Date post: | 29-Nov-2014 |
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BofA Merrill Lynch's Brazil Conference March 22, 2012
DISCLAIMER
The 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.
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BRAZIL | CARD INDUSTRY
3
17.1%18.9%
20.7%22.5%
24.3%
26.9%
2006 2007 2008 2009 2010 2011*
Penetration Of Cards as Means of Payment in the Private Consumption Expenditure (PCE)
Source: ABECS e IBGE* 2011 ( the Q4 numbers are estimated)
28.6%
28.6%
42.4%
0.3%
Banco Bradesco Banco do Brasil
Free-float Treasury
545.913.520 common shares
4
CIELO | OWNERSHIP
UPCOMING SOON
VO
UC
HER
CR
EDIT
AN
D D
EBIT
CIELO | PORTFOLIO OF BRANDS
5
CIELO | PLANNING MATRIX
6
Partnership with
Cybersource
Cielo Fidelidadeis the only loyaltyprogram developedexclusively to merchants
Scheme: accrual of pointsbased on the merchant’svolume with Cielo andredemption of points formore than 20 thousand products
Cielo Fidelidadeis the largest B2Bloyalty program inLatin America
CIELO | LOYALTY PROGRAM
7
CIELO PREMIA IS THE MOST
AND BRINGS AN ADVANCED TECHNOLOGYCHANGING THE CULTURE OF CARRYING OUTPROMOTIONS AT THE POINT S OF SALES
FLEXIBLE AND THE EASIEST TO USE
PROMOTIONAL MARKETING TOOL
IN THE MARKET
CIELO INNOVATES ONE MORE TIME
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CIELO | ADDING VALUE TO MERCHANTS
SURPRISES
ENGAGES
SEGMENTS
MANAGES
The card owner with a differentiatedpayment experience
The card owner through multiplegifts and discounts
The promotion according to your needs (Bank/Card Brand/Card type/Purchasing option: Debit or Credit)
The promotion automaticallyreducing operational costs strongly
CIELO | PREMIA’S MAIN ADVANTAGES
9
IT GIVES THE CLIENT
ON A SPECIFIC DAY / TIMEA GIFT OR A DISCOUNT
ADVANTAGES TO
IT INCREASES THE RETURN
FREQUENCY ON A DAYWITH LOW MOVEMENT
CIELO CLIENT
10
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
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CIELO | FIXED DAY AND TIME
CIELO | INNOVATIVE PRODUCTS
12
Unprecedented payment solution
application in Brazil for iPhone, iPad and
iPod touch as well as Android system
Devices used as POS terminal for mobile
payment with Visa, MasterCard,
American Express and Elo cards
In April Cielo Mobile Blackberry will be
launched
CIELO | ORIZON AQUISITION
Founded in 2006
Ownership interest of 40.95%;
Interconnection between healthcare and dental operators and services
providers
13
Financial Indicators 4Q11 4Q10 4Q11 X 4Q10 3Q11 4Q11 X 3Q11
Financial Volume(R$ million)
91,252.7 74,079.8 23.2% 79,775.2 14.4%
Transaction(million)
1,301.8 1,108.3 17.5% 1,167.0 11.6%
Net Revenue*(R$ million)
1,383.1 1,147.9 20.5% 1,210.9 14.2%
Cost of Services(R$ million)
(405.7) (354.6) 14.4% (365.6) 11.0%
Operating Expenses(R$ million)
(207.9) (130.4) 59.4% (165.8) 25.4%
Adjusted EBITDA(R$ million)
833.2 715.9 16.4% 741.2 12.4%
Net Income(R$ million)
504.5 443.3 13.8% 457.5 10.3%
Blended Net MDR (bps)
105 110 (5) 103 2
Credit Net MDR (bps) 119 132 (12) 118 1
Debit Net MDR (bps) 81 77 4 77 4
CIELO | FINANCIAL INDICATORS
14* Including prepayment of receivables present value adjusted
Financial Indicators 2011 2010 2011 X 2010
Financial Volume(R$ million)
315,856.2 261,675.3 20.7%
Transaction(million)
4.621,6 4,038.7 14.4%
Net Revenue*(R$ million)
4.795,4 4.354,4 10.1%
Cost of Services(R$ million)
(1.425,2) (1.180,8) 20.7%
Operating Expenses(R$ million)
(632.7) (441.0) 43.5%
Adjusted EBITDA(R$ million)
2,975.2 2,925.8 1.7%
Net Income(R$ million)
1,810.3 1,829.3 -1.0%
Blended Net MDR (bps) 103 119 (16)
Credit Net MDR (bps) 119 142 (23)
Debit Net MDR (bps) 77 80 (3)
CIELO | FINANCIAL INDICATORS
15* Including prepayment of receivables present value adjusted
CIELO | OPERATING PERFORMANCE
16
5.2%
CAGR: 23.3%CAGR: 17.9%
136,500
315,856
175,552
213,958
261,675
23.2%
74,080 91,2531,108
2,389
2,952
3,427
4,622
4,039
1,302
17.5%
1.403 1.720 2.003 2.323 2.658
621 730
9871,232
1.4241.716
1.964
487 572
2007 2008 2009 2010 2011 4Q10 4Q11
Cielo- Number of Transactions (millions)
Credit Debit
87.966 110.897 134.792 162.933
197.541
44.917 56.034
48.534
64.655
79.166
98.742
118.315
29.163 35.219
2007 2008 2009 2010 2011 4Q10 4Q11
Cielo- Financial Volume (R$ millions)
Credit cards Debit cards
824
9961.133 1.140
1.1991.140
1.199
2007 2008 2009 2010 2011 4T10 4T11
Cielo- Number of Active Merchants ( 1 transaction in the last 60 days)
CIELO | MERCHANTS BREAKDOWN
17
61% 60% 61% 59% 59%
39% 40% 39% 41% 41%
4Q10 1Q11 2Q11 3Q11 4Q11
Financial Volume
Large Merchants Small and Medium Merchants
33% 33% 34% 33% 32%
67% 67% 66% 67% 68%
4Q10 1Q11 2Q11 3Q11 4Q11
Revenue(*)
Large Merchants Small and Medium Merchants
(*) Comissions revenue (credit, debit and equipment rental)
CIELO | FAIR SHARE
18
Source : Earnings reported by the acquiring companiesOthers = Redecard e Santander/GetNet
Financial Volume Breakdown (in R$)
Considering the 2 main participants, Cielo gained 1.6 p.p. quarter-on-quarter
Considering the top three participants, Cielo gained 1.3 p.p. quarter-on-quarter
59,6% 56,9% 57,2% 57,7% 57,9% 59,5%
40,4% 43,1% 42,8% 42,3% 42,1% 40,5%
3Q10 4Q10 1Q11 2Q11 3Q11 4Q11
Cielo Redecard
59.4% 56.3% 56.4% 56.7% 56.7% 58,0%
40.6%43.7% 43.6% 43.3%
43.3%42,0%
3Q10 4Q10 1Q11 2Q11 3Q11 4Q11
Cielo Others
CIELO | REVENUES BREAKDOWN
29
5.5% 6.1% 6.3% 6.6% 6.4%
8.6% 9.8% 11.0% 11.6% 11.7%
21.7% 22.5% 21.5% 20.4% 19.4%
17.7% 16.4% 16.6% 16.9% 18.7%
46.5% 45.2% 44.6% 44.6% 43.8%
4Q10 1Q11 2Q11 3Q11 4Q11
Revenue- Activity (%)
Credit cards Debit cardsPOS Rental Prepayment of ReceivablesOther revenues
4.6% 3.9% 3.4% 3.9% 6.3%0.0% 0.5% 4.5% 7.5%
11.1%
27.8% 27.9%26.4%
24.3%20.8%
15.0% 16.0% 15.8% 16.3%17.3%
52.6% 51.6% 49.9% 48.1% 44.5%
2007 2008 2009 2010 2011
Revenue- Activity (%)
Credit cards Debit cardsPOS Rental Prepayment of ReceivablesOther revenues
CIELO | REVENUES
20
POS 4Q10 1Q11 2Q11 3Q11 4Q11
AverageRental(R$/month)
72 69 65 65 67
Installed POS (thousand) 1,277 1,293 1,351 1,402 1,484
MDR 4Q10 1Q11 2Q11 3Q11 4Q11
Net MDR Debit
77 76 74 77 81
Net MDR Credit
132 122 117 118 119
CAGR: 15.9%
17.1%
CAGR: 10.2%
7.5%
1,810.7
2,184.8
2,649.9
3,103.2
815.8955.4
3,268.4
1.409,31.666,9
2.012,02.317,8 2.354,6
590,8 669,0
401,3
517,9
637,9
785,4913,8
225,1286,4
2007 2008 2009 2010 2011 4Q10 4Q11
Commissions Revenues (R$ million)
Credit Debit
745,9
903,1
1.067,1
1.169,9
1.101,9
275,5 296,1
2007 2008 2009 2010 2011 4Q10 4Q11
Equipment Rental (R$ million)
CIELO | PREPAYMENT OF RECEIVABLES
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61.7%
20.8%
3.016,73.236,9 3.376,9
3.894,6
4.899,2
6,7%7,3%
7.2%7,7%
8.7%
0,0%
1,0%
2,0%
3,0%
4,0%
5,0%
6,0%
7,0%
8,0%
9,0%
10,0%
11,0%
12,0%
13,0%
14,0%
15,0%
16,0%
17,0%
18,0%
19,0%
20,0%
-
1.000,0
2.000,0
3.000,0
4.000,0
5.000,0
6.000,0
4Q10 1Q11 2Q11 3Q11 4Q11
Prepayment of Receivables
Financial prepayment volume
% Prepayment over Credit Financial Volume
66,162,9
58,5 56,0 55,8
4Q10 1Q11 2Q11 3Q11 4Q11
Average Term (days)
119,4 120,8137,7
159,9
193,1
4Q10 1Q11 2Q11 3Q11 4Q11
Revenue of Prepayment of Receivables ex Adjustments (R$ million)
CIELO | COSTS
22
The impact of the unit costexcluding the subsidiaries andthe additional brands fee wasa reduction of 9.6%
If the impact of depreciation is eliminated in the sameanalysis, the reduction wouldhave been 11.8%
Costs of services rendered
Depreciation and amortization
0.312 0.264 0.291
Unit per transaction
0.027 0.021
The impact of the unit costexcluding the subsidiaries andthe additional brands fee wasa increase of 2.0%
If the impact of depreciation is eliminated in the sameanalysis, the increase wouldhave been 4.1%
0.312 0.283 0.2770.027 0.002
405.8
343.2323.1
405.8
323.3367.8
343,4 280,8 271,0
62,4 35,7
26,8 62,4 52,1
4Q11 Reported Costs related to subsidiaries
Additional brands fee
4Q11 Adjusted 4Q10 Adjusted
Costs Comparison 4Q11 X 4Q10 (R$ million)
343,4 305,4
262,9
62,4 35,7
2,2 62,4
60,4
4Q11 Reported Costs related to subsidiaries
Additional brands fee
4Q11 Adjusted 3Q11 Adjusted
Costs Comparison 4Q11 X 3Q11 (R$ million)
9.6%
2.0%
6.2%
13.7%
CIELO | COSTS
23
The impact of the unit costexcluding the subsidiaries andthe additional brands fee was a reduction of 7.1%
If the impact of depreciation is eliminated in the same analysis, the reduction would have been10.0%
Costs of services rendered
Depreciation and amortization
0.308 0.256 0.275
Unit per transaction
0.033 0.020
1,425.2
1,181.9
1,111.3
1.192,2
948,8 921,2
233,0
152,7
90,6 233,0 190,1
2011 Reported Costs related to subsidiaries
Additional brands fee 2011 Adjusted 2010 Adjusted
Costs Comparison 2011 X 2010 (R$ million)
7.1%
6.4%
CIELO | OPERATING EXPENSES
24
In both comparison(4Q10 x 4Q11 and3Q11 x 4Q11), themain impact for theincrease was due to marketing and salesexpenses:
• campaigns withpartner banks;•Joint Cielo/Elo campaigns;•Actions with major gas station chains;•Actions withfranchisers;•Cielo Fidelidade;•Institutionalmarketing in different media
130,4
207.9
43,815,7
11,8 5,8 0.4
4Q10 Marketing and Sales Expenses
Other Expenses Personnel General and Administratives
Depreciation and
Amortization
4Q11
Operating Expenses Composition- 4Q10 to 4Q11 (R$ million)
165,8207.9
37,0 8,23,2 0,2
(6.5)
3Q11 Marketing and Sales Expenses
General and Administratives
Personnel Depreciation and
Amortization
Other Expenses 4Q11
Operating Expenses Composition- 3Q11 to 4Q11 (R$ million)
CIELO | OPERATING EXPENSES
25
In the comparison(2011 x2010),themain impact for theincrease in theexpenses were dueto:
• other expenses –provisions for taxand labor contingencies;
• marketing andsales–campaignswith partners (banksand clients) andloyalty programs to clients
441,0
632.8
61,2 51,2
40,537,3 1.5
2010 Marketing and Sales Expenses
Other Expenses General and Administratives
Personnel Depreciation and
Amortization
2011
Operating Expenses Composition- 2010 to 2011 (R$ million)
CIELO | FINANCIAL PERFORMANCE
26
16.4%
CAGR:19.6%
Adjusted EBITDA (R$ million) Net Income (R$ million)
13.8%
CAGR: 20.5%
1.409,5
1.764,3
2.450,7
2.925,92.975,2
59%61%
68% 67%
62%
45,00%
50,00%
55,00%
60,00%
65,00%
70,00%
75,00%
0,0
500,0
1.000,0
1.500,0
2.000,0
2.500,0
3.000,0
3.500,0
2007 2008 2009 2010 2011
Adjusted EBITDA
715,9
833,2
62%
60%
45,00%
50,00%
55,00%
60,00%
65,00%
70,00%
75,00%
0,0
100,0
200,0
300,0
400,0
500,0
600,0
700,0
800,0
900,0
4Q10 4Q11Adjusted EBITDA Margin
883,9
1.115,3
1.536,7
1.829,3 1.810,3
37%39%
42% 42%
38%
25,00%
30,00%
35,00%
40,00%
45,00%
50,00%
55,00%
60,00%
0,0
200,0
400,0
600,0
800,0
1.000,0
1.200,0
1.400,0
1.600,0
1.800,0
2.000,0
2007 2008 2009 2010 2011
Net Income
443,3
504,5
39%37%
25,00%
30,00%
35,00%
40,00%
45,00%
50,00%
55,00%
60,00%
0,0
100,0
200,0
300,0
400,0
500,0
600,0
4Q10 4Q11
Net Margin