerce – Risk ManagementVolume – Card present and card not – Product & Pricing# of Settled 130mm+ present merchants – Compliance AdministrationTransactions – Recurring Billing – Sales Training and Marketing LTM Net Revenue of – Risk Management – Business Analytics $124 million* * Last twelve months ended May 31, 2012 21
  22. 22. CIELO | ORIZON AQUISITION  Founded in 2006  Ownership interest of 40.95%;  Interconnection between healthcare and dental operators and services providers 22
  23. 23. CIELO | M4U AQUISITION  Founded in 2000  innovation in the development of technological mobility platforms  largest mobile top up and mobile payment platforms in the country  developed several applications under the most diverse cell phone standards for a wide range of clients in the financial and telecom markets  Founders will continue to head the businessDeal  Announced August 2010  Total amount of R$ 50.1 million  R$ 25.05 million already paid and the other half will be payable after 37 months from the closing date (as long as the contractual targets are met) 23
  24. 24. CIELO | Paggo Soluções JV  Combine Oi’s mobile payment experience with Cielo’s coverage and experience with electronic payment networks, in order to create a joint venture to offer acquiring and transaction capture services using mobile devices  Creation of a new company controlled by both Oi and Cielo  Announced September 2010 24
  25. 25. CIELO | BRASPAG AQUISITION  Deal announced May 2011  Total amount of R$ 40 million  Founded in 2005  Leader as a gateway for e-commerce in Brazil, with approximately 65% market share  Platform integrates online stores, financial institutions and acquirers, and is responsible for capturing, routing and managing payment transactions with cards, collection slips and online debit 25
  26. 26. CIELO | BRASPAG POSITION Acquirers Card Gateways Slip Debit Wallets Banks 26 Source: Company, Broker reports, Cybersource
  27. 27. CIELO | ADR Cielo has a sponsored Level I ADR Ticker: CIOXY ADR Ratio (ADR:ORD): 1:1 Depositary bank: Deutsche Bank Trust Company Americas Depositary bank contacts: ADR broker helpline: Tel: +1 212 250 9100 (New York) Tel: +44 207 547 6500 (London) Email: adr@db.com ADR website: www.adr.db.com Depositary bank’s local custodian: Banco Bradesco 27
  28. 28. CIELO | FINANCIAL INDICATORS 2Q12 X Financial Indicators 2Q12 2Q11 1Q12 2Q12 X 1Q12 2Q11 Financial Volume (R$ million) 91,720.8 74,622.6 88,081.8 22.9% 4.1% Transaction (million) 1,282.0 1,094.2 1,269.4 17.2% 1.0% Net Revenue * (R$ million) 1,470.1 1,119.3 1,399.5 31.3% 5.0% Cost of Services (R$ million) (407.7) (342.4) (399.1) 19.1% 2.1% Operating Expenses (R$ million) (223.8) (115.4) (125.9) 94.0% 77.7% Unit Costs + Expenses ex subsidiaries (0.44) (0.38) (0.37) 17.8% 20.8% Adjusted EBITDA (R$ million) 914.1 720.2 947.8 26.9% -3.6% Net Income (R$ million) 548.9 423.6 566.6 29.6% -3.1% Blended Net MDR (bps) 102.6 101.2 105.3 1.5 (2.7) Credit Net MDR (bps) 116.1 117.5 118.6 (1.4) (2.6) Debit Net MDR (bps) 78.9 73.7 81.2 5.2 (2.3) 28* Including prepayment of receivables present value adjusted
  29. 29. CIELO | OPERATING PERFORMANCE Cielo- Number of Transactions (R$ million) Transaction Financial Volume (R$ million) 17.2% 22.9% 1,302 1,269 1,282 91,721 91,253 88,082 1,1671,094 79,775 74,623 572 1.0% 531 33.150 531 35.219 31.296 4.1% 455 489 29.407 27.802 730 739 751 50.368 56.034 56.786 58.571 639 678 46.821 2Q11 3Q11 4Q11 1Q12 2Q12 2Q11 3Q11 4Q11 1Q12 2Q12 Credit cards Debit cards Credit Debit Cielo- Number of Active Merchants (1 transaction in the last 60 days) 13.4% 1.264 1.212 1.199 1.153 4.3% 1.115 2Q11 3Q11 4Q11 1Q12 2Q12 29
  30. 30. CIELO | FAIR SHARE Financial Volume Breakdown (in R$)Considering the 2 main participants , Considering the 3 main participants, Cielo gained 0.9 p.p. quarter-on- Cielo gained 0.5 p.p. quarter-on- quarter quarter 42,3% 42,1% 40,5% 39,8% 38,9% 43,3% 43,3% 42,0% 41,5% 41,0% 57,7% 57,9% 59,5% 60,2% 61,1% 56,7% 56,7% 58,0% 58,5% 59,0% 2Q11 3Q11 4Q11 1Q12 2Q12 2Q11 3Q11 4Q11 1Q12 2Q12 Cielo Redecard Cielo Others Source : Public information, released by the companies Others = Redecard and Santander/GetNet 30
  31. 31. CIELO | REVENUES Commissions Revenues (R$ million) Equipment Rental (R$ million) 24.7% 34.2% 355,8 342,9 955.4 941.2 927.8 1.4% 296,1 823.1 272,3 9.5% 754.9 265,1 286,4 254,1 261,4 226,5 204,8 669,0 673,7 679,7 550,1 596,6 2Q11 3Q11 4Q11 1Q12 2Q12 2Q11 3Q11 4Q11 1Q12 2Q12 Credit DebitMDR 2Q11 3Q11 4Q11 1Q12 2Q12 POS 2Q11 3Q11 4Q11 1Q12 2Q12Net MDR AverageDebit 74 77 81 81 79 Rental 65 65 67 71 75 (R$/month)Net MDRCredit 117 118 119 119 116 Installed POS 1,351 1,402 1,484 1,524 1,586 (thousand) 31
  32. 32. CIELO | PREPAYMENT OF RECEIVABLES Revenue of Prepayment of Receivables ex Adjustments (R$ million) 54.2% 212,4 193,1 190,1 159,9 11.7% 137,7 2Q11 3Q11 4Q11 1Q12 2Q1210.000,0 30,0% Prepayment of Receivables (R$ million) 29,0% Average Term (days) 28,0% 9.000,0 27,0% 26,0% 25,0% 8.000,0 24,0% 23,0% 22,0% 58,5 56,0 57,7 7.000,0 6.162,2 21,0% 20,0% 55,8 55,7 19,0% 6.000,0 5.289,9 18,0% 4.899,2 17,0% 16,0% 5.000,0 15,0% 3.894,6 14,0% 13,0% 4.000,0 3.376,9 10,5% 12,0% 9,3% 11,0% 8,7% 10,0% 3.000,0 9,0% 8,0% 7,0% 2.000,0 7,2% 7,7% 6,0% 5,0% 4,0% 1.000,0 3,0% 2,0% 1,0% - 0,0% 2Q11 3Q11 4Q11 1Q12 2Q12 Financial prepayment volume % Prepayment over Credit Financial Volume 2Q11 3Q11 4Q11 1Q12 2Q12 32
  33. 33. CIELO | COSTS Costs of services rendered Depreciation and amortization Unit per transaction Costs Comparison 2Q12 X 2Q11 (R$ million) 407.7  Reduction of 5.3% of the unit 11.0% cost excluding the subsidiaries 73,8 334.9 301.8 and the additional brands fee 50,7 73,8 22,1 57,7  If the impact of depreciation is 333,9 261,1 eliminated in the same 244,1 analysis, the reduction would have been 8.7% 2Q12 Reported Costs related to Additional brands fee 2Q12 Adjusted 2Q11 Adjusted subsidiaries -5.3% 0.318 0.040 0.017 0.261 0.276 Costs Comparison 2Q12 X 1TQ2 (R$ million) 407.7  Increase of 2.0% of the unit 3.0% 73,8 362.8 352.3 cost excluding the subsidiaries 50,7 73,8 and the additional brands fee 5,8 71,8  If the impact of depreciation is 333,9 289,0 280,5 eliminated in the same analysis, the increase would have been 2.0% 2Q12 Reported Costs related to Additional brands fee 2Q12 Adjusted 1Q12 Adjusted subsidiaries 0.318 0.040 +0.005 0.283 2.0% 0.278 33
  34. 34. CIELO | EXPENSES Operating Expenses- 2Q12 X 2Q11 (R$ million) 55,9 33,9 In both comparisons 0,6 2,6 15,4 223,8 (2Q12 x 2Q11 and 2Q12 x 1Q12), the 115,4 main impact for the 2Q11 Depreciation and Personnel General and Other Expenses Sales and 2Q12 increase was due to Amortization Administratives Marketing sales and marketing Expenses expenses (with the realization of some Operating Expenses- 2Q12 X 1Q12 (R$ million) initiatives and campaigns that were postponed from 1Q12 and the 54,0 incentives paid to 22,4 partner banks due to 20,8 0,0 0,7 223,8 shared sales and 125,9 marketing expenses.) 1Q12 Depreciation Personnel General and Other Expenses Sales and 2Q12 and Administratives Marketing Amortization Expenses 34
  35. 35. CIELO | FINANCIAL PERFORMANCE Adjusted EBITDA (R$ million) Net Income (R$ million) 26.9% 29.6% 947,8 600,0 566,6 548,8 60,00% 914,11.000,0 75,00% 839,8 504,5 55,00% 900,0 747,0 500,0 457,5 720,2 70,00% 423,6 -3.1% 800,0 -3.6% 50,00% 400,0 700,0 68% 65,00% 45,00% 600,0 64% 300,0 500,0 62% 60,00% 40,00% 400,0 62% 61% 200,0 41% 55,00% 38% 38% 37% 35,00% 300,0 37% 100,0 30,00% 200,0 50,00% 100,0 0,0 25,00% 2Q11 3Q11 4Q11 1Q12 2Q12 0,0 45,00% 2Q11 3Q11 4Q11 1Q12 2Q12 Net Income Net Margin Adjusted EBITDA Adjusted EBITDA Margin 35
  36. 36. CIELO | WHY INVEST?Leader in a fast growing marketStrong balance sheet, highcash generation and lowcapex requirementsMinimum dividend payout of 50% of net profit*distributed twice a yearFocus on innovationand continuous growth 36
  37. 37. Investor Relations Contacts:www.cielo.com.br/riEmail: ri@cielo.com.brPhone.: + 55 11 2596 1701
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