Cielo Day
Barueri, May 5th , 2010
AGENDA
13:30 – 14:00
14:00 – 14:10
14:10 – 14:30
14:30 – 15:00
15:00 – 15:30
15:30 – 17:00
17:00 – 17:30
17:30 – 18:00
18:00 – 18:30
18:30 – 18:45
18:45 – 20:00
Registration
Opening Remarks
Our Company & Strategic Positioning
Innovation
IT and Operations
Visit to Cielo / Coffee Break
Building on relationships
Strengthening a winning culture
Protecting Profitability
Closing Remarks
Cocktail
Marcos Grodetzky
Rômulo Dias
Eduardo Chedid
Paulo Guzzo
Eduardo Gouveia
Roberto Dumani
Marcos Grodetzky
Rômulo Dias
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
01
Cielo in a nutshell
Approximately R$4 billion revenue company
1,047 employees
Around 7% of GDP captured by Cielo’s network
R$ 22 billion market cap
1.7 million merchants covering 97.6% of Brazilian municipalities
R$ 8.4 billion IPO in June, 2009 – the largest in Brazil
Fully integrated acquirer:
Acquiring Processing Settlement
present in the complete value chain
02
Recent events impacting Cielo
Change in participation among controlling shareholders
JV between Bradesco and Banco do Brasil to participate in the card business among other initiatives to launch a Brazilian brand for credit, debt and pre-paid cards for account and non-account holders
Shareholder´s Ownership % Current % Future ∆
Controlling Shareholders 57,30% 57,30% 0,00%
Banco Bradesco 26,56% 28,65% 2,09%
Banco do Brasil 23,54% 28,65% 5,11%
Banco Santander (Spain) 7,20% 0,0% -7,20%
Free-Float 42,40% 42,40% 0,00%
Treasury 0,30% 0,30% 0,00%
Entry in Bovespa’s indexes (May/10)
Best practices of Corporate Governance
03
Executive Board
Business Solutions
Commercial / Trade Marketing
IT and Operations CFO and IR Institutional
RelationshipOrganizational Development
Internal Controls
CEORomulo Dias
Executive VPRoberto Dumani
Executive VPEduardo Chedid
Executive VPPaulo Guzzo
Executive VPEduardo Gouveia
Executive VPMarcos Grodetzky
Executive VPManoel de Souza
DirectorEduardo Magalhães
CIEL3 offers 100% of Tag-Along, traded at “BM&FBovespa’s Novo Mercado” and Corporate Governance Index
Arnaldo Alves Vieira Chairman of the board Jair Delgado Scalco Bradesco RepresentativeMilton Almicar Silva Vargas Bradesco RepresentativeNorberto Pinto Barbedo Bradesco RepresentativeRaul Francisco Moreira BB RepresentativeJosé Maurício Pereira Coelho BB RepresentativeDenilson Gonçalves Molina BB RepresentativePaulo Rogério Caffarelli BB RepresentativeFrancisco Augusto da Costa e Silva Independent MemberGilberto Mifano Independent Member Compensation&Benefits
Board of Directors Board Advisory Committees
Finance
Auditing
Issuer Risk
Corporate Governance
04
Regulatory Framework
Neutrality in clearing and settlement operations
Interoperability of networks and POS transaction capture terminals
Opening up of the affiliation process
Transparency in defining interchange fees
Strengthening of the domestic debit card framework
* Note released October,1 2009
CENTRAL BANK NOTE* – 5 recommendations
Mobile / eCommerce
05
Our business universe is enormous
Card Present Card Absent
Payment Transactions
Non-Payment Transactions
STRATEGIC MATRIX
VAN* Services
* Value Added Network
06
And we will capture new opportunities
New growth waves in the traditional business: other brands / vouchers untapped segments low ticket transactions
Further development in the mobile payment and eCommerce
New initiatives in the B2B field
High probability to be the preferred acquirer by independent banks improving even more our distribution network
9
Emphasizing our agility…
9
…our security…
9
…and our availability.
INNOVATION
APPEALING PRODUCTS
RELIABILITY
SECURITY
DISTRIBUTION
DIFFERENTIATED RELATIONSHIP
MOTIVATED PEOPLE
STRONG CULTURE
COMPETITIVE REMUNERATION
ALIGNED INCENTIVES
FOCUS ON COSTS
GOAL TO PROTECT MARGIN10
We are confident to face the new market momentum
Information Services
Data Mining Credit Scoring
Alternative Transaction Services
Healthcare Transportation Loyalty ATM
Emerging Payment Technologies
Traditional Card Transactions
eCommerce Mobile Payments
Credit Debit Prepaid Commercial
Analytics
Product Breadth and Innovation Growth potential from comprehensive suite of products and services
Cielo will continue to create new products and drive merchant acceptance by fostering card usage and non-payment transactions
Emerging Payment Transactions: Extend card usage of the traditional POS equipment to emerging technologies - e.g. Visa Mobile Pay
Traditional Card Transactions: Increase the penetration, activation and usage of cards at the point-of-sale - e.g. Debit Activation, B2B transactions,etc
Alternative Transaction Services: Leverage processing infrastructure and customer base to process other types of transactions - e.g. Orizon
Information Services: Mine captured data from existing transactions to offer new value-added services
11
Unique to Cielo
Basic to theIndustry
Product Breadth and Innovation Broader product portfolio, leveraging platform and reinforcing client loyalty
20072006
Orizon:: Health Insurance
Transactions Acquiring
Flex Car
Promotional Platform (real time loyalty program at POS)
Visa Distribution Vcorp Airline
Agrocard
VCorp Hotel
Credit and Debit Mobile Top Up at
POS
Bank Correspondent
at POSV Message
2005
Visa Mobile Pay
Multimerchant POS
CREDIT
POS Solution
DEBIT
201020092008
Promotional Platform OnLine
Multi BrandAcquiring
Post-dated debit
Vending Machine Mobile Check-out
(CDC) Personal Credit Installment
Dialup TEF app Desktop POS
TEF IP appDedicated TEF app Wireless GPRS POS Virtual POSContactless
No interest installmentsInterest installments Recurring payments
Cash Back at POS
Prepayment of Receivables
12
Online Promotional Platform
Online Promotional Platform
Brands
Banks
“Swipe the card, input transaction amount, type the pin or sign the sales receipt.”
“Promote a new shopping experience as the purchase happens”
Merchant
Before After
Real time loyalty platform that enables Merchants, Issuers, Payment Brands and Cielo to offer a new shopping experience to cardholders. Not the typical aspirational “points” scheme but a platform that speaks the language of Retailers. MULTI BRAND READY!!!
13
Expectation• “Did I just get
a discount?”
Surprise
• “I got a prize to use in my next
purchase!”
Enchantment
• “A special gift for my
Birthday!!!”
***PROMOCAO!***
GANHE DESCONTOS
VOCE GANHOU R$ 50,00 DE DESCONTO, JA DEBITADOS DO VALOR DA COMPRA.
VALOR ORIGINAL: R$ 500,00 VALOR COM DESCONTO: R$ 450,00
***PROMOCAO!***
DESCONTO PARA VOCE
VOCE GANHOU 30% DEDESCONTO P/ UTILIZAR
EM SUA PROXIMA COMPRA.
SALDO DA PREMIACAO: 1-----------
VALIDADE DE PREMIACAO: 31/12/2010
***PROMOCAO!***
FELIZ ANIVERSARIO
VOCE GANHOU UMAMASSAGEM.APROVEITE!
VALIDADE DE PREMIACAO: 31/10/2010
New Shopping Experience
Online Promotional Platform
14
ElectronicCuponing
RecencyFrequency
Monetary ValueLoyalty Programs CRM at the POS
Increase Card Holder Loyalty and $ales
Celebrate along with the Cardholder a Special Date
Promote first use of a Credit Card
NETWORK EFFECT: CROSS MERCHANT PROMOTIONS
Reduce Promotional fulfillment costs
Online Promotional Platform
15
New products for new markets
AGROCARD: Migrating existing paper based B2B credit lines to electronic payments
Exclusive product that enables agribusiness companies and individual farmers to access credit lines• Unique electronic access to credit lines for agribusiness• Initially launched as Credit , currently Credit +Debit• Issuer: Easier routines, and lower costs and risks, ensuring
the right use of the resources• Cardholder: faster credit concession process, with lower
cost• Supplier/Merchants: Increase sales volume
Solution
Results Farmers: + 115 K using the product Merchants: 7K Large Tickets: average R$46,000 Sales volume: R$ 4,6 Bi (2009)
• Reached 6,2% of debit volume after 2 years New partners and issuers interested Expansion to other B2B value chains
16
New products for new markets
MULTI MERCHANT POS: One POS Terminal shared by up to 30 different merchants
Solution that enables up to 30 merchants to share the same POS equipment if located in the same place.
Each merchant has a separate log in and transactions are registered, cleared and settled to specific accounts
The sharing of the POS equipment allows lower costs for individual professionals or companies which would not be able to afford it by themselves.
Solution
Results Allows Cielo to penetrate new segments with low usage culture: medical and dental clinics, fairs, events and expositions.
17
Innovative Point of Sale Solutions
1999
2007
2008
2009
2010
With chip technology
comes a new level of
cardholder security and convenience.
Transaction capture solution
with J2ME application
installed on the cell phone
setting
No contact between card and terminal .
Faster transactions for
low-value tickets.
The consumer makes payment
with a NFC Nokia phone at retail outlets .
Merchant cell phone becomes a POS device,
with agility and security, using
SMS for sending transactions.
CHIP / EMV
Smart Client
Contactless
NFC
Mobile POS
2003 EMV FULL
18
19
We have a powerful and scalable platform
Cielo’s highly scalable and reliable platform can process 3x current transactions without any additional investments
• Scale and IT optimization continue to generate lower marginal costs
• Platform can scale up number of transactions
• 99.995% reliability
• Operates with 3 redundant back-up data centers
• Processing capabilities with neural anti-fraud platform
• 100% terminals with Pin Pads
• 100% volume covered by EMV Chip-ready
189 Local POP’s in 99 cities
Almost 500 data circuits
1.7 million connected devices (POS, iPOS, etc.) (debit and credit transactions)
Outsourced with Oi (former TELEMAR) with a availability SLA of 99.999% uptime
Nationwide PresenceNumbers
Regional concentrators
Local concentrators
Brasília
Macapá
Belém
São Luís
TeresinaFortaleza
Natal
João Pessoa
Recife
Maceió
Aracajú
Palmas
Cuiabá
Campo Grande
Porto Alegre
Florianópolis
BeloHorizonte
Goiânia
Porto VelhoRio Branco
Manaus
Boa Vista
Balneário Camboriú
Juiz de Fora
Maringá
Caxias do Sul
UberlândiaUberaba
Ilhéus
Poços de Caldas
Foz do Iguaçu
Campina Grande
Porto Seguro
Pelotas
Santa Maria
Passo Fundo
Chapecó
Cachoeiro do Itapemirim
Criciúma
São Mateus
Londrina
Cascavel
Curitiba
JoinvilleBlumenau
Feira de Santana
GovernadorValadares
MontesClaros
Vitória
ItabunaVitoria da Conquista
Ponta Grossa
Lages
São PauloTIVIT
Guaraparí
Oiapoque
Chuí
Fernando de Noronha
Campos dos GoitacazesNova Friburgo
PetrópolisCabo FrioVolta Redonda
Rio de Janeiro
São PauloBarraTIVIT
Costa do Sauípe
Araçatuba
SorocabaSantos
Ribeirão Preto
Baurú
São José do Rio Preto
MaríliaPresidente Prudente
Taubaté
Franca
Guaratinguetá
CaraguatatubaGuarujá
Assis JaúOurinhos
CatanduvaBarretos
LemeCampos do Jordão
São José dos CamposSanto André
Barueri
LimeiraCampinasJundiaí
Araraquara
São Paulo
Our electronic transaction capture network
20
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
In average the transaction peak happens on Saturdays at 1:00 PM butwe still have more 30% of technical reserve in the network to capture transactions
2.000
1.600
1.200
800
4000 Day hour
K tr
ansa
ction
s
Daily average profile
Low volume hours (4%)
Peak (12/24/2009)
1.989.69526.3% increase
High volume hours (96%)
2.400
2.800
Daily record (12/24/2009)17,900,961 transactions
20.9% increase
Daily transaction traffic profile
21
Ja
n/0
3
Ma
r/0
3
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l/03
Se
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No
v/0
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8
Ma
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8
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l/08
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8
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Ja
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9
Ma
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9
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9
Ju
l/09
Se
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9
No
v/0
9
99.5
99.6
99.7
99.8
99.9
100.0
99.9
6299
.877 99
.935
99.9
5599
.974
99.9
6399
.854 99
.891
99.9
7499
.916
99.8
84 99.9
3999
.946
99.9
6399
.947
99.9
6799
.925
99.9
2899
.896
99.8
86 99.9
4499
.958
99.9
1099
.918 99
.974
99.9
6499
.977
99.9
7099
.981
99.8
93 99.9
4499
.965
99.8
89 99.9
3799
.946
99.9
2899
.931 99
.971
99.8
1299
.969
99.9
6099
.964
99.9
8199
.986
99.9
7999
.985
99.9
9199
.959
99.9
9199
.965
99.9
9799
.986
99.9
8699
.956 99
.996
99.9
8799
.950
99.9
5399
.945
99.9
5999
.991
99.9
8899
.987
99.9
8999
.998
99.9
9199
.994
99.9
8999
.997
99.9
9499
.989
99.9
9799
.972
99.9
8699
.995
99.9
9799
.997
99.9
2799
.999
99.9
9999
.994
99.9
9899
.994
99.9
94
%
200399,927%
Credit = 99,980%Debit = 99,842%
1) Cielo Network (PDV+Concentradores), Ambiente On-Line Cielo, TIVIT e EDS
200499,932%
Credit = 99,980%Debit = 99,898%
200599,947%
Credit = 99,985%Debit = 99,914%
200699,957%
Credit = 99,991%Debit = 99,929%
200799,973%
Credit = 99,984%Debit = 99,962%
200899,985%
Credit = 99,995%Debit = 99,975%
200999,995%
Credit = 99,996%Debit = 99,993%
Downtime: 25 minutes /year
Track record availability
22
Comercial Dashboard
Pre-payment
Account Balance
100% availability -Christmas time
PCI DSS
New Web-site
Ecommerce VbV
Workplace renewalPCs & mobile phones
Multibrandpreparation
2009 was full of accomplishments!
23
24
Multi-brand – several other local and global ones Promotional Platform On-line Go To Market New Account Balance E-commerce multi-brand Sales force tool Automatic enrollment Unified Communication
CAPACITY AND NETWORK AVAILABILITY
ALL YEAR ROUND!!!!!!
And we are looking forward 2010
25
Call center – Contact center
Tele attendants: 2,513 Attention Positions: 1,670 29 million contacts/year 149,000 contacts/day
Logistics
Couriers: 5,700 Outposts : 140 13,000 visits/day (4.6 million/year)
Operations – 2009 in numbers…
26
Jan/09
Feb/09
Mar/09
Apr/09
May/09
Jun/09Jul/0
9
Aug/09
Sep/09
Oct/09
Nov/09
Dec/09
Jan/10
Feb/10
Mar/10
Apr/10
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
Total Instalação Total Manutenção Total DesinstalaçãoTotal Alt. Tecnologia Total Suprimentos
Num
ber o
f vis
its
... demand was intense.
# of Visits to Merchants per month
Installation
Maintenance Removal Technological substitution
Supply
27
May/JuneMay/June SeptemberSeptember OctoberOctober
Logistics Operators – Rapidão Cometa starts to operate in São Paulo and Intec covers the Central-East and North region
Atento assumes the Contact Center
Atento starts to operate Help Desk, Authorizations, Telemarketing and ARV – Pre-payment
Transformation for a new era!!!!
And Cielo is prepared for a new era!
28
Hardware update ~ 270 mil
Software update: 100% POS V32 and ~ 800 mil POS multi-
brand
New merchant segmentations & SLA
New POS packaging
New Help Desk Workflow
POS repair lab: LAB2 Intec and Rapidão Cometa
Challenges in operations for 2010
29
Protect business profitability – differentiated commercial relationship with segments with higher economic return
Protect market share – better understanding of customers’ requirements
Sustain growth – dedicated structure to untapped segments
Increase efficiency – adequate cost to serve to the current and potential value of customers
Main Project - Go To Market
30
Preparing for July 2010
31
Project Go to Market – directed to strength relationship with merchants new merchants segmentation redefinition of market approach change in the sales team profile from price to value added new POS service scheme – unbundling (rental, call center, …)
Change in the mindset to a full service multi-brand oriented company - although today we already operate with 89 private labels providing VAN (Value Added Network) services
Change in the POS basis 100% ready for multi-brand operations average age around 2 years
Bank approachPricing committeesCommercial intelligence control Call center adaptionRetention cellsCommercial Action TrainingTrade MarketingCommercial IncentivesCommunication Plan
Clear communication to sales channels (direct and indirect) with defined strategy, action plan and supporting tools increasing readiness to new market momentum:
Commercial strategyECR offer/negotiationPackage offer (POS)Pricing tacticsNew competencesLoyalty contract
STRATEGY ACTION PLAN
Contribution margin simulator
Pricing management
TOOLS1 2 3
Commercial approach – Multi-brand offer
32
PRIO
RITY
+
-
Appealing multi-brand offerSegmented commercial approach
Customized support to banks
New relationship center
Alternative channels: ISO’s and Dealers
Cielo’s plans to relevant products and services
State of the art technology and Network security
MKT budget investment
MDR revision
Complete Offer – approach sequence
33
Profile of our sales team
34
382 people in the commercial team
23 offices located in the main cities in Brazil: closer relationship, more response (and 49 “virtual offices”)
Main responsibilities: Training managers of the partner banks to “sell” Cielo
Maintain day to day relationship with merchants
Execute special tasks focused on approaching new segments or new markets
Diversity of our merchants required….
35
HOW TO ADEQUATELY AND EFFICIENTLY SERVE SUCH DIFFERENT MERCHANTS ?
“It would be interesting to offer longer payment terms"
“There are too many fees"
“The fines could be paid with cards but the fee charged from the customer"
“The ideal would be a wireless POS but the rent is too expensive"
“The future is contactless"
“We still have a high fraud index in purchases via website"
…new merchant segmentation
36
Revenue
Location
Economic sector
Importance in the region
Geographical Segmentation
New Merchant Segmentation
Merchant’s profitability
Our share in merchants’ revenue
Sector / region economic potential
Card usage profile in the sector / region
Merchant’s importance in the sector
Merchant behavioral profile
(installments, seasonality, target public)
Merchants requirements
Approach of new segmentation
Key Accounts
Special Merchants
Expanding markets+
New segments
Relationship center+ Internet
Commercial approach proposal
Relationship center+ Internet Telemarketing
Relationship center+ Internet
Account managers specialized by sector or region
Telemarketing
Special Cells
Commercial Assistant + Servicing
Alternative channels + Servicing
Segments
New
mar
kets
37
We are exploring new segments
38
Growth – YTD Dec/09 over YTD Dec/08:Education:4,8%
Other
:6,3% He
alth:7,3%
Home +
Civil
Construction: 8,0%
Agribusi-
ness: 11,0%
Utilities:3,4%
Transports:6,6%
Services:10,5%
Vehi-cles:
10,6%
Leisure + Welfare:
13,5%
Food:18,1%
Education 26.70%
Insurance 76.19%
Health 33.55%
Civil Construction 43.28%
Agro business
144.11%
Financial Volume YTD Dec/09
And there is more to come in new segments: real state brokerage, taxis…
Strengthening a winning culture
39
Mission: To be an international reference in transaction solutions and network services
Values:Employees with attitude, team spirit and passion in all they do Surpassing customer expectations Ownership posture Ethics in all relationships Execution excellence Innovation oriented by results Sustainability and corporate responsibility
Clear, meaningful and timely communication to engage peopleBuilding on the employee's emotional connection with CieloAdd new elements to the culturePrepare the basis for building additional organizational capabilities
Climate Survey, an historic asset
40
New Compensation Strategy
Objective: to strength
Cielo’s attraction and retention power
Meritocracy within the organization
30%
35%
35%
Vice Presidents
Basic Salary Short term incentive Long term incentive
44%
36%
20%
Directors
Base Salary Short term incentive Long term incentive
Acceptable Target Outstanding
35%
100%125%
Individual Performance
Alignment to the market best practices
The link between employee’s compensation and the company success
41
New Compensation Strategy
42
Structure:Base salary:
Aligned to the market average
Short term incentive: Triggered by company’s achievements and based on individual
performance
Long term (stock option plan): Triggered by company’s achievements and based on individual
performance. Total dilution limited to 2% being up to 0,3% per annual grant 2nd grant scheduled for July 2010 Target population – senior leadership and key people
Performance & Talent Mgmt Strategy
43
Individual objectives are defined based on the Cielo’s ones (EBITDA, EBITDA margin, Transaction Financial Volume and Client Survey)
Annual Individual Performance Evaluation is done by immediate supervisor considering individual objective’s achievements and competencies
New set of competencies defined to shape the individual’s behavior and the leadership style necessary to convey the business strategy
Annual Individual Performance Evaluation is input to the Forum of Talents
Forum of Talents is a leadership team discussion about their subordinates. Its main outcomes are:
Identification of high potentials, key people and solid performers Identification of backups for key positionsIndividual development plan designDefinition of individual merit, promotion, stock option plan grant, etc.
Performance CIEL3
44
60
70
80
90
100
110
120
130
140
150 CIEL3
12,53%
Recent IPO (June/09)
Dividend yield 2009(1): 6.6%
P/E 2009 (1): 13.64
High cash generation, no leverage
ADR level I program
Disclosure in IFRS
(1) Considering closing price on 12/30/2009 = R$15.34/share
Constant monitoring of liquidity
Targeting to drive IR actions
Potential actions to further
enhance ADR program
Snapshot
Actions
We continue to experience strong growth
1Q06 1Q07 1Q08 1Q09 1Q10100.0
120.0
140.0
160.0
180.0
200.0
220.0
240.0
118
148
174
213
121
152
187
230
Growth comparison: Industry x Cielo ( 1Q06=100)
Industry Cielo
Cielo CAGR: 23%Industry CAGR: 21%
2006 2007 2008 2009 1Q09 1Q10
71,197 87,966 110,897
134,792
30,498 37,558
39,552 48,534
64,655
79,166
17,209 21,213
Cielo Transactions - Financial Volume (R$ million)
Credit cards Debit cards
110.749
136.500
175.552
213.958
47.70758.771
CAGR: 24.5%
23,2%
2006 2007 2008 2009 1Q09 1Q10
1,142.1 1,402.51,719.7 2,003.0
460.9 540.1
836.0986.5
1,232.41,423.8
327.6 387.5
Cielo - Number of Transactions ( million)
Credit Debit
CAGR: 20.1%
17,6%
1,978.12,389.0
2,952.1
3,426.8
788,5 927,6
1 2
3 4
2006 2007 2008 2009 1Q09 1Q10
997
1,1801,408
1,706
1,466
1,759
679 824996
1,1331,004
1,129
Cielo- Number of Merchants( thousand)
Afilliated Merchant Active Merchants( transactions in the last 60 days)45
And our results remain consistent
2006 2007 2008 2009 1Q09 1Q100 .0
2 0 0 .0
4 0 0 .0
6 0 0 .0
8 0 0 .0
1 ,0 0 0 .0
1 ,2 0 0 .0
1 ,4 0 0 .0
1 ,6 0 0 .0
1 ,8 0 0 .0
2 5 .0 0 %
3 0 .0 0 %
3 5 .0 0 %
4 0 .0 0 %
4 5 .0 0 %
5 0 .0 0 %
5 5 .0 0 %
6 0 .0 0 %
657.9
883.9
1,115.3
1,536.7
333.2440.2
34%37% 39%
42%41%
43%
Net Income (R$ million)
Net Income Net Margin
2006 2007 2008 2009 1Q09 1Q100 .0
5 0 0 .0
1 ,0 0 0 .0
1 ,5 0 0 .0
2 ,0 0 0 .0
2 ,5 0 0 .0
3 ,0 0 0 .0
4 5 .0 0 %
5 0 .0 0 %
5 5 .0 0 %
6 0 .0 0 %
6 5 .0 0 %
7 0 .0 0 %
7 5 .0 0 %
8 0 .0 0 %
1,038.8
1,409.5
1,764.3
2,450.7
538.2713.6
53%
59%61%
68% 66%
70%
Adjusted EBITDA (R$ million)
Adjusted EBITDA Adjusted EBITDA Margin
1 2
3 4
2006 2007 2008 2009 1Q09 1Q10
1,945.1
2,402.2
2,892.9
3,627.8
813.3 1,020.1
Net Revenue (R$ million)
25.4%
CAGR 23.1%
2006 2007 2008 2009 1Q09 1Q10
1,041.71,125.0
1,278.5 1,337.4
312.2350.9
Total Cost of Services + Expenses (R$ million)
CAGR 8,7%
12,4%
46
Prepayment is steadily growing
3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 -
5 0 0 .0
1 ,0 0 0 .0
1 ,5 0 0 .0
2 ,0 0 0 .0
2 ,5 0 0 .0
0 .0 0 %
1 .0 0 %
2 .0 0 %
3 .0 0 %
4 .0 0 %
5 .0 0 %
6 .0 0 %
7 .0 0 %
8 .0 0 %
9 .0 0 %
1 0 .0 0 %
98.1
732.9
1,700.01,466.5
1,604.7
2,009.42,193.3
0.35%
2.35%
5.57%4.56% 4.69%
5.29%5.80%
Prepayment of Receivables
Financial prepayment volume% Prepayment over Credit Financial Volume
3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10
21.4 22.3
51.348.5
54.4
61.866.1Average Term (days)
3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10
1.8
15.1
56.6
46.3 49.7
65.5
73.3 Prepayment of Receivables (ex/adjustment) (R$ million)
3
21
• Approximately 75% of our prepayment
occurs automatically, via IVR (Interactive
Voice Response), website or automatic;
• Average ticket of R$ 3 thousand
47
48
Finance has a role supporting other areas
Aligned attitude/Mindset between Finance and Commercial areas:
Closing deals that make economic sense keeping profitability at a healthy level
Guarantee differentiation in products and services, not just price
If chosen as second acquirer, we will adequate the pricing level accordingly
Innovation to create revenue streams to offset margin reduction
49
And goals to deliver
Focus on cost efficiency gains to mitigate eventual pressure on revenues
Second wave of cost reduction headed by Procurement
Enhance Customer Profitability tool providing better indicators for decision making process
Target ideal Capital Structure / tax efficiency
Tax efficient funding alternatives to support growth in the prepayment business
Main variable is under control: Costs
50
Impact on unit cost + expenses :
Pros gain in scale
strategic sourcing projects
reduction in brand signaling expenses
Cons additional fee
Visa
increase in marketing expenses
1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10
671.5 701.8751.2
827.6 788.5 814.9860.7
962.7 927.6
0.28 0.29 0.28
0.310.27 0.28 0.28
0.26 0.27
0.2592040063389150.2403735446434930.254308714056369
Total COGS / Transaction
Total Transactions (# MM) Total COGS / TransaçõesExlcuding Additional Fee Visa
Investor Relations Contacts:[email protected].: 55 11 2184 7930/7785/7709