R$ Million

CORPORATE PRESENTATION
October, 2015
Copyright © Cielo | Todos os direitos reservados
THE COMPANY MAKES FORWARD LOOKINGSTATEMENTS
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
LEADING MERCHANT ACQUIRER
#1
MERCHANT
ACQUIRER AND
PAYMENT
PROCESSOR IN
BRAZIL AND LATIN
AMERICA
*Closing date: 10/09/2015
Exchange: 1USD = 3.73 BRL (10/09/2015)
9.4%
OF GDP
CAPTURED
THROUGH
CIELO´S
NETWORK
BRL 74
BILLION
MARKET CAP*–
AMONG 10
LARGEST IN
BM&FBOVESPA
3
SUBSTITUTION OF CASH AND CHECKS
PCE - Private Consumption Expenditure (R$ billion)
3,201
Cards Expenditure over PCE* (%)
3,450
2,908
2,637
2,341
27.9% 28.7% 28.4%
1,629
1,857
2,064
26.2%
799
24.4%
896
22.8%
20.8%
17.7%
19.1%
2007 2008 2009 2010 2011 2012 2013 2014 2Q14 2Q15
16.1%
Card Expenditure (R$ billion)*
964
837
710
601
2007
2008
2009
2010
* Excluding Private Labels
2011
2012
2013
2014
2Q14
487
2Q15
262
329
394
2007 2008 2009 2010 2011
* Excluding Private Labels
Source: IBGE,ABECS
229
2012
2013
255
2014 2Q14 2Q15
4
Copyright © Cielo | Todos os direitos reservados
STRATEGIC PLANNING
Cielo has been active to be well positioned to
capture new avenues of growth
Launching the
new e-commerce
platform
Partnership
with Dotz
December
2010
January
2010
November
2010
Launching of
Cielo Mobile
September
2012
Acquisition of
MeS
Partnership
with
Smiles
July
2014
October
2012
March
2012
May
2011
Acquisition
of Braspag
Launching of
Partnership with Cielo Mobile
CyberSource
Chip & Pin
June
2014
MoU to create
a JV between
Cielo and Linx
30% stake
in Stelo
June
2015
November
2014
Creation of
Cateno
between
Cielo and
Banco do
Brasil
August
2015
Cielo holds
a 91.44%
stake of
M4U
5
CIELO BIG DATA
Data base of 1.6 million active points of sale more than 5 billion transaction a year
CIELO BIG DATA RESPONDS:
How is retail performing?
BIG DATA PRODUCTS:
ICVA
Business
Expansion
Customized
Promo
Benchmark
Sectorial
analysis
E-commerce
Shoppings
On Demand
What are the most accurate and updated figures of brazilian
retail considering its several sectors and regions?
Considering the main performance metrics, how is my sector
performing?
How are my peers performing?
Why my store located at a specific city/neighborhood is not
performing? Is it the manager or the location?
What is my customer purchase profile? Why am I losing
customers? What shall I do to bring them back?
Which microregion has the biggest revenue potential that I
have not explored yet? Which spot should I open my next
store?
6
CIELO´S BROAD RETAIL INDEX (ICVA)
NOMINAL REVENUE OF SALES GROWTH (YOY)
10.1%
10.1%
10.5%
8.9%
9.5%
8.0%
8.6%
8.4%
8.1%
7.1%
7.3%
3.4%
3.7%
1.8%
2.9%
1.8%
Oct-14
Nov-14
Dec-14
Adjusted Deflated ICVA
6.9%
Jan-15
6.6%
4.6%
3.6%
4.1%
3.3%
3.2%
1.9%
1.6%
1.5%
7.9%
6.9%
2.1%
2.6%
2.1%
Sep-14
5.9%
4.5%
Deflated ICVA
6.5%
7.2%
4.3%
Adjusted Nominal ICVA
8.3%
9.0%
8.2%
Nominal ICVA
1.1%
0.2%
Feb-15
Mar-15
Apr-15
0.0%
0.7%
0.4%
May-15
0.6%
Jun-15
-2.4%
0.1%
Jul-15
-1.1%
Aug-15
Sep-15
-2.3%
-2.8%
-3.0%
-3.4%
*IPCA Deflation according to the sector set by ICVA
DIFFERENTIAL
Based on
actual information
and not in sample surveys
Source: CIELO
Territorial coverage
of 99% of the
country
Over 20 economic sectors,
including services (eg: airlines,
restaurants and e-commerce)
Scope sized companies:
from small retailers to
large retailers
Dynamic model, based
on the actual mix
of each sector in
the economy
Improved
disclosure
7
TRANSACTION FINANCIAL VOLUME
3.5%
Quarterly
Evolution
2.5%
125.3
126.5
129.7
49.4
51.1
52.3
76.0
75.5
77.4
2Q14
1Q15
2Q15
(R$ billion)
CAGR: 18.5%
517.6
448.7
383.3
262.7
Annual
Evolution
320.4
163.9
202.1
169.1
138.4
118.3
98.7
205.0
245.0
279.6
312.6
(R$ billion)
2010
2011
The financial volume does not include Merchant E-Solutions transactions,
i.e., it comprises the financial volume of the domestic market only.
2012
2013
2014
Debit
Credit
8
NUMBER OF TRANSACTIONS
4.9%
10.0%
Quarterly
Evolution
(million)
1,359
1,425
1,495
734
815
836
625
610
659
2Q14
1Q15
2Q15
CAGR: 14.3%
4,902
3,801
3,317
Annual
Evolution
1,716
1,964
4,302
5,659
3,134
2,618
2,240
1,601
1,837
2,062
2010
2011
2012
2,283
2,525
Debit
Credit
(R$ million)
The number of transactions does not include Merchant E-Solutions transactions,
i.e., it comprises the number of transactions of the domestic market only.
2013
2014
9
OPERATIONAL INDICATORS
9.5%
13.6%
Wireless POS terminals
(GPRS)
2.5%
2.3%
Corresponds to 65% of Cielo’s
installed basis (as of 2Q15)
2,071
2,020
1,892
1,637
1,473
1,674
Quarterly
Evolution
(Thousand)
1Q15
2Q14
2Q15
CAGR 12.2%
CAGR: 10.9%
2,023
1,831
1,727
1,619
1,484
1,277
Annual
Evolution
1,069
1,156
1,282
1,426
(Thousand)
2010
2010
POS Terminals
2011
2012
2013
Points of Sales Merchants (30 days)*
* Points of Sales Merchants are those that have made at least a single transaction in the last 30 days .
The year is measured based on the closing
2014
10
NET OPERATING REVENUE
51.9%
18.9%
2,795.8
2,351.8
1,840.7
Quarterly
Evolution
(R$ million)
2Q14
1Q15
2Q15
CAGR: 17.9%
7,725.6
6,734.2
5,385.3
Annual
Evolution
3,992.5
4,208.7
(R$ million)
2010
2010
2011 2012
2011
2013
2014
11
PREPAYMENT OF RECEIVABLES VOLUME
5.9%
13,566
4,287
(31.6%)
Quarterly
Evolution
9,279
(68.4%)
-2.9%
14,787
14,360
4,998
(33.8%)
4,323
(30.1%)
%Pre-paid Volume from
9,789
(66.2%)
10,038
(69.9%)
%Pre-paid Volume from
Credit Installments
Regular Credit
% Prepayment over Total
19.6%
18.5%
17.9%
Credit Volume
(R$ million)
2Q14
1Q15
2Q15
56,062
Annual
Evolution
CAGR: 52.6%
26,409
(R$ million)
10,340
Total Pre-paid Volume
44,286
6.3%
2010
15.9%
15,407
17.9%
10.8%
7.6%
2011
2012
2013
2014
12
PREPAYMENT OF RECEIVABLES RESULT
40.4%
6.6%
462.9
493.6
351.6
Quarterly
Evolution
(R$ million)
2Q14
1Q15
2Q15
1,508.6
CAGR: 44.7%
953.1
768.1
Annual
Evolution
535.3
343.8
(R$ million)
2010
2011
Prepayment of Receivables Result*
*Prepayment of Receivables Result = gross revenue from prepayment parties – present value adjustments expenses
2012
2013
cost of funding with third
2014
13
PREPAYMENT OF RECEIVABLES INDICATORS
Prepayment of Receivables
% Prepayment over Total Credit Volume
Financial Volume of Prepayment (R$ million)
% Pre-paid volume from regular credit
% Pre-paid volume from credit in installments
Average Term (Calendar Days)
Average Term (Business Days)
Gross Revenue of Prepayment of Receivables (R$ million)
Present Value Adjustment Expenses (R$ million)
Cost of Funding with Third Parties (R$ million)
Prepayment of Receivables Result (R$ million)
2Q15
2Q14
1Q15
2Q15 X
2Q14
2Q15 X
1Q15
18.5%
14,360.3
30.1%
69.9%
56.45
39.0
593.3
(31.6)
(68.1)
493.6
17.9%
13,565.8
31.6%
68.4%
56.9
39.5
439.1
(16.1)
(71.4)
351.6
19.6%
14,787.0
33.8%
66.2%
57.34
38.7
536.9
(12.8)
(61.2)
462.9
0.6 p.p
5.9%
-1.5 p.p
1.5 p.p
-0.4
-0.5
35.1%
96.3%
-4.6%
40.4%
-1.1 p.p
-2.9%
-3.7 p.p
3.7 p.p
-0.8
0.3
10.5%
146.9%
11.3%
6.6%
593.3
(282.3)
311.0
439.1
(221.0)
218.1
536.9
(271.8)
265.1
35.1%
27.8%
42.6%
10.5%
3.9%
17.3%
Managerial Analysis
Gross Revenue of Prepayment of Receivables (R$ million)
Cost of Funding* (R$ million)
Managerial Net Revenue (R$ million)
*Assuming the cost of 104% of CDI in Financial Volume of Prepayment
14
EBITDA
41.9%
14.3%
1,355.8
1,186.6
955.5
Quarterly
Evolution
51.9%
50.5%
48.5%
(R$ million)
2Q14
CAGR: 10.6%
3,575
1Q15
2Q15
3,838
3,097
2,564
Annual
Evolution
2,388
64.2%
56.8%
57.5%
53.1%
49.7%
(R$ million)
2010
EBITDA
2011
EBITDA MARGIN %
*2012 figures were only impacted by Merchant E-Solutions in 4Q12
2012*
2013
2014
15
NET INCOME
9.1%
-4.6%
911.8
796.8
Quarterly
Evolution
43.3%
38.8%
869.4
31.1%
(R$ million)
2Q14
1Q15
2Q15
CAGR: 15.2%
3,220
2,332
Annual
Evolution
1,831
1,817
45.9%
43.2%
43.1%
2011
2012*
2,674
39.7%
41.7%
(R$ million)
2010
NET INCOME
NET MARGIN %
* 2012 figures were only impacted by Merchant E-Solutions in 4Q12
2013
2014
16
INVESTMENT HIGHLIGHTS
Leader in a growing market
Strong balance sheet, high
cash generation and low
capex requirements
Minimum dividend pay
out of 30% of net profit*
distributed twice a year
Focus on innovation,
diversification
and continuous growth
* After constitution of legal reserve of 20% of the Company´s capital stock
17
ADR
Cielo has a sponsored Level I ADR
Ticker: CIOXY
ADR Ratio (ADR:ORD): 1:1
Depositary bank: Deutsche Bank Trust Company Americas
Depositary bank contacts:
ADR broker helpline:
Tel: +1 212 250 9100 (New York)
Tel: +44 207 547 6500 (London)
Email: [email protected]
ADR website: www.adr.db.com
Depositary bank’s local custodian: Banco Bradesco
* Since December 2013 no IOF charged
18
APPENDIX
Copyright © Cielo | Todos os direitos reservados
TIMELINE
1995
2009
2015
4 Visa acquirers
R$ 8.4 billion IPO
Multi-brand acquirer
June 2009
+
Single Visa Acquirer
20
CAPITAL OWNERSHIP
1,886,677,126 Common Shares
Treasury:
0.27%
Free Float:
41.02%
b. 28.65%
a+b= 57.3%
Tempo
Serviços*
1.41%
*Tempo Serviços LTDA is a Bradesco subsidiary company which started
envisaging Ciel3 on its investment portfolio
a. 28.65%
21
BRAZIL | ECONOMIC SCHEME
Card Holder
MERCHANTS
The brand defines
the interchange fee.
The acquirer negotiates
the gross MDR with the
merchant.
Gross MDR
Issuer
Net MDR
Interchange Fee
22
BRAZIL | MERCHANT DISCOUNT RATES
Market Credit and Debit Gross MDR Evolution (%)
2.98
2.98
%Credit Gross MDR
%Debit Gross MDR
2.95
2.90
2.84
2.84
2.79
1.60
2.78
2.77
2.76
1.61
1.59
1.59
1.59
1.59
1.58
1.57
1.57
1.54
4Q07
Source: Central Bank, Abecs
4Q08
4Q09
4Q10
4Q11
4Q12
4Q13
4Q14 2Q15
23
MARKET SHARE – TOP 4 ACQUIRERS
Captured volume [R$ Bi], market share [%]
.
Volume Growth
2Q15
yoy [%]
3.5%
10.9%
42.4%
42.2%
Cielo
Rede
Santander
Source: Quartely earnings release (Cielo, Rede/Itaú, Santander and Banrisul); Cielo´s Analysis
Banrisul
Industry Growth
yoy (%)
24
MARKET SHARE | MARKET VOLUME | TOP4
25
ECOMMERCE POSITION
Acquirers
Gateways
Card
Slip
Debit
Wallets/
Subacquirers
Banks
Source: Company, Broker reports, Cybersource
26
CATENO VALUED AT R$11.6 BILLION
Banco do Brasil´s cards division
BB
(before the Association)
Revenues
Marketing
Credit concession and analysis
Relationship with the cardholder
Loyalty Program
Collection
Client´s activation
Fee related to the issuance of cards
Annuity
Fee related to pre-paid accounts
Fee related to the legal entity relationship
program
Revenues related to operations of
generating cards invoice installments
Payment account management
Security management and
control
Payment of fees to cards brands
and payment arrangements
Arranjo Ourocard* interchange fee
Association
Responsibilities
Cielo
Contributed
management of
part of Arranjo
Ourocard*
30%
Capital
Investment of
R$ 8.1 billion
Cateno
Valued at
R$ 11.6 billion
70%
Association
Pro forma net income*
R$ 615 million
2014
*As per the due diligence
performed during the negotiations
*Scope of Arranjo Ourocard Association: Purchase transactions from all credit and debit cards issued by Banco do Brasil
labeled by Visa, Mastercard, Elo and American Express brands, excluding the cards related to the prepaid business, payment
solutions provided to government entities and private label cards issued under current partnerships with retailers.
27
Copyright © Cielo | Todos os direitos reservados
NUMBERS (R$ million)
1) Cielo Consolidated
Net Revenue
Cost+Expenses
Cielo Net Income
2Q15
2Q14
1Q15
2Q15 X 2Q14
2Q15 X 1Q15
2,795.8
1,840.7
2,351.8
51.9%
18.9%
(1,666.0)
(989.0)
(1,321.6)
68.5%
26.1%
869.4
796.8
911.8
9.1%
-4.6%
2) Cielo ex Cateno and Fin. Exp.
Net Revenue
Cost+Expenses
Cielo Net Income
3) Cateno
2Q15
2Q14
1Q15
2Q15 X
2Q14
2Q15 X
1Q15
2,224.1
1,840.7
2,144.4
20.8%
3.7%
(1,261.5)
(989.0)
(1,168.0)
27.6%
8.0%
956.6
796.8
955.2
20.1%
0.1%
2Q15
1Q15
2Q15 X 1Q15
571.7
207.3
175.7%
Cost+Expenses
(308.1)
(121.6)
153.3%
Amortization
(96.4)
(32.1)
200.3%
Net Contribution
(87.2)
(43.5)*
100.7%
Net Revenue
4) Cielo Brazil
2Q15
2Q14
1Q15
2Q15 X
2Q14
2Q15 X
1Q15
5) Other Subsidiaries
2Q15
2Q14
1Q15
2Q15 X
2Q14
2Q15 X
1Q15
513.2
305.7
446.5
67.9%
14.9%
(294.6)
(427.5)
67.7%
15.6%
0.4
9.0
3,150.0%
44.4%
Net Revenue
1,710.9
1,535.0
1,697.9
11.5%
0.8%
Cost+Expenses
(767.4)
(694.4)
(740.5)
10.5%
3.6%
Cost+Expenses
per transaction
R$0.51
R$0.51
R$0.52
0.0%
-1.9%
Cost+Expenses (494.1)
-0.3%
Cielo Net
Income
Net Revenue
Cielo Net
Income
943.6
796.4
946.2
18.5%
13.0
(*) In Cateno´s 2Q2015 results were added extraordinary cost + expenses with consultants, lawyers and banks related to association process with Banco do Brasil,
in the amount of R$ 10MM, net of tax effect.
28
Copyright © Cielo | Todos os direitos reservados
CATENO 2Q15 (R$ Million)
Cateno
“Cash Basis”
(ex Cateno amortization)
Business
Result
Accounting
Value
571.7
571.7
(308.1)
(308.1)
Costs + Expenses
-
(96.4)
Amortization *
Operating Income
263.6
167.1
Operating Income
263.6
Financial Income
19.6
19.6
Financial Income
19.6
Income Tax\ CSLL**
(96.3)
(63.5)
Net Income
186.9
Net Revenue
Costs + Expenses
Amortization *
Net Revenue
571.7
(308.1)
-
123.2
Income Tax\ CSLL**
Net Income
(63.5)
219.7
Share Cielo – 70%
86.3
Share Cielo – 70%
153.8
Financial Expenses
(post taxes)
(173.5)
Financial Expenses
(post taxes)
(173.5)
Net contribution
(87.2)
Net contribution – Cash Basis
(19.7)
Accretive
from 2S17
Accretive
from 2S16
* Amortization of R$11.6 billion intangible assets in 30 years
** Social Contribution
29
Copyright © Cielo | Todos os direitos reservados
ADJUSTED INCOME 2Q15 (R$ million)
1) Cielo Consolidated
Net Revenue
Cost+Expenses
Cielo Net Income
2Q15
2Q14
1Q15
2Q15 X 2Q14
2Q15 X 1Q15
2,795.8
1,840.7
2,351.8
51.9%
18.9%
(1,666.0)
(989.0)
(1,321.6)
68.5%
26.1%
869.4
796.8
911,8
9.1%
-4.6%
2) Cielo ex Cateno and Fin. Exp.
Net Revenue
Cost+Expenses
Cielo Net Income
“Cash Basis”
(ex
Cateno amortization)
2Q15
2Q14
1Q15
2Q15 X
2Q14
2Q15 X
1Q15
2,224.1
1,840.7
2,144.4
20.8%
3.7%
Net Revenue
(1,261.5)
(989.0)
(1,168.0)
27.6%
8.0%
Cost+Expenses
(308.1)
956.6
796.8
955.2
20.1%
0.1%
Net Contribution - “cash
basis”
(19.7)
571.7
Net Income Adjustment composition (R$ million)
Cielo’s Net Income excluding Cateno and financial expenses
956.6
Cateno’s Net Contribution - “cash basis”
(19.7)
Cielo’s Adjusted Net Income
936.9
30
Copyright © Cielo | Todos os direitos reservados
DEBT EVOLUTION
Net Debt Evolution (R$ billion)
2.0
Total Indebtedness (R$ billion)
1.8
1. Public Debentures: 4.7
2. Private Debentures: 3.5
3. Bonds: 2.7
4. Finame: 0.4
5. FINEP: 0.1
6. Loan Issuance: 1.0
1.6
Total: 12.4
11.2
1.8x
1.4
1.2
1.0
0.8
0.6x
0.6
Interest Coverage (EBIT/
Interest Expenses): 6.81x
3.3
0.4x
0.4
1.7
0.4x
2.1
0.2
0.0
2012
Net Debt
2013
2014
Net Debt/ Adjusted Ebitda
06/30/2015
31
DEBT AMORTIZATION SCHEDULE
Principal Amortization Schedule* (R$ billion)
3.5
3.5
2.7
2.7
1.0
2.7
1.6
1.5
1.5
0.2
0.1
2016
2017
1.5
1.5
2018
0.0
2019
2020
2021
2022
FINAME PSI (BNDES)
“Ten-Year Bonds”
Private Debentures*
Public Debentures
Issuance of Loan (Bank of Tokyo-Mitsubishi UFJ)
* Private Debentures with Banco do Brasil. Amortization in 8 years but considering put/call in year 5.
32
CIEL3 OUTPERFORMING IBOV
500.00
Stock performance (IPO date* = 100)
475.00
450.00
425.00
R$39.17
400.00
375.00
350.00
325.00
300.00
275.00
250.00
225.00
200.00
175.00
150.00
47,153
125.00
100.00
75.00
50.00
28-Aug-09
28-Aug-10
28-Aug-11
28-Aug-12
CIEL3
*06/29/2009
IBOV
28-Aug-13
28-Aug-14
28-Aug-15
33
INVESTOR
RELATIONS
www.cielo.com.br/ri
E-mail: [email protected]
Phone: + 55 11 2596-8458
Copyright © Cielo | Todos os direitos reservados