Presentation of 3Q06 Results Presentation of 3Q06 Results November 16, 2006November 16, 2006
This presentation is subject to copyright and may not be copied or used without CSU’s express consent
November 16, 2006
2 This presentation is subject to copyright and may not be copied or used without CSU’s express consent
CREDIT CARD MARKETSCREDIT CARD MARKETS
Means of Payment (%)
131
82
51
166
94
64
185
109
75
Sep 04 Sep 05 Sep 06
Cards (million)
264324
368
(sep06/sep05)
13.6%
17.2%
16.0%
11.4%
Source: O Globo, 11/08/06 Edition
3%
3%
8%
15%
15%
16%
21%
37%
0% 10% 20% 30% 40% 50% 60%
Payroll deductible credit
Housing Loans
Financial Cos. personal loans
Banking overdraft facility
CC payment in equal installments
CC minimum payment invoice
CC interest-bearing purchases
Retailer Financing
CC Interest-free purchases 59%
Debt Store CreditSource: ABECS (Brazilian Association of Credit Card and Related Services Company)
RELEVANT ASPECTS:RELEVANT ASPECTS: Credit Card MarketsCredit Card Markets•• 80 MM expected until year end80 MM expected until year end•• Private Labels: Private Labels: migration to branded cardsmigration to branded cards•• R$ 20,1 R$ 20,1 bnbn revenue in 9M06 (22% higher than 9M05)revenue in 9M06 (22% higher than 9M05)•• New technologies, such as New technologies, such as smart card,smart card, to support card increaseto support card increase
November 16, 2006
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CARDSYSTEMCARDSYSTEM
• Carrefour-Visa – new customer
• Panamericano – new client co-branded card
• Caixa Project – base migration expected to Feb/07
• Nossa Caixa – growth potential (4.9 million customers)
• Losango – 2.7 million private label card
• HSBC – launch of new products
6.8 7.1 6.5 7.4
3.0 3.3 3.6 4.0
4Q05 1Q06 2Q06 3Q06Credit Cards Private Label Cards
10.111.4
Cards (million)
10.49.8
Car
ds m
illio
n
November 16, 2006
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TELESYSTEM AND TELESYSTEM AND CREDIT&RISK MARKETSYSTEMCREDIT&RISK MARKETSYSTEM
Brazil’s Call Center Revenues (R$ Bn)TeleSystem and Credit&Risk
• Banco do Brasil and FINASA – new customers –colection area• Banco IBI – new customer – credit area
• Natura – contract termination
4.645.34
6.146.91
3.96
7.68
2005 2006 2007 2008 2009 2010Actual Forecast
MarketSystem• Nossa Caixa – new program
• HSBC – launch of new products
• Santander – discontinued services
Source: IDC Brazil
RELEVANT ASPECTS:RELEVANT ASPECTS:Call Center MarketsCall Center Markets
•• Customer care and outsourcing Customer care and outsourcing ––growth driversgrowth drivers
•• Fierce competition Fierce competition ––reductions of reductions of marginsmargins
November 16, 2006
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GROSS REVENUEGROSS REVENUEGross Revenue Breakdown (R$ million)
31.0%
50.3%
18.7%
3Q05* 3Q06
32.8%
47.0%
10.1%10.2%
34.5%
50.1%
15.3%
34.9%
44.7%
9.4%11.0%
9M05 9M06
92.8
243.4272.9
87.1
CardSystem TeleSystem Credit & Risk MarketSystem
CardSystem RELEVANT ASPECTS:CardSystem RELEVANT ASPECTS:•• NonNon--recurring 3Q05 impactrecurring 3Q05 impact•• Private labels Private labels expansionexpansion•• Significant growth: adjusted 12.5% on 3Q06 and Significant growth: adjusted 12.5% on 3Q06 and 13.4% on 9M0613.4% on 9M06
TeleSystemTeleSystem and and Credit&RiskCredit&RiskRELEVANT ASPECTS:RELEVANT ASPECTS:•• TeleSystemTeleSystem and and Credit&RiskCredit&Risk: reduced : reduced commercial performance in 2006commercial performance in 2006
* Recurring revenue
November 16, 2006
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COSTSCOSTSCosts of Rendered Services (R$ million)
24.3%
55.5%
20.2%
3Q05 3Q06
25.8%
53.3%
7.4%13.6%
25.7%
56.1%
18.2%
24.0%
53.5%
7.9%14.6%
9M05 9M06
65.4 76.3183.5 218.6
MarketSystemCardSystem TeleSystem Credit & Risk
RELEVANT ASPECTS: Costs of Rendered ServicesRELEVANT ASPECTS: Costs of Rendered Services•• Increase in personal expensesIncrease in personal expenses•• Increase in Mailing Costs due to card base expansionIncrease in Mailing Costs due to card base expansion•• Leasing and Building: increase as a response to installed capaciLeasing and Building: increase as a response to installed capacity ty
((TeleSystemTeleSystem and and Credit&RiskCredit&Risk))•• CaixaCaixa Project: Temporary impactProject: Temporary impact•• Collective pay rises Collective pay rises
November 16, 2006
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GROSS PROFITGROSS PROFIT43.9
35.0 Gross Profit (R$ million) and Margin
9M06
9.19.1
27.0
23.1
3Q05 3Q06 9M05 9M06
•• NonNon--recurring effect as previously recurring effect as previously mentionedmentioned
•• TeleSystemTeleSystem and and Credit&RiskCredit&Riskreduced commercial performance in reduced commercial performance in 20062006
13.8%
20.7
9.719.3%
24.0 %11.3%
9M053Q05 3Q06
FG&A Expenses (R$ million)•• Stability between 3Q05 and Stability between 3Q05 and
3Q063Q06
•• Project to reduce operating Project to reduce operating costs and expenses, aiming to costs and expenses, aiming to improve the operating result by improve the operating result by R$4 million per quarter as of R$4 million per quarter as of 1Q071Q07
November 16, 2006
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EBITDA (R$ EBITDA (R$ milionmilion) ) andand EBITDA EBITDA MarginsMargins (%)(%)
Consolidated*
45.042.5
18.7%17.8%
12.919.9
23.2% 15.0%
3Q05 3Q06 9M05 9M06* Adjusted, excluding IPO expenses
November 16, 2006
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EBITDA Business EBITDA Business UnitUnit(R$ (R$ millionmillion))
38.4
29.8
9M05 9M06
9.113.4*
3Q05 3Q06
CardSystem
(2.0)0.8
9M05 9M06
(0.8)
1.6
3Q05 3Q06
Credit&Risk
* R$ 8,5 million after non-recurring revenue adjustment
TeleSystem MarketSystem
3.4
11.9
2.1
4.8 5.2
2.5
3Q05 3Q06 9M05 9M06 3Q06 9M06
November 16, 2006
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NET RESULTSNET RESULTS
Consolidated Net Results (R$ million)
10.1
6.1
(3.3)(1.4)
9M06*3Q05 3Q06* 9M05
* Excluding IPO expenses
November 16, 2006
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DEBTDEBT ANDAND INVESTMENTSINVESTMENTS
R$ thousand 1Q06 2Q06 3Q06Short Term Debt 36,914 36,407 17,197Long Term Debt 32,532 30,604 23,938Gross Debt 69,446 67,011 41,135(-) Cash 1,891 85,569 42,471Net Cash (Debt) 67,555 (18,558) (1,336)
20.7• Cash balance in 2Q and 3Q reduced by debt Cash balance in 2Q and 3Q reduced by debt amortization and amortization and CapexCapex
•• Adjustments in financial expenses already Adjustments in financial expenses already mentioned
Capex (R$ million)
mentioned
4.0
4.3
8.312.1
7.8CardSystem PlataformCaixa ProjectOthers 0.8
9M063Q06
November 16, 2006
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VALUE CREATIONVALUE CREATION
• CardSystem• Caixa Project implementation – Feb/07• Focus in Private Label co-branded cards• New customers prospection
• TeleSystem and Credit&Risk• Management restructuring implemented• Strengthening of commercial and structural processes
• MarketSystem• Focus in adding new financial, telecommunications and retail customers