csu 2010 road show presentation
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Clique para editar o estilo do título mestre
CSU – ROAD SHOW 2010
Clique para editar o estilo do título mestreDisclaimer
The material that follows is a presentation of general information about CSU’s antecedents on the presentation date. The information
contained in this presentation is summarized and not intended to be complete and, therefore, should not be understood as a
recommendation to potential investors. This presentation is confidential and shall not be disclosed to third parties. We do not make any
declarations, nor do we give any guarantee whatsoever regarding corrections, adjustments or the comprehensiveness of the information
presented here, which should not be used as a basis for investment decisions.
This presentation contains prospective statements and information according to Provision 27 of the Securities Act of 1933 and Provision
21E of the Securities Exchange Act of 1934. These prospective statements and information are merely projections and, therefore, do not
constitute any guarantee of future performance. We warn investors that these statements and information are and will be subject to
risks, uncertainties, and factors related to business operations and the business environment of CSU and its subsidiaries, and therefore,
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risks, uncertainties, and factors related to business operations and the business environment of CSU and its subsidiaries, and therefore,
the companies’ real performance may differ significantly from the future results shown or implicit in the statements and information
contained in this presentation.
Although CSU believes that the expectations and premises contained in these prospective statements and information are reasonable
and based on data that is available to its management, CSU cannot guarantee any results or future events. CSU does is not required to
update any of these prospective statements and information.
In the United States, the offer or sale of securities that are not registered or exempt from registration pursuant to the Securities Act of
1933 is not permitted. Any offer of securities in the United States must be made by means of an offering memorandum, which can be
obtained from underwriters. The offering memorandum must contain or reference detailed information about CSU, its business and
financial results, in addition to its financial statements.
This presentation does not constitute an offer, invitation or request of subscription offering or purchase of any securities, nor does this
presentation, or any information contained in it, constitute the basis of a contract or any sort of commitment.
Clique para editar o estilo do título mestreCSU is a compelling investment opportunity in the paymentprocessing industry in Brazil
• Rapidly growing industry that benefits from increased usage of
financial services and growth in consumption
• Largest independent payment transaction processor in Brazil
• Acquirer processing is a substantial opportunity that will be open
to CSU in July 2010
3
to CSU in July 2010
• Our Contact Center is well-positioned for profitable growth
• Our strategy is supported by a state-of-the-art, Brazil-specific
operating platform
Clique para editar o estilo do título mestreThe Brazilian card market has experienced explosive growthin the last several years
336388
453514
565628
309369
444509
594
Number of Cards(million)
Number of Transactions(million/month)
CAGR 04-10E
15%CAGR 04-10E
19%
4
277336
2004 2005 2006 2007 2008 2009 2010E
Private Label Debit Credit
210263
309369
2004 2005 2006 2007 2008 2009 2010E
Private Label Debit Credit
Source: ABECS
Brazilian GDP CAGR from 2004 to 2009 was 3.6% and expected growth in 2010 is 5.5%
Clique para editar o estilo do título mestreGrowth in card issuance is underpinned by powerful trends
Share of Card Usage in Family Spending
Population by Consumption Level
(% of total)
• Card penetration in Brazil has increased from 8% of families’ spending in 1999 to 21% in 2008.
• Access to banking services has been fueled by the intense migration of individuals to consumption level (classes A, B and C).
• The increase in disposable income and accessibility to banking services constitutes a powerful lever for the future growth in card usage and transactions.
5
8%
21%
38%42%
1999 2008 2017E* 2008
Spending
Brazil USSource: ABECS; CPS/FGV from PNAD/IBGE data * - ABECS Projection
(% of total)
45,2%47,4%
50,1%
54,3%56,6%
59,6%
54,9%52,6%
50,1%
45,7%43,4%
40,4%
2003 2004 2005 2006 2007 2008
ABC DE
Clique para editar o estilo do título mestreCSU is a compelling investment opportunity in the paymentprocessing industry in Brazil
• Rapidly growing industry that benefits from increased usage of
financial services and growth in consumption
• Largest independent payment transaction processor in Brazil
• Acquirer processing is a substantial opportunity that will be open
to CSU in July 2010
6
to CSU in July 2010
• Our Contact Center is well-positioned for profitable growth
• Our strategy is supported by a state-of-the-art, Brazil-specific
operating platform
Clique para editar o estilo do título mestre
Issuer(Banks and Retailers)
Brands (Visa, MasterCard, Amex)
Acquirer
The electronic payment value chain
Approval request
Approval request
Approval Approval
Cash Cash
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Card holder Merchant
Card / Invoice
Commercial transaction
Electronic captures
transactionCash Cash
Clique para editar o estilo do título mestre
Issuer(CSU’s client)
CSU provides a full suite of services to card issuers in Brazil
• Authorization • MIS• Contact Center• Accounting• Processing• Fraud prevention• Operational Control
Brands (Visa, MasterCard, Amex)
• Financial Information• Interchange• Processing of Electronic Transactions
Acquirer
CSU CardSystem
• Statement• Billing• Dispute Resolution• Customer Support
Card holder
CSU has a central role in the electronic
transactions business in Brazil.
Merchant
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Clique para editar o estilo do título mestreCSU is a Full BPO that works with a one stop shop philosophy, offering turn-key solutions for all its costumers
Services Provided CSUIssuer
ProcessorMerchant Processor
Services performed on
behalf of
Vis-à-visCard Holder
Authorizations � �
Billing and Credit Cycle Management �
Collection � �
Contact Center � �
Disputes with Establishments � �
Issue and sent of cards � �
Loyalty Programs / CRM �
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behalf of Issuer
Loyalty Programs / CRM �
Statement � �
Unblock Cards � �
Vis-à-visBrands
Financial Information � �
Interchange � � �
Processing � � �
Relationship with Brands �
Value-added services provided to the issuer
Accounting �
Back-Office �
Fraud prevention � � �
MIS - System Inteligence �
Operational Structure �
Operation Control and Management �
Clique para editar o estilo do título mestreCSU is the largest Independent payment processor in Brazil
44,8287,9
Processed by third
Number of Credit and Private Label Cards(2009)
Share of Outsourced Market(2009)
CSU;
Fidelity; 14.7%
Others; 2.0%
10
44,8287,9 by third
parties
Processed in-house
Total = 333 million* Total = 44.8 million
More than half of the total 333 million cards in the market are Private Label cards that can
potentially be converted to Visa/MasterCard brands and processed by CSU
Source: ABECS; *Does not include debit cards (233 million in 2009)
CSU; 54.3%
Orbital; 29.0%
Clique para editar o estilo do título mestreOur client base is well diversified and composed of financial institutions, retailers and non-traditional issuers
Banking Non-Banking
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Clique para editar o estilo do título mestreOur Business Model: multiple revenue sources, high client loyalty and economies of scale
• We generate the same level of revenue per card than our US peers, in an environment of lowest transaction values
• First Data higher gross margins due to Vision Plus royalties, which represents most of its revenues
16 16 1719
Clients Turn Over(units)
• Low client turn-over
• High quality services at attractive prices
8.57.1
2.8
7.1
First Data Fidelity Tsys CSU
Revenue per Card in 2008 (US$)
61.8%23.5% 36.0%
14.5%
12
54.4 50.9
71.2
94.3
2006 2007 2008 2009
Gross Profit and Gross Margin(million)
37.7% 34.4% 36.0%
40.4%
Source: CSU and Annual Reports of Corporations 2008
2 1 1 0
2006 2007 2008 2009
Number of Clients Clients Turn Over
• High quality services at attractive prices
• High switching costs
• Multi-year contracts with high exit penalties
• High fixed processing costs gives CSU a cost advantage as market leader
• We share our cost advantage with our clients to increase customer loyalty and discourage competition
Clique para editar o estilo do título mestreCSU is a compelling investment opportunity in the paymentprocessing industry in Brazil
• Rapidly growing industry that benefits from increased usage of
financial services and growth in consumption
• Largest independent payment transaction processor in Brazil
• Acquirer processing is a substantial opportunity that will be open
to CSU in July 2010
13
to CSU in July 2010
• Our Contact Center is well-positioned for profitable growth
• Our strategy is supported by a state-of-the-art, Brazil-specific
operating platform
Clique para editar o estilo do título mestreThe acquirer business is about to undergo significant change in Brazil, prompted by new regulation
• Two merchant acquirers dominate the market
• Exclusivity agreements with Visa and MasterCard limit competition
• Extraordinary profits produced
Current Situation
• Market open to competition
• Multiple acquirers
With New Regulation
Anti-trust authorities force end of exclusivity agreements after
July/10
771700
101215
Cielo Redecard Fidelity Tsys
2009 Net Income and Net Margins
(million US$/%)
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• Extraordinary profits produced by acquirers New entrants in the Brazilian
acquirer market
Source: Annual Reports of Companies
42.4%45.4%
2.7%12.7%
58.1
5.37.7
0.81032 10 12
USA Brazil UK Mexico
Number of POS Transactions and Number of Acquirers
Number of Transactions (billions/2008)
Number of Acquirers
Source: BIS, Central Banks and ABECS
Clique para editar o estilo do título mestreCSU is ready to provide a full suite of processing services to merchant acquirers
Acquirer(CSU’s client)
New Services• Operation Management• Authorization• Statement • Network• Accounting• Processing• Back Office• MIS
Issuer(CSU’s client)
Brands (Visa, MasterCard, Amex)
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CSU CardSystem
Card holder Merchant
• Capture Network (POS)• Contact Center• Disputes
Resolutions• Statement
Clique para editar o estilo do título mestreCSU is a compelling investment opportunity in the paymentprocessing industry in Brazil
• Rapidly growing industry that benefits from increased usage of
financial services and growth in consumption
• Largest independent payment transaction processor in Brazil
• Acquirer processing is a substantial opportunity that will be open
to CSU in July 2010
16
to CSU in July 2010
• Our Contact Center is well-positioned for profitable growth
• Our strategy is supported by a state-of-the-art, Brazil-specific
operating platform
Clique para editar o estilo do título mestreOur Contact Center has undergone a profound operating change and is positioned for profitable growth
• 9th largest Contact Center in Brazil
• Turnaround completed in February 2010
• 5 sites closed
• 1 site opened with lower operating
costs
Atento 18.2%
Contax 18.2%
Tivit 6.6%
Dedic GPTI 5.5%Teleperf. 3.2%
TMKT 2.9%
CSU 2.5%
Others 36.4%
Contact Center Companies – Market Share
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costs
• Over 10 contracts terminated due to
poor financial performance
• Financial Results have improved and will
continue to do so as occupancy rises –
current focus on commercial development
Source: CSU
Source: callcenter.inf
0.9
(5.4)
2.4
11.6
2006 2007 2008 2009
Gross Profit and Gross Margin(R$/million)
0.5%
-3.2%
1.5%
7.2%CAGR 06-09
135%
Dedic GPTI 5.5%
Algar 3.4%AeC 3.0%TMKT 2.9%
Clique para editar o estilo do título mestreCSU is a compelling investment opportunity in the paymentprocessing industry in Brazil
• Rapidly growing industry that benefits from increased usage of
financial services and growth in consumption
• Largest independent payment transaction processor in Brazil
• Acquirer processing is a substantial opportunity that will be open
to CSU in July 2010
18
to CSU in July 2010
• Our Contact Center is well-positioned for profitable growth
• Our strategy is supported by a state-of-the-art, Brazil-specific
operating platform
Clique para editar o estilo do título mestreOur Business is supported by a state-of-the-art, Brazil-specific operating platform
Belo Horizonte Back-Up site (São Paulo) Alphaview site
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• Our version of the Vision Plus software was extensively customized for the Brazilian
market in the course of 20 years of development and is the only platform in Brazil fully
prepared to deal with multiple clients
• Highly experienced technical and development teams
• Alphaview Contact Center is a state-of-the-art facility with low operating costs
Clique para editar o estilo do título mestreOur strategy is geared to produce growth with high profitability
Continue to grow issuer processing
business
Build a acquirer processing business
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Grow Contact Center business by
increasing occupancy with financial
discipline
Continue to invest in IT and software development
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Financial Summary
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Financial Summary
Clique para editar o estilo do título mestre
213.9253.7
Gross Revenue(R$/million)
Payment transaction services: strong operating performance
• Rapidly growing industry and new clients
supports company’s card base expansion
• Above-market growth in the last 4 years
12.1
16.620.1
24.3
2006 2007 2008 2009
Cards in CSU's Base(million)
CAGR 06-0926%
• Our full suite of financial services assures high
revenue per cardCAGR 06-09
17%
156.7 159.2
213.9
2006 2007 2008 2009
22
54.4 50.971.2
94.3
2006 2007 2008 2009
Gross Profit and Gross Margin(R$/million)
37.7%34.4% 36.0%
40.4%
revenue per card
• Continuous revenues growth also supported by
new products and low client turn over
• Costs advantage due to constant investments in
technology and large cards base
• Benefits of scale shared with customers to
increase loyalty and discourage competition
CAGR 06-0920%
17%
Clique para editar o estilo do título mestre
Gross Revenue (R$/million)
Contact Center: positioned for profitable growth
4,0553,322 3,596 3,229
228 1,474 629265
4,2834,796
4,2253,494
2006 2007 2008 2009
# of Workstations vs. Occupancy(units)
Occupied Available
• Turn around finalized in March-2010
• Number of workstations drop due to
termination of poor profitability contracts
• Revenues remained stable spite of lower
number of workstations197.6
174.3 177.2 172.7
2006 2007 2008 2009
(R$/million)
23
0.9
(5.4)
2.4
11.6
2006 2007 2008 2009
Gross Profit and Gross Margin(R$/million)
0.5%
-3.2%1.5%
7.2%
CAGR 06-09135%
• Management focused on growth with margin
discipline
• Profitability should increase as occupancy
recovers
number of workstations
• Revenues recover expected due to focus on
commercial development
Clique para editar o estilo do título mestreConstant investments in our software and substantial net debt improvement
19.3 15.0 25.9 21.1
29.2
24.4 13.9
21.0
4.3
11.4
43.7
28.9
46.9
25.4
40.6
2005 2006 2007 2008 2009
Capex(R$/million)
Software Others
• We generate enough cash
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21.6
59.5
109.1
95.0
55.5
2005 2006 2007 2008 2009
Net Debt and Net Debt/EBITDA(R$/million)
0.4x
1.5x
3.2x
1.5x
0.7x
Software Othersto fund our Capex program
and reduce our net debt
Clique para editar o estilo do título mestreFinancial Summary – Consolidated
In millions (R$) 2006 2007 2008 2009
Net Revenues 317.9 318.6 363.7 394.8
Gross Profit
Gross Margin
46.3 45.5 73.7 106
14.6% 14.3% 20.3% 26.8%
Processing Services
Gross Margin
54.4 50.9 71.2 94.3
37.7% 34.4% 36,0% 40.4%
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Gross Margin 37.7% 34.4% 36,0% 40.4%
Contact Center
Gross Margin
-8.1 -5.4 2.4 11.6
0.5% -3.2% 1.5% 7.2%
EBITDA 39.2 33.9 64.4 78.9
Net Income -16.9 -6.3 9.5 17.9
Net Debt 59.5 109.1 95.0 55.5
Capex 28.9 46.9 25.4 40.6
Clique para editar o estilo do título mestreHigh standards of corporate governance
Independent Audit Board Three members, one of which is appointed by the minority shareholders
Majority of independent board members
Novo Mercado (100% Tag Along)
100% common shares and 44% free-float
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Three members, one of which is appointed by the minority shareholders
Internal Audit and Compliance Department
Stock option plan for executives
Solid investor relations culture Financial Investors in the shareholder base since 1997
No Poison Pills
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Clique para editar o estilo do título mestre
Questions?
Décio Burd
Phone: (55 11) 3030-3821
E-mail: investidorescsu@csu.com.br
Site: www.csu.com.br/ri
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