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Bradesco CEO Forum – Brazil 2013
Rômulo de Mello Dias – CEO
The Company makes forward looking statements that are subject to risks and uncertainties. These statements are based on the beliefs and assumptions of our management as well as on information currently available to us. Forward-looking statements include information regarding our current intent, beliefs or expectations, in addition to those of the members of the Board of Directors and Executive Officers of the Company. Forward-looking statements also include information regarding our possible or assumed future operating results, as well as statements preceded or followed by, or that include, the words ''believes”, ''may”, ''will”, ''continues”, ''expects”, ''anticipates”, ''intends”, ''plans”, ''estimates”, or similar expressions. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions, for they relate to future events, thus depending on circumstances that may or may not occur. Our future results and the creation of value to shareholder s may differ significantly from those expressed in or suggested by these forward-looking statements. Many factors determining these results and values are beyond Cielo’s ability to control or predict.
DISCLAIMER
#1 MERCHANT ACQUIRER
AND PAYMENT
PROCESSOR IN BRAZIL
AND LATIN AMERICA PR
ES
EN
T IN
MO
RE
TH
AN
OF BRAZILIAN
MUNICIPALITIES
MARKET CAP – AMONG
15 LARGEST IN
BM&FBOVESPA
R$ 35 BILLION 99.6%
EXCHANGE RATE: 1USD = R$2.0
CIELO – LEADING MERCHANT ACQUIRER
01
1.3 million active merchants
ADR level 1 program
Most modern POS and data capture network
50% minimum dividend pay out
R$ 4,795 billion annual revenue, EBITDA of R$ 2,975 billion and net income of R$ 1,810 billion*
Free float of 42.4%
(controlling shareholders are Banco
do Brasil and Bradesco with equal
participation)
CIELO AT A GLANCE
1 OF THE WORLD’S LARGEST PAYMENT
NETWORKS
EXCHANGE RATE: 1USD = R$2.0
* 2011 figures 02
Penetration Of Cards as Means of Payment in
Personal Consumption Expenditures (PCE)
GROWTH POTENTIAL GIVEN LOW CARD
PENETRATION
0
10
20
30
40
50
60
70
80
0 5 10 15 20 25
PCE Penetration
Growth [%]
United States*
United Kingdom
Netherlands
Korea
India
Germany
France
Brazil
Volume USD bn
* 2010 figures
Source: BIS / World Bank 03
COMPETITIVE ENVIRONMENT
Source : Public information, released by the companies
Others = Redecard and Santander/GetNet
Financial Volume Breakdown (R$ Million)
Considering the 2 main
participants, Cielo has over 60%
of financial volume
Considering the 3 main
participants, Cielo has 59% of
financial volume
57.7% 57.9% 59,5% 60.2% 61.1%
42.3% 42.1% 40.5% 39.8% 38.9%
2Q11 3Q11 4Q11 1Q12 2Q12
Cielo Redecard
56.7% 56.7% 58.0% 58.5% 59.0%
43.3% 43.3% 42.0% 41.5% 41.0%
2Q11 3Q11 4Q11 1Q12 2Q12
Cielo Others
157,946 145,148 159,854 138,985 131,439 141,899 133,648 152,430 149,523 164,034
04
COMPETITIVE ADVANTAGES
Cielo is the dominant leader
Partnership with 4 of the largest Brazilian retail
banks
Working with the most relevant brands
Focus on anti-fraud and security systems
Cutting edge initiatives on mobile payment
Strong position on e-commerce
DIS
TR
IBU
TIO
N
PR
OD
UC
TS
AN
D S
ER
VIC
ES
INN
OV
AT
ION
Own sales force team
Unique products and solutions to merchants
05
NEW PRODUCTS | CREDIÁRIO
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.
Bradesco and Banco do Brasil made
available R$100 billion in credit to
the product. In the coming months
others banks will join (HSBC and
Caixa Ecônomica Federal).
06
NEW PRODUCTS | CREDIÁRIO
Step by step
1. Select option Crediário
07
NEW PRODUCTS | CREDIÁRIO
Step by step
2. Select option Simulation
08
NEW PRODUCTS | CREDIÁRIO
Step by step
3. Type the amount
09
NEW PRODUCTS | CREDIÁRIO
Step by step
4. Type the number of
installments
(up to 48 installments)
10
NEW PRODUCTS | CREDIÁRIO
Step by step
5. Type the date for the first
installment
(it should be between 30 to
59 days of the purchase
date)
11
NEW PRODUCTS | CREDIÁRIO
Step by step
6. Cardholder types the
password
12
NEW PRODUCTS | CREDIÁRIO
Step by step
7. Print out of the simulation:
- Number of installments
- Purchase total amount
- Interest
- Date of first installment
- Amount of each installment
13
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.
CREDIÁRIO: more advantages to participants
CIELO | CREDIÁRIO PRODUCT
14
Rationale
• Enhancement of Technology Platform
– Opportunity to leverage MeS’ technology to the Brazilian market and Rest of World
– MeS platform designed to achieve maximum scalability, efficiency and reliability at a low cost
• E-Commerce Improvement
– E- Commerce is fastest growth merchant category in payments
– MeS has expertise and proprietary technology tailored to serving e-commerce merchants
• Strong MeS Financial Performance
– High organic growth and attractive margins (LTM ended May 31, 2012 Net Revenues of USD 124 million)
MeS Highlights • Leading e-Commerce payment services
provider with full range of merchant acquiring, e-Commerce & fraud management solutions
• Proprietary, internet-based, next-generation technology platform with best-in-class scalability, analytical capabilities, delivery speeds and cost of services
• In-house development of products and services provides superior transaction economics across the value chain
• Portable platform with upside for expansion
• Good organic revenue growth, margins and free cash flow
• Seasoned management team
Cielo acquired 100% of Merchant e-Solutions for $670 million
INNOVATION – BEST IN CLASS PLATFORM
15
OPERATING PERFORMANCE
* Merchants that have conducted at least one electronic payment transaction with us within the preceding 60 days
1,133 1,140
1,199
1,153
1,291
2009 2010 2011 9M2011 9M2012
Number of Active* Merchants (thousands)
12.0%
2,003 2,322 2,658 1,928 2,263
1,424
1,716
1,964
1,391
1,622
2009 2010 2011 9M2011 9M2012
Number of Transactions (million)
Credit Debit
3,319
17.1%
3,427
4,038
4,622
3,885
134,792 162,933
197,541
141,400 176,400
79,165
98,742
118,315
83,100
99,100
2009 2010 2011 9M2011 9M2012
Transaction Financial Volume (R$ million)
Credit Debit
22.7%
213,957
261,675
315,856
224,500
275,500
CAGR 16.1% CAGR 21.5%
CAGR 2.9%
16
REVENUE BREAKDOWN
3.5% 4.2% 7.1% 7.1% 8.0%
27.7% 26.2% 23.4% 24.0% 25.1%
16.6% 17.6% 19.4% 18.7% 18.5%
52.2% 52.0% 50.0% 50.2% 48.4%
2009 2010 2011 9M2011 9M2012
Revenue - Activity (%)
Credit Cards
Debit Cards
POS Rental
Other Services
17
PREPAYMENT OF RECEIVABLES
218,2
403
611,5
418,4
610,4
2009 2010 2011 9M2011 9M2012
Revenue from Prepayment of Receivables ex Adjustment1 (R$ million)
54,0
68,5
58,3 59,1 57,3
2009 2010 2011 9M2011 9M2012
Average Term (days)
6,781
10,340
15,408
10,508
17,866
5.0 6.3
7.8 7.4
10.1
2009 2010 2011 9M2011 9M2012
Volume of Prepayment (R$ million)
Financial prepayment volume
% Prepayment over Credit Financial Volume
45.9% CAGR 67.4%
1 Adjusted to Net Present Value
18
OPERATING REVENUES AND COSTS
3,628
4,354 4,795
3,412
4,421
2009 2010 2011 9M2011 9M2012
Adjusted Net Operating Revenue (R$ million)
CAGR 15.0%
1,331
1,548
1,894
1,324
1,624
0.39 0.38 0.41 0.40 0.42
2009 2010 2011 9M2011 9M2012
Costs + expenses ex Subsidiaries (R$ million)
Costs + expenses ex Subsidiaries Unit Costs + expenses ex Subsidiaries
CAGR 19.3%
29.6%
22.7%
19
1,534
1,831 1,817
1,309
1,709
44.5% 45.9% 43.2% 43.6% 44.7%
2009 2010 2011 9M2011 9M2012
Net income (R$ million)
Net income Net margin
FINANCIAL PERFORMANCE
* EBITDA consists of net income (1) plus income tax and social contribution, (2) plus depreciation and amortization and (3) less financial income, net.
30.6%
2,263 2,564 2,389 1,746 2,257
65.7% 64.2% 56.8% 58.1% 59.1%
2009 2010 2011 9M2011 9M2012
EBITDA* (R$ million)
EBITDA EBITDA Margin
29.3% CAGR 2.7%
CAGR 8.8%
,
20
* AFTER CONSTITUTION OF LEGAL RESERVES
Leader in a fast growing market
Strong balance sheet, high cash generation and low capex requirements
Minimum dividend pay out of 50% of net profit* distributed twice a year
Focus on innovation and continuous growth
CIELO INVESTMENT CASE
21
INVESTOR RELATIONS CONTACTS
www.cielo.com.br/ri
E-mail: [email protected] | Phone: + 55 11 2596 1701